UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-07452
AIM Variable Insurance Funds (Invesco Variable Insurance Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Sheri Morris 11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: 12/31
Date of reporting period: 12/31/20
| Item 1. | Report to Stockholders. |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. American Franchise Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
| | | | |
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
| Invesco Distributors, Inc. | | | | VK-VIAMFR-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. American Franchise Fund (the Fund) outperformed the Russell 1000 Growth Index, the Fund’s style-specific benchmark. Your Fund’s long-term performance appears later in this report. | |
| Fund vs. Indexes | | | | |
| Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
| Series I Shares | | | 42.35 | % |
| Series II Shares | | | 41.99 | |
| S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
| Russell 1000 Growth Indexq (Style-Specific Index) | | | 38.49 | |
| Lipper VUF Large-Cap Growth Funds Index∎ (Peer Group Index) | | | 37.38 | |
| |
| Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August, revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Given this landscape, the Fund produced a strong, double digit return and outperformed its style-specific benchmark, the Russell 1000 Growth Index, during the year. Performance was primarily driven by stock selection with the health care, industrials, communication services and materials sectors being key relative contributors. Market allocation also had a positive effect with an overweight in consumer discretionary and lack of real estate exposure proving beneficial to relative re-
turns. Conversely, an underweight exposure in information technology (IT) and stock selection in consumer discretionary were relative detractors.
Top individual contributors to the Fund’s absolute performance during the year included Farfetch, Amazon.com and Moderna.
We believe Farfetch is positioned toward becoming the dominant online luxury retail destination aggregating over 1,000 luxury sellers and offering over 3,000 luxury brands with over 6 million SKUs (stock-keeping units), which is 10 times more than its nearest online competitor.4 Farfetch has a new global partnership which allowed it to expand into the China market. We believe this strong position has enabled the company to outgrow the overall online luxury market and become the partner of choice for luxury vendors.
The COVID-19 event has accelerated some of the long-term shifts driven by technological changes and increased connectivity that we seek to capture. eCommerce platforms have seen substantial growth in demand from new users, as well as for the previously underpenetrated categories of food and consumables. An overweight allocation in Amazon was beneficial to both absolute and relative performance during the year.
We originally purchased Moderna in the summer of 2019 given its promising new messenger-RNA platform which uses genetic material to produce vaccines to provoke an immune response. Its speed of delivery and portability was an important part of our original investment thesis. Having the position and access to the company also gave us confidence around a vaccination timeline at the height of uncertainty in March and April. Moderna made a COVID-19 prototype at an all-time record pace. Also, we think it can pivot quickly to handle virus mutations. Moderna contributed to both absolute and relative performance during the year. Following material gains, the shares were sold given their rich valuation.
Top individual absolute detractors from Fund performance during the year included Royal Caribbean, Tyson Foods and Airbus.
Cruise line stocks like Royal Caribbean sold off deeply in the first quarter. Early in the year, we had kept exposure thinking COVID-19 might be contained within Asia, which is not yet a major cruising market. Once the virus appeared in Europe, the largest cruise destination market, we reduced exposure significantly and eventually phased out exposure completely as we believed their path to growth would be slow and uncertain.
Tyson Foods suffered during the year as almost one-third of its business supplies food to restaurants, which were forced to close in lockdowns and operate at reduced capacity once allowed to open back up. COVID-19 infections also caused major disruptions to Tyson Food’s meat processing plants, forcing closures and causing protein shortages. We
Invesco V.I. American Franchise Fund
significantly reduced our exposure throughout the year.
Going into the COVID-19 crisis, Airbus held what we believed to be an unparalleled position in aerospace with an order backlog, a competitor whose main product was deficient and grounded, as well as a strong balance sheet with plenty of liquidity. Global air travel was grounded to a halt this year and has yet to recover fully. We sold Airbus as it seems unlikely that struggling airlines will be able to purchase new aircrafts anytime soon.
Our fundamental bottom-up research led us to overweight exposures in communication services, consumer discretionary and financials at year end, relative to the Fund’s style-specific index. Within consumer discretionary, we were focused on technology-driven share shift, demographics and changing behaviors. Despite being a small position overall, the Fund was overweight in financials given the potential to benefit from economic recovery supported by the vaccine rollout. Underweight exposures included IT, real estate, consumer staples and health care. Within IT, semiconductors were the only overweight industry, given a current
preference for technology-driven companies within the communication services and consumer discretionary sectors. Within health care, we have a preference for life sciences & tools, the “arms dealers” in the biopharma complex, and health care equipment & supplies, with a focus on secular trends such as robotics and disruptive innovators.
At the close of the year, we continued to expect volatility as the global economy ebbs and flows between high COVID-19 infection rates with lockdowns and vaccinations supporting reopenings with a return to normalcy. Interest rates are likely to remain low by historic standards and economic growth is likely to remain muted on a full year basis, although we expect some quarters will benefit from easy comparisons versus the lockdowns of 2020. We believe this is a ripe environment for equities in general as pent up demand further propels the cyclical recovery. However, value industries lack pricing power in the face of globalization, overcapacity and increased efficiencies mostly due to technological changes. Therefore, we believe growth will continue to outperform. As ever, we believe change is the fuel for growth and we expect our positioning will be active within the unfolding vaccine-related opportunities to go back outside yet balanced with secular growers. We continue to seek to identify “share-takers,” companies that can gain market share through technology-enabled advantages in their business models and from disruptive shifts in enterprise and consumer behavior.
Thank you for your commitment to the Invesco V.I. American Franchise Fund and for sharing our long-term investment horizon.
| 1 | Source: US Federal Reserve |
| 2 | Source: US Bureau of Economic Analysis |
Portfolio manager(s):
Ido Cohen
Erik Voss (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. American Franchise Fund
Your Fund’s Long – Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
| Series I Shares | | | | |
| Inception (7/3/95) | | | 11.02% | |
| 10 Years | | | 15.32 | |
| 5 Years | | | 19.56 | |
| 1 Year | | | 42.35 | |
| |
| Series II Shares | | | | |
| Inception (9/18/00) | | | 4.72% | |
| 10 Years | | | 15.03 | |
| 5 Years | | | 19.26 | |
| 1 Year | | | 41.99 | |
Effective June 1, 2010, Class I and Class II shares of the predecessor fund, Van Kampen Life Investment Trust Capital Growth Portfolio, advised by Van Kampen Asset Management were reorganized into Series I and Series II shares, respectively, of Invesco Van Kampen V.I. Capital Growth Fund (renamed Invesco V.I. American Franchise Fund on April 29, 2013). Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class I shares and Class II shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. American Franchise Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. American Franchise Fund
Supplemental Information
Invesco V.I. American Franchise Fund’s investment objective is to seek capital growth.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | | The Russell 1000® Growth Index is an unmanaged index considered representative of large-cap growth stocks. The Russell 1000 Growth Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | The Lipper VUF Large-Cap Growth Funds Index is an unmanaged index considered representative of large-cap growth variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
Invesco V.I. American Franchise Fund
Fund Information
| | |
Portfolio Composition |
By sector | | % of total net assets |
| |
| Information Technology | | 33.09% |
|
| Consumer Discretionary | | 22.78 |
|
| Communication Services | | 16.72 |
|
| Health Care | | 11.98 |
|
| Industrials | | 5.92 |
|
| Financials | | 4.10 |
|
| Consumer Staples | | 2.77 |
|
| Other Sectors, Each Less than 2% of Net Assets | | 2.62 |
|
| Money Market Funds Plus Other Assets Less Liabilities | | 0.02 |
|
| | |
Top 10 Equity Holdings* | | |
| % of total net assets |
|
1. Amazon.com, Inc. | | 9.42% |
|
2. Alphabet, Inc., Class A | | 4.78 |
|
3. Facebook, Inc., Class A | | 4.67 |
|
4. Microsoft Corp. | | 4.66 |
|
5. QUALCOMM, Inc. | | 3.56 |
|
6. Alibaba Group Holding Ltd., ADR | | 2.94 |
|
7. PayPal Holdings, Inc. | | 2.81 |
|
8. Apple, Inc. | | 2.80 |
|
9. Visa, Inc., Class A | | 2.74 |
|
10. Booking Holdings, Inc. | | 2.73 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. American Franchise Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.98% | |
| Aerospace & Defense–0.64% | |
Textron, Inc. | | | 109,671 | | | $ | 5,300,399 | |
| |
|
| Agricultural Products–0.12% | |
Darling Ingredients, Inc.(b) | | | 17,095 | | | | 986,040 | |
| |
|
| Application Software–7.13% | |
Adobe, Inc.(b) | | | 19,908 | | | | 9,956,389 | |
| |
Paycom Software, Inc.(b) | | | 7,508 | | | | 3,395,493 | |
| |
RingCentral, Inc., Class A(b) | | | 45,945 | | | | 17,411,777 | |
| |
salesforce.com, inc.(b) | | | 54,726 | | | | 12,178,177 | |
| |
Splunk, Inc.(b) | | | 18,826 | | | | 3,198,349 | |
| |
Synopsys, Inc.(b) | | | 39,142 | | | | 10,147,172 | |
| |
Unity Software, Inc.(b)(c) | | | 18,975 | | | | 2,912,093 | |
| |
| | | | | | | 59,199,450 | |
| |
|
| Asset Management & Custody Banks–3.22% | |
Apollo Global Management, Inc. | | | 258,349 | | | | 12,653,934 | |
| |
KKR & Co., Inc., Class A | | | 348,555 | | | | 14,112,992 | |
| |
| | | | | | | 26,766,926 | |
| |
|
| Automotive Retail–0.30% | |
CarMax, Inc.(b) | | | 26,275 | | | | 2,481,936 | |
| |
|
| Biotechnology–1.86% | |
Alnylam Pharmaceuticals, Inc.(b) | | | 16,871 | | | | 2,192,724 | |
| |
Argenx SE, ADR (Netherlands)(b) | | | 8,424 | | | | 2,477,414 | |
| |
BeiGene Ltd., ADR (China)(b) | | | 16,363 | | | | 4,228,035 | |
| |
C4 Therapeutics, Inc.(b) | | | 11,625 | | | | 385,136 | |
| |
Ionis Pharmaceuticals, Inc.(b) | | | 38,815 | | | | 2,194,600 | |
| |
Sarepta Therapeutics, Inc.(b) | | | 12,583 | | | | 2,145,276 | |
| |
uniQure N.V. (Netherlands)(b) | | | 51,005 | | | | 1,842,811 | |
| |
| | | | | | | 15,465,996 | |
| |
|
| Casinos & Gaming–0.74% | |
Penn National Gaming, Inc.(b) | | | 71,004 | | | | 6,132,615 | |
| |
|
| Construction Machinery & Heavy Trucks–0.12% | |
Nikola Corp.(b)(c) | | | 66,070 | | | | 1,008,228 | |
| |
|
| Consumer Electronics–1.43% | |
Sony Corp. (Japan) | | | 117,900 | | | | 11,854,100 | |
| |
|
| Copper–1.25% | |
Freeport-McMoRan, Inc. | | | 398,154 | | | | 10,359,967 | |
| |
|
| Data Processing & Outsourced Services–6.75% | |
FleetCor Technologies, Inc.(b) | | | 10,974 | | | | 2,994,036 | |
| |
Mastercard, Inc., Class A | | | 19,572 | | | | 6,986,030 | |
| |
PayPal Holdings, Inc.(b) | | | 99,625 | | | | 23,332,175 | |
| |
Visa, Inc., Class A | | | 103,893 | | | | 22,724,516 | |
| |
| | | | | | | 56,036,757 | |
| |
|
| Diversified Support Services–0.44% | |
Cintas Corp. | | | 10,409 | | | | 3,679,165 | |
| |
|
| Environmental & Facilities Services–0.49% | |
GFL Environmental, Inc. (Canada) | | | 138,451 | | | | 4,040,000 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Financial Exchanges & Data–0.18% | |
S&P Global, Inc. | | | 4,571 | | | $ | 1,502,625 | |
| |
|
| Food Distributors–1.48% | |
US Foods Holding Corp.(b) | | | 369,577 | | | | 12,310,610 | |
| |
|
| Health Care Equipment–3.32% | |
Abbott Laboratories | | | 20,499 | | | | 2,244,436 | |
| |
DexCom, Inc.(b) | | | 5,688 | | | | 2,102,967 | |
| |
Intuitive Surgical, Inc.(b) | | | 9,961 | | | | 8,149,094 | |
| |
Teleflex, Inc. | | | 17,469 | | | | 7,189,716 | |
| |
Zimmer Biomet Holdings, Inc. | | | 51,049 | | | | 7,866,141 | |
| |
| | | | | | | 27,552,354 | |
| |
|
| Health Care Services–0.25% | |
Amedisys, Inc.(b) | | | 7,021 | | | | 2,059,470 | |
| |
|
| Health Care Supplies–0.45% | |
Align Technology, Inc.(b) | | | 4,002 | | | | 2,138,589 | |
| |
West Pharmaceutical Services, Inc. | | | 5,796 | | | | 1,642,065 | |
| |
| | | | | | | 3,780,654 | |
| |
|
| Health Care Technology–0.28% | |
GoodRx Holdings, Inc., Class A(b)(c) | | | 46,817 | | | | 1,888,598 | |
| |
Teladoc Health, Inc.(b) | | | 2,044 | | | | 408,718 | |
| |
| | | | | | | 2,297,316 | |
| |
|
| Home Improvement Retail–2.20% | |
Lowe’s Cos., Inc. | | | 113,572 | | | | 18,229,442 | |
| |
|
| Industrial Conglomerates–0.50% | |
Roper Technologies, Inc. | | | 9,574 | | | | 4,127,256 | |
| |
|
| Industrial Gases–0.38% | |
Air Products and Chemicals, Inc. | | | 11,591 | | | | 3,166,893 | |
| |
|
| Integrated Oil & Gas–0.62% | |
Occidental Petroleum Corp. | | | 297,745 | | | | 5,153,966 | |
| |
|
| Interactive Home Entertainment–5.45% | |
Activision Blizzard, Inc. | | | 210,260 | | | | 19,522,641 | |
| |
Electronic Arts, Inc. | | | 46,807 | | | | 6,721,485 | |
| |
Nintendo Co. Ltd. (Japan) | | | 25,000 | | | | 15,954,730 | |
| |
Take-Two Interactive Software,
Inc.(b) | | | 14,644 | | | | 3,042,877 | |
| |
| | | | | | | 45,241,733 | |
| |
|
| Interactive Media & Services–10.06% | |
Alphabet, Inc., Class A(b) | | | 22,656 | | | | 39,707,812 | |
| |
Facebook, Inc., Class A(b) | | | 141,786 | | | | 38,730,264 | |
| |
ZoomInfo Technologies, Inc., Class A(b) | | | 105,361 | | | | 5,081,561 | |
| |
| | | | | | | 83,519,637 | |
| |
|
| Internet & Direct Marketing Retail–18.12% | |
Alibaba Group Holding Ltd., ADR (China)(b) | | | 104,895 | | | | 24,412,213 | |
| |
Amazon.com, Inc.(b) | | | 24,000 | | | | 78,166,320 | |
| |
Booking Holdings, Inc.(b) | | | 10,184 | | | | 22,682,518 | |
| |
DoorDash, Inc., Class A(b) | | | 15,595 | | | | 2,226,186 | |
| |
Farfetch Ltd., Class A (United Kingdom)(b) | | | 244,904 | | | | 15,627,324 | |
| |
HelloFresh SE (Germany)(b) | | | 94,788 | | | | 7,325,035 | |
| |
| | | | | | | 150,439,596 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
| | | | | | | | |
| | | Shares | | | Value | |
Life & Health Insurance–0.70% | | | | | | | | |
Athene Holding Ltd., Class A(b) | | | 133,965 | | | $ | 5,779,250 | |
| |
|
| Life Sciences Tools & Services–3.45% | |
10X Genomics, Inc., Class A(b) | | | 19,682 | | | | 2,786,971 | |
| |
Avantor, Inc.(b) | | | 387,143 | | | | 10,898,075 | |
| |
IQVIA Holdings, Inc.(b) | | | 66,052 | | | | 11,834,537 | |
| |
Thermo Fisher Scientific, Inc. | | | 6,751 | | | | 3,144,481 | |
| |
| | | | | | | 28,664,064 | |
| |
|
| Managed Health Care–1.14% | |
UnitedHealth Group, Inc. | | | 27,126 | | | | 9,512,546 | |
| |
|
| Movies & Entertainment–1.20% | |
Netflix, Inc.(b) | | | 11,541 | | | | 6,240,565 | |
| |
Walt Disney Co. (The)(b) | | | 20,742 | | | | 3,758,035 | |
| |
| | | | | | | 9,998,600 | |
| |
|
| Oil & Gas Equipment & Services–0.09% | |
Baker Hughes Co., Class A | | | 34,804 | | | | 725,663 | |
| |
|
| Packaged Foods & Meats–0.17% | |
Tyson Foods, Inc., Class A | | | 22,242 | | | | 1,433,274 | |
| |
|
| Pharmaceuticals–1.22% | |
Reata Pharmaceuticals, Inc., Class A(b) | | | 63,291 | | | | 7,824,033 | |
| |
Zoetis, Inc. | | | 13,859 | | | | 2,293,665 | |
| |
| | | | | | | 10,117,698 | |
| |
|
| Railroads–0.35% | |
Union Pacific Corp. | | | 14,086 | | | | 2,932,987 | |
| |
|
| Research & Consulting Services–0.91% | |
CoStar Group, Inc.(b) | | | 8,177 | | | | 7,557,838 | |
| |
|
| Semiconductor Equipment–3.06% | |
Applied Materials, Inc. | | | 237,143 | | | | 20,465,441 | |
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 10,103 | | | | 4,927,435 | |
| |
| | | | | | | 25,392,876 | |
| |
|
| Semiconductors–5.51% | |
Monolithic Power Systems, Inc. | | | 7,247 | | | | 2,654,069 | |
| |
NVIDIA Corp. | | | 25,933 | | | | 13,542,213 | |
| |
QUALCOMM, Inc. | | | 193,816 | | | | 29,525,929 | |
| |
| | | | | | | 45,722,211 | |
| |
|
| Specialty Chemicals–0.28% | |
Sherwin-Williams Co. (The) | | | 3,138 | | | | 2,306,148 | |
| |
|
| Systems Software–7.85% | |
Microsoft Corp. | | | 173,969 | | | | 38,694,185 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Systems Software–(continued) | |
Palo Alto Networks, Inc.(b) | | | 40,765 | | | $ | 14,487,473 | |
| |
ServiceNow, Inc.(b) | | | 21,769 | | | | 11,982,311 | |
| |
| | | | | | | 65,163,969 | |
| |
|
| Technology Hardware, Storage & Peripherals–2.80% | |
Apple, Inc. | | | 174,979 | | | | 23,217,963 | |
| |
| | |
Tobacco–1.00% | | | | | | | | |
Philip Morris International, Inc. | | | 100,172 | | | | 8,293,240 | |
| |
|
| Trading Companies & Distributors–1.49% | |
Fastenal Co. | | | 83,119 | | | | 4,058,701 | |
| |
United Rentals, Inc.(b) | | | 35,856 | | | | 8,315,365 | |
| |
| | | | | | | 12,374,066 | |
| |
|
| Trucking–0.98% | |
Knight-Swift Transportation Holdings, Inc. | | | 39,822 | | | | 1,665,356 | |
| |
Lyft, Inc., Class A(b) | | | 104,252 | | | | 5,121,901 | |
| |
Uber Technologies, Inc.(b) | | | 26,381 | | | | 1,345,431 | |
| |
| | | | | | | 8,132,688 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $350,694,180) | | | | 830,018,212 | |
| |
|
| Money Market Funds–0.12% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 339,535 | | | | 339,535 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 241,078 | | | | 241,150 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 388,040 | | | | 388,040 | |
| |
Total Money Market Funds (Cost $968,725) | | | | | | | 968,725 | |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.10% (Cost $351,662,905) | | | | 830,986,937 | |
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
| Money Market Funds–0.67% | |
Invesco Private Government Fund,
0.02%(d)(e)(f) | | | 2,232,586 | | | | 2,232,586 | |
| |
Invesco Private Prime Fund, 0.12%(d)(e)(f) | | | 3,347,874 | | | | 3,348,878 | |
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $5,581,464) | | | | 5,581,464 | |
| |
TOTAL INVESTMENTS IN
SECURITIES–100.77%
(Cost $357,244,369) | | | | 836,568,401 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.77)% | | | | (6,426,496 | ) |
| |
NET ASSETS–100.00% | | | $ | 830,141,905 | |
| |
Investment Abbreviations:
ADR – American Depositary Receipt
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $293,529 | | | | $ 40,524,411 | | | | $(40,478,405) | | | | $- | | | | $- | | | | $339,535 | | | | $3,936 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 209,582 | | | | 29,131,423 | | | | (29,098,113 | ) | | | - | | | | (1,742 | ) | | | 241,150 | | | | 4,580 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | 335,461 | | | | 46,313,613 | | | | (46,261,034 | ) | | | - | | | | - | | | | 388,040 | | | | 4,059 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | - | | | | 5,182,077 | | | | (5,182,077 | ) | | | - | | | | - | | | | - | | | | 270 | * |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 969,176 | | | | (969,306 | ) | | | - | | | | 130 | | | | - | | | | 136 | * |
| | | | | | | |
Invesco Private Government Fund | | | - | | | | 35,474,066 | | | | (33,241,480 | ) | | | - | | | | - | | | | 2,232,586 | | | | 455 | * |
| | | | | | | |
Invesco Private Prime Fund | | | - | | | | 23,817,229 | | | | (20,468,498 | ) | | | - | | | | 147 | | | | 3,348,878 | | | | 1,320 | * |
Total | | | $838,572 | | | | $181,411,995 | | | | $(175,698,913) | | | | $- | | | | $(1,465) | | | | $6,550,189 | | | | $14,756 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $350,694,180)* | | $ | 830,018,212 | |
| |
Investments in affiliated money market funds, at value
(Cost $6,550,189) | | | 6,550,189 | |
| |
Foreign currencies, at value
(Cost $185,524) | | | 187,241 | |
| |
Receivable for: | | | | |
Investments sold | | | 2,279,177 | |
| |
Fund shares sold | | | 246,995 | |
| |
Dividends | | | 163,753 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 349,476 | |
| |
Total assets | | | 839,795,043 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 1,478,559 | |
| |
Fund shares reacquired | | | 1,264,651 | |
| |
Amount due custodian | | | 513,096 | |
| |
Collateral upon return of securities loaned | | | 5,581,464 | |
| |
Accrued fees to affiliates | | | 384,716 | |
| |
Accrued other operating expenses | | | 60,117 | |
| |
Trustee deferred compensation and retirement plans | | | 370,535 | |
| |
Total liabilities | | | 9,653,138 | |
| |
Net assets applicable to shares outstanding | | $ | 830,141,905 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 258,745,972 | |
| |
Distributable earnings | | | 571,395,933 | |
| |
| | $ | 830,141,905 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 611,333,514 | |
| |
Series II | | $ | 218,808,391 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 6,861,441 | |
| |
Series II | | | 2,595,234 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 89.10 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 84.31 | |
| |
| * | At December 31, 2020, securities with an aggregate value of $5,297,335 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $53,688) | | $ | 4,680,325 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $21,380) | | | 33,955 | |
| |
Total investment income | | | 4,714,280 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 4,628,535 | |
| |
Administrative services fees | | | 1,149,195 | |
| |
Custodian fees | | | 22,934 | |
| |
Distribution fees - Series II | | | 439,996 | |
| |
Transfer agent fees | | | 73,362 | |
| |
Trustees’ and officers’ fees and benefits | | | 30,409 | |
| |
Reports to shareholders | | | 10,355 | |
| |
Professional services fees | | | 33,686 | |
| |
Other | | | 5,651 | |
| |
Total expenses | | | 6,394,123 | |
| |
Less: Fees waived | | | (2,549 | ) |
Net expenses | | | 6,391,574 | |
| |
Net investment income (loss) | | | (1,677,294 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 99,292,170 | |
| |
Affiliated investment securities | | | (1,465 | ) |
| |
Foreign currencies | | | 10,065 | |
| |
| | | 99,300,770 | |
| |
Change in net unrealized appreciation of: Unaffiliated investment securities | | | 152,264,028 | |
Foreign currencies | | | 2,818 | |
| |
| | | 152,266,846 | |
| |
Net realized and unrealized gain | | | 251,567,616 | |
| |
Net increase in net assets resulting from operations | | $ | 249,890,322 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (1,677,294 | ) | | $ | 502,933 | |
| |
Net realized gain | | | 99,300,770 | | | | 54,063,192 | |
| |
Change in net unrealized appreciation | | | 152,266,846 | | | | 132,918,929 | |
| |
Net increase in net assets resulting from operations | | | 249,890,322 | | | | 187,485,054 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (38,450,337 | ) | | | (64,492,029 | ) |
| |
Series II | | | (13,951,148 | ) | | | (21,911,152 | ) |
| |
Total distributions from distributable earnings | | | (52,401,485 | ) | | | (86,403,181 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (26,428,995 | ) | | | 8,287,794 | |
| |
Series II | | | 6,495,285 | | | | 4,809,729 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (19,933,710 | ) | | | 13,097,523 | |
| |
Net increase in net assets | | | 177,555,127 | | | | 114,179,396 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 652,586,778 | | | | 538,407,382 | |
| |
End of year | | $ | 830,141,905 | | | $ | 652,586,778 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net investment
income
(loss)(a) | | | Net gains
(losses)
on securities
(both realized and unrealized) | | | Total from
investment operations | | | Dividends from net investment income | | | Distributions from net realized
gains | | | Total
distributions | | | Net asset
value, end of period | | | Total
return (b) | | | Net assets,
end of period (000’s omitted) | | | Ratio of
expenses
to average
net assets
with fee waivers
and/or
expenses
absorbed | | | Ratio of
expenses
to average net
assets without fee waivers
and/or
expenses
absorbed | | | Ratio of net investment
income (loss) to average
net assets | | | Portfolio turnover (c) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $67.15 | | | | $(0.13 | ) | | | $28.00 | | | | $27.87 | | | | $(0.06) | | | | $(5.86) | | | | $(5.92) | | | | $89.10 | | | | 42.35 | % | | | $611,334 | | | | 0.86%(d) | | | | 0.86%(d) | | | | (0.18)%(d) | | | | 54% | |
Year ended 12/31/19 | | | 57.15 | | | | 0.10 | | | | 19.86 | | | | 19.96 | | | | – | | | | (9.96 | ) | | | (9.96 | ) | | | 67.15 | | | | 36.76 | | | | 490,366 | | | | 0.86 | | | | 0.87 | | | | 0.15 | | | | 40 | |
Year ended 12/31/18 | | | 62.97 | | | | (0.00 | ) | | | (1.50 | ) | | | (1.50 | ) | | | – | | | | (4.32 | ) | | | (4.32 | ) | | | 57.15 | | | | (3.62 | ) | | | 405,192 | | | | 0.88 | | | | 0.88 | | | | (0.00) | | | | 42 | |
Year ended 12/31/17 | | | 53.58 | | | | (0.04 | ) | | | 14.50 | | | | 14.46 | | | | (0.05 | ) | | | (5.02 | ) | | | (5.07 | ) | | | 62.97 | | | | 27.34 | | | | 491,271 | | | | 0.89 | | | | 0.89 | | | | (0.06) | | | | 45 | |
Year ended 12/31/16 | | | 57.30 | | | | 0.07 | | | | 1.33 | | | | 1.40 | | | | – | | | | (5.12 | ) | | | (5.12 | ) | | | 53.58 | | | | 2.27 | | | | 420,824 | | | | 0.93 | | | | 0.93 | | | | 0.12 | | | | 59 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 63.90 | | | | (0.31 | ) | | | 26.58 | | | | 26.27 | | | | – | | | | (5.86 | ) | | | (5.86 | ) | | | 84.31 | | | | 41.99 | | | | 218,808 | | | | 1.11(d) | | | | 1.11(d) | | | | (0.43)(d) | | | | 54 | |
Year ended 12/31/19 | | | 54.90 | | | | (0.07 | ) | | | 19.03 | | | | 18.96 | | | | – | | | | (9.96 | ) | | | (9.96 | ) | | | 63.90 | | | | 36.43 | | | | 162,221 | | | | 1.11 | | | | 1.12 | | | | (0.10) | | | | 40 | |
Year ended 12/31/18 | | | 60.79 | | | | (0.16 | ) | | | (1.41 | ) | | | (1.57 | ) | | | – | | | | (4.32 | ) | | | (4.32 | ) | | | 54.90 | | | | (3.88 | ) | | | 133,216 | | | | 1.13 | | | | 1.13 | | | | (0.25) | | | | 42 | |
Year ended 12/31/17 | | | 51.95 | | | | (0.19 | ) | | | 14.05 | | | | 13.86 | | | | – | | | | (5.02 | ) | | | (5.02 | ) | | | 60.79 | | | | 27.03 | | | | 170,956 | | | | 1.14 | | | | 1.14 | | | | (0.31) | | | | 45 | |
Year ended 12/31/16 | | | 55.85 | | | | (0.06 | ) | | | 1.28 | | | | 1.22 | | | | – | | | | (5.12 | ) | | | (5.12 | ) | | | 51.95 | | | | 2.00 | | | | 151,599 | | | | 1.18 | | | | 1.18 | | | | (0.13) | | | | 59 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $512,534 and $175,998 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Franchise Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. American Franchise Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital growth.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations – Securities, including restricted securities, are valued according to the following policy.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. American Franchise Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
Invesco V.I. American Franchise Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
First $250 million | | | 0.695% | |
| |
Next $250 million | | | 0.670% | |
| |
Next $500 million | | | 0.645% | |
| |
Next $550 million | | | 0.620% | |
| |
Next $3.45 billion | | | 0.600% | |
| |
Next $250 million | | | 0.595% | |
| |
Next $2.25 billion | | | 0.570% | |
| |
Next $2.5 billion | | | 0.545% | |
| |
Over $10 billion | | | 0.520% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.67%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $2,549.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $99,038 for accounting and fund administrative services and was reimbursed $1,050,157 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $2,102 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when
Invesco V.I. American Franchise Fund
market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 794,884,347 | | | $ | 35,133,865 | | | | $– | | | $ | 830,018,212 | |
| |
Money Market Funds | | | 968,725 | | | | 5,581,464 | | | | – | | | | 6,550,189 | |
| |
Total Investments | | $ | 795,853,072 | | | $ | 40,715,329 | | | | $– | | | $ | 836,568,401 | |
| |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities purchases of $204,510.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 365,024 | | | $ | 1,304,602 | |
| |
Long-term capital gain | | | 52,036,461 | | | | 85,098,579 | |
| |
Total distributions | | $ | 52,401,485 | | | $ | 86,403,181 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
Undistributed ordinary income | | $ | 19,502,461 | |
| |
Undistributed long-term capital gain | | | 77,145,118 | |
| |
Net unrealized appreciation – investments | | | 475,003,379 | |
| |
Net unrealized appreciation (depreciation) - foreign currencies | | | (199 | ) |
| |
Temporary book/tax differences | | | (254,826 | ) |
| |
Shares of beneficial interest | | | 258,745,972 | |
| |
Total net assets | | $ | 830,141,905 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and straddles.
Invesco V.I. American Franchise Fund
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $370,667,500 and $445,748,983, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 477,239,400 | |
| |
Aggregate unrealized (depreciation) of investments | | | (2,236,021 | ) |
| |
Net unrealized appreciation of investments | | $ | 475,003,379 | |
| |
Cost of investments for tax purposes is $361,565,022.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses and short term capital gains, on December 31, 2020, undistributed net investment income (loss) was increased by $1,655,530 and undistributed net realized gain was decreased by $1,655,530. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 358,250 | | | $ | 27,495,024 | | | | 288,463 | | | $ | 19,234,264 | |
| |
Series II | | | 382,659 | | | | 27,974,194 | | | | 178,715 | | | | 11,199,246 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 473,119 | | | | 38,450,334 | | | | 1,061,073 | | | | 64,492,029 | |
| |
Series II | | | 181,325 | | | | 13,951,148 | | | | 378,562 | | | | 21,911,152 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,272,230 | ) | | | (92,374,353 | ) | | | (1,137,749 | ) | | | (75,438,499 | ) |
| |
Series II | | | (507,251 | ) | | | (35,430,057 | ) | | | (445,184 | ) | | | (28,300,669 | ) |
| |
Net increase (decrease) in share activity | | | (384,128 | ) | | $ | (19,933,710 | ) | | | 323,880 | | | $ | 13,097,523 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 31% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective April 30, 2021, the Fund’s sub-classification under the Investment Company Act of 1940 will change from “diversified” to “non-diversified” and a related fundamental investment restriction will be eliminated.
Invesco V.I. American Franchise Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. American Franchise Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. American Franchise Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. American Franchise Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized
Expense Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
| Series I | | $1,000.00 | | $1,275.60 | | $4.92 | | $1,020.81 | | $4.37 | | 0.86% |
| Series II | | 1,000.00 | | 1,273.80 | | 6.34 | | 1,019.56 | | 5.63 | | 1.11 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. American Franchise Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 52,036,461 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 99.92 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. American Franchise Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Bruce L. Crockett - 1944
Trustee and Chair | | 1993 | | Chairman, Crockett Technologies Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer, COMSAT Corporation; Chairman, Board of Governors of INTELSAT (international communications company); ACE Limited (insurance company); Independent Directors Council and Investment Company Institute: Member of the Audit Committee, Investment Company Institute; Member of the Executive Committee and Chair of the Governance Committee, Independent Directors Council | | 229 | | Director and Chairman of the Audit Committee, ALPS (Attorneys Liability Protection Society) (insurance company); Director and Member of the Audit Committee and Compensation Committee, Ferroglobe PLC (metallurgical company) |
David C. Arch - 1945
Trustee | | 2010 | | Chairman of Blistex Inc. (consumer health care products manufacturer); Member, World Presidents’ Organization | | 229 | | Board member of the Illinois Manufacturers’ Association |
Beth Ann Brown - 1968
Trustee | | 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 | | 229 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Chairman, Discovery Learning Alliance (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 229 | | None |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 229 | | Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 229 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 229 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 229 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | Retired Co-Owner & Partner of Quantalytics Research, LLC, (a FinTech Investment Research Platform for the Self-Directed Investor) | | 229 | | None |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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; Member of the Vestry of Trinity Wall Street; 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 and Board of Historic Hudson Valley (non-profit cultural organization) 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) | | 229 | | Director of Greenwall Foundation (bioethics research foundation); Member of Board and Investment Committee of The Greenwall Foundation; Director of Southern Africa Legal Services Foundation; Board Member and Investment Committee Member of Pulizer 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 Financial Officer, Olayan America, The Olayan Group (international investor/commercial/industrial); Chief Executive Officer, UBS Securities LLC; Group Chief Operating Officer, Americas, UBS AG; Assistant Secretary for Management & Budget and CFO, US Department of the Treasury | | 229 | | Atlantic Power Corporation (power generation company); ON Semiconductor Corp. (semiconductor supplier) |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP | | 229 | | Federal Reserve Bank of Dallas |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired | | 229 | | None |
Daniel S. Vandivort -1954
Trustee | | 2019 | | Treasurer, Chairman of the Audit and Finance Committee, and Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds | | 229 | | Chairman and Lead Independent Director, Chairman of the Audit Committee, and Director, Board of Directors, Value Line Funds |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 229 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
Christopher L. Wilson - 1957
Trustee, Vice Chair and Chair Designate | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 229 | | ISO New England, Inc. (non-profit organization managing regional electricity market) |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
| Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
| Jeffrey H. Kupor - 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey - 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. American Franchise Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246.
Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser
Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor
Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors
PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees
Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent
Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
Invesco V.I. American Franchise Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. American Value Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
Invesco Distributors, Inc. | | VK-VIAMVA-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco V.I. American Value Fund (the Fund) underperformed the Russell Midcap Value Index, the Fund’s style-specific benchmark.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | |
| Series I Shares | | | 1.12 | % |
| Series II Shares | | | 0.86 | |
| S&P 500 Indexq(Broad Market Index) | | | 18.40 | |
| Russell Midcap Value Indexq(Style-Specific Index) | | | 4.96 | |
| Lipper VUF Mid Cap Value Funds Index∎(Peer Group Index) | | | 1.61 | |
| Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
All but two sectors within the Russell Midcap Value Index had positive returns for the year. Materials was the best performing sector in the Russell Midcap Value Index posting a double-digit gain, while energy and real estate incurred losses.
Stock selection in the consumer discretionary sector was the largest detractor from the Fund’s return relative to the Russell Midcap Value Index, driven primarily by Norwegian Cruise Lines and Royal Caribbean. Shares of
both companies declined sharply following news of COVID-19 infections on cruise ships, and the industry was also hurt by the suspension of cruise travel that resulted from the virus outbreak. We believed the companies made prudent decisions with regard to their balance sheets and future opportunities in light of the pandemic related headwinds; however, we eliminated our position in both stocks given significant uncertainty about when travel activity would return to normal levels.
Security selection in the energy sector also detracted from relative performance as oil prices declined sharply due to an ongoing supply/demand imbalance, exacerbated by the sharp deceleration in demand due to COVID-19. The sector included several of the Fund’s largest detractors, Marathon Oil, Technip FMC and Noble Energy. Given headwinds facing the sector, we sold these positions during the year and redeployed the capital in more attractive opportunities in the energy space.
Security selection in the utilities sector was another detractor from relative returns, due primarily to FirstEnergy. Shares of the stock dropped sharply after the announcement of an investigation into bribery allegations connected to energy legislation in Ohio. FirstEnergy was not explicitly named but was presumed to be related to the events. Given the potential for prolonged uncertainty created by the investigation, we sold our position in the company.
Security selection and an overweight position in information technology (IT) was the largest contributor to the Fund’s relative performance, driven by strong performance from Ciena and KLA Corporation.Ciena released better than expected earnings results for the year, driven by higher revenue. In our view, the company has executed well in a challenging environment, with minimal supply chain disruption. KLA also reported solid results, beating revenue and earnings estimates. The company continues to benefit from improving demand, even amid an uncertain environment. We sold our position in KLA as our investment thesis had largely been realized. We maintained our position in Ciena at end of the year.
Given declines in real estate during the year, the Fund’s lack of exposure to some of the weaker REITs in the sector also benefited returns relative to the Russell Mid Cap Value Index.
Stock selection in financials also benefited the Fund’s relative return. Within the sector, strong individual contributors included Ally Financial, an auto and mortgage finance company, and Ares Management, and asset management firm. A strong rebound in auto lending following the initial downturn in March and April boosted Ally’s earnings during the year. Ares has benefited from the low interest rate environment as intuitional investors
Invesco V.I. American Value Fund
sought higher yielding investment alternatives. Both companies were new purchases during the year, and we maintained our positions at year end.
During the year, we reduced the Fund’s exposures to the financials, consumer discretionary and energy sectors and increased exposures to the industrials, utilities, health care and communication services sectors. At year end, the Fund’s largest overweight allocations relative to the Russell Mid Cap Value index were in financials, health care and consumer staples sectors, while the largest underweight allocations were in the industrials, real estate and communication services sectors.
Market volatility increased during the year given the significant economic impact of the COVID-19 pandemic. While coronavirus vaccines should provide a measure of stability, we believe equity markets may experience continued volatility due to the leadership transition in Washington and an uneven economic recovery. We believe market volatility creates opportunities to invest in companies with attractive valuations and strong fundamentals. We believe that ultimately those valuations and fundamentals will be reflected in those companies’ stock prices.
As always, we are committed to working to achieve positive returns for the Fund’s shareholders through an entire market cycle.
Thank you for your continued investment in the Invesco V.I. American Value Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Jeffrey Vancavage
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. American Value Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (1/2/97) | | | 9.04 | % |
10 Years | | | 8.32 | |
5 Years | | | 7.00 | |
1 Year | | | 1.12 | |
| |
Series II Shares | | | | |
Inception (5/5/03) | | | 9.27 | % |
10 Years | | | 8.07 | |
5 Years | | | 6.73 | |
1 Year | | | 0.86 | |
Effective June 1, 2010, Class I and Class II shares of the predecessor fund, The Universal Institutional Funds, Inc. U.S. Mid Cap Value Portfolio, advised by Morgan Stanley Investment Management Inc. were reorganized into Series I and Series II shares, respectively, of Invesco VanKampen V.I. Mid Cap Value Fund (renamed Invesco V.I. American Value Fund on April 29, 2013). Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class I shares and Class II shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. American Value Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. American Value Fund
Supplemental Information
Invesco V.I. American Value Fund’s investment objective is long-term capital appreciation.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | The Russell Midcap® Value Index is an unmanaged index considered representative of mid-cap value stocks. The Russell Midcap Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Lipper VUF Mid Cap Value Funds Index is an unmanaged index considered representative of mid-cap value variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. American Value Fund
Fund Information
Portfolio Composition
| | |
| By sector | | % of total net assets |
Financials | | 20.86% |
Industrials | | 13.73 |
Consumer Discretionary | | 11.49 |
Information Technology | | 10.45 |
Health Care | | 9.17 |
Real Estate | | 7.35 |
Utilities | | 7.30 |
Materials | | 6.53 |
Consumer Staples | | 4.59 |
Energy | | 4.13 |
Communication Services | | 2.63 |
Money Market Funds Plus Other Assets Less Liabilities | | 1.77 |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
| 1. | | Science Applications International Corp. | | 3.14% |
| 2. | | Ciena Corp. | | 2.90 |
| 3. | | Tapestry, Inc. | | 2.84 |
| 4. | | Johnson Controls International PLC | | 2.66 |
| 5. | | Ally Financial, Inc. | | 2.59 |
| 6. | | Kirby Corp. | | 2.54 |
| 7. | | Encompass Health Corp. | | 2.52 |
| 8. | | Knight-Swift Transportation Holdings, Inc. | | 2.48 |
| 9. | | W.R. Grace & Co. | | 2.47 |
| 10. | | Arthur J. Gallagher & Co. | | 2.37 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. American Value Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–98.23% | |
| |
Agricultural & Farm Machinery–2.23% | | | | | |
| | |
AGCO Corp. | | | 52,254 | | | $ | 5,386,865 | |
|
Apparel, Accessories & Luxury Goods–2.84% | |
| | |
Tapestry, Inc. | | | 219,867 | | | | 6,833,466 | |
|
Asset Management & Custody Banks–1.19% | |
| | |
Ares Management Corp., Class A | | | 61,187 | | | | 2,878,848 | |
| | |
Automotive Retail–1.87% | | | | | | | | |
| | |
Advance Auto Parts, Inc. | | | 28,686 | | | | 4,518,332 | |
| | |
Broadcasting–1.39% | | | | | | | | |
| | |
Nexstar Media Group, Inc., Class A | | | 30,629 | | | | 3,344,381 | |
|
Building Products–4.65% | |
Johnson Controls International PLC | | | 137,329 | | | | 6,398,158 | |
Owens Corning | | | 63,394 | | | | 4,802,730 | |
| | | | | | | | 11,200,888 | |
|
Communications Equipment–2.90% | |
| | |
Ciena Corp.(b) | | | 132,462 | | | | 7,000,617 | |
| | |
Consumer Finance–2.59% | | | | | | | | |
| | |
Ally Financial, Inc. | | | 175,314 | | | | 6,251,697 | |
| | |
Copper–1.83% | | | | | | | | |
| | |
Freeport-McMoRan, Inc. | | | 169,248 | | | | 4,403,833 | |
|
Data Processing & Outsourced Services–1.30% | |
| | |
Sabre Corp. | | | 259,818 | | | | 3,123,012 | |
| | |
Distributors–2.24% | | | | | | | | |
| | |
LKQ Corp.(b) | | | 152,890 | | | | 5,387,844 | |
| | |
Diversified Chemicals–2.24% | | | | | | | | |
| | |
Eastman Chemical Co. | | | 53,866 | | | | 5,401,682 | |
| |
Electric Utilities–7.31% | | | | | |
| | |
Edison International | | | 72,442 | | | | 4,550,807 | |
| | |
Entergy Corp. | | | 48,454 | | | | 4,837,647 | |
| | |
Evergy, Inc. | | | 90,161 | | | | 5,004,837 | |
| | |
Exelon Corp. | | | 76,229 | | | | 3,218,388 | |
| | |
| | | | | | | | 17,611,679 | |
|
Electronic Equipment & Instruments–3.11% | |
| | |
Keysight Technologies, Inc.(b) | | | 16,214 | | | | 2,141,707 | |
| | |
Vontier Corp.(b) | | | 160,567 | | | | 5,362,938 | |
| | |
| | | | | | | | 7,504,645 | |
| |
Food Distributors–2.21% | | | | | |
| | |
Performance Food Group Co.(b) | | | 112,126 | | | | 5,338,319 | |
| |
Food Retail–2.37% | | | | | |
| | |
Casey’s General Stores, Inc. | | | 13,303 | | | | 2,376,182 | |
| | |
Kroger Co. (The) | | | 105,206 | | | | 3,341,342 | |
| | |
| | | | | | | | 5,717,524 | |
| |
General Merchandise Stores–2.17% | | | | | |
| | |
Dollar Tree, Inc.(b) | | | 48,508 | | | | 5,240,804 | |
| | | | | | | | |
| | | Shares | | | Value | |
| | |
Health Care Distributors–1.67% | | | | | | | | |
| | |
Henry Schein, Inc.(b) | | | 60,144 | | | $ | 4,021,228 | |
| |
Health Care Facilities–2.52% | | | | | |
| | |
Encompass Health Corp. | | | 73,595 | | | | 6,085,571 | |
| |
Health Care Technology–2.87% | | | | | |
| | |
Cerner Corp. | | | 35,103 | | | | 2,754,883 | |
HMS Holdings Corp.(b) | | | 113,486 | | | | 4,170,611 | |
| | | | | | | | 6,925,494 | |
|
Hotels, Resorts & Cruise Lines–2.37% | |
| | |
Wyndham Hotels & Resorts, Inc. | | | 96,073 | | | | 5,710,579 | |
| | |
Industrial Machinery–1.83% | | | | | | | | |
| | |
Kennametal, Inc. | | | 121,475 | | | | 4,402,254 | |
| | |
Industrial REITs–1.86% | | | | | | | | |
| | |
First Industrial Realty Trust, Inc. | | | 106,308 | | | | 4,478,756 | |
| |
Insurance Brokers–3.91% | | | | | |
| | |
Arthur J. Gallagher & Co. | | | 46,240 | | | | 5,720,350 | |
Willis Towers Watson PLC | | | 17,582 | | | | 3,704,176 | |
| | | | | | | | 9,424,526 | |
|
Interactive Home Entertainment–1.24% | |
| | |
Take-Two Interactive Software, Inc.(b) | | | 14,393 | | | | 2,990,721 | |
|
Investment Banking & Brokerage–1.64% | |
| | |
Stifel Financial Corp. | | | 78,435 | | | | 3,957,830 | |
|
IT Consulting & Other Services–3.14% | |
| | |
Science Applications International Corp. | | | 80,027 | | | | 7,573,755 | |
| | |
Life & Health Insurance–1.93% | | | | | | | | |
| | |
Athene Holding Ltd., Class A(b) | | | 108,092 | | | | 4,663,089 | |
| | |
Managed Health Care–2.10% | | | | | | | | |
| | |
Centene Corp.(b) | | | 84,417 | | | | 5,067,553 | |
| | |
Marine–2.54% | | | | | | | | |
| | |
Kirby Corp.(b) | | | 118,355 | | | | 6,134,340 | |
|
Oil & Gas Exploration & Production–4.13% | |
| | |
Devon Energy Corp. | | | 275,977 | | | | 4,363,197 | |
Parsley Energy, Inc., Class A | | | 393,271 | | | | 5,584,448 | |
| | | | | | | | 9,947,645 | |
|
Other Diversified Financial Services–2.33% | |
| | |
Voya Financial, Inc. | | | 95,551 | | | | 5,619,354 | |
| |
Regional Banks–7.26% | | | | | |
KeyCorp | | | 269,086 | | | | 4,415,701 | |
TCF Financial Corp. | | | 131,319 | | | | 4,861,429 | |
Wintrust Financial Corp. | | | 65,008 | | | | 3,971,339 | |
Zions Bancorporation N.A. | | | 97,720 | | | | 4,244,957 | |
| | | | | | | | 17,493,426 | |
| |
Residential REITs–3.68% | | | | | |
| | |
American Homes 4 Rent, Class A | | | 146,768 | | | | 4,403,040 | |
UDR, Inc. | | | 115,951 | | | | 4,455,997 | |
| | | | | | | | 8,859,037 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Value Fund
| | | | | | | | |
| | | Shares | | | Value | |
Specialized REITs–1.82% | | | | | | | | |
| | |
Life Storage, Inc. | | | 36,703 | | | $ | 4,381,971 | |
| | |
Specialty Chemicals–2.47% | | | | | | | | |
| | |
W.R. Grace & Co. | | | 108,469 | | | | 5,946,271 | |
| | |
Trucking–2.48% | | | | | | | | |
| | |
Knight-Swift Transportation Holdings, Inc. | | | 142,772 | | | | 5,970,725 | |
Total Common Stocks & Other Equity Interests
(Cost $170,514,668) | | | | 236,798,561 | |
|
Money Market Funds–2.02% | |
| | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 1,623,654 | | | | 1,623,654 | |
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–(continued) | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 1,390,273 | | | $ | 1,390,691 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 1,855,604 | | | | 1,855,604 | |
| |
Total Money Market Funds
(Cost $4,869,152) | | | | 4,869,949 | |
| |
TOTAL INVESTMENTS IN
SECURITIES-100.25%
(Cost $175,383,820) | | | | 241,668,510 | |
| |
OTHER ASSETS LESS
LIABILITIES–(0.25)% | | | | (595,862 | ) |
| |
NET ASSETS–100.00% | | | $ | 241,072,648 | |
| |
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain | | | Value
December 31, 2020 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $2,646,182 | | | | $ 36,898,887 | | | | $ (37,921,415) | | | | $ - | | | | $ - | | | | $1,623,654 | | | | $7,783 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 2,085,220 | | | | 26,390,658 | | | | (27,086,725 | ) | | | 831 | | | | 707 | | | | 1,390,691 | | | | 9,540 | |
Invesco Treasury Portfolio, Institutional Class | | | 3,024,207 | | | | 42,170,157 | | | | (43,338,760 | ) | | | - | | | | - | | | | 1,855,604 | | | | 8,387 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 9,489,618 | | | | (9,489,618 | ) | | | - | | | | - | | | | - | | | | 155 | * |
Invesco Private Prime Fund | | | - | | | | 1,118,647 | | | | (1,118,826 | ) | | | - | | | | 179 | | | | - | | | | 76 | * |
Total | | | $7,755,609 | | | | $116,067,967 | | | | $(118,955,344 | ) | | | $831 | | | | $886 | | | | $4,869,949 | | | | $25,941 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Value Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
| |
Investments in securities, at value
(Cost $170,514,668) | | $ | 236,798,561 | |
| |
| |
Investments in affiliated money market funds,
at value (Cost $4,869,152) | | | 4,869,949 | |
| |
Receivable for: | | | | |
Investments sold | | | 604,869 | |
| |
Fund shares sold | | | 52,143 | |
| |
Dividends | | | 208,594 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 65,775 | |
| |
Total assets | | | 242,599,891 | |
| |
| |
Liabilities: | | | | |
| |
Payable for: | | | | |
Fund shares reacquired | | | 971,809 | |
| |
Amount due custodian | | | 295,567 | |
| |
Accrued fees to affiliates | | | 138,936 | |
| |
Accrued other operating expenses | | | 46,513 | |
| |
Trustee deferred compensation and retirement plans | | | 74,418 | |
| |
Total liabilities | | | 1,527,243 | |
| |
Net assets applicable to shares outstanding | | $ | 241,072,648 | |
| |
| |
Net assets consist of: | | | | |
| |
Shares of beneficial interest | | $ | 193,035,164 | |
| |
Distributable earnings | | | 48,037,484 | |
| |
| | $ | 241,072,648 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 73,098,232 | |
| |
Series II | | $ | 167,974,416 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 4,626,444 | |
| |
Series II | | | 10,753,314 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 15.80 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 15.62 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
| |
Dividends | | $ | 4,078,982 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $1,462) | | | 27,173 | |
| |
Total investment income | | | 4,106,155 | |
| |
| |
Expenses: | | | | |
| |
Advisory fees | | | 1,768,389 | |
| |
Administrative services fees | | | 403,606 | |
| |
Custodian fees | | | 12,124 | |
| |
Distribution fees - Series II | | | 441,903 | |
| |
Transfer agent fees | | | 25,091 | |
| |
Trustees’ and officers’ fees and benefits | | | 23,956 | |
| |
Reports to shareholders | | | 9,571 | |
| |
Professional services fees | | | 35,739 | |
| |
Other | | | 3,343 | |
| |
Total expenses | | | 2,723,722 | |
| |
Less: Fees waived | | | (6,975 | ) |
| |
Net expenses | | | 2,716,747 | |
| |
Net investment income | | | 1,389,408 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
| |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (9,456,701 | ) |
| |
Affiliated investment securities | | | 886 | |
| |
| | | (9,455,815 | ) |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 3,359,012 | |
| |
Affiliated investment securities | | | 831 | |
| |
| | | 3,359,843 | |
| |
Net realized and unrealized gain (loss) | | | (6,095,972 | ) |
| |
Net increase (decrease) in net assets resulting from operations | | $ | (4,706,564 | ) |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Value Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
| | |
Net investment income | | $ | 1,389,408 | | | $ | 1,733,036 | |
| |
Net realized gain (loss) | | | (9,455,815 | ) | | | (3,087,063 | ) |
| |
Change in net unrealized appreciation | | | 3,359,843 | | | | 59,462,462 | |
| |
Net increase (decrease) in net assets resulting from operations | | | (4,706,564 | ) | | | 58,108,435 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
| | |
Series I | | | (1,301,570 | ) | | | (6,549,244 | ) |
| |
Series II | | | (3,011,200 | ) | | | (16,801,199 | ) |
| |
Total distributions from distributable earnings | | | (4,312,770 | ) | | | (23,350,443 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
| | |
Series I | | | (10,241,455 | ) | | | (4,634,059 | ) |
| |
Series II | | | (58,356,016 | ) | | | 42,039,405 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (68,597,471 | ) | | | 37,405,346 | |
| |
Net increase (decrease) in net assets | | | (77,616,805 | ) | | | 72,163,338 | |
| |
| | |
Net assets: | | | | | | | | |
| | |
Beginning of year | | | 318,689,453 | | | | 246,526,115 | |
| |
End of year | | $ | 241,072,648 | | | $ | 318,689,453 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Value Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Ratio of | | Ratio of | | | | |
| | | | | | | | | | | | | | | | | | | | | | | expenses | | expenses | | | | |
| | | | | | | Net gains | | | | | | | | | | | | | | | | to average | | to average net | | | | |
| | | | | | | (losses) | | | | | | | | | | | | | | | | net assets | | assets without | | Ratio of net | | |
| | | Net asset | | | | on securities | | | | Dividends | | Distributions | | | | | | | | | | with fee waivers | | fee waivers | | investment | | |
| | | value, | | Net | | (both | | Total from | | from net | | from net | | | | Net asset | | | | Net assets, | | and/or | | and/or | | income | | |
| | | beginning | | investment | | realized and | | investment | | investment | | realized | | Total | | value, end | | Total | | end of period | | expenses | | expenses | | to average | | Portfolio |
| | | of period | | income(a) | | unrealized) | | operations | | income | | gains | | distributions | | of period | | return (b) | | (000’s omitted) | | absorbed | | absorbed | | net assets | | turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 15.92 | | | | $ | 0.10 | | | | $ | 0.04 | | | | $ | 0.14 | | | | $ | (0.13 | ) | | | $ | (0.13 | ) | | | $ | (0.26 | ) | | | $ | 15.80 | | | | | 1.12 | % | | | $ | 73,098 | | | | | 0.93 | %(d) | | | | 0.93 | %(d) | | | | 0.74 | %(d) | | | | 59 | % |
Year ended 12/31/19 | | | | 13.86 | | | | | 0.12 | | | | | 3.24 | | | | | 3.36 | | | | | (0.11 | ) | | | | (1.19 | ) | | | | (1.30 | ) | | | | 15.92 | | | | | 25.03 | | | | | 84,799 | | | | | 0.92 | | | | | 0.92 | | | | | 0.78 | | | | | 68 | |
Year ended 12/31/18 | | | | 18.38 | | | | | 0.10 | | | | | (1.87 | ) | | | | (1.77 | ) | | | | (0.09 | ) | | | | (2.66 | ) | | | | (2.75 | ) | | | | 13.86 | | | | | (12.65 | ) | | | | 77,491 | | | | | 0.93 | | | | | 0.93 | | | | | 0.52 | | | | | 39 | |
Year ended 12/31/17 | | | | 17.06 | | | | | 0.08 | | | | | 1.59 | | | | | 1.67 | | | | | (0.14 | ) | | | | (0.21 | ) | | | | (0.35 | ) | | | | 18.38 | | | | | 9.96 | | | | | 104,510 | | | | | 0.94 | | | | | 0.94 | | | | | 0.48 | | | | | 56 | |
Year ended 12/31/16 | | | | 15.69 | | | | | 0.13 | | | | | 2.23 | | | | | 2.36 | | | | | (0.06 | ) | | | | (0.93 | ) | | | | (0.99 | ) | | | | 17.06 | | | | | 15.49 | | | | | 116,762 | | | | | 0.97 | | | | | 0.97 | | | | | 0.84 | | | | | 50 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 15.74 | | | | | 0.07 | | | | | 0.03 | | | | | 0.10 | | | | | (0.09 | ) | | | | (0.13 | ) | | | | (0.22 | ) | | | | 15.62 | | | | | 0.86 | | | | | 167,974 | | | | | 1.18 | (d) | | | | 1.18 | (d) | | | | 0.49 | (d) | | | | 59 | |
Year ended 12/31/19 | | | | 13.71 | | | | | 0.08 | | | | | 3.21 | | | | | 3.29 | | | | | (0.07 | ) | | | | (1.19 | ) | | | | (1.26 | ) | | | | 15.74 | | | | | 24.71 | | | | | 233,890 | | | | | 1.17 | | | | | 1.17 | | | | | 0.53 | | | | | 68 | |
Year ended 12/31/18 | | | | 18.19 | | | | | 0.05 | | | | | (1.83 | ) | | | | (1.78 | ) | | | | (0.04 | ) | | | | (2.66 | ) | | | | (2.70 | ) | | | | 13.71 | | | | | (12.82 | ) | | | | 169,036 | | | | | 1.18 | | | | | 1.18 | | | | | 0.27 | | | | | 39 | |
Year ended 12/31/17 | | | | 16.90 | | | | | 0.04 | | | | | 1.56 | | | | | 1.60 | | | | | (0.10 | ) | | | | (0.21 | ) | | | | (0.31 | ) | | | | 18.19 | | | | | 9.62 | | | | | 294,598 | | | | | 1.19 | | | | | 1.19 | | | | | 0.23 | | | | | 56 | |
Year ended 12/31/16 | | | | 15.55 | | | | | 0.09 | | | | | 2.21 | | | | | 2.30 | | | | | (0.02 | ) | | | | (0.93 | ) | | | | (0.95 | ) | | | | 16.90 | | | | | 15.22 | | | | | 284,043 | | | | | 1.22 | | | | | 1.22 | | | | | 0.59 | | | | | 50 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $68,848 and $176,761 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. American Value Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. American Value Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations – Securities, including restricted securities, are valued according to the following policy.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. American Value Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $1 billion | | | 0.720% | |
| |
Over $1 billion | | | 0.650% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.72%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
Invesco V.I. American Value Fund
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $6,975.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $35,366 for accounting and fund administrative services and was reimbursed $368,240 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $4,369 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
Invesco V.I. American Value Fund
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 1,822,784 | | | $ | 2,371,325 | |
| |
Long-term capital gain | | | 2,489,986 | | | | 20,979,118 | |
| |
Total distributions | | $ | 4,312,770 | | | $ | 23,350,443 | |
| |
* Includes short-term capital gain distributions, if any.
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 1,149,908 | |
| |
Net unrealized appreciation – investments | | | 56,417,614 | |
| |
Temporary book/tax differences | | | (52,449 | ) |
| |
Capital loss carryforward | | | (9,477,589 | ) |
| |
Shares of beneficial interest | | | 193,035,164 | |
| |
Total net assets | | $ | 241,072,648 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | $ | 2,377,175 | | | $ | 7,100,414 | | | $ | 9,477,589 | |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $141,150,602 and $209,117,243, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 56,809,256 | |
| |
Aggregate unrealized (depreciation) of investments | | | (391,642 | ) |
| |
Net unrealized appreciation of investments | | $ | 56,417,614 | |
| |
Cost of investments for tax purposes is $185,250,896.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of real estate investment trust distributions, on December 31, 2020, undistributed net investment income was decreased by $101,163 and undistributed net realized gain (loss) was increased by $101,163. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,298,052 | | | $ | 17,013,794 | | | | 160,277 | | | $ | 2,482,112 | |
| |
Series II | | | 3,049,679 | | | | 38,448,474 | | | | 7,353,290 | | | | 115,776,084 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 94,316 | | | | 1,301,570 | | | | 444,318 | | | | 6,549,244 | |
| |
Series II | | | 220,601 | | | | 3,011,200 | | | | 1,152,345 | | | | 16,801,199 | |
| |
Invesco V.I. American Value Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,091,708 | ) | | $ | (28,556,819 | ) | | | (867,811 | ) | | $ | (13,665,415 | ) |
| |
Series II | | | (7,374,909 | ) | | | (99,815,690 | ) | | | (5,973,505 | ) | | | (90,537,878 | ) |
| |
Net increase (decrease) in share activity | | | (4,803,969 | ) | | $ | (68,597,471 | ) | | | 2,268,914 | | | $ | 37,405,346 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 62% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 11–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco V.I. Value Opportunities Fund (the “Target Fund”) in exchange for shares of the Fund.
The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the Target Fund shareholders for their consideration at a meeting to be held in or around April 2021. The reorganization is expected to be consummated shortly thereafter. Upon closing of the reorganization, shareholders of the Target Fund will receive shares of the Fund in exchange for their shares of the Target Fund, and the Target Fund will liquidate and cease operations.
Invesco V.I. American Value Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. American Value Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. American Value Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. American Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,263.60 | | $5.35 | | $1,020.41 | | $4.77 | | 0.94% |
Series II | | 1,000.00 | | 1,261.90 | | 6.77 | | 1,019.15 | | 6.04 | | 1.19 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. American Value Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | | Federal and State Income Tax | | | |
| | Long-Term Capital Gain Distributions | | $ | 2,489,986 | |
| | Corporate Dividends Received Deduction* | | | 100.00 | % |
| | Qualified Dividend Income* | | | 0.00 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. American Value Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
Christopher L. Wilson - 1967
Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort - 1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey - 1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. American Value Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962
Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
Invesco V.I. American Value Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | Invesco V.I. Balanced-Risk Allocation Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIIBRA-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco V.I. Balanced-Risk Allocation Fund (the Fund) underperformed the Custom Invesco V.I. Balanced-Risk Allocation Index, the Fund’s style-specific benchmark.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | |
| |
Series I Shares | | | 10.22 | % |
| |
Series II Shares | | | 9.99 | |
MSCI World Indexq (Broad Market Index) | | | 15.90 | |
Custom Invesco V.I. Balanced-Risk Allocation Index∎ (Style-Specific Index) | | | 13.72 | |
Lipper VUF Absolute Return Funds Classification Average◆ (Peer Group) | | | -7.27 | |
|
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ◆Lipper Inc. | |
Market conditions and your Fund
For the year ended December 31, 2020, the Fund reported positive absolute performance as all three of the asset classes in which the Fund invests (stocks, bonds and commodities) contributed to Fund performance. The Fund invests in derivatives, such as swaps and futures, which, depending upon the type of derivative and its purpose, are generally expected to correspond to the performance of US and international fixed income, equity and commodity markets. The strategic allocation portion of the investment process involves first selecting representative assets for each asset class (equities, fixed income and commodities) from a universe of more than 50 investments. Next, we seek to construct the portfolio so that an approximately equal amount of risk comes from our equity, fixed income and commodity allocations. In the third step of the investment process, using a systematic approach based on fundamental principles, the portfolio management team analyzes the asset classes and investments, considering the following factors: valuation, economic environment and historic price movements. Tactical adjustments to the Fund’s portfolio are then made on a monthly basis to try and take advantage of short-term market dynamics.
The Fund’s strategic exposure to developed government bond markets, obtained through the use of futures, contributed to results for the year with all markets in which the Fund was invested delivering positive returns. Yields broadly fell over the course of the year on central bank assurances that rates will be held at exceptionally low levels for the foreseeable future. Canadian bonds led results as the Bank of Canada cut rates to 0.25%1 and began weekly asset purchases of Canadian government and corporate bonds at the onset of the recovery. US Treasuries also contributed to performance as the Federal Reserve cut interest rates to zero2 and, like Canada, implemented expanded asset purchases of government and corporate bonds. Australian bonds gained as the Reserve Bank of Australia announced an expansion of the
term funding facility to approximately $200 billion Australia dollars at a fixed rate of 25 basis points for three years in order to keep funding costs low and bolster the supply of credit to lenders.3 UK Gilts also aided results as the Bank of England (BoE) cut interest rates from 0.75% to 0.10%4 and provided loans directly to businesses. The UK was hit harder by the Coronavirus (“COVID-19”) pandemic than many other developed regions with multiple strict lockdowns leading the BoE to announce in November that it would further boost government bond purchases and would support negative interest rates if necessary. Germany and Japan were absent from the portfolio throughout the year due to the portfolio’s yield skew adjustments. Tactical positioning in bonds benefited from overweight exposure relative to the strategic positioning during the February-March 2020 sell-off.
The Fund’s strategic exposure to developed market equities, obtained through the use of swaps and futures, contributed to Fund performance for the year. The magnitude of recovery varied across regions, largely depending on sector exposure. US equities were the top contributor due primarily to the high allocation to technology and low energy exposure. US small-cap equities outperformed large-caps due to the late year rally in risky assets as increasing rates of growth and inflation was a good environment for small company stocks. Japanese equities were also a top contributor as investors cheered the election of Yoshihide Suga to the post of prime minister, replacing Shinzo Abe who retired for health reasons. A Suga administration is widely believed to be an extension of the Abe government, thus removing fears of Abe’s policies being reversed. European equities posted subdued, but positive, performance after a second wave of infections reversed the recovery. European markets remain suppressed as lockdown measures remained more restricted while the scale of their fiscal and monetary response also lagged China and the US. UK equities were the sole market to deliver negative returns. The UK was slow
to contain the first and second wave of the COVID-19 and implemented extensive lockdowns too late, causing the economy to suffer more relative to other countries. The uncertainty around Brexit further compounded losses. The Fund’s tactical positioning in equities contributed to Fund performance and also provided gains as overweights during the second half of the year proved timely.
The Fund’s strategic exposure to commodities, obtained through the use of swaps, futures and commodity-linked notes, also added to Fund performance for the year despite commodity indexes declining. Energy was the sole complex to finish the year negative. The Fund’s diversification within commodities and lower energy exposure helped buffer the losses. Commodities struggled to recover compared to stocks and bonds because prices are based on the current environment, whereas stocks and bonds are priced by discounting future cash flows. Performance across complexes was not uniform as evidenced by gold hitting all-time highs and crude reaching all-time lows, even dipping into negative territory for a brief period. Agriculture was the largest contributor to Fund performance with gains concentrated in grains (soymeal and soybeans) and softs, most notably cotton. The primary catalysts for the broad-based increase in prices included a weakening US dollar and improved demand from China along with some challenges in growing conditions. Precious metals were another top contributor with silver outpacing gold. Seen as a store of value, gold began to rise as economic growth slowed in 2019 and surged to a record high in August 2020 on a combination of a weakening US dollar, central bank promises of “lower for longer” policy rates and investor concerns of monetary debasement. Silver benefited for similar reasons along with its crossover use as an industrial metal. Industrial metals prices rose on increased manufacturing activity and demand resulting from projects related to fiscal stimulus. Exposure to energy detracted from Fund performance due to a combination of falling demand caused by COVID-19 containment efforts and rising supply triggered by an oil price war between Saudi Arabia and Russia. The Fund’s tactical positioning in commodities benefited from our underweight exposure for the majority of the year and overweight exposure during the fourth quarter.
Please note that our strategy is principally implemented with derivative instruments that include futures, commodity-linked notes and total return swaps. Therefore, all or most of the performance of the strategy, both positive and negative, can be attributed to these instruments. Derivatives can be a cost-effective way to gain exposure to asset classes. However, derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities.
Invesco V.I. Balanced-Risk Allocation Fund
Thank you for your continued investment in Invesco V.I. Balanced-Risk Allocation Fund.
1 Source: Bank of Canada
2 Source: US Federal Reserve
3 Source: Reserve Bank of Australia
4 Source: Bank of England
Portfolio manager(s):
Mark Ahnrud
Chris Devine
Scott Hixon
Christian Ulrich
Scott Wolle
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Balanced-Risk Allocation Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Invesco, RIMES Technologies Corp.
Past performance cannot guarantee future results.
Due to changes within the Lipper VUF Absolute Return Funds Classification Average, certain components do not have 10 years of
historical data. As such, the benchmark has not been included within the chart above.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (1/23/09) | | | 8.37 | % |
10 Years | | | 6.39 | |
5 Years | | | 7.87 | |
1 Year | | | 10.22 | |
| |
Series II Shares | | | | |
Inception (1/23/09) | | | 8.09 | % |
10 Years | | | 6.12 | |
5 Years | | | 7.62 | |
1 Year | | | 9.99 | |
The returns shown above include the returns of Invesco Van Kampen V.I. Global Tactical Asset Allocation Fund (the first predecessor fund) for the period June 1, 2010, to May 2, 2011, the date the first predecessor fund was reorganized into the Fund, and the returns of Van Kampen Life Investment Trust Global Tactical Asset Allocation Portfolio (the second predecessor fund) for the period prior to June 1, 2010, the date the second predecessor fund was reorganized into the first predecessor fund. The second predecessor fund was advised by Van Kampen Asset Management. Returns shown above for Series I and Series II shares are blended returns of the predecessor funds and Invesco V.I. Balanced-Risk Allocation Fund. Share class returns will differ from the predecessor funds because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be
lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Balanced-Risk Allocation Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees
and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Balanced-Risk Allocation Fund
Supplemental Information
Invesco V.I. Balanced-Risk Allocation Fund’s investment objective is total return with a low to moderate correlation to traditional financial market indices.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The MSCI World Index is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | The Custom Invesco V.I. Balanced-Risk Allocation Index is composed of the MSCI World Index and Bloomberg Barclays U.S. Aggregate Bond Index. Prior to May 2, 2011, the index comprised the MSCI World Index, JP Morgan GBI Global Index and FTSE US 3-Month Treasury Bill Index. The Bloomberg Barclays U.S. Aggregate Bond Index is considered representative of the US investment-grade, fixed-rate bond market. The FTSE US 3-Month Treasury Bill Index is considered representative of three-month US Treasury bills. The JP Morgan GBI Global Index tracks the performance of fixed-rate issuances from high-income developed market countries. |
| ∎ | The Lipper VUF Absolute Return Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Absolute Return Funds Classification. |
| ∎ | 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. |
Invesco V.I. Balanced-Risk Allocation Fund
Fund Information
Target Risk Contribution and Notional Asset Weights as of December 31, 2020
| | | | | | | | | | |
| Asset Class | | Target Risk
Contribution* | | Notional
Asset
Weights** |
Equities | | | | 43.74 | % | | | | 42.29 | % |
Fixed Income | | | | 20.75 | | | | | 58.49 | |
Commodities | | | | 35.51 | | | | | 36.40 | |
Total | | | | 100.00 | % | | | | 137.18 | % |
| * | Reflects the risk that each asset class is expected to contribute to the overall risk of the Fund as measured by standard deviation and estimates of risk based on historical data. Standard deviation measures the annualized fluctuations (volatility) of monthly returns. |
| ** | Proprietary models determine the Notional Asset Weights necessary to achieve the Target Risk Contributions. Total Notional Asset Weight greater than 100% is achieved through derivatives and other instruments that create leverage. |
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Schedule of Investments
December 31, 2020
| | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount (000) | | | Value |
U.S. Treasury Securities-11.10%(a) | | | | | | | | | | | | | | |
U.S. Treasury Bills-11.10% | | | | | | | | | | | | | | |
U.S. Treasury Bills | | | 0.16% | | | | 01/07/2021 | | | $ | 42,000 | | | $ 41,998,908 |
U.S. Treasury Bills | | | 0.11% | | | | 02/25/2021 | | | | 43,800 | | | 43,792,438 |
U.S. Treasury Bills | | | 0.09% | | | | 06/03/2021 | | | | 11,500 | | | 11,496,514 |
U.S. Treasury Bills | | | 0.08% | | | | 06/10/2021 | | | | 11,500 | | | 11,496,352 |
Total U.S. Treasury Securities (Cost $108,782,801) | | | | | | | | | | | | | | 108,784,212 |
| | | | |
| | | | | | Expiration
Date | | | | | | |
Commodity-Linked Securities-3.20% | | | | | | | | | | | | | | |
Canadian Imperial Bank of Commerce EMTN, U.S. Federal Funds Effective Rate minus 0.02% (linked to the Canadian Imperial Bank of Commerce Custom 7 Agriculture Commodity Index, multiplied by 2) (Canada)(b)(c) | | | | | | | 10/25/2021 | | | | 7,800 | | | 11,586,481 |
Cargill, Inc., Commodity-Linked Notes, one mo. USD LIBOR minus 0.10% (linked to the Monthly Rebalance Commodity Excess Return Index, multiplied by 2)(b)(c) | | | | | | | 04/21/2021 | | | | 11,180 | | | 19,825,869 |
Total Commodity-Linked Securities (Cost $18,980,000) | | | | | | | | | | | | | | 31,412,350 |
| | | | |
| | | | | | | | | Shares | | | |
Money Market Funds-78.23%(d) | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(e) | | | | | | | | | | | 217,347,590 | | | 217,347,590 |
Invesco Government Money Market Fund, Cash Reserve Shares, 0.01%(e) | | | | | | | | | | | 66,946,656 | | | 66,946,656 |
Invesco Premier U.S. Government Money Portfolio, Institutional Class,
0.01%(e) | | | | | | | | | | | 88,804,736 | | | 88,804,736 |
Invesco STIC (Global Series) PLC, U.S. Dollar Liquidity Portfolio (Ireland), Institutional Class, 0.07%(e) | | | | | | | | | | | 59,779,663 | | | 59,779,663 |
Invesco Treasury Obligations Portfolio, Institutional Class, 0.01%(e) | | | | | | | | | | | 171,324,067 | | | 171,324,067 |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e) | | | | | | | | | | | 146,283,230 | | | 146,283,230 |
Invesco V.I. Government Money Market Fund, Series I, 0.01%(e) | | | | | | | | | | | 16,640,310 | | | 16,640,310 |
Total Money Market Funds (Cost $767,126,252) | | | | | | | | | | | | | | 767,126,252 |
TOTAL INVESTMENTS IN SECURITIES-92.53% (Cost $894,889,053) | | | | | | | 907,322,814 |
OTHER ASSETS LESS LIABILITIES-7.47% | | | | | | | | | | | | | | 73,300,833 |
NET ASSETS-100.00% | | | | | | | | | | | | | | $980,623,647 |
Investment Abbreviations:
| | |
EMTN | | - European Medium-Term Notes |
LIBOR | | - London Interbank Offered Rate |
USD | | - U.S. Dollar |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
Notes to Consolidated Schedule of Investments:
| (a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (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 December 31, 2020 was $31,412,350, which represented 3.20% of the Fund’s Net Assets. |
| (c) | The Reference Entity Components table below includes additional information regarding the underlying components of certain reference entities that are not publicly available. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (e) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 229,550,075 | | | | $ | 269,940,826 | | | | $ | (282,143,311 | ) | | | $ | - | | | | $ | - | | | | $ | 217,347,590 | | | | $ | 853,258 | |
Invesco Government Money Market Fund, Cash Reserve Shares | | | | 82,795,364 | | | | | 58,165,411 | | | | | (74,014,119 | ) | | | | - | | | | | - | | | | | 66,946,656 | | | | | 153,166 | |
Invesco Premier U.S. Government Money Portfolio, Institutional Class | | | | 126,387,049 | | | | | 80,785,056 | | | | | (118,367,369 | ) | | | | - | | | | | - | | | | | 88,804,736 | | | | | 396,121 | |
Invesco STIC (Global Series) PLC, U.S. Dollar Liquidity Portfolio, Institutional Class | | | | 67,396,463 | | | | | 342,286,446 | | | | | (349,903,246 | ) | | | | - | | | | | - | | | | | 59,779,663 | | | | | 294,517 | |
Invesco Treasury Obligations Portfolio, Institutional Class | | | | 171,324,067 | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 171,324,067 | | | | | 664,318 | |
Invesco Treasury Portfolio, Institutional Class | | | | 141,286,416 | | | | | 304,462,523 | | | | | (299,465,709 | ) | | | | - | | | | | - | | | | | 146,283,230 | | | | | 529,048 | |
Invesco V.I. Government Money Market Fund, Series I | | | | 16,640,310 | | | | | - | | | | | - | | | | | - | | | | | - | | | | | 16,640,310 | | | | | 43,575 | |
Total | | | $ | 835,379,744 | | | | $ | 1,055,640,262 | | | | $ | (1,123,893,754 | ) | | | $ | - | | | | $ | - | | | | $ | 767,126,252 | | | | $ | 2,934,003 | |
Open Futures Contracts(a)
| | | | | | | | | | | | | | | | | | | | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| |
Commodity Risk | | | | | | | | | | | | | | | | | | | | |
| |
Brent Crude | | | 447 | | | | June-2021 | | | $ | 22,953,450 | | | $ | 1,662,568 | | | $ | 1,662,568 | |
| |
Gasoline Reformulated Blendstock Oxygenate Blending | | | 420 | | | | January-2021 | | | | 24,874,164 | | | | 1,168,593 | | | | 1,168,593 | |
| |
New York Harbor Ultra-Low Sulfur Diesel | | | 126 | | | | March-2021 | | | | 7,859,149 | | | | 578,329 | | | | 578,329 | |
| |
Silver | | | 250 | | | | March-2021 | | | | 33,015,000 | | | | 3,235,470 | | | | 3,235,470 | |
| |
WTI Crude | | | 232 | | | | June-2021 | | | | 11,256,640 | | | | 786,020 | | | | 786,020 | |
| |
Subtotal | | | | | | | | | | | | | | | 7,430,980 | | | | 7,430,980 | |
| |
Equity Risk | | | | | | | | | | | | | | | | | | | | |
| |
E-Mini Russell 2000 Index | | | 565 | | | | March-2021 | | | | 55,788,100 | | | | 1,686,998 | | | | 1,686,998 | |
| |
E-Mini S&P 500 Index | | | 289 | | | | March-2021 | | | | 54,170,160 | | | | 1,219,911 | | | | 1,219,911 | |
| |
EURO STOXX 50 Index | | | 1,495 | | | | March-2021 | | | | 64,836,024 | | | | 855,474 | | | | 855,474 | |
| |
FTSE 100 Index | | | 890 | | | | March-2021 | | | | 78,136,260 | | | | (733,986 | ) | | | (733,986 | ) |
| |
Hang Seng Index | | | 336 | | | | January-2021 | | | | 58,985,121 | | | | 1,739,281 | | | | 1,739,281 | |
| |
Tokyo Stock Price Index | | | 569 | | | | March-2021 | | | | 99,439,301 | | | | 1,686,027 | | | | 1,686,027 | |
| |
Subtotal | | | | | | | | | | | | | | | 6,453,705 | | | | 6,453,705 | |
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
| |
Australia 10 Year Bonds | | | 1,979 | | | | March-2021 | | | | 224,630,409 | | | | 930,705 | | | | 930,705 | |
| |
Canada 10 Year Bonds | | | 1,732 | | | | March-2021 | | | | 202,876,267 | | | | 727,481 | | | | 727,481 | |
| |
Long Gilt | | | 228 | | | | March-2021 | | | | 42,260,041 | | | | 489,401 | | | | 489,401 | |
| |
U.S. Treasury Long Bonds | | | 461 | | | | March-2021 | | | | 79,839,438 | | | | (471,252 | ) | | | (471,252 | ) |
| |
Subtotal | | | | | | | | | | | | | | | 1,676,335 | | | | 1,676,335 | |
| |
Total Futures Contracts | | | | | | | | | | | | | | $ | 15,561,020 | | | $ | 15,561,020 | |
| |
| (a) | Futures contracts collateralized by $63,795,000 cash held with Goldman Sachs & Co., the futures commission merchant. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Open Over-The-Counter Total Return Swap Agreements(a)(b) | |
| |
| Counterparty | | Pay/
Receive | | | Reference
Entity(c) | | Fixed
Rate | | | Payment Frequency | | Number of Contracts | | | Maturity Date | | | Notional Value | | | Upfront
Payments
Paid (Received) | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| |
Commodity Risk | |
| |
Barclays Bank PLC | | | Receive | | | Barclays Commodity Strategy 1745 Excess Return Index | | | 0.45% | | | Monthly | | | 44,000 | | | | November-2021 | | | $ | 11,529,540 | | | $– | | $ | 868,837 | | | $ | 868,837 | |
| |
Cargill, Inc. | | | Receive | | | Monthly Rebalance Commodity Excess Return Index | | | 0.47 | | | Monthly | | | 31,700 | | | | February-2021 | | | | 24,612,717 | | | – | | | 2,429,009 | | | | 2,429,009 | |
| |
Cargill, Inc. | | | Receive | | | Single Commodity Index Excess Return | | | 0.12 | | | Monthly | | | 13,900 | | | | December-2021 | | | | 16,307,869 | | | – | | | 502,054 | | | | 502,054 | |
| |
Goldman Sachs International | | | Receive | | | Goldman Sachs Commodity i-Select Strategy 1121 | | | 0.40 | | | Monthly | | | 313,500 | | | | December-2021 | | | | 25,905,511 | | | – | | | 1,155,389 | | | | 1,155,389 | |
| |
JPMorgan Chase Bank, N.A. | | | Receive | | | J.P. Morgan Contag Beta Gas Oil Excess Return Index | | | 0.25 | | | Monthly | | | 55,200 | | | | April-2021 | | | | 7,532,885 | | | – | | | 34,875 | | | | 34,875 | |
| |
JPMorgan Chase Bank, N.A. | | | Receive | | | S&P GSCI Gold Index Excess Return | | | 0.09 | | | Monthly | | | 102,000 | | | | October-2021 | | | | 14,190,005 | | | – | | | 188,170 | | | | 188,170 | |
| |
Merrill Lynch International | | | Receive | | | Merrill Lynch Gold Excess Return Index | | | 0.14 | | | Monthly | | | 81,500 | | | | June-2021 | | | | 18,004,817 | | | – | | | 0 | | | | 0 | |
| |
Merrill Lynch International | | | Receive | | | MLCX Dynamic Enhanced Copper Excess Return Index | | | 0.25 | | | Monthly | | | 2,350 | | | | September-2021 | | | | 1,678,967 | | | – | | | 0 | | | | 0 | |
| |
Merrill Lynch International | | | Receive | | | MLCX Natural Gas Annual Excess Return Index | | | 0.25 | | | Monthly | | | 86,500 | | | | November-2021 | | | | 3,920,275 | | | – | | | 0 | | | | 0 | |
| |
Subtotal | | | | | | | | | | | | | | | | | | | | | | | | | | – | | | 5,178,334 | | | | 5,178,334 | |
| |
Equity Risk | |
| |
Goldman Sachs International | | | Receive | | | Hang Seng Index Futures | | | – | | | Monthly | | | 107 | | | | January-2021 | | | | 18,189,401 | | | – | | | 590,724 | | | | 590,724 | |
| |
Subtotal – Appreciation | | | | | | | | | | | | | | | | | | | | – | | | 5,769,058 | | | | 5,769,058 | |
| |
Commodity Risk | |
| |
Barclays Bank PLC | | | Receive | | | Barclays Commodity Strategy 1452 Excess Return Index | | | 0.26 | | | Monthly | | | 32,000 | | | | November-2021 | | | | 19,668,464 | | | – | | | (39,581 | ) | | | (39,581 | ) |
| |
Canadian Imperial Bank of Commerce | | | Receive | | | Canadian Imperial Bank of Commerce Dynamic Roll LME Copper Excess Return Index 2 | | | 0.30 | | | Monthly | | | 208,500 | | | | April-2021 | | | | 19,653,898 | | | – | | | (13,427 | ) | | | (13,427 | ) |
| |
Macquarie Bank Ltd. | | | Receive | | | Macquarie Aluminium Dynamic Selection Index | | | 0.30 | | | Monthly | | | 262,000 | | | | December-2021 | | | | 12,194,711 | | | – | | | (69,509 | ) | | | (69,509 | ) |
| |
Morgan Stanley Capital Services LLC | | | Receive | | | S&P GSCI Aluminum Dynamic Roll Index Excess Return | | | 0.30 | | | Monthly | | | 146,000 | | | | July-2021 | | | | 13,375,326 | | | – | | | (351,895 | ) | | | (351,895 | ) |
| |
Subtotal – Depreciation | | | | | | | | | | | | | | | | | | | | – | | | (474,412 | ) | | | (474,412 | ) |
| |
Total – Total Return Swap Agreements | | | | | | | | | | | | | | | | | | | | $– | | $ | 5,294,646 | | | $ | 5,294,646 | |
| |
| (a) | Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $5,071,596. |
| (b) | The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
| (c) | The table below includes additional information regarding the underlying components of certain reference entities that are not publicly available. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
| | | | |
| Reference Entity Components |
Reference Entity | | Underlying Components | | Percentage |
Canadian Imperial Bank of Commerce Custom 7
Agriculture Commodity Index
| | | | |
| Long Futures Contracts | | | |
Coffee ‘C’ | | | 5.71 | % |
Corn | | | 5.63 | |
Cotton No. 2 | | | 22.87 | |
Lean Hogs | | | 0.57 | |
Live Cattle | | | 0.51 | |
Soybean Meal | | | 23.14 | |
Soybean Oil | | | 5.31 | |
Soybeans | | | 22.24 | |
Sugar No. 11 | | | 7.29 | |
Wheat | | | 6.73 | |
Total | | | 100.00 | % |
Monthly Rebalance Commodity Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Coffee ’C’ | | | 5.71 | % |
Corn | | | 5.63 | |
Cotton No. 2 | | | 22.87 | |
Lean Hogs | | | 0.57 | |
Live Cattle | | | 0.51 | |
Soybean Meal | | | 23.14 | |
Soybean Oil | | | 5.31 | |
Soybeans | | | 22.24 | |
Sugar No. 11 | | | 7.29 | |
Wheat | | | 6.73 | |
Total | | | 100.00 | % |
Barclays Commodity Strategy 1745 Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Coffee ’C’ | | | 5.71 | % |
Corn | | | 5.63 | |
Cotton No. 2 | | | 22.87 | |
Lean Hogs | | | 0.57 | |
Live Cattle | | | 0.51 | |
Soybean Meal | | | 23.14 | |
Soybean Oil | | | 5.31 | |
Soybeans | | | 22.24 | |
Sugar No. 11 | | | 7.29 | |
Wheat | | | 6.73 | |
Total | | | 100.00 | % |
Single Commodity Index Excess Return
| | | | |
| Long Futures Contracts | | | |
Gold | | | 100.00 | % |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
| | | | |
| Reference Entity Components–(continued) |
Reference Entity | | Underlying Components | | Percentage |
Goldman Sachs Commodity i-Select Strategy 1121
| | | | |
| Long Futures Contracts | | | |
Coffee ’C’ | | | 5.71 | % |
Corn | | | 5.63 | |
Cotton No. 2 | | | 22.87 | |
Lean Hogs | | | 0.57 | |
Live Cattle | | | 0.51 | |
Soybean Meal | | | 23.14 | |
Soybean Oil | | | 5.31 | |
Soybeans | | | 22.24 | |
Sugar No. 11 | | | 7.29 | |
Wheat | | | 6.73 | |
Total | | | 100.00 | % |
J.P. Morgan Contag Beta Gas Oil Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Gas Oil | | | 100.00 | % |
S&P GSCI Gold Index Excess Return
| | | | |
| Long Futures Contracts | | | |
Gold | | | 100.00 | % |
Merrill Lynch Gold Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Gold | | | 100.00 | % |
MLCX Dynamic Enhanced Copper Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Copper | | | 100.00 | % |
MLCX Natural Gas Annual Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Natural Gas | | | 100.00 | % |
Barclays Commodity Strategy 1452 Excess Return Index
| | | | |
| Long Futures Contracts | | | |
Copper | | | 100.00 | % |
Canadian Imperial Bank of Commerce Dynamic Roll LME
Copper Excess Return Index 2
| | | | |
| Long Futures Contracts | | | |
Copper | | | 100.00 | % |
Macquarie Aluminium Dynamic Selection Index
| | | | |
| Long Futures Contracts | | | |
Aluminum | | | 100.00 | % |
S&P GSCI Aluminum Dynamic Roll Index Excess Return
| | | | |
| Long Futures Contracts | | | |
Aluminum | | | 100.00 | % |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Statement of Assets and Liabilities
December 31, 2020
| | |
Assets: | | |
Investments in securities, at value
(Cost $127,762,801) | | $140,196,562 |
Investments in affiliated money market funds, at value
(Cost $767,126,252) | | 767,126,252 |
Other investments: | | |
Swaps receivable – OTC | | 1,124,211 |
Unrealized appreciation on swap agreements – OTC | | 5,769,058 |
Deposits with brokers: | | |
Cash collateral – exchange-traded futures contracts | | 63,795,000 |
Cash collateral – OTC Derivatives | | 5,071,596 |
Foreign currencies, at value (Cost $1,438) | | 1,513 |
Receivable for: | | |
Investments sold | | 6,740 |
Fund shares sold | | 866,499 |
Dividends | | 11,604 |
Investment for trustee deferred compensation and retirement plans | | 120,740 |
Total assets | | 984,089,775 |
| |
Liabilities: | | |
Other investments: | | |
Variation margin payable - futures contracts | | 102,599 |
Swaps payable – OTC | | 335,414 |
Unrealized depreciation on swap agreements–OTC | | 474,412 |
Payable for: | | |
Investments purchased | | 6,774 |
Fund shares reacquired | | 1,117,453 |
Amount due custodian | | 74,662 |
Accrued fees to affiliates | | 764,998 |
Accrued other operating expenses | | 453,935 |
Trustee deferred compensation and retirement plans | | 135,881 |
Total liabilities | | 3,466,128 |
Net assets applicable to shares outstanding | | $980,623,647 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $902,957,206 |
Distributable earnings | | 77,666,441 |
| | | $980,623,647 |
| |
Net Assets: | | |
Series I | | $ 46,853,302 |
Series II | | $933,770,345 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 4,471,723 |
Series II | | 90,770,070 |
Series I: | | |
Net asset value per share | | $ 10.48 |
Series II: | | |
Net asset value per share | | $ 10.29 |
Consolidated Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends from affiliated money market funds | | $ | 2,934,003 | |
| |
Interest | | | 884,014 | |
| |
Total investment income | | | 3,818,017 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 8,629,571 | |
| |
Administrative services fees | | | 1,541,058 | |
| |
Custodian fees | | | 25,709 | |
| |
Distribution fees - Series II | | | 2,234,751 | |
| |
Transfer agent fees | | | 24,730 | |
| |
Trustees’ and officers’ fees and benefits | | | 34,302 | |
| |
Reports to shareholders | | | 9,896 | |
| |
Professional services fees | | | 57,924 | |
| |
Other | | | 7,165 | |
| |
Total expenses | | | 12,565,106 | |
| |
Less: Fees waived | | | (4,140,286 | ) |
| |
Net expenses | | | 8,424,820 | |
| |
Net investment income (loss) | | | (4,606,803 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (2,697,969 | ) |
| |
Foreign currencies | | | 282,678 | |
| |
Futures contracts | | | 34,459,890 | |
| |
Swap agreements | | | 22,524,945 | |
| |
| | | 54,569,544 | |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 11,694,438 | |
| |
Foreign currencies | | | (97,168 | ) |
| |
Futures contracts | | | 20,386,389 | |
| |
Swap agreements | | | 3,821,719 | |
| |
| | | 35,805,378 | |
| |
Net realized and unrealized gain | | | 90,374,922 | |
| |
Net increase in net assets resulting from operations | | $ | 85,768,119 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (4,606,803 | ) | | $ | 11,730,695 | |
| |
Net realized gain | | | 54,569,544 | | | | 128,339,153 | |
| |
Change in net unrealized appreciation | | | 35,805,378 | | | | 2,732,689 | |
| |
Net increase in net assets resulting from operations | | | 85,768,119 | | | | 142,802,537 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (5,885,904 | ) | | | – | |
| |
Series II | | | (113,684,097 | ) | | | – | |
| |
Total distributions from distributable earnings | | | (119,570,001 | ) | | | – | |
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | 2,911,262 | | | | 2,158,487 | |
| |
Series II | | | (10,389,997 | ) | | | (128,836,261 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (7,478,735 | ) | | | (126,677,774 | ) |
| |
Net increase (decrease) in net assets | | | (41,280,617 | ) | | | 16,124,763 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,021,904,264 | | | | 1,005,779,501 | |
| |
End of year | | $ | 980,623,647 | | | $ | 1,021,904,264 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
Consolidated Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Ratio of | | Ratio of | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | expenses | | expenses | | | | |
| | | | | | | Net gains | | | | | | | | | | | | | | | | | | to average | | to average net | | Ratio of net | | |
| | | | | | | (losses) | | | | | | | | | | | | | | | | | | net assets | | assets without | | investment | | |
| | | Net asset | | Net | | on securities | | | | Dividends | | Distributions | | | | | | | | | | | | with fee waivers | | fee waivers | | income | | |
| | | value, | | investment | | (both | | Total from | | from net | | from net | | | | | | Net asset | | | | Net assets, | | and/or | | and/or | | (loss) | | |
| | | beginning | | income | | realized and | | investment | | investment | | realized | | Return of | | Total | | value, end | | Total | | end of period | | expenses | | expenses | | to average | | Portfolio |
| | | of period | | (loss)(a) | | unrealized) | | operations | | income | | gains | | capital | | distributions | | of period | | return (b) | | (000’s omitted) | | absorbed | | absorbed | | net assets | | turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 10.91 | | | | $ | (0.03 | ) | | | $ | 1.03 | | | | $ | 1.00 | | | | $ | (0.87 | ) | | | $ | (0.56 | ) | | | $ | – | | | | $ | (1.43 | ) | | | $ | 10.48 | | | | | 10.22 | % | | | $ | 46,853 | | | | | 0.66 | %(d)(e) | | | | 1.10 | %(d) | | | | (0.25 | )%(d) | | | | 82 | % |
Year ended 12/31/19 | | | | 9.47 | | | | | 0.14 | | | | | 1.30 | | | | | 1.44 | | | | | – | | | | | – | | | | | – | | | | | – | | | | | 10.91 | | | | | 15.21 | | | | | 45,427 | | | | | 0.64 | (e) | | | | 1.10 | | | | | 1.38 | | | | | 94 | |
Year ended 12/31/18 | | | | 11.31 | | | | | 0.11 | | | | | (0.79 | ) | | | | (0.68 | ) | | | | (0.14 | ) | | | | (0.99 | ) | | | | (0.03 | ) | | | | (1.16 | ) | | | | 9.47 | | | | | (6.46 | ) | | | | 37,450 | | | | | 0.65 | (e) | | | | 1.10 | | | | | 1.03 | | | | | 199 | |
Year ended 12/31/17 | | | | 11.35 | | | | | 0.01 | | | | | 1.08 | | | | | 1.09 | | | | | (0.48 | ) | | | | (0.65 | ) | | | | – | | | | | (1.13 | ) | | | | 11.31 | | | | | 10.06 | | | | | 39,340 | | | | | 0.68 | (e) | | | | 1.11 | | | | | 0.10 | | | | | 52 | |
Year ended 12/31/16 | | | | 10.20 | | | | | (0.04 | ) | | | | 1.24 | | | | | 1.20 | | | | | (0.05 | ) | | | | – | | | | | – | | | | | (0.05 | ) | | | | 11.35 | | | | | 11.74 | | | | | 34,714 | | | | | 0.67 | (e) | | | | 1.12 | | | | | (0.33 | ) | | | | 120 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 10.73 | | | | | (0.05 | ) | | | | 1.01 | | | | | 0.96 | | | | | (0.84 | ) | | | | (0.56 | ) | | | | – | | | | | (1.40 | ) | | | | 10.29 | | | | | 9.99 | | | | | 933,770 | | | | | 0.91 | (d)(e) | | | | 1.35 | (d) | | | | (0.50 | )(d) | | | | 82 | |
Year ended 12/31/19 | | | | 9.34 | | | | | 0.12 | | | | | 1.27 | | | | | 1.39 | | | | | – | | | | | – | | | | | – | | | | | – | | | | | 10.73 | | | | | 14.88 | | | | | 976,477 | | | | | 0.89 | (e) | | | | 1.35 | | | | | 1.13 | | | | | 94 | |
Year ended 12/31/18 | | | | 11.17 | | | | | 0.08 | | | | | (0.78 | ) | | | | (0.70 | ) | | | | (0.11 | ) | | | | (0.99 | ) | | | | (0.03 | ) | | | | (1.13 | ) | | | | 9.34 | | | | | (6.71 | ) | | | | 968,329 | | | | | 0.90 | (e) | | | | 1.35 | | | | | 0.78 | | | | | 199 | |
Year ended 12/31/17 | | | | 11.22 | | | | | (0.02 | ) | | | | 1.07 | | | | | 1.05 | | | | | (0.45 | ) | | | | (0.65 | ) | | | | – | | | | | (1.10 | ) | | | | 11.17 | | | | | 9.83 | | | | | 1,158,077 | | | | | 0.93 | (e) | | | | 1.36 | | | | | (0.15 | ) | | | | 52 | |
Year ended 12/31/16 | | | | 10.08 | | | | | (0.06 | ) | | | | 1.22 | | | | | 1.16 | | | | | (0.02 | ) | | | | – | | | | | – | | | | | (0.02 | ) | | | | 11.22 | | | | | 11.51 | | | | | 1,113,539 | | | | | 0.92 | (e) | | | | 1.37 | | | | | (0.58 | ) | | | | 120 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $44,107 and $893,900 for Series I and Series II shares, respectively. |
| (e) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.15%, 0.15%, 0.16%, 0.15% and 0.12% for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Balanced-Risk Allocation Fund
Notes to Consolidated Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Balanced-Risk Allocation Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these consolidated financial statements pertains only to the Fund and the Subsidiary. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund will seek to gain exposure to the commodity markets primarily through investments in the Invesco Cayman Commodity Fund IV Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in commodity-linked derivatives and other securities that may provide leveraged and non-leveraged exposure to commodities. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is total return with a low to moderate correlation to traditional financial market indices.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its consolidated financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
Invesco V.I. Balanced-Risk Allocation Fund
| | dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Consolidated Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Consolidated Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Consolidated Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the consolidated financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation. |
In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the consolidated financial statements are released to print.
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund and/or the Subsidiary, respectively. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Structured Securities – The Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of underlying securities, currencies, interest rates, commodities, indices or other financial indicators (“reference instruments”). Most structured securities are fixed-income securities that have maturities of three years or less. Structured securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates) and may have return characteristics similar to direct investments in the underlying reference instrument. |
Structured securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instruments. In addition to the credit risk of structured securities and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease as a result of changes in the value of the underlying reference instruments. Changes in the daily value of structured securities are recorded as unrealized gains (losses) in the Consolidated Statement of Operations. When the structured securities mature or are sold, the Fund recognizes a realized gain (loss) on the Consolidated Statement of Operations.
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Consolidated Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net |
Invesco V.I. Balanced-Risk Allocation Fund
| | unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Consolidated Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Consolidated Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Consolidated Statement of Assets and Liabilities.
| L. | Futures Contracts – The Fund may enter into futures contracts to equitize the Fund’s cash holdings or to manage exposure to interest rate, equity, commodity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Consolidated Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Consolidated Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Consolidated Statement of Assets and Liabilities. |
| M. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency, commodity or credit risk. Such transactions are agreements between Counterparties. These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Consolidated Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Consolidated Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Consolidated Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
| N. | Other Risks – The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in commodity futures and swaps, commodity related exchange-traded funds and exchange-traded notes and commodity linked notes, some or all of which will be owned through the Subsidiary. The Subsidiary, unlike the Fund, may invest without limitation in commodities, commodity-linked derivatives and other securities, |
Invesco V.I. Balanced-Risk Allocation Fund
| | such as exchange-traded and commodity-linked notes, that may provide leveraged and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. |
The current low interest rate environment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near historical lows. Increases in the federal funds and equivalent foreign rates may expose fixed income markets to heightened volatility and reduced liquidity for certain fixed income investments, particularly those with longer maturities. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs.
In addition to risks associated with the underlying commodities, investments in commodity-linked notes may be subject to additional risks, such as non-payment of interest and loss of principal, counterparty risk, lack of a secondary market and risk of greater volatility than traditional equity and debt securities. The value of the commodity-linked notes the Fund buys may fluctuate significantly because the values of the underlying investments to which they are linked are themselves volatile. Additionally, certain commodity-linked notes employ “economic” leverage by requiring payment by the issuer of an amount that is a multiple of the price increase or decrease of the underlying commodity, commodity index, or other economic variable. Such economic leverage will increase the volatility of the value of these commodity-linked notes and the Fund to the extent it invests in such notes.
| O. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| P. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser less the amount paid by the Subsidiary to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $250 million | | | 0.950% | |
| |
Next $250 million | | | 0.925% | |
| |
Next $500 million | | | 0.900% | |
| |
Next $1.5 billion | | | 0.875% | |
| |
Next $2.5 billion | | | 0.850% | |
| |
Next $2.5 billion | | | 0.825% | |
| |
Next $2.5 billion | | | 0.800% | |
| |
Over $10 billion | | | 0.775% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.92%.
The Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth in the table above.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (including prior fiscal year-end Acquired Fund Fees and Expenses of 0.15% and excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are not operating expenses of the Fund directly, but are fees and expenses, including management fees, of the investment companies in which the Fund invests. As a result, the total annual fund operating expenses after expense reimbursement may exceed the expense limits above. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $4,140,286.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $134,962 for accounting and fund administrative services and was reimbursed $1,406,096 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.
Invesco V.I. Balanced-Risk Allocation Fund
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Consolidated Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
U.S. Treasury Securities | | $ | – | | | $ | 108,784,212 | | | | $– | | | $ | 108,784,212 | |
| |
Commodity-Linked Securities | | | – | | | | 31,412,350 | | | | – | | | | 31,412,350 | |
| |
Money Market Funds | | | 767,126,252 | | | | – | | | | – | | | | 767,126,252 | |
| |
Total Investments in Securities | | | 767,126,252 | | | | 140,196,562 | | | | – | | | | 907,322,814 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 16,766,258 | | | | – | | | | – | | | | 16,766,258 | |
| |
Swap Agreements | | | – | | | | 5,769,058 | | | | – | | | | 5,769,058 | |
| |
| | | 16,766,258 | | | | 5,769,058 | | | | – | | | | 22,535,316 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | (1,205,238 | ) | | | – | | | | – | | | | (1,205,238 | ) |
| |
Swap Agreements | | | – | | | | (474,412 | ) | | | – | | | | (474,412 | ) |
| |
| | | (1,205,238 | ) | | | (474,412 | ) | | | – | | | | (1,679,650 | ) |
| |
Total Other Investments | | | 15,561,020 | | | | 5,294,646 | | | | – | | | | 20,855,666 | |
| |
Total Investments | | $ | 782,687,272 | | | $ | 145,491,208 | | | | $– | | | $ | 928,178,480 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an ISDA Master Agreement under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Consolidated Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | | | | | | | | | | | | | |
| | | Value | |
| | | Commodity | | | Equity | | | Interest | | | | |
| Derivative Assets | | Risk | | | Risk | | | Rate Risk | | | Total | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 7,430,980 | | | $ | 7,187,691 | | | $ | 2,147,587 | | | $ | 16,766,258 | |
| |
Unrealized appreciation on swap agreements – OTC | | | 5,178,334 | | | | 590,724 | | | | - | | | | 5,769,058 | |
| |
Total Derivative Assets | | | 12,609,314 | | | | 7,778,415 | | | | 2,147,587 | | | | 22,535,316 | |
| |
Derivatives not subject to master netting agreements | | | (7,430,980 | ) | | | (7,187,691 | ) | | | (2,147,587 | ) | | | (16,766,258 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | 5,178,334 | | | $ | 590,724 | | | $ | - | | | $ | 5,769,058 | |
| |
Invesco V.I. Balanced-Risk Allocation Fund
| | | | | | | | | | | | | | | | |
| | | Value | |
| | | Commodity | | | Equity | | | Interest | | | | |
| Derivative Liabilities | | Risk | | | Risk | | | Rate Risk | | | Total | |
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | - | | | $ | (733,986 | ) | | $ | (471,252 | ) | | $ | (1,205,238 | ) |
| |
Unrealized depreciation on swap agreements – OTC | | | (474,412 | ) | | | - | | | | - | | | | (474,412 | ) |
| |
Total Derivative Liabilities | | | (474,412 | ) | | | (733,986 | ) | | | (471,252 | ) | | | (1,679,650 | ) |
| |
Derivatives not subject to master netting agreements | | | - | | | | 733,986 | | | | 471,252 | | | | 1,205,238 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (474,412 | ) | | $ | - | | | $ | - | | | $ | (474,412 | ) |
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Consolidated Statement of Assets and Liabilities. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial | | | Financial | | | | | | | | | | | | | |
| | | Derivative | | | Derivative | | | | | | Collateral | | | | |
| | | Assets | | | Liabilities | | | | | | (Received)/Pledged | | | | |
| | | Swap | | | Swap | | | Net Value of | | | | | | | | | Net | |
| Counterparty | | Agreements | | | Agreements | | | Derivatives | | | Non-Cash | | | Cash | | | Amount(a) | |
| |
Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Goldman Sachs International | | $ | 590,724 | | | $ | (130,469 | ) | | $ | 460,255 | | | | $- | | | $ | - | | | $ | 460,255 | |
| |
Subtotal-Fund | | | 590,724 | | | | (130,469 | ) | | | 460,255 | | | | - | | | | - | | | | 460,255 | |
| |
Subsidiary | | | | | | | | | | | | | | | | | | | | | | | | |
Barclays Bank PLC | | | 868,837 | | | | (44,289 | ) | | | 824,548 | | | | - | | | | (824,548 | ) | | | - | |
| |
Canadian Imperial Bank of Commerce | | | - | | | | (16,755 | ) | | | (16,755 | ) | | | - | | | | 16,755 | | | | - | |
| |
Cargill, Inc. | | | 2,931,063 | | | | (8,984 | ) | | | 2,922,079 | | | | - | | | | (2,750,000 | ) | | | 172,079 | |
| |
Goldman Sachs International | | | 1,155,389 | | | | (2,785 | ) | | | 1,152,604 | | | | - | | | | - | | | | 1,152,604 | |
| |
JPMorgan Chase Bank, N.A. | | | 223,045 | | | | (849 | ) | | | 222,196 | | | | - | | | | - | | | | 222,196 | |
| |
Macquarie Bank Ltd. | | | - | | | | (69,804 | ) | | | (69,804 | ) | | | - | | | | 69,804 | | | | - | |
| |
Merrill Lynch International | | | 1,124,211 | | | | (182,259 | ) | | | 941,952 | | | | - | | | | - | | | | 941,952 | |
| |
Morgan Stanley Capital Services LLC | | | - | | | | (353,632 | ) | | | (353,632 | ) | | | - | | | | 260,000 | | | | (93,632 | ) |
| |
Subtotal-Subsidiary | | | 6,302,545 | | | | (679,357 | ) | | | 5,623,188 | | | | - | | | | (3,227,989 | ) | | | 2,395,199 | |
| |
Total | | $ | 6,893,269 | | | $ | (809,826 | ) | | $ | 6,083,443 | | | | $- | | | $ | (3,227,989 | ) | | $ | 2,855,454 | |
| |
| (a) | The Fund and the Subsidiary are recognized as separate legal entities and as such are subject to separate netting arrangements with the Counterparty. |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | | | | | |
| | | Location of Gain (Loss) on
Consolidated Statement of Operations | |
| | | Commodity | | | Equity | | | Interest | | | | |
| | | Risk | | | Risk | | | Rate Risk | | | Total | |
| |
Realized Gain (Loss): | | | | | | | | | | | | | | | | |
Futures contracts | | $ | (8,300,730 | ) | | $ | 9,869,856 | | | $ | 32,890,764 | | | $ | 34,459,890 | |
| |
Swap agreements | | | 21,689,437 | | | | 835,508 | | | | - | | | | 22,524,945 | |
| |
Change in Net Unrealized Appreciation: | | | | | | | | | | | | | | | | |
Futures contracts | | | 3,057,581 | | | | 3,762,180 | | | | 13,566,628 | | | | 20,386,389 | |
| |
Swap agreements | | | 3,230,995 | | | | 590,724 | | | | - | | | | 3,821,719 | |
| |
Total | | $ | 19,677,283 | | | $ | 15,058,268 | | | $ | 46,457,392 | | | $ | 81,192,943 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | | | |
| | | Futures | | | Swap | |
| | | Contracts | | | Agreements | |
| |
Average notional value | | $ | 1,084,018,110 | | | $ | 191,607,640 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a
Invesco V.I. Balanced-Risk Allocation Fund
period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
| | | | | | | | |
| Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019: | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 89,338,290 | | | | $– | |
| |
Long-term capital gain | | | 30,231,711 | | | | – | |
| |
Total distributions | | $ | 119,570,001 | | | | $– | |
| |
* Includes short-term capital gain distributions, if any.
| | | | |
| Tax Components of Net Assets at Period-End: | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 41,205,414 | |
| |
Undistributed long-term capital gain | | | 18,480,023 | |
| |
Net unrealized appreciation – investments | | | 18,107,984 | |
| |
Net unrealized appreciation (depreciation) - foreign currencies | | | (31,196 | ) |
| |
Temporary book/tax differences | | | (95,784 | ) |
| |
Shares of beneficial interest | | | 902,957,206 | |
| |
Total net assets | | $ | 980,623,647 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to futures contracts and swap agreements.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $18,980,000 and $17,545,113, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 19,787,634 | |
| |
Aggregate unrealized (depreciation) of investments | | | (1,679,650 | ) |
| |
Net unrealized appreciation of investments | | $ | 18,107,984 | |
| |
Cost of investments for tax purposes is $910,070,496.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currencies, swap agreements and futures contracts, on December 31, 2020, undistributed net investment income (loss) was increased by $30,907,764 and undistributed net realized gain was decreased by $30,907,764. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
Invesco V.I. Balanced-Risk Allocation Fund
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 379,236 | | | $ | 3,960,734 | | | | 479,777 | | | $ | 4,939,090 | |
| |
Series II | | | 3,857,886 | | | | 39,526,525 | | | | 4,284,767 | | | | 43,466,506 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 609,307 | | | | 5,885,904 | | | | - | | | | - | |
| |
Series II | | | 11,979,357 | | | | 113,684,097 | | | | - | | | | - | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (682,143 | ) | | | (6,935,376 | ) | | | (270,304 | ) | | | (2,780,603 | ) |
| |
Series II | | | (16,076,040 | ) | | | (163,600,619 | ) | | | (16,984,260 | ) | | | (172,302,767 | ) |
| |
Net increase (decrease) in share activity | | | 67,603 | | | $ | (7,478,735 | ) | | | (12,490,020 | ) | | $ | (126,677,774 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 81% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these consolidated financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Balanced-Risk Allocation Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Balanced-Risk Allocation Fund
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Invesco V.I. Balanced-Risk Allocation Fund and its subsidiary (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related consolidated statement of operations for the year ended December 31, 2020, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the consolidated financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
|
| /s/PricewaterhouseCoopers LLP |
|
Houston, Texas February 16, 2021 |
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Balanced-Risk Allocation Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | |
| | | Beginning Account Value (07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized Expense Ratio |
| | Ending Account Value (12/31/20)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/20) | | Expenses Paid During Period2 |
Series I | | $1,000.00 | | $1,149.70 | | $3.67 | | $1,021.72 | | $3.46 | | 0.68% |
Series II | | 1,000.00 | | 1,148.00 | | 5.02 | | 1,020.46 | | 4.72 | | 0.93 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Balanced-Risk Allocation Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | $ | 30,231,711 | |
| | Qualified Dividend Income* | | | 0.00 | % |
| | Corporate Dividends Received Deduction* | | | 0.00 | % |
| | U.S. Treasury Obligations* | | | 0.68 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Balanced-Risk Allocation Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Balanced-Risk Allocation Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Comstock Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s
Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on
Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VK-VICOM-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco V.I. Comstock Fund (the Fund) underperformed the Russell 1000 Value Index, the Fund’s style-specific benchmark.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | |
| Series I Shares | | | -0.85 | % |
| Series II Shares | | | -1.09 | |
| S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
| Russell 1000 Value Indexq (Style-Specific Index) | | | 2.80 | |
| Lipper VUF Large-Cap Value Funds Index∎ (Peer Group Index) | | | 1.69 | |
| Source(s): qRIMES Technologies Corp.; ∎ Lipper Inc. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
On the positive side, stock selection and an overweight within information technology was the largest contributor to Fund performance compared to the Russell 1000 Value Index, the Fund’s style-specific index, for the year. QUALCOMM and Microsoft were the largest contributors to the Fund’s performance. Large bellwether software and equipment technology companies benefited from increased demand as employees in most service sectors worked from home. Microsoft
beat earnings estimates in multiple quarters and provided strong guidance, as it has benefited from predictable growth in both its cloud business and Azure, as well as sustained demand for Office 365.
Strong security selection in the industrials sector was a key contributor to the Fund’s relative return. FedEx, a relatively new holding (purchased in the first quarter), was the largest individual contributor. We invested in FedEx based on its ability to charge higher prices amid a reduction in international air capacity, its lower cost structures resulting from a more efficient fleet and lower operating costs stemming from the integration of TNT Express, all of which we believe will contribute to an eventual recovery in profit margins.
A material underweight to real estate also benefited relative performance for the quarter. The real estate sector within the Russell 1000 Value Index declined more than 9% for the year.4
On the negative side, stock selection and a material overweight position in energy detracted the most from relative performance for the year as the sector was the worst performing sector within the Russell 1000 Value Index. Oil prices experienced an unprecedented “double black swan event” due to Saudi Arabia and Russia increasing supply to gain market share and global demand shocks from the COVID-19 virus. We believe COVID-19 implications should ease and business activity will resume, which should be supportive of demand. We continue to focus on balance sheets and debt levels for the energy holdings.
Within consumer discretionary, Carnival was a notable detractor as the cruise industry was hit particularly hard by the coronavirus outbreak, with cruises from the US canceled through spring of 2021. In early April, we exited the position because we believe cruise demand will be slower to recover than other areas within the consumer discretionary sector.
Stock selection in communication services also dampened relative performance. The Fund did not own Walt Disney, a large content provider and holding within the benchmark, and the stock rose over 25% for the year.4
Stock selection and material overweight exposure hindered relative performance within financials. The precipitous decline in interest rates during the first quarter of 2020, from already low levels, weighed heavily on the sector. Although financials have recovered significantly from their lows earlier in the year, large banks are trading at what we believe are extremely attractive valuations. We have invested in large banks based on sweeping changes such as improved balance sheets, lower leverage and solid capital positions.
We used currency forward contracts during the year for the purpose of hedging currency exposure of non-US-based companies held in
Invesco V.I. Comstock Fund
the Fund. Derivatives were used solely for the purpose of hedging. The use of currency forward contracts had a slight positive impact on the Fund’s performance relative to the Russell 1000 Value Index for the year.
At the end of the year, the Fund had a cyclical bias with overweight exposures to financial and energy companies. The Fund also was overweight technology stocks and healthcare. Conversely, the Fund was underweight real estate, utilities, communication services, consumer discretionary and consumer staples.
As we’ve seen a rotation towards value stocks towards the end of the year, we remain cautiously optimistic towards the longer-term outlook for the US and global economies. Though the distribution of coronavirus vaccines should provide a level of stability, we believe equity markets may experience continued volatility due to the leadership transition in Washington DC and rising COVID-19 infection rates.
Thank you for your investment in Invesco V.I. Comstock Fund and for sharing our long-term investment horizon.
| 1 | Source: US Federal Reserve |
| 2 | Source: US Bureau of Economic Analysis |
| 4 | Source: FactSet Research Systems Inc. |
Portfolio manager(s):
Devin Armstrong (Co-Lead)
Charles DyReyes
Kevin Holt (Co-Lead)
James Warwick
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Comstock Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (4/30/99) | | | 6.85 | % |
10 Years | | | 9.46 | |
5 Years | | | 8.57 | |
1 Year | | | -0.85 | |
| |
Series II Shares | | | | |
Inception (9/18/00) | | | 6.82 | % |
10 Years | | | 9.18 | |
5 Years | | | 8.30 | |
1 Year | | | -1.09 | |
Effective June 1, 2010, Class I and Class II shares of the predecessor fund, Van Kampen Life Investment Trust Comstock Portfolio, advised by Van Kampen Asset Management were reorganized into Series I and Series II shares, respectively, of Invesco Van Kampen V.I. Comstock Fund (renamed Invesco V.I. Comstock Fund on April 29, 2013). Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class I shares and Class II shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Comstock Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Comstock Fund
Supplemental Information
Invesco V.I. Comstock Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Lipper VUF Large-Cap Value Funds Index is an unmanaged index considered representative of large-cap value variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Comstock Fund
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Financials | | | | 25.28 | % |
Health Care | | | | 14.95 | |
Industrials | | | | 13.38 | |
Information Technology | | | | 11.74 | |
Energy | | | | 9.38 | |
Consumer Staples | | | | 6.79 | |
Materials | | | | 5.61 | |
Consumer Discretionary | | | | 4.77 | |
Communication Services | | | | 3.23 | |
Utilities | | | | 2.81 | |
Real Estate | | | | 1.34 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.72 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Citigroup, Inc. | | | | 4.14 | % |
2. Bank of America Corp. | | | | 3.69 | |
3. Philip Morris International, Inc. | | | | 3.18 | |
4. Anthem, Inc. | | | | 2.48 | |
5. American International Group, Inc. | | | | 2.42 | |
6. General Motors Co. | | | | 2.34 | |
7. HCA Healthcare, Inc. | | | | 2.31 | |
8. Morgan Stanley | | | | 2.30 | |
9. Caterpillar, Inc. | | | | 2.13 | |
10. QUALCOMM, Inc. | | | | 2.07 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
Invesco V.I. Comstock Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–99.28% | |
|
Aerospace & Defense–1.59% | |
| | |
Textron, Inc. | | | 436,577 | | | $ | 21,099,766 | |
| |
|
Agricultural Products–0.53% | |
| | |
Archer-Daniels-Midland Co. | | | 139,486 | | | | 7,031,489 | |
| |
|
Air Freight & Logistics–1.69% | |
| | |
FedEx Corp. | | | 86,106 | | | | 22,354,840 | |
| |
|
Application Software–0.91% | |
| | |
CDK Global, Inc. | | | 232,697 | | | | 12,060,686 | |
| |
|
Asset Management & Custody Banks–2.57% | |
| | |
Bank of New York Mellon Corp. (The) | | | 542,610 | | | | 23,028,368 | |
| |
State Street Corp. | | | 151,593 | | | | 11,032,939 | |
| |
| | | | 34,061,307 | |
| |
|
Automobile Manufacturers–2.34% | |
| | |
General Motors Co. | | | 743,838 | | | | 30,973,414 | |
| |
|
Building Products–2.60% | |
| | |
Johnson Controls International PLC | | | 477,382 | | | | 22,241,227 | |
| |
Trane Technologies PLC | | | 84,111 | | | | 12,209,553 | |
| |
| | | | 34,450,780 | |
| |
|
Cable & Satellite–1.62% | |
| | |
Comcast Corp., Class A | | | 410,282 | | | | 21,498,777 | |
| |
|
Casinos & Gaming–0.73% | |
| | |
Las Vegas Sands Corp. | | | 162,506 | | | | 9,685,358 | |
| |
|
Communications Equipment–1.83% | |
| | |
Cisco Systems, Inc. | | | 541,639 | | | | 24,238,345 | |
| |
|
Construction Machinery & Heavy Trucks–2.13% | |
| | |
Caterpillar, Inc. | | | 154,967 | | | | 28,207,093 | |
| |
|
Consumer Finance–0.37% | |
| | |
Capital One Financial Corp. | | | 49,377 | | | | 4,880,916 | |
| |
|
Diversified Banks–11.08% | |
| | |
Bank of America Corp. | | | 1,614,473 | | | | 48,934,677 | |
| |
Citigroup, Inc. | | | 891,284 | | | | 54,956,571 | |
| |
JPMorgan Chase & Co. | | | 166,756 | | | | 21,189,685 | |
| |
Wells Fargo & Co. | | | 727,313 | | | | 21,950,306 | |
| |
| | | | 147,031,239 | |
| |
|
Electric Utilities–1.59% | |
| | |
Exelon Corp. | | | 499,060 | | | | 21,070,313 | |
| |
|
Electrical Components & Equipment–3.99% | |
| | |
Eaton Corp. PLC | | | 223,976 | | | | 26,908,477 | |
| |
Emerson Electric Co. | | | 324,047 | | | | 26,043,657 | |
| |
| | | | 52,952,134 | |
| |
|
Fertilizers & Agricultural Chemicals–3.03% | |
| | |
CF Industries Holdings, Inc. | | | 496,542 | | | | 19,221,141 | |
| |
Corteva, Inc. | | | 541,116 | | | | 20,952,011 | |
| |
| | | | 40,173,152 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Health Care Distributors–2.25% | |
| | |
Henry Schein, Inc.(b) | | | 170,380 | | | $ | 11,391,607 | |
| |
McKesson Corp. | | | 105,791 | | | | 18,399,171 | |
| |
| | | | 29,790,778 | |
| |
|
Health Care Facilities–3.09% | |
| | |
HCA Healthcare, Inc. | | | 186,268 | | | | 30,633,635 | |
| |
Universal Health Services, Inc., Class B | | | 75,691 | | | | 10,407,513 | |
| |
| | | | 41,041,148 | |
| |
|
Health Care Services–1.27% | |
| | |
CVS Health Corp. | | | 247,566 | | | | 16,908,758 | |
| |
|
Health Care Supplies–0.77% | |
| | |
DENTSPLY SIRONA, Inc. | | | 196,002 | | | | 10,262,665 | |
| |
|
Hotel & Resort REITs–0.84% | |
| | |
Host Hotels & Resorts, Inc. | | | 761,602 | | | | 11,142,237 | |
| |
|
Independent Power Producers & Energy Traders–1.22% | |
| | |
Vistra Corp. | | | 822,010 | | | | 16,160,717 | |
| |
|
Industrial Conglomerates–1.39% | |
| | |
General Electric Co. | | | 1,703,963 | | | | 18,402,800 | |
| |
|
Integrated Oil & Gas–2.96% | |
| | |
Chevron Corp. | | | 288,312 | | | | 24,347,948 | |
| |
Suncor Energy, Inc. (Canada) | | | 886,432 | | | | 14,874,329 | |
| |
| | | | 39,222,277 | |
| |
|
Integrated Telecommunication Services–1.21% | |
| | |
AT&T, Inc. | | | 560,282 | | | | 16,113,710 | |
| |
|
Internet & Direct Marketing Retail–1.71% | |
| | |
Booking Holdings, Inc.(b) | | | 6,667 | | | | 14,849,209 | |
| |
eBay, Inc. | | | 155,505 | | | | 7,814,126 | |
| |
| | | | 22,663,335 | |
| |
|
Investment Banking & Brokerage–3.95% | |
| | |
Goldman Sachs Group, Inc. (The) | | | 83,299 | | | | 21,966,779 | |
| |
Morgan Stanley | | | 445,000 | | | | 30,495,850 | |
| |
| | | | 52,462,629 | |
| |
|
IT Consulting & Other Services–2.01% | |
| | |
Cognizant Technology Solutions Corp., Class A | | | 325,357 | | | | 26,663,006 | |
| |
|
Life & Health Insurance–1.03% | |
| | |
MetLife, Inc. | | | 291,483 | | | | 13,685,127 | |
| |
|
Managed Health Care–2.48% | |
| | |
Anthem, Inc. | | | 102,452 | | | | 32,896,313 | |
| |
|
Multi-line Insurance–2.42% | |
| | |
American International Group, Inc. | | | 847,613 | | | | 32,090,628 | |
| |
|
Oil & Gas Exploration & Production–6.42% | |
| | |
Canadian Natural Resources Ltd. (Canada) | | | 531,399 | | | | 12,770,442 | |
| |
ConocoPhillips | | | 212,904 | | | | 8,514,031 | |
| |
Devon Energy Corp. | | | 857,850 | | | | 13,562,608 | |
| |
Hess Corp. | | | 348,572 | | | | 18,401,116 | |
| |
Marathon Oil Corp. | | | 2,069,877 | | | | 13,806,079 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
| | | | | | | | |
| | | Shares | | | Value | |
| |
Oil & Gas Exploration & Production–(continued) | |
| | |
Parsley Energy, Inc., Class A | | | 763,419 | | | $ | 10,840,550 | |
| |
Pioneer Natural Resources Co. | | | 63,739 | | | | 7,259,235 | |
| |
| | | | 85,154,061 | |
| |
|
Packaged Foods & Meats–1.53% | |
| | |
Kraft Heinz Co. (The) | | | 305,781 | | | | 10,598,369 | |
| |
Tyson Foods, Inc., Class A | | | 151,274 | | | | 9,748,097 | |
| |
| | | | 20,346,466 | |
| |
|
Paper Packaging–1.70% | |
| | |
International Paper Co. | | | 453,484 | | | | 22,547,225 | |
| |
|
Pharmaceuticals–5.08% | |
| | |
Bristol-Myers Squibb Co. | | | 317,314 | | | | 19,682,988 | |
| |
Johnson & Johnson | | | 154,440 | | | | 24,305,767 | |
| |
Sanofi, ADR (France) | | | 482,322 | | | | 23,436,026 | |
| |
| | | | 67,424,781 | |
| |
|
Property & Casualty Insurance–1.30% | |
| | |
Allstate Corp. (The) | | | 157,235 | | | | 17,284,844 | |
| |
|
Real Estate Services–0.50% | |
| | |
Jones Lang LaSalle, Inc.(b) | | | 44,589 | | | | 6,615,670 | |
| |
|
Regional Banks–2.55% | |
| | |
Citizens Financial Group, Inc. | | | 516,410 | | | | 18,466,822 | |
| |
Fifth Third Bancorp | | | 556,248 | | | | 15,335,757 | |
| |
| | | | 33,802,579 | |
| |
|
Semiconductors–5.33% | |
| | |
Intel Corp. | | | 418,263 | | | | 20,837,863 | |
| |
NXP Semiconductors N.V. (Netherlands) | | | 140,898 | | | | 22,404,191 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Semiconductors–(continued) | |
| | |
QUALCOMM, Inc. | | | 180,210 | | | $ | 27,453,191 | |
| |
| | | | 70,695,245 | |
| |
|
Specialty Chemicals–0.88% | |
| | |
DuPont de Nemours, Inc. | | | 164,868 | | | | 11,723,764 | |
| |
|
Systems Software–1.66% | |
| | |
Microsoft Corp. | | | 99,221 | | | | 22,068,735 | |
| |
|
Tobacco–4.73% | |
| | |
Altria Group, Inc. | | | 502,655 | | | | 20,608,855 | |
| |
Philip Morris International, Inc. | | | 508,725 | | | | 42,117,343 | |
| |
| | | | 62,726,198 | |
| |
|
Wireless Telecommunication Services–0.40% | |
| | |
Vodafone Group PLC
(United Kingdom) | | | 3,197,371 | | | | 5,261,703 | |
| |
Total Common Stocks & Other Equity Interests (Cost $1,016,603,352) | | | | 1,316,927,008 | |
| |
|
Money Market Funds–2.45% | |
| | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 11,190,529 | | | | 11,190,529 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class,
0.08%(c)(d) | | | 8,568,151 | | | | 8,570,721 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 12,789,175 | | | | 12,789,175 | |
| |
Total Money Market Funds
(Cost $32,547,088) | | | | 32,550,425 | |
| |
TOTAL INVESTMENTS IN
SECURITIES–101.73%
(Cost $1,049,150,440) | | | | 1,349,477,433 | |
| |
OTHER ASSETS LESS
LIABILITIES–(1.73)% | | | | (22,971,041 | ) |
| |
NET ASSETS–100.00% | | | $ | 1,326,506,392 | |
| |
Investment Abbreviations:
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 21,797,514 | | | | $ | 104,378,222 | | | | $ | (114,985,207 | ) | | | $ | - | | | | $ | - | | | | $ | 11,190,529 | | | | $ | 58,205 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 15,602,035 | | | | | 75,091,915 | | | | | (82,132,288 | ) | | | | 3,336 | | | | | 5,723 | | | | | 8,570,721 | | | | | 61,906 | |
Invesco Treasury Portfolio, Institutional Class | | | | 24,911,444 | | | | | 119,289,396 | | | | | (131,411,665 | ) | | | | - | | | | | - | | | | | 12,789,175 | | | | | 62,925 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | - | | | | | 18,534,173 | | | | | (18,534,173 | ) | | | | - | | | | | - | | | | | - | | | | | 1,733* | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 5,397,578 | | | | | (5,396,007 | ) | | | | - | | | | | (1,571 | ) | | | | - | | | | | 1,122* | |
Invesco Private Government Fund | | | | - | | | | | 26,574,081 | | | | | (26,574,081 | ) | | | | - | | | | | - | | | | | - | | | | | 180* | |
Invesco Private Prime Fund | | | | - | | | | | 14,887,430 | | | | | (14,887,680 | ) | | | | - | | | | | 250 | | | | | - | | | | | 249* | |
Total | | | $ | 62,310,993 | | | | $ | 364,152,795 | | | | $ | (393,921,101 | ) | | | $ | 3,336 | | | | $ | 4,402 | | | | $ | 32,550,425 | | | | $ | 186,320 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
| | | | | | | | | | | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | Deliver | | | Receive | | | (Depreciation) | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/07/2021 | | Deutsche Bank AG | | | EUR | | | | 227,083 | | | | USD | | | | 278,147 | | | | $ 715 | |
01/07/2021 | | Deutsche Bank AG | | | USD | | | | 594,193 | | | | CAD | | | | 762,694 | | | | 4,998 | |
01/07/2021 | | Deutsche Bank AG | | | USD | | | | 249,358 | | | | EUR | | | | 206,318 | | | | 2,705 | |
01/07/2021 | | Deutsche Bank AG | | | USD | | | | 225,367 | | | | GBP | | | | 166,862 | | | | 2,822 | |
01/07/2021 | | Goldman Sachs International | | | USD | | | | 331,198 | | | | CAD | | | | 425,778 | | | | 3,304 | |
01/07/2021 | | Goldman Sachs International | | | USD | | | | 664,368 | | | | EUR | | | | 546,354 | | | | 3,125 | |
01/07/2021 | | Goldman Sachs International | | | USD | | | | 2,800,523 | | | | GBP | | | | 2,089,055 | | | | 56,325 | |
01/07/2021 | | Royal Bank of Canada | | | USD | | | | 391,631 | | | | GBP | | | | 290,391 | | | | 5,488 | |
Subtotal-Appreciation | | | | | | | | | | | | | | | | | | | 79,482 | |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/07/2021 | | Canadian Imperial Bank of Commerce | | | CAD | | | | 16,941,736 | | | | USD | | | | 13,068,506 | | | | (241,320 | ) |
01/07/2021 | | Citibank N.A. | | | EUR | | | | 9,014,666 | | | | USD | | | | 10,814,161 | | | | (199,250 | ) |
01/07/2021 | | Deutsche Bank AG | | | CAD | | | | 1,154,504 | | | | USD | | | | 901,885 | | | | (5,121 | ) |
01/07/2021 | | Deutsche Bank AG | | | GBP | | | | 4,319,699 | | | | USD | | | | 5,762,953 | | | | (144,376 | ) |
01/07/2021 | | Deutsche Bank AG | | | USD | | | | 332,528 | | | | CAD | | | | 423,151 | | | | (91 | ) |
01/07/2021 | | Goldman Sachs International | | | GBP | | | | 108,906 | | | | USD | | | | 145,808 | | | | (3,124 | ) |
01/07/2021 | | JP Morgan Chase Bank N.A. | | | CAD | | | | 562,620 | | | | USD | | | | 440,819 | | | | (1,188 | ) |
01/07/2021 | | Royal Bank of Canada | | | CAD | | | | 1,176,967 | | | | USD | | | | 919,124 | | | | (5,529 | ) |
01/07/2021 | | Royal Bank of Canada | | | GBP | | | | 87,922 | | | | USD | | | | 117,064 | | | | (3,172 | ) |
01/07/2021 | | Royal Bank of Canada | | | USD | | | | 469,792 | | | | CAD | | | | 595,986 | | | | (1,572 | ) |
01/07/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 1,000,000 | | | | USD | | | | 1,199,597 | | | | (22,125 | ) |
Subtotal-Depreciation | | | | | | | | | | | | | | | | | | | (626,868 | ) |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | | $(547,386 | ) |
Abbreviations:
CAD – Canadian Dollar
EUR – Euro
GBP – British Pound Sterling
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
| |
Investments in securities, at value
(Cost $1,016,603,352) | | $ | 1,316,927,008 | |
Investments in affiliated money market funds, at value (Cost $32,547,088) | | | 32,550,425 | |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 79,482 | |
Foreign currencies, at value (Cost $558) | | | 563 | |
Receivable for: | | | | |
Fund shares sold | | | 11,843 | |
Dividends | | | 2,303,293 | |
Investment for trustee deferred compensation and retirement plans | | | 227,783 | |
Total assets | | | 1,352,100,397 | |
| |
Liabilities: | | | | |
| |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 626,868 | |
Payable for: | | | | |
Fund shares reacquired | | | 22,778,901 | |
Amount due custodian | | | 1,065,443 | |
Accrued fees to affiliates | | | 798,247 | |
Accrued trustees’ and officers’ fees and benefits | | | 948 | |
Accrued other operating expenses | | | 71,345 | |
Trustee deferred compensation and retirement plans | | | 252,253 | |
Total liabilities | | | 25,594,005 | |
Net assets applicable to shares outstanding | | $ | 1,326,506,392 | |
| |
Net assets consist of: | | | | |
| |
Shares of beneficial interest | | $ | 1,092,224,972 | |
Distributable earnings | | | 234,281,420 | |
| | | $ | 1,326,506,392 | |
| |
Net Assets: | | | | |
| |
Series I | | $ | 181,593,535 | |
Series II | | $ | 1,144,912,857 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
| |
Series I | | | 11,256,933 | |
Series II | | | 71,245,370 | |
Series I: | | | | |
Net asset value per share | | $ | 16.13 | |
Series II: | | | | |
Net asset value per share | | $ | 16.07 | |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
| |
Dividends (net of foreign withholding taxes of $426,406) | | $ | 35,216,211 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $105,298) | | | 288,334 | |
| |
Total investment income | | | 35,504,545 | |
| |
| |
Expenses: | | | | |
| |
Advisory fees | | | 6,773,146 | |
| |
Administrative services fees | | | 1,948,941 | |
| |
Custodian fees | | | 46,816 | |
| |
Distribution fees - Series II | | | 2,559,688 | |
| |
Transfer agent fees | | | 39,521 | |
| |
Trustees’ and officers’ fees and benefits | | | 39,147 | |
| |
Reports to shareholders | | | 14,003 | |
| |
Professional services fees | | | 46,544 | |
| |
Other | | | 16,523 | |
| |
Total expenses | | | 11,484,329 | |
| |
Less: Fees waived | | | (44,917 | ) |
| |
Net expenses | | | 11,439,412 | |
| |
Net investment income | | | 24,065,133 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
| |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (85,239,842 | ) |
| |
Affiliated investment securities | | | 4,402 | |
| |
Foreign currencies | | | 17,364 | |
| |
Forward foreign currency contracts | | | (849,911 | ) |
| |
| | | (86,067,987 | ) |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 48,701,100 | |
| |
Affiliated investment securities | | | 3,336 | |
| |
Foreign currencies | | | 4,617 | |
| |
Forward foreign currency contracts | | | 1,042,263 | |
| |
| | | 49,751,316 | |
| |
Net realized and unrealized gain (loss) | | | (36,316,671 | ) |
| |
Net increase (decrease) in net assets resulting from operations | | $ | (12,251,538 | ) |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
| | |
Net investment income | | $ | 24,065,133 | | | $ | 26,005,428 | |
| |
Net realized gain (loss) | | | (86,067,987 | ) | | | 42,110,638 | |
| |
Change in net unrealized appreciation | | | 49,751,316 | | | | 238,104,732 | |
| |
Net increase (decrease) in net assets resulting from operations | | | (12,251,538 | ) | | | 306,220,798 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
| | |
Series I | | | (8,343,228 | ) | | | (27,866,941 | ) |
| |
Series II | | | (50,127,365 | ) | | | (173,615,673 | ) |
| |
Total distributions from distributable earnings | | | (58,470,593 | ) | | | (201,482,614 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
| | |
Series I | | | (6,729,781 | ) | | | (32,488,395 | ) |
| |
Series II | | | (35,671,961 | ) | | | 54,630,220 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (42,401,742 | ) | | | 22,141,825 | |
| |
Net increase (decrease) in net assets | | | (113,123,873 | ) | | | 126,880,009 | |
| |
| | |
Net assets: | | | | | | | | |
| | |
Beginning of year | | | 1,439,630,265 | | | | 1,312,750,256 | |
| |
End of year | | $ | 1,326,506,392 | | | $ | 1,439,630,265 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ratio of | | | Ratio of | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | expenses | | | expenses | | | | | | | |
| | | | | | | | | Net gains | | | | | | | | | | | | | | | | | | | | | | | | to average | | | to average net | | | | | | | |
| | | | | | | | | (losses) | | | | | | | | | | | | | | | | | | | | | | | | net assets | | | assets without | | | Ratio of net | | | | |
| | | Net asset | | | | | | on securities | | | | | | Dividends | | | Distributions | | | | | | | | | | | | | | | with fee waivers | | | fee waivers | | | investment | | | | |
| | | value, | | | Net | | | (both | | | Total from | | | from net | | | from net | | | | | | Net asset | | | | | | Net assets, | | | and/or | | | and/or | | | income | | | | |
| | | beginning | | | investment | | | realized and | | | investment | | | investment | | | realized | | | Total | | | value, end | | | Total | | | end of period | | | expenses | | | expenses | | | to average | | | Portfolio | |
| | | of period | | | income(a) | | | unrealized) | | | operations | | | income | | | gains | | | distributions | | | of period | | | return (b) | | | (000’s omitted) | | | absorbed | | | absorbed | | | net assets | | | turnover (c) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $17.16 | | | | $0.32 | | | | $(0.59 | ) | | | $(0.27 | ) | | | $(0.36 | ) | | | $(0.40 | ) | | | $(0.76 | ) | | | $16.13 | | | | (0.85 | )% | | | $ 181,594 | | | | 0.75 | %(d) | | | 0.75 | %(d) | | | 2.24 | %(d) | | | 38 | % |
Year ended 12/31/19 | | | 16.12 | | | | 0.37 | | | | 3.45 | | | | 3.82 | | | | (0.37 | ) | | | (2.41 | ) | | | (2.78 | ) | | | 17.16 | | | | 25.30 | | | | 199,521 | | | | 0.74 | | | | 0.74 | | | | 2.09 | | | | 21 | |
Year ended 12/31/18 | | | 20.62 | | | | 0.33 | | | | (2.41 | ) | | | (2.08 | ) | | | (0.36 | ) | | | (2.06 | ) | | | (2.42 | ) | | | 16.12 | | | | (12.16 | ) | | | 214,084 | | | | 0.75 | | | | 0.75 | | | | 1.63 | | | | 19 | |
Year ended 12/31/17 | | | 18.69 | | | | 0.28 | | | | 2.94 | | | | 3.22 | | | | (0.44 | ) | | | (0.85 | ) | | | (1.29 | ) | | | 20.62 | | | | 17.85 | | | | 270,651 | | | | 0.75 | | | | 0.75 | | | | 1.47 | | | | 13 | |
Year ended 12/31/16 | | | 17.57 | | | | 0.38 | | | | 2.47 | | | | 2.85 | | | | (0.29 | ) | | | (1.44 | ) | | | (1.73 | ) | | | 18.69 | | | | 17.30 | | | | 256,080 | | | | 0.77 | | | | 0.78 | | | | 2.20 | | | | 21 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 17.09 | | | | 0.28 | | | | (0.58 | ) | | | (0.30 | ) | | | (0.32 | ) | | | (0.40 | ) | | | (0.72 | ) | | | 16.07 | | | | (1.09 | ) | | | 1,144,913 | | | | 1.00 | (d) | | | 1.00 | (d) | | | 1.99 | (d) | | | 38 | |
Year ended 12/31/19 | | | 16.06 | | | | 0.32 | | | | 3.44 | | | | 3.76 | | | | (0.32 | ) | | | (2.41 | ) | | | (2.73 | ) | | | 17.09 | | | | 24.94 | | | | 1,240,109 | | | | 0.99 | | | | 0.99 | | | | 1.84 | | | | 21 | |
Year ended 12/31/18 | | | 20.54 | | | | 0.28 | | | | (2.40 | ) | | | (2.12 | ) | | | (0.30 | ) | | | (2.06 | ) | | | (2.36 | ) | | | 16.06 | | | | (12.37 | ) | | | 1,098,666 | | | | 1.00 | | | | 1.00 | | | | 1.38 | | | | 19 | |
Year ended 12/31/17 | | | 18.62 | | | | 0.23 | | | | 2.93 | | | | 3.16 | | | | (0.39 | ) | | | (0.85 | ) | | | (1.24 | ) | | | 20.54 | | | | 17.58 | | | | 1,643,281 | | | | 1.00 | | | | 1.00 | | | | 1.22 | | | | 13 | |
Year ended 12/31/16 | | | 17.51 | | | | 0.34 | | | | 2.45 | | | | 2.79 | | | | (0.24 | ) | | | (1.44 | ) | | | (1.68 | ) | | | 18.62 | | | | 16.99 | | | | 1,679,769 | | | | 1.02 | | | | 1.03 | | | | 1.95 | | | | 21 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $162,151 and $1,023,875 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Comstock Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Comstock Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. Comstock Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
Invesco V.I. Comstock Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
First $ 500 million | | | 0.600 | % |
Next $500 million | | | 0.550 | % |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.57%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.78% and Series II shares to 1.03% of the Fund’s average daily net assets (the “expense limits”). Effective May 1, 2021 through June 30, 2021, the Adviser has contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $44,917.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $170,989 for accounting and fund administrative services and was reimbursed $1,777,952 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $4,366 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Invesco V.I. Comstock Fund
| | Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 1,311,665,305 | | | $ | 5,261,703 | | | | $– | | | $ | 1,316,927,008 | |
| |
Money Market Funds | | | 32,550,425 | | | | – | | | | – | | | | 32,550,425 | |
| |
Total Investments in Securities | | | 1,344,215,730 | | | | 5,261,703 | | | | – | | | | 1,349,477,433 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | – | | | | 79,482 | | | | – | | | | 79,482 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | – | | | | (626,868 | ) | | | – | | | | (626,868 | ) |
| |
Total Other Investments | | | – | | | | (547,386 | ) | | | – | | | | (547,386 | ) |
| |
Total Investments | | $ | 1,344,215,730 | | | $ | 4,714,317 | | | | $– | | | $ | 1,348,930,047 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Assets | | Risk | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | $ 79,482 | |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Assets subject to master netting agreements | | | $ 79,482 | |
| |
| |
| | | Value | |
| | | Currency | |
| Derivative Liabilities | | Risk | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | $(626,868 | ) |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Liabilities subject to master netting agreements | | | $(626,868 | ) |
| |
Invesco V.I. Comstock Fund
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | |
| | | Financial | | | Financial | | | | | | | | | | |
| | | Derivative | | | Derivative | | | | | Collateral | | | |
| | | Assets | | | Liabilities | | | | | (Received)/Pledged | | | |
| | | Forward Foreign | | | Forward Foreign | | Net Value of | | | | | | | Net | |
| Counterparty | | Currency Contracts | | | Currency Contracts | | Derivatives | | | Non-Cash | | Cash | | Amount | |
| |
Canadian Imperial Bank of Commerce | | | $ – | | | $(241,320) | | | $(241,320 | ) | | $– | | $– | | | $(241,320 | ) |
| |
Citibank N.A. | | | – | | | (199,250) | | | (199,250 | ) | | – | | – | | | (199,250 | ) |
| |
Deutsche Bank AG | | | 11,240 | | | (149,588) | | | (138,348 | ) | | – | | – | | | (138,348 | ) |
| |
Goldman Sachs International | | | 62,754 | | | (3,124) | | | 59,630 | | | – | | – | | | 59,630 | |
| |
JP Morgan Chase Bank N.A. | | | – | | | (1,188) | | | (1,188 | ) | | – | | – | | | (1,188 | ) |
| |
Royal Bank of Canada | | | 5,488 | | | (10,273) | | | (4,785 | ) | | – | | – | | | (4,785 | ) |
| |
State Street Bank & Trust Co. | | | – | | | (22,125) | | | (22,125 | ) | | – | | – | | | (22,125 | ) |
| |
Total | | | $79,482 | | | $(626,868) | | | $(547,386 | ) | | $– | | $– | | | $(547,386 | ) |
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on | |
| | | Statement of Operations | |
| | | Currency | |
| | | Risk | |
| |
Realized Gain (Loss): | | | | |
Forward foreign currency contracts | | | $ (849,911) | |
| |
Change in Net Unrealized Appreciation: | | | | |
Forward foreign currency contracts | | | 1,042,263 | |
| |
Total | | | $ 192,352 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward |
| | | Foreign Currency |
| | | Contracts |
Average notional value | | $53,874,584 |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | |
| | | 2020 | | 2019 |
Ordinary income* | | $26,325,878 | | $ 35,243,443 |
Long-term capital gain | | 32,144,715 | | 166,239,171 |
Total distributions | | $58,470,593 | | $201,482,614 |
| * | Includes short-term capital gain distributions, if any. |
Invesco V.I. Comstock Fund
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | | $ 24,230,463 | |
| |
Net unrealized appreciation – investments | | | 278,676,888 | |
| |
Net unrealized appreciation - foreign currencies | | | 10,634 | |
| |
Temporary book/tax differences | | | (177,385 | ) |
| |
Capital loss carryforward | | | (68,459,180 | ) |
| |
Shares of beneficial interest | | | 1,092,224,972 | |
| |
Total net assets | | | $1,326,506,392 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and forward foreign currency contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | | $298,664 | | | $ | 68,160,516 | | | $ | 68,459,180 | |
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $438,959,150 and $473,849,962, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 329,815,880 | |
| |
Aggregate unrealized (depreciation) of investments | | | (51,138,992 | ) |
| |
Net unrealized appreciation of investments | | $ | 278,676,888 | |
| |
Cost of investments for tax purposes is $1,070,253,159.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, fair fund GAAP adjustments and distribution redesignation, on December 31, 2020, undistributed net investment income was increased by $17,837 and undistributed net realized gain (loss) was decreased by $17,837. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,063,167 | | | $ | 14,212,924 | | | | 531,077 | | | $ | 9,046,219 | |
| |
Series II | | | 9,025,347 | | | | 114,751,533 | | | | 6,503,571 | | | | 116,600,521 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 599,370 | | | | 8,343,228 | | | | 1,776,096 | | | | 27,866,941 | |
| |
Series II | | | 3,614,085 | | | | 50,127,365 | | | | 11,100,746 | | | | 173,615,673 | |
| |
Invesco V.I. Comstock Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,029,930 | ) | | $ | (29,285,933 | ) | | | (3,961,633 | ) | | $ | (69,401,555 | ) |
| |
Series II | | | (13,940,262 | ) | | | (200,550,859 | ) | | | (13,487,073 | ) | | | (235,585,974 | ) |
| |
Net increase (decrease) in share activity | | | (1,668,223 | ) | | $ | (42,401,742 | ) | | | 2,462,784 | | | $ | 22,141,825 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 68% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Comstock Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Comstock Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Comstock Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Comstock Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| �� | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,248.30 | | $4.24 | | $1,021.37 | | $3.81 | | 0.75% |
Series II | | 1,000.00 | | 1,246.60 | | 5.65 | | 1,020.11 | | 5.08 | | 1.00 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Comstock Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | Federal and State Income Tax | | | | | | |
| | Long-Term Capital Gain Distributions | | $ | 32,144,715 | | | |
| | Qualified Dividend Income* | | | 0.00 | % | | |
| | Corporate Dividends Received Deduction* | | | 100.00 | % | | |
| | U.S. Treasury Obligations* | | | 0.00 | % | | |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
Invesco V.I. Comstock Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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 |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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) |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Comstock Fund
Trustees and Officers-(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Comstock Fund
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 | | Annual Report to Shareholders | | December 31, 2020 |
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| | Invesco V.I. Core Equity Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VICEQ-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Core Equity Fund (the Fund) underperformed the Russell 1000 Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | | | | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
| |
Series I Shares | | | 13.85 | % |
Series II Shares | | | 13.57 | |
S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
Russell 1000 Indexq (Style-Specific Index) | | | 20.96 | |
Lipper VUF Large-Cap Core Funds Index∎ (Peer Group Index) | | | 13.94 | |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
During the year, stock selection in the real estate sector and a modest underweight to the utilities sector were the largest contributors to the Fund’s performance versus its style-specific benchmark, the Russell 1000 Index. This was offset by weaker stock selection in the information technology (IT), health care and energy sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the year included
Microsoft, Amazon and QUALCOMM. Microsoft and Amazon were already benefiting from strong execution and various tailwinds that were accelerated due to the pandemic including the increased need and importance of technology to work from home. Microsoft has seen continued momentum for the company’s commercial cloud offerings while continuing to report strong revenue growth and operating margin expansion. Amazon continued to benefit from retail disruption in its e-commerce business, which drove market share gains in addition to the acceleration of digital transformation benefiting its AWS cloud services.
Qualcomm has reported solid business fundamentals and has been a beneficiary of 5G spending. Additionally, the company resolved its licensing dispute with Huawei and the FTC anti-competition ruling against Qualcomm was overturned on appeal.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the year included Suncor, Capital One Financial and Magellan Midstream. Suncor, an integrated energy company, and Magellan, which is primarily a refined products pipeline company, significantly underperformed along with the rest of the energy sector. The energy sector experienced significant negative returns despite the style-specific benchmark producing positive total returns during the year. We have exited our holding in Suncor.
Capital One Financial underperformed after the unemployment picture quickly deteriorated in March 2020 due to COVID-19-related concerns about consumers’ ability to make payments on their credit cards and other loans. Capital One Financial is generally considered the most exposed to the health of the consumer out of the larger US banks.
We continue to maintain our discipline around valuation and focus on companies which we believe have competitive advantages and skilled management teams that are out-executing peers. We believe this disciplined approach is essential to generating attractive long-term performance.
We thank you for your continued investment in Invesco V.I. Core Equity Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Manind (“Mani”) Govil (Lead)
Paul Larson
Benjamin Ram
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an
Invesco V.I. Core Equity Fund
offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Core Equity Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/2/94) | | | 8.35 | % |
10 Years | | | 9.55 | |
5 Years | | | 10.67 | |
1 Year | | | 13.85 | |
| |
Series II Shares | | | | |
Inception (10/24/01) | | | 7.17 | % |
10 Years | | | 9.28 | |
5 Years | | | 10.40 | |
1 Year | | | 13.57 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Core Equity Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Perfor-
mance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Core Equity Fund
Supplemental Information
Invesco V.I. Core Equity Fund’s investment objective is long-term growth of capital.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | The Russell 1000® Index is an unmanaged index considered representative of large-cap stocks. The Russell 1000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Lipper VUF Large-Cap Core Funds Index is an unmanaged index considered representative of large-cap core variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Core Equity Fund
Fund Information
| | | | |
| Portfolio Composition | | | | |
| By sector | | % of total net assets | |
| |
Information Technology | | | 26.47% | |
| |
Health Care | | | 15.62 | |
| |
Consumer Discretionary | | | 14.28 | |
| |
Financials | | | 11.89 | |
| |
Industrials | | | 9.42 | |
| |
Communication Services | | | 8.56 | |
| |
Consumer Staples | | | 6.43 | |
| |
Real Estate | | | 2.45 | |
| |
Energy | | | 2.23 | |
| |
Other Sectors, Each Less than 2% of Net Assets | | | 2.49 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 0.16 | |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
| 1. | | Microsoft Corp. | | 7.93% |
| 2. | | Amazon.com, Inc. | | 6.30 |
| 3. | | QUALCOMM, Inc. | | 3.78 |
| 4. | | UnitedHealth Group, Inc. | | 3.43 |
| 5. | | Facebook, Inc., Class A | | 3.36 |
| 6. | | JPMorgan Chase & Co. | | 3.28 |
| 7. | | Applied Materials, Inc. | | 2.82 |
| 8. | | HCA Healthcare, Inc. | | 2.57 |
| 9. | | Procter & Gamble Co. (The) | | 2.54 |
| 10. | | Prologis, Inc. | | 2.45 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings, if any. Data presented here are as of December 31, 2020. |
Invesco V.I. Core Equity Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–99.84% | |
|
Aerospace & Defense–1.56% | |
Lockheed Martin Corp. | | | 33,615 | | | $ | 11,932,653 | |
| |
|
Air Freight & Logistics–1.85% | |
C.H. Robinson Worldwide, Inc. | | | 33,698 | | | | 3,163,231 | |
| |
United Parcel Service, Inc., Class B | | | 64,830 | | | | 10,917,372 | |
| |
| | | | | | | 14,080,603 | |
| |
|
Application Software–1.33% | |
Adobe, Inc.(b) | | | 8,475 | | | | 4,238,517 | |
| |
Workday, Inc., Class A(b) | | | 24,635 | | | | 5,902,792 | |
| |
| | | | | | | 10,141,309 | |
| |
|
Automobile Manufacturers–0.76% | |
General Motors Co. | | | 139,456 | | | | 5,806,948 | |
| |
|
Automotive Retail–1.36% | |
CarMax, Inc.(b) | | | 51,687 | | | | 4,882,354 | |
| |
O’Reilly Automotive, Inc.(b) | | | 12,141 | | | | 5,494,652 | |
| |
| | | | | | | 10,377,006 | |
| |
|
Biotechnology–0.36% | |
Neurocrine Biosciences, Inc.(b) | | | 28,469 | | | | 2,728,754 | |
| |
|
Cable & Satellite–1.00% | |
Comcast Corp., Class A | | | 145,881 | | | | 7,644,164 | |
| |
|
Commodity Chemicals–0.53% | |
Valvoline, Inc. | | | 173,243 | | | | 4,008,843 | |
| |
|
Communications Equipment–1.27% | |
Motorola Solutions, Inc. | | | 57,085 | | | | 9,707,875 | |
| |
|
Construction Machinery & Heavy Trucks–0.84% | |
Caterpillar, Inc. | | | 35,329 | | | | 6,430,585 | |
| |
|
Construction Materials–0.81% | |
Vulcan Materials Co. | | | 41,665 | | | | 6,179,336 | |
| |
|
Consumer Finance–1.87% | |
Capital One Financial Corp. | | | 144,062 | | | | 14,240,529 | |
| |
|
Data Processing & Outsourced Services–3.26% | |
Fiserv, Inc.(b) | | | 100,813 | | | | 11,478,568 | |
| |
Mastercard, Inc., Class A | | | 37,538 | | | | 13,398,814 | |
| |
| | | | | | | 24,877,382 | |
| |
|
Distillers & Vintners–1.22% | |
Constellation Brands, Inc., Class A | | | 42,355 | | | | 9,277,863 | |
| |
|
Diversified Banks–3.28% | |
JPMorgan Chase & Co. | | | 196,895 | | | | 25,019,448 | |
| |
|
Electric Utilities–1.15% | |
Duke Energy Corp. | | | 44,849 | | | | 4,106,374 | |
| |
FirstEnergy Corp. | | | 151,993 | | | | 4,652,506 | |
| |
| | | | | | | 8,758,880 | |
| |
|
Electrical Components & Equipment–0.86% | |
Hubbell, Inc. | | | 12,040 | | | | 1,887,752 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Electrical Components & Equipment–(continued) | |
Rockwell Automation, Inc. | | | 18,510 | | | $ | 4,642,493 | |
| |
| | | | | | | 6,530,245 | |
| |
|
Environmental & Facilities Services–0.90% | |
Waste Connections, Inc. | | | 67,128 | | | | 6,885,319 | |
| |
|
Financial Exchanges & Data–2.02% | |
Intercontinental Exchange, Inc. | | | 133,602 | | | | 15,402,975 | |
| |
|
Food Distributors–1.02% | |
Sysco Corp. | | | 104,817 | | | | 7,783,710 | |
| |
|
General Merchandise Stores–1.27% | |
Target Corp. | | | 54,782 | | | | 9,670,667 | |
| |
|
Health Care Facilities–2.57% | |
HCA Healthcare, Inc. | | | 119,300 | | | | 19,620,078 | |
| |
|
Health Care Services–1.26% | |
CVS Health Corp. | | | 140,488 | | | | 9,595,330 | |
| |
|
Health Care Supplies–0.49% | |
Alcon, Inc. (Switzerland)(b) | | | 56,779 | | | | 3,746,278 | |
| |
|
Home Improvement Retail–1.94% | |
Home Depot, Inc. (The) | | | 55,665 | | | | 14,785,737 | |
| |
|
Homebuilding–0.80% | |
D.R. Horton, Inc. | | | 88,191 | | | | 6,078,124 | |
| |
|
Hotels, Resorts & Cruise Lines–0.25% | |
Airbnb, Inc., Class A(b) | | | 13,035 | | | | 1,913,538 | |
| |
|
Household Products–2.96% | |
Procter & Gamble Co. (The) | | | 138,977 | | | | 19,337,260 | |
| |
Reckitt Benckiser Group PLC (United Kingdom) | | | 36,032 | | | | 3,222,547 | |
| |
| | | | | | | 22,559,807 | |
| |
|
Industrial Conglomerates–1.17% | |
Honeywell International, Inc. | | | 41,921 | | | | 8,916,597 | |
| |
|
Industrial Machinery–0.61% | |
Otis Worldwide Corp. | | | 68,842 | | | | 4,650,277 | |
| |
|
Industrial REITs–2.45% | |
Prologis, Inc. | | | 187,728 | | | | 18,708,973 | |
| |
|
Integrated Telecommunication Services–2.11% | |
Verizon Communications, Inc. | | | 273,669 | | | | 16,078,054 | |
| |
|
Interactive Home Entertainment–0.86% | |
Zynga, Inc., Class A(b) | | | 663,097 | | | | 6,544,767 | |
| |
|
Interactive Media & Services–4.05% | |
Facebook, Inc., Class A(b) | | | 93,779 | | | | 25,616,671 | |
| |
Snap, Inc., Class A(b) | | | 105,240 | | | | 5,269,367 | |
| |
| | | | | | | 30,886,038 | |
| |
|
Internet & Direct Marketing Retail–7.90% | |
Amazon.com, Inc.(b) | | | 14,742 | | | | 48,013,662 | |
| |
Booking Holdings, Inc.(b) | | | 5,502 | | | | 12,254,440 | |
| |
| | | | | | | 60,268,102 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
| | | | | | | | |
| | | Shares | | | Value | |
| |
Internet Services & Infrastructure–0.16% | |
Snowflake, Inc., Class A(b) | | | 4,236 | | | $ | 1,192,010 | |
| |
|
IT Consulting & Other Services–2.25% | |
Accenture PLC, Class A | | | 46,378 | | | | 12,114,397 | |
| |
Amdocs Ltd. | | | 70,762 | | | | 5,019,149 | |
| |
| | | | | | | 17,133,546 | |
| |
|
Life Sciences Tools & Services–2.27% | |
Avantor, Inc.(b) | | | 139,063 | | | | 3,914,623 | |
| |
Thermo Fisher Scientific, Inc. | | | 28,684 | | | | 13,360,434 | |
| |
| | | | | | | 17,275,057 | |
| |
|
Managed Health Care–3.43% | |
UnitedHealth Group, Inc. | | | 74,574 | | | | 26,151,610 | |
| |
|
Movies & Entertainment–0.53% | |
Live Nation Entertainment, Inc.(b) | | | 26,608 | | | | 1,955,156 | |
| |
Warner Music Group Corp., Class A | | | 55,700 | | | | 2,116,043 | |
| |
| | | | | | | 4,071,199 | |
| |
|
Oil & Gas Exploration & Production–0.44% | |
Cabot Oil & Gas Corp. | | | 204,154 | | | | 3,323,627 | |
| |
|
Oil & Gas Refining & Marketing–0.62% | |
Valero Energy Corp. | | | 83,785 | | | | 4,739,717 | |
| |
|
Oil & Gas Storage & Transportation–1.17% | |
Magellan Midstream Partners L.P. | | | 210,153 | | | | 8,918,893 | |
| |
|
Other Diversified Financial Services–1.90% | |
Equitable Holdings, Inc. | | | 565,471 | | | | 14,470,403 | |
| |
|
Packaged Foods & Meats–1.23% | |
a2 Milk Co. Ltd. (The)
(New Zealand)(b) | | | 107,413 | | | | 948,878 | |
| |
Mondelez International, Inc., Class A | | | 144,142 | | | | 8,427,983 | |
| |
| | | | | | | 9,376,861 | |
| |
|
Pharmaceuticals–5.24% | |
AstraZeneca PLC, ADR (United Kingdom) | | | 293,378 | | | | 14,665,966 | |
| |
Eli Lilly and Co. | | | 64,511 | | | | 10,892,038 | |
| |
Merck & Co., Inc. | | | 175,974 | | | | 14,394,673 | |
| |
| | | | | | | 39,952,677 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Property & Casualty Insurance–1.79% | |
Progressive Corp. (The) | | | 137,999 | | | $ | 13,645,341 | |
| |
|
Railroads–1.62% | |
Union Pacific Corp. | | | 59,374 | | | | 12,362,854 | |
| |
|
Semiconductor Equipment–2.82% | |
Applied Materials, Inc. | | | 248,912 | | | | 21,481,106 | |
| |
|
Semiconductors–5.60% | |
QUALCOMM, Inc. | | | 188,887 | | | | 28,775,045 | |
| |
Texas Instruments, Inc. | | | 84,591 | | | | 13,883,921 | |
| |
| | | | | | | 42,658,966 | |
| |
|
Systems Software–7.93% | |
Microsoft Corp. | | | 271,840 | | | | 60,462,653 | |
| |
|
Technology Hardware, Storage & Peripherals–1.86% | |
Apple, Inc. | | | 106,868 | | | | 14,180,315 | |
| |
|
Thrifts & Mortgage Finance–1.04% | |
Rocket Cos., Inc., Class A(b) | | | 390,560 | | | | 7,897,123 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $537,552,744) | | | | 761,130,752 | |
| |
|
Money Market Funds–0.41% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 1,101,539 | | | | 1,101,539 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 786,502 | | | | 786,738 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 1,258,901 | | | | 1,258,901 | |
| |
Total Money Market Funds
(Cost $3,147,202) | | | | 3,147,178 | |
| |
TOTAL INVESTMENTS IN
SECURITIES–100.25%
(Cost $540,699,946) | | | | 764,277,930 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.25)% | | | | (1,923,969 | ) |
| |
NET ASSETS–100.00% | | | $ | 762,353,961 | |
| |
Investment Abbreviations:
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain | | | Value
December 31, 2020 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 7,673,323 | | | | $ 50,089,174 | | | | $(56,660,958 | ) | | | $ - | | | | $ - | | | | $1,101,539 | | | | $14,557 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 5,580,713 | | | | 35,778,020 | | | | (40,575,004 | ) | | | (24) | | | | 3,033 | | | | 786,738 | | | | 16,031 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | 8,769,511 | | | | 57,244,770 | | | | (64,755,380 | ) | | | - | | | | - | | | | 1,258,901 | | | | 15,368 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | - | | | | 33,470,871 | | | | (33,470,871 | ) | | | - | | | | - | | | | - | | | | 695 | * |
| | | | | | | |
Invesco Private Prime Fund | | | - | | | | 16,863,555 | | | | (16,863,881 | ) | | | - | | | | 326 | | | | - | | | | 1,356 | * |
Total | | | $22,023,547 | | | | $193,446,390 | | | | $(212,326,094 | ) | | | $(24) | | | | $3,359 | | | | $3,147,178 | | | | $48,007 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
(d) The rate shown is the 7-day SEC standardized yield as of December 31, 2020.
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
| |
Investments in securities, at value
(Cost $537,552,744) | | $ | 761,130,752 | |
| |
Investments in affiliated money market funds, at value (Cost $3,147,202) | | | 3,147,178 | |
| |
Foreign currencies, at value (Cost $1,377) | | | 1,518 | |
| |
Receivable for: | | | | |
Investments sold | | | 5,834,461 | |
| |
Fund shares sold | | | 24,381 | |
| |
Dividends | | | 382,458 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 446,952 | |
| |
Total assets | | | 770,967,700 | |
| |
| |
Liabilities: | | | | |
| |
Payable for: | | | | |
Investments purchased | | | 7,019,562 | |
| |
Fund shares reacquired | | | 421,183 | |
| |
Amount due custodian | | | 322,527 | |
| |
Accrued fees to affiliates | | | 321,991 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 288 | |
| |
Accrued other operating expenses | | | 49,368 | |
| |
Trustee deferred compensation and retirement plans | | | 478,820 | |
| |
Total liabilities | | | 8,613,739 | |
| |
Net assets applicable to shares outstanding | | $ | 762,353,961 | |
| |
| |
Net assets consist of: | | | | |
| |
Shares of beneficial interest | | $ | 513,258,987 | |
| |
Distributable earnings | | | 249,094,974 | |
| |
| | $ | 762,353,961 | |
| |
| |
Net Assets: | | | | |
| |
Series I | | $ | 740,344,545 | |
| |
Series II | | $ | 22,009,416 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
| |
Series I | | | 24,330,387 | |
| |
Series II | | | 726,998 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 30.43 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 30.27 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $61,162) | | $ | 12,933,685 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $31,081) | | | 77,037 | |
| |
Total investment income | | | 13,010,722 | |
| |
| |
Expenses: | | | | |
| |
Advisory fees | | | 4,711,990 | |
| |
Administrative services fees | | | 1,328,463 | |
| |
Custodian fees | | | 14,937 | |
| |
Distribution fees - Series II | | | 51,498 | |
| |
Transfer agent fees | | | 54,296 | |
| |
Trustees’ and officers’ fees and benefits | | | 31,735 | |
| |
Reports to shareholders | | | 8,448 | |
| |
Professional services fees | | | 51,448 | |
| |
Other | | | 3,361 | |
| |
Total expenses | | | 6,256,176 | |
| |
Less: Fees waived | | | (10,953 | ) |
| |
Net expenses | | | 6,245,223 | |
| |
Net investment income | | | 6,765,499 | |
| |
|
Realized and unrealized gain (loss) from: | |
| |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $2,716,347) | | | 22,554,894 | |
| |
Affiliated investment securities | | | 3,359 | |
| |
Foreign currencies | | | (31,695 | ) |
| |
| | | 22,526,558 | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 62,301,243 | |
| |
Affiliated investment securities | | | (24 | ) |
| |
Foreign currencies | | | 10,148 | |
| |
| | | 62,311,367 | |
| |
Net realized and unrealized gain | | | 84,837,925 | |
| |
Net increase in net assets resulting from operations | | $ | 91,603,424 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 6,765,499 | | | $ | 9,700,451 | |
| |
Net realized gain | | | 22,526,558 | | | | 165,048,967 | |
| |
Change in net unrealized appreciation | | | 62,311,367 | | | | 53,502,474 | |
| |
Net increase in net assets resulting from operations | | | 91,603,424 | | | | 228,251,892 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (165,580,119 | ) | | | (102,597,293 | ) |
| |
Series II | | | (4,892,160 | ) | | | (2,536,276 | ) |
| |
Total distributions from distributable earnings | | | (170,472,279 | ) | | | (105,133,569 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (38,886,728 | ) | | | (123,248,676 | ) |
| |
Series II | | | 1,713,650 | | | | (504,539 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (37,173,078 | ) | | | (123,753,215 | ) |
| |
Net increase (decrease) in net assets | | | (116,041,933 | ) | | | (634,892 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 878,395,894 | | | | 879,030,786 | |
| |
End of year | | $ | 762,353,961 | | | $ | 878,395,894 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Ratio of | | Ratio of | | | | |
| | | | | | | | | | | | | | | | | | | | | | | expenses | | expenses | | | | |
| | | | | | | Net gains | | | | | | | | | | | | | | | | to average | | to average net | | | | |
| | | | | | | (losses) | | | | | | | | | | | | | | | | net assets | | assets without | | Ratio of net | | |
| | | Net asset | | | | on securities | | | | Dividends | | Distributions | | | | | | | | | | with fee waivers | | fee waivers | | investment | | |
| | | value, | | Net | | (both | | Total from | | from net | | from net | | | | Net asset | | | | Net assets, | | and/or | | and/or | | income | | |
| | | beginning | | investment | | realized and | | investment | | investment | | realized | | Total | | value, end | | Total | | end of period | | expenses | | expenses | | to average | | Portfolio |
| | | of period | | income(a) | | unrealized) | | operations | | income | | gains | | distributions | | of period | | return (b) | | (000’s omitted) | | absorbed | | absorbed | | net assets | | turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 34.95 | | | | $ | 0.29 | | | | $ | 3.89 | | | | $ | 4.18 | | | | $ | (0.48 | ) | | | $ | (8.22 | ) | | | $ | (8.70 | ) | | | $ | 30.43 | | | | | 13.85 | % | | | $ | 740,345 | | | | | 0.81 | %(d) | | | | 0.81 | %(d) | | | | 0.89 | %(d) | | | | 50 | % |
Year ended 12/31/19 | | | | 30.94 | | | | | 0.38 | | | | | 8.22 | | | | | 8.60 | | | | | (0.35 | ) | | | | (4.24 | ) | | | | (4.59 | ) | | | | 34.95 | | | | | 28.97 | | | | | 855,744 | | | | | 0.78 | | | | | 0.78 | | | | | 1.08 | | | | | 82 | |
Year ended 12/31/18 | | | | 36.72 | | | | | 0.25 | | | | | (3.29 | ) | | | | (3.04 | ) | | | | (0.34 | ) | | | | (2.40 | ) | | | | (2.74 | ) | | | | 30.94 | | | | | (9.40 | ) | | | | 858,828 | | | | | 0.79 | | | | | 0.80 | | | | | 0.70 | | | | | 46 | |
Year ended 12/31/17 | | | | 34.58 | | | | | 0.27 | | | | | 4.21 | | | | | 4.48 | | | | | (0.39 | ) | | | | (1.95 | ) | | | | (2.34 | ) | | | | 36.72 | | | | | 13.17 | | | | | 1,054,802 | | | | | 0.79 | | | | | 0.80 | | | | | 0.74 | | | | | 30 | |
Year ended 12/31/16 | | | | 33.84 | | | | | 0.39 | | | | | 3.07 | | | | | 3.46 | | | | | (0.28 | ) | | | | (2.44 | ) | | | | (2.72 | ) | | | | 34.58 | | | | | 10.26 | | | | | 1,033,700 | | | | | 0.84 | | | | | 0.85 | | | | | 1.11 | | | | | 38 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 34.81 | | | | | 0.21 | | | | | 3.85 | | | | | 4.06 | | | | | (0.38 | ) | | | | (8.22 | ) | | | | (8.60 | ) | | | | 30.27 | | | | | 13.53 | | | | | 22,009 | | | | | 1.06 | (d) | | | | 1.06 | (d) | | | | 0.64 | (d) | | | | 50 | |
Year ended 12/31/19 | | | | 30.66 | | | | | 0.29 | | | | | 8.16 | | | | | 8.45 | | | | | (0.06 | ) | | | | (4.24 | ) | | | | (4.30 | ) | | | | 34.81 | | | | | 28.66 | | | | | 22,652 | | | | | 1.03 | | | | | 1.03 | | | | | 0.83 | | | | | 82 | |
Year ended 12/31/18 | | | | 36.18 | | | | | 0.16 | | | | | (3.28 | ) | | | | (3.12 | ) | | | | - | | | | | (2.40 | ) | | | | (2.40 | ) | | | | 30.66 | | | | | (9.61 | ) | | | | 20,203 | | | | | 1.04 | | | | | 1.05 | | | | | 0.45 | | | | | 46 | |
Year ended 12/31/17 | | | | 34.11 | | | | | 0.18 | | | | | 4.14 | | | | | 4.32 | | | | | (0.30 | ) | | | | (1.95 | ) | | | | (2.25 | ) | | | | 36.18 | | | | | 12.87 | | | | | 189,982 | | | | | 1.04 | | | | | 1.05 | | | | | 0.49 | | | | | 30 | |
Year ended 12/31/16 | | | | 33.40 | | | | | 0.30 | | | | | 3.03 | | | | | 3.33 | | | | | (0.18 | ) | | | | (2.44 | ) | | | | (2.62 | ) | | | | 34.11 | | | | | 10.02 | | | | | 179,596 | | | | | 1.09 | | | | | 1.10 | | | | | 0.86 | | | | | 38 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $743,899 and $20,599 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Equity Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Core Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations
Invesco V.I. Core Equity Fund
and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to
Invesco V.I. Core Equity Fund
acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
First $250 million | | | 0.650 | % |
Over $250 million | | | 0.600 | % |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.62%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $10,953.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $108,851 for accounting and fund administrative services and was reimbursed $1,219,612 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $408 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
Invesco V.I. Core Equity Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total |
Investments in Securities | | | | | | | | | | | | | | |
Common Stocks & Other Equity Interests | | | $756,959,327 | | | | $4,171,425 | | | | $– | | | $761,130,752 |
Money Market Funds | | | 3,147,178 | | | | – | | | | – | | | 3,147,178 |
Total Investments | | | $760,106,505 | | | | $4,171,425 | | | | $– | | | $764,277,930 |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities sales of $10,129,752, which resulted in net realized gains of $2,716,347.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | |
| | | 2020 | | | 2019 |
Ordinary income* | | $ | 18,701,208 | | | $ 7,836,902 |
Long-term capital gain | | | 151,771,071 | | | 97,296,667 |
Total distributions | | $ | 170,472,279 | | | $105,133,569 |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 5,875,347 | |
| |
Undistributed long-term capital gain | | | 20,644,362 | |
| |
Net unrealized appreciation – investments | | | 224,264,394 | |
| |
Net unrealized appreciation - foreign currencies | | | 1,918 | |
| |
Temporary book/tax differences | | | (1,691,047 | ) |
| |
Shares of beneficial interest | | | 513,258,987 | |
| |
Total net assets | | $ | 762,353,961 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and partnership basis.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
Invesco V.I. Core Equity Fund
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $373,692,011 and $561,995,156, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 230,556,741 | |
| |
Aggregate unrealized (depreciation) of investments | | | (6,292,347 | ) |
| |
Net unrealized appreciation of investments | | $ | 224,264,394 | |
| |
Cost of investments for tax purposes is $540,013,536.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and partnership reclass, on December 31, 2020, undistributed net investment income was decreased by $277,383, undistributed net realized gain was increased by $278,476 and shares of beneficial interest was decreased by $1,093. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | 698,021 | | | $ | 20,672,935 | | | | 435,385 | | | $ | 14,832,571 | |
| |
Series II | | | 44,947 | | | | 1,413,543 | | | | 38,664 | | | | 1,330,035 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | 5,857,096 | | | | 165,580,119 | | | | 3,165,606 | | | | 102,597,293 | |
| |
Series II | | | 173,851 | | | | 4,892,160 | | | | 78,522 | | | | 2,536,276 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | (6,708,456 | ) | | | (225,139,782 | ) | | | (6,876,372 | ) | | | (240,678,540 | ) |
| |
Series II | | | (142,565 | ) | | | (4,592,053 | ) | | | (125,341 | ) | | | (4,370,850 | ) |
| |
Net increase (decrease) in share activity | | | (77,106 | ) | | $ | (37,173,078 | ) | | | (3,283,536 | ) | | $ | (123,753,215 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Core Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Core Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Core Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Core Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,207.20 | | $4.60 | | $1,020.96 | | $4.22 | | 0.83% |
Series II | | 1,000.00 | | 1,206.10 | | 5.99 | | 1,019.71 | | 5.48 | | 1.08 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Core Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | Federal and State Income Tax | | | | | | |
| | Qualified Dividend Income* | | | 0.00 | % | | |
| | Long-Term Capital Gain Distributions | | $ | 151,771,071 | | | |
| | Corporate Dividends Received Deduction* | | | 67.15 | % | | |
| | U.S. Treasury Obligations* | | | 0.00 | % | | |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
Invesco V.I. Core Equity Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
Christopher L. Wilson - 1967
Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort - 1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey - 1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Core Equity Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962
Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Core Equity Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Core Plus Bond Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s
Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VICPB-AR-1 |
Management’s Discussion of Fund Performance
|
| |
Performance summary |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Core |
Plus Bond Fund (the Fund) outperformed the Bloomberg Barclays U.S. Aggregate Bond Index, the Fund’s broad market/style-specific benchmark. |
Your Fund’s long-term performance appears later in this report. |
|
| | | | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 9.72 | % |
Series II Shares | | | 9.33 | |
Bloomberg Barclays U.S. Aggregate Bond Indexq (Broad Market/Style-Specific Index) | | | 7.51 | |
Lipper VUF Core Plus Bond Funds Index∎ (Peer Group Index) | | | 8.72 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Fixed income markets began the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. As fear of a worldwide recession increased, the US Federal Reserve (the Fed) took aggressive action to support both the domestic and global economy by slashing rates to a range of 0.00% to 0.25%.1 The unemployment rate reached a peak of 14.7%2 while real gross domestic product decreased at an annual rate of 31.4%3 in the second quarter of 2020.
Many economies received fiscal stimulus and very significant monetary stimulus due to the impact of COVID-19. The massive monetary policy response created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first half of the year. Consequently, some countries were able to achieve some success in controlling the spread and were able to slowly reopen their economies in the third quarter. With a potential vaccine in sight for the end of 2020 or early 2021 the broader bond market, both developed and emerging, ended the year in positive territory.
The 10-year US Treasury yield continued to decline at the start of the year as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. Elevated volatility levels due to the COVID-19 pandemic and ensuing global recession led to a severe “risk-off” tone in the markets driving Treasury yields even lower. The 10-year US Treasury yield ended the year at 0.88%, 85 basis points lower than at the beginning of the year.4 (A basis point is one one-hundredth of a percentage point.)
US corporate markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement
over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, bonds were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets.
The broader bond market, as represented by the Bloomberg Barclays U.S. Aggregate Bond Index, gained 7.51% for the year.5 Strong performance for the Fund’s broad market/style-specific benchmark was largely attributable to the sharp decline in US Treasury yields as well as a rally in spread sector assets. The four primary sectors of the Bloomberg Barclays U.S. Aggregate Bond Index – government-related, corporate, securitized and treasury – posted positive returns for the year.
The Fund, at NAV, generated positive returns for the year, and outperformed its broad market/style-specific benchmark. Overweight exposure to investment grade was the most notable contributor to the Fund’s relative performance. Underperformance from the securitized sector was driven by slightly wider credit spreads and weaker technicals due in part to declining overseas demand for the asset class stemming from heightened foreign currency hedging costs. Security selection in the technology and consumer cyclical sectors also contributed to the Fund’s relative performance during the year but was slightly offset by security selection within the high yield media and high yield airlines sectors.
Overweight exposure to and security selection in commercial mortgage-backed securities, particularly conduit and single borrower issues, contributed to the Fund’s performance relative to the broad market/style-specific index during the year. The Fund’s out-of-index exposure to US dollar-denominated emerging
market (EM) corporate debt during the year also contributed to the Fund’s relative performance. Out-of-index exposure, such as high yield, provided subtle gains despite concerns over global growth. Helping to support returns in high yield and US dollar-denominated EM corporate debt were very accommodative central bank policies.
The Fund’s allocation to cash holdings detracted from relative Fund performance, as intermediate and long duration assets rallied during the year as a result of lower Treasury rates.
The Fund benefited from incremental income earned from transactions in the highly liquid to-be-announced (TBA) market for agency mortgage-backed securities (MBS). Such transactions involve the Fund selling an MBS to a financial institution, with an agreement to repurchase a substantially similar security at an agreed upon price and date. Cash received by the Fund as a result of this repurchase transaction may be invested in short-term instruments, and the income from these investments, together with any additional fee income received from this activity, generates income for the Fund.
The Fund may use active duration and yield curve positioning for risk management and for generating excess return versus its broad market/style-specific benchmark. Duration measures a portfolio’s price sensitivity to interest rate changes. Yield curve positioning refers to actively emphasizing particular points (maturities) along the yield curve with favorable risk-return expectations. Duration of the portfolio was maintained close to that of the broad market/style-specific benchmark, on average, and the timing of changes and the degree of variance from the Fund’s broad market/style-specific benchmark during the year provided a small boost to relative returns. Buying and selling US Treasury futures and interest rate swaptions were important tools used for the management of interest rate risk and to maintain our targeted portfolio duration.
Part of the Fund’s strategy to manage credit and currency risk in the portfolio during the year entailed purchasing and selling credit and currency derivatives. We sought to manage credit market risk by purchasing and selling protection through credit default swaps at various points throughout the year. The currency management was carried out via currency forwards and options on an as-needed basis and we believe this was effective in managing the currency positioning within the Fund.
We wish to remind you that the Fund is subject to interest rate risk, meaning when interest rates rise, the value of fixed income securities tends to fall. The risk may be greater in the current market environment because interest rates are near historic lows. The degree to which the value of fixed income securities may decline due to rising interest rates may vary depending on the speed and
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| Invesco V.I. Core Plus Bond Fund |
magnitude of the increase in interest rates, as well as individual security characteristics, such as price, maturity, duration and coupon and market forces, such as supply and demand for similar securities. We are monitoring interest rates, as well as the market, economic and geopolitical factors that may impact the direction, speed and magnitude of changes to interest rates across the maturity spectrum, including the potential impact of monetary policy changes by the Fed and certain foreign central banks. If interest rates rise or fall faster than expected, markets may experience increased volatility, which may affect the value and/or liquidity of certain of the Fund’s investments.
