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: 12/31/21
| ITEM 1. | REPORTS TO STOCKHOLDERS. |
(a) The Registrant’s annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:
(b) Not Applicable
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. American Franchise Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. American Franchise Fund (the Fund) underperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 11.92 | % |
Series II Shares | | | 11.65 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 1000 Growth Index▼ (Style-Specific Index) | | | 27.60 | |
Lipper VUF Large-Cap Growth Funds Index∎ (Peer Group Index) | | | 20.42 | |
| |
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
In 2021, the market was more risk-averse, favoring staple-like, value-oriented and very liquid large caps. Energy stocks, financials (especially equity real estate investment trusts/REITs) and select mega cap information technology (IT) stocks led the market. Utilities, consumer staples and communication services were laggards. Given this landscape, the Fund produced a double-digit return, however, underperformed its style-specific benchmark during the fiscal year. Underperformance was primarily driven by stock selection resulting in underweight exposure in IT and overweight exposure in consumer discretionary. Stock selection in communication services and health care were also relative detractors. Positive relative contributors included stock selection within financials and materials, as well as an overweight allocation to energy.
Top individual detractors to the Fund’s absolute performance during the fiscal year included Reata Pharmaceuticals, Farfetch and Penn National Gaming.
Reata Pharmaceuticals was positioned for success but experienced a regulatory setback. Reata has two lead drugs, each target rare but fatal diseases that have no alternative treatments. The drugs had completed pivotal
points in clinical trials but were pending U.S. Food and Drug Administration (FDA) filings. Uncertainty entered when the Cardiovascular and Renal Drug Advisory Committee questioned whether the evidence presented in one of the trials demonstrated effectiveness of slowing progression of the disease and whether the benefits outweighed the risks. Ultimately, the committee decided more evidence would be needed, which caused the stock to sell off significantly.
Farfetch is the dominant online luxury retail destination aggregating over 1,400 luxury sellers and brands into one single platform. Farfetch was negatively impacted by forced selling tied to a large hedge fund, Archegos (not a fund holding), which placed temporary technical pressure on the share price in the spring, as well as revenues that came in at the lower end of expectations later in the fiscal year. We believed their technology unit which feeds its online platform to be grossly underappreciated and expect a potential transaction with luxury brand juggernaut Richmonte (not a fund holding) could be a strong catalyst to recognizing its value.
Our primary reason for holding select regional casinos such as Penn National Gaming came after a 2018 U.S. Supreme Court ruling, where sports betting and online gambling became subject to the approval of any US state which chooses to legalize them. Regional casinos already have licenses and relationships to operate in many states, thus would be likely candidates for online and sports betting licenses. We also believed regional casinos would benefit from an economic reopening in 2021 while travel restrictions kept consumers close to home. Penn detracted primarily because economics from the legalization of individual state gambling contracts were at times lower than expected. We continue to believe Penn to be well positioned to participate in this new and growing market.
Top individual contributors to the Fund’s absolute performance included Alphabet, Microsoft and Applied Materials.
Strong earnings results reflecting broad-based growth in digital advertising spending contributed to Alphabet’s strong performance during the fiscal year. Work-from-home and virtual school created a need for many Alphabet products including their cloud platform and streaming services. Their core product, the Google search engine, has been enhanced through artificial intelligence to increase accuracy and allow for searching with images as well as words through Google Lens. They also sought to improve lives through eco-friendly routing and an emergency wildfire layer for drivers in the US using Google Maps.
Microsoft is the second largest provider of cloud infrastructure and services and continued to benefit from digital transformation tailwinds despite tough comparisons from the beginning of the pandemic. Alphabet and Microsoft also benefited from the defensive
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| Invesco V.I. American Franchise Fund |
flight to larger, more liquid stocks as investors reduced cyclical exposure given higher inflation and the rise of particularly contagious COVID-19 variants of concern.
Applied Materials makes capital equipment used to manufacture semiconductor chips, liquid crystal displays and light-emitting diodes (LEDs). Long-term digital transformation has driven strong demand for semiconductor chips as content is growing in virtually every product from vehicles to toys. However, curtailments in spending in recent years, combined with supply disruptions from the pandemic, led to lean inventories and chip shortages. Governments globally are looking to onshore and expanding semiconductor manufacturing capacity to protect economic prosperity, innovation and national security. We believe Applied Materials would be a prime beneficiary of this increase in demand and capital spending.
At fiscal year-end and relative to the Fund’s style-specific index, the Fund was overweight in energy as oil demand has recovered quickly and appeared likely to return to tight spare capacity. Future expectations for capital expenditures continue to be low, which may further exacerbate supply/demand imbalances. The Fund is also overweight in health care, where 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. Except for the electronic equipment and instruments and semiconductor industries, the Fund is underweight in IT given a preference for technology-driven companies within communication services and consumer discretionary. The Fund is also underweight in consumer staples given lapping stimulus and a greater proportion of negative impact from inflation on lower income households.
On the margin, we began reducing cyclical exposure and rotating towards what we believe will be a slowing growth environment, one which favors companies able to generate attractive growth rates. We expect higher inflation in the first half of 2022, though it may recede toward the second half as labor issues are resolved, inventories are rebuilt and supply chain disruptions fade. Importantly, the average consumer remains in a very strong position today with high savings and still pent-up demand for travel and experiences. As ever, we believe that change is the fuel for growth and portfolios, thus we seek “share-takers”, companies that can gain market share through technology-enabled advantages in their business models and with offerings that benefit from the continued 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: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
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. and its affiliates. 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. American Franchise Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (7/3/95) | | | 11.05 | % |
10 Years | | | 17.37 | |
5 Years | | | 21.74 | |
1 Year | | | 11.92 | |
| |
Series II Shares | | | | |
Inception (9/18/00) | | | 5.04 | % |
10 Years | | | 17.08 | |
5 Years | | | 21.43 | |
1 Year | | | 11.65 | |
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 recognized 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 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.