Thank you for investing in Invesco V.I. Core Plus Bond Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: Bureau of Labor Statistics
3 Source: Bureau of Economic Analysis
4 Source: U.S. Department of the Treasury
5 Source: RIMES Technologies Corp.
Portfolio manager(s):
Matthew Brill
Chuck Burge
Michael Hyman
Todd Schomberg
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco V.I. Core Plus Bond Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 2 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee
future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/5/93) | | | 4.62 | % |
10 Years | | | 5.58 | |
5 Years | | | 6.18 | |
1 Year | | | 9.72 | |
| |
Series II Shares | | | | |
Inception (3/14/02) | | | 4.31 | % |
10 Years | | | 5.31 | |
5 Years | | | 5.91 | |
1 Year | | | 9.33 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Core Plus Bond Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco V.I. Core Plus Bond Fund |
Supplemental Information
Invesco V.I. Core Plus Bond Fund’s investment objective is total return, comprised of current income and capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
| ∎ | | The Lipper VUF Core Plus Bond Funds Index is an unmanaged index considered representative of core plus bond variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
|
| Invesco V.I. Core Plus Bond Fund |
Fund Information
Portfolio Composition
| | | | | |
| By security type | | % of total net assets |
| |
U.S. Dollar Denominated Bonds & Notes | | | | 46.18 | % |
U.S. Treasury Securities | | | | 21.66 | |
Asset-Backed Securities | | | | 14.13 | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | 8.65 | |
Preferred Stocks | | | | 2.41 | |
Security Types Each Less Than 1% of Portfolio | | | | 1.11 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 5.86 | |
Top Five Debt Issuers*
| | | | | |
| | | % of total net assets |
1. U.S. Treasury Notes | | | | 16.58 | % |
2. U.S. Treasury Bonds | | | | 4.88 | |
3. Uniform Mortgage-Backed Securities | | | | 3.78 | |
4. Federal National Mortgage Association | | | | 2.20 | |
5. Government National Mortgage Association | | | | 1.31 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. Core Plus Bond Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Dollar Denominated Bonds & Notes–46.18% | |
Advertising–0.13% | | | | | | | | |
Lamar Media Corp., 3.75%, 02/15/2028 | | $ | 44,000 | | | $ | 45,301 | |
|
| |
| | |
Aerospace & Defense–0.14% | | | | | | | | |
Boeing Co. (The), 2.75%, 02/01/2026 | | | 47,000 | | | | 49,446 | |
|
| |
| | |
Airlines–1.11% | | | | | | | | |
British Airways Pass-Through Trust (United Kingdom), Series 2019-1, Class A, 3.35%, 06/15/2029(b) | | | 17,129 | | | | 16,289 | |
|
| |
Delta Air Lines Pass-Through Trust,
Series 2019-1, Class A, 3.40%, 04/25/2024 | | | 10,000 | | | | 9,869 | |
|
| |
Series 2020-1, Class AA, 2.00%, 06/10/2028 | | | 39,774 | | | | 39,836 | |
|
| |
Delta Air Lines, Inc., 7.38%, 01/15/2026 | | | 7,000 | | | | 8,001 | |
|
| |
Delta Air Lines, Inc./SkyMiles IP Ltd.,
4.50%, 10/20/2025(b) | | | 55,000 | | | | 58,806 | |
|
| |
4.75%, 10/20/2028(b) | | | 93,000 | | | | 101,586 | |
|
| |
United Airlines Pass-Through Trust,
Series 2014-2, Class B, 4.63%, 09/03/2022 | | | 26,765 | | | | 26,963 | |
|
| |
Series 2020-1, Class A, 5.88%, 10/15/2027 | | | 94,000 | | | | 101,822 | |
|
| |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | 31,789 | | | | 31,668 | |
|
| |
| | | | | | | 394,840 | |
|
| |
| | |
Apparel Retail–0.08% | | | | | | | | |
Ross Stores, Inc.,
0.88%, 04/15/2026 | | | 21,000 | | | | 21,013 | |
|
| |
4.70%, 04/15/2027 | | | 7,000 | | | | 8,269 | |
|
| |
| | | | | | | 29,282 | |
|
| |
| |
Asset Management & Custody Banks–0.45% | | | | | |
Ameriprise Financial, Inc., 3.00%, 04/02/2025 | | | 37,000 | | | | 40,336 | |
|
| |
Carlyle Holdings II Finance LLC, 5.63%, 03/30/2043(b) | | | 49,000 | | | | 63,329 | |
|
| |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 54,000 | | | | 55,392 | |
|
| |
| | | | | | | 159,057 | |
|
| |
| | |
Automobile Manufacturers–1.53% | | | | | | | | |
Allison Transmission, Inc., 3.75%, 01/30/2031(b) | | | 28,000 | | | | 28,700 | |
|
| |
Ford Motor Credit Co. LLC,
3.09%, 01/09/2023 | | | 200,000 | | | | 203,864 | |
|
| |
3.38%, 11/13/2025 | | | 205,000 | | | | 210,189 | |
|
| |
Hyundai Capital America,
5.75%, 04/06/2023(b) | | | 48,000 | | | | 53,187 | |
|
| |
4.30%, 02/01/2024(b) | | | 16,000 | | | | 17,562 | |
|
| |
5.88%, 04/07/2025(b) | | | 26,000 | | | | 30,783 | |
|
| |
| | | | | | | 544,285 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Biotechnology–0.59% | | | | | | | | |
AbbVie, Inc.,
2.30%, 11/21/2022 | | $ | 92,000 | | | $ | 95,413 | |
|
| |
2.60%, 11/21/2024 | | | 106,000 | | | | 113,692 | |
|
| |
| | | | | | | 209,105 | |
|
| |
| | |
Brewers–0.12% | | | | | | | | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 4.75%, 01/23/2029 | | | 34,000 | | | | 41,956 | |
|
| |
| | |
Broadcasting–0.31% | | | | | | | | |
Discovery Communications LLC,
5.20%, 09/20/2047 | | | 11,000 | | | | 14,330 | |
|
| |
4.00%, 09/15/2055(b) | | | 75,000 | | | | 83,952 | |
|
| |
Fox Corp., 3.50%, 04/08/2030 | | | 11,000 | | | | 12,508 | |
|
| |
| | | | | | | 110,790 | |
|
| |
| | |
Building Products–0.33% | | | | | | | | |
Carrier Global Corp., 2.72%, 02/15/2030 | | | 61,000 | | | | 65,226 | |
|
| |
Standard Industries, Inc., 3.38%, 01/15/2031(b) | | | 52,000 | | | | 52,325 | |
|
| |
| | | | | | | 117,551 | |
|
| |
| | |
Cable & Satellite–0.66% | | | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., 4.25%, 02/01/2031(b) | | | 19,000 | | | | 20,047 | |
|
| |
Charter Communications Operating LLC/ Charter Communications Operating Capital Corp., 3.85%, 04/01/2061 | | | 41,000 | | | | 41,318 | |
|
| |
Comcast Corp.,
3.95%, 10/15/2025 | | | 14,000 | | | | 16,091 | |
|
| |
4.60%, 10/15/2038 | | | 23,000 | | | | 30,308 | |
|
| |
3.25%, 11/01/2039 | | | 11,000 | | | | 12,485 | |
|
| |
2.80%, 01/15/2051 | | | 37,000 | | | | 38,539 | |
|
| |
4.95%, 10/15/2058 | | | 24,000 | | | | 36,440 | |
|
| |
Cox Communications, Inc.,
1.80%, 10/01/2030(b) | | | 14,000 | | | | 13,996 | |
|
| |
2.95%, 10/01/2050(b) | | | 25,000 | | | | 25,562 | |
|
| |
| | | | | | | 234,786 | |
|
| |
| | |
Commodity Chemicals–0.03% | | | | | | | | |
Valvoline, Inc., 3.63%, 06/15/2031(b) | | | 11,000 | | | | 11,327 | |
|
| |
| | |
Computer & Electronics Retail–0.11% | | | | | | | | |
Seagate HDD Cayman,
3.13%, 07/15/2029(b) | | | 28,000 | | | | 28,055 | |
|
| |
3.38%, 07/15/2031(b) | | | 10,000 | | | | 10,073 | |
|
| |
| | | | | | | 38,128 | |
|
| |
| | |
Copper–0.34% | | | | | | | | |
Freeport-McMoRan, Inc., 5.00%, 09/01/2027 | | | 57,000 | | | | 60,621 | |
|
| |
4.38%, 08/01/2028 | | | 31,000 | | | | 32,996 | |
|
| |
Southern Copper Corp. (Peru), 5.88%, 04/23/2045 | | | 18,000 | | | | 26,007 | |
|
| |
| | | | | | | 119,624 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Data Processing & Outsourced Services–0.17% | | | | | |
PayPal Holdings, Inc., 2.65%, 10/01/2026 | | $ | 32,000 | | | $ | 35,184 | |
|
| |
2.85%, 10/01/2029 | | | 22,000 | | | | 24,472 | |
|
| |
| | | | | | | 59,656 | |
|
| |
| | |
Distributors–0.13% | | | | | | | | |
Genuine Parts Co., 1.88%, 11/01/2030 | | | 46,000 | | | | 45,682 | |
|
| |
| | |
Diversified Banks–4.48% | | | | | | | | |
Australia & New Zealand Banking Group Ltd. (Australia), 2.57%, 11/25/2035(b)(c) | | | 81,000 | | | | 82,694 | |
|
| |
Bank of America Corp., 2.59%, 04/29/2031(c) | | | 36,000 | | | | 38,609 | |
|
| |
1.90%, 07/23/2031(c) | | | 86,000 | | | | 86,915 | |
|
| |
1.92%, 10/24/2031(c) | | | 81,000 | | | | 82,095 | |
|
| |
BBVA Bancomer S.A. (Mexico), 6.75%, 09/30/2022(b) | | | 150,000 | | | | 162,300 | |
|
| |
Citigroup, Inc.,
2.88%, 07/24/2023(c) | | | 15,000 | | | | 15,585 | |
|
| |
3.11%, 04/08/2026(c) | | | 40,000 | | | | 43,756 | |
|
| |
4.41%, 03/31/2031(c) | | | 33,000 | | | | 40,019 | |
|
| |
2.57%, 06/03/2031(c) | | | 67,000 | | | | 71,433 | |
|
| |
Corp. Andina de Fomento (Supranational), 4.38%, 06/15/2022 | | | 50,000 | | | | 52,688 | |
|
| |
HSBC Holdings PLC (United Kingdom), 6.00%(c)(d) | | | 200,000 | | | | 218,250 | |
|
| |
JPMorgan Chase & Co., 1.10% (3 mo. USD LIBOR + 0.89%), 07/23/2024(e) | | | 65,000 | | | | 65,903 | |
|
| |
2.08%, 04/22/2026(c) | | | 52,000 | | | | 54,953 | |
|
| |
3.63%, 12/01/2027 | | | 27,000 | | | | 30,712 | |
|
| |
2.96%, 05/13/2031(c) | | | 37,000 | | | | 40,611 | |
|
| |
3.11%, 04/22/2041(c) | | | 34,000 | | | | 38,062 | |
|
| |
Series W, 1.22% (3 mo. USD LIBOR + 1.00%), 05/15/2047(e) | | | 54,000 | | | | 44,415 | |
|
| |
Standard Chartered PLC (United Kingdom), 3.27%, 02/18/2036(b)(c) | | | 200,000 | | | | 209,455 | |
|
| |
Sumitomo Mitsui Financial Group, Inc. (Japan), 2.14%, 09/23/2030 | | | 88,000 | | | | 88,501 | |
|
| |
U.S. Bancorp, 1.38%, 07/22/2030 | | | 37,000 | | | | 37,099 | |
|
| |
Wells Fargo & Co.,
2.19%, 04/30/2026(c) | | | 19,000 | | | | 20,022 | |
|
| |
3.07%, 04/30/2041(c) | | | 26,000 | | | | 28,325 | |
|
| |
Westpac Banking Corp. (Australia), 2.67%, 11/15/2035(c) | | | 37,000 | | | | 38,162 | |
|
| |
| | | | | | | 1,590,564 | |
|
| |
| | |
Diversified Capital Markets–0.83% | | | | | | | | |
Credit Suisse Group AG (Switzerland), 4.19%, 04/01/2031(b)(c) | | | 250,000 | | | | 294,248 | |
|
| |
| | |
Diversified Metals & Mining–0.67% | | | | | | | | |
Anglo American Capital PLC (South Africa), 5.38%, 04/01/2025(b) | | | 203,000 | | | | 237,787 | |
|
| |
| | |
Diversified REITs–1.38% | | | | | | | | |
Brixmor Operating Partnership L.P., 4.05%, 07/01/2030 | | | 33,000 | | | | 37,916 | |
|
| |
Trust Fibra Uno (Mexico), 5.25%, 01/30/2026(b) | | | 200,000 | | | | 225,850 | |
|
| |
4.87%, 01/15/2030(b) | | | 200,000 | | | | 228,002 | |
|
| |
| | | | | | | 491,768 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Drug Retail–0.40% | | | | | | | | |
CVS Pass-Through Trust, 5.77%, 01/10/2033(b) | | $ | 121,955 | | | $ | 143,302 | |
|
| |
| | |
Electric Utilities–0.41% | | | | | | | | |
Consolidated Edison Co. of New York, Inc., Series C, 3.00%, 12/01/2060 | | | 33,000 | | | | 33,593 | |
|
| |
Duke Energy Progress LLC, 2.50%, 08/15/2050 | | | 67,000 | | | | 67,536 | |
|
| |
Eversource Energy, Series Q, 0.80%, 08/15/2025 | | | 6,000 | | | | 5,994 | |
|
| |
NextEra Energy Capital Holdings, Inc., 2.75%, 05/01/2025 | | | 11,000 | | | | 11,910 | |
|
| |
Southern Co. (The), Series B, 5.50%, 03/15/2057(c) | | | 22,000 | | | | 22,878 | |
|
| |
Virginia Electric and Power Co., 2.45%,12/15/2050 | | | 2,000 | | | | 2,011 | |
|
| |
| | | | | | | 143,922 | |
|
| |
| |
Electrical Components & Equipment–0.17% | | | | | |
Acuity Brands Lighting, Inc., 2.15%, 12/15/2030 | | | 59,000 | | | | 59,953 | |
|
| |
| | |
Electronic Components–0.78% | | | | | | | | |
Corning, Inc., 5.45%, 11/15/2079 | | | 202,000 | | | | 277,317 | |
|
| |
| |
Electronic Manufacturing Services–0.15% | | | | | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 49,000 | | | | 52,208 | |
|
| |
| |
Environmental & Facilities Services–0.21% | | | | | |
GFL Environmental, Inc. (Canada), 4.00%, 08/01/2028(b) | | | 17,000 | | | | 17,159 | |
|
| |
3.50%, 09/01/2028(b) | | | 56,000 | | | | 57,202 | |
|
| |
| | | | | | | 74,361 | |
|
| |
| | |
Financial Exchanges & Data–0.47% | | | | | | | | |
Intercontinental Exchange, Inc., 3.00%, 09/15/2060 | | | 32,000 | | | | 33,604 | |
|
| |
Moody’s Corp.,
5.25%, 07/15/2044 | | | 27,000 | | | | 37,389 | |
|
| |
3.25%, 05/20/2050 | | | 14,000 | | | | 15,585 | |
|
| |
2.55%, 08/18/2060 | | | 14,000 | | | | 13,158 | |
|
| |
MSCI, Inc., 3.88%, 02/15/2031(b) | | | 36,000 | | | | 38,115 | |
|
| |
S&P Global, Inc., 1.25%, 08/15/2030 | | | 28,000 | | | | 27,612 | |
|
| |
| | | | | | | 165,463 | |
|
| |
| | |
Food Retail–0.02% | | | | | | | | |
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, 3.50%, 02/15/2023(b) | | | 8,000 | | | | 8,208 | |
|
| |
| | |
Gas Utilities–0.10% | | | | | | | | |
East Ohio Gas Co. (The), 1.30%, 06/15/2025(b) | | | 11,000 | | | | 11,218 | |
|
| |
3.00%, 06/15/2050(b) | | | 21,000 | | | | 22,900 | |
|
| |
| | | | | | | 34,118 | |
|
| |
| | |
Health Care Facilities–0.17% | | | | | | | | |
CommonSpirit Health, 1.55%, 10/01/2025 | | | 22,000 | | | | 22,617 | |
|
| |
Universal Health Services, Inc., 2.65%, 10/15/2030(b) | | | 21,000 | | | | 21,840 | |
|
| |
West Virginia United Health System Obligated Group, 3.13%, 06/01/2050 | | | 16,000 | | | | 16,557 | |
|
| |
| | | | | | | 61,014 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Health Care REITs–0.50% | | | | | | | | |
Diversified Healthcare Trust, 6.75%, 12/15/2021 | | $ | 40,000 | | | $ | 40,700 | |
|
| |
Healthcare Trust of America Holdings L.P., 2.00%, 03/15/2031 | | | 32,000 | | | | 32,054 | |
|
| |
Healthpeak Properties, Inc., 2.88%, 01/15/2031 | | | 22,000 | | | | 23,738 | |
|
| |
Omega Healthcare Investors, Inc., 3.38%, 02/01/2031 | | | 39,000 | | | | 41,036 | |
|
| |
Physicians Realty L.P., 4.30%, 03/15/2027 | | | 14,000 | | | | 15,485 | |
|
| |
Welltower, Inc., 3.10%, 01/15/2030 | | | 24,000 | | | | 26,291 | |
|
| |
| | | | | | | 179,304 | |
|
| |
| | |
Health Care Services–0.87% | | | | | | | | |
Cigna Corp., 1.13% (3 mo. USD LIBOR + 0.89%), 07/15/2023(e) | | | 43,000 | | | | 43,508 | |
|
| |
CVS Health Corp.,
1.30%, 08/21/2027 | | | 43,000 | | | | 43,208 | |
|
| |
2.70%, 08/21/2040 | | | 19,000 | | | | 19,251 | |
|
| |
DaVita, Inc., 3.75%, 02/15/2031(b) | | | 61,000 | | | | 62,051 | |
|
| |
Sutter Health,
Series 20A,
3.16%, 08/15/2040 | | | 75,000 | | | | 79,717 | |
|
| |
3.36%, 08/15/2050 | | | 55,000 | | | | 59,929 | |
|
| |
| | | | | | | 307,664 | |
|
| |
| | |
Home Improvement Retail–0.09% | | | | | | | | |
Lowe’s Cos., Inc., 1.30%, 04/15/2028 | | | 32,000 | | | | 32,290 | |
|
| |
| | |
Homebuilding–0.21% | | | | | | | | |
M.D.C. Holdings, Inc., 3.85%, 01/15/2030 | | | 67,000 | | | | 74,617 | |
|
| |
|
Independent Power Producers & Energy Traders–0.93% | |
AES Corp. (The),
1.38%, 01/15/2026(b) | | | 20,000 | | | | 20,193 | |
|
| |
2.45%, 01/15/2031(b) | | | 35,000 | | | | 35,482 | |
|
| |
Calpine Corp., 3.75%, 03/01/2031(b) | | | 68,000 | | | | 67,470 | |
|
| |
EnfraGen Energia Sur S.A./EnfraGen Spain S.A./Prime Energia S.p.A. (Spain), 5.38%, 12/30/2030(b) | | | 200,000 | | | | 208,000 | |
|
| |
| | | | | | | 331,145 | |
|
| |
| | |
Industrial REITs–0.06% | | | | | | | | |
Lexington Realty Trust, 2.70%, 09/15/2030 | | | 17,000 | | | | 17,724 | |
|
| |
Prologis L.P., 2.13%, 04/15/2027 | | | 4,000 | | | | 4,294 | |
|
| |
| | | | | | | 22,018 | |
|
| |
| | |
Integrated Oil & Gas–1.56% | | | | | | | | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 75,000 | | | | 76,587 | |
|
| |
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(b) | | | 38,000 | | | | 39,200 | |
|
| |
Petroleos Mexicanos (Mexico), 6.63%, 06/15/2035 | | | 23,000 | | | | 22,806 | |
|
| |
Saudi Arabian Oil Co. (Saudi Arabia), 2.88%, 04/16/2024(b) | | | 200,000 | | | | 212,432 | |
|
| |
3.50%, 11/24/2070(b) | | | 200,000 | | | | 202,491 | |
|
| |
| | | | | | | 553,516 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Integrated Telecommunication Services–1.59% | | | | | |
AT&T, Inc.,
2.55%, 12/01/2033(b) | | $ | 20,000 | | | $ | 20,610 | |
|
| |
3.10%, 02/01/2043 | | | 54,000 | | | | 54,788 | |
|
| |
3.50%, 09/15/2053(b) | | | 79,000 | | | | 79,005 | |
|
| |
3.55%, 09/15/2055(b) | | | 99,000 | | | | 98,669 | |
|
| |
3.50%, 02/01/2061 | | | 34,000 | | | | 33,865 | |
|
| |
Verizon Communications, Inc.,
0.85%, 11/20/2025 | | | 51,000 | | | | 51,413 | |
|
| |
4.81%, 03/15/2039 | | | 20,000 | | | | 26,093 | |
|
| |
2.65%, 11/20/2040 | | | 54,000 | | | | 54,615 | |
|
| |
2.88%, 11/20/2050 | | | 67,000 | | | | 67,571 | |
|
| |
3.00%, 11/20/2060 | | | 78,000 | | | | 78,542 | |
|
| |
| | | | | | | 565,171 | |
|
| |
| |
Interactive Home Entertainment–0.29% | | | | | |
Activision Blizzard, Inc., 2.50%, 09/15/2050 | | | 53,000 | | | | 51,805 | |
|
| |
WMG Acquisition Corp., 3.00%, 02/15/2031(b) | | | 52,000 | | | | 51,140 | |
|
| |
| | | | | | | 102,945 | |
|
| |
| | |
Interactive Media & Services–0.94% | | | | | | | | |
Alphabet, Inc.,
1.90%, 08/15/2040 | | | 12,000 | | | | 11,778 | |
|
| |
2.25%, 08/15/2060 | | | 49,000 | | | | 47,446 | |
|
| |
Match Group Holdings II LLC, 5.63%, 02/15/2029(b) | | | 33,000 | | | | 36,052 | |
|
| |
Tencent Holdings Ltd. (China), 2.39%, 06/03/2030(b) | | | 200,000 | | | | 205,290 | |
|
| |
Twitter, Inc., 3.88%, 12/15/2027(b) | | | 31,000 | | | | 33,054 | |
|
| |
| | | | | | | 333,620 | |
|
| |
| |
Internet & Direct Marketing Retail–0.75% | | | | | |
Expedia Group, Inc., 4.63%,
08/01/2027(b) | | | 34,000 | | | | 38,016 | |
|
| |
Prosus N.V. (Netherlands), 3.83%, 02/08/2051(b) | | | 233,000 | | | | 228,862 | |
|
| |
| | | | | | | 266,878 | |
|
| |
| |
Investment Banking & Brokerage–1.41% | | | | | |
Cantor Fitzgerald L.P., 6.50%, 06/17/2022(b) | | | 26,000 | | | | 28,102 | |
|
| |
Goldman Sachs Group, Inc. (The), 3.50%, 04/01/2025 | | | 33,000 | | | | 36,725 | |
|
| |
3.27%, 09/29/2025(c) | | | 37,000 | | | | 40,563 | |
|
| |
1.09%, 12/09/2026(c) | | | 51,000 | | | | 51,574 | |
|
| |
0.87% (SOFR + 0.79%), 12/09/2026(e) | | | 100,000 | | | | 100,689 | |
|
| |
Jefferies Group LLC/Jefferies Group Capital Finance, Inc., 4.15%, 01/23/2030 | | | 36,000 | | | | 42,020 | |
|
| |
Morgan Stanley,
2.19%, 04/28/2026(c) | | | 32,000 | | | | 33,821 | |
|
| |
2.70%, 01/22/2031(c) | | | 101,000 | | | | 109,716 | |
|
| |
3.62%, 04/01/2031(c) | | | 33,000 | | | | 38,352 | |
|
| |
Raymond James Financial, Inc., 4.65%, 04/01/2030 | | | 16,000 | | | | 19,646 | |
|
| |
| | | | | | | 501,208 | |
|
| |
| | |
Life & Health Insurance–1.71% | | | | | | | | |
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | | | 31,000 | | | | 35,048 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Life & Health Insurance–(continued) | | | | | | | | |
Athene Global Funding,
1.20%, 10/13/2023(b) | | $ | 72,000 | | | $ | 72,579 | |
|
| |
2.50%, 01/14/2025(b) | | | 42,000 | | | | 44,014 | |
|
| |
Athene Holding Ltd.,
4.13%, 01/12/2028 | | | 19,000 | | | | 21,178 | |
|
| |
6.15%, 04/03/2030 | | | 37,000 | | | | 46,089 | |
|
| |
3.50%, 01/15/2031 | | | 16,000 | | | | 16,934 | |
|
| |
Belrose Funding Trust, 2.33%, 08/15/2030(b) | | | 39,000 | | | | 40,199 | |
|
| |
Brighthouse Financial, Inc., 4.70%, 06/22/2047 | | | 10,000 | | | | 10,571 | |
|
| |
Global Atlantic Fin Co., 4.40%, 10/15/2029(b) | | | 96,000 | | | | 105,915 | |
|
| |
Nationwide Financial Services, Inc., 5.38%, 03/25/2021(b) | | | 136,000 | | | | 137,481 | |
|
| |
3.90%, 11/30/2049(b) | | | 29,000 | | | | 32,356 | |
|
| |
Pacific LifeCorp, 3.35%, 09/15/2050(b) | | | 41,000 | | | | 45,688 | |
|
| |
| | | | | | | 608,052 | |
|
| |
| | |
Managed Health Care–0.51% | | | | | | | | |
Children’s Hospital, Series 2020, 2.93%, 07/15/2050 | | | 27,000 | | | | 27,106 | |
|
| |
Community Health Network, Inc., Series 20-A, 3.10%, 05/01/2050 | | | 56,000 | | | | 56,563 | |
|
| |
Hackensack Meridian Health, Inc., Series 2020,
2.68%, 09/01/2041 | | | 24,000 | | | | 24,291 | |
|
| |
2.88%, 09/01/2050 | | | 24,000 | | | | 24,788 | |
|
| |
New York and Presbyterian Hospital (The), 2.26%, 08/01/2040 | | | 18,000 | | | | 17,635 | |
|
| |
UnitedHealth Group, Inc., 3.75%, 07/15/2025 | | | 27,000 | | | | 30,775 | |
|
| |
| | | | | | | 181,158 | |
|
| |
| | |
Movies & Entertainment–0.07% | | | | | | | | |
Netflix, Inc., 5.38%, 11/15/2029(b) | | | 21,000 | | | | 24,780 | |
|
| |
| | |
Multi-line Insurance–0.83% | | | | | | | | |
AIG Global Funding, 2.70%, 12/15/2021(b) | | | 32,000 | | | | 32,727 | |
|
| |
American Financial Group, Inc., 3.50%, 08/15/2026 | | | 14,000 | | | | 15,290 | |
|
| |
American International Group, Inc., 3.40%, 06/30/2030 | | | 53,000 | | | | 60,739 | |
|
| |
Fairfax Financial Holdings Ltd. (Canada),
4.85%, 04/17/2028 | | | 27,000 | | | | 30,243 | |
|
| |
4.63%, 04/29/2030 | | | 40,000 | | | | 44,818 | |
|
| |
Nationwide Mutual Insurance Co., 4.95%, 04/22/2044(b) | | | 100,000 | | | | 111,781 | |
|
| |
| | | | | | | 295,598 | |
|
| |
| | |
Multi-Utilities–0.26% | | | | | | | | |
Dominion Energy, Inc., Series C, 3.38%, 04/01/2030 | | | 29,000 | | | | 33,055 | |
|
| |
WEC Energy Group, Inc.,
1.38%, 10/15/2027 | | | 31,000 | | | | 31,547 | |
|
| |
1.80%, 10/15/2030 | | | 27,000 | | | | 27,123 | |
|
| |
| | | | | | | 91,725 | |
|
| |
| | |
Office REITs–0.47% | | | | | | | | |
Alexandria Real Estate Equities, Inc., 3.95%, 01/15/2027 | | | 33,000 | | | | 38,010 | |
|
| |
3.38%, 08/15/2031 | | | 19,000 | | | | 21,776 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Office REITs–(continued) | | | | | | | | |
Boston Properties L.P., 3.25%, 01/30/2031 | | $ | 26,000 | | | $ | 28,698 | |
|
| |
Highwoods Realty L.P., 2.60%, 02/01/2031 | | | 11,000 | | | | 11,239 | |
|
| |
Office Properties Income Trust, 4.50%, 02/01/2025 | | | 64,000 | | | | 67,869 | |
|
| |
| | | | | | | 167,592 | |
|
| |
|
Oil & Gas Exploration & Production–0.32% | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 58,000 | | | | 60,893 | |
|
| |
Concho Resources, Inc., 2.40%, 02/15/2031 | | | 12,000 | | | | 12,580 | |
|
| |
Pioneer Natural Resources Co., 1.90%, 08/15/2030 | | | 40,000 | | | | 39,653 | |
|
| |
| | | | | | | 113,126 | |
|
| |
|
Oil & Gas Storage & Transportation–0.77% | |
Kinder Morgan, Inc.,
2.00%, 02/15/2031 | | | 6,000 | | | | 6,068 | |
|
| |
3.25%, 08/01/2050 | | | 16,000 | | | | 16,102 | |
|
| |
MPLX L.P.,
1.33% (3 mo. USD LIBOR + 1.10%), 09/09/2022(e) | | | 48,000 | | | | 48,009 | |
|
| |
1.75%, 03/01/2026 | | | 38,000 | | | | 39,346 | |
|
| |
2.65%, 08/15/2030 | | | 41,000 | | | | 43,016 | |
|
| |
ONEOK, Inc.,
5.85%, 01/15/2026 | | | 15,000 | | | | 17,983 | |
|
| |
6.35%, 01/15/2031 | | | 61,000 | | | | 78,319 | |
|
| |
Plains All American Pipeline L.P./PAA Finance Corp., 3.80%, 09/15/2030 | | | 20,000 | | | | 21,515 | |
|
| |
Western Midstream Operating L.P., 2.07% (3 mo. USD LIBOR + 1.85%), 01/13/2023(e) | | | 4,000 | | | | 3,922 | |
|
| |
| | | | | | | 274,280 | |
|
| |
|
Other Diversified Financial Services–0.84% | |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), 4.50%, 09/15/2023 DAC | | | 150,000 | | | | 162,724 | |
|
| |
Avolon Holdings Funding Ltd. (Ireland), 4.25%, 04/15/2026(b) | | | 24,000 | | | | 25,875 | |
|
| |
Blackstone Holdings Finance Co. LLC, 1.60%, 03/30/2031(b) | | | 56,000 | | | | 55,781 | |
|
| |
2.80%, 09/30/2050(b) | | | 26,000 | | | | 26,596 | |
|
| |
KKR Group Finance Co. VIII LLC, 3.50%, 08/25/2050(b) | | | 26,000 | | | | 28,938 | |
|
| |
| | | | | | | 299,914 | |
|
| |
| | |
Packaged Foods & Meats–0.66% | | | | | | | | |
BRF S.A. (Brazil), 5.75%, 09/21/2050(b) | | | 209,000 | | | | 232,904 | |
|
| |
| | |
Paper Packaging–0.18% | | | | | | | | |
Berry Global, Inc., 1.57%, 01/15/2026(b) | | | 19,000 | | | | 19,188 | |
|
| |
Cascades, Inc./Cascades USA, Inc. (Canada), 5.38%, 01/15/2028(b) | | | 43,000 | | | | 45,782 | |
|
| |
| | | | | | | 64,970 | |
|
| |
| | |
Pharmaceuticals–0.32% | | | | | | | | |
Bristol-Myers Squibb Co.,
0.75%, 11/13/2025 | | | 50,000 | | | | 50,366 | |
|
| |
2.35%, 11/13/2040 | | | 7,000 | | | | 7,204 | |
|
| |
2.55%, 11/13/2050 | | | 25,000 | | | | 25,601 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Pharmaceuticals–(continued) | | | | | | | | |
Royalty Pharma PLC,
1.20%, 09/02/2025(b) | | $ | 15,000 | | | $ | 15,243 | |
|
| |
1.75%, 09/02/2027(b) | | | 14,000 | | | | 14,417 | |
|
| |
| | | | | | | 112,831 | |
|
| |
|
Property & Casualty Insurance–0.44% | |
Allstate Corp. (The), 4.20%, 12/15/2046 | | | 14,000 | | | | 18,522 | |
|
| |
Arch Capital Group Ltd., 3.64%, 06/30/2050 | | | 25,000 | | | | 29,150 | |
|
| |
Fidelity National Financial, Inc., 3.40%, 06/15/2030 | | | 31,000 | | | | 34,093 | |
|
| |
2.45%, 03/15/2031 | | | 43,000 | | | | 43,807 | |
|
| |
W.R. Berkley Corp., 4.00%, 05/12/2050 | | | 25,000 | | | | 30,582 | |
|
| |
| | | | | | | 156,154 | |
|
| |
| | |
Railroads–0.14% | | | | | | | | |
CSX Corp., 2.50%, 05/15/2051 | | | 49,000 | | | | 48,674 | |
|
| |
| | |
Real Estate Development–0.08% | | | | | | | | |
Piedmont Operating Partnership L.P., 3.15%, 08/15/2030 | | | 29,000 | | | | 29,738 | |
|
| |
| | |
Regional Banks–1.34% | | | | | | | | |
Citizens Financial Group, Inc., 3.25%, 04/30/2030 | | | 21,000 | | | | 23,746 | |
|
| |
Fifth Third Bancorp, 4.30%, 01/16/2024 | | | 41,000 | | | | 45,372 | |
|
| |
2.55%, 05/05/2027 | | | 27,000 | | | | 29,415 | |
|
| |
First Niagara Financial Group, Inc., 7.25%, 12/15/2021 | | | 27,000 | | | | 28,732 | |
|
| |
KeyCorp, 2.25%, 04/06/2027 | | | 53,000 | | | | 56,775 | |
|
| |
Synovus Financial Corp., 3.13%, 11/01/2022 | | | 26,000 | | | | 27,007 | |
|
| |
Zions Bancorporation N.A., 3.25%, 10/29/2029 | | | 250,000 | | | | 263,654 | |
|
| |
| | | | | | | 474,701 | |
|
| |
| | |
Reinsurance–0.19% | | | | | | | | |
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | | 39,000 | | | | 41,864 | |
|
| |
Reinsurance Group of America, Inc., 4.70%, 09/15/2023 | | | 23,000 | | | | 25,433 | |
|
| |
| | | | | | | 67,297 | |
|
| |
| | |
Renewable Electricity–0.10% | | | | | | | | |
Northern States Power Co., 2.60%, 06/01/2051 | | | 33,000 | | | | 34,996 | |
|
| |
| | | | | | | | |
| | |
Residential REITs–0.59% | | | | | | | | |
Camden Property Trust, 2.80%,
05/15/2030 | | | 16,000 | | | | 17,788 | |
|
| |
Essex Portfolio L.P.,
1.65%, 01/15/2031 | | | 20,000 | | | | 19,902 | |
|
| |
2.65%, 09/01/2050 | | | 35,000 | | | | 33,664 | |
|
| |
Mid-America Apartments L.P., 1.70%, 02/15/2031 | | | 15,000 | | | | 14,970 | |
|
| |
Spirit Realty L.P.,
4.00%, 07/15/2029 | | | 19,000 | | | | 21,397 | |
|
| |
3.40%, 01/15/2030 | | | 53,000 | | | | 57,495 | |
|
| |
VEREIT Operating Partnership L.P.,
2.20%, 06/15/2028 | | | 24,000 | | | | 24,562 | |
|
| |
2.85%, 12/15/2032 | | | 20,000 | | | | 20,920 | |
|
| |
| | | | | | | 210,698 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Restaurants–0.20% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc. (Canada), 4.00%, 10/15/2030(b) | | $ | 71,000 | | | $ | 72,094 | |
|
| |
| | |
Retail REITs–0.48% | | | | | | | | |
Kimco Realty Corp.,
1.90%, 03/01/2028 | | | 49,000 | | | | 50,624 | |
|
| |
2.70%, 10/01/2030 | | | 27,000 | | | | 29,119 | |
|
| |
Realty Income Corp., 3.25%,
01/15/2031 | | | 35,000 | | | | 39,722 | |
|
| |
Regency Centers L.P., 4.13%,
03/15/2028 | | | 19,000 | | | | 21,683 | |
|
| |
Retail Properties of America, Inc., 4.75%, 09/15/2030 | | | 28,000 | | | | 29,770 | |
|
| |
| | | | | | | 170,918 | |
|
| |
| | |
Semiconductor Equipment–0.06% | | | | | | | | |
NXP B.V./NXP Funding LLC/NXP USA,
Inc. (Netherlands), 3.40%,
05/01/2030(b) | | | 20,000 | | | | 22,713 | |
|
| |
| | |
Semiconductors–0.85% | | | | | | | | |
Analog Devices, Inc., 2.95%,
04/01/2025 | | | 14,000 | | | | 15,292 | |
|
| |
Broadcom, Inc.,
4.70%, 04/15/2025 | | | 105,000 | | | | 120,351 | |
|
| |
5.00%, 04/15/2030 | | | 60,000 | | | | 72,982 | |
|
| |
Micron Technology, Inc.,
4.98%, 02/06/2026 | | | 19,000 | | | | 22,473 | |
|
| |
4.19%, 02/15/2027 | | | 60,000 | | | | 70,745 | |
|
| |
| | | | | | | 301,843 | |
|
| |
| | |
Soft Drinks–0.47% | | | | | | | | |
Fomento Economico Mexicano, S.A.B. de C.V. (Mexico), 3.50%, 01/16/2050 | | | 150,000 | | | | 166,785 | |
|
| |
| | |
Sovereign Debt–3.79% | | | | | | | | |
Argentine Republic Government
International Bond (Argentina),
1.00%, 07/09/2029 | | | 48 | | | | 21 | |
|
| |
1.13%, 07/09/2046(f) | | | 970 | | | | 358 | |
|
| |
China Government International Bond (China), 2.25%, 10/21/2050(b) | | | 200,000 | | | | 198,690 | |
|
| |
Egypt Government International Bond (Egypt), 5.25%, 10/06/2025(b) | | | 200,000 | | | | 212,970 | |
|
| |
Hungary Government International Bond (Hungary), 5.38%, 03/25/2024 | | | 28,000 | | | | 31,991 | |
|
| |
Mexico Government International Bond (Mexico),
4.00%, 10/02/2023 | | | 14,000 | | | | 15,352 | |
|
| |
2.66%, 05/24/2031 | | | 200,000 | | | | 205,210 | |
|
| |
3.77%, 05/24/2061 | | | 200,000 | | | | 208,800 | |
|
| |
Morocco Government International Bond (Morocco), 2.38%, 12/15/2027(b) | | | 200,000 | | | | 201,100 | |
|
| |
Peruvian Government International Bond (Peru),
1.86%, 12/01/2032 | | | 30,000 | | | | 30,296 | |
|
| |
2.78%, 12/01/2060 | | | 30,000 | | | | 30,330 | |
|
| |
Turkey Government International Bond (Turkey), 5.95%, 01/15/2031 | | | 200,000 | | | | 209,000 | |
|
| |
| | | | | | | 1,344,118 | |
|
| |
| | |
Specialized Finance–0.80% | | | | | | | | |
Mitsubishi UFJ Lease & Finance Co. Ltd. (Japan), 3.64%, 04/13/2025(b) | | | 256,000 | | | | 282,794 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Specialized REITs–0.38% | | | | | | | | |
Agree L.P., 2.90%, 10/01/2030 | | $ | 12,000 | | | $ | 12,767 | |
|
| |
Crown Castle International Corp., 4.15%, 07/01/2050 | | | 14,000 | | | | 17,049 | |
|
| |
Iron Mountain, Inc.,
5.25%, 07/15/2030(b) | | | 37,000 | | | | 40,006 | |
|
| |
4.50%, 02/15/2031(b) | | | 35,000 | | | | 36,706 | |
|
| |
Life Storage L.P., 2.20%, 10/15/2030 | | | 14,000 | | | | 14,307 | |
|
| |
Simon Property Group L.P., 3.50%, 09/01/2025 | | | 12,000 | | | | 13,332 | |
|
| |
| | | | | | | 134,167 | |
|
| |
| | |
Specialty Chemicals–0.05% | | | | | | | | |
Kraton Polymers LLC/Kraton Polymers
Capital Corp., 4.25%, 12/15/2025(b) | | | 18,000 | | | | 18,384 | |
|
| |
| | |
Systems Software–0.21% | | | | | | | | |
Leidos, Inc., 2.30%, 02/15/2031(b) | | | 56,000 | | | | 57,124 | |
|
| |
Microsoft Corp., 2.53%, 06/01/2050 | | | 18,000 | | | | 18,983 | |
|
| |
| | | | | | | 76,107 | |
|
| |
|
Technology Hardware, Storage & Peripherals–0.46% | |
Apple, Inc., 4.25%, 02/09/2047 | | | 14,000 | | | | 19,107 | |
|
| |
Dell International LLC/EMC Corp.,
5.85%, 07/15/2025(b) | | | 11,000 | | | | 13,222 | |
|
| |
6.02%, 06/15/2026(b) | | | 47,000 | | | | 57,414 | |
|
| |
4.90%, 10/01/2026(b) | | | 14,000 | | | | 16,540 | |
|
| |
8.35%, 07/15/2046(b) | | | 37,000 | | | | 55,976 | |
|
| |
| | | | | | | 162,259 | |
|
| |
| | |
Tobacco–0.25% | | | | | | | | |
Altria Group, Inc., 4.40%, 02/14/2026 | | | 13,000 | | | | 15,097 | |
|
| |
BAT Capital Corp. (United Kingdom),
2.26%, 03/25/2028 | | | 34,000 | | | | 35,325 | |
|
| |
Philip Morris International, Inc., 0.88%, 05/01/2026 | | | 37,000 | | | | 37,173 | |
|
| |
| | | | | | | 87,595 | |
|
| |
| |
Trading Companies & Distributors–0.50% | | | | | |
Air Lease Corp.,
3.88%, 04/01/2021 | | | 70,000 | | | | 70,354 | |
|
| |
3.38%, 06/01/2021 | | | 50,000 | | | | 50,537 | |
|
| |
3.00%, 09/15/2023 | | | 53,000 | | | | 55,772 | |
|
| |
| | | | | | | 176,663 | |
|
| |
| | |
Trucking–0.32% | | | | | | | | |
Aviation Capital Group LLC,
0.88% (3 mo. USD LIBOR + 0.67%),
07/30/2021(b)(e) | | | 22,000 | | | | 21,797 | |
|
| |
4.13%, 08/01/2025(b) | | | 24,000 | | | | 25,182 | |
|
| |
Penske Truck Leasing Co. L.P./PTL Finance Corp.,
4.00%, 07/15/2025(b) | | | 19,000 | | | | 21,555 | |
|
| |
1.20%, 11/15/2025(b) | | | 11,000 | | | | 11,102 | |
|
| |
Ryder System, Inc.,
4.63%, 06/01/2025 | | | 17,000 | | | | 19,706 | |
|
| |
3.35%, 09/01/2025 | | | 13,000 | | | | 14,496 | |
|
| |
| | | | | | | 113,838 | |
|
| |
|
Wireless Telecommunication Services–1.87% | |
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC,
4.74%, 03/20/2025(b) | | | 200,000 | | | | 217,243 | |
|
| |
5.15%, 03/20/2028(b) | | | 209,000 | | | | 242,440 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Wireless Telecommunication Services–(continued) | |
|
| |
VEON Holdings B.V. (Netherlands), 3.38%, 11/25/2027(b) | | $ | 200,000 | | | $ | 205,722 | |
|
| |
| | | | | | | 665,405 | |
|
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $15,298,920) | | | | 16,400,296 | |
|
| |
|
U.S. Treasury Securities–21.66% | |
U.S. Treasury Bills–0.22% | | | | | | | | |
0.11% - 0.12%, 02/04/2021(g)(h) | | | 78,000 | | | | 77,993 | |
|
| |
| | |
U.S. Treasury Bonds–4.87% | | | | | | | | |
1.38%, 11/15/2040 | | | 508,500 | | | | 502,025 | |
|
| |
1.38%, 08/15/2050 | | | 1,314,300 | | | | 1,228,460 | |
|
| |
| | | | | | | 1,730,485 | |
|
| |
| | |
U.S. Treasury Notes–16.57% | | | | | | | | |
0.13%, 11/30/2022 | | | 22,200 | | | | 22,203 | |
|
| |
0.13%, 12/15/2023 | | | 272,400 | | | | 272,070 | |
|
| |
0.38%, 11/30/2025 | | | 2,813,200 | | | | 2,816,717 | |
|
| |
0.63%, 11/30/2027 | | | 1,422,900 | | | | 1,422,233 | |
|
| |
0.88%, 11/15/2030 | | | 1,356,300 | | | | 1,351,214 | |
|
| |
| | | | | | | 5,884,437 | |
|
| |
Total U.S. Treasury Securities
(Cost $7,680,579) | | | | 7,692,915 | |
|
| |
| | |
Asset-Backed Securities–14.13% | | | | | | | | |
Adjustable Rate Mortgage Trust,
Series 2004-2, Class 6A1, 2.72%,
02/25/2035(i) | | | 7,430 | | | | 7,632 | |
|
| |
Angel Oak Mortgage Trust,
Series 2020-1, Class A1, 2.47%,
12/25/2059(b)(i) | | | 40,284 | | | | 40,719 | |
|
| |
Series 2020-3, Class A1, 1.69%,
04/25/2065(b)(i) | | | 99,150 | | | | 99,975 | |
|
| |
Angel Oak Mortgage Trust I LLC,
Series 2018-3, Class A1, 3.65%,
09/25/2048(b)(i) | | | 17,667 | | | | 18,051 | |
|
| |
Series 2019-2, Class A1, 3.63%,
03/25/2049(b)(i) | | | 52,723 | | | | 54,050 | |
|
| |
Angel Oak Mortgage Trust LLC,
Series 2020-5, Class A1, 1.37%,
05/25/2065(b)(i) | | | 74,165 | | | | 74,810 | |
|
| |
Bain Capital Credit CLO Ltd.,
Series 2017-2A, Class AR, 1.46%
(3 mo. USD LIBOR + 1.25%),
07/25/2030(b)(e) | | | 249,889 | | | | 249,951 | |
|
| |
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class AS, 3.99%, 09/15/2048(i) | | | 70,000 | | | | 77,902 | |
|
| |
Benchmark Mortgage Trust,
Series 2019-B14, Class A5, 3.05%,
12/15/2062 | | | 90,000 | | | | 101,578 | |
|
| |
Series 2019-B14, Class C, 3.78%,
12/15/2062(i) | | | 83,700 | | | | 88,799 | |
|
| |
Series 2019-B15, Class B, 3.56%,
12/15/2072 | | | 70,000 | | | | 78,190 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
CGDBB Commercial Mortgage Trust,
Series 2017-BIOC, Class A, 0.95% (1 mo. USD LIBOR + 0.79%), 07/15/2032(b)(e) | | $ | 91,354 | | | $ | 91,473 | |
|
| |
Series 2017-BIOC, Class C, 1.21% (1 mo. USD LIBOR + 1.05%), 07/15/2032(b)(e) | | | 91,354 | | | | 91,412 | |
|
| |
Series 2017-BIOC, Class D, 1.76% (1 mo. USD LIBOR + 1.60%), 07/15/2032(b)(e) | | | 91,354 | | | | 91,674 | |
|
| |
Chase Home Lending Mortgage Trust, Series 2019-ATR2, Class A3, 3.50%, 07/25/2049(b)(i) | | | 73,600 | | | | 75,688 | |
|
| |
Chase Mortgage Finance Corp.,
Series 2016-SH1, Class M3, 3.75%, 04/25/2045(b)(i) | | | 40,206 | | | | 40,350 | |
|
| |
Series 2016-SH2, Class M3, 3.75%, 12/25/2045(b)(i) | | | 41,812 | | | | 42,742 | |
|
| |
Citigroup Mortgage Loan Trust, Inc.,
Series 2019-IMC1, Class A1, 2.72%, 07/25/2049(b)(i) | | | 56,062 | | | | 57,185 | |
|
| |
COLT Mortgage Loan Trust,
Series 2020-1, Class A1, 2.49%, 02/25/2050(b)(i) | | | 69,349 | | | | 70,258 | |
|
| |
Series 2020-1R, Class A1, 1.26%, 09/25/2065(b)(i) | | | 84,379 | | | | 84,651 | |
|
| |
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(i) | | | 78,902 | | | | 80,013 | |
|
| |
Commercial Mortgage Trust,
Series 2015-CR25, Class B, 4.54%, 08/10/2048(i) | | | 72,000 | | | | 80,500 | |
|
| |
Series 2016-GCT, Class B, 3.09%, 08/10/2029(b) | | | 100,000 | | | | 100,437 | |
|
| |
Credit Suisse Mortgage Capital Ctfs.,
Series 2020-SPT1, Class A1, 1.70%, 04/25/2065(b)(f) | | | 80,980 | | | | 81,489 | |
|
| |
CSAIL Commercial Mortgage Trust,
Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | 139,000 | | | | 150,321 | |
|
| |
CSFB Mortgage-Backed Pass-Through Ctfs., Series 2004-AR5, Class 3A1, 3.39%, 06/25/2034(i) | | | 11,965 | | | | 12,316 | |
|
| |
CSWF, Series 2018-TOP, Class B, 1.46% (1 mo. USD LIBOR + 1.30%), 08/15/2035(b)(e) | | | 80,000 | | | | 78,978 | |
|
| |
DB Master Finance LLC,
Series 2019-1A, Class A23, 4.35%, 05/20/2049(b) | | | 49,375 | | | | 53,596 | |
|
| |
Series 2019-1A, Class A2II, 4.02%, 05/20/2049(b) | | | 49,375 | | | | 52,269 | |
|
| |
Deephaven Residential Mortgage Trust, Series 2019-4A, Class A1, 2.79%, 10/25/2059(b)(i) | | | 59,715 | | | | 60,831 | |
|
| |
Domino’s Pizza Master Issuer LLC,
Series 2019-1A, Class A2, 3.67%, 10/25/2049(b) | | | 107,910 | | | | 114,998 | |
|
| |
DT Auto Owner Trust,
Series 2019-3A, Class C, 2.74%, 04/15/2025(b) | | | 40,000 | | | | 40,810 | |
|
| |
Series 2019-3A, Class D, 2.96%, 04/15/2025(b) | | | 56,000 | | | | 57,935 | |
|
| |
Ellington Financial Mortgage Trust,
Series 2019-2, Class A1, 2.74%, 11/25/2059(b)(i) | | | 72,361 | | | | 74,321 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
Galton Funding Mortgage Trust,
Series 2019-H1, Class A1, 2.66%, 10/25/2059(b)(i) | | $ | 46,864 | | | $ | 47,897 | |
|
| |
GCAT Trust,
Series 2019-NQM2, Class A1, 2.86%, 09/25/2059(b)(f) | | | 67,796 | | | | 68,907 | |
|
| |
Series 2019-NQM3, Class A1, 2.69%, 11/25/2059(b)(i) | | | 71,276 | | | | 73,378 | |
|
| |
GMACM Mortgage Loan Trust,
Series 2006-AR1, Class 1A1, 3.59%, 04/19/2036(i) | | | 47,686 | | | | 41,854 | |
|
| |
Golub Capital Partners CLO 41(B) Ltd.,
Series 2019-41A, Class A, 1.59% (3 mo. USD LIBOR + 1.37%),
04/20/2029(b)(e) | | | 146,000 | | | | 146,031 | |
|
| |
GS Mortgage Securities Trust,
Series 2020-GC45, Class A5, 2.91%, 02/13/2053 | | | 50,000 | | | | 55,948 | |
|
| |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 55,000 | | | | 59,301 | |
|
| |
Hertz Vehicle Financing II L.P.,
Series 2019-2A, Class A, 3.42%, 05/25/2025(b) | | | 22,828 | | | | 22,921 | |
|
| |
Homeward Opportunities Fund I Trust,
Series 2019-1, Class A1, 3.45%, 01/25/2059(b)(i) | | | 43,857 | | | | 44,374 | |
|
| |
Invitation Homes Trust, Series 2017- SFR2, Class C, 1.60% (1 mo. USD LIBOR + 1.45%), 12/17/2036(b)(e) | | | 100,000 | | | | 100,342 | |
|
| |
Merrill Lynch Mortgage Investors Trust,
Series 2005-3, Class 3A, 2.61%, 11/25/2035(i) | | | 10,287 | | | | 10,233 | |
|
| |
Morgan Stanley Capital I Trust,
Series 2017-CLS, Class A, 0.86% (1 mo. USD LIBOR + 0.70%),
11/15/2034(b)(e) | | | 99,000 | | | | 99,052 | |
|
| |
Series 2017-CLS, Class B, 1.01% (1 mo. USD LIBOR + 0.85%),
11/15/2034(b)(e) | | | 49,000 | | | | 49,009 | |
|
| |
Series 2017-CLS, Class C, 1.16% (1 mo. USD LIBOR + 1.00%),
11/15/2034(b)(e) | | | 33,000 | | | | 33,037 | |
|
| |
Series 2019-L2, Class A4, 4.07%, 03/15/2052 | | | 80,000 | | | | 95,124 | |
|
| |
Series 2019-L3, Class AS, 3.49%, 11/15/2052 | | | 60,000 | | | | 67,167 | |
|
| |
MVW LLC, Series 2019-2A, Class A, 2.22%, 10/20/2038(b) | | | 74,560 | | | | 76,849 | |
|
| |
MVW Owner Trust, Series 2019-1A, Class A, 2.89%, 11/20/2036(b) | | | 60,667 | | | | 63,072 | |
|
| |
New Residential Mortgage Loan Trust,
Series 2019-NQM4, Class A1, 2.49%, 09/25/2059(b)(i) | | | 68,693 | | | | 70,129 | |
|
| |
Series 2020-NQM1, Series A1, 2.46%, 01/26/2060(b)(i) | | | 77,959 | | | | 79,805 | |
|
| |
One Bryant Park Trust,
Series 2019-OBP, Class A, 2.52%, 09/15/2054(b) | | | 114,000 | | | | 122,529 | |
|
| |
Progress Residential Trust,
Series 2020-SFR1, Class A, 1.73%, 04/17/2037(b) | | | 100,000 | | | | 101,975 | |
|
| |
Sonic Capital LLC, Series 2020-1A, Class A2I, 3.85%, 01/20/2050(b) | | | 49,583 | | | | 53,179 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | |
| | | Principal Amount | | | Value | |
| |
Starwood Mortgage Residential Trust, Series 2020-1, Class A1, 2.28%, 02/25/2050(b)(i) | | $ | 70,943 | | | $ | 72,593 | |
|
| |
Series 2020-INV1, Class A1, 1.03%, 11/25/2055(b)(i) | | | 99,503 | | | | 99,646 | |
|
| |
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-12, Class 3A2, 2.65%, 09/25/2034(i) | | | 7,624 | | | | 7,756 | |
|
| |
Structured Asset Securities Corp. Mortgage Pass-Through Ctfs., Series 2003-34A, Class 5A5, 2.47%, 11/25/2033(i) | | | 50,092 | | | | 49,835 | |
|
| |
Thornburg Mortgage Securities Trust, Series 2005-1, Class A3, 3.33%, 04/25/2045(i) | | | 28,014 | | | | 28,142 | |
|
| |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.50% (3 mo. USD LIBOR + 1.28%), 04/20/2033(b)(e) | | | 250,000 | | | | 250,323 | |
|
| |
Towd Point Mortgage Trust, Series 2017-2, Class A1, 2.75%,
04/25/2057(b)(i) | | | 37,148 | | | | 38,022 | |
|
| |
UBS Commercial Mortgage Trust, Series 2019-C16, Class A4, 3.60%, 04/15/2052 | | | 80,000 | | | | 91,712 | |
|
| |
Verus Securitization Trust, Series 2020-1, Class A1, 2.42%,
01/25/2060(b)(f) | | | 74,513 | | | | 75,995 | |
|
| |
Wendy’s Funding LLC, Series 2018-1A, Class A2II, 3.88%, 03/15/2048(b) | | | 58,200 | | | | 61,828 | |
|
| |
WFRBS Commercial Mortgage Trust, Series 2012-C6, Class B, 4.70%, 04/15/2045 | | | 80,000 | | | | 82,466 | |
|
| |
Total Asset-Backed Securities
(Cost $4,874,955) | | | | 5,016,335 | |
|
| |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–8.65% | |
Collateralized Mortgage Obligations–0.67% | |
Freddie Mac Multifamily Structured
Pass-Through Ctfs.,
Series K062, Class A1, 3.03%, 09/25/2026 | | | 23,697 | | | | 25,415 | |
|
| |
Series K083, Class AM, 4.03%, 10/25/2028(i) | | | 23,000 | | | | 27,882 | |
|
| |
Series K085, Class AM, 4.06%, 10/25/2028(i) | | | 23,000 | | | | 27,780 | |
|
| |
Series K089, Class AM, 3.63%, 01/25/2029(i) | | | 39,000 | | | | 46,321 | |
|
| |
Series K088, Class AM, 3.76%, 01/25/2029(i) | | | 92,000 | | | | 110,117 | |
|
| |
Freddie Mac Whole Loan Securities Trust, Series 2017-SC02, Class 2A1, 3.50%, 05/25/2047 | | | 228 | | | | 228 | |
|
| |
| | | | | | | 237,743 | |
|
| |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.68% | |
6.50%, 08/01/2032 | | | 586 | | | | 671 | |
|
| |
4.00%, 11/01/2048 to 07/01/2049 | | | 225,870 | | | | 241,639 | |
|
| |
| | | | | | | 242,310 | |
|
| |
|
Federal National Mortgage Association (FNMA)–2.20% | |
3.50%, 12/01/2030 to 05/01/2047 | | | 702,034 | | | | 751,946 | |
|
| |
6.50%, 09/01/2031 | | | 561 | | | | 644 | |
|
| |
7.00%, 09/01/2032 | | | 4,290 | | | | 4,655 | |
|
| |
4.50%, 12/01/2048 | | | 23,184 | | | | 25,076 | |
|
| |
| | | | | | | 782,321 | |
|
| |
| | | | | | | | |
| | | Principal Amount | | | Value | |
| |
Government National Mortgage Association (GNMA)–1.32% | |
7.50%, 06/15/2023 | | $ | 260 | | | $ | 261 | |
|
| |
8.50%, 11/15/2024 | | | 582 | | | | 584 | |
|
| |
7.00%, 07/15/2031 to 08/15/2031 | | | 630 | | | | 731 | |
|
| |
6.50%, 11/15/2031 to 03/15/2032 | | | 1,653 | | | | 1,856 | |
|
| |
6.00%, 11/15/2032 | | | 884 | | | | 1,047 | |
|
| |
4.00%, 07/20/2049 | | | 97,013 | | | | 103,712 | |
|
| |
TBA,
2.00%, 01/01/2051(j) | | | 345,000 | | | | 360,754 | |
|
| |
| | | | | | | 468,945 | |
|
| |
|
Uniform Mortgage-Backed Securities–3.78% | |
TBA
2.00%, 01/01/2036 to 02/01/2051(j) | | | 1,286,000 | | | | 1,340,503 | |
|
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $3,004,485) | | | | | | | 3,071,822 | |
|
| |
| | |
| | | Shares | | | | | |
| | |
Preferred Stocks–2.41% | | | | | | | | |
Asset Management & Custody Banks–0.13% | |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(c)(d) | | | 43,000 | | | | 47,528 | |
|
| |
| | |
Diversified Banks–0.87% | | | | | | | | |
Bank of America Corp., 6.50%, Series Z, Pfd.(c)(d) | | | 64,000 | | | | 73,280 | |
|
| |
Citigroup, Inc., 6.25%, Series T, Pfd.(c)(d) | | | 30,000 | | | | 34,484 | |
|
| |
Citigroup, Inc., 5.00%, Series U, Pfd.(c)(d) | | | 95,000 | | | | 98,978 | |
|
| |
Citigroup, Inc., 4.00%, Series W,
Pfd.(c)(d) | | | 57,000 | | | | 58,639 | |
|
| |
JPMorgan Chase & Co., 3.68%,
Series I, Pfd.(d)(e) | | | 26,000 | | | | 25,821 | |
|
| |
Wells Fargo & Co., 7.50%, Class A, Series L, Conv. Pfd. | | | 11 | | | | 16,697 | |
|
| |
| | | | | | | 307,899 | |
|
| |
|
Integrated Telecommunication Services–0.35% | |
AT&T, Inc., 2.88%, Series B, Pfd.(c)(d) | | | 100,000 | | | | 123,203 | |
|
| |
| |
Investment Banking & Brokerage–0.68% | | | | | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(c)(d) | | | 55,000 | | | | 58,162 | |
|
| |
Goldman Sachs Group, Inc. (The), 5.00%, Series P, Pfd.(c)(d) | | | 40,000 | | | | 40,500 | |
|
| |
Morgan Stanley, 6.88%, Series F, Pfd.(c) | | | 5,000 | | | | 142,500 | |
|
| |
| | | | | | | 241,162 | |
|
| |
|
Life & Health Insurance–0.17% | |
MetLife, Inc., 3.79%, Series C, Pfd.(d)(e) | | | 12,000 | | | | 11,970 | |
|
| |
MetLife, Inc., 3.85%, Series G, Pfd.(c)(d) | | | 47,000 | | | | 49,702 | |
|
| |
| | | | | | | 61,672 | |
|
| |
|
Multi-Utilities–0.12% | |
CenterPoint Energy, Inc., 6.13%,
Series A, Pfd.(c)(d) | | | 40,000 | | | | 41,921 | |
|
| |
|
Other Diversified Financial Services–0.09% | |
Equitable Holdings, Inc., 4.95%,
Series B, Pfd.(c)(d) | | | 30,000 | | | | 31,988 | |
|
| |
Total Preferred Stocks (Cost $786,979) | | | | 855,373 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | | | | | |
| | | | Principal
Amount | | | Value | |
|
| |
Agency Credit Risk Transfer Notes–0.56% | |
Fannie Mae Connecticut Avenue Securities
Series 2018-C05, Class 1M2, 2.50% (1 mo. USD LIBOR + 2.35%), 01/25/2031(e) | | | $ | | | | 20,469 | | | $ | 20,585 | |
|
| |
Series 2019-R03, Class 1M2, 2.30% (1 mo. USD LIBOR + 2.15%), 09/25/2031(b)(e) | | | | | | | 31,421 | | | | 31,505 | |
|
| |
Series 2019-R06, Class 2M2, 2.25% (1 mo. USD LIBOR + 2.10%), 09/25/2039(b)(e) | | | | | | | 41,821 | | | | 41,913 | |
|
| |
Freddie Mac
Series 2020-DNA5, Class M2, STACR® , 2.88% (SOFR + 2.80%), 10/25/2050(b)(e) | | | | | | | 75,000 | | | | 76,380 | |
|
| |
Series 2020-DNA5, Class M1, STACR® , 1.38% (SOFR + 1.30%), 10/25/2050(b)(e) | | | | | | | 30,000 | | | | 30,118 | |
|
| |
Total Agency Credit Risk Transfer Notes
(Cost $199,151) | | | | 200,501 | |
|
| |
|
Non-U.S. Dollar Denominated Bonds & Notes–0.40%(k) | |
Movies & Entertainment–0.40% | |
Netflix, Inc., 3.88%, 11/15/2029 (Cost $111,565)(b) | | | EUR | | | | 100,000 | | | | 141,546 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Municipal Obligations–0.15% | |
Maryland (State of) Health & Higher Educational Facilities Authority (University of MD Medical System), Series 2020 D, Ref. RB, 3.05%, 07/01/2040 | | $ | 20,000 | | | $ | 20,764 | |
|
| |
Series 2020 D, Ref. RB, 3.20%, 07/01/2050 | | | 30,000 | | | | 31,158 | |
|
| |
Total Municipal Obligations (Cost $50,000) | | | | 51,922 | |
|
| |
| | |
| | | Shares | | | | |
|
Money Market Funds–9.61% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(l)(m) | | | 1,152,387 | | | | 1,152,387 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(l)(m) | | | 942,766 | | | | 943,049 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(l)(m) | | | 1,317,014 | | | | 1,317,014 | |
|
| |
Total Money Market Funds
(Cost $3,412,114) | | | | | | | 3,412,450 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–103.75%
(Cost $35,418,748) | | | | 36,843,160 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(3.75)% | | | | (1,332,702 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 35,510,458 | |
|
| |
| | |
| Investment Abbreviations: |
| |
| CLO | | – Collateralized Loan Obligation |
| Conv. | | – Convertible |
| Ctfs. | | – Certificates |
| EUR | | – Euro |
| LIBOR | | – London Interbank Offered Rate |
| Pfd. | | – Preferred |
| RB | | – Revenue Bonds |
| Ref. | | – Refunding |
| REIT | | – Real Estate Investment Trust |
| SOFR | | – Secured Overnight Financing Rate |
| TBA | | – To Be Announced |
| USD | | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $11,336,017, which represented 31.92% of the Fund’s Net Assets. |
| (c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (d) | Perpetual bond with no specified maturity date. |
| (e) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (f) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (g) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (h) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1M. |
| (i) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (j) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1N. |
| (k) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (l) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,129,193 | | | | $ | 9,655,676 | | | | $ | (9,632,482 | ) | | | $ | - | | | | $ | - | | | | $ | 1,152,387 | | | | $ | 5,690 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 817,642 | | | | | 7,005,320 | | | | | (6,880,345 | ) | | | | 264 | | | | | 168 | | | | | 943,049 | | | | | 6,466 | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,290,506 | | | | | 11,035,059 | | | | | (11,008,551 | ) | | | | - | | | | | - | | | | | 1,317,014 | | | | | 6,144 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 41,285 | | | | | (41,285 | ) | | | | - | | | | | - | | | | | - | | | | | 1* | |
Invesco Private Prime Fund | | | | - | | | | | 13,408 | | | | | (13,408 | ) | | | | - | | | | | - | | | | | - | | | | | 1* | |
Total | | | $ | 3,237,341 | | | | $ | 27,750,748 | | | | $ | (27,576,071 | ) | | | $ | 264 | | | | $ | 168 | | | | $ | 3,412,450 | | | | $ | 18,302 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (m) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | |
Open Futures Contracts | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 2 Year Notes | | | 40 | | | | March-2021 | | | | $ 8,839,062 | | | | $8,046 | | | | $8,046 | |
U.S. Treasury 5 Year Notes | | | 10 | | | | March-2021 | | | | 1,261,641 | | | | 1,525 | | | | 1,525 | |
U.S. Treasury Long Bonds | | | 1 | | | | March-2021 | | | | 173,188 | | | | (1,814 | ) | | | (1,814 | ) |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | 7,757 | | | | 7,757 | |
| | | | | |
Short Futures Contracts | | | | | | | | | | | | | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 10 Year Notes | | | 23 | | | | March-2021 | | | | (3,175,797 | ) | | | (5,443 | ) | | | (5,443 | ) |
U.S. Treasury 10 Year Ultra Bonds | | | 15 | | | | March-2021 | | | | (2,345,391 | ) | | | 1,843 | | | | 1,843 | |
U.S. Treasury Ultra Bonds | | | 2 | | | | March-2021 | | | | (427,125 | ) | | | (2,035 | ) | | | (2,035 | ) |
Subtotal–Short Futures Contracts | | | | | | | | | | | | | | | (5,635 | ) | | | (5,635 | ) |
Total Futures Contracts | | | | | | | | | | | | | | | $2,122 | | | | $2,122 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
Settlement
Date | | Counterparty | | | | Contract to | | Unrealized Appreciation
(Depreciation) | |
| | Deliver | | Receive |
| | | | | |
Currency Risk | | | | | | | | | | | | |
| | | | | |
02/17/2021 | | Citibank N.A. | | | | EUR 251,000 | | USD 297,324 | | | $(9,620) | |
|
Abbreviations: |
| EUR - Euro |
| USD - U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $32,006,634) | | $ | 33,430,710 | |
|
| |
Investments in affiliated money market funds, at value (Cost $3,412,114) | | | 3,412,450 | |
|
| |
Foreign currencies, at value (Cost $77,069) | | | 79,211 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 470,685 | |
|
| |
Fund shares sold | | | 229,617 | |
|
| |
Dividends | | | 2,255 | |
|
| |
Interest | | | 160,063 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 61,946 | |
|
| |
Total assets | | | 37,846,937 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 5,926 | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 9,620 | |
|
| |
Payable for: | | | | |
Investments purchased | | | 2,177,076 | |
|
| |
Fund shares reacquired | | | 9,234 | |
|
| |
Amount due custodian | | | 3,862 | |
|
| |
Accrued fees to affiliates | | | 8,625 | |
|
| |
Accrued other operating expenses | | | 57,871 | |
|
| |
Trustee deferred compensation and retirement plans | | | 64,265 | |
|
| |
Total liabilities | | | 2,336,479 | |
|
| |
Net assets applicable to shares outstanding | | $ | 35,510,458 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 32,150,795 | |
|
| |
Distributable earnings | | | 3,359,663 | |
|
| |
| | | $35,510,458 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 34,881,195 | |
|
| |
Series II | | $ | 629,263 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 5,030,224 | |
|
| |
Series II | | | 91,312 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 6.93 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 6.89 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $997) | | $ | 749,567 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $7) | | | 18,307 | |
|
| |
Dividends | | | 10,062 | |
|
| |
Total investment income | | | 777,936 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 139,688 | |
|
| |
Administrative services fees | | | 49,008 | |
|
| |
Custodian fees | | | 8,984 | |
|
| |
Distribution fees - Series II | | | 944 | |
|
| |
Transfer agent fees | | | 9,506 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 20,074 | |
|
| |
Reports to shareholders | | | 12,836 | |
|
| |
Professional services fees | | | 44,810 | |
|
| |
Other | | | (11,065 | ) |
|
| |
Total expenses | | | 274,785 | |
|
| |
Less: Fees waived | | | (90,082 | ) |
|
| |
Net expenses | | | 184,703 | |
|
| |
Net investment income | | | 593,233 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 1,184,830 | |
|
| |
Affiliated investment securities | | | 168 | |
|
| |
Foreign currencies | | | 5,259 | |
|
| |
Forward foreign currency contracts | | | (18,269 | ) |
|
| |
Futures contracts | | | 208,883 | |
|
| |
| | | 1,380,871 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 880,004 | |
|
| |
Affiliated investment securities | | | 264 | |
|
| |
Foreign currencies | | | (868 | ) |
|
| |
Forward foreign currency contracts | | | (4,992 | ) |
|
| |
Futures contracts | | | 21,987 | |
|
| |
| | | 896,395 | |
|
| |
Net realized and unrealized gain | | | 2,277,266 | |
|
| |
Net increase in net assets resulting from operations | | $ | 2,870,499 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 593,233 | | | $ | 622,883 | |
|
| |
Net realized gain | | | 1,380,871 | | | | 608,096 | |
|
| |
Change in net unrealized appreciation | | | 896,395 | | | | 881,049 | |
|
| |
Net increase in net assets resulting from operations | | | 2,870,499 | | | | 2,112,028 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (794,296 | ) | | | (684,305 | ) |
|
| |
Series II | | | (9,108 | ) | | | (3,040 | ) |
|
| |
Total distributions from distributable earnings | | | (803,404 | ) | | | (687,345 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 8,069,912 | | | | 6,335,765 | |
|
| |
Series II | | | 245,519 | | | | 231,286 | |
|
| |
Net increase in net assets resulting from share transactions | | | 8,315,431 | | | | 6,567,051 | |
|
| |
Net increase in net assets | | | 10,382,526 | | | | 7,991,734 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 25,127,932 | | | | 17,136,198 | |
|
| |
End of year | | $ | 35,510,458 | | | $ | 25,127,932 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 6.47 | | | | $ | 0.13 | | | | $ | 0.50 | | | | $ | 0.63 | | | | $ | (0.13 | ) | | | $ | (0.04 | ) | | | $ | (0.17 | ) | | | $ | 6.93 | | | | | 9.72 | % | | | $ | 34,881 | | | | | 0.59 | %(d) | | | | 0.88 | %(d) | | | | 1.92 | %(d) | | | | 375 | % |
Year ended 12/31/19 | | | | 6.00 | | | | | 0.19 | | | | | 0.47 | | | | | 0.66 | | | | | (0.19 | ) | | | | – | | | | | (0.19 | ) | | | | 6.47 | | | | | 11.06 | | | | | 24,769 | | | | | 0.59 | | | | | 1.13 | | | | | 2.94 | | | | | 300 | |
Year ended 12/31/18 | | | | 6.38 | | | | | 0.22 | | | | | (0.37 | ) | | | | (0.15 | ) | | | | (0.23 | ) | | | | – | | | | | (0.23 | ) | | | | 6.00 | | | | | (2.37 | ) | | | | 17,019 | | | | | 0.59 | | | | | 1.78 | | | | | 3.57 | | | | | 339 | |
Year ended 12/31/17 | | | | 6.21 | | | | | 0.22 | | | | | 0.17 | | | | | 0.39 | | | | | (0.22 | ) | | | | – | | | | | (0.22 | ) | | | | 6.38 | | | | | 6.34 | | | | | 20,326 | | | | | 0.60 | | | | | 1.58 | | | | | 3.46 | | | | | 407 | |
Year ended 12/31/16 | | | | 6.07 | | | | | 0.23 | | | | | 0.18 | | | | | 0.41 | | | | | (0.27 | ) | | | | – | | | | | (0.27 | ) | | | | 6.21 | | | | | 6.66 | | | | | 15,485 | | | | | 0.55 | | | | | 1.68 | | | | | 3.71 | | | | | 474 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 6.45 | | | | | 0.11 | | | | | 0.49 | | | | | 0.60 | | | | | (0.12 | ) | | | | (0.04 | ) | | | | (0.16 | ) | | | | 6.89 | | | | | 9.33 | | | | | 629 | | | | | 0.84 | (d) | | | | 1.13 | (d) | | | | 1.67 | (d) | | | | 375 | |
Year ended 12/31/19 | | | | 5.97 | | | | | 0.17 | | | | | 0.49 | | | | | 0.66 | | | | | (0.18 | ) | | | | – | | | | | (0.18 | ) | | | | 6.45 | | | | | 11.00 | | | | | 359 | | | | | 0.84 | | | | | 1.38 | | | | | 2.69 | | | | | 300 | |
Year ended 12/31/18 | | | | 6.35 | | | | | 0.20 | | | | | (0.37 | ) | | | | (0.17 | ) | | | | (0.21 | ) | | | | – | | | | | (0.21 | ) | | | | 5.97 | | | | | (2.64 | ) | | | | 117 | | | | | 0.84 | | | | | 2.03 | | | | | 3.32 | | | | | 339 | |
Year ended 12/31/17 | | | | 6.19 | | | | | 0.20 | | | | | 0.16 | | | | | 0.36 | | | | | (0.20 | ) | | | | – | | | | | (0.20 | ) | | | | 6.35 | | | | | 5.89 | | | | | 123 | | | | | 0.85 | | | | | 1.83 | | | | | 3.21 | | | | | 407 | |
Year ended 12/31/16 | | | | 6.04 | | | | | 0.22 | | | | | 0.18 | | | | | 0.40 | | | | | (0.25 | ) | | | | – | | | | | (0.25 | ) | | | | 6.19 | | | | | 6.52 | | | | | 126 | | | | | 0.80 | | | | | 1.93 | | | | | 3.46 | | | | | 474 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $30,664 and $378 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Core Plus Bond Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Core Plus Bond Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| .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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
|
| Invesco V.I. Core Plus Bond Fund |
dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Lower-Rated Securities – The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claims. |
| J. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized |
|
| Invesco V.I. Core Plus Bond Fund |
foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| M. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| N. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on senior securities and borrowings.
| O. | LIBOR Risk – The Fund may invest in financial instruments that utilize LIBOR as the reference or benchmark rate for variable interest rate calculations. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021, and it is currently anticipated that LIBOR will cease to be published after that time, although there are initiatives underway for the discontinuation to be extended beyond 2021 for certain LIBOR rates. There remains uncertainty regarding the effect of the LIBOR transition process and therefore any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. There is no assurance that the composition or characteristics of any alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; increased difficulty in borrowing or refinancing and diminished effectiveness of any applicable hedging strategies against instruments whose terms currently include LIBOR; and/or costs incurred in connection with temporary borrowings and closing out positions and entering into new agreements. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| P. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
| Q. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| R. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | | | |
Average Daily Net Assets | | Rate | |
|
| |
First $ 500 million | | | 0.450% | |
|
| |
Next $500 million | | | 0.425% | |
|
| |
Next $1.5 billion | | | 0.400% | |
|
| |
Next $2.5 billion | | | 0.375% | |
|
| |
Over $5 billion | | | 0.350% | |
|
| |
|
| Invesco V.I. Core Plus Bond Fund |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.45%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.61% and Series II shares to 0.86% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $90,082.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $4,688 for accounting and fund administrative services and was reimbursed $44,320 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | | $ – | | | | $16,400,296 | | | | $– | | | | $16,400,296 | |
|
| |
U.S. Treasury Securities | | | – | | | | 7,692,915 | | | | – | | | | 7,692,915 | |
|
| |
Asset-Backed Securities | | | – | | | | 5,016,335 | | | | – | | | | 5,016,335 | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 3,071,822 | | | | – | | | | 3,071,822 | |
|
| |
Preferred Stocks | | | 159,197 | | | | 696,176 | | | | – | | | | 855,373 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 200,501 | | | | – | | | | 200,501 | |
|
| |
Non-U.S. Dollar Denominated Bonds & Notes | | | – | | | | 141,546 | | | | – | | | | 141,546 | |
|
| |
Municipal Obligations | | | – | | | | 51,922 | | | | – | | | | 51,922 | |
|
| |
Money Market Funds | | | 3,412,450 | | | | – | | | | – | | | | 3,412,450 | |
|
| |
Total Investments in Securities | | | 3,571,647 | | | | 33,271,513 | | | | – | | | | 36,843,160 | |
|
| |
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | $ 11,414 | | | | $ – | | | | $– | | | | $ 11,414 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (9,292 | ) | | | – | | | | – | | | | (9,292 | ) |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (9,620 | ) | | | – | | | | (9,620 | ) |
|
| |
| | | (9,292 | ) | | | (9,620 | ) | | | – | | | | (18,912 | ) |
|
| |
Total Other Investments | | | 2,122 | | | | (9,620 | ) | | | – | | | | (7,498 | ) |
|
| |
Total Investments | | | $3,573,769 | | | | $33,261,893 | | | | $– | | | | $36,835,662 | |
|
| |
* Unrealized appreciation (depreciation).
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Currency
Risk | | | Interest Rate Risk | | | Total | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | | $ - | | | | $ 11,414 | | | | $ 11,414 | |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | (11,414 | ) | | | (11,414 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | | $ - | | | | $ - | | | | $ - | |
|
| |
| |
| | | Value | |
| Derivative Liabilities | | Currency
Risk | | | Interest Rate Risk | | | Total | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | | $ - | | | | $ (9,292 | ) | | | $ (9,292 | ) |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | (9,620 | ) | | | - | | | | (9,620 | ) |
|
| |
Total Derivative Liabilities | | | (9,620 | ) | | | (9,292 | ) | | | (18,912 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | 9,292 | | | | 9,292 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | | $ (9,620 | ) | | | $ - | | | | $ (9,620 | ) |
|
| |
(a) The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities.
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | Financial
Derivative
Liabilities | | | | Collateral (Received)/Pledged | | |
| Counterparty | | Forward Foreign
Currency Contracts | | Forward Foreign
Currency Contracts | | Net Value of
Derivatives | | Non-Cash | | Cash | | Net
Amount |
|
|
Citibank N.A. | | $– | | $(9,620) | | $(9,620) | | $– | | $– | | $(9,620) |
|
|
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Currency
Risk | | | Interest
Rate Risk | | | Total | |
|
| |
Realized Gain (Loss): | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | (18,269 | ) | | $ | - | | | $ | (18,269 | ) |
|
| |
Futures contracts | | | - | | | | 208,883 | | | | 208,883 | |
|
| |
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
|
| | Currency Risk | | | Interest Rate Risk | | | Total | |
| |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | (4,992 | ) | | $ | – | | | $ | (4,992 | ) |
|
| |
Futures contracts | | | – | | | | 21,987 | | | | 21,987 | |
|
| |
Total | | $ | (23,261 | ) | | $ | 230,870 | | | $ | 207,609 | |
|
| |
| | The table below summarizes the average notional value of derivatives held during the period. |
| | | | | | |
| | | Forward Foreign Currency Contracts | | Futures Contracts | |
|
| |
Average notional value | | $330,267 | | | $12,206,660 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 803,404 | | | $ | 687,345 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 1,778,014 | |
|
| |
Undistributed long-term capital gain | | | 204,337 | |
|
| |
Net unrealized appreciation - investments | | | 1,418,159 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 2,331 | |
|
| |
Temporary book/tax differences | | | (43,178 | ) |
|
| |
Shares of beneficial interest | | | 32,150,795 | |
|
| |
Total net assets | | $ | 35,510,458 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, futures contracts and foreign currency contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $55,490,977 and $50,591,709, respectively. During the same period, purchases and sales of U.S. Treasury
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| Invesco V.I. Core Plus Bond Fund |
obligations were $55,597,838 and $52,388,092, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 1,464,369 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (46,210 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 1,418,159 | |
|
| |
Cost of investments for tax purposes is $35,417,503.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of dollar rolls, partnership adjustments, paydown adjustments and forward foreign currency contracts, on December 31, 2020, undistributed net investment income was increased by $30,368 and undistributed net realized gain was decreased by $30,368. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 3,180,253 | | | $ | 21,269,042 | | | | 1,567,948 | | | $ | 10,023,351 | |
|
| |
Series II | | | 41,575 | | | | 286,022 | | | | 38,201 | | | | 244,863 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 117,326 | | | | 794,296 | | | | 106,424 | | | | 684,305 | |
|
| |
Series II | | | 1,317 | | | | 8,865 | | | | 432 | | | | 2,771 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,092,985 | ) | | | (13,993,426 | ) | | | (685,177 | ) | | | (4,371,891 | ) |
|
| |
Series II | | | (7,337 | ) | | | (49,368 | ) | | | (2,491 | ) | | | (16,348 | ) |
|
| |
Net increase in share activity | | | 1,240,149 | | | $ | 8,315,431 | | | | 1,025,337 | | | $ | 6,567,051 | |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 80% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
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| Invesco V.I. Core Plus Bond Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Core Plus Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Core Plus Bond Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco V.I. Core Plus Bond Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
|
|
| | Beginning Account Value (07/01/20) | | Ending Account Value (12/31/20)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/20) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
|
|
Series I | | $1,000.00 | | $1,037.90 | | $3.02 | | $1,022.17 | | $3.00 | | 0.59% |
Series II | | 1,000.00 | | 1,037.00 | | 4.30 | | 1,020.91 | | 4.27 | | 0.84 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
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| Invesco V.I. Core Plus Bond Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | | | | | |
Federal and State Income Tax | | | | |
Corporate Dividends Received Deduction* | | | 6.48 | % |
Qualified Dividend Income* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 6.87 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
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| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
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| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Core Plus Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and
Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. Core Plus Bond Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Diversified Dividend Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIDDI-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco V.I. Diversified Dividend Fund (the Fund) underperformed the Russell 1000 Value Index, the Fund’s style-specific benchmark.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | |
| Series I Shares | | | 0.14 | % |
| Series II Shares | | | -0.13 | |
| S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
| Russell 1000 Value Indexq (Style-Specific Index) | | | 2.80 | |
| Lipper VUF Large-Cap Value Funds Index∎ (Peer Group Index) | | | 1.69 | |
| Source(s): qRIMES Technologies Corp.; ∎ Lipper Inc. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
During the second quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions.
Despite a September selloff, US equity markets continued to rise, posting gains in the third quarter of 2020 as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Activity was better than expected across many areas of the economy. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks.
US equity markets again posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate,
consumer staples and utilities lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.2
Within the S&P 500 Index, information technology (IT) was the best-performing sector for the year, while energy was the worst-performing sector. It is important to view the market’s performance within the context of a full market cycle. This cycle, which began in June 2009 and ended in March of 2020, was one of the longest expansions on record with one of the largest bull markets, despite a historically low recovery in revenue versus previous cycle troughs.3 In this environment, we remained focused on our assessment of each investment’s risk-reward profile.
During the year, the Fund’s management discipline remained unchanged. Our total return approach continued to emphasize long-term capital appreciation, current income and capital preservation. We believe the Fund may serve as an equity foundation within a well-diversified asset allocation strategy, complementing more aggressive and cyclical investments. We look for dividend-paying companies with strong profitability, solid balance sheets and capital allocation policies that support sustained or increasing dividends and share repurchases. We perform extensive fundamental research, incorporating both financial statement analysis and an assessment of the potential reward relative to the downside risk, to determine a fair valuation over our two- to three-year investment horizon
for each stock. We believe this process may provide a valuable combination of dividend income, price appreciation and capital preservation. We also maintain a rigorous sell discipline and consider selling or reducing shares in stocks that no longer meet our investment criteria.
Within the Fund’s style-specific benchmark, materials and health care were the best-performing sectors, while energy, real estate and financials were the worst-performing sectors during the year. The Fund’s underweight exposure combined with stock selection in the energy and real estate sectors contributed the most to relative Fund performance versus the style-specific index. An underweight position in financials and overweight position in consumer staples also helped relative Fund performance. Stock selection combined with an overweight position in the utilities sector and stock selection combined with an underweight position in the health care sector detracted the most from the Fund’s relative performance. Stock selection combined with underweight exposure to the communication services sector also hurt the Fund’s performance relative to the style-specific benchmark.
During the year, holdings in the industrials and consumer discretionary sectors were among the largest contributors to the Fund’s absolute performance. Farm and heavy construction machinery company Deere was the largest contributor to Fund performance during the year. The company was a new purchase for the Fund during the pandemic. During the year, markets for the company appeared to be stabilizing. In addition, pricing for used equipment improved as inventory continued to be worked down. Operating margins also showed sequential improvement. Lastly, the company announced a reorganization specifying a focus to be more disciplined on its approach to allocating capital which was favorably received by investors. Discount store Target was also a large contributor to Fund performance. Target benefited from higher customer spending across its key categories, which improved market share and expanded profitability. As a result of its stronger cash flows, the company announced increases to both the dividend growth rate and to the level of share buybacks. The world’s largest parcel delivery company, United Parcel Service (UPS), was another large contributor to Fund performance. UPS reported strong revenues and earnings driven by strong volume growth in US domestic shipments. In addition, the company experienced improved core pricing power in areas where capacity remains restricted.
Holdings within communication services, energy and financials sectors were among the largest detractors from absolute Fund performance during the year. Telecom giant AT&T was the largest detractor from Fund performance. Strength in AT&T’s wireless service business was overshadowed by challenges in
Invesco V.I. Diversified Dividend Fund
the Warner Media segment, where theaters temporarily closed, content production slowed, and sports events were cancelled or postponed. The company’s efforts in late 2020 to divest its underperforming DirecTV assets did not yield a sale. Integrated oil & gas company Suncor Energy was also a large detractor from Fund performance as its upstream production and refining profits were impacted by reduced end market demand. In response to these challenges, management cut the dividend in order to improve capital flexibility. Additionally, the company’s oil sands business experienced several operational interruptions, which negatively impacted utilization rates. Hartford Financial Services was another large detractor from Fund performance during the year. Shares of the diversified insurance company declined due to investor concerns of the potential size of claims related COVID-19 costs within their Commercial Lines business.
The Fund used currency forward contracts for the purpose of hedging currency exposure of some of the non-US-based companies held in the portfolio and not for speculative purposes or leverage. The use of currency forward contracts had a very small negative impact on the Fund’s performance during the year.
The Fund has successfully navigated multiple market cycles with a consistent long-term mandate to emphasize capital appreciation, current income and capital preservation over a full market cycle.
It has been our privilege to oversee Invesco V.I. Diversified Dividend Fund, and we thank you for your continued investment.
| 1 | Source: US Federal Reserve |
| 3 | Sources: National Bureau of Economic Research, Ned Davis Research and FactSet Research Systems Inc. |
Portfolio manager(s):
Robert Botard
Caroline Le Feuvre
Chris McMeans
Meggan Walsh (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Diversified Dividend Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (3/1/90) | | | 7.92 | % |
10 Years | | | 9.99 | |
5 Years | | | 7.62 | |
1 Year | | | 0.14 | |
| |
Series II Shares | | | | |
Inception (6/5/00) | | | 5.58 | % |
10 Years | | | 9.71 | |
5 Years | | | 7.35 | |
1 Year | | | -0.13 | |
Effective June 1, 2010, Class X and Class Y shares of the predecessor fund, Morgan Stanley Variable Investment Series Dividend Growth Portfolio, advised by Morgan Stanley Investment Advisors Inc. were reorganized into Series I and Series II shares, respectively, of Invesco V.I. Dividend Growth Fund (renamed Invesco V.I. Diversified Dividend Fund on April 30, 2012). Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class X shares and Class Y shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions
and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Diversified Dividend Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Diversified Dividend Fund
Supplemental Information
Invesco V.I. Diversified Dividend Fund’s investment objective is to provide reasonable current income and long-term growth of income and capital.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Lipper VUF Large-Cap Value Funds Index is an unmanaged index considered representative of large-cap value variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Diversified Dividend Fund
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Consumer Staples | | | | 24.07 | % |
Financials | | | | 15.04 | |
Utilities | | | | 15.02 | |
Industrials | | | | 11.97 | |
Health Care | | | | 6.97 | |
Consumer Discretionary | | | | 5.64 | |
Materials | | | | 5.48 | |
Energy | | | | 4.63 | |
Communication Services | | | | 4.00 | |
Information Technology | | | | 2.32 | |
Other Sectors, Each Less than 2% of Net Assets | | | | 1.34 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 3.52 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. General Mills, Inc. | | | | 3.32 | % |
2. Procter & Gamble Co. (The) | | | | 3.18 | |
3. Hartford Financial Services Group, Inc. (The) | | | | 2.77 | |
4. Entergy Corp. | | | | 2.75 | |
5. Dominion Energy, Inc. | | | | 2.47 | |
6. PPL Corp. | | | | 2.37 | |
7. Campbell Soup Co. | | | | 2.36 | |
8. Heineken N.V. | | | | 2.24 | |
9. Mondelez International, Inc., Class A | | | | 2.23 | |
10. Coca-Cola Co. (The) | | | | 2.17 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
Invesco V.I. Diversified Dividend Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–96.48% | |
|
Aerospace & Defense–1.13% | |
| | |
General Dynamics Corp. | | | 15,784 | | | $ | 2,348,975 | |
| |
Raytheon Technologies Corp. | | | 38,457 | | | | 2,750,060 | |
| |
| | | | 5,099,035 | |
| |
|
Agricultural & Farm Machinery–1.01% | |
| | |
Deere & Co. | | | 16,979 | | | | 4,568,200 | |
| |
|
Air Freight & Logistics–1.06% | |
| | |
United Parcel Service, Inc., Class B | | | 28,463 | | | | 4,793,169 | |
| |
|
Apparel Retail–1.58% | |
| | |
TJX Cos., Inc. (The) | | | 104,252 | | | | 7,119,369 | |
| |
|
Apparel, Accessories & Luxury Goods–0.52% | |
| | |
Columbia Sportswear Co. | | | 26,636 | | | | 2,327,454 | |
| |
|
Brewers–3.83% | |
| | |
Anheuser-Busch InBev S.A./N.V. (Belgium) | | | 102,496 | | | | 7,162,678 | |
| |
Heineken N.V. (Netherlands)(b) | | | 90,770 | | | | 10,122,654 | |
| |
| | | | 17,285,332 | |
| |
|
Construction Machinery & Heavy Trucks–1.15% | |
| | |
Cummins, Inc. | | | 22,748 | | | | 5,166,071 | |
| |
|
Consumer Finance–1.29% | |
| | |
American Express Co. | | | 48,266 | | | | 5,835,842 | |
| |
|
Data Processing & Outsourced Services–1.38% | |
| | |
Automatic Data Processing, Inc. | | | 35,384 | | | | 6,234,661 | |
| |
|
Diversified Chemicals–1.11% | |
| | |
BASF SE (Germany) | | | 63,622 | | | | 5,023,907 | |
| |
|
Electric Utilities–10.24% | |
| | |
American Electric Power Co., Inc. | | | 52,952 | | | | 4,409,313 | |
| |
Duke Energy Corp. | | | 56,255 | | | | 5,150,708 | |
| |
Entergy Corp. | | | 124,293 | | | | 12,409,413 | |
| |
Exelon Corp. | | | 160,455 | | | | 6,774,410 | |
| |
PPL Corp. | | | 379,293 | | | | 10,696,063 | |
| |
SSE PLC (United Kingdom) | | | 327,823 | | | | 6,756,791 | |
| |
| | | | 46,196,698 | |
| |
|
Electrical Components & Equipment–2.37% | |
| | |
ABB Ltd. (Switzerland) | | | 252,464 | | | | 7,061,756 | |
| |
Emerson Electric Co. | | | 45,311 | | | | 3,641,645 | |
| |
| | | | 10,703,401 | |
| |
|
Fertilizers & Agricultural Chemicals–0.49% | |
| | |
Nutrien Ltd. (Canada) | | | 46,217 | | | | 2,223,528 | |
| |
|
Food Distributors–1.11% | |
| | |
Sysco Corp. | | | 67,295 | | | | 4,997,327 | |
| |
|
General Merchandise Stores–1.89% | |
| | |
Target Corp. | | | 48,420 | | | | 8,547,583 | |
| |
|
Household Products–4.93% | |
| | |
Kimberly-Clark Corp. | | | 58,648 | | | | 7,907,510 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Household Products–(continued) | |
| | |
Procter & Gamble Co. (The) | | | 103,060 | | | $ | 14,339,768 | |
| |
| | | | 22,247,278 | |
| |
|
Industrial Conglomerates–2.22% | |
| | |
3M Co. | | | 35,679 | | | | 6,236,332 | |
| |
Siemens AG (Germany) | | | 26,318 | | | | 3,766,805 | |
| |
| | | | 10,003,137 | |
| |
|
Industrial Machinery–3.03% | |
| | |
Flowserve Corp. | | | 189,578 | | | | 6,985,949 | |
| |
Pentair PLC | | | 80,235 | | | | 4,259,676 | |
| |
Stanley Black & Decker, Inc. | | | 13,637 | | | | 2,435,023 | |
| |
| | | | 13,680,648 | |
| |
|
Integrated Oil & Gas–2.62% | |
| | |
Suncor Energy, Inc. (Canada) | | | 150,911 | | | | 2,531,189 | |
| |
TOTAL SE (France) | | | 214,948 | | | | 9,272,446 | |
| |
| | | | 11,803,635 | |
| |
|
Integrated Telecommunication Services–2.82% | |
| | |
AT&T, Inc. | | | 252,676 | | | | 7,266,962 | |
| |
Deutsche Telekom AG (Germany) | | | 298,822 | | | | 5,460,864 | |
| |
| | | | 12,727,826 | |
| |
|
Investment Banking & Brokerage–0.70% | |
| | |
Charles Schwab Corp. (The) | | | 59,744 | | | | 3,168,822 | |
| |
|
IT Consulting & Other Services–0.94% | |
| | |
International Business Machines Corp. | | | 33,739 | | | | 4,247,065 | |
| |
|
Motorcycle Manufacturers–1.37% | |
| | |
Harley-Davidson, Inc. | | | 167,834 | | | | 6,159,508 | |
| |
|
Movies & Entertainment–1.18% | |
| | |
Walt Disney Co. (The)(b) | | | 29,295 | | | | 5,307,668 | |
| |
|
Multi-line Insurance–2.77% | |
| | |
Hartford Financial Services Group, Inc. (The) | | | 255,573 | | | | 12,517,966 | |
| |
|
Multi-Utilities–4.78% | |
| | |
Consolidated Edison, Inc. | | | 48,448 | | | | 3,501,337 | |
| |
Dominion Energy, Inc. | | | 148,240 | | | | 11,147,648 | |
| |
Sempra Energy | | | 54,444 | | | | 6,936,710 | |
| |
| | | | 21,585,695 | |
| |
|
Oil & Gas Equipment & Services–0.72% | |
| | |
Baker Hughes Co., Class A | | | 155,119 | | | | 3,234,231 | |
| |
|
Oil & Gas Exploration & Production–1.30% | |
| | |
ConocoPhillips | | | 146,815 | | | | 5,871,132 | |
| |
|
Packaged Foods & Meats–10.55% | |
| | |
Campbell Soup Co. | | | 220,155 | | | | 10,644,494 | |
| |
General Mills, Inc. | | | 254,670 | | | | 14,974,596 | |
| |
Kraft Heinz Co. (The) | | | 132,834 | | | | 4,604,026 | |
| |
Mondelez International, Inc., Class A | | | 172,453 | | | | 10,083,327 | |
| |
Nestle S.A. (Switzerland) | | | 62,068 | | | | 7,307,197 | |
| |
| | | | 47,613,640 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
| | | | | | | | |
| | | Shares | | | Value | |
| |
Paper Packaging–2.78% | |
| | |
Avery Dennison Corp. | | | 19,484 | | | $ | 3,022,163 | |
| |
International Paper Co. | | | 115,502 | | | | 5,742,760 | |
| |
Sonoco Products Co. | | | 63,929 | | | | 3,787,793 | |
| |
| | | | 12,552,716 | |
| |
|
Personal Products–1.48% | |
| | |
L’Oreal S.A. (France) | | | 17,596 | | | | 6,685,715 | |
| |
|
Pharmaceuticals–6.97% | |
| | |
Bayer AG (Germany) | | | 63,862 | | | | 3,753,664 | |
| |
Bristol-Myers Squibb Co. | | | 85,379 | | | | 5,296,059 | |
| |
Eli Lilly and Co. | | | 41,173 | | | | 6,951,649 | |
| |
Johnson & Johnson | | | 50,818 | | | | 7,997,737 | |
| |
Merck & Co., Inc. | | | 90,984 | | | | 7,442,491 | |
| |
| | | | 31,441,600 | |
| |
|
Property & Casualty Insurance–1.90% | |
| | |
Travelers Cos., Inc. (The) | | | 61,146 | | | | 8,583,064 | |
| |
|
Regional Banks–8.37% | |
| | |
Comerica, Inc. | | | 104,265 | | | | 5,824,243 | |
| |
Cullen/Frost Bankers, Inc. | | | 43,474 | | | | 3,792,237 | |
| |
Fifth Third Bancorp | | | 190,914 | | | | 5,263,499 | |
| |
KeyCorp | | | 104,950 | | | | 1,722,230 | |
| |
M&T Bank Corp. | | | 71,004 | | | | 9,038,809 | |
| |
PNC Financial Services Group, Inc. (The) | | | 29,051 | | | | 4,328,599 | |
| |
Zions Bancorporation N.A. | | | 179,457 | | | | 7,795,612 | |
| |
| | | | 37,765,229 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Restaurants–0.29% | |
| | |
Darden Restaurants, Inc. | | | 11,086 | | | $ | 1,320,564 | |
| |
|
Soft Drinks–2.17% | |
| | |
Coca-Cola Co. (The) | | | 178,952 | | | | 9,813,728 | |
| |
|
Specialized REITs–1.34% | |
| | |
Weyerhaeuser Co. | | | 180,555 | | | | 6,054,009 | |
| |
|
Specialty Chemicals–1.09% | |
| | |
DuPont de Nemours, Inc. | | | 69,039 | | | | 4,909,363 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $325,411,395) | | | | 435,415,816 | |
| |
|
Money Market Funds–3.73% | |
| | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 5,256,244 | | | | 5,256,244 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 5,595,485 | | | | 5,597,164 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 6,007,135 | | | | 6,007,135 | |
| |
Total Money Market Funds
(Cost $16,859,719) | | | | 16,860,543 | |
| |
TOTAL INVESTMENTS IN
SECURITIES–100.21%
(Cost $342,271,114) | | | | 452,276,359 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.21)% | | | | (969,594 | ) |
| |
NET ASSETS–100.00% | | | $ | 451,306,765 | |
| |
Investment Abbreviations:
REIT – Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| | Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Invesco Government & Agency Portfolio, Institutional Class | | | $ | 9,736,144 | | | | $ | 11,377,428 | | | | $ | (15,857,328 | ) | | | $ | - | | | | $ | - | | | | $ | 5,256,244 | | | | $ | 29,804 | |
| | Invesco Liquid Assets Portfolio, Institutional Class | | | | 6,984,374 | | | | | 10,098,202 | | | | | (11,485,600 | ) | | | | (200 | ) | | | | 388 | | | | | 5,597,164 | | | | | 32,880 | |
| | Invesco Treasury Portfolio, Institutional Class | | | | 11,127,022 | | | | | 13,002,775 | | | | | (18,122,662 | ) | | | | - | | | | | - | | | | | 6,007,135 | | | | | 32,554 | |
| | Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Invesco Private Government Fund | | | | - | | | | | 11,705,789 | | | | | (11,705,789 | ) | | | | - | | | | | - | | | | | - | | | | | 274* | |
| | Invesco Private Prime Fund | | | | - | | | | | 4,210,107 | | | | | (4,210,269 | ) | | | | - | | | | | 162 | | | | | - | | | | | 229* | |
| | Total | | | $ | 27,847,540 | | | | $ | 50,394,301 | | | | $ | (61,381,648) | | | | $ | (200) | | | | $ | 550 | | | | $ | 16,860,543 | | | | $ | 95,741 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
| | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
| |
| | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | Deliver | | | Receive | | | (Depreciation) | |
| |
Currency Risk | | | | | | | | | | | | | | |
| |
01/14/2021 | | Canadian Imperial Bank of Commerce | | | EUR 6,428,168 | | | | USD 7,565,202 | | | | $(289,730) | |
| |
01/14/2021 | | Goldman Sachs International | | | EUR 950,272 | | | | USD 1,118,475 | | | | (42,715) | |
| |
01/14/2021 | | State Street Bank & Trust Co. | | | EUR 6,467,169 | | | | USD 7,609,756 | | | | (292,834) | |
| |
Total Forward Foreign Currency Contracts | | | | | | | | $(625,279) | |
| |
Abbreviations:
EUR - Euro
USD - U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $325,411,395) | | $ | 435,415,816 | |
| |
Investments in affiliated money market funds, at value (Cost $16,859,719) | | | 16,860,543 | |
| |
Foreign currencies, at value (Cost $22,794) | | | 22,996 | |
| |
Receivable for: | | | | |
Investments sold | | | 291,550 | |
| |
Fund shares sold | | | 113,124 | |
| |
Dividends | | | 949,213 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 98,497 | |
| |
Total assets | | | 453,751,739 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 625,279 | |
| |
Payable for: | | | | |
Investments purchased | | | 395,067 | |
| |
Fund shares reacquired | | | 763,633 | |
| |
Amount due custodian | | | 231,436 | |
| |
Accrued fees to affiliates | | | 228,370 | |
| |
Accrued other operating expenses | | | 67,913 | |
| |
Trustee deferred compensation and retirement plans | | | 133,276 | |
| |
Total liabilities | | | 2,444,974 | |
| |
Net assets applicable to shares outstanding | | $ | 451,306,765 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 330,677,240 | |
| |
Distributable earnings | | | 120,629,525 | |
| |
| | $ | 451,306,765 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 233,072,576 | |
| |
Series II | | $ | 218,234,189 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 9,061,117 | |
| |
Series II | | | 8,550,499 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 25.72 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 25.52 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $329,865) | | $ | 13,187,280 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $3,304) | | | 98,542 | |
| |
Total investment income | | | 13,285,822 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 2,108,600 | |
| |
Administrative services fees | | | 733,024 | |
| |
Custodian fees | | | 43,705 | |
| |
Distribution fees - Series II | | | 508,745 | |
| |
Transfer agent fees | | | 27,383 | |
| |
Trustees’ and officers’ fees and benefits | | | 26,988 | |
| |
Reports to shareholders | | | 5,704 | |
| |
Professional services fees | | | 47,796 | |
| |
Other | | | 7,571 | |
| |
Total expenses | | | 3,509,516 | |
| |
Less: Fees waived | | | (21,212 | ) |
| |
Net expenses | | | 3,488,304 | |
| |
Net investment income | | | 9,797,518 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 2,800,440 | |
| |
Affiliated investment securities | | | 550 | |
| |
Foreign currencies | | | (10,025 | ) |
| |
Forward foreign currency contracts | | | (679,783 | ) |
| |
| | | 2,111,182 | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | (18,027,351 | ) |
| |
Affiliated investment securities | | | (200 | ) |
| |
Foreign currencies | | | 14,060 | |
| |
Forward foreign currency contracts | | | (486,843 | ) |
| |
| | | (18,500,334 | ) |
| |
Net realized and unrealized gain (loss) | | | (16,389,152 | ) |
| |
Net increase (decrease) in net assets resulting from operations | | $ | (6,591,634 | ) |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 9,797,518 | | | $ | 12,841,617 | |
| |
Net realized gain | | | 2,111,182 | | | | 44,073,693 | |
| |
Change in net unrealized appreciation (depreciation) | | | (18,500,334 | ) | | | 61,624,586 | |
| |
Net increase (decrease) in net assets resulting from operations | | | (6,591,634 | ) | | | 118,539,896 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (12,417,884 | ) | | | (21,611,367 | ) |
| |
Series II | | | (11,140,091 | ) | | | (18,163,081 | ) |
| |
Total distributions from distributable earnings | | | (23,557,975 | ) | | | (39,774,448 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
| |
Series I | | | (28,690,500 | ) | | | (106,614,162 | ) |
| |
Series II | | | (5,459,331 | ) | | | 1,105,297 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (34,149,831 | ) | | | (105,508,865 | ) |
| |
Net increase (decrease) in net assets | | | (64,299,440 | ) | | | (26,743,417 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 515,606,205 | | | | 542,349,622 | |
| |
End of year | | $ | 451,306,765 | | | $ | 515,606,205 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses) on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset
value, end
of period | | Total
return (b)
| | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses
to average
net assets
with fee
waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 27.23 | | | | $ | 0.58 | | | | $ | (0.67 | ) | | | $ | (0.09 | ) | | | $ | (0.77 | ) | | | $ | (0.65 | ) | | | $ | (1.42 | ) | | | $ | 25.72 | | | | | 0.14 | % | | | $ | 233,073 | | | | | 0.70 | %(d) | | | | 0.70 | %(d) | | | | 2.41 | %(d) | | | | 9 | % |
Year ended 12/31/19 | | | | 23.70 | | | | | 0.67 | | | | | 5.15 | | | | | 5.82 | | | | | (0.80 | ) | | | | (1.49 | ) | | | | (2.29 | ) | | | | 27.23 | | | | | 25.09 | | | | | 278,727 | | | | | 0.65 | | | | | 0.65 | | | | | 2.54 | | | | | 7 | |
Year ended 12/31/18 | | | | 27.18 | | | | | 0.63 | | | | | (2.53 | ) | | | | (1.90 | ) | | | | (0.65 | ) | | | | (0.93 | ) | | | | (1.58 | ) | | | | 23.70 | | | | | (7.57 | ) | | | | 337,461 | | | | | 0.64 | | | | | 0.65 | | | | | 2.38 | | | | | 10 | |
Year ended 12/31/17 | | | | 26.38 | | | | | 0.56 | | | | | 1.65 | | | | | 2.21 | | | | | (0.46 | ) | | | | (0.95 | ) | | | | (1.41 | ) | | | | 27.18 | | | | | 8.58 | | | | | 437,104 | | | | | 0.64 | | | | | 0.65 | | | | | 2.06 | | | | | 16 | |
Year ended 12/31/16 | | | | 23.27 | | | | | 0.50 | | | | | 2.93 | | | | | 3.43 | | | | | (0.32 | ) | | | | - | | | | | (0.32 | ) | | | | 26.38 | | | | | 14.81 | | | | | 439,857 | | | | | 0.66 | | | | | 0.68 | | | | | 2.02 | | | | | 14 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 27.03 | | | | | 0.52 | | | | | (0.68 | ) | | | | (0.16 | ) | | | | (0.71 | ) | | | | (0.64 | ) | | | | (1.35 | ) | | | | 25.52 | | | | | (0.13 | ) | | | | 218,234 | | | | | 0.95 | (d) | | | | 0.95 | (d) | | | | 2.16 | (d) | | | | 9 | |
Year ended 12/31/19 | | | | 23.54 | | | | | 0.60 | | | | | 5.11 | | | | | 5.71 | | | | | (0.73 | ) | | | | (1.49 | ) | | | | (2.22 | ) | | | | 27.03 | | | | | 24.77 | | | | | 236,880 | | | | | 0.90 | | | | | 0.90 | | | | | 2.29 | | | | | 7 | |
Year ended 12/31/18 | | | | 27.00 | | | | | 0.56 | | | | | (2.51 | ) | | | | (1.95 | ) | | | | (0.58 | ) | | | | (0.93 | ) | | | | (1.51 | ) | | | | 23.54 | | | | | (7.78 | ) | | | | 204,889 | | | | | 0.89 | | | | | 0.90 | | | | | 2.13 | | | | | 10 | |
Year ended 12/31/17 | | | | 26.23 | | | | | 0.49 | | | | | 1.64 | | | | | 2.13 | | | | | (0.41 | ) | | | | (0.95 | ) | | | | (1.36 | ) | | | | 27.00 | | | | | 8.31 | | | | | 242,614 | | | | | 0.89 | | | | | 0.90 | | | | | 1.81 | | | | | 16 | |
Year ended 12/31/16 | | | | 23.16 | | | | | 0.43 | | | | | 2.92 | | | | | 3.35 | | | | | (0.28 | ) | | | | - | | | | | (0.28 | ) | | | | 26.23 | | | | | 14.54 | | | | | 215,614 | | | | | 0.91 | | | | | 0.93 | | | | | 1.77 | | | | | 14 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $224,145 and $203,498 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Diversified Dividend Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Diversified Dividend Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to provide reasonable current income and long-term growth of income and capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. Diversified Dividend Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
Invesco V.I. Diversified Dividend Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $ 250 million | | | 0.545% | |
| |
Next $750 million | | | 0.420% | |
| |
Next $1 billion | | | 0.395% | |
| |
Over $2 billion | | | 0.370% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.49%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $21,212.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $60,969 for accounting and fund administrative services and was reimbursed $672,056 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $284 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s |
Invesco V.I. Diversified Dividend Fund
| | own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 363,041,339 | | | $ | 72,374,477 | | | | $– | | | $ | 435,415,816 | |
| |
Money Market Funds | | | 16,860,543 | | | | – | | | | – | | | | 16,860,543 | |
| |
Total Investments in Securities | | | 379,901,882 | | | | 72,374,477 | | | | – | | | | 452,276,359 | |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | – | | | | (625,279 | ) | | | – | | | | (625,279 | ) |
| |
Total Investments | | $ | 379,901,882 | | | $ | 71,749,198 | | | | $– | | | $ | 451,651,080 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Liabilities | | Risk | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | $ | (625,279 | ) |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (625,279 | ) |
| |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | | Financial
Derivative
Liabilities | | | | | | Collateral
(Received)/Pledged | | | | |
| Counterparty | | Forward Foreign
Currency Contracts | | | Forward Foreign
Currency Contracts | | | Net Value of
Derivatives | | | Non-Cash | | | Cash | | | Net
Amount | |
| |
Canadian Imperial Bank of Commerce | | | $- | | | | $(289,730) | | | | $(289,730) | | | | $- | | | | $- | | | $ | (289,730 | ) |
| |
Goldman Sachs International | | | - | | | | (42,715) | | | | (42,715) | | | | - | | | | - | | | | (42,715 | ) |
| |
State Street Bank & Trust Co. | | | - | | | | (292,834) | | | | (292,834) | | | | - | | | | - | | | | (292,834 | ) |
| |
Total | | | $- | | | | $(625,279) | | | | $(625,279) | | | | $- | | | | $- | | | $ | (625,279 | ) |
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Currency Risk | |
| |
Realized Gain (Loss): | | | | |
Forward foreign currency contracts | | | $ (679,783) | |
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Forward foreign currency contracts | | | (486,843) | |
| |
Total | | | $(1,166,626) | |
| |
Invesco V.I. Diversified Dividend Fund
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Forward
Foreign Currency
Contracts | |
| |
Average notional value | | | $19,328,741 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 13,287,513 | | | $ | 14,393,388 | |
| |
Long-term capital gain | | | 10,270,462 | | | | 25,381,060 | |
| |
Total distributions | | $ | 23,557,975 | | | $ | 39,774,448 | |
| |
* Includes short-term capital gain distributions, if any.
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 10,228,643 | |
| |
Undistributed long-term capital gain | | | 1,326,784 | |
| |
Net unrealized appreciation - investments | | | 109,154,445 | |
| |
Net unrealized appreciation - foreign currencies | | | 20,003 | |
| |
Temporary book/tax differences | | | (100,350 | ) |
| |
Shares of beneficial interest | | | 330,677,240 | |
| |
Total net assets | | $ | 451,306,765 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and forward foreign currency contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $38,493,017 and $74,408,396, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 124,152,662 | |
| |
Aggregate unrealized (depreciation) of investments | | | (14,998,217 | ) |
| |
Net unrealized appreciation of investments | | $ | 109,154,445 | |
| |
Cost of investments for tax purposes is $ 342,496,635.
Invesco V.I. Diversified Dividend Fund
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and fair fund settlement, on December 31, 2020, undistributed net investment income was decreased by $4,226 and undistributed net realized gain was increased by $4,226. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 601,614 | | | $ | 14,369,100 | | | | 1,203,566 | | | $ | 31,545,134 | |
| |
Series II | | | 566,840 | | | | 13,201,510 | | | | 533,931 | | | | 13,948,354 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 527,075 | | | | 12,417,884 | | | | 837,001 | | | | 21,611,367 | |
| |
Series II | | | 476,276 | | | | 11,140,091 | | | | 708,388 | | | | 18,163,081 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,302,436 | ) | | | (55,477,484 | ) | | | (6,041,667 | ) | | | (159,770,663 | ) |
| |
Series II | | | (1,257,557 | ) | | | (29,800,932 | ) | | | (1,181,712 | ) | | | (31,006,138 | ) |
| |
Net increase (decrease) in share activity | | | (1,388,188 | ) | | $ | (34,149,831 | ) | | | (3,940,493 | ) | | $ | (105,508,865 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 69% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Diversified Dividend Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Diversified Dividend Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Diversified Dividend Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Diversified Dividend Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL
(5% annual return before
expenses) | | |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,177.90 | | $3.94 | | $1,021.52 | | $3.66 | | 0.72% |
Series II | | 1,000.00 | | 1,176.70 | | 5.31 | | 1,020.26 | | 4.93 | | 0.97 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Diversified Dividend Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | $ | 10,270,462 | |
| | Corporate Dividends Received Deduction* | | | 92.75 | % |
| | Qualified Dividend Income* | | | 0.00 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
Invesco V.I. Diversified Dividend Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
| Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
| Beth Ann Brown - 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis - 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort - 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn - 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg - 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey - 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Diversified Dividend Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster - 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Diversified Dividend Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Equally-Weighted S&P 500 Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | MS-VIEWSP-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Equally-Weighted S&P 500 Fund (the Fund) underperformed the S&P 500 Index. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares* | | | 12.74 | % |
Series II Shares* | | | 12.41 | |
S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
S&P 500 Equal Weight Indexq (Style-Specific Index) | | | 12.83 | |
Lipper VUF Multi-Cap Core Funds Index∎ (Peer Group Index) | | | 13.45 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
* Returns above include the effect of the Adviser pay-in for an economic loss as a result of a delay in rebalancing to the index that occurred on April 24, 2020. Had the pay-in not been made, average annual total returns for Series I and Series II shares were estimated at 11.35% and 10.98%, respectively. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy,
both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
The Fund generally invests in each common stock represented in the S&P 500 Equal Weight Index, which is an equally weighted version of the S&P 500 Index. The S&P 500 Index is a stock market index that includes
common stocks of 500 companies in proportion to their market capitalization.
During the year, on an absolute basis, holdings in the information technology (IT), industrials, health care, consumer discretionary, materials, financials, communication services and consumer staples sectors generated positive Fund performance. Energy, real estate and utilities generated negative Fund performance.
The top contributor to Fund results during the year was Carrier Global, a manufacturer of HVAC equipment which was spun off from United Technologies in April of 2020. The company delivered strong performance during the year and benefited from COVID–19 driven demand for its OptiClean negative air machine. 3D graphics processor producer NVIDIA, was the second largest contributor as demand surged for semiconductors as a result of the pandemic. The top detractor from the Fund’s performance for the year was Coty, as the cosmetic company was impacted by declining revenue coupled with a high debt burden due to recent acquisitions. Another detractor was Macy’s as the retailer was adversely impacted by the pandemic resulting in the company reporting operating losses throughout 2020. Coty and Macy’s were also among the holdings we sold during the year.
Please note that the Fund’s strategy is principally implemented through equity investments, but the Fund also may use derivative instruments, including S&P 500 futures contracts, to gain exposure to the equity market. During the year, the Fund invested in S&P 500 futures contracts, which generated a positive return and added to the Fund’s absolute performance. Derivatives can be a cost-effective way to gain exposure to asset classes. However, derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities.
Thank you for your investment in Invesco V.I. Equally-Weighted S&P 500 Index Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Peter Hubbard
Michael Jeanette
Tony Seisser
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
*Includes the effect of the Adviser pay-in for an economic loss as a result of a delay in rebalancing to the index that occurred on April 24, 2020.
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (11/9/94) | | | 10.86 | % |
10 Years | | | 12.24 | |
5 Years | | | 12.63 | |
1 Year | | | 12.74 | |
| |
Series II Shares | | | | |
Inception (7/24/00) | | | 9.07 | % |
10 Years | | | 11.96 | |
5 Years | | | 12.34 | |
1 Year | | | 12.41 | |
Returns above include the effect of the Adviser pay-in for an economic loss as a result of a delay in rebalancing to the index that occurred on April 24, 2020. Had the pay-in not been made, average annual total returns for 1 Year, 5 Years, 10 Years and Inception were estimated at 11.35%, 12.35%, 12.10% and 10.80% for Series I shares and 10.98%, 12.05%, 11.81% and 9.00% for Series II shares, respectively. | | | | |
Effective June 1, 2010, Class X and Class Y shares of the predecessor fund, Morgan Stanley Select Dimensions Investment Series Equally-Weighted S&P 500 Portfolio, advised by Morgan Stanley Investment Advisors Inc. were reorganized into Series I and Series II shares, respectively, of Invesco V.I. Select Dimensions Equally-Weighted S&P 500 Fund (renamed Invesco V.I. Equally-Weighted S&P 500 Fund on April 30, 2012). Returns shown above, prior to June 1, 2010, for Series I
and Series II shares are those of the Class X shares and Class Y shares the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Equally-Weighted S&P 500 Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product
charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Supplemental Information
Invesco V.I. Equally-Weighted S&P 500 Fund’s investment objective is to achieve a high level of total return on its assets through a combination of capital appreciation and current income.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | | The S&P 500® Equal Weight Index is the equally weighted version of the S&P 500 Index, which is considered representative of the US stock market. |
| ∎ | | The Lipper VUF Multi-Cap Core Funds Index is an unmanaged index considered representative of multicap core variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 14.57 | % |
Industrials | | | | 14.17 | |
Financials | | | | 12.93 | |
Health Care | | | | 12.52 | |
Consumer Discretionary | | | | 12.05 | |
Consumer Staples | | | | 6.20 | |
Real Estate | | | | 5.81 | |
Materials | | | | 5.49 | |
Utilities | | | | 5.46 | |
Energy | | | | 4.52 | |
Communication Services | | | | 4.29 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.99 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Alexion Pharmaceuticals, Inc. | | | | 0.25 | % |
2. ABIOMED, Inc. | | | | 0.24 | |
3. Fortinet, Inc. | | | | 0.22 | |
4. Tesla, Inc. | | | | 0.22 | |
5. Cadence Design Systems, Inc. | | | | 0.22 | |
6. First Republic Bank | | | | 0.22 | |
7. NRG Energy, Inc. | | | | 0.22 | |
8. Global Payments, Inc. | | | | 0.22 | |
9. AES Corp. (The) | | | | 0.21 | |
10. Activision Blizzard, Inc. | | | | 0.22 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.01% | |
Advertising–0.37% | | | | | | | | |
Interpublic Group of Cos., Inc. (The) | | | 26,062 | | | $ | 612,978 | |
|
| |
Omnicom Group, Inc. | | | 9,652 | | | | 601,995 | |
|
| |
| | | | | | | 1,214,973 | |
|
| |
| |
Aerospace & Defense–2.11% | | | | | |
Boeing Co. (The) | | | 2,707 | | | | 579,460 | |
|
| |
General Dynamics Corp. | | | 4,120 | | | | 613,138 | |
|
| |
Howmet Aerospace, Inc. | | | 23,587 | | | | 673,173 | |
|
| |
Huntington Ingalls Industries, Inc. | | | 3,508 | | | | 598,044 | |
|
| |
L3Harris Technologies, Inc. | | | 3,295 | | | | 622,821 | |
|
| |
Lockheed Martin Corp. | | | 1,723 | | | | 611,631 | |
|
| |
Northrop Grumman Corp. | | | 2,074 | | | | 631,989 | |
|
| |
Raytheon Technologies Corp. | | | 8,553 | | | | 611,625 | |
|
| |
Teledyne Technologies, Inc.(b) | | | 1,609 | | | | 630,696 | |
|
| |
Textron, Inc. | | | 13,089 | | | | 632,591 | |
|
| |
TransDigm Group, Inc.(b) | | | 1,036 | | | | 641,129 | |
|
| |
| | | | | | | 6,846,297 | |
|
| |
| |
Agricultural & Farm Machinery–0.20% | | | | | |
Deere & Co. | | | 2,437 | | | | 655,675 | |
|
| |
| | |
Agricultural Products–0.19% | | | | | | | | |
Archer-Daniels-Midland Co. | | | 12,516 | | | | 630,932 | |
|
| |
| | |
Air Freight & Logistics–0.76% | | | | | | | | |
C.H. Robinson Worldwide, Inc. | | | 6,691 | | | | 628,084 | |
|
| |
Expeditors International of Washington, Inc. | | | 6,889 | | | | 655,213 | |
|
| |
FedEx Corp. | | | 2,154 | | | | 559,221 | |
|
| |
United Parcel Service, Inc., Class B | | | 3,702 | | | | 623,417 | |
|
| |
| | | | | | | 2,465,935 | |
|
| |
| |
Airlines–0.93% | | | | | |
Alaska Air Group, Inc. | | | 12,498 | | | | 649,896 | |
|
| |
American Airlines Group, Inc.(c)(d) | | | 36,563 | | | | 576,598 | |
|
| |
Delta Air Lines, Inc. | | | 14,935 | | | | 600,536 | |
|
| |
Southwest Airlines Co. | | | 13,588 | | | | 633,337 | |
|
| |
United Airlines Holdings, Inc.(b) | | | 12,891 | | | | 557,536 | |
|
| |
| | | | | | | 3,017,903 | |
|
| |
| |
Alternative Carriers–0.18% | | | | | |
CenturyLink, Inc. | | | 61,178 | | | | 596,485 | |
|
| |
| | |
Apparel Retail–0.78% | | | | | | | | |
Gap, Inc. (The) | | | 29,900 | | | | 603,681 | |
|
| |
L Brands, Inc. | | | 15,766 | | | | 586,337 | |
|
| |
Ross Stores, Inc. | | | 5,526 | | | | 678,648 | |
|
| |
TJX Cos., Inc. (The) | | | 9,437 | | | | 644,453 | |
|
| |
| | | | | | | 2,513,119 | |
|
| |
|
Apparel, Accessories & Luxury Goods–1.17% | |
Hanesbrands, Inc. | | | 44,657 | | | | 651,099 | |
|
| |
PVH Corp. | | | 6,609 | | | | 620,519 | |
|
| |
Ralph Lauren Corp. | | | 6,152 | | | | 638,208 | |
|
| |
Tapestry, Inc. | | | 21,255 | | | | 660,605 | |
|
| |
Under Armour, Inc., Class A(b) | | | 19,038 | | | | 326,882 | |
|
| |
Under Armour, Inc., Class C(b) | | | 19,637 | | | | 292,199 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Apparel, Accessories & Luxury Goods–(continued) | |
VF Corp. | | | 7,194 | | | $ | 614,440 | |
|
| |
| | | | | | | 3,803,952 | |
|
| |
| |
Application Software–2.03% | | | | | |
Adobe, Inc.(b) | | | 1,310 | | | | 655,157 | |
|
| |
ANSYS, Inc.(b) | | | 1,860 | | | | 676,668 | |
|
| |
Autodesk, Inc.(b) | | | 2,229 | | | | 680,603 | |
|
| |
Cadence Design Systems, Inc.(b) | | | 5,260 | | | | 717,622 | |
|
| |
Citrix Systems, Inc. | | | 4,772 | | | | 620,837 | |
|
| |
Intuit, Inc. | | | 1,711 | | | | 649,923 | |
|
| |
Paycom Software, Inc.(b) | | | 1,471 | | | | 665,260 | |
|
| |
salesforce.com, inc.(b) | | | 2,803 | | | | 623,752 | |
|
| |
Synopsys, Inc.(b) | | | 2,637 | | | | 683,616 | |
|
| |
Tyler Technologies, Inc.(b) | | | 1,383 | | | | 603,707 | |
|
| |
| | | | | | | 6,577,145 | |
|
| |
| |
Asset Management & Custody Banks–1.57% | | | | | |
Ameriprise Financial, Inc. | | | 3,251 | | | | 631,767 | |
|
| |
Bank of New York Mellon Corp. (The) | | | 15,492 | | | | 657,480 | |
|
| |
BlackRock, Inc. | | | 897 | | | | 647,221 | |
|
| |
Franklin Resources, Inc. | | | 25,623 | | | | 640,319 | |
|
| |
Invesco Ltd.(e) | | | 34,905 | | | | 608,394 | |
|
| |
Northern Trust Corp. | | | 6,919 | | | | 644,436 | |
|
| |
State Street Corp. | | | 8,563 | | | | 623,215 | |
|
| |
T. Rowe Price Group, Inc. | | | 4,115 | | | | 622,970 | |
|
| |
| | | | | | | 5,075,802 | |
|
| |
| | |
Auto Parts & Equipment–0.41% | | | | | | | | |
Aptiv PLC | | | 5,100 | | | | 664,479 | |
| |
BorgWarner, Inc. | | | 17,070 | | | | 659,585 | |
|
| |
| | | | | | | 1,324,064 | |
|
| |
| | |
Automobile Manufacturers–0.60% | | | | | | | | |
Ford Motor Co. | | | 69,114 | | | | 607,512 | |
|
| |
General Motors Co. | | | 14,871 | | | | 619,228 | |
|
| |
Tesla, Inc.(b) | | | 1,022 | | | | 721,195 | |
|
| |
| | | | | | | 1,947,935 | |
|
| |
| | |
Automotive Retail–0.78% | | | | | | | | |
Advance Auto Parts, Inc. | | | 3,954 | | | | 622,795 | |
|
| |
AutoZone, Inc.(b) | | | 540 | | | | 640,138 | |
|
| |
CarMax, Inc.(b) | | | 6,637 | | | | 626,931 | |
|
| |
O’Reilly Automotive, Inc.(b) | | | 1,392 | | | | 629,977 | |
|
| |
| | | | | | | 2,519,841 | |
|
| |
| | |
Biotechnology–1.62% | | | | | | | | |
AbbVie, Inc. | | | 5,862 | | | | 628,113 | |
|
| |
Alexion Pharmaceuticals, Inc.(b) | | | 5,153 | | | | 805,105 | |
|
| |
Amgen, Inc. | | | 2,741 | | | | 630,211 | |
|
| |
Biogen, Inc.(b) | | | 2,582 | | | | 632,228 | |
|
| |
Gilead Sciences, Inc. | | | 10,260 | | | | 597,748 | |
|
| |
Incyte Corp.(b) | | | 7,668 | | | | 666,963 | |
|
| |
Regeneron Pharmaceuticals, Inc.(b) | | | 1,299 | | | | 627,560 | |
|
| |
Vertex Pharmaceuticals, Inc.(b) | | | 2,781 | | | | 657,261 | |
|
| |
| | | | | | | 5,245,189 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Brewers–0.18% | | | | | | | | |
Molson Coors Beverage Co., Class B | | | 13,180 | | | $ | 595,604 | |
|
| |
| | |
Broadcasting–0.59% | | | | | | | | |
Discovery, Inc., Class A(b) | | | 7,976 | | | | 239,998 | |
|
| |
Discovery, Inc., Class C(b) | | | 15,411 | | | | 403,614 | |
|
| |
Fox Corp., Class A | | | 14,699 | | | | 428,035 | |
|
| |
Fox Corp., Class B | | | 6,700 | | | | 193,496 | |
|
| |
ViacomCBS, Inc., Class B | | | 17,511 | | | | 652,460 | |
|
| |
| | | | | | | 1,917,603 | |
|
| |
| |
Building Products–1.38% | | | | | |
A.O. Smith Corp. | | | 11,061 | | | | 606,364 | |
|
| |
Allegion PLC | | | 5,689 | | | | 662,086 | |
|
| |
Carrier Global Corp. | | | 16,776 | | | | 632,790 | |
|
| |
Fortune Brands Home & Security, Inc. | | | 7,490 | | | | 642,043 | |
|
| |
Johnson Controls International PLC | | | 13,686 | | | | 637,631 | |
|
| |
Masco Corp. | | | 11,470 | | | | 630,047 | |
|
| |
Trane Technologies PLC | | | 4,455 | | | | 646,688 | |
|
| |
| | | | | | | 4,457,649 | |
|
| |
| |
Cable & Satellite–0.57% | | | | | |
Charter Communications, Inc., Class A(b) | | | 956 | | | | 632,442 | |
|
| |
Comcast Corp., Class A | | | 12,240 | | | | 641,376 | |
|
| |
DISH Network Corp., Class A(b) | | | 17,312 | | | | 559,870 | |
|
| |
| | | | | | | 1,833,688 | |
|
| |
| |
Casinos & Gaming–0.60% | | | | | |
Las Vegas Sands Corp. | | | 10,985 | | | | 654,706 | |
|
| |
MGM Resorts International | | | 20,656 | | | | 650,871 | |
|
| |
Wynn Resorts Ltd. | | | 5,617 | | | | 633,766 | |
|
| |
| | | | | | | 1,939,343 | |
|
| |
| |
Commodity Chemicals–0.40% | | | | | |
Dow, Inc. | | | 11,545 | | | | 640,748 | |
| |
LyondellBasell Industries N.V., Class A | | | 7,044 | | | | 645,653 | |
|
| |
| | | | | | | 1,286,401 | |
|
| |
|
Communications Equipment–0.98% | |
Arista Networks, Inc.(b) | | | 2,248 | | | | 653,201 | |
|
| |
Cisco Systems, Inc. | | | 14,066 | | | | 629,454 | |
|
| |
F5 Networks, Inc.(b) | | | 3,616 | | | | 636,199 | |
|
| |
Juniper Networks, Inc. | | | 28,440 | | | | 640,184 | |
|
| |
Motorola Solutions, Inc. | | | 3,702 | | | | 629,562 | |
|
| |
| | | | | | | 3,188,600 | |
|
| |
| |
Computer & Electronics Retail–0.19% | | | | | |
Best Buy Co., Inc. | | | 6,197 | | | | 618,399 | |
|
| |
| |
Construction & Engineering–0.39% | | | | | |
Jacobs Engineering Group, Inc. | | | 5,738 | | | | 625,212 | |
| |
Quanta Services, Inc. | | | 8,650 | | | | 622,973 | |
|
| |
| | | | | | | 1,248,185 | |
|
| |
|
Construction Machinery & Heavy Trucks–0.78% | |
Caterpillar, Inc. | | | 3,477 | | | | 632,883 | |
|
| |
Cummins, Inc. | | | 2,851 | | | | 647,462 | |
|
| |
PACCAR, Inc. | | | 7,295 | | | | 629,413 | |
|
| |
Wabtec Corp. | | | 8,329 | | | | 609,683 | |
|
| |
| | | | | | | 2,519,441 | |
|
| |
| |
Construction Materials–0.41% | | | | | |
Martin Marietta Materials, Inc. | | | 2,333 | | | | 662,502 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Construction Materials–(continued) | |
Vulcan Materials Co. | | | 4,489 | | | $ | 665,764 | |
|
| |
| | | | | | | 1,328,266 | |
|
| |
| | |
Consumer Electronics–0.19% | | | | | | | | |
Garmin Ltd. | | | 5,241 | | | | 627,138 | |
|
| |
| | |
Consumer Finance–0.82% | | | | | | | | |
American Express Co.(c) | | | 5,185 | | | | 626,918 | |
|
| |
Capital One Financial Corp. | | | 6,764 | | | | 668,622 | |
|
| |
Discover Financial Services | | | 7,470 | | | | 676,259 | |
|
| |
Synchrony Financial | | | 19,318 | | | | 670,528 | |
|
| |
| | | | | | | 2,642,327 | |
|
| |
| |
Copper–0.20% | | | | | |
Freeport-McMoRan, Inc. | | | 25,331 | | | | 659,113 | |
|
| |
|
Data Processing & Outsourced Services–2.39% | |
Automatic Data Processing, Inc. | | | 3,592 | | | | 632,910 | |
|
| |
Broadridge Financial Solutions, Inc. | | | 4,223 | | | | 646,963 | |
|
| |
Fidelity National Information Services, Inc. | | | 4,217 | | | | 596,537 | |
|
| |
Fiserv, Inc.(b) | | | 5,429 | | | | 618,146 | |
|
| |
FleetCor Technologies, Inc.(b) | | | 2,278 | | | | 621,507 | |
|
| |
Global Payments, Inc. | | | 3,247 | | | | 699,469 | |
|
| |
Jack Henry & Associates, Inc. | | | 4,001 | | | | 648,122 | |
|
| |
Mastercard, Inc., Class A | | | 1,904 | | | | 679,614 | |
|
| |
Paychex, Inc. | | | 6,789 | | | | 632,599 | |
|
| |
PayPal Holdings, Inc.(b) | | | 2,912 | | | | 681,990 | |
|
| |
Visa, Inc., Class A | | | 3,023 | | | | 661,221 | |
|
| |
Western Union Co. (The) | | | 28,170 | | | | 618,050 | |
|
| |
| | | | | | | 7,737,128 | |
|
| |
| | |
Distillers & Vintners–0.41% | | | | | | | | |
Brown-Forman Corp., Class B | | | 8,163 | | | | 648,387 | |
| |
Constellation Brands, Inc., Class A | | | 3,037 | | | | 665,255 | |
|
| |
| | | | | | | 1,313,642 | |
|
| |
| | |
Distributors–0.60% | | | | | | | | |
Genuine Parts Co. | | | 6,423 | | | | 645,062 | |
| |
LKQ Corp.(b) | | | 17,005 | | | | 599,256 | |
| |
Pool Corp. | | | 1,846 | | | | 687,635 | |
|
| |
| | | | | | | 1,931,953 | |
|
| |
| | |
Diversified Banks–1.01% | | | | | | | | |
Bank of America Corp. | | | 21,820 | | | | 661,364 | |
|
| |
Citigroup, Inc. | | | 10,579 | | | | 652,301 | |
|
| |
JPMorgan Chase & Co. | | | 5,214 | | | | 662,543 | |
|
| |
U.S. Bancorp | | | 13,600 | | | | 633,624 | |
|
| |
Wells Fargo & Co. | | | 21,438 | | | | 646,999 | |
|
| |
| | | | | | | 3,256,831 | |
|
| |
| |
Diversified Chemicals–0.19% | | | | | |
Eastman Chemical Co. | | | 6,082 | | | | 609,903 | |
|
| |
| |
Diversified Support Services–0.40% | | | | | |
Cintas Corp. | | | 1,786 | | | | 631,280 | |
| |
Copart, Inc.(b) | | | 5,329 | | | | 678,115 | |
|
| |
| | | | | | | 1,309,395 | |
|
| |
| | |
Drug Retail–0.18% | | | | | | | | |
Walgreens Boots Alliance, Inc. | | | 15,011 | | | | 598,638 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Electric Utilities–2.93% | | | | | | | | |
Alliant Energy Corp. | | | 12,057 | | | $ | 621,297 | |
|
| |
American Electric Power Co., Inc. | | | 7,533 | | | | 627,273 | |
|
| |
Duke Energy Corp. | | | 6,810 | | | | 623,524 | |
|
| |
Edison International | | | 9,927 | | | | 623,614 | |
|
| |
Entergy Corp. | | | 6,065 | | | | 605,530 | |
|
| |
Evergy, Inc. | | | 11,308 | | | | 627,707 | |
|
| |
Eversource Energy | | | 7,267 | | | | 628,668 | |
|
| |
Exelon Corp. | | | 15,135 | | | | 639,000 | |
|
| |
FirstEnergy Corp. | | | 20,520 | | | | 628,117 | |
|
| |
NextEra Energy, Inc. | | | 8,447 | | | | 651,686 | |
|
| |
NRG Energy, Inc. | | | 18,789 | | | | 705,527 | |
|
| |
Pinnacle West Capital Corp. | | | 7,820 | | | | 625,209 | |
|
| |
PPL Corp. | | | 22,201 | | | | 626,068 | |
|
| |
Southern Co. (The) | | | 10,318 | | | | 633,835 | |
|
| |
Xcel Energy, Inc. | | | 9,591 | | | | 639,432 | |
|
| |
| | | | | | | 9,506,487 | |
|
| |
|
Electrical Components & Equipment–0.78% | |
AMETEK, Inc. | | | 5,266 | | | | 636,870 | |
|
| |
Eaton Corp. PLC | | | 5,393 | | | | 647,915 | |
|
| |
Emerson Electric Co. | | | 7,564 | | | | 607,919 | |
|
| |
Rockwell Automation, Inc. | | | 2,527 | | | | 633,797 | |
|
| |
| | | | | | | 2,526,501 | |
|
| |
| |
Electronic Components–0.39% | | | | | |
Amphenol Corp., Class A | | | 4,758 | | | | 622,204 | |
| |
Corning, Inc. | | | 17,492 | | | | 629,712 | |
|
| |
| | | | | | | 1,251,916 | |
|
| |
|
Electronic Equipment & Instruments–0.80% | |
FLIR Systems, Inc. | | | 14,896 | | | | 652,892 | |
|
| |
Keysight Technologies, Inc.(b) | | | 4,936 | | | | 651,996 | |
|
| |
Vontier Corp.(b) | | | 19,994 | | | | 667,799 | |
|
| |
Zebra Technologies Corp., Class A(b) | | | 1,651 | | | | 634,529 | |
|
| |
| | | | | | | 2,607,216 | |
|
| |
|
Electronic Manufacturing Services–0.40% | |
IPG Photonics Corp.(b) | | | 2,982 | | | | 667,342 | |
| |
TE Connectivity Ltd. | | | 5,280 | | | | 639,249 | |
|
| |
| | | | | | | 1,306,591 | |
|
| |
|
Environmental & Facilities Services–0.60% | |
Republic Services, Inc. | | | 6,564 | | | | 632,113 | |
| |
Rollins, Inc. | | | 17,000 | | | | 664,190 | |
| |
Waste Management, Inc. | | | 5,402 | | | | 637,058 | |
|
| |
| | | | | | | 1,933,361 | |
|
| |
|
Fertilizers & Agricultural Chemicals–0.77% | |
CF Industries Holdings, Inc. | | | 15,835 | | | | 612,973 | |
|
| |
Corteva, Inc. | | | 16,239 | | | | 628,774 | |
|
| |
FMC Corp. | | | 5,354 | | | | 615,335 | |
|
| |
Mosaic Co. (The) | | | 28,043 | | | | 645,270 | |
|
| |
| | | | | | | 2,502,352 | |
|
| |
| |
Financial Exchanges & Data–1.61% | | | | | |
Cboe Global Markets, Inc. | | | 7,251 | | | | 675,213 | |
|
| |
CME Group, Inc., Class A | | | 3,458 | | | | 629,529 | |
|
| |
Intercontinental Exchange, Inc. | | | 5,729 | | | | 660,496 | |
|
| |
MarketAxess Holdings, Inc. | | | 1,138 | | | | 649,297 | |
|
| |
Moody’s Corp. | | | 2,270 | | | | 658,845 | |
|
| |
MSCI, Inc. | | | 1,486 | | | | 663,544 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Financial Exchanges & Data–(continued) | |
Nasdaq, Inc. | | | 4,961 | | | $ | 658,523 | |
| |
S&P Global, Inc. | | | 1,919 | | | | 630,833 | |
|
| |
| | | | | | | 5,226,280 | |
|
| |
| | |
Food Distributors–0.19% | | | | | | | | |
Sysco Corp. | | | 8,216 | | | | 610,120 | |
|
| |
| | |
Food Retail–0.19% | | | | | | | | |
Kroger Co. (The) | | | 19,892 | | | | 631,770 | |
|
| |
| | |
Footwear–0.20% | | | | | | | | |
NIKE, Inc., Class B | | | 4,537 | | | | 641,849 | |
|
| |
| | |
Gas Utilities–0.19% | | | | | | | | |
Atmos Energy Corp. | | | 6,293 | | | | 600,541 | |
|
| |
| | |
General Merchandise Stores–0.59% | | | | | | | | |
Dollar General Corp. | | | 3,017 | | | | 634,475 | |
|
| |
Dollar Tree, Inc.(b) | | | 5,851 | | | | 632,142 | |
|
| |
Target Corp. | | | 3,631 | | | | 640,981 | |
|
| |
| | | | | | | 1,907,598 | |
|
| |
| |
Gold–0.20% | | | | | |
Newmont Corp. | | | 10,590 | | | | 634,235 | |
|
| |
| | |
Health Care Distributors–0.76% | | | | | | | | |
AmerisourceBergen Corp. | | | 6,357 | | | | 621,460 | |
|
| |
Cardinal Health, Inc. | | | 11,485 | | | | 615,137 | |
|
| |
Henry Schein, Inc.(b) | | | 8,912 | | | | 595,856 | |
|
| |
McKesson Corp. | | | 3,569 | | | | 620,721 | |
|
| |
| | | | | | | 2,453,174 | |
|
| |
| |
Health Care Equipment–3.66% | | | | | |
Abbott Laboratories | | | 5,825 | | | | 637,779 | |
|
| |
ABIOMED, Inc.(b) | | | 2,412 | | | | 781,970 | |
|
| |
Baxter International, Inc. | | | 7,857 | | | | 630,446 | |
|
| |
Becton, Dickinson and Co. | | | 2,569 | | | | 642,815 | |
|
| |
Boston Scientific Corp.(b) | | | 18,554 | | | | 667,016 | |
|
| |
Danaher Corp. | | | 2,786 | | | | 618,882 | |
|
| |
DexCom, Inc.(b) | | | 1,793 | | | | 662,908 | |
|
| |
Edwards Lifesciences Corp.(b) | | | 7,406 | | | | 675,649 | |
|
| |
Hologic, Inc.(b) | | | 8,388 | | | | 610,898 | |
|
| |
IDEXX Laboratories, Inc.(b) | | | 1,366 | | | | 682,823 | |
|
| |
Intuitive Surgical, Inc.(b) | | | 820 | | | | 670,842 | |
|
| |
Medtronic PLC | | | 5,547 | | | | 649,776 | |
|
| |
ResMed, Inc. | | | 3,048 | | | | 647,883 | |
|
| |
STERIS PLC | | | 3,348 | | | | 634,580 | |
|
| |
Stryker Corp. | | | 2,685 | | | | 657,932 | |
|
| |
Teleflex, Inc. | | | 1,626 | | | | 669,213 | |
|
| |
Varian Medical Systems, Inc.(b) | | | 3,571 | | | | 624,961 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 4,400 | | | | 677,996 | |
|
| |
| | | | | | | 11,844,369 | |
|
| |
| | |
Health Care Facilities–0.40% | | | | | | | | |
HCA Healthcare, Inc. | | | 3,956 | | | | 650,604 | |
| |
Universal Health Services, Inc., Class B | | | 4,710 | | | | 647,625 | |
|
| |
| | | | | | | 1,298,229 | |
|
| |
| | |
Health Care REITs–0.58% | | | | | | | | |
Healthpeak Properties, Inc. | | | 21,255 | | | | 642,539 | |
| |
Ventas, Inc. | | | 12,710 | | | | 623,298 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| Health Care REITs–(continued) | |
Welltower, Inc. | | | 9,703 | | | $ | 627,008 | |
| |
| | | | | | | 1,892,845 | |
| |
|
| Health Care Services–0.96% | |
Cigna Corp. | | | 2,978 | | | | 619,960 | |
| |
CVS Health Corp. | | | 8,709 | | | | 594,825 | |
| |
DaVita, Inc.(b) | | | 5,755 | | | | 675,637 | |
| |
Laboratory Corp. of America
Holdings(b) | | | 3,054 | | | | 621,642 | |
| |
Quest Diagnostics, Inc. | | | 5,107 | | | | 608,601 | |
| |
| | | | | | | 3,120,665 | |
| |
|
| Health Care Supplies–0.81% | |
Align Technology, Inc.(b) | | | 1,229 | | | | 656,753 | |
| |
Cooper Cos., Inc. (The) | | | 1,838 | | | | 667,782 | |
| |
DENTSPLY SIRONA, Inc. | | | 11,771 | | | | 616,330 | |
| |
West Pharmaceutical Services, Inc. | | | 2,362 | | | | 669,178 | |
| |
| | | | | | | 2,610,043 | |
| |
|
| Health Care Technology–0.20% | |
Cerner Corp. | | | 8,367 | | | | 656,642 | |
| |
|
| Home Furnishings–0.41% | |
Leggett & Platt, Inc. | | | 15,142 | | | | 670,790 | |
| |
Mohawk Industries, Inc.(b) | | | 4,626 | | | | 652,035 | |
| |
| | | | | | | 1,322,825 | |
| |
|
| Home Improvement Retail–0.39% | |
Home Depot, Inc. (The) | | | 2,356 | | | | 625,801 | |
| |
Lowe’s Cos., Inc. | | | 3,950 | | | | 634,014 | |
| |
| | | | | | | 1,259,815 | |
| |
|
| Homebuilding–0.78% | |
D.R. Horton, Inc. | | | 8,917 | | | | 614,560 | |
| |
Lennar Corp., Class A | | | 8,568 | | | | 653,139 | |
| |
NVR, Inc.(b) | | | 156 | | | | 636,458 | |
| |
PulteGroup, Inc. | | | 14,720 | | | | 634,726 | |
| |
| | | | | | | 2,538,883 | |
| |
|
| Hotel & Resort REITs–0.19% | |
Host Hotels & Resorts, Inc. | | | 42,964 | | | | 628,563 | |
| |
|
| Hotels, Resorts & Cruise Lines–0.97% | |
Carnival Corp. | | | 29,240 | | | | 633,338 | |
| |
Hilton Worldwide Holdings, Inc. | | | 5,952 | | | | 662,219 | |
| |
Marriott International, Inc., Class A | | | 4,851 | | | | 639,944 | |
| |
Norwegian Cruise Line Holdings Ltd.(b) | | | 23,516 | | | | 598,012 | |
| |
Royal Caribbean Cruises Ltd. | | | 8,153 | | | | 608,948 | |
| |
| | | | | | | 3,142,461 | |
| |
|
| Household Appliances–0.19% | |
Whirlpool Corp. | | | 3,389 | | | | 611,681 | |
| |
|
| Household Products–0.97% | |
Church & Dwight Co., Inc. | | | 7,262 | | | | 633,464 | |
| |
Clorox Co. (The) | | | 3,090 | | | | 623,933 | |
| |
Colgate-Palmolive Co. | | | 7,362 | | | | 629,525 | |
| |
Kimberly-Clark Corp. | | | 4,584 | | | | 618,061 | |
| |
Procter & Gamble Co. (The) | | | 4,567 | | | | 635,452 | |
| |
| | | | | | | 3,140,435 | |
| |
|
| Housewares & Specialties–0.20% | |
Newell Brands, Inc. | | | 30,395 | | | | 645,286 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Human Resource & Employment Services–0.19% | |
Robert Half International, Inc. | | | 9,710 | | | $ | 606,681 | |
| |
|
| Hypermarkets & Super Centers–0.38% | |
Costco Wholesale Corp. | | | 1,662 | | | | 626,208 | |
| |
Walmart, Inc. | | | 4,241 | | | | 611,340 | |
| |
| | | | | | | 1,237,548 | |
| |
|
| Independent Power Producers & Energy Traders–0.21% | |
AES Corp. (The) | | | 29,475 | | | | 692,662 | |
| |
|
| Industrial Conglomerates–0.77% | |
3M Co. | | | 3,582 | | | | 626,098 | |
| |
General Electric Co. | | | 55,861 | | | | 603,299 | |
| |
Honeywell International, Inc. | | | 2,905 | | | | 617,894 | |
| |
Roper Technologies, Inc. | | | 1,483 | | | | 639,306 | |
| |
| | | | | | | 2,486,597 | |
| |
|
| Industrial Gases–0.40% | |
Air Products and Chemicals, Inc. | | | 2,332 | | | | 637,149 | |
| |
Linde PLC (United Kingdom) | | | 2,500 | | | | 658,775 | |
| |
| | | | | | | 1,295,924 | |
| |
|
| Industrial Machinery–2.35% | |
Dover Corp. | | | 5,136 | | | | 648,420 | |
| |
Flowserve Corp. | | | 16,808 | | | | 619,375 | |
| |
Fortive Corp. | | | 9,094 | | | | 644,037 | |
| |
IDEX Corp. | | | 3,231 | | | | 643,615 | |
| |
Illinois Tool Works, Inc. | | | 3,063 | | | | 624,484 | |
| |
Ingersoll Rand, Inc.(b) | | | 14,066 | | | | 640,847 | |
| |
Otis Worldwide Corp. | | | 9,782 | | | | 660,774 | |
| |
Parker-Hannifin Corp. | | | 2,270 | | | | 618,371 | |
| |
Pentair PLC | | | 12,114 | | | | 643,132 | |
| |
Snap-on, Inc. | | | 3,448 | | | | 590,091 | |
| |
Stanley Black & Decker, Inc. | | | 3,558 | | | | 635,316 | |
| |
Xylem, Inc. | | | 6,330 | | | | 644,331 | |
| |
| | | | | | | 7,612,793 | |
| |
|
| Industrial REITs–0.40% | |
Duke Realty Corp. | | | 16,260 | | | | 649,912 | |
| |
Prologis, Inc. | | | 6,402 | | | | 638,024 | |
| |
| | | | | | | 1,287,936 | |
| |
|
| Insurance Brokers–0.79% | |
Aon PLC, Class A | | | 3,054 | | | | 645,218 | |
| |
Arthur J. Gallagher & Co. | | | 5,198 | | | | 643,045 | |
| |
Marsh & McLennan Cos., Inc. | | | 5,400 | | | | 631,800 | |
| |
Willis Towers Watson PLC | | | 3,050 | | | | 642,574 | |
| |
| | | | | | | 2,562,637 | |
| |
|
| Integrated Oil & Gas–0.52% | |
Chevron Corp. | | | 6,743 | | | | 569,447 | |
| |
Exxon Mobil Corp. | | | 14,233 | | | | 586,684 | |
| |
Occidental Petroleum Corp. | | | 29,842 | | | | 516,565 | |
| |
| | | | | | | 1,672,696 | |
| |
|
| Integrated Telecommunication Services–0.37% | |
AT&T, Inc. | | | 20,103 | | | | 578,162 | |
| |
Verizon Communications, Inc. | | | 10,330 | | | | 606,888 | |
| |
| | | | | | | 1,185,050 | |
|
| |
|
| Interactive Home Entertainment–0.63% | |
Activision Blizzard, Inc. | | | 7,450 | | | | 691,732 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| Interactive Home Entertainment–(continued) | |
Electronic Arts, Inc.(b) | | | 4,591 | | | $ | 659,268 | |
| |
Take-Two Interactive Software, Inc.(b) | | | 3,277 | | | | 680,928 | |
| |
| | | | | | | 2,031,928 | |
| |
|
| Interactive Media & Services–0.58% | |
Alphabet, Inc., Class A(b) | | | 177 | | | | 310,217 | |
| |
Alphabet, Inc., Class C(b) | | | 173 | | | | 303,075 | |
| |
Facebook, Inc., Class A(b) | | | 2,279 | | | | 622,532 | |
| |
Twitter, Inc.(b) | | | 12,119 | | | | 656,244 | |
| |
| | | | | | | 1,892,068 | |
| |
|
| Internet & Direct Marketing Retail–1.01% | |
Amazon.com, Inc.(b) | | | 200 | | | | 651,386 | |
| |
Booking Holdings, Inc.(b) | | | 298 | | | | 663,727 | |
| |
eBay, Inc. | | | 12,689 | | | | 637,622 | |
| |
Etsy, Inc.(b) | | | 3,667 | | | | 652,396 | |
| |
Expedia Group, Inc. | | | 5,068 | | | | 671,003 | |
| |
| | | | | | | 3,276,134 | |
| |
|
| Internet Services & Infrastructure–0.39% | |
Akamai Technologies, Inc.(b) | | | 6,021 | | | | 632,145 | |
| |
VeriSign, Inc.(b) | | | 2,969 | | | | 642,491 | |
| |
| | | | | | | 1,274,636 | |
| |
|
| Investment Banking & Brokerage–0.83% | |
Charles Schwab Corp. (The) | | | 12,612 | | | | 668,940 | |
| |
Goldman Sachs Group, Inc. (The) | | | 2,598 | | | | 685,119 | |
| |
Morgan Stanley | | | 9,845 | | | | 674,678 | |
| |
Raymond James Financial, Inc. | | | 6,751 | | | | 645,868 | |
| |
| | | | | | | 2,674,605 | |
| |
|
| IT Consulting & Other Services–1.20% | |
Accenture PLC, Class A | | | 2,536 | | | | 662,429 | |
| |
Cognizant Technology Solutions Corp., Class A | | | 7,940 | | | | 650,683 | |
| |
DXC Technology Co. | | | 26,051 | | | | 670,813 | |
| |
Gartner, Inc.(b) | | | 4,028 | | | | 645,245 | |
| |
International Business Machines Corp. | | | 5,017 | | | | 631,540 | |
| |
Leidos Holdings, Inc. | | | 5,914 | | | | 621,680 | |
| |
| | | | | | | 3,882,390 | |
| |
|
| Leisure Products–0.20% | |
Hasbro, Inc. | | | 7,005 | | | | 655,248 | |
| |
|
| Life & Health Insurance–1.34% | |
Aflac, Inc. | | | 13,903 | | | | 618,266 | |
| |
Globe Life, Inc. | | | 6,653 | | | | 631,769 | |
| |
Lincoln National Corp. | | | 12,145 | | | | 611,015 | |
| |
MetLife, Inc. | | | 13,211 | | | | 620,256 | |
| |
Principal Financial Group, Inc. | | | 12,783 | | | | 634,165 | |
| |
Prudential Financial, Inc. | | | 7,933 | | | | 619,329 | |
| |
Unum Group | | | 26,790 | | | | 614,563 | |
| |
| | | | | | | 4,349,363 | |
| |
|
| Life Sciences Tools & Services–1.57% | |
Agilent Technologies, Inc. | | | 5,262 | | | | 623,494 | |
| |
Bio-Rad Laboratories, Inc., Class A(b) | | | 1,099 | | | | 640,651 | |
| |
Illumina, Inc.(b) | | | 1,823 | | | | 674,510 | |
| |
IQVIA Holdings, Inc.(b) | | | 3,715 | | | | 665,617 | |
| |
Mettler-Toledo International, Inc.(b) | | | 545 | | | | 621,126 | |
| |
PerkinElmer, Inc. | | | 4,268 | | | | 612,458 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Life Sciences Tools & Services–(continued) | |
Thermo Fisher Scientific, Inc. | | | 1,322 | | | $ | 615,761 | |
| |
Waters Corp.(b) | | | 2,594 | | | | 641,807 | |
| |
| | | | | | | 5,095,424 | |
| |
|
| Managed Health Care–0.79% | |
Anthem, Inc. | | | 2,002 | | | | 642,822 | |
| |
Centene Corp.(b) | | | 10,269 | | | | 616,448 | |
| |
Humana, Inc. | | | 1,594 | | | | 653,971 | |
| |
UnitedHealth Group, Inc. | | | 1,849 | | | | 648,407 | |
| |
| | | | | | | 2,561,648 | |
| |
|
| Metal & Glass Containers–0.19% | |
Ball Corp. | | | 6,734 | | | | 627,474 | |
| |
|
| Movies & Entertainment–0.60% | |
Live Nation Entertainment, Inc.(b) | | | 8,789 | | | | 645,816 | |
| |
Netflix, Inc.(b) | | | 1,239 | | | | 669,964 | |
| |
Walt Disney Co. (The)(b) | | | 3,548 | | | | 642,827 | |
| |
| | | | | | | 1,958,607 | |
| |
|
| Multi-line Insurance–0.59% | |
American International Group, Inc. | | | 16,071 | | | | 608,448 | |
| |
Assurant, Inc. | | | 4,715 | | | | 642,277 | |
| |
Hartford Financial Services Group, Inc. (The) | | | 13,482 | | | | 660,349 | |
| |
| | | | | | | 1,911,074 | |
| |
|
| Multi-Sector Holdings–0.20% | |
Berkshire Hathaway, Inc., Class B(b) | | | 2,754 | | | | 638,570 | |
| |
|
| Multi-Utilities–1.93% | |
Ameren Corp. | | | 8,047 | | | | 628,149 | |
| |
CenterPoint Energy, Inc. | | | 28,662 | | | | 620,246 | |
| |
CMS Energy Corp. | | | 10,499 | | | | 640,544 | |
| |
Consolidated Edison, Inc. | | | 8,521 | | | | 615,813 | |
| |
Dominion Energy, Inc. | | | 8,322 | | | | 625,814 | |
| |
DTE Energy Co. | | | 4,984 | | | | 605,107 | |
| |
NiSource, Inc. | | | 27,235 | | | | 624,771 | |
| |
Public Service Enterprise Group, Inc. | | | 11,038 | | | | 643,515 | |
| |
Sempra Energy | | | 4,870 | | | | 620,487 | |
| |
WEC Energy Group, Inc. | | | 6,759 | | | | 622,031 | |
| |
| | | | | | | 6,246,477 | |
| |
|
| Office REITs–0.76% | |
Alexandria Real Estate Equities, Inc. | | | 3,612 | | | | 643,731 | |
| |
Boston Properties, Inc. | | | 6,235 | | | | 589,394 | |
| |
SL Green Realty Corp. | | | 10,503 | | | | 625,769 | |
| |
Vornado Realty Trust | | | 16,056 | | | | 599,531 | |
| |
| | | | | | | 2,458,425 | |
| |
|
| Oil & Gas Equipment & Services–0.91% | |
Baker Hughes Co., Class A | | | 27,499 | | | | 573,354 | |
| |
Halliburton Co. | | | 31,438 | | | | 594,178 | |
| |
NOV, Inc.(b) | | | 43,534 | | | | 597,722 | |
| |
Schlumberger Ltd. | | | 27,175 | | | | 593,231 | |
| |
TechnipFMC PLC (United Kingdom) | | | 64,468 | | | | 605,999 | |
| |
| | | | | | | 2,964,484 | |
| |
|
| Oil & Gas Exploration & Production–1.81% | |
Apache Corp. | | | 38,721 | | | | 549,451 | |
| |
Cabot Oil & Gas Corp. | | | 36,671 | | | | 597,004 | |
| |
Concho Resources, Inc. | | | 9,853 | | | | 574,922 | |
| |
ConocoPhillips | | | 14,338 | | | | 573,377 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| Oil & Gas Exploration & Production–(continued) | |
Devon Energy Corp. | | | 38,577 | | | $ | 609,902 | |
| |
Diamondback Energy, Inc. | | | 12,441 | | | | 602,144 | |
| |
EOG Resources, Inc. | | | 11,631 | | | | 580,038 | |
| |
Hess Corp. | | | 11,008 | | | | 581,112 | |
| |
Marathon Oil Corp. | | | 88,301 | | | | 588,968 | |
| |
Pioneer Natural Resources Co. | | | 5,394 | | | | 614,323 | |
| |
| | | | | | | 5,871,241 | |
| |
|
| Oil & Gas Refining & Marketing–0.74% | |
HollyFrontier Corp. | | | 22,686 | | | | 586,433 | |
| |
Marathon Petroleum Corp. | | | 14,528 | | | | 600,878 | |
| |
Phillips 66 | | | 8,969 | | | | 627,292 | |
| |
Valero Energy Corp. | | | 10,561 | | | | 597,436 | |
| |
| | | | | | | 2,412,039 | |
| |
|
| Oil & Gas Storage & Transportation–0.53% | |
Kinder Morgan, Inc. | | | 42,265 | | | | 577,763 | |
| |
ONEOK, Inc. | | | 14,997 | | | | 575,585 | |
| |
Williams Cos., Inc. (The) | | | 28,427 | | | | 569,961 | |
| |
| | | | | | | 1,723,309 | |
| |
|
| Packaged Foods & Meats–2.32% | |
Campbell Soup Co. | | | 13,205 | | | | 638,462 | |
| |
Conagra Brands, Inc. | | | 17,635 | | | | 639,445 | |
| |
General Mills, Inc. | | | 10,509 | | | | 617,929 | |
| |
Hershey Co. (The) | | | 4,181 | | | | 636,892 | |
| |
Hormel Foods Corp. | | | 13,208 | | | | 615,625 | |
| |
JM Smucker Co. (The) | | | 5,413 | | | | 625,743 | |
| |
Kellogg Co. | | | 10,037 | | | | 624,602 | |
| |
Kraft Heinz Co. (The)(c) | | | 18,298 | | | | 634,209 | |
| |
Lamb Weston Holdings, Inc. | | | 8,067 | | | | 635,195 | |
| |
McCormick & Co., Inc. | | | 6,673 | | | | 637,939 | |
| |
Mondelez International, Inc., Class A | | | 10,861 | | | | 635,042 | |
| |
Tyson Foods, Inc., Class A | | | 8,997 | | | | 579,767 | |
| |
| | | | | | | 7,520,850 | |
| |
|
| Paper Packaging–1.18% | |
Amcor PLC | | | 54,494 | | | | 641,394 | |
| |
Avery Dennison Corp. | | | 4,156 | | | | 644,637 | |
| |
International Paper Co. | | | 12,819 | | | | 637,361 | |
| |
Packaging Corp. of America | | | 4,598 | | | | 634,110 | |
| |
Sealed Air Corp. | | | 13,925 | | | | 637,626 | |
| |
Westrock Co. | | | 14,321 | | | | 623,393 | |
| |
| | | | | | | 3,818,521 | |
| |
|
| Personal Products–0.21% | |
Estee Lauder Cos., Inc. (The), Class A | | | 2,537 | | | | 675,324 | |
| |
|
| Pharmaceuticals–1.76% | |
Bristol-Myers Squibb Co.(c) | | | 10,267 | | | | 636,862 | |
| |
Catalent, Inc.(b) | | | 6,546 | | | | 681,242 | |
| |
Eli Lilly and Co. | | | 3,895 | | | | 657,632 | |
| |
Johnson & Johnson | | | 4,076 | | | | 641,481 | |
| |
Merck & Co., Inc. | | | 7,515 | | | | 614,727 | |
| |
Perrigo Co. PLC | | | 13,039 | | | | 583,104 | |
| |
Pfizer, Inc. | | | 15,161 | | | | 558,076 | |
| |
Viatris, Inc.(b) | | | 35,952 | | | | 673,741 | |
| |
Zoetis, Inc. | | | 3,908 | | | | 646,774 | |
| |
| | | | | | | 5,693,639 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Property & Casualty Insurance–1.40% | |
Allstate Corp. (The) | | | 5,970 | | | $ | 656,282 | |
| |
Chubb Ltd. | | | 4,055 | | | | 624,146 | |
| |
Cincinnati Financial Corp. | | | 7,776 | | | | 679,389 | |
| |
Loews Corp. | | | 14,279 | | | | 642,841 | |
| |
Progressive Corp. (The) | | | 6,605 | | | | 653,102 | |
| |
Travelers Cos., Inc. (The) | | | 4,620 | | | | 648,509 | |
| |
W.R. Berkley Corp. | | | 9,622 | | | | 639,093 | |
| |
| | | | | | | 4,543,362 | |
| |
|
| Publishing–0.19% | |
News Corp., Class A | | | 26,470 | | | | 475,666 | |
| |
News Corp., Class B | | | 8,287 | | | | 147,260 | |
| |
| | | | | | | 622,926 | |
| |
|
| Railroads–0.78% | |
CSX Corp. | | | 6,894 | | | | 625,631 | |
| |
Kansas City Southern | | | 3,171 | | | | 647,296 | |
| |
Norfolk Southern Corp. | | | 2,650 | | | | 629,667 | |
| |
Union Pacific Corp. | | | 3,070 | | | | 639,235 | |
| |
| | | | | | | 2,541,829 | |
| |
|
| Real Estate Services–0.18% | |
CBRE Group, Inc., Class A(b) | | | 9,424 | | | | 591,073 | |
| |
|
| Regional Banks–2.59% | |
Citizens Financial Group, Inc. | | | 17,625 | | | | 630,270 | |
| |
Comerica, Inc. | | | 11,832 | | | | 660,936 | |
| |
Fifth Third Bancorp | | | 22,802 | | | | 628,651 | |
| |
First Republic Bank | | | 4,809 | | | | 706,586 | |
| |
Huntington Bancshares, Inc. | | | 48,214 | | | | 608,943 | |
| |
KeyCorp | | | 39,356 | | | | 645,832 | |
| |
M&T Bank Corp. | | | 4,954 | | | | 630,644 | |
| |
People’s United Financial, Inc. | | | 47,881 | | | | 619,101 | |
| |
PNC Financial Services Group, Inc. (The) | | | 4,339 | | | | 646,511 | |
| |
Regions Financial Corp. | | | 40,116 | | | | 646,670 | |
| |
SVB Financial Group(b) | | | 1,782 | | | | 691,113 | |
| |
Truist Financial Corp. | | | 13,261 | | | | 635,600 | |
| |
Zions Bancorporation N.A. | | | 14,957 | | | | 649,732 | |
| |
| | | | | | | 8,400,589 | |
| |
|
| Reinsurance–0.19% | |
Everest Re Group Ltd. | | | 2,692 | | | | 630,170 | |
| |
|
| Research & Consulting Services–0.81% | |
Equifax, Inc. | | | 3,314 | | | | 639,072 | |
| |
IHS Markit Ltd. | | | 6,979 | | | | 626,924 | |
| |
Nielsen Holdings PLC | | | 32,639 | | | | 681,176 | |
| |
Verisk Analytics, Inc. | | | 3,214 | | | | 667,194 | |
| |
| | | | | | | 2,614,366 | |
| |
|
| Residential REITs–0.96% | |
AvalonBay Communities, Inc. | | | 3,840 | | | | 616,051 | |
| |
Equity Residential | | | 10,577 | | | | 627,005 | |
| |
Essex Property Trust, Inc. | | | 2,556 | | | | 606,845 | |
| |
Mid-America Apartment Communities, Inc. | | | 5,124 | | | | 649,160 | |
| |
UDR, Inc. | | | 16,345 | | | | 628,138 | |
| �� |
| | | | | | | 3,127,199 | |
| |
|
| Restaurants–1.20% | |
Chipotle Mexican Grill, Inc.(b) | | | 480 | | | | 665,621 | |
| |
Darden Restaurants, Inc. | | | 5,531 | | | | 658,853 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| Restaurants–(continued) | |
Domino’s Pizza, Inc. | | | 1,626 | | | $ | 623,506 | |
| |
McDonald’s Corp. | | | 3,001 | | �� | | 643,954 | |
| |
Starbucks Corp. | | | 6,052 | | | | 647,443 | |
| |
Yum! Brands, Inc. | | | 5,882 | | | | 638,550 | |
| |
| | | | | | | 3,877,927 | |
| |
|
| Retail REITs–0.95% | |
Federal Realty Investment Trust | | | 6,915 | | | | 588,605 | |
| |
Kimco Realty Corp. | | | 42,265 | | | | 634,397 | |
| |
Realty Income Corp. | | | 10,311 | | | | 641,035 | |
| |
Regency Centers Corp. | | | 13,241 | | | | 603,657 | |
| |
Simon Property Group, Inc. | | | 7,092 | | | | 604,806 | |
| |
| | | | | | | 3,072,500 | |
| |
|
| Semiconductor Equipment–0.77% | |
Applied Materials, Inc. | | | 7,060 | | | | 609,278 | |
| |
KLA Corp. | | | 2,420 | | | | 626,562 | |
| |
Lam Research Corp. | | | 1,268 | | | | 598,838 | |
| |
Teradyne, Inc. | | | 5,404 | | | | 647,886 | |
| |
| | | | | | | 2,482,564 | |
| |
|
| Semiconductors–2.59% | |
Advanced Micro Devices, Inc.(b) | | | 6,802 | | | | 623,811 | |
| |
Analog Devices, Inc. | | | 4,417 | | | | 652,523 | |
| |
Broadcom, Inc. | | | 1,536 | | | | 672,538 | |
| |
Intel Corp. | | | 12,536 | | | | 624,543 | |
| |
Maxim Integrated Products, Inc. | | | 7,403 | | | | 656,276 | |
| |
Microchip Technology, Inc. | | | 4,434 | | | | 612,380 | |
| |
Micron Technology, Inc.(b) | | | 8,839 | | | | 664,516 | |
| |
NVIDIA Corp. | | | 1,198 | | | | 625,596 | |
| |
Qorvo, Inc.(b) | | | 4,084 | | | | 679,047 | |
| |
QUALCOMM, Inc. | | | 4,321 | | | | 658,261 | |
| |
Skyworks Solutions, Inc. | | | 4,477 | | | | 684,444 | |
| |
Texas Instruments, Inc. | | | 3,881 | | | | 636,989 | |
| |
Xilinx, Inc. | | | 4,334 | | | | 614,431 | |
| |
| | | | | | | 8,405,355 | |
| |
|
| Soft Drinks–0.60% | |
Coca-Cola Co. (The) | | | 11,685 | | | | 640,805 | |
| |
Monster Beverage Corp.(b) | | | 7,083 | | | | 655,036 | |
| |
PepsiCo, Inc. | | | 4,300 | | | | 637,690 | |
| |
| | | | | | | 1,933,531 | |
| |
|
| Specialized REITs–1.79% | |
American Tower Corp. | | | 2,836 | | | | 636,569 | |
| |
Crown Castle International Corp. | | | 3,954 | | | | 629,437 | |
| |
Digital Realty Trust, Inc. | | | 4,785 | | | | 667,555 | |
| |
Equinix, Inc. | | | 905 | | | | 646,333 | |
| |
Extra Space Storage, Inc. | | | 5,647 | | | | 654,261 | |
| |
Iron Mountain, Inc. | | | 20,520 | | | | 604,930 | |
| |
Public Storage | | | 2,833 | | | | 654,225 | |
| |
SBA Communications Corp., Class A | | | 2,262 | | | | 638,178 | |
| |
Weyerhaeuser Co. | | | 19,481 | | | | 653,198 | |
| |
| | | | | | | 5,784,686 | |
| |
|
| Specialty Chemicals–1.37% | |
Albemarle Corp. | | | 4,496 | | | | 663,250 | |
| |
Celanese Corp. | | | 4,759 | | | | 618,384 | |
| |
DuPont de Nemours, Inc. | | | 9,389 | | | | 667,652 | |
| |
Ecolab, Inc. | | | 2,818 | | | | 609,702 | |
| |
International Flavors & Fragrances, Inc. | | | 5,614 | | | | 611,028 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Specialty Chemicals–(continued) | |
PPG Industries, Inc. | | | 4,362 | | | $ | 629,088 | |
| |
Sherwin-Williams Co. (The) | | | 868 | | | | 637,902 | |
| |
| | | | | | | 4,437,006 | |
| |
|
| Specialty Stores–0.60% | |
Tiffany & Co. | | | 4,751 | | | | 624,519 | |
| |
Tractor Supply Co. | | | 4,496 | | | | 632,047 | |
| |
Ulta Beauty, Inc.(b) | | | 2,349 | | | | 674,539 | |
| |
| | | | | | | 1,931,105 | |
| |
|
| Steel–0.18% | |
Nucor Corp. | | | 11,006 | | | | 585,409 | |
| |
|
| Systems Software–1.03% | |
Fortinet, Inc.(b) | | | 4,857 | | | | 721,410 | |
| |
Microsoft Corp. | | | 2,923 | | | | 650,134 | |
| |
NortonLifeLock, Inc. | | | 31,823 | | | | 661,282 | |
| |
Oracle Corp. | | | 10,286 | | | | 665,401 | |
| |
ServiceNow, Inc.(b) | | | 1,160 | | | | 638,499 | |
| |
| | | | | | | 3,336,726 | |
| |
|
| Technology Distributors–0.19% | |
CDW Corp. | | | 4,770 | | | | 628,638 | |
| |
|
| Technology Hardware, Storage & Peripherals–1.40% | |
Apple, Inc. | | | 5,093 | | | | 675,790 | |
| |
Hewlett Packard Enterprise Co. | | | 51,994 | | | | 616,129 | |
| |
HP, Inc. | | | 26,976 | | | | 663,340 | |
| |
NetApp, Inc. | | | 10,084 | | | | 667,964 | |
| |
Seagate Technology PLC | | | 9,626 | | | | 598,352 | |
| |
Western Digital Corp. | | | 12,202 | | | | 675,869 | |
| |
Xerox Holdings Corp. | | | 27,390 | | | | 635,174 | |
| |
| | | | | | | 4,532,618 | |
| |
|
| Tobacco–0.37% | |
Altria Group, Inc. | | | 14,498 | | | | 594,418 | |
| |
Philip Morris International, Inc. | | | 7,334 | | | | 607,182 | |
| |
| | | | | | | 1,201,600 | |
| |
|
| Trading Companies & Distributors–0.57% | |
Fastenal Co. | | | 12,668 | | | | 618,579 | |
| |
United Rentals, Inc.(b) | | | 2,589 | | | | 600,415 | |
| |
W.W. Grainger, Inc. | | | 1,545 | | | | 630,885 | |
| |
| | | | | | | 1,849,879 | |
| |
|
| Trucking–0.38% | |
J.B. Hunt Transport Services, Inc. | | | 4,488 | | | | 613,285 | |
| |
Old Dominion Freight Line, Inc. | | | 3,105 | | | | 606,034 | |
| |
| | | | | | | 1,219,319 | |
| |
|
| Water Utilities–0.20% | |
American Water Works Co., Inc. | | | 4,204 | | | | 645,188 | |
| |
|
| Wireless Telecommunication Services–0.20% | |
T-Mobile US, Inc.(b) | | | 4,750 | | | | 640,537 | |
| |
Total Common Stocks & Other Equity Interests (Cost $186,182,937) | | | | 317,597,331 | |
| |
|
| Money Market Funds–1.93% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(e)(f) | | | 2,135,376 | | | | 2,135,376 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(e)(f) | | | 1,671,572 | | | | 1,672,074 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| Money Market Funds–(continued) | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e)(f) | | | 2,440,430 | | | $ | 2,440,430 | |
|
| |
Total Money Market Funds (Cost $6,247,449) | | | | 6,247,880 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.94% (Cost $192,430,386) | | | | 323,845,211 | |
| |
Investments Purchased with Cash Collateral from
Securities on Loan | |
Money Market Funds–0.10% | | | | | | | | |
Invesco Private Government Fund, 0.02%(e)(f)(g) | | | 126,199 | | | | 126,199 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–(continued) | | | | | | | | |
Invesco Private Prime Fund, 0.12%(e)(f)(g) | | | 189,241 | | | $ | 189,298 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $315,497) | | | | 315,497 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-100.04%
(Cost $192,745,883) | | | | 324,160,708 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.04)% | | | | (120,917 | ) |
|
| |
NET ASSETS-100.00% | | | | | | $ | 324,039,791 | |
|
| |
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
| (d) | All or a portion of this security was out on loan at December 31, 2020. |
| (e) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
Invesco Ltd. | | | $ 549,469 | | | | $ 198,765 | | | | $ (289,773) | | | | $247,945 | | | | $(98,012) | | | | $608,394 | | | | $33,142 | |
|
| |
Investments in Affiliated Money Market | |
Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
Invesco Government & Agency Portfolio,
Institutional Class | | | 1,740,175 | | | | 17,791,317 | | | | (17,396,116 | ) | | | - | | | | - | | | | 2,135,376 | | | | 8,008 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional
Class | | | 1,183,097 | | | | 12,968,355 | | | | (12,480,064 | ) | | | 401 | | | | 285 | | | | 1,672,074 | | | | 8,501 | |
|
| |
Invesco Treasury Portfolio, Institutional Class | | | 1,988,772 | | | | 20,332,933 | | | | (19,881,275 | ) | | | - | | | | - | | | | 2,440,430 | | | | 8,560 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | |
|
| |
Invesco Government & Agency Portfolio,
Institutional Class | | | 716,421 | | | | 2,252,168 | | | | (2,968,589 | ) | | | - | | | | - | | | | - | | | | 1,078* | |
|
| |
Invesco Liquid Assets Portfolio, Institutional
Class | | | 239,736 | | | | 611,678 | | | | (851,173 | ) | | | - | | | | (241 | ) | | | - | | | | 467* | |
|
| |
Invesco Private Government Fund | | | - | | | | 6,683,185 | | | | (6,556,986 | ) | | | - | | | | - | | | | 126,199 | | | | 55* | |
|
| |
Invesco Private Prime Fund | | | - | | | | 2,406,912 | | | | (2,217,686 | ) | | | - | | | | 72 | | | | 189,298 | | | | 81* | |
|
| |
Total | | | $6,417,670 | | | | $63,245,313 | | | | $(62,641,662 | ) | | | $248,346 | | | | $(97,896 | ) | | | $7,171,771 | | | | $59,892 | |
|
| |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (f) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (g) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
| | | | | | | | | | | | | | | | |
| Open Futures Contracts | |
|
| |
| Long Futures Contracts | | Number of Contracts | | Expiration
Month | | Notional
Value | | | Value | | | Unrealized
Appreciation | |
|
| |
Equity Risk | | | | | | | | | | | | | | | | |
|
| |
E-Mini S&P 500 Index | | 34 | | March-2021 | | $ | 6,372,960 | | | $ | 139,260 | | | | $139,260 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value (Cost $ 185,806,172)* | | $ | 316,988,937 | |
| |
Investments in affiliates, at value (Cost $ 6,939,711) | | | 7,171,771 | |
| |
| Other investments: | | | | |
Variation margin receivable – futures contracts | | | 41,820 | |
| |
Receivable for: | | | | |
Fund shares sold | | | 24,522 | |
| |
Dividends | | | 404,750 | |
| |
| Investment for trustee deferred compensation and retirement plans | | | 46,254 | |
| |
Total assets | | | 324,678,054 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 13,277 | |
| |
Amount due custodian | | | 31,126 | |
| |
Collateral upon return of securities loaned | | | 315,497 | |
| |
Accrued fees to affiliates | | | 157,748 | |
| |
Accrued other operating expenses | | | 69,660 | |
| |
Trustee deferred compensation and retirement plans | | | 50,955 | |
| |
Total liabilities | | | 638,263 | |
| |
Net assets applicable to shares outstanding | | $ | 324,039,791 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 191,084,381 | |
| |
Distributable earnings | | | 132,955,410 | |
| |
| | $ | 324,039,791 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 30,438,053 | |
| |
Series II | | $ | 293,601,738 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 1,255,784 | |
| |
Series II | | | 12,518,895 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 24.24 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 23.45 | |
| |
| * | At December 31, 2020, securities with an aggregate value of $308,804 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends | | $ | 6,308,839 | |
| |
Dividends from affiliates (includes securities lending income of $13,878) | | | 72,089 | |
| |
Total investment income | | | 6,380,928 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 328,329 | |
| |
Administrative services fees | | | 442,766 | |
| |
Custodian fees | | | 16,268 | |
| |
Distribution fees - Series II | | | 615,908 | |
| |
Transfer agent fees | | | 4,558 | |
| |
Trustees’ and officers’ fees and benefits | | | 23,824 | |
| |
Licensing fees | | | 53,214 | |
| |
Reports to shareholders | | | 10,489 | |
| |
Professional services fees | | | 33,701 | |
| |
| Other | | | (12,857 | ) |
| |
Total expenses | | | 1,516,200 | |
| |
Less: Fees waived | | | (5,765 | ) |
| |
Net expenses | | | 1,510,435 | |
| |
Net investment income | | | 4,870,493 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (1,871,061 | ) |
| |
Affiliated investment securities | | | (97,896 | ) |
| |
Futures contracts | | | 445,271 | |
| |
Net increase from payments by affiliates | | | 215,409 | |
| |
| | | (1,308,277) | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 30,540,445 | |
| |
Affiliated investment securities | | | 264,152 | |
| |
Futures contracts | | | 45,215 | |
| |
Net increase from payments by affiliates | | | 3,926,018 | |
| |
| | | 34,775,830 | |
| |
Net realized and unrealized gain | | | 33,467,553 | |
| |
Net increase in net assets resulting from operations | | $ | 38,338,046 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 4,870,493 | | | $ | 3,603,999 | |
|
| |
Net realized gain (loss) | | | (1,523,686 | ) | | | 4,597,203 | |
|
| |
Change in net unrealized appreciation | | | 30,849,812 | | | | 55,462,807 | |
|
| |
Net increase from payments by affiliates | | | 4,141,427 | | | | - | |
|
| |
Net increase in net assets resulting from operations | | | 38,338,046 | | | | 63,664,009 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (779,893 | ) | | | (984,182 | ) |
|
| |
Series II | | | (7,321,684 | ) | | | (7,440,206 | ) |
|
| |
Total distributions from distributable earnings | | | (8,101,577 | ) | | | (8,424,388 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (2,420,641 | ) | | | (92,725,236 | ) |
|
| |
Series II | | | 16,839,845 | | | | 57,543,221 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 14,419,204 | | | | (35,182,015 | ) |
|
| |
Net increase in net assets | | | 44,655,673 | | | | 20,057,606 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 279,384,118 | | | | 259,326,512 | |
|
| |
End of year | | $ | 324,039,791 | | | $ | 279,384,118 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net
investment
income(a) | | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | | Total from
investment
operations | | | Dividends
from net
investment
income | | | Distributions
from net
realized
gains | | | Total
distributions | | | Net asset
value, end
of period | | | Total
return (b) | | | Net assets,
end of period
(000’s omitted) | | | Ratio of expenses to average net assets with fee waivers
and/or expenses absorbed | | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | | Ratio of net investment income to average net assets | | | Portfolio
turnover (c) | |
|
| |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | $ | 22.14 | | | | $0.41 | | | | $2.33 | | | | $2.74 | | | | $(0.31) | | | | $(0.33) | | | | $(0.64) | | | | $24.24 | | | | 12.74%(d) | | | | $30,438 | | | | 0.33%(e) | | | | 0.33%(e) | | | | 2.00%(e) | | | | 34% | |
Year ended 12/31/19 | | | 17.80 | | | | 0.34 | | | | 4.73 | | | | 5.07 | | | | (0.35) | | | | (0.38) | | | | (0.73) | | | | 22.14 | | | | 28.79 | �� | | | 31,327 | | | | 0.35 | | | | 0.35 | | | | 1.71 | | | | 39 | |
Year ended 12/31/18 | | | 19.88 | | | | 0.32 | | | | (1.80) | | | | (1.48) | | | | (0.23) | | | | (0.37) | | | | (0.60) | | | | 17.80 | | | | (7.87) | | | | 109,414 | | | | 0.31 | | | | 0.31 | | | | 1.61 | | | | 24 | |
Year ended 12/31/17 | | | 17.24 | | | | 0.29 | | | | 2.87 | | | | 3.16 | | | | (0.15) | | | | (0.37) | | | | (0.52) | | | | 19.88 | | | | 18.58 | | | | 127,462 | | | | 0.32 | | | | 0.32 | | | | 1.55 | | | | 22 | |
Year ended 12/31/16 | | | 15.81 | | | | 0.26 | | | | 1.96 | | | | 2.22 | | | | (0.10) | | | | (0.69) | | | | (0.79) | | | | 17.24 | | | | 14.24 | | | | 114,202 | | | | 0.39 | | | | 0.39 | | | | 1.56 | | | | 22 | |
|
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 21.46 | | | | 0.35 | | | | 2.24 | | | | 2.59 | | | | (0.27) | | | | (0.33) | | | | (0.60) | | | | 23.45 | | | | 12.41(d) | | | | 293,602 | | | | 0.58(e) | | | | 0.58(e) | | | | 1.75(e) | | | | 34 | |
Year ended 12/31/19 | | | 17.29 | | | | 0.29 | | | | 4.57 | | | | 4.86 | | | | (0.31) | | | | (0.38) | | | | (0.69) | | | | 21.46 | | | | 28.46 | | | | 248,057 | | | | 0.60 | | | | 0.60 | | | | 1.46 | | | | 39 | |
Year ended 12/31/18 | | | 19.35 | | | | 0.26 | | | | (1.74) | | | | (1.48) | | | | (0.21) | | | | (0.37) | | | | (0.58) | | | | 17.29 | | | | (8.11) | | | | 149,913 | | | | 0.56 | | | | 0.56 | | | | 1.36 | | | | 24 | |
Year ended 12/31/17 | | | 16.82 | | | | 0.24 | | | | 2.79 | | | | 3.03 | | | | (0.13) | | | | (0.37) | | | | (0.50) | | | | 19.35 | | | | 18.26 | | | | 117,400 | | | | 0.57 | | | | 0.57 | | | | 1.30 | | | | 22 | |
Year ended 12/31/16 | | | 15.44 | | | | 0.21 | | | | 1.93 | | | | 2.14 | | | | (0.07) | | | | (0.69) | | | | (0.76) | | | | 16.82 | | | | 14.01 | | | | 48,936 | | | | 0.64 | | | | 0.64 | | | | 1.31 | | | | 22 | |
|
| |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Amount includes the effect of the Adviser pay-in for an economic loss as a result of a delay in rebalancing to the Index that occurred on April 24, 2020. Had the pay-in not been made, the total return would have been 11.35% and 10.98% for Series I and Series II shares, respectively. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $27,244 and $246,363 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Equally-Weighted S&P 500 Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to achieve a high level of total return on its assets through a combination of capital appreciation and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements.Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| K. | Collateral –To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions. |
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $2 billion | | | 0.120 | % |
| |
Over $ 2 billion | | | 0.100 | % |
|
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.12%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $5,765.
The Adviser paid in to the Fund $4,141,427 for the economic loss as a result of a delay in rebalancing to the Index that occurred on April 24, 2020.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $40,830 for accounting and fund administrative services and was reimbursed $401,936 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $4,169 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 317,597,331 | | | $ | – | | | | $– | | | $ | 317,597,331 | |
| |
Money Market Funds | | | 6,247,880 | | | | 315,497 | | | | – | | | | 6,563,377 | |
| |
Total Investments in Securities | | | 323,845,211 | | | | 315,497 | | | | – | | | | 324,160,708 | |
|
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 139,260 | | | | – | | | | – | | | | 139,260 | |
|
| |
Total Investments | | $ | 323,984,471 | | | $ | 315,497 | | | | $– | | | $ | 324,299,968 | |
|
| |
| * | Unrealized appreciation. |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | Equity | |
| Derivative Assets | | Risk | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded | | $ | 139,260 | |
| |
Derivatives not subject to master netting agreements | | | (139,260 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain on
Statement of Operations | |
| | | Equity Risk | |
| |
Realized Gain: | | | | |
Futures contracts | | | $445,271 | |
| |
Change in Net Unrealized Appreciation: | | | | |
Futures contracts | | | 45,215 | |
| |
Total | | | $490,486 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
| |
Average notional value | | $ | 2,625,093 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 3,644,636 | | | $ | 5,190,383 | |
|
| |
Long-term capital gain | | | 4,456,941 | | | | 3,234,005 | |
|
| |
Total distributions | | $ | 8,101,577 | | | $ | 8,424,388 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 4,830,947 | |
| |
Net unrealized appreciation - investments | | | 128,801,351 | |
| |
Temporary book/tax differences | | | (35,213 | ) |
| |
Capital loss carryforward | | | (641,675 | ) |
| |
Shares of beneficial interest | | | 191,084,381 | |
|
| |
Total net assets | | $ | 324,039,791 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
Capital Loss Carryforward*
| | | | | | | | | | | | |
|
| |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
|
| |
Not subject to expiration | | | $– | | | | $641,675 | | | $ | 641,675 | |
|
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $105,326,633 and $89,950,651, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 130,219,571 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (1,418,220 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 128,801,351 | |
|
| |
Cost of investments for tax purposes is $195,498,617.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of fair fund settlements and return of capital, on December 31, 2020, undistributed net investment income was decreased by $807 and undistributed net realized gain (loss) was increased by $807. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 242,669 | | | $ | 5,145,147 | | | | 284,241 | | | $ | 5,873,493 | |
|
| |
Series II | | | 2,057,242 | | | | 38,865,302 | | | | 3,153,361 | | | | 62,882,016 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 36,257 | | | | 779,893 | | | | 47,845 | | | | 984,182 | |
| |
Series II | | | 351,666 | | | | 7,321,684 | | | | 373,130 | | | | 7,440,206 | |
|
| |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (438,095 | ) | | $ | (8,345,681 | ) | | | (5,064,768 | ) | | $ | (99,582,911 | ) |
| |
Series II | | | (1,450,855 | ) | | | (29,347,141 | ) | | | (637,753 | ) | | | (12,779,001 | ) |
|
| |
Net increase (decrease) in share activity | | | 798,884 | | | $ | 14,419,204 | | | | (1,843,944 | ) | | $ | (35,182,015 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 88% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Equally-Weighted S&P 500 Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Equally-Weighted S&P 500 Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL
(5% annual return before
expenses) | | |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,262.00 | | $1.88 | | $1,023.48 | | $1.68 | | 0.33% |
Series II | | 1,000.00 | | 1,259.70 | | 3.29 | | 1,022.22 | | 2.95 | | 0.58 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | $ | 4,456,941 | |
| | Corporate Dividends Received Deduction* | | | 100.00 | % |
| | Qualified Dividend Income* | | | 0.00 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
| Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis - 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort -1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | | | |
| | Invesco V.I. Equity and Income Fund |
| | |
| | |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VK-VIEQI-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Equity and Income Fund (the Fund) outperformed the Russell 1000 Value Index. | |
Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| Series I Shares | | | 9.95 | % |
| Series II Shares | | | 9.65 | |
| Russell 1000 Value Indexq (Broad Market Index) | | | 2.80 | |
| Bloomberg Barclays U.S. Government/Credit Indexq (Style-Specific Index) | | | 8.93 | |
| Lipper VUF Mixed-Asset Target Allocation Growth Funds Index∎ (Peer Group Index) | | | 10.72 | |
| Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Seven out of eleven sectors within the Russell 1000 Value Index had positive returns for the year. The materials sector had the highest return for the year, while the energy sector posted a double-digit loss.
Stock selection in and overweight exposure to the information technology (IT) sector was the largest contributor to the Fund’s relative performance compared to the Russell 1000 Value Index. Within the sector, Apple, QUALCOMM and Cognizant Technology Solutions were the largest contributors, benefiting from
a strong rally in the sector beginning in the second quarter of 2020. Apple shares moved higher following the selloff as the company reopened its factory in China and sales rebounded. Shares of QUALCOMM traded higher following the company’s patent license settlement with Huawei that helped boost both revenue and profits. Cognizant had revenue declines due to the pandemic, but earnings were better than anticipated.
Stock selection and the Fund’s underweight exposure to the real estate sector also helped the Fund’s relative performance versus the Russell 1000 Value Index as the sector under-performed, posting a decline for the year.
Security selection in the financials sector was another contributor to the Fund’s relative performance during the fiscal year. Within the sector, Morgan Stanley and Goldman Sachs were strong contributors. Large banks and capital markets firms benefited from a rise in yields during the year and these stocks performed well amid a broader rally in cyclical stocks.
The Fund holds investment grade bonds and convertible securities as a source of income and to provide a measure of stability amid market volatility. Both asset classes outperformed the Russell 1000 Value Index during the year and benefited the Fund’s performance relative to the index.
Security selection in the consumer discretionary sector was the largest detractor from the Fund’s relative performance compared to the Russell 1000 Value Index for the year. Within the sector, Carnival and Capri Holdings were significant detractors, driven in large party by the pandemic-related selloff in February and March of 2020. Shares of Carnival declined sharply following news of COVID-19 infections on cruise ships. The industry was also hit by the suspension of cruise travel that resulted from the virus outbreak. As a result, the team eliminated the Fund’s position in the stock as they believed cruise demand would be slower to recover than other areas within the sector. Capri Holdings includes the Michael Kors, Versace, and Jimmy Choo brands. The stock declined significantly in the market correction, as consumers sheltered-in-place and stores closed amid the COVID-19 pandemic. Capri’s shares later rebounded from lows set in February and March, so the team used that as an opportunity to eliminate the position given ongoing volatility in the stock.
Stock selection and an overweight exposure to the energy sector also detracted from the Fund’s relative performance versus the Russell 1000 Value Index during the year. Energy stocks were negatively impacted by the severe decline in oil prices due to the concurrent increase in oil supply resulting from the Saudi Arabia/ Russia conflict, and the sharp deceleration in demand due to COVID-19. Key detractors for the year included Royal Dutch Shell and Marathon Oil. The team eliminated these positions during the
Invesco V.I. Equity and Income Fund
year and reduced the Fund’s overall exposure to the sector during the year, as there was significant difficulty estimating the extent of volume declines amid the pandemic.
Security selection in and underweight exposure to the consumer staples sector also detracted from the Fund’s relative performance versus the Russell 1000 Value Index. Restaurant supplier US Foods was a key detractor from Fund performance as demand declined sharply due to COVID-related restaurant closures. The Fund’s lack of exposure to Proctor & Gamble and Wal-Mart (not Fund holdings) also hurt performance. These companies held up relatively better than other companies in the consumer staples sector as they were beneficiaries of heightened consumer demand in response to pandemic-related shelter-in-place mandates.
The Fund held currency forward contracts during the year for the purpose of hedging currency exposure of non-US-based companies held in the Fund. These derivatives were not for speculative purposes or leverage, and these positions had a small negative impact on the Fund’s relative performance for the year.
During the year, the team reduced the Fund’s relative overweight exposure to the financials and energy sectors within the equity portion of the Fund, and increased exposures to the industrials, communication services, IT and real estate sectors. At the end of the year, the Fund’s largest overweight exposures were in the financials, IT and health care sectors, while the largest underweight exposures were to the communication services, utilities and real estate sectors.
As always, we thank you for your investment in Invesco V.I. Equity and Income Fund and for sharing our long-term investment horizon.
| 1 | Source: US Federal Reserve |
| 2 | Source: US Bureau of Economic Analysis |
Portfolio manager(s):
Chuck Burge
Brian Jurkash (Co-Lead)
Sergio Marcheli
Matthew Titus (Co-Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Equity and Income Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (6/1/10) | | | 9.45 | % |
10 Years | | | 8.54 | |
5 Years | | | 8.89 | |
1 Year | | | 9.95 | |
| |
Series II Shares | | | | |
Inception (4/30/03) | | | 7.92 | % |
10 Years | | | 8.29 | |
5 Years | | | 8.61 | |
1 Year | | | 9.65 | |
Effective June 1, 2010, Class II shares of the predecessor fund, Universal Institutional Funds Equity and Income Portfolio, advised by Morgan Stanley Investment Management Inc. were reorganized into Series II shares of Invesco Van Kampen V.I. Equity and Income Fund (renamed Invesco V.I. Equity and Income Fund on April 29, 2013). Returns shown above, prior to June 1, 2010, for Series II shares are those of the Class II shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction
of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Equity and Income Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Equity and Income Fund
Supplemental Information
Invesco V.I. Equity and Income Fund’s investment objectives are both capital appreciation and current income.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Bloomberg Barclays U.S. Government/Credit Index is a broad-based benchmark that includes investment-grade, US dollar-denominated, fixed-rate Treasuries, government-related and corporate securities. |
| ∎ | The Lipper VUF Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index considered representative of mixed-asset target allocation growth variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Equity and Income Fund
Fund Information
| | | | | | |
| Portfolio Composition | |
| |
| By security type | | % of total net assets | |
| Common Stocks & Other Equity Interests | | | 68.65% | |
| U.S. Dollar Denominated Bonds & Notes | | | 20.90 | |
| U.S. Treasury Securities | | | 5.26 | |
| Security Types Each Less Than 1% of Portfolio | | | 0.66 | |
| Money Market Funds Plus Other Assets Less Liabilities | | | 4.53 | |
| |
| Top 10 Equity Holdings* | | | | |
| | |
| | | | | % of total net assets | |
1. | | General Motors Co. | | | 2.36% | |
2. | | Cognizant Technology Solutions Corp., Class A | | | 1.97 | |
3. | | Philip Morris International, Inc. | | | 1.92 | |
4. | | Morgan Stanley | | | 1.87 | |
5. | | Wells Fargo & Co. | | | 1.85 | |
6. | | Goldman Sachs Group, Inc. (The) | | | 1.83 | |
7. | | Corteva, Inc. | | | 1.65 | |
8. | | CSX Corp. | | | 1.60 | |
9. | | American International Group, Inc. | | | 1.58 | |
10. | | PNC Financial Services Group, Inc. (The) | | | 1.56 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. Equity and Income Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | |
| | | Shares | | | Value |
Common Stocks & Other Equity Interests–68.65% |
Aerospace & Defense–3.42% |
| | |
General Dynamics Corp. | | | 119,194 | | | $ 17,738,451 |
Raytheon Technologies Corp. | | | 213,576 | | | 15,272,820 |
Textron, Inc. | | | 214,257 | | | 10,355,041 |
| | | | 43,366,312 |
|
Apparel Retail–1.12% |
| | |
TJX Cos., Inc. (The) | | | 207,744 | | | 14,186,838 |
|
Automobile Manufacturers–2.36% |
| | |
General Motors Co. | | | 718,695 | | | 29,926,460 |
|
Building Products–2.28% |
| | |
Johnson Controls International PLC | | | 403,356 | | | 18,792,356 |
Trane Technologies PLC | | | 69,348 | | | 10,066,556 |
| | | | 28,858,912 |
|
Cable & Satellite–1.80% |
| | |
Charter Communications, Inc., Class A(b) | | | 15,340 | | | 10,148,177 |
Comcast Corp., Class A | | | 241,301 | | | 12,644,172 |
| | | | 22,792,349 |
|
Commodity Chemicals–0.75% |
| | |
Dow, Inc. | | | 171,147 | | | 9,498,658 |
|
Construction & Engineering–0.46% |
| | |
Quanta Services, Inc. | | | 81,847 | | | 5,894,621 |
|
Consumer Finance–0.76% |
| | |
American Express Co. | | | 80,150 | | | 9,690,936 |
|
Data Processing & Outsourced Services–0.75% |
| | |
Fiserv, Inc.(b) | | | 83,861 | | | 9,548,413 |
|
Diversified Banks–3.77% |
| | |
Bank of America Corp. | | | 376,435 | | | 11,409,745 |
Citigroup, Inc. | | | 209,883 | | | 12,941,386 |
Wells Fargo & Co. | | | 775,478 | | | 23,403,926 |
| | | | 47,755,057 |
|
Electric Utilities–1.91% |
| | |
Duke Energy Corp. | | | 95,326 | | | 8,728,048 |
Exelon Corp. | | | 207,663 | | | 8,767,532 |
FirstEnergy Corp. | | | 221,513 | | | 6,780,513 |
| | | | 24,276,093 |
|
Electronic Components–0.74% |
| | |
Corning, Inc. | | | 259,795 | | | 9,352,620 |
|
Electronic Manufacturing Services–0.70% |
| | |
TE Connectivity Ltd. | | | 73,600 | | | 8,910,752 |
|
Fertilizers & Agricultural Chemicals–2.17% |
| | |
Corteva, Inc. | | | 538,648 | | | 20,856,450 |
Nutrien Ltd. (Canada) | | | 139,024 | | | 6,695,396 |
| | | | 27,551,846 |
|
Food Distributors–2.07% |
| | |
Sysco Corp. | | | 180,250 | | | 13,385,365 |
| | | | | | |
| | | Shares | | | Value |
Food Distributors–(continued) |
| | |
US Foods Holding Corp.(b) | | | 386,030 | | | $ 12,858,659 |
| | | | 26,244,024 |
|
Health Care Distributors–0.89% |
| | |
McKesson Corp. | | | 64,531 | | | 11,223,232 |
|
Health Care Equipment–1.89% |
| | |
Medtronic PLC | | | 126,836 | | | 14,857,569 |
Zimmer Biomet Holdings, Inc. | | | 59,213 | | | 9,124,131 |
| | | | 23,981,700 |
|
Health Care Facilities–0.54% |
| | |
Universal Health Services, Inc., Class B | | | 49,669 | | | 6,829,488 |
|
Health Care Services–1.48% |
| | |
Cigna Corp. | | | 48,546 | | | 10,106,306 |
CVS Health Corp. | | | 126,495 | | | 8,639,609 |
| | | | 18,745,915 |
|
Health Care Supplies–0.46% |
| | |
Alcon, Inc. (Switzerland)(b) | | | 86,706 | | | 5,788,461 |
|
Home Improvement Retail–0.70% |
| | |
Kingfisher PLC (United Kingdom)(b) | | | 2,404,100 | | | 8,896,022 |
|
Human Resource & Employment Services–0.50% |
| | |
Adecco Group AG (Switzerland) | | | 95,093 | | | 6,376,215 |
|
Insurance Brokers–0.65% |
| | |
Willis Towers Watson PLC | | | 38,860 | | | 8,187,025 |
|
Integrated Oil & Gas–0.97% |
| | |
Chevron Corp. | | | 145,869 | | | 12,318,637 |
|
Internet & Direct Marketing Retail–1.10% |
| | |
Booking Holdings, Inc.(b) | | | 6,249 | | | 13,918,210 |
|
Investment Banking & Brokerage–4.29% |
| | |
Charles Schwab Corp. (The) | | | 140,646 | | | 7,459,864 |
Goldman Sachs Group, Inc. (The) | | | 88,169 | | | 23,251,047 |
Morgan Stanley | | | 345,055 | | | 23,646,619 |
| | | | 54,357,530 |
|
IT Consulting & Other Services–1.97% |
|
Cognizant Technology Solutions Corp., |
Class A | | | 304,157 | | | 24,925,666 |
|
Managed Health Care–1.43% |
| | |
Anthem, Inc. | | | 56,363 | | | 18,097,596 |
|
Movies & Entertainment–1.37% |
| | |
Walt Disney Co. (The)(b) | | | 95,581 | | | 17,317,366 |
|
Multi-line Insurance–1.58% |
| | |
American International Group, Inc. | | | 528,282 | | | 20,000,757 |
|
Oil & Gas Exploration & Production–2.46% |
| | |
Canadian Natural Resources Ltd. (Canada) | | | 271,468 | | | 6,523,848 |
Concho Resources, Inc. | | | 126,591 | | | 7,386,585 |
ConocoPhillips | | | 56,059 | | | 2,241,799 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | |
| | | | | | |
| | | Shares | | | Value |
Oil & Gas Exploration & Production–(continued) |
| | |
Devon Energy Corp. | | | 447,664 | | | $ 7,077,568 |
Parsley Energy, Inc., Class A | | | 557,153 | | | 7,911,573 |
| | | | 31,141,373 |
|
Other Diversified Financial Services–1.44% |
| | |
Equitable Holdings, Inc. | | | 296,873 | | | 7,596,980 |
Voya Financial, Inc. | | | 181,627 | | | 10,681,484 |
| | | | 18,278,464 |
|
Packaged Foods & Meats–0.25% |
| | |
Mondelez International, Inc., Class A | | | 54,098 | | | 3,163,110 |
|
Pharmaceuticals–3.68% |
| | |
Bristol-Myers Squibb Co. | | | 251,171 | | | 15,580,137 |
GlaxoSmithKline PLC (United Kingdom) | | | 287,271 | | | 5,263,686 |
Johnson & Johnson | | | 50,911 | | | 8,012,373 |
Pfizer, Inc. | | | 221,342 | | | 8,147,599 |
Sanofi (France) | | | 99,154 | | | 9,580,313 |
| | | | 46,584,108 |
|
Railroads–1.60% |
| | |
CSX Corp. | | | 224,087 | | | 20,335,895 |
|
Real Estate Services–1.46% |
| | |
CBRE Group, Inc., Class A(b) | | | 294,282 | | | 18,457,367 |
|
Regional Banks–4.42% |
| | |
Citizens Financial Group, Inc. | | | 537,932 | | | 19,236,448 |
PNC Financial Services Group, Inc. (The) | | | 132,676 | | | 19,768,724 |
Truist Financial Corp. | | | 355,151 | | | 17,022,388 |
| | | | 56,027,560 |
|
Semiconductors–2.89% |
| | |
Micron Technology, Inc.(b) | | | 108,374 | | | 8,147,557 |
NXP Semiconductors N.V. (Netherlands) | | | 75,149 | | | 11,949,443 |
QUALCOMM, Inc. | | | 108,839 | | | 16,580,533 |
| | | | 36,677,533 |
|
Specialty Chemicals–0.76% |
| | |
DuPont de Nemours, Inc. | | | 136,353 | | | 9,696,062 |
|
Systems Software–1.17% |
| | |
Oracle Corp. | | | 229,491 | | | 14,845,773 |
|
Technology Hardware, Storage & Peripherals–0.69% |
| | |
Apple, Inc. | | | 65,699 | | | 8,717,600 |
|
Tobacco–1.92% |
| | |
Philip Morris International, Inc. | | | 293,738 | | | 24,318,569 |
|
Wireless Telecommunication Services–1.03% |
| | |
Vodafone Group PLC (United Kingdom) | | | 7,919,762 | | | 13,033,030 |
| | |
Total Common Stocks & Other Equity Interests (Cost $634,568,558) | | | | | | 870,094,155 |
| | |
| | | Principal | | | |
| | | Amount | | | |
U.S. Dollar Denominated Bonds & Notes–20.90% |
|
Aerospace & Defense–0.19% |
| | |
General Dynamics Corp., 3.88%, 07/15/2021 | | $ | 1,690,000 | | | 1,707,227 |
Precision Castparts Corp., 2.50%, 01/15/2023 | | | 333,000 | | | 346,146 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Aerospace & Defense–(continued) |
| | |
Raytheon Technologies Corp., 4.45%, 11/16/2038 | | $ | 299,000 | | | $377,036 |
| | | | 2,430,409 |
|
Agricultural & Farm Machinery–0.09% |
| | |
Deere & Co., 2.60%, 06/08/2022 | | | 1,161,000 | | | 1,194,619 |
|
Agricultural Products–0.03% |
| | |
Ingredion, Inc., 6.63%, 04/15/2037 | | | 232,000 | | | 333,624 |
|
Air Freight & Logistics–0.06% |
| | |
FedEx Corp., 4.90%, 01/15/2034 | | | 402,000 | | | 519,297 |
United Parcel Service, Inc., 3.40%, 11/15/2046 | | | 236,000 | | | 284,711 |
| | | | 804,008 |
|
Airlines–0.12% |
| | |
American Airlines Pass-Through Trust, Series 2014-1, Class A, 3.70%, 04/01/2028 | | | 277,591 | | | 261,957 |
Continental Airlines Pass-Through Trust, |
Series 2010-1, Class A, 4.75%, 01/12/2021 | | | 112,577 | | | 112,691 |
Series 2012-1, Class A, 4.15%, 04/11/2024 | | | 293,349 | | | 295,874 |
United Airlines Pass-Through Trust, |
Series 2014-2, Class A, 3.75%, 09/03/2026 | | | 356,896 | | | 363,612 |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | 449,581 | | | 447,869 |
| | | | 1,482,003 |
|
Alternative Carriers–0.18% |
| | |
Liberty Latin America Ltd. (Chile), Conv., 2.00%, 07/15/2024 | | | 2,431,000 | | | 2,322,171 |
|
Application Software–0.66% |
|
Nuance Communications, Inc., Conv., |
1.00%, 12/15/2022(c) | | | 1,209,000 | | | 2,256,205 |
1.25%, 04/01/2025 | | | 1,081,000 | | | 2,465,096 |
Workday, Inc., Conv., 0.25%, 10/01/2022 | | | 2,173,000 | | | 3,641,845 |
| | | | 8,363,146 |
|
Asset Management & Custody Banks–0.31% |
| | |
Apollo Management Holdings L.P., 4.00%, 05/30/2024(d) | | | 2,715,000 | | | 3,008,871 |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 420,000 | | | 468,740 |
Carlyle Holdings Finance LLC, 3.88%, 02/01/2023(d) | | | 98,000 | | | 104,322 |
KKR Group Finance Co. III LLC, 5.13%, 06/01/2044(d) | | | 287,000 | | | 377,299 |
| | | | 3,959,232 |
|
Automobile Manufacturers–0.08% |
| | |
General Motors Co., 6.60%, 04/01/2036 | | | 361,000 | | | 494,179 |
General Motors Financial Co., Inc., 5.25%, 03/01/2026 | | | 459,000 | | | 541,476 |
| | | | 1,035,655 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Biotechnology–0.44% |
|
AbbVie, Inc., |
4.50%, 05/14/2035 | | $ | 656,000 | | | $ 824,518 |
4.05%, 11/21/2039 | | | 1,288,000 | | | 1,558,169 |
4.85%, 06/15/2044 | | | 264,000 | | | 350,181 |
Gilead Sciences, Inc., 4.40%, 12/01/2021 | | | 448,000 | | | 460,294 |
Neurocrine Biosciences, Inc., Conv., 2.25%, 05/15/2024 | | | 1,685,000 | | | 2,341,768 |
| | | | 5,534,930 |
|
Brewers–0.26% |
|
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc. (Belgium), |
4.70%, 02/01/2036 | | | 914,000 | | | 1,160,607 |
4.90%, 02/01/2046 | | | 511,000 | | | 667,119 |
Heineken N.V. (Netherlands), 3.50%, 01/29/2028(d) | | | 910,000 | | | 1,036,455 |
Molson Coors Beverage Co., 4.20%, 07/15/2046 | | | 361,000 | | | 414,251 |
| | | | 3,278,432 |
|
Cable & Satellite–1.34% |
| | |
BofA Finance LLC, Conv., 0.13%, 09/01/2022 | | | 2,151,000 | | | 2,512,368 |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., |
4.46%, 07/23/2022 | | | 969,000 | | | 1,021,810 |
3.85%, 04/01/2061 | | | 1,040,000 | | | 1,048,075 |
Comcast Corp., |
4.15%, 10/15/2028 | | | 905,000 | | | 1,089,657 |
6.45%, 03/15/2037 | | | 278,000 | | | 428,239 |
3.90%, 03/01/2038 | | | 746,000 | | | 912,895 |
Cox Communications, Inc., 2.95%, 10/01/2050(d) | | | 197,000 | | | 201,427 |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 7,388,000 | | | 7,060,945 |
Liberty Broadband Corp., Conv., 1.25%,
10/05/2023(c)(d) | | | 2,352,000 | | | 2,386,130 |
NBCUniversal Media LLC, 5.95%, 04/01/2041 | | | 197,000 | | | 301,140 |
| | | | 16,962,686 |
|
Commodity Chemicals–0.04% |
| | |
LYB Finance Co. B.V. (Netherlands), 8.10%, 03/15/2027(d) | | | 339,000 | | | 468,967 |
|
Communications Equipment–0.51% |
| | |
Cisco Systems, Inc., 1.85%, 09/20/2021 | | | 1,560,000 | | | 1,575,909 |
Finisar Corp., Conv., 0.50%, 12/15/2021(c) | | | 1,013,000 | | | 1,018,339 |
Viavi Solutions, Inc., Conv., |
1.75%, 06/01/2023 | | | 1,295,000 | | | 1,608,684 |
1.00%, 03/01/2024 | | | 1,806,000 | | | 2,320,462 |
| | | | 6,523,394 |
|
Construction Machinery & Heavy Trucks–0.06% |
| | |
Caterpillar Financial Services Corp., 1.70%, 08/09/2021 | | | 765,000 | | | 771,637 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Consumer Finance–0.28% | | | | | | |
| | |
American Express Co., 3.63%, 12/05/2024 | | $ | 306,000 | | | $ 340,159 |
Capital One Financial Corp., 3.20%, 01/30/2023 | | | 943,000 | | | 994,073 |
Discover Bank, 3.35%, 02/06/2023 | | | 1,500,000 | | | 1,583,625 |
Synchrony Financial, 3.95%, 12/01/2027 | | | 546,000 | | | 612,532 |
| | | | | | | 3,530,389 |
|
Data Processing & Outsourced Services–0.12% |
| | |
Fiserv, Inc., 3.80%, 10/01/2023 | | | 1,397,000 | | | 1,522,280 |
| | |
Diversified Banks–1.72% | | | | | | |
| | |
ANZ New Zealand (Int’l) Ltd. (New Zealand), 2.88%, 01/25/2022(d) | | | 350,000 | | | 359,354 |
Australia & New Zealand Banking Group Ltd. (Australia), 2.30%, 06/01/2021 | | | 713,000 | | | 719,246 |
Bank of America Corp., 3.25%, 10/21/2027 | | | 515,000 | | | 576,492 |
BBVA Bancomer S.A. (Mexico), 4.38%, 04/10/2024(d) | | | 700,000 | | | 762,307 |
Citigroup, Inc., | | | | | | |
3.67%, 07/24/2028(e) | | | 496,000 | | | 562,428 |
6.68%, 09/13/2043 | | | 741,000 | | | 1,206,584 |
5.30%, 05/06/2044 | | | 228,000 | | | 321,711 |
4.75%, 05/18/2046 | | | 341,000 | | | 455,429 |
HSBC Holdings PLC (United Kingdom), 2.63%, 11/07/2025(e) | | | 1,775,000 | | | 1,889,935 |
JPMorgan Chase & Co., | | | | | | |
3.20%, 06/15/2026 | | | 379,000 | | | 424,546 |
3.51%, 01/23/2029(e) | | | 1,043,000 | | | 1,190,560 |
4.26%, 02/22/2048(e) | | | 479,000 | | | 627,364 |
3.90%, 01/23/2049(e) | | | 1,043,000 | | | 1,314,948 |
Series V, 3.56% (3 mo. USD LIBOR + 3.32%)(f)(g) | | | 582,000 | | | 572,508 |
Mizuho Financial Group Cayman 3 Ltd. (Japan), 4.60%,
03/27/2024(d) | | | 200,000 | | | 220,569 |
National Australia Bank Ltd. (Australia), 1.88%, 07/12/2021 | | | 945,000 | | | 953,043 |
SMBC Aviation Capital Finance DAC (Ireland), 2.65%, 07/15/2021(d) | | | 315,000 | | | 318,344 |
Societe Generale S.A. (France), 5.00%, 01/17/2024(d) | | | 735,000 | | | 812,018 |
Standard Chartered PLC (United Kingdom), 3.05%, 01/15/2021(d) | | | 680,000 | | | 680,520 |
U.S. Bancorp, Series W, 3.10%, 04/27/2026 | | | 2,087,000 | | | 2,325,549 |
Wells Fargo & Co., | | | | | | |
3.55%, 09/29/2025 | | | 596,000 | | | 669,664 |
4.10%, 06/03/2026 | | | 410,000 | | | 470,236 |
4.65%, 11/04/2044 | | | 632,000 | | | 809,774 |
Westpac Banking Corp. (Australia), 2.10%, 05/13/2021 | | | 3,590,000 | | | 3,614,971 |
| | | | | | | 21,858,100 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Diversified Capital Markets–0.36% |
|
Credit Suisse AG (Switzerland), |
6.50%, 08/08/2023(d) | | $ | 686,000 | | | $ 774,248 |
Conv., 0.50%, 06/24/2024(d) | | | 3,834,000 | | | 3,748,502 |
| | | | 4,522,750 |
|
Diversified Metals & Mining–0.02% |
| | |
Rio Tinto Finance USA Ltd. (Australia), 7.13%, 07/15/2028 | | | 182,000 | | | 256,334 |
|
Drug Retail–0.13% |
| | |
CVS Pass-Through Trust, 6.04%, 12/10/2028 | | | 574,936 | | | 668,131 |
Walgreens Boots Alliance, Inc., |
3.30%, 11/18/2021 | | | 548,000 | | | 559,450 |
4.50%, 11/18/2034 | | | 404,000 | | | 464,632 |
| | | | 1,692,213 |
|
Electric Utilities–0.50% |
| | |
Electricite de France S.A. (France), 4.88%, 01/22/2044(d) | | | 846,000 | | | 1,069,790 |
Georgia Power Co., Series B, 3.70%, 01/30/2050 | | | 341,000 | | | 411,151 |
NextEra Energy Capital Holdings, Inc., 3.55%, 05/01/2027 | | | 519,000 | | | 591,533 |
Ohio Power Co., Series M, 5.38%, 10/01/2021 | | | 182,000 | | | 188,647 |
PPL Electric Utilities Corp., 6.25%, 05/15/2039 | | | 46,000 | | | 69,377 |
Southern Co. (The), 2.35%, 07/01/2021 | | | 2,335,000 | | | 2,353,536 |
Xcel Energy, Inc., |
0.50%, 10/15/2023 | | | 552,000 | | | 553,897 |
3.50%, 12/01/2049 | | | 957,000 | | | 1,121,974 |
| | | | 6,359,905 |
|
Environmental & Facilities Services–0.04% |
| | |
Waste Management, Inc., 3.90%, 03/01/2035 | | | 427,000 | | | 523,756 |
|
Food Retail–0.26% |
| | |
Nestle Holdings, Inc., 3.10%, 09/24/2021(d) | | | 3,190,000 | | | 3,246,426 |
|
General Merchandise Stores–0.03% |
| | |
Dollar General Corp., 3.25%, 04/15/2023 | | | 333,000 | | | 352,431 |
|
Health Care Equipment–0.76% |
| | |
Becton, Dickinson and Co., 4.88%, 05/15/2044 | | | 342,000 | | | 423,067 |
DexCom, Inc., Conv., 0.75%, 12/01/2023 | | | 2,639,000 | | | 6,006,674 |
Integra LifeSciences Holdings Corp., Conv., 0.50%, 08/15/2025(d) | | | 1,758,000 | | | 1,943,323 |
Medtronic, Inc., 4.38%, 03/15/2035 | | | 234,000 | | | 315,221 |
NuVasive, Inc., Conv., 2.25%, 03/15/2021 | | | 503,000 | | | 511,769 |
Tandem Diabetes Care, Inc., Conv., 1.50%, 05/01/2025(d) | | | 338,000 | | | 399,750 |
| | | | 9,599,804 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Health Care REITs–0.08% |
|
Healthpeak Properties, Inc., |
4.20%, 03/01/2024 | | $ | 438,000 | | | $ 481,140 |
3.88%, 08/15/2024 | | | 461,000 | | | 510,413 |
| | | | 991,553 |
|
Health Care Services–0.13% |
| | |
Cigna Corp., 4.80%, 08/15/2038 | | | 298,000 | | | 388,500 |
CVS Health Corp., 3.38%, 08/12/2024 | | | 341,000 | | | 372,653 |
Laboratory Corp. of America Holdings, |
3.20%, 02/01/2022 | | | 548,000 | | | 564,388 |
4.70%, 02/01/2045 | | | 241,000 | | | 316,594 |
| | | | 1,642,135 |
|
Health Care Technology–0.32% |
| | |
Teladoc Health, Inc., Conv., 1.25%, 06/01/2027(d) | | | 3,333,000 | | | 4,008,615 |
|
Home Improvement Retail–0.05% |
| | |
Home Depot, Inc. (The), 2.00%, 04/01/2021 | | | 575,000 | | | 576,505 |
|
Hotel & Resort REITs–0.01% |
| | |
Service Properties Trust, 5.00%, 08/15/2022 | | | 182,000 | | | 185,640 |
|
Industrial Conglomerates–0.05% |
| | |
Honeywell International, Inc., 0.46% (3 mo. USD LIBOR + 0.23%), 08/19/2022(g) | | | 590,000 | | | 590,646 |
|
Insurance Brokers–0.02% |
| | |
Willis North America, Inc., 3.60%, 05/15/2024 | | | 228,000 | | | 249,032 |
|
Integrated Oil & Gas–0.13% |
| | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 965,000 | | | 985,414 |
Husky Energy, Inc. (Canada), 3.95%, 04/15/2022 | | | 274,000 | | | 282,406 |
Suncor Energy, Inc. (Canada), 3.60%, 12/01/2024 | | | 304,000 | | | 335,486 |
| | | | 1,603,306 |
|
Integrated Telecommunication Services–0.51% |
|
AT&T, Inc., |
3.00%, 06/30/2022 | | | 474,000 | | | 490,675 |
4.30%, 02/15/2030 | | | 318,000 | | | 380,144 |
4.50%, 05/15/2035 | | | 421,000 | | | 511,039 |
3.50%, 09/15/2053(d) | | | 447,000 | | | 447,025 |
3.55%, 09/15/2055(d) | | | 157,000 | | | 156,475 |
3.80%, 12/01/2057(d) | | | 255,000 | | | 265,904 |
Orange S.A. (France), 4.13%, 09/14/2021 | | | 1,385,000 | | | 1,420,135 |
Telefonica Emisiones S.A. (Spain), |
4.67%, 03/06/2038 | | | 750,000 | | | 906,032 |
5.21%, 03/08/2047 | | | 700,000 | | | 903,848 |
Verizon Communications, Inc., |
4.40%, 11/01/2034 | | | 297,000 | | | 370,765 |
4.81%, 03/15/2039 | | | 459,000 | | | 598,840 |
| | | | 6,450,882 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Interactive Home Entertainment–0.08% |
| | |
Zynga, Inc., Conv., 0.00%, 12/15/2026(d)(h) | | $ | 1,015,000 | | | $ 1,070,584 |
|
Internet & Direct Marketing Retail–0.87% |
|
Booking Holdings, Inc., Conv., |
0.90%, 09/15/2021 | | | 1,430,000 | | | 1,660,985 |
0.75%, 05/01/2025(d) | | | 345,000 | | | 502,943 |
Match Group Financeco 3, Inc., Conv., 2.00%, 01/15/2030(d) | | | 3,211,000 | | | 6,226,663 |
Trip.com Group Ltd. (China), Conv., 1.25%, 09/15/2022 | | | 2,721,000 | | | 2,598,583 |
| | | | 10,989,174 |
|
Internet Services & Infrastructure–0.28% |
| | |
Shopify, Inc. (Canada), Conv., 0.13%, 11/01/2025 | | | 3,000,000 | | | 3,547,500 |
|
Investment Banking & Brokerage–0.62% |
|
Goldman Sachs Group, Inc. (The), |
5.25%, 07/27/2021 | | | 364,000 | | | 374,261 |
4.25%, 10/21/2025 | | | 502,000 | | | 576,018 |
GS Finance Corp., Series 0001, Conv., 0.25%, 07/08/2024 | | | 5,920,000 | | | 6,204,160 |
Morgan Stanley, 4.00%, 07/23/2025 | | | 619,000 | | | 708,835 |
| | | | 7,863,274 |
|
IT Consulting & Other Services–0.04% |
| | |
DXC Technology Co., 4.45%, 09/18/2022 | | | 446,000 | | | 469,562 |
|
Life & Health Insurance–0.33% |
|
Athene Global Funding, |
4.00%, 01/25/2022(d) | | | 1,110,000 | | | 1,149,694 |
2.75%, 06/25/2024(d) | | | 260,000 | | | 275,181 |
Guardian Life Global Funding, 2.90%, 05/06/2024(d) | | | 669,000 | | | 720,531 |
Jackson National Life Global Funding, |
2.10%, 10/25/2021(d) | | | 479,000 | | | 485,990 |
3.25%, 01/30/2024(d) | | | 438,000 | | | 471,126 |
Nationwide Financial Services, Inc., 5.30%, 11/18/2044(d) | | | 405,000 | | | 490,668 |
Prudential Financial, Inc., 3.91%, 12/07/2047 | | | 141,000 | | | 169,709 |
Reliance Standard Life Global Funding II, 3.05%, 01/20/2021(d) | | | 423,000 | | | 423,493 |
| | | | 4,186,392 |
|
Managed Health Care–0.05% |
| | |
UnitedHealth Group, Inc., 3.50%, 08/15/2039 | | | 543,000 | | | 645,988 |
|
Movies & Entertainment–0.86% |
|
Liberty Media Corp., Conv., |
2.25%, 10/05/2021(c) | | | 1,399,000 | | | 664,486 |
1.38%, 10/15/2023 | | | 5,513,000 | | | 6,995,990 |
Liberty Formula One, Conv., 1.00%, 01/30/2023 | | | 520,000 | | | 664,883 |
Live Nation Entertainment, Inc., Conv., 2.50%, 03/15/2023 | | | 1,953,000 | | | 2,530,698 |
| | | | 10,856,057 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Multi-line Insurance–0.15% |
| | |
American International Group, Inc., 4.38%, 01/15/2055 | | $ | 656,000 | | | $ 844,142 |
Liberty Mutual Group, Inc., 3.95%, 05/15/2060(d) | | | 887,000 | | | 1,062,192 |
| | | | 1,906,334 |
|
Multi-Utilities–0.11% |
| | |
NiSource, Inc., 4.38%, 05/15/2047 | | | 562,000 | | | 714,239 |
Sempra Energy, 3.80%, 02/01/2038 | | | 551,000 | | | 639,051 |
| | | | 1,353,290 |
|
Office REITs–0.05% |
| | |
Office Properties Income Trust, 4.00%, 07/15/2022 | | | 664,000 | | | 679,060 |
|
Oil & Gas Exploration & Production–0.16% |
| | |
Cameron LNG LLC, 3.70%, 01/15/2039(d) | | | 606,000 | | | 684,255 |
ConocoPhillips, 4.15%, 11/15/2034 | | | 217,000 | | | 252,204 |
Noble Energy, Inc., 5.25%, 11/15/2043 | | | 756,000 | | | 1,086,027 |
| | | | 2,022,486 |
|
Oil & Gas Storage & Transportation–0.69% |
|
Energy Transfer Operating L.P., |
4.20%, 09/15/2023 | | | 1,722,000 | | | 1,857,746 |
4.90%, 03/15/2035 | | | 325,000 | | | 358,403 |
5.00%, 05/15/2050 | | | 716,000 | | | 775,994 |
Enterprise Products Operating LLC, |
6.45%, 09/01/2040 | | | 23,000 | | | 32,964 |
4.25%, 02/15/2048 | | | 686,000 | | | 805,706 |
Kinder Morgan, Inc., 5.30%, 12/01/2034 | | | 384,000 | | | 473,391 |
MPLX L.P., |
4.50%, 07/15/2023 | | | 1,656,000 | | | 1,804,366 |
4.50%, 04/15/2038 | | | 799,000 | | | 913,936 |
Plains All American Pipeline L.P./PAA Finance Corp., 3.65%, 06/01/2022 | | | 323,000 | | | 332,672 |
Spectra Energy Partners L.P., 4.50%, 03/15/2045 | | | 488,000 | | | 571,144 |
Sunoco Logistics Partners Operations L.P., 5.30%, 04/01/2044 | | | 587,000 | | | 634,958 |
Texas Eastern Transmission L.P., 7.00%, 07/15/2032 | | | 169,000 | | | 235,141 |
| | | | 8,796,421 |
|
Other Diversified Financial Services–1.68% |
| | |
Convertible Trust - Energy, Series 2019-1, 0.33%, 09/19/2024 | | | 5,688,000 | | | 5,892,199 |
Convertible Trust - Healthcare, Series 2018-1, 0.25%, 02/05/2024 | | | 5,897,000 | | | 6,697,812 |
Convertible Trust - Media, Series 2019, Class 1, 0.25%, 12/04/2024 | | | 5,704,000 | | | 7,774,552 |
MassMutual Global Funding II, 2.00%, 04/15/2021(d) | | | 945,000 | | | 949,668 |
| | | | 21,314,231 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Packaged Foods & Meats–0.05% |
| | |
Kraft Heinz Foods Co. (The), 4.63%, 10/01/2039(d) | | $ | 525,000 | | | $ 587,322 |
Mead Johnson Nutrition Co. (United Kingdom), 4.13%, 11/15/2025 | | | 60,000 | | | 69,244 |
| | | | 656,566 |
|
Paper Packaging–0.12% |
| | |
International Paper Co., 6.00%, 11/15/2041 | | | 223,000 | | | 327,080 |
Packaging Corp. of America, 4.50%, 11/01/2023 | | | 1,037,000 | | | 1,143,934 |
| | | | 1,471,014 |
|
Pharmaceuticals–0.97% |
| | |
Bayer US Finance II LLC (Germany), 4.38%, 12/15/2028(d) | | | 985,000 | | | 1,158,831 |
Bayer US Finance LLC (Germany), 3.00%, 10/08/2021(d) | | | 590,000 | | | 600,138 |
Bristol-Myers Squibb Co., |
4.00%, 08/15/2023 | | | 485,000 | | | 531,254 |
4.13%, 06/15/2039 | | | 603,000 | | | 770,059 |
4.63%, 05/15/2044 | | | 1,390,000 | | | 1,897,988 |
GlaxoSmithKline Capital, Inc. (United Kingdom), 6.38%, 05/15/2038 | | | 64,000 | | | 101,053 |
Jazz Investments I Ltd., Conv., 2.00%, 06/15/2026(d) | | | 1,374,000 | | | 1,794,931 |
Pacira BioSciences, Inc., Conv., | | | | | | |
2.38%, 04/01/2022 | | | 205,000 | | | 235,622 |
0.75%, 08/01/2025(d) | | | 852,000 | | | 962,341 |
Pfizer, Inc., | | | | | | |
3.00%, 09/15/2021 | | | 1,805,000 | | | 1,840,977 |
2.20%, 12/15/2021 | | | 575,000 | | | 586,237 |
Supernus Pharmaceuticals, Inc., Conv., 0.63%, 04/01/2023 | | | 1,057,000 | | | 1,007,681 |
Utah Acquisition Sub, Inc., 3.15%, 06/15/2021 | | | 393,000 | | | 396,812 |
Zoetis, Inc., 4.70%, 02/01/2043 | | | 333,000 | | | 456,018 |
| | | | 12,339,942 |
|
Property & Casualty Insurance–0.21% |
| | |
Allstate Corp. (The), 3.28%, 12/15/2026 | | | 292,000 | | | 333,701 |
Markel Corp., | | | | | | |
5.00%, 03/30/2043 | | | 351,000 | | | 437,086 |
5.00%, 05/20/2049 | | | 482,000 | | | 665,449 |
Travelers Cos., Inc. (The), 4.60%, 08/01/2043 | | | 605,000 | | | 848,856 |
W.R. Berkley Corp., 4.63%, 03/15/2022 | | | 382,000 | | | 400,462 |
| | | | 2,685,554 |
|
Railroads–0.18% |
| | |
CSX Corp., 5.50%, 04/15/2041 | | | 346,000 | | | 484,526 |
Norfolk Southern Corp., 3.40%, 11/01/2049 | | | 456,000 | | | 523,135 |
Union Pacific Corp., | | | | | | |
3.65%, 02/15/2024 | | | 92,000 | | | 99,946 |
4.15%, 01/15/2045 | | | 401,000 | | | 498,563 |
3.84%, 03/20/2060 | | | 519,000 | | | 643,890 |
| | | | 2,250,060 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Real Estate Services–0.24% |
| | |
Redfin Corp., Conv., 0.00%, 10/15/2025(d)(h) | | $ | 2,531,000 | | | $ 3,037,574 |
|
Regional Banks–0.09% |
| | |
Citizens Financial Group, Inc., 2.38%, 07/28/2021 | | | 415,000 | | | 419,035 |
PNC Financial Services Group, Inc. (The), 3.45%, 04/23/2029 | | | 669,000 | | | 771,334 |
| | | | 1,190,369 |
|
Reinsurance–0.12% |
| | |
PartnerRe Finance B LLC, 3.70%, 07/02/2029 | | | 1,015,000 | | | 1,169,121 |
Reinsurance Group of America, Inc., 4.70%, 09/15/2023 | | | 352,000 | | | 389,239 |
| | | | 1,558,360 |
|
Renewable Electricity–0.05% |
| | |
Oglethorpe Power Corp., 4.55%, 06/01/2044 | | | 529,000 | | | 597,090 |
|
Restaurants–0.06% |
| | |
Starbucks Corp., 3.55%, 08/15/2029 | | | 685,000 | | | 797,331 |
|
Retail REITs–0.09% |
| | |
Regency Centers L.P., | | | | | | |
2.95%, 09/15/2029 | | | 745,000 | | | 796,490 |
4.65%, 03/15/2049 | | | 256,000 | | | 308,888 |
| | | | 1,105,378 |
|
Semiconductors–1.11% |
| | |
Broadcom Corp./Broadcom Cayman Finance Ltd., 3.63%, 01/15/2024 | | | 610,000 | | | 659,600 |
Cree, Inc., Conv., |
0.88%, 09/01/2023 | | | 1,359,000 | | | 2,472,275 |
1.75%, 05/01/2026(d) | | | 956,000 | | | 2,218,290 |
Microchip Technology, Inc., Conv., 0.13%, 11/15/2024 | | | 3,726,000 | | | 4,125,023 |
Micron Technology, Inc., 4.66%, 02/15/2030 | | | 670,000 | | | 823,037 |
NVIDIA Corp., 2.20%, 09/16/2021 | | | 720,000 | | | 728,845 |
NXP B.V./NXP Funding LLC (Netherlands), |
3.88%, 09/01/2022(d) | | | 1,885,000 | | | 1,987,084 |
5.35%, 03/01/2026(d) | | | 656,000 | | | 791,181 |
Texas Instruments, Inc., 2.63%, 05/15/2024 | | | 210,000 | | | 224,397 |
| | | | 14,029,732 |
|
Soft Drinks–0.10% |
| | |
PepsiCo, Inc., 3.00%, 08/25/2021 | | | 1,300,000 | | | 1,324,339 |
|
Specialized REITs–0.17% |
| | |
Crown Castle International Corp., 4.75%, 05/15/2047 | | | 46,000 | | | 59,104 |
EPR Properties, 4.75%, 12/15/2026 | | | 1,556,000 | | | 1,573,750 |
LifeStorage L.P., 3.50%, 07/01/2026 | | | 404,000 | | | 456,496 |
| | | | 2,089,350 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Specialty Chemicals–0.02% | |
| | |
Sherwin-Williams Co. (The), 4.50%, 06/01/2047 | | $ | 156,000 | | | $ | 208,679 | |
| |
|
Systems Software–0.37% | |
|
FireEye, Inc., | |
Series B, Conv., 1.63%, 06/01/2022(c) | | | 1,587,000 | | | | 1,565,221 | |
| |
Series A, Conv., 1.00%, 06/01/2025(c) | | | 1,566,000 | | | | 1,549,270 | |
| |
Microsoft Corp., 3.50%, 02/12/2035 | | | 367,000 | | | | 452,095 | |
| |
Oracle Corp., 3.60%, 04/01/2040 | | | 965,000 | | | | 1,131,573 | |
| |
| | | | 4,698,159 | |
| |
|
Technology Distributors–0.06% | |
| | |
Avnet, Inc., 4.63%, 04/15/2026 | | | 641,000 | | | | 725,895 | |
| |
|
Technology Hardware, Storage & Peripherals–0.28% | |
|
Apple, Inc., | |
2.15%, 02/09/2022 | | | 652,000 | | | | 665,610 | |
| |
3.35%, 02/09/2027 | | | 305,000 | | | | 348,093 | |
| |
Dell International LLC/EMC Corp., | |
5.45%, 06/15/2023(d) | | | 587,000 | | | | 649,408 | |
| |
8.35%, 07/15/2046(d) | | | 14,000 | | | | 21,180 | |
| |
Western Digital Corp., Conv., 1.50%, 02/01/2024 | | | 1,916,000 | | | | 1,913,980 | |
| |
| | | | 3,598,271 | |
| |
|
Tobacco–0.26% | |
| | |
Altria Group, Inc., 5.80%, 02/14/2039 | | | 1,088,000 | | | | 1,433,565 | |
| |
Philip Morris International, Inc., | |
3.60%, 11/15/2023 | | | 369,000 | | | | 402,181 | |
| |
4.88%, 11/15/2043 | | | 1,102,000 | | | | 1,480,194 | |
| |
| | | | 3,315,940 | |
| |
|
Trading Companies & Distributors–0.10% | |
|
Air Lease Corp., | |
3.00%, 09/15/2023 | | | 63,000 | | | | 66,296 | |
| |
4.25%, 09/15/2024 | | | 392,000 | | | | 429,814 | |
| |
Aircastle Ltd., 4.40%, 09/25/2023 | | | 761,000 | | | | 806,750 | |
| |
| | | | 1,302,860 | |
| |
|
Trucking–0.14% | |
|
Aviation Capital Group LLC, | |
2.88%, 01/20/2022(d) | | | 1,015,000 | | | | 1,027,885 | |
| |
4.88%, 10/01/2025(d) | | | 669,000 | | | | 723,477 | |
| |
| | | | 1,751,362 | |
| |
|
Wireless Telecommunication Services–0.25% | |
| | |
America Movil S.A.B. de C.V. (Mexico), 4.38%, 07/16/2042 | | | 600,000 | | | | 751,912 | |
| |
Rogers Communications, Inc. (Canada), | |
4.50%, 03/15/2043 | | | 533,000 | | | | 679,033 | |
| |
4.30%, 02/15/2048 | | | 1,379,000 | | | | 1,764,833 | |
| |
| | | | 3,195,778 | |
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $227,516,448) | | | | 264,857,571 | |
| |
|
U.S. Treasury Securities–5.26% | |
|
U.S. Treasury Bills–0.00% | |
| | |
0.11%, 02/04/2021(i)(j) | | | 10,000 | | | | 9,999 | |
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
U.S. Treasury Bonds–0.87% | |
| | |
4.50%, 02/15/2036 | | $ | 2,636,800 | | | $ | 3,866,929 | |
| |
4.50%, 08/15/2039 | | | 36,400 | | | | 55,632 | |
| |
4.38%, 05/15/2040 | | | 72,800 | | | | 110,357 | |
| |
1.38%, 08/15/2050 | | | 7,472,600 | | | | 6,984,546 | |
| |
| | | | 11,017,464 | |
| |
|
U.S. Treasury Notes–4.39% | |
| | |
0.13%, 11/30/2022 | | | 17,189,300 | | | | 17,191,986 | |
| |
0.13%, 12/15/2023 | | | 15,880,500 | | | | 15,861,270 | |
| |
0.38%, 11/30/2025 | | | 16,710,100 | | | | 16,730,987 | |
| |
0.63%, 11/30/2027 | | | 3,189,800 | | | | 3,188,305 | |
| |
0.88%, 11/15/2030 | | | 2,681,100 | | | | 2,671,046 | |
| |
| | | | 55,643,594 | |
| |
Total U.S. Treasury Securities
(Cost $66,098,164) | | | | 66,671,057 | |
| |
| | |
| | | Shares | | | | |
|
Preferred Stocks–0.58% | |
|
Asset Management & Custody Banks–0.17% | |
| | |
AMG Capital Trust II, 5.15%, Conv. Pfd. | | | 42,732 | | | | 2,135,798 | |
| |
|
Diversified Banks–0.02% | |
| | |
Wells Fargo & Co., 5.85%, Series Q, Pfd.(e) | | | 10,911 | | | | 292,960 | |
| |
|
Oil & Gas Storage & Transportation–0.39% | |
| | |
El Paso Energy Capital Trust I, 4.75%, Conv. Pfd. | | | 95,499 | | | | 4,943,028 | |
| |
Total Preferred Stocks
(Cost $5,854,432) | | | | 7,371,786 | |
| |
| | |
| | | Principal | | | | |
| | | Amount | | | | |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–0.08% | |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.08% | |
| | |
6.75%, 03/15/2031 | | $ | 682,000 | | | | 1,051,119 | |
| |
5.50%, 02/01/2037 | | | 8 | | | | 9 | |
| |
| | | | 1,051,128 | |
| |
|
Federal National Mortgage Association (FNMA)–0.00% | |
| | |
9.50%, 04/01/2030 | | | 630 | | | | 706 | |
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $843,029) | | | | 1,051,834 | |
| |
| | |
| | | Shares | | | | |
|
Money Market Funds–4.64% | |
| | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(k)(l) | | | 22,007,337 | | | | 22,007,337 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(k)(l) | | | 11,692,344 | | | | 11,695,851 | |
| |
Invesco Treasury Portfolio, Institutional Class,
0.01%(k)(l) | | | 25,151,242 | | | | 25,151,242 | |
| |
Total Money Market Funds
(Cost $58,847,595) | | | | 58,854,430 | |
| |
TOTAL INVESTMENTS IN
SECURITIES–100.11%
(Cost $993,728,226) | | | | 1,268,900,833 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.11)% | | | | (1,419,641 | ) |
| |
NET ASSETS–100.00% | | | $ | 1,267,481,192 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | |
| Investment Abbreviations: |
| |
| Conv. | | – Convertible |
| LIBOR | | – London Interbank Offered Rate |
| Pfd. | | – Preferred |
| REIT | | – Real Estate Investment Trust |
| USD | | – U.S. Dollar |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (d) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $56,869,271, which represented 4.49% of the Fund’s Net Assets. |
| (e) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (f) | Perpetual bond with no specified maturity date. |
| (g) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (h) | Zero coupon bond issued at a discount. |
| (i) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
| (j) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (k) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases at
Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
| |
Investments in Affiliated Money Market Funds: | |
| |
Invesco Government & Agency Portfolio, Institutional Class | | $ | 19,017,510 | | | $ | 96,819,974 | | | $ | (93,830,147 | ) | | | $ - | | | $ | - | | | $ | 22,007,337 | | | $ | 70,460 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class | | | 13,563,951 | | | | 69,157,124 | | | | (71,030,065 | ) | | | 4,528 | | | | 313 | | | | 11,695,851 | | | | 69,114 | |
| |
Invesco Treasury Portfolio, Institutional Class | | | 21,734,298 | | | | 110,651,398 | | | | (107,234,454 | ) | | | - | | | | - | | | | 25,151,242 | | | | 75,619 | |
| |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Invesco Government & Agency Portfolio, Institutional Class | | | - | | | | 10,778,973 | | | | (10,778,973 | ) | | | - | | | | - | | | | - | | | | 1,310* | |
| |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 3,141,262 | | | | (3,139,648 | ) | | | - | | | | (1,614 | ) | | | - | | | | 865* | |
| |
Invesco Private Government Fund | | | - | | | | 5,048,621 | | | | (5,048,621 | ) | | | - | | | | - | | | | - | | | | 35* | |
| |
Invesco Private Prime Fund | | | - | | | | 1,970,952 | | | | (1,971,046 | ) | | | - | | | | 94 | | | | - | | | | 19* | |
| |
Total | | $ | 54,315,759 | | | $ | 297,568,304 | | | $ | (293,032,954 | ) | | | $4,528 | | | $ | (1,207 | ) | | $ | 58,854,430 | | | $ | 217,422 | |
| |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
(l) The rate shown is the 7-day SEC standardized yield as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts | |
| |
| Short Futures Contracts | | | | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
U.S. Treasury 5 Year Notes | | | | 10 | | | | March-2021 | | | $ | (1,261,641 | ) | | | $(2,989 | ) | | | $(2,989 | ) |
| |
|
| Open Forward Foreign Currency Contracts | |
| |
| | | | | | | | | | | | Unrealized | |
| Settlement | | | | | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | | | | | Deliver | | | | | | Receive | | | (Depreciation) | |
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
01/15/2021 | | | State Street Bank & Trust Co. | | | | | | | | CHF 259,598 | | | | USD | | | | 293,667 | | | $ | 339 | |
| |
01/15/2021 | | | State Street Bank & Trust Co. | | | | | | | | EUR 206,737 | | | | USD | | | | 253,566 | | | | 937 | |
| |
01/15/2021 | | | State Street Bank & Trust Co. | | | | | | | | USD 191,963 | | | | CAD | | | | 247,326 | | | | 2,350 | |
| |
| See | accompanying Notes to Financial Statements which are an integral part of the financial statements. |
Invesco V.I. Equity and Income Fund
| | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts–(continued) |
|
| | | | | | | | | | | | | | Unrealized |
| Settlement | | | | Contract to | | | Appreciation |
| Date | | Counterparty | | | | | Deliver | | | | | | Receive | | | (Depreciation) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 442,223 | | | | CHF | | | | 393,032 | | | $ 1,876 |
|
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 310,836 | | | | EUR | | | | 255,075 | | | 862 |
|
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 1,654,715 | | | | GBP | | | | 1,230,080 | | | 27,589 |
|
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | 33,953 |
|
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | |
|
01/15/2021 | | Bank of New York Mellon (The) | | | CAD | | | | 6,588,230 | | | | USD | | | | 5,172,269 | | | (3,806) |
|
01/15/2021 | | Bank of New York Mellon (The) | | | EUR | | | | 5,789,354 | | | | USD | | | | 7,040,978 | | | (33,512) |
|
01/15/2021 | | Bank of New York Mellon (The) | | | GBP | | | | 16,071,964 | | | | USD | | | | 21,522,979 | | | (457,654) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | CAD | | | | 121,003 | | | | USD | | | | 94,983 | | | (84) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | CHF | | | | 8,230,018 | | | | USD | | | | 9,290,116 | | | (9,222) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 130,884 | | | | USD | | | | 159,550 | | | (388) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | GBP | | | | 403,397 | | | | USD | | | | 543,312 | | | (8,389) |
|
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 174,603 | | | | CAD | | | | 222,174 | | | (51) |
|
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | (513,106) |
|
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | $(479,153) |
|
Abbreviations:
CAD – Canadian Dollar
CHF – Swiss Franc
EUR – Euro
GBP – British Pound Sterling
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $934,880,631) | | $ | 1,210,046,403 | |
| |
Investments in affiliated money market funds, at value (Cost $58,847,595) | | | 58,854,430 | |
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 33,953 | |
| |
Foreign currencies, at value (Cost $783) | | | 793 | |
| |
Receivable for: | | | | |
Investments sold | | | 2,660,730 | |
Fund shares sold | | | 13,338 | |
| |
Dividends | | | 1,665,255 | |
| |
Interest | | | 1,736,781 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 171,827 | |
| |
Total assets | | | 1,275,183,510 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 469 | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 513,106 | |
| |
Payable for: | | | | |
Investments purchased | | | 5,116,721 | |
| |
Fund shares reacquired | | | 457,771 | |
| |
Amount due custodian | | | 643,460 | |
| |
Accrued fees to affiliates | | | 685,739 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 571 | |
| |
Accrued other operating expenses | | | 93,975 | |
| |
Trustee deferred compensation and retirement plans | | | 190,506 | |
| |
Total liabilities | | | 7,702,318 | |
| |
Net assets applicable to shares outstanding | | $ | 1,267,481,192 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 973,640,832 | |
| |
Distributable earnings | | | 293,840,360 | |
| |
| | $ | 1,267,481,192 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 43,098,779 | |
| |
Series II | | $ | 1,224,382,413 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 2,403,983 | |
| |
Series II | | | 68,694,164 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 17.93 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 17.82 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $200,707) | | $ | 19,623,657 | |
| |
Interest | | | 6,971,100 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $64,619) | | | 279,812 | |
| |
Total investment income | | | 26,874,569 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 4,292,612 | |
| |
Administrative services fees | | | 1,835,917 | |
| |
Custodian fees | | | 34,000 | |
| |
Distribution fees - Series II | | | 2,691,046 | |
| |
Transfer agent fees | | | 34,607 | |
| |
Trustees’ and officers’ fees and benefits | | | 37,587 | |
| |
Reports to shareholders | | | 17,908 | |
| |
Professional services fees | | | 63,880 | |
| |
Other | | | 9,963 | |
| |
Total expenses | | | 9,017,520 | |
| |
Less: Fees waived | | | (57,375 | ) |
| |
Net expenses | | | 8,960,145 | |
| |
Net investment income | | | 17,914,424 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 11,762,128 | |
| |
Affiliated investment securities | | | (1,207 | ) |
| |
Foreign currencies | | | 450,690 | |
| |
Forward foreign currency contracts | | | (2,855,287 | ) |
| |
Futures contracts | | | (83,105 | ) |
| |
| | | 9,273,219 | |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 66,429,215 | |
| |
Affiliated investment securities | | | 4,528 | |
| |
Foreign currencies | | | 5,349 | |
| |
Forward foreign currency contracts | | | 687,602 | |
| |
Futures contracts | | | (8,096 | ) |
| |
| | | 67,118,598 | |
| |
Net realized and unrealized gain | | | 76,391,817 | |
| |
Net increase in net assets resulting from operations | | $ | 94,306,241 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 17,914,424 | | | $ | 23,135,130 | |
| |
Net realized gain | | | 9,273,219 | | | | 83,910,028 | |
| |
Change in net unrealized appreciation | | | 67,118,598 | | | | 121,055,875 | |
| |
Net increase in net assets resulting from operations | | | 94,306,241 | | | | 228,101,033 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,664,901 | ) | | | (4,953,688 | ) |
| |
Series II | | | (74,585,577 | ) | | | (114,458,310 | ) |
| |
Total distributions from distributable earnings | | | (77,250,478 | ) | | | (119,411,998 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (8,088,300 | ) | | | (131,330,818 | ) |
| |
Series II | | | (27,486,339 | ) | | | 100,806,762 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (35,574,639 | ) | | | (30,524,056 | ) |
| |
Net increase (decrease) in net assets | | | (18,518,876 | ) | | | 78,164,979 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,286,000,068 | | | | 1,207,835,089 | |
| |
End of year | | $ | 1,267,481,192 | | | $ | 1,286,000,068 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Ratio of | | | Ratio of | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | expenses | | | expenses | | | | | | | |
| | | | | | | | | Net gains | | | | | | | | | | | | | | | | | | | | | | | | to average | | | to average net | | | | | | | |
| | | | | | | | | (losses) | | | | | | | | | | | | | | | | | | | | | | | | net assets | | | assets without | | | Ratio of net | | | | |
| | | Net asset | | | | | | on securities | | | | | | Dividends | | | Distributions | | | | | | | | | | | | | | | with fee waivers | | | fee waivers | | | investment | | | | |
| | | value, | | | Net | | | (both | | | Total from | | | from net | | | from net | | | | | | Net asset | | | | | | Net assets, | | | and/or | | | and/or | | | income | | | | |
| | | beginning | | | investment | | | realized and | | | investment | | | investment | | | realized | | | Total | | | value, end | | | Total | | | end of period | | | expenses | | | expenses | | | to average | | | Portfolio | |
| | | of period | | | income(a) | | | unrealized) | | | operations | | | income | | | gains | | | distributions | | | of period | | | return (b) | | | (000’s omitted) | | | absorbed | | | absorbed | | | net assets | | | turnover (c) | |
| |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | $ | 17.52 | | | $ | 0.30 | | | $ | 1.30 | | | $ | 1.60 | | | $ | (0.42 | ) | | $ | (0.77 | ) | | $ | (1.19 | ) | | $ | 17.93 | | | | 9.95 | % | | $ | 43,099 | | | | 0.56 | %(d) | | | 0.57 | %(d) | | | 1.84 | %(d) | | | 96 | % |
Year ended 12/31/19 | | | 16.12 | | | | 0.36 | | | | 2.82 | | | | 3.18 | | | | (0.47 | ) | | | (1.31 | ) | | | (1.78 | ) | | | 17.52 | | | | 20.37 | | | | 50,731 | | | | 0.54 | | | | 0.55 | | | | 2.02 | | | | 150 | |
Year ended 12/31/18 | | | 19.04 | | | | 0.35 | | | | (2.00 | ) | | | (1.65 | ) | | | (0.43 | ) | | | (0.84 | ) | | | (1.27 | ) | | | 16.12 | | | | (9.50 | ) | | | 165,924 | | | | 0.54 | | | | 0.55 | | | | 1.91 | | | | 150 | |
Year ended 12/31/17 | | | 17.76 | | | | 0.35 | (e) | | | 1.58 | | | | 1.93 | | | | (0.31 | ) | | | (0.34 | ) | | | (0.65 | ) | | | 19.04 | | | | 11.03 | | | | 184,768 | | | | 0.55 | | | | 0.56 | | | | 1.93 | (e) | | | 119 | |
Year ended 12/31/16 | | | 16.23 | | | | 0.29 | | | | 2.10 | | | | 2.39 | | | | (0.32 | ) | | | (0.54 | ) | | | (0.86 | ) | | | 17.76 | | | | 15.12 | | | | 157,774 | | | | 0.60 | | | | 0.61 | | | | 1.78 | | | | 101 | |
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 17.42 | | | | 0.26 | | | | 1.28 | | | | 1.54 | | | | (0.37 | ) | | | (0.77 | ) | | | (1.14 | ) | | | 17.82 | | | | 9.65 | | | | 1,224,382 | | | | 0.81 | (d) | | | 0.82 | (d) | | | 1.59 | (d) | | | 96 | |
Year ended 12/31/19 | | | 16.04 | | | | 0.31 | | | | 2.80 | | | | 3.11 | | | | (0.42 | ) | | | (1.31 | ) | | | (1.73 | ) | | | 17.42 | | | | 20.01 | | | | 1,235,269 | | | | 0.79 | | | | 0.80 | | | | 1.77 | | | | 150 | |
Year ended 12/31/18 | | | 18.95 | | | | 0.31 | | | | (2.00 | ) | | | (1.69 | ) | | | (0.38 | ) | | | (0.84 | ) | | | (1.22 | ) | | | 16.04 | | | | (9.73 | ) | | | 1,041,911 | | | | 0.79 | | | | 0.80 | | | | 1.66 | | | | 150 | |
Year ended 12/31/17 | | | 17.68 | | | | 0.31 | (e) | | | 1.57 | | | | 1.88 | | | | (0.27 | ) | | | (0.34 | ) | | | (0.61 | ) | | | 18.95 | | | | 10.78 | | | | 1,385,490 | | | | 0.80 | | | | 0.81 | | | | 1.68 | (e) | | | 119 | |
Year ended 12/31/16 | | | 16.16 | | | | 0.25 | | | | 2.09 | | | | 2.34 | | | | (0.28 | ) | | | (0.54 | ) | | | (0.82 | ) | | | 17.68 | | | | 14.84 | | | | 1,314,323 | | | | 0.85 | | | | 0.86 | | | | 1.53 | | | | 101 | |
| |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $42,899 and $1,076,418 for Series I and Series II shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the year ended December 31, 2017. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.30 and 1.64% and $0.26 and 1.39% for Series I and Series II shares, respectively. |
| See | accompanying Notes to Financial Statements which are an integral part of the financial statements. |
Invesco V.I. Equity and Income Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Equity and Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objectives are both capital appreciation and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment
Invesco V.I. Equity and Income Fund
securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement
Invesco V.I. Equity and Income Fund
based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| L. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| M. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| 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. This practice does not apply to securities pledged as collateral for securities lending transactions. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | | | |
| Average Daily Net Assets | | Rate | |
First $ 150 million | | | 0.500% | |
Next $100 million | | | 0.450% | |
Next $100 million | | | 0.400% | |
Over $350 million | | | 0.350% | |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.38%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $57,375.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $158,403 for accounting and fund administrative services and was reimbursed $1,677,514 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the
Invesco V.I. Equity and Income Fund
annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $2,204 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 821,156,428 | | | $ | 48,937,727 | | | | $ – | | | $ | 870,094,155 | |
| |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 264,857,571 | | | | – | | | | 264,857,571 | |
| |
U.S. Treasury Securities | | | – | | | | 66,671,057 | | | | – | | | | 66,671,057 | |
| |
Preferred Stocks | | | 7,371,786 | | | | – | | | | – | | | | 7,371,786 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 1,051,834 | | | | – | | | | 1,051,834 | |
| |
Money Market Funds | | | 58,854,430 | | | | – | | | | – | | | | 58,854,430 | |
| |
Total Investments in Securities | | | 887,382,644 | | | | 381,518,189 | | | | – | | | | 1,268,900,833 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | – | | | | 33,953 | | | | – | | | | 33,953 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | (2,989 | ) | | | – | | | | – | | | | (2,989 | ) |
| |
Forward Foreign Currency Contracts | | | – | | | | (513,106 | ) | | | – | | | | (513,106 | ) |
| |
| | | (2,989 | ) | | | (513,106 | ) | | | – | | | | (516,095 | ) |
| |
Total Other Investments | | | (2,989 | ) | | | (479,153 | ) | | | – | | | | (482,142 | ) |
| |
Total Investments | | $ | 887,379,655 | | | $ | 381,039,036 | | | | $ – | | | $ | 1,268,418,691 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Currency
Risk | | | Interest Rate Risk | | | Total | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 33,953 | | | $ | - | | | $ | 33,953 | |
| |
Derivatives not subject to master netting agreements | | | - | | | | - | | | | - | |
| |
Total Derivative Assets subject to master netting agreements | | $ | 33,953 | | | $ | - | | | $ | 33,953 | |
| |
Invesco V.I. Equity and Income Fund
| | | | | | | | | | | | | | | | | | | | |
| | | Value | |
| Derivative Liabilities | | Currency
Risk | | | | | | Interest
Rate Risk | | | | | | Total | |
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | - | | | | | | | $ | (2,989 | ) | | | | | | $ | (2,989 | )�� |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | (513,106 | ) | | | | | | | - | | | | | | | | (513,106 | ) |
| |
Total Derivative Liabilities | | | (513,106 | ) | | | | | | | (2,989 | ) | | | | | | | (516,095 | ) |
| |
Derivatives not subject to master netting agreements | | | - | | | | | | | | 2,989 | | | | | | | | 2,989 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (513,106 | ) | | | | | | $ | - | | | | | | | $ | (513,106 | ) |
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | Financial
Derivative
Liabilities | | | | Collateral
(Received)/Pledged | | | |
| Counterparty | | Forward Foreign
Currency Contracts | | Forward Foreign
Currency Contracts | | Net Value of
Derivatives | | Non-Cash | | Cash | | Net
Amount | |
| |
Bank of New York Mellon (The) | | $ – | | $(494,972) | | $(494,972) | | $– | | $– | | | $(494,972 | ) |
| |
State Street Bank & Trust Co. | | 33,953 | | (18,134) | | 15,819 | | – | | – | | | 15,819 | |
| |
Total | | $33,953 | | $(513,106) | | $(479,153) | | $– | | $– | | | $(479,153 | ) |
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on | |
| | | Statement of Operations | |
| | | Currency | | | Interest | | | | |
| | | Risk | | | Rate Risk | | | Total | |
| |
Realized Gain (Loss): | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | (2,855,287 | ) | | $ | - | | | $ | (2,855,287 | ) |
| |
Futures contracts | | | - | | | | (83,105 | ) | | | (83,105 | ) |
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | |
Forward foreign currency contracts | | | 687,602 | | | | - | | | | 687,602 | |
| |
Futures contracts | | | - | | | | (8,096 | ) | | | (8,096 | ) |
| |
Total | | $ | (2,167,685 | ) | | $ | (91,201 | ) | | $ | (2,258,886 | ) |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | |
| | | Forward | | | | |
| | | Foreign Currency | | | | Futures |
| | | Contracts | | | | Contracts |
|
Average notional value | | $60,144,965 | | | | $1,478,947 |
|
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
Invesco V.I. Equity and Income Fund
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
| | | | | | | | |
| Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019: | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 29,918,266 | | | $ | 29,108,510 | |
Long-term capital gain | | | 47,332,212 | | | | 90,303,488 | |
Total distributions | | $ | 77,250,478 | | | $ | 119,411,998 | |
| * | Includes short-term capital gain distributions, if any. |
| | | | |
| Tax Components of Net Assets at Period-End: | | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 34,735,702 | |
| |
Net unrealized appreciation – investments | | | 259,220,044 | |
| |
Net unrealized appreciation - foreign currencies | | | 18,058 | |
| |
Temporary book/tax differences | | | (133,444 | ) |
| |
Shares of beneficial interest | | | 973,640,832 | |
| |
Total net assets | | $ | 1,267,481,192 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, the tax treatment of equity securities, grantor trusts, forward foreign currency contracts and contingent payment debt instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $351,012,113 and $350,640,945, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $671,100,801 and $766,531,118, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 276,446,456 | |
Aggregate unrealized (depreciation) of investments | | | (17,226,412 | ) |
| |
Net unrealized appreciation of investments | | $ | 259,220,044 | |
| |
Cost of investments for tax purposes is $1,009,198,647.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of contingent payment debt instruments, grantor trusts and foreign currency transactions, on December 31, 2020, undistributed net investment income was increased by $3,038,852, undistributed net realized gain was decreased by $3,128,315 and shares of beneficial interest was increased by $89,463. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 192,505 | | | $ | 3,212,832 | | | | 400,977 | | | $ | 7,034,559 | |
| |
Series II | | | 8,497,726 | | | | 137,573,138 | | | | 10,719,286 | | | | 190,855,182 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 166,556 | | | | 2,664,901 | | | | 298,775 | | | | 4,953,688 | |
| |
Series II | | | 4,685,024 | | | | 74,585,577 | | | | 6,936,867 | | | | 114,458,310 | |
| |
Invesco V.I. Equity and Income Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (851,279 | ) | | $ | (13,966,033 | ) | | | (8,098,584 | ) | | $ | (143,319,065 | ) |
| |
Series II | | | (15,407,946 | ) | | | (239,645,054 | ) | | | (11,706,489 | ) | | | (204,506,730 | ) |
| |
Net increase (decrease) in share activity | | | (2,717,414 | ) | | $ | (35,574,639 | ) | | | (1,449,168 | ) | | $ | (30,524,056 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 74% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco V.I. Managed Volatility Fund (the “Target Fund”) in exchange for shares of the Fund.
The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the Target Fund shareholders for their consideration at a meeting to be held in or around April 2021. The reorganization is expected to be consummated shortly thereafter. Upon closing of the reorganization, shareholders of the Target Fund will receive shares of the Fund in exchange for their shares of the Target Fund, and the Target Fund will liquidate and cease operations.
Invesco V.I. Equity and Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Equity and Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Equity and Income Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Equity and Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning Account Value
(07/01/20) | | Ending Account Value (12/31/20)1 | | Expenses Paid During Period2 | | Ending Account Value
(12/31/20) | | Expenses Paid During Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,211.50 | | $3.11 | | $1,022.32 | | $2.85 | | 0.56% |
Series II | | 1,000.00 | | 1,209.70 | | 4.50 | | 1,021.06 | | 4.12 | | 0.81 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Equity and Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | | $47,332,212 | |
| | Corporate Dividends Received Deduction* | | | 53.94% | |
| | U.S. Treasury Obligations* | | | 9.46% | |
| | Business Interest Income* | | | 16.94% | |
| | * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Equity and Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
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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 | | 2007 | | 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) | | 197 | | None |
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| 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. |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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 |
| Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
| Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
| 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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Equity and Income Fund
Trustees and Officers–(continued)
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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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
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| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
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| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Equity and Income Fund
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 | | Annual Report to Shareholders | | December 31, 2020 |
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| | Invesco V.I. Global Core Equity Fund |
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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| Invesco Distributors, Inc. | | VIGCE-AR-1 |
Management’s Discussion of Fund Performance
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Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Global Core Equity Fund (the Fund) underperformed the MSCI World Index, the Fund’s broad market/style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
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Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
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Series I Shares | | | 13.23 | % |
Series II Shares | | | 13.03 | |
MSCI World Indexq (Broad Market/Style-Specific Index) | | | 15.90 | |
Lipper VUF Global Multi-Cap Value Funds Classification Average∎ (Peer Group) | | | 2.45 | |
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Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Global equity markets started the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global equity markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. The US bull market came to an abrupt end, while global equity markets also fell sharply. As fear of a worldwide recession increased, central banks around the world took aggressive action to support both local markets and the global economy.
Despite the continuing global spread of COVID-19, many countries achieved some success in controlling the spread and were able to slowly re-open their economies. Global equity markets benefited from government policy responses to the crisis, which were swift and encouraging. Many economies received fiscal stimulus and very significant monetary stimulus. The massive monetary policy responses created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first quarter.
Despite a correction in September, global equity stocks finished the third quarter in positive territory after posting strong gains in July and August. Building on progress made in the latter part of the second quarter, many countries were able to continue reducing pandemic-related stringency protocols. As a result, the “green shoots” we saw at the end of the second quarter grew and flourished into the third quarter, as many countries experienced a strong economic rebound.
At the end of the year, global equity markets again posted gains as good news about COVID-19 vaccines outweighed concerns about sharply rising infection rates and tightening social restrictions. In most global regions, equity market leadership shifted as value stocks outperformed growth stocks. Sectors that had been severely affected by the pandemic, including energy and financials, were among the fourth quarter’s top performers.
Emerging market equities, which posted robust gains amplified by US dollar weakness, outperformed developed market equities for the year.
The Fund’s relative performance compared to the MSCI World Index was primarily due to investments in the consumer discretionary sector which lagged those of the index over the year. In terms of market allocation, the Fund had an average overweighting to financials which hurt relative performance due to the sector lagging the market average. In contrast, the Fund’s investments in the communication services sector outperformed the index over the year and benefited relative performance.
The most significant individual contributors during the year included Salesforce.com and Sabre. Shares in Salesforce.com rose on strong reported operating results despite the pandemic and also benefited as companies offering SaaS (software as a service) were in favor in 2020. Salesforce.com was sold from the portfolio during the year.
Shares in Sabre rebounded late in 2020 after being hit hard as a result of the pandemic. Sabre is a leading technology firm serving the travel industry. Shares rallied on news the company was expanding its AI-based platform offerings to clients and also due to optimism that approved COVID-19 vaccines would help normalize the travel industry.
The most significant individual detractors during the year included Carnival and Airbus. Shares in Carnival and Airbus were adversely impacted by the pandemic’s impact on global travel. Both Carnival and Airbus were sold from the portfolio during the year.
On October 15, 2020, the Fund’s investment strategies and portfolio advisor were changed. The Fund will continue to provide diversified exposure to global equities. Both the previous and current investment teams focused on bottom up stock selection. However, investors should expect the new investment team to run a more concentrated, lower-turnover portfolio, with a longer investment horizon. The team seeks to own high quality companies that possess sustainable competitive advantage and that trade at a significant margin of safety to their assessment
of intrinsic value. The performance of this Fund for the period prior to this date would have been different had the current investment strategies and portfolio advisor been in place during that period. The new portfolio management team did sell a significant percentage of holdings after this date to re-position the portfolio and this transition is substantially completed.
Thank you for your investment in Invesco V.I. Global Core Equity Fund.
Portfolio manager(s):
Sunny Basi
Michael Hatcher (Lead)
Marina Pomerantz
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco V.I. Global Core Equity Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (1/2/97) | | | 5.56 | % |
10 Years | | | 6.86 | |
5 Years | | | 9.52 | |
1 Year | | | 13.23 | |
| |
Series II Shares | | | | |
Inception (6/1/10) | | | 8.12 | % |
10 Years | | | 6.60 | |
5 Years | | | 9.24 | |
1 Year | | | 13.03 | |
Effective June 1, 2010, Class I shares of the predecessor fund, Universal Funds Global Value Equity Portfolio, advised by Morgan Stanley Investment Management Inc. were reorganized into Series I shares of Invesco Van Kampen V.I. Global Value Equity Fund (renamed Invesco V.I. Global Core Equity Fund on April 30, 2012). Returns shown above, prior to June 1, 2010, for Series I shares are those of the Class I shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction
of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Global Core Equity Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco V.I. Global Core Equity Fund |
Supplemental Information
Invesco V.I. Global Core Equity Fund’s investment objective is long-term capital appreciation by investing primarily in equity securities of issuers throughout the world, including U.S. issuers.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | The Lipper VUF Global Multi-Cap Value Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Global Multi Cap Value Funds classification. |
| ∎ | | 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. |
|
| Invesco V.I. Global Core Equity Fund |
Fund Information
Portfolio Composition
| | | | | |
| By country | | % of total net assets |
| |
United States | | | | 52.60 | % |
Germany | | | | 12.77 | |
Switzerland | | | | 7.99 | |
United Kingdom | | | | 7.09 | |
China | | | | 6.43 | |
Canada | | | | 3.12 | |
Hong Kong | | | | 3.12 | |
Belgium | | | | 2.60 | |
France | | | | 2.48 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.80 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Microsoft Corp. | | | | 6.18 | % |
2. Visa, Inc., Class A | | | | 4.96 | |
3. SAP SE | | | | 4.92 | |
4. KION Group AG | | | | 4.87 | |
5. Analog Devices, Inc. | | | | 4.13 | |
6. Accenture PLC, Class A | | | | 3.75 | |
7. Alphabet, Inc., Class A | | | | 3.71 | |
8. Alibaba Group Holding Ltd., ADR | | | | 3.68 | |
9. Equinix, Inc. | | | | 3.57 | |
10. British American Tobacco PLC | | | | 3.48 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. Global Core Equity Fund |
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.20% | |
Belgium–2.60% | | | | | | | | |
Anheuser-Busch InBev S.A./N.V., ADR(a) | | | 25,533 | | | $ | 1,785,012 | |
|
| |
| | |
Canada–3.12% | | | | | | | | |
Canadian Natural Resources Ltd. | | | 57,942 | | | | 1,392,447 | |
|
| |
Constellation Software, Inc. | | | 577 | | | | 749,261 | |
|
| |
Topicus.com, Inc.(b)(c) | | | 1,073 | | | | 4,057 | |
|
| |
| | | | | | | 2,145,765 | |
|
| |
| | |
China–6.43% | | | | | | | | |
Alibaba Group Holding Ltd., ADR(b) | | | 10,866 | | | | 2,528,844 | |
|
| |
Kweichow Moutai Co. Ltd., A Shares | | | 6,200 | | | | 1,894,653 | |
|
| |
| | | | | | | 4,423,497 | |
|
| |
| | |
France–2.48% | | | | | | | | |
Bureau Veritas S.A. | | | 64,106 | | | | 1,705,157 | |
|
| |
| | |
Germany–12.77% | | | | | | | | |
Henkel AG & Co. KGaA | | | 21,331 | | | | 2,053,373 | |
|
| |
KION Group AG | | | 38,541 | | | | 3,350,805 | |
|
| |
SAP SE | | | 25,726 | | | | 3,380,616 | |
|
| |
| | | | | | | 8,784,794 | |
|
| |
| | |
Hong Kong–3.12% | | | | | | | | |
AIA Group Ltd. | | | 174,000 | | | | 2,143,274 | |
|
| |
| | |
Switzerland–7.99% | | | | | | | | |
Cie Financiere Richemont S.A. | | | 20,135 | | | | 1,819,445 | |
|
| |
Cie Financiere Richemont S.A., Wts., expiring 11/23/2022(b) | | | 40,270 | | | | 10,462 | |
|
| |
Roche Holding AG | | | 4,920 | | | | 1,716,627 | |
|
| |
Temenos AG | | | 13,970 | | | | 1,949,305 | |
|
| |
| | | | | | | 5,495,839 | |
|
| |
| | |
United Kingdom–7.09% | | | | | | | | |
British American Tobacco PLC | | | 64,285 | | | | 2,391,076 | |
|
| |
Imperial Brands PLC | | | 34,998 | | | | 735,356 | |
|
| |
Unilever PLC | | | 28,884 | | | | 1,748,958 | |
|
| |
| | | | | | | 4,875,390 | |
|
| |
| | |
United States–52.60% | | | | | | | | |
Accenture PLC, Class A | | | 9,878 | | | | 2,580,232 | |
|
| |
Alphabet, Inc., Class A(b) | | | 1,457 | | | | 2,553,597 | |
|
| |
Investment Abbreviations:
ADR - American Depositary Receipt
Wts. - Warrants
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
United States–(continued) | | | | | | | | |
Alphabet, Inc., Class C(b) | | | 349 | | | $ | 611,406 | |
|
| |
Analog Devices, Inc. | | | 19,227 | | | | 2,840,405 | |
|
| |
Aon PLC, Class A | | | 6,434 | | | | 1,359,311 | |
|
| |
Aptiv PLC | | | 17,283 | | | | 2,251,802 | |
|
| |
AutoZone, Inc.(b) | | | 1,768 | | | | 2,095,858 | |
|
| |
Becton, Dickinson and Co. | | | 7,926 | | | | 1,983,244 | |
|
| |
BorgWarner, Inc. | | | 40,099 | | | | 1,549,425 | |
|
| |
Equinix, Inc. | | | 3,441 | | | | 2,457,493 | |
|
| |
Flowserve Corp. | | | 53,660 | | | | 1,977,371 | |
|
| |
Honeywell International, Inc. | | | 10,204 | | | | 2,170,391 | |
|
| |
Microsoft Corp. | | | 19,090 | | | | 4,245,998 | |
|
| |
Sabre Corp. | | | 189,717 | | | | 2,280,398 | |
|
| |
Visa, Inc., Class A | | | 15,587 | | | | 3,409,345 | |
|
| |
Walt Disney Co. (The)(b) | | | 9,949 | | | | 1,802,560 | |
|
| |
| | | | | | | 36,168,836 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $59,879,940) | | | | 67,527,564 | |
|
| |
| | |
Money Market Funds–2.24% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 559,248 | | | | 559,248 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 343,756 | | | | 343,859 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 639,140 | | | | 639,140 | |
|
| |
Total Money Market Funds (Cost $1,542,264) | | | | 1,542,247 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding Investments purchased with cash collateral from securities on loan)-100.44%
(Cost $61,422,204) | | | | | | | 69,069,811 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–2.66% | | | | | | | | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 730,505 | | | | 730,505 | |
|
| |
Invesco Private Prime Fund,
0.12%(d)(e)(f) | | | 1,095,429 | | | | 1,095,758 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $1,826,263) | | | | 1,826,263 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–103.10%
(Cost $63,248,467) | | | | | | | 70,896,074 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(3.10)% | | | | (2,132,644 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 68,763,430 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Notes to Schedule of Investments:
| (a) | All or a portion of this security was out on loan at December 31, 2020. |
| (b) | Non-income producing security. |
| (c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Institutional Class | | | $ | 40,649 | | | | $ | 7,830,639 | | | | $ | (7,312,040 | ) | | | $ | - | | | | $ | - | | | | $ | 559,248 | | | | $ | 1,292 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 47,383 | | | | | 5,593,313 | | | | | (5,296,544 | ) | | | | (18 | ) | | | | (275 | ) | | | | 343,859 | | | | | 1,378 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 46,456 | | | | | 8,949,302 | | | | | (8,356,618 | ) | | | | - | | | | | - | | | | | 639,140 | | | | | 1,390 | |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 2,958,742 | | | | | (2,228,237 | ) | | | | - | | | | | - | | | | | 730,505 | | | | | 32* | |
| | | | | | | |
Invesco Private Prime Fund | | | | - | | | | | 4,393,070 | | | | | (3,297,312 | ) | | | | - | | | | | - | | | | | 1,095,758 | | | | | 220* | |
| | | | | | | |
Total | | | $ | 134,488 | | | | $ | 29,725,066 | | | | $ | (26,490,751 | ) | | | $ | (18 | ) | | | $ | (275 | ) | | | $ | 3,368,510 | | | | $ | 4,312 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $59,879,940)* | | $ | 67,527,564 | |
|
| |
Investments in affiliated money market funds, at value (Cost $3,368,527) | | | 3,368,510 | |
|
| |
Foreign currencies, at value (Cost $78,346) | | | 78,902 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 740 | |
|
| |
Dividends | | | 91,273 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 49,937 | |
|
| |
Total assets | | | 71,116,926 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 349,131 | |
|
| |
Amount due custodian | | | 41,171 | |
|
| |
Collateral upon return of securities loaned | | | 1,826,263 | |
|
| |
Accrued fees to affiliates | | | 32,873 | |
|
| |
Accrued other operating expenses | | | 51,185 | |
|
| |
Trustee deferred compensation and retirement plans | | | 52,873 | |
|
| |
Total liabilities | | | 2,353,496 | |
|
| |
Net assets applicable to shares outstanding | | $ | 68,763,430 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 48,549,818 | |
|
| |
Distributable earnings | | | 20,213,612 | |
|
| |
| | $ | 68,763,430 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 58,138,655 | |
|
| |
Series II | | $ | 10,624,775 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 5,059,714 | |
|
| |
Series II | | | 923,953 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 11.49 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 11.50 | |
|
| |
| * | At December 31, 2020, securities with an aggregate value of $1,767,115 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $62,374) | | $ | 1,330,982 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $301) | | | 4,361 | |
|
| |
Total investment income | | | 1,335,343 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 416,956 | |
|
| |
Administrative services fees | | | 102,127 | |
|
| |
Custodian fees | | | 15,832 | |
|
| |
Distribution fees - Series II | | | 23,936 | |
|
| |
Transfer agent fees | | | 11,302 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 20,616 | |
|
| |
Reports to shareholders | | | 7,450 | |
|
| |
Professional services fees | | | 45,204 | |
|
| |
Other | | | 1,117 | |
|
| |
Total expenses | | | 644,540 | |
|
| |
Less: Fees waived | | | (1,242 | ) |
|
| |
Net expenses | | | 643,298 | |
|
| |
Net investment income | | | 692,045 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 13,224,426 | |
|
| |
Affiliated investment securities | | | (275 | ) |
|
| |
Foreign currencies | | | 6,383 | |
|
| |
Forward foreign currency contracts | | | (13,546 | ) |
|
| |
| | | 13,216,988 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (6,488,602 | ) |
|
| |
Affiliated investment securities | | | (18 | ) |
|
| |
Foreign currencies | | | 1,435 | |
|
| |
Forward foreign currency contracts | | | (6,462 | ) |
|
| |
| | | (6,493,647 | ) |
|
| |
Net realized and unrealized gain | | | 6,723,341 | |
|
| |
Net increase in net assets resulting from operations | | $ | 7,415,386 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 692,045 | | | $ | 1,029,421 | |
|
| |
Net realized gain (loss) | | | 13,216,988 | | | | (1,299,675 | ) |
|
| |
Change in net unrealized appreciation (depreciation) | | | (6,493,647 | ) | | | 15,575,782 | |
|
| |
Net increase in net assets resulting from operations | | | 7,415,386 | | | | 15,305,528 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (704,199 | ) | | | (4,858,170 | ) |
|
| |
Series II | | | (103,806 | ) | | | (849,972 | ) |
|
| |
Total distributions from distributable earnings | | | (808,005 | ) | | | (5,708,142 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (7,426,489 | ) | | | (2,943,770 | ) |
|
| |
Series II | | | (1,056,266 | ) | | | (484,443 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (8,482,755 | ) | | | (3,428,213 | ) |
|
| |
Net increase (decrease) in net assets | | | (1,875,374 | ) | | | 6,169,173 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 70,638,804 | | | �� | 64,469,631 | |
|
| |
End of year | | $ | 68,763,430 | | | $ | 70,638,804 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 10.28 | | | | $ | 0.11 | | | | $ | 1.24 | | | | $ | 1.35 | | | | $ | (0.14 | ) | | | $ | - | | | | $ | (0.14 | ) | | | $ | 11.49 | | | | | 13.23 | % | | | $ | 58,139 | | | | | 1.00 | %(d) | | | | 1.00 | %(d) | | | | 1.14 | %(d) | | | | 127 | % |
Year ended 12/31/19 | | | | 8.99 | | | | | 0.15 | | | | | 2.03 | | | | | 2.18 | | | | | (0.15 | ) | | | | (0.74 | ) | | | | (0.89 | ) | | | | 10.28 | | | | | 25.20 | | | | | 60,078 | | | | | 1.01 | | | | | 1.01 | | | | | 1.54 | | | | | 24 | |
Year ended 12/31/18 | | | | 10.73 | | | | | 0.13 | | | | | (1.76 | ) | | | | (1.63 | ) | | | | (0.11 | ) | | | | - | | | | | (0.11 | ) | | | | 8.99 | | | | | (15.32 | ) | | | | 54,854 | | | | | 1.02 | | | | | 1.02 | | | | | 1.19 | | | | | 26 | |
Year ended 12/31/17 | | | | 8.83 | | | | | 0.09 | | | | | 1.93 | | | | | 2.02 | | | | | (0.12 | ) | | | | - | | | | | (0.12 | ) | | | | 10.73 | | | | | 22.90 | | | | | 73,716 | | | | | 1.04 | | | | | 1.04 | | | | | 0.95 | | | | | 69 | |
Year ended 12/31/16 | | | | 8.35 | | | | | 0.10 | | | | | 0.47 | | | | | 0.57 | | | | | (0.09 | ) | | | | - | | | | | (0.09 | ) | | | | 8.83 | | | | | 6.81 | | | | | 62,130 | | | | | 1.05 | | | | | 1.05 | | | | | 1.14 | | | | | 47 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 10.28 | | | | | 0.09 | | | | | 1.24 | | | | | 1.33 | | | | | (0.11 | ) | | | | - | | | | | (0.11 | ) | | | | 11.50 | | | | | 13.03 | | | | | 10,625 | | | | | 1.25 | (d) | | | | 1.25 | (d) | | | | 0.89 | (d) | | | | 127 | |
Year ended 12/31/19 | | | | 8.99 | | | | | 0.13 | | | | | 2.02 | | | | | 2.15 | | | | | (0.12 | ) | | | | (0.74 | ) | | | | (0.86 | ) | | | | 10.28 | | | | | 24.82 | | | | | 10,561 | | | | | 1.26 | | | | | 1.26 | | | | | 1.29 | | | | | 24 | |
Year ended 12/31/18 | | | | 10.73 | | | | | 0.10 | | | | | (1.75 | ) | | | | (1.65 | ) | | | | (0.09 | ) | | | | - | | | | | (0.09 | ) | | | | 8.99 | | | | | (15.54 | ) | | | | 9,616 | | | | | 1.27 | | | | | 1.27 | | | | | 0.94 | | | | | 26 | |
Year ended 12/31/17 | | | | 8.83 | | | | | 0.07 | | | | | 1.92 | | | | | 1.99 | | | | | (0.09 | ) | | | | - | | | | | (0.09 | ) | | | | 10.73 | | | | | 22.60 | | | | | 13,043 | | | | | 1.29 | | | | | 1.29 | | | | | 0.70 | | | | | 69 | |
Year ended 12/31/16 | | | | 8.35 | | | | | 0.07 | | | | | 0.47 | | | | | 0.54 | | | | | (0.06 | ) | | | | - | | | | | (0.06 | ) | | | | 8.83 | | | | | 6.50 | | | | | 12,302 | | | | | 1.30 | | | | | 1.30 | | | | | 0.89 | | | | | 47 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $52,658 and $9,574 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Global Core Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term capital appreciation by investing primarily in equity securities of issuers throughout the world, including U.S. issuers.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco V.I. Global Core Equity Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
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| Invesco V.I. Global Core Equity Fund |
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| L. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $1 billion | | | 0.670% | |
| |
Next $500 million | | | 0.645% | |
| |
Next $1 billion | | | 0.620% | |
| |
Next $1 billion | | | 0.595% | |
| |
Next $1 billion | | | 0.570% | |
| |
Over $4.5 billion | | | 0.545% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.67%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $1,242.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $8,842 for accounting and fund administrative services and was reimbursed $93,285 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $303 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
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| Invesco V.I. Global Core Equity Fund |
| Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Belgium | | $ | 1,785,012 | | | $ | – | | | $ | – | | | $ | 1,785,012 | |
| |
Canada | | | 2,141,708 | | | | – | | | | 4,057 | | | | 2,145,765 | |
| |
China | | | 2,528,844 | | | | 1,894,653 | | | | – | | | | 4,423,497 | |
| |
France | | | – | | | | 1,705,157 | | | | – | | | | 1,705,157 | |
| |
Germany | | | – | | | | 8,784,794 | | | | – | | | | 8,784,794 | |
| |
Hong Kong | | | – | | | | 2,143,274 | | | | – | | | | 2,143,274 | |
| |
Switzerland | | | 10,462 | | | | 5,485,377 | | | | – | | | | 5,495,839 | |
| |
United Kingdom | | | 1,748,958 | | | | 3,126,432 | | | | – | | | | 4,875,390 | |
| |
United States | | | 36,168,836 | | | | – | | | | – | | | | 36,168,836 | |
| |
Money Market Funds | | | 1,542,247 | | | | 1,826,263 | | | | – | | | | 3,368,510 | |
| |
Total Investments | | $ | 45,926,067 | | | $ | 24,965,950 | | | $ | 4,057 | | | $ | 70,896,074 | |
| |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | |
| | | Location of Gain (Loss) on
Statement of Operations |
| | | Currency Risk |
Realized Gain (Loss): | | | | | |
Forward foreign currency contracts | | | $ | (13,546 | ) |
Change in Net Unrealized Appreciation (Depreciation): | | | | | |
Forward foreign currency contracts | | | | (6,462 | ) |
Total | | | $ | (20,008 | ) |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | |
| | | Forward
Foreign Currency
Contracts |
Average notional value | | | $ | 1,880,667 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate
|
| Invesco V.I. Global Core Equity Fund |
by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | |
| | |
| | | 2020 | | 2019 |
|
Ordinary income* | | $808,005 | | $1,865,502 |
|
Long-term capital gain | | – | | 3,842,640 |
|
|
Total distributions | | $808,005 | | $5,708,142 |
|
|
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 3,615,458 | |
| |
Undistributed long-term capital gain | | | 8,988,160 | |
| |
Net unrealized appreciation – investments | | | 7,643,909 | |
| |
Net unrealized appreciation – foreign currencies | | | 1,992 | |
| |
Temporary book/tax differences | | | (35,907 | ) |
| |
Shares of beneficial interest | | | 48,549,818 | |
|
| |
Total net assets | | $ | 68,763,430 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $77,831,344 and $87,494,314, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 8,959,888 | |
| |
Aggregate unrealized (depreciation) of investments | | | (1,315,979 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 7,643,909 | |
|
| |
Cost of investments for tax purposes is $63,252,165.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2020, undistributed net investment income was increased by $6,383 and undistributed net realized gain was decreased by $6,383. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 130,346 | | | $ | 1,243,563 | | | | 173,169 | | | $ | 1,705,731 | |
| |
Series II | | | 22,355 | | | | 207,894 | | | | 12,211 | | | | 120,875 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 67,388 | | | | 704,199 | | | | 517,929 | | | | 4,858,170 | |
| |
Series II | | | 9,908 | | | | 103,806 | | | | 90,378 | | | | 848,653 | |
|
| |
|
| Invesco V.I. Global Core Equity Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (984,491 | ) | | $ | (9,374,251 | ) | | | (948,455 | ) | | $ | (9,507,671 | ) |
|
| |
Series II | | | (135,324 | ) | | | (1,367,966 | ) | | | (145,366 | ) | | | (1,453,971 | ) |
|
| |
Net increase (decrease) in share activity | | | (889,818 | ) | | $ | (8,482,755 | ) | | | (300,134 | ) | | $ | (3,428,213 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 85% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
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| Invesco V.I. Global Core Equity Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Core Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Global Core Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco V.I. Global Core Equity Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,246.20 | | $5.70 | | $1,020.06 | | $5.13 | | 1.01% |
Series II | | 1,000.00 | | 1,245.40 | | 7.11 | | 1,018.80 | | 6.39 | | 1.26 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
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| Invesco V.I. Global Core Equity Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | |
|
|
|
Long-Term Capital Gain Distributions | | $ | 0.00 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 45.58 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
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| Invesco V.I. Global Core Equity Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
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| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Global Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. Global Core Equity Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Global Real Estate Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIGRE-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Global Real Estate Fund (the Fund) underperformed the Custom Invesco Global Real Estate Index, the Fund’s style-specific benchmark. Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| Series I Shares | | | -12.32 | % |
| Series II Shares | | | -12.56 | |
| MSCI World Indexq (Broad Market Index) | | | 15.90 | |
| Custom Invesco Global Real Estate Index∎ (Style-Specific Index) | | | -9.95 | |
| Lipper VUF Real Estate Funds Classification Average◆ (Peer Group) | | | -5.40 | |
|
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ◆Lipper Inc. | |
Market conditions and your Fund
The year ended with positive sentiment gripping markets and the prospect of a widespread economic recovery in 2021. The surprisingly constructive announcements for therapeutic treatment and vaccine efficacy ushered in a persistent market rally and a swift reversal in the characteristics driving relative share price performance. As a result of this substantial change in outlook, the market experienced one of the most pronounced short-term inflections from structural growth into value-oriented stocks. Globally, governments appear committed to accommodative monetary policy and further fiscal stimulus in order to promote economic normalization. At the close of the year, US economic data continued to trend somewhat positively, with the unemployment rate edging lower. The vaccine efficacy news has provided a significant boost to risk appetite and US economic growth prospects for 2021. US Treasury yields and inflation expectations have risen as a result. In Asia, economic growth continued to improve, although many countries began to experience a resurgence in COVID-19 infections and have placed new restrictions on social movements and gatherings. In Europe, equity markets finished the year strongly higher. Notably, the political milestone of the post-Brexit trade deal between the UK and EU was agreed to and the sterling rallied on the news as major trading disruptions will be avoided. Nevertheless, most key economies across the region are likely to remain impeded by governmental virus responses through the spring months.
Global listed real estate delivered negative returns in 2020 and substantially underperformed broader equities as uncertainty around the short and long-term implications of the global health pandemic on real estate assets muted investors’ risk appetite. Performance was most negatively impacted by government coordinated virus related lockdowns and policies that existed on a global scale. As a result, certain real estate property types experienced lower rents and occupancy declines which led to dividend cuts or reductions
in growth pipelines. In the first half of the year, the largest price declines were felt in property types and individual companies most significantly impaired by COVID-19 such as lodging, retail, and office real estate investment trusts (REITs). Conversely, price performance in property types with more defensive characteristics or more visible cash flow growth such as industrial, data centers and infrastructure outperformed. This dynamic reversed course after the vaccine announcements were made in November leading to a strong inflection in investors’ preference for defensive stocks to value-oriented stocks. Global listed real estate is poised to benefit both from improved economic prospects and enhanced capital market conditions, which helped deliver very strong returns during the final quarter of the year. Confirmation of effective vaccines have increased confidence that REIT fundamentals will recover in 2021 alongside the overall economy. We believe property types with structural tailwinds will continue to see fundamental growth, however, there is now an improving prospect for robust recovery for sectors most impacted by COVID restrictions, including lodging/resorts, retail, and health care REITs.
Overall, the Fund underperformed its style-specific benchmark, the Custom Invesco Global Real Estate Index, during a year of negative performance. Key relative detractors included security selection in the US, an overweight allocation to Spain, and an underweight allocation to Sweden. In contrast, relative contributors existed in the Asia Pacific region with countries such as Hong Kong, Japan, China and Australia benefiting from strong security selection.
Top contributors to the Fund’s absolute performance during the year came from the residential sector and included Vonovia, a German residential property owner with a stable income profile and ample growth opportunities. A number of diversified REITs also did well over the year, including Hang Lung Properties and Longfor Group Holdings.
Top detractors from the Fund’s absolute performance during the year included holdings in the lodging sector such as Pebble-brook Hotel Trust and Park Hotels and Resorts as the lodging sector suffered from COVID-19 related travel bans. Top detractors from absolute performance also included Boston Properties in the office sector, which was negatively impacted from a decrease in tenant demand due to work from home policies. We liquidated our holdings in Pebble-brook Hotel Trust and Park Hotels and Resorts prior to the end of the year.
At the end of the year, the Fund held a slight overweight exposure to the North American region versus the style-specific benchmark. In the US, the Fund holds overweight exposure to certain property types that were fundamentally impacted by COVID-19, which we believe should see a recovery and opportunity for rerating during the early phase of economic expansion (e.g. lodging, shopping centers). This exposure is balanced with companies that own long term structural growth characteristics (e.g. towers).
In the Asia Pacific region, the Fund ended the year with modest underweight exposure focused on company-specific growth opportunities and local relative value opportunities. Overweight exposure exists in Hong Kong and underweight exposure to Singapore. Japan and Australia are neutral weight. Sector positioning in the region includes overweight exposure to structural growth via industrial and data center sectors, as well as medium-term cyclical recovery via developers and office/ retail REITs.
At the close of the year, the Fund held an underweight exposure to the European region. Key active positioning exists in underweight exposure to retail focused REITs and overweight exposure to residential real estate. Switzerland and the UK are also underweights as the UK remains domestically challenged as virus cases continue to severely impact the economy. Material country overweight exposure in Continental Europe is focused on Germany, where apartment rental exposure dominates.
The Fund also ended the year with an overweight exposure to emerging markets. Notable positioning resides in overweight exposure to development/homebuilders in the Philippines, India and Indonesia, while key active underweight exposure is in highly leveraged Chinese homebuilders and Mexican retail.
We thank you for your continued investment in the Invesco V.I. Global Real Estate Fund.
Portfolio manager(s):
Mark Blackburn
James Cowen (Co-Lead)
Paul Curbo (Co-Lead)
Grant Jackson
Joe Rodriguez, Jr. (Co-Lead)
Darin Turner
Ping-Ying Wang (Co-Lead)
Invesco V.I. Global Real Estate Fund
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Global Real Estate Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
3 Sources: Invesco, RIMES Technologies Corp.
Past performance cannot guarantee future
results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (3/31/98) | | | 6.98 | % |
10 Years | | | 4.96 | |
5 Years | | | 3.15 | |
1 Year | | | -12.32 | |
| |
Series II Shares | | | | |
Inception (4/30/04) | | | 6.55 | % |
10 Years | | | 4.69 | |
5 Years | | | 2.89 | |
1 Year | | | -12.56 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Global Real Estate Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot
purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Global Real Estate Fund
Supplemental Information
Invesco V.I. Global Real Estate Fund’s investment objective is total return through growth of capital and current income.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | The Custom Invesco Global Real Estate Index is composed of the FTSE EPRA/ NAREIT Developed Index (gross) from fund inception through February 17, 2005; the FTSE EPRA/NAREIT Developed Index (net) from February 18, 2005, through June 30, 2014; and the FTSE/ EPRA NAREIT Global Index (net) thereafter. The FTSE EPRA/NAREIT Developed index is considered representative of global real estate companies and REITs. The FTSE EPRA/NAREIT Global Index is designed to track the performance of listed real estate companies and REITS in developed and emerging markets. The net version of indexes is computed using the net return, which withholds taxes for non-resident investors. |
| ∎ | The Lipper VUF Real Estate Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Real Estate Funds classification. |
| ∎ | 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. |
Invesco V.I. Global Real Estate Fund
Fund Information
| | |
Portfolio Composition |
By country | | % of total net assets |
| |
| United States | | 47.73% |
|
| Japan | | 10.59 |
|
| Germany | | 6.53 |
|
| China | | 6.16 |
|
| Hong Kong | | 5.91 |
|
| United Kingdom | | 4.18 |
|
| Australia | | 3.10 |
|
| Canada | | 2.82 |
|
| Singapore | | 2.79 |
|
| Countries, each less than 2% of portfolio | | 9.01 |
|
Money Market Funds Plus Other Assets Less Liabilities | | 1.18 |
|
| | |
Top 10 Equity Holdings* | | |
| % of total net assets |
|
| |
1. Vonovia SE | | 4.67% |
|
2. UDR, Inc. | | 3.11 |
|
3. AvalonBay Communities, Inc. | | 2.89 |
|
4. Prologis, Inc. | | 2.82 |
|
5. Invitation Homes, Inc. | | 2.35 |
|
6. CyrusOne, Inc. | | 1.85 |
|
7. Boston Properties, Inc. | | 1.83 |
|
8. Welltower, Inc. | | 1.75 |
|
9. Rexford Industrial Realty, Inc. | | 1.69 |
|
10. Mitsui Fudosan Co. Ltd. | | 1.67 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. Global Real Estate Fund
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–98.82% | |
Australia–3.10% | | | | | | | | |
Dexus | | | 244,139 | | | $ | 1,778,733 | |
Goodman Group | | | 81,517 | | | | 1,189,111 | |
GPT Group (The) | | | 191,500 | | | | 664,956 | |
Mirvac Group | | | 564,251 | | | | 1,149,663 | |
| | | | | | | | 4,782,463 | |
| | |
Belgium–1.06% | | | | | | | | |
Cofinimmo S.A. | | | 6,839 | | | | 1,018,062 | |
Montea C.V.A | | | 5,393 | | | | 613,724 | |
| | | | | | | | 1,631,786 | |
| | |
Brazil–0.54% | | | | | | | | |
BR Malls Participacoes S.A. | | | 208,200 | | | | 400,043 | |
Iguatemi Empresa de Shopping Centers S.A. | | | 23,900 | | | | 171,854 | |
Multiplan Empreendimentos Imobiliarios S.A. | | | 56,100 | | | | 255,609 | |
| | | | | | | | 827,506 | |
| |
Canada–2.82% | | | | | |
Allied Properties REIT | | | 69,372 | | | | 2,061,704 | |
Canadian Apartment Properties REIT | | | 26,406 | | | | 1,037,030 | |
Killam Apartment REIT | | | 57,971 | | | | 779,232 | |
Summit Industrial Income REIT | | | 43,861 | | | | 470,345 | |
| | | | | | | | 4,348,311 | |
| | |
China–6.16% | | | | | | | | |
Agile Group Holdings Ltd. | | | 490,000 | | | | 653,745 | |
China Aoyuan Group Ltd. | | | 358,000 | | | | 348,410 | |
China Overseas Land & Investment Ltd. | | | 537,500 | | | | 1,169,255 | |
China Resources Land Ltd. | | | 334,444 | | | | 1,385,774 | |
China Vanke Co. Ltd., H Shares | | | 439,300 | | | | 1,518,966 | |
CIFI Holdings Group Co. Ltd. | | | 328,000 | | | | 278,127 | |
Country Garden Holdings Co. Ltd. | | | 710,000 | | | | 982,422 | |
ESR Cayman Ltd.(a)(b) | | | 114,200 | | | | 410,440 | |
KWG Group Holdings Ltd. | | | 180,000 | | | | 246,701 | |
Longfor Group Holdings Ltd.(a) | | | 158,000 | | | | 927,937 | |
Shimao Group Holdings Ltd. | | | 492,500 | | | | 1,574,561 | |
| | | | | | | | 9,496,338 | |
| | |
France–1.30% | | | | | | | | |
Gecina S.A. | | | 13,008 | | | | 2,008,667 | |
| | |
Germany–6.53% | | | | | | | | |
Deutsche Wohnen SE | | | 23,675 | | | | 1,263,840 | |
Grand City Properties S.A. | | | 62,853 | | | | 1,609,544 | |
Vonovia SE | | | 98,727 | | | | 7,199,370 | |
| | | | | | | | 10,072,754 | |
| | |
Hong Kong–5.91% | | | | | | | | |
CK Asset Holdings Ltd. | | | 318,500 | | | | 1,638,233 | |
Hang Lung Properties Ltd. | | | 344,000 | | | | 910,465 | |
Kerry Properties Ltd. | | | 358,500 | | | | 908,575 | |
New World Development Co. Ltd. | | | 262,000 | | | | 1,220,713 | |
Sun Hung Kai Properties Ltd. | | | 66,000 | | | | 852,078 | |
Swire Properties Ltd. | | | 555,600 | | | | 1,619,097 | |
| | | | | | | | |
| | | Shares | | | Value | |
Hong Kong–(continued) | | | | | | | | |
Wharf Real Estate Investment Co. Ltd. | | | 377,000 | | | $ | 1,965,720 | |
| | | | | | | | 9,114,881 | |
| | |
India–0.43% | | | | | | | | |
DLF Ltd. | | | 209,278 | | | | 668,834 | |
| | |
Indonesia–0.26% | | | | | | | | |
PT Pakuwon Jati Tbk(b) | | | 10,821,800 | | | | 392,863 | |
| | |
Italy–0.52% | | | | | | | | |
Infrastrutture Wireless Italiane S.p.A.(a) | | | 66,516 | | | | 806,312 | |
| | |
Japan–10.59% | | | | | | | | |
Activia Properties, Inc. | | | 247 | | | | 1,042,668 | |
Daiwa Office Investment Corp. | | | 51 | | | | 324,066 | |
GLP J-REIT | | | 671 | | | | 1,058,053 | |
Industrial & Infrastructure Fund Investment Corp. | | | 195 | | | | 360,019 | |
Japan Hotel REIT Investment Corp. | | | 1,719 | | | | 886,589 | |
Japan Prime Realty Investment Corp. | | | 249 | | | | 826,816 | |
Japan Retail Fund Investment Corp. | | | 662 | | | | 1,207,259 | |
Kenedix Office Investment Corp. | | | 47 | | | | 319,458 | |
LaSalle Logiport REIT | | | 652 | | | | 1,050,588 | |
Mitsui Fudosan Co. Ltd. | | | 122,458 | | | | 2,581,155 | |
Mitsui Fudosan Logistics Park, Inc. | | | 235 | | | | 1,190,433 | |
Nippon Prologis REIT, Inc. | | | 136 | | | | 424,558 | |
Nomura Real Estate Master Fund, Inc. | | | 393 | | | | 562,308 | |
ORIX JREIT, Inc. | | | 937 | | | | 1,549,168 | |
Sumitomo Realty & Development Co. Ltd. | | | 52,589 | | | | 1,624,923 | |
Tokyu Fudosan Holdings Corp. | | | 247,500 | | | | 1,322,781 | |
| | | | | | | | 16,330,842 | |
| | |
Malta–0.00% | | | | | | | | |
BGP Holdings PLC, (Acquired 08/06/2009; Cost $0)(a)(b)(c) | | | 1,355,927 | | | | 2 | |
| | |
Mexico–0.39% | | | | | | | | |
Macquarie Mexico Real Estate Management S.A. de C.V.(a) | | | 427,100 | | | | 604,394 | |
| | |
Philippines–1.33% | | | | | | | | |
Ayala Land, Inc. | | | 1,984,230 | | | | 1,689,944 | |
Megaworld Corp. | | | 4,253,300 | | | | 361,509 | |
| | | | | | | | 2,051,453 | |
| | |
Singapore–2.79% | | | | | | | | |
Ascendas India Trust | | | 642,400 | | | | 670,550 | |
City Developments Ltd. | | | 247,300 | | | | 1,492,257 | |
Keppel DC REIT | | | 330,400 | | | | 703,313 | |
Mapletree Commercial Trust | | | 269,400 | | | | 433,641 | |
Mapletree Industrial Trust | | | 458,400 | | | | 1,003,050 | |
| | | | | | | | 4,302,811 | |
| | |
South Africa–0.29% | | | | | | | | |
Growthpoint Properties Ltd. | | | 523,347 | | | | 448,198 | |
| | |
Spain–0.89% | | | | | | | | |
Merlin Properties SOCIMI S.A. | | | 144,435 | | | | 1,373,556 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
| | | | | | | | |
| | | Shares | | | Value | |
Sweden–1.62% | | | | | | | | |
Fabege AB | | | 58,790 | | | $ | 923,772 | |
Wihlborgs Fastigheter AB | | | 69,789 | | | | 1,575,833 | |
| | | | | | | | 2,499,605 | |
| | |
Thailand–0.38% | | | | | | | | |
WHA Corp. PCL, Foreign Shares | | | 5,731,300 | | | | 577,558 | |
| | |
United Kingdom–4.18% | | | | | | | | |
Assura PLC | | | 905,279 | | | | 951,181 | |
GCP Student Living PLC | | | 234,377 | | | | 456,122 | |
Land Securities Group PLC | | | 213,776 | | | | 1,971,747 | |
Segro PLC | | | 59,445 | | | | 770,667 | |
Tritax Big Box REIT PLC | | | 785,043 | | | | 1,803,067 | |
Workspace Group PLC | | | 46,988 | | | | 494,051 | |
| | | | | | | | 6,446,835 | |
| | |
United States–47.73% | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | 13,892 | | | | 2,475,832 | |
American Tower Corp. | | | 9,393 | | | | 2,108,353 | |
Apple Hospitality REIT, Inc. | | | 111,347 | | | | 1,437,490 | |
AvalonBay Communities, Inc. | | | 27,802 | | | | 4,460,275 | |
Boston Properties, Inc. | | | 29,834 | | | | 2,820,208 | |
Brandywine Realty Trust | | | 92,754 | | | | 1,104,700 | |
Brixmor Property Group, Inc. | | | 115,506 | | | | 1,911,624 | |
Columbia Property Trust, Inc. | | | 65,459 | | | | 938,682 | |
CubeSmart | | | 26,858 | | | | 902,697 | |
CyrusOne, Inc. | | | 38,946 | | | | 2,848,900 | |
DiamondRock Hospitality Co. | | | 172,215 | | | | 1,420,774 | |
Digital Realty Trust, Inc. | | | 8,360 | | | | 1,166,304 | |
Duke Realty Corp. | | | 63,412 | | | | 2,534,578 | |
Equity LifeStyle Properties, Inc. | | | 8,202 | | | | 519,679 | |
Essential Properties Realty Trust, Inc. | | | 42,745 | | | | 906,194 | |
Extra Space Storage, Inc. | | | 21,170 | | | | 2,452,756 | |
First Industrial Realty Trust, Inc. | | | 35,186 | | | | 1,482,386 | |
Gaming and Leisure Properties, Inc. | | | 607 | | | | 25,737 | |
Highwoods Properties, Inc. | | | 19,911 | | | | 789,073 | |
Hilton Worldwide Holdings, Inc. | | | 8,633 | | | | 960,508 | |
Host Hotels & Resorts, Inc. | | | 80,421 | | | | 1,176,559 | |
Invitation Homes, Inc. | | | 122,286 | | | | 3,631,894 | |
JBG SMITH Properties | | | 25,558 | | | | 799,199 | |
| | | | | | | | |
| | | Shares | | | Value | |
United States–(continued) | | | | | | | | |
Kilroy Realty Corp. | | | 12,564 | | | $ | 721,174 | |
Marriott International, Inc., Class A | | | 7,611 | | | | 1,004,043 | |
NETSTREIT Corp. | | | 18,289 | | | | 356,453 | |
Prologis, Inc. | | | 43,597 | | | | 4,344,877 | |
QTS Realty Trust, Inc., Class A | | | 25,241 | | | | 1,561,913 | |
Realty Income Corp. | | | 17,866 | | | | 1,110,729 | |
Regency Centers Corp. | | | 26,105 | | | | 1,190,127 | |
Retail Opportunity Investments Corp. | | | 94,420 | | | | 1,264,284 | |
Rexford Industrial Realty, Inc. | | | 52,963 | | | | 2,601,013 | |
RLJ Lodging Trust | | | 82,450 | | | | 1,166,667 | |
SBA Communications Corp., Class A | | | 7,711 | | | | 2,175,504 | |
SITE Centers Corp. | | | 70,271 | | | | 711,142 | |
Sun Communities, Inc. | | | 9,990 | | | | 1,517,980 | |
Sunstone Hotel Investors, Inc. | | | 97,036 | | | | 1,099,418 | |
UDR, Inc. | | | 124,929 | | | | 4,801,021 | |
Urban Edge Properties | | | 67,050 | | | | 867,627 | |
Ventas, Inc. | | | 37,981 | | | | 1,862,588 | |
VICI Properties, Inc. | | | 24,586 | | | | 626,943 | |
Vornado Realty Trust | | | 25,878 | | | | 966,284 | |
Welltower, Inc. | | | 41,788 | | | | 2,700,341 | |
Weyerhaeuser Co. | | | 37,817 | | | | 1,268,004 | |
Xenia Hotels & Resorts, Inc. | | | 53,813 | | | | 817,958 | |
| | | | | | | | 73,610,492 | |
Total Common Stocks & Other Equity Interests (Cost $139,030,354) | | | | 152,396,461 | |
|
Money Market Funds–1.50% | |
Invesco Government &Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 801,050 | | | | 801,050 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 598,012 | | | | 598,192 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 915,486 | | | | 915,486 | |
Total Money Market Funds (Cost $2,314,769) | | | | | | | 2,314,728 | |
TOTAL INVESTMENTS IN SECURITIES–100.32% (Cost $141,345,123) | | | | 154,711,189 | |
OTHER ASSETS LESS LIABILITIES–(0.32)% | | | | (486,241 | ) |
NET ASSETS–100.00% | | | | | | $ | 154,224,948 | |
Investment Abbreviations:
REIT - Real Estate Investment Trust
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
Notes to Schedule of Investments:
| (a) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $2,749,085, which represented 1.78% of the Fund’s Net Assets. |
| (b) | Non-income producing security. |
| (c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases at
Cost | | | Proceeds from
Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain | | | Value
December 31, 2020 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 857,646 | | | | $14,672,778 | | | | $(14,729,374) | | | | $ - | | | | $ - | | | | $ 801,050 | | | | $2,468 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 618,970 | | | | 10,527,857 | | | | (10,549,128) | | | | (31) | | | | 524 | | | | 598,192 | | | | 2,594 | |
Invesco Treasury Portfolio, Institutional Class | | | 980,167 | | | | 16,768,889 | | | | (16,833,570) | | | | - | | | | - | | | | 915,486 | | | | 2,654 | |
Total | | | $2,456,783 | | | | $41,969,524 | | | | $(42,112,072) | | | | $(31) | | | | $524 | | | | $2,314,728 | | | | $7,716 | |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
Open Forward Foreign Currency Contracts
| | | | | | | | | | |
| | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | Appreciation | |
| Date | | Counterparty | | Deliver | | Receive | | (Depreciation) | |
Currency Risk | | | | | | | | | | |
01/04/2021 | | State Street Bank & Trust Co. | | PHP 197,071 | | USD 4,094 | | | $(10) | |
Abbreviations:
PHP – Philippines Peso
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $139,030,354) | | $ | 152,396,461 | |
Investments in affiliated money market funds, at value (Cost $2,314,769) | | | 2,314,728 | |
Foreign currencies, at value (Cost $220,235) | | | 221,606 | |
Receivable for: | | | | |
Investments sold | | | 52,001 | |
Fund shares sold | | | 64,714 | |
Dividends | | | 490,206 | |
Investment for trustee deferred compensation and retirement plans | | | 80,155 | |
Total assets | | | 155,619,871 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 10 | |
Payable for: | | | | |
Investments purchased | | | 880,044 | |
Fund shares reacquired | | | 104,607 | |
Amount due custodian | | | 91,098 | |
Accrued foreign taxes | | | 34,678 | |
Accrued fees to affiliates | | | 69,968 | |
Accrued other operating expenses | | | 126,315 | |
Trustee deferred compensation and retirement plans | | | 88,203 | |
Total liabilities | | | 1,394,923 | |
Net assets applicable to shares outstanding | | $ | 154,224,948 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 159,998,292 | |
Distributable earnings (loss) | | | (5,773,344 | ) |
| | | $ | 154,224,948 | |
| |
Net Assets: | | | | |
Series I | | $ | 119,113,825 | |
Series II | | $ | 35,111,123 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,110,925 | |
Series II | | | 2,450,182 | |
Series I: | | | | |
Net asset value per share | | $ | 14.69 | |
Series II: | | | | |
Net asset value per share | | $ | 14.33 | |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $193,076) | | $ | 4,280,820 | |
Dividends from affiliated money market funds | | | 7,716 | |
Total investment income | | | 4,288,536 | |
| |
Expenses: | | | | |
Advisory fees | | | 1,109,042 | |
Administrative services fees | | | 243,538 | |
Custodian fees | | | 79,285 | |
Distribution fees - Series II | | | 70,918 | |
Transfer agent fees | | | 33,622 | |
Trustees’ and officers’ fees and benefits | | | 22,141 | |
Reports to shareholders | | | 6,396 | |
Professional services fees | | | 45,336 | |
Other | | | (7,211 | ) |
Total expenses | | | 1,603,067 | |
Less: Fees waived | | | (1,814 | ) |
Net expenses | | | 1,601,253 | |
Net investment income | | | 2,687,283 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $14,639) | | | (16,802,030 | ) |
Affiliated investment securities | | | 524 | |
Foreign currencies | | | (6,815 | ) |
| | | | (16,808,321 | ) |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities (net of foreign taxes of $29,685) | | | (10,467,608 | ) |
Affiliated investment securities | | | (31 | ) |
Foreign currencies | | | 3,342 | |
Forward foreign currency contracts | | | (10 | ) |
| | | | (10,464,307 | ) |
Net realized and unrealized gain (loss) | | | (27,272,628 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (24,585,345 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | | $ 2,687,283 | | | $ | 4,028,715 | |
| |
Net realized gain (loss) | | | (16,808,321 | ) | | | 6,503,530 | |
| |
Change in net unrealized appreciation (depreciation) | | | (10,464,307 | ) | | | 25,179,767 | |
| |
Net increase (decrease) in net assets resulting from operations | | | (24,585,345 | ) | | | 35,712,012 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (9,161,706 | ) | | | (6,628,755 | ) |
| |
Series II | | | (1,846,585 | ) | | | (1,565,707 | ) |
| |
Total distributions from distributable earnings | | | (11,008,291 | ) | | | (8,194,462 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (4,013,664 | ) | | | 3,645,528 | |
| |
Series II | | | (1,655,429 | ) | | | 12,709,777 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (5,669,093 | ) | | | 16,355,305 | |
| |
Net increase (decrease) in net assets | | | (41,262,729 | ) | | | 43,872,855 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 195,487,677 | | | | 151,614,822 | |
| |
End of year | | | $154,224,948 | | | $ | 195,487,677 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net
investment
income(a) | | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | | Total from
investment
operations | | | Dividends
from net
investment
income | | | Distributions
from net
realized
gains | | | Total
distributions | | | Net asset
value, end
of period | | | Total
return (b) | | | Net assets,
end of period
(000’s omitted) | | | Ratio of
expenses
to average
net assets
with fee waivers
and/or
expenses
absorbed | | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | | Ratio of net
investment
income
to average
net assets | | | Portfolio
turnover (c) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | $ | 18.22 | | | $ | 0.28 | | | $ | (2.61 | ) | | $ | (2.33 | ) | | $ | (0.77 | ) | | $ | (0.43 | ) | | $ | (1.20 | ) | | $ | 14.69 | | | | (12.32 | )% | | $ | 119,114 | | | | 1.04 | %(d) | | | 1.04 | %(d) | | | 1.86 | %(d) | | | 154 | % |
Year ended 12/31/19 | | | 15.52 | | | | 0.39 | | | | 3.15 | | | | 3.54 | | | | (0.82 | ) | | | (0.02 | ) | | | (0.84 | ) | | | 18.22 | | | | 23.00 | | | | 150,255 | | | | 1.04 | | | | 1.04 | | | | 2.22 | | | | 61 | |
Year ended 12/31/18 | | | 17.38 | | | | 0.40 | | | | (1.41 | ) | | | (1.01 | ) | | | (0.65 | ) | | | (0.20 | ) | | | (0.85 | ) | | | 15.52 | | | | (6.10 | ) | | | 124,816 | | | | 1.01 | | | | 1.01 | | | | 2.38 | | | | 57 | |
Year ended 12/31/17 | | | 16.15 | | | | 0.45 | (e) | | | 1.62 | | | | 2.07 | | | | (0.56 | ) | | | (0.28 | ) | | | (0.84 | ) | | | 17.38 | | | | 12.98 | | | | 158,229 | | | | 1.02 | | | | 1.02 | | | | 2.63 | (e) | | | 50 | |
Year ended 12/31/16 | | | 16.36 | | | | 0.30 | | | | 0.08 | | | | 0.38 | | | | (0.27 | ) | | | (0.32 | ) | | | (0.59 | ) | | | 16.15 | | | | 2.04 | | | | 147,382 | | | | 1.05 | | | | 1.05 | | | | 1.81 | | | | 66 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 17.78 | | | | 0.24 | | | | (2.55 | ) | | | (2.31 | ) | | | (0.71 | ) | | | (0.43 | ) | | | (1.14 | ) | | | 14.33 | | | | (12.56 | ) | | | 35,111 | | | | 1.29 | (d) | | | 1.29 | (d) | | | 1.61 | (d) | | | 154 | |
Year ended 12/31/19 | | | 15.03 | | | | 0.34 | | | | 3.04 | | | | 3.38 | | | | (0.61 | ) | | | (0.02 | ) | | | (0.63 | ) | | | 17.78 | | | | 22.65 | | | | 45,233 | | | | 1.29 | | | | 1.29 | | | | 1.97 | | | | 61 | |
Year ended 12/31/18 | | | 16.86 | | | | 0.34 | | | | (1.35 | ) | | | (1.01 | ) | | | (0.62 | ) | | | (0.20 | ) | | | (0.82 | ) | | | 15.03 | | | | (6.33 | ) | | | 26,799 | | | | 1.26 | | | | 1.26 | | | | 2.13 | | | | 57 | |
Year ended 12/31/17 | | | 15.69 | | | | 0.39 | (e) | | | 1.58 | | | | 1.97 | | | | (0.52 | ) | | | (0.28 | ) | | | (0.80 | ) | | | 16.86 | | | | 12.73 | | | | 260,083 | | | | 1.27 | | | | 1.27 | | | | 2.38 | (e) | | | 50 | |
Year ended 12/31/16 | | | 15.91 | | | | 0.25 | | | | 0.08 | | | | 0.33 | | | | (0.23 | ) | | | (0.32 | ) | | | (0.55 | ) | | | 15.69 | | | | 1.82 | | | | 216,893 | | | | 1.30 | | | | 1.30 | | | | 1.56 | | | | 66 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $119,505 and $28,367 for Series I and Series II shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.38 and 2.18%, $0.32 and 1.93% for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Global Real Estate Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return through growth of capital and current income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. Global Real Estate Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| J. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| K. | Other Risks - The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly. |
Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
Invesco V.I. Global Real Estate Fund
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $ 250 million | | | 0.750% | |
| |
Next $250 million | | | 0.740% | |
| |
Next $500 million | | | 0.730% | |
| |
Next $1.5 billion | | | 0.720% | |
| |
Next $2.5 billion | | | 0.710% | |
| |
Next $2.5 billion | | | 0.700% | |
| |
Next $2.5 billion | | | 0.690% | |
| |
Over $10 billion | | | 0.680% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.75%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $1,814.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $21,830 for accounting and fund administrative services and was reimbursed $221,708 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
Invesco V.I. Global Real Estate Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Australia | | $ | – | | | $ | 4,782,463 | | | | $– | | | $ | 4,782,463 | |
| |
Belgium | | | – | | | | 1,631,786 | | | | – | | | | 1,631,786 | |
| |
Brazil | | | – | | | | 827,506 | | | | – | | | | 827,506 | |
| |
Canada | | | 4,348,311 | | | | – | | | | – | | | | 4,348,311 | |
| |
China | | | – | | | | 9,496,338 | | | | – | | | | 9,496,338 | |
| |
France | | | – | | | | 2,008,667 | | | | – | | | | 2,008,667 | |
| |
Germany | | | – | | | | 10,072,754 | | | | – | | | | 10,072,754 | |
| |
Hong Kong | | | – | | | | 9,114,881 | | | | – | | | | 9,114,881 | |
| |
India | | | – | | | | 668,834 | | | | – | | | | 668,834 | |
| |
Indonesia | | | – | | | | 392,863 | | | | – | | | | 392,863 | |
| |
Italy | | | – | | | | 806,312 | | | | – | | | | 806,312 | |
| |
Japan | | | – | | | | 16,330,842 | | | | – | | | | 16,330,842 | |
| |
Malta | | | – | | | | – | | | | 2 | | | | 2 | |
| |
Mexico | | | 604,394 | | | | – | | | | – | | | | 604,394 | |
| |
Philippines | | | – | | | | 2,051,453 | | | | – | | | | 2,051,453 | |
| |
Singapore | | | – | | | | 4,302,811 | | | | – | | | | 4,302,811 | |
| |
South Africa | | | – | | | | 448,198 | | | | – | | | | 448,198 | |
| |
Spain | | | – | | | | 1,373,556 | | | | – | | | | 1,373,556 | |
| |
Sweden | | | – | | | | 2,499,605 | | | | – | | | | 2,499,605 | |
| |
Thailand | | | – | | | | 577,558 | | | | – | | | | 577,558 | |
| |
United Kingdom | | | – | | | | 6,446,835 | | | | – | | | | 6,446,835 | |
| |
United States | | | 73,610,492 | | | | – | | | | – | | | | 73,610,492 | |
| |
| | | | |
Money Market Funds | | | 2,314,728 | | | | – | | | | – | | | | 2,314,728 | |
| |
Total Investments in Securities | | | 80,877,925 | | | | 73,833,262 | | | | 2 | | | | 154,711,189 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | – | | | | (10 | ) | | | – | | | | (10 | ) |
| |
| | | | |
Total Investments | | $ | 80,877,925 | | | $ | 73,833,252 | | | | $2 | | | $ | 154,711,179 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | | |
| Derivative Liabilities | | Currency
Risk | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | $(10) | |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Liabilities subject to master netting agreements | | | $(10) | |
| |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | Financial
Derivative
Liabilities | | | | Collateral
(Received)/Pledged | | |
| Counterparty | | Forward Foreign
Currency Contracts | | Forward Foreign
Currency Contracts | | Net Value of
Derivatives | | Non-Cash | | Cash | | Net
Amount |
State Street Bank & Trust Co. | | $- | | $(10) | | $(10) | | $- | | $- | | $(10) |
Invesco V.I. Global Real Estate Fund
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Currency
Risk | |
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Forward foreign currency contracts | | | $(10) | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward
Foreign Currency
Contracts |
|
Average notional value | | $4,104 |
|
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
| | |
Ordinary income* | | $ | 8,147,137 | | | $ | 7,977,318 | |
| |
| | |
Long-term capital gain | | | 2,861,154 | | | | 217,144 | |
| |
| | |
Total distributions | | $ | 11,008,291 | | | $ | 8,194,462 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
Undistributed ordinary income | | $ | 4,174,593 | |
| |
Net unrealized appreciation – investments | | | 9,142,786 | |
| |
Net unrealized appreciation - foreign currencies | | | 5,525 | |
| |
Temporary book/tax differences | | | (61,342 | ) |
| |
Capital loss carryforward | | | (19,034,906 | ) |
| |
Shares of beneficial interest | | | 159,998,292 | |
| |
Total net assets | | $ | 154,224,948 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and the tax treatment of passive foreign investment companies.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
Invesco V.I. Global Real Estate Fund
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | | | | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | $ | 11,106,369 | | | $ | 7,928,537 | | | $ | 19,034,906 | |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $226,807,535 and $238,761,437, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | | $12,693,173 | |
| |
Aggregate unrealized (depreciation) of investments | | | (3,550,387 | ) |
| |
Net unrealized appreciation of investments | | | $ 9,142,786 | |
| |
Cost of investments for tax purposes is $145,568,393.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2020, undistributed net investment income was increased by $2,286,947 and undistributed net realized gain (loss) was decreased by $2,286,947. This reclassification had no effect on the net assets or the distributable earnings (loss) of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,028,651 | | | $ | 29,520,192 | | | | 1,903,457 | | | $ | 33,607,781 | |
| |
Series II | | | 991,547 | | | | 14,154,043 | | | | 1,239,958 | | | | 20,535,447 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 664,373 | | | | 9,161,706 | | | | 375,567 | | | | 6,628,755 | |
| |
Series II | | | 137,191 | | | | 1,846,585 | | | | 90,818 | | | | 1,565,707 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,830,439 | ) | | | (42,695,562 | ) | | | (2,070,856 | ) | | | (36,591,008 | ) |
| |
Series II | | | (1,223,217 | ) | | | (17,656,057 | ) | | | (569,384 | ) | | | (9,391,377 | ) |
| |
Net increase (decrease) in share activity | | | (231,894 | ) | | $ | (5,669,093 | ) | | | 969,560 | | | $ | 16,355,305 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 66% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Global Real Estate Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Global Real Estate Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Global Real Estate Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Global Real Estate Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized
Expense
Ratio |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
| Series I | | $1,000.00 | | $1,107.90 | | $5.56 | | $1,019.86 | | $5.33 | | 1.05% |
| Series II | | 1,000.00 | | 1,105.70 | | 6.88 | | 1,018.60 | | 6.60 | | 1.30 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Global Real Estate Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 2,861,154 | | | | | |
Qualified Business Income (199A)* | | | 21.89 | % | | | | |
Corporate Dividend Received Deduction* | | | 0.00 | % | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Global Real Estate Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson - 1967
Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort - 1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey -1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Global Real Estate Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
Invesco V.I. Global Real Estate Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Government Money Market Fund |
| | |
| | |
The Fund provides a complete list of its holdings in various monthly and quarterly regulatory filings. The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) monthly on Form N-MFP. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. The Fund’s Form N-MFP filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-MFP, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIGMKT-AR-1 |
Management’s Discussion
| | | | | | |
| | | Fund Information | | | | |
| | This annual report for Invesco V.I. Government Money Market Fund (the Fund) covers the year ended December 31, 2020. As of December 31, 2020, the Fund’s net assets totaled $802 million. As of the same date, the Fund’s weighted average maturity was 30 days and the Fund’s weighted average life was 108 days. Weighted average maturity (WAM) is an average of the maturities of all securities held in the portfolio, weighted by each security’s percentage of net assets. The days to maturity for WAM is the lower of the stated maturity date or next interest rate reset date. WAM reflects how a portfolio would react to interest rate changes. Weighted average life (WAL) is an average of all the maturities of all securities held in the portfolio, weighted by each security’s percentage of net assets. The days to maturity for WAL is the lower of the stated maturity date or next demand feature date. WAL reflects how a portfolio would react to deteriorating credit (widening spreads) or tightening liquidity conditions. | | | | |
Market conditions affecting money market funds
After cutting rates three times in the second half of 2019, 2020 began with the federal funds target range at 1.50% to 1.75%.1 As concerns over the COVID-19 pandemic began to increase dramatically during the first quarter of 2020, the US Federal Reserve (the Fed) initially cut rates by 50 basis points, to 1.00% to 1.25% at the beginning of March.1 This was followed by the Fed decisively moving towards a zero interest rate monetary policy in the middle of the month. As of March 15, 2020, the federal funds rate target range was 0.00% to 0.25%, where it was kept for the remainder of 2020.1
The Fed cited dysfunctional short-term funding markets and the potential for greater longer-term damage to markets and the broader economy as risk markets, particularly equities, racked up losses not seen since the 2008-2009 financial crisis. The Fed engaged in similar measures that it implemented during the 2008-2009 crisis to support markets and the broader economy. The Fed created lending facilities within the commercial paper market, supported prime money market funds directly, and purchased Treasury bonds and Agency Mortgage Backed Securities (MBS) across the maturity spectrum. The Fed also made clear its intention to purchase corporate bonds as part of its massive liquidity injection to help support markets and the economy.
Following the market volatility in March, net Treasury bill issuance spiked dramatically and total bills outstanding nearly doubled, due to the extreme demand for high quality government assets and a general “flight to quality” in the market. Treasury bills outstanding remained elevated through the end of the year, ending the year at $4.964 trillion.2
At the close of the year, it is Invesco Global Liquidity’s view that the Federal Open Market Committee (FOMC) monetary policy directive would remain on hold for the year 2021. Federal Reserve Chairman Jerome Powell has indicated the current zero interest rate policy will likely remain in place for the foreseeable future.
For over 35 years, Invesco Global Liquidity has been a core business for Invesco. We believe in a disciplined investment process, high credit quality solutions, distinguished client engagement and consistent performance.
We appreciate your continued investment in Invesco V.I. Government Money Market Fund.
1 Source: US Federal Reserve
2 Source: Bloomberg LP
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Team managed by Invesco Advisers, Inc.
You could lose money by investing in the Fund. Although the Fund seeks to preserve your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
| | | | | | |
| | | Portfolio Composition by Maturity* | |
| | In days, as of 12/31/2020 | | | | |
| | |
| | | 1-7 | | | 28.0% | |
| | | 8-30 | | | 8.3 | |
| | | 31-60 | | | 11.8 | |
| | | 61-90 | | | 10.9 | |
| | | 91-180 | | | 22.5 | |
| | | 181+ | | | 18.5 | |
*The number of days to maturity of each holding is determined in accordance with the provisions of Rule 2a-7 under the Investment Company Act of 1940.
Invesco V.I. Government Money Market Fund
Supplemental Information
Invesco V.I. Government Money Market Fund’s investment objective is to provide current income consistent with preservation of capital and liquidity.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
Invesco V.I. Government Money Market Fund
Schedule of Investments
December 31, 2020
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount
(000) | | | Value | |
| U.S. Treasury Securities-36.84% | | | | | | | | | |
| U.S. Treasury Bills-24.61%(a) | | | | | | | | | |
U.S. Treasury Bills | | | 0.17% | | | | 01/07/2021 | | | $ | 15,000 | | | $ | 14,999,588 | |
| |
U.S. Treasury Bills | | | 0.11% | | | | 01/14/2021 | | | | 20,000 | | | | 19,999,206 | |
| |
U.S. Treasury Bills | | | 0.09% | | | | 02/25/2021 | | | | 4,827 | | | | 4,826,373 | |
| |
U.S. Treasury Bills | | | 0.09% | | | | 03/02/2021 | | | | 40,000 | | | | 39,994,711 | |
| |
U.S. Treasury Bills | | | 0.12% | | | | 03/04/2021 | | | | 10,000 | | | | 9,998,019 | |
| |
U.S. Treasury Bills | | | 0.10% | | | | 03/11/2021 | | | | 5,688 | | | | 5,686,910 | |
| |
U.S. Treasury Bills | | | 0.12% | | | | 03/30/2021 | | | | 5,000 | | | | 4,998,594 | |
| |
U.S. Treasury Bills | | | 0.12% | | | | 04/22/2021 | | | | 20,000 | | | | 19,992,908 | |
| |
U.S. Treasury Bills | | | 0.11% | | | | 04/29/2021 | | | | 5,000 | | | | 4,998,197 | |
| |
U.S. Treasury Bills | | | 0.11% | | | | 05/06/2021 | | | | 35,000 | | | | 34,986,632 | |
| |
U.S. Treasury Bills | | | 0.08% | | | | 05/18/2021 | | | | 10,000 | | | | 9,996,899 | |
| |
U.S. Treasury Bills | | | 0.18% | | | | 05/20/2021 | | | | 5,000 | | | | 4,996,622 | |
| |
U.S. Treasury Bills | | | 0.09% | | | | 06/24/2021 | | | | 5,000 | | | | 4,997,825 | |
| |
U.S. Treasury Bills | | | 0.10% | | | | 07/01/2021 | | | | 5,000 | | | | 4,997,486 | |
| |
U.S. Treasury Bills | | | 0.16% | | | | 07/15/2021 | | | | 2,000 | | | | 1,998,321 | |
| |
U.S. Treasury Bills | | | 0.14% | | | | 10/07/2021 | | | | 5,000 | | | | 4,994,575 | |
| |
U.S. Treasury Bills | | | 0.11% | | | | 12/30/2021 | | | | 5,000 | | | | 4,994,454 | |
| |
| | | | | | | | | | | | | | | 197,457,320 | |
| |
| | |
| U.S. Treasury Notes-12.23% | | | | | | | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.12%)(b) | | | 0.21% | | | | 01/31/2021 | | | | 14,000 | | | | 13,999,580 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.14%)(b) | | | 0.23% | | | | 04/30/2021 | | | | 13,000 | | | | 13,000,145 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.22%)(b) | | | 0.31% | | | | 07/31/2021 | | | | 3,000 | | | | 3,001,297 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.30%)(b) | | | 0.39% | | | | 10/31/2021 | | | | 7,000 | | | | 7,014,059 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.15%)(b) | | | 0.24% | | | | 01/31/2022 | | | | 7,000 | | | | 6,999,149 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | | | 0.15% | | | | 07/31/2022 | | | | 2,000 | | | | 2,000,096 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | | | 0.15% | | | | 10/31/2022 | | | | 8,000 | | | | 7,999,722 | |
| |
U.S. Treasury Notes | | | 1.38% | | | | 01/31/2021 | | | | 15,000 | | | | 15,015,086 | |
| |
U.S. Treasury Notes | | | 2.13% | | | | 01/31/2021 | | | | 5,000 | | | | 5,007,222 | |
| |
U.S. Treasury Notes | | | 2.50% | | | | 01/31/2021 | | | | 9,000 | | | | 9,017,578 | |
| |
U.S. Treasury Notes | | | 3.63% | | | | 02/15/2021 | | | | 5,000 | | | | 5,020,031 | |
| |
U.S. Treasury Notes | | | 2.13% | | | | 06/30/2021 | | | | 10,000 | | | | 10,097,643 | |
| |
| | | | | | | | | | | | | | | 98,171,608 | |
| |
Total U.S. Treasury Securities (Cost $295,628,928) | | | | | | | | | | | | | | | 295,628,928 | |
| |
| | |
| U.S. Government Sponsored Agency Securities-36.31% | | | | | | | | | |
| Federal Farm Credit Bank (FFCB)-3.67% | | | | | | | | | |
Federal Farm Credit Bank (SOFR + 0.05%)(b) | | | 0.15% | | | | 10/05/2021 | | | | 10,000 | | | | 9,999,615 | |
| |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | 0.17% | | | | 06/17/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.20%)(b) | | | 0.28% | | | | 06/23/2022 | | | | 2,500 | | | | 2,504,668 | |
| |
Federal Farm Credit Bank (SOFR + 0.15%)(b) | | | 0.23% | | | | 07/28/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.07%)(b) | | | 0.15% | | | | 08/11/2022 | | | | 4,500 | | | | 4,499,998 | |
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.14% | | | | 08/26/2022 | | | | 2,500 | | | | 2,499,791 | |
| |
| | | | | | | | | | | | | | | 29,504,072 | |
| |
| | |
| Federal Home Loan Bank (FHLB)-26.62% | | | | | | | | | |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | 0.22% | | | | 01/08/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.05%)(b) | | | 0.13% | | | | 01/22/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.05%)(b) | | | 0.13% | | | | 01/28/2021 | | | | 12,000 | | | | 11,999,998 | |
| |
Federal Home Loan Bank (SOFR + 0.02%)(b) | | | 0.10% | | | | 02/05/2021 | | | | 20,000 | | | | 20,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.04%)(b) | | | 0.12% | | | | 02/09/2021 | | | | 8,000 | | | | 8,000,000 | |
| |
Federal Home Loan Bank | | | 1.38% | | | | 02/18/2021 | | | | 3,000 | | | | 3,003,498 | |
| |
Federal Home Loan Bank (SOFR + 0.07%)(b) | | | 0.15% | | | | 02/26/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank(a) | | | 0.09% | | | | 03/05/2021 | | | | 1,596 | | | | 1,595,749 | |
| |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | 0.21% | | | | 03/11/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount
(000) | | | Value | |
Federal Home Loan Bank (FHLB)-(continued) | | | | | | | | | |
Federal Home Loan Bank (SOFR + 0.07%)(b) | | | 0.15% | | | | 03/12/2021 | | | $ | 15,000 | | | $ | 15,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.11%)(b) | | | 0.19% | | | | 03/25/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.01%)(b) | | | 0.12% | | | | 04/05/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (3 mo. USD LIBOR - 0.11%)(b) | | | 0.12% | | | | 04/09/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.17%)(b) | | | 0.25% | | | | 04/09/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (3 mo. USD LIBOR - 0.11%)(b) | | | 0.11% | | | | 04/13/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Bank (3 mo. USD LIBOR - 0.14%)(b) | | | 0.08% | | | | 04/19/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.03%)(b) | | | 0.11% | | | | 04/21/2021 | | | | 15,000 | | | | 15,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.07%)(b) | | | 0.15% | | | | 04/21/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.01%)(b) | | | 0.09% | | | | 05/04/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.03%)(b) | | | 0.11% | | | | 05/04/2021 | | | | 20,000 | | | | 20,000,000 | |
| |
Federal Home Loan Bank(a) | | | 0.09% | | | | 06/23/2021 | | | | 5,000 | | | | 4,997,765 | |
| |
Federal Home Loan Bank (SOFR + 0.08%)(b) | | | 0.16% | | | | 07/23/2021 | | | | 2,000 | | | | 2,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.14%)(b) | | | 0.22% | | | | 08/18/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.06%)(b) | | | 0.14% | | | | 08/24/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.02%)(b) | | | 0.10% | | | | 09/02/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.17%)(b) | | | 0.25% | | | | 11/12/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.15%)(b) | | | 0.23% | | | | 11/15/2021 | | | | 2,000 | | | | 2,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.07%)(b) | | | 0.15% | | | | 04/28/2022 | | | | 2,000 | | | | 2,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | 0.21% | | | | 08/05/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.09%)(b) | | | 0.17% | | | | 08/19/2022 | | | | 7,000 | | | | 7,000,822 | |
| |
Federal Home Loan Bank (SOFR + 0.06%)(b) | | | 0.14% | | | | 12/08/2022 | | | | 2,000 | | | | 2,000,000 | |
| |
| | | | | | | | | | | | | | | 213,597,832 | |
| |
| | |
| Federal Home Loan Mortgage Corp. (FHLMC)-2.12% | | | | | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.03%)(b) | | | 0.11% | | | | 02/05/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.03%)(b) | | | 0.11% | | | | 02/19/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.12%)(b) | | | 0.20% | | | | 06/04/2021 | | | | 2,000 | | | | 2,000,000 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.07%)(b) | | | 0.15% | | | | 08/12/2022 | | | | 4,000 | | | | 4,000,000 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.09%)(b) | | | 0.17% | | | | 09/16/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
| | | | | | | | | | | | | | | 17,000,000 | |
| |
| | |
| Federal National Mortgage Association (FNMA)-1.62% | | | | | | | | | |
Federal National Mortgage Association (SOFR + 0.23%)(b) | | | 0.34% | | | | 07/06/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal National Mortgage Association (SOFR + 0.30%)(b) | | | 0.39% | | | | 01/07/2022 | | | | 3,000 | | | | 3,000,000 | |
| |
| | | | | | | | | | | | | | | 13,000,000 | |
| |
| | |
| U.S. International Development Finance Corp. (DFC)-2.28% | | | | | | | | | |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.13% | | | | 06/15/2025 | | | | 2,700 | | | | 2,700,000 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.13% | | | | 07/15/2025 | | | | 246 | | | | 245,944 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.13% | | | | 02/15/2028 | | | | 8,056 | | | | 8,055,556 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.13% | | | | 07/07/2040 | | | | 7,286 | | | | 7,285,950 | |
| |
| | | | | | | | | | | | | | | 18,287,450 | |
| |
Total U.S. Government Sponsored Agency Securities
(Cost $291,389,354) | | | | | | | | | | | | | | | 291,389,354 | |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-73.15%
(Cost $587,018,282) | | | | | | | | | | | | | | | 587,018,282 | |
| |
| | | | |
| | | | | | | | | Repurchase
Amount | | | | |
Repurchase Agreements-32.03%(d) | | | | | | | | | | | | | | | | |
BNP Paribas Securities Corp., joint agreement dated 12/31/2020, aggregate maturing value of $500,004,444 (collateralized by U.S. Treasury obligations, U.S. government sponsored agency obligations and domestic agency mortgage-backed securities valued at $510,000,000; 0.00% - 8.13%; 05/15/2021 - 10/20/2067) | | | 0.08% | | | | 01/04/2021 | | | | 10,848,823 | | | | 10,848,727 | |
| |
BNP Paribas Securities Corp., joint term agreement dated 10/28/2020, aggregate maturing value of $1,000,281,111 (collateralized by U.S. Treasury obligations, domestic agency mortgage-backed securities and U.S. government sponsored agency obligations valued at $1,020,000,026;
0.00% - 8.13%; 01/15/2021 - 01/01/2051)(e) | | | 0.11% | | | | 01/29/2021 | | | | 20,005,622 | | | | 20,000,000 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Repurchase
Amount | | | Value | |
BNP Paribas Securities Corp., joint term agreement dated 12/02/2020, aggregate maturing value of $2,000,238,889 (collateralized by U.S. Treasury obligations, domestic agency mortgage-backed securities and U.S. government sponsored agency obligations valued at $2,040,000,000; 0.00% - 8.13%; 01/15/2021 - 10/20/2067)(e) | | | 0.10% | | | | 01/14/2021 | | | $ | 40,004,778 | | | $ | 40,000,000 | |
| |
ING Financial Markets, LLC, joint term agreement dated 12/01/2020, aggregate maturing value of $150,017,500 (collateralized by domestic agency mortgage-backed securities valued at $153,000,001; 2.00% - 5.50%; 01/01/2029 - 01/01/2057)(e) | | | 0.12% | | | | 01/05/2021 | | | | 3,000,350 | | | | 3,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 03/27/2020 (collateralized by U.S. Treasury obligations valued at $867,001,085; 0.00% - 7.63%; 06/03/2021 - 05/15/2050)(f) | | | 0.09% | | | | - | | | | - | | | | 5,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 05/02/2019 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $510,000,001; 0.00% - 7.00%; 01/31/2021 - 08/01/2053)(f) | | | 0.10% | | | | - | | | | - | | | | 12,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 05/15/2019 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $295,800,001; 0.00% - 7.00%; 04/06/2021 - 12/20/2050)(f) | | | 0.14% | | | | - | | | | - | | | | 5,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 10/15/2019 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $408,000,025; 0.00% - 4.50%; 04/06/2021 - 01/01/2051)(f) | | | 0.11% | | | | - | | | | - | | | | 10,000,000 | |
| |
Lloyds Bank PLC, joint term agreement dated 10/23/2020, aggregate maturing value of $500,204,444 (collateralized by U.S. Treasury obligations valued at $511,224,005; 2.25% - 6.00%; 12/31/2023 - 02/15/2026) | | | 0.16% | | | | 01/26/2021 | | | | 15,006,133 | | | | 15,000,000 | |
| |
Lloyds Bank PLC, joint term agreement dated 10/29/2020, aggregate maturing value of $442,785,268 (collateralized by U.S. Treasury obligations valued at $450,875,707; 1.63% - 6.00%; 11/15/2022 - 08/15/2028) | | | 0.15% | | | | 01/29/2021 | | | | 5,001,896 | | | | 5,000,000 | |
| |
Metropolitan Life Insurance Co., joint term agreement dated 12/30/2020, aggregate maturing value of $350,016,973 (collateralized by U.S. Treasury obligations valued at $359,475,853; 0.00%; 11/15/2027 - 05/15/2046)(e) | | | 0.12% | | | | 01/06/2021 | | | | 15,002,394 | | | | 15,002,044 | |
| |
Mitsubishi UFJ Trust & Banking Corp., joint agreement dated 12/31/2020, aggregate maturing value of $100,000,889 (collateralized by domestic agency mortgage-backed securities valued at $102,000,000; 0.43% - 0.85%; 02/20/2040 - 08/25/2049) | | | 0.08% | | | | 01/04/2021 | | | | 35,000,311 | | | | 35,000,000 | |
| |
Mitsubishi UFJ Trust & Banking Corp., joint term agreement dated 12/30/2020, aggregate maturing value of $1,022,398,855 (collateralized by U.S. Treasury obligations valued at $1,044,443,126; 1.13% - 1.50%;
02/28/2025 - 02/15/2030)(e) | | | 0.12% | | | | 01/06/2021 | | | | 31,200,728 | | | | 31,200,000 | |
| |
RBC Capital Markets LLC, joint term agreement dated 12/31/2020, aggregate maturing value of $1,250,000,000 (collateralized by domestic agency mortgage-backed securities, a foreign corporate obligation and U.S. government sponsored agency obligations valued at $1,275,006,541; 0.00% - 23.42%; 03/01/2021 - 08/20/2065)(b)(e) | | | 0.14% | | | | 03/02/2021 | | | | 45,000,000 | | | | 45,000,000 | |
| |
Societe Generale, joint open agreement dated 08/05/2020 (collateralized by U.S. Treasury obligations valued at $1,530,000,099; 0.00% - 8.13%; 01/19/2021 - 05/15/2050)(f) | | | 0.09% | | | | - | | | | - | | | | 5,000,000 | |
| |
Total Repurchase Agreements (Cost $257,050,771) | | | | | | | | | | | | | | | 257,050,771 | |
| |
TOTAL INVESTMENTS IN SECURITIES(g)-105.18% (Cost $844,069,053) | | | | | | | | | | | | 844,069,053 | |
| |
OTHER ASSETS LESS LIABILITIES-(5.18)% | | | | | | | | | | | | (41,575,238 | ) |
| |
NET ASSETS-100.00% | | | | | | | | | | | $ | 802,493,815 | |
| |
Investment Abbreviations:
| | |
| LIBOR | | -London Interbank Offered Rate |
| SOFR | | -Secured Overnight Financing Rate |
| USD | | -U.S. Dollar |
| VRD | | -Variable Rate Demand |
Notes to Schedule of Investments:
| | |
| (a) | | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| |
| (b) | | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| |
| (c) | | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically by the issuer or agent based on current market conditions. Rate shown is the rate in effect on December 31, 2020. |
| |
| (d) | | Principal amount equals value at period end. See Note 1I. |
| |
| (e) | | The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
| |
| (f) | | Either party may terminate the agreement upon demand. Interest rates, principal amount and collateral are redetermined daily. |
| |
| (g) | | Also represents cost for federal income tax purposes. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, excluding repurchase agreements, at value and cost | | $ | 587,018,282 | |
Repurchase agreements, at value and cost | | | 257,050,771 | |
Receivable for: | | | | |
Fund shares sold | | | 80,450 | |
Interest | | | 413,636 | |
Due from Adviser | | | 145,366 | |
Investment for trustee deferred compensation and retirement plans | | | 46,292 | |
Other assets | | | 8,267 | |
Total assets | | | 844,763,064 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 39,994,711 | |
Fund shares reacquired | | | 1,743,419 | |
Dividends | | | 6,966 | |
Accrued fees to affiliates | | | 450,064 | |
Accrued trustees’ and officers’ fees and benefits | | | 1,024 | |
Accrued operating expenses | | | 24,715 | |
Trustee deferred compensation and retirement plans | | | 48,350 | |
Total liabilities | | | 42,269,249 | |
Net assets applicable to shares outstanding | | $ | 802,493,815 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 802,459,340 | |
Distributable earnings | | | 34,475 | |
| | | $ | 802,493,815 | |
| |
Net Assets: | | | | |
Series I | | $ | 711,647,918 | |
Series II | | $ | 90,845,897 | |
| |
Shares outstanding, no par value,
unlimited number of shares authorized: | | | | |
Series I | | | 711,605,931 | |
Series II | | | 90,840,547 | |
Series I: | | | | |
Net asset value and offering price per share | | $ | 1.00 | |
Series II: | | | | |
Net asset value and offering price per share | | $ | 1.00 | |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Interest | | $ | 4,711,217 | |
| |
Expenses: | | | | |
Advisory fees | | | 1,294,100 | |
Administrative services fees | | | 1,677,622 | |
Custodian fees | | | 2,696 | |
Distribution fees - Series II | | | 231,963 | |
Transfer agent fees | | | 9,851 | |
Trustees’ and officers’ fees and benefits | | | 23,447 | |
Reports to shareholders | | | 9,710 | |
Professional services fees | | | 18,702 | |
Other | | | 3,600 | |
Total expenses | | | 3,271,691 | |
Less: Fees waived | | | (723,448 | ) |
Net expenses | | | 2,548,243 | |
Net investment income | | | 2,162,974 | |
Net realized gain from unaffiliated investment securities | | | 40,138 | |
Net increase in net assets resulting from operations | | $ | 2,203,112 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
Operations: | | | | | | | | |
Net investment income | | $ | 2,162,974 | | | $ | 13,915,957 | |
Net realized gain | | | 40,138 | | | | 10,478 | |
Net increase in net assets resulting from operations | | | 2,203,112 | | | | 13,926,435 | |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,008,417 | ) | | | (12,604,943 | ) |
Series II | | | (154,557 | ) | | | (1,311,014 | ) |
Total distributions from distributable earnings | | | (2,162,974 | ) | | | (13,915,957 | ) |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | 112,942,473 | | | | (302,240,128 | ) |
Series II | | | 18,863,611 | | | | (24,362,713 | ) |
Net increase (decrease) in net assets resulting from share transactions | | | 131,806,084 | | | | (326,602,841 | ) |
Net increase (decrease) in net assets | | | 131,846,222 | | | | (326,592,363 | ) |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 670,647,593 | | | | 997,239,956 | |
End of year | | $ | 802,493,815 | | | $ | 670,647,593 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net
investment
income(a) | | | Net gains
(losses)
on securities
(realized) | | | Total from
investment
operations | | | Dividends from net investment income | | | Net asset
value, end
of period | | | Total
return(b) | | | Net assets,
end of period (000’s omitted) | | | Ratio of
expenses
to average net assets
with fee waivers
and/or expenses
absorbed | | | Ratio of
expenses
to average net
assets without fee waivers
and/or expenses
absorbed | | | Ratio of net investment
income
to average
net assets | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $1.00 | | | | $0.00 | | | | $ 0.00 | | | | $0.00 | | | | $(0.00 | ) | | | $1.00 | | | | 0.29 | % | | | $711,648 | | | | 0.29%(c) | | | | 0.35%(c) | | | | 0.26%(c) | |
Year ended 12/31/19 | | | 1.00 | | | | 0.02 | | | | 0.00 | | | | 0.02 | | | | (0.02 | ) | | | 1.00 | | | | 1.90 | | | | 598,670 | | | | 0.36 | | | | 0.36 | | | | 1.90 | |
Year ended 12/31/18 | | | 1.00 | | | | 0.02 | | | | (0.00 | ) | | | 0.02 | | | | (0.02 | ) | | | 1.00 | | | | 1.55 | | | | 900,901 | | | | 0.36 | | | | 0.36 | | | | 1.55 | |
Year ended 12/31/17 | | | 1.00 | | | | 0.01 | | | | (0.00 | ) | | | 0.01 | | | | (0.01 | ) | | | 1.00 | | | | 0.56 | | | | 656,368 | | | | 0.40 | | | | 0.40 | | | | 0.56 | |
Year ended 12/31/16 | | | 1.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | (0.00 | ) | | | 1.00 | | | | 0.10 | | | | 636,532 | | | | 0.35 | | | | 0.38 | | | | 0.10 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 1.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | (0.00 | ) | | | 1.00 | | | | 0.21 | | | | 90,846 | | | | 0.36(c) | | | | 0.60(c) | | | | 0.19(c) | |
Year ended 12/31/19 | | | 1.00 | | | | 0.02 | | | | 0.00 | | | | 0.02 | | | | (0.02 | ) | | | 1.00 | | | | 1.64 | | | | 71,978 | | | | 0.61 | | | | 0.61 | | | | 1.65 | |
Year ended 12/31/18 | | | 1.00 | | | | 0.01 | | | | (0.00 | ) | | | 0.01 | | | | (0.01 | ) | | | 1.00 | | | | 1.30 | | | | 96,339 | | | | 0.61 | | | | 0.61 | | | | 1.30 | |
Year ended 12/31/17 | | | 1.00 | | | | 0.00 | | | | (0.00 | ) | | | 0.00 | | | | (0.00 | ) | | | 1.00 | | | | 0.31 | | | | 85,541 | | | | 0.65 | | | | 0.65 | | | | 0.31 | |
Year ended 12/31/16 | | | 1.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | (0.00 | ) | | | 1.00 | | | | 0.03 | | | | 97,362 | | | | 0.43 | | | | 0.63 | | | | 0.02 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Ratios are based on average daily net assets (000’s omitted) of $769,948 and $92,785 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Money Market Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Government Money Market Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to provide current income consistent with preservation of capital and liquidity.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations - The Fund’s securities are recorded on the basis of amortized cost which approximates value as permitted by Rule 2a-7 under the 1940 Act. This method values a security at its cost on the date of purchase and, thereafter, assumes a constant amortization to maturity of any premiums or accretion of any discounts. |
Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
| B. | Securities Transactions and Investment Income - Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly to separate accounts of participating insurance companies. Distributions from net realized gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
Invesco V.I. Government Money Market Fund
| I. | Repurchase Agreements - The Fund may enter into repurchase agreements. Collateral on repurchase agreements, including the Fund’s pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. Collateral consisting of U.S. Government Securities and U.S. Government Sponsored Agency Securities is marked to market daily to ensure its market value is at least 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements, pursuant to procedures approved by the Board of Trustees, are through participation with other mutual funds, private accounts and certain non-registered investment companies managed by the investment adviser or its affiliates (“Joint repurchase agreements”). The principal amount of the repurchase agreement is equal to the value at period-end. If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the collateral and loss of income. |
| J. | Other Risks - Investments in obligations issued by agencies and instrumentalities of the U.S. Government may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of 0.15% of the Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual operating expenses after fee waivers and/or expense reimbursements to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
The Adviser and/or Invesco Distributors, Inc., (“IDI”) voluntarily agreed to waive fees and/or reimburse expenses in order to increase the Fund’s yield. Voluntary fee waivers and/or reimbursements may be modified at any time upon consultation with the Board of Trustees without further notice to investors.
For the year ended December 31, 2020, Invesco voluntarily waived fund level expenses 556,095 and class level expenses of 167,353 for Series II shares in order to increase the Fund’s yield.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $412,099 for accounting and fund administrative services and was reimbursed $1,265,523 for fees paid to insurance companies. Also, Invesco has entered into a sub-administration agreement whereby The Bank of New York Mellon (“BNY Mellon”) serves as custodian and fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with IDI to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 2 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Invesco V.I. Government Money Market Fund
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The Bank of New York Mellon, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 2,162,974 | | | $ | 13,915,957 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 67,438 | |
| |
Temporary book/tax differences | | | (32,963 | ) |
| |
Shares of beneficial interest | | | 802,459,340 | |
| |
Total net assets | | $ | 802,493,815 | |
| |
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 7–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | | | | Years ended December 31, | | | | |
| | | | |
| | | 2020(a) | | | 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
| | | | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,782,972,429 | | | $ | 1,782,972,429 | | | | 1,064,989,449 | | | $ | 1,064,989,449 | |
| |
Series II | | | 82,180,237 | | | | 82,180,237 | | | | 42,932,790 | | | | 42,932,790 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,952,855 | | | | 1,952,855 | | | | 12,291,497 | | | | 12,291,497 | |
| |
Series II | | | 154,297 | | | | 154,297 | | | | 1,311,014 | | | | 1,311,014 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,671,982,811 | ) | | | (1,671,982,811 | ) | | | (1,379,521,074 | ) | | | (1,379,521,074 | ) |
| |
Series II | | | (63,470,923 | ) | | | (63,470,923 | ) | | | (68,606,517 | ) | | | (68,606,517 | ) |
| |
Net increase (decrease) in share activity | | | 131,806,084 | | | $ | 131,806,084 | | | | (326,602,841 | ) | | $ | (326,602,841 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 89% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 8–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its
Invesco V.I. Government Money Market Fund
investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Government Money Market Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Government Money Market Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Government Money Market Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Government Money Market Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| Class | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized
Expense Ratio |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
| Series I | | $1,000.00 | | $1,000.10 | | $1.11 | | $1,024.03 | | $1.12 | | 0.22% |
| Series II | | 1,000.00 | | 1,000.10 | | 1.16 | | 1,023.98 | | 1.17 | | 0.23 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Government Money Market Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | | | | | | |
| Federal and State Income Tax | |
Business Interest Income* | | | 96.47 | % |
U.S. Treasury Obligations* | | | 40.99 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Government Money Market Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
| Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort -1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey - 1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Government Money Market Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962 Chief Tax Officer, Vice
President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian Bank of New York Mellon 2 Hanson Place Brooklyn, NY 11217-1431 |
Invesco V.I. Government Money Market Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Government Securities Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIGOV-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco V.I. Government Securities Fund (the Fund) outperformed the Bloomberg Barclays Intermediate U.S. Government Index, the Fund’s style-specific benchmark.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | | | |
| | | Series I Shares | | | 6.27 | % |
| | | Series II Shares | | | 5.97 | |
| | | Bloomberg Barclays U.S. Aggregate Bond Indexq (Broad Market Index) | | | 7.51 | |
| | | Bloomberg Barclays Intermediate U.S. Government Indexq (Style-Specific Index) | | | 5.73 | |
| | | Lipper VUF Intermediate U.S. Government Funds Classification Average∎ (Peer Group) | | | 6.76 | |
| | | Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Fixed income markets began the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. As fear of a worldwide recession increased, the US Federal Reserve (the Fed) took aggressive action to support both the domestic and global economy by slashing rates to a range of 0.00% to 0.25%.1 The unemployment rate reached a peak of 14.7%2 while real gross domestic product decreased at an annual rate of 31.4%3 in the second quarter of 2020.
Many economies received fiscal stimulus and very significant monetary stimulus due to the impact of COVID-19. The massive monetary policy response created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first half of the year. Consequently, some countries were able to achieve some success in controlling the spread and were able to slowly reopen their economies in the third quarter of 2020. With a potential vaccine in sight for the end of 2020 or early 2021, the broader bond market, both developed and emerging, ended the year in positive territory.
The 10-year US Treasury yield continued to decline at the start of the year as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. Elevated volatility levels due to the COVID-19 pandemic and ensuing global recession led to a severe “risk-off” tone in the markets driving Treasury yields even lower. The 10-year US Treasury yield ended the year at 0.88%, 85 basis points lower than at the beginning of the year.4 (A basis point is one one-hundredth of a percentage point.)
While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter of
2020 with estimates for employment gains and GDP growth down from the third quarter. However, bonds were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets.
Given this market backdrop, the Fund’s total return for the year was positive and outperformed its style-specific benchmark, the Bloomberg Barclays Intermediate U.S. Government Index. Out of index exposure to agency mortgage-backed securities (MBS) was the primary driver of relative outperformance for the year as the asset class benefited from the Fed’s MBS purchase program. The Fund also benefited from its out of index allocation to high quality commercial mortgage-backed securities (CMBS) which benefited from Fed support in the form of the Term Asset-Backed Securities Loan Facility (TALF). The Fund was underweight duration relative to its style-specific benchmark at the beginning of the year, which proved to be the Fund’s largest detractor as interest rates fell during the first quarter of 2020.
The Fund utilizes duration and yield curve positioning for risk management and for generating returns. Duration measures a portfolio’s price sensitivity to interest rate changes, with a shorter duration tending to be less sensitive to these changes. Yield curve positioning refers to actively emphasizing points (maturities) along the yield curve with favorable risk-return expectations. During the year, duration was managed with cash, bonds and futures positions. Buying and selling interest rate futures contracts was an important tool we used to manage interest rate risk.
Please note that our strategy is implemented using derivative instruments, including futures, swaps and options. Therefore, a portion of the performance of the Fund, both positive and negative, can be attributed to these instruments. Derivatives can be a cost-effective way to gain or hedge exposure to certain risks and asset classes. However, derivatives may amplify traditional investment
risks through the creation of leverage and may be less liquid than traditional securities.
We wish to remind you that the Fund is subject to interest rate risk, meaning when interest rates rise, the value of fixed income securities tends to fall. The risk may be greater in the current market environment because interest rates are near historic lows. The degree to which the value of fixed income securities may decline due to rising interest rates may vary depending on the speed and magnitude of the increase in interest rates as well as individual security characteristics, such as price, maturity, duration and coupon, and market forces such as supply and demand for similar securities. We are monitoring interest rates, and the market, economic and geopolitical factors that may impact the direction, speed and magnitude of changes to interest rates across the maturity spectrum, including the potential impact of monetary policy changes by the Fed and certain foreign central banks. If interest rates rise or fall faster than expected, markets may experience increased volatility, which may affect the value and/or liquidity of certain investments.
We welcome new investors who joined the Fund during the year and thank you for your investment in Invesco V.I. Government Securities Fund.
1 Source: US Federal Reserve
2 Source: Bureau of Labor Statistics
3 Source: Bureau of Economic Analysis
4 Source: US Department of the Treasury
Portfolio manager(s):
Noelle Corum
Clint Dudley
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Government Securities Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/5/93) | | | 4.23 | % |
10 Years | | | 2.79 | |
5 Years | | | 3.19 | |
1 Year | | | 6.27 | |
| |
Series II Shares | | | | |
Inception (9/19/01) | | | 3.36 | % |
10 Years | | | 2.52 | |
5 Years | | | 2.92 | |
1 Year | | | 5.97 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Government Securities Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Government Securities Fund
Supplemental Information
Invesco V.I. Government Securities Fund’s investment objective is total return, comprised of current income and capital appreciation.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
| ∎ | The Bloomberg Barclays Intermediate U.S. Government Index is comprised of the Intermediate US Treasury and US Agency Indices. |
| ∎ | The Lipper VUF Intermediate U.S. Government Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Intermediate U.S. Government Funds classification. |
| ∎ | 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. |
Invesco V.I. Government Securities Fund
Fund Information
Portfolio Composition
| | |
By security type | | % of total investments |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | 70.73% |
|
| |
| U.S. Treasury Securities | | 14.53 |
|
| |
| Asset-Backed Securities | | 8.74 |
|
| |
| U.S. Government Sponsored Agency Securities | | 3.36 |
|
| |
| U.S. Dollar Denominated Bonds & Notes | | 1.22 |
|
| |
| Security types each less than 1% portfolio | | 0.44 |
|
| |
| Money Market Funds | | 0.98 |
|
| | |
Top Five Debt Issuers* | | |
| % of total net assets |
|
| |
| 1. Federal National Mortgage Association | | 23.16% |
|
| |
| 2. Government National Mortgage Association | | 16.93 |
|
| |
| 3. U.S. Treasury | | 16.28 |
|
| |
| 4. Federal Home Loan Mortgage Corp. | | 15.53 |
|
| |
5. Uniform Mortgage-Backed Securities | | 8.90 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. Government Securities Fund
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities–79.25% | |
Collateralized Mortgage Obligations–14.73% | |
Fannie Mae ACES,
2.76% (1 mo. USD LIBOR + 0.59%), 09/25/2023(a) | | $ | 428,731 | | | $ | 430,543 | |
| |
3.27%, 02/25/2029 | | | 5,000,000 | | | | 5,806,305 | |
| |
Fannie Mae REMICs,
3.00%, 10/25/2025 | | | 498 | | | | 498 | |
| |
2.50%, 03/25/2026 | | | 5,447 | | | | 5,460 | |
| |
7.00%, 09/18/2027 | | | 115,012 | | | | 126,834 | |
| |
1.50%, 01/25/2028 | | | 2,038,251 | | | | 2,067,801 | |
| |
6.50%, 03/25/2032 | | | 428,186 | | | | 503,232 | |
| |
5.75%, 10/25/2035 | | | 132,930 | | | | 149,277 | |
| |
0.45% (1 mo. USD LIBOR + 0.30%), 05/25/2036(a) | | | 1,514,836 | | | | 1,519,177 | |
| |
4.25%, 02/25/2037 | | | 73,821 | | | | 74,512 | |
| |
0.60% (1 mo. USD LIBOR + 0.45%), 03/25/2037(a) | | | 729,006 | | | | 735,006 | |
| |
6.60%, 06/25/2039(b) | | | 1,919,594 | | | | 2,283,767 | |
| |
0.65%, 03/25/2040 to 05/25/2041(a) | | | 1,133,916 | | | | 1,138,034 | |
| |
4.00%, 07/25/2040 | | | 1,234,164 | | | | 1,343,241 | |
| |
0.70% (1 mo. USD LIBOR + 0.55%), 02/25/2041(a) | | | 1,012,192 | | | | 1,016,002 | |
| |
0.67% (1 mo. USD LIBOR + 0.52%), 11/25/2041(a) | | | 1,086,782 | | | | 1,094,141 | |
| |
0.47% (1 mo. USD LIBOR + 0.32%), 08/25/2044(a) | | | 1,236,631 | | | | 1,236,043 | |
| |
0.63% (1 mo. USD LIBOR + 0.48%), 02/25/2056(a) | | | 2,387,344 | | | | 2,399,256 | |
| |
0.57% (1 mo. USD LIBOR + 0.42%), 12/25/2056(a) | | | 2,856,460 | | | | 2,857,424 | |
| |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | | | |
Series KLU1, Class A2, 2.51%, 12/25/2025 | | | 5,000,000 | | | | 5,356,252 | |
| |
Series KG01, Class A7, 2.88%, 04/25/2026 | | | 5,000,000 | | | | 5,495,045 | |
| |
Series KS11, Class AFX1, 2.15%, 12/25/2028 | | | 5,000,000 | | | | 5,303,191 | |
| |
Series K093, Class A1, 2.76%, 12/25/2028 | | | 1,927,982 | | | | 2,109,958 | |
| |
Series K092, Class AM, 3.02%, 04/25/2029 | | | 5,000,000 | | | | 5,673,728 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
Collateralized Mortgage Obligations–(continued) | |
Freddie Mac REMICs,
3.00%, 04/15/2026 | | $ | 2,309 | | | $ | 2,317 | |
| |
0.66%, 12/15/2035 to 03/15/2040(a) | | | 2,455,226 | | | | 2,469,578 | |
| |
0.46%, 03/15/2036 to 09/15/2044(a) | | | 4,143,186 | | | | 4,137,987 | |
| |
0.50% (1 mo. USD LIBOR + 0.35%), 11/15/2036(a) | | | 1,767,919 | | | | 1,770,028 | |
| |
0.53% (1 mo. USD LIBOR + 0.37%), 03/15/2037(a) | | | 797,723 | | | | 802,479 | |
| |
0.56% (1 mo. USD LIBOR + 0.40%), 06/15/2037(a) | | | 1,173,646 | | | | 1,181,026 | |
| |
1.02% (1 mo. USD LIBOR + 0.86%), 11/15/2039(a) | | | 450,983 | | | | 461,859 | |
| |
0.61%, 03/15/2040 to 02/15/2042(a) | | | 4,156,680 | | | | 4,179,310 | |
| |
Freddie Mac STRIPS, 0.50% (1 mo. USD LIBOR + 0.35%), 10/15/2037(a) | | | 1,398,110 | | | | 1,401,228 | |
| |
Freddie Mac Whole Loan Securities Trust, Series 2017-SC02, Class 2A1,
3.50%, 05/25/2047 | | | 15,382 | | | | 15,361 | |
| |
| | | | | | | 65,145,900 | |
| |
|
Federal Home Loan Mortgage Corp. (FHLMC)–15.53% | |
6.50%, 02/01/2021 to 12/01/2035 | | | 1,252,080 | | | | 1,441,279 | |
| |
6.00%, 03/01/2021 to 07/01/2038 | | | 151,234 | | | | 172,166 | |
| |
7.00%, 12/01/2021 to 11/01/2035 | | | 1,761,243 | | | | 2,047,431 | |
| |
8.00%, 12/01/2021 to 02/01/2035 | | | 245,457 | | | | 261,617 | |
| |
7.50%, 09/01/2022 to 06/01/2035 | | | 558,611 | | | | 643,854 | |
| |
8.50%, 11/17/2022 to 08/01/2031 | | | 101,095 | | | | 107,618 | |
| |
5.50%, 12/01/2022 | | | 794 | | | | 800 | |
| |
3.50%, 08/01/2026 to 12/01/2049 | | | 5,164,485 | | | | 5,615,833 | |
| |
3.00%, 05/01/2027 to 01/01/2050 | | | 16,942,837 | | | | 18,206,663 | |
| |
7.05%, 05/20/2027 | | | 43,492 | | | | 46,966 | |
| |
6.03%, 10/20/2030 | | | 471,200 | | | | 546,311 | |
| |
2.50%, 09/01/2034 to 12/01/2050 | | | 23,257,257 | | | | 24,600,545 | |
| |
5.00%, 01/01/2037 to 01/01/2040 | | | 661,923 | | | | 769,859 | |
| |
4.50%, 01/01/2040 to 08/01/2041 | | | 4,218,929 | | | | 4,728,348 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Federal Home Loan Mortgage Corp. (FHLMC)–(continued) | |
ARM, | |
2.64% (1 yr. USD LIBOR + 1.88%), 09/01/2035(a) | | $ | 1,774,522 | | | $ | 1,871,925 | |
| |
2.99% (1 yr. USD LIBOR + 1.88%), 07/01/2036(a) | | | 1,580,544 | | | | 1,669,542 | |
| |
2.20% (1 yr. USD LIBOR + 1.55%), 10/01/2036(a) | | | 979,807 | | | | 1,023,069 | |
| |
2.41% (1 yr. USD LIBOR + 1.91%), 10/01/2036(a) | | | 69,997 | | | | 74,031 | |
| |
2.62% (1 yr. USD LIBOR + 1.97%), 11/01/2037(a) | | | 377,052 | | | | 398,635 | |
| |
4.08% (1 yr. USD LIBOR + 2.08%), 01/01/2038(a) | | | 19,530 | | | | 20,546 | |
| |
2.88% (1 yr. USD LIBOR + 1.84%), 07/01/2038(a) | | | 549,782 | | | | 580,658 | |
| |
3.02% (1 yr. USD LIBOR + 1.79%), 06/01/2043(a) | | | 621,202 | | | | 650,195 | |
| |
2.94%, 01/01/2048(c) | | | 3,100,991 | | | | 3,236,810 | |
| |
| | | | | | | 68,714,701 | |
| |
Federal National Mortgage Association (FNMA)–23.16% | |
7.00%, 02/01/2021 to 04/01/2036 | | | 1,253,942 | | | | 1,383,571 | |
| |
5.50%, 03/01/2021 to 05/01/2035 | | | 805,065 | | | | 939,319 | |
| |
6.00%, 08/01/2021 to 10/01/2038 | | | 887,821 | | | | 1,042,982 | |
| |
7.50%, 11/01/2022 to 08/01/2037 | | | 2,403,253 | | | | 2,776,373 | |
| |
6.50%, 06/01/2023 to 11/01/2037 | | | 1,411,960 | | | | 1,624,319 | |
| |
6.75%, 07/01/2024 | | | 83,328 | | | | 93,405 | |
| |
8.50%, 09/01/2024 to 08/01/2037 | | | 366,659 | | | | 420,802 | |
| |
4.50%, 11/01/2024 to 12/01/2048 | | | 7,071,819 | | | | 7,799,645 | |
| |
6.95%, 10/01/2025 | | | 10,335 | | | | 10,483 | |
| |
0.50%, 11/07/2025 | | | 4,000,000 | | | | 4,017,741 | |
| |
8.00%, 09/01/2026 to 10/01/2037 | | | 1,448,721 | | | | 1,728,222 | |
| |
3.50%, 03/01/2027 to 08/01/2027 | | | 3,994,298 | | | | 4,286,318 | |
| |
3.00%, 05/01/2027 to 03/01/2050 | | | 15,383,123 | | | | 16,410,305 | |
| |
0.75%, 10/08/2027 | | | 6,000,000 | | | | 6,027,630 | |
| |
3.59%, 10/01/2028 | | | 4,000,000 | | | | 4,656,024 | |
| |
3.79%, 11/01/2028 | | | 4,000,000 | | | | 4,687,726 | |
| |
5.00%, 08/01/2033 to 12/01/2033 | | | 142,246 | | | | 153,610 | |
| |
2.50%, 12/01/2034 to 07/01/2035 | | | 16,786,849 | | | | 17,690,796 | |
| |
2.00%, 09/01/2035 to 10/01/2035 | | | 8,933,239 | | | | 9,386,150 | |
| |
4.00%, 09/01/2043 to 12/01/2048 | | | 12,403,376 | | | | 13,733,475 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Federal National Mortgage Association (FNMA)–(continued) | |
ARM, | |
2.53% (1 yr. U.S. Treasury Yield Curve Rate + 2.36%), 10/01/2034(a) | | $ | 1,200,191 | | | $ | 1,267,452 | |
| |
2.83% (1 yr. U.S. Treasury Yield Curve Rate + 2.18%), 05/01/2035(a) | | | 114,219 | | | | 120,145 | |
| |
3.15% (1 yr. USD LIBOR + 1.72%), 03/01/2038(a) | | | 29,097 | | | | 30,635 | |
| |
2.40% (1 yr. USD LIBOR + 1.75%), 02/01/2042(a) | | | 253,438 | | | | 254,496 | |
| |
2.18% (1 yr. USD LIBOR + 1.52%), 08/01/2043(a) | | | 610,808 | | | | 629,529 | |
| |
2.17% (1 yr. U.S. Treasury Yield Curve Rate + 1.88%), 05/01/2044(a) | | | 1,232,256 | | | | 1,282,743 | |
| |
| | | | | | | 102,453,896 | |
| |
Government National Mortgage Association (GNMA)–16.93% | |
7.50%, 11/15/2022 to 10/15/2035 | | | 1,140,523 | | | | 1,290,840 | |
| |
8.00%, 01/15/2023 to 01/15/2037 | | | 655,296 | | | | 746,132 | |
| |
7.00%, 09/15/2023 to 12/15/2036 | | | 540,513 | | | | 600,797 | |
| |
6.50%, 12/15/2023 to 09/15/2034 | | | 1,762,542 | | | | 1,962,747 | |
| |
6.00%, 01/16/2025 to 08/15/2033 | | | 376,802 | | | | 420,881 | |
| |
5.00%, 02/15/2025 | | | 81,107 | | | | 89,277 | |
| |
6.95%, 08/20/2025 to 08/20/2027 | | | 96,061 | | | | 96,412 | |
| |
6.38%, 10/20/2027 to 02/20/2028 | | | 114,887 | | | | 124,550 | |
| |
6.10%, 12/20/2033 | | | 2,670,558 | | | | 3,068,944 | |
| |
5.70%, 08/20/2034(b) | | | 706,891 | | | | 810,111 | |
| |
8.50%, 10/15/2036 to 01/15/2037 | | | 120,724 | | | | 127,387 | |
| |
5.89%, 01/20/2039(b) | | | 2,541,558 | | | | 2,974,807 | |
| |
0.95% (1 mo. USD LIBOR + 0.80%), 09/16/2039(a) | | | 715,234 | | | | 727,784 | |
| |
0.85% (1 mo. USD LIBOR + 0.70%), 05/20/2040(a) | | | 1,599,294 | | | | 1,616,233 | |
| |
4.50%, 07/20/2041(b) | | | 366,230 | | | | 410,786 | |
| |
2.86%, 09/20/2041(b) | | | 1,623,188 | | | | 1,667,292 | |
| |
0.40% (1 mo. USD LIBOR + 0.25%), 01/20/2042(a) | | | 143,497 | | | | 143,486 | |
| |
3.50%, 10/20/2042 to 06/20/2050 | | | 11,456,600 | | | | 12,291,502 | |
| |
0.45% (1 mo. USD LIBOR + 0.30%), 08/20/2047(a) | | | 3,539,928 | | | | 3,539,440 | |
| |
2.50%, 07/20/2049 | | | 5,534,930 | | | | 5,703,748 | |
| |
3.00%, 10/20/2049 to 11/20/2049 | | | 8,032,592 | | | | 8,411,615 | |
| |
Series 2019-29, Class PE, 3.00%, 10/20/2048 | | | 3,865,887 | | | | 4,076,387 | |
| |
Series 2019-52, Class JL, 3.00%, 11/20/2048 | | | 4,465,083 | | | | 4,676,386 | |
| |
Series 2019-30, Class MA, 3.50%, 03/20/2049 | | | 913,127 | | | | 965,979 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Government National Mortgage Association (GNMA)– (continued) | |
TBA, | |
2.50%, 01/01/2051(d) | | $ | 13,790,000 | | | $ | 14,596,399 | |
| |
Series 2020-137, Class A, 1.50%, 04/16/2062 | | | 3,695,674 | | | | 3,771,104 | |
| |
| | | | | | | 74,911,026 | |
| |
|
| Uniform Mortgage-Backed Securities–8.90% | |
TBA, | |
1.50%, 01/01/2036(d) | | | 8,618,000 | | | | 8,866,502 | |
| |
2.00%, 01/01/2036 to 02/01/2051(d) | | | 29,372,000 | | | | 30,523,375 | |
| |
| | | | | | | 39,389,877 | |
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $340,478,963) | | | | | | | 350,615,400 | |
| |
|
| U.S. Treasury Securities–16.28% | |
| U.S. Treasury Bills–0.18%(e)(f) | |
0.11% - 0.12%, 02/04/2021 | | | 790,000 | | | | 789,923 | |
| |
| U.S. Treasury Bonds–1.23% | |
5.38%, 02/15/2031 | | | 3,800,000 | | | | 5,460,867 | |
| |
| U.S. Treasury Inflation – Indexed Bonds–2.15% | |
0.13%, 04/15/2021(g) | | | 2,197,280 | | | | 2,204,864 | |
| |
0.63%, 04/15/2023(g) | | | 2,725,528 | | | | 2,870,186 | |
| |
0.50%, 04/15/2024(g) | | | 4,129,680 | | | | 4,427,436 | |
| |
| | | | | | | 9,502,486 | |
| |
|
| U.S. Treasury Inflation – Indexed Notes–2.82% | |
0.13%, 04/15/2025(g) | | | 11,592,805 | | | | 12,474,483 | |
| |
| U.S. Treasury Notes–9.90% | |
1.50%, 09/15/2022 | | | 2,700,000 | | | | 2,763,492 | |
| |
2.00%, 11/30/2022 | | | 2,700,000 | | | | 2,796,926 | |
| |
2.38%, 01/31/2023 | | | 2,000,000 | | | | 2,093,203 | |
| |
1.63%, 04/30/2023 | | | 4,000,000 | | | | 4,138,125 | |
| |
2.75%, 05/31/2023 | | | 6,300,000 | | | | 6,695,473 | |
| |
1.63%, 10/31/2023 | | | 625,000 | | | | 651,099 | |
| |
2.63%, 12/31/2023 | | | 1,900,000 | | | | 2,039,457 | |
| |
2.00%, 05/31/2024 | | | 2,500,000 | | | | 2,653,320 | |
| |
2.25%, 11/15/2024 | | | 3,000,000 | | | | 3,232,266 | |
| |
2.88%, 11/30/2025 | | | 2,500,000 | | | | 2,806,836 | |
| |
1.50%, 08/15/2026 | | | 4,250,000 | | | | 4,500,352 | |
| |
1.13%, 02/28/2027 | | | 4,759,000 | | | | 4,934,488 | |
| |
2.38%, 05/15/2027 | | | 1,000,000 | | | | 1,115,273 | |
| |
2.38%, 05/15/2029 | | | 2,600,000 | | | | 2,937,187 | |
| |
1.63%, 08/15/2029 | | | 400,000 | | | | 427,719 | |
| |
| | | | | | | 43,785,216 | |
| |
Total U.S. Treasury Securities
(Cost $67,277,884) | | | | 72,012,975 | |
| |
|
| Asset-Backed Securities–9.79%(h) | |
Angel Oak Mortgage Trust, Series 2020-6, Class A2, 1.52%, 05/25/2065(b)(i) | | | 2,178,972 | | | | 2,186,448 | |
| |
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class XA, IO, 0.80%, 09/15/2048(j) | | | 15,590,149 | | | | 488,436 | |
| |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-10, Class 12A1, 2.96%, 01/25/2035(b) | | | 305,934 | | | | 322,412 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Chase Mortgage Finance Corp., | | | | | | | | |
Series 2016-SH1, Class M3, 3.75%, 04/25/2045(b)(i) | | $ | 1,407,202 | | | $ | 1,412,258 | |
| |
Series 2016-SH2, Class M3, 3.75%, 12/25/2045(b)(i) | | | 1,547,051 | | | | 1,581,439 | |
| |
COLT Mortgage Loan Trust, | | | | | | | | |
Series 2020-1, Class A3, 2.90%, 02/25/2050(b)(i) | | | 3,467,431 | | | | 3,520,331 | |
| |
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(i) | | | 3,085,086 | | | | 3,128,520 | |
| |
Commercial Mortgage Trust, Series 2015-CR24, Class B, 4.38%, 08/10/2048(b) | | | 6,200,000 | | | | 6,849,319 | |
| |
FRESB Mortgage Trust, Series 2019- SB63, Class A5, 2.55%, 02/25/2039(b) | | | 3,645,724 | | | | 3,781,347 | |
| |
Galton Funding Mortgage Trust, Series 2018-2, Class A41, 4.50%, 10/25/2058(b)(i) | | | 1,166,256 | | | | 1,190,141 | |
| |
GCAT Trust, Series 2020-NQM1, Class A3, 2.55%, 01/25/2060(i)(k) | | | 3,891,145 | | | | 3,969,250 | |
| |
New Residential Mortgage Loan Trust, Series 2018-4A, Class A1S, 0.90% (1 mo. USD LIBOR + 0.75%), 01/25/2048(a)(i) | | | 2,372,343 | | | | 2,378,089 | |
| |
Series 2020-NQM1, Class A3, 2.77%, 01/26/2060(b)(i) | | | 3,908,094 | | | | 3,985,421 | |
| |
Verus Securitization Trust, Series 2018-3, Class A-2, 4.18%, 10/25/2058(b)(i) | | | 2,215,174 | | | | 2,230,815 | |
| |
Wells Fargo Commercial Mortgage Trust, Series 2015-C28, Class B, 4.09%, 05/15/2048(b) | | | 5,900,000 | | | | 6,310,636 | |
| |
Total Asset-Backed Securities
(Cost $41,961,033) | | | | 43,334,862 | |
| |
|
| U.S. Government Sponsored Agency Securities–3.76% | |
| Federal Home Loan Bank (FHLB)–3.30% | |
Federal Home Loan Bank, 0.50%, 04/14/2025 | | | 14,500,000 | | | | 14,598,019 | |
| |
|
| Tennessee Valley Authority (TVA)–0.46% | |
Tennessee Valley Authority, 1.88%, 08/15/2022 | | | 2,000,000 | | | | 2,055,579 | |
| |
Total U.S. Government Sponsored Agency Securities
(Cost $16,515,919) | | | | 16,653,598 | |
| |
|
| U.S. Dollar Denominated Bonds & Notes–1.37% | |
| Other Diversified Financial Services–0.36% | |
Private Export Funding Corp., Series BB, 4.30%, 12/15/2021 | | | 1,540,000 | | | | 1,600,104 | |
| |
|
| Sovereign Debt–1.01% | |
Israel Government AID Bond, 5.13%, 11/01/2024 | | | 3,800,000 | | | | 4,448,746 | |
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $5,346,779) | | | | 6,048,850 | |
| |
|
| Agency Credit Risk Transfer Notes–0.49% | |
Fannie Mae Connecticut Avenue Securities, Series 2015-C02, Class 1M2, 4.15% (1 mo. USD LIBOR + 4.00%), 05/25/2025 (Cost $1,992,047)(a) | | | 2,121,478 | | | | 2,167,786 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Money Market Funds–1.10% | |
Invesco Government & Agency Portfolio,Institutional Class, 0.03%(l)(m) (Cost $4,863,064) | | | 4,863,064 | | | $ | 4,863,064 | |
| |
TOTAL INVESTMENTS IN SECURITIES–112.04%
(Cost $478,435,689) | | | | | | | 495,696,535 | |
| |
OTHER ASSETS LESS LIABILITIES – (12.04)% | | | | | | | (53,256,063 | ) |
| |
NET ASSETS–100.00% | | | | | | $ | 442,440,472 | |
| |
Investment Abbreviations:
| | |
| ACES | | - Automatically Convertible Extendable Security |
| ARM | | - Adjustable Rate Mortgage |
| Ctfs. | | - Certificates |
| IO | | - Interest Only |
| LIBOR | | - London Interbank Offered Rate |
| REMICs | | - Real Estate Mortgage Investment Conduits |
| STRIPS | | - Separately Traded Registered Interest and Principal Security |
| TBA | | - To Be Announced |
| USD | | - U.S. Dollar |
Notes to Schedule of Investments:
| (a) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (b) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (d) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1K. |
| (e) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
| (f) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (g) | Principal amount of security and interest payments are adjusted for inflation. See Note 1I. |
| (h) | Non-U.S. government sponsored securities. |
| (i) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $25,582,712, which represented 5.78% of the Fund’s Net Assets. |
| (j) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (k) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (l) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Change in | | | | | | |
| | | Value | | Purchases | | Proceeds | | Unrealized | | Realized | | Value | | |
| | | December 31, 2019 | | at Cost | | from Sales | | Appreciation | | Gain | | December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 8,520,491 | | | | $ | 214,097,281 | | | | $ | (217,754,708 | ) | | | $ | - | | | | $ | - | | | | $ | 4,863,064 | | | | $ | 29,343 | |
| (m) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 2 Year Notes | | | 356 | | | | March-2021 | | | $ | 78,667,656 | | | $ | 69,716 | | | | $ 69,716 | |
| |
U.S. Treasury 5 Year Notes | | | 516 | | | | March-2021 | | | | 65,100,657 | | | | 151,585 | | | | 151,585 | |
| |
U.S. Treasury 10 Year Notes | | | 268 | | | | March-2021 | | | | 37,004,938 | | | | 32,932 | | | | 32,932 | |
| |
U.S. Treasury 10 Year Ultra Notes | | | 54 | | | | March-2021 | | | | 8,443,406 | | | | (23,595 | ) | | | (23,595) | |
| |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | 230,638 | | | | 230,638 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
| | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts–(continued) | |
| |
| | | | | |
| Short Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
| |
U.S. Treasury Long Bonds | | | 6 | | | | March-2021 | | | $ | (1,039,125 | ) | | $ | (2,073 | ) | | | $ (2,073) | |
| |
U.S. Treasury Ultra Bonds | | | 69 | | | | March-2021 | | | | (14,735,813 | ) | | | 122,214 | | | | 122,214 | |
| |
Subtotal–Short Futures Contracts | | | | | | | | | | | | | | | 120,141 | | | | 120,141 | |
| |
Total Futures Contracts | | | | | | | | | | | | | | $ | 350,779 | | | | $350,779 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $ 473,572,625) | | $ | 490,833,471 | |
| |
Investments in affiliated money market funds, at value (Cost $ 4,863,064) | | | 4,863,064 | |
| |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 19,841 | |
| |
Receivable for: | | | | |
Investments sold | | | 44,612,787 | |
| |
Fund shares sold | | | 47,120 | |
| |
Dividends | | | 84 | |
| |
Interest | | | 1,119,934 | |
| |
Principal paydowns | | | 341,498 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 252,053 | |
| |
Total assets | | | 542,089,852 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 98,433,120 | |
| |
Fund shares reacquired | | | 488,512 | |
| |
Amount due custodian | | | 176,349 | |
| |
Accrued fees to affiliates | | | 223,043 | |
| |
Accrued other operating expenses | | | 59,796 | |
| |
Trustee deferred compensation and retirement plans | | | 268,560 | |
| |
Total liabilities | | | 99,649,380 | |
| |
Net assets applicable to shares outstanding | | $ | 442,440,472 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 421,388,701 | |
| |
Distributable earnings | | | 21,051,771 | |
| |
| | $ | 442,440,472 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 257,369,402 | |
| |
Series II | | $ | 185,071,070 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 21,384,676 | |
| |
Series II | | | 15,522,550 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 12.04 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 11.92 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Interest | | $ | 10,001,890 | |
| |
Treasury Inflation-Protected Securities inflation adjustments | | | 246,740 | |
| |
Dividends from affiliated money market funds | | | 29,343 | |
| |
Total investment income | | | 10,277,973 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 2,129,989 | |
| |
Administrative services fees | | | 725,134 | |
| |
Custodian fees | | | 21,247 | |
| |
Distribution fees - Series II | | | 457,889 | |
| |
Transfer agent fees | | | 30,174 | |
| |
Trustees’ and officers’ fees and benefits | | | 26,547 | |
| |
Reports to shareholders | | | 12,763 | |
| |
Professional services fees | | | 34,072 | |
| |
Other | | | (12,172 | ) |
| |
Total expenses | | | 3,425,643 | |
| |
Less: Fees waived | | | (7,125 | ) |
| |
Net expenses | | | 3,418,518 | |
| |
Net investment income | | | 6,859,455 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 16,876,132 | |
| |
Futures contracts | | | (2,949,981 | ) |
| |
| | | 13,926,151 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 5,918,306 | |
| |
Futures contracts | | | 135,022 | |
| |
| | | 6,053,328 | |
| |
Net realized and unrealized gain | | | 19,979,479 | |
| |
Net increase in net assets resulting from operations | | $ | 26,838,934 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | | $ 6,859,455 | | | $ | 9,424,865 | |
| |
Net realized gain | | | 13,926,151 | | | | 3,838,737 | |
| |
Change in net unrealized appreciation | | | 6,053,328 | | | | 13,152,012 | |
| |
Net increase in net assets resulting from operations | | | 26,838,934 | | | | 26,415,614 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (6,407,384 | ) | | | (6,666,815 | ) |
| |
Series II | | | (3,963,835 | ) | | | (4,034,804 | ) |
| |
Total distributions from distributable earnings | | | (10,371,219 | ) | | | (10,701,619 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (3,683,669 | ) | | | (37,212,596 | ) |
| |
Series II | | | 3,388,007 | | | | (23,434,778 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (295,662 | ) | | | (60,647,374 | ) |
| |
Net increase (decrease) in net assets | | | 16,172,053 | | | | (44,933,379 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 426,268,419 | | | | 471,201,798 | |
| |
End of year | | $ | 442,440,472 | | | $ | 426,268,419 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net
investment
income(a) | | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | | Total from
investment
operations | | | Dividends
from net
investment
income | | | Net asset
value, end
of period | | | Total
return (b)
| | | Net assets,
end of period
(000’s omitted) | | | Ratio of
expenses
to average net assets
with fee waivers
and/or
expenses
absorbed | | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | | Ratio of net
investment
income
to average
net assets | | | Portfolio
turnover (c) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $11.61 | | | | $0.20 | | | | $0.53 | | | | $0.73 | | | | $(0.30 | ) | | | $12.04 | | | | 6.27 | % | | | $257,369 | | | | 0.67 | %(d) | | | 0.67 | %(d) | | | 1.64 | %(d) | | | 48 | % |
Year ended 12/31/19 | | | 11.22 | | | | 0.25 | | | | 0.43 | | | | 0.68 | | | | (0.29 | ) | | | 11.61 | | | | 6.07 | | | | 251,440 | | | | 0.68 | | | | 0.68 | | | | 2.18 | | | | 35 | |
Year ended 12/31/18 | | | 11.41 | | | | 0.25 | | | | (0.19 | ) | | | 0.06 | | | | (0.25 | ) | | | 11.22 | | | | 0.56 | | | | 279,476 | | | | 0.69 | | | | 0.69 | | | | 2.25 | | | | 25 | |
Year ended 12/31/17 | | | 11.44 | | | | 0.22 | | | | (0.01 | ) | | | 0.21 | | | | (0.24 | ) | | | 11.41 | | | | 1.87 | | | | 318,298 | | | | 0.70 | | | | 0.70 | | | | 1.97 | | | | 35 | |
Year ended 12/31/16 | | | 11.52 | | | | 0.23 | | | | (0.07 | ) | | | 0.16 | | | | (0.24 | ) | | | 11.44 | | | | 1.32 | | | | 353,614 | | | | 0.73 | | | | 0.73 | | | | 1.93 | | | | 31 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 11.50 | | | | 0.17 | | | | 0.52 | | | | 0.69 | | | | (0.27 | ) | | | 11.92 | | | | 5.97 | | | | 185,071 | | | | 0.92 | (d) | | | 0.92 | (d) | | | 1.39 | (d) | | | 48 | |
Year ended 12/31/19 | | | 11.12 | | | | 0.22 | | | | 0.42 | | | | 0.64 | | | | (0.26 | ) | | | 11.50 | | | | 5.75 | | | | 174,828 | | | | 0.93 | | | | 0.93 | | | | 1.93 | | | | 35 | |
Year ended 12/31/18 | | | 11.31 | | | | 0.22 | | | | (0.19 | ) | | | 0.03 | | | | (0.22 | ) | | | 11.12 | | | | 0.29 | | | | 191,725 | | | | 0.94 | | | | 0.94 | | | | 2.00 | | | | 25 | |
Year ended 12/31/17 | | | 11.33 | | | | 0.19 | | | | (0.00 | ) | | | 0.19 | | | | (0.21 | ) | | | 11.31 | | | | 1.72 | | | | 207,086 | | | | 0.95 | | | | 0.95 | | | | 1.72 | | | | 35 | |
Year ended 12/31/16 | | | 11.42 | | | | 0.20 | | | | (0.08 | ) | | | 0.12 | | | | (0.21 | ) | | | 11.33 | | | | 1.00 | | | | 205,010 | | | | 0.98 | | | | 0.98 | | | | 1.68 | | | | 31 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $262,398 and $183,155 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Government Securities Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Government Securities Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations - Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
Invesco V.I. Government Securities Fund
dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Treasury Inflation-Protected Securities – The Fund may invest in Treasury Inflation-Protected Securities (“TIPS”). TIPS are fixed income securities whose principal value is periodically adjusted to the rate of inflation. The principal value of TIPS will be adjusted upward or downward, and any increase or decrease in the principal amount of TIPS will be shown as Treasury Inflation-Protected Securities inflation adjustments in the Statement of Operations, even though investors do not receive their principal until maturity. |
| J. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| K. | Dollar Rolls and Forward Commitment Transactions - The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on borrowings.
| L. | LIBOR Risk - The Fund may invest in financial instruments that utilize LIBOR as the reference or benchmark rate for variable interest rate calculations. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021, and it is |
Invesco V.I. Government Securities Fund
| | currently anticipated that LIBOR will cease to be published after that time, although there are initiatives underway for the discontinuation to be extended beyond 2021 for certain LIBOR rates. There remains uncertainty regarding the effect of the LIBOR transition process and therefore any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. There is no assurance that the composition or characteristics of any alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; increased difficulty in borrowing or refinancing and diminished effectiveness of any applicable hedging strategies against instruments whose terms currently include LIBOR; and/or costs incurred in connection with temporary borrowings and closing out positions and entering into new agreements. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| M. | Other Risks - The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government. |
| N. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| O. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
| |
First $ 250 million | | | 0.500% | |
| |
| |
Over $250 million | | | 0.450% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.48%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $7,125.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $64,528 for accounting and fund administrative services and was reimbursed $660,606 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
Invesco V.I. Government Securities Fund
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | $ | – | | | $ | 350,615,400 | | | | $– | | | $ | 350,615,400 | |
| |
U.S. Treasury Securities | | | – | | | | 72,012,975 | | | | – | | | | 72,012,975 | |
| |
Asset-Backed Securities | | | – | | | | 43,334,862 | | | | – | | | | 43,334,862 | |
| |
U.S. Government Sponsored Agency Securities | | | – | | | | 16,653,598 | | | | – | | | | 16,653,598 | |
| |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 6,048,850 | | | | – | | | | 6,048,850 | |
| |
Agency Credit Risk Transfer Notes | | | – | | | | 2,167,786 | | | | – | | | | 2,167,786 | |
| |
Money Market Funds | | | 4,863,064 | | | | – | | | | – | | | | 4,863,064 | |
| |
Total Investments in Securities | | | 4,863,064 | | | | 490,833,471 | | | | – | | | | 495,696,535 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 376,447 | | | | – | | | | – | | | | 376,447 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | (25,668 | ) | | | – | | | | – | | | | (25,668 | ) |
| |
Total Other Investments | | | 350,779 | | | | – | | | | – | | | | 350,779 | |
| |
Total Investments | | $ | 5,213,843 | | | $ | 490,833,471 | | | | $– | | | $ | 496,047,314 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | | |
| Derivative Assets | | Interest
Rate Risk | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 376,447 | |
| |
Derivatives not subject to master netting agreements | | | (376,447 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
| |
| |
| | | Value | |
| | | | |
| Derivative Liabilities | | Interest
Rate Risk | |
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (25,668 | ) |
| |
Derivatives not subject to master netting agreements | | | 25,668 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | |
| |
(a) The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities.
Invesco V.I. Government Securities Fund
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | | |
| | | Interest
Rate Risk | |
| |
Realized Gain (Loss): | | | | |
Futures contracts | | | $(2,949,981) | |
| |
Change in Net Unrealized Appreciation: | | | | |
Futures contracts | | | 135,022 | |
| |
Total | | | $(2,814,959) | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
| |
Average notional value | | $ | 159,651,532 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | | $10,371,219 | | | | $10,701,619 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| |
| | | 2020 | |
| |
Undistributed ordinary income | | | $ 10,222,705 | |
| |
Net unrealized appreciation – investments | | | 15,751,965 | |
| |
Temporary book/tax differences | | | (185,708 | ) |
| |
Capital loss carryforward | | | (4,737,191 | ) |
| |
Shares of beneficial interest | | | 421,388,701 | |
| |
Total net assets | | | $442,440,472 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to futures contracts and straddles.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
Invesco V.I. Government Securities Fund
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| |
| Expiration | | | | Short-Term | | | Long-Term | | | Total | |
| |
Not subject to expiration | | | | $ | 4,319,042 | | | $ | 418,149 | | | $ | 4,737,191 | |
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $1,824,902,641 and $1,677,838,735, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $18,949,256 and $116,002,474, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 15,929,019 | |
| |
Aggregate unrealized (depreciation) of investments | | | (177,054 | ) |
| |
Net unrealized appreciation of investments | | $ | 15,751,965 | |
| |
| |
Cost of investments for tax purposes is $480,295,349. | | | | |
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of paydowns and dollar roll adjustments, on December 31, 2020, undistributed net investment income was increased by $3,388,280 and undistributed net realized gain (loss) was decreased by $3,388,280. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 6,054,979 | | | $ | 72,781,909 | | | | 3,053,546 | | | $ | 35,296,652 | |
| |
Series II | | | 3,404,583 | | | | 40,292,573 | | | | 1,618,892 | | | | 18,750,084 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 535,287 | | | | 6,407,384 | | | | 571,278 | | | | 6,666,815 | |
| |
Series II | | | 334,219 | | | | 3,963,835 | | | | 348,730 | | | | 4,034,804 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (6,871,977 | ) | | | (82,872,962 | ) | | | (6,860,415 | ) | | | (79,176,063 | ) |
| |
Series II | | | (3,421,340 | ) | | | (40,868,401 | ) | | | (4,004,398 | ) | | | (46,219,666 | ) |
| |
Net increase (decrease) in share activity | | | 35,751 | | | $ | (295,662 | ) | | | (5,272,367 | ) | | $ | (60,647,374 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 80% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Government Securities Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Government Securities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Government Securities Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Government Securities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Beginning Account Value (07/01/20) | | | ACTUAL | | | HYPOTHETICAL (5% annual return before
expenses) | | | Annualized Expense Ratio | |
| | Ending Account Value (12/31/20)1 | | | Expenses Paid During Period2 | | | Ending Account Value (12/31/20) | | | Expenses Paid During Period2 | |
Series I | | | $1,000.00 | | | | $1,012.20 | | | | $3.34 | | | | $1,021.82 | | | | $3.35 | | | | 0.66% | |
Series II | | | 1,000.00 | | | | 1,010.50 | | | | 4.60 | | | | 1,020.56 | | | | 4.62 | | | | 0.91 | |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Government Securities Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 0.00 | | | | | |
Qualified Dividend Income* | | | 0.00% | | | | | |
Corporate Dividends Received Deduction* | | | 0.00% | | | | | |
U.S. Treasury Obligations* | | | 34.20% | | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Government Securities Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior
Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal
Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Government Securities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Government Securities Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Growth and Income Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | | | |
| Invesco Distributors, Inc. | | | VK-VIGRI-AR-1 | |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Growth and Income Fund (the Fund) underperformed the Russell 1000 Value Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | | | | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 2.09 | % |
Series II Shares | | | 1.85 | |
S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
Russell 1000 Value Indexq (Style-Specific Index) | | | 2.80 | |
Lipper VUF Large-Cap Value Funds Index∎ (Peer Group Index) | | | 1.69 | |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Seven out of eleven sectors within the Rus-sell 1000 Value Index had positive returns for the year. The materials sector had the highest return for the year, while the energy sector posted a double-digit loss.
Security selection in the consumer discretionary sector was the largest detractor from the Fund’s relative performance compared to the Russell 1000 Value Index for the year. Within the sector, Carnival and Capri Holdings were significant detractors, driven in
large party by the pandemic-related selloff in February and March of 2020. Shares of Carnival declined sharply following news of COVID-19 infections on cruise ships. The industry was also hit by the suspension of cruise travel that resulted from the virus outbreak. As a result, the team eliminated the Fund’s position in the stock as they believed cruise demand would be slower to recover than other areas within the sector. Capri Holdings includes the Michael Kors, Versace, and Jimmy Choo brands. The stock declined significantly in the market correction, as consumers sheltered-in-place and stores closed amid the COVID-19 pandemic. Capri’s shares later rebounded from lows set in February and March, so the team used that as an opportunity to eliminate the position given ongoing volatility in the stock.
Stock selection in and overweight exposure to the energy sector also detracted from the Fund’s relative performance versus the Rus-sell 1000 Value Index during the year. Energy stocks were negatively impacted by the severe decline in oil prices due to the concurrent increase in oil supply resulting from the Saudi Arabia/Russia conflict, and the sharp deceleration in demand due to COVID-19. Key detractors for the year included Royal Dutch Shell and Marathon Oil. The team eliminated these positions during the year and reduced the Fund’s overall exposure to the sector during the year, as there was significant difficulty estimating the extent of volume declines amid the pandemic.
Security selection in and underweight exposure to the consumer staples sector also detracted from the Fund’s relative performance versus the Russell 1000 Value Index. Restaurant supplier US Foods was a key detractor from Fund performance as demand declined sharply due to COVID-related restaurant closures. The Fund’s lack of exposure to Proctor & Gamble and Wal-Mart (not Fund holdings) also hurt performance. These companies held up relatively better than other companies in the consumer staples sector as they were beneficiaries of heightened consumer demand in response to pandemic-related shelter-in-place mandates.
Stock selection in and overweight exposure to the information technology (IT) sector was the largest contributor to the Fund’s relative performance compared to the Russell 1000 Value Index. Within the sector, Apple, QUAL-COMM and Cognizant Technology Solutions were the largest contributors, benefiting from a strong rally in the sector beginning in the second quarter of 2020. Apple shares moved higher following the selloff as the company reopened its factory in China and sales rebounded. Shares of QUALCOMM traded higher following the company’s patent license settlement with Huawei that helped boost both revenue and profits. Cognizant had revenue declines due to the pandemic, but earnings were better than anticipated.
|
| Invesco V.I. Growth and Income Fund |
Stock selection and the Fund’s underweight exposure to the real estate sector also helped the Fund’s relative performance versus the Russell 1000 Value Index as the sector under-performed, posting a decline for the year.
Security selection in the financials sector was another contributor to the Fund’s relative performance during the year. Within the sector Morgan Stanley and Goldman Sachs were strong contributors. Large banks and capital markets firms benefited from a rise in yields during the year and these stocks performed well amid a broader rally in cyclical stocks.
The Fund held currency forward contracts during the year for the purpose of hedging currency exposure of non-US-based companies held in the Fund. These derivatives were not for speculative purposes or leverage, and these positions had a small negative impact on the Fund’s relative performance for the year.
During the year, the team reduced the Fund’s relative overweight exposure to the financials and energy sectors, and increased exposure to the industrials, communication services, IT and real estate sectors. At the end of the year, the Fund’s largest overweight exposures were in the financials, IT and health care sectors, while the largest underweight exposures were to the communication services, utilities and real estate sectors.
As always, we thank you for your investment in Invesco V.I. Growth and Income Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Brian Jurkash (Co-Lead)
Sergio Marcheli
Matthew Titus (Co-Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco V.I. Growth and Income Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (12/23/96) | | | 8.54 | % |
10 Years | | | 9.33 | |
5 Years | | | 8.66 | |
1 Year | | | 2.09 | |
| |
Series II Shares | | | | |
Inception (9/18/00) | | | 6.50 | % |
10 Years | | | 9.05 | |
5 Years | | | 8.40 | |
1 Year | | | 1.85 | |
Effective June 1, 2010, Class I and Class II shares of the predecessor fund, Van Kampen Life Investment Trust Growth and Income Portfolio, advised by Van Kampen Asset Management were reorganized into Series I and Series II shares, respectively, of Invesco Van Kampen V.I. Growth and Income Fund (renamed Invesco V.I. Growth and Income Fund on April 29, 2013). Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class I shares and Class II shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Growth and Income Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco V.I. Growth and Income Fund |
Supplemental Information
Invesco V.I. Growth and Income Fund’s investment objective is to seek long-term growth of capital and income.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | The Lipper VUF Large-Cap Value Funds Index is an unmanaged index considered representative of large-cap value variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
|
| Invesco V.I. Growth and Income Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Financials | | | | 23.51 | % |
Health Care | | | | 14.52 | |
Information Technology | | | | 12.89 | |
Industrials | | | | 11.87 | |
Consumer Discretionary | | | | 7.41 | |
Communication Services | | | | 6.62 | |
Consumer Staples | | | | 6.06 | |
Materials | | | | 5.36 | |
Energy | | | | 4.91 | |
Utilities | | | | 2.69 | |
Real Estate | | | | 2.11 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 2.05 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. General Motors Co. | | | | 3.30 | % |
2. Cognizant Technology Solutions Corp., Class A | | | | 2.93 | |
3. Philip Morris International, Inc. | | | | 2.67 | |
4. Wells Fargo & Co. | | | | 2.61 | |
5. Goldman Sachs Group, Inc. (The) | | | | 2.52 | |
6. Morgan Stanley | | | | 2.45 | |
7. American International Group, Inc. | | | | 2.35 | |
8. Corteva, Inc. | | | | 2.32 | |
9. CSX Corp. | | | | 2.31 | |
10. PNC Financial Services Group, Inc. (The) | | | | 2.16 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. Growth and Income Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–97.95% | |
Aerospace & Defense–4.87% | | | | | | | | |
General Dynamics Corp. | | | 207,266 | | | $ | 30,845,326 | |
|
| |
Raytheon Technologies Corp. | | | 376,517 | | | | 26,924,731 | |
|
| |
Textron, Inc. | | | 391,404 | | | | 18,916,555 | |
|
| |
| | | | | | | 76,686,612 | |
|
| |
| | |
Apparel Retail–1.62% | | | | | | | | |
TJX Cos., Inc. (The) | | | 372,468 | | | | 25,435,840 | |
|
| |
|
Automobile Manufacturers–3.30% | |
General Motors Co. | | | 1,246,933 | | | | 51,922,290 | |
|
| |
| |
Building Products–3.28% | | | | | |
Johnson Controls International PLC | | | 723,184 | | | | 33,693,143 | |
|
| |
Trane Technologies PLC | | | 123,515 | | | | 17,929,437 | |
|
| |
| | | | | | | 51,622,580 | |
|
| |
| | |
Cable & Satellite–2.70% | | | | | | | | |
Charter Communications, Inc., Class A(b) | | | 27,150 | | | | 17,961,082 | |
|
| |
Comcast Corp., Class A | | | 468,670 | | | | 24,558,308 | |
|
| |
| | | | | | | 42,519,390 | |
|
| |
|
Commodity Chemicals–1.12% | |
Dow, Inc. | | | 317,361 | | | | 17,613,536 | |
|
| |
|
Construction & Engineering–0.66% | |
Quanta Services, Inc. | | | 144,247 | | | | 10,388,669 | |
|
| |
| | |
Consumer Finance–1.09% | | | | | | | | |
American Express Co. | | | 141,339 | | | | 17,089,298 | |
|
| |
|
Data Processing & Outsourced Services–1.05% | |
Fiserv, Inc.(b) | | | 144,648 | | | | 16,469,621 | |
|
| |
| | |
Diversified Banks–5.32% | | | | | | | | |
Bank of America Corp. | | | 650,664 | | | | 19,721,626 | |
|
| |
Citigroup, Inc. | | | 372,649 | | | | 22,977,537 | |
|
| |
Wells Fargo & Co. | | | 1,358,496 | | | | 40,999,409 | |
|
| |
| | | | | | | 83,698,572 | |
|
| |
| | |
Electric Utilities–2.69% | | | | | | | | |
Duke Energy Corp. | | | 173,365 | | | | 15,873,299 | |
|
| |
Exelon Corp. | | | 359,135 | | | | 15,162,680 | |
|
| |
FirstEnergy Corp. | | | 368,645 | | | | 11,284,224 | |
|
| |
| | | | | | | 42,320,203 | |
|
| |
|
Electronic Components–1.13% | |
Corning, Inc. | | | 494,070 | | | | 17,786,520 | |
|
| |
|
Electronic Manufacturing Services–1.05% | |
TE Connectivity Ltd. | | | 136,328 | | | | 16,505,231 | |
|
| |
|
Fertilizers & Agricultural Chemicals–3.08% | |
Corteva, Inc. | | | 942,300 | | | | 36,485,856 | |
|
| |
Nutrien Ltd. (Canada)(c) | | | 250,164 | | | | 12,047,898 | |
|
| |
| | | | | | | 48,533,754 | |
|
| |
| | |
Food Distributors–3.03% | | | | | | | | |
Sysco Corp. | | | 328,160 | | | | 24,369,162 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Food Distributors–(continued) | | | | | | | | |
US Foods Holding Corp.(b) | | | 700,653 | | | $ | 23,338,751 | |
|
| |
| | | | | | | 47,707,913 | |
|
| |
| |
Health Care Distributors–1.18% | | | | | |
McKesson Corp. | | | 106,862 | | | | 18,585,439 | |
|
| |
| |
Health Care Equipment–2.61% | | | | | |
Medtronic PLC | | | 220,037 | | | | 25,775,134 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 98,685 | | | | 15,206,372 | |
|
| |
| | | | | | | 40,981,506 | |
|
| |
| |
Health Care Facilities–0.75% | | | | | |
Universal Health Services, Inc., Class B | | | 85,611 | | | | 11,771,513 | |
|
| |
| |
Health Care Services–2.09% | | | | | |
Cigna Corp. | | | 87,815 | | | | 18,281,326 | |
|
| |
CVS Health Corp. | | | 213,106 | | | | 14,555,140 | |
|
| |
| | | | | | | 32,836,466 | |
|
| |
| | |
Health Care Supplies–0.80% | | | | | | | | |
Alcon, Inc. (Switzerland)(b) | | | 188,149 | | | | 12,560,759 | |
|
| |
|
Home Improvement Retail–0.95% | |
Kingfisher PLC (United Kingdom)(b) | | | 4,052,147 | | | | 14,994,381 | |
|
| |
|
Human Resource & Employment Services–0.74% | |
Adecco Group AG (Switzerland) | | | 173,699 | | | | 11,646,936 | |
|
| |
| | |
Insurance Brokers–0.87% | | | | | | | | |
Willis Towers Watson PLC | | | 64,821 | | | | 13,656,488 | |
|
| |
| | |
Integrated Oil & Gas–1.33% | | | | | | | | |
Chevron Corp. | | | 248,591 | | | | 20,993,510 | |
|
| |
|
Internet & Direct Marketing Retail–1.54% | |
Booking Holdings, Inc.(b) | | | 10,878 | | | | 24,228,243 | |
|
| |
|
Investment Banking & Brokerage–5.79% | |
Charles Schwab Corp. (The) | | | 244,538 | | | | 12,970,295 | |
|
| |
Goldman Sachs Group, Inc. (The) | | | 150,613 | | | | 39,718,154 | |
|
| |
Morgan Stanley | | | 561,405 | | | | 38,473,085 | |
|
| |
| | | | | | | 91,161,534 | |
|
| |
|
IT Consulting & Other Services–2.93% | |
Cognizant Technology Solutions Corp., Class A | | | 562,577 | | | | 46,103,185 | |
|
| |
|
Managed Health Care–1.98% | |
Anthem, Inc. | | | 96,974 | | | | 31,137,382 | |
|
| |
| |
Movies & Entertainment–1.94% | | | | | |
Walt Disney Co. (The)(b) | | | 168,362 | | | | 30,503,827 | |
|
| |
| |
Multi-line Insurance–2.35% | | | | | |
American International Group, Inc. | | | 977,763 | | | | 37,018,107 | |
|
| |
|
Oil & Gas Exploration & Production–3.58% | |
Canadian Natural Resources Ltd. (Canada) | | | 510,557 | | | | 12,269,572 | |
|
| |
Concho Resources, Inc. | | | 231,021 | | | | 13,480,076 | |
|
| |
ConocoPhillips | | | 96,968 | | | | 3,877,750 | |
|
| |
Devon Energy Corp. | | | 764,330 | | | | 12,084,057 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Oil & Gas Exploration & Production–(continued) | |
Parsley Energy, Inc., Class A | | | 1,026,528 | | | $ | 14,576,698 | |
|
| |
| | | | | | | 56,288,153 | |
|
| |
|
Other Diversified Financial Services–1.89% | |
Equitable Holdings, Inc. | | | 482,546 | | | | 12,348,352 | |
|
| |
Voya Financial, Inc. | | | 296,321 | | | | 17,426,638 | |
|
| |
| | | | | | | 29,774,990 | |
|
| |
|
Packaged Foods & Meats–0.36% | |
Mondelez International, Inc., Class A | | | 96,016 | | | | 5,614,056 | |
|
| |
|
Pharmaceuticals–5.12% | |
Bristol-Myers Squibb Co. | | | 401,171 | | | | 24,884,637 | |
|
| |
GlaxoSmithKline PLC (United Kingdom) | | | 499,516 | | | | 9,152,665 | |
|
| |
Johnson & Johnson | | | 92,097 | | | | 14,494,226 | |
|
| |
Pfizer, Inc. | | | 399,538 | | | | 14,706,994 | |
|
| |
Sanofi (France) | | | 179,210 | | | | 17,315,367 | |
|
| |
| | | | | | | 80,553,889 | |
|
| |
|
Railroads–2.31% | |
CSX Corp. | | | 400,519 | | | | 36,347,099 | |
|
| |
|
Real Estate Services–2.11% | |
CBRE Group, Inc., Class A(b) | | | 530,257 | | | | 33,257,719 | |
|
| |
|
Regional Banks–6.20% | |
Citizens Financial Group, Inc. | | | 946,782 | | | | 33,856,925 | |
|
| |
PNC Financial Services Group, Inc. (The) | | | 228,383 | | | | 34,029,067 | |
|
| |
Truist Financial Corp. | | | 619,811 | | | | 29,707,541 | |
|
| |
| | | | | | | 97,593,533 | |
|
| |
|
Semiconductors–4.24% | |
Micron Technology, Inc.(b) | | | 196,046 | | | | 14,738,738 | |
|
| |
NXP Semiconductors N.V. (Netherlands) | | | 142,985 | | | | 22,736,045 | |
|
| |
QUALCOMM, Inc. | | | 191,969 | | | | 29,244,558 | |
|
| |
| | | | | | | 66,719,341 | |
|
| |
|
Specialty Chemicals–1.16% | |
DuPont de Nemours, Inc. | | | 255,644 | | | | 18,178,845 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Systems Software–1.55% | |
Oracle Corp. | | | 377,840 | | | $ | 24,442,470 | |
|
| |
|
Technology Hardware, Storage & Peripherals–0.94% | |
Apple, Inc. | | | 111,514 | | | | 14,796,793 | |
|
| |
|
Tobacco–2.67% | |
Philip Morris International, Inc. | | | 507,086 | | | | 41,981,650 | |
|
| |
|
Wireless Telecommunication Services–1.98% | |
Vodafone Group PLC (United Kingdom) | | | 18,889,827 | | | | 31,085,742 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $1,179,603,311) | | | | 1,541,113,585 | |
|
| |
| |
Money Market Funds–3.94% | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 22,913,609 | | | | 22,913,609 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 12,921,593 | | | | 12,925,470 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 26,186,982 | | | | 26,186,982 | |
|
| |
Total Money Market Funds (Cost $62,027,353) | | | | 62,026,061 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-101.89%
(Cost $1,241,630,664) | | | | 1,603,139,646 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.76% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 4,780,034 | | | | 4,780,034 | |
|
| |
Invesco Private Prime Fund, 0.12%(d)(e)(f) | | | 7,167,901 | | | | 7,170,051 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $11,950,085) | | | | 11,950,085 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–102.65%
(Cost $1,253,580,749) | | | | 1,615,089,731 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(2.65)% | | | | (41,689,391 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 1,573,400,340 | |
|
| |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 36,165,254 | | | | $ | 167,728,481 | | | | $ | (180,980,126 | ) | | | $ | - | | | | $ | - | | | | $ | 22,913,609 | | | | $ | 76,131 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 25,915,806 | | | | | 119,806,058 | | | | | (132,808,185 | ) | | | | (974 | ) | | | | 12,765 | | | | | 12,925,470 | | | | | 66,798 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 41,331,718 | | | | | 191,689,693 | | | | | (206,834,429 | ) | | | | - | | | | | - | | | | | 26,186,982 | | | | | 82,941 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | - | | | | $ | 14,382,025 | | | | $ | (14,382,025 | ) | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | 768 | * |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 4,786,313 | | | | | (4,784,001 | ) | | | | - | | | | | (2,312 | ) | | | | - | | | | | 1,134 | * |
| | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 33,114,344 | | | | | (28,334,310 | ) | | | | - | | | | | - | | | | | 4,780,034 | | | | | 159 | * |
| | | | | | | |
Invesco Private Prime Fund | | | | - | | | | | 11,884,867 | | | | | (4,714,983 | ) | | | | - | | | | | 167 | | | | | 7,170,051 | | | | | 89 | * |
| | | | | | | |
Total | | | $ | 103,412,778 | | | | $ | 543,391,781 | | | | $ | (572,838,059 | ) | | | $ | (974 | ) | | | $ | 10,620 | | | | $ | 73,976,146 | | | | $ | 228,020 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
|
| |
Settlement Date | | | | Contract to | | | Unrealized Appreciation
(Depreciation) | |
| | Counterparty | | Deliver | | | Receive | |
|
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | CHF | | | | 542,563 | | | | USD | | | | 614,129 | | | $ | 1,072 | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 373,652 | | | | USD | | | | 458,290 | | | | 1,694 | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 491,714 | | | | CAD | | | | 631,814 | | | | 4,673 | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 282,850 | | | | CHF | | | | 251,405 | | | | 1,220 | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 561,797 | | | | EUR | | | | 461,017 | | | | 1,557 | |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 2,039,180 | | | | GBP | | | | 1,517,943 | | | | 36,818 | |
|
| |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | 47,034 | |
|
| |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
|
| |
01/15/2021 | | Bank of New York Mellon (The) | | | CAD | | | | 11,973,838 | | | | USD | | | | 9,400,388 | | | | (6,918 | ) |
|
| |
01/15/2021 | | Bank of New York Mellon (The) | | | EUR | | | | 10,463,624 | | | | USD | | | | 12,725,796 | | | | (60,569 | ) |
|
| |
01/15/2021 | | Bank of New York Mellon (The) | | | GBP | | | | 31,742,188 | | | | USD | | | | 42,507,964 | | | | (903,868 | ) |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | CAD | | | | 953,465 | | | | USD | | | | 745,866 | | | | (3,229 | ) |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | CHF | | | | 15,739,296 | | | | USD | | | | 17,768,115 | | | | (16,174 | ) |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 236,557 | | | | USD | | | | 288,367 | | | | (702 | ) |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | GBP | | | | 756,948 | | | | USD | | | | 1,019,329 | | | | (15,901 | ) |
|
| |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 318,986 | | | | CAD | | | | 405,893 | | | | (94 | ) |
|
| |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | (1,007,455 | ) |
|
| |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | $ | (960,421 | ) |
|
| |
|
Abbreviations: |
|
CAD – Canadian Dollar |
CHF – Swiss Franc |
EUR – Euro |
GBP – British Pound Sterling |
USD – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $1,179,603,311)* | | $ | 1,541,113,585 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $73,977,438) | | | 73,976,146 | |
|
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 47,034 | |
|
| |
Foreign currencies, at value (Cost $620) | | | 630 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 4,675,360 | |
|
| |
Fund shares sold | | | 370,353 | |
|
| |
Dividends | | | 2,932,351 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 236,832 | |
|
| |
Total assets | | | 1,623,352,291 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 1,007,455 | |
|
| |
Payable for: | | | | |
Investments purchased | | | 7,121,417 | |
|
| |
Fund shares reacquired | | | 26,992,968 | |
|
| |
Amount due custodian | | | 1,639,318 | |
|
| |
Collateral upon return of securities loaned | | | 11,950,085 | |
|
| |
Accrued fees to affiliates | | | 851,766 | |
|
| |
Accrued trustees’ and officers’ fees and benefits | | | 2,007 | |
|
| |
Accrued other operating expenses | | | 123,848 | |
|
| |
Trustee deferred compensation and retirement plans | | | 263,087 | |
|
| |
Total liabilities | | | 49,951,951 | |
|
| |
Net assets applicable to shares outstanding | | $ | 1,573,400,340 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 1,325,494,988 | |
|
| |
Distributable earnings | | | 247,905,352 | |
|
| |
| | $ | 1,573,400,340 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 157,477,786 | |
|
| |
Series II | | $ | 1,415,922,554 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,412,624 | |
|
| |
Series II | | | 75,721,164 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 18.72 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 18.70 | |
|
| |
| * | At December 31, 2020, security with a value of $11,927,402 was on loan to brokers. |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $367,915) | | $ | 33,447,847 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $121,097) | | | 346,967 | |
|
| |
Total investment income | | | 33,794,814 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 7,264,586 | |
|
| |
Administrative services fees | | | 2,097,286 | |
|
| |
Custodian fees | | | 64,535 | |
|
| |
Distribution fees - Series II | | | 2,823,213 | |
|
| |
Transfer agent fees | | | 29,043 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 42,586 | |
|
| |
Reports to shareholders | | | 9,101 | |
|
| |
Professional services fees | | | 57,685 | |
|
| |
Other | | | 17,083 | |
|
| |
Total expenses | | | 12,405,118 | |
|
| |
Less: Fees waived | | | (50,944 | ) |
|
| |
Net expenses | | | 12,354,174 | |
|
| |
Net investment income | | | 21,440,640 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (90,867,492 | ) |
|
| |
Affiliated investment securities | | | 10,620 | |
|
| |
Foreign currencies | | | 845,329 | |
|
| |
Forward foreign currency contracts | | | (4,547,860 | ) |
|
| |
| | | (94,559,403 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 58,343,039 | |
|
| |
Affiliated investment securities | | | (974 | ) |
|
| |
Foreign currencies | | | 1,694 | |
|
| |
Forward foreign currency contracts | | | 1,574,788 | |
|
| |
| | | 59,918,547 | |
|
| |
Net realized and unrealized gain (loss) | | | (34,640,856 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | $ | (13,200,216 | ) |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 21,440,640 | | | $ | 25,947,061 | |
|
| |
Net realized gain (loss) | | | (94,559,403 | ) | | | (6,838,792 | ) |
|
| |
Change in net unrealized appreciation | | | 59,918,547 | | | | 279,095,156 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (13,200,216 | ) | | | 298,203,425 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (5,561,715 | ) | | | (23,474,054 | ) |
|
| |
Series II | | | (42,601,032 | ) | | | (173,791,397 | ) |
|
| |
Total distributions from distributable earnings | | | (48,162,747 | ) | | | (197,265,451 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (24,590,096 | ) | | | 4,136,745 | |
|
| |
Series II | | | (40,847,878 | ) | | | 343,560,704 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (65,437,974 | ) | | | 347,697,449 | |
|
| |
Net increase (decrease) in net assets | | | (126,800,937 | ) | | | 448,635,423 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,700,201,277 | | | | 1,251,565,854 | |
|
| |
End of year | | $ | 1,573,400,340 | | | $ | 1,700,201,277 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 19.09 | | | | $ | 0.31 | | | | $ | (0.01 | ) | | | $ | 0.30 | | | | $ | (0.39 | ) | | | $ | (0.28 | ) | | | $ | (0.67 | ) | | | $ | 18.72 | | | | | 2.09 | % | | | $ | 157,478 | | | | | 0.75 | %(d) | | | | 0.75 | %(d) | | | | 1.90 | %(d) | | | | 46 | % |
Year ended 12/31/19 | | | | 17.51 | | | | | 0.37 | | | | | 3.84 | | | | | 4.21 | | | | | (0.38 | ) | | | | (2.25 | ) | | | | (2.63 | ) | | | | 19.09 | | | | | 25.19 | | | | | 187,097 | | | | | 0.73 | | | | | 0.74 | | | | | 1.91 | | | | | 62 | |
Year ended 12/31/18 | | | | 22.70 | | | | | 0.36 | | | | | (2.95 | ) | | | | (2.59 | ) | | | | (0.47 | ) | | | | (2.13 | ) | | | | (2.60 | ) | | | | 17.51 | | | | | (13.38 | ) | | | | 166,306 | | | | | 0.75 | | | | | 0.75 | | | | | 1.63 | | | | | 32 | |
Year ended 12/31/17 | | | | 21.05 | | | | | 0.41 | (e) | | | | 2.52 | | | | | 2.93 | | | | | (0.34 | ) | | | | (0.94 | ) | | | | (1.28 | ) | | | | 22.70 | | | | | 14.32 | | | | | 187,254 | | | | | 0.76 | | | | | 0.76 | | | | | 1.90 | (e) | | | | 17 | |
Year ended 12/31/16 | | | | 19.60 | | | | | 0.33 | | | | | 3.29 | | | | | 3.62 | | | | | (0.23 | ) | | | | (1.94 | ) | | | | (2.17 | ) | | | | 21.05 | | | | | 19.69 | | | | | 168,082 | | | | | 0.77 | | | | | 0.79 | | | | | 1.69 | | | | | 28 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 19.06 | | | | | 0.27 | | | | | (0.01 | ) | | | | 0.26 | | | | | (0.34 | ) | | | | (0.28 | ) | | | | (0.62 | ) | | | | 18.70 | | | | | 1.85 | | | | | 1,415,923 | | | | | 1.00 | (d) | | | | 1.00 | (d) | | | | 1.65 | (d) | | | | 46 | |
Year ended 12/31/19 | | | | 17.48 | | | | | 0.32 | | | | | 3.83 | | | | | 4.15 | | | | | (0.32 | ) | | | | (2.25 | ) | | | | (2.57 | ) | | | | 19.06 | | | | | 24.85 | | | | | 1,513,105 | | | | | 0.98 | | | | | 0.99 | | | | | 1.66 | | | | | 62 | |
Year ended 12/31/18 | | | | 22.66 | | | | | 0.30 | | | | | (2.95 | ) | | | | (2.65 | ) | | | | (0.40 | ) | | | | (2.13 | ) | | | | (2.53 | ) | | | | 17.48 | | | | | (13.59 | ) | | | | 1,085,260 | | | | | 1.00 | | | | | 1.00 | | | | | 1.38 | | | | | 32 | |
Year ended 12/31/17 | | | | 21.02 | | | | | 0.36 | (e) | | | | 2.51 | | | | | 2.87 | | | | | (0.29 | ) | | | | (0.94 | ) | | | | (1.23 | ) | | | | 22.66 | | | | | 14.04 | | | | | 1,823,085 | | | | | 1.01 | | | | | 1.01 | | | | | 1.65 | (e) | | | | 17 | |
Year ended 12/31/16 | | | | 19.58 | | | | | 0.28 | | | | | 3.28 | | | | | 3.56 | | | | | (0.18 | ) | | | | (1.94 | ) | | | | (2.12 | ) | | | | 21.02 | | | | | 19.37 | | | | | 1,838,074 | | | | | 1.02 | | | | | 1.04 | | | | | 1.44 | | | | | 28 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $146,094 and $1,129,285 for Series I and Series II shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets include significant dividends received during the period. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.30 and 1.42%, and $0.25 and 1.17%, for Series I and Series II, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Growth and Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek long-term growth of capital and income.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco V.I. Growth and Income Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
|
| Invesco V.I. Growth and Income Fund |
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
|
| |
First $500 million | | | 0.600 | % |
|
| |
Over $500 million | | | 0.550 | % |
|
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.57%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.78% and Series II shares to 1.03% of the Fund’s average daily net assets (the “expense limits”). Effective May 1, 2021 through June 30, 2021, the Adviser has contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $50,944.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $185,784 for accounting and fund administrative services and was reimbursed $1,911,502 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $7,925 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s |
|
| Invesco V.I. Growth and Income Fund |
| | |
| | own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 1,444,357,735 | | | $ | 96,755,850 | | | | $– | | | $ | 1,541,113,585 | |
|
| |
Money Market Funds | | | 62,026,061 | | | | 11,950,085 | | | | – | | | | 73,976,146 | |
|
| |
Total Investments in Securities | | | 1,506,383,796 | | | | 108,705,935 | | | | – | | | | 1,615,089,731 | |
|
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | 47,034 | | | | – | | | | 47,034 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (1,007,455 | ) | | | – | | | | (1,007,455 | ) |
|
| |
Total Other Investments | | | – | | | | (960,421 | ) | | | – | | | | (960,421 | ) |
|
| |
Total Investments | | $ | 1,506,383,796 | | | $ | 107,745,514 | | | | $– | | | $ | 1,614,129,310 | |
|
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Assets | | Risk | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 47,034 | |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Assets subject to master netting agreements | | $ | 47,034 | |
|
| |
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Liabilities | | Risk | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | $ | (1,007,455 | ) |
| |
Derivatives not subject to master netting agreements | | | - | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (1,007,455 | ) |
|
| |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | |
| | | Financial | | | Financial | | | | | | | | | | | |
| | | Derivative | | | Derivative | | | | | | Collateral | | | | | |
| | | Assets | | | Liabilities | | | | | | (Received)/Pledged | | | | | |
| | | Forward Foreign | | | Forward Foreign | | | Net Value of | | | | | | | Net | |
| Counterparty | | Currency Contracts | | | Currency Contracts | | | Derivatives | | | Non-Cash | | Cash | | Amount | |
| |
Bank of New York Mellon (The) | | $ | - | | | $ | (971,355 | ) | | $ | (971,355 | ) | | $- | | $- | | $ | (971,355 | ) |
| |
State Street Bank & Trust Co. | | | 47,034 | | | | (36,100 | ) | | | 10,934 | | | - | | - | | | 10,934 | |
| |
Total | | $ | 47,034 | | | $ | (1,007,455 | ) | | $ | (960,421 | ) | | $- | | $- | | $ | (960,421 | ) |
|
| |
|
| Invesco V.I. Growth and Income Fund |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on | |
| | | Statement of Operations | |
| | | Currency | |
| | | Risk | |
| |
Realized Gain (Loss): | | | | |
Forward foreign currency contracts | | | $(4,547,860) | |
| |
Change in Net Unrealized Appreciation: | | | | |
Forward foreign currency contracts | | | 1,574,788 | |
| |
Total | | | $(2,973,072) | |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Forward | |
| | | Foreign Currency | |
| | | Contracts | |
| |
Average notional value | | $ | 111,827,531 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 26,309,042 | | | $ | 24,898,470 | |
|
| |
Long-term capital gain | | | 21,853,705 | | | | 172,366,981 | |
|
| |
Total distributions | | $ | 48,162,747 | | | $ | 197,265,451 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 22,257,079 | |
|
| |
Net unrealized appreciation – investments | | | 312,594,536 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 23,525 | |
|
| |
Temporary book/tax differences | | | (185,315 | ) |
|
| |
Capital loss carryforward | | | (86,784,473 | ) |
|
| |
Shares of beneficial interest | | | 1,325,494,988 | |
|
| |
Total net assets | | $ | 1,573,400,340 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to forward foreign currency contracts and wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
|
| Invesco V.I. Growth and Income Fund |
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | |
| Capital Loss Carryforward* | |
|
| |
| Expiration | | Short-Term | | | Long-Term | | Total | |
|
| |
Not subject to expiration | | $ | 30,104,856 | | | $56,679,617 | | $ | 86,784,473 | |
|
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $573,690,625 and $631,312,481, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 335,775,233 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (23,180,697 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 312,594,536 | |
|
| |
Cost of investments for tax purposes is $1,301,534,774.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2020, undistributed net investment income was increased by $840,449 and undistributed net realized gain (loss) was decreased by $840,449. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,177,028 | | | $ | 18,316,966 | | | | 961,502 | | | $ | 18,593,160 | |
|
| |
Series II | | | 21,163,497 | | | | 336,267,970 | | | | 46,991,194 | | | | 937,263,516 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 341,629 | | | | 5,561,715 | | | | 1,324,721 | | | | 23,474,054 | |
|
| |
Series II | | | 2,618,379 | | | | 42,601,032 | | | | 9,813,179 | | | | 173,791,397 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,909,124 | ) | | | (48,468,777 | ) | | | (1,980,258 | ) | | | (37,930,469 | ) |
|
| |
Series II | | | (27,458,503 | ) | | | (419,716,880 | ) | | | (39,496,692 | ) | | | (767,494,209 | ) |
|
| |
Net increase (decrease) in share activity | | | (5,067,094 | ) | | $ | (65,437,974 | ) | | | 17,613,646 | | | $ | 347,697,449 | |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 81% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
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| Invesco V.I. Growth and Income Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Growth and Income Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Growth and Income Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco V.I. Growth and Income Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,273.00 | | $4.40 | | $1,021.27 | | $3.91 | | 0.77% |
Series II | | 1,000.00 | | 1,271.30 | | 5.82 | | 1,020.01 | | 5.18 | | 1.02 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
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| Invesco V.I. Growth and Income Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 21,853,705 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 100.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
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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 | | 2007 | | 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) | | 197 | | 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. |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort –1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey–1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Growth and Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
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| Invesco V.I. Growth and Income Fund |
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| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Health Care Fund |
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| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | I-VIGHC-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
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Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Health Care Fund (the Fund) outperformed the MSCI World Health Care Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 14.16 | % |
Series II Shares | | | 14.20 | |
MSCI World Indexq (Broad Market Index) | | | 15.90 | |
MSCI World Health Care Indexq (Style-Specific Index) | | | 13.52 | |
Lipper VUF Health/Biotechnology Funds Classification Average∎ (Peer Group) | | | 21.09 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Stock selection in the biotechnology and health care supplies industries contributed most to relative performance compared to the MSCI World Health Care Index. An overweight allocation to health care technology and life sciences tools and services was also additive to relative performance. Stock selection in health care equipment, pharmaceuticals and managed health care detracted most from relative performance.
The top three individual contributors to performance were Thermo Fisher Scientific, Immunomedics and Inspire Medical Systems. Thermo Fisher Scientific delivered strong business performance across its segments and continues to benefit from health care innovation. Immunomedics is a leading biopharmaceutical company in the area of antibody-drug conjugates. In the second quarter, its asset Trodelvy was approved on an accelerated basis for metastatic triple-negative breast cancer, a cancer with a particularly high unmet need and few treatment options. Shares also climbed in September when it was announced that Gilead would be acquiring the company. Inspire Medical Systems is a medical technology company focused on the treatment of obstructive sleep apnea. Performance was strong, with significant business momentum being driven by the number of US medical centers implanting its Inspire therapy, broader Medicare and commercial insurance coverage and no meaningful negative impact from COVID-19. We liquidated our holdings in Immunomedics prior to the end of the year.
The top three individual detractors from performance were Boston Scientific, Axsome Therapeutics and Amarin. Boston Scientific was negatively impacted by COVID-19 crowding out many of the elective procedures associated with its product portfolio and some of its clinical trials were also put on hold. Investors were also taken by surprise in late 2020, when the company announced it would be recalling its Lotus Edge transcatheter aortic valve replacement product and ending the program. We exited the position. Axsome Therapeutics is developing therapies for the treatment of central nervous system diseases using several platform approaches to drug development, modification and delivery. The company continued to make fundamental progress this year in multiple neurology programs with positive data and collaboration with the FDA, but its stock price fluctuated as investors awaited additional updates. Amarin is a pharmaceutical company focused on developing therapeutics to cost-effectively improve cardiovascular health. The company lost a patent case in early 2020 that was a surprise to investors and caused its shares to drop. We liquidated our holdings in Amarin by the end of the year.
The Fund invests around four long-term themes, underpinned by our research team’s fundamental insights: 1) Innovation – health care is in an unprecedented era of research & development, 2) the intersection between health care and other top performing sectors such as technology & consumer, 3) addressing the cost of care, and 4) aging demographics globally. In our increasingly globalized and interconnected world, the current crisis has shined a light on health care’s essential role in
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| Invesco V.I. Health Care Fund |
safeguarding the world’s economy and justified increased spending to address the current catastrophe and to mitigate and prevent future episodes.