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| 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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. |
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| Invesco V.I. American Franchise Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 38.74 | % |
| |
Consumer Discretionary | | | | 18.98 | |
| |
Communication Services | | | | 13.08 | |
| |
Health Care | | | | 9.94 | |
| |
Industrials | | | | 6.12 | |
| |
Financials | | | | 4.64 | |
| |
Energy | | | | 3.29 | |
| |
Materials | | | | 2.23 | |
| |
Consumer Staples | | | | 2.16 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.82 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Microsoft Corp. | | | | 7.20 | % |
| | |
2. | | Amazon.com, Inc. | | | | 7.08 | |
| | |
3. | | Alphabet, Inc., Class A | | | | 5.18 | |
| | |
4. | | Apple, Inc. | | | | 5.17 | |
| | |
5. | | Meta Platforms, Inc., Class A | | | | 4.47 | |
| | |
6. | | NVIDIA Corp. | | | | 3.72 | |
| | |
7. | | Lowe’s Cos., Inc. | | | | 2.95 | |
| | |
8. | | QUALCOMM, Inc. | | | | 2.54 | |
| | |
9. | | Apollo Asset Management, Inc. | | | | 2.43 | |
| | |
10. | | Palo Alto Networks, Inc. | | | | 2.22 | |
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, 2021.
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| Invesco V.I. American Franchise Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.18% | |
Aerospace & Defense–1.76% | |
Airbus SE (France)(b) | | | 70,689 | | | $ | 9,027,962 | |
|
| |
Textron, Inc. | | | 76,238 | | | | 5,885,573 | |
|
| |
| | | | 14,913,535 | |
|
| |
|
Agricultural & Farm Machinery–0.34% | |
Deere & Co. | | | 8,297 | | | | 2,844,958 | |
|
| |
|
Application Software–4.36% | |
Datadog, Inc., Class A(b) | | | 19,386 | | | | 3,452,840 | |
|
| |
DocuSign, Inc.(b) | | | 6,318 | | | | 962,295 | |
|
| |
HubSpot, Inc.(b) | | | 5,371 | | | | 3,540,295 | |
|
| |
Paycom Software, Inc.(b) | | | 11,765 | | | | 4,884,710 | |
|
| |
RingCentral, Inc., Class A(b) | | | 18,542 | | | | 3,473,844 | |
|
| |
salesforce.com, inc.(b) | | | 44,490 | | | | 11,306,244 | |
|
| |
Synopsys, Inc.(b) | | | 22,027 | | | | 8,116,949 | |
|
| |
Unity Software, Inc.(b) | | | 8,187 | | | | 1,170,659 | |
|
| |
| | | | 36,907,836 | |
|
| |
|
Asset Management & Custody Banks–4.38% | |
Apollo Asset Management, Inc.(c) | | | 284,190 | | | | 20,583,882 | |
|
| |
KKR & Co., Inc., Class A | | | 221,533 | | | | 16,504,208 | |
|
| |
| | | | 37,088,090 | |
|
| |
|
Automobile Manufacturers–1.35% | |
General Motors Co.(b) | | | 195,110 | | | | 11,439,299 | |
|
| |
|
Automotive Retail–0.29% | |
CarMax, Inc.(b) | | | 18,828 | | | | 2,451,970 | |
|
| |
|
Biotechnology–0.87% | |
Alnylam Pharmaceuticals, Inc.(b) | | | 6,588 | | | | 1,117,193 | |
|
| |
BeiGene Ltd., ADR (China)(b) | | | 9,556 | | | | 2,589,007 | |
|
| |
C4 Therapeutics, Inc.(b) | | | 16,117 | | | | 518,967 | |
|
| |
Kura Oncology, Inc.(b) | | | 76,595 | | | | 1,072,330 | |
|
| |
Ultragenyx Pharmaceutical, Inc.(b) | | | 24,216 | | | | 2,036,324 | |
|
| |
| | | | 7,333,821 | |
|
| |
|
Casinos & Gaming–2.19% | |
Caesars Entertainment, Inc.(b) | | | 69,697 | | | | 6,518,761 | |
|
| |
Penn National Gaming, Inc.(b)(c) | | | 232,111 | | | | 12,034,955 | |
|
| |
| | | | 18,553,716 | |
|
| |
|
Construction Machinery & Heavy Trucks–0.51% | |
Oshkosh Corp. | | | 38,400 | | | | 4,328,064 | |
|
| |
|
Consumer Electronics–1.55% | |
Sony Group Corp. (Japan) | | | 104,000 | | | | 13,146,567 | |
|
| |
|
Copper–1.79% | |
Freeport-McMoRan, Inc. | | | 363,537 | | | | 15,170,399 | |
|
| |
|
Data Processing & Outsourced Services–2.14% | |
Adyen N.V. (Netherlands)(b)(d) | | | 2,599 | | | | 6,799,564 | |
|
| |
Block, Inc., Class A(b)(c) | | | 19,840 | | | | 3,204,358 | |
|
| |
PayPal Holdings, Inc.(b) | | | 21,750 | | | | 4,101,615 | |
|
| |
Visa, Inc., Class A | | | 18,707 | | | | 4,053,994 | |
|
| |
| | | | 18,159,531 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Diversified Metals & Mining–0.44% | |
Glencore PLC (Australia) | | | 734,128 | | | $ | 3,734,994 | |
|
| |
|
Diversified Support Services–0.42% | |
Cintas Corp. | | | 7,968 | | | | 3,531,179 | |
|
| |
|
Electrical Components & Equipment–0.55% | |
ABB Ltd., ADR (Switzerland) | | | 121,631 | | | | 4,642,655 | |
|
| |
|
Electronic Equipment & Instruments–1.22% | |
Teledyne Technologies, Inc.(b) | | | 23,603 | | | | 10,311,915 | |
|
| |
|
Financial Exchanges & Data–0.26% | |
MSCI, Inc. | | | 1,397 | | | | 855,928 | |
|
| |
S&P Global, Inc. | | | 2,781 | | | | 1,312,437 | |
|
| |
| | | | 2,168,365 | |
|
| |
|
Food Distributors–0.92% | |
US Foods Holding Corp.(b) | | | 223,691 | | | | 7,791,158 | |
|
| |
|
Food Retail–1.07% | |
HelloFresh SE (Germany)(b) | | | 117,732 | | | | 9,056,030 | |
|
| |
|
Health Care Equipment–2.64% | |
DexCom, Inc.(b) | | | 12,688 | | | | 6,812,821 | |
|
| |
Intuitive Surgical, Inc.(b) | | | 27,369 | | | | 9,833,682 | |
|
| |
Shockwave Medical, Inc.(b) | | | 32,000 | | | | 5,706,560 | |
|
| |
| | | | 22,353,063 | |
|
| |
|
Health Care Supplies–1.32% | |
Align Technology, Inc.(b) | | | 7,056 | | | | 4,637,062 | |
|
| |
Cooper Cos., Inc. (The) | | | 15,539 | | | | 6,509,909 | |
|
| |
| | | | 11,146,971 | |
|
| |
|
Home Improvement Retail–2.95% | |
Lowe’s Cos., Inc. | | | 96,648 | | | | 24,981,575 | |
|
| |
|
Hotels, Resorts & Cruise Lines–2.13% | |
Booking Holdings, Inc.(b) | | | 6,846 | | | | 16,425,128 | |
|
| |
Travel + Leisure Co. | | | 29,403 | | | | 1,625,104 | |
|
| |
| | | | 18,050,232 | |
|
| |
|
Integrated Oil & Gas–0.59% | |
Occidental Petroleum Corp. | | | 173,894 | | | | 5,041,187 | |
|
| |
|
Interactive Home Entertainment–2.28% | |
Activision Blizzard, Inc. | | | 6,341 | | | | 421,867 | |
|
| |