We thank you for your investment in Invesco V.I. Health Care Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Justin Livengood
Henry Wu
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco V.I. Health Care Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 2 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/21/97) | | | 9.32 | % |
10 Years | | | 13.09 | |
5 Years | | | 9.43 | |
1 Year | | | 14.46 | |
| |
Series II Shares | | | | |
Inception (4/30/04) | | | 8.93 | % |
10 Years | | | 12.81 | |
5 Years | | | 9.16 | |
1 Year | | | 14.20 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Health Care Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance
figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco V.I. Health Care Fund |
Supplemental Information
Invesco V.I. Health Care Fund’s investment objective is long-term growth of capital.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The MSCI World Index is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | The MSCI World Health Care Index is an unmanaged index considered representative of health care stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | The Lipper VUF Health/Biotechnology Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Health/ Biotechnology Funds classification. |
| ∎ | | 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. |
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| Invesco V.I. Health Care Fund |
Fund Information
Portfolio Composition
| | | | | |
| By country | | % of total net assets |
| |
United States | | | | 85.88 | % |
Switzerland | | | | 5.47 | |
United Kingdom | | | | 2.94 | |
Netherlands | | | | 2.29 | |
Countries, each less than 2% of portfolio | | | | 2.41 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.01 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Thermo Fisher Scientific, Inc. | | | | 5.24 | % |
2. UnitedHealth Group, Inc. | | | | 4.96 | |
3. Medtronic PLC | | | | 3.11 | |
4. Abbott Laboratories | | | | 3.02 | |
5. AstraZeneca PLC, ADR | | | | 2.94 | |
6. Danaher Corp. | | | | 2.90 | |
7. Intuitive Surgical, Inc. | | | | 2.84 | |
8. Eli Lilly and Co. | | | | 2.73 | |
9. Novartis AG, ADR | | | | 2.55 | |
10. IDEXX Laboratories, Inc. | | | | 2.50 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
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| Invesco V.I. Health Care Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.99% | |
Biotechnology–23.59% | | | | | | | | |
AbbVie, Inc. | | | 44,227 | | | $ | 4,738,923 | |
|
| |
ACADIA Pharmaceuticals, Inc.(b) | | | 66,876 | | | | 3,575,191 | |
|
| |
Acceleron Pharma, Inc.(b) | | | 8,822 | | | | 1,128,687 | |
|
| |
Allakos, Inc.(b) | | | 4,545 | | | | 636,300 | |
|
| |
Altimmune, Inc.(b) | | | 44,440 | | | | 501,283 | |
|
| |
Arcus Biosciences, Inc.(b) | | | 27,938 | | | | 725,271 | |
|
| |
Argenx SE, ADR (Netherlands)(b) | | | 3,868 | | | | 1,137,540 | |
|
| |
Ascendis Pharma A/S, ADR
(Denmark)(b) | | | 9,038 | | | | 1,507,358 | |
|
| |
Biogen, Inc.(b) | | | 7,493 | | | | 1,834,736 | |
|
| |
BioMarin Pharmaceutical, Inc.(b) | | | 16,589 | | | | 1,454,690 | |
|
| |
CareDx, Inc.(b) | | | 8,373 | | | | 606,624 | |
|
| |
Cogent Biosciences, Inc.(b) | | | 72,358 | | | | 812,580 | |
|
| |
Exact Sciences Corp.(b) | | | 21,966 | | | | 2,910,275 | |
|
| |
Fate Therapeutics, Inc.(b) | | | 6,127 | | | | 557,128 | |
|
| |
Forte Biosciences, Inc.(b) | | | 31,301 | | | | 1,139,670 | |
|
| |
Genmab A/S, ADR (Denmark)(b) | | | 28,960 | | | | 1,177,514 | |
|
| |
Global Blood Therapeutics, Inc.(b) | | | 18,055 | | | | 781,962 | |
|
| |
Halozyme Therapeutics, Inc.(b) | | | 28,690 | | | | 1,225,350 | |
|
| |
Iovance Biotherapeutics, Inc.(b) | | | 35,611 | | | | 1,652,350 | |
|
| |
Kadmon Holdings, Inc.(b) | | | 180,528 | | | | 749,191 | |
|
| |
Keros Therapeutics, Inc.(b) | | | 19,495 | | | | 1,375,177 | |
|
| |
Kinnate Biopharma, Inc.(b) | | | 17,369 | | | | 690,939 | |
|
| |
Kronos Bio, Inc.(b) | | | 39,074 | | | | 1,167,140 | |
|
| |
Mersana Therapeutics, Inc.(b) | | | 40,698 | | | | 1,082,974 | |
|
| |
Natera, Inc.(b) | | | 9,085 | | | | 904,139 | |
|
| |
Novavax, Inc.(b) | | | 13,034 | | | | 1,453,421 | |
|
| |
Olema Pharmaceuticals, Inc.(b) | | | 54,805 | | | | 2,635,024 | |
|
| |
PMV Pharmaceuticals, Inc.(b) | | | 31,364 | | | | 1,929,200 | |
|
| |
Rocket Pharmaceuticals, Inc.(b) | | | 34,106 | | | | 1,870,373 | |
|
| |
Sarepta Therapeutics, Inc.(b) | | | 10,792 | | | | 1,839,928 | |
|
| |
Seagen, Inc.(b) | | | 9,121 | | | | 1,597,452 | |
|
| |
TG Therapeutics, Inc.(b) | | | 20,589 | | | | 1,071,040 | |
|
| |
Trillium Therapeutics, Inc. (Canada)(b)(c) | | | 91,324 | | | | 1,343,376 | |
|
| |
Ultragenyx Pharmaceutical, Inc.(b) | | | 4,240 | | | | 586,943 | |
|
| |
Vertex Pharmaceuticals, Inc.(b) | | | 20,195 | | | | 4,772,886 | |
|
| |
Zentalis Pharmaceuticals, Inc.(b) | | | 28,023 | | | | 1,455,515 | |
|
| |
| | | | | | | 54,628,150 | |
|
| |
| |
Electronic Equipment & Instruments–0.09% | | | | | |
908 Devices, Inc.(b) | | | 3,841 | | | | 218,745 | |
|
| |
| | |
Health Care Equipment–24.96% | | | | | | | | |
Abbott Laboratories | | | 63,966 | | | | 7,003,637 | |
|
| |
Becton, Dickinson and Co. | | | 7,642 | | | | 1,912,181 | |
|
| |
Danaher Corp. | | | 30,288 | | | | 6,728,176 | |
|
| |
DexCom, Inc.(b) | | | 3,270 | | | | 1,208,984 | |
|
| |
Edwards Lifesciences Corp.(b) | | | 50,164 | | | | 4,576,462 | |
|
| |
Globus Medical, Inc., Class A(b) | | | 28,672 | | | | 1,869,988 | |
|
| |
IDEXX Laboratories, Inc.(b) | | | 11,563 | | | | 5,779,997 | |
|
| |
Insulet Corp.(b) | | | 4,409 | | | | 1,127,073 | |
|
| |
Intuitive Surgical, Inc.(b) | | | 8,033 | | | | 6,571,797 | |
|
| |
Koninklijke Philips N.V. (Netherlands)(b) | | | 77,780 | | | | 4,162,502 | |
|
| |
Masimo Corp.(b) | | | 8,545 | | | | 2,293,307 | |
|
| |
Medtronic PLC | | | 61,446 | | | | 7,197,785 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Equipment–(continued) | | | | | | | | |
Outset Medical, Inc.(b) | | | 3,604 | | | $ | 204,851 | |
|
| |
Stryker Corp. | | | 7,737 | | | | 1,895,875 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 34,188 | | | | 5,268,029 | |
|
| |
| | | | | | | 57,800,644 | |
|
| |
| | |
Health Care Facilities–1.89% | | | | | | | | |
HCA Healthcare, Inc. | | | 22,861 | | | | 3,759,720 | |
|
| |
Surgery Partners, Inc.(b) | | | 20,991 | | | | 608,948 | |
|
| |
| | | | | | | 4,368,668 | |
|
| |
| | |
Health Care Services–3.72% | | | | | | | | |
1Life Healthcare, Inc.(b) | | | 28,920 | | | | 1,262,358 | |
|
| |
Amedisys, Inc.(b) | | | 6,703 | | | | 1,966,191 | |
|
| |
Cigna Corp. | | | 15,764 | | | | 3,281,750 | |
|
| |
Guardant Health, Inc.(b) | | | 7,440 | | | | 958,867 | |
|
| |
Oak Street Health, Inc.(b) | | | 18,889 | | | | 1,155,251 | |
|
| |
| | | | | | | 8,624,417 | |
|
| |
| | |
Health Care Supplies–4.83% | | | | | | | | |
Alcon, Inc. (Switzerland)(b) | | | 19,339 | | | | 1,275,987 | |
|
| |
Align Technology, Inc.(b) | | | 9,267 | | | | 4,952,100 | |
|
| |
Pulmonx Corp.(b) | | | 25,738 | | | | 1,776,437 | |
|
| |
Silk Road Medical, Inc.(b) | | | 35,197 | | | | 2,216,707 | |
|
| |
West Pharmaceutical Services, Inc. | | | 3,404 | | | | 964,387 | |
|
| |
| | | | | | | 11,185,618 | |
|
| |
| | |
Health Care Technology–4.57% | | | | | | | | |
HMS Holdings Corp.(b) | | | 30,634 | | | | 1,125,800 | |
|
| |
Inspire Medical Systems, Inc.(b) | | | 24,155 | | | | 4,543,314 | |
|
| |
Ping An Healthcare and Technology Co. Ltd. (China)(b)(d) | | | 127,100 | | | | 1,542,252 | |
|
| |
Veeva Systems, Inc., Class A(b) | | | 12,349 | | | | 3,362,015 | |
|
| |
| | | | | | | 10,573,381 | |
|
| |
| |
Life Sciences Tools & Services–11.22% | | | | | |
10X Genomics, Inc., Class A(b) | | | 9,114 | | | | 1,290,542 | |
|
| |
Agilent Technologies, Inc. | | | 14,527 | | | | 1,721,304 | |
|
| |
Bio-Rad Laboratories, Inc., Class A(b) | | | 3,095 | | | | 1,804,199 | |
|
| |
Charles River Laboratories International, Inc.(b) | | | 4,703 | | | | 1,175,092 | |
|
| |
Illumina, Inc.(b) | | | 3,487 | | | | 1,290,190 | |
|
| |
Lonza Group AG (Switzerland) | | | 2,041 | | | | 1,310,863 | |
|
| |
Maravai LifeSciences Holdings, Inc., Class A(b) | | | 39,036 | | | | 1,094,960 | |
|
| |
Mettler-Toledo International, Inc.(b) | | | 938 | | | | 1,069,020 | |
|
| |
NeoGenomics, Inc.(b) | | | 11,334 | | | | 610,223 | |
|
| |
Quanterix Corp.(b) | | | 12,486 | | | | 580,599 | |
|
| |
Repligen Corp.(b) | | | 7,858 | | | | 1,505,828 | |
|
| |
Seer, Inc.(b) | | | 6,848 | | | | 384,447 | |
|
| |
Thermo Fisher Scientific, Inc. | | | 26,069 | | | | 12,142,419 | |
|
| |
| | | | | | | 25,979,686 | |
|
| |
| | |
Managed Health Care–9.17% | | | | | | | | |
Anthem, Inc. | | | 12,268 | | | | 3,939,132 | |
|
| |
HealthEquity, Inc.(b) | | | 10,970 | | | | 764,719 | |
|
| |
Humana, Inc. | | | 12,310 | | | | 5,050,423 | |
|
| |
UnitedHealth Group, Inc. | | | 32,754 | | | | 11,486,173 | |
|
| |
| | | | | | | 21,240,447 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Pharmaceuticals–14.95% | | | | | | | | |
AstraZeneca PLC, ADR (United Kingdom) | | | 135,972 | | | $ | 6,797,240 | |
|
| |
Axsome Therapeutics, Inc.(b) | | | 27,953 | | | | 2,277,331 | |
|
| |
Bristol-Myers Squibb Co. | | | 74,401 | | | | 4,615,094 | |
|
| |
Catalent, Inc.(b) | | | 5,945 | | | | 618,696 | |
|
| |
Eli Lilly and Co. | | | 37,451 | | | | 6,323,227 | |
|
| |
Horizon Therapeutics PLC(b) | | | 15,471 | | | | 1,131,704 | |
|
| |
Novartis AG, ADR (Switzerland) | | | 62,568 | | | | 5,908,296 | |
|
| |
Relmada Therapeutics, Inc.(b) | | | 27,285 | | | | 875,030 | |
|
| |
Roche Holding AG (Switzerland) | | | 11,977 | | | | 4,178,870 | |
|
| |
Zoetis, Inc. | | | 11,514 | | | | 1,905,567 | |
|
| |
| | | | | | | 34,631,055 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $150,945,453) | | | | 229,250,811 | |
|
| |
|
Money Market Funds–1.17% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(e)(f) | | | 867,698 | | | | 867,698 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(e)(f) | | | 861,398 | | | | 861,656 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Money Market Funds–(continued) | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e)(f) | | | 991,654 | | | $ | 991,654 | |
|
| |
Total Money Market Funds (Cost $2,720,800) | | | | 2,721,008 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.16% (Cost $153,666,253) | | | | | | | 231,971,819 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.24% | | | | | | | | |
Invesco Private Government Fund, 0.02%(e)(f)(g) | | | 220,001 | | | | 220,001 | |
|
| |
Invesco Private Prime Fund,
0.12%(e)(f)(g) | | | 329,902 | | | | 330,001 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $550,002) | | | | 550,002 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–100.40%
(Cost $154,216,255) | | | | | | | 232,521,821 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.40)% | | | | (937,326 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 231,584,495 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The value of this security at December 31, 2020 represented less than 1% of the Fund’s Net Assets. |
| (e) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,366,547 | | | | $ | 20,040,460 | | | | $ | (20,539,309 | ) | | | $ | - | | | | $ | - | | | | $ | 867,698 | | | | $ | 5,132 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 893,809 | | | | | 14,574,756 | | | | | (14,608,200 | ) | | | | 248 | | | | | 1,043 | | | | | 861,656 | | | | | 8,048 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,561,768 | | | | | 22,903,382 | | | | | (23,473,496 | ) | | | | - | | | | | - | | | | | 991,654 | | | | | 4,899 | |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 27,951,760 | | | | | (27,731,759 | ) | | | | - | | | | | - | | | | | 220,001 | | | | | 332* | |
| | | | | | | |
Invesco Private Prime Fund | | | | - | | | | | 18,006,831 | | | | | (17,676,990 | ) | | | | - | | | | | 160 | | | | | 330,001 | | | | | 559* | |
| | | | | | | |
Total | | | $ | 3,822,124 | | | | $ | 103,477,189 | | | | $ | (104,029,754 | ) | | | $ | 248 | | | | $ | 1,203 | | | | $ | 3,271,010 | | | | $ | 18,970 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (f) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (g) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $150,945,453)* | | $ | 229,250,811 | |
| |
Investments in affiliated money market funds, at value
(Cost $3,270,802) | | | 3,271,010 | |
| |
Foreign currencies, at value (Cost $8,527) | | | 8,832 | |
| |
Receivable for: | | | | |
Fund shares sold | | | 11,900 | |
| |
Dividends | | | 275,706 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 86,202 | |
| |
Total assets | | | 232,904,461 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 149,467 | |
| |
Fund shares reacquired | | | 187,997 | |
| |
Amount due custodian | | | 188,266 | |
| |
Collateral upon return of securities loaned | | | 550,002 | |
| |
Accrued fees to affiliates | | | 109,224 | |
| |
Accrued other operating expenses | | | 40,249 | |
| |
Trustee deferred compensation and retirement plans | | | 94,761 | |
| |
Total liabilities | | | 1,319,966 | |
| |
Net assets applicable to shares outstanding | | $ | 231,584,495 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 129,147,303 | |
| |
Distributable earnings | | | 102,437,192 | |
| |
| | $ | 231,584,495 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 155,598,096 | |
| |
Series II | | $ | 75,986,399 | |
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 4,618,149 | |
| |
Series II | | | 2,396,910 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 33.69 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 31.70 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $109,710) | | $ | 2,288,356 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $16,231) | | | 34,310 | |
| |
Total investment income | | | 2,322,666 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,565,051 | |
| |
Administrative services fees | | | 341,077 | |
| |
Custodian fees | | | 13,583 | |
| |
Distribution fees - Series II | | | 168,840 | |
| |
Transfer agent fees | | | 38,211 | |
| |
Trustees’ and officers’ fees and benefits | | | 23,357 | |
| |
Reports to shareholders | | | 8,105 | |
| |
Professional services fees | | | 46,797 | |
| |
Other | | | 2,766 | |
| |
Total expenses | | | 2,207,787 | |
| |
Less: Fees waived | | | (6,555 | ) |
| |
Net expenses | | | 2,201,232 | |
| |
Net investment income | | | 121,434 | |
| |
| |
Realized and unrealized gain from: | | | | |
Net realized gain from: | | | | |
Unaffiliated investment securities | | | 24,336,903 | |
| |
Affiliated investment securities | | | 1,203 | |
| |
Foreign currencies | | | 13,117 | |
| |
| | | 24,351,223 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 4,438,701 | |
| |
Affiliated investment securities | | | 248 | |
| |
Foreign currencies | | | 9,345 | |
| |
| | | 4,448,294 | |
| |
Net realized and unrealized gain | | | 28,799,517 | |
| |
Net increase in net assets resulting from operations | | $ | 28,920,951 | |
| |
| * | At December 31, 2020, securities with an aggregate value of $536,800 were on loan to brokers. | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 121,434 | | | $ | 476,623 | |
|
| |
Net realized gain | | | 24,351,223 | | | | 5,111,934 | |
|
| |
Change in net unrealized appreciation | | | 4,448,294 | | | | 50,736,226 | |
|
| |
Net increase in net assets resulting from operations | | | 28,920,951 | | | | 56,324,783 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (3,835,331 | ) | | | (3,345,368 | ) |
|
| |
Series II | | | (1,795,400 | ) | | | (1,628,278 | ) |
|
| |
Total distributions from distributable earnings | | | (5,630,731 | ) | | | (4,973,646 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (10,234,970 | ) | | | (14,313,793 | ) |
|
| |
Series II | | | (2,188,112 | ) | | | (6,003,015 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (12,423,082 | ) | | | (20,316,808 | ) |
|
| |
Net increase in net assets | | | 10,867,138 | | | | 31,034,329 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 220,717,357 | | | | 189,683,028 | |
|
| |
End of year | | $ | 231,584,495 | | | $ | 220,717,357 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income (loss)(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income
(loss) to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 30.23 | | | | $ | 0.04 | | | | $ | 4.26 | | | | $ | 4.30 | | | | $ | (0.10 | ) | | | $ | (0.74 | ) | | | $ | (0.84 | ) | | | $ | 33.69 | | | | | 14.46 | % | | | $ | 155,598 | | | | | 0.98 | %(d) | | | | 0.98 | %(d) | | | | 0.13 | %(d) | | | | 46 | % |
Year ended 12/31/19 | | | | 23.41 | | | | | 0.08 | | | | | 7.40 | | | | | 7.48 | | | | | (0.01 | ) | | | | (0.65 | ) | | | | (0.66 | ) | | | | 30.23 | | | | | 32.50 | | | | | 149,954 | | | | | 0.97 | | | | | 0.97 | | | | | 0.32 | | | | | 8 | |
Year ended 12/31/18 | | | | 26.44 | | | | | 0.03 | (e) | | | | 0.59 | | | | | 0.62 | | | | | - | | | | | (3.65 | ) | | | | (3.65 | ) | | | | 23.41 | | | | | 0.90 | | | | | 129,377 | | | | | 1.00 | | | | | 1.00 | | | | | 0.10 | (e) | | | | 35 | |
Year ended 12/31/17 | | | | 24.11 | | | | | (0.02 | ) | | | | 3.86 | | | | | 3.84 | | | | | (0.10 | ) | | | | (1.41 | ) | | | | (1.51 | ) | | | | 26.44 | | | | | 15.83 | | | | | 144,038 | | | | | 1.01 | | | | | 1.01 | | | | | (0.08 | ) | | | | 37 | |
Year ended 12/31/16 | | | | 31.75 | | | | | 0.09 | | | | | (3.36 | ) | | | | (3.27 | ) | | | | - | | | | | (4.37 | ) | | | | (4.37 | ) | | | | 24.11 | | | | | (11.46 | ) | | | | 145,408 | | | | | 1.04 | | | | | 1.04 | | | | | 0.31 | | | | | 23 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 28.49 | | | | | (0.03 | ) | | | | 4.01 | | | | | 3.98 | | | | | (0.03 | ) | | | | (0.74 | ) | | | | (0.77 | ) | | | | 31.70 | | | | | 14.20 | | | | | 75,986 | | | | | 1.23 | (d) | | | | 1.23 | (d) | | | | (0.12 | )(d) | | | | 46 | |
Year ended 12/31/19 | | | | 22.14 | | | | | 0.02 | | | | | 6.98 | | | | | 7.00 | | | | | - | | | | | (0.65 | ) | | | | (0.65 | ) | | | | 28.49 | | | | | 32.18 | | | | | 70,763 | | | | | 1.22 | | | | | 1.22 | | | | | 0.07 | | | | | 8 | |
Year ended 12/31/18 | | | | 25.25 | | | | | (0.04 | )(e) | | | | 0.58 | | | | | 0.54 | | | | | - | | | | | (3.65 | ) | | | | (3.65 | ) | | | | 22.14 | | | | | 0.62 | | | | | 60,306 | | | | | 1.25 | | | | | 1.25 | | | | | (0.15 | )(e) | | | | 35 | |
Year ended 12/31/17 | | | | 23.07 | | | | | (0.08 | ) | | | | 3.69 | | | | | 3.61 | | | | | (0.02 | ) | | | | (1.41 | ) | | | | (1.43 | ) | | | | 25.25 | | | | | 15.55 | | | | | 67,240 | | | | | 1.26 | | | | | 1.26 | | | | | (0.33 | ) | | | | 37 | |
Year ended 12/31/16 | | | | 30.65 | | | | | 0.02 | | | | | (3.23 | ) | | | | (3.21 | ) | | | | - | | | | | (4.37 | ) | | | | (4.37 | ) | | | | 23.07 | | | | | (11.69 | ) | | | | 69,190 | | | | | 1.29 | | | | | 1.29 | | | | | 0.06 | | | | | 23 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $141,137 and $67,536 for Series I and Series II shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets include significant dividends received during the year ended December 31, 2018. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.00 and (0.03)%, $(0.07) and (0.28)%, for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Health Care Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations
|
| Invesco V.I. Health Care Fund |
and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to
|
| Invesco V.I. Health Care Fund |
acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| L. | Other Risks - The Fund’s performance is vulnerable to factors affecting the health care industry, including government regulation, obsolescence caused by scientific advances and technological innovations. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
|
| |
First $250 million | | | 0.750% | |
| |
Next $250 million | | | 0.740% | |
| |
Next $500 million | | | 0.730% | |
| |
Next $1.5 billion | | | 0.720% | |
| |
Next $2.5 billion | | | 0.710% | |
| |
Next $2.5 billion | | | 0.700% | |
| |
Next $2.5 billion | | | 0.690% | |
| |
Over $10 billion | | | 0.680% | |
|
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.75%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $6,555.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $30,077 for accounting and fund administrative services and was reimbursed $311,000 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $1,930 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
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| Invesco V.I. Health Care Fund |
| | |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 218,056,324 | | | $ | 11,194,487 | | | | $- | | | $ | 229,250,811 | |
|
| |
Money Market Funds | | | 2,721,008 | | | | 550,002 | | | | - | | | | 3,271,010 | |
|
| |
Total Investments | | $ | 220,777,332 | | | $ | 11,744,489 | | | | $- | | | $ | 232,521,821 | |
|
| |
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 799,574 | | | $ | 1,765,566 | |
|
| |
Long-term capital gain | | | 4,831,157 | | | | 3,208,080 | |
|
| |
Total distributions | | $ | 5,630,731 | | | $ | 4,973,646 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 2,733,642 | |
|
| |
Undistributed long-term capital gain | | | 21,653,775 | |
|
| |
Net unrealized appreciation – investments | | | 78,106,208 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 9,555 | |
|
| |
Temporary book/tax differences | | | (65,988 | ) |
|
| |
Shares of beneficial interest | | | 129,147,303 | |
|
| |
Total net assets | | $ | 231,584,495 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to passive foreign investment companies.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
|
| Invesco V.I. Health Care Fund |
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $94,082,293 and $110,766,574, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 79,168,350 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (1,062,142 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 78,106,208 | |
|
| |
Cost of investments for tax purposes is $154,415,613.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and passive foreign investment companies, on December 31, 2020, undistributed net investment income was increased by $18,402 and undistributed net realized gain was decreased by $18,402. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 688,939 | | | $ | 20,193,172 | | | | 588,096 | | | $ | 15,603,976 | |
|
| |
Series II | | | 296,254 | | | | 8,256,245 | | | | 184,379 | | | | 4,579,271 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 124,161 | | | | 3,835,331 | | | | 131,915 | | | | 3,345,368 | |
|
| |
Series II | | | 61,740 | | | | 1,795,400 | | | | 68,072 | | | | 1,628,278 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,155,847 | ) | | | (34,263,473 | ) | | | (1,286,131 | ) | | | (33,263,137 | ) |
|
| |
Series II | | | (444,589 | ) | | | (12,239,757 | ) | | | (492,335 | ) | | | (12,210,564 | ) |
|
| |
Net increase (decrease) in share activity | | | (429,342 | ) | | $ | (12,423,082 | ) | | | (806,004 | ) | | $ | (20,316,808 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 44% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
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| Invesco V.I. Health Care Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Health Care Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Health Care Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco V.I. Health Care Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,175.70 | | $5.36 | | $1,020.21 | | $4.98 | | 0.98% |
Series II | | 1,000.00 | | 1,174.10 | | 6.72 | | 1,018.95 | | 6.24 | | 1.23 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
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| Invesco V.I. Health Care Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | $ | 4,831,157 | |
| | Qualified Dividend Income* | | | 0.00 | % |
| | Corporate Dividends Received Deduction* | | | 99.93 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
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| Invesco V.I. Health Care Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
| Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Health Care Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
|
| Invesco V.I. Health Care Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. High Yield Fund |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIHYI-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. High Yield Fund (the Fund) underperformed the Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 3.32% | |
Series II Shares | | | 2.90 | |
Bloomberg Barclays U.S. Aggregate Bond Indexq (Broad Market Index) | | | 7.51 | |
Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Indexq | | | | |
(Style-Specific Index) | | | 7.05 | |
Lipper VUF High Yield Bond Funds Classification Average∎ (Peer Group) | | | 4.99 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Fixed income markets began the fiscal year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. As fear of a worldwide recession increased, the US Federal Reserve (the Fed) took aggressive action to support both the domestic and global economy by slashing rates to a range of 0.00% to 0.25%.1 The unemployment rate reached a peak of 14.7%2 while real gross domestic product decreased at an annual rate of 31.4%3 in the second quarter of 2020.
Many economies received fiscal stimulus and very significant monetary stimulus due to the impact of COVID-19. The massive monetary policy response created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first half of the year. Consequently, some countries were able to achieve some success in controlling the spread and were able to slowly reopen their economies in the third quarter. With a potential vaccine in sight for the end of 2020 or early 2021 the broader bond market, both developed and emerging, ended the year in positive territory.
The 10-year US Treasury yield continued to decline at the start of the year as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. Elevated volatility levels due to the COVID-19 pandemic and ensuing global recession led to a severe “risk-off” tone in the markets driving Treasury yields even lower. The 10-year US Treasury yield ended the year at 0.88%, 85 basis points lower than at the beginning of the year.4 (A basis point is one one-hundredth of a percentage point.) Against this backdrop, the high yield market experienced swift and severe drawdowns in the first quarter but quickly normalized
following central bank interventions and ended the period with positive gains. The initial fallout from COVID-19 drove a wave of downgrades in the high yield market and pushed the par-weighted, trailing twelve months, high yield default rate to 6.17%; over 3% higher than the twenty-five year average of 3.02%.5 But as a result of the monetary policy support, and interest rates at near zero, high yield new issuance increased to the highest level on record with companies issuing $449.9 billion in high yield debt.5
The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index, which measures the performance of the US high yield bond market and is the Fund’s style-specific index, returned 7.05% for the year ended December 31, 2020.6 Likewise, the Fund generated a positive return for the year, but underperformed its style-specific index.
During the year, the Fund benefited from its security selection in the retailers and construction machinery sectors. The Fund had an underweight allocation to the oil field services and independent energy sectors relative to the style-specific index, which also contributed positively as the energy sector was hit particularly hard when lockdowns were put into effect and all non-essential travel ceased. The Fund’s overweight allocation to construction machinery was also beneficial to relative performance.
During the year, the Fund used credit default swaps to hedge against a second market downturn as economies began to reopen in the second quarter. While cases did eventually increase, news of vaccine developments drove prices higher leading to underperformance of the Fund’s hedges. Security selection in the independent energy and leisure sectors also detracted from Fund performance relative to the style-specific index as defaults in both of these sectors began to rise as a result of the COVID-19 induced shutdowns.
During the year, we used currency forward contracts for the purpose of hedging currency exposure of non-US-dollar-denominated
bonds held in the portfolio. We also used credit default swaps to efficiently manage the portfolio and to take advantage of relative value opportunities. The use of currency and interest rate had an immaterial impact on the Fund’s performance during the year.
We wish to remind you that the Fund is subject to interest rate risk, meaning when interest rates rise, the value of fixed income securities tends to fall. This risk may be greater in the current market environment because interest rates are near historic lows. The degree to which the value of fixed income securities may decline due to rising interest rates may vary depending on the speed and magnitude of the increase in interest rates, as well as individual security characteristics such as price, maturity, duration and coupon and market forces such as supply and demand for similar securities. We are monitoring interest rates, and the market, economic and geopolitical factors that may impact the direction, speed and magnitude of changes to interest rates across the maturity spectrum, including the potential impact of monetary policy changes by the Fed and certain foreign central banks. If interest rates rise or fall faster than expected, markets may experience increased volatility, which may affect the value and/or liquidity of certain of the Fund’s investments.
Thank you for investing in Invesco V.I. High Yield Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: Bureau of Labor Statistics
3 Source: Bureau of Economic Analysis
4 Source: US Department of the Treasury
5 Source: JP Morgan Markets
6 Source: Bloomberg Barclays
Portfolio manager(s):
Niklas Nordenfelt
Scott Roberts
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco V.I. High Yield Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/1/98) | | | 4.33 | % |
10 Years | | | 5.27 | |
5 Years | | | 6.03 | |
1 Year | | | 3.32 | |
| |
Series II Shares | | | | |
Inception (3/26/02) | | | 6.40 | % |
10 Years | | | 4.99 | |
5 Years | | | 5.71 | |
1 Year | | | 2.90 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. High Yield Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance data at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco V.I. High Yield Fund |
Supplemental Information
Invesco V.I. High Yield Fund’s investment objective is total return, comprised of current income and capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market. |
| ∎ | | The Bloomberg Barclays U.S. Corporate High Yield 2% Issuer Cap Index is an unmanaged index considered representative of the US high-yield, fixed-rate corporate bond market. Index weights for each issuer are capped at 2%. |
| ∎ | | The Lipper VUF High Yield Bond Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper High Yield Bond Funds classification. |
| ∎ | | 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. |
|
| Invesco V.I. High Yield Fund |
Fund Information
Portfolio Composition†
| | | | | |
| By credit quality | | % of total investments |
| |
AAA | | | | 0.09 | % |
BBB | | | | 8.32 | |
BB | | | | 44.29 | |
B | | | | 31.12 | |
CCC | | | | 11.04 | |
Non-Rated | | | | 5.14 | |
Top Five Debt Issuers*
| | | | | |
| | | % of total net assets |
1. CCO Holdings LLC/CCO Holdings Capital Corp. | | | | 1.99 | % |
2. OneMain Finance Corp. | | | | 1.70 | |
3. Occidental Petroleum Corp. | | | | 1.57 | |
4. Ford Motor Credit Co. LLC | | | | 1.51 | |
5. Kraft Heinz Foods Co. (The) | | | | 1.48 | |
†Source: Standard & Poor’s. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA
(highest) to D (lowest); ratings are subject to change without notice. “Non- Rated” indicates the debtor was not rated, and should not be interpreted as indicating low quality. For more information on Standard & Poor’s rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage.
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. High Yield Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Dollar Denominated Bonds & Notes–92.10% | |
Aerospace & Defense–2.65% | | | | | | | | |
Bombardier, Inc. (Canada), | | | | | | | | |
5.75%, 03/15/2022(b) | | $ | 222,000 | | | $ | 226,722 | |
| |
6.00%, 10/15/2022(b) | | | 397,000 | | | | 390,708 | |
| |
7.50%, 03/15/2025(b) | | | 1,015,000 | | | | 942,681 | |
| |
TransDigm UK Holdings PLC, 6.88%,
05/15/2026 | | | 600,000 | | | | 635,805 | |
| |
TransDigm, Inc., | | | | | | | | |
6.50%, 07/15/2024 | | | 163,000 | | | | 166,194 | |
| |
6.50%, 05/15/2025 | | | 593,000 | | | | 610,419 | |
| |
Triumph Group, Inc., | | | | | | | | |
8.88%, 06/01/2024(b) | | | 177,000 | | | | 194,589 | |
| |
7.75%, 08/15/2025 | | | 819,000 | | | | 751,433 | |
|
| |
| | | | | | | 3,918,551 | |
|
| |
|
Agricultural & Farm Machinery–0.77% | |
Titan International, Inc., 6.50%, 11/30/2023 | | | 1,221,000 | | | | 1,133,876 | |
|
| |
| | |
Airlines–0.97% | | | | | | | | |
Delta Air Lines, Inc., | | | | | | | | |
7.00%, 05/01/2025(b) | | | 987,000 | | | | 1,140,199 | |
| |
7.38%, 01/15/2026 | | | 263,000 | | | | 300,617 | |
|
| |
| | | | | | | 1,440,816 | |
|
| |
| | |
Alternative Carriers–0.39% | | | | | | | | |
Level 3 Financing, Inc., | | | | | | | | |
5.38%, 05/01/2025 | | | 197,000 | | | | 202,974 | |
| |
5.25%, 03/15/2026 | | | 119,000 | | | | 123,111 | |
| |
3.63%, 01/15/2029(b) | | | 258,000 | | | | 257,839 | |
|
| |
| | | | | | | 583,924 | |
|
| |
| | |
Apparel Retail–0.96% | | | | | | | | |
L Brands, Inc., | | | | | | | | |
6.88%, 11/01/2035 | | | 907,000 | | | | 1,019,808 | |
| |
6.75%, 07/01/2036 | | | 354,000 | | | | 395,064 | |
|
| |
| | | | | | | 1,414,872 | |
|
| |
|
Apparel, Accessories & Luxury Goods–0.51% | |
Hanesbrands, Inc., 5.38%,
05/15/2025(b) | | | 412,000 | | | | 436,419 | |
| |
William Carter Co. (The), | | | | | | | | |
5.50%, 05/15/2025(b) | | | 130,000 | | | | 138,302 | |
| |
5.63%, 03/15/2027(b) | | | 173,000 | | | | 182,407 | |
|
| |
| | | | | | | 757,128 | |
|
| |
| | |
Auto Parts & Equipment–1.10% | | | | | | | | |
Clarios Global L.P., 6.75%,
05/15/2025(b) | | | 164,000 | | | | 176,967 | |
| |
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | | | 365,000 | | | | 397,142 | |
| |
Dana, Inc., | | | | | | | | |
5.50%, 12/15/2024 | | | 498,000 | | | | 508,894 | |
| |
5.38%, 11/15/2027 | | | 122,000 | | | | 129,549 | |
| |
5.63%, 06/15/2028 | | | 70,000 | | | | 75,485 | |
| |
Tenneco, Inc., 5.00%, 07/15/2026 | | | 377,000 | | | | 347,547 | |
|
| |
| | | | | | | 1,635,584 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Automobile Manufacturers–3.74% | |
Allison Transmission, Inc., 3.75%, 01/30/2031(b) | | $ | 1,094,000 | | | $ | 1,121,350 | |
| |
Ford Motor Co., | | | | | | | | |
8.50%, 04/21/2023 | | | 222,000 | | | | 250,677 | |
| |
9.00%, 04/22/2025 | | | 208,000 | | | | 255,868 | |
| |
9.63%, 04/22/2030 | | | 111,000 | | | | 156,827 | |
| |
4.75%, 01/15/2043 | | | 315,000 | | | | 321,694 | |
| |
Ford Motor Credit Co. LLC, | | | | | | | | |
5.13%, 06/16/2025 | | | 204,000 | | | | 222,064 | |
| |
3.38%, 11/13/2025 | | | 251,000 | | | | 257,353 | |
| |
4.39%, 01/08/2026 | | | 282,000 | | | | 296,407 | |
| |
5.11%, 05/03/2029 | | | 1,316,000 | | | | 1,467,274 | |
| |
J.B. Poindexter & Co., Inc.,
7.13%, 04/15/2026(b) | | | 1,122,000 | | | | 1,189,320 | |
| |
Motors Liquidation Co.,
8.38%, 07/15/2033(c)(d) | | | 1,060,000 | | | | 0 | |
|
| |
| | | | | | | 5,538,834 | |
|
| |
| | |
Automotive Retail–2.15% | | | | | | | | |
Capitol Investment Merger Sub 2 LLC, 10.00%, 08/01/2024(b) | | | 1,035,000 | | | | 1,135,933 | |
| |
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | | | 698,000 | | | | 720,357 | |
| |
Lithia Motors, Inc., | | | | | | | | |
5.25%, 08/01/2025(b) | | | 248,000 | | | | 258,204 | |
| |
4.63%, 12/15/2027(b) | | | 175,000 | | | | 184,953 | |
| |
4.38%, 01/15/2031(b) | | | 94,000 | | | | 100,991 | |
| |
Penske Automotive Group, Inc., 5.50%, 05/15/2026 | | | 747,000 | | | | 777,347 | |
|
| |
| | | | | | | 3,177,785 | |
|
| |
| | |
Broadcasting–1.14% | | | | | | | | |
Gray Television, Inc., 7.00%,
05/15/2027(b) | | | 872,000 | | | | 955,930 | |
| |
iHeartCommunications, Inc., 8.38%,
05/01/2027 | | | 542,000 | | | | 579,493 | |
| |
TV Azteca S.A.B. de C.V. (Mexico), 8.25%, 08/09/2024(b) | | | 270,000 | | | | 152,859 | |
|
| |
| | | | | | | 1,688,282 | |
|
| |
| | |
Building Products–0.29% | | | | | | | | |
Standard Industries, Inc.,
5.00%, 02/15/2027(b) | | | 414,000 | | | | 433,406 | |
|
| |
| | |
Cable & Satellite–5.30% | | | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | | | | | | | |
5.75%, 02/15/2026(b) | | | 1,128,000 | | | | 1,165,337 | |
| |
5.00%, 02/01/2028(b) | | | 1,684,000 | | | | 1,782,514 | |
| |
CSC Holdings LLC, | | | | | | | | |
6.50%, 02/01/2029(b) | | | 745,000 | | | | 842,539 | |
| |
4.63%, 12/01/2030(b) | | | 1,099,000 | | | | 1,148,603 | |
| |
DISH DBS Corp., | | | | | | | | |
5.88%, 11/15/2024 | | | 555,000 | | | | 582,750 | |
| |
7.75%, 07/01/2026 | | | 227,000 | | | | 254,409 | |
| |
DISH Network Corp., Conv.,
3.38%, 08/15/2026 | | | 552,000 | | | | 527,564 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Cable & Satellite–(continued) | |
Intelsat Jackson Holdings S.A. (Luxembourg), | | | | | | | | |
5.50%, 08/01/2023(c) | | $ | 731,000 | | | $ | 497,080 | |
| |
8.50%, 10/15/2024(b)(c) | | | 292,000 | | | | 209,481 | |
| |
9.75%, 07/15/2025(b)(c) | | | 210,000 | | | | 151,536 | |
| |
UPC Holding B.V. (Netherlands), 5.50%, 01/15/2028(b) | | | 655,000 | | | | 692,253 | |
|
| |
| | | | | | | 7,854,066 | |
|
| |
| | |
Casinos & Gaming–2.98% | | | | | | | | |
CCM Merger, Inc., 6.38%,
05/01/2026(b) | | | 669,000 | | | | 704,122 | |
| |
Codere Finance 2 (Luxembourg) S.A. (Spain), 7.13% PIK Rate, 4.50% Cash Rate, 11/01/2023(b)(e) | | | 448,000 | | | | 295,680 | |
| |
MGM Resorts International, | | | | | | | | |
7.75%, 03/15/2022 | | | 536,000 | | | | 571,845 | |
| |
6.00%, 03/15/2023 | | | 315,000 | | | | 338,625 | |
| |
Scientific Games International, Inc., | | | | | | | | |
8.63%, 07/01/2025(b) | | | 183,000 | | | | 200,614 | |
| |
8.25%, 03/15/2026(b) | | | 710,000 | | | | 766,307 | |
| |
7.00%, 05/15/2028(b) | | | 759,000 | | | | 817,367 | |
| |
Station Casinos LLC,
4.50%, 02/15/2028(b) | | | 716,000 | | | | 722,712 | |
|
| |
| | | | | | | 4,417,272 | |
|
| |
|
Coal & Consumable Fuels–0.76% | |
SunCoke Energy Partners L.P./SunCoke Energy Partners Finance Corp., 7.50%, 06/15/2025(b) | | | 1,133,000 | | | | 1,126,853 | |
|
| |
|
Commodity Chemicals–0.33% | |
Koppers, Inc., 6.00%, 02/15/2025(b) | | | 475,000 | | | | 490,141 | |
|
| |
|
Construction & Engineering–0.44% | |
New Enterprise Stone & Lime Co., Inc., | | | | | | | | |
6.25%, 03/15/2026(b) | | | 339,000 | | | | 348,111 | |
| |
9.75%, 07/15/2028(b) | | | 276,000 | | | | 303,600 | |
|
| |
| | | | | | | 651,711 | |
|
| |
| | |
Consumer Finance–3.13% | | | | | | | | |
Navient Corp., | | | | | | | | |
7.25%, 01/25/2022 | | | 356,000 | | | | 372,688 | |
| |
7.25%, 09/25/2023 | | | 1,038,000 | | | | 1,139,573 | |
| |
5.00%, 03/15/2027 | | | 215,000 | | | | 217,178 | |
| |
5.63%, 08/01/2033 | | | 400,000 | | | | 384,750 | |
| |
OneMain Finance Corp., | | | | | | | | |
5.38%, 11/15/2029 | | | 1,485,000 | | | | 1,674,337 | |
| |
4.00%, 09/15/2030 | | | 815,000 | | | | 846,671 | |
|
| |
| | | | | | | 4,635,197 | |
|
| |
| | |
Copper–1.62% | | | | | | | | |
First Quantum Minerals Ltd. (Zambia),
7.50%, 04/01/2025(b) | | | 672,000 | | | | 700,560 | |
| |
Freeport-McMoRan, Inc.,
5.40%, 11/14/2034 | | | 1,355,000 | | | | 1,697,984 | |
|
| |
| | | | | | | 2,398,544 | |
|
| |
|
Data Processing & Outsourced Services–0.69% | |
Cardtronics, Inc./Cardtronics USA, Inc., 5.50%, 05/01/2025(b) | | | 985,000 | | | | 1,021,834 | |
|
| |
| | |
Department Stores–0.71% | | | | | | | | |
Macy’s, Inc., 8.38%, 06/15/2025(b) | | | 949,000 | | | | 1,054,908 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Distributors–0.67% | | | | | | | | |
Core & Main Holdings L.P., 9.38% PIK Rate, 8.63% Cash Rate,
09/15/2024(b)(e) | | $ | 975,000 | | | $ | 999,882 | |
|
| |
| | |
Diversified Banks–0.95% | | | | | | | | |
Credit Agricole S.A. (France),
8.13%(b)(f)(g) | | | 507,000 | | | | 618,173 | |
| |
Natwest Group PLC (United Kingdom), 6.00%(f)(g) | | | 720,000 | | | | 790,466 | |
|
| |
| | | | | | | 1,408,639 | |
|
| |
|
Diversified Capital Markets–0.54% | |
Credit Suisse Group AG (Switzerland), 7.50%(b)(f)(g) | | | 730,000 | | | | 797,525 | |
|
| |
| | |
Diversified REITs–0.88% | | | | | | | | |
Colony Capital, Inc., Conv., 5.00%,
04/15/2023 | | | 268,000 | | | | 264,078 | |
| |
iStar, Inc., 4.75%, 10/01/2024 | | | 1,030,000 | | | | 1,044,703 | |
|
| |
| | | | | | | 1,308,781 | |
|
| |
| | |
Electric Utilities–0.60% | | | | | | | | |
Talen Energy Supply LLC,
7.63%, 06/01/2028(b) | | | 828,000 | | | | 893,722 | |
|
| |
|
Electrical Components & Equipment–0.89% | |
EnerSys, | | | | | | | | |
5.00%, 04/30/2023(b) | | | 342,000 | | | | 358,886 | |
| |
4.38%, 12/15/2027(b) | | | 350,000 | | | | 371,000 | |
| |
Sensata Technologies B.V., 4.88%, 10/15/2023(b) | | | 546,000 | | | | 590,363 | |
|
| |
| | | | | | | 1,320,249 | |
|
| |
|
Electronic Components–0.08% | |
Sensata Technologies, Inc.,
3.75%, 02/15/2031(b) | | | 110,000 | | | | 114,161 | |
|
| |
|
Electronic Equipment & Instruments–0.30% | |
MTS Systems Corp., 5.75%,
08/15/2027(b) | | | 406,000 | | | | 441,860 | |
|
| |
|
Environmental & Facilities Services–0.59% | |
GFL Environmental, Inc. (Canada), 3.50%, 09/01/2028(b) | | | 463,000 | | | | 472,936 | |
| |
Waste Pro USA, Inc., 5.50%, 02/15/2026(b) | | | 394,000 | | | | 404,010 | |
|
| |
| | | | | | | 876,946 | |
|
| |
|
Fertilizers & Agricultural Chemicals–0.37% | |
OCI N.V. (Netherlands), 4.63%, 10/15/2025(b) | | | 523,000 | | | | 543,593 | |
|
| |
| | |
Food Retail–2.25% | | | | | | | | |
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, | | | | | | | | |
7.50%, 03/15/2026(b) | | | 287,000 | | | | 321,705 | |
| |
5.88%, 02/15/2028(b) | | | 319,000 | | | | 347,672 | |
| |
3.50%, 03/15/2029(b) | | | 370,000 | | | | 374,255 | |
| |
Fresh Market, Inc. (The), 9.75%, 05/01/2023(b) | | | 701,000 | | | | 723,499 | |
| |
SEG Holding LLC/SEG Finance Corp., 5.63%, 10/15/2028(b) | | | 656,000 | | | | 693,720 | |
| |
Simmons Foods, Inc., 5.75%, 11/01/2024(b) | | | 845,000 | | | | 865,069 | |
|
| |
| | | | | | | 3,325,920 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Health Care Equipment–0.25% | |
Hologic, Inc., 3.25%, 02/15/2029(b) | | $ | 369,000 | | | $ | 376,149 | |
|
| |
| | |
Health Care Facilities–1.97% | | | | | | | | |
Acadia Healthcare Co., Inc.,
5.00%, 04/15/2029(b) | | | 1,014,000 | | | | 1,084,980 | |
| |
Encompass Health Corp.,
4.75%, 02/01/2030 | | | 654,000 | | | | 701,703 | |
| |
HCA, Inc., | | | | | | | | |
5.38%, 02/01/2025 | | | 506,000 | | | | 569,763 | |
| |
5.88%, 02/15/2026 | | | 290,000 | | | | 333,862 | |
| |
5.50%, 06/15/2047 | | | 176,000 | | | | 235,095 | |
|
| |
| | | | | | | 2,925,403 | |
|
| |
| | |
Health Care Services–4.73% | | | | | | | | |
Akumin, Inc., 7.00%, 11/01/2025(b) | | | 1,120,000 | | | | 1,180,200 | |
| |
Community Health Systems, Inc., | | | | | | | | |
6.63%, 02/15/2025(b) | | | 338,000 | | | | 356,372 | |
| |
8.00%, 03/15/2026(b) | | | 673,000 | | | | 725,831 | |
| |
8.00%, 12/15/2027(b) | | | 337,000 | | | | 366,488 | |
| |
DaVita, Inc., | | | | | | | | |
4.63%, 06/01/2030(b) | | | 226,000 | | | | 239,701 | |
| |
3.75%, 02/15/2031(b) | | | 1,211,000 | | | | 1,231,872 | |
| |
Global Medical Response, Inc.,
6.50%, 10/01/2025(b) | | | 1,057,000 | | | | 1,105,886 | |
| |
Hadrian Merger Sub, Inc.,
8.50%, 05/01/2026(b) | | | 1,021,000 | | | | 1,057,817 | |
| |
RP Escrow Issuer LLC,
5.25%, 12/15/2025(b) | | | 708,000 | | | | 741,396 | |
|
| |
| | | | | | | 7,005,563 | |
|
| |
| | |
Homebuilding–1.33% | | | | | | | | |
Ashton Woods USA LLC/Ashton Woods Finance Co., 9.88%, 04/01/2027(b) | | | 585,000 | | | | 659,476 | |
| |
Lennar Corp., 5.38%, 10/01/2022 | | | 254,000 | | | | 272,891 | |
| |
Meritage Homes Corp.,
5.13%, 06/06/2027 | | | 361,000 | | | | 404,703 | |
| |
Taylor Morrison Communities, Inc.,
6.63%, 07/15/2027(b) | | | 580,000 | | | | 629,010 | |
|
| |
| | | | | | | 1,966,080 | |
|
| |
| | |
Hotel & Resort REITs–0.28% | | | | | | | | |
Service Properties Trust,
4.95%, 10/01/2029 | | | 407,000 | | | | 408,781 | |
|
| |
|
Hotels, Resorts & Cruise Lines–0.75% | |
Carnival Corp., | | | | | | | | |
11.50%, 04/01/2023(b) | | | 372,000 | | | | 430,692 | |
| |
10.50%, 02/01/2026(b) | | | 584,000 | | | | 681,090 | |
|
| |
| | | | | | | 1,111,782 | |
|
| |
| | |
Household Products–0.45% | | | | | | | | |
Energizer Holdings, Inc., | | | | | | | | |
7.75%, 01/15/2027(b) | | | 284,000 | | | | 315,844 | |
| |
4.75%, 06/15/2028(b) | | | 71,000 | | | | 74,820 | |
| |
4.38%, 03/31/2029(b) | | | 270,000 | | | | 279,995 | |
|
| |
| | | | | | | 670,659 | |
|
| |
|
Human Resource & Employment Services–0.28% | |
ASGN, Inc., 4.63%, 05/15/2028(b) | | | 404,000 | | | | 420,843 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Independent Power Producers & Energy Traders–1.45% | |
Calpine Corp., | | | | | | | | |
4.50%, 02/15/2028(b) | | $ | 600,000 | | | $ | 624,900 | |
| |
3.75%, 03/01/2031(b) | | | 785,000 | | | | 778,881 | |
| |
Clearway Energy Operating LLC, 4.75%, 03/15/2028(b) | | | 688,000 | | | | 738,527 | |
|
| |
| | | | | | | 2,142,308 | |
|
| |
| | |
Industrial Machinery–1.59% | | | | | | | | |
Cleaver-Brooks, Inc.,
7.88%, 03/01/2023(b) | | | 894,000 | | | | 886,084 | |
| |
EnPro Industries, Inc.,
5.75%, 10/15/2026 | | | 563,000 | | | | 600,192 | |
| |
Mueller Industries, Inc.,
6.00%, 03/01/2027 | | | 852,000 | | | | 869,943 | |
|
| |
| | | | | | | 2,356,219 | |
|
| |
| | |
Integrated Oil & Gas–2.29% | | | | | | | | |
Cenovus Energy, Inc. (Canada),
4.25%, 04/15/2027 | | | 744,000 | | | | 812,828 | |
| |
Occidental Petroleum Corp., | | | | | | | | |
2.90%, 08/15/2024 | | | 333,000 | | | | 321,012 | |
| |
6.38%, 09/01/2028 | | | 190,000 | | | | 201,281 | |
| |
3.50%, 08/15/2029 | | | 186,000 | | | | 170,519 | |
| |
6.13%, 01/01/2031 | | | 669,000 | | | | 717,636 | |
| |
6.20%, 03/15/2040 | | | 328,000 | | | | 326,360 | |
| |
4.10%, 02/15/2047 | | | 691,000 | | | | 566,154 | |
| |
Parsley Energy LLC/Parsley Finance Corp., | | | | | | | | |
5.38%, 01/15/2025(b) | | | 150,000 | | | | 154,541 | |
| |
4.13%, 02/15/2028(b) | | | 108,000 | | | | 114,683 | |
|
| |
| | | | | | | 3,385,014 | |
|
| |
|
Integrated Telecommunication Services–2.61% | |
Altice France Holding S.A. (Luxembourg),
10.50%, 05/15/2027(b) | | | 410,000 | | | | 460,994 | |
| |
Altice France S.A. (France),
7.38%, 05/01/2026(b) | | | 1,167,000 | | | | 1,229,726 | |
| |
Embarq Corp., 8.00%, 06/01/2036 | | | 446,000 | | | | 550,955 | |
| |
Frontier Communications Corp., | | | | | | | | |
10.50%, 09/15/2022(c) | | | 1,501,000 | | | | 785,796 | |
| |
11.00%, 09/15/2025(c) | | | 264,000 | | | | 139,095 | |
| |
Telecom Italia Capital S.A. (Italy), | | | | | | | | |
6.38%, 11/15/2033 | | | 98,000 | | | | 120,767 | |
| |
7.20%, 07/18/2036 | | | 431,000 | | | | 582,850 | |
|
| |
| | | | | | | 3,870,183 | |
|
| |
|
Interactive Media & Services–1.39% | |
Cumulus Media New Holdings, Inc., | | | | | | | | |
6.75%, 07/01/2026(b) | | | 639,000 | | | | 654,422 | |
| |
Diamond Sports Group LLC/Diamond Sports Finance Co., | | | | | | | | |
5.38%, 08/15/2026(b) | | | 598,000 | | | | 486,996 | |
| |
6.63%, 08/15/2027(b) | | | 810,000 | | | | 491,063 | |
| |
Scripps Escrow II, Inc., 3.88%, 01/15/2029(b) | | | 408,000 | | | | 426,103 | |
|
| |
| | | | | | | 2,058,584 | |
|
| |
|
Internet & Direct Marketing Retail–0.42% | |
QVC, Inc., 5.45%, 08/15/2034 | | | 593,000 | | | | 618,203 | |
|
| |
|
Investment Banking & Brokerage–0.51% | |
NFP Corp., 6.88%, 08/15/2028(b) | | | 705,000 | | | | 753,596 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
IT Consulting & Other Services–0.49% | |
Gartner, Inc., | | | | | | | | |
4.50%, 07/01/2028(b) | | $ | 399,000 | | | $ | 421,443 | |
|
| |
3.75%, 10/01/2030(b) | | | 295,000 | | | | 310,119 | |
|
| |
| | | | | | | 731,562 | |
|
| |
| | |
Leisure Products–0.22% | | | | | | | | |
Mattel, Inc., 6.75%, 12/31/2025(b) | | | 313,000 | | | | 330,675 | |
|
| |
| | |
Managed Health Care–0.91% | | | | | | | | |
Centene Corp., | | | | | | | | |
5.38%, 06/01/2026(b) | | | 356,000 | | | | 375,922 | |
|
| |
5.38%, 08/15/2026(b) | | | 320,000 | | | | 338,800 | |
|
| |
4.63%, 12/15/2029 | | | 258,000 | | | | 286,768 | |
|
| |
3.00%, 10/15/2030 | | | 322,000 | | | | 341,690 | |
|
| |
| | | | | | | 1,343,180 | |
|
| |
| | |
Metal & Glass Containers–0.33% | | | | | | | | |
Flex Acquisition Co., Inc., 7.88%, 07/15/2026(b) | | | 460,000 | | | | 484,527 | |
|
| |
| | |
Movies & Entertainment–0.77% | | | | | | | | |
Netflix, Inc., | | | | | | | | |
5.88%, 11/15/2028 | | | 556,000 | | | | 667,497 | |
|
| |
5.38%, 11/15/2029(b) | | | 395,000 | | | | 466,100 | |
|
| |
| | | | | | | 1,133,597 | |
|
| |
| | |
Oil & Gas Drilling–1.11% | | | | | | | | |
Diamond Offshore Drilling, Inc., 4.88%, 11/02/2043(c) | | | 240,000 | | | | 30,431 | |
|
| |
Precision Drilling Corp. (Canada), | | | | | | | | |
7.75%, 12/15/2023 | | | 97,000 | | | | 89,422 | |
|
| |
5.25%, 11/15/2024 | | | 419,000 | | | | 363,744 | |
|
| |
Rockies Express Pipeline LLC, | | | | | | | | |
4.80%, 05/15/2030(b) | | | 600,000 | | | | 617,625 | |
|
| |
6.88%, 04/15/2040(b) | | | 474,000 | | | | 518,248 | |
|
| |
Valaris PLC (Saudi Arabia), 7.75%, 02/01/2026(c) | | | 544,000 | | | | 23,476 | |
|
| |
| | | | | | | 1,642,946 | |
|
| |
| |
Oil & Gas Equipment & Services–1.45% | | | | | |
Hilcorp Energy I L.P./Hilcorp Finance Co., 6.25%, 11/01/2028(b) | | | 1,284,000 | | | | 1,317,333 | |
|
| |
Oceaneering International, Inc., 6.00%, 02/01/2028 | | | 36,000 | | | | 32,265 | |
|
| |
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | | | 750,000 | | | | 801,952 | |
|
| |
| | | | | | | 2,151,550 | |
|
| |
| |
Oil & Gas Exploration & Production–5.53% | | | | | |
Antero Resources Corp., | | | | | | | | |
5.63%, 06/01/2023 | | | 219,000 | | | | 214,894 | |
|
| |
5.00%, 03/01/2025 | | | 720,000 | | | | 685,350 | |
|
| |
Ascent Resources Utica Holdings LLC/ARU Finance Corp., | | | | | | | | |
9.00%, 11/01/2027(b) | | | 469,000 | | | | 522,935 | |
|
| |
8.25%, 12/31/2028(b) | | | 95,000 | | | | 95,000 | |
|
| |
CNX Resources Corp., | | | | | | | | |
7.25%, 03/14/2027(b) | | | 661,000 | | | | 708,109 | |
|
| |
6.00%, 01/15/2029(b) | | | 722,000 | | | | 741,032 | |
|
| |
Comstock Resources, Inc., 9.75%, 08/15/2026 | | | 640,000 | | | | 687,360 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Oil & Gas Exploration & Production–(continued) | |
Continental Resources, Inc., 5.75%, 01/15/2031(b) | | $ | 597,000 | | | $ | 663,777 | |
|
| |
Genesis Energy L.P./Genesis Energy Finance Corp., | | | | | | | | |
6.25%, 05/15/2026 | | | 573,000 | | | | 539,634 | |
|
| |
7.75%, 02/01/2028 | | | 219,000 | | | | 209,898 | |
|
| |
QEP Resources, Inc., | | | | | | | | |
5.25%, 05/01/2023 | | | 387,000 | | | | 407,898 | |
|
| |
5.63%, 03/01/2026 | | | 562,000 | | | | 617,315 | |
|
| |
SM Energy Co., | | | | | | | | |
10.00%, 01/15/2025(b) | | | 497,000 | | | | 535,207 | |
|
| |
6.75%, 09/15/2026 | | | 444,000 | | | | 360,750 | |
|
| |
6.63%, 01/15/2027 | | | 99,000 | | | | 79,448 | |
|
| |
Southwestern Energy Co., | | | | | | | | |
7.50%, 04/01/2026 | | | 112,000 | | | | 117,656 | |
|
| |
7.75%, 10/01/2027 | | | 567,000 | | | | 613,253 | |
|
| |
WPX Energy, Inc., | | | | | | | | |
5.75%, 06/01/2026 | | | 248,000 | | | | 261,082 | |
|
| |
5.25%, 10/15/2027 | | | 62,000 | | | | 65,801 | |
|
| |
5.88%, 06/15/2028 | | | 35,000 | | | | 38,196 | |
|
| |
4.50%, 01/15/2030 | | | 29,000 | | | | 30,784 | |
|
| |
| | | | | | | 8,195,379 | |
|
| |
|
Oil & Gas Refining & Marketing–1.02% | |
Calumet Specialty Products Partners L.P./Calumet Finance Corp., | | | | | | | | |
7.63%, 01/15/2022 | | | 247,000 | | | | 245,398 | |
|
| |
9.25%, 07/15/2024(b) | | | 468,000 | | | | 524,160 | |
|
| |
Parkland Corp. (Canada), 6.00%, 04/01/2026(b) | | | 699,000 | | | | 735,261 | |
|
| |
| | | | | | | 1,504,819 | |
|
| |
| |
Oil & Gas Storage & Transportation–4.15% | | | | | |
Antero Midstream Partners L.P./Antero Midstream Finance Corp., | | | | | | | | |
5.75%, 03/01/2027(b) | | | 65,000 | | | | 63,984 | |
|
| |
5.75%, 01/15/2028(b) | | | 685,000 | | | | 659,381 | |
|
| |
Blue Racer Midstream LLC/Blue Racer Finance Corp., 7.63%, 12/15/2025(b) | | | 604,000 | | | | 644,770 | |
|
| |
EQM Midstream Partners L.P., | | | | | | | | |
6.50%, 07/01/2027(b) | | | 356,000 | | | | 401,372 | |
|
| |
5.50%, 07/15/2028 | | | 595,000 | | | | 651,513 | |
|
| |
Global Partners L.P./GLP Finance Corp., 6.88%, 01/15/2029(b) | | | 669,000 | | | | 725,447 | |
|
| |
Holly Energy Partners L.P./Holly Energy Finance Corp., 5.00%, 02/01/2028(b) | | | 700,000 | | | | 706,563 | |
|
| |
NGL Energy Partners L.P./NGL Energy Finance Corp., | | | | | | | | |
7.50%, 11/01/2023 | | | 742,000 | | | | 526,820 | |
|
| |
7.50%, 04/15/2026 | | | 807,000 | | | | 501,853 | |
|
| |
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., | | | | | | | | |
5.88%, 04/15/2026 | | | 768,000 | | | | 815,689 | |
|
| |
5.50%, 03/01/2030 | | | 103,000 | | | | 111,924 | |
|
| |
4.88%, 02/01/2031(b) | | | 311,000 | | | | 337,902 | |
|
| |
| | | | | | | 6,147,218 | |
|
| |
| |
Other Diversified Financial Services–0.83% | | | | | |
eG Global Finance PLC (United Kingdom), | | | | | | | | |
6.75%, 02/07/2025(b) | | | 449,000 | | | | 463,143 | |
|
| |
8.50%, 10/30/2025(b) | | | 212,000 | | | | 225,038 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Other Diversified Financial Services–(continued) | |
LPL Holdings, Inc., 5.75%,
09/15/2025(b) | | $ | 526,000 | | | $ | 545,420 | |
|
| |
SW Acquisition L.P., 0.00%(d) | | | 1 | | | | 0 | |
|
| |
| | | | | | | 1,233,601 | |
|
| |
| | |
Packaged Foods & Meats–2.72% | | | | | | | | |
JBS USA LUX S.A./JBS USA Finance, Inc., 5.75%, 06/15/2025(b) | | | 180,000 | | | | 186,300 | |
|
| |
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 5.50%, 01/15/2030(b) | | | 454,000 | | | | 522,218 | |
|
| |
Kraft Heinz Foods Co. (The), | | | | | | | | |
6.88%, 01/26/2039 | | | 421,000 | | | | 584,054 | |
|
| |
5.00%, 06/04/2042 | | | 381,000 | | | | 447,033 | |
|
| |
5.50%, 06/01/2050(b) | | | 922,000 | | | | 1,164,331 | |
|
| |
Pilgrim’s Pride Corp., 5.88%, 09/30/2027(b) | | | 354,000 | | | | 384,395 | |
|
| |
Post Holdings, Inc., | | | | | | | | |
5.63%, 01/15/2028(b) | | | 366,000 | | | | 390,476 | |
|
| |
4.63%, 04/15/2030(b) | | | 327,000 | | | | 344,400 | |
|
| |
| | | | | | | 4,023,207 | |
|
| |
| | |
Paper Products–0.67% | | | | | | | | |
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(b) | | | 937,000 | | | | 996,556 | |
|
| |
| | |
Personal Products–0.26% | | | | | | | | |
Herbalife Nutrition Ltd./HLF Financing, Inc., 7.88%, 09/01/2025(b) | | | 348,000 | | | | 380,625 | |
|
| |
| | |
Pharmaceuticals–2.74% | | | | | | | | |
Bausch Health Americas, Inc., 9.25%, 04/01/2026(b) | | | 384,000 | | | | 428,659 | |
|
| |
Bausch Health Cos., Inc., | | | | | | | | |
9.00%, 12/15/2025(b) | | | 1,207,000 | | | | 1,337,302 | |
|
| |
6.25%, 02/15/2029(b) | | | 403,000 | | | | 438,339 | |
|
| |
Endo DAC/Endo Finance LLC/Endo Finco, Inc., | | | | | | | | |
9.50%, 07/31/2027(b) | | | 89,000 | | | | 99,513 | |
|
| |
6.00%, 06/30/2028(b) | | | 112,000 | | | | 95,312 | |
|
| |
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 7.25%, 08/15/2026(b) | | | 414,000 | | | | 439,875 | |
|
| |
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b) | | | 1,118,000 | | | | 1,214,495 | |
|
| |
| | | | | | | 4,053,495 | |
|
| |
| | |
Publishing–0.50% | | | | | | | | |
Meredith Corp., 6.88%, 02/01/2026 | | | 760,000 | | | | 742,425 | |
|
| |
| | |
Railroads–0.49% | | | | | | | | |
Kenan Advantage Group, Inc. (The), | | | | | | | | |
7.88%, 07/31/2023(b) | | | 717,000 | | | | 719,613 | |
|
| |
| | |
Renewable Electricity–0.09% | | | | | | | | |
NextEra Energy Operating Partners L.P., 3.88%, 10/15/2026(b) | | | 124,000 | | | | 132,603 | |
|
| |
|
Research & Consulting Services–0.27% | |
Dun & Bradstreet Corp. (The), 6.88%, 08/15/2026(b) | | | 210,000 | | | | 226,144 | |
|
| |
10.25%, 02/15/2027(b) | | | 160,000 | | | | 180,770 | |
|
| |
| | | | | | | 406,914 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Restaurants–1.35% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc. (Canada), 4.00%, 10/15/2030(b) | | $ | 868,000 | | | $ | 881,376 | |
|
| |
IRB Holding Corp., | | | | | | | | |
7.00%, 06/15/2025(b) | | | 113,000 | | | | 123,653 | |
|
| |
6.75%, 02/15/2026(b) | | | 956,000 | | | | 987,883 | |
|
| |
| | | | | | | 1,992,912 | |
|
| |
| | |
Security & Alarm Services–0.45% | | | | | | | | |
Brink’s Co. (The), | | | | | | | | |
5.50%, 07/15/2025(b) | | | 71,000 | | | | 75,926 | |
|
| |
4.63%, 10/15/2027(b) | | | 563,000 | | | | 589,390 | |
|
| |
| | | | | | | 665,316 | |
|
| |
| |
Specialized Consumer Services–0.62% | | | | | |
ServiceMaster Co. LLC (The), 7.45%, 08/15/2027 | | | 790,000 | | | | 922,175 | |
|
| |
| | |
Specialized REITs–0.77% | | | | | | | | |
Rayonier A.M. Products, Inc., | | | | | | | | |
5.50%, 06/01/2024(b) | | | 945,000 | | | | 824,512 | |
|
| |
7.63%, 01/15/2026(b) | | | 296,000 | | | | 309,024 | |
|
| |
| | | | | | | 1,133,536 | |
|
| |
| | |
Specialty Chemicals–0.40% | | | | | | | | |
GCP Applied Technologies, Inc., 5.50%, 04/15/2026(b) | | | 567,000 | | | | 586,029 | |
|
| |
| | |
Specialty Stores–0.18% | | | | | | | | |
Sally Holdings LLC/Sally Capital, Inc., 8.75%, 04/30/2025(b) | | | 246,000 | | | | 273,983 | |
|
| |
| | |
Steel–0.45% | | | | | | | | |
Cleveland-Cliffs, Inc., | | | | | | | | |
9.88%, 10/17/2025(b) | | | 430,000 | | | | 506,325 | |
|
| |
6.25%, 10/01/2040 | | | 180,000 | | | | 163,900 | |
|
| |
| | | | | | | 670,225 | |
|
| |
| | |
Systems Software–1.18% | | | | | | | | |
Banff Merger Sub, Inc., 9.75%, 09/01/2026(b) | | | 257,000 | | | | 277,874 | |
|
| |
Boxer Parent Co., Inc., | | | | | | | | |
7.13%, 10/02/2025(b) | | | 141,000 | | | | 153,251 | |
|
| |
9.13%, 03/01/2026(b) | | | 574,000 | | | | 619,202 | |
|
| |
Camelot Finance S.A., 4.50%, 11/01/2026(b) | | | 672,000 | | | | 702,660 | |
|
| |
| | | | | | | 1,752,987 | |
|
| |
|
Technology Hardware, Storage & Peripherals–0.37% | |
Dell International LLC/EMC Corp., | | | | | | | | |
7.13%, 06/15/2024(b) | | | 396,000 | | | | 411,098 | |
|
| |
8.10%, 07/15/2036(b) | | | 94,000 | | | | 139,018 | |
|
| |
| | | | | | | 550,116 | |
|
| |
| | |
Textiles–0.49% | | | | | | | | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 7.50%, 05/01/2025(b) | | | 814,000 | | | | 720,390 | |
|
| |
| |
Trading Companies & Distributors–0.75% | | | | | |
AerCap Global Aviation Trust (Ireland), 6.50%, 06/15/2045(b)(f) | | | 434,000 | | | | 443,765 | |
|
| |
BMC East LLC, 5.50%, 10/01/2024(b) | | | 649,000 | | | | 666,847 | |
|
| |
| | | | | | | 1,110,612 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. High Yield Fund
| | | | | | | | | | |
| | | | | Principal
Amount | | | Value | |
|
| |
Wireless Telecommunication Services–1.49% | |
Intelsat (Luxembourg) S.A. (Luxembourg), 7.75%, 06/01/2021(c) | | | | $ | 347,000 | | | $ | 17,350 | |
|
| |
Intelsat Connect Finance S.A. (Luxembourg), 9.50%, 02/15/2023(b)(c) | | | | | 159,000 | | | | 43,427 | |
|
| |
Sprint Corp., | | | | | | | | | | |
7.88%, 09/15/2023 | | | | | 1,476,000 | | | | 1,710,758 | |
|
| |
7.63%, 02/15/2025 | | | | | 284,000 | | | | 340,150 | |
|
| |
7.63%, 03/01/2026 | | | | | 75,000 | | | | 93,203 | |
|
| |
| | | | | | | | | 2,204,888 | |
|
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $132,068,391) | | | | 136,411,890 | |
|
| |
|
Non-U.S. Dollar Denominated Bonds & Notes–1.83%(h) | |
Building Products–0.48% | |
Maxeda DIY Holding B.V. (Netherlands), 5.88%, 10/01/2026(b) | | EUR | | | 560,000 | | | | 715,081 | |
|
| |
| | |
Casinos & Gaming–0.22% | | | | | | | | |
Codere Finance 2 (Luxembourg) S.A. (Spain), 10.75%, 09/30/2023(b)(i) | | EUR | | | 253,000 | | | | 321,408 | |
|
| |
| | |
Diversified Banks–0.56% | | | | | | | | |
Erste Group Bank AG (Austria), 6.50%(b)(f)(g) | | EUR | | | 600,000 | | | | 820,579 | |
|
| |
| | |
Food Retail–0.50% | | | | | | | | |
Iceland Bondco PLC (United Kingdom), 4.63%, 03/15/2025(b) | | GBP | | | 542,000 | | | | 739,681 | |
|
| |
| | | |
Textiles–0.07% | | | | | | | | | | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 5.38%, 05/01/2023(b) | | EUR | | | 100,000 | | | | 106,047 | |
|
| |
Total Non-U.S. Dollar Denominated Bonds & Notes
(Cost $2,559,040) | | | | 2,702,796 | |
|
| |
|
Variable Rate Senior Loan Interests–1.33%(j)(k) | |
Oil & Gas Exploration & Production–0.18% | | | | | |
Ascent Resources Utica Holdings LLC, Term Loan, 10.00% (1 mo. USD LIBOR + 9.00%), 11/01/2025 | | | 239,000 | | | | 261,257 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Pharmaceuticals–0.57% | | | | | | | | |
Valeant Pharmaceuticals International, Inc. (Canada), First Lien Incremental Term Loan, 2.90% (3 mo. USD LIBOR + 2.75%), 11/27/2025 | | $ | 857,036 | | | $ | 850,454 | |
|
| |
| | |
Railroads–0.58% | | | | | | | | |
4.00%(1 mo. USD LIBOR + 3.00%), 07/29/2022 | | | 861,728 | | | | 856,282 | |
|
| |
Total Variable Rate Senior Loan Interests
(Cost $1,934,294) | | | | | | | 1,967,993 | |
|
| |
| |
U.S. Treasury Securities–0.09% | | | | | |
U.S. Treasury Bills–0.09% | | | | | |
0.11%, 02/04/2021 | | | | | | | | |
(Cost $134,986)(l)(m) | | | 135,000 | | | | 134,986 | |
|
| |
| | | Shares | | | | |
Common Stocks & Other Equity Interests–0.09% | |
Oil & Gas Exploration & Production–0.09% | |
Whiting Petroleum Corp.(n)
(Cost $245,970) | | | 5,352 | | | | 133,777 | |
|
| |
| | |
Money Market Funds–3.09% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional
Class, 0.03%(o)(p) | | | 1,570,848 | | | | 1,570,848 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(o)(p) | | | 1,209,835 | | | | 1,210,198 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(o)(p) | | | 1,795,255 | | | | 1,795,255 | |
|
| |
Total Money Market Funds
(Cost $4,576,274) | | | | 4,576,301 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–98.53%
(Cost $141,518,955) | | | | | | | 145,927,743 | |
|
| |
OTHER ASSETS LESS
LIABILITIES–1.47% | | | | | | | 2,183,030 | |
|
| |
NET ASSETS–100.00% | | | | | | $ | 148,110,773 | |
|
| |
| | |
Investment Abbreviations: |
| Conv. | | – Convertible |
| EUR | | – Euro |
| GBP | | – British Pound Sterling |
| LIBOR | | – London Interbank Offered Rate |
| PIK | | – Pay-in-Kind |
| REIT | | – Real Estate Investment Trust |
| USD | | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. High Yield Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $91,173,007, which represented 61.56% of the Fund’s Net Assets. |
| (c) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at December 31, 2020 was $1,897,672, which represented 1.28% of the Fund’s Net Assets. |
| (d) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (e) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| (f) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (g) | Perpetual bond with no specified maturity date. |
| (h) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (i) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (j) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the variable rate senior loan interests will have an expected average life of three to five years. |
| (k) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the 1933 Act and may be subject to contractual and legal restrictions on sale. Variable rate senior loan interests in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
| (l) | All or a portion of the value was designated as collateral to cover margin requirements for swap agreements. See Note 10. |
| (m) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (n) | Non-income producing security. |
| (o) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 4,401,627 | | | | $ | 45,038,047 | | | | $ | (47,868,826 | ) | | | $ | - | | | | $ | - | | | | $ | 1,570,848 | | | | $ | 7,954 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 3,245,601 | | | | | 32,860,893 | | | | | (34,896,772 | ) | | | | 28 | | | | | 448 | | | | | 1,210,198 | | | | | 8,364 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 5,030,431 | | | | | 51,472,054 | | | | | (54,707,230 | ) | | | | - | | | | | - | | | | | 1,795,255 | | | | | 8,840 | |
| | | | | | | |
Total | | | $ | 12,677,659 | | | | $ | 129,370,994 | | | | $ | (137,472,828 | ) | | | $ | 28 | | | | $ | 448 | | | | $ | 4,576,301 | | | | $ | 25,158 | |
| (p) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | |
| | | Open Forward Foreign Currency Contracts | | | | |
| | | |
Settlement Date | | | | Contract to | | Unrealized
Appreciation
(Depreciation) |
| | Counterparty | | Deliver | | Receive |
| | | | |
Currency Risk | | | | | | | | | | | | | | | | | |
| | | | |
02/17/2021 | | Citibank, N.A. | | | | EUR 1,600,000 | | | | | USD 1,896,219 | | | | $ | (60,391 | ) |
| | | | |
02/17/2021 | | Deutsche Bank AG | | | | GBP 185,000 | | | | | USD 245,241 | | | | | (7,823 | ) |
| | | | |
02/17/2021 | | Goldman Sachs International | | | | GBP 150,000 | | | | | USD 197,692 | | | | | (7,495 | ) |
| | | | |
02/17/2021 | | Toronto Dominion Bank | | | | EUR 105,000 | | | | | USD 124,949 | | | | | (3,454 | ) |
| | | |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | $ | (79,163 | ) |
Abbreviations:
EUR - Euro
GBP - British Pound Sterling
USD - U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $136,942,681) | | $ | 141,351,442 | |
|
| |
Investments in affiliated money market funds, at value (Cost $4,576,274) | | | 4,576,301 | |
|
| |
Foreign currencies, at value (Cost $59,760) | | | 77,419 | |
| |
Receivable for: | | | | |
Investments sold | | | 349,208 | |
|
| |
Fund shares sold | | | 19,591 | |
|
| |
Dividends | | | 179 | |
|
| |
Interest | | | 2,420,501 | |
|
| |
Investments matured, at value | | | 0 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 82,653 | |
|
| |
Total assets | | | 148,877,294 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 79,163 | |
|
| |
Payable for: | | | | |
Investments purchased | | | 232,617 | |
|
| |
Fund shares reacquired | | | 102,140 | |
|
| |
Amount due custodian | | | 86,022 | |
|
| |
Accrued fees to affiliates | | | 88,851 | |
|
| |
Accrued other operating expenses | | | 72,761 | |
|
| |
Trustee deferred compensation and retirement plans | | | 88,557 | |
|
| |
Collateral with broker | | | 16,410 | |
|
| |
Total liabilities | | | 766,521 | |
|
| |
Net assets applicable to shares outstanding | | $ | 148,110,773 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 162,661,827 | |
|
| |
Distributable earnings (loss) | | | (14,551,054 | ) |
|
| |
| | | $148,110,773 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 44,542,702 | |
|
| |
Series II | | $ | 103,568,071 | |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 8,466,839 | |
|
| |
Series II | | | 19,901,924 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 5.26 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 5.20 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest | | $ | 8,622,691 | |
|
| |
Dividends | | | 48,034 | |
|
| |
Dividends from affiliated money market funds | | | 25,158 | |
|
| |
Total investment income | | | 8,695,883 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 860,265 | |
|
| |
Administrative services fees | | | 225,222 | |
|
| |
Custodian fees | | | 7,979 | |
|
| |
Distribution fees - Series II | | | 243,906 | |
|
| |
Transfer agent fees | | | 28,534 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 20,593 | |
|
| |
Reports to shareholders | | | 14,259 | |
|
| |
Professional services fees | | | 137,209 | |
|
| |
Other | | | (9,721 | ) |
|
| |
Total expenses | | | 1,528,246 | |
|
| |
Less: Fees waived | | | (7,428 | ) |
|
| |
Net expenses | | | 1,520,818 | |
|
| |
Net investment income | | | 7,175,065 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (5,678,965 | ) |
|
| |
Affiliated investment securities | | | 448 | |
|
| |
Foreign currencies | | | (14,475 | ) |
|
| |
Forward foreign currency contracts | | | (29,699 | ) |
|
| |
Option contracts written | | | 46,433 | |
|
| |
Swap agreements | | | (807,523 | ) |
|
| |
| | | (6,483,781 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 3,169,516 | |
|
| |
Affiliated investment securities | | | 28 | |
|
| |
Foreign currencies | | | 6,813 | |
|
| |
Forward foreign currency contracts | | | (62,328 | ) |
|
| |
Option contracts written | | | (10,725 | ) |
|
| |
Swap agreements | | | (21,369 | ) |
|
| |
| | | 3,081,935 | |
|
| |
Net realized and unrealized gain (loss) | | | (3,401,846 | ) |
|
| |
Net increase in net assets resulting from operations | | $ | 3,773,219 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 7,175,065 | | | $ | 8,009,131 | |
|
| |
Net realized gain (loss) | | | (6,483,781 | ) | | | (7,514,703 | ) |
|
| |
Change in net unrealized appreciation | | | 3,081,935 | | | | 18,190,282 | |
|
| |
Net increase in net assets resulting from operations | | | 3,773,219 | | | | 18,684,710 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,376,198 | ) | | | (3,070,770 | ) |
|
| |
Series II | | | (5,617,153 | ) | | | (5,696,932 | ) |
|
| |
Total distributions from distributable earnings | | | (7,993,351 | ) | | | (8,767,702 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (4,610,355 | ) | | | (9,441,935 | ) |
|
| |
Series II | | | 1,822,978 | | | | 12,704,138 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (2,787,377 | ) | | | 3,262,203 | |
|
| |
Net increase (decrease) in net assets | | | (7,007,509 | ) | | | 13,179,211 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 155,118,282 | | | | 141,939,071 | |
|
| |
End of year | | $ | 148,110,773 | | | $ | 155,118,282 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 5.41 | | | | $ | 0.28 | | | | $ | (0.12 | ) | | | $ | 0.16 | | | | $ | (0.31 | ) | | | $ | 5.26 | | | | | 3.32 | % | | | $ | 44,543 | | | |
| 0.93
| %(d)
| | |
| 0.94
| %(d)
| | |
| 5.39
| %(d)
| | | | 89 | % |
Year ended 12/31/19 | | | | 5.06 | | | | | 0.29 | | | | | 0.39 | | | | | 0.68 | | | | | (0.33 | ) | | | | 5.41 | | | | | 13.51 | | | | | 50,190 | | | | | 0.88 | | | | | 0.89 | | | | | 5.45 | | | | | 54 | |
Year ended 12/31/18 | | | | 5.51 | | | | | 0.26 | | | | | (0.43 | ) | | | | (0.17 | ) | | | | (0.28 | ) | | | | 5.06 | | | | | (3.35 | ) | | | | 55,703 | | | | | 1.17 | | | | | 1.17 | | | | | 4.84 | | | | | 66 | |
Year ended 12/31/17 | | | | 5.40 | | | | | 0.26 | | | | | 0.08 | | | | | 0.34 | | | | | (0.23 | ) | | | | 5.51 | | | | | 6.30 | | | | | 80,372 | | | | | 0.99 | | | | | 1.00 | | | | | 4.73 | | | | | 73 | |
Year ended 12/31/16 | | | | 5.06 | | | | | 0.28 | | | | | 0.28 | | | | | 0.56 | | | | | (0.22 | ) | | | | 5.40 | | | | | 11.21 | | | | | 94,653 | | | | | 0.96 | | | | | 0.96 | | | | | 5.25 | | | | | 99 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 5.36 | | | | | 0.26 | | | | | (0.12 | ) | | | | 0.14 | | | | | (0.30 | ) | | | | 5.20 | | | | | 2.90 | | | | | 103,568 | | | | | 1.18 | (d) | | | | 1.19 | (d) | | | | 5.14 | (d) | | | | 89 | |
Year ended 12/31/19 | | | | 5.02 | | | | | 0.28 | | | | | 0.37 | | | | | 0.65 | | | | | (0.31 | ) | | | | 5.36 | | | | | 13.16 | | | | | 104,929 | | | | | 1.13 | | | | | 1.14 | | | | | 5.20 | | | | | 54 | |
Year ended 12/31/18 | | | | 5.46 | | | | | 0.25 | | | | | (0.42 | ) | | | | (0.17 | ) | | | | (0.27 | ) | | | | 5.02 | | | | | (3.43 | ) | | | | 86,236 | | | | | 1.42 | | | | | 1.42 | | | | | 4.59 | | | | | 66 | |
Year ended 12/31/17 | | | | 5.36 | | | | | 0.25 | | | | | 0.07 | | | | | 0.32 | | | | | (0.22 | ) | | | | 5.46 | | | | | 5.93 | | | | | 91,802 | | | | | 1.24 | | | | | 1.25 | | | | | 4.48 | | | | | 73 | |
Year ended 12/31/16 | | | | 5.03 | | | | | 0.26 | | | | | 0.28 | | | | | 0.54 | | | | | (0.21 | ) | | | | 5.36 | | | | | 10.83 | | | | | 82,971 | | | | | 1.21 | | | | | 1.21 | | | | | 5.00 | | | | | 99 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $40,080 and $97,562 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. High Yield Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is total return, comprised of current income and capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Variable rate senior loan interests are fair valued using quotes provided by an independent pricing service. Quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
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dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date.
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Purchased on a When-Issued and Delayed Delivery Basis — The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
| J. | Lower-Rated Securities – The Fund normally invests at least 80% of its net assets in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claims. |
| K. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement
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| Invesco V.I. High Yield Fund |
based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| M. | Call Options Purchased and Written – The Fund may write covered call options and/or buy call options. A covered call option gives the purchaser of such option the right to buy, and the writer the obligation to sell, the underlying security or foreign currency at the stated exercise price during the option period. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently “marked-to-market” to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized and unrealized gains and losses on call options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Statement of Assets and Liabilities. The amount of the investment is subsequently “marked-to-market” to reflect the current value of the option purchased. Realized and unrealized gains and losses on call options purchased are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased.
| N. | Put Options Purchased and Written – The Fund may purchase and write put options including options on securities indexes, or foreign currency and/or futures contracts. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option’s underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option’s underlying instrument may be a security, securities index, or a futures contract. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund’s resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the underlying portfolio securities. The Fund may write put options to earn additional income in the form of option premiums if it expects the price of the underlying instrument to remain stable or rise during the option period so that the option will not be exercised. The risk in this strategy is that the price of the underlying securities may decline by an amount greater than the premium received. Put options written are reported as a liability in the Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities and Option contracts written, respectively. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased.
| O. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund
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would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
| P. | Other Risks – The Fund invests in corporate loans from U.S. or non-U.S. companies (the “Borrowers”). The investment of the Fund in a corporate loan may take the form of participation interests or assignments. If the Fund purchases a participation interest from a syndicate of lenders (“Lenders”) or one of the participants in the syndicate (“Participant”), one or more of which administers the loan on behalf of all the Lenders (the “Agent Bank”), the Fund would be required to rely on the Lender that sold the participation interest not only for the enforcement of the Fund’s rights against the Borrower but also for the receipt and processing of payments due to the Fund under the corporate loans. As such, the Fund is subject to the credit risk of the Borrower and the Participant. Lenders and Participants interposed between the Fund and a Borrower, together with Agent Banks, are referred to as “Intermediate Participants”. |
| Q. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| R. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
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| Average Daily Net Assets | | Rate | |
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First $ 200 million | | | 0.625% | |
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Next $300 million | | | 0.550% | |
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Next $500 million | | | 0.500% | |
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Over $1 billion | | | 0.450% | |
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For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.625%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement
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to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $7,428.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $18,876 for accounting and fund administrative services and was reimbursed $206,346 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | $ | – | | | $ | 136,411,890 | | | | $0 | | | $ | 136,411,890 | |
|
| |
Non-U.S. Dollar Denominated Bonds & Notes | | | – | | | | 2,702,796 | | | | – | | | | 2,702,796 | |
|
| |
Variable Rate Senior Loan Interests | | | – | | | | 1,967,993 | | | | – | | | | 1,967,993 | |
|
| |
U.S. Treasury Securities | | | – | | | | 134,986 | | | | – | | | | 134,986 | |
|
| |
Common Stocks & Other Equity Interests | | | 133,777 | | | | – | | | | – | | | | 133,777 | |
|
| |
Money Market Funds | | | 4,576,301 | | | | – | | | | – | | | | 4,576,301 | |
|
| |
Total Investments in Securities | | | 4,710,078 | | | | 141,217,665 | | | | 0 | | | | 145,927,743 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Investments Matured | | | – | | | | 0 | | | | 0 | | | | 0 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (79,163 | ) | | | – | | | | (79,163 | ) |
|
| |
Total Investments | | $ | 4,710,078 | | | $ | 141,138,502 | | | | $0 | | | $ | 145,848,580 | |
|
| |
| * | Forward foreign currency contracts are valued at unrealized appreciation (depreciation). Investments matured are shown at value. |
NOTE 4–Derivative Investments
The Fund may enter into an ISDA Master Agreement under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
|
| Invesco V.I. High Yield Fund |
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| Derivative Liabilities | | Currency
Risk | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | $ | (79,163 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (79,163 | ) |
|
| |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | Financial
Derivative
Liabilities | | | | Collateral
(Received)/Pledged | | | |
| Counterparty | | Forward Foreign
Currency Contracts | | Forward Foreign
Currency Contracts | | Net Value of
Derivatives | | Non-Cash | | Cash | | Net
Amount | |
|
| |
Citibank, N.A. | | $- | | $(60,391) | | $(60,391) | | $- | | $- | | | $(60,391 | ) |
|
| |
Deutsche Bank AG | | - | | (7,823) | | (7,823) | | - | | - | | | (7,823 | ) |
|
| |
Goldman Sachs International | | - | | (7,495) | | (7,495) | | - | | - | | | (7,495 | ) |
|
| |
Toronto Dominion Bank | | - | | (3,454) | | (3,454) | | - | | - | | | (3,454 | ) |
|
| |
Total | | $- | | $(79,163) | | $(79,163) | | $- | | $- | | | $(79,163 | ) |
|
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | | | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Credit
Risk | | | Currency
Risk | | | Equity
Risk | | | Total | |
|
| |
Realized Gain (Loss):
Forward foreign currency contracts | | $ | - | | | $ | (29,699 | ) | | $ | - | | | $ | (29,699 | ) |
|
| |
Options purchased | | | (80,190 | ) | | | - | | | | - | | | | (80,190 | ) |
|
| |
Options written | | | 46,433 | | | | - | | | | - | | | | 46,433 | |
|
| |
Swap agreements | | | (287,447 | ) | | | - | | | | (520,076 | ) | | | (807,523 | ) |
|
| |
Change in Net Unrealized Appreciation (Depreciation):
Forward foreign currency contracts | | | - | | | | (62,328 | ) | | | - | | | | (62,328 | ) |
|
| |
Options purchased | | | 30,182 | | | | - | | | | - | | | | 30,182 | |
|
| |
Options written | | | (10,725 | ) | | | - | | | | - | | | | (10,725 | ) |
|
| |
Swap agreements | | | (4,885 | ) | | | - | | | | (16,484 | ) | | | (21,369 | ) |
|
| |
Total | | $ | (306,632 | ) | | $ | (92,027 | ) | | $ | (536,560 | ) | | $ | (935,219 | ) |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | | | | | |
| | | Forward
Foreign Currency
Contracts | | Swaptions
Purchased | �� | Swaptions
Written | | Swap
Agreements | |
|
| |
Average notional value | | $1,256,950 | | $15,000,000 | | $6,666,667 | | $ | 8,311,556 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
|
| Invesco V.I. High Yield Fund |
NOTE 6–Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 7,993,351 | | | $ | 8,767,702 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 7,442,031 | |
|
| |
Net unrealized appreciation – investments | | | 4,297,056 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 18,600 | |
|
| |
Temporary book/tax differences | | | (60,504 | ) |
|
| |
Capital loss carryforward | | | (26,248,237 | ) |
|
| |
Shares of beneficial interest | | | 162,661,827 | |
|
| |
Total net assets | | $ | 148,110,773 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, book to tax amortization differences and forward foreign currency contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | |
| Capital Loss Carryforward* | |
|
| |
| Expiration | | Short-Term | | | Long-Term | | Total | |
|
| |
Not subject to expiration | | $ | 8,283,733 | | | $17,964,504 | | $ | 26,248,237 | |
|
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $118,254,683 and $116,451,895, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 8,029,154 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (3,732,098 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 4,297,056 | |
|
| |
Cost of investments for tax purposes is $141,551,524.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of market premiums and foreign currency transactions, on December 31, 2020, undistributed net investment income was increased by $266,723, undistributed net realized gain (loss) was decreased by $265,744 and shares of beneficial interest was decreased by $979. This reclassification had no effect on the net assets of the Fund.
|
| Invesco V.I. High Yield Fund |
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 17,479,158 | | | $ | 90,315,593 | | | | 10,060,540 | | | $ | 54,316,527 | |
|
| |
Series II | | | 2,661,078 | | | | 13,309,998 | | | | 3,671,455 | | | | 19,825,254 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 476,192 | | | | 2,376,198 | | | | 581,585 | | | | 3,070,770 | |
|
| |
Series II | | | 1,137,075 | | | | 5,617,153 | | | | 1,089,280 | | | | 5,696,932 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (18,762,181 | ) | | | (97,302,146 | ) | | | (12,378,602 | ) | | | (66,829,232 | ) |
|
| |
Series II | | | (3,475,105 | ) | | | (17,104,173 | ) | | | (2,376,915 | ) | | | (12,818,048 | ) |
|
| |
Net increase (decrease) in share activity | | | (483,783 | ) | | $ | (2,787,377 | ) | | | 647,343 | | | $ | 3,262,203 | |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 73% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
|
| Invesco V.I. High Yield Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. High Yield Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. High Yield Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent, brokers and agent banks; when replies were not received from brokers or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco V.I. High Yield Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL
(5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,117.90 | | $5.27 | | $1,020.16 | | $5.03 | | 0.99% |
Series II | | 1,000.00 | | 1,114.20 | | 6.59 | | 1,018.90 | | 6.29 | | 1.24 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco V.I. High Yield Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | |
|
|
|
Corporate Dividends Received Deduction* | | | 0.00 | % |
Qualified Dividend Income* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 0.13 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. High Yield Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. High Yield Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. International Growth Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VIIGR-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. International Growth Fund (the Fund) underperformed the Custom Invesco International Growth Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 14.00 | % |
Series II Shares | | | 13.74 | |
MSCI All Country World ex-USA Indexq (Broad Market Index) | | | 10.65 | |
Custom Invesco International Growth Index∎ (Style-Specific Index) | | | 22.20 | |
Lipper VUF International Large-Cap Growth Funds Index¨ (Peer Group Index) | | | 20.02 | |
|
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ¨Lipper Inc. | |
Market conditions and your Fund
Global equity markets started the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global equity markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. The US bull market came to an abrupt end, while global equity markets also fell sharply. As fear of a worldwide recession increased, central banks around the world took aggressive action to support both local markets and the global economy.
Despite the continuing global spread of COVID-19, many countries achieved some success in controlling the spread and were able to slowly re-open their economies. Global equity markets benefited from government policy responses to the crisis, which were swift and encouraging. Many economies received fiscal stimulus and very significant monetary stimulus. The massive monetary policy responses created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first quarter.
Despite a correction in September, global equity stocks finished the third quarter in positive territory after posting strong gains in July and August. Building on progress made in the latter part of the second quarter, many countries were able to continue reducing pandemic-related stringency protocols. As a result, the “green shoots” we saw at the end of the second quarter grew and flourished into the third quarter, as many countries experienced a strong economic rebound.
At the end of the year, global equity markets again posted gains as good news about COVID-19 vaccines outweighed concerns about sharply rising infection rates and tightening social restrictions. In most global regions, equity market leadership shifted as value stocks outperformed growth stocks. Sectors that had been severely affected by the pandemic, including energy and financials,
were among the fourth quarter’s top performers. Emerging market equities, which posted robust gains amplified by US dollar weakness, outperformed developed market equities for the year.
Regardless of the macroeconomic environment, we remain focused on our bottom-up investment approach of identifying attractive companies that fit our earnings, quality and valuation (EQV) process.
Fund holdings in the industrials sector outperformed those of the Fund’s style-specific benchmark, the Custom Invesco International Growth Index, contributing to relative performance. Within the sector, France-based Schneider Electric, a company that specializes in products and services which help to control/streamline energy consumption, Japan-based Nidec, a manufacturer of electric motors, and FANUC, a Japanese manufacturer of factory-automation systems and robots, contributed to both absolute and relative results during the year. A lack of exposure to select style-specific index names, including Airbus and Safran, also added to relative return. Having no exposure to the real estate and utilities sectors also had a positive impact on the Fund’s relative performance. On a geographic basis, the Fund’s holdings in India and Australia outperformed those of the style-specific benchmark index and contributed to relative return. Underweight exposure to both countries relative to the style-specific index also added to relative results during the year.
Internationally, growth stocks outperformed value stocks for the year despite a rotation away from momentum growth stocks toward more cyclical and economically sensitive stocks in early November following the release of vaccine efficacy news. To illustrate, the MSCI All Country World ex USA Growth Index outperformed the MSCI All Country World ex USA Value Index by 21.43% for the year.1 In this momentum growth market, investors chased stocks with the faster earnings growth and focused less on fundamentals and valuation. Historically, momentum growth markets have been challenging for our
conservative quality growth with a valuation bias (EQV) approach. As a result, it is not surprising that the Fund lagged its style-specific benchmark, while outperforming its broad market index, the MSCI All Country World ex USA Index. Our investment process seeks sustainable growth and quality with lower volatility relative to more momentum growth-oriented strategies.
Stock selection in the information technology (IT), health care and energy sectors drove the Fund’s relative underperformance versus the style-specific index. Within the IT sector, weakness was seen in Spain-based Amadeus IT Group and Germany-based software company SAP. During the year, we exited the Fund’s position in Amadeus IT Group due to a deterioration in its earnings that was COVID-related and limited visibility around turnaround of air travel. We also exited the Fund’s position in SAP due to deteriorating EQV characteristics. In the health care sector, a lack of exposure to strong style-specific index performers, including Japan-based companies M3 and Daiichi Sankyo, hampered relative results. In the energy sector, Canada-based Suncor Energy and TechnipFMC were notable detractors from both absolute and relative performance; we exited both Fund positions during the year. In addition, underweight exposure to IT and health care hampered relative results. Geographically, the Fund’s holdings in the UK, Canada, China and Germany underperformed those of the style-specific index and were among the largest detractors from relative performance. Underweight exposure to the strong Chinese market and overweight exposure to Germany also had a negative impact on relative return. Given the rising equity market, the Fund’s cash position dampened relative results. As a reminder, cash is a by-product of our bottom-up stock selection process.
During the year, we continued to look for opportunities to improve the growth potential and quality of the Fund’s portfolio by adding companies based on our EQV outlook for each company. As a result of the COVID-19 market selloff, our trading activity picked up to take advantage of the broadening opportunity set. We added several new holdings, including Mexico-based retailer Walmart de Mexico, Switzerland-based food and drink processing company Nestle and Switzerland-based pharmaceuticals company Roche. We sold several holdings during the year, including France-based testing, inspection and certification company Bureau Veritas, France-based concessions and construction company Vinci and UK-based industrials company RELX. After owning RELX for over a decade, we exited the Fund’s position as we questioned the long-term organic revenue potential and we felt that there were better growth opportunities elsewhere in the Fund.
As always, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused
|
| Invesco V.I. International Growth Fund |
investment process. We continue to look for high-quality companies that exhibit the following characteristics: strong organic growth; high returns on capital; pricing power; strong balance sheets; cash generation; and reasonable valuations. In addition, we continue to favor companies that are able to consistently generate cash during weak economic environments. Our balanced EQV-focused approach aligns with our goal of delivering attractive risk-adjusted returns over the long term.
We thank you for your continued investment in Invesco V.I. International Growth Fund.
1 Source: RIMES Technologies Corp.
Portfolio manager(s):
Brent Bates
Matthew Dennis
Mark Jason
Richard Nield
Clas Olsson
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco V.I. International Growth Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 2 | Sources: Invesco, RIMES Technologies Corp. |
| 3 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/5/93) | | | 7.42 | % |
10 Years | | | 6.72 | |
5 Years | | | 8.82 | |
1 Year | | | 14.00 | |
| |
Series II Shares | | | | |
Inception (9/19/01) | | | 7.66 | % |
10 Years | | | 6.46 | |
5 Years | | | 8.55 | |
1 Year | | | 13.74 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. International Growth Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You
cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco V.I. International Growth Fund |
Supplemental Information
Invesco V.I. International Growth Fund’s investment objective is long-term growth of capital.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The MSCI All Country World ex-USA® Index is an index considered representative of developed and emerging stock markets, excluding the US. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | The Custom Invesco International Growth Index is composed of the MSCI EAFE® Growth Index through February 28, 2013, and the MSCI All Country World ex-U.S. Growth Index thereafter. The MSCI EAFE® Growth Index is an unmanaged index considered representative of growth stocks of Europe, Australasia and the Far East. The MSCI All Country World ex-U.S. Growth Index is a market capitalization weighted index that includes growth companies in developed and emerging markets, excluding the US. Both MSCI indexes are computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | The Lipper VUF International Large-Cap Growth Funds Index is an unmanaged index considered representative of international large-cap growth variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
|
| Invesco V.I. International Growth Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Consumer Discretionary | | | | 17.97 | % |
Industrials | | | | 17.05 | |
Consumer Staples | | | | 15.56 | |
Information Technology | | | | 14.74 | |
Financials | | | | 14.72 | |
Health Care | | | | 10.54 | |
Communication Services | | | | 3.92 | |
Materials | | | | 3.19 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 2.31 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. CGI, Inc., Class A | | | | 3.42 | % |
2. Broadcom, Inc. | | | | 3.20 | |
3. Alibaba Group Holding Ltd., ADR | | | | 3.02 | |
4. Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | | | 2.86 | |
5. Investor AB, Class B | | | | 2.66 | |
6. Wal-Mart de Mexico S.A.B. de C.V., Series V | | | | 2.52 | |
7. Samsung Electronics Co. Ltd. | | | | 2.46 | |
8. Canadian National Railway Co. | | | | 2.36 | |
9. FinecoBank Banca Fineco S.p.A. | | | | 2.31 | |
10. Wolters Kluwer N.V. | | | | 2.30 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
|
| Invesco V.I. International Growth Fund |
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–97.69% | |
Australia–0.59% | | | | | | | | |
CSL Ltd. | | | 38,975 | | | $ | 8,516,332 | |
|
| |
| | |
Brazil–2.58% | | | | | | | | |
B3 S.A. - Brasil, Bolsa, Balcao | | | 2,164,134 | | | | 25,958,648 | |
|
| |
Banco Bradesco S.A., ADR | | | 2,150,737 | | | | 11,312,875 | |
|
| |
| | | | | | | 37,271,523 | |
|
| |
| | |
Canada–5.78% | | | | | | | | |
Canadian National Railway Co. | | | 310,084 | | | | 34,089,995 | |
|
| |
CGI, Inc., Class A(a) | | | 620,925 | | | | 49,263,270 | |
|
| |
| | | | | | | 83,353,265 | |
|
| |
| | |
China–12.87% | | | | | | | | |
Alibaba Group Holding Ltd., ADR(a) | | | 187,468 | | | | 43,629,428 | |
|
| |
China Mengniu Dairy Co. Ltd. | | | 3,379,000 | | | | 20,453,345 | |
|
| |
JD.com, Inc., ADR(a) | | | 303,341 | | | | 26,663,674 | |
|
| |
Kweichow Moutai Co. Ltd., A Shares | | | 29,287 | | | | 8,949,788 | |
|
| |
New Oriental Education & Technology Group, Inc., ADR(a) | | | 84,515 | | | | 15,703,732 | |
|
| |
Tencent Holdings Ltd. | | | 445,500 | | | | 32,551,449 | |
|
| |
Wuliangye Yibin Co. Ltd., A Shares | | | 287,297 | | | | 12,853,311 | |
|
| |
Yum China Holdings, Inc. | | | 435,025 | | | | 24,835,577 | |
|
| |
| | | | | | | 185,640,304 | |
|
| |
| | |
Denmark–2.35% | | | | | | | | |
Carlsberg A/S, Class B | | | 108,276 | | | | 17,358,608 | |
|
| |
Novo Nordisk A/S, Class B | | | 235,521 | | | | 16,473,631 | |
|
| |
| | | | | | | 33,832,239 | |
|
| |
| | |
France–4.98% | | | | | | | | |
LVMH Moet Hennessy Louis Vuitton SE | | | 23,271 | | | | 14,540,435 | |
|
| |
Pernod Ricard S.A. | | | 57,577 | | | | 11,036,834 | |
|
| |
Sanofi | | | 136,918 | | | | 13,229,092 | |
|
| |
Schneider Electric SE | | | 228,003 | | | | 32,979,606 | |
|
| |
| | | | | | | 71,785,967 | |
|
| |
| | |
Germany–3.94% | | | | | | | | |
Beiersdorf AG | | | 80,033 | | | | 9,227,238 | |
|
| |
Deutsche Boerse AG | | | 183,997 | | | | 31,237,224 | |
|
| |
Knorr-Bremse AG | | | 120,340 | | | | 16,393,415 | |
|
| |
| | | | | | | 56,857,877 | |
|
| |
| | |
Hong Kong–2.07% | | | | | | | | |
AIA Group Ltd. | | | 2,429,000 | | | | 29,919,614 | |
|
| |
| | |
India–2.24% | | | | | | | | |
HDFC Bank Ltd., ADR(a) | | | 447,872 | | | | 32,363,231 | |
|
| |
| | |
Ireland–3.37% | | | | | | | | |
CRH PLC | | | 171,401 | | | | 7,245,522 | |
|
| |
Flutter Entertainment PLC | | | 72,836 | | | | 15,079,946 | |
|
| |
ICON PLC(a) | | | 134,568 | | | | 26,238,069 | |
|
| |
| | | | | | | 48,563,537 | |
|
| |
| | |
Italy–2.31% | | | | | | | | |
FinecoBank Banca Fineco S.p.A.(a) | | | 2,038,405 | | | | 33,266,006 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Japan–13.12% | | | | | | | | |
Asahi Group Holdings Ltd. | | | 435,300 | | | $ | 17,942,371 | |
|
| |
FANUC Corp. | | | 55,300 | | | | 13,615,819 | |
|
| |
Hoya Corp. | | | 159,300 | | | | 22,019,886 | |
|
| |
Keyence Corp. | | | 20,500 | | | | 11,537,037 | |
|
| |
Koito Manufacturing Co. Ltd. | | | 300,900 | | | | 20,465,233 | |
|
| |
Komatsu Ltd. | | | 931,900 | | | | 25,536,527 | |
|
| |
Nidec Corp. | | | 91,200 | | | | 11,490,738 | |
|
| |
Olympus Corp. | | | 1,053,100 | | | | 23,052,480 | |
|
| |
SMC Corp. | | | 22,300 | | | | 13,619,114 | |
|
| |
Sony Corp. | | | 297,500 | | | | 29,911,745 | |
|
| |
| | | | | | | 189,190,950 | |
|
| |
| | |
Macau–1.56% | | | | | | | | |
Galaxy Entertainment Group Ltd.(a) | | | 2,883,000 | | | | 22,424,245 | |
|
| |
| | |
Mexico–2.52% | | | | | | | | |
Wal-Mart de Mexico S.A.B. de C.V., Series V | | | 12,925,748 | | | | 36,361,887 | |
|
| |
| | |
Netherlands–5.82% | | | | | | | | |
ASML Holding N.V. | | | 26,830 | | | | 12,965,919 | |
|
| |
Heineken N.V.(a) | | | 130,090 | | | | 14,507,614 | |
|
| |
Prosus N.V.(a) | | | 215,873 | | | | 23,222,181 | |
|
| |
Wolters Kluwer N.V. | | | 393,113 | | | | 33,179,920 | |
|
| |
| | | | | | | 83,875,634 | |
|
| |
| | |
Singapore–0.69% | | | | | | | | |
United Overseas Bank Ltd. | | | 578,466 | | | | 9,875,529 | |
|
| |
| | |
South Korea–4.12% | | | | | | | | |
NAVER Corp.(a) | | | 88,747 | | | | 23,963,590 | |
|
| |
Samsung Electronics Co. Ltd. | | | 474,098 | | | | 35,432,867 | |
|
| |
| | | | | | | 59,396,457 | |
|
| |
| | |
Sweden–4.89% | | | | | | | | |
Investor AB, Class B(a) | | | 525,190 | | | | 38,384,686 | |
|
| |
Sandvik AB(a) | | | 1,314,528 | | | | 32,132,669 | |
|
| |
| | | | | | | 70,517,355 | |
|
| |
| | |
Switzerland–8.05% | | | | | | | | |
Alcon, Inc.(a) | | | 211,258 | | | | 14,103,507 | |
|
| |
Kuehne + Nagel International AG | | | 114,985 | | | | 26,066,041 | |
|
| |
Logitech International S.A. | | | 164,815 | | | | 15,985,203 | |
|
| |
Nestle S.A. | | | 268,933 | | | | 31,661,183 | |
|
| |
Roche Holding AG | | | 81,196 | | | | 28,329,924 | |
|
| |
| | | | | | | 116,145,858 | |
|
| |
| | |
Taiwan–2.86% | | | | | | | | |
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | | 378,549 | | | | 41,276,983 | |
|
| |
| | |
United Kingdom–2.98% | | | | | | | | |
Ashtead Group PLC | | | 142,987 | | | | 6,728,787 | |
|
| |
British American Tobacco PLC | | | 355,481 | | | | 13,222,093 | |
|
| |
Linde PLC | | | 87,492 | | | | 23,055,017 | |
|
| |
| | | | | | | 43,005,897 | |
|
| |
| | |
United States–8.00% | | | | | | | | |
Amcor PLC, CDI | | | 1,322,744 | | | | 15,712,891 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. International Growth Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
United States–(continued) | |
Booking Holdings, Inc.(a) | | | 10,176 | | | $ | 22,664,700 | |
|
| |
Broadcom, Inc. | | | 105,368 | | | | 46,135,379 | |
|
| |
Philip Morris International, Inc. | | | 372,905 | | | | 30,872,805 | |
|
| |
| | | | | | | 115,385,775 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $866,897,250) | | | | 1,408,826,465 | |
|
| |
|
Money Market Funds–2.26% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(b)(c) | | | 11,470,872 | | | | 11,470,872 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Money Market Funds–(continued) | | | | | |
Invesco Liquid Assets Portfolio,
Institutional Class, 0.08%(b)(c) | | | 7,986,761 | | | $ | 7,989,157 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(b)(c) | | | 13,109,568 | | | | 13,109,569 | |
|
| |
Total Money Market Funds
(Cost $32,565,297) | | | | 32,569,598 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–99.95%
(Cost $899,462,547) | | | | 1,441,396,063 | |
|
| |
OTHER ASSETS LESS LIABILITIES–0.05% | | | | 651,261 | |
|
| |
NET ASSETS–100.00% | | | | | | $ | 1,442,047,324 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
CDI – CREST Depository Interest
Notes to Schedule of Investments:
| (a) | Non-income producing security. |
| (b) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 14,279,963 | | | | $ | 152,272,061 | | | | $ | (155,081,152 | ) | | | $ | - | | | | $ | - | | | | $ | 11,470,872 | | | | $ | 59,339 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 10,203,588 | | | | | 108,765,758 | | | | | (110,987,440 | ) | | | | 2,308 | | | | | 4,943 | | | | | 7,989,157 | | | | | 65,223 | |
Invesco Treasury Portfolio, Institutional Class | | | | 16,319,957 | | | | | 174,025,214 | | | | | (177,235,602 | ) | | | | - | | | | | - | | | | | 13,109,569 | | | | | 63,272 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 10,304,831 | | | | | (10,304,831 | ) | | | | - | | | | | - | | | | | - | | | | | 42* | |
Invesco Private Prime Fund | | | | - | | | | | 15,454,276 | | | | | (15,454,276 | ) | | | | - | | | | | - | | | | | - | | | | | 430* | |
Total | | | $ | 40,803,508 | | | | $ | 460,822,140 | | | | $ | (469,063,301 | ) | | | $ | 2,308 | | | | $ | 4,943 | | | | $ | 32,569,598 | | | | $ | 188,306 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (c) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. International Growth Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $866,897,250) | | $ | 1,408,826,465 | |
| |
Investments in affiliated money market funds, at value (Cost $32,565,297) | | | 32,569,598 | |
| |
Cash | | | 212,012 | |
| |
Foreign currencies, at value (Cost $1,069,330) | | | 1,072,570 | |
Receivable for: | | | | |
Investments sold | | | 2,645,343 | |
| |
Fund shares sold | | | 486,207 | |
| |
Dividends | | | 3,288,880 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 277,215 | |
|
| |
Total assets | | | 1,449,378,290 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 5,145,800 | |
| |
Fund shares reacquired | | | 854,570 | |
| |
Accrued fees to affiliates | | | 801,601 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 305 | |
| |
Accrued other operating expenses | | | 224,375 | |
| |
Trustee deferred compensation and retirement plans | | | 304,315 | |
| |
Total liabilities | | | 7,330,966 | |
| |
Net assets applicable to shares outstanding | | $ | 1,442,047,324 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 825,329,400 | |
| |
Distributable earnings | | | 616,717,924 | |
| |
| | $ | 1,442,047,324 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 468,725,810 | |
|
| |
Series II | | $ | 973,321,514 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 11,023,956 | |
|
| |
Series II | | | 23,241,512 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 42.52 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 41.88 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $2,171,487) | | $ | 20,111,640 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $2) | | | 187,834 | |
| |
Total investment income | | | 20,299,474 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 9,251,278 | |
| |
Administrative services fees | | | 2,138,429 | |
| |
Custodian fees | | | 190,827 | |
| |
Distribution fees - Series II | | | 2,199,939 | |
| |
Transfer agent fees | | | 72,572 | |
| |
Trustees’ and officers’ fees and benefits | | | 36,923 | |
| |
Reports to shareholders | | | 13,105 | |
| |
Professional services fees | | | 157,539 | |
| |
Other | | | 14,673 | |
| |
Total expenses | | | 14,075,285 | |
| |
Less: Fees waived | | | (47,026 | ) |
| |
Net expenses | | | 14,028,259 | |
| |
Net investment income | | | 6,271,215 | |
|
| |
| |
Realized and unrealized gain from: | | | | |
Net realized gain from: | | | | |
Unaffiliated investment securities | | | 98,452,469 | |
| |
Affiliated investment securities | | | 4,943 | |
| |
Foreign currencies | | | 1,541 | |
| |
| | | 98,458,953 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 61,439,205 | |
| |
Affiliated investment securities | | | 2,308 | |
| |
Foreign currencies | | | 129,885 | |
| |
| | | 61,571,398 | |
| |
Net realized and unrealized gain | | | 160,030,351 | |
| |
Net increase in net assets resulting from operations | | $ | 166,301,566 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. International Growth Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 6,271,215 | | | $ | 19,460,503 | |
|
| |
Net realized gain | | | 98,458,953 | | | | 36,486,226 | |
|
| |
Change in net unrealized appreciation | | | 61,571,398 | | | | 292,289,985 | |
|
| |
Net increase in net assets resulting from operations | | | 166,301,566 | | | | 348,236,714 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (19,693,113 | ) | | | (35,398,141 | ) |
|
| |
Series II | | | (38,602,388 | ) | | | (74,537,058 | ) |
|
| |
Total distributions from distributable earnings | | | (58,295,501 | ) | | | (109,935,199 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (34,482,600 | ) | | | (25,039,724 | ) |
Series II | | | (103,508,855 | ) | | | (18,732,098 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (137,991,455 | ) | | | (43,771,822 | ) |
|
| |
Net increase (decrease) in net assets | | | (29,985,390 | ) | | | 194,529,693 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,472,032,714 | | | | 1,277,503,021 | |
|
| |
End of year | | $ | 1,442,047,324 | | | $ | 1,472,032,714 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. International Growth Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 39.05 | | | | $ | 0.24 | | | | $ | 5.04 | | | | $ | 5.28 | | | | $ | (0.92 | ) | | | $ | (0.89 | ) | | | $ | (1.81 | ) | | | $ | 42.52 | | | | | 14.02 | % | | | $ | 468,726 | | | | | 0.91 | %(d) | | | | 0.91 | %(d) | | | | 0.65 | %(d) | | | | 52 | % |
Year ended 12/31/19 | | | | 32.98 | | | | | 0.58 | | | | | 8.60 | | | | | 9.18 | | | | | (0.62 | ) | | | | (2.49 | ) | | | | (3.11 | ) | | | | 39.05 | | | | | 28.54 | | | | | 466,401 | | | | | 0.89 | | | | | 0.89 | | | | | 1.54 | | | | | 31 | |
Year ended 12/31/18 | | | | 39.89 | | | | | 0.66 | | | | | (6.51 | ) | | | | (5.85 | ) | | | | (0.79 | ) | | | | (0.27 | ) | | | | (1.06 | ) | | | | 32.98 | | | | | (14.97 | ) | | | | 414,774 | | | | | 0.92 | | | | | 0.93 | | | | | 1.74 | | | | | 35 | |
Year ended 12/31/17 | | | | 32.89 | | | | | 0.49 | | | | | 7.06 | | | | | 7.55 | | | | | (0.55 | ) | | | | – | | | | | (0.55 | ) | | | | 39.89 | | | | | 23.00 | | | | | 627,894 | | | | | 0.92 | | | | | 0.93 | | | | | 1.34 | | | | | 34 | |
Year ended 12/31/16 | | | | 33.49 | | | | | 0.50 | | | | | (0.63 | ) | | | | (0.13 | ) | | | | (0.47 | ) | | | | – | | | | | (0.47 | ) | | | | 32.89 | | | | | (0.45 | ) | | | | 540,460 | | | | | 0.95 | | | | | 0.96 | | | | | 1.51 | | | | | 18 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 38.48 | | | | | 0.15 | | | | | 4.95 | | | | | 5.10 | | | | | (0.81 | ) | | | | (0.89 | ) | | | | (1.70 | ) | | | | 41.88 | | | | | 13.74 | | | | | 973,322 | | | | | 1.16 | (d) | | | | 1.16 | (d) | | | | 0.40 | (d) | | | | 52 | |
Year ended 12/31/19 | | | | 32.52 | | | | | 0.48 | | | | | 8.47 | | | | | 8.95 | | | | | (0.50 | ) | | | | (2.49 | ) | | | | (2.99 | ) | | | | 38.48 | | | | | 28.20 | | | | | 1,005,632 | | | | | 1.14 | | | | | 1.14 | | | | | 1.29 | | | | | 31 | |
Year ended 12/31/18 | | | | 39.33 | | | | | 0.56 | | | | | (6.42 | ) | | | | (5.86 | ) | | | | (0.68 | ) | | | | (0.27 | ) | | | | (0.95 | ) | | | | 32.52 | | | | | (15.18 | ) | | | | 862,729 | | | | | 1.17 | | | | | 1.18 | | | | | 1.49 | | | | | 35 | |
Year ended 12/31/17 | | | | 32.44 | | | | | 0.40 | | | | | 6.96 | | | | | 7.36 | | | | | (0.47 | ) | | | | – | | | | | (0.47 | ) | | | | 39.33 | | | | | 22.73 | | | | | 1,448,723 | | | | | 1.17 | | | | | 1.18 | | | | | 1.09 | | | | | 34 | |
Year ended 12/31/16 | | | | 33.04 | | | | | 0.41 | | | | | (0.62 | ) | | | | (0.21 | ) | | | | (0.39 | ) | | | | – | | | | | (0.39 | ) | | | | 32.44 | | | | | (0.70 | ) | | | | 1,167,820 | | | | | 1.20 | | | | | 1.21 | | | | | 1.26 | | | | | 18 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $423,778 and $879,976 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. International Growth Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. International Growth Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco V.I. International Growth Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
|
| Invesco V.I. International Growth Fund |
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
|
| |
First $ 250 million | | | 0.750% | |
|
| |
Over $250 million | | | 0.700% | |
|
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.71%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $47,026.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $187,224 for accounting and fund administrative services and was reimbursed $1,951,205 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $1,062 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
|
| Invesco V.I. International Growth Fund |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Australia | | $ | – | | | $ | 8,516,332 | | | | $– | | | $ | 8,516,332 | |
|
| |
Brazil | | | 11,312,875 | | | | 25,958,648 | | | | – | | | | 37,271,523 | |
|
| |
Canada | | | 83,353,265 | | | | – | | | | – | | | | 83,353,265 | |
|
| |
China | | | 110,832,411 | | | | 74,807,893 | | | | – | | | | 185,640,304 | |
|
| |
Denmark | | | – | | | | 33,832,239 | | | | – | | | | 33,832,239 | |
|
| |
France | | | – | | | | 71,785,967 | | | | – | | | | 71,785,967 | |
|
| |
Germany | | | – | | | | 56,857,877 | | | | – | | | | 56,857,877 | |
|
| |
Hong Kong | | | – | | | | 29,919,614 | | | | – | | | | 29,919,614 | |
|
| |
India | | | 32,363,231 | | | | – | | | | – | | | | 32,363,231 | |
|
| |
Ireland | | | 26,238,069 | | | | 22,325,468 | | | | – | | | | 48,563,537 | |
|
| |
Italy | | | – | | | | 33,266,006 | | | | – | | | | 33,266,006 | |
|
| |
Japan | | | – | | | | 189,190,950 | | | | – | | | | 189,190,950 | |
|
| |
Macau | | | – | | | | 22,424,245 | | | | – | | | | 22,424,245 | |
|
| |
Mexico | | | 36,361,887 | | | | – | | | | – | | | | 36,361,887 | |
|
| |
Netherlands | | | – | | | | 83,875,634 | | | | – | | | | 83,875,634 | |
|
| |
Singapore | | | – | | | | 9,875,529 | | | | – | | | | 9,875,529 | |
|
| |
South Korea | | | – | | | | 59,396,457 | | | | – | | | | 59,396,457 | |
|
| |
Sweden | | | – | | | | 70,517,355 | | | | – | | | | 70,517,355 | |
|
| |
Switzerland | | | – | | | | 116,145,858 | | | | – | | | | 116,145,858 | |
|
| |
Taiwan | | | 41,276,983 | | | | – | | | | – | | | | 41,276,983 | |
|
| |
United Kingdom | | | 23,055,017 | | | | 19,950,880 | | | | – | | | | 43,005,897 | |
|
| |
United States | | | 99,672,884 | | | | 15,712,891 | | | | – | | | | 115,385,775 | |
|
| |
Money Market Funds | | | 32,569,598 | | | | – | | | | – | | | | 32,569,598 | |
|
| |
Total Investments | | $ | 497,036,220 | | | $ | 944,359,843 | | | | $– | | | $ | 1,441,396,063 | |
|
| |
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 30,977,650 | | | | $ 19,392,737 | |
|
| |
Long-term capital gain | | | 27,317,851 | | | | 90,542,462 | |
|
| |
Total distributions | | $ | 58,295,501 | | | | $109,935,199 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. International Growth Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 16,064,807 | |
|
| |
Undistributed long-term capital gain | | | 91,870,208 | |
|
| |
Net unrealized appreciation – investments | | | 508,821,381 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 174,538 | |
|
| |
Temporary book/tax differences | | | (213,010 | ) |
|
| |
Shares of beneficial interest | | | 825,329,400 | |
|
| |
Total net assets | | $ | 1,442,047,324 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and passive foreign investment companies.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $655,910,743 and $831,560,107, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 513,450,735 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (4,629,354 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 508,821,381 | |
|
| |
Cost of investments for tax purposes is $932,574,682.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2020, undistributed net investment income was increased by $5,167,094 and undistributed net realized gain was decreased by $5,167,094. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,482,979 | | | $ | 52,751,557 | | | | 1,348,893 | | | $ | 50,918,059 | |
|
| |
Series II | | | 2,437,340 | | | | 85,719,081 | | | | 2,347,857 | | | | 86,070,698 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 511,763 | | | | 19,559,591 | | | | 964,334 | | | | 35,063,198 | |
|
| |
Series II | | | 1,025,024 | | | | 38,602,388 | | | | 2,079,137 | | | | 74,537,058 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,913,014 | ) | | | (106,793,748 | ) | | | (2,946,756 | ) | | | (111,020,981 | ) |
|
| |
Series II | | | (6,351,741 | ) | | | (227,830,324 | ) | | | (4,827,830 | ) | | | (179,339,854 | ) |
|
| |
Net increase (decrease) in share activity | | | (3,807,649 | ) | | $ | (137,991,455 | ) | | | (1,034,365 | ) | | $ | (43,771,822 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 51% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
|
| Invesco V.I. International Growth Fund |
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
|
| Invesco V.I. International Growth Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. International Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. International Growth Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco V.I. International Growth Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,242.40 | | $5.19 | | $1,020.51 | | $4.67 | | 0.92% |
Series II | | 1,000.00 | | 1,240.60 | | 6.59 | | 1,019.25 | | 5.94 | | 1.17 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco V.I. International Growth Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | | | |
| Federal and State Income Tax | | | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 27,317,851 | | | |
Qualified Dividend Income* | | | 0.00 | % | | |
Corporate Dividends Received Deduction* | | | 11.56 | % | | |
U.S. Treasury Obligations* | | | 0.00 | % | | |
Foreign Taxes | | $ | 0.0613 | | | per share |
Foreign Source Income | | $ | 0.5646 | | | per share |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection
(non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. International Growth Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and
Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. International Growth Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Managed Volatility Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| |
| Invesco Distributors, Inc. | | I-VIMGV-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Managed Volatility Fund (the Fund) underperformed the Russell 1000 Value Index. Your Fund’s long-term performance appears later in this report. | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | -1.49 | % |
Series II Shares | | | -1.76 | |
Russell 1000 Value Indexq (Broad Market Index) | | | 2.80 | |
Bloomberg Barclays U.S. Government/Credit Indexq (Style-Specific Index) | | | 8.93 | |
Lipper VUF Mixed-Asset Target Allocation Growth Funds Index∎ (Peer Group Index) | | | 10.72 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Seven out of eleven sectors within the Russell 1000 Value Index had positive returns for the year. The materials sector had the highest return for the year, while the energy sector posted a double-digit loss.
Stock selection in and overweight exposure to the information technology (IT) sector was the largest contributor to the Fund’s relative performance compared to the Russell 1000 Value Index. Within the sector, Apple, Qualcomm and Cognizant Technology Solutions were the largest contributors, benefiting from
a strong rally in the sector beginning in the second quarter of 2020. Apple shares moved higher following the selloff as the company reopened its factory in China and sales rebounded. Shares of Qualcomm traded higher following the company’s patent license settlement with Huawei that helped boost both revenue and profits. Cognizant had revenue declines due to the pandemic, but earnings were better than anticipated.
Stock selection and the Fund’s underweight exposure to the real estate sector also helped the Fund’s relative performance versus the Russell
1000 Value Index as the sector underperformed, posting a decline for the year.
Security selection in the financials sector was another contributor to the Fund’s relative performance during the year. Within the sector Morgan Stanley and Goldman Sachs were strong contributors. Large banks and capital markets firms benefited from a rise in yields during the year and these stocks performed well amid a broader rally in cyclical stocks.
The Fund holds investment grade bonds and convertible securities as a source of income and to provide a measure of stability amid market volatility. Both asset classes outperformed the Russell 1000 Value Index during the year and benefited the Fund’s performance relative to the index.
Security selection in the consumer discretionary sector was the largest detractor from the Fund’s relative performance compared to the Russell 1000 Value Index for the year. Within the sector, Carnival and Capri Holdings were significant detractors, driven in large part by the pandemic-related selloff in February and March of 2020. Shares of Carnival declined sharply following news of COVID-19 infections on cruise ships. The industry was also hit by the suspension of cruise travel that resulted from the virus outbreak. As a result, the team eliminated the Fund’s position in the stock as they believed cruise demand would be slower to recover than other areas within the sector. Capri Holdings includes the Michael Kors, Versace, and Jimmy Choo brands. The stock declined significantly in the market correction, as con sumers sheltered-in-place and stores closed amid the COVID-19 pandemic. Capri’s shares later rebounded from lows set in February and March, so the team used that as an opportunity to eliminate the position given ongoing volatility in the stock.
Stock selection and an overweight exposure to the energy sector also detracted from the Fund’s relative performance versus the Russell
1000 Value Index during the year. Energy stocks were negatively impacted by the severe decline in oil prices due the concurrent increase in oil supply resulting from the Saudi Arabia/Russia conflict, and the sharp deceleration in demand due to COVID-19. Key detractors for the year included Royal Dutch Shell and Marathon Oil. The team eliminated these positions during the
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| Invesco V.I. Managed Volatility Fund |
year and reduced the Fund’s overall exposure to the sector during the year, as there was significant difficulty estimating the extent of volume declines amid the pandemic.
Although cash averaged under 4% for the year, cash detracted from relative performance. This would be expected when the Russell 1000 Value Index had positive returns.
The Fund held currency forward contracts during the year for the purpose of hedging currency exposure of non-US-based companies held in the Fund. These derivatives were not for speculative purposes or leverage, and these positions had a small negative impact on the Fund’s relative performance for the year. As part of our mandate, and to potentially reduce portfolio volatility during a market downturn, we sold short S&P 500 futures contracts during the year. Derivatives were used solely for the purpose of reducing volatility and not for speculative purposes. The use of S&P 500 futures contracts had a negative impact on the Fund’s performance relative to the Russell 1000 Value Index for the year. However, the Fund was less volatile, as measured by standard deviation, than the Russell 1000 Value Index for the year.
During the year, the team reduced the Fund’s relative overweight exposure to the financials and energy sectors within the equity portion of the Fund, and increased exposure to the industrials, communication services, IT and real estate sectors. At the end of the year, the Fund’s largest overweight exposures were in the financials, IT and health care sectors, while the largest underweight exposures were to the communication services, utilities and real estate sectors.
As always, we thank you for your investment in Invesco V.I. Managed Volatility Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Jacob Borbidge
Chuck Burge
Brian Jurkash (Co-Lead)
Sergio Marcheli
Matthew Titus (Co-Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco V.I. Managed Volatility Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | |
| |
Series I Shares | | | | |
Inception (12/30/94) | | | 6.75 | % |
10 Years | | | 7.20 | |
5 Years | | | 4.92 | |
1 Year | | | -1.49 | |
| |
Series II Shares | | | | |
Inception (4/30/04) | | | 7.75 | % |
10 Years | | | 6.93 | |
5 Years | | | 4.64 | |
1 Year | | | -1.76 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Managed Volatility Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco V.I. Managed Volatility Fund |
Supplemental Information
Invesco V.I. Managed Volatility Fund’s investment objective is both capital appreciation and current income while managing portfolio volatility.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | The Bloomberg Barclays U.S. Government/Credit Index is a broad-based benchmark that includes investment grade, US dollar-denominated, fixed-rate Treasuries, government-related and corporate securities. |
| ∎ | | The Lipper VUF Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index considered representative of mixed-asset target allocation growth variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
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| Invesco V.I. Managed Volatility Fund |
Fund Information
Portfolio Composition
| | | | | | | |
| By sector | | % of total net assets |
Financials | | | | 23.15 | % |
Health Care | | | | 14.30 | |
Information Technology | | | | 12.82 | |
Industrials | | | | 9.26 | |
Communication Services | | | | 7.59 | |
Consumer Discretionary | | | | 6.56 | |
U.S. Treasury Securities | | | | 5.23 | |
Consumer Staples | | | | 4.94 | |
Energy | | | | 4.00 | |
Materials | | | | 3.47 | |
Utilities | | | | 2.68 | |
Real Estate | | | | 1.85 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 4.15 | |
|
Top 10 Equity Holdings* | |
| | | % of total net assets |
| 1. | | General Motors Co. | | | | 2.24 | % |
| 2. | | Cognizant Technology Solutions Corp., Class A | | | | 1.90 | |
| 3. | | Wells Fargo & Co. | | | | 1.74 | |
| 4. | | Philip Morris International, Inc. | | | | 1.74 | |
| 5. | | Morgan Stanley | | | | 1.68 | |
| 6. | | Goldman Sachs Group, Inc. (The) | | | | 1.67 | |
| 7. | | CSX Corp. | | | | 1.64 | |
| 8. | | Johnson Controls International PLC | | | | 1.53 | |
| 9. | | American International Group, Inc. | | | | 1.53 | |
10. | | Corteva, Inc. | | | | 1.53 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
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| Invesco V.I. Managed Volatility Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–65.20% | |
Aerospace & Defense–3.41% | | | | | | | | |
General Dynamics Corp. | | | 2,847 | | | $ | 423,691 | |
Raytheon Technologies Corp. | | | 5,003 | | | | 357,764 | |
Textron, Inc. | | | 5,876 | | | | 283,987 | |
| | | | | | | | 1,065,442 | |
| | |
Apparel Retail–1.07% | | | | | | | | |
TJX Cos., Inc. (The) | | | 4,888 | | | | 333,801 | |
| | |
Automobile Manufacturers–2.24% | | | | | | | | |
General Motors Co.(b) | | | 16,759 | | | | 697,845 | |
| | |
Building Products–2.28% | | | | | | | | |
Johnson Controls International PLC | | | 10,266 | | | | 478,293 | |
Trane Technologies PLC | | | 1,610 | | | | 233,707 | |
| | | | | | | | 712,000 | |
| | |
Cable & Satellite–1.66% | | | | | | | | |
Charter Communications, Inc., | | | | | | | | |
Class A(c) | | | 353 | | | | 233,527 | |
Comcast Corp., Class A | | | 5,436 | | | | 284,847 | |
| | | | | | | | 518,374 | |
| | |
Commodity Chemicals–0.70% | | | | | | | | |
Dow, Inc. | | | 3,930 | | | | 218,115 | |
| | |
Construction & Engineering–0.44% | | | | | | | | |
Quanta Services, Inc. | | | 1,917 | | | | 138,062 | |
| | |
Consumer Finance–0.73% | | | | | | | | |
American Express Co. | | | 1,879 | | | | 227,190 | |
| |
Data Processing & Outsourced Services–0.72% | | | | | |
Fiserv, Inc.(c) | | | 1,976 | | | | 224,987 | |
| | |
Diversified Banks–3.57% | | | | | | | | |
Bank of America Corp.(b) | | | 8,828 | | | | 267,577 | |
Citigroup, Inc. | | | 4,905 | | | | 302,442 | |
Wells Fargo & Co. | | | 18,065 | | | | 545,202 | |
| | | | | | | | 1,115,221 | |
| | |
Electric Utilities–1.73% | | | | | | | | |
Duke Energy Corp. | | | 1,811 | | | | 165,815 | |
Exelon Corp. | | | 4,949 | | | | 208,947 | |
FirstEnergy Corp. | | | 5,363 | | | | 164,161 | |
| | | | | | | | 538,923 | |
| | |
Electronic Components–0.69% | | | | | | | | |
Corning, Inc. | | | 5,964 | | | | 214,704 | |
| |
Electronic Manufacturing Services–0.67% | | | | | |
TE Connectivity Ltd. | | | 1,737 | | | | 210,299 | |
| |
Fertilizers & Agricultural Chemicals–2.06% | | | | | |
Corteva, Inc. | | | 12,316 | | | | 476,876 | |
Nutrien Ltd. (Canada) | | | 3,433 | | | | 165,333 | |
| | | | | | | | 642,209 | |
| | |
Food Distributors–1.96% | | | | | | | | |
Sysco Corp. | | | 4,155 | | | | 308,550 | |
| | | | | | | | |
| | | Shares | | | Value | |
Food Distributors–(continued) | | | | | | | | |
US Foods Holding Corp.(c) | | | 9,140 | | | $ | 304,454 | |
| | | | | | | | 613,004 | |
| | |
Health Care Distributors–0.82% | | | | | | | | |
McKesson Corp. | | | 1,467 | | | | 255,141 | |
| | |
Health Care Equipment–1.83% | | | | | | | | |
Medtronic PLC | | | 3,115 | | | | 364,891 | |
Zimmer Biomet Holdings, Inc. | | | 1,341 | | | | 206,635 | |
| | | | | | | | 571,526 | |
| | |
Health Care Facilities–0.52% | | | | | | | | |
Universal Health Services, Inc., Class B | | | 1,175 | | | | 161,562 | |
| | |
Health Care Services–1.39% | | | | | | | | |
Cigna Corp.(b) | | | 1,165 | | | | 242,530 | |
CVS Health Corp. | | | 2,815 | | | | 192,264 | |
| | | | | | | | 434,794 | |
| | |
Health Care Supplies–0.45% | | | | | | | | |
Alcon, Inc. (Switzerland)(c) | | | 2,092 | | | | 139,661 | |
| | |
Home Improvement Retail–0.69% | | | | | | | | |
Kingfisher PLC (United Kingdom)(c) | | | 58,280 | | | | 215,657 | |
| |
Human Resource & Employment Services–0.48% | | | | | |
Adecco Group AG (Switzerland) | | | 2,238 | | | | 150,063 | |
| | |
Insurance Brokers–0.59% | | | | | | | | |
Willis Towers Watson PLC | | | 870 | | | | 183,292 | |
| | |
Integrated Oil & Gas–0.92% | | | | | | | | |
Chevron Corp. | | | 3,395 | | | | 286,708 | |
| |
Internet & Direct Marketing Retail–1.02% | | | | | |
Booking Holdings, Inc.(c) | | | 143 | | | | 318,500 | |
| | |
Investment Banking & Brokerage–3.90% | | | | | | | | |
Charles Schwab Corp. (The) | | | 3,271 | | | | 173,494 | |
Goldman Sachs Group, Inc. (The) | | | 1,972 | | | | 520,036 | |
Morgan Stanley | | | 7,641 | | | | 523,638 | |
| | | | | | | | 1,217,168 | |
| | |
IT Consulting & Other Services–1.90% | | | | | | | | |
Cognizant Technology Solutions Corp., Class A | | | 7,239 | | | | 593,236 | |
| | |
Managed Health Care–1.26% | | | | | | | | |
Anthem, Inc. | | | 1,224 | | | | 393,014 | |
| | |
Movies & Entertainment–1.32% | | | | | | | | |
Walt Disney Co. (The)(c) | | | 2,264 | | | | 410,191 | |
| | |
Multi-line Insurance–1.53% | | | | | | | | |
American International Group, Inc. | | | 12,609 | | | | 477,377 | |
| |
Oil & Gas Exploration & Production–2.33% | | | | | |
Canadian Natural Resources Ltd. (Canada) | | | 6,049 | | | | 145,368 | |
Concho Resources, Inc. | | | 2,962 | | | | 172,833 | |
ConocoPhillips | | | 1,324 | | | | 52,947 | |
Devon Energy Corp. | | | 10,467 | | | | 165,483 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | | | |
| | | Shares | | | Value | |
Oil & Gas Exploration & Production–(continued) | |
Parsley Energy, Inc., Class A | | | 13,343 | | | $ | 189,470 | |
| | | | | | | | 726,101 | |
|
Other Diversified Financial Services–1.45% | |
Equitable Holdings, Inc. | | | 7,041 | | | | 180,179 | |
Voya Financial, Inc. | | | 4,642 | | | | 272,996 | |
| | | | | | | | 453,175 | |
| | |
Packaged Foods & Meats–0.24% | | | | | | | | |
Mondelez International, Inc., Class A | | | 1,296 | | | | 75,777 | |
| | |
Pharmaceuticals–3.52% | | | | | | | | |
Bristol-Myers Squibb Co.(b) | | | 6,280 | | | | 389,548 | |
GlaxoSmithKline PLC (United Kingdom) | | | 6,639 | | | | 121,647 | |
Johnson & Johnson | | | 1,131 | | | | 177,997 | |
Pfizer, Inc. | | | 5,280 | | | | 194,357 | |
Sanofi (France) | | | 2,230 | | | | 215,464 | |
| | | | | | | | 1,099,013 | |
| | |
Railroads–1.64% | | | | | | | | |
CSX Corp.(b) | | | 5,629 | | | | 510,832 | |
| | |
Real Estate Services–1.43% | | | | | | | | |
CBRE Group, Inc., Class A(c) | | | 7,097 | | | | 445,124 | |
| | |
Regional Banks–4.20% | | | | | | | | |
Citizens Financial Group, Inc. | | | 12,373 | | | | 442,459 | |
PNC Financial Services Group, Inc. (The) | | | 3,092 | | | | 460,708 | |
Truist Financial Corp. | | | 8,512 | | | | 407,980 | |
| | | | | | | | 1,311,147 | |
| | |
Semiconductors–2.70% | | | | | | | | |
Micron Technology, Inc.(c) | | | 2,544 | | | | 191,258 | |
NXP Semiconductors N.V. (Netherlands) | | | 1,690 | | | | 268,727 | |
QUALCOMM, Inc. | | | 2,513 | | | | 382,830 | |
| | | | | | | | 842,815 | |
| | |
Specialty Chemicals–0.70% | | | | | | | | |
DuPont de Nemours, Inc. | | | 3,073 | | | | 218,521 | |
| | |
Systems Software–1.09% | | | | | | | | |
Oracle Corp. | | | 5,253 | | | | 339,816 | |
| | |
Technology Hardware, Storage & Peripherals–0.65% | | | | | | | | |
Apple, Inc. | | | 1,519 | | | | 201,556 | |
| | |
Tobacco–1.74% | | | | | | | | |
Philip Morris International, Inc. | | | 6,574 | | | | 544,261 | |
|
Wireless Telecommunication Services–0.96% | |
Vodafone Group PLC (United Kingdom) | | | 181,782 | | | | 299,147 | |
Total Common Stocks & Other Equity Interests
(Cost $14,539,530) | | | | 20,345,351 | |
| | |
| | | Principal Amount | | | | |
U.S. Dollar Denominated Bonds & Notes–25.15% | |
Aerospace & Defense–0.18% | | | | | | | | |
General Dynamics Corp., 3.88%, 07/15/2021 | | $ | 45,000 | | | | 45,459 | |
Raytheon Technologies Corp., 4.45%, 11/16/2038 | | | 9,000 | | | | 11,349 | |
| | | | | | | | 56,808 | |
| | | | | | | | |
| | | Principal Amount | | | Value | |
Air Freight & Logistics–0.02% | | | | | | | | |
United Parcel Service, Inc., 3.40%, 11/15/2046 | | $ | 4,000 | | | $ | 4,826 | |
| | |
Airlines–0.17% | | | | | | | | |
American Airlines Pass-Through Trust,
Series 2014-1, Class A, 3.70%, 04/01/2028 | | | 16,927 | | | | 15,973 | |
United Airlines Pass-Through Trust, | | | | | | | | |
Series 2014-2, Class A, 3.75%, 09/03/2026 | | | 21,543 | | | | 21,949 | |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | 15,440 | | | | 15,381 | |
| | | | | | | | 53,303 | |
| | |
Alternative Carriers–0.23% | | | | | | | | |
Liberty Latin America Ltd. (Chile), Conv., 2.00%, 07/15/2024 | | | 74,000 | | | | 70,687 | |
| | |
Application Software–0.88% | | | | | | | | |
Nuance Communications, Inc., Conv., | | | | | | | | |
1.00%, 12/15/2022(d) | | | 38,000 | | | | 70,915 | |
1.25%, 04/01/2025 | | | 34,000 | | | | 77,533 | |
Workday, Inc., Conv., 0.25%, 10/01/2022 | | | 75,000 | | | | 125,696 | |
| | | | | | | | 274,144 | |
| |
Asset Management & Custody Banks–0.61% | | | | | |
Apollo Management Holdings L.P., 4.00%, 05/30/2024(e) | | | 40,000 | | | | 44,330 | |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 25,000 | | | | 27,901 | |
Carlyle Holdings Finance LLC, 3.88%, 02/01/2023(e) | | | 5,000 | | | | 5,322 | |
KKR Group Finance Co. III LLC, 5.13%, 06/01/2044(e) | | | 85,000 | | | | 111,744 | |
| | | | | | | | 189,297 | |
| | |
Automobile Manufacturers–0.15% | | | | | | | | |
General Motors Co., 6.60%, 04/01/2036 | | | 16,000 | | | | 21,903 | |
General Motors Financial Co., Inc., 5.25%, 03/01/2026 | | | 21,000 | | | | 24,773 | |
| | | | | | | | 46,676 | |
| | |
Biotechnology–0.64% | | | | | | | | |
AbbVie, Inc., | | | | | | | | |
4.50%, 05/14/2035 | | | 38,000 | | | | 47,762 | |
4.05%, 11/21/2039 | | | 34,000 | | | | 41,132 | |
Gilead Sciences, Inc., 4.40%, 12/01/2021 | | | 25,000 | | | | 25,686 | |
Neurocrine Biosciences, Inc., Conv., 2.25%, 05/15/2024 | | | 62,000 | | | | 86,166 | |
| | | | | | | | 200,746 | |
| | |
Brewers–0.48% | | | | | | | | |
Anheuser-Busch Cos. LLC/Anheuser-Busch InBev Worldwide, Inc. (Belgium), | | | | | | | | |
4.70%, 02/01/2036 | | | 45,000 | | | | 57,141 | |
4.90%, 02/01/2046 | | | 27,000 | | | | 35,249 | |
Heineken N.V. (Netherlands), 3.50%, 01/29/2028(e) | | | 35,000 | | | | 39,864 | |
Molson Coors Beverage Co., 4.20%, 07/15/2046 | | | 16,000 | | | | 18,360 | |
| | | | | | | | 150,614 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Cable & Satellite–1.54% | | | | | | |
BofA Finance LLC, Conv., 0.13%, 09/01/2022 | | $ | 62,000 | | | $ 72,416 |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | | | | | | |
4.46%, 07/23/2022 | | | 60,000 | | | 63,270 |
3.85%, 04/01/2061 | | | 27,000 | | | 27,210 |
Comcast Corp., | | | | | | |
4.15%, 10/15/2028 | | | 30,000 | | | 36,121 |
3.90%, 03/01/2038 | | | 10,000 | | | 12,237 |
Cox Communications, Inc., 2.95%, 10/01/2050(e) | | | 5,000 | | | 5,112 |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 216,000 | | | 206,438 |
Liberty Broadband Corp., Conv., 1.25%, 10/05/2023(d)(e) | | | 58,000 | | | 58,842 |
| | | | | | | 481,646 |
| | |
Communications Equipment–0.83% | | | | | | |
Cisco Systems, Inc., 1.85%, 09/20/2021 | | | 45,000 | | | 45,459 |
Finisar Corp., Conv., 0.50%, 12/15/2021(d) | | | 39,000 | | | 39,205 |
Viavi Solutions, Inc., Conv., | | | | | | |
1.75%, 06/01/2023 | | | 71,000 | | | 88,198 |
1.00%, 03/01/2024 | | | 68,000 | | | 87,371 |
| | | | | | | 260,233 |
| |
Construction Machinery & Heavy Trucks–0.07% | | | |
Caterpillar Financial Services Corp., 1.70%, 08/09/2021 | | | 20,000 | | | 20,174 |
| | |
Consumer Finance–0.15% | | | | | | |
American Express Co., 3.63%, 12/05/2024 | | | 18,000 | | | 20,009 |
Capital One Financial Corp., 3.20%, 01/30/2023 | | | 15,000 | | | 15,812 |
Synchrony Financial, 3.95%, 12/01/2027 | | | 10,000 | | | 11,219 |
| | | | | | | 47,040 |
| |
Data Processing & Outsourced Services–0.05% | | | |
Fiserv, Inc., 3.80%, 10/01/2023 | | | 15,000 | | | 16,345 |
| | |
Diversified Banks–1.91% | | | | | | |
Bank of America Corp., 3.25%, 10/21/2027 | | | 10,000 | | | 11,194 |
Citigroup, Inc., | | | | | | |
4.00%, 08/05/2024 | | | 60,000 | | | 66,835 |
3.67%, 07/24/2028(f) | | | 15,000 | | | 17,009 |
4.75%, 05/18/2046 | | | 15,000 | | | 20,034 |
JPMorgan Chase & Co., | | | | | | |
3.20%, 06/15/2026 | | | 15,000 | | | 16,803 |
3.51%, 01/23/2029(f) | | | 15,000 | | | 17,122 |
4.26%, 02/22/2048(f) | | | 10,000 | | | 13,097 |
3.90%, 01/23/2049(f) | | | 15,000 | | | 18,911 |
Series V, 3.56% (3 mo. USD LIBOR + 3.32%)(g)(h) | | | 150,000 | | | 147,553 |
U.S. Bancorp, Series W, 3.10%, 04/27/2026 | | | 10,000 | | | 11,143 |
Wells Fargo & Co., | | | | | | |
3.55%, 09/29/2025 | | | 30,000 | | | 33,708 |
4.10%, 06/03/2026 | | | 95,000 | | | 108,957 |
4.65%, 11/04/2044 | | | 15,000 | | | 19,219 |
| | | | | | |
| | | Principal
Amount | | | Value |
Diversified Banks–(continued) | | | | | | |
Westpac Banking Corp. (Australia), 2.10%, 05/13/2021 | | $ | 95,000 | | | $ 95,661 |
| | | | | | | 597,246 |
| | |
Diversified Capital Markets–0.41% | | | | | | |
Credit Suisse AG (Switzerland), Conv., 0.50%, 06/24/2024(e) | | | 131,000 | | | 128,079 |
| | |
Drug Retail–0.19% | | | | | | |
Walgreens Boots Alliance, Inc., | | | | | | |
3.30%, 11/18/2021 | | | 32,000 | | | 32,669 |
4.50%, 11/18/2034 | | | 24,000 | | | 27,602 |
| | | | | | | 60,271 |
| | |
Electric Utilities–0.34% | | | | | | |
Georgia Power Co., Series B, 3.70%, 01/30/2050 | | | 9,000 | | | 10,852 |
NextEra Energy Capital Holdings, Inc., 3.55%, 05/01/2027 | | | 11,000 | | | 12,537 |
Southern Co. (The), 2.35%, 07/01/2021 | | | 60,000 | | | 60,476 |
Xcel Energy, Inc., | | | | | | |
0.50%, 10/15/2023 | | | 14,000 | | | 14,048 |
3.50%, 12/01/2049 | | | 7,000 | | | 8,207 |
| | | | | | | 106,120 |
| |
Environmental & Facilities Services–0.10% | | | |
Waste Management, Inc., 3.90%, 03/01/2035 | | | 25,000 | | | 30,665 |
| | |
General Merchandise Stores–0.07% | | | | | | |
Dollar General Corp., 3.25%, 04/15/2023 | | | 20,000 | | | 21,167 |
| | |
Health Care Equipment–1.33% | | | | | | |
Becton, Dickinson and Co., 4.88%, 05/15/2044 | | | 86,000 | | | 106,385 |
DexCom, Inc., Conv., 0.75%, 12/01/2023 | | | 86,000 | | | 195,746 |
Integra LifeSciences Holdings Corp., Conv., 0.50%, 08/15/2025(e) | | | 51,000 | | | 56,376 |
Medtronic, Inc., 4.38%, 03/15/2035 | | | 15,000 | | | 20,207 |
NuVasive, Inc., Conv., 2.25%, 03/15/2021 | | | 24,000 | | | 24,418 |
Tandem Diabetes Care, Inc., Conv., 1.50%, 05/01/2025(e) | | | 10,000 | | | 11,827 |
| | | | | | | 414,959 |
| | |
Health Care REITs–0.09% | | | | | | |
Healthpeak Properties, Inc., 3.88%, 08/15/2024 | | | 25,000 | | | 27,680 |
| | |
Health Care Services–0.31% | | | | | | |
Cigna Corp., 4.80%, 08/15/2038 | | | 9,000 | | | 11,733 |
CVS Health Corp., 3.38%, 08/12/2024 | | | 20,000 | | | 21,856 |
Laboratory Corp. of America Holdings, | | | | | | |
3.20%, 02/01/2022 | | | 33,000 | | | 33,987 |
4.70%, 02/01/2045 | | | 22,000 | | | 28,901 |
| | | | | | | 96,477 |
| | |
Health Care Technology–0.37% | | | | | | |
Teladoc Health, Inc., Conv., 1.25%, 06/01/2027(e) | | | 97,000 | | | 116,662 |
| | |
Home Improvement Retail–0.09% | | | | | | |
Home Depot, Inc. (The), 2.00%, 04/01/2021 | | | 27,000 | | | 27,071 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Industrial Conglomerates–0.05% | | | | | | |
Honeywell International, Inc., 0.46% (3 mo. USD LIBOR + 0.23%),
08/19/2022(h) | | $ | 17,000 | | | $ 17,019 |
| | |
Insurance Brokers–0.02% | | | | | | |
Willis North America, Inc., 3.60%, 05/15/2024 | | | 5,000 | | | 5,461 |
| | |
Integrated Oil & Gas–0.15% | | | | | | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 26,000 | | | 26,550 |
Suncor Energy, Inc. (Canada), 3.60%, 12/01/2024 | | | 18,000 | | | 19,864 |
| | | | | | | 46,414 |
| |
Integrated Telecommunication Services–0.67% | | | |
AT&T, Inc., | | | | | | |
3.00%, 06/30/2022 | | | 28,000 | | | 28,985 |
4.50%, 05/15/2035 | | | 25,000 | | | 30,347 |
Verizon Communications, Inc., 4.40%, 11/01/2034 | | | 120,000 | | | 149,804 |
| | | | | | | 209,136 |
| |
Interactive Home Entertainment–0.08% | | | |
Zynga, Inc., Conv., 0.00%, 12/15/2026(e)(i) | | | 25,000 | | | 26,369 |
| |
Internet & Direct Marketing Retail–1.17% | | | |
Amazon.com, Inc., 4.80%, 12/05/2034 | | | 9,000 | | | 12,353 |
Booking Holdings, Inc., Conv., | | | | | | |
0.90%, 09/15/2021 | | | 40,000 | | | 46,461 |
0.75%, 05/01/2025(e) | | | 10,000 | | | 14,578 |
Match Group Financeco 3, Inc., Conv., 2.00%, 01/15/2030(e) | | | 94,000 | | | 182,282 |
Trip.com Group Ltd. (China), Conv., 1.25%, 09/15/2022 | | | 113,000 | | | 107,916 |
| | | | | | | 363,590 |
| |
Internet Services & Infrastructure–0.21% | | | |
Shopify, Inc. (Canada), Conv., 0.13%, 11/01/2025 | | | 55,000 | | | 65,038 |
| |
Investment Banking & Brokerage–0.89% | | | |
Goldman Sachs Group, Inc. (The), 4.25%, 10/21/2025 | | | 27,000 | | | 30,981 |
GS Finance Corp., Series 0001, Conv., 0.25%, 07/08/2024 | | | 198,000 | | | 207,504 |
Morgan Stanley, 4.00%, 07/23/2025 | | | 35,000 | | | 40,080 |
| | | | | | | 278,565 |
| | |
Life & Health Insurance–0.50% | | | | | | |
Athene Global Funding, 4.00%, 01/25/2022(e) | | | 45,000 | | | 46,609 |
Guardian Life Global Funding, 2.90%, 05/06/2024(e) | | | 20,000 | | | 21,541 |
Jackson National Life Global Funding, | | | | | | |
2.10%, 10/25/2021(e) | | | 10,000 | | | 10,146 |
3.25%, 01/30/2024(e) | | | 15,000 | | | 16,135 |
Nationwide Financial Services, Inc., 5.30%, 11/18/2044(e) | | | 35,000 | | | 42,403 |
Reliance Standard Life Global Funding II, 3.05%, 01/20/2021(e) | | | 20,000 | | | 20,023 |
| | | | | | | 156,857 |
| | | | | | |
| | | Principal
Amount | | | Value |
Managed Health Care–0.06% | | | | | | |
UnitedHealth Group, Inc., 3.50%, 08/15/2039 | | $ | 16,000 | | | $ 19,035 |
| | |
Movies & Entertainment–1.07% | | | | | | |
Liberty Media Corp., Conv., | | | | | | |
2.25%, 10/05/2021(d) | | | 55,000 | | | 26,123 |
1.38%, 10/15/2023 | | | 158,000 | | | 200,502 |
Liberty Formula One, Conv., 1.00%, 01/30/2023 | | | 20,000 | | | 25,572 |
Live Nation Entertainment, Inc., Conv., 2.50%, 03/15/2023 | | | 62,000 | | | 80,340 |
| | | | | | | 332,537 |
| | |
Multi-line Insurance–0.17% | | | | | | |
American International Group, Inc., 4.38%, 01/15/2055 | | | 40,000 | | | 51,472 |
| | |
Multi-Utilities–0.07% | | | | | | |
NiSource, Inc., 4.38%, 05/15/2047 | | | 9,000 | | | 11,438 |
Sempra Energy, 3.80%, 02/01/2038 | | | 8,000 | | | 9,278 |
| | | | | | | 20,716 |
| | |
Office REITs–0.08% | | | | | | |
Office Properties Income Trust, 4.00%, 07/15/2022 | | | 25,000 | | | 25,567 |
| |
Oil & Gas Exploration & Production–0.11% | | | |
Cameron LNG LLC, 3.70%, 01/15/2039(e) | | | 16,000 | | | 18,066 |
ConocoPhillips, 4.15%, 11/15/2034 | | | 13,000 | | | 15,109 |
| | | | | | | 33,175 |
| |
Oil & Gas Storage & Transportation–0.50% | | | |
Energy Transfer Operating L.P., | | | | | | |
4.20%, 09/15/2023 | | | 2,000 | | | 2,158 |
4.90%, 03/15/2035 | | | 19,000 | | | 20,953 |
5.00%, 05/15/2050 | | | 8,000 | | | 8,670 |
Enterprise Products Operating LLC, 4.25%, 02/15/2048 | | | 10,000 | | | 11,745 |
Kinder Morgan, Inc., 5.30%, 12/01/2034 | | | 23,000 | | | 28,354 |
MPLX L.P., | | | | | | |
4.50%, 07/15/2023 | | | 65,000 | | | 70,824 |
4.50%, 04/15/2038 | | | 11,000 | | | 12,582 |
| | | | | | | 155,286 |
| |
Other Diversified Financial Services–1.90% | | | |
Convertible Trust - Energy, Series 2019-1, 0.33%, 09/19/2024 | | | 168,000 | | | 174,031 |
Convertible Trust - Healthcare, Series 2018-1, 0.25%, 02/05/2024 | | | 168,000 | | | 190,815 |
Convertible Trust - Media, Series 2019, Class 1, 0.25%, 12/04/2024 | | | 168,000 | | | 228,984 |
| | | | | | | 593,830 |
| | |
Packaged Foods & Meats–0.05% | | | | | | |
Kraft Heinz Foods Co. (The), 4.63%, 10/01/2039(e) | | | 10,000 | | | 11,187 |
Mead Johnson Nutrition Co. (United Kingdom), 4.13%, 11/15/2025 | | | 3,000 | | | 3,462 |
| | | | | | | 14,649 |
| | |
Pharmaceuticals–1.80% | | | | | | |
Bayer US Finance LLC (Germany), 3.00%, 10/08/2021(e) | | | 200,000 | | | 203,436 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | |
| | �� | Principal
Amount | | | Value |
Pharmaceuticals–(continued) | | | | | | |
Bristol-Myers Squibb Co., | | | | | | |
4.13%, 06/15/2039 | | $ | 18,000 | | | $ 22,987 |
4.63%, 05/15/2044 | | | 100,000 | | | 136,546 |
Jazz Investments I Ltd., Conv., 2.00%, 06/15/2026(e) | | | 37,000 | | | 48,335 |
Pacira BioSciences, Inc., Conv., | | | | | | |
2.38%, 04/01/2022 | | | 7,000 | | | 8,046 |
0.75%, 08/01/2025(e) | | | 23,000 | | | 25,979 |
Pfizer, Inc., | | | | | | |
3.00%, 09/15/2021 | | | 50,000 | | | 50,997 |
2.20%, 12/15/2021 | | | 15,000 | | | 15,293 |
Supernus Pharmaceuticals, Inc., Conv., 0.63%, 04/01/2023 | | | 33,000 | | | 31,460 |
Utah Acquisition Sub, Inc., 3.15%, 06/15/2021 | | | 17,000 | | | 17,165 |
| | | | | | | 560,244 |
| |
Property & Casualty Insurance–0.10% | | | |
Allstate Corp. (The), 3.28%, 12/15/2026 | | | 10,000 | | | 11,428 |
Markel Corp., 5.00%, 05/20/2049 | | | 15,000 | | | 20,709 |
| | | | | | | 32,137 |
| | |
Railroads–0.12% | | | | | | |
Norfolk Southern Corp., 3.40%, 11/01/2049 | | | 5,000 | | | 5,736 |
Union Pacific Corp., 4.15%, 01/15/2045 | | | 25,000 | | | 31,083 |
| | | | | | | 36,819 |
| | |
Real Estate Services–0.24% | | | | | | |
Redfin Corp., Conv., 0.00%,
10/15/2025(e)(i) | | | 62,000 | | | 74,409 |
| | |
Regional Banks–0.12% | | | | | | |
Citizens Financial Group, Inc., 2.38%, 07/28/2021 | | | 15,000 | | | 15,146 |
PNC Financial Services Group, Inc. (The), 3.45%, 04/23/2029 | | | 20,000 | | | 23,059 |
| | | | | | | 38,205 |
| | |
Reinsurance–0.11% | | | | | | |
PartnerRe Finance B LLC, 3.70%, 07/02/2029 | | | 30,000 | | | 34,555 |
| | |
Renewable Electricity–0.54% | | | | | | |
Oglethorpe Power Corp., 4.55%, 06/01/2044 | | | 150,000 | | | 169,307 |
| | |
Restaurants–0.07% | | | | | | |
Starbucks Corp., 3.55%, 08/15/2029 | | | 20,000 | | | 23,280 |
| | |
Retail REITs–0.02% | | | | | | |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 5,000 | | | 5,346 |
| | |
Semiconductors–1.25% | | | | | | |
Broadcom Corp./Broadcom Cayman Finance Ltd., 3.63%, 01/15/2024 | | | 30,000 | | | 32,439 |
Cree, Inc., Conv., | | | | | | |
0.88%, 09/01/2023 | | | 42,000 | | | 76,406 |
1.75%, 05/01/2026(e) | | | 28,000 | | | 64,971 |
Microchip Technology, Inc., Conv., 0.13%, 11/15/2024 | | | 139,000 | | | 153,886 |
| | | | | | |
| | | Principal
Amount | | | Value |
Semiconductors–(continued) | | | | | | |
Micron Technology, Inc., 4.66%, 02/15/2030 | | $ | 10,000 | | | $ 12,284 |
NVIDIA Corp., 2.20%, 09/16/2021 | | | 20,000 | | | 20,246 |
NXP B.V./NXP Funding LLC (Netherlands), 5.35%, 03/01/2026(e) | | | 20,000 | | | 24,121 |
Texas Instruments, Inc., 2.63%, 05/15/2024 | | | 5,000 | | | 5,343 |
| | | | | | | 389,696 |
| | |
Soft Drinks–0.11% | | | | | | |
PepsiCo, Inc., 3.00%, 08/25/2021 | | | 35,000 | | | 35,655 |
| | |
Specialty Chemicals–0.01% | | | | | | |
Sherwin-Williams Co. (The), 4.50%, 06/01/2047 | | | 3,000 | | | 4,013 |
| | |
Systems Software–0.63% | | | | | | |
FireEye, Inc., | | | | | | |
Series B, Conv., 1.63%, 06/01/2022(d) | | | 77,000 | | | 75,943 |
Series A, Conv., 1.00%, 06/01/2025(d) | | | 76,000 | | | 75,188 |
Microsoft Corp., 3.50%, 02/12/2035 | | | 37,000 | | | 45,579 |
| | | | | | | 196,710 |
| | |
Technology Distributors–0.11% | | | | | | |
Avnet, Inc., 4.63%, 04/15/2026 | | | 30,000 | | | 33,973 |
|
Technology Hardware, Storage & Peripherals–0.45% |
Apple, Inc., | | | | | | |
2.15%, 02/09/2022 | | | 39,000 | | | 39,814 |
3.35%, 02/09/2027 | | | 10,000 | | | 11,413 |
Dell International LLC/EMC Corp., 5.45%, 06/15/2023(e) | | | 26,000 | | | 28,764 |
Western Digital Corp., Conv., 1.50%, 02/01/2024 | | | 61,000 | | | 60,936 |
| | | | | | | 140,927 |
| | |
Tobacco–0.15% | | | | | | |
Altria Group, Inc., 5.80%, 02/14/2039 | | | 36,000 | | | 47,434 |
|
Trading Companies & Distributors–0.16% |
Air Lease Corp., 4.25%, 09/15/2024 | | | 35,000 | | | 38,376 |
Aircastle Ltd., 4.40%, 09/25/2023 | | | 10,000 | | | 10,601 |
| | | | | | | 48,977 |
| | |
Trucking–0.14% | | | | | | |
Aviation Capital Group LLC, 4.88%, 10/01/2025(e) | | | 40,000 | | | 43,257 |
| |
Wireless Telecommunication Services–0.06% | | | |
Rogers Communications, Inc. (Canada), 4.30%, 02/15/2048 | | | 15,000 | | | 19,197 |
Total U.S. Dollar Denominated Bonds & Notes (Cost $6,736,987) | | | 7,847,793 |
| | |
U.S. Treasury Securities–5.23% | | | | | | |
U.S. Treasury Bonds–0.63% | | | | | | |
1.38%, 08/15/2050 | | | 209,500 | | | 195,817 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Treasury Notes–4.60% | | | | | | | | |
0.13%, 11/30/2022 | | $ | 968,000 | | | $ | 968,151 | |
|
| |
0.38%, 11/30/2025 | | | 288,200 | | | | 288,560 | |
|
| |
0.63%, 11/30/2027 | | | 99,300 | | | | 99,254 | |
|
| |
0.88%, 11/15/2030 | | | 79,000 | | | | 78,704 | |
|
| |
| | | | | | | 1,434,669 | |
|
| |
Total U.S. Treasury Securities
(Cost $1,629,263) | | | | 1,630,486 | |
|
| |
| | |
| | | Shares | | | | |
Preferred Stocks–0.27% | | | | | | | | |
Asset Management & Custody Banks–0.27% | | | | | |
AMG Capital Trust II, 5.15%, Conv. Pfd.
(Cost $106,269) | | | 1,700 | | | | 84,968 | |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Money Market Funds–4.15% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(j)(k) | | | 513,587 | | | $ | 513,587 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(j)(k) | | | 194,348 | | | | 194,406 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(j)(k) | | | 586,956 | | | | 586,956 | |
|
| |
Total Money Market Funds
(Cost $1,294,957) | | | | | | | 1,294,949 | |
|
| |
TOTAL INVESTMENTS IN
SECURITIES–100.00%
(Cost $24,307,006) | | | | 31,203,547 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.00)% | | | | (205 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 31,203,342 | |
|
| |
Investment Abbreviations:
| | |
| Conv. | | – Convertible |
| LIBOR | | – London Interbank Offered Rate |
| Pfd. | | – Preferred |
| REIT | | – Real Estate Investment Trust |
| USD | | – U.S. Dollar |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K. |
| (c) | Non-income producing security. |
| (d) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (e) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $1,500,769, which represented 4.81% of the Fund’s Net Assets. |
| (f) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (g) | Perpetual bond with no specified maturity date. |
| (h) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (i) | Zero coupon bond issued at a discount. |
| (j) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 619,911 | | | | $ | 6,486,018 | | | | $ | (6,592,342 | ) | | | $ | - | | | | $ | - | | | | $ | 513,587 | | | | $ | 2,348 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 441,820 | | | | | 4,632,869 | | | | | (4,879,906 | ) | | | | (8 | ) | | | | (369 | ) | | | | 194,406 | | | | | 2,209 | |
Invesco Treasury Portfolio, Institutional Class | | | | 708,469 | | | | | 7,412,592 | | | | | (7,534,105 | ) | | | | - | | | | | - | | | | | 586,956 | | | | | 2,520 | |
Total | | | $ | 1,770,200 | | | | $ | 18,531,479 | | | | $ | (19,006,353 | ) | | | $ | (8 | ) | | | $ | (369 | ) | | | $ | 1,294,949 | | | | $ | 7,077 | |
| (k) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts |
| Short Futures Contracts | | Number of
Contracts | | Expiration
Month | | Notional
Value | | Value | | Unrealized
Appreciation
(Depreciation) |
| | | | | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
E-Mini S&P 500 Index | | | | 16 | | | | | March-2021 | | | | $ | (2,999,040 | ) | | | $ | (35,368 | ) | | | $ | (35,368 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
| | | | | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | Deliver | | | Receive | | | (Depreciation) | |
Currency Risk | | | | | | | | | | | | | | | | | | | | |
01/15/2021 | | State Street Bank & Trust Co. | | | CHF | | | | 3,156 | | | | USD | | | | 3,571 | | | | $ 5 | |
01/15/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 4,649 | | | | USD | | | | 5,702 | | | | 21 | |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 4,275 | | | | CAD | | | | 5,509 | | | | 52 | |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 4,061 | | | | CHF | | | | 3,609 | | | | 17 | |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 6,990 | | | | EUR | | | | 5,736 | | | | 19 | |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 41,333 | | | | GBP | | | | 30,720 | | | | 682 | |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | 796 | |
| | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | |
01/15/2021 | | Bank of New York Mellon (The) | | | CAD | | | | 147,610 | | | | USD | | | | 115,885 | | | | (85 | ) |
01/15/2021 | | Bank of New York Mellon (The) | | | EUR | | | | 130,204 | | | | USD | | | | 158,353 | | | | (754 | ) |
01/15/2021 | | Bank of New York Mellon (The) | | | GBP | | | | 377,930 | | | | USD | | | | 506,111 | | | | (10,762 | ) |
01/15/2021 | | State Street Bank & Trust Co. | | | CHF | | | | 193,274 | | | | USD | | | | 218,196 | | | | (190 | ) |
01/15/2021 | | State Street Bank & Trust Co. | | | EUR | | | | 2,944 | | | | USD | | | | 3,589 | | | | (9 | ) |
01/15/2021 | | State Street Bank & Trust Co. | | | GBP | | | | 9,588 | | | | USD | | | | 12,913 | | | | (199 | ) |
01/15/2021 | | State Street Bank & Trust Co. | | | USD | | | | 2,428 | | | | CAD | | | | 3,089 | | | | (1 | ) |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | (12,000 | ) |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | | $(11,204 | ) |
|
| Abbreviations: |
|
| CAD - Canadian Dollar |
| CHF - Swiss Franc |
| EUR - Euro |
| GBP - British Pound Sterling |
| USD - U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $23,012,049) | | $ | 29,908,598 | |
|
| |
Investments in affiliated money market funds, at value (Cost $1,294,957) | | | 1,294,949 | |
|
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 796 | |
|
| |
Foreign currencies, at value (Cost $11,542) | | | 11,774 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 63,144 | |
|
| |
Fund shares sold | | | 63,187 | |
|
| |
Dividends | | | 37,994 | |
|
| |
Interest | | | 45,287 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 72,568 | |
|
| |
Total assets | | | 31,498,297 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 19,137 | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 12,000 | |
|
| |
Payable for: | | | | |
Investments purchased | | | 85,316 | |
|
| |
Fund shares reacquired | | | 7,795 | |
|
| |
Amount due custodian | | | 14,160 | |
|
| |
Accrued fees to affiliates | | | 15,103 | |
|
| |
Accrued other operating expenses | | | 64,406 | |
|
| |
Trustee deferred compensation and retirement plans | | | 77,038 | |
|
| |
Total liabilities | | | 294,955 | |
|
| |
Net assets applicable to shares outstanding | | $ | 31,203,342 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 27,098,950 | |
|
| |
Distributable earnings | | | 4,104,392 | |
|
| |
| | $ | 31,203,342 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 30,164,285 | |
|
| |
Series II | | $ | 1,039,057 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 2,582,436 | |
|
| |
Series II | | | 89,989 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 11.68 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 11.55 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $5,264) | | $ | 510,725 | |
|
| |
Interest | | | 217,227 | |
|
| |
Dividends from affiliated money market funds | | | 7,077 | |
|
| |
Total investment income | | | 735,029 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 184,818 | |
|
| |
Administrative services fees | | | 50,597 | |
|
| |
Custodian fees | | | 13,863 | |
|
| |
Distribution fees - Series II | | | 2,642 | |
|
| |
Transfer agent fees | | | 17,824 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 20,029 | |
|
| |
Reports to shareholders | | | 9,919 | |
|
| |
Professional services fees | | | 50,080 | |
|
| |
Other | | | (1,061 | ) |
|
| |
Total expenses | | | 348,711 | |
|
| |
Less: Fees waived | | | (1,640 | ) |
|
| |
Net expenses | | | 347,071 | |
|
| |
Net investment income | | | 387,958 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 158,366 | |
|
| |
Affiliated investment securities | | | (369 | ) |
|
| |
Foreign currencies | | | 14,843 | |
|
| |
Forward foreign currency contracts | | | (73,949 | ) |
|
| |
Futures contracts | | | (2,926,763 | ) |
|
| |
| | | (2,827,872 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 1,484,809 | |
|
| |
Affiliated investment securities | | | (8 | ) |
|
| |
Foreign currencies | | | 289 | |
|
| |
Forward foreign currency contracts | | | 21,786 | |
|
| |
Futures contracts | | | (35,368 | ) |
|
| |
| | | 1,471,508 | |
|
| |
Net realized and unrealized gain (loss) | | | (1,356,364 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | $ | (968,406 | ) |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 387,958 | | | $ | 569,748 | |
|
| |
Net realized gain (loss) | | | (2,827,872 | ) | | | 708,999 | |
|
| |
Change in net unrealized appreciation | | | 1,471,508 | | | | 5,011,773 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (968,406 | ) | | | 6,290,520 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (1,284,342 | ) | | | (1,896,583 | ) |
|
| |
Series II | | | (40,901 | ) | | | (63,708 | ) |
|
| |
Total distributions from distributable earnings | | | (1,325,243 | ) | | | (1,960,291 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (3,051,585 | ) | | | (3,190,164 | ) |
|
| |
Series II | | | (177,719 | ) | | | (47,952 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (3,229,304 | ) | | | (3,238,116 | ) |
|
| |
Net increase (decrease) in net assets | | | (5,522,953 | ) | | | 1,092,113 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 36,726,295 | | | | 35,634,182 | |
|
| |
End of year | | $ | 31,203,342 | | | $ | 36,726,295 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Managed Volatility Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends from net investment income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset
value, end
of period | | Total
return (b) | | Net assets,
end of period (000’s omitted) | | Ratio of
expenses
to average net assets
with fee waivers
and/or expenses absorbed | | Ratio of
expenses
to average net
assets without fee waivers and/or expenses
absorbed | | Ratio of net investment
income
to average
net assets | | Portfolio turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | $12.41 | | | | | $0.14 | | | | | $(0.36 | ) | | | | $(0.22 | ) | | | | $(0.24 | ) | | | | $(0.27 | ) | | | | $(0.51 | ) | | | | $11.68 | | | | | (1.49 | )% | | | | $30,164 | | | | | 1.11 | %(d) | | | | 1.12 | %(d) | | | | 1.28 | %(d) | | | | 97 | % |
Year ended 12/31/19 | | | | 11.04 | | | | | 0.19 | | | | | 1.82 | | | | | 2.01 | | | | | (0.17 | ) | | | | (0.47 | ) | | | | (0.64 | ) | | | | 12.41 | | | | | 18.58 | | | | | 35,409 | | | | | 1.07 | | | | | 1.08 | | | | | 1.55 | | | | | 109 | |
Year ended 12/31/18 | | | | 13.06 | | | | | 0.16 | | | | | (1.51 | ) | | | | (1.35 | ) | | | | (0.22 | ) | | | | (0.45 | ) | | | | (0.67 | ) | | | | 11.04 | | | | | (11.00 | ) | | | | 34,420 | | | | | 1.23 | | | | | 1.24 | | | | | 1.24 | | | | | 111 | |
Year ended 12/31/17 | | | | 11.97 | | | | | 0.18 | (e) | | | | 1.08 | | | | | 1.26 | | | | | (0.17 | ) | | | | - | | | | | (0.17 | ) | | | | 13.06 | | | | | 10.56 | | | | | 44,104 | | | | | 1.13 | | | | | 1.13 | | | | | 1.42 | (e) | | | | 91 | |
Year ended 12/31/16 | | | | 11.38 | | | | | 0.14 | | | | | 1.03 | | | | | 1.17 | | | | | (0.22 | ) | | | | (0.36 | ) | | | | (0.58 | ) | | | | 11.97 | | | | | 10.61 | | | | | 50,183 | | | | | 1.15 | | | | | 1.16 | | | | | 1.26 | | | | | 92 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 12.26 | | | | | 0.11 | | | | | (0.34 | ) | | | | (0.23 | ) | | | | (0.21 | ) | | | | (0.27 | ) | | | | (0.48 | ) | | | | 11.55 | | | | | (1.67 | ) | | | | 1,039 | | | | | 1.36 | (d) | | | | 1.37 | (d) | | | | 1.03 | (d) | | | | 97 | |
Year ended 12/31/19 | | | | 10.91 | | | | | 0.15 | | | | | 1.81 | | | | | 1.96 | | | | | (0.14 | ) | | | | (0.47 | ) | | | | (0.61 | ) | | | | 12.26 | | | | | 18.30 | | | | | 1,317 | | | | | 1.32 | | | | | 1.33 | | | | | 1.30 | | | | | 109 | |
Year ended 12/31/18 | | | | 12.92 | | | | | 0.12 | | | | | (1.49 | ) | | | | (1.37 | ) | | | | (0.19 | ) | | | | (0.45 | ) | | | | (0.64 | ) | | | | 10.91 | | | | | (11.28 | ) | | | | 1,214 | | | | | 1.48 | | | | | 1.49 | | | | | 0.99 | | | | | 111 | |
Year ended 12/31/17 | | | | 11.84 | | | | | 0.15 | (e) | | | | 1.07 | | | | | 1.22 | | | | | (0.14 | ) | | | | - | | | | | (0.14 | ) | | | | 12.92 | | | | | 10.33 | | | | | 1,446 | | | | | 1.38 | | | | | 1.38 | | | | | 1.17 | (e) | | | | 91 | |
Year ended 12/31/16 | | | | 11.26 | | | | | 0.11 | | | | | 1.02 | | | | | 1.13 | | | | | (0.19 | ) | | | | (0.36 | ) | | | | (0.55 | ) | | | | 11.84 | | | | | 10.31 | | | | | 1,462 | | | | | 1.40 | | | | | 1.41 | | | | | 1.01 | | | | | 92 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $29,746 and $1,057 for Series I and Series II shares, respectively. |
| (e) | Net investment income per share and the ratio of net investment income to average net assets includes significant dividends received during the year ended December 31, 2017. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.14 and 1.11% and $0.11 and 0.86% for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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| Invesco V.I. Managed Volatility Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Managed Volatility Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is both capital appreciation and current income while managing portfolio volatility.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment
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| Invesco V.I. Managed Volatility Fund |
securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| J. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| K. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference |
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| Invesco V.I. Managed Volatility Fund |
between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities.
| L. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
The current low interest rate environment was created in part by the Federal Reserve Board (FRB) and certain foreign central banks keeping the federal funds and equivalent foreign rates near historical lows. Increases in the federal funds and equivalent foreign rates may expose fixed income markets to heightened volatility and reduced liquidity for certain fixed income investments, particularly those with longer maturities. In addition, decreases in fixed income dealer market-making capacity may also potentially lead to heightened volatility and reduced liquidity in the fixed income markets. As a result, the value of the Fund’s investments and share price may decline. Changes in central bank policies could also result in higher than normal shareholder redemptions, which could potentially increase portfolio turnover and the Fund’s transaction costs.
The market values of convertible securities are affected by market interest rates, the risk of actual issuer default on interest or principal payments and the value of the underlying common stock into which the convertible security may be converted. Additionally, a convertible security is subject to the same types of market and issuer risks as apply to the underlying common stock. In addition, certain convertible securities are subject to involuntary conversions and may undergo principal write-downs upon the occurrence of certain triggering events, and, as a result, are subject to an increased risk of loss. Convertible securities may be rated below investment grade.
| M. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser at the annual rate of 0.60% of the Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $1,640.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $4,443 for accounting and fund administrative services and was reimbursed $46,154 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
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| 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. |
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| Invesco V.I. Managed Volatility Fund |
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| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
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| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 19,203,712 | | | $ | 1,141,639 | | | $ | – | | | $ | 20,345,351 | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 7,847,793 | | | | – | | | | 7,847,793 | |
|
| |
U.S. Treasury Securities | | | – | | | | 1,630,486 | | | | – | | | | 1,630,486 | |
|
| |
Preferred Stocks | | | 84,968 | | | | – | | | | – | | | | 84,968 | |
|
| |
Money Market Funds | | | 1,294,949 | | | | – | | | | – | | | | 1,294,949 | |
|
| |
Total Investments in Securities | | | 20,583,629 | | | | 10,619,918 | | | | – | | | | 31,203,547 | |
|
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | 796 | | | | – | | | | 796 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (35,368 | ) | | | – | | | | – | | | | (35,368 | ) |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (12,000 | ) | | | – | | | | (12,000 | ) |
|
| |
| | | (35,368 | ) | | | (12,000 | ) | | | – | | | | (47,368 | ) |
|
| |
Total Other Investments | | | (35,368 | ) | | | (11,204 | ) | | | – | | | | (46,572 | ) |
|
| |
Total Investments | | $ | 20,548,261 | | | $ | 10,608,714 | | | $ | – | | | $ | 31,156,975 | |
|
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | | | | | | | | | |
| | | Value | |
| | | Currency | | | Equity | | | | |
| Derivative Assets | | Risk | | | Risk | | | Total | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 796 | | | $ | - | | | $ | 796 | |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | - | | | | - | |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 796 | | | $ | - | | | $ | 796 | |
|
| |
| |
| | | Value | |
| | | Currency | | | Equity | | | | |
| Derivative Liabilities | | Risk | | | Risk | | | Total | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | - | | | $ | (35,368 | ) | | $ | (35,368 | ) |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | (12,000 | ) | | | - | | | | (12,000 | ) |
|
| |
Total Derivative Liabilities | | | (12,000 | ) | | | (35,368 | ) | | | (47,368 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | 35,368 | | | | 35,368 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (12,000 | ) | | $ | - | | | $ | (12,000 | ) |
|
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
|
| Invesco V.I. Managed Volatility Fund |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | | Financial
Derivative
Liabilities | | | | | | Collateral
(Received)/Pledged | | | | |
| | | Forward Foreign | | | Forward Foreign | | | Net Value of | | | | | | | | | Net | |
| Counterparty | | Currency Contracts | | | Currency Contracts | | | Derivatives | | | Non-Cash | | | Cash | | | Amount | |
|
| |
Bank of New York Mellon (The) | | | $ - | | | | $(11,601) | | | | $(11,601) | | | | $- | | | | $- | | | | $(11,601) | |
|
| |
State Street Bank & Trust Co. | | | 796 | | | | (399) | | | | 397 | | | | - | | | | - | | | | 397 | |
|
| |
Total | | | $796 | | | | $(12,000) | | | | $(11,204) | | | | $- | | | | $- | | | | $(11,204) | |
|
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on | |
| | | Statement of Operations | |
| | | Currency | | | Equity | | | | |
| | | Risk | | | Risk | | | Total | |
|
| |
Realized Gain (Loss): | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | (73,949 | ) | | $ | - | | | $ | (73,949 | ) |
|
| |
Futures contracts | | | - | | | | (2,926,763 | ) | | | (2,926,763 | ) |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | |
Forward foreign currency contracts | | | 21,786 | | | | - | | | | 21,786 | |
|
| |
Futures contracts | | | - | | | | (35,368 | ) | | | (35,368 | ) |
|
| |
Total | | $ | (52,163 | ) | | $ | (2,962,131 | ) | | $ | (3,014,294 | ) |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | |
| | | Forward | | | |
| | | Foreign Currency | | Futures | |
| | | Contracts | | Contracts | |
|
| |
Average notional value | | $1,614,916 | | $ | 9,376,707 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 634,855 | | | $ | 514,166 | |
|
| |
Long-term capital gain | | | 690,388 | | | | 1,446,125 | |
|
| |
Total distributions | | $ | 1,325,243 | | | $ | 1,960,291 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Managed Volatility Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 491,902 | |
|
| |
Net unrealized appreciation - investments | | | 6,181,006 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 615 | |
|
| |
Temporary book/tax differences | | | (52,489 | ) |
|
| |
Capital loss carryforward | | | (2,516,642 | ) |
|
| |
Shares of beneficial interest | | | 27,098,950 | |
|
| |
Total net assets | | $ | 31,203,342 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and grantor trust adjustments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | |
| Capital Loss Carryforward* | |
|
| |
| Expiration | | Short-Term | | Long-Term | | | Total | |
|
| |
Not subject to expiration | | $856,943 | | $ | 1,659,699 | | | $ | 2,516,642 | |
|
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $9,588,445 and $14,907,885, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $18,845,092 and $20,168,743, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 6,442,593 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (261,587 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 6,181,006 | |
|
| |
Cost of investments for tax purposes is $24,975,969.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of contingent payment debt instruments adjustments, grantor trusts and foreign currency transactions, on December 31, 2020, undistributed net investment income was increased by $96,968 and undistributed net realized gain (loss) was decreased by $96,968. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 173,050 | | | $ | 1,946,065 | | | | 262,050 | | | $ | 3,173,461 | |
|
| |
Series II | | | 8,311 | | | | 92,914 | | | | 2,709 | | | | 32,332 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 117,399 | | | | 1,284,342 | | | | 161,687 | | | | 1,896,583 | |
|
| |
Series II | | | 3,780 | | | | 40,901 | | | | 5,492 | | | | 63,708 | |
|
| |
|
| Invesco V.I. Managed Volatility Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (560,998 | ) | | $ | (6,281,992 | ) | | | (688,807 | ) | | $ | (8,260,208 | ) |
|
| |
Series II | | | (29,512 | ) | | | (311,534 | ) | | | (12,075 | ) | | | (143,992 | ) |
|
| |
Net increase (decrease) in share activity | | | (287,970 | ) | | $ | (3,229,304 | ) | | | (268,944 | ) | | $ | (3,238,116 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 59% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco V.I. Equity and Income Fund (the “Acquiring Fund”).
The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2021. The reorganization is expected to be consummated shortly thereafter. Upon closing of the reorganization, shareholders of the Fund will receive shares of the Acquiring Fund in exchange for their shares of the Fund, and the Fund will liquidate and cease operations.
|
| Invesco V.I. Managed Volatility Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Managed Volatility Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Managed Volatility Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco V.I. Managed Volatility Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,127.70 | | $6.36 | | $1,019.15 | | $6.04 | | 1.19% |
Series II | | 1,000.00 | | 1,125.60 | | 7.69 | | 1,017.90 | | 7.30 | | 1.44 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco V.I. Managed Volatility Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | Federal and State Income Tax | | | | | | |
| | Long-Term Capital Gain Distributions | | $ | 690,388 | | | |
| | Qualified Dividend Income* | | | 0.00 | % | | |
| | Corporate Dividends Received Deduction* | | | 71.62 | % | | |
| | Business Interest Income* | | | 25.45 | % | | |
| | U.S. Treasury Obligations* | | | 6.02 | % | | |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
|
| Invesco V.I. Managed Volatility Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
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| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
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| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| Invesco V.I. Managed Volatility Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
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| Invesco V.I. Managed Volatility Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Mid Cap Core Equity Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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| Invesco Distributors, Inc. | | VIMCCE-AR-1 |
Management’s Discussion of Fund Performance
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Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Mid | |
Cap Core Equity Fund (the Fund) underperformed the Russell Midcap Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 9.25 | % |
Series II Shares | | | 8.94 | |
S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
Russell Midcap Indexq (Style-Specific Index) | | | 17.10 | |
Lipper VUF Mid-Cap Core Funds Index∎ (Peer Group Index) | | | 11.26 | |
| |
Source(s): qRIMES Technologies Corp.; ∎ Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
During the year, stock selection in the consumer discretionary and communication services sectors were the largest contributors to the Fund’s performance versus its style-specific benchmark, the Russell Midcap Index. This was offset by weaker stock selection in the information technology (IT) and energy sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the year included
T-Mobile, BJ’s Wholesale Club and Dexcom. T-Mobile performed well after the company won approval from a federal judge that allowed the company to merge with Sprint (not owned). Uncertainty about the merger being closed had been an overhang for the stock prior the deal being approved. BJ’s Wholesale Club benefited from being deemed an essential retailer during the pandemic. Dexcom is a pure play diabetes company focused on Continuous Glucose Monitoring (CGM) technology. The company benefited from increasing awareness of the benefits of CGM technology, its pump partnerships, opportunities for tele-health and the need for better glucose management in the hospital setting. We exited our holdings in T-Mobile and Dexcom.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the year included Noble Energy, Schlumberger and Diamond-back Energy. Noble Energy and Diamond-back Energy are exploration and production companies in the energy sector and Schlumberger is an energy services company. The energy sector experienced significant negative returns despite the style-specific benchmark producing positive total returns during the year. We exited our holdings in Noble Energy and Diamondback Energy.
We continue to maintain our discipline around valuation and focus on companies which we believe have competitive advantages and skilled management teams that are out-executing peers. We believe this disciplined approach is essential to generating attractive long-term performance.
We thank you for your continued investment in Invesco V.I. Mid Cap Core Equity Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Raymond Anello (Co-Lead)
Joy Budzinski
Belinda Cavazos (Co-Lead)
Magnus Krantz
Kristin Ketner Pak
Raman Vardharaj
Adam Weiner
Matthew P. Ziehl
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no
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| Invesco V.I. Mid Cap Core Equity Fund |
representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco V.I. Mid Cap Core Equity Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (9/10/01) | | | 7.56 | % |
10 Years | | | 7.81 | |
5 Years | | | 9.60 | |
1 Year | | | 9.25 | |
| |
Series II Shares | | | | |
Inception (9/10/01) | | | 7.30 | % |
10 Years | | | 7.55 | |
5 Years | | | 9.33 | |
1 Year | | | 8.94 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Mid Cap Core Equity Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco V.I. Mid Cap Core Equity Fund |
Supplemental Information
Invesco V.I. Mid Cap Core Equity Fund’s investment objective is long-term growth of capital.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | | The Russell Midcap® Index is an unmanaged index considered representative of mid-cap stocks. The Russell Midcap Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | The Lipper VUF Mid-Cap Core Funds Index is an unmanaged index considered representative of mid-cap core variable insurance underlying funds tracked by Lipper. |
| ∎ | | 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. |
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| Invesco V.I. Mid Cap Core Equity Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 20.14 | % |
Industrials | | | | 15.33 | |
Health Care | | | | 12.90 | |
Financials | | | | 10.90 | |
Consumer Discretionary | | | | 9.83 | |
Real Estate | | | | 6.88 | |
Consumer Staples | | | | 5.66 | |
Utilities | | | | 5.08 | |
Communication Services | | | | 4.46 | |
Materials | | | | 4.28 | |
Energy | | | | 3.83 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.71 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Keysight Technologies, Inc. | | | | 2.55 | % |
2. Fiserv, Inc. | | | | 2.51 | |
3. Republic Services, Inc. | | | | 2.31 | |
4. Synopsys, Inc. | | | | 2.20 | |
5. CACI International, Inc., Class A | | | | 2.15 | |
6. Alexandria Real Estate Equities, Inc. | | | | 2.11 | |
7. Stanley Black & Decker, Inc. | | | | 2.10 | |
8. Liberty Broadband Corp., Class C | | | | 2.03 | |
9. Lamar Advertising Co., Class A | | | | 1.96 | |
10. PNC Financial Services Group, Inc. (The) | | | | 1.84 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.29% | |
Apparel Retail–1.34% | | | | | | | | |
Ross Stores, Inc. | | | 26,331 | | | $ | 3,233,710 | |
|
| |
| | |
Application Software–4.92% | | | | | | | | |
Manhattan Associates, Inc.(b) | | | 29,985 | | | | 3,153,822 | |
|
| |
Paylocity Holding Corp.(b) | | | 9,419 | | | | 1,939,466 | |
|
| |
Q2 Holdings, Inc.(b) | | | 11,811 | | | | 1,494,446 | |
|
| |
Synopsys, Inc.(b) | | | 20,475 | | | | 5,307,939 | |
|
| |
| | | | | | | 11,895,673 | |
|
| |
| |
Asset Management & Custody Banks–0.96% | | | | | |
Northern Trust Corp. | | | 24,834 | | | | 2,313,039 | |
|
| |
| | |
Auto Parts & Equipment–1.26% | | | | | | | | |
Visteon Corp.(b) | | | 24,259 | | | | 3,044,990 | |
|
| |
| | |
Automotive Retail–1.59% | | | | | | | | |
O’Reilly Automotive, Inc.(b) | | | 8,521 | | | | 3,856,349 | |
|
| |
| | |
Biotechnology–1.97% | | | | | | | | |
Neurocrine Biosciences, Inc.(b) | | | 24,091 | | | | 2,309,122 | |
|
| |
Seagen, Inc.(b) | | | 14,010 | | | | 2,453,712 | |
|
| |
| | | | | | | 4,762,834 | |
|
| |
| | |
Building Products–1.77% | | | | | | | | |
Trane Technologies PLC | | | 29,456 | | | | 4,275,833 | |
|
| |
| | |
Cable & Satellite–2.03% | | | | | | | | |
Liberty Broadband Corp., Class C(b) | | | 30,952 | | | | 4,901,868 | |
|
| |
| | |
Communications Equipment–1.06% | | | | | | | | |
Motorola Solutions, Inc. | | | 15,108 | | | | 2,569,266 | |
|
| |
| | |
Construction Materials–1.51% | | | | | | | | |
Vulcan Materials Co. | | | 24,643 | | | | 3,654,803 | |
|
| |
|
Data Processing & Outsourced Services–2.51% | |
Fiserv, Inc.(b) | | | 53,232 | | | | 6,060,996 | |
|
| |
| | |
Distillers & Vintners–1.63% | | | | | | | | |
Constellation Brands, Inc., Class A | | | 18,020 | | | | 3,947,281 | |
|
| |
| | |
Diversified Chemicals–1.63% | | | | | | | | |
Eastman Chemical Co. | | | 39,332 | | | | 3,944,213 | |
|
| |
| | |
Diversified Support Services–0.87% | | | | | | | | |
Cintas Corp. | | | 5,954 | | | | 2,104,501 | |
|
| |
| | |
Electric Utilities–0.85% | | | | | | | | |
Eversource Energy | | | 23,656 | | | | 2,046,481 | |
|
| |
| |
Electrical Components & Equipment–2.15% | | | | | |
Hubbell, Inc. | | | 16,382 | | | | 2,568,533 | |
| |
Rockwell Automation, Inc. | | | 10,475 | | | | 2,627,235 | |
|
| |
| | | | | | | 5,195,768 | |
|
| |
| |
Electronic Equipment & Instruments–2.55% | | | | | |
Keysight Technologies, Inc.(b) | | | 46,634 | | | | 6,159,885 | |
|
| |
| |
Environmental & Facilities Services–2.31% | | | | | |
Republic Services, Inc. | | | 57,902 | | | | 5,575,963 | |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Financial Exchanges & Data–2.55% | | | | | | | | |
Intercontinental Exchange, Inc. | | | 29,842 | | | $ | 3,440,484 | |
| |
Tradeweb Markets, Inc., Class A | | | 43,640 | | | | 2,725,318 | |
|
| |
| | | | | | | 6,165,802 | |
|
| |
| | |
Gas Utilities–1.88% | | | | | | | | |
Atmos Energy Corp. | | | 26,007 | | | | 2,481,848 | |
| |
Southwest Gas Holdings, Inc. | | | 33,869 | | | | 2,057,542 | |
|
| |
| | | | | | | 4,539,390 | |
|
| |
| | |
General Merchandise Stores–1.75% | | | | | | | | |
Dollar General Corp. | | | 7,664 | | | | 1,611,739 | |
| |
Target Corp. | | | 14,825 | | | | 2,617,057 | |
|
| |
| | | | | | | 4,228,796 | |
|
| |
| | |
Gold–0.42% | | | | | | | | |
Franco-Nevada Corp. (Canada) | | | 8,027 | | | | 1,006,024 | |
| | |
Health Care Equipment–4.77% | | | | | | | | |
Boston Scientific Corp.(b) | | | 70,057 | | | | 2,518,549 | |
| |
Hill-Rom Holdings, Inc. | | | 31,809 | | | | 3,116,328 | |
| |
STERIS PLC | | | 9,478 | | | | 1,796,460 | |
| |
Teleflex, Inc. | | | 9,965 | | | | 4,101,295 | |
|
| |
| | | | | | | 11,532,632 | |
|
| |
| | |
Health Care Facilities–1.33% | | | | | | | | |
HCA Healthcare, Inc. | | | 19,573 | | | | 3,218,976 | |
|
| |
| | |
Health Care Services–2.41% | | | | | | | | |
Guardant Health, Inc.(b) | | | 11,955 | | | | 1,540,760 | |
| |
LHC Group, Inc.(b) | | | 20,047 | | | | 4,276,426 | |
|
| |
| | | | | | | 5,817,186 | |
|
| |
| | |
Health Care Technology–0.21% | | | | | | | | |
American Well Corp., Class A(b)(c) | | | 19,583 | | | | 496,037 | |
|
| |
| | |
Homebuilding–1.30% | | | | | | | | |
D.R. Horton, Inc. | | | 45,764 | | | | 3,154,055 | |
|
| |
| | |
Hotels, Resorts & Cruise Lines–0.54% | | | | | | | | |
Airbnb, Inc., Class A(b)(c) | | | 8,834 | | | | 1,296,831 | |
|
| |
|
Human Resource & Employment Services–1.63% | |
ASGN, Inc.(b) | | | 22,851 | | | | 1,908,744 | |
| |
Korn Ferry | | | 46,731 | | | | 2,032,799 | |
|
| |
| | | | | | | 3,941,543 | |
|
| |
| |
Hypermarkets & Super Centers–1.33% | | | | | |
BJ’s Wholesale Club Holdings, Inc.(b) | | | 86,166 | | | | 3,212,268 | |
|
| |
| | |
Industrial Machinery–4.39% | | | | | | | | |
Evoqua Water Technologies Corp.(b) | | | 85,507 | | | | 2,306,979 | |
| |
ITT, Inc. | | | 41,788 | | | | 3,218,511 | |
| |
Stanley Black & Decker, Inc. | | | 28,464 | | | | 5,082,532 | |
|
| |
| | | | | | | 10,608,022 | |
|
| |
| | |
Industrial REITs–1.20% | | | | | | | | |
Duke Realty Corp. | | | 72,709 | | | | 2,906,179 | |
|
| |
| | |
Insurance Brokers–1.63% | | | | | | | | |
Arthur J. Gallagher & Co. | | | 31,919 | | | | 3,948,699 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Interactive Home Entertainment–1.37% | | | | | |
Zynga, Inc., Class A(b) | | | 336,821 | | | $ | 3,324,423 | |
|
| |
| | |
Interactive Media & Services–1.06% | | | | | | | | |
Snap, Inc., Class A(b) | | | 50,985 | | | | 2,552,819 | |
|
| |
| |
Investment Banking & Brokerage–1.15% | | | | | |
Raymond James Financial, Inc. | | | 29,077 | | | | 2,781,797 | |
|
| |
| |
IT Consulting & Other Services–4.37% | | | | | |
Amdocs Ltd. | | | 29,965 | | | | 2,125,417 | |
|
| |
CACI International, Inc., Class A(b) | | | 20,806 | | | | 5,187,560 | |
|
| |
KBR, Inc. | | | 105,315 | | | | 3,257,393 | |
|
| |
| | | | | | | 10,570,370 | |
|
| |
| | |
Managed Health Care–0.66% | | | | | | | | |
Humana, Inc. | | | 3,898 | | | | 1,599,233 | |
|
| |
| | |
Metal & Glass Containers–0.72% | | | | | | | | |
Silgan Holdings, Inc. | | | 47,191 | | | | 1,749,842 | |
|
| |
| | |
Multi-Utilities–2.35% | | | | | | | | |
CMS Energy Corp. | | | 43,212 | | | | 2,636,364 | |
|
| |
Public Service Enterprise Group, Inc. | | | 52,415 | | | | 3,055,795 | |
|
| |
| | | | | | | 5,692,159 | |
|
| |
| | |
Office REITs–2.11% | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | 28,680 | | | | 5,111,350 | |
|
| |
| |
Oil & Gas Equipment & Services–0.81% | | | | | |
Schlumberger Ltd. | | | 90,182 | | | | 1,968,673 | |
|
| |
|
Oil & Gas Refining & Marketing–0.85% | |
Valero Energy Corp. | | | 36,503 | | | | 2,064,975 | |
|
| |
| |
Oil & Gas Storage & Transportation–2.16% | | | | | |
Magellan Midstream Partners L.P. | | | 89,760 | | | | 3,809,415 | |
|
| |
Shell Midstream Partners L.P. | | | 139,815 | | | | 1,409,335 | |
|
| |
| | | | | | | 5,218,750 | |
|
| |
| | |
Packaged Foods & Meats–1.41% | | | | | | | | |
Conagra Brands, Inc. | | | 94,221 | | | | 3,416,453 | |
|
| |
| | |
Pharmaceuticals–1.55% | | | | | | | | |
Catalent, Inc.(b) | | | 36,085 | | | | 3,755,366 | |
|
| |
| | |
Railroads–0.77% | | | | | | | | |
Canadian Pacific Railway Ltd. (Canada) | | | 5,383 | | | | 1,866,232 | |
|
| |
| | |
Regional Banks–3.99% | | | | | | | | |
East West Bancorp, Inc. | | | 40,987 | | | | 2,078,451 | |
|
| |
PNC Financial Services Group, Inc. (The) | | | 29,827 | | | | 4,444,223 | |
|
| |
SVB Financial Group(b) | | | 8,087 | | | | 3,136,381 | |
|
| |
| | | | | | | 9,659,055 | |
|
| |
| | |
Residential REITs–1.06% | | | | | | | | |
American Homes 4 Rent, Class A | | | 85,135 | | | | 2,554,050 | |
|
| |
| | |
Restaurants–0.77% | | | | | | | | |
Wendy’s Co. (The) | | | 84,385 | | | | 1,849,719 | |
|
| |
Investment Abbreviations:
REIT – Real Estate Investment Trust
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Semiconductor Equipment–3.28% | | | | | | | | |
KLA Corp. | | | 15,736 | | | $ | 4,074,208 | |
|
| |
MKS Instruments, Inc. | | | 25,605 | | | | 3,852,272 | |
|
| |
| | | | | | | 7,926,480 | |
|
| |
| | |
Semiconductors–1.46% | | | | | | | | |
Analog Devices, Inc. | | | 23,852 | | | | 3,523,656 | |
|
| |
| | |
Soft Drinks–1.29% | | | | | | | | |
Coca-Cola European Partners PLC (United Kingdom) | | | 62,472 | | | | 3,112,980 | |
|
| |
| | |
Specialized REITs–2.51% | | | | | | | | |
Equinix, Inc. | | | 1,857 | | | | 1,326,232 | |
|
| |
Lamar Advertising Co., Class A | | | 57,058 | | | | 4,748,367 | |
|
| |
| | | | | | | 6,074,599 | |
|
| |
| | |
Specialty Stores–1.29% | | | | | | | | |
Tractor Supply Co. | | | 22,116 | | | | 3,109,067 | |
|
| |
| | |
Thrifts & Mortgage Finance–0.61% | | | | | | | | |
Rocket Cos., Inc., Class A(b) | | | 73,309 | | | | 1,482,308 | |
|
| |
| |
Trading Companies & Distributors–1.44% | | | | | |
Fastenal Co. | | | 71,387 | | | | 3,485,827 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $182,186,733) | | | | 240,066,076 | |
|
| |
| | |
Money Market Funds–0.83% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 664,176 | | | | 664,176 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 585,073 | | | | 585,249 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 759,058 | | | | 759,058 | |
|
| |
Total Money Market Funds
(Cost $2,008,310) | | | | 2,008,483 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.12%
(Cost $184,195,043) | | | | | | | 242,074,559 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.77% | | | | | | | | |
Invesco Private Government Fund,
0.02%(d)(e)(f) | | | 743,763 | | | | 743,763 | |
|
| |
Invesco Private Prime Fund,
0.12%(d)(e)(f) | | | 1,115,310 | | | | 1,115,645 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $1,859,408) | | | | 1,859,408 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–100.89%
(Cost $186,054,451) | | | | | | | 243,933,967 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.89)% | | | | (2,156,120 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 241,777,847 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,051,777 | | | | $ | 24,803,151 | | | | $ | (25,190,752 | ) | | | $ | - | | | | $ | - | | | | $ | 664,176 | | | | $ | 6,709 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 401,834 | | | | | 18,095,444 | | | | | (17,912,009 | ) | | | | 167 | | | | | (187 | ) | | | | 585,249 | | | | | 6,027 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,202,031 | | | | | 28,346,458 | | | | | (28,789,431 | ) | | | | - | | | | | - | | | | | 759,058 | | | | | 7,330 | |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | 674,953 | | | | | 5,029,273 | | | | | (5,704,226 | ) | | | | - | | | | | - | | | | | - | | | | | 2,822* | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 224,984 | | | | | 1,723,466 | | | | | (1,948,062 | ) | | | | 21 | | | | | (409 | ) | | | | - | | | | | 1,172* | |
| | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 10,661,618 | | | | | (9,917,855 | ) | | | | - | | | | | - | | | | | 743,763 | | | | | 117* | |
| | | | | | | |
Invesco Private Prime Fund | | | | - | | | | | 7,029,340 | | | | | (5,913,729 | ) | | | | - | | | | | 34 | | | | | 1,115,645 | | | | | 302* | |
| | | | | | | |
Total | | | $ | 3,555,579 | | | | $ | 95,688,750 | | | | $ | (95,376,064 | ) | | | $ | 188 | | | | $ | (562 | ) | | | $ | 3,867,891 | | | | $ | 24,479 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1J. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $182,186,733)* | | $ | 240,066,076 | |
|
| |
Investments in affiliated money market funds, at value (Cost $3,867,718) | | | 3,867,891 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 5,189 | |
|
| |
Dividends | | | 181,325 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 130,501 | |
|
| |
Total assets | | | 244,250,982 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 65,884 | |
|
| |
Fund shares reacquired | | | 99,360 | |
|
| |
Amount due custodian | | | 140,619 | |
|
| |
Collateral upon return of securities loaned | | | 1,859,408 | |
|
| |
Accrued fees to affiliates | | | 123,413 | |
|
| |
Accrued other operating expenses | | | 44,275 | |
|
| |
Trustee deferred compensation and retirement plans | | | 140,176 | |
|
| |
Total liabilities | | | 2,473,135 | |
|
| |
Net assets applicable to shares outstanding | | $ | 241,777,847 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 188,713,021 | |
|
| |
Distributable earnings | | | 53,064,826 | |
|
| |
| | $ | 241,777,847 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 150,989,638 | |
|
| |
Series II | | $ | 90,788,209 | |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 14,283,054 | |
|
| |
Series II | | | 8,866,245 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 10.57 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 10.24 | |
|
| |
| * | At December 31, 2020, securities with an aggregate value of $1,771,553 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $6,403) | | $ | 3,058,416 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $44,264) | | | 64,330 | |
|
| |
Total investment income | | | 3,122,746 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,583,679 | |
|
| |
Administrative services fees | | | 358,782 | |
|
| |
Custodian fees | | | 6,475 | |
|
| |
Distribution fees - Series II | | | 200,296 | |
|
| |
Transfer agent fees | | | 36,492 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 23,180 | |
|
| |
Reports to shareholders | | | 10,909 | |
|
| |
Professional services fees | | | 38,173 | |
|
| |
Other | | | 3,409 | |
|
| |
Total expenses | | | 2,261,395 | |
|
| |
Less: Fees waived | | | (3,854 | ) |
|
| |
Net expenses | | | 2,257,541 | |
|
| |
Net investment income | | | 865,205 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
|
| |
Unaffiliated investment securities | | | (5,497,827 | ) |
|
| |
Affiliated investment securities | | | (562 | ) |
|
| |
Foreign currencies | | | 198 | |
|
| |
| | | (5,498,191 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 24,445,576 | |
|
| |
Affiliated investment securities | | | 188 | �� |
|
| |
Foreign currencies | | | (86 | ) |
|
| |
| | | 24,445,678 | |
|
| |
Net realized and unrealized gain | | | 18,947,487 | |
|
| |
Net increase in net assets resulting from operations | | $ | 19,812,692 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 865,205 | | | $ | 1,487,761 | |
|
| |
Net realized gain (loss) | | | (5,498,191 | ) | | | 45,992,201 | |
|
| |
Change in net unrealized appreciation | | | 24,445,678 | | | | 5,912,021 | |
|
| |
Net increase in net assets resulting from operations | | | 19,812,692 | | | | 53,391,983 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (28,871,670 | ) | | | (17,475,575 | ) |
|
| |
Series II | | | (17,431,471 | ) | | | (9,551,503 | ) |
|
| |
Total distributions from distributable earnings | | | (46,303,141 | ) | | | (27,027,078 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 9,496,489 | | | | (7,906,038 | ) |
|
| |
Series II | | | 11,755,405 | | | | 8,650,685 | |
|
| |
Net increase in net assets resulting from share transactions | | | 21,251,894 | | | | 744,647 | |
|
| |
Net increase (decrease) in net assets | | | (5,238,555 | ) | | | 27,109,552 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 247,016,402 | | | | 219,906,850 | |
|
| |
End of year | | $ | 241,777,847 | | | $ | 247,016,402 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 12.18 | | | | $ | 0.05 | | | | $ | 0.80 | | | | $ | 0.85 | | | | $ | (0.08 | ) | | | $ | (2.38 | ) | | | $ | (2.46 | ) | | | $ | 10.57 | | | | | 9.25 | % | | | $ | 150,990 | | | | | 0.94 | %(d) | | | | 0.94 | %(d) | | | | 0.49 | %(d) | | | | 75 | % |
Year ended 12/31/19 | | | | 10.97 | | | | | 0.09 | | | | | 2.57 | | | | | 2.66 | | | | | (0.06 | ) | | | | (1.39 | ) | | | | (1.45 | ) | | | | 12.18 | | | | | 25.28 | | | | | 157,959 | | | | | 0.93 | | | | | 0.94 | | | | | 0.70 | | | | | 114 | |
Year ended 12/31/18 | | | | 14.41 | | | | | 0.06 | | | | | (1.39 | ) | | | | (1.33 | ) | | | | (0.07 | ) | | | | (2.04 | ) | | | | (2.11 | ) | | | | 10.97 | | | | | (11.35 | ) | | | | 148,078 | | | | | 0.91 | | | | | 0.94 | | | | | 0.46 | | | | | 27 | |
Year ended 12/31/17 | | | | 12.87 | | | | | 0.05 | | | | | 1.85 | | | | | 1.90 | | | | | (0.07 | ) | | | | (0.29 | ) | | | | (0.36 | ) | | | | 14.41 | | | | | 14.92 | | | | | 192,277 | | | | | 0.94 | | | | | 0.96 | | | | | 0.37 | | | | | 45 | |
Year ended 12/31/16 | | | | 12.12 | | | | | 0.07 | | | | | 1.54 | | | | | 1.61 | | | | | (0.01 | ) | | | | (0.85 | ) | | | | (0.86 | ) | | | | 12.87 | | | | | 13.43 | | | | | 195,464 | | | | | 0.98 | | | | | 1.00 | | | | | 0.57 | | | | | 29 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 11.88 | | | | | 0.02 | | | | | 0.78 | | | | | 0.80 | | | | | (0.06 | ) | | | | (2.38 | ) | | | | (2.44 | ) | | | | 10.24 | | | | | 8.94 | | | | | 90,788 | | | | | 1.19 | (d) | | | | 1.19 | (d) | | | | 0.24 | (d) | | | | 75 | |
Year ended 12/31/19 | | | | 10.72 | | | | | 0.05 | | | | | 2.53 | | | | | 2.58 | | | | | (0.03 | ) | | | | (1.39 | ) | | | | (1.42 | ) | | | | 11.88 | | | | | 25.04 | | | | | 89,057 | | | | | 1.18 | | | | | 1.19 | | | | | 0.45 | | | | | 114 | |
Year ended 12/31/18 | | | | 14.11 | | | | | 0.03 | | | | | (1.36 | ) | | | | (1.33 | ) | | | | (0.02 | ) | | | | (2.04 | ) | | | | (2.06 | ) | | | | 10.72 | | | | | (11.60 | ) | | | | 71,829 | | | | | 1.16 | | | | | 1.19 | | | | | 0.21 | | | | | 27 | |
Year ended 12/31/17 | | | | 12.61 | | | | | 0.02 | | | | | 1.81 | | | | | 1.83 | | | | | (0.04 | ) | | | | (0.29 | ) | | | | (0.33 | ) | | | | 14.11 | | | | | 14.65 | | | | | 141,120 | | | | | 1.19 | | | | | 1.21 | | | | | 0.12 | | | | | 45 | |
Year ended 12/31/16 | | | | 11.91 | | | | | 0.04 | | | | | 1.51 | | | | | 1.55 | | | | | - | | | | | (0.85 | ) | | | | (0.85 | ) | | | | 12.61 | | | | | 13.16 | | | | | 130,118 | | | | | 1.23 | | | | | 1.25 | | | | | 0.32 | | | | | 29 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $138,320 and $80,118 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Mid Cap Core Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco V.I. Mid Cap Core Equity Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Master Limited Partnerships – The Fund invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund invests in MLPs engaged in, among other things, the transportation, storage, processing, refining, marketing, exploration, production and mining of minerals and natural resources. The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. |
MLP’s may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
| F. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| G. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| H. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| I. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| J. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized |
|
| Invesco V.I. Mid Cap Core Equity Fund |
| | foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
|
| |
First $500 million | | | 0.725% | |
|
| |
Next $500 million | | | 0.700% | |
|
| |
Next $500 million | | | 0.675% | |
|
| |
Over $1.5 billion | | | 0.650% | |
|
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.725%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $3,854.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $31,347 for accounting and fund administrative services and was reimbursed $327,435 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $718 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 240,066,076 | | | $ | – | | | | $– | | | $ | 240,066,076 | |
|
| |
Money Market Funds | | | 2,008,483 | | | | 1,859,408 | | | | – | | | | 3,867,891 | |
|
| |
Total Investments | | $ | 242,074,559 | | | $ | 1,859,408 | | | | $– | | | $ | 243,933,967 | |
|
| |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities purchases of $509,773.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 1,379,795 | | | $ | 944,716 | |
|
| |
Long-term capital gain | | | 44,923,346 | | | | 26,082,362 | |
|
| |
Total distributions | | $ | 46,303,141 | | | $ | 27,027,078 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 826,709 | |
|
| |
Net unrealized appreciation – investments | | | 57,443,142 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 10 | |
|
| |
Temporary book/tax differences | | | (747,065 | ) |
|
| |
Capital loss carryforward | | | (4,457,970 | ) |
|
| |
Shares of beneficial interest | | | 188,713,021 | |
|
| |
Total net assets | | $ | 241,777,847 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and partnerships.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | |
| Capital Loss Carryforward* | |
|
| |
| Expiration | | Short-Term | | | Long-Term | | Total | |
|
| |
Not subject to expiration | | $ | 4,457,970 | | | $– | | $ | 4,457,970 | |
|
| |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $162,538,393 and $186,745,226, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 62,003,035 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (4,559,893 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 57,443,142 | |
|
| |
Cost of investments for tax purposes is $186,490,825.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnerships, on December 31, 2020, undistributed net investment income was decreased by $283,254 and undistributed net realized gain (loss) was increased by $283,254. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 650,434 | | | $ | 6,303,263 | | | | 261,011 | | | $ | 3,199,054 | |
|
| |
Series II | | | 1,003,597 | | | | 10,172,288 | | | | 1,214,662 | | | | 14,406,495 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 3,035,927 | | | | 28,871,668 | | | | 1,542,416 | | | | 17,475,575 | |
|
| |
Series II | | | 1,890,615 | | | | 17,431,471 | | | | 864,389 | | | | 9,551,503 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,371,419 | ) | | | (25,678,442 | ) | | | (2,338,334 | ) | | | (28,580,667 | ) |
|
| |
Series II | | | (1,527,486 | ) | | | (15,848,354 | ) | | | (1,281,486 | ) | | | (15,307,313 | ) |
|
| |
Net increase in share activity | | | 2,681,668 | | | $ | 21,251,894 | | | | 262,658 | | | $ | 744,647 | |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 72% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
|
| Invesco V.I. Mid Cap Core Equity Fund |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco V.I. Mid Cap Core Equity Fund to Invesco V.I.Main Street Mid Cap Fund.
|
| Invesco V.I. Mid Cap Core Equity Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Mid Cap Core Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Mid Cap Core Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco V.I. Mid Cap Core Equity Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,229.80 | | $5.27 | | $1,020.41 | | $4.77 | | 0.94% |
Series II | | 1,000.00 | | 1,229.10 | | 6.67 | | 1,019.15 | | 6.04 | | 1.19 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 44,923,346 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 100.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
| Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Mid Cap Core Equity Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and
Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco V.I. Mid Cap Core Equity Fund |
| | | | |
| | |
| | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. S&P 500 Index Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
| | | | |
| |
| NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
| Invesco Distributors, Inc. | | | | MS-VISPI-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. S&P 500 Index Fund (the Fund) underperformed the S&P 500 Index, the Fund’s broad market/style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | | | | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 17.99 | % |
Series II Shares | | | 17.70 | |
S&P 500 Indexq (Broad Market/Style-Specific Index) | | | 18.40 | |
Lipper VUF S&P 500 Funds Index∎ (Peer Group Index) | | | 16.70 | |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%2, a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were
also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
The Invesco S&P 500 Index Fund invests in stocks in approximately the same proportion as they are represented in the S&P 500 Index. During the year, the information technology (IT), consumer discretionary, communication services, health care, consumer staples, materials, consumer staples and industrials sectors contributed the most to the Fund’s overall performance. Market sectors delivering negative overall returns for the Fund included energy, financials, real estate and utilities.
Leading contributors to the Fund’s performance for the year included Apple, Amazon-.com,
Microsoft and NVIDIA. Apple and Amazon repeatedly delivered strong earnings and increased revenue growth during the year. The top detractor from the Fund’s performance for the year was Exxon Mobil.The stock’s negative return was associated with the lack of travel during the pandemic. Another detractor from Fund performance was Wells Fargo which was also adversely impacted by the economic impact of the pandemic.
Please note that the Fund’s strategy is principally implemented through equity investments, but the Fund also may use derivative instruments, including S&P 500 futures contracts, to gain exposure to the equity market. During the year, the Fund invested in S&P 500 futures contracts, which generated a positive return and were a slight contributor to Fund performance. Derivatives can be a cost-effective way to gain exposure to asset classes. However, derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities.
Thank you for your investment in Invesco V.I. S&P 500 Index Fund
| 1 | Source: US Federal Reserve |
| 2 | Source: US Bureau of Economic Analysis |
Portfolio manager(s):
Peter Hubbard
Michael Jeanette
Tony Seisser
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. S&P 500 Index Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee
future results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
| Series I Shares | | | | |
| Inception (5/18/98) | | | 7.21 | % |
| 10 Years | | | 13.46 | |
| 5 Years | | | 14.72 | |
| 1 Year | | | 17.99 | |
| |
| Series II Shares | | | | |
| Inception (6/5/00) | | | 6.12 | % |
| 10 Years | | | 13.18 | |
| 5 Years | | | 14.45 | |
| 1 Year | | | 17.70 | |
Effective June 1, 2010, Class X and Class Y shares of the predecessor fund, Morgan Stanley Variable Investment Series S&P 500 Index Portfolio advised by Morgan Stanley Investment Advisors Inc. were reorganized into Series I and Series II shares, respectively, of Invesco V.I. S&P 500 Index Fund. Returns shown above, prior to June 1, 2010, for Series I and Series II shares are those of the Class X shares and Class Y shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction
of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. S&P 500 Index Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. S&P 500 Index Fund
Supplemental Information
Invesco V.I. S&P 500 Index Fund’s investment objective is to provide investment results that, before expenses, correspond to the total return (i.e., the combination of capital changes and income) of the Standard & Poor’s® 500 Composite Stock Price Index.
| | ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| | ∎ | | Unless otherwise noted, all data provided by Invesco. |
| | ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| | ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| | ∎ | | The Lipper VUF S&P 500 Funds Index is an unmanaged index considered representative of S&P 500 variable insurance underlying funds tracked by Lipper. |
| | ∎ | | 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. |
Invesco V.I. S&P 500 Index Fund
Fund Information
Portfolio Composition
| | | | |
| By sector | | % of total net assets | |
| |
Information Technology | | | 27.21% | |
Health Care | | | 13.29 | |
Consumer Discretionary | | | 12.55 | |
Communication Services | | | 10.62 | |
Financials | | | 10.31 | |
Industrials | | | 8.31 | |
Consumer Staples | | | 6.43 | |
Utilities | | | 2.73 | |
Materials | | | 2.60 | |
Real Estate | | | 2.38 | |
Energy | | | 2.26 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 1.31 | |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
| 1. | | Apple, Inc. | | 6.60% |
| 2. | | Microsoft Corp. | | 5.23 |
| 3. | | Amazon.com, Inc. | | 4.32 |
| 4. | | Facebook, Inc., Class A | | 2.04 |
| 5. | | Tesla, Inc. | | 1.67 |
| 6. | | Alphabet, Inc., Class A | | 1.64 |
| 7. | | Alphabet, Inc., Class C | | 1.58 |
| 8. | | Berkshire Hathaway, Inc., Class B | | 1.40 |
| 9. | | Johnson & Johnson | | 1.29 |
| 10. | | JPMorgan Chase & Co. | | 1.20 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco V.I. S&P 500 Index Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests-98.69% | |
| Advertising-0.07% | |
Interpublic Group of Cos., Inc. (The) | | | 1,132 | | | $ | 26,625 | |
| |
Omnicom Group, Inc. | | | 624 | | | | 38,919 | |
| |
| | | | | | | 65,544 | |
| |
|
| Aerospace & Defense-1.59% | |
Boeing Co. (The) | | | 1,518 | | | | 324,943 | |
| |
General Dynamics Corp. | | | 665 | | | | 98,965 | |
| |
Howmet Aerospace, Inc. | | | 1,140 | | | | 32,536 | |
| |
Huntington Ingalls Industries, Inc. | | | 117 | | | | 19,946 | |
| |
L3Harris Technologies, Inc. | | | 601 | | | | 113,601 | |
| |
Lockheed Martin Corp. | | | 704 | | | | 249,906 | |
| |
Northrop Grumman Corp. | | | 444 | | | | 135,296 | |
| |
Raytheon Technologies Corp. | | | 4,344 | | | | 310,639 | |
| |
Teledyne Technologies, Inc.(b) | | | 107 | | | | 41,942 | |
| |
Textron, Inc. | | | 662 | | | | 31,995 | |
| |
TransDigm Group, Inc.(b) | | | 157 | | | | 97,159 | |
| |
| | | | | | | 1,456,928 | |
| |
|
| Agricultural & Farm Machinery-0.26% | |
Deere & Co. | | | 897 | | | | 241,338 | |
| |
|
| Agricultural Products-0.09% | |
Archer-Daniels-Midland Co. | | | 1,613 | | | | 81,311 | |
| |
|
| Air Freight & Logistics-0.66% | |
C.H. Robinson Worldwide, Inc. | | | 391 | | | | 36,703 | |
| |
Expeditors International of Washington, Inc. | | | 487 | | | | 46,319 | |
| |
FedEx Corp. | | | 691 | | | | 179,398 | |
| |
United Parcel Service, Inc., Class B | | | 2,046 | | | | 344,546 | |
| |
| | | | | | | 606,966 | |
| |
|
| Airlines-0.26% | |
Alaska Air Group, Inc. | | | 358 | | | | 18,616 | |
| |
American Airlines Group, Inc. | | | 1,746 | | | | 27,534 | |
| |
Delta Air Lines, Inc. | | | 1,852 | | | | 74,469 | |
| |
Southwest Airlines Co. | | | 1,713 | | | | 79,843 | |
| |
United Airlines Holdings, Inc.(b) | | | 844 | | | | 36,503 | |
| |
| | | | | | | 236,965 | |
| |
|
| Alternative Carriers-0.03% | |
CenturyLink, Inc. | | | 2,868 | | | | 27,963 | |
| |
|
| Apparel Retail-0.43% | |
Gap, Inc. (The) | | | 596 | | | | 12,033 | |
| |
L Brands, Inc. | | | 678 | | | | 25,215 | |
| |
Ross Stores, Inc. | | | 1,019 | | | | 125,143 | |
| |
TJX Cos., Inc. (The) | | | 3,434 | | | | 234,508 | |
| |
| | | | | | | 396,899 | |
| |
|
| Apparel, Accessories & Luxury Goods-0.19% | |
Hanesbrands, Inc. | | | 1,011 | | | | 14,741 | |
| |
PVH Corp. | | | 206 | | | | 19,341 | |
| |
Ralph Lauren Corp. | | | 139 | | | | 14,420 | |
| |
Tapestry, Inc. | | | 802 | | | | 24,926 | |
| |
Under Armour, Inc., Class A(b) | | | 547 | | | | 9,392 | |
| |
Under Armour, Inc., Class C(b) | | | 564 | | | | 8,392 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Apparel, Accessories & Luxury Goods-(continued) | |
VF Corp. | | | 927 | | | $ | 79,175 | |
| |
| | | | | | | 170,387 | |
| |
|
| Application Software-2.42% | |
Adobe, Inc.(b) | | | 1,373 | | | | 686,665 | |
| |
ANSYS, Inc.(b) | | | 249 | | | | 90,586 | |
| |
Autodesk, Inc.(b) | | | 629 | | | | 192,059 | |
| |
Cadence Design Systems, Inc.(b) | | | 798 | | | | 108,871 | |
| |
Citrix Systems, Inc. | | | 358 | | | | 46,576 | |
| |
Intuit, Inc. | | | 752 | | | | 285,647 | |
| |
Paycom Software, Inc.(b) | | | 142 | | | | 64,219 | |
| |
salesforce.com, inc.(b) | | | 2,617 | | | | 582,361 | |
| |
Synopsys, Inc.(b) | | | 441 | | | | 114,325 | |
| |
Tyler Technologies, Inc.(b) | | | 117 | | | | 51,073 | |
| |
| | | | | | | 2,222,382 | |
| |
|
| Asset Management & Custody Banks-0.79% | |
Ameriprise Financial, Inc. | | | 337 | | | | 65,489 | |
| |
Bank of New York Mellon Corp. (The) | | | 2,331 | | | | 98,928 | |
| |
BlackRock, Inc. | | | 406 | | | | 292,945 | |
| |
Franklin Resources, Inc. | | | 777 | | | | 19,417 | |
| |
Invesco Ltd.(c) | | | 1,117 | | | | 19,469 | |
| |
Northern Trust Corp. | | | 604 | | | | 56,257 | |
| |
State Street Corp. | | | 1,023 | | | | 74,454 | |
| |
T. Rowe Price Group, Inc. | | | 648 | | | | 98,101 | |
| |
| | | | | | | 725,060 | |
| |
|
| Auto Parts & Equipment-0.14% | |
Aptiv PLC | | | 773 | | | | 100,714 | |
| |
BorgWarner, Inc. | | | 709 | | | | 27,396 | |
| |
| | | | | | | 128,110 | |
| |
|
| Automobile Manufacturers-1.94% | |
Ford Motor Co. | | | 11,175 | | | | 98,228 | |
| |
General Motors Co. | | | 3,603 | | | | 150,029 | |
| |
Tesla, Inc.(b) | | | 2,169 | | | | 1,530,598 | |
| |
| | | | | | | 1,778,855 | |
| |
|
| Automotive Retail-0.27% | |
Advance Auto Parts, Inc. | | | 201 | | | | 31,659 | |
| |
AutoZone, Inc.(b) | | | 66 | | | | 78,239 | |
| |
CarMax, Inc.(b) | | | 473 | | | | 44,680 | |
| |
O’Reilly Automotive, Inc.(b) | | | 207 | | | | 93,682 | |
| |
| | | | | | | 248,260 | |
| |
|
| Biotechnology-1.86% | |
AbbVie, Inc. | | | 5,049 | | | | 541,000 | |
| |
Alexion Pharmaceuticals, Inc.(b) | | | 626 | | | | 97,806 | |
| |
Amgen, Inc. | | | 1,665 | | | | 382,817 | |
| |
Biogen, Inc.(b) | | | 440 | | | | 107,739 | |
| |
Gilead Sciences, Inc. | | | 3,585 | | | | 208,862 | |
| |
Incyte Corp.(b) | | | 540 | | | | 46,969 | |
| |
Regeneron Pharmaceuticals, Inc.(b) | | | 301 | | | | 145,416 | |
| |
Vertex Pharmaceuticals, Inc.(b) | | | 744 | | | | 175,837 | |
| |
| | | | | | | 1,706,446 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Brewers-0.03% | |
Molson Coors Beverage Co., Class B | | | 545 | | | $ | 24,629 | |
| |
|
| Broadcasting-0.15% | |
Discovery, Inc., Class A(b) | | | 465 | | | | 13,992 | |
| |
Discovery, Inc., Class C(b) | | | 843 | | | | 22,078 | |
| |
Fox Corp., Class A | | | 998 | | | | 29,062 | |
| |
Fox Corp., Class B | | | 454 | | | | 13,112 | |
| |
ViacomCBS, Inc., Class B | | | 1,636 | | | | 60,957 | |
| |
| | | | | | | 139,201 | |
| |
|
| Building Products-0.45% | |
A.O. Smith Corp. | | | 393 | | | | 21,544 | |
| |
Allegion PLC | | | 267 | | | | 31,073 | |
| |
Carrier Global Corp. | | | 2,330 | | | | 87,888 | |
| |
Fortune Brands Home & Security, Inc. | | | 401 | | | | 34,374 | |
| |
Johnson Controls International PLC | | | 2,070 | | | | 96,441 | |
| |
Masco Corp. | | | 759 | | | | 41,692 | |
| |
Trane Technologies PLC | | | 694 | | | | 100,741 | |
| |
| | | | | | | 413,753 | |
| |
|
| Cable & Satellite-1.07% | |
Charter Communications, Inc., Class A(b) | | | 417 | | | | 275,866 | |
| |
Comcast Corp., Class A | | | 13,057 | | | | 684,187 | |
| |
DISH Network Corp., Class A(b) | | | 716 | | | | 23,156 | |
| |
| | | | | | | 983,209 | |
| |
|
| Casinos & Gaming-0.14% | |
Las Vegas Sands Corp. | | | 954 | | | | 56,859 | |
| |
MGM Resorts International | | | 1,189 | | | | 37,465 | |
| |
Wynn Resorts Ltd. | | | 281 | | | | 31,705 | |
| |
| | | | | | | 126,029 | |
| |
|
| Commodity Chemicals-0.20% | |
Dow, Inc. | | | 2,121 | | | | 117,716 | |
| |
LyondellBasell Industries N.V., Class A | | | 746 | | | | 68,378 | |
| |
| | | | | | | 186,094 | |
| |
|
| Communications Equipment-0.79% | |
Arista Networks, Inc.(b) | | | 159 | | | | 46,201 | |
| |
Cisco Systems, Inc. | | | 12,084 | | | | 540,759 | |
| |
F5 Networks, Inc.(b) | | | 177 | | | | 31,141 | |
| |
Juniper Networks, Inc. | | | 963 | | | | 21,677 | |
| |
Motorola Solutions, Inc. | | | 485 | | | | 82,479 | |
| |
| | | | | | | 722,257 | |
| |
|
| Computer & Electronics Retail-0.07% | |
Best Buy Co., Inc. | | | 669 | | | | 66,759 | |
| |
|
| Construction & Engineering-0.08% | |
Jacobs Engineering Group, Inc. | | | 378 | | | | 41,187 | |
| |
Quanta Services, Inc. | | | 401 | | | | 28,880 | |
| |
| | | | | | | 70,067 | |
| |
|
| Construction Machinery & Heavy Trucks-0.55% | |
Caterpillar, Inc. | | | 1,554 | | | | 282,859 | |
| |
Cummins, Inc. | | | 428 | | | | 97,199 | |
| |
PACCAR, Inc. | | | 1,005 | | | | 86,711 | |
| |
Wabtec Corp. | | | 519 | | | | 37,991 | |
| |
| | | | | | | 504,760 | |
| |
|
| Construction Materials-0.12% | |
Martin Marietta Materials, Inc. | | | 180 | | | | 51,115 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Construction Materials-(continued) | |
Vulcan Materials Co. | | | 384 | | | $ | 56,951 | |
| |
| | | | | | | 108,066 | |
| |
|
| Consumer Electronics-0.06% | |
Garmin Ltd. | | | 433 | | | | 51,813 | |
| |
|
| Consumer Finance-0.53% | |
American Express Co. | | | 1,865 | | | | 225,497 | |
| |
Capital One Financial Corp. | | | 1,308 | | | | 129,296 | |
| |
Discover Financial Services | | | 889 | | | | 80,481 | |
| |
Synchrony Financial | | | 1,577 | | | | 54,738 | |
| |
| | | | | | | 490,012 | |
| |
|
| Copper-0.12% | |
Freeport-McMoRan, Inc. | | | 4,155 | | | | 108,113 | |
| |
|
| Data Processing & Outsourced Services-4.18% | |
Automatic Data Processing, Inc. | | | 1,227 | | | | 216,197 | |
| |
Broadridge Financial Solutions, Inc. | | | 334 | | | | 51,169 | |
| |
Fidelity National Information Services, Inc. | | | 1,775 | | | | 251,092 | |
| |
Fiserv, Inc.(b) | | | 1,592 | | | | 181,265 | |
| |
FleetCor Technologies, Inc.(b) | | | 238 | | | | 64,934 | |
| |
Global Payments, Inc. | | | 857 | | | | 184,615 | |
| |
Jack Henry & Associates, Inc. | | | 222 | | | | 35,962 | |
| |
Mastercard, Inc., Class A | | | 2,516 | | | | 898,061 | |
| |
Paychex, Inc. | | | 915 | | | | 85,260 | |
| |
PayPal Holdings, Inc.(b) | | | 3,351 | | | | 784,804 | |
| |
Visa, Inc., Class A | | | 4,850 | | | | 1,060,840 | |
| |
Western Union Co. (The) | | | 1,193 | | | | 26,174 | |
| |
| | | | | | | 3,840,373 | |
| |
|
| Distillers & Vintners-0.16% | |
Brown-Forman Corp., Class B | | | 530 | | | | 42,098 | |
| |
Constellation Brands, Inc., Class A | | | 488 | | | | 106,896 | |
| |
| | | | | | | 148,994 | |
| |
|
| Distributors-0.12% | |
Genuine Parts Co. | | | 418 | | | | 41,980 | |
| |
LKQ Corp.(b) | | | 813 | | | | 28,650 | |
| |
Pool Corp. | | | 116 | | | | 43,210 | |
| |
| | | | | | | 113,840 | |
| |
|
| Diversified Banks-2.91% | |
Bank of America Corp. | | | 21,770 | | | | 659,849 | |
| |
Citigroup, Inc. | | | 5,954 | | | | 367,124 | |
| |
JPMorgan Chase & Co. | | | 8,717 | | | | 1,107,669 | |
| |
U.S. Bancorp | | | 3,920 | | | | 182,633 | |
| |
Wells Fargo & Co. | | | 11,824 | | | | 356,848 | |
| |
| | | | | | | 2,674,123 | |
| |
|
| Diversified Chemicals-0.04% | |
Eastman Chemical Co. | | | 393 | | | | 39,410 | |
| |
|
| Diversified Support Services-0.18% | |
Cintas Corp. | | | 252 | | | | 89,072 | |
| |
Copart, Inc.(b) | | | 599 | | | | 76,223 | |
| |
| | | | | | | 165,295 | |
| |
|
| Drug Retail-0.09% | |
Walgreens Boots Alliance, Inc. | | | 2,056 | | | | 81,993 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Electric Utilities-1.74% | |
Alliant Energy Corp. | | | 725 | | | $ | 37,359 | |
| |
American Electric Power Co., Inc. | | | 1,420 | | | | 118,243 | |
| |
Duke Energy Corp. | | | 2,105 | | | | 192,734 | |
| |
Edison International | | | 1,098 | | | | 68,976 | |
| |
Entergy Corp. | | | 581 | | | | 58,007 | |
| |
Evergy, Inc. | | | 658 | | | | 36,526 | |
| |
Eversource Energy | | | 995 | | | | 86,078 | |
| |
Exelon Corp. | | | 2,791 | | | | 117,836 | |
| |
FirstEnergy Corp. | | | 1,574 | | | | 48,180 | |
| |
NextEra Energy, Inc. | | | 5,602 | | | | 432,194 | |
| |
NRG Energy, Inc. | | | 709 | | | | 26,623 | |
| |
Pinnacle West Capital Corp. | | | 326 | | | | 26,064 | |
| |
PPL Corp. | | | 2,232 | | | | 62,942 | |
| |
Southern Co. (The) | | | 3,021 | | | | 185,580 | |
| |
Xcel Energy, Inc. | | | 1,504 | | | | 100,272 | |
| |
| | | | | | | 1,597,614 | |
| |
|
| Electrical Components & Equipment-0.48% | |
AMETEK, Inc. | | | 667 | | | | 80,667 | |
| |
Eaton Corp. PLC | | | 1,140 | | | | 136,960 | |
| |
Emerson Electric Co. | | | 1,711 | | | | 137,513 | |
| |
Rockwell Automation, Inc. | | | 336 | | | | 84,272 | |
| |
| | | | | | | 439,412 | |
| |
|
| Electronic Components-0.21% | |
Amphenol Corp., Class A | | | 856 | | | | 111,939 | |
| |
Corning, Inc. | | | 2,209 | | | | 79,524 | |
| |
| | | | | | | 191,463 | |
| |
|
| Electronic Equipment & Instruments-0.17% | |
FLIR Systems, Inc. | | | 380 | | | | 16,656 | |
| |
Keysight Technologies, Inc.(b) | | | 530 | | | | 70,008 | |
| |
Vontier Corp.(b) | | | 391 | | | | 13,059 | |
| |
Zebra Technologies Corp., Class A(b) | | | 155 | | | | 59,571 | |
| |
| | | | | | | 159,294 | |
| |
|
| Electronic Manufacturing Services-0.15% | |
IPG Photonics Corp.(b) | | | 103 | | | | 23,051 | |
| |
TE Connectivity Ltd. | | | 947 | | | | 114,653 | |
| |
| | | | | | | 137,704 | |
| |
|
| Environmental & Facilities Services-0.23% | |
Republic Services, Inc. | | | 610 | | | | 58,743 | |
| |
Rollins, Inc. | | | 642 | | | | 25,083 | |
| |
Waste Management, Inc. | | | 1,113 | | | | 131,256 | |
| |
| | | | | | | 215,082 | |
| |
|
| Fertilizers & Agricultural Chemicals-0.19% | |
CF Industries Holdings, Inc. | | | 621 | | | | 24,039 | |
| |
Corteva, Inc. | | | 2,131 | | | | 82,512 | |
| |
FMC Corp. | | | 376 | | | | 43,214 | |
| |
Mosaic Co. (The) | | | 1,002 | | | | 23,056 | |
| |
| | | | | | | 172,821 | |
| |
|
| Financial Exchanges & Data-1.06% | |
Cboe Global Markets, Inc. | | | 315 | | | | 29,333 | |
| |
CME Group, Inc., Class A | | | 1,027 | | | | 186,965 | |
| |
Intercontinental Exchange, Inc. | | | 1,605 | | | | 185,040 | |
| |
MarketAxess Holdings, Inc. | | | 110 | | | | 62,762 | |
| |
Moody’s Corp. | | | 463 | | | | 134,381 | |
| |
MSCI, Inc. | | | 237 | | | | 105,828 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Financial Exchanges & Data-(continued) | |
Nasdaq, Inc. | | | 333 | | | $ | 44,202 | |
| |
S&P Global, Inc. | | | 689 | | | | 226,495 | |
| |
| | | | | | | 975,006 | |
| |
|
| Food Distributors-0.12% | |
Sysco Corp. | | | 1,457 | | | | 108,197 | |
| |
|
| Food Retail-0.08% | |
Kroger Co. (The) | | | 2,215 | | | | 70,348 | |
| |
|
| Footwear-0.55% | |
NIKE, Inc., Class B | | | 3,589 | | | | 507,736 | |
| |
|
| Gas Utilities-0.04% | |
Atmos Energy Corp. | | | 357 | | | | 34,068 | |
| |
|
| General Merchandise Stores-0.51% | |
Dollar General Corp. | | | 701 | | | | 147,420 | |
| |
Dollar Tree, Inc.(b) | | | 672 | | | | 72,603 | |
| |
Target Corp. | | | 1,432 | | | | 252,791 | |
| |
| | | | | | | 472,814 | |
| |
|
| Gold-0.15% | |
Newmont Corp. | | | 2,298 | | | | 137,627 | |
| |
|
| Health Care Distributors-0.21% | |
AmerisourceBergen Corp. | | | 426 | | | | 41,646 | |
| |
Cardinal Health, Inc. | | | 849 | | | | 45,473 | |
| |
Henry Schein, Inc.(b) | | | 414 | | | | 27,680 | |
| |
McKesson Corp. | | | 459 | | | | 79,829 | |
| |
| | | | | | | 194,628 | |
| |
|
| Health Care Equipment-3.48% | |
Abbott Laboratories | | | 5,069 | | | | 555,005 | |
| |
ABIOMED, Inc.(b) | | | 130 | | | | 42,146 | |
| |
Baxter International, Inc. | | | 1,470 | | | | 117,953 | |
| |
Becton, Dickinson and Co. | | | 830 | | | | 207,683 | |
| |
Boston Scientific Corp.(b) | | | 4,095 | | | | 147,215 | |
| |
Danaher Corp. | | | 1,808 | | | | 401,629 | |
| |
DexCom, Inc.(b) | | | 277 | | | | 102,412 | |
| |
Edwards Lifesciences Corp.(b) | | | 1,783 | | | | 162,663 | |
| |
Hologic, Inc.(b) | | | 735 | | | | 53,530 | |
| |
IDEXX Laboratories, Inc.(b) | | | 247 | | | | 123,468 | |
| |
Intuitive Surgical, Inc.(b) | | | 337 | | | | 275,700 | |
| |
Medtronic PLC | | | 3,850 | | | | 450,989 | |
| |
ResMed, Inc. | | | 420 | | | | 89,275 | |
| |
STERIS PLC | | | 247 | | | | 46,816 | |
| |
Stryker Corp. | | | 936 | | | | 229,358 | |
| |
Teleflex, Inc. | | | 134 | | | | 55,150 | |
| |
Varian Medical Systems, Inc.(b) | | | 264 | | | | 46,203 | |
| |
Zimmer Biomet Holdings, Inc. | | | 601 | | | | 92,608 | |
| |
| | | | | | | 3,199,803 | |
| |
|
| Health Care Facilities-0.17% | |
HCA Healthcare, Inc. | | | 755 | | | | 124,167 | |
| |
Universal Health Services, Inc., Class B | | | 225 | | | | 30,938 | |
| |
| | | | | | | 155,105 | |
| |
|
| Health Care REITs-0.19% | |
Healthpeak Properties, Inc. | | | 1,563 | | | | 47,250 | |
| |
Ventas, Inc. | | | 1,083 | | | | 53,110 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Health Care REITs-(continued) | |
Welltower, Inc. | | | 1,211 | | | $ | 78,255 | |
| |
| | | | | | | 178,615 | |
| |
|
| Health Care Services-0.65% | |
Cigna Corp. | | | 1,033 | | | | 215,050 | |
| |
CVS Health Corp. | | | 3,743 | | | | 255,647 | |
| |
DaVita, Inc.(b) | | | 218 | | | | 25,593 | |
| |
Laboratory Corp. of America
Holdings(b) | | | 282 | | | | 57,401 | |
| |
Quest Diagnostics, Inc. | | | 390 | | | | 46,476 | |
| |
| | | | | | | 600,167 | |
| |
|
| Health Care Supplies-0.28% | |
Align Technology, Inc.(b) | | | 208 | | | | 111,151 | |
| |
Cooper Cos., Inc. (The) | | | 142 | | | | 51,592 | |
| |
DENTSPLY SIRONA, Inc. | | | 634 | | | | 33,196 | |
| |
West Pharmaceutical Services, Inc. | | | 213 | | | | 60,345 | |
| |
| | | | | | | 256,284 | |
| |
|
| Health Care Technology-0.08% | |
Cerner Corp. | | | 886 | | | | 69,533 | |
| |
|
| Home Furnishings-0.04% | |
Leggett & Platt, Inc. | | | 384 | | | | 17,011 | |
| |
Mohawk Industries, Inc.(b) | | | 173 | | | | 24,385 | |
| |
| | | | | | | 41,396 | |
| |
|
| Home Improvement Retail-1.26% | |
Home Depot, Inc. (The) | | | 3,079 | | | | 817,844 | |
| |
Lowe’s Cos., Inc. | | | 2,095 | | | | 336,268 | |
| |
| | | | | | | 1,154,112 | |
| |
|
| Homebuilding-0.21% | |
D.R. Horton, Inc. | | | 961 | | | | 66,232 | |
| |
Lennar Corp., Class A | | | 797 | | | | 60,755 | |
| |
NVR, Inc.(b) | | | 9 | | | | 36,719 | |
| |
PulteGroup, Inc. | | | 779 | | | | 33,591 | |
| |
| | | | | | | 197,297 | |
| |
|
| Hotel & Resort REITs-0.03% | |
Host Hotels & Resorts, Inc. | | | 2,048 | | | | 29,962 | |
| |
|
| Hotels, Resorts & Cruise Lines-0.32% | |
Carnival Corp. | | | 2,127 | | | | 46,071 | |
| |
Hilton Worldwide Holdings, Inc. | | | 805 | | | | 89,564 | |
| |
Marriott International, Inc., Class A | | | 761 | | | | 100,391 | |
| |
Norwegian Cruise Line Holdings Ltd.(b) | | | 800 | | | | 20,344 | |
| |
Royal Caribbean Cruises Ltd. | | | 517 | | | | 38,615 | |
| |
| | | | | | | 294,985 | |
| |
|
| Household Appliances-0.04% | |
Whirlpool Corp. | | | 180 | | | | 32,488 | |
| |
|
| Household Products-1.59% | |
Church & Dwight Co., Inc. | | | 718 | | | | 62,631 | |
| |
Clorox Co. (The) | | | 366 | | | | 73,903 | |
| |
Colgate-Palmolive Co. | | | 2,452 | | | | 209,670 | |
| |
Kimberly-Clark Corp. | | | 973 | | | | 131,190 | |
| |
Procter & Gamble Co. (The) | | | 7,091 | | | | 986,642 | |
| |
| | | | | | | 1,464,036 | |
| |
|
| Housewares & Specialties-0.03% | |
Newell Brands, Inc. | | | 1,096 | | | | 23,268 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Human Resource & Employment Services-0.02% | |
Robert Half International, Inc. | | | 332 | | | $ | 20,743 | |
| |
|
| Hypermarkets & Super Centers-1.14% | |
Costco Wholesale Corp. | | | 1,262 | | | | 475,496 | |
| |
Walmart, Inc. | | | 3,965 | | | | 571,555 | |
| |
| | | | | | | 1,047,051 | |
| |
|
| Independent Power Producers & Energy Traders-0.05% | |
AES Corp. (The) | | | 1,931 | | | | 45,378 | |
| |
|
| Industrial Conglomerates-1.21% | |
3M Co. | | | 1,650 | | | | 288,403 | |
| |
General Electric Co.(d) | | | 25,050 | | | | 270,540 | |
| |
Honeywell International, Inc. | | | 2,007 | | | | 426,889 | |
| |
Roper Technologies, Inc. | | | 301 | | | | 129,758 | |
| |
| | | | | | | 1,115,590 | |
| |
|
| Industrial Gases-0.62% | |
Air Products and Chemicals, Inc. | | | 633 | | | | 172,948 | |
| |
Linde PLC (United Kingdom) | | | 1,502 | | | | 395,792 | |
| |
| | | | | | | 568,740 | |
| |
|
| Industrial Machinery-0.83% | |
Dover Corp. | | | 417 | | | | 52,646 | |
| |
Flowserve Corp. | | | 378 | | | | 13,929 | |
| |
Fortive Corp. | | | 978 | | | | 69,262 | |
| |
IDEX Corp. | | | 218 | | | | 43,426 | |
| |
Illinois Tool Works, Inc. | | | 824 | | | | 167,997 | |
| |
Ingersoll Rand, Inc.(b) | | | 1,077 | | | | 49,068 | |
| |
Otis Worldwide Corp. | | | 1,182 | | | | 79,844 | |
| |
Parker-Hannifin Corp. | | | 373 | | | | 101,609 | |
| |
Pentair PLC | | | 482 | | | | 25,590 | |
| |
Snap-on, Inc. | | | 158 | | | | 27,040 | |
| |
Stanley Black & Decker, Inc. | | | 463 | | | | 82,673 | |
| |
Xylem, Inc. | | | 522 | | | | 53,135 | |
| |
| | | | | | | 766,219 | |
| |
|
| Industrial REITs-0.28% | |
Duke Realty Corp. | | | 1,075 | | | | 42,968 | |
| |
Prologis, Inc. | | | 2,114 | | | | 210,681 | |
| |
| | | | | | | 253,649 | |
| |
|
| Insurance Brokers-0.50% | |
Aon PLC, Class A | | | 654 | | | | 138,171 | |
| |
Arthur J. Gallagher & Co. | | | 555 | | | | 68,659 | |
| |
Marsh & McLennan Cos., Inc. | | | 1,451 | | | | 169,767 | |
| |
Willis Towers Watson PLC | | | 374 | | | | 78,794 | |
| |
| | | | | | | 455,391 | |
| |
|
| Integrated Oil & Gas-1.09% | |
Chevron Corp. | | | 5,506 | | | | 464,982 | |
| |
Exxon Mobil Corp. | | | 12,091 | | | | 498,391 | |
| |
Occidental Petroleum Corp. | | | 2,431 | | | | 42,080 | |
| |
| | | | | | | 1,005,453 | |
| |
|
| Integrated Telecommunication Services-1.39% | |
AT&T, Inc.(d) | | | 20,378 | | | | 586,071 | |
| |
Verizon Communications, Inc. | | | 11,833 | | | | 695,189 | |
| |
| | | | | | | 1,281,260 | |
| |
|
| Interactive Home Entertainment-0.43% | |
Activision Blizzard, Inc. | | | 2,210 | | | | 205,199 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Interactive Home Entertainment-(continued) | |
Electronic Arts, Inc.(b) | | | 838 | | | $ | 120,337 | |
| |
Take-Two Interactive Software, Inc.(b) | | | 332 | | | | 68,986 | |
| |
| | | | | | | 394,522 | |
| |
|
| Interactive Media & Services-5.40% | |
Alphabet, Inc., Class A(b) | | | 861 | | | | 1,509,023 | |
| |
Alphabet, Inc., Class C(b) | | | 830 | | | | 1,454,061 | |
| |
Facebook, Inc., Class A(b) | | | 6,875 | | | | 1,877,975 | |
| |
Twitter, Inc.(b) | | | 2,296 | | | | 124,328 | |
| |
| | | | | | | 4,965,387 | |
| |
|
| Internet & Direct Marketing Retail-4.84% | |
Amazon.com, Inc.(b) | | | 1,220 | | | | 3,973,454 | |
| |
Booking Holdings, Inc.(b) | | | 118 | | | | 262,818 | |
| |
eBay, Inc. | | | 1,872 | | | | 94,068 | |
| |
Etsy, Inc.(b) | | | 346 | | | | 61,557 | |
| |
Expedia Group, Inc. | | | 394 | | | | 52,166 | |
| |
| | | | | | | 4,444,063 | |
| |
|
| Internet Services & Infrastructure-0.12% | |
Akamai Technologies, Inc.(b) | | | 472 | | | | 49,555 | |
| |
VeriSign, Inc.(b) | | | 293 | | | | 63,405 | |
| |
| | | | | | | 112,960 | |
| |
|
| Investment Banking & Brokerage-0.87% | |
Charles Schwab Corp. (The) | | | 4,266 | | | | 226,269 | |
| |
Goldman Sachs Group, Inc. (The) | | | 985 | | | | 259,754 | |
| |
Morgan Stanley | | | 4,088 | | | | 280,151 | |
| |
Raymond James Financial, Inc. | | | 354 | | | | 33,867 | |
| |
| | | | | | | 800,041 | |
| |
|
| IT Consulting & Other Services-1.11% | |
Accenture PLC, Class A | | | 1,812 | | | | 473,312 | |
| |
Cognizant Technology Solutions Corp., Class A | | | 1,528 | | | | 125,220 | |
| |
DXC Technology Co. | | | 737 | | | | 18,978 | |
| |
Gartner, Inc.(b) | | | 259 | | | | 41,489 | |
| |
International Business Machines Corp. | | | 2,548 | | | | 320,742 | |
| |
Leidos Holdings, Inc. | | | 388 | | | | 40,787 | |
| |
| | | | | | | 1,020,528 | |
| |
|
| Leisure Products-0.04% | |
Hasbro, Inc. | | | 369 | | | | 34,516 | |
| |
|
| Life & Health Insurance-0.41% | |
Aflac, Inc. | | | 1,869 | | | | 83,114 | |
| |
Globe Life, Inc. | | | 284 | | | | 26,969 | |
| |
Lincoln National Corp. | | | 527 | | | | 26,513 | |
| |
MetLife, Inc. | | | 2,187 | | | | 102,680 | |
| |
Principal Financial Group, Inc. | | | 741 | | | | 36,761 | |
| |
Prudential Financial, Inc. | | | 1,147 | | | | 89,546 | |
| |
Unum Group | | | 590 | | | | 13,535 | |
| |
| | | | | | | 379,118 | |
| |
|
| Life Sciences Tools & Services-1.19% | |
Agilent Technologies, Inc. | | | 875 | | | | 103,679 | |
| |
Bio-Rad Laboratories, Inc., Class A(b) | | | 62 | | | | 36,142 | |
| |
Illumina, Inc.(b) | | | 418 | | | | 154,660 | |
| |
IQVIA Holdings, Inc.(b) | | | 555 | | | | 99,439 | |
| |
Mettler-Toledo International, Inc.(b) | | | 69 | | | | 78,638 | |
| |
PerkinElmer, Inc. | | | 324 | | | | 46,494 | |
| |
Thermo Fisher Scientific, Inc. | | | 1,134 | | | | 528,195 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Life Sciences Tools & Services-(continued) | |
Waters Corp.(b) | | | 179 | | | $ | 44,288 | |
| |
| | | | | | | 1,091,535 | |
| |
|
| Managed Health Care-1.56% | |
Anthem, Inc. | | | 711 | | | | 228,295 | |
| |
Centene Corp.(b) | | | 1,659 | | | | 99,590 | |
| |
Humana, Inc. | | | 379 | | | | 155,492 | |
| |
UnitedHealth Group, Inc. | | | 2,713 | | | | 951,395 | |
| |
| | | | | | | 1,434,772 | |
| |
|
| Metal & Glass Containers-0.10% | |
Ball Corp. | | | 948 | | | | 88,335 | |
| |
|
| Movies & Entertainment-1.80% | |
Live Nation Entertainment, Inc.(b) | | | 412 | | | | 30,274 | |
| |
Netflix, Inc.(b) | | | 1,264 | | | | 683,482 | |
| |
Walt Disney Co. (The)(b) | | | 5,178 | | | | 938,150 | |
| |
| | | | | | | 1,651,906 | |
| |
|
| Multi-line Insurance-0.18% | |
American International Group, Inc. | | | 2,464 | | | | 93,287 | |
| |
Assurant, Inc. | | | 172 | | | | 23,430 | |
| |
Hartford Financial Services Group, Inc. (The) | | | 1,040 | | | | 50,939 | |
| |
| | | | | | | 167,656 | |
| |
|
| Multi-Sector Holdings-1.40% | |
Berkshire Hathaway, Inc., Class B(b) | | | 5,565 | | | | 1,290,357 | |
| |
|
| Multi-Utilities-0.82% | |
Ameren Corp. | | | 717 | | | | 55,969 | |
| |
CenterPoint Energy, Inc. | | | 1,582 | | | | 34,235 | |
| |
CMS Energy Corp. | | | 832 | | | | 50,760 | |
| |
Consolidated Edison, Inc. | | | 971 | | | | 70,174 | |
| |
Dominion Energy, Inc. | | | 2,333 | | | | 175,442 | |
| |
DTE Energy Co. | | | 559 | | | | 67,868 | |
| |
NiSource, Inc. | | | 1,111 | | | | 25,486 | |
| |
Public Service Enterprise Group, Inc. | | | 1,468 | | | | 85,584 | |
| |
Sempra Energy | | | 825 | | | | 105,113 | |
| |
WEC Energy Group, Inc. | | | 916 | | | | 84,300 | |
| |
| | | | | | | 754,931 | |
| |
|
| Office REITs-0.14% | |
Alexandria Real Estate Equities, Inc. | | | 340 | | | | 60,595 | |
| |
Boston Properties, Inc. | | | 411 | | | | 38,852 | |
| |
SL Green Realty Corp. | | | 212 | | | | 12,631 | |
| |
Vornado Realty Trust | | | 454 | | | | 16,952 | |
| |
| | | | | | | 129,030 | |
| |
|
| Oil & Gas Equipment & Services-0.22% | |
Baker Hughes Co., Class A | | | 1,906 | | | | 39,740 | |
| |
Halliburton Co. | | | 2,551 | | | | 48,214 | |
| |
NOV, Inc.(b) | | | 1,127 | | | | 15,474 | |
| |
Schlumberger Ltd. | | | 4,031 | | | | 87,997 | |
| |
TechnipFMC PLC (United Kingdom) | | | 1,226 | | | | 11,524 | |
| |
| | | | | | | 202,949 | |
| |
|
| Oil & Gas Exploration & Production-0.46% | |
Apache Corp. | | | 1,096 | | | | 15,552 | |
| |
Cabot Oil & Gas Corp. | | | 1,157 | | | | 18,836 | |
| |
Concho Resources, Inc. | | | 571 | | | | 33,318 | |
| |
ConocoPhillips | | | 3,055 | | | | 122,169 | |
| |
Devon Energy Corp. | | | 1,111 | | | | 17,565 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Oil & Gas Exploration & Production-(continued) | |
Diamondback Energy, Inc. | | | 458 | | | $ | 22,167 | |
| |
EOG Resources, Inc. | | | 1,690 | | | | 84,280 | |
| |
Hess Corp. | | | 793 | | | | 41,863 | |
| |
Marathon Oil Corp. | | | 2,291 | | | | 15,281 | |
| |
Pioneer Natural Resources Co. | | | 477 | | | | 54,326 | |
| |
| | | | | | | 425,357 | |
| |
|
| Oil & Gas Refining & Marketing-0.26% | |
HollyFrontier Corp. | | | 433 | | | | 11,193 | |
| |
Marathon Petroleum Corp. | | | 1,889 | | | | 78,129 | |
| |
Phillips 66 | | | 1,249 | | | | 87,355 | |
| |
Valero Energy Corp. | | | 1,184 | | | | 66,979 | |
| |
| | | | | | | 243,656 | |
| |
|
| Oil & Gas Storage & Transportation-0.21% | |
Kinder Morgan, Inc. | | | 5,568 | | | | 76,115 | |
| |
ONEOK, Inc. | | | 1,290 | | | | 49,510 | |
| |
Williams Cos., Inc. (The) | | | 3,524 | | | | 70,656 | |
| |
| | | | | | | 196,281 | |
| |
|
| Packaged Foods & Meats-0.90% | |
Campbell Soup Co. | | | 588 | | | | 28,430 | |
| |
Conagra Brands, Inc. | | | 1,418 | | | | 51,417 | |
| |
General Mills, Inc. | | | 1,749 | | | | 102,841 | |
| |
Hershey Co. (The) | | | 428 | | | | 65,197 | |
| |
Hormel Foods Corp. | | | 815 | | | | 37,987 | |
| |
JM Smucker Co. (The) | | | 331 | | | | 38,264 | |
| |
Kellogg Co. | | | 736 | | | | 45,801 | |
| |
Kraft Heinz Co. (The) | | | 1,881 | | | | 65,195 | |
| |
Lamb Weston Holdings, Inc. | | | 421 | | | | 33,150 | |
| |
McCormick & Co., Inc. | | | 718 | | | | 68,641 | |
| |
Mondelez International, Inc., Class A | | | 4,090 | | | | 239,142 | |
| |
Tyson Foods, Inc., Class A | | | 854 | | | | 55,032 | |
| |
| | | | | | | 831,097 | |
| |
|
| Paper Packaging-0.26% | |
Amcor PLC | | | 4,555 | | | | 53,612 | |
| |
Avery Dennison Corp. | | | 242 | | | | 37,537 | |
| |
International Paper Co. | | | 1,141 | | | | 56,731 | |
| |
Packaging Corp. of America | | | 275 | | | | 37,925 | |
| |
Sealed Air Corp. | | | 451 | | | | 20,651 | |
| |
Westrock Co. | | | 753 | | | | 32,778 | |
| |
| | | | | | | 239,234 | |
| |
|
| Personal Products-0.19% | |
Estee Lauder Cos., Inc. (The), Class A | | | 648 | | | | 172,491 | |
| |
|
| Pharmaceuticals-3.81% | |
Bristol-Myers Squibb Co. | | | 6,462 | | | | 400,838 | |
| |
Catalent, Inc.(b) | | | 476 | | | | 49,537 | |
| |
Eli Lilly and Co. | | | 2,271 | | | | 383,436 | |
| |
Johnson & Johnson | | | 7,529 | | | | 1,184,914 | |
| |
Merck & Co., Inc. | | | 7,235 | | | | 591,823 | |
| |
Perrigo Co. PLC | | | 396 | | | | 17,709 | |
| |
Pfizer, Inc. | | | 15,895 | | | | 585,095 | |
| |
Viatris, Inc.(b) | | | 3,503 | | | | 65,646 | |
| |
Zoetis, Inc. | | | 1,360 | | | | 225,080 | |
| |
| | | | | | | 3,504,078 | |
| |
|
| Property & Casualty Insurance-0.72% | |
Allstate Corp. (The) | | | 870 | | | | 95,639 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Property & Casualty Insurance-(continued) | |
Chubb Ltd. | | | 1,291 | | | $ | 198,711 | |
| |
Cincinnati Financial Corp. | | | 434 | | | | 37,919 | |
| |
Loews Corp. | | | 691 | | | | 31,109 | |
| |
Progressive Corp. (The) | | | 1,675 | | | | 165,624 | |
| |
Travelers Cos., Inc. (The) | | | 725 | | | | 101,768 | |
| |
W.R. Berkley Corp. | | | 408 | | | | 27,099 | |
| |
| | | | | | | 657,869 | |
| |
|
| Publishing-0.03% | |
News Corp., Class A | | | 1,129 | | | | 20,288 | |
| |
News Corp., Class B | | | 353 | | | | 6,273 | |
| |
| | | | | | | 26,561 | |
| |
|
| Railroads-0.90% | |
CSX Corp. | | | 2,188 | | | | 198,561 | |
| |
Kansas City Southern | | | 273 | | | | 55,728 | |
| |
Norfolk Southern Corp. | | | 727 | | | | 172,742 | |
| |
Union Pacific Corp. | | | 1,928 | | | | 401,448 | |
| |
| | | | | | | 828,479 | |
| |
|
| Real Estate Services-0.07% | |
CBRE Group, Inc., Class A(b) | | | 973 | | | | 61,027 | |
| |
|
| Regional Banks-0.91% | |
Citizens Financial Group, Inc. | | | 1,239 | | | | 44,307 | |
| |
Comerica, Inc. | | | 403 | | | | 22,512 | |
| |
Fifth Third Bancorp | | | 2,068 | | | | 57,015 | |
| |
First Republic Bank | | | 499 | | | | 73,318 | |
| |
Huntington Bancshares, Inc. | | | 2,954 | | | | 37,309 | |
| |
KeyCorp | | | 2,834 | | | | 46,506 | |
| |
M&T Bank Corp. | | | 372 | | | | 47,356 | |
| |
People’s United Financial, Inc. | | | 1,233 | | | | 15,943 | |
| |
PNC Financial Services Group, Inc. (The) | | | 1,212 | | | | 180,588 | |
| |
Regions Financial Corp. | | | 2,788 | | | | 44,942 | |
| |
SVB Financial Group(b) | | | 150 | | | | 58,174 | |
| |
Truist Financial Corp. | | | 3,856 | | | | 184,818 | |
| |
Zions Bancorporation N.A. | | | 476 | | | | 20,677 | |
| |
| | | | | | | 833,465 | |
| |
|
| Reinsurance-0.03% | |
Everest Re Group Ltd. | | | 116 | | | | 27,154 | |
| |
|
| Research & Consulting Services-0.31% | |
Equifax, Inc. | | | 353 | | | | 68,072 | |
| |
IHS Markit Ltd. | | | 1,067 | | | | 95,849 | |
| |
Nielsen Holdings PLC | | | 1,036 | | | | 21,621 | |
| |
Verisk Analytics, Inc. | | | 471 | | | | 97,775 | |
| |
| | | | | | | 283,317 | |
| |
|
| Residential REITs-0.26% | |
AvalonBay Communities, Inc. | | | 400 | | | | 64,172 | |
| |
Equity Residential | | | 994 | | | | 58,924 | |
| |
Essex Property Trust, Inc. | | | 189 | | | | 44,872 | |
| |
Mid-America Apartment Communities, Inc. | | | 332 | | | | 42,061 | |
| |
UDR, Inc. | | | 857 | | | | 32,935 | |
| |
| | | | | | | 242,964 | |
| |
|
| Restaurants-1.21% | |
Chipotle Mexican Grill, Inc.(b) | | | 80 | | | | 110,937 | |
| |
Darden Restaurants, Inc. | | | 377 | | | | 44,908 | |
| |
Domino’s Pizza, Inc. | | | 114 | | | | 43,714 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Restaurants-(continued) | |
McDonald’s Corp. | | | 2,131 | | | $ | 457,270 | |
| |
Starbucks Corp. | | | 3,356 | | | | 359,025 | |
| |
Yum! Brands, Inc. | | | 874 | | | | 94,882 | |
| |
| | | | | | | 1,110,736 | |
| |
|
| Retail REITs-0.21% | |
Federal Realty Investment Trust | | | 200 | | | | 17,024 | |
| |
Kimco Realty Corp. | | | 1,255 | | | | 18,837 | |
| |
Realty Income Corp. | | | 1,002 | | | | 62,294 | |
| |
Regency Centers Corp. | | | 457 | | | | 20,835 | |
| |
Simon Property Group, Inc. | | | 888 | | | | 75,729 | |
| |
| | | | | | | 194,719 | |
| |
|
| Semiconductor Equipment-0.64% | |
Applied Materials, Inc. | | | 2,612 | | | | 225,416 | |
| |
KLA Corp. | | | 442 | | | | 114,438 | |
| |
Lam Research Corp. | | | 411 | | | | 194,103 | |
| |
Teradyne, Inc. | | | 482 | | | | 57,787 | |
| |
| | | | | | | 591,744 | |
| |
|
| Semiconductors-4.40% | |
Advanced Micro Devices, Inc.(b) | | | 3,409 | | | | 312,639 | |
| |
Analog Devices, Inc. | | | 1,057 | | | | 156,151 | |
| |
Broadcom, Inc. | | | 1,158 | | | | 507,030 | |
| |
Intel Corp. | | | 11,719 | | | | 583,841 | |
| |
Maxim Integrated Products, Inc. | | | 775 | | | | 68,704 | |
| |
Microchip Technology, Inc. | | | 732 | | | | 101,096 | |
| |
Micron Technology, Inc.(b) | | | 3,184 | | | | 239,373 | |
| |
NVIDIA Corp. | | | 1,770 | | | | 924,294 | |
| |
Qorvo, Inc.(b) | | | 331 | | | | 55,035 | |
| |
QUALCOMM, Inc. | | | 3,234 | | | | 492,668 | |
| |
Skyworks Solutions, Inc. | | | 475 | | | | 72,618 | |
| |
Texas Instruments, Inc. | | | 2,625 | | | | 430,841 | |
| |
Xilinx, Inc. | | | 701 | | | | 99,381 | |
| |
| | | | | | | 4,043,671 | |
| |
|
| Soft Drinks-1.40% | |
Coca-Cola Co. (The) | | | 11,060 | | | | 606,531 | |
| |
Monster Beverage Corp.(b) | | | 1,057 | | | | 97,751 | |
| |
PepsiCo, Inc. | | | 3,953 | | | | 586,230 | |
| |
| | | | | | | 1,290,512 | |
| |
|
| Specialized REITs-1.20% | |
American Tower Corp. | | | 1,271 | | | | 285,289 | |
| |
Crown Castle International Corp. | | | 1,218 | | | | 193,893 | |
| |
Digital Realty Trust, Inc. | | | 780 | | | | 108,818 | |
| |
Equinix, Inc. | | | 257 | | | | 183,544 | |
| |
Extra Space Storage, Inc. | | | 374 | | | | 43,332 | |
| |
Iron Mountain, Inc. | | | 836 | | | | 24,645 | |
| |
Public Storage | | | 435 | | | | 100,455 | |
| |
SBA Communications Corp., Class A | | | 318 | | | | 89,717 | |
| |
Weyerhaeuser Co. | | | 2,167 | | | | 72,659 | |
| |
| | | | | | | 1,102,352 | |
| |
|
| Specialty Chemicals-0.76% | |
Albemarle Corp. | | | 308 | | | | 45,436 | |
| |
Celanese Corp. | | | 343 | | | | 44,569 | |
| |
DuPont de Nemours, Inc. | | | 2,099 | | | | 149,260 | |
| |
Ecolab, Inc. | | | 711 | | | | 153,832 | |
| |
International Flavors & Fragrances, Inc. | | | 310 | | | | 33,740 | |
| |
PPG Industries, Inc. | | | 676 | | | | 97,493 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Specialty Chemicals-(continued) | |
Sherwin-Williams Co. (The) | | | 234 | | | $ | 171,969 | |
| |
| | | | | | | 696,299 | |
| |
|
| Specialty Stores-0.15% | |
Tiffany & Co. | | | 313 | | | | 41,144 | |
| |
Tractor Supply Co. | | | 337 | | | | 47,376 | |
| |
Ulta Beauty, Inc.(b) | | | 164 | | | | 47,094 | |
| |
| | | | | | | 135,614 | |
| |
|
| Steel-0.05% | |
Nucor Corp. | | | 876 | | | | 46,594 | |
| |
|
| Systems Software-6.05% | |
Fortinet, Inc.(b) | | | 390 | | | | 57,927 | |
| |
Microsoft Corp. | | | 21,621 | | | | 4,808,943 | |
| |
NortonLifeLock, Inc. | | | 1,716 | | | | 35,658 | |
| |
Oracle Corp. | | | 5,424 | | | | 350,879 | |
| |
ServiceNow, Inc.(b) | | | 556 | | | | 306,039 | |
| |
| | | | | | | 5,559,446 | |
| |
|
| Technology Distributors-0.06% | |
CDW Corp. | | | 414 | | | | 54,561 | |
| |
|
| Technology Hardware, Storage & Peripherals-6.91% | |
Apple, Inc. | | | 45,739 | | | | 6,069,108 | |
| |
Hewlett Packard Enterprise Co. | | | 3,736 | | | | 44,272 | |
| |
HP, Inc. | | | 3,928 | | | | 96,589 | |
| |
NetApp, Inc. | | | 644 | | | | 42,659 | |
| |
Seagate Technology PLC | | | 647 | | | | 40,217 | |
| |
Western Digital Corp. | | | 878 | | | | 48,632 | |
| |
Xerox Holdings Corp. | | | 519 | | | | 12,036 | |
| |
| | | | | | | 6,353,513 | |
| |
|
| Tobacco-0.64% | |
Altria Group, Inc. | | | 5,315 | | | | 217,915 | |
| |
Philip Morris International, Inc. | | | 4,454 | | | | 368,747 | |
| |
| | | | | | | 586,662 | |
| |
|
| Trading Companies & Distributors-0.20% | |
Fastenal Co. | | | 1,666 | | | | 81,351 | |
| |
United Rentals, Inc.(b) | | | 209 | | | | 48,469 | |
| |
W.W. Grainger, Inc. | | | 130 | | | | 53,084 | |
| |
| | | | | | | 182,904 | |
| |
|
| Trucking-0.10% | |
J.B. Hunt Transport Services, Inc. | | | 242 | | | | 33,070 | |
| |
Old Dominion Freight Line, Inc. | | | 279 | | | | 54,455 | |
| |
| | | | | | | 87,525 | |
| |
|
| Water Utilities-0.09% | |
American Water Works Co., Inc. | | | 518 | | | | 79,497 | |
| |
|
| Wireless Telecommunication Services-0.24% | |
T-Mobile US, Inc.(b) | | | 1,669 | | | | 225,065 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $21,917,718) | | | | 90,699,593 | |
| |
|
| Money Market Funds-1.35% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(c)(e) | | | 431,341 | | | | 431,341 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(e) | | | 321,408 | | | | 321,504 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Money Market Funds-(continued) | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(e) | | | 492,961 | | | $ | 492,961 | |
| |
Total Money Market Funds
(Cost $1,245,848) | | | | 1,245,806 | |
| |
TOTAL INVESTMENTS IN
SECURITIES-100.04% (Cost $23,163,566) | | | | 91,945,399 | |
| |
OTHER ASSETS LESS
LIABILITIES-(0.04)% | | | | (41,151 | ) |
| |
NET ASSETS-100.00% | | | $ | 91,904,248 | |
| |
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
Invesco Ltd. | | | $ 21,918 | | | | $ 1,108 | | | | $ (2,436 | ) | | | $1,643 | | | | $(2,764 | ) | | | $ 19,469 | | | | $ 923 | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | 281,283 | | | | 4,742,712 | | | | (4,592,654 | ) | | | - | | | | - | | | | 431,341 | | | | 1,107 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 221,995 | | | | 3,417,145 | | | | (3,317,732 | ) | | | (21 | ) | | | 117 | | | | 321,504 | | | | 1,327 | |
Invesco Treasury Portfolio, Institutional Class | | | 321,467 | | | | 5,420,241 | | | | (5,248,747 | ) | | | - | | | | - | | | | 492,961 | | | | 1,184 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | - | | | | 19,425 | | | | (19,425 | ) | | | - | | | | - | | | | - | | | | 2 | * |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 5,512 | | | | (5,512) | | | | - | | | | - | | | | - | | | | 1 | * |
Invesco Private Government Fund | | | - | | | | 66,792 | | | | (66,792 | ) | | | - | | | | - | | | | - | | | | 2 | * |
Invesco Private Prime Fund | | | - | | | | 29,656 | | | | (29,656 | ) | | | - | | | | - | | | | - | | | | 3 | * |
Total | | | $846,663 | | | | $13,702,591 | | | | $(13,282,954 | ) | | | $1,622 | | | | $(2,647 | ) | | | $1,265,275 | | | | $4,549 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | |
| Open Futures Contracts | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | Notional
Value | | | Value | | | Unrealized
Appreciation | |
Equity Risk | | | | | | | | | | | | | | | | | | |
E-Mini S&P 500 Index | | | 6 | | | March-2021 | | | $1,124,640 | | | | $26,335 | | | | $26,335 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $21,893,292) | | $ | 90,680,124 | |
| |
Investments in affiliates, at value
(Cost $1,270,274) | | | 1,265,275 | |
| |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 6,917 | |
| |
Receivable for: | | | | |
Dividends | | | 66,892 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 45,898 | |
| |
Total assets | | | 92,065,106 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 14,687 | |
| |
Amount due custodian | | | 9,365 | |
| |
Accrued fees to affiliates | | | 45,096 | |
| |
Accrued other operating expenses | | | 39,099 | |
| |
Trustee deferred compensation and retirement plans | | | 52,611 | |
| |
Total liabilities | | | 160,858 | |
| |
Net assets applicable to shares outstanding | | $ | 91,904,248 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 13,873,676 | |
| |
Distributable earnings | | | 78,030,572 | |
| |
| | $ | 91,904,248 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 38,820,009 | |
| |
Series II | | $ | 53,084,239 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 1,912,945 | |
| |
Series II | | | 2,634,849 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 20.29 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 20.15 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Dividends | | $ | 1,505,815 | |
| |
Dividends from affiliates (includes securities lending income of $47) | | | 4,588 | |
| |
Total investment income | | | 1,510,403 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 100,290 | |
| |
Administrative services fees | | | 137,335 | |
| |
Custodian fees | | | 6,476 | |
| |
Distribution fees - Series II | | | 122,233 | |
| |
Transfer agent fees | | | 4,092 | |
| |
Trustees’ and officers’ fees and benefits | | | 20,988 | |
| |
Licensing fees | | | 17,025 | |
| |
Reports to shareholders | | | 11,365 | |
| |
Professional services fees | | | 35,356 | |
| |
Other | | | (17,021 | ) |
| |
Total expenses | | | 438,139 | |
| |
Less: Fees waived | | | (1,301 | ) |
| |
Net expenses | | | 436,838 | |
| |
Net investment income | | | 1,073,565 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 10,068,109 | |
| |
Affiliated investment securities | | | (2,647 | ) |
| |
Futures contracts | | | 298,849 | |
| |
| | | 10,364,311 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 2,603,672 | |
| |
Affiliated investment securities | | | 1,622 | |
| |
Futures contracts | | | 4,555 | |
| |
| | | 2,609,849 | |
| |
Net realized and unrealized gain | | | 12,974,160 | |
| |
Net increase in net assets resulting from operations | | $ | 14,047,725 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 1,073,565 | | | $ | 1,270,313 | |
| |
Net realized gain | | | 10,364,311 | | | | 5,915,111 | |
| |
Change in net unrealized appreciation | | | 2,609,849 | | | | 15,853,714 | |
| |
Net increase in net assets resulting from operations | | | 14,047,725 | | | | 23,039,138 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,904,454 | ) | | | (4,162,074 | ) |
| |
Series II | | | (3,939,993 | ) | | | (5,597,313 | ) |
| |
Total distributions from distributable earnings | | | (6,844,447 | ) | | | (9,759,387 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (1,001,963 | ) | | | (2,676,121 | ) |
| |
Series II | | | (3,859,935 | ) | | | 98,753 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (4,861,898 | ) | | | (2,577,368 | ) |
| |
Net increase in net assets | | | 2,341,380 | | | | 10,702,383 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 89,562,868 | | | | 78,860,485 | |
| |
End of year | | $ | 91,904,248 | | | $ | 89,562,868 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset value, beginning of period | | | Net investment income(a) | | | Net gains (losses) on securities (both realized and unrealized) | | | Total from investment operations | | | Dividends from net investment income | | | Distributions from net realized gains | | | Total
distributions | | | Net asset value, end of period | | | Total return (b) | | | Net assets, end of period (000’s omitted) | | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | | Ratio of net investment income to average net assets | | | Portfolio
turnover (c) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $18.71 | | | | $0.26 | | | | $ 2.96 | | | | $ 3.22 | | | | $(0.33 | ) | | | $(1.31 | ) | | | $(1.64 | ) | | | $20.29 | | | | 17.99 | % | | | $38,820 | | | | 0.38 | %(d) | | | 0.38 | %(d) | | | 1.43 | %(d) | | | 4 | % |
Year ended 12/31/19 | | | 16.12 | | | | 0.29 | | | | 4.51 | | | | 4.80 | | | | (0.28 | ) | | | (1.93 | ) | | | (2.21 | ) | | | 18.71 | | | | 30.98 | | | | 36,806 | | | | 0.41 | | | | 0.41 | | | | 1.61 | | | | 3 | |
Year ended 12/31/18 | | | 18.53 | | | | 0.26 | | | | (0.91 | ) | | | (0.65 | ) | | | (0.30 | ) | | | (1.46 | ) | | | (1.76 | ) | | | 16.12 | | | | (4.86 | ) | | | 33,758 | | | | 0.51 | | | | 0.51 | | | | 1.41 | | | | 3 | |
Year ended 12/31/17 | | | 16.78 | | | | 0.26 | | | | 3.18 | | | | 3.44 | | | | (0.31 | ) | | | (1.38 | ) | | | (1.69 | ) | | | 18.53 | | | | 21.26 | | | | 38,450 | | | | 0.48 | | | | 0.48 | | | | 1.46 | | | | 3 | |
Year ended 12/31/16 | | | 16.58 | | | | 0.30 | | | | 1.55 | | | | 1.85 | | | | (0.31 | ) | | | (1.34 | ) | | | (1.65 | ) | | | 16.78 | | | | 11.45 | | | | 34,812 | | | | 0.41 | | | | 0.41 | | | | 1.81 | | | | 4 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 18.59 | | | | 0.22 | | | | 2.93 | | | | 3.15 | | | | (0.28 | ) | | | (1.31 | ) | | | (1.59 | ) | | | 20.15 | | | | 17.70 | | | | 53,084 | | | | 0.63 | (d) | | | 0.63 | (d) | | | 1.18 | (d) | | | 4 | |
Year ended 12/31/19 | | | 16.03 | | | | 0.25 | | | | 4.47 | | | | 4.72 | | | | (0.23 | ) | | | (1.93 | ) | | | (2.16 | ) | | | 18.59 | | | | 30.62 | | | | 52,757 | | | | 0.66 | | | | 0.66 | | | | 1.36 | | | | 3 | |
Year ended 12/31/18 | | | 18.43 | | | | 0.22 | | | | (0.91 | ) | | | (0.69 | ) | | | (0.25 | ) | | | (1.46 | ) | | | (1.71 | ) | | | 16.03 | | | | (5.07 | ) | | | 45,102 | | | | 0.76 | | | | 0.76 | | | | 1.16 | | | | 3 | |
Year ended 12/31/17 | | | 16.69 | | | | 0.22 | | | | 3.17 | | | | 3.39 | | | | (0.27 | ) | | | (1.38 | ) | | | (1.65 | ) | | | 18.43 | | | | 21.00 | | | | 55,090 | | | | 0.73 | | | | 0.73 | | | | 1.21 | | | | 3 | |
Year ended 12/31/16 | | | 16.49 | | | | 0.26 | | | | 1.54 | | | | 1.80 | | | | (0.26 | ) | | | (1.34 | ) | | | (1.60 | ) | | | 16.69 | | | | 11.20 | | | | 52,212 | | | | 0.66 | | | | 0.66 | | | | 1.56 | | | | 4 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $34,682 and $48,893 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. S&P 500 Index Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. S&P 500 Index Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to provide investment results that, before expenses, correspond to the total return (i.e., the combination of capital changes and income) of the Standard & Poor’s 500® Composite Stock Price Index.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per
Invesco V.I. S&P 500 Index Fund
share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties (“Counterparties”) to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| K. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions. |
Invesco V.I. S&P 500 Index Fund
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
| |
First $2 billion | | | 0.120% | |
| |
| |
Over $2 billion | | | 0.100% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.12%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $1,301.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $12,069 for accounting and fund administrative services and was reimbursed $125,266 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Invesco V.I. S&P 500 Index Fund
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | | $90,699,593 | | | | $– | | | | $– | | | | $90,699,593 | |
| |
| | | | |
Money Market Funds | | | 1,245,806 | | | | – | | | | – | | | | 1,245,806 | |
| |
Total Investments in Securities | | | 91,945,399 | | | | – | | | | – | | | | 91,945,399 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 26,335 | | | | – | | | | – | | | | 26,335 | |
| |
| | | | |
Total Investments | | | $91,971,734 | | | | $– | | | | $– | | | | $91,971,734 | |
| |
| * | Unrealized appreciation. |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | | |
| Derivative Assets | | Equity
Risk | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 26,335 | |
| |
Derivatives not subject to master netting agreements | | | (26,335 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain on
Statement of Operations | |
| | | Equity
Risk | |
| |
Realized Gain: | | | | |
Futures contracts | | | $298,849 | |
| |
Change in Net Unrealized Appreciation: | | | | |
Futures contracts | | | 4,555 | |
| |
Total | | | $303,404 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
| |
Average notional value | | $ | 1,446,381 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
Invesco V.I. S&P 500 Index Fund
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
| | |
Ordinary income* | | $ | 1,421,367 | | | $ | 1,124,398 | |
| |
| | |
Long-term capital gain | | | 5,423,080 | | | | 8,634,989 | |
| |
| | |
Total distributions | | $ | 6,844,447 | | | $ | 9,759,387 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
Undistributed ordinary income | | $ | 1,257,902 | |
| |
Undistributed long-term capital gain | | | 9,594,534 | |
| |
Net unrealized appreciation – investments | | | 67,215,176 | |
| |
Temporary book/tax differences | | | (37,040 | ) |
| |
| |
Shares of beneficial interest | | | 13,873,676 | |
| |
Total net assets | | $ | 91,904,248 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $2,994,474 and $15,793,553, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | | $67,993,773 | |
| |
| |
Aggregate unrealized (depreciation) of investments | | | (778,597 | ) |
| |
| |
Net unrealized appreciation of investments | | $ | 67,215,176 | |
| |
Cost of investments for tax purposes is $24,756,558.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of fair fund settlements, on December 31, 2020, undistributed net investment income was increased by $75 and undistributed net realized gain was decreased by $75. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 83,700 | | | $ | 1,520,338 | | | | 101,728 | | | $ | 1,853,921 | |
| |
Series II | | | 95,867 | | | | 1,653,237 | | | | 79,690 | | | | 1,455,975 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 156,018 | | | | 2,903,491 | | | | 242,328 | | | | 4,160,777 | |
| |
Series II | | | 213,088 | | | | 3,939,993 | | | | 327,904 | | | | 5,597,313 | |
| |
Invesco V.I. S&P 500 Index Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (293,468 | ) | | $ | (5,425,792 | ) | | | (470,895 | ) | | $ | (8,690,819 | ) |
| |
Series II | | | (512,091 | ) | | | (9,453,165 | ) | | | (383,854 | ) | | | (6,954,535 | ) |
| |
Net increase (decrease) in share activity | | | (256,886 | ) | | $ | (4,861,898 | ) | | | (103,099 | ) | | $ | (2,577,368 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 90% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. S&P 500 Index Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. S&P 500 Index Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. S&P 500 Index Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. S&P 500 Index Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
| Series I | | $1,000.00 | | $1,219.00 | | $2.18 | | $1,023.18 | | $1.98 | | 0.39% |
| Series II | | 1,000.00 | | 1,217.60 | | 3.57 | | 1,021.92 | | 3.25 | | 0.64 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. S&P 500 Index Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 5,423,080 | | | | | |
Qualified Dividend Income* | | | 100.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 100.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967
Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey –1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. S&P 500 Index Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
Invesco V.I. S&P 500 Index Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
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| | Invesco V.I. Small Cap Equity Fund |
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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Invesco Distributors, Inc. | | VISCE-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary For the year ended December 31, 2020, Series I shares of Invesco V.I. Small Cap Equity Fund (the Fund) outperformed the Russell 2000 Index, the Fund’s style-specific benchmark. Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| Series I Shares | | | 27.25 | % |
| Series II Shares | | | 26.87 | |
| S&P 500 Indexq (Broad Market Index) | | | 18.40 | |
| Russell 2000 Indexq (Style-Specific Index) | | | 19.96 | |
| Lipper VUF Small-Cap Core Funds Index∎ (Peer Group Index) | | | 11.23 | |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Given this environment, the Fund produced a strong, double-digit return and outperformed its style-specific benchmark during the year. Relative outperformance was largely attributed to positive security selection across a broad set of sectors including information technology (IT), real estate, industrials, consumer discretionary, communication services, financials, utilities and materials. The Fund’s allocation to most of these sectors also provided a positive impact to relative results with
our allocations in the IT, consumer discretionary and utilities sectors contributing the most. Alternatively, stock selection and an underweight allocation in the health care sector detracted the most from relative performance. Security selection in the consumer staples and energy sectors were headwinds along with the Fund’s ancillary cash position.
Top individual contributors to the Fund’s absolute performance during the year included Crocs, Penn National Gaming and Lattice Semiconductor.
Comfort foam shoemaker, Crocs was the leading contributor to Fund performance on an absolute basis and was added to the Fund in the first quarter of 2020 following a significant decline in its stock price due to concerns over business interruption from COVID-19. During the year, the company generated better than expected results driven by strong eCommerce growth offsetting weakness in its retail segment.
Penn National Gaming benefited from strong gaming activity during the year as its casinos gradually reopened following COVID-19 shutdowns and are operating with improved profitability. The regional casino operator also owns a 36%4 stake in Barstool Sports whose sports betting app, Barstool Sportsbook, rocketed to become the most downloaded sports betting application in Apple’s app store shortly after its September soft launch.
Strength in Lattice Semiconductor during the year can be attributed to two primary factors. The semiconductor company introduced its Nexus platform which we believe offers significant competitive pricing and performance benefits relative to peers due to its better power efficiency and faster speeds. Additionally, with Nexus now available, Lattice was able to capitalize on improving end market spending including 5G, data centers, auto and industrials.
Top individual detractors from the Fund’s absolute performance included ChampionX, Boot Barn and Viper Energy.
ChampionX (formerly Apergy) and Viper Energy are both energy sector constituents that declined with oil prices early in the year. We exited our position to become more defensive in this space as the oil markets were likely to take longer than other areas of the economy to navigate the COVID driven lock-down.
Boot Barn was among the leading detractors despite being a strong retailer offering good competitive dynamics. However, with oil prices depressed and rig count down, we believed Boot Barn would struggle to sustain growth without this key customer demographic. We exited our position during the year.
We wish to remind you that all positioning changes are based on a bottom-up stock selection process. Our portfolio construction is designed to manage risk and ensure alignment with small-cap market sector exposure
Invesco V.I. Small Cap Equity Fund
within modest over- and underweights. At the close of the year, the Fund’s underweight exposures relative to the Russell 2000 Index were in the health care, energy, utilities, consumer staples, real estate and communication services sectors. Conversely, the Fund’s overweight exposures were in the IT, industrials, financials, materials and consumer discretionary sectors.
At the close of the year, we continued to expect volatility as the global economy ebbs and flows between high COVID-19 infection rates resulting in either government-mandated or self-imposed lockdowns and vaccinations supporting reopenings and a return to normalcy. At the margin, we have shifted out of more defensive stocks and into stocks that we believe have more upside potential in a post-COVID economic and market recovery. Though the situation continues to evolve, we believe the US economy will gradually re-open on a regional basis. We expect unemployment, weakened confidence, de-leveraging, and bankruptcies will be headwinds, while COVID vaccine deployment, growing herd immunity, monetary and fiscal stimulus, as well as pent-up demand will provide tailwinds.
Thank you for your commitment to the Invesco V.I. Small Cap Equity Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
4 Source: Penn National Gaming: pngaming.com
Portfolio manager(s):
Juan Hartsfield (Lead)
Davis Paddock
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Small Cap Equity Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (8/29/03) | | | 9.32 | % |
10 Years | | | 10.15 | |
5 Years | | | 11.82 | |
1 Year | | | 27.25 | |
| |
Series II Shares | | | | |
Inception (8/29/03) | | | 9.06 | % |
10 Years | | | 9.87 | |
5 Years | | | 11.55 | |
1 Year | | | 26.87 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Small Cap Equity Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Small Cap Equity Fund
Supplemental Information
Invesco V.I. Small Cap Equity Fund’s investment objective is long-term growth of capital.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | The Russell 2000® Index is an unmanaged index considered representative of small-cap stocks. The Russell 2000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | The Lipper VUF Small-Cap Core Funds Index is an unmanaged index considered representative of small-cap core variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Small Cap Equity Fund
Fund Information
| | |
Portfolio Composition |
By sector | | % of total net assets |
| |
| Information Technology | | 19.27% |
|
| Industrials | | 19.19 |
|
| Financials | | 17.33 |
|
| Health Care | | 15.25 �� |
|
| Consumer Discretionary | | 13.43 |
|
| Real Estate | | 5.59 |
|
| Materials | | 4.69 |
|
| Other Sectors, Each Less than 2% of Net Assets | | 4.36 |
|
| Money Market Funds Plus Other Assets Less Liabilities | | 0.89 |
|
| | |
| |
Top 10 Equity Holdings* | | |
| | | % of total net assets |
|
1. Lattice Semiconductor Corp. | | 2.00% |
|
2. NeoGenomics, Inc. | | 1.87 |
|
3. Penn National Gaming, Inc. | | 1.67 |
|
4. Ryman Hospitality Properties, Inc. | | 1.65 |
|
5. OneMain Holdings, Inc. | | 1.61 |
|
6. Taylor Morrison Home Corp., Class A | | 1.43 |
|
7. Semtech Corp. | | 1.31 |
|
8. LPL Financial Holdings, Inc. | | 1.29 |
|
9. Piper Sandler Cos. | | 1.29 |
|
10. Visteon Corp. | | 1.27 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
Invesco V.I. Small Cap Equity Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–99.10% | |
| | |
Air Freight & Logistics–0.89% | | | | | | | | |
Air Transport Services Group, Inc.(b) | | | 69,785 | | | $ | 2,187,062 | |
|
Alternative Carriers–1.19% | |
Iridium Communications, Inc.(b) | | | 74,189 | | | | 2,917,482 | |
|
Apparel Retail–1.25% | |
American Eagle Outfitters, Inc. | | | 106,295 | | | | 2,133,341 | |
Children’s Place, Inc. (The)(b) | | | 18,529 | | | | 928,303 | |
| | | | | | | | 3,061,644 | |
|
Application Software–7.19% | |
Avalara, Inc.(b) | | | 14,279 | | | | 2,354,464 | |
Avaya Holdings Corp.(b) | | | 110,958 | | | | 2,124,846 | |
LivePerson, Inc.(b) | | | 43,740 | | | | 2,721,940 | |
Manhattan Associates, Inc.(b) | | | 20,707 | | | | 2,177,962 | |
Nuance Communications, Inc.(b) | | | 62,264 | | | | 2,745,220 | |
Q2 Holdings, Inc.(b) | | | 21,227 | | | | 2,685,852 | |
Verint Systems, Inc.(b) | | | 41,016 | | | | 2,755,455 | |
| | | | | | | | 17,565,739 | |
| |
Asset Management & Custody Banks–0.37% | | | | | |
Blucora, Inc.(b) | | | 57,313 | | | | 911,850 | |
| | |
Auto Parts & Equipment–1.27% | | | | | | | | |
Visteon Corp.(b) | | | 24,815 | | | | 3,114,779 | |
| | |
Automotive Retail–1.05% | | | | | | | | |
Lithia Motors, Inc., Class A | | | 8,741 | | | | 2,558,228 | |
| | |
Biotechnology–3.07% | | | | | | | | |
CRISPR Therapeutics AG
(Switzerland)(b) | | | 10,417 | | | | 1,594,947 | |
Emergent BioSolutions, Inc.(b) | | | 19,046 | | | | 1,706,522 | |
Natera, Inc.(b) | | | 27,468 | | | | 2,733,615 | |
TG Therapeutics, Inc.(b) | | | 28,206 | | | | 1,467,276 | |
| | | | | | | | 7,502,360 | |
| | |
Building Products–2.92% | | | | | | | | |
Masonite International Corp.(b) | | | 24,413 | | | | 2,400,774 | |
Owens Corning | | | 38,035 | | | | 2,881,532 | |
Trex Co., Inc.(b) | | | 22,041 | | | | 1,845,273 | |
| | | | | | | | 7,127,579 | |
| | |
Casinos & Gaming–1.67% | | | | | | | | |
Penn National Gaming, Inc.(b) | | | 47,309 | | | | 4,086,078 | |
| |
Communications Equipment–0.75% | | | | | |
Ciena Corp.(b) | | | 34,497 | | | | 1,823,166 | |
| |
Construction & Engineering–2.22% | | | | | |
NV5 Global, Inc.(b) | | | 35,727 | | | | 2,814,573 | |
WillScot Mobile Mini Holdings
Corp.(b) | | | 112,560 | | | | 2,608,015 | |
| | | | | | | | 5,422,588 | |
| | |
Construction Materials–2.04% | | | | | | | | |
Eagle Materials, Inc. | | | 25,061 | | | | 2,539,932 | |
Summit Materials, Inc., Class A(b) | | | 121,422 | | | | 2,438,154 | |
| | | | | | | | 4,978,086 | |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Consumer Finance–1.61% | |
OneMain Holdings, Inc. | | | 81,551 | | | $ | 3,927,496 | |
|
Electric Utilities–0.27% | |
IDACORP, Inc. | | | 6,900 | | | | 662,607 | |
|
Electrical Components & Equipment–2.98% | |
EnerSys | | | 27,613 | | | | 2,293,536 | |
Plug Power, Inc.(b) | | | 77,091 | | | | 2,614,156 | |
Vertiv Holdings Co. | | | 127,311 | | | | 2,376,896 | |
| | | | | | | | 7,284,588 | |
|
Electronic Equipment & Instruments–2.31% | |
Badger Meter, Inc. | | | 32,303 | | | | 3,038,420 | |
Coherent, Inc.(b) | | | 17,295 | | | | 2,594,596 | |
| | | | | | | | 5,633,016 | |
|
Electronic Manufacturing Services–1.08% | |
Flex Ltd.(b) | | | 146,770 | | | | 2,638,925 | |
|
Environmental & Facilities Services–0.88% | |
Casella Waste Systems, Inc.,
Class A(b) | | | 34,914 | | | | 2,162,922 | |
|
Fertilizers & Agricultural Chemicals–0.97% | |
Scotts Miracle-Gro Co. (The) | | | 11,872 | | | | 2,364,190 | |
|
Financial Exchanges & Data–1.10% | |
TMX Group Ltd. (Canada) | | | 26,824 | | | | 2,679,239 | |
|
Food Retail–0.66% | |
Sprouts Farmers Market, Inc.(b) | | | 80,636 | | | | 1,620,784 | |
|
Footwear–2.20% | |
Crocs, Inc.(b) | | | 39,472 | | | | 2,473,316 | |
Wolverine World Wide, Inc. | | | 92,960 | | | | 2,905,000 | |
| | | | | | | | 5,378,316 | |
|
Health Care Equipment–3.13% | |
AtriCure, Inc.(b) | | | 51,529 | | | | 2,868,619 | |
CONMED Corp. | | | 23,838 | | | | 2,669,856 | |
Hill-Rom Holdings, Inc. | | | 21,501 | | | | 2,106,453 | |
| | | | | | | | 7,644,928 | |
|
Health Care Facilities–2.10% | |
Encompass Health Corp. | | | 32,944 | | | | 2,724,139 | |
Pennant Group, Inc. (The)(b) | | | 41,398 | | | | 2,403,568 | |
| | | | | | | | 5,127,707 | |
|
Health Care Services–1.06% | |
Castle Biosciences, Inc.(b) | | | 38,479 | | | | 2,583,865 | |
|
Health Care Supplies–1.68% | |
ICU Medical, Inc.(b) | | | 9,024 | | | | 1,935,558 | |
OrthoPediatrics Corp.(b) | | | 52,367 | | | | 2,160,139 | |
| | | | | | | | 4,095,697 | |
|
Health Care Technology–1.24% | |
Simulations Plus, Inc. | | | 42,142 | | | | 3,030,853 | |
|
Heavy Electrical Equipment–0.74% | |
TPI Composites, Inc.(b) | | | 34,047 | | | | 1,797,001 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
| | | Shares | | | Value | |
Homebuilding–1.43% | |
| | |
Taylor Morrison Home Corp.,
Class A(b) | | | 136,557 | | | $ | 3,502,687 | |
| | |
Hotel & Resort REITs–1.65% | | | | | | | | |
| | |
Ryman Hospitality Properties, Inc. | | | 59,332 | | | | 4,020,336 | |
| |
Hotels, Resorts & Cruise Lines–1.18% | | | | | |
Wyndham Destinations, Inc. | | | 64,219 | | | | 2,880,864 | |
| |
Industrial Machinery–4.78% | | | | | |
Altra Industrial Motion Corp. | | | 45,536 | | | | 2,524,061 | |
Gates Industrial Corp. PLC(b) | | | 166,937 | | | | 2,130,116 | |
Helios Technologies, Inc. | | | 45,083 | | | | 2,402,473 | |
ITT, Inc. | | | 31,685 | | | | 2,440,379 | |
SPX Corp.(b) | | | 40,019 | | | | 2,182,636 | |
| | | | | | | | 11,679,665 | |
| |
Industrial REITs–1.82% | | | | | |
EastGroup Properties, Inc. | | | 16,379 | | | | 2,261,285 | |
STAG Industrial, Inc. | | | 69,849 | | | | 2,187,670 | |
| | | | | | | | 4,448,955 | |
| |
Interactive Media & Services–0.77% | | | | | |
Eventbrite, Inc., Class A(b) | | | 104,402 | | | | 1,889,676 | |
| |
Investment Banking & Brokerage–2.58% | | | | | |
LPL Financial Holdings, Inc. | | | 30,234 | | | | 3,150,988 | |
Piper Sandler Cos. | | | 31,148 | | | | 3,142,833 | |
| | | | | | | | 6,293,821 | |
| |
Life & Health Insurance–0.94% | | | | | |
Primerica, Inc. | | | 17,125 | | | | 2,293,551 | |
| |
Life Sciences Tools & Services–2.98% | | | | | |
Medpace Holdings, Inc.(b) | | | 19,398 | | | | 2,700,202 | |
NeoGenomics, Inc.(b) | | | 84,907 | | | | 4,571,393 | |
| | | | | | | | 7,271,595 | |
| |
Multi-line Insurance–0.92% | | | | | |
Assurant, Inc. | | | 16,422 | | | | 2,237,005 | |
| |
Packaged Foods & Meats–0.67% | | | | | |
Calavo Growers, Inc. | | | 23,622 | | | | 1,640,075 | |
| |
Paper Packaging–0.78% | | | | | |
Graphic Packaging Holding Co. | | | 112,461 | | | | 1,905,089 | |
| |
Property & Casualty Insurance–1.36% | | | | | |
Hanover Insurance Group, Inc. (The) | | | 13,909 | | | | 1,626,240 | |
Selective Insurance Group, Inc. | | | 25,430 | | | | 1,703,302 | |
| | | | | | | | 3,329,542 | |
| |
Real Estate Services–1.04% | | | | | |
FirstService Corp. (Canada) | | | 18,500 | | | | 2,532,069 | |
| |
Regional Banks–7.02% | | | | | |
Columbia Banking System, Inc. | | | 61,422 | | | | 2,205,050 | |
Community Bank System, Inc. | | | 31,050 | | | | 1,934,726 | |
Glacier Bancorp, Inc. | | | 47,932 | | | | 2,205,351 | |
Pacific Premier Bancorp, Inc. | | | 63,715 | | | | 1,996,191 | |
Pinnacle Financial Partners, Inc. | | | 34,047 | | | | 2,192,627 | |
South State Corp. | | | 24,581 | | | | 1,777,206 | |
Webster Financial Corp. | | | 49,241 | | | | 2,075,508 | |
Western Alliance Bancorporation | | | 46,172 | | | | 2,768,011 | |
| | | | | | | | 17,154,670 | |
| | | | | | | | |
| | | Shares | | | Value | |
Research & Consulting Services–1.06% | | | | | |
Huron Consulting Group, Inc.(b) | | | 43,868 | | | $ | 2,586,019 | |
| |
Restaurants–1.33% | | | | | |
Papa John’s International, Inc. | | | 19,067 | | | | 1,617,835 | |
Wendy’s Co. (The) | | | 74,059 | | | | 1,623,373 | |
| | | | | | | | 3,241,208 | |
| |
Semiconductor Equipment–2.15% | | | | | |
Brooks Automation, Inc. | | | 41,684 | | | | 2,828,260 | |
Entegris, Inc. | | | 25,162 | | | | 2,418,068 | |
| | | | | | | | 5,246,328 | |
| |
Semiconductors–5.79% | | | | | |
Lattice Semiconductor Corp.(b) | | | 106,797 | | | | 4,893,439 | |
MACOM Technology Solutions Holdings, Inc.(b) | | | 56,280 | | | | 3,097,651 | |
Power Integrations, Inc. | | | 36,285 | | | | 2,970,290 | |
Semtech Corp.(b) | | | 44,311 | | | | 3,194,380 | |
| | | | | | | | 14,155,760 | |
| |
Specialized Consumer Services–1.03% | | | | | |
Terminix Global Holdings, Inc.(b) | | | 49,143 | | | | 2,506,784 | |
| |
Specialized REITs–1.08% | | | | | |
Gaming and Leisure Properties, Inc. | | | 62,379 | | | | 2,644,870 | |
| |
Specialty Chemicals–0.91% | | | | | |
Ashland Global Holdings, Inc. | | | 27,992 | | | | 2,216,966 | |
| |
Thrifts & Mortgage Finance–1.43% | | | | | |
Essent Group Ltd. | | | 43,219 | | | | 1,867,061 | |
Radian Group, Inc. | | | 80,653 | | | | 1,633,223 | |
| | | | | | | | 3,500,284 | |
| |
Tires & Rubber–1.01% | | | | | |
Cooper Tire & Rubber Co. | | | 61,089 | | | | 2,474,105 | |
| |
Trading Companies & Distributors–1.95% | | | | | |
Applied Industrial Technologies, Inc. | | | 32,321 | | | | 2,520,715 | |
Univar Solutions, Inc.(b) | | | 118,345 | | | | 2,249,738 | |
| | | | | | | | 4,770,453 | |
| |
Trucking–0.76% | | | | | |
Knight-Swift Transportation Holdings, Inc. | | | 44,559 | | | | 1,863,457 | |
| |
Water Utilities–0.79% | | | | | |
California Water Service Group | | | 35,603 | | | | 1,923,630 | |
Total Common Stocks & Other Equity Interests (Cost $169,682,624) | | | | | | | 242,098,239 | |
| |
Money Market Funds–0.71% | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(c)(d) | | | 622,027 | | | | 622,027 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 398,715 | | | | 398,835 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 710,888 | | | | 710,888 | |
Total Money Market Funds
(Cost $1,731,750) | | | | | | | 1,731,750 | |
TOTAL INVESTMENTS IN SECURITIES–99.81% (Cost $171,414,374) | | | | 243,829,989 | |
OTHER ASSETS LESS LIABILITIES–0.19% | | | | 457,753 | |
NET ASSETS–100.00% | | | | | | $ | 244,287,742 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
Investment Abbreviations:
REIT - Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation (Depreciation) | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,445,484 | | | | $ | 21,869,405 | | | | $ | (22,692,862 | ) | | | $ | - | | | | $ | - | | | | $ | 622,027 | | | | $ | 3,006 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 1,043,617 | | | | | 15,621,004 | | | | | (16,267,028 | ) | | | | (108 | ) | | | | 1,350 | | | | | 398,835 | | | | | 3,614 | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,651,983 | | | | | 24,993,605 | | | | | (25,934,700 | ) | | | | - | | | | | - | | | | | 710,888 | | | | | 3,056 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | 795,743 | | | | | 7,044,651 | | | | | (7,840,394 | ) | | | | - | | | | | - | | | | | - | | | | | 2,630 | * |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 265,247 | | | | | 1,904,449 | | | | | (2,169,869 | ) | | | | 24 | | | | | 149 | | | | | - | | | | | 979 | * |
Invesco Private Government Fund | | | | - | | | | | 22,350,112 | | | | | (22,350,112 | ) | | | | - | | | | | - | | | | | - | | | | | 132 | * |
Invesco Private Prime Fund | | | | - | | | | | 5,120,945 | | | | | (5,121,019 | ) | | | | - | | | | | 74 | | | | | - | | | | | 160 | * |
Total | | | $ | 5,202,074 | | | | $ | 98,904,171 | | | | $ | (102,375,984 | ) | | | $ | (84 | ) | | | $ | 1,573 | | | | $ | 1,731,750 | | | | $ | 13,577 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $169,682,624) | | $ | 242,098,239 | |
| |
Investments in affiliated money market funds, at value
(Cost $1,731,750) | | | 1,731,750 | |
| |
Cash | | | 532,709 | |
| |
Foreign currencies, at value (Cost $12,781) | | | 12,817 | |
| |
Receivable for: | | | | |
Investments sold | | | 578,368 | |
| |
Fund shares sold | | | 43,207 | |
| |
Dividends | | | 73,744 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 87,023 | |
| |
Total assets | | | 245,157,857 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 280,573 | |
| |
Fund shares reacquired | | | 330,430 | |
| |
Accrued fees to affiliates | | | 120,321 | |
| |
Accrued other operating expenses | | | 43,298 | |
| |
Trustee deferred compensation and retirement plans | | | 95,493 | |
| |
Total liabilities | | | 870,115 | |
| |
Net assets applicable to shares outstanding | | $ | 244,287,742 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 158,828,107 | |
| |
Distributable earnings | | | 85,459,635 | |
| |
| | $ | 244,287,742 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 129,880,966 | |
| |
Series II | | $ | 114,406,776 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 6,297,436 | |
| |
Series II | | | 5,960,933 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 20.62 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 19.19 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $10,693) | | $ | 2,314,918 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $2,738) | | | 12,414 | |
| |
Total investment income | | | 2,327,332 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,476,891 | |
| |
Administrative services fees | | | 322,319 | |
| |
Custodian fees | | | 5,674 | |
| |
Distribution fees - Series II | | | 227,183 | |
| |
Transfer agent fees | | | 27,035 | |
| |
Trustees’ and officers’ fees and benefits | | | 21,865 | |
| |
Reports to shareholders | | | 11,470 | |
| |
Professional services fees | | | 32,978 | |
| |
Other | | | 2,787 | |
| |
Total expenses | | | 2,128,202 | |
| |
Less: Fees waived | | | (3,830 | ) |
| |
Net expenses | | | 2,124,372 | |
| |
Net investment income | | | 202,960 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $72,814) | | | 13,010,945 | |
| |
Affiliated investment securities | | | 1,573 | |
| |
Foreign currencies | | | 436 | |
| |
| | | 13,012,954 | |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 40,099,158 | |
| |
Affiliated investment securities | | | (84 | ) |
| |
Foreign currencies | | | (142 | ) |
| |
| | | 40,098,932 | |
| |
Net realized and unrealized gain | | | 53,111,886 | |
| |
Net increase in net assets resulting from operations | | $ | 53,314,846 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | | $ 202,960 | | | $ | 529,966 | |
| |
Net realized gain | | | 13,012,954 | | | | 29,137,765 | |
| |
Change in net unrealized appreciation | | | 40,098,932 | | | | 25,301,514 | |
| |
Net increase in net assets resulting from operations | | | 53,314,846 | | | | 54,969,245 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (9,700,819 | ) | | | (13,821,130 | ) |
| |
Series II | | | (8,807,533 | ) | | | (18,517,603 | ) |
| |
Total distributions from distributable earnings | | | (18,508,352 | ) | | | (32,338,733 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (7,393,188 | ) | | | (1,229,864 | ) |
| |
Series II | | | 623,910 | | | | (30,878,941 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (6,769,278 | ) | | | (32,108,805 | ) |
| |
Net increase (decrease) in net assets | | | 28,037,216 | | | | (9,478,293 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 216,250,526 | | | | 225,728,819 | |
| |
End of year | | $ | 244,287,742 | | | $ | 216,250,526 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Ratio of | | Ratio of | | | | |
| | | | | | | | | | | | | | | | | | | | | | | expenses | | expenses | | | | |
| | | | | | | Net gains | | | | | | | | | | | | | | | | to average | | to average net | | Ratio of net | | |
| | | | | | | (losses) | | | | | | | | | | | | | | | | net assets | | assets without | | investment | | |
| | | Net asset | | Net | | on securities | | | | Dividends | | Distributions | | | | | | | | | | with fee waivers | | fee waivers | | income | | |
| | | value, | | investment | | (both | | Total from | | from net | | from net | | | | Net asset | | | | Net assets, | | and/or | | and/or | | (loss) | | |
| | | beginning | | income | | realized and | | investment | | investment | | realized | | Total | | value, end | | Total | | end of period | | expenses | | expenses | | to average | | Portfolio |
| | | of period | | (loss)(a) | | unrealized) | | operations | | income | | gains | | distributions | | of period | | return (b) | | (000’s omitted) | | absorbed | | absorbed | | net assets | | turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 17.73 | | | | $ | 0.04 | | | | $ | 4.48 | | | | $ | 4.52 | | | | $ | (0.06 | ) | | | $ | (1.57 | ) | | | $ | (1.63 | ) | | | $ | 20.62 | | | | | 27.25 | % | | | $ | 129,881 | | | | | 0.96 | %(d) | | | | 0.96 | %(d) | | | | 0.21 | %(d) | | | | 45 | % |
Year ended 12/31/19 | | | | 15.93 | | | | | 0.06 | | | | | 4.03 | | | | | 4.09 | | | | | – | | | | | (2.29 | ) | | | | (2.29 | ) | | | | 17.73 | | | | | 26.60 | | | | | 118,208 | | | | | 0.96 | | | | | 0.96 | | | | | 0.34 | | | | | 44 | |
Year ended 12/31/18 | | | | 20.02 | | | | | 0.02 | | | | | (2.74 | ) | | | | (2.72 | ) | | | | – | | | | | (1.37 | ) | | | | (1.37 | ) | | | | 15.93 | | | | | (15.08 | ) | | | | 106,064 | | | | | 0.96 | | | | | 0.96 | | | | | 0.10 | | | | | 22 | |
Year ended 12/31/17 | | | | 18.38 | | | | | (0.01 | ) | | | | 2.53 | | | | | 2.52 | | | | | – | | | | | (0.88 | ) | | | | (0.88 | ) | | | | 20.02 | | | | | 14.06 | | | | | 149,405 | | | | | 0.97 | | | | | 0.97 | | | | | (0.02 | ) | | | | 20 | |
Year ended 12/31/16 | | | | 17.64 | | | | | 0.01 | | | | | 2.06 | | | | | 2.07 | | | | | – | | | | | (1.33 | ) | | | | (1.33 | ) | | | | 18.38 | | | | | 12.06 | | | | | 161,727 | | | | | 1.01 | | | | | 1.01 | | | | | 0.04 | | | | | 37 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 16.60 | | | | | (0.01 | ) | | | | 4.17 | | | | | 4.16 | | | | | (0.00 | ) | | | | (1.57 | ) | | | | (1.57 | ) | | | | 19.19 | | | | | 26.87 | | | | | 114,407 | | | | | 1.21 | (d) | | | | 1.21 | (d) | | | | (0.04 | )(d) | | | | 45 | |
Year ended 12/31/19 | | | | 15.07 | | | | | 0.02 | | | | | 3.80 | | | | | 3.82 | | | | | – | | | | | (2.29 | ) | | | | (2.29 | ) | | | | 16.60 | | | | | 26.32 | | | | | 98,043 | | | | | 1.21 | | | | | 1.21 | | | | | 0.09 | | | | | 44 | |
Year ended 12/31/18 | | | | 19.05 | | | | | (0.03 | ) | | | | (2.58 | ) | | | | (2.61 | ) | | | | – | | | | | (1.37 | ) | | | | (1.37 | ) | | | | 15.07 | | | | | (15.27 | ) | | | | 119,664 | | | | | 1.21 | | | | | 1.21 | | | | | (0.15 | ) | | | | 22 | |
Year ended 12/31/17 | | | | 17.58 | | | | | (0.05 | ) | | | | 2.40 | | | | | 2.35 | | | | | – | | | | | (0.88 | ) | | | | (0.88 | ) | | | | 19.05 | | | | | 13.73 | | | | | 157,349 | | | | | 1.22 | | | | | 1.22 | | | | | (0.27 | ) | | | | 20 | |
Year ended 12/31/16 | | | | 16.96 | | | | | (0.03 | ) | | | | 1.98 | | | | | 1.95 | | | | | – | | | | | (1.33 | ) | | | | (1.33 | ) | | | | 17.58 | | | | | 11.84 | | | | | 148,883 | | | | | 1.26 | | | | | 1.26 | | | | | (0.21 | ) | | | | 37 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $107,367 and $90,873 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Small Cap Equity Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Small Cap Equity Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. Small Cap Equity Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
Invesco V.I. Small Cap Equity Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| |
First $250 million | | | 0.745% | |
| |
Next $250 million | | | 0.730% | |
| |
Next $500 million | | | 0.715% | |
| |
Next $1.5 billion | | | 0.700% | |
| |
Next $2.5 billion | | | 0.685% | |
| |
Next $2.5 billion | | | 0.670% | |
| |
Next $2.5 billion | | | 0.655% | |
| |
Over $10 billion | | | 0.640% | |
| |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.745%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $3,830.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $26,504 for accounting and fund administrative services and was reimbursed $295,815 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $749 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when
Invesco V.I. Small Cap Equity Fund
market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities sales of $529,957, which resulted in net realized gains of $72,814.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
| | |
Ordinary income* | | $ | 2,363,813 | | | $ | 179,127 | |
| |
| | |
Long-term capital gain | | | 16,144,539 | | | | 32,159,606 | |
| |
| | |
Total distributions | | $ | 18,508,352 | | | $ | 32,338,733 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
Undistributed ordinary income | | $ | 6,543,835 | |
| |
Undistributed long-term capital gain | | | 7,785,112 | |
| |
Net unrealized appreciation – investments | | | 71,196,986 | |
| |
Net unrealized appreciation - foreign currencies | | | 35 | |
| |
Temporary book/tax differences | | | (66,333 | ) |
| |
Shares of beneficial interest | | | 158,828,107 | |
| |
Total net assets | | $ | 244,287,742 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
Invesco V.I. Small Cap Equity Fund
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $88,877,327 and $112,408,286, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 76,334,742 | |
| |
Aggregate unrealized (depreciation) of investments | | | (5,137,756 | ) |
| |
Net unrealized appreciation of investments | | $ | 71,196,986 | |
| |
Cost of investments for tax purposes is $172,633,003.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of redemption-in-kind, on December 31, 2020, undistributed net investment income was decreased by $34,081 and undistributed net realized gain was increased by $34,081. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,036,038 | | | $ | 15,659,643 | | | | 501,715 | | | $ | 8,900,799 | |
| |
Series II | | | 1,139,291 | | | | 16,592,309 | | | | 1,589,687 | | | | 27,357,249 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 559,125 | | | | 9,700,819 | | | | 828,605 | | | | 13,821,130 | |
| |
Series II | | | 545,358 | | | | 8,807,533 | | | | 1,185,506 | | | | 18,517,603 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | (1,963,194 | ) | | | (32,753,650 | ) | | | (1,321,243 | ) | | | (23,951,793 | ) |
| |
Series II | | | (1,631,642 | ) | | | (24,775,932 | ) | | | (4,807,788 | ) | | | (76,753,793 | ) |
| |
Net increase (decrease) in share activity | | | (315,024 | ) | | $ | (6,769,278 | ) | | | (2,023,518 | ) | | $ | (32,108,805 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 73% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco V.I. Small Cap Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Small Cap Equity Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Small Cap Equity Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Small Cap Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,384.10 | | $5.75 | | $1,020.31 | | $4.88 | | 0.96% |
Series II | | 1,000.00 | | 1,382.80 | | 7.25 | | 1,019.05 | | 6.14 | | 1.21 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Small Cap Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 16,144,539 | | | | | |
Corporate Dividends Received Deduction* | | | 97.18% | | | | | |
Qualified Dividend Income* | | | 0.00% | | | | | |
U.S. Treasury Obligations* | | | 0.00% | | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Small Cap Equity Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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 |
| Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School – Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Small Cap Equity Fund
| | | | | | | | |
Trustees and Officers–(continued) | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Small Cap Equity Fund
| | | | |
| | |
| | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco V.I. Technology Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
| | | | |
| |
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
| Invesco Distributors, Inc. | | | | I-VITEC-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco V.I. Technology Fund (the Fund) outperformed the NASDAQ Composite Index, the Fund’s broad market/style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | | | | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 46.11 | % |
Series II Shares | | | 45.79 | |
NASDAQ Composite Indexq (Broad Market/Style-Specific Index) | | | 44.92 | |
Lipper VUF Science & Technology Funds Classification Average∎ (Peer Group) | | | 47.07 | |
| |
Source(s): qBloomberg LP; ∎Lipper Inc. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were
also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Given this landscape, the Fund produced a strong, double digit return and outperformed its broad market/style-specific benchmark, the NASDAQ Composite Index, during the year. Performance was driven by both stock selection and market allocation. Key relative contributors included stock selection and overweight exposure in the interactive home entertainment and application software industries, as well as stock selection and underweight exposure in the biotechnology and systems software industries. A lack of exposure in regional banks was also beneficial versus the style-specific benchmark. Conversely,
a lack of automobile manufacturers, an underweight in technology hardware and stock selection in the health care equipment and the internet & direct marketing retail industries detracted from the Fund’s relative returns.
Top individual contributors to the Fund’s absolute and relative performance during the year included Amazon.com, Sea Limited and NVIDIA.
The COVID-19 event has accelerated some of the long-term shifts driven by technological changes and increased connectivity that we seek to capture in the Fund’s investments. eCommerce platforms have seen substantial growth in demand from new users, as well as for the previously underpenetrated categories of food and consumables. An overweight allocation in Amazon was beneficial as the eCommerce giant experienced a surge in demand for food, consumables and office supplies as users worked, schooled and shopped from home in 2020.
Sea Limited, the leading internet platform in Southeast Asia and Taiwan, also benefited from mandated and voluntary social distancing measures through its digital entertainment, eCommerce and digital payments business units. During the second and third quarters of 2020, Sea’s sales and profits were up nearly 100%. Additionally, Free Fire, Sea’s self-developed battle royale game for mobile devices has been quite successful – particularly in markets that tend to have lower-end mobile devices. This is an important and impactful product for Sea given the title earned recognition as the highest grossing mobile game in Latin America and Southeast Asia in 2019 and well into 2020.
NVIDIA designs graphics processing units (GPU) for video gaming, mobile computing and automotive markets. Beyond its initial GPU in 1999 that brought gaming to personal computers, NVIDIA is still a leader in GPUs today, particularly in the high-end market. And NVIDIA has been rapidly expanding into accelerated computing and artificial intelligence (AI). The COVID-19 event has accelerated the use of AI in health care. Leading research institutions, universities and health care start-ups are using NVIDIA’s technology for GPU-accelerated AI in medical imaging to better understand disease and ultimately develop therapies.
Top individual detractors from absolute Fund performance included Broadcom, Boston Scientific and Fiserv.
Broadcom designs a wide range of semiconductors for the wireless, broadband, network and industrial markets. The chip maker’s share price had been slowly recovering from the May 2019 US ban on component exports to Chinese telecommunication giant Huawei (not a Fund holding), which negatively impacted sales and profit expectations. The stock faced additional headwinds as Broadcom withdrew previous guidance as a result
Invesco V.I. Technology Fund
of COVID-19 and reported lower-than-expected profits. We sold the stock during the year.
Boston Scientific is a medical device company with product concentration in the areas of cardiovascular and the nervous system. The company was set up to have multiple product launches in 2020, until COVID-19 hit. As patients opted to delay medical procedures as much as possible during the pandemic, Boston Scientific pushed out product launches and underperformed peers given reduced sales and a relatively high debt load from prior acquisitions. Increased competitive pressures ultimately caused us to sell the stock during the year.
Fiserv is a technology solution provider for banks and other financial institutions. The original investment thesis for owning Fiserv was hindered in the COVID-19 event. Fiserv was originally purchased for its attractive valuation, potential to benefit from merger and acquisition activity and its ability to leverage consumer demand deposit account data to drive higher value to banks and merchants. The COVID-19 event was relatively more detrimental to Fiserv versus competitors given greater exposure to consumer spending and higher amounts of debt on its balance sheet. We sold Fiserv during the year.
At the close of the year, we continued to emphasize innovation, transformative technology and opportunities, which we expect to take market share from mature companies, including the game-changing technologies of mobile, security, cloud and medical technology. We remain optimistic about technology spending and companies’ need to invest in more robust security solutions and for future growth. In our opinion, technology will continue to be a key driver of the increased pace of health care innovation and attractive long-term growth rates. Areas of focus include genomics research and more targeted therapeutics, bioproduction, robotic surgery adoption, and disruption aimed at the healthcare consumer. We attempt to harness multi-year secular trends, which may benefit long-term investors regardless of near-term economic strength.
We expect continued volatility as the global economy ebbs and flows between high COVID-19 infection rates with lockdowns and vaccinations supporting reopenings with a return to normalcy. Interest rates are likely to remain low by historic standards and economic growth is likely to remain muted on a full year basis. Throughout the next year, some quarterly results for sales and profits will have some relatively easy comparisons compared to the early and tight lockdown situation we had during the first and second quarters of 2020. We believe this is a ripe environment for equities in general as pent up demand further propels the cyclical recovery. However, value industries lack pricing power in the face of globalization, overcapacity and increased efficiencies mostly due to technological changes. Therefore, we believe growth will continue to outperform. As ever, we believe change is the fuel for growth. We plan to
be active in our positioning to take advantage of cyclical opportunities as a result of vaccinedeployment and a return to normal while also balancing the portfolio with securities we think will benefit from longer term secular growth. We continue to seek to identify “share-takers,” companies that can gain market share through technology-enabled advantages in their business models and from disruptive shifts in enterprise and consumer behavior.
Thank you for your commitment to the Invesco V.I. Technology Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Janey Luby
Erik Voss (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Technology Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Souce: Bloomberg LP
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
| Average Annual Total Returns | |
| As of 12/31/20 | | | | |
| |
| Series I Shares | | | | |
| Inception (5/20/97) | | | 8.39% | |
| 10 Years | | | 15.31 | |
| 5 Years | | | 21.53 | |
| 1 Year | | | 46.11 | |
| |
| Series II Shares | | | | |
| Inception (4/30/04) | | | 11.06% | |
| 10 Years | | | 15.03 | |
| 5 Years | | | 21.22 | |
| 1 Year | | | 45.79 | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Technology Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly.
Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Technology Fund
Supplemental Information
Invesco V.I. Technology Fund’s investment objective is long-term growth of capital.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The NASDAQ Composite Index is a broad-based, market index of the common stocks and similar securities listed on the Nasdaq stock market. |
| ∎ | | The Lipper VUF Science & Technology Funds Classification Average represents an average of all variable insurance underlying funds in the Lipper Science & Technology Funds classification. |
| ∎ | | 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. |
Invesco V.I. Technology Fund
Fund Information
Portfolio Composition
| | |
| By sector | | % of total net assets |
Information Technology | | 47.17% |
|
Communication Services | | 18.52 |
|
Consumer Discretionary | | 16.58 |
|
Health Care | | 13.99 |
|
Industrials | | 2.25 |
|
Money Market Funds Plus Other Assets Less Liabilities | | 1.49 |
|
Top 10 Equity Holdings* |
| | | % of total net assets |
|
1. Amazon.com, Inc. | | 8.06% |
|
2. Microsoft Corp. | | 5.61 |
|
3. Apple, Inc. | | 5.41 |
|
4. QUALCOMM, Inc. | | 5.32 |
|
5. Alphabet, Inc., Class A | | 5.07 |
|
6. Facebook, Inc., Class A | | 4.44 |
|
7. NVIDIA Corp. | | 3.92 |
|
8. Applied Materials, Inc. | | 3.80 |
|
9. RingCentral, Inc., Class A | | 3.59 |
|
10. Booking Holdings, Inc. | | 3.10 |
|
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings, if any. Data presented here are as of December 31, 2020. |
Invesco V.I. Technology Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–98.50% | |
| Application Software–9.70% | |
Adobe, Inc.(b) | | | 6,177 | | | $ | 3,089,241 | |
| |
C3.ai, Inc., Class A(b) | | | 7,667 | | | | 1,063,796 | |
| |
Paylocity Holding Corp.(b) | | | 5,074 | | | | 1,044,787 | |
| |
RingCentral, Inc., Class A(b) | | | 19,030 | | | | 7,211,799 | |
| |
salesforce.com, inc.(b) | | | 8,039 | | | | 1,788,919 | |
| |
Splunk, Inc.(b) | | | 9,420 | | | | 1,600,364 | |
| |
Synopsys, Inc.(b) | | | 14,287 | | | | 3,703,762 | |
| |
| | | | | | | 19,502,668 | |
| |
|
| Biotechnology–0.55% | |
BeiGene Ltd., ADR (China)(b) | | | 4,273 | | | | 1,104,100 | |
| |
|
| Construction Machinery & Heavy Trucks–0.23% | |
Nikola Corp.(b)(c) | | | 30,629 | | | | 467,399 | |
| |
|
| Consumer Electronics–2.33% | |
Sony Corp. (Japan) | | | 46,500 | | | | 4,675,281 | |
| |
|
| Data Processing & Outsourced Services–5.93% | |
PayPal Holdings, Inc.(b) | | | 25,271 | | | | 5,918,468 | |
| |
Visa, Inc., Class A | | | 27,419 | | | | 5,997,358 | |
| |
| | | | | | | 11,915,826 | |
| |
|
| Health Care Equipment–3.73% | |
Abbott Laboratories | | | 14,558 | | | | 1,593,956 | |
| |
Intuitive Surgical, Inc.(b) | | | 2,941 | | | | 2,406,032 | |
| |
Teleflex, Inc. | | | 8,520 | | | | 3,506,576 | |
| |
| | | | | | | 7,506,564 | |
| |
|
| Health Care Technology–0.71% | |
GoodRx Holdings, Inc., Class A(b)(c) | | | 28,417 | | | | 1,146,342 | |
| |
Teladoc Health, Inc.(b) | | | 1,391 | | | | 278,144 | |
| |
| | | | | | | 1,424,486 | |
| |
|
| Interactive Home Entertainment–6.90% | |
Activision Blizzard, Inc. | | | 29,381 | | | | 2,728,026 | |
| |
Electronic Arts, Inc.(b) | | | 11,960 | | | | 1,717,456 | |
| |
Nintendo Co. Ltd. (Japan) | | | 3,700 | | | | 2,361,300 | |
| |
Sea Ltd., ADR (Taiwan)(b) | | | 25,828 | | | | 5,141,063 | |
| |
Take-Two Interactive Software, Inc.(b) | | | 9,296 | | | | 1,931,616 | |
| |
| | | | | | | 13,879,461 | |
| |
|
| Interactive Media & Services–10.58% | |
Alphabet, Inc., Class A(b) | | | 5,823 | | | | 10,205,623 | |
| |
Facebook, Inc., Class A(b) | | | 32,652 | | | | 8,919,220 | |
| |
ZoomInfo Technologies, Inc.,
Class A(b) | | | 44,615 | | | | 2,151,782 | |
| |
| | | | | | | 21,276,625 | |
| |
|
| Internet & Direct Marketing Retail–14.26% | |
Alibaba Group Holding Ltd., ADR (China)(b) | | | 26,742 | | | | 6,223,666 | |
| |
Amazon.com, Inc.(b) | | | 4,977 | | | | 16,209,741 | |
| |
Booking Holdings, Inc.(b) | | | 2,796 | | | | 6,227,447 | |
| |
| | | | | | | 28,660,854 | |
| |
|
| Life Sciences Tools & Services–6.71% | |
10X Genomics, Inc., Class A(b) | | | 18,692 | | | | 2,646,787 | |
| |
Avantor, Inc.(b) | | | 129,612 | | | | 3,648,578 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Life Sciences Tools & Services–(continued) | |
IQVIA Holdings, Inc.(b) | | | 26,344 | | | $ | 4,720,055 | |
| |
Thermo Fisher Scientific, Inc. | | | 5,330 | | | | 2,482,607 | |
| |
| | | | | | | 13,498,027 | |
| |
|
| Managed Health Care–1.21% | |
UnitedHealth Group, Inc. | | | 6,946 | | | | 2,435,823 | |
| |
|
| Movies & Entertainment–1.03% | |
Netflix, Inc.(b) | | | 3,826 | | | | 2,068,833 | |
| |
|
| Pharmaceuticals–1.07% | |
Reata Pharmaceuticals, Inc., Class A(b) | | | 17,383 | | | | 2,148,886 | |
| |
|
| Semiconductor Equipment–5.97% | |
Applied Materials, Inc. | | | 88,403 | | | | 7,629,179 | |
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 8,957 | | | | 4,368,508 | |
| |
| | | | | | | 11,997,687 | |
| |
|
| Semiconductors–10.44% | |
NVIDIA Corp. | | | 15,079 | | | | 7,874,254 | |
| |
QUALCOMM, Inc. | | | 70,163 | | | | 10,688,631 | |
| |
Semtech Corp.(b) | | | 33,573 | | | | 2,420,278 | |
| |
| | | | | | | 20,983,163 | |
| |
|
| Systems Software–9.73% | |
Microsoft Corp. | | | 50,710 | | | | 11,278,918 | |
| |
Palo Alto Networks, Inc.(b) | | | 9,865 | | | | 3,505,923 | |
| |
ServiceNow, Inc.(b) | | | 8,658 | | | | 4,765,623 | |
| |
| | | | | | | 19,550,464 | |
| |
|
| Technology Hardware, Storage & Peripherals–5.41% | |
Apple, Inc. | | | 81,905 | | | | 10,867,974 | |
| |
|
| Trucking–2.01% | |
Uber Technologies, Inc.(b) | | | 79,326 | | | | 4,045,626 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $84,633,513) | | | | | | | 198,009,747 | |
| |
|
| Money Market Funds–1.52% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 1,133,386 | | | | 1,133,386 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 617,322 | | | | 617,507 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 1,295,298 | | | | 1,295,298 | |
| |
Total Money Market Funds
(Cost $3,046,217) | | | | 3,046,191 | |
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.02%
(Cost $87,679,730) | | | | | | | 201,055,938 | |
| |
Investments Purchased with Cash Collateral from
Securities on Loan | |
|
| Money Market Funds–0.85% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 684,163 | | | | 684,163 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Technology Fund
| | | | | | | | |
| | | Shares | | | Value | |
|
| Money Market Funds–(continued) | |
Invesco Private Prime Fund,
0.12%(d)(e)(f) | | | 1,025,937 | | | $ | 1,026,245 | |
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $1,710,408) | | | | 1,710,408 | |
| |
TOTAL INVESTMENTS IN SECURITIES–100.87%
(Cost $89,390,138) | | | | | | | 202,766,346 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.87)% | | | | (1,750,351 | ) |
| |
NET ASSETS–100.00% | | | | | | $ | 201,015,995 | |
| |
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 344,022 | | | | $ | 18,777,184 | | | | $ | (17,987,820 | ) | | | $ | - | | | | $ | - | | | | $ | 1,133,386 | | | | $ | 1,885 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 254,021 | | | | | 13,494,964 | | | | | (13,131,364 | ) | | | | (16 | ) | | | | (98 | ) | | | | 617,507 | | | | | 2,349 | |
Invesco Treasury Portfolio, Institutional Class | | | | 393,168 | | | | | 21,459,639 | | | | | (20,557,509 | ) | | | | - | | | | | - | | | | | 1,295,298 | | | | | 1,948 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | 550,517 | | | | | 2,408,004 | | | | | (2,958,521 | ) | | | | - | | | | | - | | | | | - | | | | | 1,323 | * |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 183,505 | | | | | 652,303 | | | | | (836,008 | ) | | | | - | | | | | 200 | | | | | - | | | | | 544 | * |
Invesco Private Government Fund | | | | - | | | | | 13,024,881 | | | | | (12,340,718 | ) | | | | - | | | | | - | | | | | 684,163 | | | | | 162 | * |
Invesco Private Prime Fund | | | | - | | | | | 9,888,845 | | | | | (8,862,670 | ) | | | | - | | | | | 70 | | | | | 1,026,245 | | | | | 494 | * |
Total | | | $ | 1,725,233 | | | | $ | 79,705,820 | | | | $ | (76,674,610 | ) | | | $ | (16 | ) | | | $ | 172 | | | | $ | 4,756,599 | | | | $ | 8,705 | |
|
* Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. | |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Technology Fund
| | |
Statement of Assets and Liabilities December 31, 2020 | | Statement of Operations For the year ended December 31, 2020 |
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $84,633,513)* | | $ | 198,009,747 | |
| |
Investments in affiliated money market funds, at value (Cost $4,756,625) | | | 4,756,599 | |
| |
Foreign currencies, at value (Cost $29,704) | | | 29,873 | |
| |
Receivable for: | | | | |
Fund shares sold | | | 310,946 | |
| |
Dividends | | | 1,215 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 73,526 | |
| |
Total assets | | | 203,181,906 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 97,394 | |
| |
Amount due custodian | | | 145,439 | |
| |
Collateral upon return of securities loaned | | | 1,710,408 | |
| |
Accrued fees to affiliates | | | 85,875 | |
| |
Accrued other operating expenses | | | 45,744 | |
| |
Trustee deferred compensation and retirement plans | | | 81,051 | |
| |
Total liabilities | | | 2,165,911 | |
| |
Net assets applicable to shares outstanding | | $ | 201,015,995 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 70,494,261 | |
| |
Distributable earnings | | | 130,521,734 | |
| |
| | $ | 201,015,995 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 187,800,658 | |
| |
Series II | | $ | 13,215,337 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 5,137,660 | |
| |
Series II | | | 387,254 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 36.55 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 34.13 | |
| |
| * | At December 31, 2020, securities with an aggregate value of $1,591,387 were on loan to brokers. |
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $9,917) | | $ | 696,145 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $10,223) | | | 16,405 | |
| |
Total investment income | | | 712,550 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,187,451 | |
| |
Administrative services fees | | | 257,969 | |
| |
Custodian fees | | | 11,424 | |
| |
Distribution fees - Series II | | | 27,771 | |
| |
Transfer agent fees | | | 29,390 | |
| |
Trustees’ and officers’ fees and benefits | | | 22,128 | |
| |
Reports to shareholders | | | 10,477 | |
| |
Professional services fees | | | 34,179 | |
| |
Other | | | 2,890 | |
| |
Total expenses | | | 1,583,679 | |
| |
Less: Fees waived | | | (2,008 | ) |
| |
Net expenses | | | 1,581,671 | |
| |
Net investment income (loss) | | | (869,121 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 19,543,293 | |
| |
Affiliated investment securities | | | 172 | |
| |
Foreign currencies | | | (3,492 | ) |
| |
| | | 19,539,973 | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 43,893,917 | |
| |
Affiliated investment securities | | | (16 | ) |
| |
Foreign currencies | | | 168 | |
| |
| | | 43,894,069 | |
| |
Net realized and unrealized gain | | | 63,434,042 | |
| |
Net increase in net assets resulting from operations | | $ | 62,564,921 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Technology Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (869,121 | ) | | $ | (506,840 | ) |
| |
Net realized gain | | | 19,539,973 | | | | 15,223,819 | |
| |
Change in net unrealized appreciation | | | 43,894,069 | | | | 25,304,082 | |
| |
Net increase in net assets resulting from operations | | | 62,564,921 | | | | 40,021,061 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (14,122,842 | ) | | | (10,151,000 | ) |
| |
Series II | | | (1,087,242 | ) | | | (904,027 | ) |
| |
Total distributions from distributable earnings | | | (15,210,084 | ) | | | (11,055,027 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 16,335,060 | | | | (9,079,975 | ) |
| |
Series II | | | (165,991 | ) | | | (1,576,636 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | 16,169,069 | | | | (10,656,611 | ) |
| |
Net increase in net assets | | | 63,523,906 | | | | 18,309,423 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 137,492,089 | | | | 119,182,666 | |
| |
End of year | | $ | 201,015,995 | | | $ | 137,492,089 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Technology Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income
(loss)(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Distributions
from net
realized
gains | | Net asset
value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses
to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed | | Ratio of net
investment income (loss)
to average
net assets | | Portfolio
turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 27.23 | | | | $ | (0.17 | ) | | | $ | 12.49 | | | | $ | 12.32 | | | | $ | (3.00 | ) | | | $ | 36.55 | | | | | 46.11 | % | | | $ | 187,801 | | | | | 0.98 | %(d) | | | | 0.98 | %(d) | | | | (0.53 | )%(d) | | | | 56 | % |
Year ended 12/31/19 | | | | 21.92 | | | | | (0.09 | ) | | | | 7.71 | | | | | 7.62 | | | | | (2.31 | ) | | | | 27.23 | | | | | 35.88 | | | | | 127,308 | | | | | 0.99 | | | | | 0.99 | | | | | (0.36 | ) | | | | 46 | |
Year ended 12/31/18 | | | | 22.97 | | | | | (0.12 | ) | | | | 0.22 | | | | | 0.10 | | | | | (1.15 | ) | | | | 21.92 | | | | | (0.45 | ) | | | | 109,596 | | | | | 1.03 | | | | | 1.03 | | | | | (0.47 | ) | | | | 48 | |
Year ended 12/31/17 | | | | 17.89 | | | | | (0.09 | ) | | | | 6.34 | | | | | 6.25 | | | | | (1.17 | ) | | | | 22.97 | | | | | 35.13 | | | | | 113,352 | | | | | 1.06 | | | | | 1.06 | | | | | (0.41 | ) | | | | 43 | |
Year ended 12/31/16 | | | | 18.83 | | | | | (0.06 | ) | | | | (0.06 | ) | | | | (0.12 | ) | | | | (0.82 | ) | | | | 17.89 | | | | | (0.76 | ) | | | | 87,632 | | | | | 1.10 | | | | | 1.10 | | | | | (0.33 | ) | | | | 52 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 25.63 | | | | | (0.23 | ) | | | | 11.73 | | | | | 11.50 | | | | | (3.00 | ) | | | | 34.13 | | | | | 45.79 | | | | | 13,215 | | | | | 1.23 | (d) | | | | 1.23 | (d) | | | | (0.78 | )(d) | | | | 56 | |
Year ended 12/31/19 | | | | 20.79 | | | | | (0.15 | ) | | | | 7.30 | | | | | 7.15 | | | | | (2.31 | ) | | | | 25.63 | | | | | 35.56 | | | | | 10,184 | | | | | 1.24 | | | | | 1.24 | | | | | (0.61 | ) | | | | 46 | |
Year ended 12/31/18 | | | | 21.89 | | | | | (0.17 | ) | | | | 0.22 | | | | | 0.05 | | | | | (1.15 | ) | | | | 20.79 | | | | | (0.71 | ) | | | | 9,587 | | | | | 1.28 | | | | | 1.28 | | | | | (0.72 | ) | | | | 48 | |
Year ended 12/31/17 | | | | 17.14 | | | | | (0.14 | ) | | | | 6.06 | | | | | 5.92 | | | | | (1.17 | ) | | | | 21.89 | | | | | 34.74 | | | | | 9,439 | | | | | 1.31 | | | | | 1.31 | | | | | (0.66 | ) | | | | 43 | |
Year ended 12/31/16 | | | | 18.12 | | | | | (0.10 | ) | | | | (0.06 | ) | | | | (0.16 | ) | | | | (0.82 | ) | | | | 17.14 | | | | | (1.01 | ) | | | | 6,799 | | | | | 1.35 | | | | | 1.35 | | | | | (0.58 | ) | | | | 52 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $147,219 and $11,108 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Technology Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Technology Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations – Securities, including restricted securities, are valued according to the following policy.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations
Invesco V.I. Technology Fund
and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. |
| | Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund investsand are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to
Invesco V.I. Technology Fund
acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| L. | Other Risks - The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | |
| Average Daily Net Assets | | Rate |
|
First $ 250 million | | 0.750% |
|
Next $250 million | | 0.740% |
|
Next $500 million | | 0.730% |
|
Next $1.5 billion | | 0.720% |
|
Next $2.5 billion | | 0.710% |
|
Next $2.5 billion | | 0.700% |
|
Next $2.5 billion | | 0.690% |
|
Over $10 billion | | 0.680% |
|
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.75%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $2,008.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $22,356 for accounting and fund administrative services and was reimbursed $235,613 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $924 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when
Invesco V.I. Technology Fund
market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 190,973,166 | | | $ | 7,036,581 | | | | $– | | | $ | 198,009,747 | |
| |
Money Market Funds | | | 3,046,191 | | | | 1,710,408 | | | | – | | | | 4,756,599 | |
| |
Total Investments | | $ | 194,019,357 | | | $ | 8,746,989 | | | | $– | | | $ | 202,766,346 | |
| |
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 1,043,018 | | | $ | – | |
| |
Long-term capital gain | | | 14,167,066 | | | | 11,055,027 | |
| |
Total distributions | | $ | 15,210,084 | | | $ | 11,055,027 | |
| |
* Includes short-term capital gain distributions, if any.
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 1,934,423 | |
| |
Undistributed long-term capital gain | | | 15,668,116 | |
| |
Net unrealized appreciation – investments | | | 112,975,330 | |
| |
Net unrealized appreciation – foreign currencies | | | 169 | |
| |
Temporary book/tax differences | | | (56,304 | ) |
| |
Shares of beneficial interest | | | 70,494,261 | |
| |
Total net assets | | $ | 201,015,995 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
Invesco V.I. Technology Fund
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $86,901,434 and $89,605,732, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | | $113,797,607 | |
| |
Aggregate unrealized (depreciation) of investments | | | (822,277 | ) |
| |
Net unrealized appreciation of investments | | | $112,975,330 | |
| |
|
Cost of investments for tax purposes is $89,791,016. | |
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2020, undistributed net investment income (loss) was increased by $871,520 and undistributed net realized gain was decreased by $871,520. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,316,336 | | | $ | 40,969,639 | | | | 672,084 | | | $ | 16,955,731 | |
| |
Series II | | | 91,668 | | | | 2,566,999 | | | | 39,526 | | | | 966,364 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 417,589 | | | | 14,122,842 | | | | 412,475 | | | | 10,151,000 | |
| |
Series II | | | 34,417 | | | | 1,087,242 | | | | 39,000 | | | | 904,027 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,271,839 | ) | | | (38,757,421 | ) | | | (1,409,534 | ) | | | (36,186,706 | ) |
| |
Series II | | | (136,171 | ) | | | (3,820,232 | ) | | | (142,286 | ) | | | (3,447,027 | ) |
| |
Net increase (decrease) in share activity | | | 452,000 | | | $ | 16,169,069 | | | | (388,735 | ) | | $ | (10,656,611 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 62% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 11–Subsequent Event
Effective April 30, 2021, the Fund’s sub-classification under the Investment Company Act of 1940 will change from “diversified” to “non-diversified” and a related fundamental investment restriction will be eliminated.
Invesco V.I. Technology Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Technology Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Technology Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Technology Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | |
| | | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | | $ | 1,000.00 | | | | $ | 1,259.10 | | | | $ | 5.51 | | | | $ | 1,020.26 | | | | $ | 4.93 | | | | | 0.97 | % |
Series II | | | | 1,000.00 | | | | | 1,257.70 | | | | | 6.92 | | | | | 1,019.00 | | | | | 6.19 | | | | | 1.22 | |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Technology Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Funds designate the following amounts or, if subsequently determined to be different, the maximum amount allowable for their fiscal year ended December 31, 2020:
| | | | | | |
| | | Federal and State Income Tax | | | |
| | Long-Term Capital Gain Distributions | | $ | 14,167,066 | |
| | Corporate Dividends Received Deduction* | | | 54.49 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
| | Qualified Dividend Income* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Technology Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
| Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
| 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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis - 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey - 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Technology Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
Invesco V.I. Technology Fund
| | | | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | Invesco V.I. Value Opportunities Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | VK-VIVOPP-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary For the year ended December 31, 2020, Series I shares of Invesco V.I. Value Opportunities Fund (the Fund) outperformed the S&P 1500 Value Index, the Fund’s style-specific benchmark. Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 5.45% | |
Series II Shares | | | 5.33 | |
S&P 500 Indexq(Broad Market Index) | | | 18.40 | |
S&P 1500 Value Indexq(Style-Specific Index) | | | 1.60 | |
Lipper VUF Multi-Cap Value Funds Index∎(Peer Group Index) | | | 1.23 | |
|
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Within the S&P 1500 Value Index, sector performance was mixed during the year. Consumer discretionary and consumer staples posted the largest gains, while energy, real estate and financials posted the biggest losses.
During the year, we continued to use our intrinsic value strategy, seeking to create wealth by maintaining a long-term investment horizon and investing in companies selling at a significant discount to our estimate of their
intrinsic value. We believe intrinsic value represents the fair economic worth of a business. Since our application of this strategy is highly disciplined and relatively unique, it is important to understand the benefits and limitations of our process. First, the investment strategy is intended to preserve your capital while growing it at above-market rates over the long term. Second, our investments have little in common with popular stock market indexes and most of our peers. And third, the Fund’s short-term relative performance will naturally be different from stock market indexes and peers since we typically structure the portfolio significantly differently than these benchmarks.
Drivers of Fund performance were mainly stock-specific during the year. However, the Fund’s lack of exposure to real estate helped the Fund’s relative performance versus the S&P 1500 Value Index as the sector underperformed. Select holdings within the information technology (IT) and materials sectors contributed the most to absolute Fund performance, while select holdings in financials and materials were the largest detractors.
IT companies Flex and Oracle were the largest contributors to absolute Fund performance during the year. Flex is a global electronic contract manufacturing firm that provides products for a diverse set of end markets. Shares of the company rose as the new management team continued to deliver on driving quality sales with higher margins and cash flows resulting in improving return on invested capital. Software company Oracle is a leading provider of enterprise resource planning (ERP) software and database technology. Shares of the company appreciated during 2020 as the company showed steady progress in customer adoption of their cloud-based ERP and database products. Materials company Eastman Chemical was also a large contributor to absolute Fund performance during the year. Eastman Chemical is a global specialty materials company that produces a broad range of products found in items people use every day. Following solid share price appreciation, we sold the Fund’s position in the company based on valuation and to fund more attractive opportunities elsewhere.
Mortgage insurance companies MGIC Investment and Radian Group were among the largest detractors from absolute Fund performance during the year. Shares of both companies declined along with other financial stocks exposed to consumer credit in the first half of the year. Materials company Allegheny Technologies was also a large detractor during the year. The company manufactures specialty metal alloys for aerospace, energy, medical and industrial markets. We sold our position in Allegheny Technologies to fund more attractive investment opportunities elsewhere.
Invesco V.I. Value Opportunities Fund
We believe the single most important indicator of how the Fund is positioned for potential future success is not our recent investment results or popular statistical measures, but rather the difference between current market prices and the Fund’s estimated intrinsic value–the aggregate business value of the portfolio based on our estimate of intrinsic value for each individual holding.
At the end of the year, the difference between the market price and the estimated intrinsic value of the Fund was very attractive, according to our estimation. While there is no assurance that market value will ever reflect our estimate of the Fund’s intrinsic value, we believe the gap between price and estimated intrinsic value may provide above-average capital appreciation.
We will continue to work hard to protect and grow the Fund’s estimated intrinsic value. We thank you for your investment in Invesco V.I. Value Opportunities Fund and for sharing our long-term investment perspective.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Jonathan Edwards (Lead)
Jonathan Mueller
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco V.I. Value Opportunities Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (9/10/01) | | | 4.84 | % |
10 Years | | | 8.47 | |
5 Years | | | 9.12 | |
1 Year | | | 5.45 | |
Series II Shares | | | | |
Inception (9/10/01) | | | 4.58 | % |
10 Years | | | 8.20 | |
5 Years | | | 8.85 | |
1 Year | | | 5.33 | |
Performance includes litigation proceeds. Had these proceeds not been received, total returns would have been lower. | |
The performance of the Fund’s Series I and Series II share classes will differ primarily due to different class expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco V.I. Value Opportunities Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds),
is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco V.I. Value Opportunities Fund
Supplemental Information
Invesco V.I. Value Opportunities Fund’s investment objective is long-term growth of capital.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. |
| ∎ | The S&P 1500 Value Index tracks the performance of US large-, mid- and small-cap value stocks. |
| ∎ | The Lipper VUF Multi-Cap Value Funds Index is an unmanaged index considered representative of multicap value variable insurance underlying funds tracked by Lipper. |
| ∎ | 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. |
Invesco V.I. Value Opportunities Fund
Fund Information
| | |
| Portfolio Composition |
| By sector | | % of total net assets |
| |
| Financials | | 24.48% |
|
| Industrials | | 19.85 |
|
| Consumer Discretionary | | 12.71 |
|
| Information Technology | | 8.99 |
|
| Health Care | | 7.92 |
|
| Energy | | 7.89 |
|
| Consumer Staples | | 6.88 |
|
| Materials | | 6.88 |
|
| Communication Services | | 2.64 |
|
| Utilities | | 0.56 |
|
| Money Market Funds Plus Other Assets Less Liabilities | | 1.20 |
|
|
| Top 10 Equity Holdings* |
| % of total net assets |
|
1. Booking Holdings, Inc. | | 4.59% |
|
2. Goldman Sachs Group, Inc. (The) | | 3.95 |
|
3. Spectrum Brands Holdings, Inc. | | 3.67 |
|
4. Oracle Corp. | | 3.51 |
|
5. Citigroup, Inc. | | 3.42 |
|
6. ManpowerGroup, Inc. | | 3.40 |
|
7. Wells Fargo & Co. | | 3.40 |
|
8. AECOM | | 3.25 |
|
9. Athene Holding Ltd., Class A | | 3.24 |
|
10. Univar Solutions, Inc. | | 3.12 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings, if any. Data presented here are as of December 31, 2020. |
Invesco V.I. Value Opportunities Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
Common Stocks & Other Equity Interests–98.80% | |
| | |
Auto Parts & Equipment–2.47% | | | | | | | | |
| | |
Dana, Inc. | | | 109,627 | | | $ | 2,139,919 | |
| | |
Building Products–0.24% | | | | | | | | |
| | |
Builders FirstSource, Inc.(b) | | | 5,100 | | | | 208,131 | |
| | |
Communications Equipment–0.27% | | | | | | | | |
| | |
Ciena Corp.(b) | | | 4,500 | | | | 237,825 | |
| | |
Construction & Engineering–3.25% | | | | | | | | |
| | |
AECOM(b) | | | 56,645 | | | | 2,819,788 | |
| | |
Consumer Finance–0.06% | | | | | | | | |
| | |
SLM Corp. | | | 4,400 | | | | 54,516 | |
| | |
Distributors–2.26% | | | | | | | | |
| | |
LKQ Corp.(b) | | | 55,500 | | | | 1,955,820 | |
| | |
Diversified Banks–6.82% | | | | | | | | |
| | |
Citigroup, Inc. | | | 48,072 | | | | 2,964,119 | |
| | |
Wells Fargo & Co. | | | 97,700 | | | | 2,948,586 | |
| | |
| | | | | | | | 5,912,705 | |
| | |
Diversified Chemicals–2.60% | | | | | | | | |
| | |
Huntsman Corp. | | | 89,600 | | | | 2,252,544 | |
|
Electrical Components & Equipment–2.08% | |
| | |
nVent Electric PLC | | | 77,600 | | | | 1,807,304 | |
|
Electronic Manufacturing Services–3.58% | |
| | |
Flex Ltd.(b) | | | 65,365 | | | | 1,175,263 | |
| | |
Jabil, Inc. | | | 45,442 | | | | 1,932,648 | |
| | |
| | | | | | | | 3,107,911 | |
| | |
Food Distributors–2.45% | | | | | | | | |
| | |
US Foods Holding Corp.(b) | | | 63,700 | | | | 2,121,847 | |
| | |
Health Care Services–2.28% | | | | | | | | |
| | |
Cigna Corp. | | | 9,500 | | | | 1,977,710 | |
| | |
Health Care Technology–1.14% | | | | | | | | |
| | |
Change Healthcare, Inc.(b) | | | 52,900 | | | | 986,585 | |
|
Hotels, Resorts & Cruise Lines–2.89% | |
| | |
Norwegian Cruise Line Holdings Ltd.(b) | | | 5,700 | | | | 144,951 | |
| | |
Wyndham Destinations, Inc. | | | 52,700 | | | | 2,364,122 | |
| | |
| | | | | | | | 2,509,073 | |
| | |
Household Products–4.44% | | | | | | | | |
| | |
Energizer Holdings, Inc. | | | 15,689 | | | | 661,762 | |
| | |
Spectrum Brands Holdings, Inc. | | | 40,309 | | | | 3,183,605 | |
| | |
| | | | | | | | 3,845,367 | |
|
Human Resource & Employment Services–3.40% | |
| | |
ManpowerGroup, Inc. | | | 32,700 | | | | 2,948,886 | |
|
Independent Power Producers & Energy Traders–0.56% | |
| | |
Vistra Corp. | | | 24,500 | | | | 481,670 | |
| | |
Industrial Conglomerates–2.07% | | | | | | | | |
| | |
Carlisle Cos., Inc. | | | 11,500 | | | | 1,796,070 | |
| | | | | | | | |
| | | Shares | | | Value | |
| | |
Industrial Machinery–2.99% | | | | | | | | |
| | |
Crane Co. | | | 27,800 | | | $ | 2,158,948 | |
| | |
Timken Co. (The) | | | 5,600 | | | | 433,216 | |
| | |
| | | | | | | | 2,592,164 | |
|
Interactive Media & Services–2.64% | |
| | |
Baidu, Inc., ADR (China)(b) | | | 10,600 | | | | 2,292,144 | |
|
Internet & Direct Marketing Retail–5.10% | |
| | |
Alibaba Group Holding Ltd., ADR (China)(b) | | | 1,900 | | | | 442,187 | |
| | |
Booking Holdings, Inc.(b) | | | 1,785 | | | | 3,975,677 | |
| | |
| | | | | | | | 4,417,864 | |
|
Investment Banking & Brokerage–3.95% | |
| | |
Goldman Sachs Group, Inc. (The) | | | 13,000 | | | | 3,428,230 | |
|
IT Consulting & Other Services–1.61% | |
| | |
KBR, Inc. | | | 45,200 | | | | 1,398,036 | |
| | |
Life & Health Insurance–3.30% | | | | | | | | |
| | |
Athene Holding Ltd., Class A(b) | | | 65,200 | | | | 2,812,728 | |
| | |
MetLife, Inc. | | | 1,017 | | | | 47,748 | |
| | |
| | | | | | | | 2,860,476 | |
| | |
Managed Health Care–4.50% | | | | | | | | |
| | |
Anthem, Inc. | | | 6,400 | | | | 2,054,976 | |
| | |
Centene Corp.(b) | | | 30,700 | | | | 1,842,921 | |
| | |
| | | | | | | | 3,897,897 | |
|
Oil & Gas Exploration & Production–4.25% | |
| | |
Diamondback Energy, Inc. | | | 44,400 | | | | 2,148,960 | |
| | |
Parsley Energy, Inc., Class A | | | 107,900 | | | | 1,532,180 | |
| | |
| | | | | | | | 3,681,140 | |
|
Oil & Gas Refining & Marketing–3.65% | |
| | |
Marathon Petroleum Corp. | | | 50,100 | | | | 2,072,136 | |
| | |
Phillips 66 | | | 15,600 | | | | 1,091,064 | |
| | |
| | | | | | | | 3,163,200 | |
|
Other Diversified Financial Services–2.61% | |
| | |
Equitable Holdings, Inc. | | | 88,300 | | | | 2,259,597 | |
| | |
Paper Packaging–2.16% | | | | | | | | |
| | |
Sealed Air Corp. | | | 40,800 | | | | 1,868,232 | |
| | |
Regional Banks–4.15% | | | | | | | | |
| | |
TCF Financial Corp. | | | 66,200 | | | | 2,450,724 | |
| | |
Western Alliance Bancorporation | | | 19,100 | | | | 1,145,045 | |
| | |
| | | | | | | | 3,595,769 | |
|
Research & Consulting Services–2.04% | |
| | |
Nielsen Holdings PLC | | | 84,800 | | | | 1,769,776 | |
| | |
Specialty Chemicals–2.12% | | | | | | | | |
| | |
Axalta Coating Systems Ltd.(b) | | | 62,800 | | | | 1,792,940 | |
| | |
Element Solutions, Inc. | | | 2,700 | | | | 47,871 | |
| | |
| | | | | | | | 1,840,811 | |
| | |
Systems Software–3.51% | | | | | | | | |
| | |
Oracle Corp. | | | 47,095 | | | | 3,046,576 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Value Opportunities Fund
| | | | | | | | |
| | | Shares | | | Value | |
Thrifts & Mortgage Finance–3.59% | | | | | | | | |
| | |
MGIC Investment Corp. | | | 163,882 | | | $ | 2,056,719 | |
Radian Group, Inc. | | | 51,998 | | | | 1,052,960 | |
| | | | | | | | 3,109,679 | |
Trading Companies & Distributors–3.77% | |
| | |
AerCap Holdings N.V. (Ireland)(b) | | | 7,500 | | | | 341,850 | |
| | |
Univar Solutions, Inc.(b) | | | 142,400 | | | | 2,707,024 | |
WESCO International, Inc.(b) | | | 2,800 | | | | 219,800 | |
| | | | | | | | 3,268,674 | |
Total Common Stocks & Other Equity Interests
(Cost $68,005,213) | | | | 85,653,936 | |
| | |
Money Market Funds–1.11% | | | | | | | | |
| | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(c)(d) | | | 313,458 | | | | 313,458 | |
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–(continued) | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 291,345 | | | $ | 291,432 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 358,238 | | | | 358,238 | |
Total Money Market Funds
(Cost $962,927) | | | | 963,128 | |
TOTAL INVESTMENTS IN SECURITIES-99.91% (Cost $68,968,140) | | | | 86,617,064 | |
OTHER ASSETS LESS LIABILITIES-0.09% | | | | 82,020 | |
NET ASSETS–100.00% | | | | | | $ | 86,699,084 | |
| ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases
at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 563,912 | | | | $ 7,073,153 | | | | $ (7,323,607 | ) | | | $ - | | | | $ - | | | | $313,458 | | | | $2,810 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 412,357 | | | | 5,111,606 | | | | (5,232,524 | ) | | | 112 | | | | (119 | ) | | | 291,432 | | | | 3,357 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | 644,471 | | | | 8,083,604 | | | | (8,369,837 | ) | | | - | | | | - | | | | 358,238 | | | | 2,970 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | - | | | | 1,356,600 | | | | (1,356,600 | ) | | | - | | | | - | | | | - | | | | 250 | * |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 452,402 | | | | (452,196 | ) | | | - | | | | (206 | ) | | | - | | | | 105 | * |
Total | | | $1,620,740 | | | | $22,077,365 | | | | $(22,734,764 | ) | | | $112 | | | | $(325 | ) | | | $963,128 | | | | $9,49 | 2 |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Value Opportunities Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $68,005,213) | | $ | 85,653,936 | |
Investments in affiliated money market funds, at value
(Cost $962,927) | | | 963,128 | |
Foreign currencies, at value (Cost $3,099) | | | 3,542 | |
Receivable for: | | | | |
Investments sold | | | 566,012 | |
Fund shares sold | | | 1,993 | |
Dividends | | | 16,731 | |
Investment for trustee deferred compensation and retirement plans | | | 121,840 | |
Total assets | | | 87,327,182 | |
| |
Liabilities: | | | | |
| |
Payable for: | | | | |
Fund shares reacquired | | | 346,610 | |
Amount due custodian | | | 62,501 | |
Accrued fees to affiliates | | | 44,879 | |
Accrued other operating expenses | | | 44,572 | |
Trustee deferred compensation and retirement plans | | | 129,536 | |
Total liabilities | | | 628,098 | |
Net assets applicable to shares outstanding | | $ | 86,699,084 | |
| |
Net assets consist of: | | | | |
| |
Shares of beneficial interest | | $ | 72,861,950 | |
Distributable earnings | | | 13,837,134 | |
| |
| | | $ | 86,699,084 | |
| |
Net Assets: | | | | |
| |
Series I | | $ | 64,560,350 | |
Series II | | $ | 22,138,734 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
| |
Series I | | | 11,489,984 | |
Series II | | | 3,946,911 | |
Series I: | | | | |
Net asset value per share | | $ | 5.62 | |
Series II: | | | | |
Net asset value per share | | $ | 5.61 | |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $4,182) | | $ | 1,369,879 | |
Dividends from affiliated money market funds (includes securities lending income of $9,005) | | | 18,142 | |
Total investment income | | | 1,388,021 | |
| |
Expenses: | | | | |
| |
Advisory fees | | | 511,488 | |
Administrative services fees | | | 120,659 | |
Custodian fees | | | 2,689 | |
Distribution fees - Series II | | | 47,562 | |
Transfer agent fees | | | 24,679 | |
Trustees’ and officers’ fees and benefits | | | 20,822 | |
Reports to shareholders | | | 12,198 | |
Professional services fees | | | 31,116 | |
Other | | | 2,543 | |
Total expenses | | | 773,756 | |
Less: Fees waived | | | (2,444 | ) |
Net expenses | | | 771,312 | |
Net investment income | | | 616,709 | |
| |
Realized and unrealized gain (loss) from: | | | | |
| |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (3,878,819 | ) |
Affiliated investment securities | | | (325 | ) |
Foreign currencies | | | 246 | |
| | | | (3,878,898 | ) |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 7,391,104 | |
Affiliated investment securities | | | 112 | |
Foreign currencies | | | 1,467 | |
| | | | 7,392,683 | |
Net realized and unrealized gain | | | 3,513,785 | |
Net increase in net assets resulting from operations | | $ | 4,130,494 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Value Opportunities Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
Operations: | | | | | | | | |
| | |
Net investment income | | $ | 616,709 | | | $ | 233,340 | |
Net realized gain (loss) | | | (3,878,898 | ) | | | 4,534,845 | |
Change in net unrealized appreciation | | | 7,392,683 | | | | 18,922,226 | |
Net increase in net assets resulting from operations | | | 4,130,494 | | | | 23,690,411 | |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
| | |
Series I | | | (2,681,516 | ) | | | (13,915,883 | ) |
Series II | | | (875,536 | ) | | | (4,877,021 | ) |
Total distributions from distributable earnings | | | (3,557,052 | ) | | | (18,792,904 | ) |
| | |
Share transactions–net: | | | | | | | | |
| | |
Series I | | | (3,516,962 | ) | | | 4,066,968 | |
Series II | | | (1,711,474 | ) | | | 1,082,646 | |
Net increase (decrease) in net assets resulting from share transactions | | | (5,228,436 | ) | | | 5,149,614 | |
Net increase (decrease) in net assets | | | (4,654,994 | ) | | | 10,047,121 | |
| | |
Net assets: | | | | | | | | |
| | |
Beginning of year | | | 91,354,078 | | | | 81,306,957 | |
End of year | | $ | 86,699,084 | | | $ | 91,354,078 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Value Opportunities Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset value, beginning of period | | Net investment income (loss)(a) | | Net gains (losses) on securities (both realized and unrealized) | | Total from investment operations | | Dividends from net investment income | | Distributions from net realized gains | | Total distributions | | Net asset value, end of period | | Total return (b) | | Net assets, end of period (000’s omitted) | | Ratio of expenses to average net assets with fee
waivers and/or expenses absorbed | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | Ratio of net investment income (loss) to average net assets | | Portfolio turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 5.60 | | | | $ | 0.04 | | | | $ | 0.22 | | | | $ | 0.26 | | | | $ | (0.02 | ) | | | $ | (0.22 | ) | | | $ | (0.24 | ) | | | $ | 5.62 | | | | | 5.45 | % | | | $ | 64,560 | | | | | 0.99 | %(d) | | | | 0.99 | %(d) | | | | 0.90 | %(d) | | | | 67 | % |
Year ended 12/31/19 | | | | 5.50 | | | | | 0.02 | | | | | 1.51 | (e) | | | | 1.53 | | | | | (0.02 | ) | | | | (1.41 | ) | | | | (1.43 | ) | | | | 5.60 | | | | | 30.61 | (e) | | | | 67,691 | | | | | 0.97 | | | | | 0.97 | | | | | 0.32 | | | | | 34 | |
Year ended 12/31/18 | | | | 7.58 | | | | | 0.01 | | | | | (1.30 | ) | | | | (1.29 | ) | | | | (0.02 | ) | | | | (0.77 | ) | | | | (0.79 | ) | | | | 5.50 | | | | | (19.18 | ) | | | | 59,998 | | | | | 1.01 | | | | | 1.01 | | | | | 0.22 | | | | | 45 | |
Year ended 12/31/17 | | | | 6.48 | | | | | 0.02 | | | | | 1.11 | (f) | | | | 1.13 | | | | | (0.03 | ) | | | | - | | | | | (0.03 | ) | | | | 7.58 | | | | | 17.44 | (f) | | | | 87,232 | | | | | 0.98 | | | | | 0.98 | | | | | 0.30 | | | | | 28 | |
Year ended 12/31/16 | | | | 7.82 | | | | | 0.03 | | | | | 1.10 | | | | | 1.13 | | | | | (0.03 | ) | | | | (2.44 | ) | | | | (2.47 | ) | | | | 6.48 | | | | | 18.34 | | | | | 85,722 | | | | | 1.01 | | | | | 1.02 | | | | | 0.43 | | | | | 36 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 5.58 | | | | | 0.03 | | | | | 0.22 | | | | | 0.25 | | | | | (0.00 | ) | | | | (0.22 | ) | | | | (0.22 | ) | | | | 5.61 | | | | | 5.33 | | | | | 22,139 | | | | | 1.24 | (d) | | | | 1.24 | (d) | | | | 0.65 | (d) | | | | 67 | |
Year ended 12/31/19 | | | | 5.49 | | | | | 0.00 | | | | | 1.50 | (e) | | | | 1.50 | | | | | - | | | | | (1.41 | ) | | | | (1.41 | ) | | | | 5.58 | | | | | 30.12 | (e) | | | | 23,663 | | | | | 1.22 | | | | | 1.22 | | | | | 0.07 | | | | | 34 | |
Year ended 12/31/18 | | | | 7.56 | | | | | (0.00 | ) | | | | (1.30 | ) | | | | (1.30 | ) | | | | - | | | | | (0.77 | ) | | | | (0.77 | ) | | | | 5.49 | | | | | (19.35 | ) | | | | 21,309 | | | | | 1.26 | | | | | 1.26 | | | | | (0.03 | ) | | | | 45 | |
Year ended 12/31/17 | | | | 6.45 | | | | | 0.00 | | | | | 1.11 | (f) | | | | 1.11 | | | | | 0.00 | | | | | - | | | | | 0.00 | | | | | 7.56 | | | | | 17.23 | (f) | | | | 35,328 | | | | | 1.23 | | | | | 1.23 | | | | | 0.05 | | | | | 28 | |
Year ended 12/31/16 | | | | 7.79 | | | | | 0.01 | | | | | 1.10 | | | | | 1.11 | | | | | (0.01 | ) | | | | (2.44 | ) | | | | (2.45 | ) | | | | 6.45 | | | | | 17.92 | | | | | 54,438 | | | | | 1.26 | | | | | 1.27 | | | | | 0.18 | | | | | 36 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $54,570 and $19,025 for Series I and Series II shares, respectively. |
| (e) | Includes litigation proceeds received during the period. Had these litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share would have been $1.44 and $1.43 for Series I and Series II shares, respectively. Total returns would have been lower. |
| (f) | Includes litigation proceeds received during the period. Had these litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share would have been $1.09 and $1.09 for Series I and Series II shares, respectively. Total returns would have been lower. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Value Opportunities Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco V.I. Value Opportunities Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements.Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco V.I. Value Opportunities Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| J. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| K. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
Invesco V.I. Value Opportunities Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
First $ 250 million | | | 0.695 | % |
Next $250 million | | | 0.670 | % |
Next $500 million | | | 0.645 | % |
Next $1.5 billion | | | 0.620 | % |
Next $2.5 billion | | | 0.595 | % |
Next $2.5 billion | | | 0.570 | % |
Next $2.5 billion | | | 0.545 | % |
Over $10 billion | | | 0.520 | % |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.695%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $2,444.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $10,334 for accounting and fund administrative services and was reimbursed $110,325 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $1,118 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1– Prices are determined using quoted prices in an active market for identical assets.
Invesco V.I. Value Opportunities Fund
| | |
Level 2 – | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 – | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 1,182,372 | | | $ | 2,447,612 | |
| |
Long-term capital gain | | | 2,374,680 | | | | 16,345,292 | |
| |
Total distributions | | $ | 3,557,052 | | | $ | 18,792,904 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 600,358 | |
| |
Net unrealized appreciation - investments | | | 17,238,263 | |
| |
Net unrealized appreciation - foreign currencies | | | 1,605 | |
| |
Temporary book/tax differences | | | (89,217 | ) |
| |
Capital loss carryforward | | | (3,913,875 | ) |
| |
Shares of beneficial interest | | | 72,861,950 | |
| |
Total net assets | | $ | 86,699,084 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
Capital Loss Carryforward*
| | | | | | |
|
| Expiration | | Short-Term | | Long-Term | | Total |
|
Not subject to expiration | | $- | | $3,913,875 | | $3,913,875 |
|
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
Invesco V.I. Value Opportunities Fund
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $48,581,381 and $55,777,415, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 19,022,128 | |
| |
Aggregate unrealized (depreciation) of investments | | | (1,783,865 | ) |
| |
Net unrealized appreciation of investments | | $ | 17,238,263 | |
| |
Cost of investments for tax purposes is $69,378,801.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of fair fund adjustments and foreign currency transactions, on December 31, 2020, undistributed net investment income was decreased by $2,787 and undistributed net realized gain (loss) was increased by $2,787. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | 794,326 | | | $ | 3,215,357 | | | | 585,705 | | | $ | 3,555,762 | |
| |
Series II | | | 396,937 | | | | 1,547,212 | | | | 183,035 | | | | 1,127,174 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | 577,913 | | | | 2,681,516 | | | | 2,766,577 | | | | 13,915,883 | |
| |
Series II | | | 189,101 | | | | 875,536 | | | | 971,518 | | | | 4,877,021 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | (1,977,810 | ) | | | (9,413,835 | ) | | | (2,173,905 | ) | | | (13,404,677 | ) |
| |
Series II | | | (876,914 | ) | | | (4,134,222 | ) | | | (801,319 | ) | | | (4,921,549 | ) |
| |
Net increase (decrease) in share activity | | | (896,447 | ) | | $ | (5,228,436 | ) | | | 1,531,611 | | | $ | 5,149,614 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 70% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 11–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco V.I. American Value Fund (the “Acquiring Fund”).
The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2021. The reorganization is expected to be consummated shortly thereafter. Upon closing of the reorganization, shareholders of the Fund will receive shares of the Acquiring Fund in exchange for their shares of the Fund, and the Fund will liquidate and cease operations.
Invesco V.I. Value Opportunities Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco V.I. Value Opportunities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. Value Opportunities Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the five years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco V.I. Value Opportunities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| | Beginning Account Value (07/01/20) | | Ending Account Value (12/31/20)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/20) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | | $ | 1,000.00 | | | | $ | 1,363.90 | | | | $ | 5.94 | | | | $ | 1,020.11 | | | | $ | 5.08 | | | | | 1.00 | % |
Series II | | | | 1,000.00 | | | | | 1,363.70 | | | | | 7.37 | | | | | 1,018.90 | | | | | 6.29 | | | | | 1.24 | |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco V.I. Value Opportunities Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 2,374,680 | | | |
Corporate Dividends Received Deduction* | | | 91.90 | % | | |
Qualified Dividend Income* | | | 94.03 | % | | |
U.S. Treasury Obligations* | | | 0.00 | % | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco V.I. Value Opportunities Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
| Christopher L. Wilson -1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown -1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis - 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort -1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn - 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. | | N/A | | N/A |
| | | | | |
| | | | | 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.; and 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 | | | | |
Russell C. Burk - 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation | | N/A | | N/A |
| | | | | |
| | | | | Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | | | |
| Andrew R. Schlossberg - 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. | | N/A | | N/A |
| | | | | |
| | | | | Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | | | |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey -1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Value Opportunities Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster - 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President - Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco V.I. Value Opportunities Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Capital Appreciation Fund |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | O-VICAPA-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Capital Appreciation Fund (the Fund) underperformed the Russell 1000 Growth Index. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 36.59 | % |
Series II Shares | | | 36.24 | |
S&P 500 Indexq | | | 18.40 | |
Russell 1000 Growth Indexq | | | 38.49 | |
Source(s): qRIMES Technologies Corp. | | | | |
| | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were
also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
Given this landscape, the Fund produced a strong, double digit return but underperformed the Russell 1000 Growth Index during the year. Stock selection in consumer discretionary, information technology (IT) and energy were key relative detractors from Fund performance. Additionally, an overweight in consumer discretionary and energy, and an underweight in IT, relative to the Russell 1000 Growth Index also detracted from returns. Conversely, stock selection in the health care, communication services, materials and industrials sectors were relative contributors to Fund performance. An underweight
in health care and a lack of real estate exposure was also beneficial to relative returns.
Top individual contributors to the Fund’s absolute performance during the year included Amazon.com, PayPal and Moderna.
The COVID-19 event has accelerated some of the long-term shifts driven by technological changes and increased connectivity that we seek to capture in the Fund’s investments. eCommerce platforms have seen substantial growth in demand from new users, as well as for the previously underpenetrated categories of food and consumables. An overweight allocation in Amazon was beneficial as the eCommerce giant experienced a surge in demand for food, consumables and office supplies as users worked, schooled and shopped from home in 2020.
Pandemic-related movement restrictions grew the rate of new customers as PayPal’s digital payments platform benefited from the shift to eCommerce. Even when COVID-19 restrictions lifted, PayPal’s growth had not significantly slowed from elevated levels. We believe the market is also starting to discount new product releases that should expand Pay-Pal’s total addressable market and support high growth.
We originally purchased Moderna in the summer of 2019 given its promising new messenger-RNA platform which uses genetic material to produce vaccines to provoke an immune response. Its speed of delivery and portability was an important part of our original investment thesis. Having the position and access to the company’s reports to shareholders also gave us confidence around a vaccination timeline at the height of uncertainty in March and April. Moderna made a COVID-19 prototype at an all-time record pace of just 42 days. Also, it is anticipated that it can pivot quickly to handle virus mutations. Moderna contributed to both absolute and relative performance during the year. Following material gains, the shares were sold given their rich valuation.
Top individual absolute detractors from Fund performance included Norwegian Cruise Line Holdings, Tyson Foods and Airbus.
Cruise line stocks like Norwegian Cruise Line Holdings sold off deeply in the first quarter. Early in the year, we had kept exposure thinking COVID-19 might be contained within Asia, which is not yet a major cruising market. Once the virus appeared in Europe, the largest cruise destination market, we reduced exposure significantly and eventually phased out exposure completely as their path to growth would be slow and uncertain.
Tyson Foods suffered during the year as almost one-third of its business supplies food to restaurants, which were forced to close in lockdowns and operate at reduced capacity once allowed to open back up. COVID-19 infections also caused major disruptions to Tyson Food’s meat processing plants, forcing
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
closures and causing protein shortages. We significantly reduced our exposure throughout the year.
Going into the COVID-19 crisis, Airbus held an unparalleled position in aerospace with an order backlog, a competitor whose main product was deficient and grounded, as well as a strong balance sheet with plenty of liquidity. Global air travel was grounded to a halt this year and has yet to recover fully. We sold Airbus as it seems unlikely that the struggling airlines will be able to purchase new aircrafts anytime soon.
Our fundamental bottom-up research led us to overweight exposures in communication services, consumer discretionary and financials at year end, relative to the Russell 1000 Growth Index. Within consumer discretionary, we were focused on technology-driven share shift, demographics and changing behaviors. Despite being a small position overall, the Fund was overweight in financials given the potential to benefit from economic recovery supported by vaccine rollout. Underweight exposures included IT, health care, real estate and consumer staples. Within IT, semiconductors were the only overweight industry, given a preference for technology-driven companies within the communication services and consumer discretionary sectors. Within health care, we have a preference for life sciences & tools, the “arms dealers” into the biopharma complex, and health care equipment & supplies, with a focus on secular trends such as robotics and disruptive innovators.
At the close of the year, we continued to expect volatility as the global economy ebbs and flows between high COVID-19 infection rates with lockdowns and vaccinations supporting reopening’s with a return to normalcy. Interest rates are likely to remain low by historic standards and economic growth is likely to remain muted on a full year basis, although some quarters will benefit from easy comparisons versus the lockdowns of 2020. We believe this is a ripe environment for equities in general as pent up demand further propels the cyclical recovery. However, value industries lack pricing power in the face of globalization, overcapacity and increased efficiencies mostly due to technological changes. Therefore, we believe growth will continue to outperform. As ever, we believe change is the fuel for growth and our positioning will be active within the unfolding vaccine-related opportunities to go back outside yet balanced with secular growers. We continue to seek to identify “share-takers,” companies that can gain market share through technology-enabled advantages in their business models and from disruptive shifts in enterprise and consumer behavior.
Thank you for your commitment to the Invesco Oppenheimer V.I. Capital Appreciation Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Ash Shah
Ronald Zibelli, Jr. (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (4/3/85) | | | 10.98 | % |
10 Years | | | 14.30 | |
5 Years | | | 16.82 | |
1 Year | | | 36.59 | |
| |
Series II Shares | | | | |
Inception (9/18/01) | | | 8.46 | % |
10 Years | | | 14.01 | |
5 Years | | | 16.52 | |
1 Year | | | 36.24 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Capital Appreciation Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Capital Appreciation Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Capital Appreciation Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Supplemental Information
Invesco Oppenheimer V.I. Capital Appreciation Fund’s investment objective is to seek capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
| | |
About indexes used in this report | | |
∎ The Russell 1000® Growth Index is an unmanaged index considered representative of large-cap growth stocks. The Russell 1000 Growth Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. ∎ The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. ∎ 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. | | |
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 35.56 | % |
Communication Services | | | | 19.87 | |
Consumer Discretionary | | | | 19.73 | |
Health Care | | | | 9.65 | |
Industrials | | | | 5.05 | |
Financials | | | | 4.40 | |
Consumer Staples | | | | 2.73 | |
Other Sectors, Each Less than 2% of Net Assets | | | | 1.76 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.25 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Amazon.com, Inc. | | | | 10.48 | % |
2. Facebook, Inc., Class A | | | | 5.10 | |
3. Alphabet, Inc., Class C | | | | 5.04 | |
4. Microsoft Corp. | | | | 5.00 | |
5. Apple, Inc. | | | | 3.92 | |
6. Mastercard, Inc., Class A | | | | 3.20 | |
7. Lowe’s Cos., Inc. | | | | 2.96 | |
8. PayPal Holdings, Inc. | | | | 2.71 | |
9. Activision Blizzard, Inc. | | | | 2.56 | |
10. Nintendo Co. Ltd. | | | | 2.25 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.74% | |
| | |
Application Software–8.41% | | | | | | | | |
Adobe, Inc.(b) | | | 12,105 | | | $ | 6,053,953 | |
|
| |
Paylocity Holding Corp.(b) | | | 15,331 | | | | 3,156,806 | |
|
| |
RealPage, Inc.(b) | | | 72,502 | | | | 6,325,074 | |
|
| |
RingCentral, Inc., Class A(b) | | | 37,847 | | | | 14,342,878 | |
|
| |
salesforce.com, inc.(b) | | | 67,198 | | | | 14,953,571 | |
|
| |
Splunk, Inc.(b) | | | 36,077 | | | | 6,129,122 | |
|
| |
Trade Desk, Inc. (The), Class A(b) | | | 20,692 | | | | 16,574,292 | |
|
| |
Unity Software, Inc.(b) | | | 21,509 | | | | 3,300,986 | |
|
| |
| | | | | | | 70,836,682 | |
|
| |
| |
Asset Management & Custody Banks–3.25% | | | | | |
Apollo Global Management, Inc. | | | 169,890 | | | | 8,321,212 | |
|
| |
Ares Management Corp., Class A | | | 144,275 | | | | 6,788,139 | |
|
| |
KKR & Co., Inc., Class A | | | 302,500 | | | | 12,248,225 | |
|
| |
| | | | | | | 27,357,576 | |
|
| |
| | |
Automotive Retail–0.37% | | | | | | | | |
CarMax, Inc.(b) | | | 32,775 | | | | 3,095,926 | |
|
| |
| | |
Biotechnology–1.04% | | | | | | | | |
Alnylam Pharmaceuticals, Inc.(b) | | | 28,011 | | | | 3,640,590 | |
|
| |
BeiGene Ltd., ADR (China)(b) | | | 18,338 | | | | 4,738,356 | |
|
| |
BioNTech SE, ADR (Germany)(b) | | | 2,176 | | | | 177,387 | |
|
| |
Moderna, Inc.(b) | | | 1,759 | | | | 183,763 | |
|
| |
| | | | | | | 8,740,096 | |
|
| |
| | |
Cable & Satellite–0.82% | | | | | | | | |
Altice USA, Inc., Class A(b) | | | 182,895 | | | | 6,926,234 | |
|
| |
| | |
Consumer Electronics–1.50% | | | | | | | | |
Sony Corp. (Japan) | | | 125,300 | | | | 12,598,123 | |
|
| |
| | |
Copper–0.96% | | | | | | | | |
Freeport-McMoRan, Inc. | | | 310,927 | | | | 8,090,295 | |
|
| |
|
Data Processing & Outsourced Services–8.11% | |
Fidelity National Information Services, Inc. | | | 8,399 | | | | 1,188,123 | |
|
| |
Mastercard, Inc., Class A | | | 75,491 | | | | 26,945,757 | |
|
| |
PayPal Holdings, Inc.(b) | | | 97,579 | | | | 22,853,002 | |
|
| |
Visa, Inc., Class A | | | 49,719 | | | | 10,875,037 | |
|
| |
WEX, Inc.(b) | | | 31,704 | | | | 6,452,715 | |
|
| |
| | | | | | | 68,314,634 | |
|
| |
| | |
Diversified Support Services–0.46% | | | | | | | | |
Cintas Corp. | | | 11,072 | | | | 3,913,509 | |
|
| |
| |
Environmental & Facilities Services–0.46% | | | | | |
GFL Environmental, Inc. (Canada) | | | 132,327 | | | | 3,861,302 | |
|
| |
| | |
Food Distributors–1.08% | | | | | | | | |
Sysco Corp. | | | 123,010 | | | | 9,134,723 | |
|
| |
| | |
Health Care Distributors–0.17% | | | | | | | | |
Henry Schein, Inc.(b) | | | 21,532 | | | | 1,439,630 | |
|
| |
| | |
Health Care Equipment–3.90% | | | | | | | | |
Danaher Corp. | | | 32,086 | | | | 7,127,584 | |
|
| |
DexCom, Inc.(b) | | | 10,730 | | | | 3,967,096 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Equipment–(continued) | | | | | | | | |
Intuitive Surgical, Inc.(b) | | | 10,384 | | | $ | 8,495,150 | |
|
| |
Teleflex, Inc. | | | 14,219 | | | | 5,852,114 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 47,862 | | | | 7,375,055 | |
|
| |
| | | | | | | 32,816,999 | |
|
| |
| | |
Health Care Services–0.61% | | | | | | | | |
LHC Group, Inc.(b) | | | 23,943 | | | | 5,107,521 | |
|
| |
| | |
Health Care Supplies–0.28% | | | | | | | | |
West Pharmaceutical Services, Inc. | | | 8,330 | | | | 2,359,972 | |
|
| |
| | |
Health Care Technology–0.37% | | | | | | | | |
GoodRx Holdings, Inc., Class A(b) | | | 76,456 | | | | 3,084,235 | |
|
| |
| | |
Home Improvement Retail–2.96% | | | | | | | | |
Lowe’s Cos., Inc. | | | 155,031 | | | | 24,884,026 | |
|
| |
| | |
Hotels, Resorts & Cruise Lines–0.84% | | | | | | | | |
Wyndham Destinations, Inc. | | | 157,556 | | | | 7,067,962 | |
|
| |
| | |
Industrial Conglomerates–0.39% | | | | | | | | |
Roper Technologies, Inc. | | | 7,677 | | | | 3,309,478 | |
|
| |
| | |
Industrial Gases–0.16% | | | | | | | | |
Linde PLC (United Kingdom) | | | 4,990 | | | | 1,314,915 | |
|
| |
| | |
Industrial Machinery–0.23% | | | | | | | | |
Chart Industries, Inc.(b) | | | 16,163 | | | | 1,903,840 | |
|
| |
| |
Interactive Home Entertainment–7.54% | | | | | |
Activision Blizzard, Inc. | | | 231,711 | | | | 21,514,366 | |
|
| |
Electronic Arts, Inc. | | | 78,674 | | | | 11,297,586 | |
|
| |
Nintendo Co. Ltd. (Japan) | | | 29,700 | | | | 18,954,219 | |
|
| |
Take-Two Interactive Software, Inc.(b) | | | 56,292 | | | | 11,696,915 | |
|
| |
| | | | | | | 63,463,086 | |
|
| |
| |
Interactive Media & Services–10.55% | | | | | |
Alphabet, Inc., Class C(b) | | | 24,248 | | | | 42,479,586 | |
|
| |
Facebook, Inc., Class A(b) | | | 157,105 | | | | 42,914,802 | |
|
| |
ZoomInfo Technologies, Inc., Class A(b) | | | 71,179 | | | | 3,432,963 | |
|
| |
| | | | | | | 88,827,351 | |
|
| |
| |
Internet & Direct Marketing Retail–13.56% | | | | | |
Alibaba Group Holding Ltd., ADR (China)(b) | | | 75,571 | | | | 17,587,639 | |
|
| |
Amazon.com, Inc.(b) | | | 27,095 | | | | 88,246,518 | |
|
| |
Booking Holdings, Inc.(b) | | | 3,736 | | | | 8,321,081 | |
|
| |
| | | | | | | 114,155,238 | |
|
| |
| | |
Leisure Facilities–0.21% | | | | | | | | |
Cedar Fair L.P. | | | 44,260 | | | | 1,741,188 | |
|
| |
| | |
Life & Health Insurance–0.88% | | | | | | | | |
Athene Holding Ltd., Class A(b) | | | 171,673 | | | | 7,405,973 | |
|
| |
| |
Life Sciences Tools & Services–1.69% | | | | | |
10X Genomics, Inc., Class A(b) | | | 20,777 | | | | 2,942,023 | |
|
| |
Avantor, Inc.(b) | | | 402,192 | | | | 11,321,705 | |
|
| |
| | | | | | | 14,263,728 | |
|
| |
| | |
Managed Health Care–1.59% | | | | | | | | |
Humana, Inc. | | | 16,839 | | | | 6,908,536 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Managed Health Care–(continued) | | | | | | | | |
UnitedHealth Group, Inc. | | | 18,513 | | | $ | 6,492,139 | |
|
| |
| | | | | | | 13,400,675 | |
|
| |
| | |
Movies & Entertainment–0.96% | | | | | | | | |
IMAX Corp.(b) | | | 109,268 | | | | 1,969,010 | |
|
| |
Netflix, Inc.(b) | | | 11,358 | | | | 6,141,611 | |
|
| |
| | | | | | | 8,110,621 | |
|
| |
| |
Oil & Gas Exploration & Production–0.51% | | | | | |
Apache Corp. | | | 300,082 | | | | 4,258,164 | |
|
| |
| | |
Packaged Foods & Meats–1.64% | | | | | | | | |
Conagra Brands, Inc. | | | 77,987 | | | | 2,827,809 | |
|
| |
Nomad Foods Ltd. (United Kingdom)(b) | | | 98,558 | | | | 2,505,344 | |
|
| |
Tyson Foods, Inc., Class A | | | 132,030 | | | | 8,508,013 | |
|
| |
| | | | | | | 13,841,166 | |
|
| |
| | |
Railroads–0.89% | | | | | | | | |
Kansas City Southern | | | 25,728 | | | | 5,251,857 | |
|
| |
Union Pacific Corp. | | | 10,621 | | | | 2,211,504 | |
|
| |
| | | | | | | 7,463,361 | |
|
| |
| | |
Regional Banks–0.27% | | | | | | | | |
SVB Financial Group(b) | | | 5,825 | | | | 2,259,110 | |
|
| |
| |
Research & Consulting Services–0.52% | | | | | |
CoStar Group, Inc.(b) | | | 4,762 | | | | 4,401,421 | |
|
| |
| | |
Restaurants–0.30% | | | | | | | | |
Restaurant Brands International, Inc. (Canada) | | | 42,058 | | | | 2,570,164 | |
|
| |
| | |
Semiconductor Equipment–2.36% | | | | | | | | |
Applied Materials, Inc. | | | 171,999 | | | | 14,843,513 | |
|
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 10,283 | | | | 5,015,225 | |
|
| |
| | | | | | | 19,858,738 | |
|
| |
| | |
Semiconductors–4.75% | | | | | | | | |
NVIDIA Corp. | | | 20,697 | | | | 10,807,973 | |
|
| |
QUALCOMM, Inc. | | | 121,611 | | | | 18,526,220 | |
|
| |
Semtech Corp.(b) | | | 147,480 | | | | 10,631,833 | |
|
| |
| | | | | | | 39,966,026 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Specialty Chemicals–0.13% | | | | | | | | |
Sherwin-Williams Co. (The) | | | 1,523 | | | $ | 1,119,268 | |
|
| |
| | |
Systems Software–8.01% | | | | | | | | |
Microsoft Corp. | | | 189,085 | | | | 42,056,286 | |
|
| |
Palo Alto Networks, Inc.(b) | | | 40,103 | | | | 14,252,205 | |
|
| |
ServiceNow, Inc.(b) | | | 20,233 | | | | 11,136,850 | |
|
| |
| | | | | | | 67,445,341 | |
|
| |
|
Technology Hardware, Storage & Peripherals–3.92% | |
Apple, Inc. | | | 248,617 | | | | 32,988,990 | |
|
| |
| |
Trading Companies & Distributors–1.04% | | | | | |
Fastenal Co. | | | 69,365 | | | | 3,387,093 | |
|
| |
United Rentals, Inc.(b) | | | 23,177 | | | | 5,374,978 | |
|
| |
| | | | | | | 8,762,071 | |
|
| |
| | |
Trucking–1.05% | | | | | | | | |
Knight-Swift Transportation Holdings, Inc. | | | 37,170 | | | | 1,554,450 | |
|
| |
Lyft, Inc., Class A(b) | | | 105,501 | | | | 5,183,264 | |
|
| |
Uber Technologies, Inc.(b) | | | 41,559 | | | | 2,119,509 | |
|
| |
| | | | | | | 8,857,223 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $418,014,016) | | | | 831,316,581 | |
|
| |
| | |
Money Market Funds–1.00% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional
Class, 0.03%(c)(d) | | | 2,929,702 | | | | 2,929,702 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 2,091,768 | | | | 2,092,396 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 3,348,230 | | | | 3,348,230 | |
|
| |
Total Money Market Funds
(Cost $8,370,494) | | | | 8,370,328 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–99.74%
(Cost $426,384,510) | | | | | | | 839,686,909 | |
|
| |
OTHER ASSETS LESS LIABILITIES–0.26% | | | | 2,227,170 | |
|
| |
NET ASSETS–100.00% | | | | | | $ | 841,914,079 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | - | | | | $ | 44,120,538 | | | | $ | (41,190,836 | ) | | | $ | - | | | | $ | - | | | | $ | 2,929,702 | | | | $ | 1,833 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 5,253,956 | | | | | (3,161,312 | ) | | | | (166 | ) | | | | (82 | ) | | | | 2,092,396 | | | | | 88 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 8,406,329 | | | | | (5,058,099 | ) | | | | - | | | | | - | | | | | 3,348,230 | | | | | 20 | |
| | | | | | | |
Total | | | $ | - | | | | $ | 57,780,823 | | | | $ | (49,410,247 | ) | | | $ | (166 | ) | | | $ | (82 | ) | | | $ | 8,370,328 | | | | $ | 1,941 | |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $418,014,016) | | $ | 831,316,581 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $8,370,494) | | | 8,370,328 | |
|
| |
Cash | | | 1,505,232 | |
|
| |
Foreign currencies, at value (Cost $174) | | | 175 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 1,397,204 | |
|
| |
Dividends | | | 351,846 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 123,810 | |
|
| |
Total assets | | | 843,065,176 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 479,877 | |
|
| |
Accrued fees to affiliates | | | 387,372 | |
|
| |
Accrued other operating expenses | | | 160,037 | |
|
| |
Trustee deferred compensation and retirement plans | | | 123,811 | |
|
| |
Total liabilities | | | 1,151,097 | |
|
| |
Net assets applicable to shares outstanding | | $ | 841,914,079 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 389,236,307 | |
|
| |
Distributable earnings | | | 452,677,772 | |
|
| |
| | $ | 841,914,079 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 626,303,582 | |
|
| |
Series II | | $ | 215,610,497 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,903,873 | |
|
| |
Series II | | | 3,140,962 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 70.34 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 68.64 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $117,777) | | $ | 5,042,128 | |
|
| |
Dividends from affiliated money market funds | | | 1,941 | |
|
| |
Total investment income | | | 5,044,069 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 5,135,174 | |
|
| |
Administrative services fees | | | 1,180,137 | |
|
| |
Custodian fees | | | 3,755 | |
|
| |
Distribution fees - Series II | | | 472,733 | |
|
| |
Transfer agent fees | | | 39,446 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 25,800 | |
|
| |
Reports to shareholders | | | 67,615 | |
|
| |
Professional services fees | | | 46,399 | |
|
| |
Other | | | 16,126 | |
|
| |
Total expenses | | | 6,987,185 | |
|
| |
Less: Fees waived | | | (598,281 | ) |
|
| |
Net expenses | | | 6,388,904 | |
|
| |
Net investment income (loss) | | | (1,344,835 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 44,096,343 | |
|
| |
Affiliated investment securities | | | (82 | ) |
|
| |
Foreign currencies | | | 5,111 | |
|
| |
Forward foreign currency contracts | | | (3,325 | ) |
|
| |
| | | 44,098,047 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 187,485,006 | |
|
| |
Affiliated investment securities | | | (166 | ) |
|
| |
Foreign currencies | | | 24,045 | |
|
| |
| | | 187,508,885 | |
|
| |
Net realized and unrealized gain | | | 231,606,932 | |
|
| |
Net increase in net assets resulting from operations | | $ | 230,262,097 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (1,344,835 | ) | | $ | 234,983 | |
|
| |
Net realized gain | | | 44,098,047 | | | | 107,254,371 | |
|
| |
Change in net unrealized appreciation | | | 187,508,885 | | | | 103,531,279 | |
|
| |
Net increase in net assets resulting from operations | | | 230,262,097 | | | | 211,020,633 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (81,814,036 | ) | | | (49,378,533 | ) |
|
| |
Series II | | | (28,225,418 | ) | | | (18,651,335 | ) |
|
| |
Total distributions from distributable earnings | | | (110,039,454 | ) | | | (68,029,868 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (6,360,539 | ) | | | (29,869,839 | ) |
|
| |
Series II | | | (10,935,911 | ) | | | 23,369,205 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (17,296,450 | ) | | | (6,500,634 | ) |
|
| |
Net increase in net assets | | | 102,926,193 | | | | 136,490,131 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 738,987,886 | | | | 602,497,755 | |
|
| |
End of year | | $ | 841,914,079 | | | $ | 738,987,886 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net
investment
income (loss)(a) | | | Net gains
(losses)
on��securities
(both
realized and
unrealized) | | | Total from
investment
operations | | | Dividends
from net
investment
income | | | Distributions
from net
realized
gains | | | Total
distributions | | | Net asset value, end
of period | | | Total
return (b) | | | Net assets,
end of period
(000’s omitted) | | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed(c) | | | Ratio of net
investment
income (loss) to average
net assets | | | Portfolio
turnover (d) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $59.77 | | | | $(0.08 | ) | | | $21.00 | | | | $20.92 | | | | $ – | | | | $(10.35 | ) | | | $(10.35 | ) | | | $70.34 | | | | 36.59 | % | | | $626,304 | | | | 0.80 | %(e) | | | 0.88 | %(e) | | | (0.12 | )%(e) | | | 37 | % |
Year ended 12/31/19 | | | 48.50 | | | | 0.06 | | | | 16.80 | | | | 16.86 | | | | (0.04 | ) | | | (5.55 | ) | | | (5.59 | ) | | | 59.77 | | | | 36.20 | | | | 538,247 | | | | 0.80 | | | | 0.88 | | | | 0.10 | | | | 73 | |
Year ended 12/31/18 | | | 55.70 | | | | 0.09 | | | | (2.71 | ) | | | (2.62 | ) | | | (0.19 | ) | | | (4.39 | ) | | | (4.58 | ) | | | 48.50 | | | | (5.73 | ) | | | 460,708 | | | | 0.80 | | | | 0.85 | | | | 0.16 | | | | 27 | |
Year ended 12/31/17 | | | 48.36 | | | | 0.15 | | | | 12.33 | | | | 12.48 | | | | (0.13 | ) | | | (5.01 | ) | | | (5.14 | ) | | | 55.70 | | | | 26.83 | | | | 556,227 | | | | 0.80 | | | | 0.82 | | | | 0.29 | | | | 26 | |
Year ended 12/31/16 | | | 55.49 | | | | 0.12 | | | | (1.57 | ) | | | (1.45 | ) | | | (0.22 | ) | | | (5.46 | ) | | | (5.68 | ) | | | 48.36 | | | | (2.20 | ) | | | 501,756 | | | | 0.80 | | | | 0.83 | | | | 0.25 | | | | 114 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 58.67 | | | | (0.23 | ) | | | 20.55 | | | | 20.32 | | | | – | | | | (10.35 | ) | | | (10.35 | ) | | | 68.64 | | | | 36.24 | | | | 215,610 | | | | 1.05 | (e) | | | 1.13 | (e) | | | (0.37 | )(e) | | | 37 | |
Year ended 12/31/19 | | | 47.78 | | | | (0.08 | ) | | | 16.52 | | | | 16.44 | | | | – | | | | (5.55 | ) | | | (5.55 | ) | | | 58.67 | | | | 35.84 | | | | 200,741 | | | | 1.05 | | | | 1.13 | | | | (0.15 | ) | | | 73 | |
Year ended 12/31/18 | | | 54.89 | | | | (0.05 | ) | | | (2.67 | ) | | | (2.72 | ) | | | – | | | | (4.39 | ) | | | (4.39 | ) | | | 47.78 | | | | (5.96 | ) | | | 141,790 | | | | 1.05 | | | | 1.10 | | | | (0.09 | ) | | | 27 | |
Year ended 12/31/17 | | | 47.73 | | | | 0.02 | | | | 12.16 | | | | 12.18 | | | | (0.01 | ) | | | (5.01 | ) | | | (5.02 | ) | | | 54.89 | | | | 26.50 | | | | 316,864 | | | | 1.05 | | | | 1.07 | | | | 0.04 | | | | 26 | |
Year ended 12/31/16 | | | 54.80 | | | | 0.00 | | | | (1.55 | ) | | | (1.55 | ) | | | (0.06 | ) | | | (5.46 | ) | | | (5.52 | ) | | | 47.73 | | | | (2.43 | ) | | | 295,226 | | | | 1.05 | | | | 1.08 | | | | 0.00 | | | | 114 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended October 31, 2019, 2018, 2017, and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $550,544 and $189,093 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Capital Appreciation Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
| The | following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. |
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
| E. | Master Limited Partnerships – The Fund invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund invests in MLPs engaged in, among other things, the transportation, storage, processing, refining, marketing, exploration, production and mining of minerals and natural resources. The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. |
MLP’s may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
The Fund is non-diversified and will invest in securities of fewer issues than if it were diversified.
| F. | Return of Capital – Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
| G. | Federal Income Taxes – The Fund does not intend to qualify as a regulated investment company pursuant to Subchapter M of the Internal Revenue Code. The Fund is treated as a regular corporation, or “C” corporation, for U.S. federal income tax purposes and generally is subject to U.S. federal income tax on its taxable income at the rate applicable to corporations. In addition, as a regular corporation, the Fund may be subject to state and local taxes in jurisdictions in which the MLPs operate. The estimate state tax rate is based on a periodic analysis of the Fund’s holdings. Taxes include current and deferred taxes. Current taxes reflect the estimated tax liability of the Fund as of a measurement date based on taxable income. Deferred taxes reflect estimates of (i) taxes on net unrealized gains (losses), which are attributable to the difference between fair market value and tax basis, (ii) the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes, and (iii) the net tax benefit of accumulated net operating losses, capital loss carryforwards and other tax attributes. |
The Fund’s deferred tax asset (“DTA”) and/or liability balances are estimated using estimates of effective tax rates expected to apply to taxable income in the years such balances are realized. A DTA will be recognized for temporary book/tax differences, net of unrealized losses, and carryforwards (net operating losses, capital loss carryforward, or tax credits). To the extent the Fund has a DTA, the Fund will assess whether a valuation allowance is required to offset the value of a portion, or all, of the DTA. Prior year capital gains (carrybacks), unrealized net gains, future reversals of existing taxable timing differences, forecast of future profitability (based on historical evidence), potential tax planning strategies, unsettled circumstances, and other evidence will be used in determining the valuation allowance. The valuation allowance is reviewed periodically and the Fund may modify its estimates or assumptions regarding the net deferred tax asset or liability balances and any applicable valuation allowance. The Fund recognizes interest and penalties associated with underpayment of federal and state income taxes, if any, in tax expense. The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| H. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| I. | 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. |
| J. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized |
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
| | foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
| |
Upto $200 million | | | 0.750% | |
|
| |
Next $ 200 million | | | 0.720% | |
|
| |
Next $ 200 million | | | 0.690% | |
|
| |
Next $ 200 million | | | 0.660% | |
|
| |
Next $ 200 million | | | 0.600% | |
|
| |
Over $1 billion | | | 0.580% | |
|
| |
| * | The advisory fee payable by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with Invesco. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.69%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $598,281.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $106,431 for accounting and fund administrative services and was reimbursed $1,073,706 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
For the year ended December 31, 2020, the Fund incurred $3,520 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 799,764,239 | | | $ | 31,552,342 | | | | $– | | | $ | 831,316,581 | |
|
| |
Money Market Funds | | | 8,370,328 | | | | – | | | | – | | | | 8,370,328 | |
|
| |
Total Investments | | $ | 808,134,567 | | | $ | 31,552,342 | | | | $– | | | $ | 839,686,909 | |
|
| |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | |
| | | | | Location of Gain (Loss) on
Statement of Operations | |
| | | | | Currency | |
| | | | | Risk | |
|
| |
Realized Gain (Loss): | | | | | | |
Forward foreign currency contracts | | | | | $(3,325) | |
|
| |
|
The table below summarizes the average notional value of derivatives held during the period. | |
| | |
| | | | | Forward Foreign Currency
Contracts | |
|
| |
Average notional value | | | | | $289,807 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 4,657,573 | | | $ | 2,174,989 | |
|
| |
Long-term capital gain | | | 105,381,881 | | | | 65,854,879 | |
|
| |
Total distributions | | $ | 110,039,454 | | | $ | 68,029,868 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed long-term capital gain | | $ | 45,467,293 | |
|
| |
Net unrealized appreciation – investments | | | 409,655,865 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 12,610 | |
|
| |
Temporary book/tax differences | | | (2,457,996 | ) |
|
| |
Shares of beneficial interest | | | 389,236,307 | |
|
| |
Total net assets | | $ | 841,914,079 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and partnership transactions.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $273,944,016 and $417,124,220, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 411,594,426 | |
| |
Aggregate unrealized (depreciation) of investments | | | (1,938,561 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 409,655,865 | |
|
| |
Cost of investments for tax purposes is $430,031,044.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnership transactions and net operating loss, on December 31, 2020, undistributed net investment income (loss) was increased by $675,712, undistributed net realized gain was increased by $708,758 and shares of beneficial interest was decreased by $1,384,470. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 286,935 | | | $ | 18,471,044 | | | | 222,808 | | | $ | 12,378,336 | |
Series II | | | 706,142 | | | | 41,437,974 | | | | 809,631 | | | | 43,673,830 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,269,813 | | | | 81,814,036 | | | | 930,266 | | | | 49,378,533 | |
Series II | | | 448,663 | | | | 28,225,406 | | | | 357,511 | | | | 18,651,335 | |
Issued in connection with acquisitions:
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,658,108 | ) | | $ | (106,645,619 | ) | | | (1,646,179 | ) | | $ | (91,626,708 | ) |
|
| |
Series II | | | (1,435,287 | ) | | | (80,599,291 | ) | | | (713,247 | ) | | | (38,955,960 | ) |
|
| |
Net increase (decrease) in share activity | | | (381,842 | ) | | $ | (17,296,450 | ) | | | (39,210 | ) | | $ | (6,500,634 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 29% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Capital Appreciation Fund to Invesco V.I. Capital Appreciation Fund.
Further, effective April 30, 2021, the Fund’s sub-classification under the Investment Company Act of 1940 will change from “diversified” to “non-diversified” and a related fundamental investment restriction will be eliminated.
|
| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Capital Appreciation Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Capital Appreciation Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Capital Appreciation Fund (formerly known as Oppenheimer Capital Appreciation Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
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| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | |
| Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,251.30 | | $4.53 | | $1,021.11 | | $4.06 | | 0.80% |
Series II | | 1,000.00 | | 1,249.70 | | 5.94 | | 1,019.86 | | 5.33 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| | | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | | $105,381,881 | |
| | Qualified Dividend Income* | | | 0.00% | |
| | Corporate Dividends Received Deduction* | | | 100.00% | |
| | U.S. Treasury Obligations* | | | 0.00% | |
| | * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
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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 | | 2007 | | 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) | | 197 | | 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. |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
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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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
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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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
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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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
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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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
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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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and
Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
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| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
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| Invesco Oppenheimer V.I. Capital Appreciation Fund |
| | | | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | Invesco Oppenheimer V.I. Conservative Balanced Fund |
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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| Invesco Distributors, Inc. | | O-VICBAL-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Conservative Balanced Fund (the Fund) outperformed the Custom Invesco Oppenheimer V.I. Conservative Balanced Index. Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 14.86% | |
Series II Shares | | | 14.59 | |
Russell 3000 Indexq | | | 20.89 | |
Bloomberg Barclays U.S. Aggregate Bond Indexq | | | 7.51 | |
Custom Invesco Oppenheimer V.I. Conservative Balanced Index∎ | | | 13.69 | |
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines
earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
During the year, stock selection in the communication services and financials sectors were the largest contributors to the equity holding’s performance versus the Russell 3000 Index. This was offset by weaker stock selection in the health care and consumer discretionary sectors.
The largest individual contributors to performance during the year included NVIDIA and Microsoft. NVIDIA experienced strength in both its gaming and data center businesses
for accelerated computing. Those end markets had secular growth tailwinds, and both were in the early stages of new product cycles.
Microsoft benefited from strong execution and various tailwinds that were accelerated due to the pandemic including the increased need and importance of technology to work from home. The company experienced continued momentum for commercial cloud offerings and reported strong revenue growth and increased operating margin.
The largest individual detractors to performance during the fiscal year included SL Green and ExxonMobil. SL Green is a pure play on New York City office space. The stock was hit very hard when investors grew concerned that COVID-19 would inflict long-term damage on New York office demand. The collapse of an anticipated building sale due to the buyer’s inability to obtain financing also dealt a blow to the stock, as the proceeds had been earmarked for share buybacks. During the year, we disposed of our previous investment in SL Green.
ExxonMobil was negatively impacted by the general weakness across the energy sector. Oil prices and related equities were hit particularly hard during the first quarter of 2020 when mandatory quarantines dramatically reduced demand for driving and flying.
In fixed income markets, the 10-year US Treasury yield continued to decline at the start of the year as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. Elevated volatility levels due to the COVID-19 pandemic and ensuing global recession led to a severe “risk-off” tone in the markets driving Treasury yields even lower. The 10-year US Treasury yield ended the year at 0.88%, 85 basis points lower than at the beginning of the year.4 (A basis point is one one-hundredth of a percentage point.)
US corporate markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, bonds were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. With a potential vaccine in sight for the end of 2020 or early 2021 the broader bond market ended the year in positive territory.
Overweight exposure to investment grade bonds was the most notable contributor to
Invesco Oppenheimer V.I. Conservative Balanced Fund
Fund performance relative to the Bloomberg Barclays U.S. Aggregate Bond Index. However, trading friction detracted from Fund performance with the majority of the impact occurring in the second quarter due to market volatility and higher than usual bid/offers. With regard to security selection, in the financial institutions and technology sectors, security selection contributed to relative Fund performance during the year. The Fund’s allocation to cash holdings also contributed to relative performance. Meanwhile, security selection in the investment grade industrial sector and high yield banking sector detracted from relative Fund performance.