Electronic Arts, Inc. | | | 73,790 | | | | 9,732,901 | |
|
| |
Nintendo Co. Ltd. (Japan) | | | 16,100 | | | | 7,509,649 | |
|
| |
Sea Ltd., ADR (Taiwan)(b) | | | 7,434 | | | | 1,663,060 | |
|
| |
| | | | 19,327,477 | |
|
| |
|
Interactive Media & Services–10.45% | |
Alphabet, Inc., Class A(b) | | | 15,149 | | | | 43,887,259 | |
|
| |
Meta Platforms, Inc., Class A(b) | | | 112,590 | | | | 37,869,647 | |
|
| |
ZoomInfo Technologies, Inc., Class A(b) | | | 105,402 | | | | 6,766,808 | |
|
| |
| | | | 88,523,714 | |
|
| |
|
Internet & Direct Marketing Retail–8.52% | |
Amazon.com, Inc.(b) | | | 17,983 | | | | 59,961,436 | |
|
| |
Farfetch Ltd., Class A (United
Kingdom)(b) | | | 349,576 | | | | 11,686,326 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. American Franchise Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Internet & Direct Marketing Retail–(continued) | |
MercadoLibre, Inc. (Argentina)(b)(c) | | | 348 | | | $ | 469,243 | |
|
| |
| | | | 72,117,005 | |
|
| |
|
Internet Services & Infrastructure–3.92% | |
Cloudflare, Inc., Class A(b) | | | 63,351 | | | | 8,330,657 | |
|
| |
MongoDB, Inc.(b) | | | 18,177 | | | | 9,621,995 | |
|
| |
Shopify, Inc., Class A (Canada)(b) | | | 7,719 | | | | 10,632,073 | |
|
| |
Snowflake, Inc., Class A(b) | | | 13,556 | | | | 4,592,095 | |
|
| |
| | | | 33,176,820 | |
|
| |
|
Life Sciences Tools & Services–3.16% | |
10X Genomics, Inc., Class A(b) | | | 2,312 | | | | 344,395 | |
|
| |
Avantor, Inc.(b) | | | 246,777 | | | | 10,399,183 | |
|
| |
IQVIA Holdings, Inc.(b) | | | 40,904 | | | | 11,540,655 | |
|
| |
Thermo Fisher Scientific, Inc. | | | 6,749 | | | | 4,503,203 | |
|
| |
| | | | 26,787,436 | |
|
| |
|
Managed Health Care–1.34% | |
UnitedHealth Group, Inc. | | | 22,622 | | | | 11,359,411 | |
|
| |
|
Movies & Entertainment–0.35% | |
Netflix, Inc.(b) | | | 4,867 | | | | 2,932,075 | |
|
| |
|
Oil & Gas Equipment & Services–1.27% | |
Baker Hughes Co., Class A | | | 319,838 | | | | 7,695,302 | |
|
| |
Halliburton Co. | | | 133,462 | | | | 3,052,276 | |
|
| |
| | | | 10,747,578 | |
|
| |
|
Oil & Gas Exploration & Production–1.43% | |
APA Corp. | | | 449,342 | | | | 12,082,806 | |
|
| |
|
Pharmaceuticals–0.61% | |
Novo Nordisk A/S, ADR (Denmark) | | | 7,541 | | | | 844,592 | |
|
| |
Novo Nordisk A/S, Class B (Denmark) | | | 18,521 | | | | 2,070,551 | |
|
| |
Reata Pharmaceuticals, Inc., Class A(b) | | | 87,172 | | | | 2,298,725 | |
|
| |
| | | | 5,213,868 | |
|
| |
|
Semiconductor Equipment–2.27% | |
Applied Materials, Inc. | | | 73,681 | | | | 11,594,442 | |
|
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 8,380 | | | | 6,671,653 | |
|
| |
Enphase Energy, Inc.(b) | | | 5,490 | | | | 1,004,341 | |
|
| |
| | | | 19,270,436 | |
|
| |
|
Semiconductors–7.09% | |
Monolithic Power Systems, Inc. | | | 14,361 | | | | 7,084,712 | |
|
| |
NVIDIA Corp. | | | 107,029 | | | | 31,478,299 | |
|
| |
QUALCOMM, Inc. | | | 117,335 | | | | 21,457,052 | |
|
| |
| | | | 60,020,063 | |
|
| |
|
Systems Software–12.56% | |
Microsoft Corp. | | | 181,200 | | | | 60,941,184 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Systems Software–(continued) | |
Palo Alto Networks, Inc.(b) | | | 33,680 | | | $ | 18,751,677 | |
|
| |
ServiceNow, Inc.(b) | | | 27,205 | | | | 17,659,038 | |
|
| |
Zscaler, Inc.(b) | | | 28,053 | | | | 9,014,270 | |
|
| |
| | | | 106,366,169 | |
|
| |
|
Technology Hardware, Storage & Peripherals–5.17% | |
Apple, Inc. | | | 246,558 | | | | 43,781,304 | |
|
| |
|
Tobacco–0.17% | |
Philip Morris International, Inc. | | | 15,090 | | | | 1,433,550 | |
|
| |
|
Trading Companies & Distributors–1.38% | |
Fastenal Co. | | | 74,285 | | | | 4,758,697 | |
|
| |
United Rentals, Inc.(b) | | | 20,819 | | | | 6,917,946 | |
|
| |
| | | | 11,676,643 | |
|
| |
|
Trucking–1.17% | |
Knight-Swift Transportation Holdings, Inc. | | | 87,785 | | | | 5,349,618 | |
|
| |
Lyft, Inc., Class A(b) | | | 106,553 | | | | 4,553,010 | |
|
| |
| | | | 9,902,628 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $438,690,667) | | | | 839,866,093 | |
|
| |
|
Money Market Funds–0.97% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(e)(f) | | | 2,868,097 | | | | 2,868,097 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(e)(f) | | | 2,048,159 | | | | 2,048,569 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e)(f) | | | 3,277,826 | | | | 3,277,826 | |
|
| |
Total Money Market Funds (Cost $8,194,492) | | | | 8,194,492 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.15%
(Cost $446,885,159) | | | | 848,060,585 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–2.56% | |
Invesco Private Government Fund, 0.02%(e)(f)(g) | | | 6,515,520 | | | | 6,515,520 | |
|
| |
Invesco Private Prime Fund,
0.11%(e)(f)(g) | | | 15,199,840 | | | | 15,202,880 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $21,718,400) | | | | 21,718,400 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–102.71%
(Cost $468,603,559) | | | | 869,778,985 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(2.71)% | | | | (22,963,793 | ) |
|
| |
NET ASSETS–100.00% | | | $ | 846,815,192 | |
|
| |
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, 2021. |
| (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, 2021 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Unrealized | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | Appreciation | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $ | 339,535 | | | $ | 51,739,156 | | | $ | (49,210,594 | ) | | | $- | | | $ | - | | | $ | 2,868,097 | | | $ | 222 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 241,150 | | | | 36,445,443 | | | | (34,637,991 | ) | | | - | | | | (33) | | | | 2,048,569 | | | | 88 | |