Thank you for your continued investment in Invesco Oppenheimer V.I. Conservative Balanced Fund.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
4 Source: US Department of the Treasury
Portfolio manager(s):
Michael Hyman
Magnus Krantz
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
2 Source: Invesco, RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (2/9/87) | | | 7.20% | |
10 Years | | | 7.46 | |
5 Years | | | 8.00 | |
1 Year | | | 14.86 | |
Series II Shares | | | | |
Inception (5/1/02) | | | 4.51% | |
10 Years | | | 7.18 | |
5 Years | | | 7.73 | |
1 Year | | | 14.59 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Conservative Balanced Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Conservative Balanced Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on
Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Conservative Balanced Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Supplemental Information
Invesco Oppenheimer V.I. Conservative Balanced Fund’s investment objective is to seek total return.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | | The Custom Invesco Oppenheimer V.I. Conservative Balanced Index is composed of 65% Bloomberg Barclays U.S. Aggregate Bond Index/35% Russell 3000 Index. |
| ∎ | | The Russell 3000® Index is an unmanaged index considered representative of the US stock market. The Russell 3000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | 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. |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Fund Information
Portfolio Composition
| | |
| By security type | | % of total net assets |
| |
| Common Stocks & Other Equity Interests | | 43.75% |
|
| |
| U.S. Dollar Denominated Bonds & Notes | | 23.35 |
|
| |
| Asset-Backed Securities | | 13.14 |
|
| |
| U.S. Government Sponsored Agency Mortgage-Backed Securities | | 11.44 |
|
| |
| U.S. Treasury Securities | | 5.69 |
|
| |
| Security Types Each Less Than 1% of Portfolio | | 1.37 |
|
| Other Assets Less Liabilities | | 1.26 |
|
|
Top 10 Equity Holdings* |
| | | % of total net assets |
|
1. Microsoft Corp. | | 2.66% |
|
2. Amazon.com, Inc. | | 2.03 |
|
3. Alphabet, Inc., Class A | | 1.91 |
|
4. Apple, Inc. | | 1.59 |
|
5. NVIDIA Corp. | | 1.48 |
|
6. JPMorgan Chase & Co. | | 1.37 |
|
7. Facebook, Inc., Class A | | 1.34 |
|
8. QUALCOMM, Inc. | | 1.07 |
|
9. Mastercard, Inc., Class A | | 0.97 |
|
10. Verizon Communications, Inc. | | 0.91 |
|
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings, if any. Data presented here are as of December 31, 2020. |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–43.75% | |
| Aerospace & Defense–0.71% | |
Boeing Co. (The) | | | 3,550 | | | $ | 759,913 | |
| |
Lockheed Martin Corp. | | | 1,818 | | | | 645,354 | |
| |
| | | | | | | 1,405,267 | |
| |
|
| Air Freight & Logistics–0.43% | |
United Parcel Service, Inc., Class B | | | 5,097 | | | | 858,335 | |
| |
|
| Alternative Carriers–0.00% | |
ORBCOMM, Inc.(b) | | | 375 | | | | 2,782 | |
| |
|
| Apparel Retail–0.37% | |
Ross Stores, Inc. | | | 5,955 | | | | 731,334 | |
| |
|
| Application Software–0.83% | |
Q2 Holdings, Inc.(b) | | | 4,970 | | | | 628,854 | |
| |
Workday, Inc., Class A(b) | | | 4,252 | | | | 1,018,822 | |
| |
| | | | | | | 1,647,676 | |
| |
|
| Automobile Manufacturers–0.28% | |
General Motors Co. | | | 13,181 | | | | 548,857 | |
| |
|
| Automotive Retail–0.41% | |
CarMax, Inc.(b) | | | 8,619 | | | | 814,151 | |
| |
|
| Biotechnology–0.29% | |
Seagen, Inc.(b) | | | 3,321 | | | | 581,640 | |
| |
|
| Cable & Satellite–0.36% | |
Charter Communications, Inc.,
Class A(b) | | | 1,093 | | | | 723,074 | |
| |
|
| Commodity Chemicals–0.20% | |
Valvoline, Inc. | | | 17,323 | | | | 400,854 | |
| |
|
| Communications Equipment–0.44% | |
Motorola Solutions, Inc. | | | 5,124 | | | | 871,387 | |
| |
|
| Construction Machinery & Heavy Trucks–0.33% | |
Caterpillar, Inc. | | | 3,622 | | | | 659,276 | |
| |
|
| Construction Materials–0.22% | |
Vulcan Materials Co. | | | 2,978 | | | | 441,667 | |
| |
|
| Consumer Finance–0.41% | |
Capital One Financial Corp. | | | 8,335 | | | | 823,915 | |
| |
|
| Data Processing & Outsourced Services–1.48% | |
Fiserv, Inc.(b) | | | 8,897 | | | | 1,013,012 | |
| |
Mastercard, Inc., Class A | | | 5,440 | | | | 1,941,754 | |
| |
| | | | | | | 2,954,766 | |
| |
|
| Distillers & Vintners–0.33% | |
Constellation Brands, Inc., Class A | | | 3,010 | | | | 659,340 | |
| |
|
| Diversified Banks–1.37% | |
JPMorgan Chase & Co. | | | 21,510 | | | | 2,733,276 | |
| |
|
| Diversified Metals & Mining–0.29% | |
Compass Minerals International, Inc. | | | 9,440 | | | | 582,637 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Electric Utilities–0.53% | |
Avangrid, Inc. | | | 16,320 | | | $ | 741,744 | |
| |
Portland General Electric Co. | | | 7,373 | | | | 315,343 | |
| |
| | | | | | | 1,057,087 | |
| |
|
| Electrical Components & Equipment–0.22% | |
Rockwell Automation, Inc. | | | 1,765 | | | | 442,680 | |
| |
|
| Financial Exchanges & Data–0.75% | |
Intercontinental Exchange, Inc. | | | 12,900 | | | | 1,487,241 | |
| |
|
| Food Distributors–0.38% | |
Sysco Corp. | | | 10,252 | | | | 761,313 | |
| |
|
| Footwear–0.34% | |
NIKE, Inc., Class B | | | 4,795 | | | | 678,349 | |
| |
|
| Gas Utilities–0.33% | |
National Fuel Gas Co. | | | 7,788 | | | | 320,320 | |
| |
Suburban Propane Partners L.P. | | | 22,085 | | | | 328,183 | |
| |
| | | | | | | 648,503 | |
| |
|
| Health Care Equipment–1.13% | |
Boston Scientific Corp.(b) | | | 18,211 | | | | 654,686 | |
| |
CryoPort, Inc.(b) | | | 9,707 | | | | 425,943 | |
| |
DexCom, Inc.(b) | | | 1,212 | | | | 448,101 | |
| |
Zimmer Biomet Holdings, Inc. | | | 4,627 | | | | 712,974 | |
| |
| | | | | | | 2,241,704 | |
| |
|
| Health Care Facilities–0.32% | |
HCA Healthcare, Inc. | | | 3,859 | | | | 634,651 | |
| |
|
| Health Care Services–0.45% | |
LHC Group, Inc.(b) | | | 4,189 | | | | 893,597 | |
| |
|
| Health Care Technology–0.31% | |
Teladoc Health, Inc.(b) | | | 3,104 | | | | 620,676 | |
| |
|
| Home Improvement Retail–0.64% | |
Home Depot, Inc. (The) | | | 4,792 | | | | 1,272,851 | |
| |
|
| Homebuilding–0.37% | |
D.R. Horton, Inc. | | | 10,580 | | | | 729,174 | |
| |
|
| Hotels, Resorts & Cruise Lines–0.23% | |
Airbnb, Inc., Class A(b) | | | 3,184 | | | | 467,411 | |
| |
|
| Household Products–0.61% | |
Procter & Gamble Co. (The) | | | 8,763 | | | | 1,219,284 | |
| |
|
| Human Resource & Employment Services–0.28% | |
Korn Ferry | | | 12,820 | | | | 557,670 | |
| |
|
| Hypermarkets & Super Centers–0.45% | |
Walmart, Inc. | | | 6,196 | | | | 893,153 | |
| |
|
| Industrial Conglomerates–0.76% | |
General Electric Co. | | | 59,685 | | | | 644,598 | |
| |
Honeywell International, Inc. | | | 4,117 | | | | 875,686 | |
| |
| | | | | | | 1,520,284 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Shares | | | Value | |
| Industrial Machinery–0.36% | |
Stanley Black & Decker, Inc. | | | 4,005 | | | $ | 715,133 | |
| |
|
| Industrial REITs–0.72% | |
Prologis, Inc. | | | 14,481 | | | | 1,443,176 | |
| |
|
| Insurance Brokers–0.34% | |
Arthur J. Gallagher & Co. | | | 5,537 | | | | 684,982 | |
| |
|
| Integrated Oil & Gas–0.74% | |
Exxon Mobil Corp. | | | 25,321 | | | | 1,043,732 | |
| |
TOTAL S.A., ADR (France) | | | 10,445 | | | | 437,750 | |
| |
| | | | | | | 1,481,482 | |
| |
|
| Integrated Telecommunication Services–0.91% | |
Verizon Communications, Inc. | | | 30,775 | | | | 1,808,031 | |
| |
|
| Interactive Home Entertainment–0.77% | |
Zynga, Inc., Class A(b) | | | 154,290 | | | | 1,522,842 | |
| |
|
| Interactive Media & Services–4.10% | |
Alphabet, Inc., Class A(b) | | | 2,163 | | | | 3,790,961 | |
| |
Facebook, Inc., Class A(b) | | | 9,781 | | | | 2,671,778 | |
| |
Snap, Inc., Class A(b) | | | 33,890 | | | | 1,696,872 | |
| |
| | | | | | | 8,159,611 | |
| |
|
| Internet & Direct Marketing Retail–2.03% | |
Amazon.com, Inc.(b) | | | 1,238 | | | | 4,032,079 | |
| |
|
| Internet Services & Infrastructure–0.07% | |
Snowflake, Inc., Class A(b) | | | 480 | | | | 135,072 | |
| |
|
| IT Consulting & Other Services–0.30% | |
Perspecta, Inc. | | | 24,907 | | | | 599,761 | |
| |
|
| Leisure Facilities–0.11% | |
Cedar Fair L.P. | | | 5,485 | | | | 215,780 | |
| |
|
| Life Sciences Tools & Services–0.22% | |
Avantor, Inc.(b) | | | 15,586 | | | | 438,746 | |
| |
|
| Managed Health Care–0.87% | |
UnitedHealth Group, Inc. | | | 4,953 | | | | 1,736,918 | |
| |
|
| Metal & Glass Containers–0.20% | |
Silgan Holdings, Inc. | | | 10,567 | | | | 391,824 | |
| |
|
| Multi-Utilities–0.15% | |
Consolidated Edison, Inc. | | | 4,263 | | | | 308,087 | |
| |
|
| Office REITs–0.21% | |
Alexandria Real Estate Equities, Inc. | | | 2,308 | | | | 411,332 | |
| |
|
| Office Services & Supplies–0.21% | |
ACCO Brands Corp. | | | 48,950 | | | | 413,627 | |
| |
|
| Oil & Gas Refining & Marketing–0.24% | |
Valero Energy Corp. | | | 8,435 | | | | 477,168 | |
| |
|
| Oil & Gas Storage & Transportation–0.15% | |
Shell Midstream Partners L.P. | | | 29,695 | | | | 299,326 | |
| |
|
| Paper Products–0.24% | |
Schweitzer-Mauduit International, Inc., Class A | | | 11,635 | | | | 467,843 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Pharmaceuticals–1.44% | |
AstraZeneca PLC, ADR (United Kingdom) | | | 21,183 | | | $ | 1,058,938 | |
| |
Catalent, Inc.(b) | | | 8,464 | | | | 880,849 | |
| |
Merck & Co., Inc. | | | 11,234 | | | | 918,941 | |
| |
| | | | | | | 2,858,728 | |
| |
|
| Property & Casualty Insurance–0.62% | |
Progressive Corp. (The) | | | 12,480 | | | | 1,234,022 | |
| |
|
| Railroads–0.55% | |
Canadian Pacific Railway Ltd. (Canada) | | | 3,140 | | | | 1,088,607 | |
| |
|
| Regional Banks–1.08% | |
East West Bancorp, Inc. | | | 15,001 | | | | 760,701 | |
| |
Signature Bank | | | 3,464 | | | | 468,644 | |
| |
SVB Financial Group(b) | | | 2,395 | | | | 928,853 | |
| |
| | | | | | | 2,158,198 | |
| |
|
| Restaurants–0.65% | |
Starbucks Corp. | | | 12,053 | | | | 1,289,430 | |
| |
|
| Semiconductor Equipment–0.82% | |
Applied Materials, Inc. | | | 18,890 | | | | 1,630,207 | |
| |
|
| Semiconductors–3.03% | |
NVIDIA Corp. | | | 5,638 | | | | 2,944,164 | |
| |
QUALCOMM, Inc. | | | 14,039 | | | | 2,138,701 | |
| |
Texas Instruments, Inc. | | | 5,787 | | | | 949,820 | |
| |
| | | | | | | 6,032,685 | |
| |
|
| Soft Drinks–0.59% | |
Coca-Cola Co. (The) | | | 21,420 | | | | 1,174,673 | |
| |
|
| Specialized REITs–0.15% | |
EPR Properties | | | 8,940 | | | | 290,550 | |
| |
|
| Specialty Stores–0.39% | |
Tractor Supply Co. | | | 5,577 | | | | 784,015 | |
| |
|
| Systems Software–2.66% | |
Microsoft Corp. | | | 23,799 | | | | 5,293,374 | |
| |
|
| Technology Hardware, Storage & Peripherals–1.59% | |
Apple, Inc. | | | 23,800 | | | | 3,158,022 | |
| |
|
| Trading Companies & Distributors–0.39% | |
Fastenal Co. | | | 16,040 | | | | 783,233 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $58,232,271) | | | | | | | 87,084,426 | |
| |
| | |
| | | Principal
Amount | | | | |
| U.S. Dollar Denominated Bonds & Notes–23.35% | |
| Advertising–0.25% | |
Interpublic Group of Cos., Inc. (The), | | | | | | | | |
3.75%, 10/01/2021 | | $ | 198,000 | | | | 202,989 | |
| |
4.20%, 04/15/2024 | | | 135,000 | | | | 150,302 | |
| |
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | | | 132,000 | | | | 146,377 | |
| |
| | | | | | | 499,668 | |
| |
|
| Aerospace & Defense–0.23% | |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, 12/15/2025(c) | | | 101,000 | | | | 114,661 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Aerospace & Defense–(continued) | |
L3Harris Technologies, Inc., 3.85%, 06/15/2023 | | $ | 137,000 | | | $ | 148,055 | |
| |
Northrop Grumman Corp., 4.75%, 06/01/2043 | | | 77,000 | | | | 102,847 | |
| |
Raytheon Technologies Corp., 3.95%, 08/16/2025 | | | 85,000 | | | | 97,509 | |
| |
| | | | | | | 463,072 | |
| |
|
| Agricultural & Farm Machinery–0.02% | |
Deere & Co., 3.10%, 04/15/2030 | | | 30,000 | | | | 34,359 | |
| |
|
| Airlines–0.52% | |
Delta Air Lines Pass-Through Trust,
Series 2020-1, Class AA,
2.00%, 06/10/2028 | | | 162,977 | | | | 163,231 | |
| |
Delta Air Lines, Inc./SkyMiles IP Ltd.,
4.50%, 10/20/2025(c) | | | 185,000 | | | | 197,803 | |
| |
4.75%, 10/20/2028(c) | | | 311,000 | | | | 339,713 | |
| |
United Airlines Pass-Through Trust,
Series 2020-1, Class A,
5.88%, 10/15/2027 | | | 312,000 | | | | 337,963 | |
| |
| | | | | | | 1,038,710 | |
| |
|
| Apparel Retail–0.15% | |
Ross Stores, Inc.,
3.38%, 09/15/2024 | | | 154,000 | | | | 165,102 | |
| |
0.88%, 04/15/2026 | | | 71,000 | | | | 71,045 | |
| |
4.70%, 04/15/2027 | | | 26,000 | | | | 30,714 | |
| |
1.88%, 04/15/2031 | | | 36,000 | | | | 36,187 | |
| |
| | | | | | | 303,048 | |
| |
|
| Application Software–0.02% | |
Autodesk, Inc., 4.38%, 06/15/2025 | | | 42,000 | | | | 48,051 | |
| |
|
| Asset Management & Custody Banks–0.25% | |
Ameriprise Financial, Inc., 3.00%, 04/02/2025 | | | 124,000 | | | | 135,182 | |
| |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 102,000 | | | | 113,837 | |
| |
Carlyle Finance Subsidiary LLC, 3.50%, 09/19/2029(c) | | | 63,000 | | | | 69,305 | |
| |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 173,000 | | | | 177,458 | |
| |
| | | | | | | 495,782 | |
| |
|
| Automobile Manufacturers–0.81% | |
Daimler Finance North America LLC (Germany), 2.55%, 08/15/2022(c) | | | 149,000 | | | | 154,153 | |
| |
General Motors Financial Co., Inc.,
4.20%, 11/06/2021 | | | 194,000 | | | | 199,984 | |
| |
4.15%, 06/19/2023 | | | 127,000 | | | | 136,676 | |
| |
Hyundai Capital America,
5.75%, 04/06/2023(c) | | | 166,000 | | | | 183,940 | |
| |
4.13%, 06/08/2023(c) | | | 137,000 | | | | 147,894 | |
| |
Nissan Motor Acceptance Corp., 3.65%, 09/21/2021(c) | | | 266,000 | | | | 270,700 | |
| |
Volkswagen Group of America Finance LLC (Germany),
4.00%, 11/12/2021(c) | | | 311,000 | | | | 320,584 | |
| |
1.63%, 11/24/2027(c) | | | 200,000 | | | | 201,870 | |
| |
| | | | | | | 1,615,801 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Biotechnology–0.19% | |
AbbVie, Inc.,
3.85%, 06/15/2024 | | $ | 223,000 | | | $ | 245,821 | |
| |
2.95%, 11/21/2026 | | | 52,000 | | | | 57,567 | |
| |
4.05%, 11/21/2039 | | | 60,000 | | | | 72,585 | |
| |
| | | | | | | 375,973 | |
| |
|
| Brewers–0.17% | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | 81,000 | | | | 139,789 | |
| |
Bacardi Ltd. (Bermuda), 4.70%, 05/15/2028(c) | | | 171,000 | | | | 203,024 | |
| |
| | | | | | | 342,813 | |
| |
|
| Broadcasting–0.34% | |
Discovery Communications LLC, 4.00%, 09/15/2055(c) | | | 453,000 | | | | 507,068 | |
| |
Fox Corp., 3.05%, 04/07/2025 | | | 42,000 | | | | 45,987 | |
| |
ViacomCBS, Inc.,
4.20%, 06/01/2029 | | | 65,000 | | | | 77,864 | |
| |
4.38%, 03/15/2043 | | | 42,000 | | | | 49,621 | |
| |
| | | | | | | 680,540 | |
| |
|
| Cable & Satellite–0.42% | |
Charter Communications Operating LLC/ Charter Communications Operating Capital Corp.,
5.13%, 07/01/2049 | | | 42,000 | | | | 51,264 | |
| |
3.85%, 04/01/2061 | | | 135,000 | | | | 136,048 | |
| |
Comcast Corp.,
4.00%, 03/01/2048 | | | 35,000 | | | | 44,045 | |
| |
2.80%, 01/15/2051 | | | 121,000 | | | | 126,032 | |
| |
2.45%, 08/15/2052 | | | 134,000 | | | | 130,534 | |
| |
2.65%, 08/15/2062 | | | 166,000 | | | | 166,196 | |
| |
Cox Communications, Inc.,
1.80%, 10/01/2030(c) | | | 51,000 | | | | 50,985 | |
| |
2.95%, 10/01/2050(c) | | | 81,000 | | | | 82,820 | |
| |
Time Warner Cable LLC, 4.50%, 09/15/2042 | | | 46,000 | | | | 53,905 | |
| |
| | | | | | | 841,829 | |
| |
|
| Communications Equipment–0.18% | |
British Telecommunications PLC (United Kingdom), 4.50%, 12/04/2023 | | | 202,000 | | | | 223,808 | |
| |
Motorola Solutions, Inc., 4.60%, 02/23/2028 | | | 106,000 | | | | 127,907 | |
| |
| | | | | | | 351,715 | |
| |
|
| Consumer Finance–0.31% | |
American Express Co., 3.13%, 05/20/2026 | | | 77,000 | | | | 86,338 | |
| |
Series C, 3.50% (3 mo. USD LIBOR +3.29%)(d)(e) | | | 184,000 | | | | 179,560 | |
| |
Capital One Financial Corp., 3.80%, 01/31/2028 | | | 38,000 | | | | 43,818 | |
| |
Discover Bank, 4.65%, 09/13/2028 | | | 122,000 | | | | 146,071 | |
| |
Discover Financial Services, 3.75%, 03/04/2025 | | | 44,000 | | | | 48,471 | |
| |
Synchrony Financial, 4.25%, 08/15/2024 | | | 102,000 | | | | 112,755 | |
| |
| | | | | | | 617,013 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Distillers & Vintners–0.07% | |
Pernod Ricard S.A. (France), 4.25%, 07/15/2022(c) | | $ | 134,000 | | | $ | 141,514 | |
| |
|
| Distributors–0.08% | |
Genuine Parts Co., 1.88%, 11/01/2030 | | | 152,000 | | | | 150,950 | |
| |
|
| Diversified Banks–3.96% | |
Australia & New Zealand Banking Group Ltd. (Australia), 2.57%, 11/25/2035(c)(f) | | | 200,000 | | | | 204,182 | |
| |
Banco Santander S.A. (Spain), 2.75%, 12/03/2030 | | | 200,000 | | | | 206,592 | |
| |
Bank of America Corp., 3.37%, 01/23/2026(f) | | | 117,000 | | | | 128,855 | |
| |
3.82%, 01/20/2028(f) | | | 77,000 | | | | 88,458 | |
| |
4.27%, 07/23/2029(f) | | | 64,000 | | | | 76,225 | |
| |
2.59%, 04/29/2031(f) | | | 105,000 | | | | 112,611 | |
| |
1.90%, 07/23/2031(f) | | | 265,000 | | | | 267,818 | |
| |
1.92%, 10/24/2031(f) | | | 270,000 | | | | 273,651 | |
| |
7.75%, 05/14/2038 | | | 115,000 | | | | 196,414 | |
| |
Bank of Ireland Group PLC (Ireland), 4.50%, 11/25/2023(c) | | | 263,000 | | | | 288,460 | |
| |
Bank of Montreal (Canada), Series E, 3.30%, 02/05/2024 | | | 101,000 | | | | 109,595 | |
| |
BBVA Bancomer S.A. (Mexico), 1.88%, 09/18/2025(c) | | | 200,000 | | | | 202,250 | |
| |
BBVA USA, 2.50%, 08/27/2024 | | | 252,000 | | | | 267,826 | |
| |
BNP Paribas S.A. (France), 2.59%, 08/12/2035(c)(f) | | | 200,000 | | | | 204,697 | |
| |
BPCE S.A. (France), 4.50%, 03/15/2025(c) | | | 184,000 | | | | 208,198 | |
| |
Citigroup, Inc.,
3.11%, 04/08/2026(f) | | | 143,000 | | | | 156,426 | |
| |
4.08%, 04/23/2029(f) | | | 110,000 | | | | 129,045 | |
| |
4.41%, 03/31/2031(f) | | | 117,000 | | | | 141,887 | |
| |
Series V, 4.70%(d)(f) | | | 160,000 | | | | 164,714 | |
| |
Credit Agricole S.A. (France), 4.38%, 03/17/2025(c) | | | 304,000 | | | | 341,649 | |
| |
Danske Bank A/S (Denmark), 3.24%, 12/20/2025(c)(f) | | | 200,000 | | | | 214,220 | |
| |
HSBC Holdings PLC (United Kingdom),
3.95%, 05/18/2024(f) | | | 109,000 | | | | 117,615 | |
| |
4.04%, 03/13/2028(f) | | | 135,000 | | | | 154,194 | |
| |
4.58%, 06/19/2029(f) | | | 183,000 | | | | 216,638 | |
| |
4.60%(d)(f) | | | 225,000 | | | | 229,527 | |
| |
JPMorgan Chase & Co., 3.80%, 07/23/2024(f) | | | 170,000 | | | | 184,572 | |
| |
2.08%, 04/22/2026(f) | | | 185,000 | | | | 195,506 | |
| |
3.78%, 02/01/2028(f) | | | 136,000 | | | | 156,427 | |
| |
3.54%, 05/01/2028(f) | | | 104,000 | | | | 118,963 | |
| |
2.96%, 05/13/2031(f) | | | 144,000 | | | | 158,053 | |
| |
3.11%, 04/22/2041(f) | | | 115,000 | | | | 128,738 | |
| |
Mitsubishi UFJ Financial Group, Inc. (Japan), 3.74%, 03/07/2029 | | | 79,000 | | | | 92,991 | |
| |
National Australia Bank Ltd. (Australia),
3.93%, 08/02/2034(c)(f) | | | 154,000 | | | | 173,179 | |
| |
Royal Bank of Canada (Canada), 3.70%, 10/05/2023 | | | 118,000 | | | | 128,716 | |
| |
Standard Chartered PLC (United Kingdom), 3.27%, 02/18/2036(c)(f) | | | 221,000 | | | | 231,448 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Diversified Banks–(continued) | |
Sumitomo Mitsui Financial Group, Inc. (Japan),
1.47%, 07/08/2025 | | $ | 200,000 | | | $ | 205,008 | |
| |
2.14%, 09/23/2030 | | | 291,000 | | | | 292,657 | |
| |
Truist Bank, 2.64%, 09/17/2029(f) | | | 376,000 | | | | 397,939 | |
| |
U.S. Bancorp,
Series W, 3.10%, 04/27/2026 | | | 101,000 | | | | 112,545 | |
| |
1.38%, 07/22/2030 | | | 107,000 | | | | 107,286 | |
| |
Wells Fargo & Co., 2.19%, 04/30/2026(f) | | | 54,000 | | | | 56,903 | |
| |
3.58%, 05/22/2028(f) | | �� | 102,000 | | | | 115,648 | |
| |
3.07%, 04/30/2041(f) | | | 77,000 | | | | 83,887 | |
| |
4.75%, 12/07/2046 | | | 79,000 | | | | 103,498 | |
| |
Westpac Banking Corp. (Australia), 2.89%, 02/04/2030(f) | | | 92,000 | | | | 96,485 | |
| |
2.67%, 11/15/2035(f) | | | 42,000 | | | | 43,319 | |
| |
| | | | | | | 7,885,515 | |
| |
|
| Diversified Capital Markets–0.63% | |
Credit Suisse AG (Switzerland), 3.63%, 09/09/2024 | | | 197,000 | | | | 218,927 | |
| |
Credit Suisse Group AG (Switzerland),
4.55%, 04/17/2026 | | | 154,000 | | | | 181,269 | |
| |
4.19%, 04/01/2031(c)(f) | | | 250,000 | | | | 294,248 | |
| |
5.10%(c)(d)(f) | | | 201,000 | | | | 209,543 | |
| |
UBS Group AG (Switzerland), 4.13%, 04/15/2026(c) | | | 160,000 | | | | 185,186 | |
| |
4.25%, 03/23/2028(c) | | | 147,000 | | | | 172,135 | |
| |
| | | | | | | 1,261,308 | |
| |
|
| Diversified Chemicals–0.10% | |
Dow Chemical Co. (The), 3.63%, 05/15/2026 | | | 92,000 | | | | 103,715 | |
| |
Eastman Chemical Co., 3.50%, 12/01/2021 | | | 98,000 | | | | 100,689 | |
| |
| | | | | | | 204,404 | |
| |
|
| Diversified Metals & Mining–0.31% | |
Anglo American Capital PLC (South Africa),
3.63%, 09/11/2024(c) | | | 86,000 | | | | 93,654 | |
| |
5.38%, 04/01/2025(c) | | | 203,000 | | | | 237,787 | |
| |
5.63%, 04/01/2030(c) | | | 216,000 | | | | 275,451 | |
| |
| | | | | | | 606,892 | |
| |
|
| Diversified REITs–0.10% | |
Brixmor Operating Partnership L.P., 4.13%, 05/15/2029 | | | 65,000 | | | | 74,867 | |
| |
4.05%, 07/01/2030 | | | 106,000 | | | | 121,791 | |
| |
| | | | | | | 196,658 | |
| |
|
| Drug Retail–0.06% | |
Walgreen Co., 3.10%, 09/15/2022 | | | 121,000 | | | | 126,345 | |
| |
|
| Electric Utilities–0.58% | |
AEP Texas, Inc.,
3.95%, 06/01/2028(c) | | | 172,000 | | | | 201,394 | |
| |
Consolidated Edison Co. of
New York, Inc.,
Series 20A, 3.35%, 04/01/2030 | | | 18,000 | | | | 20,648 | |
| |
Series C, 3.00%, 12/01/2060 | | | 111,000 | | | | 112,994 | |
| |
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(c) | | | 231,000 | | | | 252,277 | |
| |
Emera US Finance L.P. (Canada), 2.70%, 06/15/2021 | | | 146,000 | | | | 147,146 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Electric Utilities–(continued) | |
Enel Finance International N.V. (Italy), 2.88%, 05/25/2022(c) | | $ | 313,000 | | | $ | 323,046 | |
| |
Eversource Energy, Series Q, 0.80%, 08/15/2025 | | | 26,000 | | | | 25,973 | |
| |
Fortis, Inc. (Canada), 3.06%, 10/04/2026 | | | 51,000 | | | | 56,206 | |
| |
Virginia Electric and Power Co., 2.45%, 12/15/2050 | | | 19,000 | | | | 19,105 | |
| |
| | | | | | | 1,158,789 | |
| |
|
| Electrical Components & Equipment–0.10% | |
Acuity Brands Lighting, Inc., 2.15%, 12/15/2030 | | | 194,000 | | | | 197,134 | |
| |
|
| Electronic Components–0.02% | |
Corning, Inc., 5.45%, 11/15/2079 | | | 32,000 | | | | 43,931 | |
| |
|
| Electronic Manufacturing Services–0.08% | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 148,000 | | | | 157,691 | |
| |
|
| Environmental & Facilities Services–0.08% | |
Republic Services, Inc., 1.75%, 02/15/2032 | | | 153,000 | | | | 153,417 | |
| |
|
| Financial Exchanges & Data–0.15% | |
Intercontinental Exchange, Inc., 3.00%, 09/15/2060 | | | 110,000 | | | | 115,515 | |
| |
Moody’s Corp.,
3.25%, 05/20/2050 | | | 47,000 | | | | 52,320 | |
| |
2.55%, 08/18/2060 | | | 40,000 | | | | 37,594 | |
| |
S&P Global, Inc., 1.25%, 08/15/2030 | | | 97,000 | | | | 95,655 | |
| |
| | | | | | | 301,084 | |
| |
|
| Gas Utilities–0.02% | |
East Ohio Gas Co. (The), 1.30%, 06/15/2025(c) | | | 40,000 | | | | 40,791 | |
| |
|
| Health Care Equipment–0.04% | |
Becton, Dickinson and Co., 3.70%, 06/06/2027 | | | 71,000 | | | | 81,496 | |
| |
|
| Health Care Facilities–0.07% | |
CommonSpirit Health, 1.55%, 10/01/2025 | | | 73,000 | | | | 75,050 | |
| |
West Virginia United Health System Obligated Group, 3.13%, 06/01/2050 | | | 53,000 | | | | 54,844 | |
| |
| | | | | | | 129,894 | |
| |
|
| Health Care REITs–0.26% | |
Healthcare Trust of America Holdings L.P.,
3.50%, 08/01/2026 | | | 87,000 | | | | 98,621 | |
| |
2.00%, 03/15/2031 | | | 106,000 | | | | 106,179 | |
| |
Healthpeak Properties, Inc., 3.00%, 01/15/2030 | | | 112,000 | | | | 122,616 | |
| |
Omega Healthcare Investors, Inc., 3.38%, 02/01/2031 | | | 133,000 | | | | 139,943 | |
| |
Welltower, Inc., 2.70%, 02/15/2027 | | | 53,000 | | | | 58,431 | |
| |
| | | | | | | 525,790 | |
| |
|
| Health Care Services–0.47% | |
Cigna Corp., 4.13%, 11/15/2025 | | | 102,000 | | | | 117,519 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Health Care Services–(continued) | |
CVS Health Corp.,
1.30%, 08/21/2027 | | $ | 149,000 | | | $ | 149,720 | |
| |
2.70%, 08/21/2040 | | | 64,000 | | | | 64,845 | |
| |
Fresenius Medical Care US Finance II, Inc. (Germany), 5.88%, 01/31/2022(c) | | | 130,000 | | | | 136,931 | |
| |
Sutter Health, Series 20A,
3.16%, 08/15/2040 | | | 245,000 | | | | 260,408 | |
| |
3.36%, 08/15/2050 | | | 180,000 | | | | 196,133 | |
| |
| | | | | | | 925,556 | |
| |
|
| Home Improvement Retail–0.08% | |
Lowe’s Cos., Inc.,
1.30%, 04/15/2028 | | | 104,000 | | | | 104,941 | |
| |
4.50%, 04/15/2030 | | | 48,000 | | | | 59,764 | |
| |
| | | | | | | 164,705 | |
| |
|
| Homebuilding–0.06% | |
D.R. Horton, Inc., 4.75%, 02/15/2023 | | | 118,000 | | | | 127,033 | |
| |
|
| Independent Power Producers & Energy Traders–0.20% | |
AES Corp. (The),
1.38%, 01/15/2026(c) | | | 104,000 | | | | 105,004 | |
| |
2.45%, 01/15/2031(c) | | | 114,000 | | | | 115,571 | |
| |
Deutsche Telekom International Finance B.V. (Germany), 4.38%, 06/21/2028(c) | | | 146,000 | | | | 172,504 | |
| |
| | | | | | | 393,079 | |
| |
|
| Industrial Conglomerates–0.09% | |
GE Capital International Funding Co. Unlimited Co., 3.37%, 11/15/2025 | | | 160,000 | | | | 178,160 | |
| |
|
| Industrial REITs–0.03% | |
Lexington Realty Trust, 2.70%, 09/15/2030 | | | 59,000 | | | | 61,512 | |
| |
|
| Insurance Brokers–0.03% | |
Marsh & McLennan Cos., Inc., 4.35%, 01/30/2047 | | | 46,000 | | | | 61,052 | |
| |
|
| Integrated Oil & Gas–0.32% | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 239,000 | | | | 244,056 | |
| |
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(c) | | | 127,000 | | | | 131,011 | |
| |
Occidental Petroleum Corp.,
2.90%, 08/15/2024 | | | 228,000 | | | | 219,792 | |
| |
4.50%, 07/15/2044 | | | 48,000 | | | | 40,890 | |
| |
| | | | | | | 635,749 | |
| |
|
| Integrated Telecommunication Services–1.36% | |
AT&T, Inc.,
4.30%, 02/15/2030 | | | 136,000 | | | | 162,577 | |
| |
2.55%, 12/01/2033(c) | | | 595,000 | | | | 613,150 | |
| |
3.10%, 02/01/2043 | | | 160,000 | | | | 162,335 | |
| |
3.50%, 09/15/2053(c) | | | 262,000 | | | | 262,014 | |
| |
3.55%, 09/15/2055(c) | | | 16,000 | | | | 15,946 | |
| |
3.80%, 12/01/2057(c) | | | 80,000 | | | | 83,421 | |
| |
3.65%, 09/15/2059(c) | | | 11,000 | | | | 11,055 | |
| |
3.50%, 02/01/2061 | | | 102,000 | | | | 101,596 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Integrated Telecommunication Services–(continued) | |
T–Mobile USA, Inc., 3.50%, 04/15/2025(c) | | $ | 160,000 | | | $ | 176,957 | |
| |
Verizon Communications, Inc., 0.85%, 11/20/2025 | | | 167,000 | | | | 168,353 | |
| |
1.75%, 01/20/2031 | | | 204,000 | | | | 203,229 | |
| |
2.65%, 11/20/2040 | | | 175,000 | | | | 176,992 | |
| |
4.52%, 09/15/2048 | | | 71,000 | | | | 92,594 | |
| |
2.88%, 11/20/2050 | | | 214,000 | | | | 215,825 | |
| |
3.00%, 11/20/2060 | | | 252,000 | | | | 253,750 | |
| |
| | | | | | | 2,699,794 | |
| |
|
| Interactive Home Entertainment–0.09% | |
Activision Blizzard, Inc., 2.50%, 09/15/2050 | | | 185,000 | | | | 180,828 | |
| |
|
| Interactive Media & Services–0.08% | |
Alphabet, Inc., 1.90%, 08/15/2040 | | | 30,000 | | | | 29,445 | |
| |
2.25%, 08/15/2060 | | | 137,000 | | | | 132,655 | |
| |
| | | | | | | 162,100 | |
| |
|
| Internet & Direct Marketing Retail–0.32% | |
Expedia Group, Inc., 4.63%, 08/01/2027(c) | | | 101,000 | | | | 112,930 | |
| |
Prosus N.V. (Netherlands), 3.83%, 02/08/2051(c) | | | 531,000 | | | | 521,571 | |
| |
| | | | | | | 634,501 | |
| |
|
| Internet Services & Infrastructure–0.16% | |
VeriSign, Inc., 5.25%, 04/01/2025 | | | 105,000 | | | | 119,503 | |
| |
4.75%, 07/15/2027 | | | 189,000 | | | | 203,118 | |
| |
| | | | | | | 322,621 | |
| |
|
| Investment Banking & Brokerage–0.92% | |
Goldman Sachs Group, Inc. (The), 3.50%, 04/01/2025 | | | 126,000 | | | | 140,224 | |
| |
3.75%, 02/25/2026 | | | 66,000 | | | | 75,007 | |
| |
3.50%, 11/16/2026 | | | 68,000 | | | | 76,390 | |
| |
1.09%, 12/09/2026(f) | | | 163,000 | | | | 164,834 | |
| |
0.87% (SOFR + 0.79%), 12/09/2026(e) | | | 700,000 | | | | 704,822 | |
| |
Morgan Stanley, 5.00%, 11/24/2025 | | | 131,000 | | | | 156,816 | |
| |
2.19%, 04/28/2026(f) | | | 94,000 | | | | 99,349 | |
| |
4.43%, 01/23/2030(f) | | | 97,000 | | | | 118,283 | |
| |
3.62%, 04/01/2031(f) | | | 120,000 | | | | 139,462 | |
| |
Raymond James Financial, Inc., 3.63%, 09/15/2026 | | | 63,000 | | | | 72,348 | |
| |
4.65%, 04/01/2030 | | | 60,000 | | | | 73,673 | |
| |
| | | | | | | 1,821,208 | |
| |
|
| IT Consulting & Other Services–0.06% | |
DXC Technology Co., 4.75%, 04/15/2027 | | | 101,000 | | | | 115,678 | |
| |
|
| Life & Health Insurance–0.86% | |
AIA Group Ltd. (Hong Kong), 3.20%, 09/16/2040(c) | | | 200,000 | | | | 210,026 | |
| |
Athene Global Funding, 1.20%, 10/13/2023(c) | | | 242,000 | | | | 243,947 | |
| |
2.95%, 11/12/2026(c) | | | 203,000 | | | | 217,966 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Life & Health Insurance–(continued) | |
Athene Holding Ltd., 6.15%, 04/03/2030 | | $ | 132,000 | | | $ | 164,426 | |
| |
3.50%, 01/15/2031 | | | 54,000 | | | | 57,153 | |
| |
Belrose Funding Trust, 2.33%, 08/15/2030(c) | | | 133,000 | | | | 137,089 | |
| |
Lincoln National Corp., 3.80%, 03/01/2028 | | | 76,000 | | | | 88,029 | |
| |
Manulife Financial Corp. (Canada), 4.06%, 02/24/2032(f) | | | 97,000 | | | | 106,167 | |
| |
Pacific LifeCorp, 3.35%, 09/15/2050(c) | | | 136,000 | | | | 151,552 | |
| |
Prudential Financial, Inc., 5.20%, 03/15/2044(f) | | | 184,000 | | | | 195,695 | |
| |
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(c) | | | 139,000 | | | | 146,243 | |
| |
| | | | | | | 1,718,293 | |
| |
|
| Managed Health Care–0.32% | |
Anthem, Inc., 3.13%, 05/15/2022 | | | 124,000 | | | | 128,684 | |
| |
Children’s Hospital, Series 2020, 2.93%, 07/15/2050 | | | 90,000 | | | | 90,353 | |
| |
Community Health Network, Inc., Series 20-A, 3.10%, 05/01/2050 | | | 193,000 | | | | 194,939 | |
| |
Hackensack Meridian Health, Inc., Series 2020, 2.68%, 09/01/2041 | | | 84,000 | | | | 85,018 | |
| |
2.88%, 09/01/2050 | | | 81,000 | | | | 83,659 | |
| |
New York and Presbyterian Hospital (The), 2.26%, 08/01/2040 | | | 61,000 | | | | 59,763 | |
| |
| | | | | | | 642,416 | |
| |
|
| Multi–Utilities–0.38% | |
Ameren Corp.,
2.50%, 09/15/2024 | | | 83,000 | | | | 88,557 | |
| |
3.50%, 01/15/2031 | | | 61,000 | | | | 70,229 | |
| |
CenterPoint Energy, Inc., 4.25%, 11/01/2028 | | | 61,000 | | | | 72,293 | |
| |
Dominion Energy, Inc., 2.72%, 08/15/2021(g) | | | 160,000 | | | | 162,012 | |
| |
Series C, 3.38%, 04/01/2030 | | | 101,000 | | | | 115,124 | |
| |
DTE Energy Co., Series F, 1.05%, 06/01/2025 | | | 54,000 | | | | 54,641 | |
| |
WEC Energy Group, Inc., 1.38%, 10/15/2027 | | | 102,000 | | | | 103,801 | |
| |
1.80%, 10/15/2030 | | | 92,000 | | | | 92,418 | |
| |
| | | | | | | 759,075 | |
| |
|
| Office REITs–0.13% | |
Highwoods Realty L.P., 2.60%, 02/01/2031 | | | 31,000 | | | | 31,673 | |
| |
Office Properties Income Trust, 4.50%, 02/01/2025 | | | 212,000 | | | | 224,816 | |
| |
| | | | | | | 256,489 | |
| |
|
| Oil & Gas Exploration & Production–0.21% | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 184,000 | | | | 193,179 | |
| |
Concho Resources, Inc., 2.40%, 02/15/2031 | | | 45,000 | | | | 47,174 | |
| |
EQT Corp., 3.00%, 10/01/2022 | | | 29,000 | | | | 29,272 | |
| |
Pioneer Natural Resources Co., 1.90%, 08/15/2030 | | | 140,000 | | | | 138,783 | |
| |
| | | | | | | 408,408 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Oil & Gas Storage & Transportation–0.76% | |
Energy Transfer Operating L.P., 4.25%, 03/15/2023 | | $ | 107,000 | | | $ | 113,804 | |
| |
Kinder Morgan Energy Partners L.P., 5.80%, 03/01/2021 | | | 108,000 | | | | 108,884 | |
| |
Kinder Morgan, Inc.,
2.00%, 02/15/2031 | | | 85,000 | | | | 85,964 | |
| |
5.20%, 03/01/2048 | | | 52,000 | | | | 66,242 | |
| |
MPLX L.P.,
1.33% (3 mo. USD LIBOR + 1.10%), 09/09/2022(e) | | | 144,000 | | | | 144,026 | |
| |
1.75%, 03/01/2026 | | | 134,000 | | | | 138,746 | |
| |
4.25%, 12/01/2027 | | | 77,000 | | | | 90,508 | |
| |
2.65%, 08/15/2030 | | | 142,000 | | | | 148,983 | |
| |
ONEOK, Inc.,
5.85%, 01/15/2026 | | | 48,000 | | | | 57,544 | |
| |
6.35%, 01/15/2031 | | | 180,000 | | | | 231,104 | |
| |
Sabine Pass Liquefaction LLC, 4.20%, 03/15/2028 | | | 74,000 | | | | 84,954 | |
| |
Sunoco Logistics Partners Operations L.P.,
4.00%, 10/01/2027 | | | 85,000 | | | | 93,030 | |
| |
Williams Cos., Inc. (The), 3.70%, 01/15/2023 | | | 137,000 | | | | 145,209 | |
| |
| | | | | | | 1,508,998 | |
| |
|
| Other Diversified Financial Services–0.30% | |
Avolon Holdings Funding Ltd. (Ireland), 4.25%, 04/15/2026(c) | | | 78,000 | | | | 84,094 | |
| |
Blackstone Holdings Finance Co. LLC,
3.15%, 10/02/2027(c) | | | 48,000 | | | | 53,541 | |
| |
1.60%, 03/30/2031(c) | | | 190,000 | | | | 189,258 | |
| |
2.80%, 09/30/2050(c) | | | 87,000 | | | | 88,994 | |
| |
Equitable Holdings, Inc., 4.35%, 04/20/2028 | | | 66,000 | | | | 78,046 | |
| |
KKR Group Finance Co. VIII LLC, 3.50%, 08/25/2050(c) | | | 85,000 | | | | 94,605 | |
| |
| | | | | | | 588,538 | |
| |
|
| Packaged Foods & Meats–0.48% | |
Conagra Brands, Inc., 4.60%, 11/01/2025 | | | 130,000 | | | | 153,262 | |
| |
Experian Finance PLC (United Kingdom),
2.75%, 03/08/2030(c) | | | 311,000 | | | | 338,030 | |
| |
Mondelez International Holdings Netherlands B.V., 2.00%, 10/28/2021(c) | | | 339,000 | | | | 343,216 | |
| |
Tyson Foods, Inc., 3.90%, 09/28/2023 | | | 112,000 | | | | 122,360 | |
| |
| | | | | | | 956,868 | |
| |
|
| Paper Packaging–0.09% | |
Berry Global, Inc., 1.57%, 01/15/2026(c) | | | 60,000 | | | | 60,594 | |
| |
Packaging Corp. of America, 3.65%, 09/15/2024 | | | 112,000 | | | | 122,820 | |
| |
| | | | | | | 183,414 | |
| |
|
| Pharmaceuticals–0.78% | |
Bayer US Finance II LLC (Germany),
3.88%, 12/15/2023(c) | | | 335,000 | | | | 365,245 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Pharmaceuticals–(continued) | |
Bristol-Myers Squibb Co.,
0.75%, 11/13/2025 | | $ | 160,000 | | | $ | 161,171 | |
| |
1.45%, 11/13/2030 | | | 248,000 | | | | 249,320 | |
| |
2.35%, 11/13/2040 | | | 24,000 | | | | 24,701 | |
| |
2.55%, 11/13/2050 | | | 80,000 | | | | 81,923 | |
| |
Elanco Animal Health, Inc., 5.90%, 08/28/2028 | | | 145,000 | | | | 171,553 | |
| |
Mylan, Inc., 3.13%, 01/15/2023(c) | | | 126,000 | | | | 132,341 | |
| |
Royalty Pharma PLC,
1.20%, 09/02/2025(c) | | | 53,000 | | | | 53,859 | |
| |
1.75%, 09/02/2027(c) | | | 50,000 | | | | 51,489 | |
| |
2.20%, 09/02/2030(c) | | | 59,000 | | | | 60,657 | |
| |
Takeda Pharmaceutical Co. Ltd. (Japan), 5.00%, 11/26/2028 | | | 160,000 | | | | 198,974 | |
| |
| | | | | | | 1,551,233 | |
| |
|
| Property & Casualty Insurance–0.27% | |
Arch Capital Group Ltd., 3.64%, 06/30/2050 | | | 73,000 | | | | 85,119 | |
| |
CNA Financial Corp., 3.45%, 08/15/2027 | | | 94,000 | | | | 106,601 | |
| |
Fidelity National Financial, Inc., 3.40%, 06/15/2030 | | | 92,000 | | | | 101,179 | |
| |
2.45%, 03/15/2031 | | | 142,000 | | | | 144,665 | |
| |
W.R. Berkley Corp., 4.00%, 05/12/2050 | | | 81,000 | | | | 99,085 | |
| |
| | | | | | | 536,649 | |
| |
|
| Railroads–0.18% | |
CSX Corp., 2.50%, 05/15/2051 | | | 155,000 | | | | 153,968 | |
| |
Union Pacific Corp.,
2.15%, 02/05/2027 | | | 89,000 | | | | 94,653 | |
| |
2.40%, 02/05/2030 | | | 110,000 | | | | 118,590 | |
| |
| | | | | | | 367,211 | |
| |
|
| Real Estate Development–0.05% | |
Piedmont Operating Partnership L.P., 3.15%, 08/15/2030 | | | 99,000 | | | | 101,520 | |
| |
|
| Regional Banks–0.56% | |
Citizens Financial Group, Inc., 3.25%, 04/30/2030 | | | 60,000 | | | | 67,847 | |
| |
Fifth Third Bancorp, 2.55%, 05/05/2027 | | | 78,000 | | | | 84,978 | |
| |
Fifth Third Bank N.A., 3.85%, 03/15/2026 | | | 160,000 | | | | 181,495 | |
| |
Huntington Bancshares, Inc., 4.00%, 05/15/2025 | | | 137,000 | | | | 155,240 | |
| |
KeyCorp, 4.15%, 10/29/2025 | | | 43,000 | | | | 49,954 | |
| |
PNC Financial Services Group, Inc. (The), 3.15%, 05/19/2027 | | | 104,000 | | | | 116,294 | |
| |
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | | | 102,000 | | | | 110,228 | |
| |
Synovus Financial Corp., 3.13%, 11/01/2022 | | | 72,000 | | | | 74,788 | |
| |
Zions Bancorporation N.A., 3.25%, 10/29/2029 | | | 250,000 | | | | 263,653 | |
| |
| | | | | | | 1,104,477 | |
| |
|
| Reinsurance–0.07% | |
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | | 132,000 | | | | 141,692 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Residential REITs–0.27% | |
Essex Portfolio L.P.,
3.00%, 01/15/2030 | | $ | 61,000 | | | $ | 67,024 | |
| |
1.65%, 01/15/2031 | | | 66,000 | | | | 65,677 | |
| |
2.65%, 09/01/2050 | | | 118,000 | | | | 113,495 | |
| |
Mid-America Apartments L.P., 1.70%, 02/15/2031 | | | 43,000 | | | | 42,914 | |
| |
Spirit Realty L.P.,
3.20%, 01/15/2027 | | | 83,000 | | | | 88,251 | |
| |
VEREIT Operating Partnership L.P., 2.20%, 06/15/2028 | | | 76,000 | | | | 77,781 | |
| |
2.85%, 12/15/2032 | | | 69,000 | | | | 72,174 | |
| |
| | | | | | | 527,316 | |
| |
|
| Restaurants–0.01% | |
McDonald’s Corp.,
3.30%, 07/01/2025 | | | 19,000 | | | | 21,175 | |
| |
|
| Retail REITs–0.41% | |
Kimco Realty Corp.,
1.90%, 03/01/2028 | | | 166,000 | | | | 171,501 | |
| |
2.70%, 10/01/2030 | | | 81,000 | | | | 87,357 | |
| |
Kite Realty Group L.P., 4.00%, 10/01/2026 | | | 81,000 | | | | 85,025 | |
| |
Realty Income Corp., 3.25%, 01/15/2031 | | | 110,000 | | | | 124,840 | |
| |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 98,000 | | | | 104,773 | |
| |
Retail Properties of America, Inc., 4.75%, 09/15/2030 | | | 95,000 | | | | 101,005 | |
| |
Scentre Group Trust 2 (Australia), 4.75%, 09/24/2080(c)(f) | | | 133,000 | | | | 138,811 | |
| |
5.13%, 09/24/2080(c)(f) | | | 4,000 | | | | 4,225 | |
| |
| | | | | | | 817,537 | |
| |
|
| Semiconductor Equipment–0.06% | |
NXP B.V./NXP Funding LLC/NXP USA, Inc. (Netherlands),
2.70%, 05/01/2025(c) | | | 33,000 | | | | 35,540 | |
| |
3.88%, 06/18/2026(c) | | | 81,000 | | | | 92,863 | |
| |
| | | | | | | 128,403 | |
| |
|
| Semiconductors–0.60% | |
Analog Devices, Inc., 2.95%, 04/01/2025 | | | 52,000 | | | | 56,800 | |
| |
Broadcom, Inc.,
2.25%, 11/15/2023 | | | 175,000 | | | | 182,881 | |
| |
4.70%, 04/15/2025 | | | 215,000 | | | | 246,432 | |
| |
3.15%, 11/15/2025 | | | 180,000 | | | | 196,620 | |
| |
4.15%, 11/15/2030 | | | 148,000 | | | | 171,428 | |
| |
QUALCOMM, Inc.,
2.15%, 05/20/2030 | | | 160,000 | | | | 169,516 | |
| |
3.25%, 05/20/2050 | | | 155,000 | | | | 179,932 | |
| |
| | | | | | | 1,203,609 | |
| |
|
| Soft Drinks–0.07% | |
Keurig Dr Pepper, Inc., 4.06%, 05/25/2023 | | | 125,000 | | | | 135,897 | |
| |
|
| Specialized REITs–0.27% | |
Agree L.P., 2.90%, 10/01/2030 | | | 42,000 | | | | 44,684 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| Specialized REITs–(continued) | |
American Tower Corp.,
3.00%, 06/15/2023 | | $ | 112,000 | | | $ | 118,710 | |
| |
4.00%, 06/01/2025 | | | 70,000 | | | | 79,114 | |
| |
1.30%, 09/15/2025 | | | 82,000 | | | | 83,907 | |
| |
Crown Castle International Corp., 3.30%, 07/01/2030 | | | 42,000 | | | | 47,060 | |
| |
Equinix, Inc.,
3.20%, 11/18/2029 | | | 60,000 | | | | 66,225 | |
| |
Life Storage L.P., 2.20%, 10/15/2030 | | | 48,000 | | | | 49,053 | |
| |
Simon Property Group L.P., 3.50%, 09/01/2025 | | | 38,000 | | | | 42,217 | |
| |
| | | | | | | 530,970 | |
| |
|
| Systems Software–0.14% | |
Leidos, Inc.,
2.30%, 02/15/2031(c) | | | 191,000 | | | | 194,834 | |
| |
VMware, Inc.,
3.90%, 08/21/2027 | | | 70,000 | | | | 78,985 | |
| |
| | | | | | | 273,819 | |
| |
|
| Technology Hardware, Storage & Peripherals–0.50% | |
Apple, Inc.,
4.38%, 05/13/2045 | | | 76,000 | | | | 104,160 | |
| |
2.55%, 08/20/2060 | | | 480,000 | | | | 493,703 | |
| |
Dell International LLC/EMC Corp., 5.30%, 10/01/2029(c) | | | 157,000 | | | | 192,409 | |
| |
Lenovo Group Ltd. (China), 3.42%, 11/02/2030(c) | | | 200,000 | | | | 210,373 | |
| |
| | | | | | | 1,000,645 | |
| |
|
| Thrifts & Mortgage Finance–0.09% | |
Nationwide Building Society (United Kingdom),
3.96%, 07/18/2030(c)(f) | | | 150,000 | | | | 174,865 | |
| |
|
| Tobacco–0.34% | |
Altria Group, Inc., 3.49%, 02/14/2022 | | | 85,000 | | | | 87,935 | |
| |
BAT Capital Corp. (United Kingdom), 2.26%, 03/25/2028 | | | 117,000 | | | | 121,557 | |
| |
Imperial Brands Finance PLC (United Kingdom), 3.75%, 07/21/2022(c) | | | 328,000 | | | | 342,143 | |
| |
Philip Morris International, Inc., 0.88%, 05/01/2026 | | | 124,000 | | | | 124,580 | |
| |
| | | | | | | 676,215 | |
| |
|
| Trucking–0.31% | |
Penske Truck Leasing Co. L.P./PTL Finance Corp.,
3.65%, 07/29/2021(c) | | | 90,000 | | | | 91,406 | |
| |
4.00%, 07/15/2025(c) | | | 106,000 | | | | 120,256 | |
| |
1.20%, 11/15/2025(c) | | | 36,000 | | | | 36,334 | |
| |
3.40%, 11/15/2026(c) | | | 120,000 | | | | 133,531 | |
| |
Ryder System, Inc.,
2.50%, 09/01/2024 | | | 58,000 | | | | 61,640 | |
| |
4.63%, 06/01/2025 | | | 98,000 | | | | 113,599 | |
| |
3.35%, 09/01/2025 | | | 48,000 | | | | 53,525 | |
| |
| | | | | | | 610,291 | |
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $43,144,515) | | | | 46,481,576 | |
| |
| |
Asset-Backed Securities–13.14% | | | | | |
Alternative Loan Trust, Series 2005-29CB, Class A4, 5.00%, 07/25/2035 | | | 123,206 | | | | 100,141 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
American Credit Acceptance Receivables Trust,
Series 2017-4, Class D, 3.57%, 01/10/2024(c) | | $ | 166,254 | | | $ | 168,452 | |
| |
Series 2018-2, Class C, 3.70%, 07/10/2024(c) | | | 67,477 | | | | 67,766 | |
| |
Series 2018-3, Class D, 4.14%, 10/15/2024(c) | | | 25,000 | | | | 25,586 | |
| |
Series 2018-4, Class C, 3.97%, 01/13/2025(c) | | | 119,614 | | | | 120,908 | |
| |
Series 2019-3, Class C, 2.76%, 09/12/2025(c) | | | 155,000 | | | | 157,937 | |
| |
AmeriCredit Automobile Receivables Trust,
Series 2017-2, Class D, 3.42%, 04/18/2023 | | | 320,000 | | | | 329,087 | |
| |
Series 2017-4, Class D, 3.08%, 12/18/2023 | | | 205,000 | | | | 211,302 | |
| |
Series 2018-3, Class C, 3.74%, 10/18/2024 | | | 260,000 | | | | 274,001 | |
| |
Series 2019-2, Class C, 2.74%, 04/18/2025 | | | 100,000 | | | | 104,235 | |
| |
Series 2019-2, Class D, 2.99%, 06/18/2025 | | | 270,000 | | | | 282,756 | |
| |
Series 2019-3, Class D, 2.58%, 09/18/2025 | | | 130,000 | | | | 135,065 | |
| |
Angel Oak Mortgage Trust, Series 2020-1, Class A1, 2.47%, 12/25/2059(c)(h) | | | 128,909 | | | | 130,301 | |
| |
Series 2020-3, Class A1, 1.69%, 04/25/2065(c)(h) | | | 373,912 | | | | 377,024 | |
| |
Bain Capital Credit CLO Ltd., Series 2017-2A, Class AR, 1.46% (3 mo. USD LIBOR + 1.25%), 07/25/2030(c)(e) | | | 423,812 | | | | 423,917 | |
| |
Banc of America Funding Trust, Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | 28,512 | | | | 28,170 | |
| |
Series 2007-C, Class 1A4, 3.48%, 05/20/2036(h) | | | 9,490 | | | | 9,368 | |
| |
Banc of America Mortgage Trust, Series 2004-E, Class 2A6, 3.60%, 06/25/2034(h) | | | 26,014 | | | | 26,064 | |
| |
Bank, Series 2019-BNK16, Class XA, IO, 0.96%, 02/15/2052(i) | | | 1,564,204 | | | | 98,655 | |
| |
Bear Stearns Adjustable Rate Mortgage Trust,
Series 2005-9, Class A1, 2.41% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(e) | | | 162,741 | | | | 163,082 | |
| |
Series 2006-1, Class A1, 2.37% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(e) | | | 59,534 | | | | 60,925 | |
| |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.52%, 01/15/2051(i) | | | 2,175,845 | | | | 63,722 | |
| |
Capital Auto Receivables Asset Trust,
Series 2017-1, Class D, 3.15%, 02/20/2025(c) | | | 40,000 | | | | 40,619 | |
| |
Series 2018-2, Class B, 3.48%, 10/20/2023(c) | | | 125,000 | | | | 125,953 | |
| |
Series 2018-2, Class C, 3.69%, 12/20/2023(c) | | | 120,000 | | | | 122,006 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
CarMax Auto Owner Trust,
Series 2017-1, Class D, 3.43%, 07/17/2023 | | $ | 245,000 | | | $ | 246,355 | |
| |
Series 2017-4, Class D, 3.30%, 05/15/2024 | | | 110,000 | | | | 112,575 | |
| |
CCG Receivables Trust, Series 2018-1, Class B, 3.09%, 06/16/2025(c) | | | 90,000 | | | | 90,848 | |
| |
Series 2018-2, Class C, 3.87%, 12/15/2025(c) | | | 60,000 | | | | 61,848 | |
| |
Series 2019-2, Class B, 2.55%, 03/15/2027(c) | | | 105,000 | | | | 107,844 | |
| |
Series 2019-2, Class C, 2.89%, 03/15/2027(c) | | | 100,000 | | | | 102,629 | |
| |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(i) | | | 841,558 | | | | 34,893 | |
| |
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, 4.00%,
04/25/2049(c)(h) | | | 28,566 | | | | 29,339 | |
| |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 3.36%, 01/25/2036(h) | | | 65,846 | | | | 63,796 | |
| |
CHL Mortgage Pass-Through Trust,
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | 38,198 | | | | 32,585 | |
| |
Series 2006-6, Class A3, 6.00%, 04/25/2036 | | | 24,437 | | | | 18,598 | |
| |
Citigroup Commercial Mortgage Trust,
Series 2013-GC17, Class XA, IO, 1.03%, 11/10/2046(i) | | | 405,128 | | | | 9,986 | |
| |
Series 2014-GC21, Class AA, 3.48%, 05/10/2047 | | | 74,308 | | | | 77,845 | |
| |
Series 2017-C4, Class XA, IO, 1.10%, 10/12/2050(i) | | | 2,248,923 | | | | 119,032 | |
| |
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR1, Class 1A1, 3.88% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(e) | | | 154,156 | | | | 157,423 | |
| |
CNH Equipment Trust,
Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 70,000 | | | | 71,044 | |
| |
Series 2019-A, Class A4, 3.22%, 01/15/2026 | | | 120,000 | | | | 126,928 | |
| |
COLT Mortgage Loan Trust, Series 2020-1, Class A1, 2.49%, 02/25/2050(c)(h) | | | 263,525 | | | | 266,981 | |
| |
Series 2020-2, Class A1, 1.85%, 03/25/2065(c)(h) | | | 193,311 | | | | 196,033 | |
| |
COMM Mortgage Trust,
Series 2012-CR5, Class XA, IO, 1.51%, 12/10/2045(i) | | | 297,329 | | | | 7,238 | |
| |
Series 2013-CR6, Class AM, 3.15%, 03/10/2046(c) | | | 255,000 | | | | 265,354 | |
| |
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | | | 54,362 | | | | 57,006 | |
| |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 865,000 | | | | 950,971 | |
| |
Series 2014-LC15, Class AM, 4.20%, 04/10/2047 | | | 140,000 | | | | 153,932 | |
| |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 495,000 | | | | 544,372 | |
| |
CSAIL Commercial Mortgage Trust, Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | 571,000 | | | | 617,506 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
CSMC Mortgage-Backed Trust,
Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | $ | 99,970 | | | $ | 79,090 | |
| |
Dell Equipment Finance Trust,
Series 2018-1, Class B, 3.34%, 06/22/2023(c) | | | 90,000 | | | | 90,729 | |
| |
Series 2019-1, Class C, 3.14%, 03/22/2024(c) | | | 330,000 | | | | 337,602 | |
| |
Series 2019-2, Class D, 2.48%, 04/22/2025(c) | | | 110,000 | | | | 111,812 | |
| |
Drive Auto Receivables Trust,
Series 2017-1, Class D, 3.84%, 03/15/2023 | | | 135,875 | | | | 137,517 | |
| |
Series 2018-1, Class D, 3.81%, 05/15/2024 | | | 116,050 | | | | 118,350 | |
| |
Series 2018-2, Class D, 4.14%, 08/15/2024 | | | 230,000 | | | | 236,711 | |
| |
Series 2018-3, Class D, 4.30%, 09/16/2024 | | | 215,000 | | | | 222,817 | |
| |
Series 2018-5, Class C, 3.99%, 01/15/2025 | | | 210,000 | | | | 214,911 | |
| |
Series 2019-1, Class C, 3.78%, 04/15/2025 | | | 340,000 | | | | 346,560 | |
| |
DT Auto Owner Trust,
Series 2017-1A, Class D, 3.55%,
11/15/2022(c) | | | 44 | | | | 44 | |
| |
Series 2017-2A, Class D, 3.89%, 01/15/2023(c) | | | 16,037 | | | | 16,072 | |
| |
Series 2017-3A, Class D, 3.58%, 05/15/2023(c) | | | 21,483 | | | | 21,651 | |
| |
Series 2017-3A, Class E, 5.60%, 08/15/2024(c) | | | 195,000 | | | | 200,773 | |
| |
Series 2017-4A, Class D, 3.47%, 07/17/2023(c) | | | 42,944 | | | | 43,133 | |
| |
Series 2018-3A, Class B, 3.56%, 09/15/2022(c) | | | 26,744 | | | | 26,776 | |
| |
Series 2018-3A, Class C, 3.79%, 07/15/2024(c) | | | 105,000 | | | | 106,314 | |
| |
Ellington Financial Mortgage Trust, Series 2020-1, Class A1, 2.01%, 05/25/2065(c)(h) | | | 86,465 | | | | 87,917 | |
| |
Exeter Automobile Receivables Trust,
Series 2019-2A, Class C, 3.30%, 03/15/2024(c) | | | 322,000 | | | | 328,798 | |
| |
Series 2019-4A, Class D, 2.58%, 09/15/2025(c) | | | 230,000 | | | | 236,744 | |
| |
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class 1A6, 0.80% (1 mo. USD LIBOR + 0.65%), 11/25/2035(e) | | | 55,402 | | | | 25,995 | |
| |
Flagship Credit Auto Trust, Series 2016-1, Class C, 6.22%, 06/15/2022(c) | | | 133,305 | | | | 134,590 | |
| |
Ford Credit Floorplan Master Owner Trust, Series 2019-3, Class A2, 0.76% (1 mo. USD LIBOR + 0.60%), 09/15/2024(e) | | | 550,000 | | | | 554,111 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
FREMF Mortgage Trust,
Series 2013-K25, Class C, 3.62%, 11/25/2045(c)(h) | | $ | 60,000 | | | $ | 62,366 | |
| |
Series 2013-K26, Class C, 3.60%, 12/25/2045(c)(h) | | | 40,000 | | | | 41,749 | |
| |
Series 2013-K27, Class C, 3.50%, 01/25/2046(c)(h) | | | 110,000 | | | | 114,680 | |
| |
Series 2013-K28, Class C, 3.49%, 06/25/2046(c)(h) | | | 450,000 | | | | 472,372 | |
| |
Series 2014-K715, Class C, 4.12%, 02/25/2046(c)(h) | | | 180,000 | | | | 179,762 | |
| |
GLS Auto Receivables Trust, Series 2018-1A, Class A, 2.82%, 07/15/2022(c) | | | 8,361 | | | | 8,370 | |
| |
GS Mortgage Securities Trust, Series 2012-GC6, Class A3, 3.48%, 01/10/2045 | | | 54,793 | | | | 55,674 | |
| |
Series 2013-GC16, Class AS, 4.65%, 11/10/2046 | | | 65,000 | | | | 71,079 | |
| |
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | | | 15,804 | | | | 16,127 | |
| |
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | | | 56,035 | | | | 58,516 | |
| |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 225,000 | | | | 242,593 | |
| |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.33%, 07/25/2035(h) | | | 8,401 | | | | 8,578 | |
| |
HomeBanc Mortgage Trust, Series 2005-3, Class A2, 0.77% (1 mo. USD LIBOR + 0.62%), 07/25/2035(e) | | | 4,570 | | | | 4,584 | |
| |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-C10, Class AS, 3.37%, 12/15/2047 | | | 325,000 | | | | 339,775 | |
| |
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | | | 330,000 | | | | 359,433 | |
| |
Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | 78,000 | | | | 81,195 | |
| |
Series 2014-C20, Class AS, 4.04%, 07/15/2047 | | | 245,000 | | | | 267,714 | |
| |
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | | | 128,912 | | | | 130,193 | |
| |
JP Morgan Mortgage Trust,
Series 2007-A1, Class 5A1, 3.06%, 07/25/2035(h) | | | 41,731 | | | | 41,387 | |
| |
Series 2018-8, Class A17, 4.00%, 01/25/2049(c)(h) | | | 4,171 | | | | 4,175 | |
| |
JPMBB Commercial Mortgage Securities Trust,
Series 2014-C24, Class B, 4.12%, 11/15/2047(h) | | | 270,000 | | | | 278,608 | |
| |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | 105,000 | | | | 115,635 | |
| |
Series 2015-C27, Class XA, IO, 1.16%, 02/15/2048(i) | | | 2,105,926 | | | | 83,663 | |
| |
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 2A2, 3.11%, 04/21/2034(h) | | | 14,758 | | | | 14,790 | |
| |
Morgan Stanley BAML Trust, Series 2014-C19, Class AS, 3.83%, 12/15/2047 | | | 720,000 | | | | 784,843 | |
| |
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | 240,000 | | | | 251,267 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Morgan Stanley Capital I Trust, Series 2011-C2, Class A4, 4.66%, 06/15/2044(c) | | $ | 57,196 | | | $ | 57,585 | |
| |
Series 2017-HR2, Class XA, IO, 0.79%, 12/15/2050(i) | | | 764,387 | | | | 33,821 | |
| |
Morgan Stanley ReRemic Trust, Series 2012-R3, Class 1B, 2.64%, 11/26/2036(c)(h) | | | 169,000 | | | | 161,287 | |
| |
Mortgage-Linked Amortizing Notes, Series 2012-1, Class A10, 2.06%, 01/15/2022 | | | 80,533 | | | | 81,898 | |
| |
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 1.24% (3 mo. USD LIBOR + 1.02%), 04/19/2030(c)(e) | | | 276,000 | | | | 274,945 | |
| |
OCP CLO Ltd. (Cayman Islands), Series 2017-13A, Class A1A, 1.50% (3 mo. USD LIBOR + 1.26%), 07/15/2030(c)(e) | | | 250,000 | | | | 250,125 | |
| |
Series 2020-8RA, Class A1, 1.00% (1.22% - 3 mo. USD LIBOR), 01/17/2032(c)(e) | | | 366,000 | | | | 366,183 | |
| |
Octagon Investment Partners 49 Ltd., Series 2020-5A, Class A1, 1.00% (1.22% - 3 mo. USD LIBOR), 01/15/2033(c)(e) | | | 339,000 | | | | 339,276 | |
| |
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.48% (3 mo. USD LIBOR + 1.26%),
01/20/2033(c)(e) | | | 272,907 | | | | 273,615 | |
| |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(c) | | | 115,000 | | | | 118,045 | |
| |
Progress Residential Trust, Series 2020-SFR1, Class A, 1.73%, 04/17/2037(c) | | | 360,000 | | | | 367,108 | |
| |
RBSSP Resecuritization Trust, Series 2010-1, Class 2A1, 3.04%, 07/26/2045(c)(h) | | | 2,278 | | | | 2,297 | |
| |
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | 5,579 | | | | 5,204 | |
| |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, 02/25/2024(c)(h) | | | 120,007 | | | | 122,561 | |
| |
Santander Drive Auto Receivables Trust,
Series 2017-1, Class E, 5.05%, 07/15/2024(c) | | | 410,000 | | | | 416,986 | |
| |
Series 2017-3, Class D, 3.20%, 11/15/2023 | | | 295,000 | | | | 300,185 | |
| |
Series 2018-1, Class D, 3.32%, 03/15/2024 | | | 110,000 | | | | 112,539 | |
| |
Series 2018-2, Class D, 3.88%, 02/15/2024 | | | 170,000 | | | | 175,616 | |
| |
Series 2018-5, Class C, 3.81%, 12/16/2024 | | | 170,375 | | | | 172,281 | |
| |
Series 2019-2, Class D, 3.22%, 07/15/2025 | | | 195,000 | | | | 202,915 | |
| |
Series 2019-3, Class D, 2.68%, 10/15/2025 | | | 165,000 | | | | 169,744 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Santander Retail Auto Lease Trust,
Series 2019-A, Class C, 3.30%, 05/22/2023(c) | | $ | 320,000 | | | $ | 329,638 | |
| |
Series 2019-B, Class C, 2.77%, 08/21/2023(c) | | | 115,000 | | | | 118,410 | |
| |
Series 2019-C, Class C, 2.39%, 11/20/2023(c) | | | 205,000 | | | | 210,577 | |
| |
Starwood Mortgage Residential Trust, Series 2020-1, Class A1, 2.28%, 02/25/2050(c)(h) | | | 152,527 | | | | 156,074 | |
| |
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, 1.51% (3 mo. USD LIBOR + 1.29%), 04/18/2033(c)(e) | | | 250,000 | | | | 250,312 | |
| |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.50% (3 mo. USD LIBOR + 1.28%), 04/20/2033(c)(e) | | | 256,000 | | | | 256,330 | |
| |
Tricon American Homes Trust, Series 2020-SFR2, Class A, 1.48%, 11/17/2039(c) | | | 280,000 | | | | 282,831 | |
| |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 1.00%, 11/15/2050(i) | | | 1,494,516 | | | | 71,969 | |
| |
United Auto Credit Securitization Trust, Series 2019-1, Class C, 3.16%, 08/12/2024(c) | | | 139,182 | | | | 139,849 | |
| |
Verus Securitization Trust,
Series 2020-1, Class A1, 2.42%,
01/25/2060(c)(g) | | | 335,307 | | | | 341,976 | |
| |
Series 2020-1, Class A2, 2.64%, 01/25/2060(c)(g) | | | 99,729 | | | | 101,752 | |
| |
Series 2020-INV1, Class A1, 1.98%, 03/25/2060(c)(h) | | | 90,494 | | | | 91,918 | |
| |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(c) | | | 175,429 | | | | 175,966 | |
| |
WaMu Mortgage Pass-Through Ctfs. Trust,
Series 2003-AR10, Class A7, 2.57%, 10/25/2033(h) | | | 38,396 | | | | 38,664 | |
| |
Series 2005-AR14, Class 1A4, 2.90%, 12/25/2035(h) | | | 44,307 | | | | 44,289 | |
| |
Series 2005-AR16, Class 1A1, 2.75%, 12/25/2035(h) | | | 43,293 | | | | 42,851 | |
| |
Wells Fargo Commercial Mortgage Trust,
Series 2015-NXS1, Class ASB, 2.93%, 05/15/2048 | | | 288,534 | | | | 299,028 | |
| |
Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(i) | | | 1,064,556 | | | | 54,379 | |
| |
Westlake Automobile Receivables Trust,
Series 2017-2A, Class E, 4.63%, 07/15/2024(c) | | | 320,000 | | | | 321,459 | |
| |
Series 2018-1A, Class D, 3.41%, 05/15/2023(c) | | | 212,931 | | | | 214,549 | |
| |
Series 2018-3A, Class B, 3.32%, 10/16/2023(c) | | | 16,322 | | | | 16,341 | |
| |
Series 2019-3A, Class C, 2.49%, 10/15/2024(c) | | | 265,000 | | | | 271,368 | |
| |
WFRBS Commercial Mortgage Trust,
Series 2011-C3, Class XA, IO, 1.27%, 03/15/2044(c)(i) | | | 1,482,413 | | | | 1,020 | |
| |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | 155,000 | | | | 162,754 | |
| |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | 150,000 | | | | 163,144 | |
| |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(h) | | | 165,000 | | | | 180,318 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
World Financial Network Credit Card Master Trust, Series 2018-A, Class A, 3.07%, 12/16/2024 | | $ | 540,000 | | | $ | 541,766 | |
| |
Series 2018-B, Class A, 3.46%, 07/15/2025 | | | 245,000 | | | | 250,406 | |
| |
Series 2018-C, Class A, 3.55%, 08/15/2025 | | | 490,000 | | | | 502,427 | |
| |
Series 2019-A, Class A, 3.14%, 12/15/2025 | | | 75,000 | | | | 77,364 | |
| |
Series 2019-B, Class A, 2.49%, 04/15/2026 | | | 260,000 | | | | 268,050 | |
| |
Series 2019-C, Class A, 2.21%, 07/15/2026 | | | 225,000 | | | | 232,069 | |
| |
Total Asset-Backed Securities
(Cost $25,800,602) | | | | 26,152,212 | |
| |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–11.44% | |
Collateralized Mortgage Obligations–0.99% | |
Fannie Mae Interest STRIPS, IO, 7.00%, 06/25/2023 to 04/25/2032(j) | | | 32,249 | | | | 2,776 | |
| |
7.50%, 08/25/2023 to 11/25/2023(j) | | | 41,772 | | | | 2,811 | |
| |
6.50%, 02/25/2032 to 02/25/2033(j) | | | 116,443 | | | | 22,650 | |
| |
6.50%, 02/25/2033(h)(j) | | | 31,663 | | | | 5,979 | |
| |
6.00%, 06/25/2033 to 08/25/2035(j) | | | 87,725 | | | | 16,543 | |
| |
5.50%, 09/25/2033 to 06/25/2035(j) | | | 246,132 | | | | 43,842 | |
| |
6.00%, 09/25/2035(h)(j) | | | 35,505 | | | | 6,525 | |
| |
Fannie Mae REMICs, IO, 5.50%, 06/25/2023 to 07/25/2046(j) | | | 420,577 | | | | 341,771 | |
| |
6.55%, 02/25/2024 to 05/25/2035(e)(j) | | | 108,922 | | | | 20,570 | |
| |
4.00%, 08/25/2026 to 08/25/2047(j) | | | 307,865 | | | | 30,990 | |
| |
3.00%, 11/25/2027(j) | | | 131,866 | | | | 7,571 | |
| |
6.95% (7.10% - 1 mo. USD LIBOR), 11/25/2030(e)(j) | | | 36,339 | | | | 6,586 | |
| |
7.75% (7.90% - 1 mo. USD LIBOR), 11/25/2031(e)(j) | | | 52,469 | | | | 10,474 | |
| |
7.80% (7.95% - 1 mo. USD LIBOR), 01/25/2032(e)(j) | | | 12,101 | | | | 2,499 | |
| |
7.95% (8.10% - 1 mo. USD LIBOR), 03/25/2032(e)(j) | | | 13,979 | | | | 3,105 | |
| |
7.85%, 04/25/2032 to 12/25/2032(e)(j) | | | 167,430 | | | | 37,017 | |
| |
7.94% (8.10% - 1 mo. USD LIBOR), 12/18/2032(e)(j) | | | 16,800 | | | | 2,737 | |
| |
8.10%, 02/25/2033 to 05/25/2033(e)(j) | | | 79,118 | | | | 18,718 | |
| |
7.40% (1 mo. USD LIBOR + 7.55%), 10/25/2033(e)(j) | | | 9,964 | | | | 2,228 | |
| |
5.90%, 03/25/2035 to 07/25/2038(e)(j) | | | 31,300 | | | | 5,572 | |
| |
6.60% (6.75% - 1 mo. USD LIBOR), 03/25/2035(e)(j) | | | 5,673 | | | | 972 | |
| |
6.45% (6.60% - 1 mo. USD LIBOR), 05/25/2035(e)(j) | | | 291,825 | | | | 47,690 | |
| |
3.50%, 08/25/2035(j) | | | 334,945 | | | | 40,689 | |
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Collateralized Mortgage Obligations–(continued) | |
5.95% (6.10% - 1 mo. USD LIBOR), 10/25/2035(e)(j) | | $ | 26,196 | | | $ | 5,187 | |
| |
6.39% (1 mo. USD LIBOR + 6.54%), 06/25/2037(e)(j) | | | 47,882 | | | | 9,970 | |
| |
6.40% (6.55% - 1 mo. USD LIBOR), 10/25/2041(e)(j) | | | 68,523 | | | | 14,421 | |
| |
6.00% (6.15% - 1 mo. USD LIBOR), 12/25/2042(e)(j) | | | 248,010 | | | | 49,352 | |
| |
PO, 0.00%, 09/25/2023(k) | | | 10,781 | | | | 10,637 | |
| |
6.00%, 11/25/2028 | | | 21,420 | | | | 24,278 | |
| |
13.80% (1 mo. USD LIBOR + 14.10%), 12/25/2033(e) | | | 38 | | | | 39 | |
| |
0.40% (1 mo. USD LIBOR + 0.25%), 08/25/2035(e) | | | 25,164 | | | | 25,185 | |
| |
24.02% (24.57% - (3.67 x 1 mo.
USD LIBOR)), 03/25/2036(e) | | | 33,583 | | | | 55,183 | |
| |
23.66% (24.20% - (3.67 x 1 mo.
USD LIBOR)), 06/25/2036(e) | | | 3,739 | | | | 5,579 | |
| |
23.66% (24.20% - (3.67 x 1 mo.
USD LIBOR)), 06/25/2036(e) | | | 19,818 | | | | 32,199 | |
| |
1.09% (1 mo. USD LIBOR + 0.94%), 06/25/2037(e) | | | 15,231 | | | | 15,599 | |
| |
1.50%, 01/25/2040 | | | 78,576 | | | | 79,127 | |
| |
5.00%, 04/25/2040 to 09/25/2047(e)(j) | | | 711,248 | | | | 136,886 | |
| |
Freddie Mac Multifamily Structured Pass-Through Ctfs., Series KC02, Class X1, 0.50%, 03/25/2024(h) | | | 4,845,245 | | | | 52,558 | |
| |
Series KC03, Class X1, 0.63%, 11/25/2024(h) | | | 2,713,198 | | | | 44,707 | |
| |
Series K734, Class X1, 0.65%, 02/25/2026(h) | | | 2,066,437 | | | | 59,079 | |
| |
Series K735, Class X1, 1.10%, 05/25/2026(h) | | | 2,033,436 | | | | 93,170 | |
| |
Series K093, Class X1, 0.95%, 05/25/2029(h) | | | 1,650,526 | | | | 115,483 | |
| |
Freddie Mac REMICs,
1.50%, 07/15/2023 | | | 128,861 | | | | 129,759 | |
| |
6.50%, 03/15/2032 to 06/15/2032 | | | 68,630 | | | | 80,741 | |
| |
3.50%, 05/15/2032 | | | 17,191 | | | | 18,479 | |
| |
24.17% (24.75% - (3.67 x 1 mo.
USD LIBOR)), 08/15/2035(e) | | | 7,485 | | | | 12,427 | |
| |
0.56% (1 mo. USD LIBOR + 0.40%), 09/15/2035(e) | | | 44,029 | | | | 44,336 | |
| |
IO, 7.49%, 07/15/2026 to 03/15/2029(e)(j) | | | 56,003 | | | | 7,559 | |
| |
3.00%, 06/15/2027 to 05/15/2040(j) | | | 426,560 | | | | 26,775 | |
| |
2.50%, 05/15/2028(j) | | | 80,399 | | | | 4,334 | |
| |
6.54% (6.70% - 1 mo. USD LIBOR), 01/15/2035(e)(j) | | | 209,341 | | | | 38,527 | |
| |
6.59% (6.75% - 1 mo. USD LIBOR), 02/15/2035(e)(j) | | | 12,885 | | | | 2,327 | |
| |
6.56% (6.72% - 1 mo. USD LIBOR), 05/15/2035(e)(j) | | | 94,267 | | | | 14,969 | |
| |
6.84% (7.00% - 1 mo. USD LIBOR), 12/15/2037(e)(j) | | | 12,802 | | | | 2,923 | |
| |
5.84% (6.00% - 1 mo. USD LIBOR), 04/15/2038(e)(j) | | | 5,163 | | | | 906 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Collateralized Mortgage Obligations–(continued) | |
5.91% (6.07% - 1 mo. USD LIBOR), 05/15/2038(e)(j) | | $ | 42,425 | | | $ | 8,468 | |
| |
6.09% (6.25% - 1 mo. USD LIBOR), 12/15/2039(e)(j) | | | 20,136 | | | | 3,833 | |
| |
4.00%, 04/15/2040 to 03/15/2045(j) | | | 147,605 | | | | 25,352 | |
| |
5.94% (6.10% - 1 mo. USD LIBOR), 01/15/2044(e)(j) | | | 102,239 | | | | 11,166 | |
| |
Freddie Mac STRIPS, IO,
7.00%, 04/01/2027(j) | | | 27,562 | | | | 3,741 | |
| |
3.00%, 12/15/2027(j) | | | 166,459 | | | | 10,970 | |
| |
3.27%, 12/15/2027(h)(j) | | | 43,166 | | | | 2,326 | |
| |
6.50%, 02/01/2028(j) | | | 7,118 | | | | 1,020 | |
| |
6.00%, 12/15/2032(j) | | | 22,090 | | | | 3,559 | |
| |
PO,
0.00%, 06/01/2026(k) | | | 7,194 | | | | 6,993 | |
| |
| | | | | | | 1,970,444 | |
| |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.11% | |
9.00%, 08/01/2022 to 05/01/2025 | | | 380 | | | | 412 | |
| |
6.50%, 07/01/2028 to 04/01/2034 | | | 11,776 | | | | 13,460 | |
| |
7.00%, 10/01/2031 to 10/01/2037 | | | 38,765 | | | | 44,686 | |
| |
5.00%, 12/01/2034 | | | 1,533 | | | | 1,743 | |
| |
5.50%, 09/01/2039 | | | 135,913 | | | | 157,897 | |
| |
| | |
| | | | | | | 218,198 | |
| |
|
Federal National Mortgage Association (FNMA)–0.06% | |
8.50%, 07/01/2032 | | | 844 | | | | 847 | |
| |
7.50%, 01/01/2033 | | | 30,591 | | | | 36,118 | |
| |
6.00%, 03/01/2037 | | | 66,334 | | | | 79,519 | |
| |
| | | | | | | 116,484 | |
| |
|
Government National Mortgage Association (GNMA)–2.45% | |
7.50%, 01/15/2023 to 06/15/2024 | | | 6,520 | | | | 6,639 | |
| |
8.00%, 04/15/2023 | | | 1,330 | | | | 1,347 | |
| |
7.00%, 01/15/2024 | | | 4,874 | | | | 4,892 | |
| |
IO,
7.35% (7.50% - 1 mo. USD LIBOR), 02/16/2032(e)(j) | | | 40,237 | | | | 25 | |
| |
6.40% (6.55% - 1 mo. USD LIBOR), 04/16/2037(e)(j) | | | 179,570 | | | | 36,021 | |
| |
6.50% (6.65% - 1 mo. USD LIBOR), 04/16/2041(e)(j) | | | 85,069 | | | | 14,834 | |
| |
4.50%, 09/16/2047(j) | | | 248,638 | | | | 36,203 | |
| |
6.05% (6.20% - 1 mo. USD LIBOR), 10/16/2047(e)(j) | | | 233,649 | | | | 42,540 | |
| |
TBA,
2.50%, 01/01/2051(l) | | | 4,465,000 | | | | 4,726,100 | |
| |
| | | | | | | 4,868,601 | |
| |
|
Uniform Mortgage-Backed Securities–7.83% | |
TBA
2.00%, 01/01/2036 to 02/01/2051(l) | | | 15,012,000 | | | | 15,588,222 | |
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $22,898,439) | | | | 22,761,949 | |
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
U.S. Treasury Securities–5.69% | |
U.S. Treasury Bonds–1.05% | | | | | | | | |
1.38%, 11/15/2040 | | $ | 627,000 | | | $ | 619,016 | |
| |
1.38%, 08/15/2050 | | | 1,564,800 | | | | 1,462,599 | |
| |
| | | | | | | 2,081,615 | |
| |
| |
U.S. Treasury Notes–4.64% | | | | | |
0.13%, 11/30/2022 | | | 211,500 | | | | 211,533 | |
| |
0.13%, 12/15/2023 | | | 1,249,900 | | | | 1,248,386 | |
| |
0.38%, 11/30/2025 | | | 4,728,100 | | | | 4,734,010 | |
| |
0.63%, 11/30/2027 | | | 728,900 | | | | 728,558 | |
| |
0.88%, 11/15/2030 | | | 2,328,400 | | | | 2,319,669 | |
| |
| | | | | | | 9,242,156 | |
| |
Total U.S. Treasury Securities
(Cost $11,307,434) | | | | 11,323,771 | |
| |
|
Agency Credit Risk Transfer Notes–0.62% | |
Fannie Mae
Connecticut Avenue Securities Series 2014-C04, Class 2M2, 5.15% (1 mo. USD LIBOR + 5.00%), 11/25/2024(e) | | | 173,894 | | | | 178,828 | |
| |
Series 2016-C02, Class 1M2, 6.15% (1 mo. USD LIBOR + 6.00%), 09/25/2028(e) | | | 144,573 | | | | 153,832 | |
| |
Freddie Mac
Series 2014-DN1, Class M2, STACR® , 2.35% (1 mo. USD LIBOR +
2.20%), 02/25/2024(e) | | | 971 | | | | 972 | |
| |
Series 2014-DN3, Class M3, STACR® , 4.15% (1 mo. USD LIBOR +
4.00%), 08/25/2024(e) | | | 100,789 | | | | 103,211 | |
| |
Series 2014-HQ2, Class M3, STACR® , 3.90% (1 mo. USD LIBOR +
3.75%), 09/25/2024(e) | | | 331,194 | | | | 341,253 | |
| |
Series 2018-HQA1, Class M2, STACR® , 2.45% (1 mo. USD LIBOR + 2.30%), 09/25/2030(e) | | | 86,816 | | | | 86,882 | |
| |
Series 2018-DNA2, Class M1, STACR® , 0.95% (1 mo. USD LIBOR + 0.80%), 12/25/2030(c)(e) | | | 49,435 | | | | 49,471 | |
| |
Series 2018-HRP2, Class M2, STACR® , 1.40% (1 mo. USD LIBOR + 1.25%), 02/25/2047(c)(e) | | | 143,172 | | | | 143,144 | |
| |
Series 2018-DNA3, Class M1, STACR® , 0.90% (1 mo. USD LIBOR + 0.75%), 09/25/2048(c)(e) | | | 177 | | | | 177 | |
| |
Series 2018-HQA2, Class M1, STACR® , 0.90% (1 mo. USD LIBOR + 0.75%), 10/25/2048(c)(e) | | | 28,180 | | | | 28,196 | |
| |
Series 2019-HRP1, Class M2, STACR® , 1.55% (1 mo. USD LIBOR + 1.40%), 02/25/2049(c)(e) | | | 59,848 | | | | 59,815 | |
| |
Series 2020-DNA5, Class M1, STACR® , 1.38% (SOFR +
1.30%), 10/25/2050(c)(e) | | | 95,000 | | | | 95,374 | |
| |
Total Agency Credit Risk Transfer Notes
(Cost $1,266,268) | | | | 1,241,155 | |
| |
| | |
| | | Shares | | | | |
Preferred Stocks–0.52% | | | | | | | | |
Asset Management & Custody Banks–0.10% | | | | | |
Bank of New York Mellon Corp. (The), 4.70%, Series G,
Pfd.(d)(f) | | | 175,000 | | | | 193,427 | |
| |
| | |
Diversified Banks–0.12% | | | | | | | | |
Citigroup, Inc., 5.00%, Series U, Pfd.(d)(f) | | | 240,000 | | | | 250,050 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | |
| | |
| | | Shares | | | Value | |
| |
Investment Banking & Brokerage–0.16% | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(d)(f) | | | 302,000 | | | $ | 319,365 | |
| |
|
Life & Health Insurance–0.08% | |
MetLife, Inc., 3.85%, Series G, Pfd.(d)(f) | | | 157,000 | | | | 166,028 | |
| |
|
Other Diversified Financial Services–0.06% | |
Equitable Holdings, Inc., 4.95%, Series B, Pfd.(d)(f) | | | 105,000 | | | | 111,956 | |
| |
Total Preferred Stocks (Cost $979,000) | | | | 1,040,826 | |
| |
| | |
| | | Principal | | | | |
| | | Amount | | | | |
Municipal Obligations–0.23% | | | | | | | | |
Maryland (State of) Health & Higher Educational Facilities Authority (University of MD Medical System), Series 2020 D, Ref. RB, 3.05%, 07/01/2040 | | $ | 80,000 | | | | 83,057 | |
| |
Series 2020 D, Ref. RB, 3.20%, 07/01/2050 | | | 105,000 | | | | 109,051 | |
| |
Investment Abbreviations:
| | | | |
| ADR | | – | | American Depositary Receipt |
| CLO | | – | | Collateralized Loan Obligation |
| Ctfs. | | – | | Certificates |
| IO | | – | | Interest Only |
| LIBOR | | – | | London Interbank Offered Rate |
| Pfd. | | – | | Preferred |
| PO | | – | | Principal Only |
| RB | | – | | Revenue Bonds |
| Ref. | | – | | Refunding |
| REIT | | – | | Real Estate Investment Trust |
| REMICs | | – | | Real Estate Mortgage Investment Conduits |
| SOFR | | – | | Secured Overnight Financing Rate |
| STACR® | | – | | Structured Agency Credit Risk |
| STRIPS | | – | | Separately Traded Registered Interest and Principal Security |
| TBA | | – | | To Be Announced |
| USD | | – | | U.S. Dollar |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041 | | $ | 265,000 | | | $ | 267,231 | |
| |
Total Municipal Obligations (Cost $450,000) | | | | 459,339 | |
| |
TOTAL INVESTMENTS IN SECURITIES–98.74% (Cost $164,078,529) | | | | | | | 196,545,254 | |
| |
OTHER ASSETS LESS LIABILITIES–1.26% | | | | | | | 2,514,347 | |
| |
NET ASSETS–100.00% | | | | | | $ | 199,059,601 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $26,502,564, which represented 13.31% of the Fund’s Net Assets. |
| (d) | Perpetual bond with no specified maturity date. |
| (e) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (f) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (g) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (h) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (i) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (j) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (k) | Zero coupon bond issued at a discount. |
| (l) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1O. |
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 year ended December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend
Income |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | $ | - | | | | $ | 862,312 | | | | $ | (862,312 | ) | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | 11 | * |
Invesco Private Prime Fund | | | | - | | | | | 1,293,469 | | | | | (1,293,469 | ) | | | | - | | | | | - | | | | | - | | | | | 60 | * |
Total | | | $ | - | | | | $ | 2,155,781 | | | | $ | (2,155,781 | ) | | | $ | - | | | | $ | - | | | | $ | - | | | | $ | 71 | |
| * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a) | |
| Long Futures Contracts | | Number of
Contracts | | Expiration Month | | Notional
Value | | Value | | Unrealized
Appreciation
(Depreciation) |
| Interest Rate Risk | | | | | | | | | | |
U.S. Treasury 2 Year Notes | | | | 158 | | | | | March-2021 | | | | $ | 34,914,297 | | | | $ | 31,782 | | | | $ | 31,782 | |
U.S. Treasury 5 Year Notes | | | | 56 | | | | | March-2021 | | | | | 7,065,188 | | | | | 11,591 | | | | | 11,591 | |
U.S. Treasury Ultra Bonds | | | | 24 | | | | | March-2021 | | | | | 5,125,500 | | | | | (78,803 | ) | | | | (78,803 | ) |
Subtotal-Long Futures Contracts | | | | | | | | | | | | | | | | | | | (35,430 | ) | | | | (35,430 | ) |
| | | | | |
| Short Futures Contracts | | | | | | | | | | |
| Interest Rate Risk | | | | | | | | | | |
U.S. Treasury 10 Year Notes | | | | 54 | | | | | March-2021 | | | | | (7,456,219 | ) | | | | (11,505 | ) | | | | (11,505 | ) |
U.S. Treasury 10 Year Ultra Bonds | | | | 37 | | | | | March-2021 | | | | | (5,785,297 | ) | | | | 4,141 | | | | | 4,141 | |
.U.S. Treasury Long Bonds | | | | 11 | | | | | March-2021 | | | | | (1,905,063 | ) | | | | 8,860 | | | | | 8,860 | |
Subtotal-Short Futures Contracts | | | | | | | | | | | | | | | | | | | 1,496 | | | | | 1,496 | |
Total Futures Contracts | | | | | | | | | | | | | | | | | | $ | (33,934 | ) | | | $ | (33,934 | ) |
| (a) | Futures contracts collateralized by $168,804 cash held with Bank of America, the futures commission merchant. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $164,078,529) | | $ | 196,545,254 | |
| |
Other investments:
Variation margin receivable – futures contracts | | | 373,443 | |
| |
Deposits with brokers:
Cash collateral – exchange-traded futures contracts | | | 168,804 | |
| |
Cash | | | 22,606,590 | |
| |
Receivable for:
Investments sold | | | 12,779,731 | |
| |
Fund shares sold | | | 54,825 | |
| |
Dividends | | | 58,442 | |
| |
Interest | | | 476,193 | |
| |
Principal paydowns | | | 484 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 66,338 | |
| |
Total assets | | | 233,130,104 | |
| |
| |
Liabilities: | | | | |
Payable for:
Investments purchased | | | 33,717,134 | |
| |
Fund shares reacquired | | | 40,351 | |
| |
Accrued fees to affiliates | | | 86,660 | |
| |
Accrued other operating expenses | | | 160,020 | |
| |
Trustee deferred compensation and retirement plans | | | 66,338 | |
| |
Total liabilities | | | 34,070,503 | |
| |
Net assets applicable to shares outstanding | | $ | 199,059,601 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 153,777,241 | |
| |
Distributable earnings | | | 45,282,360 | |
| |
| | $ | 199,059,601 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 150,982,726 | |
| |
Series II | | $ | 48,076,875 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,419,644 | |
| |
Series II | | | 2,719,127 | |
| |
Series I:
Net asset value per share | | $ | 17.93 | |
| |
Series II:
Net asset value per share | | $ | 17.68 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $64) | | $ | 2,983,481 | |
| |
Dividends (net of foreign withholding taxes of $10,199) | | | 1,333,719 | |
| |
Dividends from affiliated money market funds (includes securities lending income of $227) | | | 227 | |
| |
Total investment income | | | 4,317,427 | |
| |
Expenses: | | | | |
Advisory fees | | | 1,396,456 | |
| |
Administrative services fees | | | 289,746 | |
| |
Custodian fees | | | 41,108 | |
| |
Distribution fees - Series II | | | 113,503 | |
| |
Transfer agent fees | | | 19,992 | |
| |
Trustees’ and officers’ fees and benefits | | | 20,290 | |
| |
Reports to shareholders | | | 52,610 | |
| |
Professional services fees | | | 46,765 | |
| |
Other | | | 8,645 | |
| |
Total expenses | | | 1,989,115 | |
| |
Less: Fees waived | | | (603,705 | ) |
| |
Net expenses | | | 1,385,410 | |
| |
Net investment income | | | 2,932,017 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from:
Unaffiliated investment securities | | | 8,266,120 | |
| |
Foreign currencies | | | 42 | |
| |
Futures contracts | | | 1,542,437 | |
| |
Swap agreements | | | (51 | ) |
| |
| | | 9,808,548 | |
| |
Change in net unrealized appreciation of:
Unaffiliated investment securities | | | 13,458,348 | |
| |
Foreign currencies | | | 258 | |
| |
Futures contracts | | | 320,210 | |
| |
| | | 13,778,816 | |
| |
Net realized and unrealized gain | | | 23,587,364 | |
| |
Net increase in net assets resulting from operations | | $ | 26,519,381 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 2,932,017 | | | $ | 3,922,312 | |
| |
Net realized gain | | | 9,808,548 | | | | 4,974,593 | |
| |
Change in net unrealized appreciation | | | 13,778,816 | | | | 21,690,735 | |
| |
Net increase in net assets resulting from operations | | | 26,519,381 | | | | 30,587,640 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (6,277,496 | ) | | | (5,596,424 | ) |
| |
Series II | | | (1,887,499 | ) | | | (1,648,251 | ) |
| |
Total distributions from distributable earnings | | | (8,164,995 | ) | | | (7,244,675 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (7,271,309 | ) | | | (13,751,593 | ) |
| |
Series II | | | (2,260,271 | ) | | | (2,673,730 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (9,531,580 | ) | | | (16,425,323 | ) |
| |
Net increase in net assets | | | 8,822,806 | | | | 6,917,642 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 190,236,795 | | | | 183,319,153 | |
| |
End of year | | $ | 199,059,601 | | | $ | 190,236,795 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | | Net investment
income(a) | | | Net gains
(losses)
on securities
(both realized and unrealized) | | | Total from
investment operations (a) | | | Dividends from net investment income | | | Distributions from net realized
gains | | | Total
distributions | | | Net asset
value, end of period | | | Total
return (b) | | | Net assets,
end of period (000’s omitted) | | | Ratio of
expenses
to average
net assets
with fee waivers
and/or
expenses
absorbed | | | Ratio of
expenses
to average net
assets without fee waivers
and/or
expenses
absorbed(c) | | | Ratio of net investment
income
to average
net assets | | | Portfolio turnover (d)(e) | |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $16.31 | | | | $0.27 | | | | $2.11 | | | | $2.38 | | | | $(0.36 | ) | | | $(0.40 | ) | | | $(0.76 | ) | | | $17.93 | | | | 14.86 | % | | | $150,983 | | | | 0.67 | %(f) | | | 0.99 | %(f) | | | 1.60 | %(f) | | | 311 | % |
Year ended 12/31/19 | | | 14.43 | | | | 0.33 | | | | 2.16 | | | | 2.49 | | | | (0.36 | ) | | | (0.25 | ) | | | (0.61 | ) | | | 16.31 | | | | 17.51 | | | | 144,384 | | | | 0.67 | | | | 1.00 | | | | 2.11 | | | | 68 | |
Year ended 12/31/18 | | | 15.92 | | | | 0.32 | | | | (1.13 | ) | | | (0.81 | ) | | | (0.31 | ) | | | (0.37 | ) | | | (0.68 | ) | | | 14.43 | | | | (5.32 | ) | | | 140,290 | | | | 0.67 | | | | 0.98 | | | | 2.05 | | | | 60 | |
Year ended 12/31/17 | | | 14.86 | | | | 0.27 | | | | 1.09 | | | | 1.36 | | | | (0.30 | ) | | | – | | | | (0.30 | ) | | | 15.92 | | | | 9.25 | | | | 166,015 | | | | 0.67 | | | | 0.94 | | | | 1.74 | | | | 76 | |
Year ended 12/31/16 | | | 14.46 | | | | 0.26 | | | | 0.49 | | | | 0.75 | | | | (0.35 | ) | | | – | | | | (0.35 | ) | | | 14.86 | | | | 5.26 | | | | 172,573 | | | | 0.67 | | | | 0.94 | | | | 1.78 | | | | 68 | |
| | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | 16.09 | | | | 0.23 | | | | 2.08 | | | | 2.31 | | | | (0.32 | ) | | | (0.40 | ) | | | (0.72 | ) | | | 17.68 | | | | 14.59 | | | | 48,077 | | | | 0.92 | (f) | | | 1.24 | (f) | | | 1.35 | (f) | | | 311 | |
Year ended 12/31/19 | | | 14.24 | | | | 0.29 | | | | 2.13 | | | | 2.42 | | | | (0.32 | ) | | | (0.25 | ) | | | (0.57 | ) | | | 16.09 | | | | 17.22 | | | | 45,853 | | | | 0.92 | | | | 1.25 | | | | 1.86 | | | | 68 | |
Year ended 12/31/18 | | | 15.71 | | | | 0.27 | | | | (1.10 | ) | | | (0.83 | ) | | | (0.27 | ) | | | (0.37 | ) | | | (0.64 | ) | | | 14.24 | | | | (5.53 | ) | | | 43,029 | | | | 0.92 | | | | 1.23 | | | | 1.80 | | | | 60 | |
Year ended 12/31/17 | | | 14.67 | | | | 0.23 | | | | 1.07 | | | | 1.30 | | | | (0.26 | ) | | | – | | | | (0.26 | ) | | | 15.71 | | | | 8.95 | | | | 51,633 | | | | 0.92 | | | | 1.19 | | | | 1.49 | | | | 76 | |
Year ended 12/31/16 | | | 14.28 | | | | 0.22 | | | | 0.48 | | | | 0.70 | | | | (0.31 | ) | | | – | | | | (0.31 | ) | | | 14.67 | | | | 4.96 | | | | 51,743 | | | | 0.92 | | | | 1.19 | | | | 1.53 | | | | 68 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $489,567,330 and $509,769,207, $685,887,902 and $703,549,464, $729,295,309 and $711,803,922 and $737,550,642 and $742,753,245 for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (f) | Ratios are based on average daily net assets (000’s omitted) of $144,435 and $45,401 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Conservative Balanced Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company -Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek total return.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. Security Valuations – Securities, including restricted securities, are valued according to the following policy.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements.Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Purchased on a When-Issued and Delayed Delivery Basis – The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
| J. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) |
| | currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lockin” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| M. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| N. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/ OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/ or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate payment of any net liability owed to the Counterparty. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
| O. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on borrowings.
| P. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
Mortgage- and asset-backed securities, including collateralized debt obligations and collateralized mortgage obligations, are subject to prepayment or call risk, which is the risk that a borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. This could result in the Fund reinvesting these early payments at lower interest rates, thereby reducing the Fund’s income. Mortgage- and asset-backed securities also are subject to extension risk, which is the risk that an unexpected rise in interest rates could reduce the rate of prepayments, causing the price of the mortgage- and asset-backed securities and the Fund’s share price to fall. An unexpectedly high rate of defaults on the mortgages held by a mortgage pool may adversely affect the value of mortgage-backed securities and could result in losses to the Fund. Privately-issued mortgage-backed securities and asset-backed securities may be less liquid than other types of securities and the Fund may be unable to sell these securities at the time or price it desires.
Obligations of U.S. Government agencies and authorities receive varying levels of support and may not be backed by the full faith and credit of the U.S. Government, which could affect the Fund’s ability to recover should they default. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so.
| Q. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
| |
| |
First $ 200 million | | | 0.750% | |
| |
| |
Next $ 200 million | | | 0.720% | |
| |
| |
Next $ 200 million | | | 0.690% | |
| |
| |
Next $ 200 million | | | 0.660% | |
| |
| |
Over $ 800 million | | | 0.600% | |
| |
| * | The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.74%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
Invesco Oppenheimer V.I. Conservative Balanced Fund
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.67% and Series II shares to 0.92% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $603,705.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $27,320 for accounting and fund administrative services and was reimbursed $262,426 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $735 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | | $87,084,426 | | | | $ - | | | | $- | | | | $ 87,084,426 | |
| |
U.S. Dollar Denominated Bonds & Notes | | | - | | | | 46,481,576 | | | | - | | | | 46,481,576 | |
| |
Asset-Backed Securities | | | - | | | | 26,152,212 | | | | - | | | | 26,152,212 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | - | | | | 22,761,949 | | | | - | | | | 22,761,949 | |
| |
U.S. Treasury Securities | | | - | | | | 11,323,771 | | | | - | | | | 11,323,771 | |
| |
Agency Credit Risk Transfer Notes | | | - | | | | 1,241,155 | | | | - | | | | 1,241,155 | |
| |
Preferred Stocks | | | - | | | | 1,040,826 | | | | - | | | | 1,040,826 | |
| |
Municipal Obligations | | | - | | | | 459,339 | | | | - | | | | 459,339 | |
| |
Total Investments in Securities | | | 87,084,426 | | | | 109,460,828 | | | | - | | | | 196,545,254 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 56,374 | | | | - | | | | - | | | | 56,374 | |
| |
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total
| |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | $ | (90,308 | ) | | $ | - | | | | $- | | | $ | (90,308 | ) |
| |
Total Other Investments | | | (33,934 | ) | | | - | | | | - | | | | (33,934 | ) |
| |
Total Investments | | $ | 87,050,492 | | | $ | 109,460,828 | | | | $- | | | $ | 196,511,320 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4-Derivative Investments
The Fund may enter into an ISDA Master Agreement under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | | |
| Derivative Assets | | Interest
Rate Risk | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 56,374 | |
| |
Derivatives not subject to master netting agreements | | | (56,374 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
| |
| | | | |
| | | Value | |
| | | | |
| Derivative Liabilities | | Interest
Rate Risk | |
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (90,308 | ) |
| |
Derivatives not subject to master netting agreements | | | 90,308 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | |
| |
| (a) | The daily variation margin receivable at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Credit
Risk | | | Interest
Rate Risk | | | Total | |
Realized Gain (Loss): | | | | | | | | | | | | |
Futures contracts | | $ | - | | | $ | 1,542,437 | | | $ | 1,542,437 | |
Swap agreements | | | (51 | ) | | | - | | | | (51 | ) |
Change in Net Unrealized Appreciation: | | | | | | | | | | | | |
Futures contracts | | | - | | | | 320,210 | | | | 320,210 | |
Total | | $ | (51 | ) | | $ | 1,862,647 | | | $ | 1,862,596 | |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | | | |
| | | Futures
Contracts | | | Swap
Agreements | |
| |
Average notional value | | $ | 48,142,311 | | | $ | 3,439,094 | |
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
Invesco Oppenheimer V.I. Conservative Balanced Fund
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
| | |
Ordinary income* | | $ | 6,064,889 | | | $ | 4,189,683 | |
| |
| | |
Long-term capital gain | | | 2,100,106 | | | | 3,054,992 | |
| |
| | |
Total distributions | | $ | 8,164,995 | | | $ | 7,244,675 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 8,544,929 | |
| |
Undistributed long-term capital gain | | | 4,172,842 | |
| |
Net unrealized appreciation – investments | | | 33,044,233 | |
| |
Net unrealized appreciation – foreign currencies | | | 380 | |
| |
Temporary book/tax differences | | | (480,024 | ) |
| |
Shares of beneficial interest | | | 153,777,241 | |
| |
Total net assets | | $ | 199,059,601 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to partnerships.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $427,618,744 and $443,453,457, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $147,871,241 and $141,685,323, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | | $36,693,262 | |
| |
Aggregate unrealized (depreciation) of investments | | | (3,649,029 | ) |
| |
Net unrealized appreciation of investments | | | $33,044,233 | |
| |
Cost of investments for tax purposes is $163,467,087.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of paydowns and foreign currencies, on December 31, 2020, undistributed net investment income was increased by $51,424, undistributed net realized gain was decreased by $47,506 and shares of beneficial interest was decreased by $3,918. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 293,180 | | | $ | 4,958,390 | | | | 137,278 | | | $ | 2,146,719 | |
| |
Series II | | | 407,137 | | | | 6,648,678 | | | | 190,204 | | | | 2,932,620 | |
| |
Invesco Oppenheimer V.I. Conservative Balanced Fund
| | | | | | | | | | | | | | | | |
| | | | Summary of Share Activity | |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 366,462 | | | $ | 6,277,496 | | | | 362,933 | | | $ | 5,596,424 | |
| |
Series II | | | 111,753 | | | | 1,887,499 | | | | 108,224 | | | | 1,648,251 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,093,831 | ) | | | (18,507,195 | ) | | | (1,371,558 | ) | | | (21,494,736 | ) |
| |
Series II | | | (649,731 | ) | | | (10,796,448 | ) | | | (470,960 | ) | | | (7,254,601 | ) |
| |
Net increase (decrease) in share activity | | | (565,030 | ) | | $ | (9,531,580 | ) | | | (1,043,879 | ) | | $ | (16,425,323 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 73% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Conservative Balanced Fund to Invesco V.I. Conservative Balanced Fund.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Conservative Balanced Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Conservative Balanced Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Conservative Balanced Fund (formerly known as Oppenheimer Conservative Balanced Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | | | | | | | | | |
| | | | | ACTUAL | | | HYPOTHETICAL
(5% annual return before expenses) | | | Annualized
Expense
Ratio |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | | Expenses
Paid During
Period2 | | | Ending
Account Value
(12/31/20) | | | Expenses
Paid During
Period2 | |
| Series I | | $1,000.00 | | | $1,102.60 | | | | $3.54 | | | | $1,021.77 | | | | $3.40 | | | 0.67% |
| Series II | | 1,000.00 | | | 1,101.40 | | | | 4.86 | | | | 1,020.51 | | | | 4.67 | | | 0.92 |
1 The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses.
2 Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year.
Invesco Oppenheimer V.I. Conservative Balanced Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 2,100,106 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 16.15 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | |
Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli -1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort -1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairmanof Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk - 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey - 1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco Oppenheimer V.I. Conservative Balanced Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster - 1962
Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco Oppenheimer V.I. Conservative Balanced Fund
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 | | Annual Report to Shareholders | | December 31, 2020 |
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| | Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund |
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | O-VIDMCG-AR-1 |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund (the Fund) outperformed the Russell Midcap Growth Index.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower.
| | | | |
| Series I Shares | | | 40.69 | % |
| Series II Shares | | | 40.24 | |
| Russell Midcap Growth Indexq | | | 35.59 | |
| Source(s): qRIMES Technologies Corp. | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were also better than anticipated and a gradual
decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
During the year, stock selection in the information technology, financials and consumer discretionary sectors were the largest contributors to the Fund’s performance versus the Russell Midcap Growth Index. This was partially offset by weaker stock selection in the consumer staples, real estate and communication services sectors.
The largest individual contributors to the Fund’s performance during the year included RingCentral, Twilio and Trade Desk.
RingCentral is a global provider of cloud enterprise unified communications and collaboration software. RingCentral’s cloud-based suite of telephony, video and messaging solutions was well-built for the mobile
workforce and helped produce one of the most consistent growth profiles in the software industry.
Twilio is the leading provider of cloud communications services that allows developers to communicate with end users using phone calls, text messages and video. Twilio reported strong results during the year, driven by broad-based digital transformation strength that was able to more than offset the decline in the company’s travel/hospitality exposure.
Trade Desk provides a technology based self-serve programmatic platform that enables ad buyers to purchase internet advertising more efficiently and effectively. Coronavirus headwinds reversed course over the year and gave way to strong second half growth for Trade Desk. During the year, management provided positive comments about the breadth of the ad spend recovery across virtually all of the company’s customer verticals (except travel) and provided a positive outlook for Connected TV ad spending.
The largest individual detractors from the Fund’s performance during the year included TransDigm Group, CBRE Group and Hilton Worldwide Holdings.
TransDigm Group is a leader in highly engineered, proprietary aircraft components and systems for commercial and military aircraft. The company was under pressure due to the uncertainty of aftermarket and original equipment manufacturer volumes as a result of the travel slow down due to COVID-19. We exited our position.
CBRE Group is an industry-leading, multinational commercial real estate services firm. The spread of the coronavirus and the increased risk of a global recession created a headwind to transactional activity across industries. The commercial real estate industry was not immune, and the CBRE service providers had large businesses that were highly dependent on completed transactions that were more challenged with heightened uncertainty regarding future corporate real estate needs. We exited our position.
Hilton Worldwide Holdings is a multinational hospitality company that manages and franchises a broad portfolio of hotels and resorts. The spread of the coronavirus increased the risk of a global recession and was a clear headwind for the hospitality industry. Travel restrictions and stay-at-home orders curtailed travel volumes, both domestically and internationally.
Our long-term investment process remains the same. We seek dynamic companies with above-average, sustainable revenue and earnings growth that we believe are positioned to outperform. This includes leading firms in structurally attractive industries with committed management teams that have proven records of success.
We thank you for your continued investment in Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Portfolio manager(s):
Justin Livengood
Ronald J. Zibelli, Jr. (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (8/15/86) | | | 10.61 | % |
10 Years | | | 15.92 | |
5 Years | | | 19.40 | |
1 Year | | | 40.69 | |
| |
Series II Shares | | | | |
Inception (10/16/00) | | | 4.39 | % |
10 Years | | | 15.62 | |
5 Years | | | 19.09 | |
1 Year | | | 40.24 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Discovery Mid Cap Growth Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Supplemental Information
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund’s investment objective is to seek capital appreciation.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The Russell Midcap® Growth Index is an unmanaged index considered representative of mid-cap growth stocks. The Russell Midcap Growth Index is a trademark/ service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | 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. |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Fund Information
| | |
Portfolio Composition |
By sector | | % of total net assets |
| |
| Information Technology | | 35.03% |
|
| Health Care | | 20.41 |
|
| Industrials | | 15.98 |
|
| Consumer Discretionary | | 14.07 |
|
| Financials | | 5.97 |
|
| Materials | | 3.26 |
|
| Communication Services | | 2.84 |
|
| Other Sectors, Each Less than 2% of Net Assets | | 1.60 |
|
| Money Market Funds Plus Other Assets Less Liabilities | | 0.84 |
|
| | |
Top 10 Equity Holdings* | | |
| % of total net assets |
| |
1. Synopsys, Inc. | | 2.32% |
|
2. Monolithic Power Systems, Inc. | | 2.24 |
|
3. RingCentral, Inc., Class A | | 2.18 |
|
4. Twilio, Inc., Class A | | 2.16 |
|
5. IDEXX Laboratories, Inc. | | 2.12 |
|
6. Align Technology, Inc. | | 1.92 |
|
7. Coupa Software, Inc. | | 1.84 |
|
8. MSCI, Inc. | | 1.80 |
|
9. West Pharmaceutical Services, Inc. | | 1.79 |
|
10. Chipotle Mexican Grill, Inc. | | 1.77 |
|
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–99.16% | |
Air Freight & Logistics–0.73% | |
XPO Logistics, Inc.(b) | | | 71,091 | | | $ | 8,474,047 | |
| |
|
Apparel, Accessories & Luxury Goods–1.41% | |
lululemon athletica, inc.(b) | | | 47,045 | | | | 16,373,071 | |
| |
|
Application Software–13.89% | |
Atlassian Corp. PLC, Class A(b) | | | 42,624 | | | | 9,968,475 | |
| |
Avalara, Inc.(b) | | | 76,347 | | | | 12,588,857 | |
| |
Coupa Software, Inc.(b) | | | 62,990 | | | | 21,347,941 | |
| |
DocuSign, Inc.(b) | | | 79,401 | | | | 17,650,842 | |
| |
Dynatrace, Inc.(b) | | | 232,638 | | | | 10,066,246 | |
| |
Five9, Inc.(b) | | | 33,761 | | | | 5,887,919 | |
| |
HubSpot, Inc.(b) | | | 29,595 | | | | 11,732,642 | |
| |
RingCentral, Inc., Class A(b) | | | 66,667 | | | | 25,264,793 | |
| |
Synopsys, Inc.(b) | | | 103,989 | | | | 26,958,108 | |
| |
Trade Desk, Inc. (The), Class A(b) | | | 24,404 | | | | 19,547,604 | |
| |
| | | | 161,013,427 | |
| |
|
Asset Management & Custody Banks–1.17% | |
KKR & Co., Inc., Class A | | | 335,028 | | | | 13,565,284 | |
| |
|
Auto Parts & Equipment–1.47% | |
Aptiv PLC | | | 130,924 | | | | 17,058,088 | |
| |
|
Automotive Retail–1.26% | |
Carvana Co.(b) | | | 23,454 | | | | 5,618,171 | |
| |
Lithia Motors, Inc., Class A | | | 30,861 | | | | 9,032,089 | |
| |
| | | | 14,650,260 | |
| |
|
Biotechnology–1.45% | |
Alnylam Pharmaceuticals, Inc.(b) | | | 51,769 | | | | 6,728,417 | |
| |
Seagen, Inc.(b) | | | 57,725 | | | | 10,109,956 | |
| |
| | | | 16,838,373 | |
| |
|
Brewers–1.05% | |
Boston Beer Co., Inc. (The), Class A(b) | | | 12,275 | | | | 12,204,910 | |
| |
|
Building Products–2.36% | |
Trane Technologies PLC | | | 97,029 | | | | 14,084,729 | |
| |
Trex Co., Inc.(b) | | | 158,376 | | | | 13,259,239 | |
| |
| | | | 27,343,968 | |
| |
|
Copper–1.26% | |
Freeport-McMoRan, Inc. | | | 559,760 | | | | 14,564,955 | |
| |
|
Data Processing & Outsourced Services–0.87% | |
Black Knight, Inc.(b) | | | 114,312 | | | | 10,099,465 | |
| |
|
Distributors–1.61% | |
Pool Corp. | | | 50,246 | | | | 18,716,635 | |
| |
|
Diversified Support Services–2.90% | |
Cintas Corp. | | | 45,400 | | | | 16,047,084 | |
| |
Copart, Inc.(b) | | | 138,261 | | | | 17,593,712 | |
| |
| | | | 33,640,796 | |
| |
|
Electrical Components & Equipment–4.21% | |
AMETEK, Inc. | | | 132,365 | | | | 16,008,223 | |
| |
Generac Holdings, Inc.(b) | | | 60,214 | | | | 13,693,266 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Electrical Components & Equipment–(continued) | |
Regal Beloit Corp. | | | 48,341 | | | $ | 5,936,758 | |
| |
Rockwell Automation, Inc. | | | 52,725 | | | | 13,223,957 | |
| |
| | | | 48,862,204 | |
| |
|
Electronic Equipment & Instruments–2.49% | |
Trimble, Inc.(b) | �� | | 228,664 | | | | 15,267,895 | |
| |
Zebra Technologies Corp., Class A(b) | | | 35,369 | | | | 13,593,368 | |
| |
| | | | 28,861,263 | |
| |
|
Fertilizers & Agricultural Chemicals–0.96% | |
FMC Corp. | | | 96,770 | | | | 11,121,776 | |
| |
|
Financial Exchanges & Data–2.91% | |
MarketAxess Holdings, Inc. | | | 22,429 | | | | 12,797,090 | |
| |
MSCI, Inc. | | | 46,793 | | | | 20,894,479 | |
| |
| | | | 33,691,569 | |
| |
|
Health Care Equipment–7.28% | |
DexCom, Inc.(b) | | | 48,134 | | | | 17,796,103 | |
| |
IDEXX Laboratories, Inc.(b) | | | 49,266 | | | | 24,626,596 | |
| |
Masimo Corp.(b) | | | 75,035 | | | | 20,137,893 | |
| |
ResMed, Inc. | | | 64,647 | | | | 13,741,366 | |
| |
STERIS PLC | | | 42,850 | | | | 8,121,789 | |
| |
| | | | 84,423,747 | |
| |
|
Health Care Services–0.74% | |
Amedisys, Inc.(b) | | | 29,365 | | | | 8,613,635 | |
| |
|
Health Care Supplies–3.71% | |
Align Technology, Inc.(b) | | | 41,558 | | | | 22,207,764 | |
| |
West Pharmaceutical Services, Inc. | | | 73,270 | | | | 20,758,124 | |
| |
| | | | 42,965,888 | |
| |
|
Health Care Technology–1.32% | |
Veeva Systems, Inc., Class A(b) | | | 56,235 | | | | 15,309,979 | |
| |
|
Home Improvement Retail–1.07% | |
Floor & Decor Holdings, Inc., Class A(b) | | | 133,576 | | | | 12,402,532 | |
| |
|
Homebuilding–1.53% | |
D.R. Horton, Inc. | | | 80,734 | | | | 5,564,188 | |
| |
TopBuild Corp.(b) | | | 66,303 | | | | 12,205,056 | |
| |
| | | | 17,769,244 | |
| |
|
Homefurnishing Retail–0.48% | |
RH(b) | | | 12,499 | | | | 5,593,552 | |
| |
|
Hotels, Resorts & Cruise Lines–0.87% | |
Hilton Worldwide Holdings, Inc. | | | 90,647 | | | | 10,085,385 | |
| |
|
Industrial Conglomerates–0.99% | |
Roper Technologies, Inc. | | | 26,564 | | | | 11,451,475 | |
| |
|
Industrial Machinery–1.74% | |
IDEX Corp. | | | 72,663 | | | | 14,474,470 | |
| |
ITT, Inc. | | | 73,618 | | | | 5,670,058 | |
| |
| | | | 20,144,528 | |
| |
|
Interactive Media & Services–1.51% | |
Pinterest, Inc., Class A(b) | | | 181,694 | | | | 11,973,635 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
| | | | | | | | |
| | | Shares | | | Value | |
| |
Interactive Media & Services–(continued) | |
Zillow Group, Inc., Class C(b) | | | 42,450 | | | $ | 5,510,010 | |
| |
| | | | 17,483,645 | |
| |
Internet & Direct Marketing Retail–1.37% | |
Chewy, Inc., Class A(b) | | | 176,899 | | | | 15,901,451 | |
| |
Internet Services & Infrastructure–2.93% | |
Twilio, Inc., Class A(b) | | | 74,137 | | | | 25,095,374 | |
| |
Wix.com Ltd. (Israel)(b) | | | 35,678 | | | | 8,918,073 | |
| |
| | | | 34,013,447 | |
| |
Investment Banking & Brokerage–0.77% | |
LPL Financial Holdings, Inc. | | | 86,151 | | | | 8,978,657 | |
| |
IT Consulting & Other Services–2.43% | |
EPAM Systems, Inc.(b) | | | 46,200 | | | | 16,555,770 | |
| |
Globant S.A. (Argentina)(b) | | | 53,333 | | | | 11,605,794 | |
| |
| | | | 28,161,564 | |
| |
Leisure Products–0.68% | |
Peloton Interactive, Inc., Class A(b) | | | 51,668 | | | | 7,839,069 | |
| |
Life Sciences Tools & Services–4.67% | |
Bio-Rad Laboratories, Inc., Class A(b) | | | 23,348 | | | | 13,610,483 | |
| |
Charles River Laboratories International, Inc.(b) | | | 41,382 | | | | 10,339,707 | |
| |
ICON PLC (Ireland)(b) | | | 34,790 | | | | 6,783,354 | |
| |
Maravai LifeSciences Holdings, Inc., Class A(b) | | | 175,926 | | | | 4,934,724 | |
| |
Mettler-Toledo International, Inc.(b) | | | 7,924 | | | | 9,030,824 | |
| |
Repligen Corp.(b) | | | 49,180 | | | | 9,424,364 | |
| |
| | | | 54,123,456 | |
| |
Movies & Entertainment–1.33% | |
Roku, Inc.(b) | | | 46,526 | | | | 15,447,563 | |
| |
Paper Packaging–1.04% | |
Avery Dennison Corp. | | | 77,902 | | | | 12,083,379 | |
| |
Pharmaceuticals–1.25% | |
Catalent, Inc.(b) | | | 138,791 | | | | 14,443,979 | |
| |
Regional Banks–1.12% | |
First Republic Bank | | | 88,688 | | | | 13,030,928 | |
| |
Research & Consulting Services–1.26% | |
TransUnion | | | 147,576 | | | | 14,642,491 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Restaurants–1.77% | |
Chipotle Mexican Grill, Inc.(b) | | | 14,818 | | | $ | 20,548,269 | |
| |
Semiconductor Equipment–4.84% | |
Enphase Energy, Inc.(b) | | | 72,305 | | | | 12,687,359 | |
| |
Entegris, Inc. | | | 161,357 | | | | 15,506,408 | |
| |
Lam Research Corp. | | | 29,079 | | | | 13,733,139 | |
| |
Teradyne, Inc. | | | 118,653 | | | | 14,225,308 | |
| |
| | | | 56,152,214 | |
| |
Semiconductors–5.86% | |
Marvell Technology Group Ltd. | | | 220,747 | | | | 10,494,312 | |
| |
Microchip Technology, Inc. | | | 143,751 | | | | 19,853,451 | |
| |
Monolithic Power Systems, Inc. | | | 70,836 | | | | 25,942,268 | |
| |
ON Semiconductor Corp.(b) | | | 356,870 | | | | 11,680,355 | |
| |
| | | | 67,970,386 | |
| |
Specialized REITs–0.55% | |
SBA Communications Corp., Class A | | | 22,519 | | | | 6,353,285 | |
| |
Specialty Stores–0.54% | |
Five Below, Inc.(b) | | | 35,509 | | | | 6,213,365 | |
| |
Systems Software–1.72% | |
Crowdstrike Holdings, Inc., Class A(b) | | | 94,230 | | | | 19,959,799 | |
| |
Trading Companies & Distributors–0.45% | |
United Rentals, Inc.(b) | | | 22,674 | | | | 5,258,327 | |
| |
Trucking–1.34% | |
Old Dominion Freight Line, Inc. | | | 79,337 | | | | 15,484,996 | |
| |
Total Common Stocks & Other Equity Interests (Cost $691,796,998) | | | | 1,149,930,326 | |
| |
Money Market Funds–1.16% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 4,694,901 | | | | 4,694,901 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 3,352,066 | | | | 3,353,072 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 5,365,601 | | | | 5,365,601 | |
| |
Total Money Market Funds
(Cost $13,413,579) | | | | 13,413,574 | |
| |
TOTAL INVESTMENTS IN SECURITIES–100.32%
(Cost $705,210,577) | | | | 1,163,343,900 | |
| |
OTHER ASSETS LESS LIABILITIES-(0.32)% | | | | (3,713,041 | ) |
| |
NET ASSETS–100.00% | | | $ | 1,159,630,859 | |
| |
Investment Abbreviations:
REIT – Real Estate Investment Trust
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Value
December 31, 2019 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain | | | Value
December 31, 2020 | | | Dividend Income | |
| |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| Invesco Government & Agency Portfolio, Institutional Class | | | $5,411,943 | | | | $182,978,908 | | | | $(183,695,950 | ) | | | $ - | | | | $ - | | | | $4,694,901 | | | | $34,981 | |
| |
| Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 55,877,602 | | | | (52,524,788 | ) | | | (5) | | | | 263 | | | | 3,353,072 | | | | 4,740 | |
| |
| Invesco Treasury Portfolio, Institutional Class | | | - | | | | 88,623,434 | | | | (83,257,833 | ) | | | - | | | | - | | | | 5,365,601 | | | | 1,701 | |
| |
| Total | | | $5,411,943 | | | | $327,479,944 | | | | $(319,478,571 | ) | | | $(5) | | | | $263 | | | | $13,413,574 | | | | $41,422 | |
| |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
| |
Assets: | | | | |
Investments in securities, at value
(Cost $ 691,796,998) | | $ | 1,149,930,326 | |
Investments in affiliated money market funds, at value (Cost $13,413,579) | | | 13,413,574 | |
Receivable for: | | | | |
Fund shares sold | | | 119,975 | |
Dividends | | | 162,029 | |
Investment for trustee deferred compensation and retirement plans | | | 213,655 | |
Other assets | | | 1,025 | |
Total assets | | | 1,163,840,584 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 3,205,288 | |
Amount due custodian | | | 104,825 | |
Accrued fees to affiliates | | | 501,081 | |
Accrued other operating expenses | | | 171,643 | |
Trustee deferred compensation and retirement plans | | | 226,888 | |
Total liabilities | | | 4,209,725 | |
Net assets applicable to shares outstanding | | $ | 1,159,630,859 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 577,827,255 | |
Distributable earnings | | | 581,803,604 | |
| | | $ | 1,159,630,859 | |
| |
Net Assets: | | | | |
Series I | | $ | 963,414,122 | |
| |
Series II | | $ | 196,216,737 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 9,009,332 | |
| |
Series II | | | 2,001,207 | |
Series I: | | | | |
Net asset value per share | | $ | 106.94 | |
Series II: | | | | |
Net asset value per share | | $ | 98.05 | |
Statement of Operations
For the year ended December 31, 2020
| | | | |
| |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $3,813) | | $ | 3,890,944 | |
| |
Dividends from affiliated money market funds | | | 41,422 | |
| |
Total investment income | | | 3,932,366 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 6,207,521 | |
| |
Administrative services fees | | | 1,483,863 | |
| |
Distribution fees - Series II | | | 325,857 | |
| |
Transfer agent fees | | | 71,588 | |
| |
Trustees’ and officers’ fees and benefits | | | 32,484 | |
| |
Reports to shareholders | | | 58,436 | |
| |
Professional services fees | | | 36,903 | |
| |
Other | | | 17,620 | |
| |
Total expenses | | | 8,234,272 | |
| |
Less: Fees waived | | | (586,880 | ) |
| |
Net expenses | | | 7,647,392 | |
| |
Net investment income (loss) | | | (3,715,026 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain from: | | | | |
Unaffiliated investment securities (includes net gains (losses) from securities sold to affiliates of $(118,411)) | | | 129,593,783 | |
| |
Affiliated investment securities | | | 263 | |
| |
Foreign currencies | | | 35 | |
| |
| | | 129,594,081 | |
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 232,836,363 | |
| |
Affiliated investment securities | | | (5 | ) |
| |
232,836,358 | |
Net realized and unrealized gain | | | 362,430,439 | |
| |
Net increase in net assets resulting from operations | | $ | 358,715,413 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | | $ (3,715,026) | | | $ | 260,969 | |
| |
Net realized gain | | | 129,594,081 | | | | 67,792,034 | |
| |
Change in net unrealized appreciation | | | 232,836,358 | | | | 163,454,901 | |
| |
Net increase in net assets resulting from operations | | | 358,715,413 | | | | 231,507,904 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (59,869,406 | ) | | | (84,658,513 | ) |
| |
Series II | | | (5,791,819 | ) | | | (5,797,957 | ) |
| |
Total distributions from distributable earnings | | | (65,661,225 | ) | | | (90,456,470 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 33,303,183 | | | | (25,925,623 | ) |
| |
Series II | | | 88,537,075 | | | | 8,283,693 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | 121,840,258 | | | | (17,641,930 | ) |
| |
Net increase in net assets | | | 414,894,446 | | | | 123,409,504 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 744,736,413 | | | | 621,326,909 | |
| |
End of year | | $ | 1,159,630,859 | | | $ | 744,736,413 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | Ratio of | | Ratio of | | | | |
| | | | | | | | | | | | | | | | | | | | | | | expenses | | expenses | | | | |
| | | | | | | Net gains | | | | | | | | | | | | | | | | to average | | to average net | | Ratio of net | | |
| | | | | | | (losses) | | | | | | | | | | | | | | | | net assets | | assets without | | investment | | |
| | | Net asset | | Net | | on securities | | | | Dividends | | Distributions | | | | | | | | | | with fee waivers | | fee waivers | | income | | |
| | | value, | | investment | | (both | | Total from | | from net | | from net | | | | Net asset | | | | Net assets, | | and/or | | and/or | | (loss) | | |
| | | beginning | | income | | realized and | | investment | | investment | | realized | | Total | | value, end | | Total | | end of period | | expenses | | expenses | | to average | | Portfolio |
| | | of period | | (loss)(a) | | unrealized) | | operations | | income | | gains | | distributions | | of period | | return (b) | | (000’s omitted) | | absorbed | | absorbed(c) | | net assets | | turnover(d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 83.82 | | | | $ | (0.32 | ) | | | $ | 30.78 | | | | $ | 30.46 | | | | $ | (0.04 | ) | | | $ | (7.30 | ) | | | $ | (7.34 | ) | | | $ | 106.94 | | | | | 40.70 | % | | | $ | 963,414 | | | | | 0.80 | %(e) | | | | 0.86 | %(e) | | | | (0.37 | )%(e) | | | | 87 | % |
Year ended 12/31/19 | | | | 68.65 | | | | | 0.04 | (f) | | | | 26.04 | | | | | 26.08 | | | | | – | | | | | (10.91 | ) | | | | (10.91 | ) | | | | 83.82 | | | | | 39.37 | | | | | 693,424 | | | | | 0.80 | | | | | 0.87 | | | | | 0.05 | (f) | | | | 76 | |
Year ended 12/31/18 | | | | 84.21 | | | | | (0.19 | ) | | | | (3.07 | ) | | | | (3.26 | ) | | | | – | | | | | (12.30 | ) | | | | (12.30 | ) | | | | 68.65 | | | | | (6.08 | ) | | | | 586,273 | | | | | 0.80 | | | | | 0.86 | | | | | (0.23 | ) | | | | 104 | |
Year ended 12/31/17 | | | | 72.65 | | | | | (0.10 | ) | | | | 20.08 | | | | | 19.98 | | | | | (0.03 | ) | | | | (8.39 | ) | | | | (8.42 | ) | | | | 84.21 | | | | | 28.79 | | | | | 694,675 | | | | | 0.80 | | | | | 0.84 | | | | | (0.12 | ) | | | | 105 | |
Year ended 12/31/16 | | | | 76.85 | | | | | 0.03 | | | | | 1.69 | | | | | 1.72 | | | | | – | | | | | (5.92 | ) | | | | (5.92 | ) | | | | 72.65 | | | | | 2.34 | | | | | 603,708 | | | | | 0.80 | | | | | 0.84 | | | | | 0.04 | | | | | 141 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 77.70 | | | | | (0.50 | ) | | | | 28.15 | | | | | 27.65 | | | | | – | | | | | (7.30 | ) | | | | (7.30 | ) | | | | 98.05 | | | | | 40.24 | | | | | 196,217 | | | | | 1.05 | (e) | | | | 1.11 | (e) | | | | (0.62 | )(e) | | | | 87 | |
Year ended 12/31/19 | | | | 64.41 | | | | | (0.14 | )(f) | | | | 24.34 | | | | | 24.20 | | | | | – | | | | | (10.91 | ) | | | | (10.91 | ) | | | | 77.70 | | | | | 39.01 | | | | | 51,312 | | | | | 1.05 | | | | | 1.12 | | | | | (0.19 | )(f) | | | | 76 | |
Year ended 12/31/18 | | | | 79.87 | | | | | (0.37 | ) | | | | (2.79 | ) | | | | (3.16 | ) | | | | – | | | | | (12.30 | ) | | | | (12.30 | ) | | | | 64.41 | | | | | (6.31 | ) | | | | 35,054 | | | | | 1.05 | | | | | 1.11 | | | | | (0.48 | ) | | | | 104 | |
Year ended 12/31/17 | | | | 69.43 | | | | | (0.28 | ) | | | | 19.11 | | | | | 18.83 | | | | | – | | | | | (8.39 | ) | | | | (8.39 | ) | | | | 79.87 | | | | | 28.46 | | | | | 39,599 | | | | | 1.05 | | | | | 1.09 | | | | | (0.37 | ) | | | | 105 | |
Year ended 12/31/16 | | | | 73.88 | | | | | (0.15 | ) | | | | 1.62 | | | | | 1.47 | | | | | – | | | | | (5.92 | ) | | | | (5.92 | ) | | | | 69.43 | | | | | 2.08 | | | | | 32,252 | | | | | 1.05 | | | | | 1.09 | | | | | (0.21 | ) | | | | 141 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended December 31, 2020, the portfolio turnover calculation excludes the value of securities purchased of $123,217,891 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco V.I. Mid Cap Growth Fund into the Fund. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $786,269 and $130,343 for Series I and Series II shares, respectively. |
| (f) | Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets includes significant dividends received during the year ended December 31, 2019. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the significant dividends are $(0.13) and (0.16)% for Series I Shares and $(0.30) and (0.40)% for Series II Shares. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
Up to $200 million | | | 0.750 | % |
Next $200 million | | | 0.720 | % |
Next $200 million | | | 0.690 | % |
Next $200 million | | | 0.660 | % |
Next $700 million | | | 0.600 | % |
Over $1.5 billion | | | 0.580 | % |
| * | The advisory fee payable by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with Invesco. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.68%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $586,880.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $132,146 for accounting and fund administrative services and was reimbursed $1,351,717 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $2,005 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
Level 1 – | | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 – | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 – | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities sales of $993,638, which resulted in net realized gains (losses) of $(118,411).
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | |
| | | 2020 | | | 2019 |
Ordinary income* | | $ | 271,534 | | | $ – |
Long-term capital gain | | | 65,389,691 | | | 90,456,470 |
Total distributions | | $ | 65,661,225 | | | $90,456,470 |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed long-term capital gain | | $ | 124,943,743 | |
| |
Net unrealized appreciation – investments | | | 457,041,987 | |
| |
Temporary book/tax differences | | | (182,126 | ) |
| |
Shares of beneficial interest | | | 577,827,255 | |
| |
Total net assets | | $ | 1,159,630,859 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $723,206,925 and $822,616,662, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 457,855,522 | |
| |
Aggregate unrealized (depreciation) of investments | | | (813,535 | ) |
| |
Net unrealized appreciation of investments | | $ | 457,041,987 | |
| |
Cost of investments for tax purposes is $706,301,913.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies and net operating losses, on December 31, 2020, undistributed net investment income (loss) was increased by $3,724,819, undistributed net realized gain was decreased by $1,759,687 and shares of beneficial interest was decreased by $1,965,132. Further, as a result of tax deferrals acquired in the reorganization of Invesco V.I. Mid Cap Growth Fund into the Fund, undistributed net investment income (loss) was decreased by $100,750, undistributed net realized gain was decreased by $2,937,165 and shares of beneficial interest was increased by $3,037,915. These reclassifications had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,005,686 | | | $ | 81,011,069 | | | | 189,092 | | | $ | 15,154,696 | |
| |
Series II | | | 1,316,158 | | | | 93,201,526 | | | | 150,758 | | | | 11,141,446 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 839,683 | | | | 59,869,406 | | | | 1,097,324 | | | | 84,658,513 | |
| |
Series II | | | 88,384 | | | | 5,791,819 | | | | 80,955 | | | | 5,797,957 | |
| |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
| | | | |
Issued in connection with acquisitions:(b) | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | 803,912 | | | $ | 57,978,197 | | | | - | | | $ | - | |
| |
Series II | | | 775,472 | | | | 51,406,035 | | | | - | | | | - | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
| | | | |
Series I | | | (1,912,557 | ) | | | (165,555,489 | ) | | | (1,553,777 | ) | | | (125,738,832 | ) |
| |
Series II | | | (839,168 | ) | | | (61,862,305 | ) | | | (115,611 | ) | | | (8,655,710 | ) |
| |
Net increase (decrease) in share activity | | | 2,077,570 | | | $ | 121,840,258 | | | | (151,259 | ) | | $ | (17,641,930 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
| (b) | After the close of business on April 30, 2020, the Fund acquired all the net assets of Invesco V.I. Mid Cap Growth Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on February 14, 2020 and by the shareholders of the Target Fund on April 24, 2020. The reorganization was executed in order to reduce overlap and increase efficiencies in the Adviser’s product line. The acquisition was accomplished by a tax-free exchange of 1,579,384 shares of the Fund for 30,799,415 shares outstanding of the Target Fund as of the close of business on April 30, 2020. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, April 30, 2020. The Target Fund’s net assets as of the close of business on April 30, 2020 of $109,384,232, including $25,370,264 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $753,884,659 and $863,268,891 immediately after the acquisition. |
The pro forma results of operations for the year ended December 31, 2020 assuming the reorganization had been completed on January 1, 2020, the beginning of the annual reporting period are as follows:
| | | | |
| |
Net investment income (loss) | | $ | (4,379,802) | |
| |
Net realized/unrealized gains | | | 349,391,558 | |
| |
Change in net assets resulting from operations | | $ | 345,011,756 | |
| |
As the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that has been included in the Fund’s Statement of Operations since May 1, 2020.
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco
Oppenheimer V.I. Discovery Mid Cap Growth Fund to Invesco V.I. Discovery Mid Cap Growth Fund.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund (formerly known as Oppenheimer Discovery Mid Cap Growth Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning Account Value (07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized Expense Ratio |
| | Ending Account Value (12/31/20)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/20) | | Expenses Paid During Period2 |
Series I | | $1,000.00 | | $1,285.80 | | $4.60 | | $1,021.11 | | $4.06 | | 0.80% |
Series II | | 1,000.00 | | 1,284.30 | | 6.03 | | 1,019.86 | | 5.33 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 65,389,691 | | | | | |
Corporate Dividends Received Deduction* | | | 0.00% | | | | | |
Qualified Dividend Income* | | | 0.00% | | | | | |
U.S. Treasury Obligations* | | | 0.00% | | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
| Christopher L. Wilson - 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis - 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort - 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn - 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. | | N/A | | N/A |
| | | | | 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.; and 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 | | | | |
Russell C. Burk - 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation | | N/A | | N/A |
| | | | | Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | | | |
| Andrew R. Schlossberg - 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. | | N/A | | N/A |
| | | | | Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | | | |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée | | N/A | | N/A |
| | | | | Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | | | |
| Gregory G. McGreevey - 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
| Michael McMaster - 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco Oppenheimer V.I. Discovery Mid Cap Growth Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Global Fund |
| | |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | O-VIGLBL-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Global Fund (the Fund) outperformed the MSCI All Country World Index. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 27.64 | % |
Series II Shares | | | 27.34 | |
MSCI All Country World Indexq | | | 16.25 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
Global equity markets started the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global equity markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. The US bull market came to an abrupt end, while global equity markets also fell sharply. As fear of a worldwide recession increased, central banks around the world took aggressive action to support both local markets and the global economy.
Despite the continuing global spread of COVID-19, many countries achieved some success in controlling the spread and were able to slowly re-open their economies. Global equity markets benefited from government policy responses to the crisis, which were swift and encouraging. Many economies received fiscal stimulus and very significant monetary stimulus. The massive monetary policy responses created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first quarter.
Despite a correction in September, global equity stocks finished the third quarter in positive territory after posting strong gains in July and August. Building on progress made in the latter part of the second quarter, many countries were able to continue reducing pandemic-related stringency protocols. As a result, the “green shoots” we saw at the end of the second quarter grew and flourished into the third quarter, as many countries experienced a strong economic rebound.
At the end of the year, global equity markets again posted gains as good news about COVID-19 vaccines outweighed concerns about sharply rising infection rates and tightening social restrictions. In most global regions, equity market leadership shifted as value stocks outperformed growth stocks. Sectors that had been severely affected by the pandemic, including energy and financials, were among the fourth quarter’s top performers. Emerging market equities, which posted robust gains amplified by US dollar weakness,
outperformed developed market equities for the year.
The Fund outperformed the MSCI All Country World Index in 8 of 11 sectors. Stock selection in the communication services sector and consumer discretionary sector, as well as an overweight allocation in the information technology sector added most to relative Fund performance compared to the MSCI All Country World Index. Stock selection in the real estate sector, an underweight allocation in the materials sector and stock selection in health care detracted most from relative performance.
On a geographic basis, stock selection in the US and Japan contributed most to relative Fund performance during the year. Overweight exposure to France and stock selection in Germany detracted the most from relative Fund performance.
The top three individual contributors to relative Fund performance during the year were JD.com, Alphabet and PayPal Holdings. JD.com had a strong year. It is the number two player in e-commerce in China and has demonstrated through the pandemic the strength and relevance of its end to end service model, which marries the company’s e-commerce platform with its wholly owned distribution network. As the pandemic swept across parts of China, JD.com was able to operate in a highly effective manner. Alphabet is involved in some of the fastest growing and most exciting trends within the global economy. It dominates the online search market. Alphabet’s Google has benefited from an increase in brand and direct-response digital ad spending as search and YouTube ad revenue continue to grow. The firm’s cloud segment also continues to grow at a healthy pace. PayPal was another strong contributor. In a world of shelter-at-home mandates and social distancing, the adoption of digital payments has hastened at a pace that few predicted. As investors have grasped PayPal’s enhanced utility, the stock has climbed steadily.
The three top detractors from relative Fund performance during the year were Airbus, Citigroup and DLF Limited. Airbus, the wide-body aircraft maker, has appealing traits, among them are limited competition and structurally growing demand for travel.
COVID-19, however, has dropped an exogenous shock to the system, which will take time to heal. We are content to remain patient here, though the near term will be difficult. Citigroup was also a victim of COVID-19. The aftermath of the pandemic has ushered in a period of low interest rates that central bankers have indicated may go on for years. That means that net interest margins will be compressed for an extended period. We decided to exit Citigroup earlier this year. DLF Limited, an Indian real estate owner and developer, was negatively impacted by COVID-19. Its lease income and development business took a hit due to the pandemic environment.
Our holdings are selected for the sustainability of their purpose and the sensibility of their price. If we have this combination well calibrated, our portfolio should be able to weather most transient challenges and create meaningful economic value for our clients over the medium to long-term.
We invest with a long-term structural mind-set, considering the attractiveness of a company’s attributes and ecosystem over as long as a 10-year horizon. Thus, the cyclical influences weigh very little on our thinking about, or the positioning of the portfolio. This remains the case. Our holdings are largely invested in industries that are growing organically, on a sustained basis, and our individual holdings are substantial beneficiaries.
We thank you for your continued investment in Invesco Oppenheimer V.I. Global Fund.
Portfolio manager(s):
John Delano
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco Oppenheimer V.I. Global Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (11/12/90) | | | 10.65 | % |
10 Years | | | 11.64 | |
5 Years | | | 14.84 | |
1 Year | | | 27.64 | |
| |
Series II Shares | | | | |
Inception (7/13/00) | | | 7.39 | % |
10 Years | | | 11.36 | |
5 Years | | | 14.56 | |
1 Year | | | 27.34 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Global Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Global Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will
fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Global Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco Oppenheimer V.I. Global Fund |
Supplemental Information
Invesco Oppenheimer V.I. Global Fund’s investment objective is to seek capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The MSCI All Country World Index is an unmanaged index considered representative of large and mip-cap stocks across developed and emerging markets. The index is computed using the net return, which withholds applicable taxes for nonresident investors. |
| ∎ | | 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. |
|
| Invesco Oppenheimer V.I. Global Fund |
Fund Information
Portfolio Composition
| | | | | |
| By country | | % of total net assets |
| |
United States | | | | 53.03 | % |
Japan | | | | 16.62 | |
France | | | | 10.74 | |
China | | | | 4.27 | |
India | | | | 3.17 | |
Sweden | | | | 2.85 | |
United Kingdom | | | | 2.69 | |
Germany | | | | 2.49 | |
Countries, each less than 2% of portfolio | | | | 3.89 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.25 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Alphabet, Inc., Class A | | | | 8.49 | % |
2. LVMH Moet Hennessy Louis Vuitton SE | | | | 5.12 | |
3. Adobe, Inc. | | | | 4.56 | |
4. Facebook, Inc., Class A | | | | 4.41 | |
5. JD.com, Inc., ADR | | | | 4.27 | |
6. Intuit, Inc. | | | | 4.14 | |
7. S&P Global, Inc. | | | | 3.93 | |
8. Nidec Corp. | | | | 3.79 | |
9. Murata Manufacturing Co. Ltd. | | | | 3.07 | |
10. PayPal Holdings, Inc. | | | | 2.95 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco Oppenheimer V.I. Global Fund |
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.74% | |
Brazil–1.13% | | | | | | | | |
StoneCo Ltd., Class A(a) | | | 372,550 | | | $ | 31,264,396 | |
|
| |
| | |
China–4.27% | | | | | | | | |
JD.com, Inc., ADR(a) | | | 1,339,962 | | | | 117,782,660 | |
|
| |
| | |
Denmark–0.07% | | | | | | | | |
Ascendis Pharma A/S, ADR(a) | | | 11,288 | | | | 1,882,613 | |
|
| |
| | |
France–10.74% | | | | | | | | |
Airbus SE(a) | | | 680,495 | | | | 74,751,980 | |
|
| |
Dassault Systemes SE | | | 38,783 | | | | 7,878,502 | |
|
| |
Kering S.A. | | | 99,733 | | | | 72,505,659 | |
|
| |
LVMH Moet Hennessy Louis Vuitton SE | | | 226,201 | | | | 141,337,330 | |
|
| |
| | | | | | | 296,473,471 | |
|
| |
| | |
Germany–2.49% | | | | | | | | |
SAP SE | | | 522,999 | | | | 68,726,532 | |
|
| |
| | |
India–3.16% | | | | | | | | |
DLF Ltd. | | | 15,300,485 | | | | 48,898,966 | |
|
| |
ICICI Bank Ltd., ADR | | | 2,588,928 | | | | 38,471,469 | |
|
| |
| | | | | | | 87,370,435 | |
|
| |
| | |
Italy–0.26% | | | | | | | | |
Brunello Cucinelli S.p.A.(a) | | | 168,134 | | | | 7,299,610 | |
|
| |
| | |
Japan–16.62% | | | | | | | | |
Capcom Co. Ltd. | | | 621,200 | | | | 40,387,770 | |
|
| |
FANUC Corp. | | | 130,200 | | | | 32,057,498 | |
|
| |
Keyence Corp. | | | 142,744 | | | | 80,333,793 | |
|
| |
MINEBEA MITSUMI, Inc. | | | 23,500 | | | | 467,535 | |
|
| |
Murata Manufacturing Co. Ltd. | | | 941,800 | | | | 84,819,582 | |
|
| |
Nidec Corp. | | | 830,700 | | | | 104,663,996 | |
|
| |
Omron Corp. | | | 488,500 | | | | 43,597,331 | |
|
| |
Takeda Pharmaceutical Co. Ltd. | | | 570,194 | | | | 20,670,474 | |
|
| |
TDK Corp. | | | 345,300 | | | | 52,081,194 | |
|
| |
| | | | | | | 459,079,173 | |
|
| |
| | |
Netherlands–0.78% | | | | | | | | |
ASML Holding N.V. | | | 27,638 | | | | 13,356,394 | |
|
| |
uniQure N.V.(a) | | | 224,410 | | | | 8,107,934 | |
|
| |
| | | | | | | 21,464,328 | |
|
| |
| | |
Spain–1.21% | | | | | | | | |
Industria de Diseno Textil S.A. | | | 1,048,822 | | | | 33,396,511 | |
|
| |
| | |
Sweden–2.85% | | | | | | | | |
Assa Abloy AB, Class B | | | 1,392,179 | | | | 34,242,634 | |
|
| |
Atlas Copco AB, Class A | | | 869,665 | | | | 44,475,321 | |
|
| |
| | | | | | | 78,717,955 | |
|
| |
| | |
Switzerland–0.44% | | | | | | | | |
Zur Rose Group AG(a) | | | 37,587 | | | | 12,007,235 | |
|
| |
| | |
United Kingdom–2.69% | | | | | | | | |
Farfetch Ltd., Class A(a) | | | 680,013 | | | | 43,391,630 | |
|
| |
Prudential PLC | | | 1,680,293 | | | | 31,015,244 | |
|
| |
| | | | | | | 74,406,874 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
United States–53.03% | | | | | | | | |
Adobe, Inc.(a) | | | 251,555 | | | $ | 125,807,687 | |
|
| |
Agilent Technologies, Inc. | | | 403,780 | | | | 47,843,892 | |
|
| |
Alphabet, Inc., Class A(a) | | | 133,749 | | | | 234,413,847 | |
|
| |
Amazon.com, Inc.(a) | | | 11,588 | | | | 37,741,305 | |
|
| |
Analog Devices, Inc. | | | 37,502 | | | | 5,540,171 | |
|
| |
Anthem, Inc. | | | 31,962 | | | | 10,262,679 | |
|
| |
Avantor, Inc.(a) | | | 1,277,507 | | | | 35,961,822 | |
|
| |
Blueprint Medicines Corp.(a) | | | 144,841 | | | | 16,243,918 | |
|
| |
Boston Scientific Corp.(a) | | | 364,376 | | | | 13,099,317 | |
|
| |
Castle Biosciences, Inc.(a) | | | 88,909 | | | | 5,970,239 | |
|
| |
Centene Corp.(a) | | | 152,916 | | | | 9,179,548 | |
|
| |
Charles River Laboratories International, Inc.(a) | | | 15,842 | | | | 3,958,282 | |
|
| |
Colgate-Palmolive Co. | | | 159,181 | | | | 13,611,567 | |
|
| |
Dun & Bradstreet Holdings, Inc.(a) | | | 152,740 | | | | 3,803,226 | |
|
| |
Electronic Arts, Inc.(a) | | | 171,682 | | | | 24,653,535 | |
|
| |
Equifax, Inc. | | | 227,885 | | | | 43,945,343 | |
|
| |
Facebook, Inc., Class A(a) | | | 445,893 | | | | 121,800,132 | |
|
| |
Fidelity National Information Services, Inc. | | | 224,339 | | | | 31,734,995 | |
|
| |
Illumina, Inc.(a) | | | 48,640 | | | | 17,996,800 | |
|
| |
Intuit, Inc. | | | 301,185 | | | | 114,405,122 | |
|
| |
Ionis Pharmaceuticals, Inc.(a) | | | 269,759 | | | | 15,252,174 | |
|
| |
IQVIA Holdings, Inc.(a) | | | 56,176 | | | | 10,065,054 | |
|
| |
MacroGenics, Inc.(a) | | | 356,733 | | | | 8,154,916 | |
|
| |
Maxim Integrated Products, Inc. | | | 846,454 | | | | 75,038,147 | |
|
| |
Microsoft Corp. | | | 124,384 | | | | 27,665,489 | |
|
| |
Nuance Communications, Inc.(a) | | | 194,676 | | | | 8,583,265 | |
|
| |
PayPal Holdings, Inc.(a) | | | 347,921 | | | | 81,483,098 | |
|
| |
Pegasystems, Inc. | | | 128,483 | | | | 17,121,645 | |
|
| |
Phathom Pharmaceuticals, Inc.(a) | | | 244,311 | | | | 8,116,011 | |
|
| |
S&P Global, Inc. | | | 330,481 | | | | 108,639,019 | |
|
| |
Sage Therapeutics, Inc.(a) | | | 98,037 | | | | 8,481,181 | |
|
| |
Sarepta Therapeutics, Inc.(a) | | | 113,843 | | | | 19,409,093 | |
|
| |
Twist Bioscience Corp.(a) | | | 12,647 | | | | 1,786,895 | |
|
| |
United Parcel Service, Inc., Class B | | | 274,709 | | | | 46,260,996 | |
|
| |
Veracyte, Inc.(a) | | | 323,430 | | | | 15,828,664 | |
|
| |
Visa, Inc., Class A | | | 133,784 | | | | 29,262,574 | |
|
| |
Walt Disney Co. (The)(a) | | | 314,785 | | | | 57,032,746 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 54,094 | | | | 8,335,345 | |
|
| |
| | | | | | | 1,464,489,739 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $897,266,729) | | | | 2,754,361,532 | |
|
| |
| | |
Preferred Stocks–0.01% | | | | | | | | |
India–0.01% | | | | | | | | |
Zee Entertainment Enterprises Ltd., 6.00%, Pfd.
(Cost $0) | | | 4,053,320 | | | | 220,785 | |
| |
| | |
Money Market Funds–0.18% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(b)(c) | | | 1,723,917 | | | | 1,723,917 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(b)(c) | | | 1,230,642 | | | | 1,231,011 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Fund |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Money Market Funds–(continued) | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(b)(c) | | | 1,970,192 | | | $ | 1,970,192 | |
|
| |
Total Money Market Funds
(Cost $4,925,243) | | | | 4,925,120 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–99.93%
(Cost $902,191,972) | | | | | | | 2,759,507,437 | |
|
| |
OTHER ASSETS LESS LIABILITIES–0.07% | | | | 2,059,455 | |
|
| |
NET ASSETS–100.00% | | | | | | $ | 2,761,566,892 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
Pfd. – Preferred
Notes to Schedule of Investments:
| (a) | Non-income producing security. |
| (b) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Institutional Class | | | $ | 20,491,964 | | | | $ | 301,904,366 | | | | $ | (320,672,413 | ) | | | $ | - | | | | $ | - | | | | $ | 1,723,917 | | | | $ | 36,162 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 35,350,405 | | | | | (34,118,928 | ) | | | | (123 | ) | | | | (343 | ) | | | | 1,231,011 | | | | | 782 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 56,560,647 | | | | | (54,590,455 | ) | | | | - | | | | | - | | | | | 1,970,192 | | | | | 248 | |
| | | | | | | |
Total | | | $ | 20,491,964 | | | | $ | 393,815,418 | | | | $ | (409,381,796 | ) | | | $ | (123 | ) | | | $ | (343 | ) | | | $ | 4,925,120 | | | | $ | 37,192 | |
| (c) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $897,266,729) | | $ | 2,754,582,317 | |
|
| |
Investments in affiliated money market funds, at value (Cost $4,925,243) | | | 4,925,120 | |
|
| |
Cash | | | 67,364 | |
|
| |
Foreign currencies, at value (Cost $426,710) | | | 426,547 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 2,637,634 | |
|
| |
Fund shares sold | | | 256,291 | |
|
| |
Dividends | | | 5,110,029 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 198,843 | |
|
| |
Total assets | | | 2,768,204,145 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 4,433,807 | |
|
| |
Accrued foreign taxes | | | 204,726 | |
|
| |
Accrued fees to affiliates | | | 1,374,555 | |
|
| |
Accrued trustees’ and officers’ fees and benefits | | | 92 | |
|
| |
Accrued other operating expenses | | | 425,230 | |
|
| |
Trustee deferred compensation and retirement plans | | | 198,843 | |
|
| |
Total liabilities | | | 6,637,253 | |
|
| |
Net assets applicable to shares outstanding | | $ | 2,761,566,892 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 783,363,295 | |
|
| |
Distributable earnings | | | 1,978,203,597 | |
|
| |
| | $ | 2,761,566,892 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 1,438,772,522 | |
|
| |
Series II | | $ | 1,322,794,370 | |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 27,602,871 | |
|
| |
Series II | | | 25,757,163 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 52.12 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 51.36 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $1,404,254) | | $ | 17,915,575 | |
|
| |
Dividends from affiliated money market funds | | | 37,192 | |
|
| |
Interest | | | 3,050 | |
|
| |
Total investment income | | | 17,955,817 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 14,738,266 | |
|
| |
Administrative services fees | | | 3,867,071 | |
|
| |
Custodian fees | | | 146,420 | |
|
| |
Distribution fees - Series II | | | 2,772,032 | |
|
| |
Transfer agent fees | | | 69,671 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 42,586 | |
|
| |
Reports to shareholders | | | 187,761 | |
|
| |
Professional services fees | | | 62,861 | |
|
| |
Other | | | 46,253 | |
|
| |
Total expenses | | | 21,932,921 | |
|
| |
Less: Fees waived | | | (900,944 | ) |
|
| |
Net expenses | | | 21,031,977 | |
|
| |
Net investment income (loss) | | | (3,076,160 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 143,259,179 | |
|
| |
Affiliated investment securities | | | (343 | ) |
|
| |
Foreign currencies | | | 142,138 | |
|
| |
| | | 143,400,974 | |
|
| |
Change in net unrealized appreciation (depreciation) of: Unaffiliated investment securities (net of foreign taxes of $351,510) | | | 453,802,961 | |
|
| |
Affiliated investment securities | | | (123 | ) |
|
| |
Foreign currencies | | | 361,102 | |
|
| |
| | | 454,163,940 | |
|
| |
Net realized and unrealized gain | | | 597,564,914 | |
|
| |
Net increase in net assets resulting from operations | | $ | 594,488,754 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (3,076,160 | ) | | $ | 14,040,147 | |
|
| |
Net realized gain | | | 143,400,974 | | | | 90,146,991 | |
|
| |
Change in net unrealized appreciation | | | 454,163,940 | | | | 529,044,048 | |
|
| |
Net increase in net assets resulting from operations | | | 594,488,754 | | | | 633,231,186 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (54,374,979 | ) | | | (194,974,813 | ) |
|
| |
Series II | | | (46,721,722 | ) | | | (166,963,633 | ) |
|
| |
Total distributions from distributable earnings | | | (101,096,701 | ) | | | (361,938,446 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (164,348,638 | ) | | | 21,278,948 | |
|
| |
Series II | | | (89,155,546 | ) | | | 156,942,783 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (253,504,184 | ) | | | 178,221,731 | |
|
| |
Net increase in net assets | | | 239,887,869 | | | | 449,514,471 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 2,521,679,023 | | | | 2,072,164,552 | |
|
| |
End of year | | $ | 2,761,566,892 | | | $ | 2,521,679,023 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income (loss)(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed(c) | | Ratio of net
investment
income (loss) to average
net assets | | Portfolio
turnover (d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 42.55 | | | | $ | (0.01 | ) | | | $ | 11.51 | | | | $ | 11.50 | | | | $ | (0.31 | ) | | | $ | (1.62 | ) | | | $ | (1.93 | ) | | | $ | 52.12 | | | | | 27.64 | % | | | $ | 1,438,773 | | | | | 0.77 | %(e) | | | | 0.81 | %(e) | | | | (0.01 | )%(e) | | | | 13 | % |
Year ended 12/31/19 | | | | 38.00 | | | | | 0.29 | | | | | 11.03 | | | | | 11.32 | | | | | (0.40 | ) | | | | (6.37 | ) | | | | (6.77 | ) | | | | 42.55 | | | | | 31.79 | | | | | 1,334,573 | | | | | 0.77 | | | | | 0.80 | | | | | 0.70 | | | | | 23 | |
Year ended 12/31/18 | | | | 47.42 | | | | | 0.37 | | | | | (5.99 | ) | | | | (5.62 | ) | | | | (0.47 | ) | | | | (3.33 | ) | | | | (3.80 | ) | | | | 38.00 | | | | | (13.18 | ) | | | | 1,160,317 | | | | | 0.78 | | | | | 0.78 | | | | | 0.81 | | | | | 16 | |
Year ended 12/31/17 | | | | 35.02 | | | | | 0.29 | | | | | 12.50 | | | | | 12.79 | | | | | (0.39 | ) | | | | – | | | | | (0.39 | ) | | | | 47.42 | | | | | 36.66 | | | | | 1,479,034 | | | | | 0.76 | | | | | 0.76 | | | | | 0.69 | | | | | 9 | |
Year ended 12/31/16 | | | | 38.00 | | | | | 0.26 | | | | | (0.42 | ) | | | | (0.16 | ) | | | | (0.38 | ) | | | | (2.44 | ) | | | | (2.82 | ) | | | | 35.02 | | | | | 0.08 | | | | | 1,245,070 | | | | | 0.77 | | | | | 0.77 | | | | | 0.75 | | | | | 14 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 41.95 | | | | | (0.11 | ) | | | | 11.34 | | | | | 11.23 | | | | | (0.20 | ) | | | | (1.62 | ) | | | | (1.82 | ) | | | | 51.36 | | | | | 27.34 | | | | | 1,322,794 | | | | | 1.02 | (e) | | | | 1.06 | (e) | | | | (0.26 | )(e) | | | | 13 | |
Year ended 12/31/19 | | | | 37.53 | | | | | 0.18 | | | | | 10.89 | | | | | 11.07 | | | | | (0.28 | ) | | | | (6.37 | ) | | | | (6.65 | ) | | | | 41.95 | | | | | 31.45 | | | | | 1,187,107 | | | | | 1.02 | | | | | 1.04 | | | | | 0.45 | | | | | 23 | |
Year ended 12/31/18 | | | | 46.88 | | | | | 0.26 | | | | | (5.92 | ) | | | | (5.66 | ) | | | | (0.36 | ) | | | | (3.33 | ) | | | | (3.69 | ) | | | | 37.53 | | | | | (13.39 | ) | | | | 911,848 | | | | | 1.03 | | | | | 1.03 | | | | | 0.56 | | | | | 16 | |
Year ended 12/31/17 | | | | 34.64 | | | | | 0.18 | | | | | 12.36 | | | | | 12.54 | | | | | (0.30 | ) | | | | – | | | | | (0.30 | ) | | | | 46.88 | | | | | 36.32 | | | | | 1,309,590 | | | | | 1.01 | | | | | 1.01 | | | | | 0.43 | | | | | 9 | |
Year ended 12/31/16 | | | | 37.59 | | | | | 0.17 | | | | | (0.41 | ) | | | | (0.24 | ) | | | | (0.27 | ) | | | | (2.44 | ) | | | | (2.71 | ) | | | | 34.64 | | | | | (0.16 | ) | | | | 1,065,147 | | | | | 1.02 | | | | | 1.02 | | | | | 0.49 | | | | | 14 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $1,264,399 and $1,108,813 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Global Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco Oppenheimer V.I. Global Fund |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
|
| |
Up to $200 million | | | 0.750% | |
|
| |
Next $200 million | | | 0.720% | |
|
| |
Next $200 million | | | 0.690% | |
|
| |
Next $200 million | | | 0.660% | |
|
| |
Next $4.2 billion | | | 0.600% | |
|
| |
Over $5 billion | | | 0.580% | |
|
| |
| * | The advisory fee payable by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with Invesco. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.62%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
|
| Invesco Oppenheimer V.I. Global Fund |
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement excluding certain items discussed below) of Series I shares to 0.77% and Series II shares to 1.02% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $900,944.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $341,006 for accounting and fund administrative services and was reimbursed $3,526,065 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $660 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
|
| Invesco Oppenheimer V.I. Global Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Brazil | | $ | 31,264,396 | | | $ | – | | | | $– | | | $ | 31,264,396 | |
|
| |
China | | | 117,782,660 | | | | – | | | | – | | | | 117,782,660 | |
|
| |
Denmark | | | 1,882,613 | | | | – | | | | – | | | | 1,882,613 | |
|
| |
France | | | – | | | | 296,473,471 | | | | – | | | | 296,473,471 | |
|
| |
Germany | | | – | | | | 68,726,532 | | | | – | | | | 68,726,532 | |
|
| |
India | | | 38,692,254 | | | | 48,898,966 | | | | – | | | | 87,591,220 | |
|
| |
Italy | | | – | | | | 7,299,610 | | | | – | | | | 7,299,610 | |
|
| |
Japan | | | – | | | | 459,079,173 | | | | – | | | | 459,079,173 | |
|
| |
Netherlands | | | 8,107,934 | | | | 13,356,394 | | | | – | | | | 21,464,328 | |
|
| |
Spain | | | – | | | | 33,396,511 | | | | – | | | | 33,396,511 | |
|
| |
Sweden | | | – | | | | 78,717,955 | | | | – | | | | 78,717,955 | |
|
| |
Switzerland | | | – | | | | 12,007,235 | | | | – | | | | 12,007,235 | |
|
| |
United Kingdom | | | 43,391,630 | | | | 31,015,244 | | | | – | | | | 74,406,874 | |
|
| |
United States | | | 1,464,489,739 | | | | – | | | | – | | | | 1,464,489,739 | |
|
| |
Money Market Funds | | | 4,925,120 | | | | – | | | | – | | | | 4,925,120 | |
|
| |
Total Investments | | $ | 1,710,536,346 | | | $ | 1,048,971,091 | | | | $– | | | $ | 2,759,507,437 | |
|
| |
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 13,783,397 | | | $ | 18,844,750 | |
|
| |
Long-term capital gain | | | 87,313,304 | | | | 343,093,696 | |
|
| |
Total distributions | | $ | 101,096,701 | | | $ | 361,938,446 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 664,007 | |
|
| |
Undistributed long-term capital gain | | | 132,503,952 | |
|
| |
Net unrealized appreciation – investments | | | 1,845,078,442 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 150,725 | |
|
| |
Temporary book/tax differences | | | (193,529 | ) |
|
| |
Shares of beneficial interest | | | 783,363,295 | |
|
| |
Total net assets | | $ | 2,761,566,892 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
|
| Invesco Oppenheimer V.I. Global Fund |
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $306,078,552 and $647,310,848, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 1,846,839,285 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (1,760,843 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 1,845,078,442 | |
|
| |
Cost of investments for tax purposes is $914,428,995.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2020, undistributed net investment income (loss) was increased by $3,058,576 and undistributed net realized gain was decreased by $3,058,576. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,282,828 | | | $ | 53,569,521 | | | | 1,087,675 | | | $ | 44,342,732 | |
|
| |
Series II | | | 4,607,818 | | | | 189,694,783 | | | | 5,583,631 | | | | 232,838,451 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,182,836 | | | | 54,374,979 | | | | 5,090,726 | | | | 194,974,813 | |
|
| |
Series II | | | 1,030,929 | | | | 46,721,722 | | | | 4,415,859 | | | | 166,963,633 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (6,229,273 | ) | | | (272,293,138 | ) | | | (5,343,326 | ) | | | (218,038,597 | ) |
|
| |
Series II | | | (8,181,254 | ) | | | (325,572,051 | ) | | | (5,995,084 | ) | | | (242,859,301 | ) |
|
| |
Net increase (decrease) in share activity | | | (6,306,116 | ) | | $ | (253,504,184 | ) | | | 4,839,481 | | | $ | 178,221,731 | |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 35% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 11–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Global Fund to Invesco V.I. Global Fund.
|
| Invesco Oppenheimer V.I. Global Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Global Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Global Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Global Fund (formerly known as Oppenheimer Global Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco Oppenheimer V.I. Global Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,299.90 | | $4.45 | | $1,021.27 | | $3.91 | | 0.77% |
Series II | | 1,000.00 | | 1,298.40 | | 5.89 | | 1,020.01 | | 5.18 | | 1.02 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco Oppenheimer V.I. Global Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 87,313,304 | |
Corporate Dividends Received Deduction* | | | 80.23 | % |
Qualified Dividend Income* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non- profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
| 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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| Invesco Oppenheimer V.I. Global Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
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| Invesco Oppenheimer V.I. Global Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Global Strategic Income Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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| Invesco Distributors, Inc. | | O-VIGLSI-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Global Strategic Income Fund (the Fund) underperformed the Bloomberg Barclays U.S. Aggregate Bond Index. | |
Your Fund’s long-term performance appears later in this report. | | | | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 3.40 | % |
Series II Shares | | | 2.99 | |
Bloomberg Barclays U.S. Aggregate Bond Indexq | | | 7.51 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
During the year ended December 31, 2020, financial markets were predominantly driven by the COVID-19 pandemic and the swift response of extraordinary monetary and fiscal support globally.
News of the pandemic overwhelmed the market’s previous expectations for 2020 global growth, which were supported by receding global trade concerns and indications that the US Federal Reserve (the Fed) would hold interest rates steady. The first quarter of 2020 was characterized by extreme volatility in the capital markets as COVID-19 spread rapidly across the globe. As global equity markets spiraled downward and interest rates in developed markets (DM) generally fell, yield spreads between Treasuries and both credit and emerging market (EM) debt widened significantly. These trends were further exacerbated by funding pressures and lower oil prices that resulted from increased supply as Russia and Saudi Arabia began a price war.
Central banks and governments globally responded with monetary and fiscal stimulus of unprecedented scale. Major central banks, along with those in EM countries, swiftly cut interest rates and instituted other extraordinary policies. Notably, the Fed’s actions dwarfed those taken in 2008 and were implemented within a fraction of the time, including reducing short-term interest rates to zero, signaling unlimited quantitative easing in US Treasuries and reprising many of the 2008 liquidity programs. Investors reacted positively as funding concerns eased, and global equity and debt markets recovered some of their earlier losses by quarter end.
In the second quarter, the pandemic’s spread continued across the globe (albeit at a slower rate) and economic indicators signaled that the economies of many countries, including the US, bottomed in April. In Asia, China’s economic activity improved as lockdowns eased, raising hopes for economic recovery. In Europe, to further boost support, the European Central Bank provided more favorable refinancing conditions in the form of targeted longer-term refinancing operations and increased its bond purchasing program twice. In EM economies, more central banks elected
to cut interest rates rather than hold rates steady, with 12 of the 20 primary EM central banks cutting rates by at least 1.50%.1 Buoyed by global policy support measures, investor sentiment improved as global equity and fixed income markets recovered throughout the quarter.
Several key trends from the second quarter developed further throughout the third quarter. US cases increased sharply early on, while several European countries had smaller flare-ups throughout the period, some of which caused reversals in reopening the economy. Second quarter GDP data released in July reflected COVID-19’s global economic impact with sharp contractions across multiple countries. US GDP showed a -31.4% annualized contraction.2 However, more recent indicators suggest that economies of many countries, including the US, are gradually recovering. In Asia, a rise in retail sales and a tightening labor market in China suggest the region’s economic recovery has further to run.
Governments and policymakers across the world continue to provide fiscal and monetary policy support in response to the COVID-19 pandemic. In the third quarter, the US Federal Reserve implemented further measures to boost dollar liquidity, such as extending its dollar swap lines with other central banks until the end of March 2021. The Fed left policy rates unchanged and adjusted its inflation target to an “average” of 2%, thereby giving itself more flexibility around monetary policy.3 This, coupled with Fed assurances that it would provide whatever monetary support is needed, improved investor sentiment. Meanwhile, European Union leaders launched a €750 billion1 package aimed at funding post-pandemic relief efforts, while the European Central Bank held policy rates unchanged and granted Eurozone banks extra capital relief, enabling them to increase lending to governments, businesses and households. In emerging market economies, most central banks left policy rates unchanged, while central banks in Mexico, Colombia and Egypt cut interest rates to provide additional support to their economies.
Central banks across the global maintained very accommodative stances throughout the
fourth quarter, while the pandemic worsened in many countries as infections, hospitalizations and deaths rose. As a result, several countries, particularly in Europe, implemented varying levels of lockdowns that put pressure on nascent economic recoveries. For much of the quarter, the US struggled to pass another substantial fiscal stimulus package, putting added pressure on its economic recovery. Yet US elections outcomes in favor of the Democrats may indicate greater fiscal spending to come. During the quarter, several pharmaceutical firms announced vaccines with high efficacy against COVID-19, improving investor sentiment and providing a strong catalyst for a rally in global capital markets. Buoyed by continued monetary support and the beginning of vaccine distributions, global markets extended their recovery through quarter end.
Compared to the Bloomberg Barclays U.S. Aggregate Bond Index, which consists primarily of higher quality US exposures, the Fund takes a global perspective across the credit spectrum. Over the year, the Fund’s emerging market local rates and US investment grade credit contributed to Fund performance, while positioning in DM high yield and EM foreign currencies detracted.
Coming into 2020, portfolio positioning continued to favor EM rates and foreign currency (FX) exposure given attractive yields and additional room for central bank rate cuts amidst a low inflationary environment, as well as less attractive negative/low yielding rates and FX in DM countries. Beyond that, a supportive backdrop of recovering global growth and easier US financial conditions existed given a pausing (and perhaps cutting) Fed. However, a sharp reassessment of global growth prospects and a large correction in asset prices occurred in March. Global markets sold off as COVID-19 spread, but the severe liquidity stress experienced in the second half of the month, which added an additional leg of dislocation unwarranted by fundamentals, is what truly took markets by surprise. As a result, the Fund’s higher EM exposure and lower DM duration positioning led to underperformance in the first quarter.
Rather than reducing the overall risk level of the portfolio, and thus inhibiting the Fund from taking advantage of opportunities, the team consolidated exposures to where they believed the best opportunities to be going forward, including focusing on areas well supported by global central banks. This included largely maintaining our EM rates exposure, as we believed these central banks had more room to cut, rotating into lower beta credit exposure, as well as creating more balanced foreign currency exposure between EM and DM, with the expectation of the US dollar weakening over the longer term. The second quarter witnessed a fairly sharp market reversal and the beginning of a recovery trade, which largely continued in the third and
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
fourth quarters, as the magnitude of the economic downturn was met with large policy easing by the Fed and global central banks, along with large fiscal spending. The seismic shift in global central bank policy created significant opportunities in EM and DM interest rates, which we correctly anticipated to be among the first opportunities realized. The Fund rebounded strongly in the second quarter, benefiting from EM rates positions, as most central banks materially cut their policy rates (by 1.50% on average)1 while longer-term rates had also fallen due to lowered inflation expectations, along with EM and DM market credit positions, as spreads rebounded (although still remained wide of their tightenings in early February). These trends largely prevailed in the third and fourth quarters, with the Fund ending the year in positive territory.
In terms of positioning, we continue to favor EM interest rate exposure, although we have shifted focus to the three- to five-year maturity range of country yield curves given attractive total return potential. We also increased our foreign currency exposure, as we see a tremendous opportunity over the next two to three years with the Fed having removed much support for the US dollar. We incrementally increased the Fund’s exposure to US and developed market credit, while reducing emerging market credit exposure. Overall, fiscal and monetary policy actions globally continue to be supportive, and we remain quite constructive in seeking global income opportunities.
Please note that we implemented our strategy using derivative instruments, including futures, forwards, swaps and options. Therefore, a portion of the performance of the strategy, both positive and negative, can be attributed to these instruments. Derivatives can be a cost-effective way to gain or hedge exposure to certain risks. However, derivatives may amplify traditional investment risks through the creation of leverage and may be less liquid than traditional securities.
Part of the Fund’s strategy to manage credit and currency risk in the portfolio during the year entailed purchasing and selling credit and currency derivatives. We sought to manage credit market risk by purchasing and selling protection through credit default swaps at various points throughout the year. The currency management was carried out via currency forwards and options on an as-needed basis and we believe this strategy was effective in managing the currency positioning within the Fund.
We wish to remind you that the Fund is subject to interest rate risk, meaning when interest rates rise, the value of fixed income securities tends to fall. The risk may be greater in the current market environment because interest rates are near historic lows. The degree to which the value of fixed income securities may decline due to rising interest rates may vary depending on the speed and magnitude of the increase in interest rates, as well as individual security characteristics such as price, maturity, duration and coupon and
market forces such as supply and demand for similar securities. We are monitoring interest rates, and the market, economic and geopolitical factors that may impact the direction, speed and magnitude of changes to interest rates across the maturity spectrum, including the potential impact of monetary policy changes by the Fed and certain foreign central banks. If interest rates rise or fall faster than expected, markets may experience increased volatility, which may affect the value and/or liquidity of certain investments held by the Fund.
Thank you for investing in Invesco Oppenheimer V.I. Global Strategic Income Fund.