Invesco Treasury Portfolio, Institutional Class | | | 388,040 | | | | 59,130,464 | | | | (56,240,678 | ) | | | - | | | | - | | | | 3,277,826 | | | | 96 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | 2,232,586 | | | | 128,037,319 | | | | (123,754,385 | ) | | | - | | | | - | | | | 6,515,520 | | | | 1,141* | |
Invesco Private Prime Fund | | | 3,348,878 | | | | 222,151,300 | | | | (210,292,550 | ) | | | - | | | | (4,748) | | | | 15,202,880 | | | | 15,371* | |
Total | | $ | 6,550,189 | | | $ | 497,503,682 | | | $ | (474,136,198 | ) | | | $- | | | $ | (4,781) | | | $ | 29,912,892 | | | $ | 16,918 | |
| | * | 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, 2021. |
| (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. American Franchise Fund |
Statement of Assets and Liabilities
December 31, 2021
| | |
Assets: | | |
Investments in unaffiliated securities, at value (Cost $438,690,667)* | | $839,866,093 |
Investments in affiliated money market funds, at value (Cost $29,912,892) | | 29,912,892 |
Foreign currencies, at value (Cost $8,091) | | 8,647 |
Receivable for: | | |
Investments sold | | 2,814 |
Fund shares sold | | 1,213,317 |
Dividends | | 48,931 |
Investment for trustee deferred compensation and retirement plans | | 275,860 |
Other assets | | 3,434 |
Total assets | | 871,331,988 |
| |
Liabilities: | | |
Payable for: | | |
Investments purchased | | 1,298,396 |
Fund shares reacquired | | 271,242 |
Amount due custodian | | 434,924 |
Collateral upon return of securities loaned | | 21,718,400 |
Accrued fees to affiliates | | 426,259 |
Accrued other operating expenses | | 74,555 |
Trustee deferred compensation and retirement plans | | 293,020 |
Total liabilities | | 24,516,796 |
Net assets applicable to shares outstanding | | $846,815,192 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $278,951,068 |
Distributable earnings | | 567,864,124 |
| | | $846,815,192 |
| |
Net Assets: | | |
Series I | | $591,906,575 |
Series II | | $254,908,617 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 6,678,391 |
Series II | | 3,069,528 |
Series I: | | |
Net asset value per share | | $ 88.63 |
Series II: | | |
Net asset value per share | | $ 83.04 |
| * | At December 31, 2021, securities with an aggregate value of $21,185,252 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $52,361) | | $ | 3,867,984 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $44,469) | | | 44,875 | |
|
| |
Total investment income | | | 3,912,859 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 5,769,213 | |
|
| |
Administrative services fees | | | 1,420,485 | |
|
| |
Custodian fees | | | 10,207 | |
|
| |
Distribution fees - Series II | | | 623,169 | |
|
| |
Transfer agent fees | | | 58,899 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 29,938 | |
|
| |
Reports to shareholders | | | 83,313 | |
|
| |
Professional services fees | | | 56,034 | |
|
| |
Other | | | 13,601 | |
|
| |
Total expenses | | | 8,064,859 | |
|
| |
Less: Fees waived | | | (543 | ) |
|
| |
Net expenses | | | 8,064,316 | |
|
| |
Net investment income (loss) | | | (4,151,457 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 178,892,413 | |
|
| |
Affiliated investment securities | | | (4,781 | ) |
|
| |
Foreign currencies | | | 22,453 | |
|
| |
| | | 178,910,085 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (78,148,606 | ) |
|
| |
Foreign currencies | | | (588 | ) |
|
| |
| | | (78,149,194 | ) |
|
| |
Net realized and unrealized gain | | | 100,760,891 | |
|
| |
Net increase in net assets resulting from operations | | $ | 96,609,434 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (4,151,457 | ) | | $ | (1,677,294 | ) |
|
| |
Net realized gain | | | 178,910,085 | | | | 99,300,770 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (78,149,194 | ) | | | 152,266,846 | |
|
| |
Net increase in net assets resulting from operations | | | 96,609,434 | | | | 249,890,322 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (69,405,765 | ) | | | (38,450,337 | ) |
|
| |
Series II | | | (32,075,893 | ) | | | (13,951,148 | ) |
|
| |
Total distributions from distributable earnings | | | (101,481,658 | ) | | | (52,401,485 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (19,513,798 | ) | | | (26,428,995 | ) |
|
| |
Series II | | | 41,059,309 | | | | 6,495,285 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 21,545,511 | | | | (19,933,710 | ) |
|
| |
Net increase in net assets | | | 16,673,287 | | | | 177,555,127 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 830,141,905 | | | | 652,586,778 | |
|
| |
End of year | | $ | 846,815,192 | | | $ | 830,141,905 | |
|
| |
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 12/31/21 | | | $89.10 | | | | $(0.39 | ) | | | $11.37 | | | | $10.98 | | | | $ – | | | | $(11.45 | ) | | | $(11.45 | ) | | | $88.63 | | | | 11.92 | % | | | $591,907 | | | | 0.86 | % | | | 0.86 | % | | | (0.41 | )% | | | 68 | % |
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 | | | | 0.86 | | | | (0.18 | ) | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 84.31 | | | | (0.59 | ) | | | 10.77 | | | | 10.18 | | | | – | | | | (11.45 | ) | | | (11.45 | ) | | | 83.04 | | | | 11.65 | | | | 254,909 | | | | 1.11 | | | | 1.11 | | | | (0.66 | ) | | | 68 | |
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 | | | | 1.11 | | | | (0.43 | ) | | | 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 | |
| (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. |
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, 2021
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. The Fund is classified as non-diversified. The Fund’s classification changed from diversified to non-diversified on April 30, 2021. 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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