1 Source: International Monetary Fund
2 Source: US Bureau of Economic Analysis
3 Source: US Federal Reserve
Portfolio manager(s):
Hemant Baijal (Lead)
Christopher (Chris) Kelly
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | |
| |
Series I Shares | | | | |
Inception (5/3/93) | | | 5.57 | % |
10 Years | | | 3.61 | |
5 Years | | | 4.40 | |
1 Year | | | 3.40 | |
| |
Series II Shares | | | | |
Inception (3/19/01) | | | 5.14 | % |
10 Years | | | 3.34 | |
5 Years | | | 4.15 | |
1 Year | | | 2.99 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Global Strategic Income Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Global Strategic Income Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Global Strategic Income Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Supplemental Information
Invesco Oppenheimer V.I. Global Strategic Income Fund’s investment objective is to seek total return.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | | 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. |
Invesco Oppenheimer V.I. Global Strategic Income Fund
Fund Information
Portfolio Composition
| | | | | | | |
| By security type | | % of total net assets |
Non-U.S. Dollar Denominated Bonds & Notes | | | | 35.69 | % |
U.S. Dollar Denominated Bonds & Notes | | | | 32.59 | |
Asset-Backed Securities | | | | 6.87 | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | 3.81 | |
U.S. Treasury Securities | | | | 1.98 | |
Preferred Stocks | | | | 1.33 | |
Variable Rate Senior Loan Interests | | | | 1.22 | |
Agency Credit Risk Transfer Notes | | | | 1.18 | |
Security Types Each Less Than 1% of Portfolio | | | | 1.36 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 13.97 | |
|
Top Five Debt Issuers* | |
| | | % of total net assets |
| 1. | | Hellenic Republic Government Bond | | | | 8.34 | % |
| 2. | | Italy Buoni Poliennali Del Tesoro | | | | 3.79 | |
| 3. | | Australia Government Bond | | | | 3.70 | |
| 4. | | Indonesia Treasury Bond | | | | 3.54 | |
5. | | Uniform Mortgage-Backed Securities | | | | 2.26 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Consolidated Schedule of Investments
December 31, 2020
| | | | | | | | | | | | |
| | | Principal Amount | | | Value | |
Non-U.S. Dollar Denominated Bonds & Notes–35.69%(a) | |
Argentina–1.51% | | | | | | | | | | | | |
Argentina Treasury Bond BONCER, | | | | | | | | | | | | |
1.00%, 08/05/2021 | | | ARS | | | | 814,936,715 | | | $ | 12,922,595 | |
1.40%, 03/25/2023 | | | ARS | | | | 69,727,000 | | | | 986,961 | |
1.50%, 03/25/2024 | | | ARS | | | | 51,260,000 | | | | 665,611 | |
4.00%, 04/27/2025 | | | ARS | | | | 29,500,000 | | | | 835,862 | |
Argentine Bonos del Tesoro, 18.20%, 10/03/2021 | | | ARS | | | | 9,285,000 | | | | 98,334 | |
| | | | | | | | | | | | 15,509,363 | |
| | | |
Australia–3.70% | | | | | | | | | | | | |
Australia Government Bond, Series 152, 2.75%, 11/21/2028(b) | | | AUD | | | | 18,600,000 | | | | 16,550,251 | |
Series 162, 1.75%, 06/21/2051(b) | | | AUD | | | | 29,071,000 | | | | 21,351,577 | |
| | | | | | | | | | | | 37,901,828 | |
| | | |
Austria–0.48% | | | | | | | | | | | | |
Erste Group Bank AG, 6.50%(b)(c)(d) | | | EUR | | | | 400,000 | | | | 547,053 | |
Republic of Austria Government Bond, 2.10%, 09/20/2117(b) | | | EUR | | | | 1,610,000 | | | | 4,407,313 | |
| | | | | | | | | | | | 4,954,366 | |
| | | |
Brazil–0.39% | | | | | | | | | | | | |
Brazil Notas do Tesouro Nacional, Series B, 6.00%, 05/15/2045 | | | BRL | | | | 3,400,000 | | | | 3,020,323 | |
Swiss Insured Brazil Power Finance S.a r.l., 9.85%,
07/16/2032(b) | | | BRL | | | | 4,411,125 | | | | 974,504 | |
| | | | | | | | | | | | 3,994,827 | |
| | | |
Chile–0.54% | | | | | | | | | | | | |
Bonos de la Tesoreria de la Republica en pesos, 2.80%, 10/01/2033(b) | | | CLP | | | | 4,000,000,000 | | | | 5,483,181 | |
| | | |
Colombia–0.35% | | | | | | | | | | | | |
Colombian TES, Series B, 10.00%, 07/24/2024 | | | COP | | | | 10,146,000,000 | | | | 3,608,669 | |
| | | |
Cyprus–0.98% | | | | | | | | | | | | |
Cyprus Government International Bond, 1.25%, 01/21/2040(b) | | | EUR | | | | 7,565,000 | | | | 10,013,611 | |
| | | |
Czech Republic–0.15% | | | | | | | | | | | | |
CPI Property Group S.A., 4.88%(b)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,539,206 | |
| | | |
Denmark–0.04% | | | | | | | | | | | | |
Danske Bank A/S, 5.88%(b)(c)(d) | | | EUR | | | | 360,000 | | | | 461,079 | |
| | | | | | | | | | | | |
| | | Principal Amount | | | Value | |
| | | |
Egypt–0.56% | | | | | | | | | | | | |
Egypt Government Bond, 16.00%, 06/11/2022 | | | EGP | | | | 50,300,000 | | | $ | 3,315,684 | |
Egypt Government International Bond, 4.75%, 04/16/2026(b) | | | EUR | | | | 1,900,000 | | | | 2,416,624 | |
| | | | | | | | | | | | 5,732,308 | |
| | | |
Germany–0.15% | | | | | | | | | | | | |
Commerzbank AG,
6.13%(b)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,568,613 | |
| | | |
Greece–8.34% | | | | | | | | | | | | |
Hellenic Republic Government Bond, | | | | | | | | | | | | |
1.50%, 06/18/2030(b) | | | EUR | | | | 45,850,000 | | | | 60,533,073 | |
1.88%, 02/04/2035(b) | | | EUR | | | | 17,978,000 | | | | 24,834,970 | |
Series GDP, 0.00%, 10/15/2042(e) | | | EUR | | | | 23,730,000 | | | | 96,246 | |
| | | | | | | | | | | | 85,464,289 | |
| | | |
India–2.22% | | | | | | | | | | | | |
India Government Bond, | | | | | | | | | | | | |
7.72%, 05/25/2025 | | | INR | | | | 15,000,000 | | | | 226,229 | |
8.20%, 09/24/2025 | | | INR | | | | 215,600,000 | | | | 3,313,869 | |
7.59%, 01/11/2026 | | | INR | | | | 300,000,000 | | | | 4,536,163 | |
7.27%, 04/08/2026 | | | INR | | | | 600,000,000 | | | | 8,984,295 | |
8.24%, 02/15/2027 | | | INR | | | | 215,000,000 | | | | 3,342,957 | |
7.17%, 01/08/2028 | | | INR | | | | 155,000,000 | | | | 2,302,593 | |
| | | | | | | | | | | | 22,706,106 | |
| | | |
Indonesia–3.53% | | | | | | | | | | | | |
Indonesia Treasury Bond, | | | | | | | | | | | | |
6.50%, 02/15/2031 | | | IDR | | | | 95,000,000,000 | | | | 7,081,818 | |
Series FR56, 8.38%, 09/15/2026 | | | IDR | | | | 104,095,000,000 | | | | 8,495,087 | |
Series FR59, 7.00%, 05/15/2027 | | | IDR | | | | 90,000,000,000 | | | | 6,913,768 | |
Series FR64, 6.13%, 05/15/2028 | | | IDR | | | | 20,000,000,000 | | | | 1,445,979 | |
Series FR74, 7.50%, 08/15/2032 | | | IDR | | | | 72,480,000,000 | | | | 5,627,214 | |
Series FR78, 8.25%, 05/15/2029 | | | IDR | | | | 29,100,000,000 | | | | 2,390,330 | |
Series FR82, 7.00%, 09/15/2030 | | | IDR | | | | 55,000,000,000 | | | | 4,245,374 | |
| | | | | | | | | | | | 36,199,570 | |
| | | |
Italy–4.46% | | | | | | | | | | | | |
Banca Monte dei Paschi di Siena S.p.A., 5.38%, 01/18/2028(b)(c) | | | EUR | | | | 750,000 | | | | 798,272 | |
Intesa Sanpaolo S.p.A., 7.75%(b)(c)(d) | | | EUR | | | | 1,300,000 | | | | 1,907,759 | |
5.50%(b)(c)(d) | | | EUR | | | | 1,300,000 | | | | 1,693,757 | |
Italy Buoni Poliennali Del Tesoro, 2.80%, 03/01/2067(b) | | | EUR | | | | 23,691,000 | | | | 38,859,590 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | |
| | | Principal Amount | | | Value | |
Italy–(continued) | | | | | | | | | | | | |
UniCredit S.p.A.,
9.25%(b)(c)(d) | | | EUR | | | | 1,800,000 | | | $ | 2,417,493 | |
| | | | | | | | | | | | 45,676,871 | |
| | | |
Ivory Coast–0.65% | | | | | | | | | | | | |
Ivory Coast Government International Bond, | | | | | | | | | | | | |
5.25%, 03/22/2030(b) | | | EUR | | | | 1,819,000 | | | | 2,389,874 | |
4.88%, 01/30/2032(b) | | | EUR | | | | 790,000 | | | | 994,906 | |
6.88%, 10/17/2040(b) | | | EUR | | | | 2,330,000 | | | | 3,246,564 | |
| | | | | | | | | | | | 6,631,344 | |
| | | |
Mexico–0.06% | | | | | | | | | | | | |
J.P. Morgan S.A./Hipotecaria Su Casita S.A. de C.V., 6.47%, 08/26/2035(b)(f) | | | MXN | | | | 5,808,600 | | | | 42,878 | |
Mexican Bonos, Series M, 7.75%, 11/13/2042 | | | MXN | | | | 10,000,000 | | | | 579,276 | |
| | | | | | | | | | | | 622,154 | |
| | | |
Netherlands–0.73% | | | | | | | | | | | | |
ABN AMRO Bank N.V., 4.38%(b)(c)(d) | | | EUR | | | | 3,200,000 | | | | 4,164,161 | |
Cooperatieve Rabobank U.A., 4.38%(b)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,625,230 | |
Maxeda DIY Holding B.V., 5.88%, 10/01/2026(b) | | | EUR | | | | 418,000 | | | | 533,757 | |
Stichting AK Rabobank Certificaten, 6.50%(b)(d) | | | EUR | | | | 715,625 | | | | 1,161,432 | |
| | | | | | | | | | | | 7,484,580 | |
| | | |
Portugal–0.62% | | | | | | | | | | | | |
Banco Comercial Portugues S.A., 4.50%,
12/07/2027(b)(c) | | | EUR | | | | 500,000 | | | | 607,350 | |
Caixa Geral de Depositos S.A., 10.75%(b)(c)(d) | | | EUR | | | | 3,600,000 | | | | 4,852,850 | |
Novo Banco S.A., | | | | | | | | | | | | |
3.50%, 02/19/2043(b) | | | EUR | | | | 750,000 | | | | 804,640 | |
3.50%, 03/18/2043(b) | | | EUR | | | | 110,000 | | | | 118,277 | |
| | | | | | | | | | | | 6,383,117 | |
| | | |
Russia–1.62% | | | | | | | | | | | | |
Mos.ru, 5.00%, 08/22/2034 | | | RUB | | | | 22,725,040 | | | | 0 | |
Russian Federal Bond - OFZ, | | | | | | | | | | | | |
Series 6212, 7.05%, 01/19/2028 | | | RUB | | | | 250,000,000 | | | | 3,653,296 | |
Series 6221, 7.70%, 03/23/2033 | | | RUB | | | | 133,300,000 | | | | 2,031,689 | |
Series 6225, 7.25%, 05/10/2034 | | | RUB | | | | 537,500,000 | | | | 7,912,081 | |
Series 6228, 7.65%, 04/10/2030 | | | RUB | | | | 200,000,000 | | | | 3,055,057 | |
| | | | | | | | | | | | 16,652,123 | |
| | | | | | | | | | | | |
| | | Principal Amount | | | Value | |
South Africa–1.15% | | | | | | | | | | | | |
Republic of South Africa Government Bond, Series 2037, 8.50%, 01/31/2037 | | | ZAR | | | | 9,400,000 | | | $ | 530,316 | |
Series R186, 10.50%, 12/21/2026 | | | ZAR | | | | 101,775,000 | | | | 8,201,990 | |
Republic of South Africa Government International Bond, Series 2048, 8.75%, 02/28/2048 | | | ZAR | | | | 54,000,000 | | | | 3,027,618 | |
| | | | | | | | | | | | 11,759,924 | |
| | | |
Spain–2.24% | | | | | | | | | | | | |
Banco Bilbao Vizcaya Argentaria S.A., | | | | | | | | | | | | |
5.88%(b)(c)(d) | | | EUR | | | | 2,625,000 | | | | 3,298,130 | |
6.00%(b)(c)(d) | | | EUR | | | | 600,000 | | | | 788,331 | |
6.00%(b)(c)(d) | | | EUR | | | | 2,800,000 | | | | 3,786,456 | |
Banco Santander S.A., | | | | | | | | | | | | |
4.38%(b)(c)(d) | | | EUR | | | | 2,600,000 | | | | 3,192,203 | |
6.25%(b)(c)(d) | | | EUR | | | | 3,900,000 | | | | 4,886,934 | |
4.75%(b)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,472,027 | |
Bankinter S.A., | | | | | | | | | | | | |
8.63%(b)(c)(d) | | | EUR | | | | 1,145,000 | | | | 1,436,382 | |
6.25%(b)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,616,067 | |
CaixaBank S.A.,
5.88%(b)(c)(d) | | | EUR | | | | 1,800,000 | | | | 2,430,961 | |
| | | | | | | | | | | | 22,907,491 | |
| | | |
Supranational–0.28% | | | | | | | | | | | | |
African Development Bank, 0.00%, 01/17/2050(e) | | | ZAR | | | | 78,000,000 | | | | 539,684 | |
European Bank for Reconstruction and Development, 6.85%, 06/21/2021 | | | IDR | | | | 10,600,000,000 | | | | 764,102 | |
International Finance Corp., | | | | | | | | | | | | |
0.00%, 02/15/2029(b)(e) | | | TRY | | | | 3,700,000 | | | | 190,301 | |
0.00%, 03/23/2038(e) | | | MXN | | | | 90,000,000 | | | | 1,409,576 | |
| | | | | | | | | | | | 2,903,663 | |
| | | |
Thailand–0.14% | | | | | | | | | | | | |
Thailand Government Bond, 3.30%, 06/17/2038 | | | THB | | | | 35,000,000 | | | | 1,455,768 | |
| | | |
United Kingdom–0.55% | | | | | | | | | | | | |
eG Global Finance PLC, 6.25%, 10/30/2025(b) | | | EUR | | | | 150,000 | | | | 189,239 | |
HSBC Holdings PLC, | | | | | | | | | | | | |
5.25%(b)(c)(d) | | | EUR | | | | 1,300,000 | | | | 1,661,597 | |
6.00%(b)(c)(d) | | | EUR | | | | 1,555,000 | | | | 2,087,266 | |
Iceland Bondco PLC, 4.63%, 03/15/2025(b) | | | GBP | | | | 391,000 | | | | 533,607 | |
Natwest Group PLC, 5.13%(c)(d) | | | GBP | | | | 780,000 | | | | 1,117,983 | |
| | | | | | | | | | | | 5,589,692 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal Amount | | | Value | |
United States–0.25% | | | | | | | | |
AT&T, Inc., 2.05%, 05/19/2032 | | EUR | 1,820,000 | | | $ | 2,538,942 | |
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $362,556,049) | | | | | | | 365,742,685 | |
|
U.S. Dollar Denominated Bonds & Notes–32.59% | |
Argentina–0.35% | | | | | | | | |
Argentine Bonad Bonds, 0.10%, 11/30/2021 | | $ | 4,616,450 | | | | 2,602,524 | |
Argentine Republic Government International Bond, 2.50%, 07/09/2041(g) | | | 2,600,000 | | | | 986,700 | |
| | | | | | | | 3,589,224 | |
| | |
Australia–0.01% | | | | | | | | |
FMG Resources August 2006 Pty. Ltd., 4.75%, 05/15/2022(b) | | | 119,000 | | | | 122,644 | |
| | |
Belgium–0.00% | | | | | | | | |
Telenet Finance Luxembourg Notes S.a.r.l., 5.50%, 03/01/2028(b) | | | 5,000 | | | | 5,349 | |
| | |
Brazil–1.03% | | | | | | | | |
B2W Digital Lux S.a.r.l., 4.38%, 12/20/2030(b) | | | 815,000 | | | | 844,544 | |
Banco do Brasil S.A., 6.25%(b)(c)(d) | | | 625,000 | | | | 641,562 | |
Braskem Netherlands Finance B.V., 8.50%, 01/23/2081(b)(c) | | | 390,000 | | | | 434,659 | |
Cemig Geracao e Transmissao S.A., 9.25%, 12/05/2024(b) | | | 650,000 | | | | 751,569 | |
CSN Islands XI Corp., 6.75%, 01/28/2028(b) | | | 560,000 | | | | 607,040 | |
Petrobras Global Finance B.V., 5.09%, 01/15/2030 | | | 5,200,000 | | | | 5,817,500 | |
Yara International ASA, 3.15%, 06/04/2030(b) | | | 1,300,000 | | | | 1,409,122 | |
| | | | | | | | 10,505,996 | |
| | | | | | | | |
| | | Principal Amount | | | Value | |
| | |
Canada–0.88% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc., 4.00%,
10/15/2030(b) | | $ | 642,000 | | | $ | 651,893 | |
Canadian Natural Resources Ltd., 2.05%, 07/15/2025 | | | 2,600,000 | | | | 2,729,700 | |
Cenovus Energy, Inc., 4.25%, 04/15/2027 | | | 598,000 | | | | 653,321 | |
GFL Environmental, Inc., 3.50%, 09/01/2028(b) | | | 324,000 | | | | 330,953 | |
Magna International, Inc., 2.45%, 06/15/2030 | | | 1,300,000 | | | | 1,399,357 | |
Nutrien Ltd., 2.95%, 05/13/2030 | | | 1,300,000 | | | | 1,431,763 | |
Parkland Corp., 6.00%, 04/01/2026(b) | | | 567,000 | | | | 596,413 | |
Transcanada Trust, Series 16-A, 5.88%, 08/15/2076(c) | | | 1,130,000 | | | | 1,261,166 | |
| | | | | | | | 9,054,566 | |
| | |
Chile–0.14% | | | | | | | | |
AES Gener S.A., 6.35%, 10/07/2079(b)(c) | | | 750,000 | | | | 825,937 | |
Antofagasta PLC, 2.38%, 10/14/2030(b) | | | 650,000 | | | | 653,250 | |
| | | | | | | | 1,479,187 | |
| | |
China–0.65% | | | | | | | | |
CIFI Holdings Group Co. Ltd., | | | | | | | | |
6.45%, 11/07/2024(b) | | | 800,000 | | | | 865,000 | |
6.00%, 07/16/2025(b) | | | 650,000 | | | | 697,159 | |
Country Garden Holdings Co. Ltd., 5.40%, 05/27/2025(b) | | | 1,690,000 | | | | 1,827,422 | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC, 7.50%, 05/01/2025(b) | | | 135,000 | | | | 119,475 | |
ENN Clean Energy International Investment Ltd., 7.50%, 02/27/2021(b) | | | 1,250,000 | | | | 1,257,813 | |
Logan Group Co. Ltd., | | | | | | | | |
7.50%, 08/25/2022(b) | | | 565,000 | | | | 581,679 | |
5.25%, 02/23/2023(b) | | | 1,250,000 | | | | 1,274,998 | |
| | | | | | | | 6,623,546 | |
|
Congo, Democratic Republic of the–0.12% | |
HTA Group Ltd., 7.00%, 12/18/2025(b) | | | 1,170,000 | | | | 1,265,823 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Denmark–0.03% | | | | | | | | |
Danske Bank A/S, 6.13%(b)(c)(d) | | $ | 250,000 | | | $ | 265,116 | |
| | |
Dominican Republic–0.41% | | | | | | | | |
Dominican Republic International Bond, | | | | | | | | |
5.95%, 01/25/2027(b) | | | 650,000 | | | | 766,188 | |
6.40%, 06/05/2049(b) | | | 1,187,000 | | | | 1,397,692 | |
5.88%, 01/30/2060(b) | | | 1,800,000 | | | | 1,989,000 | |
| | | | | | | | 4,152,880 | |
| | |
Egypt–0.20% | | | | | | | | |
Egypt Government International Bond, | | | | | | | | |
8.50%, 01/31/2047(b) | | | 1,300,000 | | | | 1,477,612 | |
8.70%, 03/01/2049(b) | | | 522,000 | | | | 605,194 | |
| | | | | | | | 2,082,806 | |
| | |
France–1.35% | | | | | | | | |
BNP Paribas S.A., | | | | | | | | |
6.75%(b)(c)(d) | | | 2,000,000 | | | | 2,090,620 | |
7.38%(b)(c)(d) | | | 1,300,000 | | | | 1,504,834 | |
Credit Agricole S.A., | | | | | | | | |
8.13%(b)(c)(d) | | | 433,000 | | | | 527,946 | |
6.88%(b)(c)(d) | | | 1,600,000 | | | | 1,776,104 | |
La Mondiale SAM, 4.80%, 01/18/2048(b)(c) | | | 858,000 | | | | 917,524 | |
Societe Generale S.A., | | | | | | | | |
7.38%(b)(c)(d) | | | 1,600,000 | | | | 1,642,000 | |
8.00%(b)(c)(d) | | | 2,145,000 | | | | 2,518,706 | |
Total Capital International S.A., 3.13%, 05/29/2050 | | | 2,600,000 | | | | 2,820,648 | |
| | | | | | | | 13,798,382 | |
| | |
Ghana–0.14% | | | | | | | | |
Ghana Government International Bond, | | | | | | | | |
7.88%, 03/26/2027(b) | | | 650,000 | | | | 716,753 | |
8.95%, 03/26/2051(b) | | | 650,000 | | | | 679,933 | |
| | | | | | | | 1,396,686 | |
| | |
Hong Kong–0.33% | | | | | | | | |
Melco Resorts Finance Ltd., 4.88%, 06/06/2025(b) | | | 3,250,000 | | | | 3,357,249 | |
| | |
India–0.44% | | | | | | | | |
Azure Power Energy Ltd., 5.50%, 11/03/2022(b) | | | 1,515,000 | | | | 1,556,663 | |
NTPC Ltd., 4.50%, 03/19/2028(b) | | | 650,000 | | | | 727,727 | |
Oil India International Pte. Ltd., 4.00%, 04/21/2027(b) | | | 2,119,000 | | | | 2,278,073 | |
| | | | | | | | 4,562,463 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| | |
Indonesia–1.22% | | | | | | | | |
Indonesia Government International Bond, 4.45%, 04/15/2070 | | $ | 1,300,000 | | | $ | 1,600,010 | |
PT Cikarang Listrindo Tbk, 4.95%, 09/14/2026(b) | | | 2,285,000 | | | | 2,387,825 | |
PT Indonesia Asahan Aluminium (Persero), | | | | | | | | |
4.75%, 05/15/2025(b) | | | 2,600,000 | | | | 2,875,600 | |
5.45%, 05/15/2030(b) | | | 1,300,000 | | | | 1,565,717 | |
PT Pertamina (Persero), 4.70%, 07/30/2049(b) | | | 650,000 | | | | 745,948 | |
PT Perusahaan Perseroan (Persero) Perusahaan Listrik Negara, 4.13%, 05/15/2027(b) | | | 1,300,000 | | | | 1,441,128 | |
PT Tower Bersama Infrastructure Tbk, 4.25%, 01/21/2025(b) | | | 650,000 | | | | 676,000 | |
PT Perusahaan Perseroan (Persero) Perusahaan Listrik Negara, 4.88%, 07/17/2049(b) | | | 1,040,000 | | | | 1,186,458 | |
| | | | | | | | 12,478,686 | |
| | |
Ireland–0.59% | | | | | | | | |
AerCap Global Aviation Trust, 6.50%, 06/15/2045(b)(c) | | | 503,000 | | | | 514,318 | |
Coriolanus DAC, | | | | | | | | |
Series 116, 0.00%,
04/30/2025(b)(e) | | | 640,519 | | | | 638,529 | |
Series 119, 0.00%,
04/30/2025(b)(e) | | | 681,434 | | | | 679,317 | |
Series 120, 0.00%,
04/30/2025(b)(e) | | | 852,983 | | | | 850,334 | |
Series 122, 0.00%,
04/30/2025(b)(e) | | | 747,347 | | | | 745,026 | |
Series 124, 0.00%,
04/30/2025(b)(e) | | | 600,240 | | | | 598,375 | |
Series 126, 0.00%,
04/30/2025(b)(e) | | | 671,504 | | | | 669,418 | |
Series 127, 0.00%,
04/30/2025(b)(e) | | | 777,798 | | | | 775,382 | |
0.00%, 04/30/2025(b)(e) | | | 610,445 | | | | 608,550 | |
| | | | | | | | 6,079,249 | |
| | |
Italy–0.09% | | | | | | | | |
Telecom Italia Capital S.A., 7.20%, 07/18/2036 | | | 690,000 | | | | 933,101 | |
| | |
Japan–0.13% | | | | | | | | |
Takeda Pharmaceutical Co. Ltd., 3.18%, 07/09/2050 | | | 1,300,000 | | | | 1,385,656 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Kazakhstan–0.07% | | | | | | |
Astana-Finance JSC, 0.00%, 12/22/2024(b)(e)(f) | | $ | 315,159 | | | $ 0 |
KazMunayGas National Co. JSC, 3.50%, 04/14/2033(b) | | | 650,000 | | | 711,690 |
| | | | | | | 711,690 |
| | |
Luxembourg–0.29% | | | | | | |
ArcelorMittal S.A., 3.60%, 07/16/2024 | | | 2,500,000 | | | 2,698,786 |
Intelsat Jackson Holdings S.A., 8.50%, 10/15/2024(b)(h) | | | 367,000 | | | 263,286 |
| | | | | | | 2,962,072 |
| | |
Macau–0.51% | | | | | | |
MGM China Holdings Ltd., 5.38%, 05/15/2024(b) | | | 1,505,000 | | | 1,557,833 |
Sands China Ltd.,
| | | | | | |
3.80%, 01/08/2026(b) | | | 520,000 | | | 556,639 |
4.38%, 06/18/2030(b) | | | 650,000 | | | 726,030 |
Wynn Macau Ltd., 4.88%, 10/01/2024(b) | | | 2,335,000 | | | 2,371,438 |
| | | | | | | 5,211,940 |
| | |
Mexico–0.68% | | | | | | |
Banco Mercantil del Norte S.A., 8.38%(b)(c)(d) | | | 650,000 | | | 776,919 |
Cemex S.A.B. de C.V., 5.45%, 11/19/2029(b) | | | 1,015,000 | | | 1,118,286 |
| Petroleos Mexicanos, | | | | | | |
6.88%, 10/16/2025(b) | | | 1,300,000 | | | 1,426,620 |
4.50%, 01/23/2026 | | | 1,797,000 | | | 1,793,388 |
6.49%, 01/23/2027 | | | 650,000 | | | 687,375 |
6.38%, 01/23/2045 | | | 1,300,000 | | | 1,193,725 |
| | | | | | | 6,996,313 |
| | |
Netherlands–0.34% | | | | | | |
ING Groep N.V., 5.75%(c)(d) | | | 500,000 | | | 543,857 |
UPC Holding B.V., 5.50%, 01/15/2028(b) | | | 481,000 | | | 508,357 |
VEON Holdings B.V., 3.38%, 11/25/2027(b) | | | 2,355,000 | | | 2,422,377 |
| | | | | | | 3,474,591 |
| | |
Nigeria–0.07% | | | | | | |
Nigeria Government International Bond, 9.25%, 01/21/2049(b) | | | 600,000 | | | 707,013 |
| | | | | | |
| | | Principal
Amount | | | Value |
Oman–0.30% | | | | | | |
Oman Government International Bond, 4.75%, 06/15/2026(b) | | $ | 3,018,000 | | | $ 3,027,145 |
Peru–0.15% | | | | | | |
Banco de Credito del Peru, 3.13%, 07/01/2030(b)(c) | | | 650,000 | | | 666,257 |
Nexa Resources S.A., 6.50%, 01/18/2028(b) | | | 780,000 | | | 920,887 |
| | | | | | | 1,587,144 |
| | |
Saudi Arabia–0.05% | | | | | | |
ADES International Holding PLC, 8.63%, 04/24/2024(b) | | | 500,000 | | | 502,500 |
South Africa–0.13% | | | | | | |
Republic of South Africa Government International Bond, 5.75%, 09/30/2049 | | | 1,300,000 | | | 1,306,920 |
Spain–0.08% | | | | | | |
Banco Santander S.A., 2.75%, 12/03/2030 | | | 800,000 | | | 826,368 |
Sri Lanka–0.13% | | | | | | |
Sri Lanka Government International Bond,
| | | | | | |
6.35%, 06/28/2024(b) | | | 1,210,000 | | | 742,940 |
6.20%, 05/11/2027(b) | | | 200,000 | | | 114,908 |
6.75%, 04/18/2028(b) | | | 873,000 | | | 503,616 |
| | | | | | | 1,361,464 |
| | |
Sweden–0.06% | | | | | | |
Skandinaviska Enskilda Banken AB, 5.13%(b)(c)(d) | | | 600,000 | | | 627,825 |
| | |
Switzerland–1.41% | | | | | | |
Argentum Netherlands B.V. for Swiss Re Ltd., 5.75%, 08/15/2050(b)(c) | | | 1,560,000 | | | 1,775,085 |
Credit Suisse Group AG, | | | | | | |
7.13%(b)(c)(d) | | | 570,000 | | | 602,342 |
7.50%(b)(c)(d) | | | 2,020,000 | | | 2,253,914 |
6.38%(b)(c)(d) | | | 965,000 | | | 1,075,575 |
6.25%(b)(c)(d) | | | 625,000 | | | 685,508 |
7.50%(b)(c)(d) | | | 540,000 | | | 589,950 |
UBS Group AG, | | | | | | |
7.00%(b)(c)(d) | | | 650,000 | | | 713,014 |
7.00%(b)(c)(d) | | | 2,400,000 | | | 2,737,500 |
7.13%(b)(c)(d) | | | 2,600,000 | | | 2,681,250 |
6.88%(b)(c)(d) | | | 630,000 | | | 637,494 |
5.13%(b)(c)(d) | | | 650,000 | | | 697,125 |
| | | | | | | 14,448,757 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Thailand–0.44% | | | | | | |
Bangkok Bank PCL, | | | | | | |
3.73%, 09/25/2034(b)(c) | | $ | 700,000 | | | $ 730,200 |
5.00%(b)(c)(d) | | | 1,130,000 | | | 1,184,297 |
Thaioil Treasury Center Co. Ltd., | | | | | | |
3.50%, 10/17/2049(b) | | | 1,300,000 | | | 1,254,068 |
3.75%, 06/18/2050(b) | | | 1,300,000 | | | 1,294,943 |
| | | | | | | 4,463,508 |
| | |
Ukraine–0.64% | | | | | | |
Metinvest B.V., | | | | | | |
8.50%, 04/23/2026(b) | | | 1,250,000 | | | 1,409,375 |
7.65%, 10/01/2027(b) | | | 200,000 | | | 219,500 |
7.75%, 10/17/2029(b) | | | 920,000 | | | 1,010,675 |
NAK Naftogaz Ukraine via Kondor Finance PLC, 7.63%, 11/08/2026(b) | | | 600,000 | | | 623,100 |
Ukraine Government International Bond, | | | | | | |
7.75%, 09/01/2024(b) | | | 650,000 | | | 724,233 |
7.75%, 09/01/2025(b) | | | 938,000 | | | 1,054,054 |
7.30%, 03/15/2033(b) | | | 1,430,000 | | | 1,565,764 |
| | | | | | | 6,606,701 |
| | |
United Arab Emirates–0.16% | | | | | | |
Emirate of Dubai Government International Bond, 3.90%, 09/09/2050(b) | | | 1,650,000 | | | 1,627,106 |
United Kingdom–1.21% | | | | | | |
BAT Capital Corp., 2.26%, 03/25/2028 | | | 2,600,000 | | | 2,701,268 |
BP Capital Markets PLC,
4.88%(c)(d) | | | 910,000 | | | 1,017,562 |
eG Global Finance PLC, 8.50%, 10/30/2025(b) | | | 296,000 | | | 314,204 |
HSBC Holdings PLC,
| | | | | | |
6.38%(c)(d) | | | 2,080,000 | | | 2,276,092 |
6.38%(c)(d) | | | 1,465,000 | | | 1,584,031 |
Natwest Group PLC, 6.00%(c)(d) | | | 535,000 | | | 587,360 |
Standard Chartered PLC,
7.50%(b)(c)(d) | | | 1,625,000 | | | 1,701,042 |
Standard Life Aberdeen PLC, 4.25%, 06/30/2028(b) | | | 1,225,000 | | | 1,311,853 |
| | | | | | |
| | | Principal
Amount | | | Value |
United Kingdom–(continued) | | | | | | |
Virgin Media Secured Finance PLC, | | | | | | |
5.50%, 08/15/2026(b) | | $ | 169,000 | | | $ 175,866 |
5.50%, 05/15/2029(b) | | | 130,000 | | | 141,094 |
Vodafone Group PLC, 7.00%, 04/04/2079(c) | | | 500,000 | | | 622,633 |
| | | | | | | 12,433,005 |
| | |
United States–17.76% | | | | | | |
Acadia Healthcare Co., Inc., 5.00%, 04/15/2029(b) | | | 487,000 | | | 521,090 |
AdaptHealth LLC, 4.63%, 08/01/2029(b) | | | 291,000 | | | 299,366 |
AECOM, 5.13%, 03/15/2027 | | | 189,000 | | | 210,998 |
Akumin, Inc., 7.00%, 11/01/2025(b) | | | 685,000 | | | 721,819 |
Albertsons Cos., Inc./Safeway, Inc./New Albertsons L.P./Albertson’s LLC, 3.50%, 03/15/2029(b) | | | 272,000 | | | 275,128 |
Alcoa Nederland Holding B.V., 6.13%, 05/15/2028(b) | | | 2,600,000 | | | 2,845,375 |
Allison Transmission, Inc., 3.75%, 01/30/2031(b) | | | 756,000 | | | 774,900 |
Ally Financial, Inc., | | | | | | |
5.75%, 11/20/2025 | | | 521,000 | | | 606,962 |
8.00%, 11/01/2031 | | | 254,000 | | | 373,385 |
American Airlines Group, Inc., 5.00%, 06/01/2022(b) | | | 262,000 | | | 236,032 |
Amsted Industries, Inc., 5.63%, 07/01/2027(b) | | | 165,000 | | | 175,900 |
Anagram International, Inc./Anagram Holdings LLC, 5% PIK Rate, 5% Cash Rate, 08/15/2026(b)(i) | | | 17,059 | | | 16,974 |
Antero Resources Corp., 5.00%, 03/01/2025 | | | 724,000 | | | 689,157 |
Applied Materials, Inc., 2.75%, 06/01/2050 | | | 1,300,000 | | | 1,417,331 |
Ascent Resources Utica Holdings LLC/ARU Finance Corp., 8.25%, 12/31/2028(b) | | | 66,000 | | | 66,000 |
ASGN, Inc., 4.63%,
05/15/2028(b) | | | 239,000 | | | 248,964 |
Ashland LLC, 4.75%, 08/15/2022 | | | 18,000 | | | 18,889 |
Banff Merger Sub, Inc., 9.75%, 09/01/2026(b) | | | 323,000 | | | 349,234 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
Bausch Health Cos., Inc., | | | | | | |
7.00%, 03/15/2024(b) | | $ | 349,000 | | | $ 359,383 |
5.75%, 08/15/2027(b) | �� | | 156,000 | | | 167,603 |
Becton, Dickinson and Co., 3.79%, 05/20/2050 | | | 2,600,000 | | | 3,091,449 |
Belo Corp., 7.75%, 06/01/2027 | | | 207,000 | | | 241,988 |
Blue Racer Midstream LLC/Blue Racer Finance Corp., 7.63%, 12/15/2025(b) | | | 427,000 | | | 455,822 |
BMC East LLC, 5.50%, 10/01/2024(b) | | | 508,000 | | | 521,970 |
BorgWarner, Inc., 2.65%, 07/01/2027 | | | 1,300,000 | | | 1,398,530 |
Boxer Parent Co., Inc., 9.13%, 03/01/2026(b) | | | 376,000 | | | 405,610 |
Brink’s Co. (The), | | | | | | |
5.50%, 07/15/2025(b) | | | 53,000 | | | 56,677 |
4.63%, 10/15/2027(b) | | | 591,000 | | | 618,703 |
Bunge Ltd. Finance Corp., 1.63%, 08/17/2025 | | | 2,080,000 | | | 2,150,666 |
Calpine Corp., | | | | | | |
5.25%, 06/01/2026(b) | | | 164,000 | | | 169,904 |
3.75%, 03/01/2031(b) | | | 556,000 | | | 551,666 |
Calumet Specialty Products Partners L.P./Calumet Finance Corp., | | | | | | |
7.63%, 01/15/2022 | | | 142,000 | | | 141,079 |
9.25%, 07/15/2024(b) | | | 260,000 | | | 291,200 |
Camelot Finance S.A., 4.50%, 11/01/2026(b) | | | 503,000 | | | 525,949 |
Capitol Investment Merger Sub 2 LLC, 10.00%, 08/01/2024(b) | | | 500,000 | | | 548,760 |
Cardtronics, Inc./Cardtronics USA, Inc., 5.50%,
05/01/2025(b) | | | 703,000 | | | 729,289 |
Carnival Corp., | | | | | | |
11.50%, 04/01/2023(b) | | | 5,765,000 | | | 6,674,573 |
10.50%, 02/01/2026(b) | | | 328,000 | | | 382,530 |
Carrier Global Corp., 2.70%, 02/15/2031 | | | 1,300,000 | | | 1,398,370 |
CCM Merger, Inc., 6.38%, 05/01/2026(b) | | | 491,000 | | | 516,777 |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | | | | | |
4.00%, 03/01/2023(b) | | $ | 92,000 | | | $ 92,748 |
5.75%, 02/15/2026(b) | | | 387,000 | | | 399,810 |
5.13%, 05/01/2027(b) | | | 253,000 | | | 268,819 |
5.88%, 05/01/2027(b) | | | 60,000 | | | 62,385 |
5.00%, 02/01/2028(b) | | | 550,000 | | | 582,175 |
4.50%, 08/15/2030(b) | | | 529,000 | | | 562,065 |
Celanese US Holdings LLC, 5.88%, 06/15/2021 | | | 1,019,000 | | | 1,041,521 |
Centene Corp., | | | | | | |
5.38%, 06/01/2026(b) | | | 561,000 | | | 592,394 |
5.38%, 08/15/2026(b) | | | 393,000 | | | 416,089 |
4.63%, 12/15/2029 | | | 474,000 | | | 526,853 |
3.38%, 02/15/2030 | | | 360,000 | | | 379,316 |
Charles River Laboratories International, Inc., 4.25%, 05/01/2028(b) | | | 541,000 | | | 567,612 |
Charles Schwab Corp. (The), Series G, 5.38%(c)(d) | | | 2,500,000 | | | 2,790,625 |
Choice Hotels International, Inc., 3.70%, 01/15/2031 | | | 3,900,000 | | | 4,326,640 |
Clarios Global L.P., 6.75%, 05/15/2025(b) | | | 122,000 | | | 131,647 |
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | | | 100,000 | | | 108,806 |
Clearway Energy Operating LLC, 4.75%, 03/15/2028(b) | | | 472,000 | | | 506,664 |
Cleaver-Brooks, Inc., 7.88%, 03/01/2023(b) | | | 269,000 | | | 266,618 |
Cleveland-Cliffs, Inc., 9.88%, 10/17/2025(b) | | | 362,000 | | | 426,255 |
CNX Resources Corp., | | | | | | |
7.25%, 03/14/2027(b) | | | 492,000 | | | 527,065 |
6.00%, 01/15/2029(b) | | | 151,000 | | | 154,980 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
Colfax Corp., | | | | | | |
6.00%, 02/15/2024(b) | | $ | 149,000 | | | $ 154,777 |
6.38%, 02/15/2026(b) | | | 70,000 | | | 74,835 |
Comstock Resources, Inc., 9.75%, 08/15/2026 | | | 477,000 | | | 512,298 |
Continental Resources, Inc., 5.75%, 01/15/2031(b) | | | 288,000 | | | 320,214 |
Cox Communications, Inc., 2.95%, 10/01/2050(b) | | | 956,000 | | | 977,481 |
Crown Castle International Corp., 3.25%, 01/15/2051 | | | 1,300,000 | | | 1,371,697 |
CSC Holdings LLC, | | | | | | |
5.88%, 09/15/2022 | | | 100,000 | | | 106,063 |
5.50%, 04/15/2027(b) | | | 304,000 | | | 322,544 |
6.50%, 02/01/2029(b) | | | 280,000 | | | 316,659 |
4.63%, 12/01/2030(b) | | | 729,000 | | | 761,903 |
Cumulus Media New Holdings, Inc., 6.75%, 07/01/2026(b) | | | 273,000 | | | 279,589 |
CVS Health Corp., 1.30%, 08/21/2027 | | | 1,300,000 | | | 1,306,283 |
Cxloyalty Group, Inc., 15.50% PIK Rate, 12.50% Cash Rate, 11/10/2022(b)(i) | | | 1,345,033 | | | 1,429,098 |
Dana Financing Luxembourg S.a.r.l., 6.50%, 06/01/2026(b) | | | 180,000 | | | 188,977 |
Dana, Inc., | | | | | | |
5.38%, 11/15/2027 | | | 146,000 | | | 155,034 |
5.63%, 06/15/2028 | | | 253,000 | | | 272,826 |
Darling Ingredients, Inc., 5.25%, 04/15/2027(b) | | | 79,000 | | | 84,149 |
DaVita, Inc., | | | | | | |
4.63%, 06/01/2030(b) | | | 255,000 | | | 270,459 |
3.75%, 02/15/2031(b) | | | 757,000 | | | 770,047 |
Dell International LLC/EMC Corp., | | | | | | |
7.13%, 06/15/2024(b) | | | 409,000 | | | 424,593 |
6.20%, 07/15/2030(b) | | | 2,600,000 | | | 3,383,155 |
Delta Air Lines, Inc., | | | | | | |
7.00%, 05/01/2025(b) | | | 575,000 | | | 664,249 |
7.38%, 01/15/2026 | | | 1,775,000 | | | 2,028,880 |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
Diamond Sports Group LLC/ Diamond Sports Finance Co., | | | | | | |
5.38%, 08/15/2026(b) | | $ | 766,000 | | | $ 623,811 |
6.63%, 08/15/2027(b) | | | 387,000 | | | 234,619 |
Discovery Communications LLC, 3.63%, 05/15/2030 | | | 1,040,000 | | | 1,192,110 |
DISH DBS Corp., | | | | | | |
5.88%, 11/15/2024 | | | 283,000 | | | 297,150 |
7.75%, 07/01/2026 | | | 150,000 | | | 168,112 |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 100,000 | | | 95,573 |
Diversified Healthcare Trust, 9.75%, 06/15/2025 | | | 522,000 | | | 593,180 |
Dun & Bradstreet Corp. (The), 6.88%, 08/15/2026(b) | | | 157,000 | | | 169,069 |
eBay, Inc., 2.70%, 03/11/2030 | | | 520,000 | | | 559,980 |
Embarq Corp., 8.00%, 06/01/2036 | | | 300,000 | | | 370,597 |
Encompass Health Corp., 4.75%, 02/01/2030 | | | 475,000 | | | 509,646 |
Energizer Holdings, Inc., 4.38%, 03/31/2029(b) | | | 495,000 | | | 513,325 |
Energy Transfer Operating L.P., Series A, 6.25%(c)(d) | | | 175,000 | | | 139,563 |
EnerSys, 5.00%, 04/30/2023(b) | | | 497,000 | | | 521,539 |
EnPro Industries, Inc., 5.75%, 10/15/2026 | | | 606,000 | | | 646,032 |
EPR Properties, 3.75%, 08/15/2029 | | | 2,700,000 | | | 2,590,899 |
EQM Midstream Partners L.P., | | | | | | |
6.50%, 07/01/2027(b) | | | 268,000 | | | 302,157 |
5.50%, 07/15/2028 | | | 577,000 | | | 631,803 |
Everi Payments, Inc., 7.50%, 12/15/2025(b) | | | 175,000 | | | 182,200 |
Expedia Group, Inc., 3.60%, 12/15/2023(b) | | | 1,300,000 | | | 1,386,262 |
Flex Acquisition Co., Inc., 7.88%, 07/15/2026(b) | | | 228,000 | | | 240,157 |
Flex Ltd., 3.75%, 02/01/2026 | | | 2,769,000 | | | 3,099,450 |
Ford Motor Co., | | | | | | |
8.50%, 04/21/2023 | | | 649,000 | | | 732,835 |
9.00%, 04/22/2025 | | | 265,000 | | | 325,986 |
9.63%, 04/22/2030 | | | 84,000 | | | 118,680 |
4.75%, 01/15/2043 | | | 241,000 | | | 246,121 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
Ford Motor Credit Co. LLC, | | | | | | |
5.13%, 06/16/2025 | | $ | 204,000 | | | $ 222,064 |
4.13%, 08/04/2025 | | | 2,500,000 | | | 2,626,562 |
3.38%, 11/13/2025 | | | 206,000 | | | 211,214 |
4.39%, 01/08/2026 | | | 138,000 | | | 145,050 |
5.11%, 05/03/2029 | | | 638,000 | | | 711,338 |
Freeport-McMoRan, Inc., | | | | | | |
4.63%, 08/01/2030 | | | 2,210,000 | | | 2,429,398 |
5.40%, 11/14/2034 | | | 1,223,000 | | | 1,532,572 |
5.45%, 03/15/2043 | | | 64,000 | | | 79,799 |
Frontier Communications Corp., | | | | | | |
10.50%, 09/15/2022(h) | | | 732,000 | | | 383,213 |
11.00%, 09/15/2025(h) | | | 105,000 | | | 55,322 |
Gartner, Inc., | | | | | | |
4.50%, 07/01/2028(b) | | | 298,000 | | | 314,762 |
3.75%, 10/01/2030(b) | | | 221,000 | | | 232,326 |
Genesis Energy L.P./Genesis Energy Finance Corp., | | | | | | |
6.50%, 10/01/2025 | | | 150,000 | | | 146,156 |
6.25%, 05/15/2026 | | | 274,000 | | | 258,045 |
7.75%, 02/01/2028 | | | 112,000 | | | 107,345 |
Global Medical Response, Inc., 6.50%, 10/01/2025(b) | | | 731,000 | | | 764,809 |
Global Partners L.P./GLP Finance Corp., 6.88%, 01/15/2029(b) | | | 499,000 | | | 541,103 |
Gray Television, Inc., 7.00%, 05/15/2027(b) | | | 460,000 | | | 504,275 |
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | | | 453,000 | | | 467,510 |
Hadrian Merger Sub, Inc., 8.50%, 05/01/2026(b) | | | 279,000 | | | 289,061 |
Hanesbrands, Inc., | | | | | | |
5.38%, 05/15/2025(b) | | | 308,000 | | | 326,255 |
4.88%, 05/15/2026(b) | | | 222,000 | | | 241,425 |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
HCA, Inc., | | | | | | |
5.38%, 02/01/2025 | | $ | 133,000 | | | $ 149,760 |
5.38%, 09/01/2026 | | | 654,000 | | | 752,934 |
5.63%, 09/01/2028 | | | 163,000 | | | 192,629 |
4.13%, 06/15/2029 | | | 491,000 | | | 569,936 |
7.50%, 11/06/2033 | | | 235,000 | | | 327,487 |
Herbalife Nutrition Ltd./HLF Financing, Inc., 7.88%, 09/01/2025(b) | | | 245,000 | | | 267,969 |
Hess Midstream Operations L.P., 5.63%, 02/15/2026(b) | | | 465,000 | | | 484,472 |
HighPoint Operating Corp., 8.75%, 06/15/2025 | | | 81,000 | | | 31,995 |
Hilcorp Energy I L.P./Hilcorp Finance Co., 6.25%,
11/01/2028(b) | | | 809,000 | | | 830,002 |
HLF Financing S.a.r.l. LLC/Herbalife International, Inc., 7.25%, 08/15/2026(b) | | | 100,000 | | | 106,250 |
Holly Energy Partners L.P./Holly Energy Finance Corp., 5.00%, 02/01/2028(b) | | | 522,000 | | | 526,894 |
Hologic, Inc., 3.25%,
02/15/2029(b) | | | 276,000 | | | 281,347 |
Host Hotels & Resorts L.P., Series D, 3.75%, 10/15/2023 | | | 3,280,000 | | | 3,466,456 |
Howmet Aerospace, Inc., 6.88%, 05/01/2025 | | | 163,000 | | | 192,544 |
Hyundai Capital America, 1.80%, 10/15/2025(b) | | | 1,888,000 | | | 1,937,452 |
Ingles Markets, Inc., 5.75%, 06/15/2023 | | | 78,000 | | | 79,023 |
International Game Technology PLC, 6.25%, 02/15/2022(b) | | | 1,279,000 | | | 1,322,953 |
Intrado Corp., 5.38%, 07/15/2022(b) | | | 332,000 | | | 249,830 |
IRB Holding Corp., 6.75%, 02/15/2026(b) | | | 734,000 | | | 758,479 |
iStar, Inc., 4.75%, 10/01/2024 | | | 584,000 | | | 592,337 |
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | | | 346,000 | | | 366,760 |
Jabil, Inc., 3.00%, 01/15/2031 | | | 1,300,000 | | | 1,385,122 |
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 5.50%, 01/15/2030(b) | | | 335,000 | | | 385,337 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
Kenan Advantage Group, Inc. (The), 7.88%, 07/31/2023(b) | | $ | 293,000 | | | $ 294,068 |
Kraft Heinz Foods Co. (The), | | | | | | |
6.88%, 01/26/2039 | | | 400,000 | | | 554,920 |
5.00%, 06/04/2042 | | | 265,000 | | | 310,929 |
4.38%, 06/01/2046 | | | 402,000 | | | 434,959 |
5.50%, 06/01/2050(b) | | | 672,000 | | | 848,623 |
L Brands, Inc., 6.88%, 11/01/2035 | | | 367,000 | | | 412,646 |
Lamar Media Corp., | | | | | | |
5.75%, 02/01/2026 | | | 177,000 | | | 182,845 |
4.00%, 02/15/2030 | | | 157,000 | | | 163,182 |
Lennar Corp., | | | | | | |
4.50%, 04/30/2024 | | | 89,000 | | | 98,512 |
4.75%, 05/30/2025 | | | 244,000 | | | 279,227 |
5.00%, 06/15/2027 | | | 381,000 | | | 449,580 |
Level 3 Financing, Inc., | | | | | | |
5.25%, 03/15/2026 | | | 433,000 | | | 447,960 |
3.63%, 01/15/2029(b) | | | 189,000 | | | 188,882 |
Lithia Motors, Inc., | | | | | | |
5.25%, 08/01/2025(b) | | | 452,000 | | | 470,598 |
4.63%, 12/15/2027(b) | | | 126,000 | | | 133,166 |
4.38%, 01/15/2031(b) | | | 26,000 | | | 27,934 |
Louisiana-Pacific Corp., 4.88%, 09/15/2024 | | | 816,000 | | | 837,930 |
Macy’s, Inc., 8.38%, 06/15/2025(b) | | | 953,000 | | | 1,059,355 |
Marriott International, Inc., 4.63%, 06/15/2030 | | | 255,000 | | | 299,428 |
Series GG, 3.50%, 10/15/2032 | | | 3,640,000 | | | 3,989,672 |
Mattel, Inc., 6.75%,
12/31/2025(b) | | | 281,000 | | | 296,868 |
Meredith Corp., 6.88%, 02/01/2026 | | | 309,000 | | | 301,854 |
Meritage Homes Corp., 5.13%, 06/06/2027 | | | 497,000 | | | 557,167 |
MGM Growth Properties Operating Partnership L.P./MGP Finance Co.-Issuer, Inc., | | | | | | |
5.63%, 05/01/2024 | | | 233,000 | | | 253,510 |
5.75%, 02/01/2027 | | | 70,000 | | | 78,640 |
| | | | | | |
| | | Principal
Amount | | | Value |
United States–(continued) | | | | | | |
MGM Resorts International, | | | | | | |
6.00%, 03/15/2023 | | $ | 758,000 | | | $ 814,850 |
5.75%, 06/15/2025 | | | 82,000 | | | 90,817 |
4.63%, 09/01/2026 | | | 221,000 | | | 234,277 |
Micron Technology, Inc., 4.66%, 02/15/2030 | | | 424,000 | | | 521,105 |
Motorola Solutions, Inc., 2.30%, 11/15/2030 | | | 520,000 | | | 530,433 |
MPLX L.P., 1.75%, 03/01/2026 | | | 1,820,000 | | | 1,884,459 |
MPT Operating Partnership L.P./MPT Finance Corp., 4.63%, 08/01/2029 | | | 466,000 | | | 501,752 |
Mueller Industries, Inc., 6.00%, 03/01/2027 | | | 467,000 | | | 476,835 |
Murphy Oil Corp., 6.38%, 12/01/2042 | | | 195,000 | | | 173,550 |
Murray Energy Corp., 12.00%, 04/15/2024(b)(h) | | | 2,352,945 | | | 45,035 |
Navient Corp., | | | | | | |
6.63%, 07/26/2021 | | | 157,000 | | | 160,631 |
6.50%, 06/15/2022 | | | 147,000 | | | 155,929 |
6.13%, 03/25/2024 | | | 288,000 | | | 308,337 |
5.88%, 10/25/2024 | | | 210,000 | | | 223,650 |
6.75%, 06/25/2025 | | | 203,000 | | | 221,016 |
6.75%, 06/15/2026 | | | 110,000 | | | 120,106 |
5.00%, 03/15/2027 | | | 277,000 | | | 279,806 |
5.63%, 08/01/2033 | | | 632,000 | | | 607,905 |
Netflix, Inc., | | | | | | |
5.88%, 11/15/2028 | | | 1,090,000 | | | 1,308,583 |
5.38%, 11/15/2029(b) | | | 262,000 | | | 309,160 |
New Enterprise Stone & Lime Co., Inc., | | | | | | |
6.25%, 03/15/2026(b) | | | 254,000 | | | 260,826 |
9.75%, 07/15/2028(b) | | | 214,000 | | | 235,400 |
NextEra Energy Operating Partners L.P., 3.88%, 10/15/2026(b) | | | 84,000 | | | 89,828 |
NGL Energy Partners L.P./NGL Energy Finance Corp., | | | | | | |
7.50%, 11/01/2023 | | | 618,000 | | | 438,780 |
6.13%, 03/01/2025 | | | 245,000 | | | 155,881 |
7.50%, 04/15/2026 | | | 98,000 | | | 60,944 |
Nucor Corp., 2.70%, 06/01/2030 | | | 780,000 | | | 858,647 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
Occidental Petroleum Corp., | | | | | | | | |
2.70%, 02/15/2023 | | $ | 49,000 | | | $ | 49,045 | |
6.95%, 07/01/2024 | | | 165,000 | | | | 178,613 | |
2.90%, 08/15/2024 | | | 996,000 | | | | 960,144 | |
6.38%, 09/01/2028 | | | 136,000 | | | | 144,075 | |
6.13%, 01/01/2031 | | | 214,000 | | | | 229,558 | |
6.20%, 03/15/2040 | | | 249,000 | | | | 247,755 | |
4.10%, 02/15/2047 | | | 324,000 | | | | 265,461 | |
Oceaneering International, Inc., 6.00%, 02/01/2028 | | | 28,000 | | | | 25,095 | |
Omnicare, Inc., 4.75%12/01/2022 | | | 1,765,000 | | | | 1,870,030 | |
OneMain Finance Corp., | | | | | | | | |
6.88%, 03/15/2025 | | | 434,000 | | | | 504,796 | |
7.13%, 03/15/2026 | | | 543,000 | | | | 642,779 | |
5.38%, 11/15/2029 | | | 456,000 | | | | 514,140 | |
4.00%, 09/15/2030 | | | 565,000 | | | | 586,956 | |
Parsley Energy LLC/Parsley Finance Corp., | | | | | | | | |
5.38%, 01/15/2025(b) | | | 115,000 | | | | 118,482 | |
4.13%, 02/15/2028(b) | | | 214,000 | | | | 227,241 | |
Party City Holdings, Inc., 5.75% (6 mo. USD LIBOR + 5.00%), 07/15/2025(b)(j) | | | 31,559 | | | | 28,561 | |
Penske Automotive Group, Inc., 5.50%, 05/15/2026 | | | 337,000 | | | | 350,691 | |
Phillips 66, 2.15%, 12/15/2030 | | | 3,900,000 | | | | 3,965,510 | |
Pilgrim’s Pride Corp., | | | | | | | | |
5.75%, 03/15/2025(b) | | | 158,000 | | | | 162,400 | |
5.88%, 09/30/2027(b) | | | 223,000 | | | | 242,147 | |
Plains All American Pipeline L.P./PAA Finance Corp., 3.80%, 09/15/2030 | | | 780,000 | | | | 839,098 | |
PulteGroup, Inc., | | | | | | | | |
7.88%, 06/15/2032 | | | 160,000 | | | | 240,044 | |
6.38%, 05/15/2033 | | | 170,000 | | | | 233,601 | |
6.00%, 02/15/2035 | | | 175,000 | | | | 238,385 | |
QEP Resources, Inc., 5.63%, 03/01/2026 | | | 806,000 | | | | 885,331 | |
Quicken Loans LLC, 5.25%, 01/15/2028(b) | | | 98,000 | | | | 104,799 | |
QVC, Inc., 5.45%, 08/15/2034 | | | 264,000 | | | | 275,220 | |
Radian Group, Inc., 4.88%, 03/15/2027 | | | 300,000 | | | | 330,210 | |
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(b) | | | 204,000 | | | | 212,976 | |
| Rockies Express Pipeline LLC, | | | | | | | | |
4.80%, 05/15/2030(b) | | | 445,000 | | | | 458,072 | |
6.88%, 04/15/2040(b) | | | 351,000 | | | | 383,766 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
Roper Technologies, Inc., | | | | | | | | |
1.40%, 09/15/2027 | | $ | 1,300,000 | | | $ | 1,316,746 | |
2.00%, 06/30/2030 | | | 780,000 | | | | 797,476 | |
RP Escrow Issuer LLC, 5.25%, 12/15/2025(b) | | | 497,000 | | | | 520,443 | |
RR Donnelley & Sons Co., 8.25%, 07/01/2027 | | | 165,000 | | | | 189,441 | |
Sally Holdings LLC/Sally Capital, Inc., 8.75%, 04/30/2025(b) | | | 183,000 | | | | 203,816 | |
SBA Communications Corp., 4.00%, 10/01/2022 | | | 186,000 | | | | 188,209 | |
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(b) | | | 570,000 | | | | 606,229 | |
Scientific Games International, Inc., | | | | | | | | |
8.63%, 07/01/2025(b) | | | 135,000 | | | | 147,994 | |
8.25%, 03/15/2026(b) | | | 542,000 | | | | 584,983 | |
Scripps Escrow II, Inc., 3.88%, 01/15/2029(b) | | | 285,000 | | | | 297,645 | |
Seagate HDD Cayman, 4.13%, 01/15/2031(b) | | | 1,040,000 | | | | 1,113,627 | |
SEG Holding LLC/SEG Finance Corp., 5.63%, 10/15/2028(b) | | | 303,000 | | | | 320,422 | |
Sensata Technologies B.V., | | | | | | | | |
4.88%, 10/15/2023(b) | | | 487,000 | | | | 526,569 | |
5.63%, 11/01/2024(b) | | | 163,000 | | | | 182,668 | |
Sensata Technologies, Inc., 3.75%, 02/15/2031(b) | | | 81,000 | | | | 84,064 | |
ServiceMaster Co. LLC (The), 7.45%, 08/15/2027 | | | 480,000 | | | | 560,309 | |
Simmons Foods, Inc., 5.75%, 11/01/2024(b) | | | 597,000 | | | | 611,179 | |
SM Energy Co., 10.00%,
01/15/2025(b) | | | 528,000 | | | | 568,590 | |
Southern Co. (The), Series B, 4.00%, 01/15/2051(c) | | | 2,846,000 | | | | 3,017,407 | |
Southwest Airlines Co., 5.25%, 05/04/2025 | | | 780,000 | | | | 903,896 | |
Southwestern Energy Co., | | | | | | | | |
6.45%, 01/23/2025 | | | 44,000 | | | | 45,843 | |
7.50%, 04/01/2026 | | | 307,000 | | | | 322,503 | |
7.75%, 10/01/2027 | | | 151,000 | | | | 163,318 | |
Sprint Capital Corp., 8.75%, 03/15/2032 | | | 341,000 | | | | 540,272 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
Sprint Corp., | | | | | | | | |
7.88%, 09/15/2023 | | $ | 449,000 | | | $ | 520,413 | |
7.63%, 03/01/2026 | | | 421,000 | | | | 523,181 | |
Standard Industries, Inc., 5.00%, 02/15/2027(b) | | | 698,000 | | | | 730,719 | |
Station Casinos LLC, 4.50%, 02/15/2028(b) | | | 526,000 | | | | 530,931 | |
Steel Dynamics, Inc., 3.25%, 01/15/2031 | | | 780,000 | | | | 873,586 | |
SunCoke Energy Partners L.P./SunCoke Energy Partners Finance Corp., 7.50%, 06/15/2025(b) | | | 454,000 | | | | 451,537 | |
Sunoco L.P./Sunoco Finance Corp., | | | | | | | | |
6.00%, 04/15/2027 | | | 70,000 | | | | 74,499 | |
5.88%, 03/15/2028 | | | 487,000 | | | | 527,694 | |
Sysco Corp., 3.30%, 02/15/2050 | | | 3,905,000 | | | | 4,095,014 | |
Talen Energy Supply LLC, 7.63%, 06/01/2028(b) | | | 507,000 | | | | 547,243 | |
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., | | | | | | | | |
5.13%, 02/01/2025 | | | 391,000 | | | | 401,993 | |
5.88%, 04/15/2026 | | | 781,000 | | | | 829,496 | |
6.50%, 07/15/2027 | | | 70,000 | | | | 76,125 | |
5.00%, 01/15/2028 | | | 246,000 | | | | 260,129 | |
5.50%, 03/01/2030 | | | 75,000 | | | | 81,498 | |
4.88%, 02/01/2031(b) | | | 82,000 | | | | 89,093 | |
TEGNA, Inc., 5.50%, 09/15/2024(b) | | | 58,000 | | | | 59,033 | |
Teleflex, Inc., 4.88%, 06/01/2026 | | | 393,000 | | | | 410,626 | |
Tenneco, Inc., 5.38%, 12/15/2024 | | | 313,000 | | | | 303,011 | |
Terraform Global Operating LLC, 6.13%, 03/01/2026(b) | | | 227,000 | | | | 232,916 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
TerraForm Power Operating LLC, | | | | | | | | |
4.25%, 01/31/2023(b) | | $ | 104,000 | | | $ | 107,705 | |
5.00%, 01/31/2028(b) | | | 29,000 | | | | 32,640 | |
Titan International, Inc., 6.50%, 11/30/2023 | | | 365,000 | | | | 338,955 | |
Triumph Group, Inc., 8.88%, 06/01/2024(b) | | | 134,000 | | | | 147,316 | |
Universal Health Services, Inc., 2.65%, 10/15/2030(b) | | | 1,460,000 | | | | 1,518,383 | |
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | | | 505,000 | | | | 539,981 | |
Valvoline, Inc., 3.63%,
06/15/2031(b) | | | 433,000 | | | | 445,884 | |
ViacomCBS, Inc., 4.95%, 05/19/2050 | | | 1,300,000 | | | | 1,685,424 | |
Viatris, Inc., 3.85%, 06/22/2040(b) | | | 780,000 | | | | 880,396 | |
Vistra Operations Co. LLC, | | | | | | | | |
5.50%, 09/01/2026(b) | | | 87,000 | | | | 90,780 | |
5.63%, 02/15/2027(b) | | | 149,000 | | | | 158,700 | |
5.00%, 07/31/2027(b) | | | 326,000 | | | | 345,886 | |
Wabtec Corp., 3.20%, 06/15/2025 | | | 780,000 | | | | 842,205 | |
William Carter Co. (The), | | | | | | | | |
5.50%, 05/15/2025(b) | | | 80,000 | | | | 85,109 | |
5.63%, 03/15/2027(b) | | | 225,000 | | | | 237,234 | |
WPX Energy, Inc., | | | | | | | | |
5.75%, 06/01/2026 | | | 406,000 | | | | 427,416 | |
5.25%, 10/15/2027 | | | 48,000 | | | | 50,943 | |
5.88%, 06/15/2028 | | | 26,000 | | | | 28,374 | |
4.50%, 01/15/2030 | | | 27,000 | | | | 28,661 | |
WRKCo, Inc., 3.00%, 06/15/2033 | | | 1,820,000 | | | | 2,002,324 | |
XPO Logistics, Inc., | | | | | | | | |
6.13%, 09/01/2023(b) | | | 313,000 | | | | 319,064 | |
6.75%, 08/15/2024(b) | | | 147,000 | | | | 156,371 | |
| | | | | | | | 181,949,442 | |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $318,518,176) | | | | | | | 333,970,113 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Asset-Backed Securities–6.87% | |
American Credit Acceptance Receivables Trust, Series 2019-2, Class D, 3.41%, 06/12/2025(b) | | $ | 1,720,000 | | | $ | 1,785,992 | |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2006-1, Class A1, 2.37% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(j) | | | 16,825 | | | | 17,218 | |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.52%, 01/15/2051(k) | | | 5,691,434 | | | | 166,681 | |
Capital Auto Receivables Asset Trust, Series 2017-1, Class D, 3.15%, 02/20/2025(b) | | | 110,000 | | | | 111,703 | |
CarMax Auto Owner Trust, | | | | | | | | |
Series 2019-3, Class D, 2.85%, 01/15/2026 | | | 990,000 | | | | 1,024,683 | |
Series 2017-4, Class D, 3.30%, 05/15/2024 | | | 280,000 | | | | 286,554 | |
Series 2018-1, Class D, 3.37%, 07/15/2024 | | | 195,000 | | | | 201,810 | |
CCG Receivables Trust, | | | | | | | | |
Series 2018-1, Class C, 3.42%, 06/16/2025(b) | | | 70,000 | | | | 70,721 | |
Series 2019-1, Class B, 3.22%, 09/14/2026(b) | | | 140,000 | | | | 145,517 | |
Series 2019-1, Class C, 3.57%, 09/14/2026(b) | | | 35,000 | | | | 36,367 | |
Series 2018-1, Class B, 3.09%, 06/16/2025(b) | | | 240,000 | | | | 242,260 | |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(k) | | | 2,203,179 | | | | 91,349 | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 3.36%, 01/25/2036(l) | | | 7,183 | | | | 6,960 | |
CHL Mortgage Pass-Through Trust, | | | | | | | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | 240,147 | | | | 239,153 | |
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | | | 254,820 | | | | 253,369 | |
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, IO, 1.10%, 10/12/2050(k) | | | 5,850,046 | | | | 309,633 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Citigroup Mortgage Loan Trust, Inc., | | | | | | | | |
Series 2005-2, Class 1A3, 3.51%, 05/25/2035(l) | | $ | 296,447 | | | $ | 300,523 | |
Series 2006-AR1, Class 1A1, 3.88% (1yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(j) | | | 74,606 | | | | 76,187 | |
Series 2014-8, Class 1A2, 0.44% (1mo. USD LIBOR + 0.29%), 07/20/2036(b)(j) | | | 1,619,483 | | | | 1,575,419 | |
CNH Equipment Trust, Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 185,000 | | | | 187,759 | |
COMM Mortgage Trust, | | | | | | | | |
Series 2012-CR5, Class XA, IO, 1.51%, 12/10/2045(k) | | | 2,365,420 | | | | 57,581 | |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 1,600,000 | | | | 1,759,586 | |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 25,000 | | | | 27,485 | |
Credit Acceptance Auto Loan Trust, | | | | | | | | |
Series 2019-1A, Class B, 3.75%, 04/17/2028(b) | | | 85,000 | | | | 88,489 | |
Series 2019-1A, Class C, 3.94%, 06/15/2028(b) | | | 515,000 | | | | 538,701 | |
Series 2018-1A, Class C, 3.77%, 06/15/2027(b) | | | 1,040,000 | | | | 1,056,815 | |
CWHEQ Revolving Home Equity Loan Trust, | | | | | | | | |
Series 2005-G, Class 2A, 0.39% (1mo. USD LIBOR + 0.23%), 12/15/2035(j) | | | 9,999 | | | | 9,897 | |
Series 2006-H, Class 2A1A, 0.31% (1mo. USD LIBOR + 0.15%), 11/15/2036(j) | | | 12,534 | | | | 9,961 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Dell Equipment Finance Trust, | | | | | | | | |
Series 2019-1, Class C, 3.14%, 03/22/2024(b) | | $ | 270,000 | | | $ | 276,220 | |
Series 2019-2, Class D, 2.48%, 04/22/2025(b) | | | 1,290,000 | | | | 1,311,249 | |
Deutsche Alt-B Securities, Inc. Mortgage Loan Trust, Series 2006-AB2, Class A1, 5.89%, 06/25/2036(l) | | | 35,956 | | | | 35,004 | |
Deutsche Mortgage Securities, Inc., Series 2013-RS1, Class 1A2, 0.59% (1 mo. USD LIBOR + 0.44%), 07/22/2036(b)(j) | | | 1,639,418 | | | | 1,637,301 | |
DT Auto Owner Trust, | | | | | | | | |
Series 2019-2A, Class D, 3.48%, 02/18/2025(b) | | | 285,000 | | | | 295,991 | |
Series 2019-4A, Class D, 2.85%, 07/15/2025(b) | | | 2,050,000 | | | | 2,114,700 | |
Exeter Automobile Receivables Trust, | | | | | | | | |
Series 2019-1A, Class D, 4.13%, 12/16/2024(b) | | | 2,170,000 | | | | 2,263,356 | |
Series 2019-4A, Class D, 2.58%, 09/15/2025(b) | | | 2,730,000 | | | | 2,810,045 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
FREMF Mortgage Trust, | | | | | | | | |
Series 2017-K62, Class B, 3.87%, 01/25/2050(b)(l) | | $ | 280,000 | | | $ | 307,333 | |
Series 2016-K54, Class C, 4.05%, 04/25/2048(b)(l) | | | 1,810,000 | | | | 1,938,576 | |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.33%, 07/25/2035(l) | | | 4,982 | | | | 5,087 | |
HomeBanc Mortgage Trust, Series 2005-3, Class A2, 0.77% (1 mo. USD LIBOR + 0.62%), 07/25/2035(j) | | | 3,324 | | | | 3,333 | |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | 235,000 | | | | 244,625 | |
JP Morgan Mortgage Trust, Series 2007-A1, Class 5A1, 3.06%, 07/25/2035(l) | | | 24,107 | | | | 23,908 | |
JPMBB Commercial Mortgage Securities Trust, Series 2014-C24, Class B, 4.12%, 11/15/2047(l) | | | 680,000 | | | | 701,678 | |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 0.25% (1 mo. USD LIBOR + 0.10%), 08/25/2036(j) | | | 784,998 | | | | 371,889 | |
Morgan Stanley BAML Trust, Series 2014- C14, Class B, 4.86%, 02/15/2047(l) | | | 240,000 | | | | 262,740 | |
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | 570,000 | | | | 596,759 | |
Morgan Stanley Capital I Trust, Series 2017- HR2, Class XA, IO, 0.79%, 12/15/2050(k) | | | 1,997,269 | | | | 88,371 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Navistar Financial Dealer Note Master Owner Trust II, | | | | | | |
Series 2019-1, Class C, 1.10% (1 mo. USD LIBOR + 0.95%), 05/25/2024(b)(j) | | $ | 270,000 | | | $ 269,973 |
Series 2019-1, Class D, 1.60% (1 mo. USD LIBOR + 1.45%), 05/25/2024(b)(j) | | | 255,000 | | | 255,259 |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(b) | | | 1,410,000 | | | 1,447,339 |
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | 8,829 | | | 8,237 |
Residential Asset Securitization Trust, Series 2005-A6CB, Class A7, 6.00%, 06/25/2035 | | | 1,345,551 | | | 1,252,634 |
Santander Retail Auto Lease Trust, | | | | | | |
Series 2019-B, Class C, 2.77%, 08/21/2023(b) | | | 1,410,000 | | | 1,451,813 |
Series 2019-C, Class C, 2.39%, 11/20/2023(b) | | | 2,365,000 | | | 2,429,343 |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 1.00%, 11/15/2050(k) | | | 3,750,943 | | | 180,628 |
WaMu Mortgage Pass-Through Ctfs. Trust, | | | | | | |
Series 2005-AR16, Class 1A1, 2.75%, 12/25/2035(l) | | | 4,615 | | | 4,568 |
Series 2003-AR10, Class A7, 2.57%, 10/25/2033(l) | | | 27,897 | | | 28,092 |
Wells Fargo Commercial Mortgage Trust, Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(k) | | | 2,769,817 | | | 141,485 |
| | | | | | |
| | | Principal Amount | | | Value |
WFRBS Commercial Mortgage Trust, | | | | | | |
Series 2011-C3, Class XA, IO, 1.27%, 03/15/2044(b)(k) | | $ | 2,185,450 | | | $ 1,504 |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | 640,000 | | | 672,015 |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(l) | | | 395,000 | | | 431,671 |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | 490,000 | | | 532,937 |
Madison Park Funding XI Ltd., Series 2013-11A, Class DR, 3.46% (3 mo. USD LIBOR + 3.25%), 07/23/2029(b)(j) | | | 250,000 | | | 249,972 |
Alba PLC, Series 2007-1, Class F, 3.29% (3 mo. GBP LIBOR + 3.25%),
03/17/2039(b)(j) | | GBP | 409,387 | | | 518,173 |
Eurosail PLC, | | | | | | |
Series 2006-2X, Class E1C, 3.29% (3 mo. GBP LIBOR + 3.25%), 12/15/2044(b)(j) | | GBP | 1,830,000 | | | 2,214,696 |
Series 2007-1X, Class C1A, 0.00% (3 mo. EURIBOR + 0.44%), 03/13/2045(b)(j) | | EUR | 7,369,000 | | | 7,766,633 |
Series 2006-3X, Class D1C, 0.94% (3 mo. GBP LIBOR + 0.90%), 09/10/2044(b)(j) | | GBP | 1,500,000 | | | 1,678,311 |
Gemgarto PLC, Series 2018-1, Class E, 2.29% (3 mo. GBP LIBOR + 2.25%),
09/16/2065(b)(j) | | GBP | 2,224,480 | | | 2,937,310 |
Ludgate Funding PLC, Series 2007-1, Class MA, 0.27% (3 mo. GBP LIBOR + 0.24%), 01/01/2061(b)(j) | | GBP | 1,209,892 | | | 1,541,173 |
Prosil Acquisition S.A., Series 2019-1, Class A, 1.49% (3 mo. EURIBOR + 2.00%), 10/31/2039(b)(j) | | EUR | 2,286,587 | | | 2,383,633 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal Amount | | | Value |
Alhambra SME Funding, | | | | | | |
Series 2019-1, Class A, 2.00% (1 mo. EURIBOR + 2.00%), 11/30/2028(b)(j) | | EUR | 4,232,659 | | | $ 5,005,103 |
Series 2019-1, Class B, 2.50% (1 mo. EURIBOR + 2.50%), 11/30/2028(b)(j) | | EUR | 625,000 | | | 731,317 |
Series 2019-1, Class D, 8.68% (1 mo. EURIBOR + 9.25%), 11/30/2028(b)(j) | | EUR | 141,425 | | | 154,094 |
Futura S.r.l., Series 2019-1, Class A, 2.61% (6 mo. EURIBOR + 3.00%), 07/31/2044(b)(j) | | EUR | 2,364,161 | | | 2,808,112 |
BBVA Consumer Auto, Series 2018-1, Class C, 2.30%, 07/20/2031(b) | | EUR | 5,000,000 | | | 6,129,397 |
IM Pastor 4, FTA, Series A, 0.00% (3 mo. EURIBOR + 0.14%), 03/22/2044(b)(j) | | EUR | 1,104,329 | | | 1,231,793 |
Total Asset-Backed Securities
(Cost $68,615,710) | | | 70,423,753 |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–3.81% |
Fannie Mae Interest STRIPS, | | | | | | |
IO, 7.50%, 03/25/2023(m) | | $ | 20,661 | | | 1,224 |
7.50%, 05/25/2023(m) | | | 2,481 | | | 152 |
7.50%, 01/25/2024(m) | | | 55,111 | | | 4,203 |
6.50%, 04/25/2029(m) | | | 15,650 | | | 2,378 |
6.50%, 06/25/2031(m) | | | 168,105 | | | 24,806 |
6.50%, 02/25/2032(m) | | | 87,319 | | | 13,901 |
6.50%, 04/25/2032(m) | | | 24,906 | | | 4,841 |
6.50%, 07/25/2032(m) | | | 25,025 | | | 4,380 |
6.00%, 12/25/2032(m) | | | 50,240 | | | 8,517 |
6.00%, 02/25/2033(m) | | | 98,894 | | | 18,211 |
6.00%, 03/25/2033(m) | | | 437,308 | | | 76,253 |
6.00%, 03/25/2033(m) | | | 79,511 | | | 14,259 |
6.00%, 10/25/2033(m) | | | 230,581 | | | 43,355 |
5.50%, 01/25/2034(m) | | | 74,372 | | | 12,697 |
5.50%, 04/25/2034(m) | | | 81,463 | | | 14,525 |
5.50%, 04/25/2034(m) | | | 43,775 | | | 7,744 |
| | | | | | |
| | | Principal Amount | | | Value |
5.50%, 02/25/2035(m) | | $ | 28,472 | | | $ 4,925 |
5.50%, 06/25/2035(m) | | | 57,560 | | | 9,363 |
6.00%, 08/25/2035(m) | | | 37,151 | | | 7,572 |
Fannie Mae REMICs, | | | | | | |
IO, 6.55% (6.70% - 1 mo. USD LIBOR), 02/25/2024(j)(m) | | | 261 | | | 12 |
4.00%, 08/25/2026 | | | 718 | | | 724 |
6.55% (1 mo. USD LIBOR + 6.70%), 10/25/2031(j)(m) | | | 12,292 | | | 2,231 |
7.74% (7.90% - 1 mo. USD LIBOR), 11/18/2031(j)(m) | | | 25,601 | | | 5,536 |
7.75% (7.90% - 1 mo. USD LIBOR), 11/25/2031(j)(m) | | | 4,538 | | | 955 |
7.74% (7.90% - 1 mo. USD LIBOR), 12/18/2031(j)(m) | | | 5,796 | | | 1,071 |
7.80% (7.95% - 1 mo. USD LIBOR), 01/25/2032(j)(m) | | | 4,994 | | | 1,031 |
7.95% (8.10% - 1 mo. USD LIBOR), 03/25/2032(j)(m) | | | 7,298 | | | 1,621 |
6.85% (7.00% - 1 mo. USD LIBOR), 04/25/2032(j)(m) | | | 27,508 | | | 5,481 |
7.65% (7.80% - 1 mo. USD LIBOR), 04/25/2032(j)(m) | | | 3,787 | | | 833 |
7.85% (8.00% - 1 mo. USD LIBOR), 07/25/2032(j)(m) | | | 5,678 | | | 1,260 |
7.85% (8.00% - 1 mo. USD LIBOR), 07/25/2032(j)(m) | | | 7,803 | | | 1,740 |
7.85% (8.00% - 1 mo. USD LIBOR), 09/25/2032(j)(m) | | | 3,805 | | | 859 |
7.94% (8.10% - 1 mo. USD LIBOR), 12/18/2032(j)(m) | | | 6,908 | | | 1,125 |
7.94% (8.10% - 1 mo. USD LIBOR), 12/18/2032(j)(m) | | | 46,866 | | | 10,439 |
8.10% (8.25% - 1 mo. USD LIBOR), 02/25/2033(j)(m) | | | 12,073 | | | 2,829 |
7.00%, 03/25/2033(m) | | | 80,245 | | | 15,511 |
7.00%, 04/25/2033(m) | | | 62,251 | | | 13,197 |
8.10% (8.25% - 1 mo. USD LIBOR), 05/25/2033(j)(m) | | | 41,887 | | | 9,961 |
7.40% (1 mo. USD LIBOR + 7.55%), 10/25/2033(j)(m) | | | 203,046 | | | 45,395 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal Amount | | | Value |
5.90% (6.05% - 1 mo. USD LIBOR), 03/25/2035(j)(m) | | $ | 257,947 | | | $ 47,018 |
6.60% (6.75% - 1 mo. USD LIBOR), 03/25/2035(j)(m) | | | 6,714 | | | 1,151 |
6.45% (6.60% - 1 mo. USD LIBOR), 05/25/2035(j)(m) | | | 140,783 | | | 23,007 |
6.55% (6.70% - 1 mo. USD LIBOR), 05/25/2035(j)(m) | | | 226,102 | | | 42,723 |
6.60% (6.75% - 1 mo. USD LIBOR), 05/25/2035(j)(m) | | | 333,576 | | | 50,105 |
7.08% (1 mo. USD LIBOR + 7.23%), 09/25/2036(j)(m) | | | 253,189 | | | 43,038 |
6.39% (1 mo. USD LIBOR + 6.54%), 06/25/2037(j)(m) | | | 217,715 | | | 45,334 |
5.90% (6.05% - 1 mo. USD LIBOR), 07/25/2038(j)(m) | | | 9,192 | | | 1,567 |
4.00%, 03/25/2041 | | | 31,494 | | | 34,477 |
4.00%, 04/25/2041(m) | | | 478,453 | | | 46,048 |
6.40% (6.55% - 1 mo. USD LIBOR), 10/25/2041(j)(m) | | | 101,724 | | | 21,409 |
6.00% (6.15% - 1 mo. USD LIBOR), 12/25/2042(j)(m) | | | 318,392 | | | 63,358 |
5.50%, 12/25/2025 | | | 218,762 | | | 228,281 |
6.00%, 01/25/2032 | | | 41,462 | | | 47,099 |
1.15% (1 mo. USD LIBOR + 1.00%), 04/25/2032(j) | | | 21,258 | | | 21,715 |
1.15% (1 mo. USD LIBOR + 1.00%), 04/25/2032(j) | | | 6,546 | | | 6,687 |
0.65% (1 mo. USD LIBOR + 0.50%), 09/25/2032(j) | | | 52,055 | | | 52,301 |
1.15% (1 mo. USD LIBOR + 1.00%), 09/25/2032(j) | | | 93,041 | | | 95,062 |
0.66% (1 mo. USD LIBOR + 0.50%), 10/18/2032(j) | | | 15,702 | | | 15,772 |
1.15% (1 mo. USD LIBOR + 1.00%), 12/25/2032(j) | | | 93,039 | | | 95,060 |
0.55% (1 mo. USD LIBOR + 0.40%), 11/25/2033(j) | | | 10,000 | | | 10,032 |
24.02% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(j) | | | 51,993 | | | 85,434 |
23.66% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(j) | | | 69,883 | | | 113,545 |
1.09% (1 mo. USD LIBOR + 0.94%), 06/25/2037(j) | | | 11,018 | | | 11,284 |
| | | | | | |
| | | Principal Amount | | | Value |
Federal Home Loan Mortgage Corp., | | | | | | |
6.00%, 11/01/2021 | | $ | 4,928 | | | $ 5,536 |
6.50%, 11/01/2022 | | | 1,834 | | | 1,855 |
6.50%, 08/01/2031 | | | 78,551 | | | 88,312 |
5.00%, 09/01/2033 | | | 133,057 | | | 153,779 |
7.00%, 10/01/2037 | | | 12,509 | | | 14,407 |
Federal National Mortgage Association, | | | | | | |
5.50%, 04/01/2021 | | | 212 | | | 212 |
5.00%, 12/01/2021 | | | 3,250 | | | 3,409 |
5.00%, 01/01/2022 | | | 82 | | | 86 |
5.50%, 04/01/2022 | | | 1,204 | | | 1,220 |
5.50%, 04/01/2022 | | | 953 | | | 960 |
5.50%, 07/01/2022 | | | 1,170 | | | 1,198 |
5.00%, 01/01/2024 | | | 23 | | | 25 |
7.50%, 10/01/2029 | | | 62,963 | | | 73,551 |
7.00%, 07/01/2032 | | | 26,313 | | | 30,540 |
8.50%, 07/01/2032 | | | 291 | | | 292 |
7.50%, 03/01/2033 | | | 183,233 | | | 216,021 |
7.00%, 04/01/2033 | | | 3,486 | | | 4,028 |
5.00%, 07/01/2033 | | | 138,394 | | | 159,052 |
5.50%, 02/01/2035 | | | 13,416 | | | 15,767 |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | |
Series K734, Class X1, 0.65%, 02/25/2026(l) | | | 1,677,108 | | | 47,948 |
Series K735, Class X1, 1.10%, 05/25/2026(l) | | | 2,943,505 | | | 134,868 |
Series K093, Class X1, 0.95%, 05/25/2029(l) | | | 20,065,609 | | | 1,403,936 |
Freddie Mac REMICs, | | | | | | |
1.50%, 07/15/2023 | | | 50,188 | | | 50,538 |
5.00%, 09/15/2023 | | | 135,531 | | | 140,837 |
6.75%, 02/15/2024 | | | 40,177 | | | 42,616 |
7.00%, 09/15/2026 | | | 155,093 | | | 172,235 |
0.61% (1 mo. USD LIBOR + 0.45%), 12/15/2028(j) | | | 140,381 | | | 140,713 |
0.61% (1 mo. USD LIBOR + 0.45%), 02/15/2029(j) | | | 4,042 | | | 4,052 |
6.00%, 04/15/2029 | | | 77,492 | | | 87,565 |
6.50%, 10/15/2029 | | | 60,203 | | | 68,873 |
0.71% (1 mo. USD LIBOR + 0.55%), 06/15/2031(j) | | | 83,506 | | | 84,003 |
6.50%, 06/15/2031 | | | 7,806 | | | 9,001 |
6.50%, 10/15/2031 | | | 30,606 | | | 35,993 |
0.71% (1 mo. USD LIBOR + 0.55%), 01/15/2032(j) | | | 49,256 | | | 49,568 |
1.16% (1 mo. USD LIBOR + 1.00%), 02/15/2032(j) | | | 20,674 | | | 21,115 |
1.16% (1 mo. USD LIBOR + 1.00%), 02/15/2032(j) | | | 21,156 | | | 21,608 |
1.16% (1 mo. USD LIBOR + 1.00%), 02/15/2032(j) | | | 18,394 | | | 18,787 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal Amount | | | Value |
1.16% (1 mo. USD LIBOR + 1.00%), 03/15/2032(j) | | $ | 21,964 | | | $ 22,086 |
3.50%, 05/15/2032 | | | 26,380 | | | 28,356 |
6.50%, 06/15/2032 | | | 104,635 | | | 121,687 |
24.17% (24.75% - (3.67 x 1 mo. USD LIBOR)), 08/15/2035(j) | | | 50,031 | | | 83,061 |
4.00%, 06/15/2038 | | | 36,476 | | | 40,100 |
3.00%, 05/15/2040 | | | 2,273 | | | 2,341 |
IO,
5.84% (1 mo. USD LIBOR + 6.00%), 03/15/2024(j)(m) | | | 91,509 | | | 6,652 |
7.79% (1 mo. USD LIBOR + 7.95%), 12/15/2026(j)(m) | | | 102,175 | | | 11,882 |
8.55% (8.70% - 1 mo. USD LIBOR), 07/17/2028(j)(m) | | | 2,305 | | | 184 |
8.55% (8.70% - 1 mo. USD LIBOR), 07/17/2028(j)(m) | | | 5,014 | | | 505 |
7.49% (1 mo. USD LIBOR + 7.65%), 03/15/2029(j)(m) | | | 198,698 | | | 32,620 |
7.94% (8.10% - 1 mo. USD LIBOR), 06/15/2029(j)(m) | | | 7,578 | | | 1,444 |
7.84% (1 mo. USD LIBOR + 8.00%), 04/15/2032(j)(m) | | | 355,881 | | | 53,612 |
6.89% (1 mo. USD LIBOR + 7.05%), 10/15/2033(j)(m) | | | 85,443 | | | 17,094 |
6.54% (6.70% - 1 mo. USD LIBOR), 01/15/2035(j)(m) | | | 86,612 | | | 15,940 |
6.59% (6.75% - 1 mo. USD LIBOR), 02/15/2035(j)(m) | | | 15,215 | | | 2,748 |
6.56% (1 mo. USD LIBOR + 6.72%), 05/15/2035(j)(m) | | | 179,397 | | | 36,055 |
6.56% (6.72% - 1 mo. USD LIBOR), 05/15/2035(j)(m) | | | 116,561 | | | 18,509 |
6.84% (7.00% - 1 mo. USD LIBOR), 12/15/2037(j)(m) | | | 55,404 | | | 12,649 |
5.84% (6.00% - 1 mo. USD LIBOR), 04/15/2038(j)(m) | | | 17,938 | | | 3,149 |
5.91% (6.07% - 1 mo. USD LIBOR), 05/15/2038(j)(m) | | | 110,203 | | | 21,997 |
6.09% (6.25% - 1 mo. USD LIBOR), 12/15/2039(j)(m) | | | 29,725 | | | 5,658 |
4.00%, 04/15/2040 | | | 32,788 | | | 33,387 |
| | | | | | |
| | | Principal Amount | | | Value |
Freddie Mac STRIPS, | | | | | | |
IO,
6.50%, 02/01/2028(m) | | $ | 2,548 | | | $ 365 |
7.00%, 09/01/2029(m) | | | 16,176 | | | 2,870 |
6.00%, 12/15/2032(m) | | | 36,341 | | | 5,855 |
Government National Mortgage Association, | | | | | | |
ARM 3.13% (1 yr. U.S. Treasury Yield Curve Rate + 1.50%), 11/20/2025(j) | | | 1,093 | | | 1,124 |
8.00%, 05/15/2026 | | | 6,176 | | | 6,202 |
7.00%, 04/15/2028 | | | 10,148 | | | 11,294 |
7.00%, 07/15/2028 | | | 20,864 | | | 23,208 |
IO, 6.40% (6.55% - 1 mo. USD LIBOR), 04/16/2037(j)(m) | | | 134,097 | | | 26,899 |
6.50% (6.65% - 1 mo. USD LIBOR), 04/16/2041(j)(m) | | | 220,585 | | | 38,465 |
TBA, 2.50%, 01/01/2051(n) | | | 9,715,000 | | | 10,283,105 |
Uniform Mortgage-Backed Securities, | | | | | | |
TBA, 2.00%, 01/01/2036(n) | | | 9,150,000 | | | 9,565,390 |
2.50%, 02/01/2051(n) | | | 12,900,000 | | | 13,573,706 |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $38,815,828) | | | 39,011,329 |
|
U.S. Treasury Securities-1.98% |
U.S. Treasury Inflation – Indexed Notes-1.98% |
0.13%, 04/15/2025
(Cost $19,535,231)(o) | | | 19,535,231 | | | 20,338,831 |
| | |
| | | Shares | | | |
Preferred Stocks-1.33% |
United States-1.33% | | | | | | |
AT&T, Inc., 2.88%, Series B, Pfd.(c) | | | 3,900,000 | | | 4,804,933 |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(c) | | | 1,300,000 | | | 1,436,890 |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(c) | | | 2,600,000 | | | 2,749,500 |
Claire’s Holdings LLC, Series A, Pfd. | | | 71 | | | 14,378 |
MetLife, Inc., 3.85%, Series G, Pfd.(c) | | | 4,333,000 | | | 4,582,147 |
Total Preferred Stocks (Cost $12,763,870) | | | 13,587,848 |
| | |
| | | Principal
Amount | | | |
Variable Rate Senior Loan Interests-1.22%(p)(q) |
Canada-0.04% | | | | | | |
Valeant Pharmaceuticals International, Inc., First Lien Incremental Term Loan, 2.90% (3 mo. USD LIBOR + 2.75%), 11/27/2025 | | | 438,000 | | | 434,636 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Principal Amount | | | Value |
Colombia-1.09% |
Avianca Holdings S.A., Term Loan A-1, 11/10/2021(f) | | | 4,784,220 | | | $ 4,784,221 |
Avianca Holdings S.A., Term Loan A-1, 11/10/2021(f)(r) | | | 1,359,349 | | | 1,359,349 |
Avianca Holdings S.A., Term Loan A-2, 11/10/2021(f) | | | 3,910,003 | | | 3,910,003 |
Avianca Holdings S.A., Term Loan A-2, 11/10/2021(f)(r) | | | 1,089,997 | | | 1,089,997 |
| | | | | | | 11,143,570 |
|
United States-0.09% |
Claire’s Stores, Inc., Term Loan B (1 mo. USD LIBOR + 6.50%), 12/18/2026 | | | 72,242 | | | 61,046 |
Dun & Bradstreet Corp. (The), Term Loan (1 mo. USD LIBOR + 3.75%), 02/06/2026 | | | 428,760 | | | 429,772 |
PetSmart, Inc., Term Loan (1 mo. USD LIBOR + 4.00%), 03/11/2022 | | | 353,054 | | | 353,908 |
Windstream Services LLC, Term Loan B-6 (3 mo. Prime Rate + 5.00%), 03/29/2021(f) | | | 81,688 | | | 50,237 |
| | | | | | | 894,963 |
Total Variable Rate Senior Loan Interests
(Cost $12,247,489) | | | | | | 12,473,169 |
|
Agency Credit Risk Transfer Notes–1.18% |
United States–1.18% |
Connecticut Avenue Securities Trust, | | | | | | |
Series 2018-R07, Class 1M2, 2.55% (1 mo. USD LIBOR + 2.40%), 04/25/2031(b)(j) | | $ | 1,349,485 | | | 1,353,784 |
Series 2019-R02, Class 1M2, 2.45% (1 mo. USD LIBOR + 2.30%), 08/25/2031(b)(j) | | | 397,217 | | | 398,264 |
| | | | | | |
| | | Principal Amount | | | Value |
United States-(continued) |
Fannie Mae Connecticut Avenue Securities, | | | | | | |
Series 2017-C04, Class 2M2, 3.00% (1 mo. USD LIBOR + 2.85%), 11/25/2029(j) | | $ | 863,167 | | | $ 872,600 |
Series 2017-C07, Class 1M2, 2.55% (1 mo. USD LIBOR + 2.40%), 05/25/2030(j) | | | 408,323 | | | 407,702 |
Series 2018-C04, Class 2M2, 2.70% (1 mo. USD LIBOR + 2.55%), 12/25/2030(j) | | | 549,614 | | | 553,539 |
Series 2018-C06, Class 2M2, 2.25% (1 mo. USD LIBOR + 2.10%), 03/25/2031(j) | | | 883,345 | | | 876,053 |
Series 2019-R03, Class 1M2, 2.30% (1 mo. USD LIBOR + 2.15%), 09/25/2031(b)(j) | | | 887,360 | | | 889,710 |
Federal Home Loan Mortgage Corp., | | | | | | |
Series 2016-DNA2, Class M3, STACR®, 4.80% (1 mo. USD LIBOR + 4.65%), 10/25/2028(j) | | | 738,987 | | | 772,172 |
Series 2016-DNA3, Class M3, STACR®, 5.15% (1 mo. USD LIBOR + 5.00%), 12/25/2028(j) | | | 3,069,004 | | | 3,220,376 |
Freddie Mac, STACR®, | | | | | | |
Series 2017-DNA1, Class M2, STACR®, 3.40% (1 mo. USD LIBOR + 3.25%),
07/25/2029(j) | | | 1,903,414 | | | 1,956,660 |
Series 2019-HRP1, Class M2, STACR®, 1.55% (1 mo. USD LIBOR + 1.40%), 02/25/2049(b)(j) | | | 743,115 | | | 742,701 |
Total Agency Credit Risk Transfer Notes
(Cost $11,772,732) | | | 12,043,561 |
|
Investment Companies-0.06% |
United States-0.06% |
Invesco Master Event-Linked Bond Fund, Class R6,(s)(t)
(Cost $571,315) | | | 40,868 | | | 640,083 |
| | |
| | | Shares | | | |
Common Stocks & Other Equity Interests-0.02% |
Kazakhstan-0.00% |
Astana-Finance JSC, GDR(b)(f) | | | 446,837 | | | 0 |
|
United States-0.02% |
ACNR Holdings, Inc. | | | 762 | | | 6,668 |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | |
| | | Shares | | | Value |
United States-(continued) |
ACNR Holdings, Inc.(f) | | | 149 | | | $ 1,304 |
Claire’s Holdings LLC(s) | | | 235 | | | 51,406 |
Cxloyalty Group, Inc., Wts., expiring 4/10/2024(f) | | | 775 | | | 0 |
McDermott International Ltd.(u) | | | 15,957 | | | 12,925 |
McDermott International Ltd.(f) | | | 23,067 | | | 18,684 |
McDermott International Ltd., Series A, Wts., expiring 6/30/2027(u) | | | 31,946 | | | 4,153 |
McDermott International Ltd., Series B, Wts., expiring 6/30/2027(u) | | | 35,496 | | | 4,614 |
Party City Holdco, Inc.(u) | | | 3,211 | | | 19,751 |
Sabine Oil & Gas Holdings, Inc.(s)(u) | | | 837 | | | 11,718 |
Whiting Petroleum Corp.(u) | | | 4,716 | | | 117,900 |
| | | | | | | 249,123 |
Total Common Stocks & Other Equity Interests
(Cost $3,263,580) | | | 249,123 |
| | | | | | |
| | | Shares | | | Value |
Money Market Funds-10.26% |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(s)(v) | | | 36,794,763 | | | $ 36,794,763 |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(s)(v) | | | 26,266,853 | | | 26,274,733 |
Invesco Treasury Portfolio, Institutional Class, 0.01%(s)(v) | | | 42,051,158 | | | 42,051,158 |
Total Money Market Funds
(Cost $105,122,955) | | | 105,120,654 |
|
Options Purchased-1.28%(w) |
(Cost $14,116,983) | | | 13,067,508 |
TOTAL INVESTMENTS IN SECURITIES-96.29%
(Cost $967,899,918) | | | 986,668,657 |
OTHER ASSETS LESS LIABILITIES-3.71% | | | 38,011,895 |
NET ASSETS-100.00% | | | $1,024,680,552 |
Investment Abbreviations:
| | |
| ARM | | - Adjustable Rate Mortgage |
| ARS | | - Argentina Peso |
| AUD | | - Australian Dollar |
| BRL | | - Brazilian Real |
| CLP | | - Chile Peso |
| Conv. | | - Convertible |
| COP | | - Colombia Peso |
| Ctfs. | | - Certificates |
| EGP | | - Egypt Pound |
| EUR | | - Euro |
| EURIBOR | | - Euro Interbank Offered Rate |
| GBP | | - British Pound Sterling |
| GDR | | - Global Depositary Receipt |
| IDR | | - Indonesian Rupiah |
| INR | | - Indian Rupee |
| IO | | - Interest Only |
| LIBOR | | - London Interbank Offered Rate |
| MXN | | - Mexican Peso |
| Pfd. | | - Preferred |
| PIK | | - Pay-in-Kind |
| REMICs | | - Real Estate Mortgage Investment Conduits |
| RUB | | - Russian Ruble |
| STACR® | | - Structured Agency Credit Risk |
| STRIPS | | - Separately Traded Registered Interest and Principal Security |
| TBA | | - To Be Announced |
| THB | | - Thai Baht |
| TRY | | - Turkish Lira |
| USD | | - U.S. Dollar |
| Wts. | | - Warrants |
| ZAR | | - South African Rand |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Notes to Consolidated Schedule of Investments:
| (a) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (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 December 31, 2020 was $488,327,193, which represented 47.66% of the Fund’s Net Assets. |
| (c) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (d) | Perpetual bond with no specified maturity date. |
| (e) | Zero coupon bond issued at a discount. |
| (f) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (g) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (h) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The aggregate value of these securities at December 31, 2020 was $746,856, which represented less than 1% of the Fund’s Net Assets. |
| (i) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| (j) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (k) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (l) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (m) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (n) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1R. |
| (o) | Principal amount of security and interest payments are adjusted for inflation. See Note 1J. |
| (p) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with any accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the variable rate senior loan interests will have an expected average life of three to five years. |
| (q) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the 1933 Act and may be subject to contractual and legal restrictions on sale. Variable rate senior loan interests in the Fund’s portfolio generally have variable rates which adjust to a base, such as the London Interbank Offered Rate (“LIBOR”), on set dates, typically every 30 days, but not greater than one year, and/or have interest rates that float at margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
| (r) | All or a portion of this holding is subject to unfunded loan commitments. Interest rate will be determined at the time of funding. See Note 7. |
| (s) | Affiliated issuer. The issuer is affiliated by having an investment adviser that is under common control of Invesco Ltd. and/or the Investment Company Act of 1940, as amended (the “1940 Act”), defines “affiliated person” to include an issuer of which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The table below shows the Fund’s transactions in, and earnings from, its investments in affiliates for the fiscal year ended December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in Unrealized Appreciation (Depreciation) | | Realized Gain (Loss) | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 111,331,442 | | | | $ | 740,897,646 | | | | $ | (815,434,325 | ) | | | $ | - | | | | $ | - | | | | $ | 36,794,763 | | | | $ | 283,967 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 97,399,170 | | | | | (71,117,197 | ) | | | | (2,301 | ) | | | | (4,939 | ) | | | | 26,274,733 | | | | | 7,053 | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 155,838,673 | | | | | (113,787,515 | ) | | | | - | | | | | - | | | | | 42,051,158 | | | | | 2,177 | |
| Investments in Other Affiliates: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Carlyle Tactical Private Credit Fund | | | | 664,049 | | | | | - | | | | | (669,100 | ) | | | | 38,352 | | | | | (33,301 | ) | | | | - | | | | | - | |
Claire’s Holdings LLC* | | | | 152,750 | | | | | - | | | | | - | | | | | (101,344 | ) | | | | - | | | | | 51,406 | | | | | - | |
Invesco Conservative Income Fund, Class Y | | | | 26,120,338 | | | | | 105,283 | | | | | (26,238,636 | ) | | | | 98,868 | | | | | (85,853 | ) | | | | - | | | | | 105,179 | |
Invesco Master Event-Linked Bond Fund, Class R6 | | | | 25,095,080 | | | | | 372,432 | | | | | (24,510,979 | ) | | | | (7,378,291 | ) | | | | 7,061,841 | | | | | 640,083 | | | | | 514,267 | |
Invesco Oppenheimer Limited-Term Bond Fund | | | | 9,920 | | | | | - | | | | | (9,942 | ) | | | | - | | | | | 22 | | | | | - | | | | | - | |
Sabine Oil & Gas Holdings, Inc.* | | | | 58,800 | | | | | - | | | | | - | | | | | (47,082 | ) | | | | - | | | | | 11,718 | | | | | 48,965 | |
Total | | | $ | 163,432,379 | | | | $ | 994,613,204 | | | | $ | (1,051,767,694 | ) | | | $ | (7,391,798 | ) | | | $ | 6,937,770 | | | | $ | 105,823,861 | | | | $ | 961,608 | |
| | * | At December 31, 2020, this security was no longer an affiliate of the Fund. |
| (t) | Effective September 30, 2020, the underlying fund’s name changed. |
| (u) | Non-income producing security. |
| (v) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (w) | The table below details options purchased. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Open Over-The-Counter Foreign Currency Options Purchased(a) | | | | | | | |
| Description | | Type of
Contract | | | Counterparty | | Expiration
Date | | | | | | Exercise
Price | | | | | | Notional
Value | | | Value | |
| | | | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CNH Versus TWD | | | Call | | | Goldman Sachs International | | | 11/17/2021 | | | | TWD | | | | 4.10 | | | | CNH | | | | 50,000,000 | | | $ | 179,606 | |
EUR Versus USD | | | Call | | | Bank of America, N.A. | | | 02/01/2021 | | | | USD | | | | 1.25 | | | | EUR | | | | 650,000 | | | | 242,833 | |
EUR Versus USD | | | Call | | | Bank of America, N.A. | | | 02/01/2021 | | | | USD | | | | 1.25 | | | | EUR | | | | 650,000 | | | | 113,313 | |
EUR Versus USD | | | Call | | | Bank of America, N.A. | | | 02/19/2021 | | | | USD | | | | 1.26 | | | | EUR | | | | 1,300,000 | | | | 166,720 | |
GBP Versus USD | | | Call | | | Morgan Stanley and Co. International PLC | | | 02/02/2021 | | | | USD | | | | 1.39 | | | | GBP | | | | 720,981 | | | | 641,945 | |
Subtotal – Foreign Currency Call Options Purchased | | | | | | | | | | | | | | | | | | | | 1,344,417 | |
| | | | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EUR Versus NOK | | | Put | | | Goldman Sachs International | | | 01/06/2021 | | | | NOK | | | | 8.65 | | | | EUR | | | | 3,650,000 | | | | 4 | |
EUR Versus NOK | | | Put | | | Goldman Sachs International | | | 01/06/2021 | | | | NOK | | | | 8.36 | | | | EUR | | | | 3,650,000 | | | | 4 | |
EUR Versus NOK | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 08/26/2021 | | | | NOK | | | | 8.90 | | | | EUR | | | | 3,750,000 | | | | 91,216 | |
EUR Versus PLN | | | Put | | | Morgan Stanley and Co. International PLC | | | 10/28/2021 | | | | PLN | | | | 4.20 | | | | EUR | | | | 2,500,000 | | | | 137,426 | |
USD Versus BRL | | | Put | | | Goldman Sachs International | | | 02/01/2021 | | | | BRL | | | | 5.10 | | | | USD | | | | 12,500,000 | | | | 192,838 | |
USD Versus BRL | | | Put | | | Goldman Sachs International | | | 02/12/2021 | | | | BRL | | | | 3.85 | | | | USD | | | | 1,250,000 | | | | 124 | |
USD Versus BRL | | | Put | | | Goldman Sachs International | | | 04/26/2021 | | | | BRL | | | | 4.75 | | | | USD | | | | 1,250,000 | | | | 213,844 | |
USD Versus BRL | | | Put | | | Goldman Sachs International | | | 08/17/2021 | | | | BRL | | | | 3.85 | | | | USD | | | | 1,460,000 | | | | 31,396 | |
USD Versus BRL | | | Put | | | Morgan Stanley and Co. International PLC | | | 02/24/2021 | | | | BRL | | | | 5.00 | | | | USD | | | | 1,500,000 | | | | 461,314 | |
USD Versus CNH | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 07/15/2021 | | | | CNH | | | | 6.35 | | | | USD | | | | 625,000 | | | | 122,374 | |
USD Versus CNH | | | Put | | | Standard Chartered Bank PLC | | | 07/28/2021 | | | | CNH | | | | 6.40 | | | | USD | | | | 1,400,000 | | | | 841,795 | |
USD Versus IDR | | | Put | | | Goldman Sachs International | | | 02/23/2021 | | | | IDR | | | | 14,115.00 | | | | USD | | | | 13,000,000 | | | | 271,167 | |
USD Versus IDR | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 05/05/2021 | | | | IDR | | | | 14,020.00 | | | | USD | | | | 18,750,000 | | | | 393,488 | |
USD Versus INR | | | Put | | | Goldman Sachs International | | | 04/09/2021 | | | | INR | | | | 69.50 | | | | USD | | | | 1,300,000 | | | | 100,948 | |
USD Versus INR | | | Put | | | Goldman Sachs International | | | 06/11/2021 | | | | INR | | | | 71.00 | | | | USD | | | | 1,250,000 | | | | 360,043 | |
USD Versus INR | | | Put | | | Goldman Sachs International | | | 07/02/2021 | | | | INR | | | | 70.50 | | | | USD | | | | 1,250,000 | | | | 280,674 | |
USD Versus INR | | | Put | | | Standard Chartered Bank PLC | | | 04/09/2021 | | | | INR | | | | 69.70 | | | | USD | | | | 1,300,000 | | | | 116,202 | |
USD Versus KRW | | | Put | | | Bank of America, N.A. | | | 03/18/2021 | | | | KRW | | | | 1,071.00 | | | | USD | | | | 20,000,000 | | | | 153,200 | |
USD Versus MXN | | | Put | | | Bank of America, N.A. | | | 02/10/2021 | | | | MXN | | | | 19.55 | | | | USD | | | | 625,000 | | | | 222,053 | |
USD Versus MXN | | | Put | | | Citibank, N.A. | | | 03/04/2021 | | | | MXN | | | | 19.98 | | | | USD | | | | 12,500,000 | | | | 287,138 | |
USD Versus MXN | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 01/21/2021 | | | | MXN | | | | 20.15 | | | | USD | | | | 18,750,000 | | | | 398,775 | |
USD Versus MXN | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 01/06/2022 | | | | MXN | | | | 20.10 | | | | USD | | | | 25,000,000 | | | | 933,900 | |
USD Versus MXN | | | Put | | | Morgan Stanley and Co. International PLC | | | 02/16/2021 | | | | MXN | | | | 19.77 | | | | USD | | | | 15,000,000 | | | | 233,040 | |
USD Versus NOK | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 05/10/2021 | | | | NOK | | | | 8.55 | | | | USD | | | | 15,000,000 | | | | 399,240 | |
USD Versus RUB | | | Put | | | Goldman Sachs International | | | 03/08/2021 | | | | RUB | | | | 67.99 | | | | USD | | | | 29,450,000 | | | | 39,964 | |
USD Versus RUB | | | Put | | | Goldman Sachs International | | | 03/26/2021 | | | | RUB | | | | 74.80 | | | | USD | | | | 29,450,000 | | | | 814,145 | |
USD Versus RUB | | | Put | | | Goldman Sachs International | | | 04/29/2021 | | | | RUB | | | | 70.00 | | | | USD | | | | 3,500,000 | | | | 617,890 | |
USD Versus RUB | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 06/02/2021 | | | | RUB | | | | 67.00 | | | | USD | | | | 3,500,000 | | | | 256,186 | |
USD Versus TRY | | | Put | | | Goldman Sachs International | | | 11/11/2021 | | | | TRY | | | | 7.70 | | | | USD | | | | 10,000,000 | | | | 252,150 | |
USD Versus ZAR | | | Put | | | Goldman Sachs International | | | 03/18/2021 | | | | ZAR | | | | 14.17 | | | | USD | | | | 20,000,000 | | | | 210,240 | |
USD Versus ZAR | | | Put | | | Standard Chartered Bank PLC | | | 02/16/2021 | | | | ZAR | | | | 14.40 | | | | USD | | | | 23,000,000 | | | | 264,753 | |
Subtotal – Foreign Currency Put Options Purchased | | | | | | | | | | | | | | | | | | | | 8,697,531 | |
Total Foreign Currency Options Purchased | | | | | | | | | | | | | | | | | | | | | | $ | 10,041,948 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Open Over-The-Counter Interest Rate Swaptions Purchased(a) | | | | | | | |
| Description | | Type of Contract | | | Counterparty | | Exercise
Rate | | | Pay/
Receive Exercise
Rate | | | Floating Rate Index | | Payment Frequency | | | Expiration
Date | | | | | | Notional
Value | | | Value | |
| | | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | | (0.41 | )% | | | Pay | | | 6 Month EUR LIBOR | | | Semi-Annually | | | | 02/08/2021 | | | | EUR | | | | 312,500,000 | | | $ | 1,336 | |
2 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 0.61 | | | | Pay | | | 6 Month EUR LIBOR | | | Semi-Annually | | | | 04/06/2021 | | | | EUR | | | | 146,000,000 | | | | 18 | |
2 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 0.62 | | | | Pay | | | 6 Month EUR LIBOR | | | Semi-Annually | | | | 04/12/2021 | | | | EUR | | | | 146,250,000 | | | | 25 | |
30 Year Interest Rate Swap | | | Put | | | Goldman Sachs International | | | 2.00 | | | | Pay | | | 3 Month USD LIBOR | | | Quarterly | | | | 05/31/2022 | | | | USD | | | | 46,800,000 | | | | 1,510,788 | |
30 Year Interest Rate Swap | | | Put | | | Goldman Sachs International | | | 2.00 | | | | Pay | | | 3 Month USD LIBOR | | | Quarterly | | | | 09/26/2022 | | | | USD | | | | 36,800,000 | | | | 1,415,273 | |
5 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 1.12 | | | | Pay | | | 6 Month EUR LIBOR | | | Semi-Annually | | | | 03/29/2021 | | | | EUR | | | | 146,200,000 | | | | 5 | |
Total Interest Rate Swaptions Purchased | | | | | | | | | | | | | | | | | | | | | | | | | $ | 2,927,445 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $ 1,737,859. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Open Over-The-Counter Credit Default Swaptions Purchased(a) | | | | | | | |
| Counterparty | | Type of
Contract | | | Exercise
Rate | | | Reference Entity | | | (Pay)/
Receive
Fixed
Rate | | | Payment Frequency | | | Expiration
Date | | | Implied
Credit
Spread | | | Notional
Value | | | Value | |
| | | | | | | | | |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | Call | | | | 22.50% | | |
| Markit iTraxx Europe
Crossover Index,
Series 34, Version 1 |
| | | Receive | | | | Quarterly | | | | 03/17/2021 | | | | 2.4086 | % | | | 15,600,000 | | | $ | 98,115 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Open Over-The-Counter Credit Default Swaptions Written(a) | | | | | | | | | | |
| Counterparty | | Type of
Contract | | | Exercise
Rate | | | Reference Entity | | (Pay)/
Receive
Fixed
Rate | | Payment
Frequency | | Expiration
Date | | Implied
Credit
Spread(b) | | | Premiums
Received | | | | | | Notional
Value | | | Value | | | Unrealized
Appreciation | |
| Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Goldman Sachs International | | | Put | | | | 1.05 | % | | Markit CDX North America
High Yield Index, Series
35, Version 1 | | Pay | | Quarterly | | 02/17/2021 | | | 2.9323 | % | | $ | (319,800 | ) | | | USD | | | | 78,000,000 | | | $ | (316,500 | ) | | $ | 3,300 | |
J.P. Morgan Chase Bank, N.A. | | | Put | | | | 3.25 | | | Markit iTraxx Europe
Crossover Index, Series
34, Version 1 | | Pay | | Quarterly | | 03/17/2021 | | | 2.4086 | | | | (140,167 | ) | | | EUR | | | | 15,600,000 | | | | (107,041 | ) | | | 33,126 | |
Total Credit Default Swaptions Written | | | | | | | | | | $ | (459,967 | ) | | | | | | | | | | $ | (423,541 | ) | | $ | 36,426 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Open Over-The-Counter Foreign Currency Options Written(a) | | | | |
|
| |
| Description | | Type of
Contract | | | Counterparty | | Expiration
Date | | | | Exercise
Price | | | Premiums
Received | | | | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
|
| |
| Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
| USD Versus BRL | | | Call | | | Goldman Sachs International | | 09/01/2021 | | BRL | | | 6.00 | | | $ | (329,100 | ) | | | USD | | | | 12,500,000 | | | $ | (274,050 | ) | | $ | 55,050 | |
|
| |
| USD Versus BRL | | | Call | | | Morgan Stanley and Co. International PLC | | 02/24/2021 | | BRL | | | 5.50 | | | | (279,600 | ) | | | USD | | | | 15,000,000 | | | | (193,575 | ) | | | 86,025 | |
|
| |
| USD Versus CNH | | | Call | | | Standard Chartered Bank PLC | | 07/28/2021 | | CNH | | | 7.13 | | | | (164,360 | ) | | | USD | | | | 14,000,000 | | | | (52,010 | ) | | | 112,350 | |
|
| |
| USD Versus CNH | | | Call | | | Standard Chartered Bank PLC | | 11/08/2021 | | CNH | | | 6.90 | | | | (570,000 | ) | | | USD | | | | 30,000,000 | | | | (345,570 | ) | | | 224,430 | |
|
| |
| USD Versus GBP | | | Call | | | Morgan Stanley and Co. International PLC | | 02/12/2021 | | GBP | | | 1.39 | | | | (142,932 | ) | | | GBP | | | | 310,022 | | | | (134,198 | ) | | | 8,734 | |
|
| |
| USD Versus IDR | | | Call | | | Goldman Sachs International | | 02/23/2021 | | IDR | | | 14,750.00 | | | | (92,534 | ) | | | USD | | | | 13,000,000 | | | | (34,359 | ) | | | 58,175 | |
|
| |
| USD Versus IDR | | | Call | | | J.P. Morgan Chase Bank, N.A. | | 05/05/2021 | | IDR | | | 15,120.00 | | | | (198,750 | ) | | | USD | | | | 18,750,000 | | | | (110,625 | ) | | | 88,125 | |
|
| |
| USD Versus INR | | | Call | | | Goldman Sachs International | | 04/09/2021 | | INR | | | 77.50 | | | | (209,560 | ) | | | USD | | | | 1,300,000 | | | | (112,090 | ) | | | 97,470 | |
|
| |
| USD Versus INR | | | Call | | | Goldman Sachs International | | 06/11/2021 | | INR | | | 83.00 | | | | (210,000 | ) | | | USD | | | | 1,250,000 | | | | (19,780 | ) | | | 190,220 | |
|
| |
| USD Versus INR | | | Call | | | Goldman Sachs International | | 07/02/2021 | | INR | | | 84.05 | | | | (124,375 | ) | | | USD | | | | 1,250,000 | | | | (23,956 | ) | | | 100,419 | |
|
| |
| USD Versus INR | | | Call | | | Standard Chartered Bank PLC | | 04/09/2021 | | INR | | | 77.75 | | | | (231,010 | ) | | | USD | | | | 1,300,000 | | | | (98,809 | ) | | | 132,201 | |
|
| |
| USD Versus KRW | | | Call | | | Bank of America, N.A. | | 03/18/2021 | | KRW | | | 1,130.00 | | | | (113,540 | ) | | | USD | | | | 20,000,000 | | | | (85,640 | ) | | | 27,900 | |
|
| |
| USD Versus MXN | | | Call | | | Bank of America, N.A. | | 05/10/2021 | | MXN | | | 22.35 | | | | (250,388 | ) | | | USD | | | | 12,500,000 | | | | (126,275 | ) | | | 124,113 | |
|
| |
| USD Versus MXN | | | Call | | | Citibank, N.A. | | 03/04/2021 | | MXN | | | 22.52 | | | | (251,367 | ) | | | USD | | | | 12,500,000 | | | | (38,363 | ) | | | 213,004 | |
|
| |
| USD Versus MXN | | | Call | | | J.P. Morgan Chase Bank, N.A. | | 01/21/2021 | | MXN | | | 21.50 | | | | (109,375 | ) | | | USD | | | | 9,375,000 | | | | (13,772 | ) | | | 95,603 | |
|
| |
| USD Versus MXN | | | Call | | | J.P. Morgan Chase Bank, N.A. | | 01/06/2022 | | MXN | | | 23.09 | | | | (570,125 | ) | | | USD | | | | 25,000,000 | | | | (626,025 | ) | | | (55,900 | ) |
|
| |
| USD Versus MXN | | | Call | | | Morgan Stanley and Co. International PLC | | 05/14/2021 | | MXN | | | 22.50 | | | | (139,425 | ) | | | USD | | | | 7,500,000 | | | | (72,765 | ) | | | 66,660 | |
|
| |
| USD Versus NOK | | | Call | | | J.P. Morgan Chase Bank, N.A. | | 05/10/2021 | | NOK | | | 9.70 | | | | (215,700 | ) | | | USD | | | | 15,000,000 | | | | (67,020 | ) | | | 148,680 | |
|
| |
| USD Versus RUB | | | Call | | | Goldman Sachs International | | 02/24/2021 | | RUB | | | 80.00 | | | | (339,125 | ) | | | USD | | | | 1,250,000 | | | | (168,331 | ) | | | 170,794 | |
|
| |
| USD Versus RUB | | | Call | | | Goldman Sachs International | | 03/26/2021 | | RUB | | | 88.69 | | | | (648,430 | ) | | | USD | | | | 29,450,000 | | | | (92,296 | ) | | | 556,134 | |
|
| |
| USD Versus RUB | | | Call | | | Goldman Sachs International | | 04/29/2021 | | RUB | | | 95.00 | | | | (334,376 | ) | | | USD | | | | 28,000,000 | | | | (89,404 | ) | | | 244,972 | |
|
| |
| USD Versus RUB | | | Call | | | Goldman Sachs International | | 08/23/2021 | | RUB | | | 85.00 | | | | (288,000 | ) | | | USD | | | | 1,250,000 | | | | (215,969 | ) | | | 72,031 | |
|
| |
| USD Versus RUB | | | Call | | | J.P. Morgan Chase Bank, N.A. | | 06/02/2021 | | RUB | | | 82.00 | | | | (434,280 | ) | | | USD | | | | 28,000,000 | | | | (465,164 | ) | | | (30,884 | ) |
|
| |
| USD Versus TRY | | | Call | | | Goldman Sachs International | | 11/11/2021 | | TRY | | | 12.00 | | | | (392,543 | ) | | | USD | | | | 12,500,000 | | | | (179,475 | ) | | | 213,068 | |
|
| |
| USD Versus ZAR | | | Call | | | Goldman Sachs International | | 03/18/2021 | | ZAR | | | 15.61 | | | | (271,220 | ) | | | USD | | | | 20,000,000 | | | | (273,840 | ) | | | (2,620 | ) |
|
| |
| USD Versus ZAR | | | Call | | | Standard Chartered Bank PLC | | 02/16/2021 | | ZAR | | | 15.75 | | | | (244,099 | ) | | | USD | | | | 23,000,000 | | | | (152,835 | ) | | | 91,264 | |
|
| |
| Subtotal ��� Foreign Currency Call Options Written | | | | | | | | | (7,154,214 | ) | | | | | | | | | | | (4,066,196 | ) | | | 3,088,018 | |
|
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Open Over-The-Counter Foreign Currency Options Written(a)–(continued) | | | | |
|
| |
| Description | | Type of
Contract | | | Counterparty | | Expiration
Date | | | | Exercise
Price | | | Premiums
Received | | | | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
|
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
CNH Versus TWD | | | Put | | | Goldman Sachs International | | 11/17/2021 | | TWD | | | 3.83 | | | $ | (93,183 | ) | | | CNH | | | | 65,000,000 | | | $ | (127,694 | ) | | $ | (34,511 | ) |
|
| |
USD Versus GBP | | | Put | | | Morgan Stanley and Co. International PLC | | 02/12/2021 | | GBP | | | 1.28 | | | | (180,600 | ) | | | GBP | | | | 15,588,465 | | | | (18,610 | ) | | | 161,990 | |
|
| |
USD Versus IDR | | | Put | | | Goldman Sachs International | | 02/23/2021 | | IDR | | | 13,685.00 | | | | (42,913 | ) | | | USD | | | | 13,000,000 | | | | (78,169 | ) | | | (35,256 | ) |
|
| |
USD Versus JPY | | | Put | | | J.P. Morgan Chase Bank, N.A. | | 01/06/2021 | | JPY | | | 100.00 | | | | (112,386 | ) | | | USD | | | | 30,000,000 | | | | (450 | ) | | | 111,936 | |
|
| |
USD Versus MXN | | | Put | | | Citibank, N.A. | | 03/04/2021 | | MXN | | | 18.57 | | | | (99,731 | ) | | | USD | | | | 12,500,000 | | | | (24,938 | ) | | | 74,793 | |
|
| |
USD Versus MXN | | | Put | | | J.P. Morgan Chase Bank, N.A. | | 01/21/2021 | | MXN | | | 19.25 | | | | (80,874 | ) | | | USD | | | | 18,750,000 | | | | (45,375 | ) | | | 35,499 | |
|
| |
USD Versus MXN | | | Put | | | J.P. Morgan Chase Bank, N.A. | | 01/06/2022 | | MXN | | | 18.40 | | | | (224,600 | ) | | | USD | | | | 25,000,000 | | | | (266,350 | ) | | | (41,750 | ) |
|
| |
Subtotal – Foreign Currency Put Options Written | | | | (834,287 | ) | | | | | | | | | | | (561,586 | ) | | | 272,701 | |
|
| |
Total - Foreign Currency Options Written | | | $ | (7,988,501 | ) | | | | | | | | | | $ | (4,627,782 | ) | | $ | 3,360,719 | |
|
| |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Over-The-Counter Interest Rate Swaptions Written(a) | |
| Description | | Type of
Contract | | | Counterparty | | Exercise
Rate | | Floating
Rate Index | | Pay/
Receive
Exercise
Rate | | Payment
Frequency | | Expiration
Date | | Premiums
Received | | | Notional Value | | | Value | | | Unrealized
Appreciation | |
| | | | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.89% | | 3 Month CDOR | | Pay | | Quarterly | | 01/11/2021 | | $ | (55,874 | ) | | | CAD35,814,000 | | | $ | (4,233 | ) | | $ | 51,641 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.90 | | 3 Month CDOR | | Pay | | Quarterly | | 01/04/2021 | | | (44,609 | ) | | | CAD30,375,000 | | | | (126 | ) | | | 44,483 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.88 | | 3 Month CDOR | | Pay | | Quarterly | | 01/11/2021 | | | (40,828 | ) | | | CAD26,000,000 | | | | (3,918 | ) | | | 36,910 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.86 | | 3 Month CDOR | | Pay | | Quarterly | | 01/14/2021 | | | (40,756 | ) | | | CAD26,000,000 | | | | (11,709 | ) | | | 29,047 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.88 | | 3 Month CDOR | | Pay | | Quarterly | | 01/25/2021 | | | (31,056 | ) | | | CAD20,465,000 | | | | (11,833 | ) | | | 19,223 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.87 | | 3 Month CDOR | | Pay | | Quarterly | | 01/21/2021 | | | (26,795 | ) | | | CAD16,800,000 | | | | (9,376 | ) | | | 17,419 | |
5 Year Interest Rate Swap | | | Put | | | Bank of America, N.A. | | 0.88 | | 3 Month CDOR | | Pay | | Quarterly | | 01/18/2021 | | | (7,726 | ) | | | CAD 5,200,000 | | | | (2,063 | ) | | | 5,663 | |
10 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | 1.15 | | 3 Month USD LIBOR | | Pay | | Quarterly | | 01/11/2021 | | | (51,350 | ) | | | USD13,000,000 | | | | (1,130 | ) | | | 50,220 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.89 | | 3 Month CDOR | | Pay | | Quarterly | | 01/07/2021 | | | (35,006 | ) | | | CAD22,400,000 | | | | (934 | ) | | | 34,072 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.88 | | 3 Month CDOR | | Pay | | Quarterly | | 01/04/2021 | | | (32,764 | ) | | | CAD22,310,000 | | | | (334 | ) | | | 32,430 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.88 | | 3 Month CDOR | | Pay | | Quarterly | | 01/08/2021 | | | (31,929 | ) | | | CAD20,465,000 | | | | (2,180 | ) | | | 29,749 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.85 | | 3 Month CDOR | | Pay | | Quarterly | | 01/14/2021 | | | (41,774 | ) | | | CAD26,000,000 | | | | (13,128 | ) | | | 28,646 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.85 | | 3 Month CDOR | | Pay | | Quarterly | | 01/21/2021 | | | (54,462 | ) | | | CAD35,000,000 | | | | (26,789 | ) | | | 27,673 | |
5 Year Interest Rate Swap | | | Put | | | Toronto-Dominion Bank (The) | | 0.85 | | 3 Month CDOR | | Pay | | Quarterly | | 01/29/2021 | | | (49,003 | ) | | | CAD31,400,000 | | | | (33,530 | ) | | | 15,473 | |
Total Open Over-The-Counter Interest Rate Swaptions Written | | $ | (543,932 | ) | | | | | | $ | (121,283 | ) | | $ | 422,649 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | |
| | | Open Futures Contracts(a) | | | | | | | |
|
| |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
|
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
Australia 10 Year Bonds | | | 104 | | | | March-2021 | | | $ | 11,804,731 | | | $ | 32,247 | | | $ | 32,247 | |
|
| |
U.S. Treasury 2 Year Notes | | | 188 | | | | March-2021 | | | | 41,543,594 | | | | 5,580 | | | | 5,580 | |
|
| |
U.S. Treasury 10 Year Notes | | | 342 | | | | March-2021 | | | | 47,222,719 | | | | 71,619 | | | | 71,619 | |
|
| |
U.S. Treasury Long Bonds | | | 426 | | | | March-2021 | | | | 73,777,875 | | | | (473,500 | ) | | | (473,500 | ) |
|
| |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | (364,054 | ) | | | (364,054 | ) |
|
| |
| | | | | |
Short Futures Contracts | | | | | | | | | | | | | | | | | | | | |
|
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
Canadian Government Bond | | | 828 | | | | March-2021 | | | | (96,987,037 | ) | | | (274,761 | ) | | | (274,761 | ) |
|
| |
Euro BTP | | | 502 | | | | March-2021 | | | | (93,222,921 | ) | | | (571,333 | ) | | | (571,333 | ) |
|
| |
Euro Bund | | | 13 | | | | March-2021 | | | | (2,821,181 | ) | | | (5,740 | ) | | | (5,740 | ) |
|
| |
Euro Buxl | | | 150 | | | | March-2021 | | | | (41,274,670 | ) | | | (414,400 | ) | | | (414,400 | ) |
|
| |
U.S. Treasury 5 Year Notes | | | 183 | | | | March-2021 | | | | (23,088,024 | ) | | | (58,987 | ) | | | (58,987 | ) |
|
| |
U.S. Treasury 10 Year Ultra Bonds | | | 227 | | | | March-2021 | | | | (35,493,578 | ) | | | 25,400 | | | | 25,400 | |
|
| |
U.S. Treasury Ultra Bonds | | | 462 | | | | March-2021 | | | | (98,665,875 | ) | | | (313,192 | ) | | | (313,192 | ) |
|
| |
Subtotal–Short Futures Contracts | | | | | | | | | | | | | | | (1,613,013 | ) | | | (1,613,013 | ) |
|
| |
Total Futures Contracts | | | | | | | | | | | | | | $ | (1,977,067 | ) | | $ | (1,977,067 | ) |
|
| |
| (a) | Futures contracts collateralized by $12,731,784 cash held with Merrill Lynch, the futures commission merchant. |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
|
| |
Settlement Date | | | | Contract to | | | Unrealized Appreciation
(Depreciation) | |
| | Counterparty | | | | | Deliver | | | | | | Receive | |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/05/2021 | | Bank of America, N.A. | | | BRL | | | | 46,226,984 | | | | USD | | | | 8,915,522 | | | $ | 15,791 | |
01/05/2021 | | Bank of America, N.A. | | | USD | | | | 8,895,450 | | | | BRL | | | | 46,226,984 | | | | 4,281 | |
01/15/2021 | | Bank of America, N.A. | | | USD | | | | 16,700,000 | | | | MXN | | | | 357,722,900 | | | | 1,255,048 | |
02/02/2021 | | Bank of America, N.A. | | | BRL | | | | 44,075,000 | | | | USD | | | | 8,495,648 | | | | 12,969 | |
02/02/2021 | | Bank of America, N.A. | | | USD | | | | 10,000,000 | | | | BRL | | | | 52,980,000 | | | | 196,538 | |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 26,765,863 | | | | AUD | | | | 35,582,967 | | | | 683,193 | |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 4,531,875 | | | | EUR | | | | 3,730,000 | | | | 32,288 | |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 2,257,000 | | | | GBP | | | | 1,699,395 | | | | 67,966 | |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 34,647,391 | | | | NOK | | | | 303,864,550 | | | | 783,026 | |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 6,530,127 | | | | ZAR | | | | 99,319,968 | | | | 167,266 | |
04/19/2021 | | Bank of America, N.A. | | | USD | | | | 14,677,590 | | | | EUR | | | | 12,300,000 | | | | 384,053 | |
05/28/2021 | | Bank of America, N.A. | | | USD | | | | 7,230,136 | | | | ZAR | | | | 119,525,000 | | | | 762,902 | |
03/17/2021 | | Citibank, N.A. | | | EGP | | | | 20,500,000 | | | | USD | | | | 1,279,052 | | | | 395 | |
03/17/2021 | | Citibank, N.A. | | | RUB | | | | 1,916,836,068 | | | | USD | | | | 25,825,887 | | | | 77,145 | |
03/17/2021 | | Citibank, N.A. | | | USD | | | | 10,323,700 | | | | CLP | | | | 7,534,612,493 | | | | 281,589 | |
03/17/2021 | | Citibank, N.A. | | | USD | | | | 2,205,074 | | | | EUR | | | | 1,815,936 | | | | 16,971 | |
03/17/2021 | | Citibank, N.A. | | | USD | | | | 28,731,341 | | | | IDR | | | | 408,559,662,500 | | | | 477,134 | |
03/17/2021 | | Citibank, N.A. | | | USD | | | | 20,787,301 | | | | NOK | | | | 182,250,000 | | | | 462,936 | |
01/08/2021 | | Goldman Sachs International | | | NOK | | | | 243,000,000 | | | | USD | | | | 28,911,957 | | | | 571,088 | |
01/08/2021 | | Goldman Sachs International | | | USD | | | | 28,432,650 | | | | EUR | | | | 23,500,000 | | | | 278,644 | |
01/11/2021 | | Goldman Sachs International | | | USD | | | | 8,575,000 | | | | RUB | | | | 704,142,128 | | | | 947,351 | |
01/11/2021 | | Goldman Sachs International | | | USD | | | | 6,100,000 | | | | ZAR | | | | 113,074,480 | | | | 1,586,442 | |
02/10/2021 | | Goldman Sachs International | | | USD | | | | 1,539,099 | | | | ZAR | | | | 23,875,425 | | | | 77,687 | |
02/25/2021 | | Goldman Sachs International | | | RUB | | | | 492,093,750 | | | | USD | | | | 7,250,000 | | | | 625,701 | |
02/25/2021 | | Goldman Sachs International | | | USD | | | | 8,750,000 | | | | RUB | | | | 741,125,000 | | | | 1,226,623 | |
03/08/2021 | | Goldman Sachs International | | | BRL | | | | 40,000,000 | | | | USD | | | | 9,713,453 | | | | 2,022,264 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts–(continued) | |
Settlement Date | | | | Contract to | | | Unrealized Appreciation
(Depreciation) | |
| | Counterparty | | | | | Deliver | | | | | | Receive | |
03/09/2021 | | Goldman Sachs International | | | RUB | | | | 108,013,248 | | | | USD | | | | 1,470,000 | | | $ | 17,824 | |
03/09/2021 | | Goldman Sachs International | | | USD | | | | 3,300,000 | | | | RUB | | | | 265,390,620 | | | | 268,024 | |
03/17/2021 | | Goldman Sachs International | | | USD | | | | 47,948,256 | | | | EUR | | | | 39,432,752 | | | | 303,087 | |
03/17/2021 | | Goldman Sachs International | | | USD | | | | 22,054,707 | | | | RUB | | | | 1,643,373,377 | | | | 20,628 | |
03/17/2021 | | Goldman Sachs International | | | USD | | | | 692,037 | | | | TRY | | | | 5,622,803 | | | | 43,421 | |
03/17/2021 | | Goldman Sachs International | | | USD | | | | 16,920,562 | | | | ZAR | | | | 257,548,241 | | | | 446,559 | |
05/10/2021 | | Goldman Sachs International | | | USD | | | | 10,500,000 | | | | MXN | | | | 229,941,600 | | | | 890,423 | |
11/12/2021 | | Goldman Sachs International | | | USD | | | | 1,043,256 | | | | TRY | | | | 9,165,000 | | | | 45,297 | |
01/05/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 10,279,946 | | | | BRL | | | | 53,421,794 | | | | 4,948 | |
01/29/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 11,550,000 | | | | ZAR | | | | 189,720,300 | | | | 1,316,452 | |
02/02/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 1,013,538 | | | | BRL | | | | 5,280,026 | | | | 2,657 | |
02/08/2021 | | J.P. Morgan Chase Bank, N.A. | | | RUB | | | | 690,200,000 | | | | USD | | | | 10,122,832 | | | | 815,295 | |
02/08/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 9,299,004 | | | | RUB | | | | 690,200,000 | | | | 8,532 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | CNY | | | | 64,440,947 | | | | USD | | | | 9,848,251 | | | | 3,945 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | EUR | | | | 6,625,000 | | | | USD | | | | 8,131,744 | | | | 25,154 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | MXN | | | | 11,370,000 | | | | USD | | | | 568,960 | | | | 2,219 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | RUB | | | | 269,605,316 | | | | USD | | | | 3,629,777 | | | | 8,185 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 24,429,060 | | | | AUD | | | | 32,022,687 | | | | 273,560 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 9,380,839 | | | | CAD | | | | 11,940,842 | | | | 1,869 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 8,674,763 | | | | CLP | | | | 6,441,950,667 | | | | 392,557 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 37,781,065 | | | | CNY | | | | 248,513,063 | | | | 182,973 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 75,588,867 | | | | EUR | | | | 62,067,247 | | | | 358,864 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 31,302,168 | | | | GBP | | | | 23,503,920 | | | | 853,887 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 35,900,635 | | | | INR | | | | 2,670,073,842 | | | | 386,560 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 14,856,796 | | | | JPY | | | | 1,547,870,145 | | | | 146,337 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 3,975,000 | | | | MXN | | | | 80,904,368 | | | | 57,708 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 12,684,727 | | | | NOK | | | | 111,276,770 | | | | 290,075 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 14,027,235 | | | | THB | | | | 434,744,750 | | | | 485,420 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 17,342,403 | | | | TRY | | | | 141,163,905 | | | | 1,121,730 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 8,832,120 | | | | ZAR | | | | 133,155,206 | | | | 146,868 | |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | ZAR | | | | 58,740,563 | | | | USD | | | | 3,975,000 | | | | 13,977 | |
08/30/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 18,061,785 | | | | EUR | | | | 15,525,000 | | | | 1,004,090 | |
08/30/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 18,000,000 | | | | NOK | | | | 171,829,250 | | | | 2,019,946 | |
01/10/2022 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 4,500,000 | | | | MXN | | | | 93,574,800 | | | | 7,574 | |
02/02/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 9,076,462 | | | | BRL | | | | 47,292,905 | | | | 25,537 | |
02/05/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 4,975,000 | | | | CLP | | | | 3,747,170,000 | | | | 298,248 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | RUB | | | | 378,713,402 | | | | USD | | | | 5,096,056 | | | | 8,822 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 10,689,266 | | | | AUD | | | | 14,213,126 | | | | 274,882 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 10,000,000 | | | | CAD | | | | 12,730,600 | | | | 3,273 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 4,646,088 | | | | CLP | | | | 3,391,801,424 | | | | 128,017 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 2,249,690 | | | | EUR | | | | 1,850,820 | | | | 15,040 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 11,788,854 | | | | JPY | | | | 1,228,162,857 | | | | 115,433 | |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 6,892,462 | | | | THB | | | | 206,932,400 | | | | 15,358 | |
05/10/2021 | | Morgan Stanley and Co. International PLC | | | MXN | | | | 201,372,442 | | | | USD | | | | 10,000,000 | | | | 24,783 | |
05/11/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 6,450,000 | | | | MXN | | | | 133,708,500 | | | | 172,639 | |
08/26/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 9,910,000 | | | | BRL | | | | 53,543,829 | | | | 296,803 | |
03/17/2021 | | Royal Bank of Canada | | | USD | | | | 5,353,300 | | | | EUR | | | | 4,412,581 | | | | 46,095 | |
03/17/2021 | | Royal Bank of Canada | | | USD | | | | 4,817,607 | | | | GBP | | | | 3,625,000 | | | | 141,808 | |
03/17/2021 | | Royal Bank of Canada | | | USD | | | | 1,237,344 | | | | JPY | | | | 128,968,342 | | | | 12,715 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts–(continued) | |
| Settlement | | | | Contract to | | | Unrealized Appreciation | |
| Date | | Counterparty | | | | | Deliver | | | | | | Receive | | | (Depreciation) | |
11/10/2021 | | Standard Chartered Bank PLC | | | USD | | | | 11,341,294 | | | | CNY | | | | 76,892,840 | | | $ | 235,285 | |
|
| |
Subtotal–Appreciation | | | | | | | | | | | | | | | | 26,798,674 | |
|
| |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
|
| |
01/05/2021 | | Bank of America, N.A. | | | BRL | | | | 44,075,000 | | | | USD | | | | 8,481,344 | | | | (4,082 | ) |
|
| |
01/05/2021 | | Bank of America, N.A. | | | USD | | | | 8,500,482 | | | | BRL | | | | 44,075,000 | | | | (15,056 | ) |
|
| |
01/15/2021 | | Bank of America, N.A. | | | MXN | | | | 401,926,250 | | | | USD | | | | 18,511,144 | | | | (1,662,585 | ) |
|
| |
02/02/2021 | | Bank of America, N.A. | | | USD | | | | 11,935,268 | | | | BRL | | | | 61,695,888 | | | | (61,269 | ) |
|
| |
03/17/2021 | | Bank of America, N.A. | | | EUR | | | | 28,109,536 | | | | USD | | | | 34,152,524 | | | | (243,321 | ) |
|
| |
03/17/2021 | | Bank of America, N.A. | | | GBP | | | | 12,746,000 | | | | USD | | | | 16,928,218 | | | | (509,771 | ) |
|
| |
03/17/2021 | | Bank of America, N.A. | | | JPY | | | | 318,830,276 | | | | USD | | | | 3,058,500 | | | | (31,845 | ) |
|
| |
03/17/2021 | | Bank of America, N.A. | | | MXN | | | | 26,404,376 | | | | USD | | | | 1,309,936 | | | | (6,200 | ) |
|
| |
03/17/2021 | | Bank of America, N.A. | | | USD | | | | 1,879,953 | | | | CAD | | | | 2,390,097 | | | | (1,896 | ) |
|
| |
05/28/2021 | | Bank of America, N.A. | | | ZAR | | | | 119,525,000 | | | | USD | | | | 7,000,000 | | | | (993,039 | ) |
|
| |
08/30/2021 | | Bank of America, N.A. | | | EUR | | | | 15,580,700 | | | | USD | | | | 18,300,000 | | | | (834,280 | ) |
|
| |
03/17/2021 | | Citibank, N.A. | | | COP | | | | 12,764,000,000 | | | | USD | | | | 3,478,877 | | | | (251,713 | ) |
|
| |
03/17/2021 | | Citibank, N.A. | | | EUR | | | | 86,875,000 | | | | USD | | | | 105,491,478 | | | | (811,916 | ) |
|
| |
03/17/2021 | | Citibank, N.A. | | | GBP | | | | 3,623,000 | | | | USD | | | | 4,816,760 | | | | (139,918 | ) |
|
| |
03/17/2021 | | Citibank, N.A. | | | IDR | | | | 516,394,000,000 | | | | USD | | | | 36,314,627 | | | | (603,068 | ) |
|
| |
03/17/2021 | | Citibank, N.A. | | | MXN | | | | 20,265,845 | | | | USD | | | | 1,005,521 | | | | (4,638 | ) |
|
| |
01/05/2021 | | Goldman Sachs International | | | BRL | | | | 55,573,778 | | | | USD | | | | 10,694,052 | | | | (5,147 | ) |
|
| |
01/05/2021 | | Goldman Sachs International | | | USD | | | | 10,883,268 | | | | BRL | | | | 55,573,778 | | | | (184,070 | ) |
|
| |
01/11/2021 | | Goldman Sachs International | | | RUB | | | | 704,142,127 | | | | USD | | | | 9,513,699 | | | | (8,652 | ) |
|
| |
01/11/2021 | | Goldman Sachs International | | | ZAR | | | | 113,074,480 | | | | USD | | | | 6,129,263 | | | | (1,557,179 | ) |
|
| |
02/03/2021 | | Goldman Sachs International | | | BRL | | | | 23,591,680 | | | | USD | | | | 4,480,000 | | | | (60,350 | ) |
|
| |
02/08/2021 | | Goldman Sachs International | | | RUB | | | | 690,200,000 | | | | USD | | | | 9,298,002 | | | | (9,535 | ) |
|
| |
02/08/2021 | | Goldman Sachs International | | | USD | | | | 10,139,786 | | | | RUB | | | | 690,200,000 | | | | (832,249 | ) |
|
| |
02/10/2021 | | Goldman Sachs International | | | ZAR | | | | 23,875,425 | | | | USD | | | | 1,550,000 | | | | (66,786 | ) |
|
| |
02/18/2021 | | Goldman Sachs International | | | USD | | | | 3,175,000 | | | | BRL | | | | 16,068,357 | | | | (83,792 | ) |
|
| |
02/24/2021 | | Goldman Sachs International | | | RUB | | | | 238,281,250 | | | | USD | | | | 3,125,000 | | | | (82,952 | ) |
|
| |
02/25/2021 | | Goldman Sachs International | | | IDR | | | | 121,832,000,000 | | | | USD | | | | 8,250,000 | | | | (474,899 | ) |
|
| |
02/25/2021 | | Goldman Sachs International | | | RUB | | | | 249,031,250 | | | | USD | | | | 3,348,950 | | | | (3,374 | ) |
|
| |
03/08/2021 | | Goldman Sachs International | | | USD | | | | 9,643,202 | | | | BRL | | | | 40,000,000 | | | | (1,952,013 | ) |
|
| |
03/17/2021 | | Goldman Sachs International | | | EUR | | | | 3,637,883 | | | | USD | | | | 4,423,485 | | | | (27,961 | ) |
|
| |
03/17/2021 | | Goldman Sachs International | | | MXN | | | | 203,296,000 | | | | USD | | | | 10,108,781 | | | | (24,583 | ) |
|
| |
03/17/2021 | | Goldman Sachs International | | | RUB | | | | 198,747,540 | | | | USD | | | | 2,667,269 | | | | (2,495 | ) |
|
| |
04/15/2021 | | Goldman Sachs International | | | INR | | | | 726,862,500 | | | | USD | | | | 9,750,000 | | | | (94,596 | ) |
|
| |
04/28/2021 | | Goldman Sachs International | | | BRL | | | | 9,144,450 | | | | USD | | | | 1,575,000 | | | | (179,907 | ) |
|
| |
04/30/2021 | | Goldman Sachs International | | | RUB | | | | 620,546,850 | | | | USD | | | | 7,700,000 | | | | (596,028 | ) |
|
| |
06/15/2021 | | Goldman Sachs International | | | INR | | | | 677,925,000 | | | | USD | | | | 8,625,000 | | | | (484,798 | ) |
|
| |
08/19/2021 | | Goldman Sachs International | | | USD | | | | 4,500,000 | | | | BRL | | | | 22,756,050 | | | | (159,785 | ) |
|
| |
08/24/2021 | | Goldman Sachs International | | | RUB | | | | 155,600,000 | | | | USD | | | | 2,000,000 | | | | (53,785 | ) |
|
| |
09/03/2021 | | Goldman Sachs International | | | BRL | | | | 12,744,514 | | | | USD | | | | 2,395,000 | | | | (32,930 | ) |
|
| |
11/12/2021 | | Goldman Sachs International | | | TRY | | | | 31,150,000 | | | | USD | | | | 3,500,000 | | | | (199,773 | ) |
|
| |
01/05/2021 | | J.P. Morgan Chase Bank, N.A. | | | BRL | | | | 53,421,794 | | | | USD | | | | 9,895,215 | | | | (389,678 | ) |
|
| |
01/29/2021 | | J.P. Morgan Chase Bank, N.A. | | | ZAR | | | | 189,720,300 | | | | USD | | | | 11,565,843 | | | | (1,300,609 | ) |
|
| |
02/02/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 3,024,815 | | | | BRL | | | | 15,474,954 | | | | (46,503 | ) |
|
| |
02/08/2021 | | J.P. Morgan Chase Bank, N.A. | | | RUB | | | | 690,200,000 | | | | USD | | | | 9,299,004 | | | | (8,532 | ) |
|
| |
02/18/2021 | | J.P. Morgan Chase Bank, N.A. | | | BRL | | | | 16,065,000 | | | | USD | | | | 2,923,354 | | | | (167,208 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | AUD | | | | 77,702,351 | | | | USD | | | | 58,478,866 | | | | (1,461,503 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | CLP | | | | 6,791,780,000 | | | | USD | | | | 8,960,997 | | | | (598,722 | ) |
|
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts–(continued) | |
|
| |
Settlement Date | | | | Contract to | | | Unrealized Appreciation
(Depreciation) | |
| | Counterparty | | | | | Deliver | | | | | | Receive | |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | CNY | | | | 65,863,000 | | | | USD | | | | 10,000,000 | | | $ | (61,545 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | EUR | | | | 140,771,150 | | | | USD | | | | 171,307,615 | | | | (945,056 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | GBP | | | | 21,767,369 | | | | USD | | | | 29,074,125 | | | | (706,131 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | INR | | | | 1,815,060,000 | | | | USD | | | | 24,404,496 | | | | (262,776 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | MXN | | | | 445,957,292 | | | | USD | | | | 22,068,124 | | | | (160,781 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | RUB | | | | 101,387,885 | | | | USD | | | | 1,361,167 | | | | (770 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | THB | | | | 678,210,000 | | | | USD | | | | 21,675,881 | | | | (964,135 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | TRY | | | | 19,759,625 | | | | USD | | | | 2,500,000 | | | | (84,544 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 31,993,409 | | | | EUR | | | | 26,078,890 | | | | (82,335 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | USD | | | | 10,000,000 | | | | HUF | | | | 2,907,100,000 | | | | (207,864 | ) |
|
| |
03/17/2021 | | J.P. Morgan Chase Bank, N.A. | | | ZAR | | | | 653,717,098 | | | | USD | | | | 42,884,693 | | | | (1,197,085 | ) |
|
| |
04/19/2021 | | J.P. Morgan Chase Bank, N.A. | | | EUR | | | | 16,413,233 | | | | USD | | | | 20,000,000 | | | | (98,394 | ) |
|
| |
04/28/2021 | | J.P. Morgan Chase Bank, N.A. | | | BRL | | | | 3,587,500 | | | | USD | | | | 625,000 | | | | (63,476 | ) |
|
| |
05/07/2021 | | J.P. Morgan Chase Bank, N.A. | | | IDR | | | | 39,503,750,000 | | | | USD | | | | 2,750,000 | | | | (61,176 | ) |
|
| |
05/19/2021 | | J.P. Morgan Chase Bank, N.A. | | | IDR | | | | 140,043,750,000 | | | | USD | | | | 8,750,000 | | | | (1,204,835 | ) |
|
| |
06/03/2021 | | J.P. Morgan Chase Bank, N.A. | | | RUB | | | | 646,721,600 | | | | USD | | | | 7,840,000 | | | | (773,715 | ) |
|
| |
08/30/2021 | | J.P. Morgan Chase Bank, N.A. | | | NOK | | | | 162,250,000 | | | | USD | | | | 18,063,302 | | | | (840,559 | ) |
|
| |
01/10/2022 | | J.P. Morgan Chase Bank, N.A. | | | MXN | | | | 140,358,825 | | | | USD | | | | 6,750,000 | | | | (11,198 | ) |
|
| |
02/02/2021 | | Morgan Stanley and Co. International PLC | | | BRL | | | | 57,992,842 | | | | USD | | | | 10,950,000 | | | | (211,310 | ) |
|
| |
02/02/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 4,037,370 | | | | BRL | | | | 20,627,523 | | | | (67,394 | ) |
|
| |
02/05/2021 | | Morgan Stanley and Co. International PLC | | | CLP | | | | 3,747,170,000 | | | | USD | | | | 4,911,873 | | | | (361,375 | ) |
|
| |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | CLP | | | | 14,290,948,000 | | | | USD | | | | 19,113,231 | | | | (1,001,887 | ) |
|
| |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | EUR | | | | 17,690,561 | | | | USD | | | | 21,503,054 | | | | (143,757 | ) |
|
| |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | MXN | | | | 194,990,734 | | | | USD | | | | 9,652,919 | | | | (66,465 | ) |
|
| |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | NOK | | | | 60,723,208 | | | | USD | | | | 6,921,562 | | | | (158,727 | ) |
|
| |
03/17/2021 | | Morgan Stanley and Co. International PLC | | | USD | | | | 9,395,801 | | | | CAD | | | | 11,942,533 | | | | (11,764 | ) |
|
| |
08/26/2021 | | Morgan Stanley and Co. International PLC | | | EUR | | | | 8,290,000 | | | | USD | | | | 9,914,840 | | | | (265,011 | ) |
|
| |
03/17/2021 | | Natwest Markets PLC | | | EUR | | | | 805,000 | | | | USD | | | | 977,592 | | | | (7,435 | ) |
|
| |
03/17/2021 | | Royal Bank of Canada | | | EUR | | | | 56,986,842 | | | | USD | | | | 69,135,866 | | | | (595,295 | ) |
|
| |
03/17/2021 | | Standard Chartered Bank PLC | | | AUD | | | | 7,125,000 | | | | USD | | | | 5,341,114 | | | | (155,182 | ) |
|
| |
04/15/2021 | | Standard Chartered Bank PLC | | | INR | | | | 953,461,600 | | | | USD | | | | 12,740,000 | | | | (173,645 | ) |
|
| |
11/10/2021 | | Standard Chartered Bank PLC | | | CNY | | | | 66,018,240 | | | | USD | | | | 9,720,000 | | | | (219,357 | ) |
|
| |
Subtotal–Depreciation | | | | | | | | | | | | | | | | (28,489,970 | ) |
|
| |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | $ | (1,691,296 | ) |
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Open Centrally Cleared Credit Default Swap Agreements(a) | | | | | | | |
|
| |
| Reference Entity | | Buy/Sell
Protection | | | (Pay)/
Receive
Fixed
Rate | | | Payment
Frequency | | | Maturity
Date | | | Implied
Credit
Spread(b) | | | | | | Notional Value | | | Upfront
Payments Paid (Received) | | | Value | | | Unrealized
Appreciation (Depreciation) | |
| | | | | | | | | | |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Markit iTraxx Europe Crossover Index, Series 34, Version 1 | | | Buy | | | | (5.00 | )% | | | Quarterly | | | | 12/20/2025 | | | | 2.4086 | % | | | EUR | | | | 6,500,000 | | | $ | 860,670 | | | $ | 943,394 | | | $ | 82,724 | |
Markit iTraxx Europe Index, Series 34, Version 1 | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 1.1164 | | | | EUR | | | | 8,125,000 | | | | 54,395 | | | | 55,754 | | | | 1,359 | |
Brazilian Government International Bonds | | | Sell | | | | 1.00 | | | | Quarterly | | | | 06/20/2022 | | | | 0.5678 | | | | USD | | | | 2,500,000 | | | | (43,299 | ) | | | 16,853 | | | | 60,152 | |
UniCredit S.p.A. | | | Sell | | | | 1.00 | | | | Quarterly | | | | 12/20/2025 | | | | 0.7159 | | | | EUR | | | | 2,600,000 | | | | 21,290 | | | | 44,999 | | | | 23,709 | |
Subtotal - Appreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 893,056 | | | | 1,061,000 | | | | 167,944 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Open Centrally Cleared Credit Default Swap Agreements(a)–(continued) | | | | | | | |
| Reference Entity | | Buy/Sell
Protection | | | (Pay)/
Receive
Fixed
Rate | | | Payment
Frequency | | | Maturity
Date | | | Implied
Credit
Spread(b) | | | | | | Notional Value | | | Upfront
Payments Paid (Received) | | | Value | | | Unrealized
Appreciation (Depreciation) | |
| | | | | | | | | | |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Host Hotels & Resorts, L.P. | | | Buy | | | | (1.00 | )% | | | Quarterly | | | | 12/20/2023 | | | | 0.8660 | % | | | USD | | | | 3,280,000 | | | $ | 10,454 | | | $ | (11,949 | ) | | $ | (22,403 | ) |
Indonesia Government International Bond | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 0.6807 | | | | USD | | | | 4,475,000 | | | | 30,084 | | | | (68,194 | ) | | | (98,278 | ) |
South Africa Government International Bond | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 2.0187 | | | | USD | | | | 2,600,000 | | | | 237,530 | | | | 128,619 | | | | (108,911 | ) |
ViacomCBS, Inc. | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 0.6437 | | | | USD | | | | 1,300,000 | | | | (17,682 | ) | | | (22,229 | ) | | | (4,547 | ) |
United Mexican States International Bonds | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 0.8119 | | | | USD | | | | 975,000 | | | | (2,356 | ) | | | (8,876 | ) | | | (6,520 | ) |
Markit CDX North America High Yield Index, Series 35, Version 1 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2025 | | | | 2.9323 | | | | USD | | | | 13,260,000 | | | | (959,182 | ) | | | (1,234,837 | ) | | | (275,655 | ) |
Subtotal - Depreciation | | | | | | | | | | | | (701,152 | ) | | | (1,217,466 | ) | | | (516,314 | ) |
Total Centrally Cleared Credit Default Swap Agreements | | | | | | | $ | 191,904 | | | $ | (156,466 | ) | | $ | (348,370 | ) |
| (a) | Centrally cleared swap agreements collateralized by $17,568,401 cash held with Counterparties. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Centrally Cleared Interest Rate Swap Agreements(a) | |
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
(Depreciation) | |
| | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 2.50 | % | | Quarterly | | | 12/24/2023 | | | | COP | | | | 12,490,000,000 | | | $ | – | | | $ | 1,794 | | | $ | 1,794 | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 2.53 | | | Quarterly | | | 12/23/2023 | | | | COP | | | | 19,870,000,000 | | | | – | | | | 8,082 | | | | 8,082 | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 3.03 | | | Quarterly | | | 07/10/2025 | | | | COP | | | | 9,400,000,000 | | | | – | | | | 10,954 | | | | 10,954 | |
Pay | | 6 Month CDOR | | Semi-
Annually | | | 0.76 | | | Semi-Annually | | | 06/29/2025 | | | | CAD | | | | 71,760,000 | | | | (256 | ) | | | 12,858 | | | | 13,114 | |
Pay | | 28 Day MXN TIIE | | At
Maturity | | | 4.80 | | | At Maturity | | | 07/23/2025 | | | | MXN | | | | 57,800,000 | | | | – | | | | 17,816 | | | | 17,816 | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 3.09 | | | Quarterly | | | 07/09/2025 | | | | COP | | | | 9,125,000,000 | | | | – | | | | 18,326 | | | | 18,326 | |
Receive | | 6 Month CLICP | | Semi-
Annually | | | (0.52 | ) | | Semi-Annually | | | 06/26/2022 | | | | CLP | | | | 12,625,000,000 | | | | – | | | | 23,548 | | | | 23,548 | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 3.08 | | | Quarterly | | | 07/09/2025 | | | | COP | | | | 19,250,000,000 | | | | – | | | | 36,124 | | | | 36,124 | |
Pay | | 28 Day MXN TIIE | | At
Maturity | | | 4.67 | | | At Maturity | | | 07/02/2024 | | | | MXN | | | | 200,100,000 | | | | – | | | | 54,601 | | | | 54,601 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 4.11 | | | At Maturity | | | 01/02/2023 | | | | BRL | | | | 61,435,394 | | | | – | | | | 78,486 | | | | 78,486 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 5.10 | | | At Maturity | | | 01/02/2024 | | | | BRL | | | | 41,182,210 | | | | – | | | | 102,606 | | | | 102,606 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 5.92 | | | At Maturity | | | 01/02/2025 | | | | BRL | | | | 32,532,661 | | | | – | | | | 104,865 | | | | 104,865 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 5.75 | | | At Maturity | | | 01/02/2025 | | | | BRL | | | | 16,852,097 | | | | – | | | | 105,932 | | | | 105,932 | |
Pay | | 28 Day MXN TIIE | | At
Maturity | | | 4.81 | | | At Maturity | | | 07/23/2025 | | | | MXN | | | | 453,900,000 | | | | – | | | | 147,540 | | | | 147,540 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 7.26 | | | At Maturity | | | 01/02/2029 | | | | BRL | | | | 17,661,546 | | | | – | | | | 152,229 | | | | 152,229 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 5.93 | | | At Maturity | | | 01/02/2025 | | | | BRL | | | | 21,886,802 | | | | – | | | | 186,173 | | | | 186,173 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 6.03 | | | At Maturity | | | 01/02/2025 | | | | BRL | | | | 23,294,056 | | | | – | | | | 219,377 | | | | 219,377 | |
Receive | | 28 Day MXN TIIE | | At
Maturity | | | (7.07 | ) | | At Maturity | | | 12/12/2029 | | | | MXN | | | | 247,125,000 | | | | – | | | | 270,524 | | | | 270,524 | |
Pay | | 3 Month COOVIBR | | Quarterly | | | 5.56 | | | Quarterly | | | 08/26/2026 | | | | COP | | | | 12,803,000,000 | | | | – | | | | 462,824 | | | | 462,824 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 6.61 | | | At Maturity | | | 01/02/2023 | | | | BRL | | | | 358,875,496 | | | | – | | | | 693,012 | | | | 693,012 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 5.56 | | | At Maturity | | | 01/02/2023 | | | | BRL | | | | 107,234,096 | | | | – | | | | 1,065,461 | | | | 1,065,461 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 8.42 | | | At Maturity | | | 01/02/2025 | | | | BRL | | | | 26,699,194 | | | | – | | | | 1,069,206 | | | | 1,069,206 | |
Pay | | 1 Month
BZDIOVRA | | At
Maturity | | | 8.68 | | | At Maturity | | | 01/04/2027 | | | | BRL | | | | 24,429,011 | | | | – | | | | 1,164,671 | | | | 1,164,671 | |
Subtotal – Appreciation | | | | | | | | (256 | ) | | | 6,007,009 | | | | 6,007,265 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Centrally Cleared Interest Rate Swap Agreements(a)–(continued) | |
| |
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
(Depreciation) | |
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Pay | | 6 Month CDOR | | Semi-Annually | | | 1.06 | % | | | Semi-Annually | | | | 03/26/2030 | | | | CAD | | | | 107,225,000 | | | $ | 1,006 | | | $ | (670,255 | ) | | $ | (671,261 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 2.04 | | | | Quarterly | | | | 06/18/2022 | | | | CNY | | | | 247,500,000 | | | | – | | | | (220,796 | ) | | | (220,796 | ) |
| |
Pay | | 28 Day MXN TIIE | | At Maturity | | | 6.91 | | | | At Maturity | | | | 12/12/2029 | | | | MXN | | | | 107,250,000 | | | | – | | | | (210,971 | ) | | | (210,971 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 1.99 | | | | Quarterly | | | | 06/15/2022 | | | | CNY | | | | 175,000,000 | | | | – | | | | (175,007 | ) | | | (175,007 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 2.13 | | | | Quarterly | | | | 06/30/2022 | | | | CNY | | | | 181,250,000 | | | | – | | | | (134,117 | ) | | | (134,117 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 2.23 | | | | Quarterly | | | | 07/07/2022 | | | | CNY | | | | 227,270,000 | | | | – | | | | (117,204 | ) | | | (117,204 | ) |
| |
Receive | | 3 Month CNRR007 | | Quarterly | | | (2.77 | ) | | | Quarterly | | | | 10/16/2025 | | | | CNY | | | | 89,000,000 | | | | – | | | | (70,119 | ) | | | (70,119 | ) |
| |
Pay | | 6 Month CLICP | | Semi-Annually | | | 1.20 | | | | Semi-Annually | | | | 06/26/2025 | | | | CLP | | | | 5,125,000,000 | | | | – | | | | (54,337 | ) | | | (54,337 | ) |
| |
Pay | | 6 Month CLICP | | Semi-Annually | | | 1.16 | | | | Semi-Annually | | | | 07/13/2025 | | | | CLP | | | | 4,875,000,000 | | | | – | | | | (42,343 | ) | | | (42,343 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 2.13 | | | | Quarterly | | | | 06/29/2022 | | | | CNY | | | | 45,000,000 | | | | – | | | | (32,765 | ) | | | (32,765 | ) |
| |
Pay | | 3 Month CNRR007 | | Quarterly | | | 2.40 | | | | Quarterly | | | | 07/13/2022 | | | | CNY | | | | 225,000,000 | | | | – | | | | (29,801 | ) | | | (29,801 | ) |
| |
Receive | | 28 Day MXN TIIE | | At Maturity | | | (5.50 | ) | | | At Maturity | | | | 11/29/2030 | | | | MXN | | | | 64,600,000 | | | | – | | | | (25,530 | ) | | | (25,530 | ) |
| |
Pay | | 6 Month CDOR | | Semi-Annually | | | 0.75 | | | | Semi-Annually | | | | 11/30/2025 | | | | CAD | | | | 3,900,000 | | | | – | | | | (7,011 | ) | | | (7,011 | ) |
| |
Receive | | 6 Month CLICP | | Semi-Annually | | | (0.57 | ) | | | Semi-Annually | | | | 07/13/2022 | | | | CLP | | | | 12,062,500,000 | | | | – | | | | (2,373 | ) | | | (2,373 | ) |
|
| |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | | | | | 1,006 | | | | (1,792,629 | ) | | | (1,793,635 | ) |
|
| |
Total Centrally Cleared Interest Rate Swap Agreements | | | | | | | | | | | $ | 750 | | | $ | 4,214,380 | | | $ | 4,213,630 | |
|
| |
| (a) | Centrally cleared swap agreements collateralized by $17,568,401 cash held with Counterparties. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Open Over-The-Counter Credit Default Swap Agreements(a) | | | | | | | |
| Counterparty | | Reference Entity | | Buy/Sell Protection | | | (Pay)/
Receive Fixed Rate | | | Payment
Frequency | | | Maturity
Date | | | Implied Credit Spread(b) | | | | | | Notional
Value | | | Upfront
Payments
Paid
(Received) | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| | | | | | | | | | | |
| Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Bank of America, N.A. | | Uruguary Government International Bonds | | | Sell | | | | 1.00 | % | | | Quarterly | | | | 12/20/2021 | | | | 0.4992 | % | | | USD | | | | 2,697,000 | | | $ | (10,651 | ) | | $ | 13,215 | | | $ | 23,866 | |
| Citibank, N.A. | | Assicurazioni Generali S.p.A. | | | Sell | | | | 1.00 | | | | Quarterly | | | | 12/20/2024 | | | | 0.4783 | | | | EUR | | | | 2,500,000 | | | | 39,744 | | | | 64,097 | | | | 24,353 | |
| J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 28, Version 9 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2022 | | | | 0.4996 | | | | EUR | | | | 15,000,000 | | | | 1,459,853 | | | | 1,652,327 | | | | 192,474 | |
| J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Index, Series 32, Version 1 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2021 | | | | 4.8707 | | | | EUR | | | | 2,500,000 | | | | (187,417 | ) | | | 3,808 | | | | 191,225 | |
| J.P. Morgan Chase Bank, N.A. | | Deutsche Bank AG | | | Sell | | | | 1.00 | | | | Quarterly | | | | 12/20/2025 | | | | 0.5545 | | | | EUR | | | | 5,200,000 | | | | 115,743 | | | | 141,998 | | | | 26,255 | |
Subtotal-Appreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,417,272 | | | | 1,875,445 | | | | 458,173 | |
| Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Barclays Bank PLC | | Royal Bank of Scotland PLC Froup PLC (The) | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 0.8133 | | | | EUR | | | | 1,560,000 | | | | (4,567 | ) | | | (17,854 | ) | | | (13,287 | ) |
| Citibank, N.A. | | Assicurazioni Generali S.p.A. | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2024 | | | | 0.8553 | | | | EUR | | | | 1,250,000 | | | | 12,909 | | | | (8,865 | ) | | | (21,774 | ) |
| J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 28, Version 9 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2022 | | | | 0.4996 | | | | EUR | | | | 2,500,000 | | | | 47,313 | | | | (117,966 | ) | | | (165,279 | ) |
| J.P. Morgan Chase Bank, N.A. | | Royal Bank of Scotland PLC Froup PLC (The) | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2021 | | | | 0.2772 | | | | EUR | | | | 2,500,000 | | | | 15,689 | | | | (21,744 | ) | | | (37,433 | ) |
| J.P. Morgan Chase Bank, N.A. | | UniCredit S.p.A. | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 1.2108 | | | | EUR | | | | 1,300,000 | | | | 36,275 | | | | 16,503 | | | | (19,772 | ) |
| J.P. Morgan Chase Bank, N.A. | | Royal Bank of Scotland PLC Froup PLC (The) | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 1.2499 | | | | EUR | | | | 1,200,000 | | | | 24,212 | | | | 18,200 | | | | (6,012 | ) |
| J.P. Morgan Chase Bank, N.A. | | Deutsche Bank AG | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2025 | | | | 1.838 | | | | EUR | | | | 1,300,000 | | | | 103,387 | | | | 65,213 | | | | (38,174 | ) |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | 235,218 | | | | (66,513 | ) | | | (301,731 | ) |
Total Open Over-The-Counter Credit Default Swap Agreements | | | | | | | | | | | | | | | | | | | $ | 1,652,490 | | | $ | 1,808,932 | | | $ | 156,442 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2020, at which protection could be bought or sold given the terms of the existing credit default swap agreement and serve as an indicator of the current status of the payment/performance risk of the credit default swap agreement. An implied credit spread that has widened or increased since entry into the initial agreement may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | Open Over-The-Counter Interest Rate Swap Agreements(a) | | | | | | |
| Counterparty | | Pay/
Receive
Floating
Rate | | | Floating Rate
Index | | Payment
Frequency | | | (Pay)/
Received
Fixed
Rate | | | Payment
Frequency | | | Maturity
Date | | | Notional Value | | | Upfront
Payments
Paid
(Received) | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| | | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Bank of America, N.A. | | | Pay | | | FBIL Overnight MIBOR | | | Semi-Annually | | | | 6.33 | % | | | Semi-Annually | | | | 01/31/2022 | | | | INR 210,000,000 | | | $– | | $ | 112,414 | | | $ | 112,414 | |
Goldman Sachs International | | | Pay | | | 3 Month MOSKP | | | Quarterly | | | | 6.77 | | | | Annually | | | | 01/14/2030 | | | | RUB 198,000,000 | | | – | | | 95,446 | | | | 95,446 | |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | | | | – | | | 207,860 | | | | 207,860 | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Standard Chartered Bank PLC | | | Receive | | | FBIL Overnight MIBOR | | | Semi-Annually | | | | (6.44 | ) | | | Semi-Annually | | | | 01/10/2024 | | | | INR 250,000,000 | | | – | | | (253,303 | ) | | | (253,303 | ) |
Total Over-The-Counter Interest Rate Swap Agreements | | | $– | | $ | (45,443 | ) | | $ | (45,443 | ) |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Open Over-The-Counter Total Return Swap Agreements(a)(b) | | | | | | | |
|
| |
| Counterparty | | Pay/ Receive | | | Reference Entity | | Fixed
Rate | | | Payment
Frequency | | | Number of
Contracts | | | Maturity Date | | | Notional Value | | | Upfront
Payments
Paid
(Received) | | | Value | | | Unrealized
Appreciation | |
|
| |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
J.P. Morgan Chase Bank, N.A. | | | Pay | | | J.P. Morgan EMBI Global Core High Yield Index | | | (1.00 | )% | | | Maturity | | | | 8,128 | | | | February-2021 | | | | $2,600,000 | | | | $– | | | | $71,848 | | | | $71,848 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $1,737,859. |
| (b) | The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
Abbreviations:
| | |
| AUD | | -Australian Dollar |
| BRL | | -Brazilian Real |
| CAD | | -Canadian Dollar |
| CDOR | | -Canadian Dealer Offered Rate |
| CLP | | -Chile Peso |
| CNH | | -Chinese Renminbi |
| CNY | | -Chinese Yuan Renminbi |
| COP | | -Colombia Peso |
| EGP | | -Egypt Pound |
| EMBI | | -Emerging Markets Bond Index |
| EUR | | -Euro |
| FBIL | | -Financial Benchmarks India Private Ltd. |
| GBP | | -British Pound Sterling |
| HUF | | -Hungarian Forint |
| IDR | | -Indonesian Rupiah |
| INR | | -Indian Rupee |
| JPY | | -Japanese Yen |
| KRW | | -South Korean Won |
| LIBOR | | -London Interbank Offered Rate |
| MIBOR | | -Mumbai Interbank Offered Rate |
| MOSKP | | -Moscow Prime Offered Rate |
| MXN | | -Mexican Peso |
| NOK | | -Norwegian Krone |
| PLN | | -Polish Zloty |
| RUB | | -Russian Ruble |
| THB | | -Thai Baht |
| TIIE | | -Interbank Equilibrium Interest Rate |
| TRY | | -Turkish Lira |
| TWD | | -New Taiwan Dollar |
| TWD | | -Taiwan New Dollar |
| USD | | -U.S. Dollar |
| ZAR | | -South African Rand |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Consolidated Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $860,762,798) | | $ | 880,844,796 | |
| |
Investments in affiliates, at value
(Cost $107,137,120) | | | 105,823,861 | |
| |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 3,370,659 | |
| |
Swaps receivable – OTC | | | 221,597 | |
| |
Unrealized appreciation on swap agreements – OTC | | | 737,881 | |
| |
Premiums paid on swap agreements - OTC | | | 1,652,487 | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 26,798,674 | |
| |
Deposits with brokers: | | | | |
Cash collateral – exchange-traded futures contracts | | | 12,731,784 | |
| |
Cash collateral – centrally cleared swap agreements | | | 17,568,401 | |
| |
Cash collateral – OTC Derivatives | | | 1,737,859 | |
| |
Cash | | | 27,091,119 | |
| |
Foreign currencies, at value (Cost $2,706,555) | | | 2,704,128 | |
| |
Receivable for: | | | | |
Investments sold | | | 102,239,310 | |
| |
Fund shares sold | | | 8,167,083 | |
| |
Interest | | | 9,034,478 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 172,885 | |
| |
Other assets | | | 7,543 | |
| |
Total assets | | | 1,200,904,545 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Options written, at value (premiums received $8,992,400) | | | 5,172,606 | |
| |
Variation margin payable – centrally cleared swap agreements | | | 192,303 | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 28,489,970 | |
| |
Swaps payable – OTC | | | 30,032 | |
| |
Unrealized depreciation on swap agreements – OTC | | | 555,034 | |
| |
Payable for: | | | | |
Investments purchased | | | 137,473,398 | |
| |
Fund shares reacquired | | | 147,864 | |
| |
Accrued foreign taxes | | | 453,498 | |
| |
Accrued fees to affiliates | | | 554,561 | |
�� | |
Accrued other operating expenses | | | 532,496 | |
| |
Trustee deferred compensation and retirement plans | | | 172,885 | |
| |
Unfunded loan commitments | | | 2,449,346 | |
| |
Total liabilities | | | 176,223,993 | |
| |
Net assets applicable to shares outstanding | | $ | 1,024,680,552 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 1,183,411,311 | |
| |
Distributable earnings (loss) | | | (158,730,759 | ) |
| |
| | $ | 1,024,680,552 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 363,404,182 | |
| |
Series II | | $ | 661,276,370 | |
| |
| | |
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 75,175,422 |
|
Series II | | 132,392,462 |
|
Series I:
Net asset value per share | | $ 4.83 |
|
Series II:
Net asset value per share | | $ 4.99 |
|
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Consolidated Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $700,141) | | $ | 38,872,137 | |
| |
Dividends from affiliates | | | 961,608 | |
| |
Dividends (net of foreign withholding taxes of $(9,170)) | | | 127,251 | |
| |
Total investment income | | | 39,960,996 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 6,791,251 | |
| |
Administrative services fees | | | 1,650,231 | |
| |
Custodian fees | | | 41,292 | |
| |
Distribution fees - Series II | | | 1,646,352 | |
| |
Transfer agent fees | | | 48,751 | |
| |
Trustees’ and officers’ fees and benefits | | | 28,901 | |
| |
Reports to shareholders | | | 161,756 | |
| |
Professional services fees | | | 116,685 | |
| |
Other | | | 46,734 | |
| |
Total expenses | | | 10,531,953 | |
| |
Less: Fees waived | | | (521,836 | ) |
| |
Net expenses | | | 10,010,117 | |
| |
Net investment income | | | 29,950,879 | |
| |
| | | | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $203,486) | | | (14,448,559 | ) |
| |
Affiliated investment securities | | | 6,937,770 | |
| |
Foreign currencies | | | (2,561,574 | ) |
| |
Forward foreign currency contracts | | | (11,337,981 | ) |
| |
Futures contracts | | | 11,844,277 | |
| |
Option contracts written | | | (72,762,542 | ) |
Swap agreements | | | 27,132,098 | |
| |
| | | (55,196,511 | ) |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities (net of foreign taxes of $242,101) | | | 48,760,886 | |
| |
Affiliated investment securities | | | (7,391,798 | ) |
| |
Foreign currencies | | | 1,058,621 | |
| |
Forward foreign currency contracts | | | 8,632,803 | |
| |
Futures contracts | | | (823,291 | ) |
| |
Option contracts written | | | (3,894,553 | ) |
| |
Swap agreements | | | 2,720,121 | |
| |
| | | 49,062,789 | |
| |
Net realized and unrealized gain (loss) | | | (6,133,722 | ) |
| |
Net increase in net assets resulting from operations | | $ | 23,817,157 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Consolidated Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 29,950,879 | | | $ | 65,657,033 | |
|
| |
Net realized gain (loss) | | | (55,196,511 | ) | | | (4,708,162 | ) |
|
| |
Change in net unrealized appreciation | | | 49,062,789 | | | | 79,839,376 | |
|
| |
Net increase in net assets resulting from operations | | | 23,817,157 | | | | 140,788,247 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (21,122,311 | ) | | | (15,389,942 | ) |
|
| |
Series II | | | (34,704,644 | ) | | | (36,879,378 | ) |
|
| |
Total distributions from distributable earnings | | | (55,826,955 | ) | | | (52,269,320 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (20,356,992 | ) | | | 25,392,026 | |
|
| |
Series II | | | (54,615,245 | ) | | | (410,787,898 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (74,972,237 | ) | | | (385,395,872 | ) |
|
| |
Net increase (decrease) in net assets | | | (106,982,035 | ) | | | (296,876,945 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,131,662,587 | | | | 1,428,539,532 | |
|
| |
End of year | | $ | 1,024,680,552 | | | $ | 1,131,662,587 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Consolidated Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset value, beginning of period | | Net investment income(a) | | Net gains (losses) on securities (both realized and unrealized) | | Total from investment operations | | Dividends from net investment income | | Net asset value, end of period | | Total return (b) | | Net assets, end of period (000’s omitted) | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed(c) | | Ratio of net investment income to average net assets | | Portfolio turnover (d)(e) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 4.97 | | | | $ | 0.15 | | | | $ | (0.01 | ) | | | $ | 0.14 | | | | $ | (0.28 | ) | | | $ | 4.83 | | | | | 3.19 | % | | | $ | 363,404 | | | | | 0.82 | %(f) | | | | 0.87 | %(f) | | | | 3.10 | %(f) | | | | 324 | % |
Year ended 12/31/19 | | | | 4.66 | | | | | 0.24 | | | | | 0.26 | | | | | 0.50 | | | | | (0.19 | ) | | | | 4.97 | | | | | 10.80 | | | | | 395,324 | | | | | 0.77 | (g) | | | | 0.82 | | | | | 4.86 | (h) | | | | 134 | |
Year ended 12/31/18 | | | | 5.13 | | | | | 0.25 | | | | | (0.47 | ) | | | | (0.22 | ) | | | | (0.25 | ) | | | | 4.66 | | | | | (4.40 | ) | | | | 346,707 | | | | | 0.81 | (g) | | | | 0.88 | (g) | | | | 5.07 | (h) | | | | 68 | |
Year ended 12/31/17 | | | | 4.94 | | | | | 0.22 | | | | | 0.09 | | | | | 0.31 | | | | | (0.12 | ) | | | | 5.13 | | | | | 6.27 | | | | | 393,337 | | | | | 0.76 | (g) | | | | 0.82 | (g) | | | | 4.40 | (h) | | | | 74 | |
Year ended 12/31/16 | | | | 4.88 | | | | | 0.20 | | | | | 0.11 | | | | | 0.31 | | | | | (0.25 | ) | | | | 4.94 | | | | | 6.53 | | | | | 401,308 | | | | | 0.74 | (g) | | | | 0.79 | (g) | | | | 4.00 | (h) | | | | 80 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 5.13 | | | | | 0.14 | | | | | (0.01 | ) | | | | 0.13 | | | | | (0.27 | ) | | | | 4.99 | | | | | 2.79 | | | | | 661,276 | | | | | 1.07 | (f) | | | | 1.12 | (f) | | | | 2.85 | (f) | | | | 324 | |
Year ended 12/31/19 | | | | 4.80 | | | | | 0.23 | | | | | 0.27 | | | | | 0.50 | | | | | (0.17 | ) | | | | 5.13 | | | | | 10.61 | | | | | 736,339 | | | | | 1.02 | (g) | | | | 1.08 | | | | | 4.60 | (h) | | | | 134 | |
Year ended 12/31/18 | | | | 5.27 | | | | | 0.24 | | | | | (0.48 | ) | | | | (0.24 | ) | | | | (0.23 | ) | | | | 4.80 | | | | | (4.54 | ) | | | | 1,081,833 | | | | | 1.06 | (g) | | | | 1.13 | (g) | | | | 4.82 | (h) | | | | 68 | |
Year ended 12/31/17 | | | | 5.07 | | | | | 0.22 | | | | | 0.08 | | | | | 0.30 | | | | | (0.10 | ) | | | | 5.27 | | | | | 6.04 | | | | | 1,277,689 | | | | | 1.01 | (g) | | | | 1.07 | (g) | | | | 4.15 | (h) | | | | 74 | |
Year ended 12/31/16 | | | | 5.00 | | | | | 0.19 | | | | | 0.12 | | | | | 0.31 | | | | | (0.24 | ) | | | | 5.07 | | | | | 6.27 | | | | | 1,284,022 | | | | | 0.99 | (g) | | | | 1.04 | (g) | | | | 3.75 | (h) | | | | 80 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.04%, 0.02%, 0.01% and 0.01% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $1,644,610,033 and 1,693,210,282, $2,177,497,748 and $2,279,114,634, $2,370,164,194 and $2,399,236,376, $2,271,944,419 and $2,153,905,799, $1,798,210,272 and $1,766,445,159 for the years ended December 31, 2020, 2019, 2018, 2017 and 2016, respectively. |
| (e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (f) | Ratios are based on average daily net assets (000’s omitted) of $360,997 and $658,541 for Series I and Series II shares, respectively. |
| (g) | Includes the Fund’s share of the allocated expenses from Invesco Oppenheimer Master Event-Linked Bond Fund and Invesco Oppenheimer Master Loan Fund. |
| (h) | Includes the Fund’s share of the allocated net investment income from Invesco Oppenheimer Master Event-Linked Bond Fund and Invesco Oppenheimer Master Loan Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Notes to Consolidated Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Global Strategic Income Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these consolidated financial statements pertains only to the Fund and the Subsidiary. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund will seek to gain exposure to Regulation S securities primarily through investments in the Invesco Oppenheimer V.I Global Strategic Income Fund (Cayman) Ltd. (the “Subsidiary”), a wholly-owned and controlled subsidiary by the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in Regulation S securities. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is to seek total return.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its consolidated financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Consolidated Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Consolidated Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Consolidated Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the consolidated financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation. |
In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the consolidated financial statements are released to print.
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of the performance of their duties to the Fund and/or the Subsidiary, respectively. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Purchased on a When-Issued and Delayed Delivery Basis – The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
| J. | Treasury Inflation-Protected Securities – The Fund may invest in Treasury Inflation-Protected Securities (“TIPS”). TIPS are fixed income securities whose principal value is periodically adjusted to the rate of inflation. The principal value of TIPS will be adjusted upward or downward, and any increase or decrease in the principal amount of TIPS will be included as interest income in the Consolidated Statement of Operations, even though investors do not receive their principal until maturity. |
| K. | Structured Securities – The Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of underlying securities, currencies, interest rates, commodities, indices or other financial indicators (“reference instruments”). Most structured securities are fixed-income securities that have maturities of three years or less. Structured securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates) and may have return characteristics similar to direct investments in the underlying reference instrument. |
Structured securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instruments. In addition to the credit risk of structured securities and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease as a result of changes in the value of the underlying reference instruments. Changes in the daily value of structured securities are recorded as unrealized gains (losses) in the Consolidated Statement of Operations. When the structured securities mature or are sold, the Fund recognizes a realized gain (loss) on the Consolidated Statement of Operations.
| L. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases |
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Consolidated Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Consolidated Statement of Operations.
| M. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Consolidated Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Consolidated Statement of Assets and Liabilities.
| N. | Futures Contracts – The Fund may enter into futures contracts to equitize the Fund’s cash holdings or to manage exposure to interest rate, equity, commodity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Consolidated Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Consolidated Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Consolidated Statement of Assets and Liabilities. |
| O. | Call Options Purchased and Written – The Fund may write covered call options and/or buy call options. A covered call option gives the purchaser of such option the right to buy, and the writer the obligation to sell, the underlying security or foreign currency at the stated exercise price during the option period. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability in the Consolidated Statement of Assets and Liabilities. The amount of the liability is subsequently “marked-to-market” to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized and unrealized gains and losses on call options written are included in the Consolidated Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised.
When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Consolidated Statement of Assets and Liabilities. The amount of the investment is subsequently “marked-to-market” to reflect the current value of the option purchased. Realized and unrealized gains and losses on call options purchased are included in the Consolidated Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased.
| P. | Put Options Purchased and Written – The Fund may purchase and write put options including options on securities indexes, or foreign currency and/or futures contracts. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option’s underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option’s underlying instrument may be a security, securities index, or a futures contract. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund’s resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option,
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the underlying portfolio securities. The Fund may write put options to earn additional income in the form of option premiums if it expects the price of the underlying instrument to remain stable or rise during the option period so that the option will not be exercised. The risk in this strategy is that the price of the underlying securities may decline by an amount greater than the premium received. Put options written are reported as a liability in the Consolidated Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Consolidated Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities and Option contracts written, respectively. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased.
| Q. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency, commodity or credit risk. Such transactions are agreements between Counterparties. A swap agreement may be negotiated bilaterally and traded over-the-counter (“OTC”) between two parties (“uncleared/OTC”) or, in some instances, must be transacted through a future commission merchant (“FCM”) and cleared through a clearinghouse that serves as a central Counterparty (“centrally cleared swap”). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or provide limits regarding the decline of the Fund’s NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Consolidated Schedule of Investments and cash deposited is recorded on the Consolidated Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Consolidated Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
A total return swap is an agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income generated and capital gains, if any. The unrealized appreciation (depreciation) on total return swaps includes dividends on the underlying securities and financing rate payable from the Counterparty. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Consolidated Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Consolidated Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated Statement of Operations. The Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Consolidated Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Consolidated Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally, an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) includes credit related contingent features which allow Counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
payment of any net liability owed to the Counterparty. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of December 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
| R. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on senior securities and borrowings.
| S. | LIBOR Risk – The Fund may invest in financial instruments that utilize LIBOR as the reference or benchmark rate for variable interest rate calculations. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021, and it is currently anticipated that LIBOR will cease to be published after that time, although there are initiatives underway for the discontinuation to be extended beyond 2021 for certain LIBOR rates. There remains uncertainty regarding the effect of the LIBOR transition process and therefore any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. There is no assurance that the composition or characteristics of any alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; increased difficulty in borrowing or refinancing and diminished effectiveness of any applicable hedging strategies against instruments whose terms currently include LIBOR; and/or costs incurred in connection with temporary borrowings and closing out positions and entering into new agreements. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| T. | Other Risks – The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim. |
The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in exchange-traded funds and commodity-linked derivatives. The Subsidiary, unlike the Fund, may invest without limitation in commodities, commodity-linked derivatives and other securities, such as exchange-traded and commodity-linked notes, that may provide leveraged and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments.
The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| U. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| V. | Collateral – To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets | | Rate | |
| First $200 million | | | 0.750% | |
| Next $200 million | | | 0.720% | |
| Next $200 million | | | 0.690% | |
| Next $200 million | | | 0.660% | |
| Next $200 million | | | 0.600% | |
| Next $4 billion | | | 0.500% | |
| Over $5 billion | | | 0.480% | |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.67%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement excluding certain items discussed below) of Series I shares to 0.84% and Series II shares to 1.09% of the Fund’s average daily net assets (the “expense limits”). Effective June 1, 2021 through June 30, 2021, the Adviser has contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense
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| Invesco Oppenheimer V.I. Global Strategic Income Fund |
on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $521,836.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $146,437 for accounting and fund administrative services and was reimbursed $1,503,794 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Consolidated Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
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| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2020, there were transfers from Level 2 to Level 3 of $93,116, due to lack of availability of market data for these securities.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
Non-U.S. Dollar Denominated Bonds & Notes | | $ | – | | | $ | 365,699,807 | | | $ | 42,878 | | | $ | 365,742,685 | |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 333,970,113 | | | | – | | | | 333,970,113 | |
Asset-Backed Securities | | | – | | | | 70,423,753 | | | | – | | | | 70,423,753 | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 39,011,329 | | | | – | | | | 39,011,329 | |
U.S. Treasury Securities | | | – | | | | 20,338,831 | | | | – | | | | 20,338,831 | |
Preferred Stocks | | | – | | | | 13,587,848 | | | | – | | | | 13,587,848 | |
Variable Rate Senior Loan Interests | | | – | | | | 1,279,362 | | | | 11,193,807 | | | | 12,473,169 | |
Agency Credit Risk Transfer Notes | | | – | | | | 12,043,561 | | | | – | | | | 12,043,561 | |
Investment Companies | | | 640,083 | | | | – | | | | – | | | | 640,083 | |
Common Stocks & Other Equity Interests | | | 150,576 | | | | 78,559 | | | | 19,988 | | | | 249,123 | |
Money Market Funds | | | 105,120,654 | | | | – | | | | – | | | | 105,120,654 | |
Options Purchased | | | – | | | | 13,067,508 | | | | – | | | | 13,067,508 | |
Total Investments in Securities | | | 105,911,313 | | | | 869,500,671 | | | | 11,256,673 | | | | 986,668,657 | |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
Futures Contracts | | | 134,846 | | | | – | | | | – | | | | 134,846 | |
Forward Foreign Currency Contracts | | | – | | | | 26,798,674 | | | | – | | | | 26,798,674 | |
Swap Agreements | | | – | | | | 6,913,090 | | | | – | | | | 6,913,090 | |
| | | | 134,846 | | | | 33,711,764 | | | | – | | | | 33,846,610 | |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | $ | (2,111,913 | ) | | $ | – | | | $ | – | | | $ | (2,111,913 | ) |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (28,489,970 | ) | | | – | | | | (28,489,970 | ) |
|
| |
Options Written | | | – | | | | (5,172,606 | ) | | | – | | | | (5,172,606 | ) |
|
| |
Swap Agreements | | | – | | | | (2,864,983 | ) | | | – | | | | (2,864,983 | ) |
|
| |
| | | (2,111,913 | ) | | | (36,527,559 | ) | | | – | | | | (38,639,472 | ) |
|
| |
Total Other Investments | | | (1,977,067 | ) | | | (2,815,795 | ) | | | – | | | | (4,792,862 | ) |
|
| |
Total Investments | | $ | 103,934,246 | | | $ | 866,684,876 | | | $ | 11,256,673 | | | $ | 981,875,795 | |
|
| |
| * | Forward foreign currency contracts, futures contracts and swap agreements are valued at unrealized appreciation (depreciation). Options written are shown at value. |
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) during the year ended December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
12/31/2019 | | | Purchases at
Cost | | | Proceeds
from Sales | | | Accrued
Discounts/
Premiums | | | Realized
Gain (Loss) | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Transfers
into
Level 3 | | | Transfers
out of
Level 3 | | | Value
12/31/2020 |
Variable Rate Senior Loan Interests | | $ | 66,846 | | | $ | 10,880,000 | | | $ | (66,846 | ) | | $ | 18,335 | | | $ | 29,709 | | | $ | 215,525 | | | $ | 50,238 | | | | $- | | | $11,193,807 |
Non-U.S. Dollar Denominated Bonds & Notes | | | - | | | | - | | | | - | | | | - | | | | (1,011,900 | ) | | | 1,011,900 | | | | 42,878 | | | | - | | | 42,878 |
Common Stocks & Other Equity Interests | | | - | | | | 395,120 | | | | - | | | | - | | | | (3,201,217 | ) | | | 2,826,085 | | | | - | | | | - | | | 19,988 |
Total | | $ | 66,846 | | | $ | 11,275,120 | | | $ | (66,846 | ) | | $ | 18,335 | | | $ | (4,183,408 | ) | | $ | 4,053,510 | | | $ | 93,116 | | | | $- | | | $11,256,673 |
Securities determined to be Level 3 at the end of the reporting period were valued primarily by utilizing quotes from a third-party vendor pricing service. A significant change in third-party pricing information could result in a significantly lower or higher value in Level 3 investments.
NOTE 4–Derivative Investments
The Fund may enter into an ISDA Master Agreement under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Consolidated Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | | | | | | | | | | | | | |
| | | Value | |
| | | | |
| Derivative Assets | | Credit
Risk | | | Currency
Risk | | | Interest Rate Risk | | | Total | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | - | | | $ | - | | | $ | 134,846 | | | $ | 134,846 | |
|
| |
Unrealized appreciation on swap agreements – Centrally Cleared(a) | | | 167,944 | | | | - | | | | 6,007,265 | | | | 6,175,209 | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | - | | | | 26,798,674 | | | | - | | | | 26,798,674 | |
|
| |
Unrealized appreciation on swap agreements – OTC | | | 530,021 | | | | - | | | | 207,860 | | | | 737,881 | |
|
| |
Options purchased, at value – OTC(b) | | | 98,115 | | | | 10,041,948 | | | | 2,927,445 | | | | 13,067,508 | |
|
| |
Total Derivative Assets | | | 796,080 | | | | 36,840,622 | | | | 9,277,416 | | | | 46,914,118 | |
|
| |
Derivatives not subject to master netting agreements | | | (167,944 | ) | | | - | | | | (6,142,111 | ) | | | (6,310,055 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 628,136 | | | $ | 36,840,622 | | | $ | 3,135,305 | | | $ | 40,604,063 | |
|
| |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | |
| | | Value | |
| | | | |
| Derivative Liabilities | | Credit Risk | | | Currency
Risk | | | Interest Rate Risk | | | Total | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | - | | | $ | - | | | $ | (2,111,913 | ) | | $ | (2,111,913 | ) |
|
| |
Unrealized depreciation on swap agreements – Centrally Cleared(a) | | | (516,314 | ) | | | - | | | | (1,793,635 | ) | | | (2,309,949 | ) |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | - | | | | (28,489,970 | ) | | | - | | | | (28,489,970 | ) |
|
| |
Unrealized depreciation on swap agreements – OTC | | | (301,731 | ) | | | - | | | | (253,303 | ) | | | (555,034 | ) |
|
| |
Options written, at value – OTC | | | (423,541 | ) | | | (4,627,782 | ) | | | (121,283 | ) | | | (5,172,606 | ) |
|
| |
Total Derivative Liabilities | | | (1,241,586 | ) | | | (33,117,752 | ) | | | (4,280,134 | ) | | | (38,639,472 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 516,314 | | | | - | | | | 3,905,548 | | | | 4,421,862 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (725,272 | ) | | $ | (33,117,752 | ) | | $ | (374,586 | ) | | $ | (34,217,610 | ) |
|
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Consolidated Statement of Assets and Liabilities. |
| (b) | Options purchased, at value as reported in the Consolidated Schedule of Investments. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of December 31, 2020.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial Derivative Assets | | | | | | Financial Derivative Liabilities | | | | | | Collateral (Received/Pledged) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Counterparty | | Forward
Foreign
Currency
Contracts | | | Options
Purchased | | | Swap
Agreements | | | Total Assets | | | | | | Forward
Foreign
Currency
Contracts | | | Options
Written | | | Swap
Agreements | | | Total
Liabilities | | | Net Value
of
Derivatives | | | Non-Cash | | | Cash | | | Net
Amount | |
|
| |
Bank of America, N.A. | | $ | 4,365,321 | | | $ | 899,455 | | | $ | 136,280 | | | $ | 5,401,056 | | | | | | | $ | (4,363,344 | ) | | $ | (255,173 | ) | | $ | - | | | $ | (4,618,517 | ) | | $ | 782,539 | | | $ | - | | | $ | (782,539 | ) | | $ | - | |
|
| |
Barclays Bank PLC | | | - | | | | - | | | | - | | | | - | | | | | | | | - | | | | - | | | | (13,287 | ) | | | (13,287 | ) | | | (13,287 | ) | | | - | | | | - | | | | (13,287 | ) |
|
| |
Citibank, N.A. | | | 1,316,170 | | | | 287,138 | | | | 24,353 | | | | 1,627,661 | | | | | | | | (1,811,253 | ) | | | (63,301 | ) | | | (21,774 | ) | | | (1,896,328 | ) | | | (268,667 | ) | | | - | | | | 268,667 | | | | - | |
|
| |
Goldman Sachs International | | | 9,371,063 | | | | 6,491,098 | | | | 95,446 | | | | 15,957,607 | | | | | | | | (7,177,639 | ) | | | (2,005,913 | ) | | | - | | | | (9,183,552 | ) | | | 6,774,055 | | | | - | | | | (3,150,000 | ) | | | 3,624,055 | |
|
| |
J.P. Morgan Chase Bank, N.A. | | | 9,931,382 | | | | 2,693,342 | | | | 703,399 | | | | 13,328,123 | | | | | | | | (11,699,130 | ) | | | (1,702,952 | ) | | | (296,702 | ) | | | (13,698,784 | ) | | | (370,661 | ) | | | - | | | | - | | | | (370,661 | ) |
|
| |
Morgan Stanley and Co. International PLC | | | 1,378,835 | | | | 1,473,725 | | | | - | | | | 2,852,560 | | | | | | | | (2,287,690 | ) | | | (419,148 | ) | | | - | | | | (2,706,838 | ) | | | 145,722 | | | | - | | | | - | | | | 145,722 | |
|
| |
Natwest Markets PLC | | | - | | | | - | | | | - | | | | - | | | | | | | | (7,435 | ) | | | - | | | | - | | | | (7,435 | ) | | | - | | | | - | | | | - | | | | - | |
|
| |
Royal Bank of Canada | | | 200,618 | | | | - | | | | - | | | | 200,618 | | | | | | | | (595,295 | ) | | | - | | | | - | | | | (595,295 | ) | | | (394,677 | ) | | | - | | | | 394,677 | | | | - | |
|
| |
Standard Chartered Bank PLC | | | 235,285 | | | | 1,222,750 | | | | - | | | | 1,458,035 | | | | | | | | (548,184 | ) | | | (649,224 | ) | | | (253,303 | ) | | | (1,450,711 | ) | | | 7,324 | | | | - | | | | - | | | | 7,324 | |
|
| |
Toronto-Dominion Bank (The) | | | - | | | | - | | | | - | | | | - | | | | | | | | - | | | | (76,895 | ) | | | - | | | | (76,895 | ) | | | - | | | | - | | | | - | | | | - | |
|
| |
Total | | $ | 26,798,674 | | | $ | 13,067,508 | | | $ | 959,478 | | | $ | 40,825,660 | | | | | | | $ | (28,489,970 | ) | | $ | (5,172,606 | ) | | $ | (585,066 | ) | | $ | (34,247,642 | ) | | $ | 6,578,018 | | | $ | - | | | $ | (3,269,195 | ) | | $ | 3,308,823 | |
|
| |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | | | | | | | | | |
| | | Location of Gain (Loss) on Consolidated Statement of Operations | |
| | | | |
| | | Credit Risk | | | Currency Risk | | | Equity Risk | | | Interest Rate Risk | | | Total | |
|
| |
Realized Gain (Loss): | | | | | | | | | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | - | | | $ | (11,337,981 | ) | | $ | - | | | $ | - | | | $ | (11,337,981 | ) |
|
| |
Futures contracts | | | - | | | | - | | | | - | | | | 11,844,277 | | | | 11,844,277 | |
|
| |
Options purchased(a) | | | - | | | | 2,560,458 | | | | (1,630,713 | ) | | | (4,198,151 | ) | | | (3,268,406 | ) |
|
| |
Options written | | | - | | | | (21,901,143 | ) | | | 1,034,512 | | | | (51,895,911 | ) | | | (72,762,542 | ) |
|
| |
Swap agreements | | | 7,903,809 | | | | - | | | | - | | | | 19,228,289 | | | | 27,132,098 | |
|
| |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | |
| | | Location of Gain (Loss) on Consolidated Statement of Operations | |
| | | | |
| | | Credit Risk | | | Currency Risk | | | Equity Risk | | | Interest Rate Risk | | | Total | |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | - | | | $ | 8,632,803 | | | $ | - | | | $ | - | | | $ | 8,632,803 | |
|
| |
Futures contracts | | | - | | | | - | | | | - | | | | (823,291 | ) | | | (823,291 | ) |
|
| |
Options purchased(a) | | | 498,381 | | | | 1,861,434 | | | | 2,609,109 | | | | (823,724 | ) | | | 4,145,200 | |
|
| |
Options written | | | (110,548 | ) | | | (2,541,025 | ) | | | (847,115 | ) | | | (395,865 | ) | | | (3,894,553 | ) |
|
| |
Swap agreements | | | 1,742,556 | | | | - | | | | - | | | | 977,565 | | | | 2,720,121 | |
|
| |
Total | | $ | 10,034,198 | | | $ | (22,725,454 | ) | | $ | 1,165,793 | | | $ | (26,086,811 | ) | | $ | (37,612,274 | ) |
|
| |
| (a) | Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) of investment securities. |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Forward
Foreign
Currency
Contracts | | | Futures
Contracts | | | Swaptions
Purchased | | | Foreign
Currency
Options
Purchased | | | Swaptions
Written | | | Foreign
Currency
Options
Written | | | Swap
Agreements | |
Average notional value | | $ | 2,156,165,866 | | | $ | 544,361,362 | | | $ | 1,372,389,487 | | | $ | 385,625,271 | | | $ | 740,796,897 | | | $ | 608,347,307 | | | $ | 2,678,576,302 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Unfunded Loan Commitments
Pursuant to the terms of certain Senior Loan agreements, the Fund held the following unfunded loan commitments as of December 31, 2020. The Fund intends to reserve against such contingent obligations by designating cash, liquid securities and liquid Senior Loans as a reserve.
| | | | | | | | | | | | |
| Borrower | | Type | | | Principal
Amount | | | Value | |
Avianca Holdings S.A. | | | Term Loan A-1 | | | $ | 1,359,349 | | | $ | 1,359,349 | |
Avianca Holdings S.A. | | | Term Loan A-2 | | | | 1,089,997 | | | | 1,089,997 | |
| | | | | | | | | | | $ | 2,449,346 | |
NOTE 8–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 55,826,955 | | | $ | 52,269,320 | |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | |
Tax Components of Net Assets at Period-End: | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 43,016,327 | |
|
| |
Net unrealized appreciation – investments | | | 24,406,251 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 1,145,633 | |
|
| |
Temporary book/tax differences | | | (169,103 | ) |
|
| |
Capital loss carryforward | | | (227,129,867 | ) |
|
| |
Shares of beneficial interest | | | 1,183,411,311 | |
|
| |
Total net assets | | $ | 1,024,680,552 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to straddle losses deferred and derivative instruments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2020, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | $ | 112,395,747 | | | $ | 114,734,120 | | | $ | 227,129,867 | |
| * | Capital loss carryforward is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
NOTE 9–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $3,063,567,107 and $3,281,561,500, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $70,910,716 and $54,096,307, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | | $ 95,995,524 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (71,589,273 | ) |
|
| |
Net unrealized appreciation of investments | | | $ 24,406,251 | |
|
| |
Cost of investments for tax purposes is $959,122,031.
NOTE 10–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency gain loss, income from swap agreements, income from subsidiary, straddle losses deferred and partnership transactions, on December 31, 2020, undistributed net investment income was increased by $3,232,428, undistributed net realized gain (loss) was decreased by $3,231,930 and shares of beneficial interest was decreased by $498. This reclassification had no effect on the net assets of the Fund.
NOTE 11–Share Information
| | | | | | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended | | | | | | Year ended | |
| | | December 31, 2020(a) | | | | | | December 31, 2019 | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | | | | | |
Series I | | | 7,198,242 | | | $ | 34,167,624 | | | | | | | | 18,615,624 | | | $ | 91,652,597 | |
Series II | | | 2,731,449 | | | | 13,393,044 | | | | | | | | 5,575,798 | | | | 28,193,986 | |
| | | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | | | | | |
Series I | | | 4,591,807 | | | | 21,122,311 | | | | | | | | 3,199,572 | | | | 15,389,942 | |
Series II | | | 7,290,891 | | | | 34,704,644 | | | | | | | | 7,435,359 | | | | 36,879,378 | |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | | | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended December 31, 2020(a) | | | | | | Year ended December 31, 2019 | |
| | | | | | | | | | | | |
| | | Shares | | | Amount | | | | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | | | | | |
Series I | | | (16,117,197 | ) | | $ | (75,646,927 | ) | | | | | | | (16,669,750 | ) | | $ | (81,650,513 | ) |
|
| |
Series II | | | (21,278,732 | ) | | | (102,712,933 | ) | | | | | | | (94,815,980 | ) | | | (475,861,262 | ) |
|
| |
Net increase (decrease) in share activity | | | (15,583,540 | ) | | $ | (74,972,237 | ) | | | | | | | (76,659,377 | ) | | $ | (385,395,872 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 58% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 12–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these consolidated financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 13–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Global Strategic Income Fund to Invesco V.I. Global Strategic Income Fund.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Global Strategic Income Fund
Opinion on the Financial Statements
We have audited the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, of Invesco Oppenheimer V.I. Global Strategic Income Fund and its subsidiary (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related consolidated statement of operations for the year ended December 31, 2020, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the consolidated financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The consolidated financial statements of Invesco Oppenheimer V.I. Global Strategic Income Fund and its subsidiary (formerly known as Oppenheimer Global Strategic Income Fund/VA) as of and for the year ended December 31, 2018 and the consolidated financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the consolidated financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those consolidated financial statements and consolidated financial highlights.
Basis for Opinion
These consolidated financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent, brokers and agent banks; when replies were not received from brokers or agent banks, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 17, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| �� | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,086.50 | | $4.30 | | $1,021.01 | | $4.17 | | 0.82% |
Series II | | 1,000.00 | | 1,084.90 | | 5.61 | | 1.019.76 | | 5.43 | | 1.07 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Corporate Dividends Received Deduction* | | | 1.74 | % |
| | U.S. Treasury Obligations* | | | 3.35 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée | | N/A | | N/A |
| | | | | |
| | | | | Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | | | |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco Oppenheimer V.I. Global Strategic Income Fund |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Government Money Fund |
The Fund provides a complete list of its holdings in various monthly and quarterly regulatory filings. The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) monthly on Form N-MFP. For the second and fourth quarters, the list appears in the Fund’s semiannual and annual reports to shareholders. The Fund’s Form N-MFP filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-MFP, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
| | | | |
NOT FDC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Invesco Distributors, Inc. | | | | O-VIGMKT-AR-1 |
Management’s Discussion
| | | | |
| Fund Information | | | | |
This annual report for Invesco Oppenheimer V.I. Government Money Fund (the Fund) covers the year ended December 31, 2020. As of December 31, 2020, the Fund’s net assets totaled $365 million. As of the same date, the Fund’s weighted average maturity was 12 days and the Fund’s weighted average life was 117 days. Weighted average maturity (WAM) is an average of the maturities of all securities held in the portfolio, weighted by each security’s percentage of net assets. The days to maturity for WAM is the lower of the stated maturity date or next interest rate reset date. WAM reflects how a portfolio would react to interest rate changes. Weighted average life (WAL) is an average of all the maturities of all securities held in the portfolio, weighted by each security’s percentage of net assets. The days to maturity for WAL is the lower of the stated maturity date or next demand feature date. WAL reflects how a portfolio would react to deteriorating credit (widening spreads) or tightening liquidity conditions. | | | | |
Market conditions affecting money market funds
After cutting rates three times in the second half of 2019, 2020 began with the federal funds target range at 1.50% to 1.75%.1 As concerns over the COVID-19 pandemic began to increase dramatically during the first quarter of 2020, the US Federal Reserve (the Fed) initially cut rates by 50 basis points, to 1.00% to 1.25% at the beginning of March.1 This was followed by the Fed decisively moving towards a zero interest rate monetary policy in the middle of the month. As of March 15, 2020, the federal funds rate target range was 0.00% to 0.25%, where it was kept for the remainder of 2020.1
The Fed cited dysfunctional short-term funding markets and the potential for greater longer-term damage to markets and the broader economy as risk markets, particularly equities, racked up losses not seen since the 2008-2009 financial crisis. The Fed engaged in similar measures that it implemented during the 2008-2009 crisis to support markets and the broader economy. The Fed created lending facilities within the commercial paper market, supported prime money market funds directly, and purchased Treasury bonds and Agency Mortgage Backed Securities (MBS) across the maturity spectrum. The Fed also made clear its intention to purchase corporate bonds as part of its massive liquidity injection to help support markets and the economy.
Following the market volatility in March, net Treasury bill issuance spiked dramatically and total bills outstanding nearly doubled, due to the extreme demand for high quality government assets and a general “flight to quality” in the market. Treasury bills outstanding remained elevated through the end of the year, ending the year at $4.964 trillion.2
At the close of the year, it is Invesco Global Liquidity’s view that the Federal Open Market Committee (FOMC) monetary policy directive would remain on hold for the year 2021. Federal Reserve Chairman Jerome Powell has indicated the current zero interest rate policy will likely remain in place for the foreseeable future.
For over 35 years, Invesco Global Liquidity has been a core business for Invesco. We believe in a disciplined investment process, high credit quality solutions, distinguished client engagement and consistent performance.
We appreciate your continued investment in Invesco Oppenheimer V.I. Government Money Fund.
1 Source: US Federal Reserve
2 Source: Bloomberg LP
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Team managed by Invesco Advisers, Inc.
You could lose money by investing in the Fund. Although the Fund seeks to preserve your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
| | | | |
Portfolio Composition by Maturity* | |
In days, as of 12/31/2020 | | | | |
| |
| 1-7 | | | 52.7% | |
| 8-30 | | | 0.0 | |
| 31-60 | | | 3.3 | |
| 61-90 | | | 4.4 | |
| 91-180 | | | 9.9 | |
| 181+ | | | 29.7 | |
*The number of days to maturity of each holding is determined in accordance with the provisions of Rule 2a-7 under the Investment Company Act of 1940.
Invesco Oppenheimer V.I. Government Money Fund
Supplemental Information
Invesco Oppenheimer V.I. Government Money Fund’s investment objective is to seek income consistent with stability of principal.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
Invesco Oppenheimer V.I. Government Money Fund
Schedule of Investments
December 31, 2020
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal Amount
(000) | | | Value | |
| |
U.S. Government Sponsored Agency Securities-38.94% | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank (FFCB)-4.39% | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank (SOFR + 0.08%)(a) | | | 0.16% | | | | 03/10/2022 | | | $ | 3,000 | | | $ | 3,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.19%)(a) | | | 0.27% | | | | 07/14/2022 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.07%)(a) | | | 0.15% | | | | 08/11/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.09%)(a) | | | 0.17% | | | | 10/07/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
| | | | | | | | | | | | | | | 16,000,000 | |
| |
| | | | |
Federal Home Loan Bank (FHLB)-12.61% | | | | | | | | | | | | | | | | |
Federal Home Loan Bank | | | 1.38% | | | | 02/18/2021 | | | | 3,000 | | | | 3,003,498 | |
| |
Federal Home Loan Bank (SOFR + 0.04%)(a) | | | 0.12% | | | | 02/25/2021 | | | | 4,000 | | | | 4,000,000 | |
| |
Federal Home Loan Bank(b) | | | 0.45% | | | | 03/08/2021 | | | | 10,000 | | | | 9,991,750 | |
| |
Federal Home Loan Bank | | | 0.38% | | | | 03/11/2021 | | | | 3,000 | | | | 2,999,458 | |
| |
Federal Home Loan Bank (SOFR + 0.11%)(a) | | | 0.19% | | | | 03/25/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Bank (3 mo. USD LIBOR - 0.11%)(a) | | | 0.12% | | | | 04/09/2021 | | | | 3,000 | | | | 3,000,000 | |
| |
Federal Home Loan Bank (3 mo. USD LIBOR - 0.14%)(a) | | | 0.08% | | | | 04/19/2021 | | | | 4,000 | | | | 4,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.07%)(a) | | | 0.15% | | | | 04/21/2021 | | | | 7,000 | | | | 7,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.16%)(a) | | | 0.24% | | | | 05/07/2021 | | | | 4,000 | | | | 4,000,350 | |
| |
Federal Home Loan Bank (SOFR + 0.09%)(a) | | | 0.17% | | | | 09/10/2021 | | | | 5,000 | | | | 5,000,000 | |
| |
| | | | | | | | | | | | | | | 45,995,056 | |
| |
| | | | |
Federal Home Loan Mortgage Corp. (FHLMC)-4.11% | | | | | | | | | | | | | | | | |
Federal Home Loan Mortgage Corp. (SOFR + 0.18%)(a) | | | 0.26% | | | | 12/13/2021 | | | | 15,000 | | | | 15,000,000 | |
| |
| | | | |
Federal National Mortgage Association (FNMA)-17.83% | | | | | | | | | | | | | | | | |
Federal National Mortgage Association (SOFR + 0.21%)(a) | | | 0.29% | | | | 07/01/2021 | | | | 25,000 | | | | 25,000,000 | |
| |
Federal National Mortgage Association (SOFR + 0.23%)(a) | | | 0.34% | | | | 07/06/2021 | | | | 10,000 | | | | 10,000,000 | |
| |
Federal National Mortgage Association (SOFR + 0.30%)(a) | | | 0.39% | | | | 01/07/2022 | | | | 20,000 | | | | 20,000,000 | |
| |
Federal National Mortgage Association (SOFR + 0.22%)(a) | | | 0.30% | | | | 03/16/2022 | | | | 10,000 | | | | 10,000,000 | |
| |
| | | | | | | | | | | | | | | 65,000,000 | |
| |
Total U.S. Government Sponsored Agency Securities (Cost $141,995,056) | | | | | | | | | | | | | | | 141,995,056 | |
| |
| | | | |
U.S. Treasury Securities-8.23% | | | | | | | | | | | | | | | | |
U.S. Treasury Bills-6.31%(b) | | | | | | | | | | | | | | | | |
U.S. Treasury Bills | | | 0.08% | | | | 02/02/2021 | | | | 5,000 | | | | 4,999,689 | |
| |
U.S. Treasury Bills | | | 0.10% | | | | 04/01/2021 | | | | 4,000 | | | | 3,999,050 | |
| |
U.S. Treasury Bills | | | 0.09% | | | | 04/13/2021 | | | | 5,000 | | | | 4,998,725 | |
| |
U.S. Treasury Bills | | | 0.10% | | | | 04/29/2021 | | | | 4,000 | | | | 3,998,754 | |
| |
U.S. Treasury Bills | | | 0.10% | | | | 06/01/2021 | | | | 5,000 | | | | 4,998,008 | |
| |
| | | | | | | | | | | | | | | 22,994,226 | |
| |
| | | | |
U.S. Treasury Notes-1.92% | | | | | | | | | | | | | | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.30%)(a) | | | 0.39% | | | | 10/31/2021 | | | | 4,000 | | | | 4,001,300 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.15%)(a) | | | 0.24% | | | | 01/31/2022 | | | | 2,000 | | | | 1,999,634 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(a) | | | 0.15% | | | | 10/31/2022 | | | | 1,000 | | | | 999,907 | |
| |
| | | | | | | | | | | | | | | 7,000,841 | |
| |
Total U.S. Treasury Securities (Cost $29,995,067) | | | | | | | | | | | | | | | 29,995,067 | |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-47.17%
(Cost $171,990,123) | | | | | | | | 171,990,123 | |
| |
| | | | | | | | | | | | | | | | |
| | | | | | | | | Repurchase
Amount | | | | |
Repurchase Agreements-53.76%(c) | | | | | | | | | | | | | | | | |
Credit Agricole Corporate & Investment Bank, agreement dated 12/31/2020, maturing value of $80,000,711 (collateralized by a domestic agency mortgage-backed security valued at $81,600,726; 2.00%; 11/20/2050) | | | 0.08% | | | | 01/04/2021 | | | | 80,000,711 | | | | 80,000,000 | |
| |
RBC Dominion Securities Inc., agreement dated 12/31/2020, maturing value of $76,000,676 (collateralized by U.S. Treasury obligations and domestic agency mortgage-backed securities valued at $77,520,693; 0.00% - 3.50%; 01/15/2021 - 12/20/2050) | | | 0.08% | | | | 01/04/2021 | | | | 76,000,676 | | | | 76,000,000 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Government Money Fund
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Repurchase
Amount | | | Value | |
TD Securities (USA) LLC, term agreement dated 12/30/2020, maturing value of $40,000,856 (collateralized by domestic agency mortgage-backed securities valued at $40,800,624; 3.50%; 02/20/2050 - 09/20/2050)(d) | | | 0.11% | | | | 01/06/2021 | | | $ | 40,000,856 | | | $ | 40,000,000 | |
| |
Total Repurchase Agreements (Cost $196,000,000) | | | | | | | | | | | | | | | 196,000,000 | |
| |
TOTAL INVESTMENTS IN SECURITIES(e)-100.93% (Cost $367,990,123) | | | | | | | | | | | | | | | 367,990,123 | |
| |
OTHER ASSETS LESS LIABILITIES-(0.93)% | | | | | | | | | | | | | | | (3,374,865 | ) |
| |
NET ASSETS-100.00% | | | | | | | | | | | | | | $ | 364,615,258 | |
| |
Investment Abbreviations:
LIBOR -London Interbank Offered Rate
SOFR -Secured Overnight Financing Rate
USD -U.S. Dollar
Notes to Schedule of Investments:
| (a) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (b) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (c) | Principal amount equals value at period end. See Note 1I. |
| (d) | The Fund may demand payment of the term repurchase agreement upon one to seven business days’ notice depending on the timing of the demand. |
| (e) | Also represents cost for federal income tax purposes. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Government Money Fund
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, excluding repurchase agreements, at value and cost | | $ | 171,990,123 | |
| |
Repurchase agreements, at value and cost | | | 196,000,000 | |
| |
Cash | | | 786,057 | |
| |
Receivable for: | | | | |
Fund shares sold | | | 964,163 | |
| |
Interest | | | 82,765 | |
| |
Fund expenses absorbed | | | 114,872 | |
| |
Total assets | | | 369,937,980 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 4,999,689 | |
| |
Fund shares reacquired | | | 7,546 | |
| |
Dividends | | | 3,273 | |
| |
Accrued fees to affiliates | | | 200,057 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 1,239 | |
| |
Accrued operating expenses | | | 110,918 | |
| |
Total liabilities | | | 5,322,722 | |
| |
Net assets applicable to shares outstanding | | $ | 364,615,258 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 364,518,324 | |
| |
Distributable earnings | | | 96,934 | |
| |
| | $ | 364,615,258 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 364,605,255 | |
| |
Series II | | $ | 10,003 | |
| |
| |
Shares outstanding, no par value, unlimited number of shares authorized: | | | | |
Series I | | | 364,478,668 | |
| |
Series II | | | 10,000 | |
| |
Series I: | | | | |
Net asset value and offering price per share | | $ | 1.00 | |
| |
Series II: | | | | |
Net asset value and offering price per share | | $ | 1.00 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest | | $ | 4,141,581 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 5,140,540 | |
| |
Administrative services fees | | | 587,362 | |
| |
Custodian fees | | | 15,705 | |
| |
Distribution fees - Series II | | | 26 | |
| |
Transfer agent fees | | | 7,873 | |
| |
Trustees’ and officers’ fees and benefits | | | 29,343 | |
| |
Reports to shareholders | | | 17,350 | |
| |
Professional services fees | | | 70,714 | |
| |
Other | | | 14,467 | |
| |
Total expenses | | | 5,883,380 | |
| |
Less: Fees waived and expenses reimbursed | | | (2,887,765 | ) |
| |
Net expenses | | | 2,995,615 | |
| |
Net investment income | | | 1,145,966 | |
| |
Net realized gain from unaffiliated investment securities | | | 90,321 | |
| |
Net increase in net assets resulting from operations | | $ | 1,236,287 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Government Money Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 1,145,966 | | | $ | 21,081,559 | |
| |
Net realized gain | | | 90,321 | | | | 10,320 | |
| |
Net increase in net assets resulting from operations | | | 1,236,287 | | | | 21,091,879 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (1,145,947 | ) | | | (21,080,865 | ) |
| |
Series II | | | (19 | ) | | | (78 | ) |
| |
Total distributions from distributable earnings | | | (1,145,966 | ) | | | (21,080,943 | ) |
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (5,244,425 | ) | | | (2,685,977,149 | ) |
| |
Series II | | | - | | | | 10,000 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (5,244,425 | ) | | | (2,685,967,149 | ) |
| |
Net increase (decrease) in net assets | | | (5,154,104 | ) | | | (2,685,956,213 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 369,769,362 | | | | 3,055,725,575 | |
| |
End of year | | $ | 364,615,258 | | | $ | 369,769,362 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Government Money Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(realized) | | Total from
investment
operations | | Dividends from net investment income | | Net asset
value, end
of period | | Total
return(b) | | Net assets,
end of period (000’s omitted) | | Ratio of
expenses
to average net assets
with fee waivers
and/or expenses
absorbed | | Ratio of
expenses
to average net
assets without fee waivers
and/or expenses
absorbed(c) | | Ratio of net investment
income
to average
net assets |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | $1.00 | | | | | $0.00 | | | | | $ 0.00 | | | | | $0.00 | | | | | $(0.00) | | | | | $1.00 | | | | | 0.22 | % | | | | $ 364,605 | | | | | 0.24 | %(d) | | | | 0.48 | %(d) | | | | 0.09 | %(d) |
Year ended 12/31/19 | | | | 1.00 | | | | | 0.02 | | | | | 0.00 | | | | | 0.02 | | | | | (0.02) | | | | | 1.00 | | | | | 1.71 | | | | | 369,759 | | | | | 0.50 | | | | | 0.54 | | | | | 1.82 | |
Year ended 12/31/18 | | | | 1.00 | | | | | 0.01 | | | | | 0.00 | | | | | 0.01 | | | | | (0.01) | | | | | 1.00 | | | | | 1.35 | | | | | 3,055,726 | | | | | 0.50 | | | | | 0.56 | | | | | 1.54 | |
Year ended 12/31/17 | | | | 1.00 | | | | | 0.00 | | | | | (0.00 | ) | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.39 | | | | | 425,604 | | | | | 0.50 | | | | | 0.59 | | | | | 0.39 | |
Year ended 12/31/16 | | | | 1.00 | | | | | 0.00 | | | | | (0.00 | ) | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.01 | | | | | 541,970 | | | | | 0.35 | | | | | 0.55 | | | | | 0.01 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 1.00 | | | | | 0.00 | | | | | 0.00 | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.17 | | | | | 10 | | | | | 0.29 | (d) | | | | 0.73 | (d) | | | | 0.04 | (d) |
Period ended 12/31/19(e) | | | | 1.00 | | | | | 0.01 | | | | | 0.00 | | | | | 0.01 | | | | | (0.01) | | | | | 1.00 | | | | | 0.78 | | | | | 10 | | | | | 0.72 | (f) | | | | 0.72 | (f) | | | | 1.61 | (f) |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Ratios are based on average daily net assets (000’s omitted) of $1,236,603 and $10 for Series I and Series II shares, respectively. |
| (e) | Commencement date after the close of business on May 24, 2019. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Government Money Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Government Money Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek income consistent with stability of principal.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations - The Fund’s securities are recorded on the basis of amortized cost which approximates value as permitted by Rule 2a-7 under the 1940 Act. This method values a security at its cost on the date of purchase and, thereafter, assumes a constant amortization to maturity of any premiums or accretion of any discounts. |
Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
| B. | Securities Transactions and Investment Income - Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination - For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions - Distributions from net investment income, if any, are declared daily and paid monthly to separate accounts of participating insurance companies. Distributions from net realized gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes - The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses - Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
Invesco Oppenheimer V.I. Government Money Fund
| I. | Repurchase Agreements - The Fund may enter into repurchase agreements. Collateral on repurchase agreements, including the Fund’s pro-rata interest in joint repurchase agreements, is taken into possession by the Fund upon entering into the repurchase agreement. Collateral consisting of U.S. Government Securities and U.S. Government Sponsored Agency Securities is marked to market daily to ensure its market value is at least 102% of the sales price of the repurchase agreement. The investments in some repurchase agreements, pursuant to procedures approved by the Board of Trustees, are through participation with other mutual funds, private accounts and certain non-registered investment companies managed by the investment adviser or its affiliates (“Joint repurchase agreements”). The principal amount of the repurchase agreement is equal to the value at period-end. If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, the Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the collateral and loss of income. |
| J. | Other Risks - Investments in obligations issued by agencies and instrumentalities of the U.S. Government may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the Fund may not be able to recover its investment in such issuer from the U.S. Government. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
First $500 million | | | 0.450 | % |
Next $500 million | | | 0.425 | |
Next $500 million | | | 0.400 | |
Over $1.5 billion | | | 0.375 | |
*The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser.
For the year ended December 31, 2020, the effective advisory fees incurred by the Fund was 0.42%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a Sub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Series I shares to 0.50% and Series II shares to 0.75% of the Fund’s average daily net assets (the “expense limits”). Effective June 1, 2021 through June 30, 2021, the Adviser agreed to limit expenses of Series I shares to 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual operating expenses after fee waivers and/or expense reimbursements to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2021. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
The Adviser and/or Invesco Distributors, Inc., (“IDI”) voluntarily agreed to waive fees and/or reimburse expenses in order to increase the Fund’s yield. Voluntary fee waivers and/or reimbursements may be modified at any time upon consultation with the Board of Trustees without further notice to investors.
For the year ended December 31, 2020, Invesco voluntarily waived advisory fees of $2,887,745 and reimbursed class level expenses of $20 for Series II shares in order to increase the Fund’s yield.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $551,894 for accounting and fund administrative services and was reimbursed $35,468 for fees paid to insurance companies. Also, Invesco has entered into a sub-administration agreement whereby The Bank of New York Mellon (“BNY Mellon”) serves as custodian and fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with IDI to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
Invesco Oppenheimer V.I. Government Money Fund
| | Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of December 31, 2020, all of the securities in this Fund were valued based on Level 2 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with BNY Mellon, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 6–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 1,135,576 | | | $ | 21,080,943 | |
| |
Long-term capital gain | | | 10,390 | | | | - | |
Total distributions | | $ | 1,145,966 | | | $ | 21,080,943 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 188,180 | |
| |
Temporary book/tax differences | | | (91,246 | ) |
| |
Shares of beneficial interest | | | 364,518,324 | |
| |
Total net assets | | $ | 364,615,258 | |
| |
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 7–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of distributions, on December 31, 2020, undistributed net investment income was increased by $100,215 and undistributed net realized gain was decreased by $100,215. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 8–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | | | | Years ended December 31, | | | | |
| | | | |
| | | 2020(a) | | | | | | 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,362,230,625 | | | $ | 2,362,230,625 | | | | 2,074,144,735 | | | $ | 2,074,144,735 | |
| |
Series II(b) | | | - | | | | - | | | | 10,000 | | | | 10,000 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,144,201 | | | | 1,144,201 | | | | 23,445,418 | | | | 23,445,418 | |
| |
Series II | | | - | | | | - | | | | - | | | | - | |
| |
Invesco Oppenheimer V.I. Government Money Fund
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | | | | Years ended December 31, | | | | |
| | | | |
| | | 2020(a) | | | | | | 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,368,619,251 | ) | | $ | (2,368,619,251 | ) | | | (4,783,567,302 | ) | | $ | (4,783,567,302 | ) |
| |
Series II | | | - | | | | - | | | | - | | | | - | |
| |
Net increase (decrease) in share activity | | | (5,244,425 | ) | | $ | (5,244,425) | | | | (2,685,967,149 | ) | | $ | (2,685,967,149 | ) |
| |
| (a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 89% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with the entity whereby the entity sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to the entity, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by the entity are also owned beneficially. |
| (b) | Commencement date after the close of business on May 24, 2019. |
NOTE 9–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 10–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Government Money Fund to Invesco V.I. U.S. Government Money Portfolio.
Invesco Oppenheimer V.I. Government Money Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Government Money Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Government Money Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the periods indicated in the table below (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2020 and the financial highlights for each of the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.
|
| Financial Highlights |
For the year ended December 31, 2020 and the year ended December 31, 2019 for Series I. |
For the year ended December 31, 2020 and the period May 24, 2019 (commencement of operations) through December 31, 2019 for Series II. |
The financial statements of Invesco Oppenheimer V.I. Government Money Fund (formerly known as Oppenheimer Government Money Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco Oppenheimer V.I. Government Money Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
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| | | | | ACTUAL | | HYPOTHETICAL
(5% annual return before expenses) | | |
| Class | | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,000.10 | | $1.06 | | $1,024.08 | | $1.07 | | 0.21% |
Series II | | 1,000.00 | | 1,000.10 | | 1.11 | | 1,024.03 | | 1.12 | | 0.22 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco Oppenheimer V.I. Government Money Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 10,390 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 0.00 | % |
Business Interest Income* | | | 91.63 | % |
U.S. Treasury Obligations* | | | 39.60 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
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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 | | 2007 | | 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) | | 197 | | 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. |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco Oppenheimer V.I. Government Money Fund
Trustees and Officers–(continued)
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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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
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Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
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Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian Bank of New York Mellon 2 Hanson Place Brooklyn, NY 11217-1431 |
Invesco Oppenheimer V.I. Government Money Fund
| | | | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | Invesco Oppenheimer V.I. International Growth Fund |
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
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| Invesco Distributors, Inc. | | O-VIIGR-AR-1 |
Management’s Discussion of Fund Performance
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| | | Performance summary For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. International Growth Fund (the Fund) outperformed the MSCI All Country World ex-USA Index. | |
| | Your Fund’s long-term performance appears later in this report. | |
| | | Fund vs. Indexes | | | | |
| | Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
| | | Series I Shares | | | 21.50 | % |
| | | Series II Shares | | | 21.04 | |
| | | MSCI All Country World ex-USA Indexq | | | 10.65 | |
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| | Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your fund
Global equity markets started the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global equity markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. The US bull market came to an abrupt end, while global equity markets also fell sharply. As fear of a worldwide recession increased, central banks around the world took aggressive action to support both local markets and the global economy.
Despite the continuing global spread of COVID-19, many countries achieved some success in controlling the spread and were able to slowly re-open their economies. Global equity markets benefited from government policy responses to the crisis, which were swift and encouraging. Many economies received fiscal stimulus and very significant monetary stimulus. The massive monetary policy responses created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first quarter.
Despite a correction in September, global equity stocks finished the third quarter in positive territory after posting strong gains in July and August. Building on progress made in the latter part of the second quarter, many countries were able to continue reducing pandemic-related stringency protocols. As a result, the “green shoots” we saw at the end of the second quarter grew and flourished into the third quarter, as many countries experienced a strong economic rebound.
At the end of the year, global equity markets again posted gains as good news about COVID-19 vaccines outweighed concerns about sharply rising infection rates and tightening social restrictions. In most global regions, equity market leadership shifted as value stocks outperformed growth stocks. Sectors that had been severely affected by the pandemic, including energy and financials, were among the fourth quarter’s top performers. Emerging market equities, which posted
robust gains amplified by US dollar weakness, outperformed developed market equities for the year.
We identify structural growth trends in the global economy, investing in companies that can monetize them sustainably for many years – often decades. We buy these companies when they are trading at attractive valuations and hold them in the portfolio for a long period of time to benefit from the compounding of the returns they produce. This is a discipline that we have been following for over two decades.
The Fund delivered strong absolute and relative returns for the year ending December 31, 2020. The Fund’s quality-oriented portfolio provided downside protection during the dramatic COVID-19-related sell-off in the first quarter of 2020 relative to the MSCI All Country World ex-USA Index and participated very well in the market rallies that started in March and continued through the end of the year.
The Fund performed most strongly in the information technology sector as a result of our usual overweight to the sector and in the financials and energy sectors as a result of our usual underweight exposures. The only two sectors in which the Fund underperformed on a relative basis during the year were in the materials and communication services sectors due to stock selection.
The three largest contributors to absolute performance during the year were ASML Holding, Taiwan Semiconductor Manufacturing and Hermès International.
ASML Holding, a Dutch company, makes the equipment needed for producing semiconductors. ASML is the only supplier of the extreme ultraviolet lithography equipment that is required to produce the next generation of semiconductor chips. In our opinion, the stock has reacted favorably to a growing appreciation of the company’s growth potential.
Taiwan Semiconductor Manufacturing, more commonly known as TSMC, has become the dominant player in the semiconductor foundry industry. The need for semiconductors continues to proliferate as the “internet of things” becomes a reality and we digitize more of our business and personal activities. The complexity and capital intensity of high-
end semiconductor production has highly concentrated the industry. It is now, in effect, an oligopoly. TSMC has the lion’s share and therefore captures a greater share of the profit pool in the industry.
Hermès International is a leading luxury goods producer and perhaps the strictest brand curator in the industry. Hermès never has a sale, increases production very slowly, and raises prices inexorably. Hermès has begun to reopen stores in Asia after their COVID-19 closure and has experienced strong demand in them. The share price reacted favorably to this news.
The three largest detractors from absolute performance for the year were Hitachi, ICICI Bank and Airbus.
Hitachi is a Japanese company that has some industrial component and services businesses that are very interesting to us and other legacy businesses that we think are completely awful. Like most companies, Hitachi’s share price declined during the COVID-19 market sell-off. As part of the sea changes we are seeing in the behavior of Japanese company management teams, Hitachi is selling its “bad” businesses and restructuring itself into an attractive company.
ICICI Bank, a market leader in India, experienced that same share price decline that nearly all of the world’s banks experienced during the first quarter of 2020. We began buying ICICI Bank in 2011. Since then we have benefited from India’s dramatic increase in the financial inclusion of its 1.3 billion people - enabled by their Aadhar identification program and mobile smart devices - and from the improved management of the bank itself by an able team. ICICI Bank has accomplished most of the tasks it set itself several years ago: it has run off its bad loan book, improved its credit processes and spun off its joint venture insurance arm. We think there are other investment opportunities for us, and we exited our position during the second quarter.
Airbus dominates the widebody, long haul jet market along with its US competitor, Boeing. During the COVID-19 market sell-off, anything and everything to do with travel sold off sharply. We have owned Airbus for many years and continue to view it as a profitable way to benefit from the very long-term trend of rising air travel. We believe aviation will recover and so will Airbus. It’s a vital cog in our global transportation system.
Thank you for your continued investment in Invesco Oppenheimer V.I. International Growth Fund.
Portfolio manager(s):
Robert B. Dunphy
George R. Evans (Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors
Invesco Oppenheimer V.I. International Growth Fund
such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco Oppenheimer V.I. International Growth Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
| Series I Shares | | | | |
| Inception (5/13/92) | | | 7.61% | |
| 10 Years | | | 7.87 | |
| 5 Years | | | 9.25 | |
| 1 Year | | | 21.50 | |
| |
| Series II Shares | | | | |
| Inception (3/19/01) | | | 6.69% | |
| 10 Years | | | 7.57 | |
| 5 Years | | | 8.92 | |
| 1 Year | | | 21.04 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer International Growth Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. International Growth Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. International Growth Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco Oppenheimer V.I. International Growth Fund
Supplemental Information
Invesco Oppenheimer V.I. International Growth Fund’s investment objective is to seek capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The MSCI All Country World ex-USA® Index is an index considered representative of developed and emerging stock markets, excluding the US. The index is computed using the net return, which withholds applicable taxes for non-resident investors. |
| ∎ | | 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. |
Invesco Oppenheimer V.I. International Growth Fund
Fund Information
Portfolio Composition
| | |
| By sector | | % of total net assets |
Information Technology | | 25.74% |
Consumer Discretionary | | 20.57 |
Industrials | | 16.40 |
Health Care | | 15.22 |
Consumer Staples | | 8.66 |
Communication Services | | 5.80 |
Materials | | 2.88 |
Other Sectors, Each Less than 2% of Net Assets | | 2.68 |
Money Market Funds Plus Other Assets Less Liabilities | | 2.05 |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
1. | | ASML Holding N.V. | | 2.92% |
2. | | Taiwan Semiconductor Manufacturing Co. Ltd. | | 2.67 |
3. | | Hermes International | | 2.59 |
4. | | LVMH Moet Hennessy Louis Vuitton SE | | 2.16 |
5. | | Keyence Corp. | | 1.97 |
6. | | Atlas Copco AB, Class A | | 1.95 |
7. | | Hoya Corp. | | 1.94 |
8. | | Tencent Holdings Ltd. | | 1.93 |
9. | | Flutter Entertainment PLC | | 1.90 |
10. | | Alimentation Couche-Tard, Inc., Class B | | 1.88 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings, if any. Data presented here are as of December 31, 2020. |
Invesco Oppenheimer V.I. International Growth Fund
Schedule of Investments
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–97.94% | |
| Australia–1.25% | |
CSL Ltd. | | | 28,738 | | | $ | 6,279,470 | |
| |
|
| Belgium–0.41% | |
Galapagos N.V.(a) | | | 14,205 | | | | 1,397,745 | |
| |
Galapagos N.V., ADR(a) | | | 6,567 | | | | 645,657 | |
| |
| | | | | | | 2,043,402 | |
| |
|
| Canada–4.82% | |
Alimentation Couche-Tard, Inc., Class B | | | 276,662 | | | | 9,428,547 | |
| |
CAE, Inc. | | | 232,458 | | | | 6,441,035 | |
| |
Dollarama, Inc. | | | 111,798 | | | | 4,556,588 | |
| |
Shopify, Inc., Class A(a) | | | 3,314 | | | | 3,742,068 | |
| |
| | | | | | | 24,168,238 | |
| |
|
| China–3.51% | |
Alibaba Group Holding Ltd., ADR(a) | | | 34,047 | | | | 7,923,758 | |
| |
Tencent Holdings Ltd. | | | 132,800 | | | | 9,703,328 | |
| |
| | | | | | | 17,627,086 | |
| |
|
| Denmark–2.42% | |
Ascendis Pharma A/S, ADR(a) | | | 19,100 | | | | 3,185,498 | |
| |
Novo Nordisk A/S, Class B | | | 128,259 | | | | 8,971,138 | |
| |
| | | | | | | 12,156,636 | |
| |
|
| France–15.60% | |
Adevinta ASA, Class B(a) | | | 155,056 | | | | 2,603,368 | |
| |
Airbus SE(a) | | | 61,111 | | | | 6,713,008 | |
| |
Dassault Systemes SE | | | 26,407 | | | | 5,364,402 | |
| |
Edenred | | | 86,778 | | | | 4,923,723 | |
| |
EssilorLuxottica S.A. | | | 24,195 | | | | 3,773,358 | |
| |
Hermes International | | | 12,088 | | | | 12,998,896 | |
| |
Kering S.A. | | | 6,330 | | | | 4,601,895 | |
| |
L’Oreal S.A. | | | 12,341 | | | | 4,689,043 | |
| |
LVMH Moet Hennessy Louis Vuitton SE | | | 17,333 | | | | 10,830,191 | |
| |
Sartorius Stedim Biotech | | | 13,944 | | | | 4,969,926 | |
| |
SEB S.A. | | | 22,796 | | | | 4,180,002 | |
| |
Ubisoft Entertainment S.A.(a) | | | 55,295 | | | | 5,328,075 | |
| |
Worldline S.A.(a)(b) | | | 75,714 | | | | 7,323,232 | |
| |
| | | | | | | 78,299,119 | |
| |
|
| Germany–6.94% | |
CTS Eventim AG & Co. KGaA | | | 92,800 | | | | 6,168,058 | |
| |
Fresenius Medical Care AG & Co. KGaA | | | 64,441 | | | | 5,374,955 | |
| |
Infineon Technologies AG | | | 219,368 | | | | 8,418,612 | |
| |
SAP SE | | | 51,059 | | | | 6,709,588 | |
| |
Siemens AG | | | 16,309 | | | | 2,334,251 | |
| |
Siemens Healthineers AG(b) | | | 113,927 | | | | 5,832,670 | |
| |
| | | | | | | 34,838,134 | |
| |
|
| Hong Kong–0.60% | |
WH Group Ltd. | | | 3,621,500 | | | | 3,036,655 | |
| |
|
| India–1.19% | |
Dr Lal PathLabs Ltd.(b) | | | 48,237 | | | | 1,522,958 | |
| |
Reliance Industries Ltd. | | | 163,878 | | | | 4,464,192 | |
| |
| | | | | | | 5,987,150 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Ireland–1.90% | |
Flutter Entertainment PLC | | | 46,095 | | | $ | 9,543,497 | |
| |
|
| Italy–1.12% | |
Davide Campari-Milano N.V. | | | 490,180 | | | | 5,606,844 | |
| |
|
| Japan–10.31% | |
Daikin Industries Ltd. | | | 34,500 | | | | 7,683,729 | |
| |
Hitachi Ltd. | | | 58,300 | | | | 2,300,484 | |
| |
Hoya Corp. | | | 70,593 | | | | 9,758,003 | |
| |
Keyence Corp. | | | 17,524 | | | | 9,862,197 | |
| |
Kobe Bussan Co. Ltd. | | | 59,000 | | | | 1,821,120 | |
| |
Nidec Corp. | | | 63,700 | | | | 8,025,877 | |
| |
Nihon M&A Center, Inc. | | | 114,700 | | | | 7,675,740 | |
| |
Nitori Holdings Co. Ltd. | | | 22,000 | | | | 4,612,227 | |
| |
| | | | | | | 51,739,377 | |
| |
|
| Netherlands–6.00% | |
Aalberts N.V. | | | 150,415 | | | | 6,666,673 | |
| |
Adyen N.V.(a)(b) | | | 2,944 | | | | 6,850,418 | |
| |
ASML Holding N.V. | | | 30,293 | | | | 14,639,455 | |
| |
Boskalis Westminster | | | 30,582 | | | | 842,715 | |
| |
Shop Apotheke Europe N.V.(a)(b) | | | 6,046 | | | | 1,094,874 | |
| |
| | | | | | | 30,094,135 | |
| |
|
| New Zealand–1.84% | |
Xero Ltd.(a) | | | 81,010 | | | | 9,222,767 | |
| |
|
| Spain–1.51% | |
Amadeus IT Group S.A.(a) | | | 86,248 | | | | 6,244,161 | |
| |
Prosegur Cash S.A.(b) | | | 1,348,827 | | | | 1,319,277 | |
| |
| | | | | | | 7,563,438 | |
| |
|
| Sweden–5.16% | |
Atlas Copco AB, Class A | | | 191,157 | | | | 9,775,912 | |
| |
Epiroc AB, Class A | | | 370,667 | | | | 6,737,861 | |
| |
Swedish Match AB | | | 120,895 | | | | 9,391,334 | |
| |
| | | | | | | 25,905,107 | |
| |
|
| Switzerland–9.04% | |
Barry Callebaut AG | | | 2,046 | | | | 4,859,957 | |
| |
Lonza Group AG | | | 8,607 | | | | 5,527,978 | |
| |
Novartis AG | | | 32,959 | | | | 3,113,004 | |
| |
Roche Holding AG | | | 20,360 | | | | 7,103,764 | |
| |
Sika AG | | | 23,536 | | | | 6,425,378 | |
| |
STMicroelectronics N.V. | | | 249,495 | | | | 9,243,838 | |
| |
Temenos AG | | | 32,189 | | | | 4,491,496 | |
| |
VAT Group AG(b) | | | 18,481 | | | | 4,606,234 | |
| |
| | | | | | | 45,371,649 | |
| |
|
| Taiwan–2.67% | |
Taiwan Semiconductor Manufacturing Co. Ltd. | | | 713,000 | | | | 13,391,196 | |
| |
|
| United Kingdom–13.69% | |
Blue Prism Group PLC(a) | | | 101,522 | | | | 2,389,080 | |
| |
boohoo Group PLC(a) | | | 1,137,598 | | | | 5,364,337 | |
| |
Britvic PLC | | | 417,968 | | | | 4,643,500 | |
| |
Compass Group PLC | | | 331,157 | | | | 6,179,527 | |
| |
Entain PLC | | | 372,012 | | | | 5,774,588 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. International Growth Fund
| | | | | | | | |
| | | Shares | | | Value | |
| United Kingdom–(continued) | |
Legal & General Group PLC | | | 1,140,021 | | | $ | 4,190,328 | |
| |
London Stock Exchange Group PLC | | | 38,843 | | | | 4,787,979 | |
| |
Melrose Industries PLC | | | 3,410,542 | | | | 8,317,717 | |
| |
Next PLC | | | 91,539 | | | | 8,876,714 | |
| |
Ocado Group PLC(a) | | | 233,654 | | | | 7,321,418 | |
| |
Rightmove PLC | | | 594,538 | | | | 5,294,461 | |
| |
Trainline PLC(a)(b) | | | 879,354 | | | | 5,587,296 | |
| |
| | | | | | | 68,726,945 | |
| |
|
| United States–7.96% | |
Atlassian Corp. PLC, Class A(a) | | | 23,815 | | | | 5,569,614 | |
| |
EPAM Systems, Inc.(a) | | | 23,730 | | | | 8,503,646 | |
| |
Ferguson PLC | | | 42,466 | | | | 5,164,332 | |
| |
James Hardie Industries PLC, CDI(a) | | | 270,720 | | | | 8,008,130 | |
| |
Medtronic PLC | | | 34,164 | | | | 4,001,971 | |
| |
ResMed, Inc. | | | 40,824 | | | | 8,677,550 | |
| |
| | | | | | | 39,925,243 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $251,411,546) | | | | 491,526,088 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Preferred Stocks–0.01% | |
| India–0.01% | |
Zee Entertainment Enterprises Ltd., 6.00%, Pfd.
(Cost $0) | | | 599,541 | | | $ | 32,656 | |
| |
|
| Money Market Funds–1.79% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 3,150,830 | | | | 3,150,830 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 2,249,384 | | | | 2,250,059 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 3,600,948 | | | | 3,600,948 | |
| |
Total Money Market Funds
(Cost $9,001,980) | | | | 9,001,837 | |
| |
TOTAL INVESTMENTS IN SECURITIES–99.74%
(Cost $260,413,526) | | | | | | | 500,560,581 | |
| |
OTHER ASSETS LESS LIABILITIES–0.26% | | | | | | | 1,323,142 | |
| |
NET ASSETS–100.00% | | | | | | $ | 501,883,723 | |
| |
Investment Abbreviations:
| | |
| ADR | | – American Depositary Receipt |
| CDI | | – CREST Depository Interest |
| Pfd. | | – Preferred |
Notes to Schedule of Investments:
| (a) | Non-income producing security. |
| (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 December 31, 2020 was $34,136,959, which represented 6.80% of the Fund’s Net Assets. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2020 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $6,357,038 | | | | $112,466,463 | | | | $(115,672,671) | | | | $ - | | | | $ - | | | | $3,150,830 | | | | $41,954 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 11,521,271 | | | | (9,270,679) | | | | (143 | ) | | | (390 | ) | | | 2,250,059 | | | | 827 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | - | | | | 18,434,034 | | | | (14,833,086) | | | | - | | | | - | | | | 3,600,948 | | | | 272 | |
Total | | | $6,357,038 | | | | $142,421,768 | | | | $(139,776,436) | | | | $(143 | ) | | | $(390 | ) | | | $9,001,837 | | | | $43,053 | |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. International Growth Fund
Statement of Assets and Liabilities
December 31, 2020
| | |
Assets: | | |
Investments in securities, at value
(Cost $251,411,546) | | $491,558,744 |
Investments in affiliated money market funds, at value (Cost $9,001,980) | | 9,001,837 |
Cash | | 160,606 |
Foreign currencies, at value (Cost $207,089) | | 211,132 |
Receivable for: | | |
Fund shares sold | | 125,898 |
Dividends | | 1,979,713 |
Investment for trustee deferred compensation and retirement plans | | 53,679 |
Total assets | | 503,091,609 |
| |
Liabilities: | | |
Payable for: | | |
Fund shares reacquired | | 797,216 |
Accrued fees to affiliates | | 258,528 |
Accrued other operating expenses | | 98,463 |
Trustee deferred compensation and retirement plans | | 53,679 |
Total liabilities | | 1,207,886 |
Net assets applicable to shares outstanding | | $501,883,723 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $218,145,635 |
Distributable earnings | | 283,738,088 |
| | | $501,883,723 |
| |
Net Assets: | | |
Series I | | $230,463,105 |
Series II | | $271,420,618 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 79,257,520 |
Series II | | 89,183,181 |
Series I: | | |
Net asset value per share | | $ 2.91 |
Series II: | | |
Net asset value per share | | $ 3.04 |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $567,515) | | $ | 4,353,252 | |
| |
Dividends from affiliated money market funds | | | 43,053 | |
| |
Total investment income | | | 4,396,305 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 4,167,445 | |
| |
Administrative services fees | | | 727,081 | |
| |
Custodian fees | | | 39,333 | |
| |
Distribution fees - Series II | | | 589,814 | |
| |
Transfer agent fees | | | 48,232 | |
| |
Trustees’ and officers’ fees and benefits | | | 22,760 | |
| |
Reports to shareholders | | | 29,520 | |
| |
Professional services fees | | | 60,686 | |
| |
Other | | | 13,083 | |
| |
Total expenses | | | 5,697,954 | |
| |
Less: Fees waived | | | (696,702 | ) |
| |
Net expenses | | | 5,001,252 | |
| |
Net investment income (loss) | | | (604,947 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
| |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $101,550) | | | 47,536,836 | |
| |
Affiliated investment securities | | | (390 | ) |
| |
Foreign currencies | | | 55,260 | |
| |
Forward foreign currency contracts | | | (1,742 | ) |
| |
| | | 47,589,964 | |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities (net of foreign taxes of $212,752) | | | 42,319,477 | |
| |
Affiliated investment securities | | | (143 | ) |
| |
Foreign currencies | | | 146,050 | |
| |
| | | 42,465,384 | |
| |
Net realized and unrealized gain | | | 90,055,348 | |
| |
Net increase in net assets resulting from operations | | $ | 89,450,401 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. International Growth Fund
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (604,947 | ) | | $ | 3,686,941 | |
| |
Net realized gain | | | 47,589,964 | | | | 7,399,457 | |
| |
Change in net unrealized appreciation | | | 42,465,384 | | | | 108,124,591 | |
| |
Net increase in net assets resulting from operations | | | 89,450,401 | | | | 119,210,989 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (4,813,313 | ) | | | (13,472,374 | ) |
| |
Series II | | | (4,638,613 | ) | | | (12,709,522 | ) |
| |
Total distributions from distributable earnings | | | (9,451,926 | ) | | | (26,181,896 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (28,064,430 | ) | | | (95,274,031 | ) |
| |
Series II | | | (24,747,573 | ) | | | 10,086,290 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (52,812,003 | ) | | | (85,187,741 | ) |
| |
Net increase in net assets | | | 27,186,472 | | | | 7,841,352 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 474,697,251 | | | | 466,855,899 | |
| |
End of year | | $ | 501,883,723 | | | $ | 474,697,251 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. International Growth Fund
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income
(loss)(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset
value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses
to average
net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed(c) | | Ratio of net
investment
income
(loss)
to average
net assets | | Portfolio
turnover (d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 2.45 | | | | $ | (0.00 | ) | | | $ | 0.52 | | | | $ | 0.52 | | | | $ | (0.02 | ) | | | $ | (0.04 | ) | | | $ | (0.06 | ) | | | $ | 2.91 | | | | | 21.50 | % | | | $ | 230,463 | | | | | 1.00 | %(e) | | | | 1.15 | %(e) | | | | (0.01 | )%(e) | | | | 37 | % |
Year ended 12/31/19 | | | | 2.03 | | | | | 0.02 | | | | | 0.54 | | | | | 0.56 | | | | | (0.02 | ) | | | | (0.12 | ) | | | | (0.14 | ) | | | | 2.45 | | | | | 28.60 | | | | | 221,944 | | | | | 1.00 | | | | | 1.13 | | | | | 0.91 | | | | | 51 | |
Year ended 12/31/18 | | | | 2.59 | | | | | 0.02 | | | | | (0.51 | ) | | | | (0.49 | ) | | | | (0.02 | ) | | | | (0.05 | ) | | | | (0.07 | ) | | | | 2.03 | | | | | (19.42 | ) | | | | 267,220 | | | | | 1.00 | | | | | 1.10 | | | | | 0.83 | | | | | 25 | |
Year ended 12/31/17 | | | | 2.08 | | | | | 0.02 | | | | | 0.52 | | | | | 0.54 | | | | | (0.03 | ) | | | | — | | | | | (0.03 | ) | | | | 2.59 | | | | | 26.29 | | | | | 360,417 | | | | | 1.00 | | | | | 1.08 | | | | | 0.87 | | | | | 27 | |
Year ended 12/31/16 | | | | 2.20 | | | | | 0.03 | | | | | (0.08 | ) | | | | (0.05 | ) | | | | (0.02 | ) | | | | (0.05 | ) | | | | (0.07 | ) | | | | 2.08 | | | | | (2.12 | ) | | | | 301,559 | | | | | 1.00 | | | | | 1.09 | | | | | 1.24 | | | | | 15 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 2.56 | | | | | (0.01 | ) | | | | 0.55 | | | | | 0.54 | | | | | (0.02 | ) | | | | (0.04 | ) | | | | (0.06 | ) | | | | 3.04 | | | | | 21.04 | | | | | 271,421 | | | | | 1.25 | (e) | | | | 1.40 | (e) | | | | (0.26 | )(e) | | | | 37 | |
Year ended 12/31/19 | | | | 2.12 | | | | | 0.02 | | | | | 0.56 | | | | | 0.58 | | | | | (0.02 | ) | | | | (0.12 | ) | | | | (0.14 | ) | | | | 2.56 | | | | | 27.95 | | | | | 252,753 | | | | | 1.25 | | | | | 1.38 | | | | | 0.67 | | | | | 51 | |
Year ended 12/31/18 | | | | 2.70 | | | | | 0.01 | | | | | (0.52 | ) | | | | (0.51 | ) | | | | (0.02 | ) | | | | (0.05 | ) | | | | (0.07 | ) | | | | 2.12 | | | | | (19.55 | ) | | | | 199,636 | | | | | 1.25 | | | | | 1.35 | | | | | 0.58 | | | | | 25 | |
Year ended 12/31/17 | | | | 2.16 | | | | | 0.01 | | | | | 0.56 | | | | | 0.57 | | | | | (0.03 | ) | | | | — | | | | | (0.03 | ) | | | | 2.70 | | | | | 26.44 | | | | | 239,042 | | | | | 1.25 | | | | | 1.33 | | | | | 0.60 | | | | | 27 | |
Year ended 12/31/16 | | | | 2.29 | | | | | 0.02 | | | | | (0.08 | ) | | | | (0.06 | ) | | | | (0.02 | ) | | | | (0.05 | ) | | | | (0.07 | ) | | | | 2.16 | | | | | (2.72 | ) | | | | 175,633 | | | | | 1.25 | | | | | 1.34 | | | | | 0.99 | | | | | 15 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended October 31, 2019, 2018, 2017, and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $206,410 and $235,925 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. International Growth Fund
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. International Growth Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco Oppenheimer V.I. International Growth Fund
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| J. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
Invesco Oppenheimer V.I. International Growth Fund
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
| |
Up to $250 million | | | 1.000% | |
| |
Next $250 million | | | 0.900% | |
| |
Next $500 million | | | 0.850% | |
| |
Over $1 billion | | | 0.820% | |
| |
| * | The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.94%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement excluding certain items discussed below) of Series I shares to 1.00% and Series II shares to 1.25% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $696,702.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $63,577 for accounting and fund administrative services and was reimbursed $663,504 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Invesco Oppenheimer V.I. International Growth Fund
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Australia | | $ | – | | | $ | 6,279,470 | | | | $– | | | $ | 6,279,470 | |
| |
Belgium | | | 645,657 | | | | 1,397,745 | | | | – | | | | 2,043,402 | |
| |
Canada | | | 24,168,238 | | | | – | | | | – | | | | 24,168,238 | |
| |
China | | | 7,923,758 | | | | 9,703,328 | | | | – | | | | 17,627,086 | |
| |
Denmark | | | 3,185,498 | | | | 8,971,138 | | | | – | | | | 12,156,636 | |
| |
France | | | – | | | | 78,299,119 | | | | – | | | | 78,299,119 | |
| |
Germany | | | – | | | | 34,838,134 | | | | – | | | | 34,838,134 | |
| |
Hong Kong | | | – | | | | 3,036,655 | | | | – | | | | 3,036,655 | |
| |
India | | | 32,656 | | | | 5,987,150 | | | | – | | | | 6,019,806 | |
| |
Ireland | | | – | | | | 9,543,497 | | | | – | | | | 9,543,497 | |
| |
Italy | | | – | | | | 5,606,844 | | | | – | | | | 5,606,844 | |
| |
Japan | | | – | | | | 51,739,377 | | | | – | | | | 51,739,377 | |
| |
Netherlands | | | – | | | | 30,094,135 | | | | – | | | | 30,094,135 | |
| |
New Zealand | | | – | | | | 9,222,767 | | | | – | | | | 9,222,767 | |
| |
Spain | | | – | | | | 7,563,438 | | | | – | | | | 7,563,438 | |
| |
Sweden | | | – | | | | 25,905,107 | | | | – | | | | 25,905,107 | |
| |
Switzerland | | | – | | | | 45,371,649 | | | | – | | | | 45,371,649 | |
| |
Taiwan | | | – | | | | 13,391,196 | | | | – | | | | 13,391,196 | |
| |
United Kingdom | | | – | | | | 68,726,945 | | | | – | | | | 68,726,945 | |
| |
United States | | | 26,752,781 | | | | 13,172,462 | | | | – | | | | 39,925,243 | |
| |
Money Market Funds | | | 9,001,837 | | | | – | | | | – | | | | 9,001,837 | |
| |
Total Investments | | $ | 71,710,425 | | | $ | 428,850,156 | | | | $– | | | $ | 500,560,581 | |
| |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Currency
Risk | |
| |
Realized Gain (Loss): | | | | |
Forward foreign currency contracts | | | $(1,742) | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward
Foreign Currency
Contracts |
|
Average notional value | | $112,313 |
|
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
Invesco Oppenheimer V.I. International Growth Fund
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Ordinary income* | | $ | 3,427,490 | | | $ | 3,888,153 | |
| |
Long-term capital gain | | | 6,024,436 | | | | 22,293,743 | |
| |
Total distributions | | $ | 9,451,926 | | | $ | 26,181,896 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed long-term capital gain | | $ | 45,164,337 | |
| |
Net unrealized appreciation – investments | | | 238,497,503 | |
| |
Net unrealized appreciation - foreign currencies | | | 126,973 | |
| |
Temporary book/tax differences | | | (50,725 | ) |
| |
Shares of beneficial interest | | | 218,145,635 | |
| |
Total net assets | | $ | 501,883,723 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $159,190,666 and $224,965,674, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis
| | | | |
| |
Aggregate unrealized appreciation of investments | | $ | 241,390,920 | |
| |
Aggregate unrealized (depreciation) of investments | | | (2,893,417 | ) |
| |
Net unrealized appreciation of investments | | $ | 238,497,503 | |
| |
Cost of investments for tax purposes is $262,063,078.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, passive foreign investment companies and foreign capital gains taxes, on December 31, 2020, undistributed net investment income (loss) was increased by $929,387, undistributed net realized gain was decreased by $284,783 and shares of beneficial interest was decreased by $644,604. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 12,200,099 | | | $ | 28,925,077 | | | | 8,881,295 | | | $ | 19,659,846 | |
| |
Series II | | | 9,099,234 | | | | 22,431,074 | | | | 13,275,646 | | | | 30,754,894 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,865,625 | | | | 4,813,313 | | | | 6,179,988 | | | | 13,472,374 | |
| |
Series II | | | 1,718,005 | | | | 4,638,613 | | | | 5,574,352 | | | | 12,709,522 | |
| |
Invesco Oppenheimer V.I. International Growth Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (25,538,177 | ) | | $ | (61,802,820 | ) | | | (55,770,549 | ) | | $ | (128,406,251 | ) |
| |
Series II | | | (20,462,841 | ) | | | (51,817,260 | ) | | | (14,188,919 | ) | | | (33,378,126 | ) |
| |
Net increase (decrease) in share activity | | | (21,118,055 | ) | | $ | (52,812,003 | ) | | | (36,048,187 | ) | | $ | (85,187,741 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 35% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
Invesco Oppenheimer V.I. International Growth Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. International Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. International Growth Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. International Growth Fund (formerly known as Oppenheimer International Growth Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco Oppenheimer V.I. International Growth Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL
(5% annual return before expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,266.70 | | $5.70 | | $1,020.11 | | $5.08 | | 1.00% |
Series II | | 1,000.00 | | 1,259.60 | | 7.10 | | 1,018.85 | | 6.34 | | 1.25 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco Oppenheimer V.I. International Growth Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Long-Term Capital Gain Distributions | | $ | 6,024,436 | |
| | Qualified Dividend Income* | | | 0.00 | % |
| | Corporate Dividends Received Deduction* | | | 1.02 | % |
| | U.S. Treasury Obligations* | | | 0.00 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| 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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
| 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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
| James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco Oppenheimer V.I. International Growth Fund
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
| 11 Greenway Plaza, Suite 1000 | | Invesco Advisers, Inc. | | Invesco Distributors, Inc. | | PricewaterhouseCoopers LLP |
| Houston, TX 77046-1173 | | 1555 Peachtree Street, N.E. | | 11 Greenway Plaza, Suite 1000 | | 1000 Louisiana Street, Suite 5800 |
| | Atlanta, GA 30309 | | Houston, TX 77046-1173 | | Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
| Stradley Ronon Stevens & Young, LLP | | Goodwin Procter LLP | | Invesco Investment Services, Inc. | | State Street Bank and Trust Company |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 225 Franklin Street |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Boston, MA 02110-2801 |
Invesco Oppenheimer V.I. International Growth Fund
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | Invesco Oppenheimer V.I. Main Street Fund® |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
| | | | |
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
| Invesco Distributors, Inc. | | | | O-VIMST-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Main Street Fund® (the Fund) underperformed the S&P 500 Index. | | | | |
Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
| |
Series I Shares | | | 13.94 | % |
Series II Shares | | | 13.69 | |
S&P 500 Indexq | | | 18.40 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were also better than anticipated and a gradual decline in new COVID-19 infections in many
regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3
During the year, stock selection in the real estate sector and a modest underweight to the utilities sector were the largest contributors to the Fund’s performance versus the S&P 500 Index. This was offset by weaker stock selection in the information technology (IT), health care and energy sectors.
The largest individual contributors to the Fund’s performance relative to the S&P 500 Index during the year included Microsoft, Amazon and QUALCOMM. Microsoft and Amazon benefited from strong execution and various tailwinds that were accelerated due to the pandemic including the increased need and importance of technology to work from home. Microsoft saw continued momentum for the company’s commercial cloud offerings and continued to report strong revenue
growth and operating margin expansion. Amazon continued to benefit from retail disruption in their e-commerce business, which drove market share gains in addition to the acceleration of digital transformation that benefited its AWS cloud services.
Qualcomm reported solid business fundamentals and benefited from 5G spending. Additionally, the company resolved its licensing dispute with Huawei and the FTC anticompetition ruling against Qualcomm was overturned on appeal.
The largest individual detractors from the Fund’s performance relative to the S&P 500 Index during the year included Suncor, Capital One Financial and Magellan Midstream. Suncor, an integrated energy company, and Magellan, which is primarily a refined products pipeline company, significantly underperformed along with the rest of the energy sector. The energy sector experienced significant negative returns despite the S&P 500 Index producing positive total returns during the year. We have exited our holding in Suncor.
Capital One Financial underperformed after the unemployment picture quickly deteriorated in March 2020 due to COVID-19-related concerns about consumers’ ability to make payments on their credit cards and other loans. Capital One Financial was generally considered the most exposed to the health of the consumer out of the larger US banks.
We continue to maintain our discipline around valuation and focus on companies which we believe have competitive advantages and skilled management teams that are out-executing peers. We believe this disciplined approach is essential to generating attractive long-term performance.
We appreciate your continued investment in Invesco Oppenheimer V.I. Main Street Fund®.
1 Source: US Federal Reserve
2 Source: US Bureau of Economic Analysis
3 Source: Lipper Inc.
Invesco Oppenheimer V.I. Main Street Fund®
Portfolio manager(s):
Manind (“Mani”) Govil (Lead)
Paul Larson
Benjamin Ram
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Invesco Oppenheimer V.I. Main Street Fund®
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
| Series I Shares | | | | |
| Inception (7/5/95) | | | 9.28% | |
| 10 Years | | | 12.29 | |
| 5 Years | | | 12.59 | |
| 1 Year | | | 13.94 | |
| |
| Series II Shares | | | | |
| Inception (7/13/00) | | | 5.80% | |
| 10 Years | | | 12.01 | |
| 5 Years | | | 12.31 | |
| 1 Year | | | 13.69 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Main Street Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Main Street Fund®. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Main Street Fund®, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
Invesco Oppenheimer V.I. Main Street Fund®
Supplemental Information
Invesco Oppenheimer V.I. Main Street Fund’s® investment objective is to seek capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The S&P 500® Index is an unmanaged index considered representative of the US stock market. |
| ∎ | | 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. |
Invesco Oppenheimer V.I. Main Street Fund®
Fund Information
Portfolio Composition
| | |
| By sector | | % of total net assets |
Information Technology | | 26.57% |
Health Care | | 15.42 |
Consumer Discretionary | | 14.27 |
Financials | | 11.94 |
Industrials | | 9.45 |
Communication Services | | 8.61 |
Consumer Staples | | 6.43 |
Real Estate | | 2.45 |
Energy | | 2.23 |
Other Sectors, Each Less than 2% of Net Assets | | 2.49 |
Money Market Funds Plus Other Assets Less Liabilities | | 0.14 |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
| 1. | | Microsoft Corp. | | 7.93% |
| 2. | | Amazon.com, Inc. | | 6.30 |
| 3. | | QUALCOMM, Inc. | | 3.80 |
| 4. | | UnitedHealth Group, Inc. | | 3.43 |
| 5. | | Facebook, Inc., Class A | | 3.41 |
| 6. | | JPMorgan Chase & Co. | | 3.29 |
| 7. | | Applied Materials, Inc. | | 2.83 |
| 8. | | Procter & Gamble Co. (The) | | 2.54 |
| 9. | | Prologis, Inc. | | 2.45 |
| 10. | | HCA Healthcare, Inc. | | 2.36 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
| * | Excluding money market fund holdings, if any. |
Data presented here are as of December 31, 2020.
Invesco Oppenheimer V.I. Main Street Fund®
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.86% | |
| Aerospace & Defense–1.57% | |
Lockheed Martin Corp. | | | 48,780 | | | $ | 17,315,924 | |
| |
|
| Air Freight & Logistics–1.85% | |
C.H. Robinson Worldwide, Inc. | | | 49,052 | | | | 4,604,511 | |
| |
United Parcel Service, Inc., Class B | | | 93,989 | | | | 15,827,748 | |
| |
| | | | | | | 20,432,259 | |
| |
|
| Application Software–1.33% | |
Adobe, Inc.(b) | | | 12,299 | | | | 6,150,976 | |
| |
Workday, Inc., Class A(b) | | | 35,626 | | | | 8,536,346 | |
| |
| | | | | | | 14,687,322 | |
| |
|
| Automobile Manufacturers–0.76% | |
General Motors Co. | | | 202,380 | | | | 8,427,103 | |
| |
|
| Automotive Retail–1.36% | |
CarMax, Inc.(b) | | | 74,693 | | | | 7,055,501 | |
| |
O’Reilly Automotive, Inc.(b) | | | 17,544 | | | | 7,939,888 | |
| |
| | | | | | | 14,995,389 | |
| |
|
| Biotechnology–0.36% | |
Neurocrine Biosciences, Inc.(b) | | | 41,550 | | | | 3,982,567 | |
| |
|
| Cable & Satellite–1.00% | |
Comcast Corp., Class A | | | 210,957 | | | | 11,054,147 | |
| |
|
| Commodity Chemicals–0.53% | |
Valvoline, Inc. | | | 254,247 | | | | 5,883,276 | |
| |
|
| Communications Equipment–1.28% | |
Motorola Solutions, Inc. | | | 83,217 | | | | 14,151,883 | |
| |
|
| Construction Machinery & Heavy Trucks–0.84% | |
Caterpillar, Inc. | | | 51,072 | | | | 9,296,125 | |
| |
|
| Construction Materials–0.81% | |
Vulcan Materials Co. | | | 60,233 | | | | 8,933,156 | |
| |
|
| Consumer Finance–1.87% | |
Capital One Financial Corp. | | | 208,660 | | | | 20,626,041 | |
| |
|
| Data Processing & Outsourced Services–3.26% | |
Fiserv, Inc.(b) | | | 145,860 | | | | 16,607,619 | |
| |
Mastercard, Inc., Class A | | | 54,287 | | | | 19,377,202 | |
| |
| | | | | | | 35,984,821 | |
| |
|
| Distillers & Vintners–1.22% | |
Constellation Brands, Inc., Class A | | | 61,191 | | | | 13,403,889 | |
| |
|
| Diversified Banks–3.29% | |
JPMorgan Chase & Co. | | | 285,455 | | | | 36,272,767 | |
| |
|
| Electric Utilities–1.15% | |
Duke Energy Corp. | | | 64,709 | | | | 5,924,756 | |
| |
FirstEnergy Corp. | | | 219,586 | | | | 6,721,527 | |
| |
| | | | | | 12,646,283 | |
| |
|
| Electrical Components & Equipment–0.86% | |
Hubbell, Inc. | | | 17,399 | | | | 2,727,989 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Electrical Components & Equipment–(continued) | |
Rockwell Automation, Inc. | | | 26,755 | | | $ | 6,710,422 | |
| |
| | | | | | | 9,438,411 | |
| |
|
| Environmental & Facilities Services–0.91% | |
Waste Connections, Inc. | | | 97,419 | | | | 9,992,267 | |
| |
|
| Financial Exchanges & Data–2.02% | |
Intercontinental Exchange, Inc. | | | 193,151 | | | | 22,268,379 | |
| |
|
| Food Distributors–1.02% | |
Sysco Corp. | | | 151,430 | | | | 11,245,192 | |
| |
|
| General Merchandise Stores–1.27% | |
Target Corp. | | | 79,500 | | | | 14,034,135 | |
| |
|
| Health Care Facilities–2.36% | |
HCA Healthcare, Inc. | | | 158,086 | | | | 25,998,824 | |
| |
|
| Health Care Services–1.26% | |
CVS Health Corp. | | | 203,085 | | | | 13,870,705 | |
| |
|
| Health Care Supplies–0.51% | |
Alcon, Inc. (Switzerland)(b) | | | 84,888 | | | | 5,600,910 | |
| |
|
| Home Improvement Retail–1.95% | |
Home Depot, Inc. (The) | | | 80,780 | | | | 21,456,784 | |
| |
|
| Homebuilding–0.77% | |
D.R. Horton, Inc. | | | 123,084 | | | | 8,482,949 | |
| |
|
| Hotels, Resorts & Cruise Lines–0.25% | |
Airbnb, Inc., Class A(b) | | | 18,845 | | | | 2,766,446 | |
| |
|
| Household Products–2.96% | |
Procter & Gamble Co. (The) | | | 200,922 | | | | 27,956,287 | |
| |
Reckitt Benckiser Group PLC (United Kingdom) | | | 52,069 | | | | 4,656,827 | |
| |
| | | | | | | 32,613,114 | |
| |
|
| Industrial Conglomerates–1.17% | |
Honeywell International, Inc. | | | 60,850 | | | | 12,942,795 | |
| |
|
| Industrial Machinery–0.61% | |
Otis Worldwide Corp. | | | 99,488 | | | | 6,720,414 | |
| |
|
| Industrial REITs–2.45% | |
Prologis, Inc. | | | 271,403 | | | | 27,048,023 | |
| |
|
| Integrated Telecommunication Services–2.11% | |
Verizon Communications, Inc. | | | 395,989 | | | | 23,264,354 | |
| |
|
| Interactive Home Entertainment–0.86% | |
Zynga, Inc., Class A(b) | | | 958,770 | | | | 9,463,060 | |
| |
|
| Interactive Media & Services–4.10% | |
Facebook, Inc., Class A(b) | | | 137,653 | | | | 37,601,294 | |
| |
Snap, Inc., Class A(b) | | | 152,731 | | | | 7,647,241 | |
| |
| | | | | | | 45,248,535 | |
| |
|
| Internet & Direct Marketing Retail–7.91% | |
Amazon.com, Inc.(b) | | | 21,312 | | | | 69,411,692 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
| | | | | | | | |
| | | Shares | | | Value | |
|
| Internet & Direct Marketing Retail–(continued) | |
Booking Holdings, Inc.(b) | | | 7,985 | | | $ | 17,784,751 | |
| |
| | | | | | | 87,196,443 | |
| |
|
| Internet Services & Infrastructure–0.16% | |
Snowflake, Inc., Class A(b) | | | 6,194 | | | | 1,742,992 | |
| |
|
| IT Consulting & Other Services–2.27% | |
Accenture PLC, Class A | | | 67,812 | | | | 17,713,172 | |
| |
Amdocs Ltd. | | | 102,932 | | | | 7,300,967 | |
| |
| | | | | | | 25,014,139 | |
| |
|
| Life Sciences Tools & Services–2.25% | |
Avantor, Inc.(b) | | | 192,821 | | | | 5,427,911 | |
| |
Thermo Fisher Scientific, Inc. | | | 41,592 | | | | 19,372,722 | |
| |
| | | | | | | 24,800,633 | |
| |
|
| Managed Health Care–3.43% | |
UnitedHealth Group, Inc. | | | 107,814 | | | | 37,808,214 | |
| |
| | |
Movies & Entertainment–0.53% | | | | | | | | |
Live Nation Entertainment, Inc.(b) | | | 38,494 | | | | 2,828,539 | |
| |
Warner Music Group Corp., Class A | | | 80,834 | | | | 3,070,884 | |
| |
| | | | | | | 5,899,423 | |
| |
|
| Oil & Gas Exploration & Production–0.44% | |
Cabot Oil & Gas Corp. | | | 297,052 | | | | 4,836,007 | |
| |
|
| Oil & Gas Refining & Marketing–0.62% | |
Valero Energy Corp. | | | 121,168 | | | | 6,854,474 | |
| |
|
| Oil & Gas Storage & Transportation–1.17% | |
Magellan Midstream Partners L.P. | | | 303,918 | | | | 12,898,280 | |
| |
|
| Other Diversified Financial Services–1.91% | |
Equitable Holdings, Inc. | | | 822,050 | | | | 21,036,259 | |
| |
|
| Packaged Foods & Meats–1.23% | |
a2 Milk Co. Ltd. (The)
(New Zealand)(b) | | | 161,326 | | | | 1,425,142 | |
| |
Mondelez International, Inc., Class A | | | 208,243 | | | | 12,175,968 | |
| |
| | | | | | | 13,601,110 | |
| |
|
| Pharmaceuticals–5.26% | |
AstraZeneca PLC, ADR
(United Kingdom) | | | 428,172 | | | | 21,404,318 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Pharmaceuticals–(continued) | |
Eli Lilly and Co. | | | 93,225 | | | $ | 15,740,109 | |
| |
Merck & Co., Inc. | | | 254,622 | | | | 20,828,080 | |
| |
| | | | | | | 57,972,507 | |
| |
|
| Property & Casualty Insurance–1.81% | |
Progressive Corp. (The) | | | 201,297 | | | | 19,904,247 | |
| |
|
| Railroads–1.64% | |
Union Pacific Corp. | | | 86,598 | | | | 18,031,436 | |
| |
|
| Semiconductor Equipment–2.83% | |
Applied Materials, Inc. | | | 361,224 | | | | 31,173,631 | |
| |
|
| Semiconductors–5.63% | |
QUALCOMM, Inc. | | | 275,490 | | | | 41,968,146 | |
| |
Texas Instruments, Inc. | | | 122,759 | | | | 20,148,435 | |
| |
| | | | | | | 62,116,581 | |
| |
|
| Systems Software–7.93% | |
Microsoft Corp. | | | 393,126 | | | | 87,439,085 | |
| |
|
| Technology Hardware, Storage & Peripherals–1.87% | |
Apple, Inc. | | | 155,789 | | | | 20,671,642 | |
| |
|
| Thrifts & Mortgage Finance–1.05% | |
Rocket Cos., Inc., Class A(b) | | | 571,126 | | | | 11,548,168 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $730,969,333) | | | | 1,101,093,520 | |
| |
|
| Money Market Funds–0.31% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 1,204,226 | | | | 1,204,226 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(c)(d) | | | 859,893 | | | | 860,151 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 1,376,258 | | | | 1,376,258 | |
| |
Total Money Market Funds
(Cost $3,440,635) | | | | 3,440,635 | |
| |
TOTAL INVESTMENTS IN SECURITIES–100.17%
(Cost $734,409,968) | | | | 1,104,534,155 | |
| |
OTHER ASSETS LESS LIABILITIES–(0.17)% | | | | (1,921,253 | ) |
| |
NET ASSETS–100.00% | | | | | | $ | 1,102,612,902 | |
| |
Investment Abbreviations:
| | |
ADR - American Depositary Receipt |
REIT - Real Estate Investment Trust |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 14,860,862 | | | | $ | 145,017,177 | | | | $ | (158,673,813 | ) | | | $ | - | | | | $ | - | | | | $ | 1,204,226 | | | | $ | 43,264 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 35,012,389 | | | | | (34,150,659 | ) | | | | - | | | | | (1,579 | ) | | | | 860,151 | | | | | 2,426 | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 56,019,778 | | | | | (54,643,520 | ) | | | | - | | | | | - | | | | | 1,376,258 | | | | | 1,000 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 8,150,710 | | | | | (8,150,710 | ) | | | | - | | | | | - | | | | | - | | | | | 168 | * |
Invesco Private Prime Fund | | | | - | | | | | 11,380,282 | | | | | (11,380,282 | ) | | | | - | | | | | - | | | | | - | | | | | 851 | * |
Total | | | $ | 14,860,862 | | | | $ | 255,580,336 | | | | $ | (266,998,984 | ) | | | $ | - | | | | $ | (1,579 | ) | | | $ | 3,440,635 | | | | $ | 47,709 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (d) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $730,969,333) | | $ | 1,101,093,520 | |
| |
Investments in affiliated money market funds, at value (Cost $3,440,635) | | | 3,440,635 | |
| |
Cash | | | 147,094 | |
| |
Foreign currencies, at value (Cost $152) | | | 154 | |
| |
Receivable for: | | | | |
Investments sold | | | 8,790,447 | |
| |
Fund shares sold | | | 99,666 | |
| |
Dividends | | | 399,343 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 174,253 | |
| |
Total assets | | | 1,114,145,112 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 10,108,450 | |
| |
Fund shares reacquired | | | 409,230 | |
| |
Accrued fees to affiliates | | | 610,435 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 488 | |
| |
Accrued other operating expenses | | | 229,354 | |
| |
Trustee deferred compensation and retirement plans | | | 174,253 | |
| |
Total liabilities | | | 11,532,210 | |
| |
Net assets applicable to shares outstanding | | $ | 1,102,612,902 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 659,125,965 | |
| |
Distributable earnings | | | 443,486,937 | |
| |
| | $ | 1,102,612,902 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 505,876,690 | |
| |
Series II | | $ | 596,736,212 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 16,911,690 | |
| |
Series II | | | 20,231,844 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 29.91 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 29.49 | |
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $89,636) | | $ | 17,476,638 | |
| |
Dividends from affiliates (includes securities lending income of $10,971) | | | 57,661 | |
| |
Total investment income | | | 17,534,299 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 7,306,164 | |
| |
Administrative services fees | | | 1,743,983 | |
| |
Custodian fees | | | 4,892 | |
| |
Distribution fees - Series II | | | 1,540,836 | |
| |
Transfer agent fees | | | 43,139 | |
| |
Trustees’ and officers’ fees and benefits | | | 30,918 | |
| |
Reports to shareholders | | | 97,128 | |
| |
Professional services fees | | | 40,303 | |
| |
Other | | | 21,828 | |
| |
Total expenses | | | 10,829,191 | |
| |
Less: Fees waived | | | (437,853 | ) |
| |
Net expenses | | | 10,391,338 | |
| |
Net investment income | | | 7,142,961 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $6,127,718) | | | 72,285,406 | |
| |
Affiliated investment securities | | | (1,579 | ) |
| |
Foreign currencies | | | (65,972 | ) |
| |
| | | 72,217,855 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 46,841,777 | |
| |
Foreign currencies | | | 1,802 | |
| |
| | | 46,843,579 | |
| |
Net realized and unrealized gain | | | 119,061,434 | |
| |
Net increase in net assets resulting from operations | | $ | 126,204,395 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
| |
Operations: | | | | | | | | |
| | |
Net investment income | | $ | 7,142,961 | | | $ | 12,198,812 | |
| |
Net realized gain | | | 72,217,855 | | | | 98,443,317 | |
| |
Change in net unrealized appreciation | | | 46,843,579 | | | | 230,858,088 | |
| |
Net increase in net assets resulting from operations | | | 126,204,395 | | | | 341,500,217 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
| | |
Series I | | | (52,173,015 | ) | | | (93,497,935 | ) |
| |
Series II | | | (60,587,458 | ) | | | (121,555,544 | ) |
| |
Total distributions from distributable earnings | | | (112,760,473 | ) | | | (215,053,479 | ) |
| |
| | |
Share transactions-net: | | | | | | | | |
| | |
Series I | | | (70,040,502 | ) | | | 30,061,913 | |
| |
Series II | | | (143,073,768 | ) | | | 29,147,063 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (213,114,270 | ) | | | 59,208,976 | |
| |
Net increase (decrease) in net assets | | | (199,670,348 | ) | | | 185,655,714 | |
| |
| | |
Net assets: | | | | | | | | |
| | |
Beginning of year | | | 1,302,283,250 | | | | 1,116,627,536 | |
| |
End of year | | $ | 1,102,612,902 | | | $ | 1,302,283,250 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net investment
income(a) | | Net gains
(losses)
on securities
(both realized and unrealized) | | Total from
investment operations | | Dividends from net investment income | | Distributions from net realized
gains | | Total
distributions | | Net asset
value, end of period | | Total
return (b) | | Net assets,
end of period (000’s omitted) | | Ratio of
expenses
to average
net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without fee waivers
and/or
expenses
absorbed(c) | | Ratio of net investment
income to average
net assets | | Portfolio turnover (d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | $29.44 | | | | | $0.22 | | | | | $3.63 | | | | | $3.85 | | | | $ | (0.45 | ) | | | | $(2.93 | ) | | | | $(3.38 | ) | | | $ | 29.91 | | | | | 13.94 | % | | | $ | 505,877 | | | | | 0.80 | %(e) | | | | 0.84 | %(e) | | | | 0.78 | %(e) | | | | 46 | % |
Year ended 12/31/19 | | | | 26.82 | | | | | 0.32 | | | | | 7.73 | | | | | 8.05 | | | | | (0.34 | ) | | | | (5.09 | ) | | | | (5.43 | ) | | | | 29.44 | | | | | 32.03 | | | | | 570,821 | | | | | 0.80 | | | | | 0.82 | | | | | 1.11 | | | | | 43 | |
Year ended 12/31/18 | | | | 32.25 | | | | | 0.32 | | | | | (2.55 | ) | | | | (2.23 | ) | | | | (0.38 | ) | | | | (2.82 | ) | | | | (3.20 | ) | | | | 26.82 | | | | | (7.89 | ) | | | | 485,230 | | | | | 0.80 | | | | | 0.80 | | | | | 1.03 | | | | | 65 | |
Year ended 12/31/17 | | | | 28.41 | | | | | 0.34 | | | | | 4.41 | | | | | 4.75 | | | | | (0.39 | ) | | | | (0.52 | ) | | | | (0.91 | ) | | | | 32.25 | | | | | 16.91 | | | | | 561,555 | | | | | 0.78 | | | | | 0.78 | | | | | 1.12 | | | | | 35 | |
Year ended 12/31/16 | | | | 29.24 | | | | | 0.33 | | | | | 2.76 | | | | | 3.09 | | | | | (0.34 | ) | | | | (3.58 | ) | | | | (3.92 | ) | | | | 28.41 | | | | | 11.62 | | | | | 485,196 | | | | | 0.79 | | | | | 0.79 | | | | | 1.16 | | | | | 33 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 29.05 | | | | | 0.15 | | | | | 3.57 | | | | | 3.72 | | | | | (0.35 | ) | | | | (2.93 | ) | | | | (3.28 | ) | | | | 29.49 | | | | | 13.65 | | | | | 596,736 | | | | | 1.05 | (e) | | | | 1.09 | (e) | | | | 0.53 | (e) | | | | 46 | |
Year ended 12/31/19 | | | | 26.51 | | | | | 0.25 | | | | | 7.64 | | | | | 7.89 | | | | | (0.26 | ) | | | | (5.09 | ) | | | | (5.35 | ) | | | | 29.05 | | | | | 31.74 | | | | | 731,463 | | | | | 1.05 | | | | | 1.07 | | | | | 0.86 | | | | | 43 | |
Year ended 12/31/18 | | | | 31.91 | | | | | 0.24 | | | | | (2.53 | ) | | | | (2.29 | ) | | | | (0.29 | ) | | | | (2.82 | ) | | | | (3.11 | ) | | | | 26.51 | | | | | (8.10 | ) | | | | 631,398 | | | | | 1.05 | | | | | 1.05 | | | | | 0.78 | | | | | 65 | |
Year ended 12/31/17 | | | | 28.12 | | | | | 0.26 | | | | | 4.37 | | | | | 4.63 | | | | | (0.32 | ) | | | | (0.52 | ) | | | | (0.84 | ) | | | | 31.91 | | | | | 16.63 | | | | | 785,379 | | | | | 1.03 | | | | | 1.03 | | | | | 0.87 | | | | | 35 | |
Year ended 12/31/16 | | | | 28.98 | | | | | 0.26 | | | | | 2.72 | | | | | 2.98 | | | | | (0.26 | ) | | | | (3.58 | ) | | | | (3.84 | ) | | | | 28.12 | | | | | 11.30 | | | | | 772,594 | | | | | 1.04 | | | | | 1.04 | | | | | 0.94 | | | | | 33 | |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $491,454 and $616,334 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco Oppenheimer V.I. Main Street Fund®
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Main Street Fund® (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
Invesco Oppenheimer V.I. Main Street Fund®
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Master Limited Partnerships – The Fund invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund invests in MLPs engaged in, among other things, the transportation, storage, processing, refining, marketing, exploration, production and mining of minerals and natural resources. The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. |
MLP’s may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
| F. | Return of Capital — Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
| G. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| H. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| I. | 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. |
| J. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| K. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
| L. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized |
Invesco Oppenheimer V.I. Main Street Fund®
| | foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| M. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
Up to $200 million | | | 0.750 | % |
Next $200 million | | | 0.720 | % |
Next $200 million | | | 0.690 | % |
Next $200 million | | | 0.660 | % |
Next $200 million | | | 0.600 | % |
Next $4 billion | | | 0.580 | % |
Over $5 billion | | | 0.560 | % |
| * | The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.66%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $437,853.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $159,011 for accounting and fund administrative services and was reimbursed $1,584,972 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the
Invesco Oppenheimer V.I. Main Street Fund®
annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $583 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - Prices are determined using quoted prices in an active market for identical assets.
Level 2 - Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others.
Level 3 - Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information.
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
| |
Investments in Securities | | | | | | | | | | | | | | | | |
| |
Common Stocks & Other Equity Interests | | $ | 1,095,011,551 | | | $ | 6,081,969 | | | | $– | | | $ | 1,101,093,520 | |
| |
Money Market Funds | | | 3,440,635 | | | | – | | | | – | | | | 3,440,635 | |
| |
Total Investments | | $ | 1,098,452,186 | | | $ | 6,081,969 | | | | $– | | | $ | 1,104,534,155 | |
| |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities purchases of $4,472,836 and securities sales of $45,966,645, which resulted in net realized gains of $6,127,718.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 20,517,553 | | | $ | 15,468,146 | |
| |
Long-term capital gain | | | 92,242,920 | | | | 199,585,333 | |
| |
Total distributions | | $ | 112,760,473 | | | $ | 215,053,479 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Invesco Oppenheimer V.I. Main Street Fund®
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
| |
Undistributed ordinary income | | $ | 7,225,816 | |
| |
Undistributed long-term capital gain | | | 72,887,615 | |
| |
Net unrealized appreciation – investments | | | 368,601,911 | |
| |
Net unrealized appreciation - foreign currencies | | | 2,027 | |
| |
Temporary book/tax differences | | | (5,230,432 | ) |
| |
Shares of beneficial interest | | | 659,125,965 | |
| |
Total net assets | | $ | 1,102,612,902 | |
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and partnership transactions.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $499,862,012 and $801,505,219, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
| |
Aggregate unrealized appreciation of investments | | $ | 376,211,599 | |
| |
Aggregate unrealized (depreciation) of investments | | | (7,609,688 | ) |
| |
Net unrealized appreciation of investments | | $ | 368,601,911 | |
| |
Cost of investments for tax purposes is $735,932,244.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnership transactions, on December 31, 2020, undistributed net investment income was increased by $89,861, undistributed net realized gain was decreased by $85,939 and shares of beneficial interest was decreased by $3,922. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended
December 31, 2020(a) | | | Year ended
December 31, 2019 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 488,428 | | | $ | 13,734,224 | | | | 673,942 | | | $ | 19,609,116 | |
| |
Series II | | | 1,712,042 | | | | 44,161,406 | | | | 1,630,045 | | | | 46,915,384 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,877,403 | | | | 52,173,014 | | | | 3,495,250 | | | | 93,497,935 | |
| |
Series II | | | 2,210,414 | | | | 60,587,455 | | | | 4,599,150 | | | | 121,555,544 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (4,843,261 | ) | | | (135,947,740 | ) | | | (2,875,474 | ) | | | (83,045,138 | ) |
| |
Series II | | | (8,868,684 | ) | | | (247,822,629 | ) | | | (4,866,048 | ) | | | (139,323,865 | ) |
| |
Net increase (decrease) in share activity | | | (7,423,658 | ) | | $ | (213,114,270 | ) | | | 2,656,865 | | | $ | 59,208,976 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 52% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
Invesco Oppenheimer V.I. Main Street Fund®
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Main Street Fund® to Invesco V.I. Main Street Fund®.
Invesco Oppenheimer V.I. Main Street Fund®
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Main Street Fund®
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Main Street Fund® (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Main Street Fund® (formerly known as Oppenheimer Main Street Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
Invesco Oppenheimer V.I. Main Street Fund®
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | |
| | | | | ACTUAL | | HYPOTHETICAL
(5% annual return before expenses) | | |
| | Beginning
Account Value
(07/01/20) | | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
| Series I | | $1,000.00 | | $1,206.60 | | $4.44 | | $1,021.11 | | $4.06 | | 0.80% |
| Series II | | 1,000.00 | | 1,205.40 | | 5.82 | | 1,019.86 | | 5.33 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
Invesco Oppenheimer V.I. Main Street Fund®
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisers.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 92,242,920 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 97.25 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson - 1967
Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown - 1968
Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields - 1952
Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones - 1961
Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis - 1950
Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | |
Ann Barnett Stern - 1957
Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli - 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort -1954
Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn - 1945
Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958
Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor - 1968
Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg - 1974
Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey - 1962
Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco Oppenheimer V.I. Main Street Fund®
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser
Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors
PricewaterhouseCoopers LLP
1000 Louisiana Street, Suite 5800
Houston, TX 77002-5678 |
| | | |
Counsel to the Fund
Stradley Ronon Stevens & Young, LLP
2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street
Boston, MA 02110-2801 |
Invesco Oppenheimer V.I. Main Street Fund®
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
| | |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| Invesco Distributors, Inc. | | O-VIMSS-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Main Street Small Cap Fund® (the Fund) underperformed the Russell 2000 Index. | |
Your Fund’s long-term performance appears later in this report. | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 19.93 | % |
Series II Shares | | | 19.63 | |
Russell 2000 Indexq | | | 19.96 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
During the first quarter of 2020, as the spread of the new coronavirus (COVID-19) disrupted travel and suppressed consumer activity, investors became increasingly concerned about the global economy. At the same time, oil prices fell sharply as a price war between Saudi Arabia and Russia threatened to boost supply even as demand was falling. Beginning in late February, equity markets declined sharply and quickly, ushering in the first bear market since the financial crisis of 2008. Though equity markets stabilized somewhat toward the end of March, all sectors declined during the downturn. In response to the major collapse in demand and to help facilitate liquidity, the US Federal Reserve (the Fed) cut interest rates two times in March by 0.50% and 1.00%, ending with a target range of 0.00% to 0.25%.1
In April, US unemployment numbers continued to climb and the initial gross domestic product (GDP) estimates for the first quarter of 2020 saw the economy shrink by 5%, the sharpest drop since the 2008 financial crisis.2 However, during the second and into the third quarter of 2020, US stocks largely shrugged off economic uncertainty, social unrest and a resurgence in coronavirus infections to rally from the market bottom. Investor sentiment improved in response to trillions of dollars in economic stimulus, progress on a coronavirus vaccine and re-openings in many US regions. In July, the Fed extended its emergency stimulus programs, originally scheduled to end in September, to year-end, which provided support to equities. In late August revised second quarter GDP fell by 31.4%,2 a record decline. Despite the extreme drop in the economy, the S&P 500 Index not only erased all its losses from the first quarter but made record highs.
Despite a September selloff, US equity markets posted gains in the third quarter as the Fed extended its emergency stimulus programs and changed its inflation target policy, both of which supported equities. Data for both manufacturing and services indicated expansion, a reversal from significant declines earlier in the year. Corporate earnings were also better than anticipated and a gradual
decline in new COVID-19 infections in many regions, combined with optimism about progress on a coronavirus vaccine, further boosted stocks. October saw increased volatility as COVID-19 infection rates rose to record highs in the US and in Europe. Investors also became concerned about delayed results from the US presidential election and the real possibility of a contested election, further delaying a clear winner.
US equity markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials lead the way, while real estate and consumer staples lagged. Market leadership also shifted during the quarter with value stocks outperforming growth for the first time since the fourth quarter of 2016. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, stocks were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets. Despite massive volatility and one of the worst bear markets in decades for the major stock indices in the US and globally, the S&P 500 Index returned 18.40% for the year.3 During the year, stock selection in the health care and communication services sectors were the largest contributors to the Fund’s performance versus the Russell 2000 Index. This was partially offset by weaker stock selection in the information technology (IT) and consumer discretionary sectors.
Top contributors to the Fund’s relative performance during the year included Quidel, Renewable Energy Group, and Zynga.
Quidel specializes in rapid diagnostic testing and was a major beneficiary of the COVID-19 pandemic. In addition to already strong demand for its point of care testing for the flu, the company received FDA Emergency Use Authorization to market its rapid point-of-care
COVID-19 antigen test to detect current infection on its Sofia platform. We have exited our position during the year.
Renewable Energy Group, a pure play in renewable fuels, benefited from a growing interest within the sector as the demand outlook improved around more US states adopting low carbon fuel standard programs. This spurred several refiners and integrated oil companies to announce renewable diesel projects.
Zynga, a mobile gaming company, saw strong top-line growth and improved profitability. Zynga also benefited from an increase in gaming driven by social distancing mandates associated with COVID-19. We have exited our position during the year.
Top detractors from relative performance included Matador Resources, Houghton Mifflin Harcourt, and Noble Midstream.
Matador Resources, an exploration and production company, was negatively affected by low oil prices and decreased demand that was exacerbated by the pandemic and an increase in supply driven by the Russia-Saudi Arabia price war earlier in 2020. Additionally, Matador had a relatively higher debt load which put the company in a less advantaged position. We have exited this position.
Noble Midstream, a pipeline company, was negatively affected by the significant drop in oil prices. Given less growth potential around new pipeline capacity and desire to maintain financial leverage, Noble Midstream was forced to cut their distribution sharply.
Houghton Mifflin Harcourt, a provider of textbooks and education services, was negatively affected by US school closures due to the pandemic. We have exited this position.
We continue to maintain our discipline around valuation and focus on companies which we believe have skilled management teams that are out-executing peers. We believe this disciplined approach is essential to generating attractive long-term performance.
We thank you for your continued investment in Invesco Oppenheimer V.I. Main Street Small Cap Fund®.
| 1 | Source: US Federal Reserve |
| 2 | Source: US Bureau of Economic Analysis |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Portfolio manager(s):
Raymond Anello
Joy Budzinski
Magnus Krantz
Kristin Ketner Pak
Raman Vardharaj
Adam Weiner (Co-Lead)
Matthew P. Ziehl (Co-Lead)
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | | | | |
| |
Series I Shares | | | | |
Inception (5/1/98) | | | 8.87 | % |
10 Years | | | 12.13 | |
5 Years | | | 12.88 | |
1 Year | | | 19.93 | |
| |
Series II Shares | | | | |
Inception (7/16/01) | | | 9.62 | % |
10 Years | | | 11.85 | |
5 Years | | | 12.59 | |
1 Year | | | 19.63 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Main Street Small Cap Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Main Street Small Cap Fund®. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Main Street Small Cap Fund®, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Supplemental Information
Invesco Oppenheimer V.I. Main Street Small Cap Fund’s® investment objective is to seek capital appreciation.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Russell 2000® Index is an unmanaged index considered representative of small-cap stocks. The Russell 2000® Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| ∎ | | 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. |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Health Care | | | | 18.41 | % |
Industrials | | | | 16.31 | |
Information Technology | | | | 15.89 | |
Financials | | | | 14.57 | |
Consumer Discretionary | | | | 13.00 | |
Real Estate | | | | 5.84 | |
Consumer Staples | | | | 4.93 | |
Materials | | | | 3.82 | |
Energy | | | | 3.42 | |
Utilities | | | | 3.11 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.70 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Renewable Energy Group, Inc. | | | | 2.35 | % |
2. AutoNation, Inc. | | | | 2.27 | |
3. ASGN, Inc. | | | | 2.25 | |
4. Rexnord Corp. | | | | 2.02 | |
5. WSFS Financial Corp. | | | | 1.99 | |
6. Korn Ferry | | | | 1.93 | |
7. j2 Global, Inc. | | | | 1.89 | |
8. LHC Group, Inc. | | | | 1.82 | |
9. Visteon Corp. | | | | 1.81 | |
10. KBR, Inc. | | | | 1.75 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.30% | |
Air Freight & Logistics–0.60% | | | | | | | | |
Hub Group, Inc., Class A(b) | | | 80,866 | | | $ | 4,609,362 | |
|
| |
| |
Aluminum–1.18% | | | | | |
Kaiser Aluminum Corp. | | | 92,157 | | | | 9,114,327 | |
|
| |
| |
Apparel Retail–0.50% | | | | | |
Foot Locker, Inc. | | | 94,658 | | | | 3,827,969 | |
|
| |
| |
Application Software–6.39% | | | | | |
Bottomline Technologies (DE), Inc.(b) | | | 220,672 | | | | 11,638,241 | |
|
| |
Envestnet, Inc.(b) | | | 68,671 | | | | 5,650,936 | |
|
| |
Everbridge, Inc.(b) | | | 29,838 | | | | 4,447,951 | |
|
| |
j2 Global, Inc.(b) | | | 148,844 | | | | 14,540,570 | |
|
| |
Q2 Holdings, Inc.(b) | | | 101,937 | | | | 12,898,089 | |
|
| |
| | | | | | | 49,175,787 | |
|
| |
|
Asset Management & Custody Banks–1.69% | |
Federated Hermes, Inc., Class B | | | 171,912 | | | | 4,966,538 | |
|
| |
Focus Financial Partners, Inc.,
Class A(b) | | | 184,362 | | | | 8,019,747 | |
|
| |
| | | | | | | 12,986,285 | |
|
| |
| |
Auto Parts & Equipment–2.95% | | | | | |
Dorman Products, Inc.(b) | | | 101,175 | | | | 8,784,013 | |
|
| |
Visteon Corp.(b) | | | 111,040 | | | | 13,937,741 | |
|
| |
| | | | | | | 22,721,754 | |
|
| |
| |
Automotive Retail–3.38% | | | | | |
AutoNation, Inc.(b) | | | 250,126 | | | | 17,456,294 | |
|
| |
Monro, Inc. | | | 160,115 | | | | 8,534,129 | |
|
| |
| | | | | | | 25,990,423 | |
|
| |
| |
Biotechnology–4.07% | | | | | |
ADC Therapeutics S.A.
(Switzerland)(b)(c) | | | 62,489 | | | | 2,000,273 | |
|
| |
Avid Bioservices, Inc.(b) | | | 55,054 | | | | 635,323 | |
|
| |
Emergent BioSolutions, Inc.(b) | | | 120,606 | | | | 10,806,298 | |
|
| |
G1 Therapeutics, Inc.(b) | | | 177,089 | | | | 3,185,831 | |
|
| |
Twist Bioscience Corp.(b) | | | 59,843 | | | | 8,455,218 | |
|
| |
uniQure N.V. (Netherlands)(b) | | | 66,842 | | | | 2,415,001 | |
|
| |
Zai Lab Ltd., ADR (China)(b) | | | 28,347 | | | | 3,836,483 | |
|
| |
| | | | | | | 31,334,427 | |
|
| |
| |
Building Products–1.05% | | | | | |
Masonite International Corp.(b) | | | 82,438 | | | | 8,106,953 | |
|
| |
| |
Communications Equipment–0.48% | | | | | |
EchoStar Corp., Class A(b) | | | 176,251 | | | | 3,734,759 | |
|
| |
| |
Construction & Engineering–1.16% | | | | | |
Comfort Systems USA, Inc. | | | 72,618 | | | | 3,824,064 | |
|
| |
Valmont Industries, Inc. | | | 29,047 | | | | 5,081,192 | |
|
| |
| | | | | | | 8,905,256 | |
|
| |
| |
Construction Materials–0.89% | | | | | |
Summit Materials, Inc., Class A(b) | | | 340,432 | | | | 6,835,875 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
Diversified Banks–1.10% | | | | | |
Bank of NT Butterfield & Son Ltd. (The) (Bermuda) | | | 271,432 | | | $ | 8,457,821 | |
|
| |
| |
Diversified Metals & Mining–1.13% | | | | | |
Compass Minerals International, Inc. | | | 140,547 | | | | 8,674,561 | |
|
| |
|
Electrical Components & Equipment–2.04% | |
Atkore International Group, Inc.(b) | | | 209,040 | | | | 8,593,634 | |
|
| |
EnerSys | | | 85,494 | | | | 7,101,132 | |
|
| |
| | | | | | | 15,694,766 | |
|
| |
|
Environmental & Facilities Services–0.43% | |
US Ecology, Inc. | | | 90,650 | | | | 3,293,314 | |
|
| |
| | |
Gas Utilities–2.19% | | | | | | | | |
National Fuel Gas Co. | | | 118,481 | | | | 4,873,124 | |
|
| |
South Jersey Industries, Inc. | | | 149,850 | | | | 3,229,267 | |
|
| |
Suburban Propane Partners L.P. | | | 589,789 | | | | 8,764,265 | |
|
| |
| | | | | | | 16,866,656 | |
|
| |
| |
General Merchandise Stores–0.81% | | | | | |
Big Lots, Inc. | | | 82,465 | | | | 3,540,222 | |
|
| |
Ollie’s Bargain Outlet Holdings, Inc.(b) | | | 33,437 | | | | 2,734,144 | |
|
| |
| | | | | | | 6,274,366 | |
|
| |
| |
Health Care Equipment–4.22% | | | | | |
AtriCure, Inc.(b) | | | 149,517 | | | | 8,323,611 | |
|
| |
CryoPort, Inc.(b)(c) | | | 152,386 | | | | 6,686,698 | |
|
| |
iRhythm Technologies, Inc.(b) | | | 29,313 | | | | 6,953,337 | |
|
| |
Tandem Diabetes Care, Inc.(b) | | | 109,921 | | | | 10,517,241 | |
|
| |
| | | | | | | 32,480,887 | |
|
| |
| |
Health Care Facilities–1.09% | | | | | |
Tenet Healthcare Corp.(b) | | | 210,843 | | | | 8,418,961 | |
|
| |
| |
Health Care Services–4.18% | | | | | |
1Life Healthcare, Inc.(b) | | | 137,007 | | | | 5,980,355 | |
|
| |
Addus HomeCare Corp.(b) | | | 104,141 | | | | 12,193,870 | |
|
| |
LHC Group, Inc.(b) | | | 65,750 | | | | 14,025,790 | |
|
| |
| | | | | | | 32,200,015 | |
|
| |
| |
Health Care Supplies–0.27% | | | | | |
OraSure Technologies, Inc.(b) | | | 194,595 | | | | 2,059,788 | |
|
| |
| |
Health Care Technology–1.26% | | | | | |
Inspire Medical Systems, Inc.(b) | | | 51,601 | | | | 9,705,632 | |
|
| |
| |
Homebuilding–1.28% | | | | | |
TopBuild Corp.(b) | | | 53,374 | | | | 9,825,086 | |
|
| |
| |
Hotel & Resort REITs–1.27% | | | | | |
DiamondRock Hospitality Co. | | | 1,189,288 | | | | 9,811,626 | |
|
| |
| |
Household Products–0.93% | | | | | |
Energizer Holdings, Inc. | | | 169,504 | | | | 7,149,679 | |
|
| |
|
Human Resource & Employment Services–4.18% | |
ASGN, Inc.(b) | | | 207,701 | | | | 17,349,265 | |
|
| |
Korn Ferry | | | 340,641 | | | | 14,817,883 | |
|
| |
| | | | | | | 32,167,148 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Hypermarkets & Super Centers–1.26% | | | | | |
BJ’s Wholesale Club Holdings, Inc.(b) | | | 259,397 | | | $ | 9,670,320 | |
|
| |
| |
Industrial Machinery–5.37% | | | | | |
Chart Industries, Inc.(b) | | | 71,606 | | | | 8,434,471 | |
|
| |
EnPro Industries, Inc. | | | 111,531 | | | | 8,422,821 | |
|
| |
Evoqua Water Technologies Corp.(b) | | | 331,832 | | | | 8,952,827 | |
|
| |
Rexnord Corp. | | | 393,274 | | | | 15,530,390 | |
|
| |
| | | | | | | | 41,340,509 | |
| |
Insurance Brokers–0.31% | | | | | |
Selectquote, Inc.(b) | | | 116,213 | | | | 2,411,420 | |
|
| |
| |
Investment Banking & Brokerage–1.45% | | | | | |
Stifel Financial Corp. | | | 221,467 | | | | 11,175,225 | |
|
| |
| |
IT Consulting & Other Services–4.27% | | | | | |
CACI International, Inc., Class A(b) | | | 42,045 | | | | 10,483,080 | |
|
| |
KBR, Inc. | | | 434,040 | | | | 13,424,857 | |
|
| |
Perspecta, Inc. | | | 372,025 | | | | 8,958,362 | |
|
| |
| | | | | | | 32,866,299 | |
|
| |
| |
Leisure Facilities–0.53% | | | | | |
Cedar Fair L.P. | | | 103,285 | | | | 4,063,232 | |
|
| |
| |
Life Sciences Tools & Services–2.48% | | | | | |
Adaptive Biotechnologies Corp.(b) | | | 80,955 | | | | 4,786,869 | |
|
| |
NeoGenomics, Inc.(b) | | | 162,314 | | | | 8,738,986 | |
|
| |
Repligen Corp.(b) | | | 29,225 | | | | 5,600,387 | |
|
| |
| | | | | | | 19,126,242 | |
|
| |
| |
Multi-Utilities–0.92% | | | | | |
Avista Corp. | | | 176,962 | | | | 7,103,255 | |
|
| |
| |
Office REITs–0.94% | | | | | |
Brandywine Realty Trust | | | 609,261 | | | | 7,256,298 | |
|
| |
| |
Office Services & Supplies–1.49% | | | | | |
ACCO Brands Corp. | | | 1,354,251 | | | | 11,443,421 | |
|
| |
| |
Oil & Gas Exploration & Production–0.59% | | | | | |
CNX Resources Corp.(b) | | | 418,074 | | | | 4,515,199 | |
|
| |
| |
Oil & Gas Refining & Marketing–2.35% | | | | | |
Renewable Energy Group, Inc.(b) | | | 255,079 | | | | 18,064,695 | |
|
| |
| |
Oil & Gas Storage & Transportation–0.48% | | | | | |
Noble Midstream Partners L.P. | | | 357,076 | | | | 3,720,732 | |
|
| |
| |
Other Diversified Financial Services–0.32% | | | | | |
Social Capital Hedosophia Holdings Corp. III, Class A(b) | | | 145,951 | | | | 2,447,598 | |
|
| |
| |
Packaged Foods & Meats–1.55% | | | | | |
Simply Good Foods Co. (The)(b) | | | 379,364 | | | | 11,896,855 | |
|
| |
| |
Paper Products–0.62% | | | | | |
Schweitzer-Mauduit International, Inc., Class A | | | 119,613 | | | | 4,809,639 | |
|
| |
| |
Personal Products–1.20% | | | | | |
BellRing Brands, Inc., Class A(b) | | | 381,104 | | | | 9,264,638 | |
|
| |
| |
Pharmaceuticals–0.83% | | | | | |
Axsome Therapeutics, Inc.(b) | | | 33,342 | | | | 2,716,373 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
| | |
Pharmaceuticals–(continued) | | | | | | | | |
|
| |
Collegium Pharmaceutical, Inc.(b) | | | 183,473 | | | $ | 3,674,964 | |
|
| |
| | | | | | | 6,391,337 | |
|
| |
| |
Regional Banks–7.70% | | | | | |
BankUnited, Inc. | | | 282,527 | | | | 9,826,289 | |
|
| |
Berkshire Hills Bancorp, Inc. | | | 246,412 | | | | 4,218,573 | |
|
| |
Cathay General Bancorp | | | 200,622 | | | | 6,458,022 | |
|
| |
CIT Group, Inc. | | | 197,805 | | | | 7,101,200 | |
|
| |
Heritage Financial Corp. | | | 243,837 | | | | 5,703,347 | |
|
| |
OceanFirst Financial Corp. | | | 295,417 | | | | 5,503,619 | |
|
| |
Pacific Premier Bancorp, Inc. | | | 299,459 | | | | 9,382,051 | |
|
| |
Signature Bank | | | 32,035 | | | | 4,334,015 | |
|
| |
Sterling Bancorp | | | 376,902 | | | | 6,776,698 | |
|
| |
| | | | | | | 59,303,814 | |
|
| |
| |
Restaurants–3.56% | | | | | |
Denny’s Corp.(b) | | | 306,503 | | | | 4,499,464 | |
|
| |
Jack in the Box, Inc. | | | 114,407 | | | | 10,616,970 | |
|
| |
Texas Roadhouse, Inc. | | | 156,862 | | | | 12,260,334 | |
|
| |
| | | | | | | 27,376,768 | |
|
| |
| |
Semiconductor Equipment–3.07% | | | | | |
Brooks Automation, Inc. | | | 158,638 | | | | 10,763,588 | |
|
| |
MKS Instruments, Inc. | | | 85,578 | | | | 12,875,210 | |
|
| |
| | | | | | | 23,638,798 | |
|
| |
| |
Semiconductors–1.68% | | | | | |
Allegro MicroSystems, Inc. (Japan)(b) | | | 98,286 | | | | 2,620,305 | |
|
| |
Semtech Corp.(b) | | | 142,611 | | | | 10,280,827 | |
|
| |
| | | | | | | 12,901,132 | |
|
| |
| |
Specialized REITs–3.62% | | | | | |
EPR Properties | | | 228,361 | | | | 7,421,732 | |
|
| |
Four Corners Property Trust, Inc. | | | 428,771 | | | | 12,764,513 | |
|
| |
National Storage Affiliates Trust | | | 212,636 | | | | 7,661,275 | |
|
| |
| | | | | | | 27,847,520 | |
|
| |
| |
Thrifts & Mortgage Finance–1.99% | | | | | |
WSFS Financial Corp. | | | 341,820 | | | | 15,340,882 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $530,419,945) | | | | 764,399,311 | |
|
| |
| |
Money Market Funds–0.70% | | | | | |
Invesco Government & Agency Portfolio, Institutional
Class, 0.03%(d)(e) | | | 1,875,710 | | | | 1,875,710 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(d)(e) | | | 1,339,234 | | | | 1,339,636 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 2,143,668 | | | | 2,143,668 | |
|
| |
Total Money Market Funds
(Cost $5,359,106) | | | | 5,359,014 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.00%
(Cost $535,779,051) | | | | 769,758,325 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
| |
Money Market Funds–0.72% | | | | | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 2,231,743 | | | | 2,231,743 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Money Market Funds–(continued) | | | | | | | | |
Invesco Private Prime Fund,
0.12%(d)(e)(f) | | | 3,346,610 | | | $ | 3,347,614 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $5,579,357) | | | | 5,579,357 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–100.72%
(Cost $541,358,408) | | | | 775,337,682 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.72)% | | | | (5,574,881 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 769,762,801 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2020. |
| (d) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2020 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,914,336 | | | | $ | 111,961,002 | | | | $ | (111,999,628 | ) | | | $ | - | | | | $ | - | | | | $ | 1,875,710 | | | | $ | 19,248 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 22,147,693 | | | | | (20,807,365 | ) | | | | (92 | ) | | | | (600 | ) | | | | 1,339,636 | | | | | 858 | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 35,436,309 | | | | | (33,292,641 | ) | | | | - | | | | | - | | | | | 2,143,668 | | | | | 303 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 8,135,366 | | | | | (5,903,623 | ) | | | | - | | | | | - | | | | | 2,231,743 | | | | | 76 | * |
Invesco Private Prime Fund | | | | - | | | | | 9,038,575 | | | | | (5,690,961 | ) | | | | - | | | | | - | | | | | 3,347,614 | | | | | 647 | * |
Total | | | $ | 1,914,336 | | | | $ | 186,718,945 | | | | $ | (177,694,218 | ) | | | $ | (92 | ) | | | $ | (600 | ) | | | $ | 10,938,371 | | | | $ | 21,132 | |
| | * | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Statement of Operations. Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any. |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1K. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $ 530,419,945)* | | $ | 764,399,311 | |
|
| |
Investments in affiliated money market funds, at value (Cost $ 10,938,463) | | | 10,938,371 | |
|
| |
Cash | | | 362,235 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 701,573 | |
|
| |
Fund shares sold | | | 86,786 | |
|
| |
Dividends | | | 398,390 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 94,680 | |
|
| |
Total assets | | | 776,981,346 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 788,406 | |
|
| |
Collateral upon return of securities loaned | | | 5,579,357 | |
|
| |
Accrued fees to affiliates | | | 431,433 | |
|
| |
Accrued other operating expenses | | | 324,669 | |
|
| |
Trustee deferred compensation and retirement plans | | | 94,680 | |
|
| |
Total liabilities | | | 7,218,545 | |
|
| |
Net assets applicable to shares outstanding | | $ | 769,762,801 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 491,159,911 | |
|
| |
Distributable earnings | | | 278,602,890 | |
|
| |
| | $ | 769,762,801 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 119,377,069 | |
|
| |
Series II | | $ | 650,385,732 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 4,353,226 | |
|
| |
Series II | | | 24,164,639 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 27.42 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 26.91 | |
|
| |
| * | Includes securities on loan with an aggregate value of $5,273,800 |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Dividends | | $ | 7,718,630 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $1,237) | | | 21,646 | |
|
| |
Total investment income | | | 7,740,276 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 4,489,560 | |
|
| |
Administrative services fees | | | 1,045,022 | |
|
| |
Custodian fees | | | 5,584 | |
|
| |
Distribution fees - Series II | | | 1,361,228 | |
|
| |
Transfer agent fees | | | 47,236 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 24,792 | |
|
| |
Reports to shareholders | | | 153,200 | |
|
| |
Professional services fees | | | 34,067 | |
|
| |
Other | | | 19,276 | |
|
| |
Total expenses | | | 7,179,965 | |
|
| |
Less: Fees waived | | | (707,949 | ) |
|
| |
Net expenses | | | 6,472,016 | |
|
| |
Net investment income | | | 1,268,260 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $2,645,118) | | | 49,209,343 | |
|
| |
Affiliated investment securities | | | (600 | ) |
|
| |
| | | 49,208,743 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 81,826,914 | |
|
| |
Affiliated investment securities | | | (92 | ) |
|
| |
| | | 81,826,822 | |
|
| |
Net realized and unrealized gain | | | 131,035,565 | |
|
| |
Net increase in net assets resulting from operations | | $ | 132,303,825 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 1,268,260 | | | $ | 2,495,743 | |
|
| |
Net realized gain | | | 49,208,743 | | | | 69,732,405 | |
|
| |
Change in net unrealized appreciation | | | 81,826,822 | | | | 122,277,503 | |
|
| |
Net increase in net assets resulting from operations | | | 132,303,825 | | | | 194,505,651 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (1,994,674 | ) | | | (10,160,591 | ) |
|
| |
Series II | | | (9,921,357 | ) | | | (77,152,079 | ) |
|
| |
Total distributions from distributable earnings | | | (11,916,031 | ) | | | (87,312,670 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (7,562,317 | ) | | | (31,945,204 | ) |
|
| |
Series II | | | (58,085,112 | ) | | | (220,156,704 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (65,647,429 | ) | | | (252,101,908 | ) |
|
| |
Net increase (decrease) in net assets | | | 54,740,365 | | | | (144,908,927 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 715,022,436 | | | | 859,931,363 | |
|
| |
End of year | | $ | 769,762,801 | | | $ | 715,022,436 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends
from net
investment
income | | Distributions
from net
realized
gains | | Total
distributions | | Net asset value, end
of period | | Total
return (b) | | Net assets,
end of period
(000’s omitted) | | Ratio of
expenses to average net assets
with fee waivers
and/or
expenses
absorbed | | Ratio of
expenses
to average net
assets without
fee waivers
and/or
expenses
absorbed(c) | | Ratio of net
investment
income to average
net assets | | Portfolio
turnover (d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | $ | 23.32 | | | | $ | 0.09 | | | | $ | 4.47 | | | | $ | 4.56 | | | | $ | (0.14 | ) | | | $ | (0.32 | ) | | | $ | (0.46 | ) | | | $ | 27.42 | | | | | 19.93 | % | | | $ | 119,377 | | | | | 0.80 | %(e) | | | | 0.91 | %(e) | | | | 0.41 | %(e) | | | | 35 | % |
Year ended 12/31/19 | | | | 20.36 | | | | | 0.11 | | | | | 5.06 | | | | | 5.17 | | | | | (0.05 | ) | | | | (2.16 | ) | | | | (2.21 | ) | | | | 23.32 | | | | | 26.47 | | | | | 109,695 | | | | | 0.80 | | | | | 0.86 | | | | | 0.49 | | | | | 36 | |
Year ended 12/31/18 | | | | 25.79 | | | | | 0.07 | | | | | (2.07 | ) | | | | (2.00 | ) | | | | (0.08 | ) | | | | (3.35 | ) | | | | (3.43 | ) | | | | 20.36 | | | | | (10.32 | ) | | | | 123,962 | | | | | 0.80 | | | | | 0.83 | | | | | 0.28 | | | | | 45 | |
Year ended 12/31/17 | | | | 24.08 | | | | | 0.07 | | | | | 3.22 | | | | | 3.29 | | | | | (0.22 | ) | | | | (1.36 | ) | | | | (1.58 | ) | | | | 25.79 | | | | | 14.15 | | | | | 152,617 | | | | | 0.80 | | | | | 0.80 | | | | | 0.28 | | | | | 42 | |
Year ended 12/31/16 | | | | 21.32 | | | | | 0.16 | | | | | 3.55 | | | | | 3.71 | | | | | (0.11 | ) | | | | (0.84 | ) | | | | (0.95 | ) | | | | 24.08 | | | | | 18.05 | | | | | 145,428 | | | | | 0.80 | | | | | 0.81 | | | | | 0.74 | | | | | 65 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 22.89 | | | | | 0.03 | | | | | 4.39 | | | | | 4.42 | | | | | (0.08 | ) | | | | (0.32 | ) | | | | (0.40 | ) | | | | 26.91 | | | | | 19.63 | | | | | 650,386 | | | | | 1.05 | (e) | | | | 1.16 | (e) | | | | 0.16 | (e) | | | | 35 | |
Year ended 12/31/19 | | | | 20.03 | | | | | 0.05 | | | | | 4.97 | | | | | 5.02 | | | | | 0.00 | | | | | (2.16 | ) | | | | (2.16 | ) | | | | 22.89 | | | | | 26.13 | | | | | 605,327 | | | | | 1.05 | | | | | 1.11 | | | | | 0.25 | | | | | 36 | |
Year ended 12/31/18 | | | | 25.42 | | | | | 0.01 | | | | | (2.03 | ) | | | | (2.02 | ) | | | | (0.02 | ) | | | | (3.35 | ) | | | | (3.37 | ) | | | | 20.03 | | | | | (10.54 | ) | | | | 735,969 | | | | | 1.05 | | | | | 1.08 | | | | | 0.03 | | | | | 45 | |
Year ended 12/31/17 | | | | 23.75 | | | | | 0.01 | | | | | 3.18 | | | | | 3.19 | | | | | (0.16 | ) | | | | (1.36 | ) | | | | (1.52 | ) | | | | 25.42 | | | | | 13.91 | | | | | 935,793 | | | | | 1.05 | | | | | 1.05 | | | | | 0.03 | | | | | 42 | |
Year ended 12/31/16 | | | | 21.05 | | | | | 0.10 | | | | | 3.49 | | | | | 3.59 | | | | | (0.05 | ) | | | | (0.84 | ) | | | | (0.89 | ) | | | | 23.75 | | | | | 17.67 | | | | | 922,037 | | | | | 1.05 | | | | | 1.06 | | | | | 0.49 | | | | | 65 | |
| (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. Total returns are not annualized for periods less than one year, if applicable, and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.00% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $95,116 and $544,491 for Series I and Series II shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Main Street Small Cap Fund® (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services – Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Master Limited Partnerships – The Fund invests in Master Limited Partnerships (“MLPs”). MLPs are publicly traded partnerships and limited liability companies taxed as partnerships under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The Fund invests in MLPs engaged in, among other things, the transportation, storage, processing, refining, marketing, exploration, production and mining of minerals and natural resources. The Fund is a partner in each MLP; accordingly, the Fund is required to take into account the Fund’s allocable share of income, gains, losses, deductions, expenses, and tax credits recognized by each MLP. |
MLP’s may be less liquid and subject to more abrupt or erratic price movements than conventional publicly traded securities.
| F. | Return of Capital – Distributions received from the Fund’s investments in MLPs generally are comprised of income and return of capital. The Fund records investment income and return of capital based on estimates made at the time such distributions are received. The return of capital portion of the distribution is a reduction to investment income that results in an equivalent reduction in the cost basis of the associated investments and increases net realized gains (losses) and change in unrealized appreciation (depreciation). Such estimates are based on historical information available from each MLP and other industry sources. These estimates will subsequently be revised and may materially differ primarily based on information received from the MLPs after their tax reporting periods are concluded. |
| G. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. |
| | Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| H. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| I. | 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. |
| J. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| K. | Securities Lending – The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
| Average Daily Net Assets* | | Rate | |
|
| |
Up to $ 200 million | | | 0.750% | |
|
| |
Next $ 200 million | | | 0.720% | |
|
| |
Next $ 200 million | | | 0.690% | |
|
| |
Next $ 200 million | | | 0.660% | |
|
| |
Next $ 200 million | | | 0.600% | |
|
| |
Next $ 4 billion | | | 0.580% | |
|
| |
Over $5 billion | | | 0.560% | |
|
| |
| * | The advisory fee payable by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with Invesco. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.70%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.80% and Series II shares to 1.05% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $707,949.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $91,844 for accounting and fund administrative services and was reimbursed $953,178 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2020, the Fund incurred $223 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
| | |
| | | own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
Common Stocks & Other Equity Interests | | $ | 764,399,311 | | | $ | – | | | | $– | | | $ | 764,399,311 | |
|
| |
Money Market Funds | | | 5,359,014 | | | | 5,579,357 | | | | – | | | | 10,938,371 | |
|
| |
Total Investments | | $ | 769,758,325 | | | $ | 5,579,357 | | | | $– | | | $ | 775,337,682 | |
|
| |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2020, the Fund engaged in securities purchases of $ 4,083,915 and securities sales of $5,970,353, which resulted in net realized gains of $2,645,118.
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Ordinary income* | | $ | 2,600,095 | | | $ | 7,555,176 | |
|
| |
Long-term capital gain | | | 9,315,936 | | | | 79,757,494 | |
|
| |
Total distributions | | $ | 11,916,031 | | | $ | 87,312,670 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 8,750,471 | |
|
| |
Undistributed long-term capital gain | | | 43,783,107 | |
|
| |
Net unrealized appreciation – investments | | | 226,160,731 | |
|
| |
Temporary book/tax differences | | | (91,419 | ) |
|
| |
Shares of beneficial interest | | | 491,159,911 | |
|
| |
Total net assets | | $ | 769,762,801 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, partnerships and master limited partnerships.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $223,069,055 and $301,469,270, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 262,170,274 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (36,009,543 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 226,160,731 | |
|
| |
Cost of investments for tax purposes is $549,176,951.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of post financial statement adjustments and partnerships, on December 31, 2020, undistributed net investment income was decreased by $1,076,236, undistributed net realized gain was increased by $381,033 and shares of beneficial interest was increased by $695,203. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | Shares | | | | Amount | | | | Shares | | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 768,674 | | | $ | 16,458,610 | | | | 483,827 | | | $ | 10,802,190 | |
|
| |
Series II | | | 2,822,113 | | | | 51,901,552 | | | | 2,432,799 | | | | 52,170,452 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 85,498 | | | | 1,994,674 | | | | 480,179 | | | | 10,160,591 | |
|
| |
Series II | | | 433,058 | | | | 9,921,357 | | | | 3,709,234 | | | | 77,152,079 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,204,533 | ) | | | (26,015,601 | ) | | | (2,347,530 | ) | | | (52,907,985 | ) |
|
| |
Series II | | | (5,530,234 | ) | | | (119,908,021 | ) | | | (16,441,278 | ) | | | (349,479,235 | ) |
|
| |
Net increase (decrease) in share activity | | | (2,625,424 | ) | | $ | (65,647,429 | ) | | | (11,682,769 | ) | | $ | (252,101,908 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 57% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Main Street Small Cap Fund® to Invesco V.I. Main Street Small Cap Fund®.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Main Street Small Cap Fund®
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Main Street Small Cap Fund® (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Main Street Small Cap Fund® (formerly known as Oppenheimer Main Street Small Cap Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian and transfer agent. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 16, 2021
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL | | Annualized
Expense
Ratio |
| | (5% annual return before expenses) |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,353.00 | | $4.73 | | $1,021.11 | | $4.06 | | 0.80% |
Series II | | 1,000.00 | | 1,351.00 | | 6.21 | | 1,019.86 | | 5.33 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Tax Information
Form 1099-DIV, Form 1042-S and other year–end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | | | |
| Federal and State Income Tax | | | | | |
|
|
|
Long-Term Capital Gain Distributions | | $ | 9,315,936 | |
Corporate Dividends Received Deduction* | | | 99.99 | % |
Qualified Dividend Income* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
| Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and
Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
| Office of the Fund | | Investment Adviser | | Distributor | | Auditors |
11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Invesco Advisers, Inc.
1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
| Counsel to the Fund | | Counsel to the Independent Trustees | | Transfer Agent | | Custodian |
Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco Oppenheimer V.I. Main Street Small Cap Fund® |
| | | | |
| | |
 | | Annual Report to Shareholders | | December 31, 2020 |
| | |
| | Invesco Oppenheimer V.I. Total Return Bond Fund |
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the SEC website, sec.gov. The SEC file numbers for the Fund are 811-07452 and 033-57340. The Fund’s most recent portfolio holdings, as filed on Form N-PORT, have also been made available to insurance companies issuing variable annuity contracts and variable life insurance policies (“variable products”) that invest in the Fund.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
This report must be accompanied or preceded by a currently effective Fund prospectus and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
| | |
| |
| Invesco Distributors, Inc. | | O-VITRB-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2020, Series I shares of Invesco Oppenheimer V.I. Total Return Bond Fund (the Fund) outperformed the Bloomberg Barclays U.S. Credit Index. | |
Your Fund’s long-term performance appears later in this report. | | | | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/19 to 12/31/20, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 9.71 | % |
Series II Shares | | | 9.43 | |
Bloomberg Barclays U.S. Credit Indexq | | | 9.35 | |
Bloomberg Barclays U.S. Aggregate Bond Indexq | | | 7.51 | |
FTSE Broad Investment Grade Bond Indexq | | | 7.74 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
Fixed income markets began the year buoyed by positive economic data and the signing of the phase one US-China trade deal. However, initial optimism was dampened by the outbreak of the new coronavirus (COVID-19) that swiftly spread from China to other global regions. Global markets fell sharply as the human and economic cost of the COVID-19 pandemic mounted. As fear of a worldwide recession increased, the US Federal Reserve (the Fed) took aggressive action to support both the domestic and global economy by slashing rates to a range of 0.00% to 0.25%.1 The unemployment rate reached a peak of 14.7%2 while real gross domestic product decreased at an annual rate of 31.4%3 in the second quarter of 2020.
Many economies received fiscal stimulus and very significant monetary stimulus due to the impact of COVID-19. The massive monetary policy response created an environment in which investors embraced risk, and stocks rose globally after a deep rout in the first half of the year. Consequently, some countries were able to achieve some success in controlling the spread and were able to slowly reopen their economies in the third quarter. With a potential vaccine in sight for the end of 2020 or early 2021 the broader bond market, both developed and emerging, ended the year in positive territory.
The 10-year US Treasury yield continued to decline at the start of the year as the Fed adopted a more dovish stance and continued geopolitical uncertainty forced investors to seek higher quality fixed income instruments. Elevated volatility levels due to the COVID-19 pandemic and ensuing global recession led to a severe “risk-off” tone in the markets driving Treasury yields even lower. The 10-year US Treasury yield ended the year at 0.88%, 85 basis points lower than at the beginning of the year.4 (A basis point is one one-hundredth of a percentage point.)
US corporate markets posted gains in the fourth quarter, as positive news on COVID-19 vaccines and strong corporate earnings outweighed investor concerns about political
disagreement over a fiscal stimulus package and sharply rising coronavirus infections nationwide. Cyclical sectors like energy and financials led the way, while real estate and consumer staples lagged. While the US economy rebounded significantly since the pandemic began, the recovery appeared to slow in the fourth quarter with estimates for employment gains and GDP growth down from the third quarter. However, bonds were buoyed by the Fed’s pledge to maintain its accommodative stance and asset purchases, “until substantial further progress has been made” toward employment and inflation targets.
The broader bond market, as represented by the Bloomberg Barclays U.S. Aggregate Bond Index, gained 7.51%5 for the year. The strong performance by this index was largely attributable to the sharp decline in US Treasury yields as well as a rally in spread sector assets. The four primary sectors of the Bloomberg Barclays U.S. Aggregate Bond Index – government-related, corporate, securitized and treasury – posted positive returns for the year. The Fund, at NAV, generated positive returns for the year, and outperformed the Bloomberg Barclays U.S. Aggregate Bond Index. Overweight exposure to investment grade bonds were the most notable contributor to the Fund’s relative performance. However, trading friction detracted from Fund performance with the majority of the impact occurring in the second quarter due to market volatility and higher than usual bid/offers. With regard to security selection, in the financial institutions and consumer cyclical sectors, security selection contributed to the Fund’s relative performance during the year. Meanwhile, security selection in investment grade sectors, such as energy and transportation, detracted from relative Fund performance.
Overweight exposure to and security selection in commercial mortgage-backed securities, particularly conduit and single borrower issues, contributed to the Fund’s outperformance relative to the Bloomberg Barclays U.S. Aggregate Bond Index during the year. The Fund’s out-of-index exposure to US
dollar-denominated emerging market (EM) corporate debt during the year also contributed to the Fund’s relative performance. Helping to support returns in US dollar-denominated EM corporate debt were very accommodative central bank policies.
The Fund’s allocation to cash holdings detracted from relative Fund performance, as intermediate and long duration assets rallied during the year as a result of lower Treasury rates.
The Fund benefited from incremental income earned from transactions in the highly liquid to-be-announced (TBA) market for agency mortgage-backed securities (MBS). Such transactions involve the Fund selling an MBS to a financial institution, with an agreement to repurchase a substantially similar security at an agreed upon price and date. Cash received by the Fund as a result of this repurchase transaction may be invested in short-term instruments, and the income from these investments, together with any additional fee income received from this activity, generates income for the Fund.
The Fund may use active duration and yield curve positioning for risk management and for generating excess return versus the Bloomberg Barclays U.S. Aggregate Bond Index. Duration measures a portfolio’s price sensitivity to interest rate changes. Yield curve positioning refers to actively emphasizing particular points (maturities) along the yield curve with favorable risk-return expectations. Duration of the portfolio was maintained close to that of the Bloomberg Barclays U.S. Aggregate Bond Index, on average, and the timing of changes and the degree of variance from this index during the year detracted slightly from relative returns. Buying and selling US Treasury futures were important tools used for the management of interest rate risk and to maintain our targeted portfolio duration.
Part of the Fund’s strategy to manage credit and currency risk in the portfolio during the year entailed purchasing and selling credit and currency derivatives. We sought to manage credit market risk by purchasing and selling protection through credit default swaps index contracts at various points throughout the year. The currency management was carried out via currency forwards on an asneeded basis and we believe this was effective in managing the currency positioning within the Fund.
We wish to remind you that the Fund is subject to interest rate risk, meaning when interest rates rise, the value of fixed income securities tends to fall. The risk may be greater in the current market environment because interest rates are near historic lows. The degree to which the value of fixed income securities may decline due to rising interest rates may vary depending on the speed and magnitude of the increase in interest rates, as well as individual security characteristics, such as price, maturity, duration and coupon
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
and market forces, such as supply and demand for similar securities. We are monitoring interest rates, as well as the market, economic and geopolitical factors that may impact the direction, speed and magnitude of changes to interest rates across the maturity spectrum, including the potential impact of monetary policy changes by the Fed and certain foreign central banks. If interest rates rise or fall faster than expected, markets may experience increased volatility, which may affect the value and/or liquidity of certain of the Fund’s investments.
Thank you for investing in Invesco V.I. Total Return Bond Fund and for sharing our long-term investment horizon.
1 Source: US Federal Reserve
2 Source: US Bureau of Labor Statistics
3 Source: US Bureau of Economic Analysis
4 Source: US Department of the Treasury
5 Source: Morningstar Direct
Portfolio manager(s):
Matthew Brill
Michael Hyman
Todd Schomberg
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/10
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/20 | |
| |
Series I Shares | | | | |
Inception (4/3/85) | | | 5.53 | % |
10 Years | | | 5.20 | |
5 Years | | | 5.14 | |
1 Year | | | 9.71 | |
| |
Series II Shares | | | | |
Inception (5/1/02) | | | 2.62 | % |
10 Years | | | 4.93 | |
5 Years | | | 4.88 | |
1 Year | | | 9.43 | |
Effective May 24, 2019, Non-Service and Service shares of the Oppenheimer Total Return Bond Fund/VA, (the predecessor fund) were reorganized into Series I and Series II shares, respectively, of Invesco Oppenheimer V.I. Total Return Bond Fund. Returns shown above, for periods ending on or prior to May 24, 2019, for Series I and Series II shares are those of the Non-Service shares and Service shares of the predecessor fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee future results; current performance may be lower or higher. Please contact your variable product issuer or financial adviser for the most recent month-end variable product performance. Performance figures reflect Fund expenses, reinvested distributions and changes in net asset value. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
Invesco Oppenheimer V.I. Total Return Bond Fund, a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds), is currently offered through insurance companies issuing variable products. You cannot purchase shares of the Fund directly. Performance figures given represent the Fund and are not intended to reflect actual variable product values. They do not reflect sales charges, expenses and fees assessed in connection with a variable product. Sales charges, expenses and fees, which are determined by the variable product issuers, will vary and will lower the total return.
The most recent month-end performance at the Fund level, excluding variable product charges, is available at 800 451 4246. As mentioned above, for the most recent month-end performance including variable product charges, please contact your variable product issuer or financial adviser.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
Supplemental Information
Invesco Oppenheimer V.I. Total Return Bond Fund’s investment objective is to seek total return.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2020, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | | The Bloomberg Barclays U.S. Credit Index is an unmanaged index considered representative of publicly issued, SEC-registered US corporate and specified foreign debentures and secured notes. |
| ∎ | | The FTSE Broad Investment Grade Bond Index is a multi-asset, multi-currency benchmark that provides a broad-based measure of the global fixed income markets. |
| ∎ | | 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. |
Invesco Oppenheimer V.I. Total Return Bond Fund
Fund Information
Portfolio Composition
| | | | | | | |
| By security type | | % of total net assets |
U.S. Dollar Denominated Bonds & Notes | | | | 38.66 | % |
Asset-Backed Securities | | | | 19.33 | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | 18.25 | |
U.S. Treasury Securities | | | | 7.42 | |
Security Types Each Less Than 1% of Portfolio | | | | 2.14 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 14.20 | |
|
Top Five Debt Issuers* | |
| | | % of total net assets |
| 1. | | Uniform Mortgage-Backed Securities | | | | 12.70 | % |
2. | | U.S. Treasury | | | | 7.42 | |
3. | | Government National Mortgage Association | | | | 3.46 | |
4. | | COMM Mortgage Trust | | | | 1.38 | |
5. | | World Financial Network Credit Card Master Trust | | | | 1.36 | |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
* Excluding money market fund holdings, if any.
Data presented here are as of December 31, 2020.
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
Schedule of Investments(a)
December 31, 2020
| | | | | | | | |
| | | Principal
Amount | | | Value | |
U.S. Dollar Denominated Bonds & Notes-38.66% | |
Advertising-0.43% | | | | | | | | |
Interpublic Group of Cos., Inc. (The), | | | | | | | | |
3.75%, 10/01/2021 | | $ | 201,000 | | | $ | 206,065 | |
4.20%, 04/15/2024 | | | 160,000 | | | | 178,135 | |
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | | | 166,000 | | | | 184,080 | |
| | | | | | | | 568,280 | |
| |
Aerospace & Defense-0.42% | | | | | |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, 12/15/2025(b) | | | 127,000 | | | | 144,178 | |
L3Harris Technologies, Inc., 3.85%, 06/15/2023 | | | 164,000 | | | | 177,234 | |
Northrop Grumman Corp., 4.75%, 06/01/2043 | | | 90,000 | | | | 120,210 | |
Raytheon Technologies Corp., 3.95%, 08/16/2025 | | | 99,000 | | | | 113,570 | |
| | | | | | | | 555,192 | |
| |
Agricultural & Farm Machinery-0.03% | | | | | |
Deere & Co., 3.10%, 04/15/2030 | | | 37,000 | | | | 42,377 | |
| | |
Airlines-0.87% | | | | | | | | |
Delta Air Lines Pass-Through Trust, Series 2020-1, Class AA, 2.00%, 06/10/2028 | | | 191,110 | | | | 191,408 | |
Delta Air Lines, Inc./SkyMiles IP Ltd., | |
4.50%, 10/20/2025(b) | | | 204,000 | | | | 218,118 | |
4.75%, 10/20/2028(b) | | | 341,000 | | | | 372,482 | |
United Airlines Pass-Through Trust, Series 2020-1, Class A, 5.88%, 10/15/2027 | | | 346,000 | | | | 374,793 | |
| | | | | | | | 1,156,801 | |
| |
Apparel Retail-0.24% | | | | | |
Ross Stores, Inc., | | | | | | | | |
3.38%, 09/15/2024 | | | 182,000 | | | | 195,121 | |
0.88%, 04/15/2026 | | | 85,000 | | | | 85,053 | |
1.88%, 04/15/2031 | | | 45,000 | | | | 45,234 | |
| | | | | | | | 325,408 | |
| |
Application Software-0.04% | | | | | |
Autodesk, Inc., 4.38%, 06/15/2025 | | | 51,000 | | | | 58,347 | |
| |
Asset Management & Custody Banks-0.45% | | | | | |
Ameriprise Financial, Inc., 3.00%, 04/02/2025 | | | 150,000 | | | | 163,527 | |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 130,000 | | | | 145,086 | |
Carlyle Finance Subsidiary LLC, 3.50%, 09/19/2029(b) | | | 83,000 | | | | 91,307 | |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 196,000 | | | | 201,051 | |
| | | | | | | | 600,971 | |
| |
Automobile Manufacturers-1.41% | | | | | |
Daimler Finance North America LLC (Germany), 2.55%, 08/15/2022(b) | | | 319,000 | | | | 330,032 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Automobile Manufacturers-(continued) | | | | | |
General Motors Financial Co., Inc., | | | | | | | | |
4.20%, 11/06/2021 | | $ | 200,000 | | | $ | 206,169 | |
4.15%, 06/19/2023 | | | 160,000 | | | | 172,190 | |
Hyundai Capital America, | | | | | | | | |
5.75%, 04/06/2023(b) | | | 201,000 | | | | 222,722 | |
4.13%, 06/08/2023(b) | | | 163,000 | | | | 175,962 | |
Nissan Motor Acceptance Corp., 3.65%, 09/21/2021(b) | | | 269,000 | | | | 273,753 | |
Volkswagen Group of America Finance LLC (Germany), | | | | | | | | |
4.00%, 11/12/2021(b) | | | 298,000 | | | | 307,184 | |
1.63%, 11/24/2027(b) | | | 200,000 | | | | 201,870 | |
| | | | | | | | 1,889,882 | |
| |
Biotechnology-0.32% | | | | | |
AbbVie, Inc., | | | | | | | | |
3.85%, 06/15/2024 | | | 231,000 | | | | 254,639 | |
2.95%, 11/21/2026 | | | 68,000 | | | | 75,280 | |
4.05%, 11/21/2039 | | | 76,000 | | | | 91,942 | |
| | | | | | | | 421,861 | |
| |
Brewers-0.27% | | | | | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | 96,000 | | | | 165,675 | |
Bacardi Ltd. (Bermuda), 4.70%, 05/15/2028(b) | | | 163,000 | | | | 193,526 | |
| | | | | | | | 359,201 | |
| |
Broadcasting-0.54% | | | | | |
Discovery Communications LLC, 4.00%, 09/15/2055(b) | | | 536,000 | | | | 599,974 | |
Fox Corp., 3.05%, 04/07/2025 | | | 53,000 | | | | 58,031 | |
ViacomCBS, Inc., 4.38%, 03/15/2043 | | | 52,000 | | | | 61,435 | |
| | | | | | | | 719,440 | |
| |
Cable & Satellite-0.74% | | | | | |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | | | | | | | | |
5.13%, 07/01/2049 | | | 54,000 | | | | 65,911 | |
3.85%, 04/01/2061 | | | 150,000 | | | | 151,165 | |
Comcast Corp., | | | | | | | | |
4.00%, 03/01/2048 | | | 55,000 | | | | 69,213 | |
2.80%, 01/15/2051 | | | 144,000 | | | | 149,988 | |
2.45%, 08/15/2052 | | | 153,000 | | | | 149,043 | |
2.65%, 08/15/2062 | | | 189,000 | | | | 189,223 | |
Cox Communications, Inc., | | | | | | | | |
1.80%, 10/01/2030(b) | | | 59,000 | | | | 58,983 | |
2.95%, 10/01/2050(b) | | | 94,000 | | | | 96,112 | |
Time Warner Cable LLC, 4.50%, 09/15/2042 | | | 55,000 | | | | 64,451 | |
| | | | | | | | 994,089 | |
| |
Communications Equipment-0.17% | | | | | |
British Telecommunications PLC (United Kingdom), 4.50%, 12/04/2023 | | | 201,000 | | | | 222,700 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Consumer Finance-0.52% | | | | | | | | |
American Express Co., | | | | | | | | |
3.13%, 05/20/2026 | | $ | 97,000 | | | $ | 108,763 | |
Series C, 3.50% (3 mo. USD LIBOR + 3.29%)(c)(d) | | | 196,000 | | | | 191,271 | |
Capital One Financial Corp., 3.80%, 01/31/2028 | | | 46,000 | | | | 53,043 | |
Discover Bank, 4.65%, 09/13/2028 | | | 116,000 | | | | 138,887 | |
Discover Financial Services, 3.75%, 03/04/2025 | | | 58,000 | | | | 63,894 | |
Synchrony Financial, 4.25%, 08/15/2024 | | | 130,000 | | | | 143,707 | |
| | | | | | | | 699,565 | |
| |
Distillers & Vintners-0.24% | | | | | |
Pernod Ricard S.A. (France), 4.25%, 07/15/2022(b) | | | 307,000 | | | | 324,215 | |
| |
Distributors-0.13% | | | | | |
Genuine Parts Co., 1.88%, 11/01/2030 | | | 179,000 | | | | 177,764 | |
| |
Diversified Banks-6.24% | | | | | |
Australia & New Zealand Banking Group Ltd. (Australia), 2.57%, 11/25/2035(b)(e) | | | 200,000 | | | | 204,182 | |
Banco Santander S.A. (Spain), 2.75%, 12/03/2030 | | | 200,000 | | | | 206,592 | |
Bank of America Corp., | | | | | | | | |
3.82%, 01/20/2028(e) | | | 95,000 | | | | 109,136 | |
4.27%, 07/23/2029(e) | | | 130,000 | | | | 154,831 | |
2.59%, 04/29/2031(e) | | | 125,000 | | | | 134,060 | |
1.90%, 07/23/2031(e) | | | 296,000 | | | | 299,148 | |
1.92%, 10/24/2031(e) | | | 319,000 | | | | 323,314 | |
7.75%, 05/14/2038 | | | 232,000 | | | | 396,244 | |
Bank of Montreal (Canada), Series E, 3.30%, 02/05/2024 | | | 127,000 | | | | 137,807 | |
BBVA Bancomer S.A. (Mexico), 1.88%, 09/18/2025(b) | | | 200,000 | | | | 202,250 | |
BBVA USA, 2.50%, 08/27/2024 | | | 255,000 | | | | 271,014 | |
BNP Paribas S.A. (France), 2.59%, 08/12/2035(b)(e) | | | 200,000 | | | | 204,697 | |
BPCE S.A. (France), 4.50%, 03/15/2025(b) | | | 185,000 | | | | 209,330 | |
Citigroup, Inc., | | | | | | | | |
3.11%, 04/08/2026(e) | | | 171,000 | | | | 187,055 | |
4.08%, 04/23/2029(e) | | | 131,000 | | | | 153,681 | |
4.41%, 03/31/2031(e) | | | 144,000 | | | | 174,630 | |
Series V, 4.70%(c)(e) | | | 165,000 | | | | 169,862 | |
Credit Agricole S.A. (France), 4.38%, 03/17/2025(b) | | | 310,000 | | | | 348,392 | |
Danske Bank A/S (Denmark), 3.24%, 12/20/2025(b)(e) | | | 200,000 | | | | 214,220 | |
HSBC Holdings PLC (United Kingdom), | | | | | | | | |
3.95%, 05/18/2024(e) | | | 103,000 | | | | 111,141 | |
1.65%, 04/18/2026(e) | | | 202,000 | | | | 206,685 | |
4.60%(c)(e) | | | 225,000 | | | | 229,527 | |
JPMorgan Chase & Co., | | | | | | | | |
3.80%, 07/23/2024(e) | | | 195,000 | | | | 211,715 | |
2.08%, 04/22/2026(e) | | | 223,000 | | | | 235,664 | |
3.78%, 02/01/2028(e) | | | 174,000 | | | | 200,134 | |
3.54%, 05/01/2028(e) | | | 133,000 | | | | 152,135 | |
2.96%, 05/13/2031(e) | | | 168,000 | | | | 184,395 | |
3.11%, 04/22/2041(e) | | | 138,000 | | | | 154,486 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Diversified Banks-(continued) | | | | | | | | |
Mitsubishi UFJ Financial Group, Inc. (Japan), 3.74%, 03/07/2029 | | $ | 102,000 | | | $ | 120,064 | |
National Australia Bank Ltd. (Australia), 3.93%, 08/02/2034(b)(e) | | | 153,000 | | | | 172,054 | |
Royal Bank of Canada (Canada), 3.70%, 10/05/2023 | | | 140,000 | | | | 152,714 | |
Standard Chartered PLC (United Kingdom), 3.27%, 02/18/2036(b)(e) | | | 250,000 | | | | 261,819 | |
Sumitomo Mitsui Financial Group, Inc. (Japan), | | | | | | | | |
1.47%, 07/08/2025 | | | 200,000 | | | | 205,008 | |
2.14%, 09/23/2030 | | | 340,000 | | | | 341,936 | |
Truist Bank, 2.64%, 09/17/2029(e) | | | 390,000 | | | | 412,756 | |
U.S. Bancorp, | | | | | | | | |
Series W, 3.10%, 04/27/2026 | | | 126,000 | | | | 140,402 | |
1.38%, 07/22/2030 | | | 120,000 | | | | 120,321 | |
Wells Fargo & Co., | | | | | | | | |
2.19%, 04/30/2026(e) | | | 65,000 | | | | 68,495 | |
3.58%, 05/22/2028(e) | | | 132,000 | | | | 149,663 | |
3.07%, 04/30/2041(e) | | | 93,000 | | | | 101,318 | |
4.75%, 12/07/2046 | | | 99,000 | | | | 129,700 | |
Westpac Banking Corp. (Australia), | | | | | | | | |
2.89%, 02/04/2030(e) | | | 119,000 | | | | 124,801 | |
2.67%, 11/15/2035(e) | | | 51,000 | | | | 52,602 | |
| | | | | | | | 8,339,980 | |
| |
Diversified Capital Markets-0.91% | | | | | |
Credit Suisse AG (Switzerland), 3.63%, 09/09/2024 | | | 189,000 | | | | 210,037 | |
Credit Suisse Group AG (Switzerland), | | | | | | | | |
4.55%, 04/17/2026 | | | 147,000 | | | | 173,030 | |
4.19%, 04/01/2031(b)(e) | | | 250,000 | | | | 294,248 | |
5.10%(b)(c)(e) | | | 201,000 | | | | 209,542 | |
UBS Group AG (Switzerland), | | | | | | | | |
4.13%, 04/15/2026(b) | | | 153,000 | | | | 177,084 | |
4.25%, 03/23/2028(b) | | | 135,000 | | | | 158,083 | |
| | | | | | | | 1,222,024 | |
| |
Diversified Chemicals-0.18% | | | | | |
Dow Chemical Co. (The), 3.63%, 05/15/2026 | | | 116,000 | | | | 130,771 | |
Eastman Chemical Co., 3.50%, 12/01/2021 | | | 101,000 | | | | 103,771 | |
| | | | | | | | 234,542 | |
| |
Diversified Metals & Mining-0.50% | | | | | |
Anglo American Capital PLC (South Africa), | | | | | | | | |
3.63%, 09/11/2024(b) | | | 83,000 | | | | 90,387 | |
5.38%, 04/01/2025(b) | | | 231,000 | | | | 270,585 | |
5.63%, 04/01/2030(b) | | | 240,000 | | | | 306,057 | |
| | | | | | | | 667,029 | |
| |
Diversified REITs-0.18% | | | | | |
Brixmor Operating Partnership L.P., | | | | | | | | |
4.13%, 05/15/2029 | | | 83,000 | | | | 95,599 | |
4.05%, 07/01/2030 | | | 125,000 | | | | 143,621 | |
| | | | | | | | 239,220 | |
| |
Drug Retail-0.12% | | | | | |
Walgreen Co., 3.10%, 09/15/2022 | | | 155,000 | | | | 161,847 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Electric Utilities-0.88% | | | | | | | | |
AEP Texas, Inc., 3.95%,
06/01/2028(b) | | $ | 162,000 | | | $ | 189,685 | |
Consolidated Edison Co. of New York, Inc., | | | | | | | | |
Series 20A, 3.35%, 04/01/2030 | | | 21,000 | | | | 24,090 | |
Series C, 3.00%, 12/01/2060 | | | 133,000 | | | | 135,389 | |
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(b) | | | 219,000 | | | | 239,171 | |
Emera US Finance L.P. (Canada), 2.70%, 06/15/2021 | | | 146,000 | | | | 147,146 | |
Enel Finance International N.V. (Italy), 2.88%, 05/25/2022(b) | | | 309,000 | | | | 318,918 | |
Eversource Energy, Series Q, 0.80%, 08/15/2025 | | | 30,000 | | | | 29,969 | |
Fortis, Inc. (Canada), 3.06%, 10/04/2026 | | | 65,000 | | | | 71,635 | |
Virginia Electric and Power Co., 2.45%, 12/15/2050 | | | 26,000 | | | | 26,143 | |
| | | | | | | | 1,182,146 | |
| |
Electrical Components & Equipment-0.17% | | | | | |
Acuity Brands Lighting, Inc., 2.15%, 12/15/2030 | | | 230,000 | | | | 233,716 | |
| | |
Electronic Components-0.05% | | | | | | | | |
Corning, Inc., 5.45%, 11/15/2079 | | | 44,000 | | | | 60,406 | |
| |
Electronic Manufacturing Services-0.13% | | | | | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 167,000 | | | | 177,935 | |
| |
Environmental & Facilities Services-0.14% | | | | | |
Republic Services, Inc., 1.75%, 02/15/2032 | | | 183,000 | | | | 183,499 | |
| | |
Financial Exchanges & Data-0.26% | | | | | | | | |
Intercontinental Exchange, Inc., 3.00%, 09/15/2060 | | | 124,000 | | | | 130,217 | |
Moody’s Corp., | | | | | | | | |
3.25%, 05/20/2050 | | | 55,000 | | | | 61,226 | |
2.55%, 08/18/2060 | | | 46,000 | | | | 43,233 | |
S&P Global, Inc., 1.25%, 08/15/2030 | | | 111,000 | | | | 109,461 | |
| | | | | | | | 344,137 | |
| |
Gas Utilities-0.04% | | | | | |
East Ohio Gas Co. (The), 1.30%, 06/15/2025(b) | | | 48,000 | | | | 48,950 | |
| | |
Health Care Equipment-0.07% | | | | | | | | |
Becton, Dickinson and Co., 3.70%, 06/06/2027 | | | 85,000 | | | | 97,565 | |
| | |
Health Care Facilities-0.11% | | | | | | | | |
CommonSpirit Health, 1.55%, 10/01/2025 | | | 81,000 | | | | 83,274 | |
West Virginia United Health System Obligated Group, 3.13%, 06/01/2050 | | | 60,000 | | | | 62,088 | |
| | | | | | | | 145,362 | |
| |
Health Care REITs-0.50% | | | | | |
Healthcare Trust of America Holdings L.P., | | | | | | | | |
3.50%, 08/01/2026 | | | 113,000 | | | | 128,093 | |
2.00%, 03/15/2031 | | | 124,000 | | | | 124,210 | |
Healthpeak Properties, Inc., 3.00%, 01/15/2030 | | | 153,000 | | | | 167,502 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Health Care REITs-(continued) | | | | | | | | |
Omega Healthcare Investors, Inc., 3.38%, 02/01/2031 | | $ | 156,000 | | | $ | 164,144 | |
Welltower, Inc., 2.70%, 02/15/2027 | | | 72,000 | | | | 79,378 | |
| | | | | | | | 663,327 | |
| |
Health Care Services-0.80% | | | | | |
Cigna Corp., 4.13%, 11/15/2025 | | | 127,000 | | | | 146,323 | |
CVS Health Corp., | | | | | | | | |
1.30%, 08/21/2027 | | | 170,000 | | | | 170,822 | |
2.70%, 08/21/2040 | | | 74,000 | | | | 74,977 | |
Fresenius Medical Care US Finance II, Inc. (Germany), 5.88%, 01/31/2022(b) | | | 166,000 | | | | 174,850 | |
Sutter Health, | | | | | | | | |
Series 20A, | | | | | | | | |
3.16%, 08/15/2040 | | | 270,000 | | | | 286,980 | |
3.36%, 08/15/2050 | | | 200,000 | | | | 217,925 | |
| | | | | | | | 1,071,877 | |
| |
Home Improvement Retail-0.15% | | | | | |
Lowe’s Cos., Inc., | | | | | | | | |
1.30%, 04/15/2028 | | | 123,000 | | | | 124,113 | |
4.50%, 04/15/2030 | | | 62,000 | | | | 77,195 | |
| | | | | | | | 201,308 | |
| |
Homebuilding-0.12% | | | | | |
D.R. Horton, Inc., 4.75%, 02/15/2023 | | | 150,000 | | | | 161,482 | |
|
Independent Power Producers & Energy Traders-0.33% | |
AES Corp. (The), | | | | | | | | |
1.38%, 01/15/2026(b) | | | 123,000 | | | | 124,188 | |
2.45%, 01/15/2031(b) | | | 136,000 | | | | 137,874 | |
Deutsche Telekom International Finance B.V. (Germany), 4.38%, 06/21/2028(b) | | | 149,000 | | | | 176,048 | |
| | | | | | | | 438,110 | |
| |
Industrial Conglomerates-0.14% | | | | | |
GE Capital International Funding Co. Unlimited Co., 3.37%, 11/15/2025 | | | 163,000 | | | | 181,500 | |
| | |
Industrial REITs-0.05% | | | | | | | | |
Lexington Realty Trust, 2.70%, 09/15/2030 | | | 69,000 | | | | 71,938 | |
| | |
Insurance Brokers-0.05% | | | | | | | | |
Marsh & McLennan Cos., Inc., 4.35%, 01/30/2047 | | | 55,000 | | | | 72,997 | |
| | |
Integrated Oil & Gas-0.42% | | | | | | | | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 111,000 | | | | 113,348 | |
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(b) | | | 149,000 | | | | 153,706 | |
Occidental Petroleum Corp., | | | | | | | | |
2.90%, 08/15/2024 | | | 267,000 | | | | 257,388 | |
4.50%, 07/15/2044 | | | 49,000 | | | | 41,742 | |
| | | | | | | | 566,184 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Integrated Telecommunication Services-2.36% | | | | | |
AT&T, Inc., | | | | | | | | |
4.30%, 02/15/2030 | | $ | 123,000 | | | $ | 147,037 | |
2.55%, 12/01/2033(b) | | | 668,000 | | | | 688,377 | |
3.10%, 02/01/2043 | | | 179,000 | | | | 181,612 | |
3.50%, 09/15/2053(b) | | | 305,000 | | | | 305,017 | |
3.55%, 09/15/2055(b) | | | 53,000 | | | | 52,823 | |
3.80%, 12/01/2057(b) | | | 103,000 | | | | 107,404 | |
3.65%, 09/15/2059(b) | | | 12,000 | | | | 12,060 | |
3.50%, 02/01/2061 | | | 116,000 | | | | 115,540 | |
T-Mobile USA, Inc., 3.50%, 04/15/2025(b) | | | 187,000 | | | | 206,818 | |
Verizon Communications, Inc., | | | | | | | | |
0.85%, 11/20/2025 | | | 199,000 | | | | 200,612 | |
1.75%, 01/20/2031 | | | 243,000 | | | | 242,082 | |
2.65%, 11/20/2040 | | | 210,000 | | | | 212,390 | |
4.52%, 09/15/2048 | | | 94,000 | | | | 122,589 | |
2.88%, 11/20/2050 | | | 263,000 | | | | 265,243 | |
3.00%, 11/20/2060 | | | 300,000 | | | | 302,084 | |
| | | | | | | | 3,161,688 | |
| |
Interactive Home Entertainment-0.16% | | | | | |
Activision Blizzard, Inc., 2.50%, 09/15/2050 | | | 212,000 | | | | 207,219 | |
| | |
Interactive Media & Services-0.14% | | | | | | | | |
Alphabet, Inc., | | | | | | | | |
1.90%, 08/15/2040 | | | 36,000 | | | | 35,334 | |
2.25%, 08/15/2060 | | | 160,000 | | | | 154,926 | |
| | | | | | | | 190,260 | |
| |
Internet & Direct Marketing Retail-0.54% | | | | | |
Expedia Group, Inc., | | | | | | | | |
4.63%, 08/01/2027(b) | | | 115,000 | | | | 128,584 | |
Prosus N.V. (Netherlands), 3.83%, 02/08/2051(b) | | | 599,000 | | | | 588,363 | |
| | | | | | | | 716,947 | |
| |
Internet Services & Infrastructure-0.24% | | | | | |
VeriSign, Inc., | | | | | | | | |
5.25%, 04/01/2025 | | | 99,000 | | | | 112,674 | |
4.75%, 07/15/2027 | | | 190,000 | | | | 204,193 | |
| | | | | | | | 316,867 | |
| |
Investment Banking & Brokerage-1.61% | | | | | |
Goldman Sachs Group, Inc. (The), | | | | | | | | |
3.50%, 04/01/2025 | | | 153,000 | | | | 170,272 | |
3.75%, 02/25/2026 | | | 87,000 | | | | 98,873 | |
3.50%, 11/16/2026 | | | 87,000 | | | | 97,734 | |
1.09%, 12/09/2026(e) | | | 184,000 | | | | 186,070 | |
0.87% (SOFR + 0.79%), 12/09/2026(d) | | | 786,000 | | | | 791,415 | |
Morgan Stanley, | | | | | | | | |
5.00%, 11/24/2025 | | | 164,000 | | | | 196,320 | |
2.19%, 04/28/2026(e) | | | 112,000 | | | | 118,373 | |
4.43%, 01/23/2030(e) | | | 123,000 | | | | 149,988 | |
3.62%, 04/01/2031(e) | | | 144,000 | | | | 167,354 | |
Raymond James Financial, Inc., | | | | | | | | |
3.63%, 09/15/2026 | | | 81,000 | | | | 93,018 | |
4.65%, 04/01/2030 | | | 72,000 | | | | 88,408 | |
| | | | | | | | 2,157,825 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Life & Health Insurance-1.49% | | | | | | | | |
AIA Group Ltd. (Hong Kong), 3.20%, 09/16/2040(b) | | $ | 200,000 | | | $ | 210,026 | |
Athene Global Funding, | | | | | | | | |
1.20%, 10/13/2023(b) | | | 269,000 | | | | 271,164 | |
2.95%, 11/12/2026(b) | | | 261,000 | | | | 280,242 | |
Athene Holding Ltd., | | | | | | | | |
6.15%, 04/03/2030 | | | 157,000 | | | | 195,567 | |
3.50%, 01/15/2031 | | | 65,000 | | | | 68,795 | |
Belrose Funding Trust, 2.33%,
08/15/2030(b) | | | 143,000 | | | | 147,397 | |
Lincoln National Corp., 3.80%, 03/01/2028 | | | 99,000 | | | | 114,670 | |
Manulife Financial Corp. (Canada), 4.06%, 02/24/2032(e) | | | 119,000 | | | | 130,246 | |
Pacific LifeCorp, 3.35%, 09/15/2050(b) | | | 159,000 | | | | 177,182 | |
Prudential Financial, Inc., 5.20%, 03/15/2044(e) | | | 193,000 | | | | 205,267 | |
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(b) | | | 178,000 | | | | 187,275 | |
| | | | | | | | 1,987,831 | |
| | |
Managed Health Care-0.54% | | | | | | | | |
Anthem, Inc., 3.13%, 05/15/2022 | | | 163,000 | | | | 169,157 | |
Children’s Hospital, Series 2020, 2.93%, 07/15/2050 | | | 98,000 | | | | 98,385 | |
Community Health Network, Inc., Series 20-A, 3.10%, 05/01/2050 | | | 208,000 | | | | 210,089 | |
Hackensack Meridian Health, Inc., | | | | | | | | |
Series 2020, | | | | | | | | |
2.68%, 09/01/2041 | | | 91,000 | | | | 92,103 | |
2.88%, 09/01/2050 | | | 88,000 | | | | 90,889 | |
New York and Presbyterian Hospital (The), 2.26%, 08/01/2040 | | | 66,000 | | | | 64,662 | |
| | | | | | | | 725,285 | |
| |
Multi-Utilities-0.67% | | | | | |
Ameren Corp., | | | | | | | | |
2.50%, 09/15/2024 | | | 107,000 | | | | 114,164 | |
3.50%, 01/15/2031 | | | 74,000 | | | | 85,195 | |
CenterPoint Energy, Inc., 4.25%, 11/01/2028 | | | 76,000 | | | | 90,070 | |
Dominion Energy, Inc., | | | | | | | | |
2.72%, 08/15/2021(f) | | | 177,000 | | | | 179,226 | |
Series C, 3.38%, 04/01/2030 | | | 121,000 | | | | 137,921 | |
DTE Energy Co., Series F, 1.05%, 06/01/2025 | | | 64,000 | | | | 64,760 | |
WEC Energy Group, Inc., | | | | | | | | |
1.38%, 10/15/2027 | | | 119,000 | | | | 121,101 | |
1.80%, 10/15/2030 | | | 109,000 | | | | 109,495 | |
| | | | | | | | 901,932 | |
| | |
Office REITs-0.22% | | | | | | | | |
Highwoods Realty L.P., 2.60%, 02/01/2031 | | | 36,000 | | | | 36,781 | |
Office Properties Income Trust, 4.50%, 02/01/2025 | | | 247,000 | | | | 261,932 | |
| | | | | | | | 298,713 | |
| |
Oil & Gas Exploration & Production-0.35% | | | | | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 223,000 | | | | 234,124 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Oil & Gas Exploration & Production-(continued) |
Concho Resources, Inc., 2.40%, 02/15/2031 | | $ | 51,000 | | | $ 53,464 |
EQT Corp., 3.00%, 10/01/2022 | | | 29,000 | | | 29,272 |
Pioneer Natural Resources Co., 1.90%, 08/15/2030 | | | 158,000 | | | 156,627 |
| | | | | | | 473,487 |
| |
Oil & Gas Storage & Transportation-1.31% | | | |
Energy Transfer Operating L.P., 4.25%, 03/15/2023 | | | 126,000 | | | 134,012 |
Kinder Morgan Energy Partners L.P., 5.80%, 03/01/2021 | | | 108,000 | | | 108,884 |
Kinder Morgan, Inc., | | | | | | |
2.00%, 02/15/2031 | | | 95,000 | | | 96,077 |
5.20%, 03/01/2048 | | | 69,000 | | | 87,897 |
MPLX L.P., | | | | | | |
1.33% (3 mo. USD LIBOR + 1.10%), 09/09/2022(d) | | | 149,000 | | | 149,027 |
1.75%, 03/01/2026 | | | 153,000 | | | 158,419 |
4.25%, 12/01/2027 | | | 101,000 | | | 118,719 |
2.65%, 08/15/2030 | | | 162,000 | | | 169,966 |
ONEOK, Inc., | | | | | | |
5.85%, 01/15/2026 | | | 56,000 | | | 67,135 |
6.35%, 01/15/2031 | | | 215,000 | | | 276,041 |
Sabine Pass Liquefaction LLC, 4.20%, 03/15/2028 | | | 85,000 | | | 97,583 |
Sunoco Logistics Partners Operations L.P., 4.00%, 10/01/2027 | | | 100,000 | | | 109,447 |
Williams Cos., Inc. (The), 3.70%, 01/15/2023 | | | 164,000 | | | 173,827 |
| | | | | | | 1,747,034 |
| |
Other Diversified Financial Services-0.53% | | | |
Avolon Holdings Funding Ltd. (Ireland), 4.25%, 04/15/2026(b) | | | 94,000 | | | 101,345 |
Blackstone Holdings Finance Co. LLC, | | | | | | |
3.15%, 10/02/2027(b) | | | 62,000 | | | 69,157 |
1.60%, 03/30/2031(b) | | | 222,000 | | | 221,133 |
2.80%, 09/30/2050(b) | | | 103,000 | | | 105,360 |
Equitable Holdings, Inc., 4.35%, 04/20/2028 | | | 85,000 | | | 100,514 |
KKR Group Finance Co. VIII LLC, 3.50%, 08/25/2050(b) | | | 97,000 | | | 107,961 |
| | | | | | | 705,470 |
| | |
Packaged Foods & Meats-0.48% | | | | | | |
Conagra Brands, Inc., 4.60%, 11/01/2025 | | | 155,000 | | | 182,735 |
Mondelez International Holdings Netherlands B.V., 2.00%, 10/28/2021(b) | | | 319,000 | | | 322,967 |
Tyson Foods, Inc., 3.90%, 09/28/2023 | | | 130,000 | | | 142,026 |
| | | | | | | 647,728 |
| | |
Paper Packaging-0.17% | | | | | | |
Berry Global, Inc., 1.57%,
01/15/2026(b) | | | 71,000 | | | 71,704 |
Packaging Corp. of America, 3.65%, 09/15/2024 | | | 141,000 | | | 154,621 |
| | | | | | | 226,325 |
| | | | | | |
| | | Principal
Amount | | | Value |
Pharmaceuticals-1.11% | | | | | | |
Bayer US Finance II LLC (Germany), 3.88%, 12/15/2023(b) | | $ | 313,000 | | | $ 341,259 |
Bristol-Myers Squibb Co., | | | | | | |
0.75%, 11/13/2025 | | | 192,000 | | | 193,405 |
1.45%, 11/13/2030 | | | 296,000 | | | 297,575 |
2.35%, 11/13/2040 | | | 28,000 | | | 28,818 |
2.55%, 11/13/2050 | | | 101,000 | | | 103,428 |
Elanco Animal Health, Inc., 5.90%, 08/28/2028 | | | 137,000 | | | 162,088 |
Mylan, Inc., 3.13%, 01/15/2023(b) | | | 159,000 | | | 167,001 |
Royalty Pharma PLC, | | | | | | |
1.20%, 09/02/2025(b) | | | 62,000 | | | 63,005 |
1.75%, 09/02/2027(b) | | | 56,000 | | | 57,668 |
2.20%, 09/02/2030(b) | | | 70,000 | | | 71,966 |
| | | | | | | 1,486,213 |
| |
Property & Casualty Insurance-0.48% | | | |
Arch Capital Group Ltd., 3.64%, 06/30/2050 | | | 87,000 | | | 101,443 |
CNA Financial Corp., 3.45%, 08/15/2027 | | | 123,000 | | | 139,489 |
Fidelity National Financial, Inc., | | | | | | |
3.40%, 06/15/2030 | | | 111,000 | | | 122,075 |
2.45%, 03/15/2031 | | | 166,000 | | | 169,115 |
W.R. Berkley Corp., 4.00%, 05/12/2050 | | | 95,000 | | | 116,211 |
| | | | | | | 648,333 |
| | |
Railroads-0.35% | | | | | | |
CSX Corp., 2.50%, 05/15/2051 | | | 187,000 | | | 185,755 |
Union Pacific Corp., | | | | | | |
2.15%, 02/05/2027 | | | 119,000 | | | 126,559 |
2.40%, 02/05/2030 | | | 147,000 | | | 158,479 |
| | | | | | | 470,793 |
| | |
Real Estate Development-0.09% | | | | | | |
Piedmont Operating Partnership L.P., 3.15%, 08/15/2030 | | | 113,000 | | | 115,877 |
| | |
Regional Banks-1.16% | | | | | | |
Citizens Financial Group, Inc., | | | | | | |
2.50%, 02/06/2030 | | | 113,000 | | | 120,166 |
3.25%, 04/30/2030 | | | 70,000 | | | 79,155 |
Fifth Third Bancorp, 2.55%, 05/05/2027 | | | 94,000 | | | 102,409 |
Fifth Third Bank N.A., 3.85%, 03/15/2026 | | | 168,000 | | | 190,570 |
Huntington Bancshares, Inc., 4.00%, 05/15/2025 | | | 164,000 | | | 185,835 |
KeyCorp, | | | | | | |
4.15%, 10/29/2025 | | | 52,000 | | | 60,409 |
2.25%, 04/06/2027 | | | 164,000 | | | 175,680 |
PNC Financial Services Group, Inc. (The), 3.15%, 05/19/2027 | | | 121,000 | | | 135,303 |
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | | | 131,000 | | | 141,567 |
Synovus Financial Corp., 3.13%, 11/01/2022 | | | 93,000 | | | 96,601 |
Zions Bancorporation N.A., 3.25%, 10/29/2029 | | | 250,000 | | | 263,654 |
| | | | | | | 1,551,349 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Reinsurance-0.12% | | | | | | |
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | $ | 154,000 | | | $ 165,307 |
| | |
Residential REITs-0.47% | | | | | | |
Essex Portfolio L.P., | | | | | | |
3.00%, 01/15/2030 | | | 77,000 | | | 84,605 |
1.65%, 01/15/2031 | | | 77,000 | | | 76,623 |
2.65%, 09/01/2050 | | | 136,000 | | | 130,808 |
Mid-America Apartments L.P., 1.70%, 02/15/2031 | | | 51,000 | | | 50,898 |
Spirit Realty L.P., 3.20%, 01/15/2027 | | | 107,000 | | | 113,769 |
VEREIT Operating Partnership L.P., | | | | | | |
2.20%, 06/15/2028 | | | 90,000 | | | 92,108 |
2.85%, 12/15/2032 | | | 82,000 | | | 85,772 |
| | | | | | | 634,583 |
| | |
Restaurants-0.02% | | | | | | |
McDonald’s Corp., 3.30%, 07/01/2025 | | | 22,000 | | | 24,519 |
| | |
Retail REITs-0.74% | | | | | | |
Kimco Realty Corp., | | | | | | |
1.90%, 03/01/2028 | | | 191,000 | | | 197,330 |
2.70%, 10/01/2030 | | | 93,000 | | | 100,299 |
Kite Realty Group L.P., 4.00%, 10/01/2026 | | | 111,000 | | | 116,516 |
Realty Income Corp., 3.25%, 01/15/2031 | | | 127,000 | | | 144,133 |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 126,000 | | | 134,708 |
Retail Properties of America, Inc., 4.75%, 09/15/2030 | | | 110,000 | | | 116,953 |
Scentre Group Trust 2 (Australia), 4.75%, 09/24/2080(b)(e) | | | 166,000 | | | 173,253 |
| | | | | | | 983,192 |
| | |
Semiconductor Equipment-0.12% | | | | | | |
NXP B.V./NXP Funding LLC/NXP USA, Inc. (Netherlands), | | | | | | |
2.70%, 05/01/2025(b) | | | 40,000 | | | 43,078 |
3.88%, 06/18/2026(b) | | | 106,000 | | | 121,525 |
| | | | | | | 164,603 |
| | |
Semiconductors-1.02% | | | | | | |
Analog Devices, Inc., 2.95%, 04/01/2025 | | | 63,000 | | | 68,816 |
Broadcom, Inc., | | | | | | |
2.25%, 11/15/2023 | | | 191,000 | | | 199,601 |
4.70%, 04/15/2025 | | | 235,000 | | | 269,356 |
3.15%, 11/15/2025 | | | 196,000 | | | 214,097 |
4.15%, 11/15/2030 | | | 172,000 | | | 199,227 |
QUALCOMM, Inc., | | | | | | |
2.15%, 05/20/2030 | | | 190,000 | | | 201,301 |
3.25%, 05/20/2050 | | | 186,000 | | | 215,918 |
| | | | | | | 1,368,316 |
| | |
Soft Drinks-0.13% | | | | | | |
Keurig Dr Pepper, Inc., 4.06%, 05/25/2023 | | | 156,000 | | | 169,599 |
| | |
Specialized REITs-0.42% | | | | | | |
Agree L.P., 2.90%, 10/01/2030 | | | 50,000 | | | 53,196 |
| | | | | | |
| | | Principal
Amount | | | Value |
Specialized REITs-(continued) | | | | | | |
American Tower Corp., | | | | | | |
3.00%, 06/15/2023 | | $ | 135,000 | | | $ 143,088 |
4.00%, 06/01/2025 | | | 86,000 | | | 97,196 |
1.30%, 09/15/2025 | | | 99,000 | | | 101,302 |
Crown Castle International Corp., 3.30%, 07/01/2030 | | | 53,000 | | | 59,385 |
Life Storage L.P., 2.20%, 10/15/2030 | | | 55,000 | | | 56,207 |
Simon Property Group L.P., 3.50%, 09/01/2025 | | | 44,000 | | | 48,883 |
| | | | | | | 559,257 |
| | |
Systems Software-0.17% | | | | | | |
Leidos, Inc., 2.30%, 02/15/2031(b) | | | 224,000 | | | 228,497 |
|
Technology Hardware, Storage & Peripherals-0.86% |
Apple, Inc., | | | | | | |
4.38%, 05/13/2045 | | | 97,000 | | | 132,941 |
2.55%, 08/20/2060 | | | 554,000 | | | 569,816 |
Dell International LLC/EMC Corp., 5.30%, 10/01/2029(b) | | | 196,000 | | | 240,205 |
Lenovo Group Ltd. (China), 3.42%, 11/02/2030(b) | | | 200,000 | | | 210,372 |
| | | | | | | 1,153,334 |
| |
Thrifts & Mortgage Finance-0.13% | | | |
Nationwide Building Society (United Kingdom), 3.96%, 07/18/2030(b)(e) | | | 150,000 | | | 174,865 |
| | |
Tobacco-0.54% | | | | | | |
Altria Group, Inc., 3.49%, 02/14/2022 | | | 107,000 | | | 110,694 |
BAT Capital Corp. (United Kingdom), 2.26%, 03/25/2028 | | | 137,000 | | | 142,336 |
Imperial Brands Finance PLC (United Kingdom), 3.75%, 07/21/2022(b) | | | 308,000 | | | 321,281 |
Philip Morris International, Inc., 0.88%, 05/01/2026 | | | 147,000 | | | 147,688 |
| | | | | | | 721,999 |
| | |
Trucking-0.56% | | | | | | |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | | | | | |
3.65%, 07/29/2021(b) | | | 95,000 | | | 96,484 |
4.00%, 07/15/2025(b) | | | 128,000 | | | 145,215 |
1.20%, 11/15/2025(b) | | | 43,000 | | | 43,399 |
3.40%, 11/15/2026(b) | | | 154,000 | | | 171,364 |
Ryder System, Inc., | | | | | | |
2.50%, 09/01/2024 | | | 83,000 | | | 88,210 |
4.63%, 06/01/2025 | | | 117,000 | | | 135,623 |
3.35%, 09/01/2025 | | | 56,000 | | | 62,446 |
| | | | | | | 742,741 |
Total U.S. Dollar Denominated Bonds & Notes (Cost $48,035,755) | | | 51,711,162 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Asset-Backed Securities-19.33% |
American Credit Acceptance Receivables Trust, | | | | | | |
Series 2017-4, Class D, 3.57%, 01/10/2024(b) | | $ | 153,413 | | | $ 155,442 |
Series 2018-2, Class C, 3.70%, 07/10/2024(b) | | | 62,570 | | | 62,838 |
Series 2018-3, Class D, 4.14%, 10/15/2024(b) | | | 25,000 | | | 25,586 |
Series 2018-4, Class C, 3.97%, 01/13/2025(b) | | | 119,614 | | | 120,908 |
Series 2019-3, Class C, 2.76%, 09/12/2025(b) | | | 160,000 | | | 163,032 |
AmeriCredit Automobile Receivables Trust, | | | | | | |
Series 2017-2, Class D, 3.42%, 04/18/2023 | | | 300,000 | | | 308,519 |
Series 2017-4, Class D, 3.08%, 12/18/2023 | | | 190,000 | | | 195,840 |
Series 2018-3, Class C, 3.74%, 10/18/2024 | | | 260,000 | | | 274,001 |
Series 2019-2, Class C, 2.74%, 04/18/2025 | | | 100,000 | | | 104,235 |
Series 2019-2, Class D, 2.99%, 06/18/2025 | | | 280,000 | | | 293,228 |
Series 2019-3, Class D, 2.58%, 09/18/2025 | | | 135,000 | | | 140,260 |
Angel Oak Mortgage Trust, | | | | | | |
Series 2020-1, Class A1, 2.47%, 12/25/2059(b)(g) | | | 136,966 | | | 138,445 |
Series 2020-3, Class A1, 1.69%, 04/25/2065(b)(g) | | | 382,315 | | | 385,497 |
Bain Capital Credit CLO Ltd., Series 2017-2A, Class AR, 1.46% (3 mo. USD LIBOR + 1.25%), 07/25/2030(b)(d) | | | 480,786 | | | 480,905 |
Banc of America Funding Trust, | | | | | | |
Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | 53,223 | | | 52,584 |
Series 2007-C, Class 1A4, 3.48%, 05/20/2036(g) | | | 18,386 | | | 18,150 |
Banc of America Mortgage Trust, Series 2007-1, Class 1A24, 6.00%, 03/25/2037 | | | 38,662 | | | 38,847 |
Bank, Series 2019-BNK16, Class XA, IO, 0.96%,
02/15/2052(h) | | | 1,569,154 | | | 98,967 |
Bear Stearns Adjustable Rate Mortgage Trust, | | | | | | |
Series 2005-9, Class A1, 2.41% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(d) | | | 43,875 | | | 43,967 |
Series 2006-1, Class A1, 2.37% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(d) | | | 53,926 | | | 55,185 |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.52%, 01/15/2051(h) | | | 1,770,163 | | | 51,842 |
Capital Auto Receivables Asset Trust, | | | | | | |
Series 2017-1, Class D, 3.15%, 02/20/2025(b) | | | 40,000 | | | 40,619 |
Series 2018-2, Class B, 3.48%, 10/20/2023(b) | | | 120,000 | | | 120,915 |
Series 2018-2, Class C, 3.69%, 12/20/2023(b) | | | 115,000 | | | 116,923 |
Capital Lease Funding Securitization L.P., Series 1997-CTL1, Class IO, 1.51%, 06/22/2024(b)(h) | | | 55,429 | | | 600 |
| | | | | | |
| | | Principal
Amount | | | Value |
CarMax Auto Owner Trust, | | | | | | |
Series 2017-1, Class D, 3.43%, 07/17/2023 | | $ | 230,000 | | | $ 231,272 |
Series 2017-4, Class D, 3.30%, 05/15/2024 | | | 100,000 | | | 102,341 |
CCG Receivables Trust, | | | | | | |
Series 2018-1, Class B, 3.09%, 06/16/2025(b) | | | 85,000 | | | 85,800 |
Series 2018-2, Class C, 3.87%, 12/15/2025(b) | | | 60,000 | | | 61,848 |
Series 2019-2, Class B, 2.55%, 03/15/2027(b) | | | 105,000 | | | 107,844 |
Series 2019-2, Class C, 2.89%, 03/15/2027(b) | | | 100,000 | | | 102,629 |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(h) | | | 713,906 | | | 29,600 |
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, 4.00%, 04/25/2049(b)(g) | | | 28,566 | | | 29,339 |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 3.36%, 01/25/2036(g) | | | 51,806 | | | 50,193 |
CHL Mortgage Pass-Through Trust, | | | | | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | 5,137 | | | 5,116 |
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | 45,235 | | | 38,587 |
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | | | 4,831 | | | 4,803 |
Citigroup Commercial Mortgage Trust, Series 2013-GC17, Class XA, IO, 1.03%, 11/10/2046(g) | | | 377,506 | | | 9,305 |
Series 2014-GC21, Class AA, 3.48%, 05/10/2047 | | | 67,231 | | | 70,431 |
Series 2017-C4, Class XA, IO, 1.10%, 10/12/2050(h) | | | 1,973,738 | | | 104,467 |
Citigroup Mortgage Loan Trust, Inc., Series 2006-AR1, Class 1A1, 3.88% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(d) | | | 138,201 | | | 141,130 |
CNH Equipment Trust, | | | | | | |
Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 65,000 | | | 65,969 |
Series 2019-A, Class A4, 3.22%, 01/15/2026 | | | 125,000 | | | 132,217 |
COLT Mortgage Loan Trust, | | | | | | |
Series 2020-1, Class A1, 2.49%, 02/25/2050(b)(g) | | | 277,395 | | | 281,033 |
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(g) | | | 213,037 | | | 216,036 |
COMM Mortgage Trust, | | | | | | |
Series 2012-CR5, Class XA, IO, 1.51%, 12/10/2045(h) | | | 1,876,478 | | | 45,679 |
Series 2013-CR6, Class AM, 3.15%, 03/10/2046(b) | | | 245,000 | | | 254,948 |
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | | | 50,479 | | | 52,935 |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 715,000 | | | 786,063 |
Series 2014-LC15, Class AM, 4.20%, 04/10/2047 | | | 170,000 | | | 186,917 |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 475,000 | | | 522,377 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
CSAIL Commercial Mortgage Trust, Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | $ | 637,000 | | | $ 688,881 |
CSMC Mortgage-Backed Trust, Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | | 117,406 | | | 92,884 |
Dell Equipment Finance Trust, | | | | | | |
Series 2018-1, Class B, 3.34%, 06/22/2023(b) | | | 80,000 | | | 80,648 |
Series 2019-1, Class C, 3.14%, 03/22/2024(b) | | | 325,000 | | | 332,487 |
Series 2019-2, Class D, 2.48%, 04/22/2025(b) | | | 115,000 | | | 116,894 |
Drive Auto Receivables Trust, | | | | | | |
Series 2016-CA, Class D, 4.18%, 03/15/2024(b) | | | 77,329 | | | 78,095 |
Series 2017-1, Class D, 3.84%, 03/15/2023 | | | 135,875 | | | 137,517 |
Series 2018-1, Class D, 3.81%, 05/15/2024 | | | 130,556 | | | 133,144 |
Series 2018-2, Class D, 4.14%, 08/15/2024 | | | 215,000 | | | 221,274 |
Series 2018-3, Class D, 4.30%, 09/16/2024 | | | 200,000 | | | 207,271 |
Series 2018-5, Class C, 3.99%, 01/15/2025 | | | 210,000 | | | 214,911 |
Series 2019-1, Class C, 3.78%, 04/15/2025 | | | 345,000 | | | 351,657 |
DT Auto Owner Trust, | | | | | | |
Series 2017-1A, Class D, 3.55%, 11/15/2022(b) | | | 37 | | | 37 |
Series 2017-2A, Class D, 3.89%, 01/15/2023(b) | | | 15,592 | | | 15,626 |
Series 2017-3A, Class D, 3.58%, 05/15/2023(b) | | | 20,051 | | | 20,208 |
Series 2017-3A, Class E, 5.60%, 08/15/2024(b) | | | 195,000 | | | 200,772 |
Series 2017-4A, Class D, 3.47%, 07/17/2023(b) | | | 39,802 | | | 39,976 |
Series 2018-3A, Class B, 3.56%, 09/15/2022(b) | | | 24,763 | | | 24,793 |
Series 2018-3A, Class C, 3.79%, 07/15/2024(b) | | | 100,000 | | | 101,252 |
Ellington Financial Mortgage Trust, Series 2020-1, Class A1, 2.01%, 05/25/2065(b)(g) | | | 94,700 | | | 96,290 |
Exeter Automobile Receivables Trust, | | | | | | |
Series 2019-2A, Class C, 3.30%, 03/15/2024(b) | | | 317,000 | | | 323,693 |
Series 2019-4A, Class D, 2.58%, 09/15/2025(b) | | | 240,000 | | | 247,037 |
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class 1A6, 0.80% (1 mo. USD LIBOR + 0.65%), 11/25/2035(d) | | | 83,942 | | | 39,387 |
Flagship Credit Auto Trust, Series 2016-1, Class C, 6.22%,
06/15/2022(b) | | | 121,027 | | | 122,194 |
Ford Credit Floorplan Master Owner Trust, Series 2019-3, Class A2, 0.76% (1 mo. USD LIBOR + 0.60%), 09/15/2024(d) | | | 560,000 | | | 564,186 |
| | | | | | |
| | | Principal
Amount | | | Value |
FREMF Mortgage Trust, | | | | | | |
Series 2013-K25, Class C, 3.62%, 11/25/2045(b)(g) | | $ | 90,000 | | | $ 93,549 |
Series 2013-K26, Class C, 3.60%, 12/25/2045(b)(g) | | | 60,000 | | | 62,624 |
Series 2013-K27, Class C, 3.50%, 01/25/2046(b)(g) | | | 95,000 | | | 99,041 |
Series 2013-K28, Class C, 3.49%, 06/25/2046(b)(g) | | | 285,000 | | | 299,169 |
Series 2014-K715, Class C, 4.12%, 02/25/2046(b)(g) | | | 190,000 | | | 189,749 |
GLS Auto Receivables Trust, Series 2018-1A, Class A, 2.82%, 07/15/2022(b) | | | 7,777 | | | 7,786 |
GS Mortgage Securities Trust, | | | | | | |
Series 2012-GC6, Class A3, 3.48%, 01/10/2045 | | | 59,774 | | | 60,735 |
Series 2013-GC16, Class AS, 4.65%, 11/10/2046 | | | 45,000 | | | 49,209 |
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | | | 15,804 | | | 16,127 |
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | | | 52,922 | | | 55,265 |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 245,000 | | | 264,157 |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.33%, 07/25/2035(g) | | | 23,738 | | | 24,237 |
HomeBanc Mortgage Trust, Series 2005-3, Class A2, 0.77% (1 mo. USD LIBOR + 0.62%),
07/25/2035(d) | | | 4,819 | | | 4,834 |
JP Morgan Chase Commercial Mortgage Securities Trust, | | | | | | |
Series 2013-C10, Class AS, 3.37%, 12/15/2047 | | | 315,000 | | | 329,320 |
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | | | 300,000 | | | 326,757 |
Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | 40,000 | | | 41,638 |
Series 2014-C20, Class AS, 4.04%, 07/15/2047 | | | 220,000 | | | 240,396 |
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | | | 123,307 | | | 124,533 |
JP Morgan Mortgage Trust, | | | | | | |
Series 2007-A1, Class 5A1, 3.06%, 07/25/2035(g) | | | 29,576 | | | 29,333 |
Series 2018-8, Class A17, 4.00%, 01/25/2049(b)(g) | | | 4,171 | | | 4,175 |
JPMBB Commercial Mortgage Securities Trust, | | | | | | |
Series 2014-C24, Class B, 4.12%, 11/15/2047(g) | | | 245,000 | | | 252,810 |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | 200,000 | | | 220,258 |
Series 2015-C27, Class XA, IO, 1.16%, 02/15/2048(h) | | | 2,044,588 | | | 81,227 |
LB Commercial Conduit Mortgage Trust, Series 1998-C1, Class IO, 0.93%, 02/18/2030(h) | | | 40,213 | | | 0 |
Lehman Structured Securities Corp., Series 2002-GE1, Class A, 0.00%, 07/26/2024(b)(g) | | | 16,272 | | | 10,513 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 0.25% (1 mo. USD LIBOR + 0.10%), 08/25/2036(d) | | $ | 41,947 | | | $ 19,872 |
Morgan Stanley BAML Trust, Series 2014-C19, Class AS, 3.83%, 12/15/2047 | | | 595,000 | | | 648,586 |
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | 225,000 | | | 235,563 |
Morgan Stanley Capital I Trust, | | | | | | |
Series 2011-C2, Class A4, 4.66%, 06/15/2044(b) | | | 61,282 | | | 61,698 |
Series 2017-HR2, Class XA, IO, 0.79%, 12/15/2050(h) | | | 675,619 | | | 29,893 |
Morgan Stanley ReRemic Trust, Series 2012-R3, Class 1B, 2.64%, 11/26/2036(b)(g) | | | 305,387 | | | 291,449 |
Mortgage-Linked Amortizing Notes, Series 2012-1, Class A10, 2.06%, 01/15/2022 | | | 151,355 | | | 153,920 |
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 1.24% (3 mo. USD LIBOR + 1.02%), 04/19/2030(b)(d) | | | 293,000 | | | 291,880 |
OCP CLO Ltd. (Cayman Islands), | | | | | | |
Series 2017-13A, Class A1A, 1.50% (3 mo. USD LIBOR + 1.26%), 07/15/2030(b)(d) | | | 250,000 | | | 250,125 |
Series 2020-8RA, Class A1, 1.00% (1.22% - 3 mo. USD LIBOR), 01/17/2032(b)(d) | | | 433,000 | | | 433,217 |
Octagon Investment Partners 49 Ltd., Series 2020-5A, Class A1, 1.00% (1.22% - 3 mo. USD LIBOR), 01/15/2033(b)(d) | | | 400,000 | | | 400,326 |
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.48% (3 mo. USD LIBOR + 1.26%),
01/20/2033(b)(d) | | | 287,936 | | | 288,683 |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(b) | | | 115,000 | | | 118,045 |
Progress Residential Trust, Series 2020-SFR1, Class A, 1.73%, 04/17/2037(b) | | | 395,000 | | | 402,799 |
RBSSP Resecuritization Trust, Series 2010-1, Class 2A1, 3.04%, 07/26/2045(b)(g) | | | 1,798 | | | 1,813 |
Residential Accredit Loans, Inc. Trust, | | | | | | |
Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | 441 | | | 412 |
Series 2007-QS6, Class A28, 5.75%, 04/25/2037 | | | 5,276 | | | 5,080 |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, 02/25/2024(b)(g) | | | 128,284 | | | 131,014 |
| | | | | | |
| | | Principal
Amount | | | Value |
Santander Drive Auto Receivables Trust, | | | | | | |
Series 2017-1, Class E, 5.05%, 07/15/2024(b) | | $ | 355,000 | | | $ 361,049 |
Series 2017-2, Class D, 3.49%, 07/17/2023 | | | 51,384 | | | 52,014 |
Series 2017-3, Class D, 3.20%, 11/15/2023 | | | 280,000 | | | 284,921 |
Series 2018-1, Class D, 3.32%, 03/15/2024 | | | 100,000 | | | 102,308 |
Series 2018-2, Class D, 3.88%, 02/15/2024 | | | 165,000 | | | 170,451 |
Series 2018-5, Class C, 3.81%, 12/16/2024 | | | 162,802 | | | 164,624 |
Series 2019-2, Class D, 3.22%, 07/15/2025 | | | 195,000 | | | 202,915 |
Series 2019-3, Class D, 2.68%, 10/15/2025 | | | 165,000 | | | 169,744 |
Santander Retail Auto Lease Trust, | | | | | | |
Series 2019-A, Class C, 3.30%, 05/22/2023(b) | | | 315,000 | | | 324,488 |
Series 2019-B, Class C, 2.77%, 08/21/2023(b) | | | 115,000 | | | 118,410 |
Series 2019-C, Class C, 2.39%, 11/20/2023(b) | | | 210,000 | | | 215,713 |
Starwood Mortgage Residential Trust, Series 2020-1, Class A1, 2.28%, 02/25/2050(b)(g) | | | 163,168 | | | 166,963 |
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, 1.51% (3 mo. USD LIBOR + 1.29%),
04/18/2033(b)(d) | | | 250,000 | | | 250,312 |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.50% (3 mo. USD LIBOR + 1.28%), 04/20/2033(b)(d) | | | 271,000 | | | 271,350 |
Tricon American Homes Trust, Series 2020-SFR2, Class A, 1.48%, 11/17/2039(b) | | | 310,000 | | | 313,134 |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 1.00%, 11/15/2050(h) | | | 1,230,778 | | | 59,268 |
United Auto Credit Securitization Trust, Series 2019-1, Class C, 3.16%, 08/12/2024(b) | | | 139,182 | | | 139,849 |
Verus Securitization Trust, | | | | | | |
Series 2020-1, Class A1, 2.42%, 01/25/2060(b)(f) | | | 357,661 | | | 364,774 |
Series 2020-1, Class A2, 2.64%, 01/25/2060(b)(f) | | | 99,729 | | | 101,752 |
Series 2020-INV1, Class A1, 1.98%, 03/25/2060(b)(g) | | | 90,494 | | | 91,918 |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(b) | | | 199,794 | | | 200,405 |
WaMu Mortgage Pass-Through Ctfs. Trust, | | | | | | |
Series 2003-AR10, Class A7, 2.57%, 10/25/2033(g) | | | 33,896 | | | 34,133 |
Series 2005-AR14, Class 1A4, 2.90%, 12/25/2035(g) | | | 76,465 | | | 76,435 |
Series 2005-AR16, Class 1A1, 2.75%, 12/25/2035(g) | | | 35,549 | | | 35,186 |
Wells Fargo Commercial Mortgage Trust, | | | | | | |
Series 2015-NXS1, Class ASB, 2.93%, 05/15/2048 | | | 247,895 | | | 256,911 |
Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(h) | | | 887,130 | | | 45,316 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Westlake Automobile Receivables Trust, | | | | | | |
Series 2017-2A, Class E, 4.63%, 07/15/2024(b) | | $ | 305,000 | | | $ 306,391 |
Series 2018-1A, Class D, 3.41%, 05/15/2023(b) | | | 108,156 | | | 108,977 |
Series 2018-3A, Class B, 3.32%, 10/16/2023(b) | | | 15,869 | | | 15,887 |
Series 2019-3A, Class C, 2.49%, 10/15/2024(b) | | | 260,000 | | | 266,248 |
WFRBS Commercial Mortgage Trust, | | | | | | |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | 150,000 | | | 157,504 |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | 130,000 | | | 141,392 |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(g) | | | 145,000 | | | 158,461 |
World Financial Network Credit Card Master Trust, | | | | | | |
Series 2018-A, Class A, 3.07%, 12/16/2024 | | | 495,000 | | | 496,619 |
Series 2018-B, Class A, 3.46%, 07/15/2025 | | | 230,000 | | | 235,075 |
Series 2018-C, Class A, 3.55%, 08/15/2025 | | | 470,000 | | | 481,920 |
Series 2019-A, Class A, 3.14%, 12/15/2025 | | | 75,000 | | | 77,364 |
Series 2019-B, Class A, 2.49%, 04/15/2026 | | | 270,000 | | | 278,360 |
Series 2019-C, Class A, 2.21%, 07/15/2026 | | | 235,000 | | | 242,383 |
Total Asset-Backed Securities
(Cost $25,931,983) | | | 25,850,069 |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities-18.25% |
Collateralized Mortgage Obligations-1.69% | | | |
Fannie Mae Interest STRIPS, | | | | | | |
IO, | | | | | | |
7.50%, 05/25/2023 to 11/25/2029(i) | | | 65,758 | | | 7,239 |
7.00%, 06/25/2023 to 04/25/2032(i) | | | 144,710 | | | 23,097 |
6.50%, 04/25/2029 to 02/25/2033(i) | | | 278,486 | | | 54,654 |
6.00%, 02/25/2033 to 03/25/2036(i) | | | 206,144 | | | 39,357 |
6.50%, 02/25/2033(i) | | | 45,201 | | | 8,536 |
5.50%, 09/25/2033 to 06/25/2035(i) | | | 398,070 | | | 70,645 |
6.00%, 09/25/2035(i) | | | 60,097 | | | 11,045 |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations-(continued) | | | |
Fannie Mae REMICs, | | | | | | |
IO, | | | | | | |
5.50%, 04/25/2023 to 07/25/2046(i) | | $ | 169,661 | | | $ 104,440 |
6.55%, 02/25/2024 to 05/25/2035(d)(i) | | | 139,090 | | | 26,244 |
4.00%, 08/25/2026 to 08/25/2047(i) | | | 219,319 | | | 13,729 |
3.00%, 11/25/2027(i) | | | 106,577 | | | 6,119 |
6.95% (7.10% - 1 mo. USD LIBOR), 11/25/2030(d)(i) | | | 53,445 | | | 9,686 |
7.74%, 11/18/2031 to 12/18/2031(d)(i) | | | 3,593 | | | 751 |
7.75%, 11/25/2031(d)(i) | | | 70,547 | | | 14,090 |
7.10% (7.25% - 1 mo. USD LIBOR), 01/25/2032(d)(i) | | | 3,846 | | | 787 |
7.80% (7.95% - 1 mo. USD LIBOR), 01/25/2032(d)(i) | | | 18,356 | | | 3,791 |
7.84%, 03/18/2032 to 12/18/2032(d)(i) | | | 6,703 | | | 1,505 |
7.95%, 03/25/2032 to 04/25/2032(d)(i) | | | 5,541 | | | 1,270 |
6.85%, 04/25/2032 to 09/25/2032(d)(i) | | | 17,191 | | | 3,278 |
7.65% (7.80% - 1 mo. USD LIBOR), 04/25/2032(d)(i) | | | 596 | | | 131 |
7.85%, 04/25/2032 to 12/25/2032(d)(i) | | | 269,953 | | | 59,931 |
7.94%, 12/18/2032(d)(i) | | | 27,384 | | | 4,661 |
8.10%, 02/25/2033 to 05/25/2033(d)(i) | | | 104,672 | | | 24,752 |
7.00%, 04/25/2033(i) | | | 3,070 | | | 651 |
5.90%, 03/25/2035 to 07/25/2038(d)(i) | | | 50,659 | | | 9,198 |
6.60%, 03/25/2035 to 05/25/2035(d)(i) | | | 20,330 | | | 3,360 |
6.45% (6.60% - 1 mo. USD LIBOR), 05/25/2035(d)(i) | | | 37,881 | | | 6,191 |
3.50%, 08/25/2035(i) | | | 305,524 | | | 37,115 |
5.95% (6.10% - 1 mo. USD LIBOR), 10/25/2035(d)(i) | | | 107,757 | | | 21,337 |
6.40% (6.55% - 1 mo. USD LIBOR), 10/25/2041(d)(i) | | | 34,614 | | | 7,285 |
6.00% (6.15% - 1 mo. USD LIBOR), 12/25/2042(d)(i) | | | 88,815 | | | 17,673 |
5.00% (5.90% - 1 mo. USD LIBOR), 09/25/2047(d)(i) | | | 611,851 | | | 85,760 |
6.50%, 06/25/2023 to 10/25/2031 | | | 130,360 | | | 145,674 |
6.00%, 11/25/2028 to 12/25/2031 | | | 90,747 | | | 104,182 |
0.40% (1 mo. USD LIBOR + 0.25%), 08/25/2035(d) | | | 1,033 | | | 1,034 |
24.02% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(d) | | | 44,884 | | | 73,752 |
23.66% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(d) | | | 32,555 | | | 48,572 |
23.66% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(d) | | | 26,510 | | | 43,074 |
1.09% (1 mo. USD LIBOR + 0.94%), 06/25/2037(d) | | | 16,121 | | | 16,510 |
1.50%, 01/25/2040 | | | 78,575 | | | 79,127 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations-(continued) |
PO, | | | | | | |
0.00%, 09/25/2023(j) | | $ | 15,450 | | | $ 15,243 |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | |
Series KC02, Class X1, 0.50%, 03/25/2024(g) | | | 4,552,619 | | | 49,384 |
Series KC03, Class X1, 0.63%, 11/25/2024(g) | | | 2,753,171 | | | 45,365 |
Series K734, Class X1, 0.65%, 02/25/2026(g) | | | 2,046,472 | | | 58,508 |
Series K735, Class X1, 1.10%, 05/25/2026(g) | | | 2,047,656 | | | 93,821 |
Series K093, Class X1, 0.95%, 05/25/2029(g) | | | 1,690,418 | | | 118,274 |
Freddie Mac REMICs, | | | | | | |
1.50%, 07/15/2023 | | | 19,442 | | | 19,578 |
6.75%, 02/15/2024 | | | 2,976 | | | 3,157 |
6.50%, 02/15/2028 to 06/15/2032 | | | 380,912 | | | 433,749 |
8.00%, 03/15/2030 | | | 649 | | | 779 |
1.16% (1 mo. USD LIBOR + 1.00%), 02/15/2032(d) | | | 747 | | | 763 |
3.50%, 05/15/2032 | | | 13,629 | | | 14,650 |
24.17% (24.75% - (3.67 x 1 mo. USD LIBOR)), 08/15/2035(d) | | | 7,485 | | | 12,426 |
0.56% (1 mo. USD LIBOR + 0.40%), 09/15/2035(d) | | | 1,270 | | | 1,279 |
IO, | | | | | | |
7.49%, 07/15/2026 to 03/15/2029(d)(i) | | | 91,782 | | | 12,309 |
3.00%, 06/15/2027 to 05/15/2040(i) | | | 358,840 | | | 22,563 |
2.50%, 05/15/2028(i) | | | 68,914 | | | 3,715 |
8.55%, 07/17/2028(d)(i) | | | 968 | | | 91 |
7.94% (8.10% - 1 mo. USD LIBOR), 06/15/2029(d)(i) | | | 1,234 | | | 235 |
6.54% (6.70% - 1 mo. USD LIBOR), 01/15/2035(d)(i) | | | 265,771 | | | 48,912 |
6.59% (6.75% - 1 mo. USD LIBOR), 02/15/2035(d)(i) | | | 32,846 | | | 5,932 |
6.56% (6.72% - 1 mo. USD LIBOR), 05/15/2035(d)(i) | | | 35,092 | | | 5,572 |
5.99% (6.15% - 1 mo. USD LIBOR), 07/15/2035(d)(i) | | | 11,000 | | | 1,542 |
6.84% (7.00% - 1 mo. USD LIBOR), 12/15/2037(d)(i) | | | 5,960 | | | 1,361 |
5.84% (6.00% - 1 mo. USD LIBOR), 04/15/2038(d)(i) | | | 4,634 | | | 813 |
5.91% (6.07% - 1 mo. USD LIBOR), 05/15/2038(d)(i) | | | 185,223 | | | 36,971 |
6.09% (6.25% - 1 mo. USD LIBOR), 12/15/2039(d)(i) | | | 43,629 | | | 8,304 |
4.00%, 04/15/2040 to 03/15/2045(i) | | | 108,944 | | | 9,785 |
5.94% (6.10% - 1 mo. USD LIBOR), 01/15/2044(d)(i) | | | 93,122 | | | 10,170 |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations-(continued) |
Freddie Mac STRIPS, | | | | | | |
PO, | | | | | | |
0.00%, 06/01/2026(j) | | $ | 11,990 | | | $ 11,655 |
IO, | | | | | | |
3.00%, 12/15/2027(i) | | | 152,088 | | | 10,021 |
3.27%, 12/15/2027(i) | | | 39,685 | | | 2,139 |
7.00%, 09/01/2029(i) | | | 2,618 | | | 465 |
7.50%, 12/15/2029(i) | | | 50,658 | | | 9,607 |
6.00%, 12/15/2032(i) | | | 29,928 | | | 4,822 |
| | | | | | | 2,264,193 |
|
Federal Home Loan Mortgage Corp. (FHLMC)-0.33% |
9.00%, 08/01/2022 to 05/01/2025 | | | 1,682 | | | 1,825 |
6.00%, 10/01/2022 to 10/01/2029 | | | 123,293 | | | 139,540 |
6.50%, 07/01/2028 to 04/01/2034 | | | 64,383 | | | 73,344 |
7.00%, 10/01/2031 to 10/01/2037 | | | 56,319 | | | 65,049 |
5.00%, 12/01/2034 | | | 2,606 | | | 2,963 |
5.50%, 09/01/2039 | | | 132,464 | | | 153,890 |
| | | | | | | 436,611 |
|
Federal National Mortgage Association (FNMA)-0.07% |
5.00%, 03/01/2021 to 07/01/2022 | | | 179 | | | 189 |
7.00%, 01/01/2030 to 12/01/2032 | | | 8,912 | | | 10,389 |
8.50%, 07/01/2032 | | | 1,989 | | | 1,996 |
7.50%, 01/01/2033 | | | 1,955 | | | 2,308 |
6.50%, 01/01/2034 | | | 3,934 | | | 4,457 |
5.50%, 02/01/2035 to 05/01/2036 | | | 66,781 | | | 78,226 |
| | | | | | | 97,565 |
|
Government National Mortgage Association (GNMA)-3.47% |
7.00%, 12/15/2023 to 03/15/2026 | | | 1,615 | | | 1,720 |
IO, | | | | | | |
7.35% (7.50% - 1 mo. USD LIBOR), 02/16/2032(d)(i) | | | 61,847 | | | 38 |
6.40% (6.55% - 1 mo. USD LIBOR), 04/16/2037(d)(i) | | | 37,584 | | | 7,539 |
6.50% (6.65% - 1 mo. USD LIBOR), 04/16/2041(d)(i) | | | 242,347 | | | 42,260 |
4.50%, 09/16/2047(i) | | | 200,823 | | | 29,241 |
6.05% (6.20% - 1 mo. USD LIBOR), 10/16/2047(d)(i) | | | 213,233 | | | 38,823 |
TBA, | | | | | | |
2.50%, 01/01/2051(k) | | | 4,265,000 | | | 4,514,405 |
| | | | | | | 4,634,026 |
|
Uniform Mortgage-Backed Securities-12.69% |
TBA | | | | | | |
2.00%, 01/01/2036 to 02/01/2051(k) | | | 16,350,000 | | | 16,976,070 |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $25,071,033) | | | 24,408,465 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
|
|
U.S. Treasury Securities-7.42% | | | | | | |
U.S. Treasury Bonds-1.56% | | | | | | |
1.38%, 11/15/2040 | | $ | 640,500 | | | $ 632,344 |
|
|
1.38%, 08/15/2050 | | | 1,562,500 | | | 1,460,449 |
|
|
| | | | | | 2,092,793 |
|
|
| | |
U.S. Treasury Notes-5.86% | | | | | | |
0.13%, 11/30/2022 | | | 190,900 | | | 190,930 |
|
|
0.13%, 12/15/2023 | | | 1,269,100 | | | 1,267,563 |
|
|
0.38%, 11/30/2025 | | | 3,415,200 | | | 3,419,469 |
|
|
0.63%, 11/30/2027 | | | 704,000 | | | 703,670 |
|
|
0.88%, 11/15/2030 | | | 2,261,200 | | | 2,252,720 |
|
|
| | | | | | 7,834,352 |
|
|
Total U.S. Treasury Securities
(Cost $9,914,870) | | | 9,927,145 |
|
|
| |
Agency Credit Risk Transfer Notes-0.92% | | | |
Fannie Mae Connecticut Avenue Securities | | | | | | |
Series 2014-C04, Class 2M2, 5.15% (1 mo. USD LIBOR + 5.00%), 11/25/2024(d) | | | 151,600 | | | 155,902 |
|
|
Series 2016-C02, Class 1M2, 6.15% (1 mo. USD LIBOR + 6.00%), 09/25/2028(d) | | | 146,905 | | | 156,313 |
|
|
Freddie Mac | | | | | | |
Series 2014-DN1, Class M2, STACR® , 2.35% (1 mo. USD LIBOR + 2.20%), 02/25/2024(d) | | | 822 | | | 822 |
|
|
Series 2014-DN3, Class M3, STACR® , 4.15% (1 mo. USD LIBOR + 4.00%), 08/25/2024(d) | | | 102,845 | | | 105,317 |
|
|
Series 2014-HQ2, Class M3, STACR® , 3.90% (1 mo. USD LIBOR + 3.75%), 09/25/2024(d) | | | 331,194 | | | 341,253 |
|
|
Series 2018-HQA1, Class M2, STACR® , 2.45% (1 mo. USD LIBOR + 2.30%), 09/25/2030(d) | | | 86,816 | | | 86,882 |
|
|
Series 2018-DNA2, Class M1, STACR® , 0.95% (1 mo. USD LIBOR + 0.80%), 12/25/2030(b)(d) | | | 42,214 | | | 42,245 |
|
|
Series 2018-HRP2, Class M2, STACR® , 1.40% (1 mo. USD LIBOR + 1.25%), 02/25/2047(b)(d) | | | 143,172 | | | 143,144 |
|
|
Series 2018-DNA3, Class M1, STACR® , 0.90% (1 mo. USD LIBOR + 0.75%), 09/25/2048(b)(d) | | | 165 | | | 165 |
|
|
Series 2018-HQA2, Class M1, STACR® , 0.90% (1 mo. USD LIBOR + 0.75%), 10/25/2048(b)(d) | | | 27,110 | | | 27,126 |
|
|
Series 2019-HRP1, Class M2, STACR® , 1.55% (1 mo. USD LIBOR + 1.40%), 02/25/2049(b)(d) | | | 59,848 | | | 59,815 |
|
|
Series 2020-DNA5, Class M1, STACR® , 1.38% (SOFR + 1.30%), 10/25/2050(b)(d) | | | 105,000 | | | 105,413 |
|
|
Total Agency Credit Risk Transfer Notes
(Cost $1,248,524) | | | 1,224,397 |
|
|
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Preferred Stocks-0.86% | | | | | | | | |
Asset Management & Custody Banks-0.17% | | | | | |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(e) | | | 205,000 | | | $ | 226,586 | |
|
| |
| | |
Diversified Banks-0.19% | | | | | | | | |
Citigroup, Inc., 5.00%, Series U, Pfd.(e) | | | 249,000 | | | | 259,427 | |
|
| |
|
Investment Banking & Brokerage-0.27% | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(e) | | | 342,000 | | | | 361,665 | |
|
| |
|
Life & Health Insurance-0.14% | |
MetLife, Inc., 3.85%, Series G,
Pfd.(e) | | | 171,000 | | | | 180,833 | |
|
| |
|
Other Diversified Financial Services-0.09% | |
Equitable Holdings, Inc., 4.95%, Series B, Pfd.(e) | | | 113,000 | | | | 120,486 | |
|
| |
Total Preferred Stocks (Cost $1,080,000) | | | | 1,148,997 | |
|
| |
| | |
| | | Principal
Amount | | | | |
Municipal Obligations-0.36% | | | | | | | | |
Maryland (State of) Health & Higher Educational Facilities Authority (University of MD Medical System), | | | | | | | | |
Series 2020 D, Ref. RB, 3.05%, 07/01/2040 | | $ | 85,000 | | | | 88,248 | |
|
| |
Series 2020 D, Ref. RB, 3.20%, 07/01/2050 | | | 110,000 | | | | 114,244 | |
|
| |
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041 | | | 280,000 | | | | 282,357 | |
|
| |
Total Municipal Obligations (Cost $475,000) | | | | 484,849 | |
|
| |
| | |
| | | Shares | | | | |
Money Market Funds-29.43% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(l)(m) | | | 13,781,057 | | | | 13,781,057 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.08%(l)(m) | | | 9,836,268 | | | | 9,839,218 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(l)(m) | | | 15,749,779 | | | | 15,749,779 | |
|
| |
Total Money Market Funds
(Cost $39,372,213) | | | | 39,370,054 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-115.23%
(Cost $151,129,378) | | | | 154,125,138 | |
|
| |
OTHER ASSETS LESS LIABILITIES-(15.23)% | | | | (20,366,969 | ) |
|
| |
NET ASSETS-100.00% | | | $ | 133,758,169 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
|
| Investment Abbreviations: |
| | |
| CLO | | - Collateralized Loan Obligation |
| Ctfs. | | - Certificates |
| IO | | - Interest Only |
| LIBOR | | - London Interbank Offered Rate |
| Pfd. | | - Preferred |
| PO | | - Principal Only |
| RB | | - Revenue Bonds |
| Ref. | | - Refunding |
| REIT | | - Real Estate Investment Trust |
| REMICs | | - Real Estate Mortgage Investment Conduits |
| SOFR | | - Secured Overnight Financing Rate |
| STACR® | | - Structured Agency Credit Risk |
| STRIPS | | - Separately Traded Registered Interest and Principal Security |
| TBA | | - To Be Announced |
| USD | | - U.S. Dollar |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2020 was $27,713,906, which represented 20.72% of the Fund’s Net Assets. |
| (c) | Perpetual bond with no specified maturity date. |
| (d) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2020. |
| (e) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (f) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (g) | Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (h) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. Interest rate is redetermined periodically based on the cash flows generated by the pool of assets backing the security, less any applicable fees. The rate shown is the rate in effect on December 31, 2020. |
| (i) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (j) | Zero coupon bond issued at a discount. |
| (k) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1O. |
| (l) | 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 December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2019 | | Purchases at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2020 | | Dividend Income |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Institutional Class | | | $ | - | | | | $ | 26,162,233 | | | | $ | (12,381,176 | ) | | | $ | - | | | | $ | - | | | | $ | 13,781,057 | | | | $ | 12,311 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 21,539,049 | | | | | 48,078,765 | | | | | (59,789,905 | ) | | | | 4,303 | | | | | 7,006 | | | | | 9,839,218 | | | | | 99,152 | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 29,899,695 | | | | | (14,149,916 | ) | | | | - | | | | | - | | | | | 15,749,779 | | | | | 2,314 | |
Total | | | $ | 21,539,049 | | | | $ | 104,140,693 | | | | $ | (86,320,997 | ) | | | $ | 4,303 | | | | $ | 7,006 | | | | $ | 39,370,054 | | | | $ | 113,777 | |
| (m) | The rate shown is the 7-day SEC standardized yield as of December 31, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a) |
| Long Futures Contracts | | Number of Contracts | | Expiration Month | | Notional Value | | Value | | Unrealized Appreciation (Depreciation) |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 2 Year Notes | | | | 167 | | | | | March-2021 | | | | $ | 36,903,086 | | | | $ | 33,593 | | | | $ | 33,593 | |
U.S. Treasury 5 Year Notes | | | | 99 | | | | | March-2021 | | | | | 10,976,273 | | | | | 19,747 | | | | | 19,747 | |
U.S. Treasury Ultra Bonds | | | | 44 | | | | | March-2021 | | | | | 9,396,750 | | | | | (116,032 | ) | | | | (116,032 | ) |
Subtotal - Long Futures Contracts | | | | | | | | | | | | | | | | | | | (62,692 | ) | | | | (62,692 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a)–(continued) |
| Short Futures Contracts | | Number of
Contracts | | Expiration
Month | | Notional Value | | Value | | Unrealized
Appreciation
(Depreciation) |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 10 Year Notes | | | | 50 | | | | | March-2021 | | | | $ | (6,903,906 | ) | | | $ | (10,653 | ) | | | $ | (10,653 | ) |
U.S. Treasury 10 Year Ultra Bonds | | | | 27 | | | | | March-2021 | | | | | (4,221,703 | ) | | | | 3,318 | | | | | 3,318 | |
U.S. Treasury Long Bonds | | | | 30 | | | | | March-2021 | | | | | (5,195,625 | ) | | | | 24,164 | | | | | 24,164 | |
Subtotal-Short Futures Contracts | | | | | | | | | | | | | | | | | | | 16,829 | | | | | 16,829 | |
Total Futures Contracts | | | | | | | | | | | | | | | | | | $ | (45,863 | ) | | | $ | (45,863 | ) |
| (a) | Futures contracts collateralized by $345,749 cash held with Merrill Lynch International, the futures commission merchant. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Statement of Assets and Liabilities
December 31, 2020
| | | | |
Assets: | | | | |
Investments in securities, at value
(Cost $111,757,165) | | $ | 114,755,084 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $39,372,213) | | | 39,370,054 | |
|
| |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 431,980 | |
|
| |
Deposits with brokers: | | | | |
Cash collateral – exchange-traded futures contracts | | | 345,749 | |
|
| |
Cash | | | 446,788 | |
|
| |
Foreign currencies, at value (Cost $353,914) | | | 365,848 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 14,099,856 | |
|
| |
Fund shares sold | | | 54,652 | |
|
| |
Dividends | | | 954 | |
|
| |
Interest | | | 513,367 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 56,596 | |
|
| |
Total assets | | | 170,440,928 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 36,372,853 | |
|
| |
Fund shares reacquired | | | 63,134 | |
|
| |
Accrued fees to affiliates | | | 48,976 | |
|
| |
Accrued other operating expenses | | | 141,200 | |
|
| |
Trustee deferred compensation and retirement plans | | | 56,596 | |
|
| |
Total liabilities | | | 36,682,759 | |
|
| |
Net assets applicable to shares outstanding | | $ | 133,758,169 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 123,773,249 | |
|
| |
Distributable earnings | | | 9,984,920 | |
|
| |
| | $ | 133,758,169 | |
|
| |
Net Assets: | | | | |
Series I | | $ | 87,077,041 | |
|
| |
Series II | | $ | 46,681,128 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 10,327,385 | |
|
| |
Series II | | | 5,617,697 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 8.43 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 8.31 | |
|
| |
Statement of Operations
For the year ended December 31, 2020
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $64) | | $ | 3,132,911 | |
|
| |
Dividends from affiliated money market funds | | | 113,777 | |
|
| |
Total investment income | | | 3,246,688 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 723,242 | |
|
| |
Administrative services fees | | | 200,457 | |
|
| |
Custodian fees | | | 47,145 | |
|
| |
Distribution fees - Series II | | | 115,776 | |
|
| |
Transfer agent fees | | | 21,343 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 19,690 | |
|
| |
Reports to shareholders | | | 38,423 | |
|
| |
Professional services fees | | | 51,224 | |
|
| |
Other | | | 6,709 | |
|
| |
Total expenses | | | 1,224,009 | |
|
| |
Less: Fees waived | | | (210,063 | ) |
|
| |
Net expenses | | | 1,013,946 | |
|
| |
Net investment income | | | 2,232,742 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 5,582,923 | |
|
| |
Affiliated investment securities | | | 7,006 | |
|
| |
Foreign currencies | | | 2,693 | |
|
| |
Futures contracts | | | 1,990,165 | |
|
| |
Swap agreements | | | (770 | ) |
|
| |
| | | 7,582,017 | |
|
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 1,020,702 | |
|
| |
Affiliated investment securities | | | 4,303 | |
|
| |
Foreign currencies | | | 11,932 | |
|
| |
Futures contracts | | | 372,387 | |
|
| |
| | | 1,409,324 | |
|
| |
Net realized and unrealized gain | | | 8,991,341 | |
|
| |
Net increase in net assets resulting from operations | | $ | 11,224,083 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2020 and 2019
| | | | | | | | |
| | | 2020 | | | 2019 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 2,232,742 | | | $ | 3,626,205 | |
|
| |
Net realized gain | | | 7,582,017 | | | | 4,087,528 | |
|
| |
Change in net unrealized appreciation | | | 1,409,324 | | | | 3,532,308 | |
|
| |
Net increase in net assets resulting from operations | | | 11,224,083 | | | | 11,246,041 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,429,653 | ) | | | (2,462,939 | ) |
|
| |
Series II | | | (1,301,736 | ) | | | (1,702,386 | ) |
|
| |
Total distributions from distributable earnings | | | (3,731,389 | ) | | | (4,165,325 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | 9,260,558 | | | | (6,004,640 | ) |
|
| |
Series II | | | (3,393,814 | ) | | | (1,997,752 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 5,866,744 | | | | (8,002,392 | ) |
|
| |
Net increase (decrease) in net assets | | | 13,359,438 | | | | (921,676 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 120,398,731 | | | | 121,320,407 | |
|
| |
End of year | | $ | 133,758,169 | | | $ | 120,398,731 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset
value,
beginning
of period | | Net
investment
income(a) | | Net gains
(losses)
on securities
(both
realized and
unrealized) | | Total from
investment
operations | | Dividends from net investment income | | Net asset
value, end
of period | | Total
return (b) | | Net assets,
end of period (000’s omitted) | | Ratio of
expenses
to average net assets
with fee waivers
and/or expenses absorbed | | Ratio of
expenses
to average net
assets without fee waivers and/or expenses
absorbed(c) | | Ratio of net investment
income
to average
net assets | | Portfolio turnover (d) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | $7.93 | | | | | $0.16 | | | | | $ 0.61 | | | | | $ 0.77 | | | | | $(0.27 | ) | | | | $8.43 | | | | | 9.71 | % | | | | $87,077 | | | | | 0.73 | %(e) | | | | 0.90 | %(e) | | | | 1.90 | %(e) | | | | 480 | % |
Year ended 12/31/19 | | | | 7.49 | | | | | 0.23 | | | | | 0.48 | | | | | 0.71 | | | | | (0.27 | ) | | | | 7.93 | | | | | 9.53 | | | | | 73,160 | | | | | 0.75 | | | | | 0.89 | | | | | 2.99 | | | | | 93 | (f) |
Year ended 12/31/18(g) | | | | 7.83 | | | | | 0.25 | | | | | (0.33 | ) | | | | (0.08 | ) | | | | (0.26 | ) | | | | 7.49 | | | | | (1.02 | ) | | | | 74,929 | | | | | 0.75 | | | | | 0.87 | | | | | 3.35 | | | | | 64 | (f) |
Year ended 12/31/17 | | | | 7.67 | | | | | 0.19 | | | | | 0.16 | | | | | 0.35 | | | | | (0.19 | ) | | | | 7.83 | | | | | 4.59 | | | | | 81,481 | | | | | 0.75 | | | | | 0.85 | | | | | 2.38 | | | | | 86 | (f) |
Year ended 12/31/16 | | | | 7.71 | | | | | 0.23 | | | | | 0.02 | | | | | 0.25 | | | | | (0.29 | ) | | | | 7.67 | | | | | 3.27 | | | | | 83,405 | | | | | 0.75 | | | | | 0.84 | | | | | 2.96 | | | | | 79 | (f) |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/20 | | | | 7.82 | | | | | 0.14 | | | | | 0.59 | | | | | 0.73 | | | | | (0.24 | ) | | | | 8.31 | | | | | 9.43 | | | | | 46,681 | | | | | 0.98 | (e) | | | | 1.15 | (e) | | | | 1.65 | (e) | | | | 480 | |
Year ended 12/31/19 | | | | 7.39 | | | | | 0.21 | | | | | 0.47 | | | | | 0.68 | | | | | (0.25 | ) | | | | 7.82 | | | | | 9.25 | | | | | 47,239 | | | | | 1.00 | | | | | 1.14 | | | | | 2.75 | | | | | 93 | (f) |
Year ended 12/31/18(g) | | | | 7.73 | | | | | 0.23 | | | | | (0.33 | ) | | | | (0.10 | ) | | | | (0.24 | ) | | | | 7.39 | | | | | (1.31 | ) | | | | 46,391 | | | | | 1.00 | | | | | 1.12 | | | | | 3.10 | | | | | 64 | (f) |
Year ended 12/31/17 | | | | 7.57 | | | | | 0.16 | | | | | 0.17 | | | | | 0.33 | | | | | (0.17 | ) | | | | 7.73 | | | | | 4.38 | | | | | 51,030 | | | | | 1.00 | | | | | 1.10 | | | | | 2.13 | | | | | 86 | (f) |
Year ended 12/31/16 | | | | 7.61 | | | | | 0.21 | | | | | 0.02 | | | | | 0.23 | | | | | (0.27 | ) | | | | 7.57 | | | | | 3.05 | | | | | 53,350 | | | | | 1.00 | | | | | 1.09 | | | | | 2.70 | | | | | 79 | (f) |
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America. Total returns are not annualized for periods less than one year, if applicable and do not reflect charges assessed in connection with a variable product, which if included would reduce total returns. |
| (c) | Does not include indirect expenses from affiliated fund fees and expenses of 0.01%, 0.00%, 0.00% and 0.01% for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (e) | Ratios are based on average daily net assets (000’s omitted) of $77,194 and $46,311 for Series I and Series II shares, respectively. |
| (f) | The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $488,722,598 and $507,909,671, $641,318,699 and $653,537,737, $679,964,368 and $662,714,451 and $672,031,328 and $673,808,454 for the years ended December 31, 2019, 2018, 2017 and 2016, respectively. |
| (g) | Commencement date of . |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Notes to Financial Statements
December 31, 2020
NOTE 1–Significant Accounting Policies
Invesco Oppenheimer V.I. Total Return Bond Fund (the “Fund”) is a series portfolio of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class. Current Securities and Exchange Commission (“SEC”) guidance, however, requires participating insurance companies offering separate accounts to vote shares proportionally in accordance with the instructions of the contract owners whose investments are funded by shares of each Fund or class.
The Fund’s investment objective is to seek total return.
The Fund currently offers two classes of shares, Series I and Series II, both of which are offered to insurance company separate accounts funding variable annuity contracts and variable life insurance policies (“variable products”).
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services - Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
| A. | Security Valuations – Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote, if available, provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end-of-day net present values, spreads, ratings, industry, company performance and returns of referenced assets. Centrally cleared swap agreements are valued at the daily settlement price determined by the relevant exchange or clearinghouse.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general market conditions which are not specifically related to the particular issuer, such as real or perceived adverse economic conditions, changes in the general outlook for revenues or corporate earnings, changes in interest or currency rates, regional or global instability, natural or environmental disasters, widespread disease or other public health issues, war, acts of terrorism or adverse investor sentiment generally and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| 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. Bond premiums and discounts are amortized and/or accreted over the lives of the respective securities. Pay-in-kind interest income and non-cash |
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
| C. | Country Determination – For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions – Distributions from net investment income and net realized capital gain, if any, are generally declared and paid to separate accounts of participating insurance companies annually and recorded on the ex-dividend date. |
| E. | Federal Income Taxes – The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses – Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
| G. | Accounting Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
| H. | Indemnifications – Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Purchased on a When-Issued and Delayed Delivery Basis – The Fund may purchase and sell interests in corporate loans and corporate debt securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
| J. | Lower-Rated Securities – The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claims. |
| K. | Foreign Currency Translations – Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| L. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
| M. | Futures Contracts – The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between Counterparties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| N. | Swap Agreements – The Fund may enter into various swap transactions, including interest rate, total return, index, currency and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency 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 over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index.
In a centrally cleared swap, the Fund’s ultimate Counterparty is a central clearinghouse. The Fund initially will enter into centrally cleared swaps through an executing broker. When a fund enters into a centrally cleared swap, it must deliver to the central Counterparty (via the FCM) an amount referred to as “initial margin.” Initial margin requirements are determined by the central Counterparty, but an FCM may require additional initial margin above the amount required by the central Counterparty. Initial margin deposits required upon entering into centrally cleared swaps are satisfied by cash or securities as collateral at the FCM. Securities deposited as initial margin are designated on the Schedule of Investments and cash deposited is recorded on the Statement of Assets and Liabilities. During the term of a cleared swap agreement, a “variation margin” amount may be required to be paid by the Fund or may be received by the Fund, based on the daily change in price of the underlying reference instrument subject to the swap agreement and is recorded as a receivable or payable for variation margin in the Statement of Assets and Liabilities until the centrally cleared swap is terminated at which time a realized gain or loss is recorded.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its Counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a Counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Fund’s maximum risk of loss from Counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the Counterparty and by the designation of collateral by the Counterparty to cover the Fund’s exposure to the Counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
An interest rate swap is an agreement between Counterparties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified notional amount.
Changes in the value of centrally cleared and OTC swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
Fund segregates cash or liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Cash held as collateral is recorded as deposits with brokers on the Statement of Assets and Liabilities. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and Counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the Counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements. Additionally, ISDA master agreements include credit related contingent features which allow counterparties to OTC derivatives to terminate derivative contracts prior to maturity in the event that, for example, the Fund’s net assets decline by a stated percentage or the Fund fails to meet the terms of its ISDA master agreements, which would cause the Fund to accelerate payment of any net liability owed to the counterparty. A short position in a security poses more risk than holding the same security long. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited.
Notional amounts of each individual credit default swap agreement outstanding as of December 31, 2020 for which the Fund is the seller of protection are disclosed in the open swap agreements table. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by the Fund for the same referenced entity or entities.
| O. | Dollar Rolls and Forward Commitment Transactions – The Fund may enter into dollar roll transactions to enhance the Fund’s performance. The Fund executes its dollar roll transactions in the to be announced (“TBA”) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Fund’s portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments.
Dollar roll transactions involve the risk that a Counterparty to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar roll transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. Dollar roll transactions covered in this manner are not treated as senior securities for purposes of a Fund’s fundamental investment limitation on senior securities and borrowings.
| P. | LIBOR Risk – The Fund may invest in financial instruments that utilize LIBOR as the reference or benchmark rate for variable interest rate calculations. On July 27, 2017, the head of the United Kingdom’s Financial Conduct Authority announced a desire to phase out the use of LIBOR by the end of 2021, and it is currently anticipated that LIBOR will cease to be published after that time, although there are initiatives underway for the discontinuation to be extended beyond 2021 for certain LIBOR rates. There remains uncertainty regarding the effect of the LIBOR transition process and therefore any impact of a transition away from LIBOR on the Fund or the instruments in which the Fund invests cannot yet be determined. There is no assurance that the composition or characteristics of any alternative reference rate will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. As a result, the transition process might lead to increased volatility and reduced liquidity in markets that currently rely on LIBOR to determine interest rates; a reduction in the value of some LIBOR-based investments; increased difficulty in borrowing or refinancing and diminished effectiveness of any applicable hedging strategies against instruments whose terms currently include LIBOR; and/or costs incurred in connection with temporary borrowings and closing out positions and entering into new agreements. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| Q. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
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.
| R. | Leverage Risk – Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
| S. | Collateral –To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
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| Average Daily Net Assets* | | Rate | |
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Up to $1 billion | | | 0.600% | |
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Over $1 billion | | | 0.500% | |
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| * | The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser. |
For the year ended December 31, 2020, the effective advisory fee rate incurred by the Fund was 0.59%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
The Adviser has contractually agreed, through at least April 30, 2022, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Series I shares to 0.75% and Series II shares to 1.00% of the Fund’s average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2022. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees.
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| Invesco Oppenheimer V.I. Total Return Bond Fund |
Further, the Adviser has contractually agreed, through at least June 30, 2022, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2020, the Adviser waived advisory fees of $210,063.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco a fee for costs incurred in providing accounting services and fund administrative services to the Fund and to reimburse Invesco for fees paid to insurance companies that have agreed to provide certain administrative services to the Fund. These administrative services provided by the insurance companies may include, among other things: maintenance of master accounts with the Fund; tracking, recording and transmitting net purchase and redemption orders for Fund shares; maintaining and preserving records related to the purchase, redemption and other account activity of variable product owners; distributing copies of Fund documents such as prospectuses, proxy materials and periodic reports, to variable product owners, and responding to inquiries from variable product owners about the Fund. Pursuant to such agreement, for the year ended December 31, 2020, Invesco was paid $17,784 for accounting and fund administrative services and was reimbursed $182,673 for fees paid to insurance companies. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. For the year ended December 31, 2020, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into a master distribution agreement with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Fund. The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Series II shares (the “Plan”). The Fund, pursuant to the Plan, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Series II shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of the Series II shares may be paid to insurance companies who furnish continuing personal shareholder services to customers who purchase and own Series II shares of the Fund. For the year ended December 31, 2020, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2020. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Investments in Securities | | | | | | | | | | | | | | | | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | $ | – | | | $ | 51,711,162 | | | | $– | | | $ | 51,711,162 | |
|
| |
Asset-Backed Securities | | | – | | | | 25,850,069 | | | | – | | | | 25,850,069 | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 24,408,465 | | | | – | | | | 24,408,465 | |
|
| |
U.S. Treasury Securities | | | – | | | | 9,927,145 | | | | – | | | | 9,927,145 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 1,224,397 | | | | – | | | | 1,224,397 | |
|
| |
Preferred Stocks | | | – | | | | 1,148,997 | | | | – | | | | 1,148,997 | |
|
| |
Municipal Obligations | | | – | | | | 484,849 | | | | – | | | | 484,849 | |
|
| |
Money Market Funds | | | 39,370,054 | | | | – | | | | – | | | | 39,370,054 | |
|
| |
Total Investments in Securities | | | 39,370,054 | | | | 114,755,084 | | | | – | | | | 154,125,138 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 80,822 | | | | – | | | | – | | | | 80,822 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (126,685 | ) | | | – | | | | – | | | | (126,685 | ) |
|
| |
Total Other Investments | | | (45,863 | ) | | | – | | | | – | | | | (45,863 | ) |
|
| |
Total Investments | | $ | 39,324,191 | | | $ | 114,755,084 | | | | $– | | | $ | 154,079,275 | |
| |
| * | Unrealized appreciation (depreciation). |
NOTE 4–Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of December 31, 2020:
| | | | |
| | | Value | |
| | | Interest | |
| Derivative Assets | | Rate Risk | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 80,822 | |
|
| |
Derivatives not subject to master netting agreements | | | (80,822 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
| | | | |
| | | Value | |
| | | Interest | |
| Derivative Liabilities | | Rate Risk | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (126,685 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 126,685 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | |
|
| |
| (a) | The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2020
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | | Location of Gain (Loss) on | |
| | | Statement of Operations | |
| | | Credit | | | Interest | | | | |
| | | Risk | | | Rate Risk | | | Total | |
|
| |
Realized Gain (Loss): | | | | | | | | | | | | |
Futures contracts | | $ | - | | | $ | 1,990,165 | | | $ | 1,990,165 | |
|
| |
Swap agreements | | | (770 | ) | | | - | | | | (770 | ) |
|
| |
Change in Net Unrealized Appreciation: | | | | | | | | | | | | |
Futures contracts | | | - | | | | 372,387 | | | | 372,387 | |
|
| |
Total | | $ | (770 | ) | | $ | 2,362,552 | | | $ | 2,361,782 | |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | | | |
| | | Futures | | | Swap | |
| | | Contracts | | | Agreements | |
|
| |
Average notional value | | $ | 54,305,258 | | | $ | 3,717,756 | |
|
| |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. The Fund may not purchase additional securities when any borrowings from banks or broker-dealers exceed 5% of the Fund’s total assets, or when any borrowings from an Invesco Fund are outstanding.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
NOTE 7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2020 and 2019:
| | | | | | | | |
| | | 2020 | | | 2019 | |
Ordinary income* | | $ | 3,731,389 | | | $ | 4,165,325 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2020 | |
|
| |
Undistributed ordinary income | | $ | 6,144,033 | |
|
| |
Undistributed long-term capital gain | | | 916,983 | |
|
| |
Net unrealized appreciation – investments | | | 2,966,005 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 11,932 | |
|
| |
Temporary book/tax differences | | | (54,033 | ) |
|
| |
Shares of beneficial interest | | | 123,773,249 | |
|
| |
Total net assets | | $ | 133,758,169 | |
|
| |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and futures contracts.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of December 31, 2020.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2020 was $412,448,426 and $425,224,695, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $139,790,608 and $135,247,379, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
| Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
|
| |
Aggregate unrealized appreciation of investments | | $ | 5,269,141 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (2,303,136 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 2,966,005 | |
|
| |
Cost of investments for tax purposes is $151,113,270.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of paydowns, forward foreign currency contracts and doll roll adjustments, on December 31, 2020, undistributed net investment income was increased by $246,883 and undistributed net realized gain was decreased by $246,883. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,207,694 | | | $ | 18,501,766 | | | | 778,748 | | | $ | 6,072,746 | |
| |
Series II | | | 2,667,997 | | | | 21,953,889 | | | | 2,278,654 | | | | 17,388,336 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 293,082 | | | | 2,429,653 | | | | 320,278 | | | | 2,462,939 | |
| |
Series II | | | 159,136 | | | | 1,301,736 | | | | 224,293 | | | | 1,702,386 | |
|
| |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2020(a) | | | December 31, 2019 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,401,177 | ) | | $ | (11,670,861 | ) | | | (1,874,852 | ) | | $ | (14,540,325 | ) |
| |
Series II | | | (3,253,104 | ) | | | (26,649,439 | ) | | | (2,738,590 | ) | | | (21,088,474 | ) |
| |
Net increase (decrease) in share activity | | | 673,628 | | | $ | 5,866,744 | | | | (1,011,469 | ) | | $ | (8,002,392 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 56% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Fund’s ability to achieve its investment objective. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments.
The extent of the impact on the performance of the Fund and its investments will depend on future developments, including the duration and spread of the COVID-19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.
NOTE 12–Subsequent Event
Effective on or about April 30, 2021, the name of the Fund and all references thereto will change from Invesco Oppenheimer V.I. Total Return Bond Fund to Invesco V.I. Core Bond Fund.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) and Shareholders of Invesco Oppenheimer V.I. Total Return Bond Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco Oppenheimer V.I. Total Return Bond Fund (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2020, the related statement of operations for the year ended December 31, 2020, the statement of changes in net assets for each of the two years in the period ended December 31, 2020, including the related notes, and the financial highlights for each of the two years in the period ended December 31, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of December 31, 2020, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Invesco Oppenheimer V.I. Total Return Bond Fund (formerly known as Oppenheimer Total Return Bond Fund/VA) as of and for the year ended December 31, 2018 and the financial highlights for each of the periods ended on or prior to December 31, 2018 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated February 14, 2019 expressed an unqualified opinion on those financial statements and financial highlights.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2020 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
|
| /s/PricewaterhouseCoopers LLP |
|
Houston, Texas February 16, 2021 |
We have served as the auditor of one or more investment companies in the Invesco group of investment companies since at least 1995. We have not been able to determine the specific year we began serving as auditor.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and/or service fees (12b-1); and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2020 through December 31, 2020.
The actual and hypothetical expenses in the examples below do not represent the effect of any fees or other expenses assessed in connection with a variable product; if they did, the expenses shown would be higher while the ending account values shown would be lower.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the hypothetical information is useful in comparing ongoing costs, and will not help you determine the relative total costs of owning different funds.
| | | | | | | | | | | | |
| | | Beginning
Account Value
(07/01/20) | | ACTUAL | | HYPOTHETICAL (5% annual return before expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/20)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/20) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,025.90 | | $3.62 | | $1,021.57 | | $3.61 | | 0.71% |
Series II | | 1,000.00 | | 1,024.80 | | 4.84 | | 1,020.36 | | 4.82 | | 0.95 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2020 through December 31, 2020, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2020:
| | | | | | |
| | Federal and State Income Tax | | | | |
| | Qualified Dividend Income* | | | 0.00 | % |
| | Corporate Dividends Received Deduction* | | | 0.00 | % |
| | U.S. Treasury Obligations* | | | 0.44 | % |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year.
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers
The address of each trustee and officer is AIM Variable Insurance Funds (Invesco Variable Insurance Funds) (the “Trust”), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
| | | | | | | | |
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 | | 2007 | | 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) | | 197 | | 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. |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | | | | | | | |
Christopher L. Wilson – 1967 Trustee and Chair | | 2017 | | Retired Formerly: Director, TD Asset Management USA Inc. (mutual fund complex) (22 portfolios); Managing Partner, CT2, LLC (investing and consulting firm); President/Chief Executive Officer, Columbia Funds, Bank of America Corporation; President/Chief Executive Officer, CDC IXIS Asset Management Services, Inc.; Principal & Director of Operations, Scudder Funds, Scudder, Stevens & Clark, Inc.; Assistant Vice President, Fidelity Investments | | 197 | | enaible, Inc. (artificial intelligence technology); ISO New England, Inc. (non-profit organization managing regional electricity market) |
Beth Ann Brown – 1968 Trustee | | 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 | | 197 | | 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); and Vice President and Director of Grahamtastic Connection (non-profit) |
Jack M. Fields – 1952 Trustee | | 1997 | | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Board Member, Impact(Ed) (non-profit) Formerly: Owner and Chief Executive Officer, Dos Angeles Ranch L.P. (cattle, hunting, corporate entertainment); Director, Insperity, Inc. (formerly known as Administaff) (human resources provider); Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives | | 197 | | Member, Board of Directors of Baylor College of Medicine |
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); Artio Global Investment LLC (mutual fund complex); Edgen Group, Inc. (specialized energy and infrastructure products distributor); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 197 | | Resideo Technologies, Inc. (Technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Genesee & Wyoming, Inc. (railroads); Investment Company Institute (professional organization); Independent Directors Council (professional organization) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean, Mays Business School - Texas A&M University Formerly: Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 197 | | Insperity, Inc. (formerly known as Administaff) (human resources provider) |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
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; Advisory Board Member of the Securities and Exchange Commission Historical Society; and Trustee of certain Oppenheimer Funds | | 197 | | Trustee of the University of Florida National Board Foundation and Audit Committee Member; Member of the Cartica Funds Board of Directors (private investment funds); Member of the University of Florida Law Center Association, Inc. Board of Trustees and Audit Committee Member |
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 | | 197 | | Blue Hills Bank; Chairman, Bentley University; Member, Business School Advisory Council; and Nominating Committee KPMG LLP |
| Prema Mathai-Davis – 1950 Trustee | | 1998 | | 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; Board member of Johns Hopkins Bioethics Institute | | 197 | | None |
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 and Board of Historic Hudson Valley (non-profit cultural organization) 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); and Member of the Vestry of Trinity Church Wall Street | | 197 | | Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulizer 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); Assistant Secretary for Management & Budget and Designated Chief Financial Officer, U.S. Department of Treasury | | 197 | | Elucida Oncology (nanotechnology & medical particles company); Atlantic Power Corporation (power generation company); ON Semiconductor Corporation (semiconductor manufacturing) |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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) | | | | | | |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President and Chief Executive Officer, Houston Endowment Inc. (private philanthropic institution) Formerly: Executive Vice President and General Counsel, Texas Children’s Hospital; Attorney, Beck, Redden and Secrest, LLP; Business Law Instructor, University of St. Thomas; Attorney, Andrews & Kurth LLP and Federal Reserve Bank of Dallas | | 197 | | None |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 197 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | Trustee, Board of Trustees, Huntington Disease Foundation of America; and President, Flyway Advisory Services LLC (consulting and property management) Formerly: Trustee and Governance Chair, of certain Oppenheimer Funds; and Treasurer, Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America | | 197 | | None |
James D. Vaughn – 1945 Trustee | | 2019 | | Retired Formerly: Managing Partner, Deloitte & Touche LLP; Trustee and Chairman of the Audit Committee, Schroder Funds; Board Member, Mile High United Way, Boys and Girls Clubs, Boy Scouts, Colorado Business Committee for the Arts, Economic Club of Colorado and Metro Denver Network (economic development corporation); and Trustee of certain Oppenheimer Funds | | 197 | | Board member and Chairman of Audit Committee of AMG National Trust Bank; Trustee and Investment Committee member, University of South Dakota Foundation; Board member, Audit Committee Member and past Board Chair, Junior Achievement (non-profit) |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; 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.; and 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 | | N/A | | N/A |
Russell C. Burk – 1958 Senior Vice President and Senior Officer | | 2005 | | Senior Vice President and Senior Officer, The Invesco Funds | | N/A | | N/A |
Jeffrey H. Kupor – 1968 Senior Vice President, Chief Legal Officer and Secretary | | 2018 | | 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); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC ; Secretary and Vice President, Harbourview Asset Management Corporation; Secretary and Vice President, OppenheimerFunds, Inc. and Invesco Managed Accounts, LLC; Secretary and Senior Vice President, OFI Global Institutional, Inc.; Secretary and Vice President, OFI SteelPath, Inc.; Secretary and Vice President, Oppenheimer Acquisition Corp.; Secretary and Vice President, Shareholder Services, Inc.; Secretary and Vice President, Trinity Investment Management Corporation Formerly: Secretary and Vice President, Jemstep, Inc.; Head of Legal, Worldwide Institutional, Invesco Ltd.; Secretary and General Counsel, INVESCO Private Capital Investments, Inc.; Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Assistant Secretary, INVESCO Asset Management (Bermuda) Ltd.; Secretary and General Counsel, Invesco Private Capital, Inc.; Assistant Secretary and General Counsel, INVESCO Realty, Inc.; Secretary and General Counsel, Invesco Senior Secured Management, Inc.; and Secretary, Sovereign G./P. Holdings Inc. | | N/A | | N/A |
Andrew R. Schlossberg – 1974 Senior Vice President | | 2019 | | 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; Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, President and Chairman, Invesco Insurance Agency, Inc. Formerly: 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; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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 | | 2006 | | Chief Operating Officer of the Americas; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director and Vice President, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.) Senior Vice President, The Invesco Funds; Managing Director, Invesco Capital Management LLC; 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; Director and Senior Vice President, Invesco Insurance Agency, Inc.; 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 President, Trimark Investments Ltd./Placements Trimark Ltée Formerly: 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.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser) | | N/A | | N/A |
| Gregory G. McGreevey – 1962 Senior Vice President | | 2012 | | 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.; and Senior Vice President, The Invesco Funds; and 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.; and Chairman and Director, INVESCO Realty, 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; 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 | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; OppenheimerFunds Distributor, Inc., and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
Trustees and Officers–(continued)
| | | | | | | | |
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, The Invesco Funds and Senior Vice President 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 |
Michael McMaster – 1962 Chief Tax Officer, Vice President and Assistant Treasurer | | 2020 | | Head of Global Fund Services Tax; Chief Tax Officer, Vice President and Assistant Treasurer, The Invesco Funds; Assistant Treasurer, Invesco Capital Management LLC, Assistant Treasurer and Chief Tax 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; Assistant Treasurer, Invesco Specialized Products, LLC Formerly: Senior Vice President – Managing Director of Tax Services, U.S. Bank Global Fund Services (GFS) | | N/A | | N/A |
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s Statement of Additional Information for information on the Fund’s sub-advisers.
| | | | | | |
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Auditors PricewaterhouseCoopers LLP 1000 Louisiana Street, Suite 5800 Houston, TX 77002-5678 |
| | | |
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 | | Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 | | Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
|
| Invesco Oppenheimer V.I. Total Return Bond Fund |
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 David C. Arch, Bruce L. Crockett, Cynthia Hostetler, Elizabeth Krentzman, Anthony J. LaCava, Jr., Teresa M. Ressel, Jr. Robert C. Troccoli and James Vaughn. David C. Arch, Bruce L. Crockett, Cynthia Hostetler, Elizabeth Krentzman, Anthony J. LaCava, Jr., Teresa M. Ressel, Jr. Robert C. Troccoli and James Vaughn 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, PricewaterhouseCoopers LLC (“PwC”) advised the Registrant’s Audit Committee of the following matters identified between January 1, 2020 to February 16, 2021 that may be reasonably thought to bear on PwC’s independence. PwC advised the Audit Committee that five PwC Managers and one PwC Associate each held financial interests either directly or, in the case of two PwC Managers, indirectly through their spouse’s brokerage account, in investment companies within the Invesco Fund Complex that were inconsistent with the requirements of Rule 2-01(c)(1) of Regulation S-X. In reporting the matters to the Audit Committee, PwC noted, among other things, that the impermissible holdings were disposed of by the individuals, the individuals were not in the chain of command of the audit or the audit partners of the Funds, the individuals either did not provide any audit services (or in the case of one PwC Manager and one PwC Associate, the individual did not have decision-making responsibility for matters that materially affected the audit and their audit work was reviewed by team members at least two levels higher than the individuals), or did not provide services of any kind to the Registrant or its affiliates, and the financial interests were not material to the net worth of each individual or their respective immediate family members and senior leadership of the Funds’ audit engagement team was unaware of the impermissible holdings until after the matters were confirmed to be independence exceptions or individuals ceased providing services. 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 2020 | | | Fees Billed for Services
Rendered to the
Registrant for fiscal year
end 2019 | |
Audit Fees | | $ | 992,930 | | | $ | 977,878 | |
Audit-Related Fees | | $ | 33,000 | | | $ | 0 | |
Tax Fees(1) | | $ | 511,931 | | | $ | 576,844 | |
All Other Fees | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Total Fees | | $ | 1,537,861 | | | $ | 1,554,722 | |
| | | | | | | | |
| (1) | Tax Fees for the fiscal year ended December 31, 2020 and 2019 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
2020 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
2019 That Were Required
to be Pre-Approved
by the Registrant’s
Audit Committee | |
Audit-Related Fees(1) | | $ | 701,000 | | | $ | 690,000 | |
Tax Fees | | $ | 0 | | | $ | 0 | |
All Other Fees | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Total Fees | | $ | 701,000 | | | $ | 690,000 | |
| | | | | | | | |
| (1) | Audit-Related Fees for the fiscal years ended 2020 and 2019 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
| 1 | Applicable Rules include, for example, New York Stock Exchange (“NYSE”) rules applicable to closed-end funds managed by Invesco and listed on NYSE. |
engagements for other audit services, which are those services that only an independent auditor reasonably can provide. Other audit services may include services associated with SEC registration statements, periodic reports and other documents filed with the SEC.
| | III. | General and Specific Pre-Approval of Non-Audit Fund Services |
The Audit Committee will consider, at least annually, the list of General Pre-Approved Non-Audit Services which list may be terminated or modified at any time by the Audit Committee. To inform the Audit Committee’s review and approval of General Pre-Approved Non-Audit Services, the Funds’ Treasurer (or his or her designee) and Auditor shall provide such information regarding independence or other matters as the Audit Committee may request.
Any services or fee ranges that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval. Each request for specific pre-approval by the Audit Committee for services to be provided by the Auditor to the Funds must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, and other relevant information sufficient to allow the Audit Committee to consider whether to pre-approve such engagement, including evaluating whether the provision of such services will impair the independence of the Auditor and is otherwise consistent with Applicable Rules.
| | IV. | Non-Audit Service Types |
The Audit Committee may provide either general or specific pre-approval of audit-related, tax or other services, each as described in more detail below.
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by an independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; services related to mergers, acquisitions or dispositions; compliance with ratings agency requirements and interfund lending activities; and assistance with internal control reporting requirements.
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will not approve proposed services of the Auditor which the Audit Committee believes are to be provided in connection with a service or transaction initially recommended by the Auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisers as necessary to ensure the consistency of tax services rendered by the Auditor
with the foregoing policy. The Auditor shall not represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Each request to provide tax services under either the general or specific pre-approval of the Audit Committee will include a description from the Auditor in writing of (i) the scope of the service, the fee structure for the engagement, and any side letter or other amendment to the engagement letter, or any other agreement (whether oral, written, or otherwise) between the Auditor and the Funds, relating to the service; and (ii) any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor (or an affiliate of the Auditor) and any person (other than the Funds or Service Affiliates receiving the services) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will also discuss with the Audit Committee the potential effects of the services on the independence of the Auditor and document the substance of its discussion with the Audit Committee.
The Audit Committee may pre-approve other non-audit services so long as the Audit Committee believes that the service will not impair the independence of the Auditor. Appendix I includes a list of services that the Auditor is prohibited from performing by the SEC rules. Appendix I also includes a list of services that would impair the Auditor’s independence unless the Audit Committee reasonably concludes that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements.
| | V. | Pre-Approval of Service Affiliate’s Covered Engagements |
Rule 2-01 of Regulation S-X requires that the Audit Committee pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds, defined above as a “Service Affiliate’s Covered Engagement”.
The Audit Committee may provide either general or specific pre-approval of any Service Affiliate’s Covered Engagement, including for audit-related, tax or other services, as described above, if the Audit Committee believes that the provision of the services to a Service Affiliate will not impair the independence of the Auditor with respect to the Funds. Any Service Affiliate’s Covered Engagements that are not within the scope of General Pre-Approved Non-Audit Services have not received general pre-approval and require specific pre-approval.
Each request for specific pre-approval by the Audit Committee of a Service Affiliate’s Covered Engagement must be submitted to the Audit Committee by the Funds’ Treasurer (or his or her designee) and must include detailed information about the services to be provided, the fees or fee ranges to be charged, a description of the current status of the pre-approval process involving other audit committees in the Invesco investment company complex (as defined in Rule 2-201 of Regulation S-X) with respect to the proposed engagement, and other relevant information sufficient to allow the Audit Committee to consider whether the provision of such services will impair the independence of the Auditor from the Funds. Additionally, the Funds’ Treasurer (or his or her designee) and the Auditor will provide the Audit Committee with a statement that the proposed engagement requires pre-approval by the Audit Committee, the proposed engagement, in their view, will not impair the independence of the Auditor and is consistent with Applicable
Rules, and the description of the proposed engagement provided to the Audit Committee is consistent with that presented to or approved by the Invesco audit committee.
Information about all Service Affiliate engagements of the Auditor for non-audit services, whether or not subject to pre-approval by the Audit Committee, shall be provided to the Audit Committee at least quarterly, to allow the Audit Committee to consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Funds. The Funds’ Treasurer and Auditor shall provide the Audit Committee with sufficiently detailed information about the scope of services provided and the fees for such services, to ensure that the Audit Committee can adequately consider whether the provision of such services is compatible with maintaining the Auditor’s independence from the Funds.
| | VI. | Pre-Approved Fee Levels or Established Amounts |
Pre-approved fee levels or ranges for audit and non-audit services to be provided by the Auditor to the Funds, and for a Service Affiliate’s Covered Engagement, under general pre-approval or specific pre-approval will be set periodically by the Audit Committee. Any proposed fees exceeding 110% of the maximum pre-approved fee levels or ranges for such services or engagements will be promptly presented to the Audit Committee and will require specific pre-approval by the Audit Committee before payment of any additional fees is made.
The Audit Committee hereby delegates, subject to the dollar limitations set forth below, specific authority to its Chair, or in his or her absence, Vice Chair, to pre-approve audit and non-audit services proposed to be provided by the Auditor to the Funds and/or a Service Affiliate’s Covered Engagement, between Audit Committee meetings. Such delegation does not preclude the Chair or Vice Chair from declining, on a case by case basis, to exercise his or her delegated authority and instead convening the Audit Committee to consider and pre-approve any proposed services or engagements.
Notwithstanding the foregoing, the Audit Committee must pre-approve: (a) any non-audit services to be provided to the Funds for which the fees are estimated to exceed $500,000; (b) any Service Affiliate’s Covered Engagement for which the fees are estimated to exceed $500,000; or (c) any cost increase to any previously approved service or engagement that exceeds the greater of $250,000 or 50% of the previously approved fees up to a maximum increase of $500,000.
| | VIII. | Compliance with Procedures |
Notwithstanding anything herein to the contrary, failure to pre-approve any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X shall not constitute a violation of these Procedures. The Audit Committee has designated the Funds’ Treasurer to ensure services and engagements are pre-approved in compliance with these Procedures. The Funds’ Treasurer will immediately report to the Chair of the Audit Committee, or the Vice Chair in his or her absence, any breach of these Procedures that comes to the attention of the Funds’ Treasurer or any services or engagements that are not required to be pre-approved pursuant to the de minimis exception provided for in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
On at least an annual basis, the Auditor will provide the Audit Committee with a summary of all non-audit services provided to any entity in the investment company complex (as defined in section 2-01(f)(14) of Regulation S-X, including the Funds and Service Affiliates) that were not pre-approved, including the nature of services provided and the associated fees.
| | IX. | Amendments to Procedures |
All material amendments to these Procedures must be approved in advance by the Audit Committee. Non-material amendments to these Procedures may be made by the Legal and Compliance Departments and will be reported to the Audit Committee at the next regularly scheduled meeting of the Audit Committee.
Appendix I
Non-Audit Services That May Impair the Auditor’s Independence
The Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services:
| | • | | Broker-dealer, investment adviser, or investment banking services ; |
| | • | | Expert services unrelated to the audit; |
| | • | | Any service or product provided for a contingent fee or a commission; |
| | • | | Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance; |
| | • | | Tax services for persons in financial reporting oversight roles at the Fund; and |
| | • | | Any other service that the Public Company Oversight Board determines by regulation is impermissible. |
An Auditor is not independent if, at any point during the audit and professional engagement, the Auditor provides the following non-audit services unless it is reasonable to conclude that the results of the services will not be subject to audit procedures during an audit of the Funds’ financial statements:
| | • | | Bookkeeping or other services related to the accounting records or financial statements of the audit client; |
| | • | | Financial information systems design and implementation; |
| | • | | Appraisal or valuation services, fairness opinions, or contribution-in-kind reports; |
| | • | | 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 $6,219,000 for the fiscal year ended December 31, 2020 and $4,089,000 for the fiscal year ended December 31, 2019. In total, PwC billed the Registrant, Invesco and Invesco Affiliates aggregate non-audit fees of $7,431,931 for the fiscal year ended December 31, 2020 and $5,355,844 for the fiscal year ended December 31, 2019.
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. |
Not applicable.
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None
| ITEM 11. | CONTROLS AND PROCEDURES. |
| | (a) | As of February 11, 2021, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of February 11, 2021, 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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Registrant: | AIM Variable Insurance Funds (Invesco Variable Insurance Funds) |
| | |
| By: | | /s/ Sheri Morris |
| | Sheri Morris |
| | Principal Executive Officer |
| |
| Date: | | February 26, 2021 |
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: | | February 26, 2021 |
| | |
| By: | | /s/ Adrien Deberghes |
| | Adrien Deberghes |
| | Principal Financial Officer |
| |
| Date: | | February 26, 2021 |