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| Invesco V.I. American Franchise 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
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| Invesco V.I. American Franchise Fund |
| 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 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 is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $543.
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, 2021, Invesco was paid $123,125 for accounting and fund administrative services and was reimbursed $1,297,360 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, 2021, 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
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| Invesco V.I. American Franchise 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $20,168 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, 2021. 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 | | | $ | 788,520,776 | | | | $ | 51,345,317 | | | | $ | – | | | | $ | 839,866,093 | |
Money Market Funds | | | | 8,194,492 | | | | | 21,718,400 | | | | | – | | | | | 29,912,892 | |
Total Investments | | | $ | 796,715,268 | | | | $ | 73,063,717 | | | | $ | – | | | | $ | 869,778,985 | |
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, 2021, the Fund engaged in securities purchases of $1,706,286.
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
Ordinary income* | | $ | 19,502,461 | | | | | | | $ | 365,024 | |
Long-term capital gain | | | 81,979,197 | | | | | | | | 52,036,461 | |
Total distributions | | $ | 101,481,658 | | | | | | | $ | 52,401,485 | |
| * | Includes short-term capital gain distributions, if any. |
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| Invesco V.I. American Franchise Fund |
| | | | |
| Tax Components of Net Assets at Period-End: | | | |
| | | 2021 | |
|
| |
Undistributed long-term capital gain | | $ | 173,691,191 | |
|
| |
Net unrealized appreciation – investments | | | 394,341,248 | |
|
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (787 | ) |
|
| |
Temporary book/tax differences | | | (167,528 | ) |
|
| |
Shares of beneficial interest | | | 278,951,068 | |
|
| |
Total net assets | | $ | 846,815,192 | |
|
| |
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 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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $580,180,367 and $670,946,930, 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 | | $ | 417,447,138 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (23,105,890 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 394,341,248 | |
|
| |
Cost of investments for tax purposes is $475,437,737.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $4,219,626, undistributed net realized gain was decreased by $2,879,211 and shares of beneficial interest was decreased by $1,340,415. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 183,103 | | | $ | 17,299,379 | | | | 358,250 | | | $ | 27,495,024 | |
|
| |
Series II | | | 553,978 | | | | 49,490,468 | | | | 382,659 | | | | 27,974,194 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 759,114 | | | | 69,405,759 | | | | 473,119 | | | | 38,450,334 | |
|
| |
Series II | | | 374,237 | | | | 32,075,893 | | | | 181,325 | | | | 13,951,148 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,125,267 | ) | | | (106,218,936 | ) | | | (1,272,230 | ) | | | (92,374,353 | ) |
|
| |
Series II | | | (453,921 | ) | | | (40,507,052 | ) | | | (507,251 | ) | | | (35,430,057 | ) |
|
| |
Net increase (decrease) in share activity | | | 291,244 | | | $ | 21,545,511 | | | | (384,128 | ) | | $ | (19,933,710 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 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. |
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $999.40 | | $4.28 | | $1,020.92 | | $4.33 | | 0.85% |
Series II | | 1,000.00 | | 998.10 | | 5.54 | | 1,019.66 | | 5.60 | | 1.10 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 81,979,197 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 21.08 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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. 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) | | 186 | | 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 | | | | | | | | |
Christopher L. Wilson – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| 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; 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| 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; Vice President, Invesco Advisers, Inc.; 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. American Franchise Fund
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| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. American Value Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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. | | | | VK-VIAMVA-AR-1 |
Management’s Discussion of Fund Performance
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Performance summary | | | | |
For the year ended December 31, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 27.95 | % |
Series II Shares | | | 27.62 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell Midcap Value Index▼ (Style-Specific Index) | | | 28.34 | |
Lipper VUF Mid Cap Value Funds Index∎ (Peer Group Index) | | | 28.10 | |
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Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
All sectors within the Russell Midcap Value Index had positive returns for the fiscal year. The energy sector had the highest returns, while communication services lagged.
Stock selection in energy was the largest contributor to the Fund’s relative return during the fiscal year, due in part to Devon Energy and Pioneer Natural Resources. Energy stocks overall were buoyed by rising oil prices resulting from a rebound in demand, OPEC production cuts and energy shortages abroad. Shares of Devon Energy rose sharply, particularly following its third-quarter 2021 earnings report which exceeded expectations. Even though Devon Energy benefited from rising oil prices, the company has maintained a commitment to disciplined growth and spending, while returning capital to shareholders. We maintained our position in both companies at fiscal year end.
Stock selection in financials was another contributor to relative performance during the fiscal year, with Ally Financial and Athene posting double-digit gains. Ally Financial benefited from attractive used car pricing, lower interest rates and a favorable credit environment. Athene has delivered strong sales and significant alternative investment income leading to positive earnings. Anticipation
of Apollo Global Management (not a fund holding) acquisition of Athene in early January 2022 also supported the stock. We held both stocks at fiscal year end.
Stock selection in the health care sector was the largest detractor from the Fund’s relative performance during the fiscal year, due to weakness in Encompass Health and Universal Health Services. Despite strong demand in a challenging environment, COVID-19-related disruptions and labor shortages led to weaker revenues for Encompass Health. Similarly, Universal Health Services also encountered staffing issues related to the pandemic. We maintained our positions in these stocks at fiscal year end.
Stock selection in information technology (IT) also detracted from the Fund’s relative returns during the fiscal year, due to Vontier, a global mobility and transportation technology company and Sabre, a travel technology company. Vontier traded lower as investors worried about its ability to drive incremental value through mergers and acquisitions. Shares of Sabre declined as investor sentiment toward travel-related stocks turned negative as new COVID-19 variants emerged. The rapid spread of Omicron also began to reduce booking demand in the latter part of the fiscal year. We sold our position in Sabre but held Vontier at fiscal year end.
Stock selection in materials was another relative detractor from the Fund’s relative returns during the fiscal year, due to We-strock, a corrugated packaging company. Shares traded lower amid weakening demand for boxes and container boards as COVID-19 lockdowns were reinstated in many areas to combat the Delta and Omicron variants. At the same time, the company faced higher costs for freight and input materials, which put pressure on earnings. We held Westrock at fiscal year end.
The Fund’s cash position, while less than 2.5% on average, also detracted from relative returns during the fiscal year amid the strong market environment.
During the fiscal year, we added positions in industrials, consumer discretionary and energy and reduced the number of holdings in financials, consumer staples, communication services, IT and utilities. At fiscal year end, the Fund’s largest overweights relative to the Russell MidCap Index were in financials and energy, while the largest underweights were in real estate and IT.
We believe equity market volatility will continue in 2022 due to COVID-19 concerns, supply chain issues and inflationary pressures. 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.
|
| Invesco V.I. American Value Fund |
Thank you for your continued investment in the Invesco V.I. American Value Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 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. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (1/2/97) | | | 9.74 | % |
10 Years | | | 10.92 | |
5 Years | | | 9.22 | |
1 Year | | | 27.95 | |
Series II Shares | | | | |
Inception (5/5/03) | | | 10.18 | % |
10 Years | | | 10.65 | |
5 Years | | | 8.94 | |
1 Year | | | 27.62 | |
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 Van Kampen 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 | | | | 24.47 | % |
| |
Industrials | | | | 16.91 | |
| |
Consumer Discretionary | | | | 12.13 | |
| |
Health Care | | | | 8.14 | |
| |
Real Estate | | | | 7.02 | |
| |
Energy | | | | 6.86 | |
| |
Materials | | | | 5.94 | |
| |
Information Technology | | | | 5.79 | |
| |
Utilities | | | | 5.08 | |
| |
Consumer Staples | | | | 4.44 | |
| |
Communication Services | | | | 1.75 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.47 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Athene Holding Ltd., Class A | | | | 3.86 | % |
| | |
2. | | Vertiv Holdings Co. | | | | 3.07 | |
| | |
3. | | Arthur J. Gallagher & Co. | | | | 2.96 | |
| | |
4. | | Voya Financial, Inc. | | | | 2.89 | |
| | |
5. | | Eastman Chemical Co. | | | | 2.82 | |
| | |
6. | | Ally Financial, Inc. | | | | 2.74 | |
| | |
7. | | KeyCorp | | | | 2.72 | |
| | |
8. | | Pioneer Natural Resources Co. | | | | 2.64 | |
| | |
9. | | Huntington Bancshares, Inc. | | | | 2.60 | |
| | |
10. | | Zions Bancorporation N.A. | | | | 2.52 | |
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, 2021.
|
| Invesco V.I. American Value Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.53% | |
| Aerospace & Defense–2.05% | | | | | | | | |
Curtiss-Wright Corp. | | | 55,346 | | | $ | 7,674,830 | |
|
| |
| | |
Agricultural & Farm Machinery–1.99% | | | | | | | | |
AGCO Corp. | | | 64,181 | | | | 7,446,280 | |
|
| |
| | |
Airlines–1.63% | | | | | | | | |
Southwest Airlines Co.(b) | | | 142,935 | | | | 6,123,335 | |
|
| |
| |
Apparel, Accessories & Luxury Goods–3.47% | | | | | |
Ralph Lauren Corp. | | | 55,898 | | | | 6,644,036 | |
Tapestry, Inc. | | | 156,443 | | | | 6,351,586 | |
|
| |
| | | | | | | 12,995,622 | |
|
| |
| | |
Auto Parts & Equipment–2.50% | | | | | | | | |
Lear Corp.(c) | | | 51,156 | | | | 9,358,990 | |
|
| |
| | |
Broadcasting–1.75% | | | | | | | | |
Nexstar Media Group, Inc., Class A | | | 43,504 | | | | 6,568,234 | |
|
| |
| | |
Building Products–2.10% | | | | | | | | |
Johnson Controls International PLC | | | 96,608 | | | | 7,855,196 | |
|
| |
| | |
Casinos & Gaming–1.58% | | | | | | | | |
Bally’s Corp.(b) | | | 156,108 | | | | 5,941,470 | |
|
| |
| | |
Communications Equipment–2.07% | | | | | | | | |
Ciena Corp.(b) | | | 101,015 | | | | 7,775,125 | |
|
| |
| |
Construction Machinery & Heavy Trucks–2.25% | | | | | |
Oshkosh Corp. | | | 74,694 | | | | 8,418,761 | |
|
| |
| | |
Consumer Finance–2.74% | | | | | | | | |
Ally Financial, Inc. | | | 215,457 | | | | 10,257,908 | |
|
| |
| | |
Copper–1.40% | | | | | | | | |
Freeport-McMoRan, Inc. | | | 125,747 | | | | 5,247,422 | |
|
| |
| | |
Distributors–2.12% | | | | | | | | |
LKQ Corp. | | | 132,406 | | | | 7,948,332 | |
|
| |
| | |
Electric Utilities–5.08% | | | | | | | | |
Entergy Corp. | | | 65,520 | | | | 7,380,828 | |
|
| |
Evergy, Inc. | | | 83,618 | | | | 5,737,031 | |
|
| |
Exelon Corp. | | | 102,521 | | | | 5,921,613 | |
|
| |
| | | | | | | 19,039,472 | |
|
| |
| |
Electrical Components & Equipment–3.07% | | | | | |
Vertiv Holdings Co. | | | 460,973 | | | | 11,510,496 | |
|
| |
| |
Electronic Equipment & Instruments–1.82% | | | | | |
Vontier Corp. | | | 221,853 | | | | 6,817,543 | |
|
| |
| | |
Food Distributors–2.29% | | | | | | | | |
Performance Food Group Co.(b)(c) | | | 187,068 | | | | 8,584,550 | |
|
| |
| | |
Health Care Distributors–1.88% | | | | | | | | |
Henry Schein, Inc.(b) | | | 90,676 | | | | 7,030,110 | |
|
| |
| | |
Health Care Facilities–3.96% | | | | | | | | |
Encompass Health Corp. | | | 112,873 | | | | 7,366,092 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Facilities–(continued) | | | | | | | | |
Universal Health Services, Inc., Class B | | | 57,762 | | | $ | 7,489,421 | |
|
| |
| | | | | | | 14,855,513 | |
|
| |
| | |
Hotel & Resort REITs–2.38% | | | | | | | | |
Host Hotels & Resorts, Inc.(b) | | | 513,318 | | | | 8,926,600 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–2.46% | | | | | |
Wyndham Hotels & Resorts, Inc. | | | 102,824 | | | | 9,218,172 | |
|
| |
| | |
Industrial Machinery–1.60% | | | | | | | | |
Kennametal, Inc.(c) | | | 166,513 | | | | 5,979,482 | |
|
| |
| | |
Industrial REITs–1.54% | | | | | | | | |
First Industrial Realty Trust, Inc. | | | 87,057 | | | | 5,763,173 | |
|
| |
| | |
Insurance Brokers–2.96% | | | | | | | | |
Arthur J. Gallagher & Co. | | | 65,455 | | | | 11,105,750 | |
|
| |
| |
Investment Banking & Brokerage–1.76% | | | | | |
Stifel Financial Corp. | | | 93,807 | | | | 6,605,889 | |
|
| |
| | |
Life & Health Insurance–3.86% | | | | | | | | |
Athene Holding Ltd., Class A(b) | | | 173,758 | | | | 14,479,254 | |
|
| |
| | |
Managed Health Care–2.30% | | | | | | | | |
Centene Corp.(b) | | | 104,516 | | | | 8,612,118 | |
|
| |
| | |
Marine–2.23% | | | | | | | | |
Kirby Corp.(b)(c) | | | 140,793 | | | | 8,365,920 | |
|
| |
| |
Oil & Gas Exploration & Production–6.86% | | | | | |
Devon Energy Corp. | | | 195,302 | | | | 8,603,053 | |
|
| |
Diamondback Energy, Inc. | | | 66,834 | | | | 7,208,047 | |
|
| |
Pioneer Natural Resources Co. | | | 54,458 | | | | 9,904,821 | |
|
| |
| | | | | | | 25,715,921 | |
|
| |
| |
Other Diversified Financial Services–2.89% | | | | | |
Voya Financial, Inc. | | | 163,176 | | | | 10,820,201 | |
|
| |
| | |
Paper Packaging–1.72% | | | | | | | | |
WestRock Co. | | | 145,181 | | | | 6,440,229 | |
|
| |
| | |
Regional Banks–10.26% | | | | | | | | |
Huntington Bancshares, Inc. | | | 630,573 | | | | 9,723,436 | |
|
| |
KeyCorp | | | 440,033 | | | | 10,177,963 | |
|
| |
Wintrust Financial Corp. | | | 100,559 | | | | 9,132,768 | |
|
| |
Zions Bancorporation N.A. | | | 149,298 | | | | 9,429,662 | |
|
| |
| | | | | | | 38,463,829 | |
|
| |
| | |
Residential REITs–3.10% | | | | | | | | |
American Homes 4 Rent, Class A | | | 135,071 | | | | 5,890,447 | |
|
| |
UDR, Inc. | | | 95,371 | | | | 5,721,306 | |
|
| |
| | | | | | | 11,611,753 | |
|
| |
| | |
Semiconductor Equipment–1.89% | | | | | | | | |
MKS Instruments, Inc. | | | 40,723 | | | | 7,092,725 | |
|
| |
| | |
Soft Drinks–2.15% | | | | | | | | |
Coca-Cola Europacific Partners PLC (United Kingdom) | | | 144,102 | | | | 8,059,625 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. American Value Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Specialty Chemicals–2.82% | | | | | | | | |
Eastman Chemical Co. | | | 87,445 | | | $ | 10,572,975 | |
|
| |
Total Common Stocks & Other Equity Interests (Cost $268,983,174) | | | | 369,282,805 | |
|
| |
|
Money Market Funds–1.57% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 2,040,739 | | | | 2,040,738 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class,
0.02%(d)(e) | | | 1,500,172 | | | | 1,500,473 | |
|
| |
Invesco Treasury Portfolio, Institutional Class,
0.01%(d)(e) | | | 2,332,272 | | | | 2,332,272 | |
|
| |
Total Money Market Funds
(Cost $5,873,546) | | | | 5,873,483 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.10% (Cost $274,856,720) | | | | 375,156,288 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–2.03% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 2,280,527 | | | $ | 2,280,527 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 5,320,166 | | | | 5,321,230 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $7,601,757) | | | | 7,601,757 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-102.13%
(Cost $282,458,477) | | | | 382,758,045 | |
|
| |
OTHER ASSETS LESS LIABILITIES-(2.13)% | | | | (7,972,154 | ) |
|
| |
NET ASSETS-100.00% | | | | | | $ | 374,785,891 | |
|
| |
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 this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | | | | | | | | |
| | | | | | | | | | | | Unrealized | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Appreciation | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | (Depreciation) | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $ | 1,623,654 | | | $ | 46,647,720 | | | $ | (46,230,636 | ) | | $ | - | | | $ | - | | | $ | 2,040,738 | | | $ | 749 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 1,390,691 | | | | 33,320,422 | | | | (33,210,410 | ) | | | (860 | ) | | | 630 | | | | 1,500,473 | | | | 304 | |
Invesco Treasury Portfolio, Institutional Class | | | 1,855,604 | | | | 53,311,680 | | | | (52,835,012 | ) | | | - | | | | - | | | | 2,332,272 | | | | 317 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 39,049,671 | | | | (36,769,144 | ) | | | - | | | | - | | | | 2,280,527 | | | | 481 | * |
Invesco Private Prime Fund | | | - | | | | 84,460,626 | | | | (79,137,287 | ) | | | - | | | | (2,109 | ) | | | 5,321,230 | | | | 6,460 | * |
Total | | $ | 4,869,949 | | | $ | 256,790,119 | | | $ | (248,182,489 | ) | | $ | (860 | ) | | $ | (1,479 | ) | | $ | 13,475,240 | | | $ | 8,311 | |
| | * | 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, 2021. |
| (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 Value Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $268,983,174)* | | $ | 369,282,805 | |
Investments in affiliated money market funds, at value (Cost $13,475,303) | | | 13,475,240 | |
Receivable for: | | | | |
Fund shares sold | | | 176,177 | |
Dividends | | | 337,129 | |
Investment for trustee deferred compensation and retirement plans | | | 139,118 | |
Other assets | | | 1,436 | |
Total assets | | | 383,411,905 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 385,603 | |
Amount due custodian | | | 219,137 | |
Amount due custodian - foreign currency, at value (Cost $881) | | | 877 | |
Collateral upon return of securities loaned | | | 7,601,757 | |
Accrued fees to affiliates | | | 199,332 | |
Accrued other operating expenses | | | 66,077 | |
Trustee deferred compensation and retirement plans | | | 153,231 | |
Total liabilities | | | 8,626,014 | |
Net assets applicable to shares outstanding | | $ | 374,785,891 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 225,174,055 | |
Distributable earnings | | | 149,611,836 | |
| | | $ | 374,785,891 | |
| |
Net Assets: | | | | |
Series I | | $ | 160,576,364 | |
Series II | | $ | 214,209,527 | |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 7,977,578 | |
Series II | | | 10,771,379 | |
Series I: | | | | |
Net asset value per share | | $ | 20.13 | |
Series II: | | | | |
Net asset value per share | | $ | 19.89 | |
| * | At December 31, 2021, securities with an aggregate value of $7,476,646 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | |
Investment income: | | |
Dividends | | $ 5,247,681 |
Dividends from affiliated money market funds (includes securities lending income of $13,619) | | 14,989 |
Total investment income | | 5,262,670 |
| |
Expenses: | | |
Advisory fees | | 2,319,586 |
Administrative services fees | | 547,455 |
Distribution fees - Series II | | 500,305 |
Transfer agent fees | | 23,529 |
Trustees’ and officers’ fees and benefits | | 25,156 |
Reports to shareholders | | 9,921 |
Professional services fees | | 39,775 |
Other | | 5,709 |
Total expenses | | 3,471,436 |
Less: Fees waived | | (2,410) |
Net expenses | | 3,469,026 |
Net investment income | | 1,793,644 |
| |
Realized and unrealized gain (loss) from: | | |
Net realized gain (loss) from: | | |
Unaffiliated investment securities | | 67,402,419 |
Affiliated investment securities | | (1,479) |
Foreign currencies | | 6 |
| | | 67,400,946 |
Change in net unrealized appreciation (depreciation) of: |
Unaffiliated investment securities | | 88,280 |
Affiliated investment securities | | (860) |
Foreign currencies | | 818 |
| | | 88,238 |
Net realized and unrealized gain | | 67,489,184 |
Net increase in net assets resulting from operations | | $69,282,828 |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 1,793,644 | | | $ | 1,389,408 | |
|
| |
Net realized gain (loss) | | | 67,400,946 | | | | (9,455,815 | ) |
|
| |
Change in net unrealized appreciation | | | 88,238 | | | | 3,359,843 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | 69,282,828 | | | | (4,706,564 | ) |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (682,929 | ) | | | (1,301,570 | ) |
|
| |
Series II | | | (483,149 | ) | | | (3,011,200 | ) |
|
| |
Total distributions from distributable earnings | | | (1,166,078 | ) | | | (4,312,770 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 64,404,681 | | | | (10,241,455 | ) |
|
| |
Series II | | | 1,191,812 | | | | (58,356,016 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 65,596,493 | | | | (68,597,471 | ) |
|
| |
Net increase (decrease) in net assets | | | 133,713,243 | | | | (77,616,805 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 241,072,648 | | | | 318,689,453 | |
|
| |
End of year | | $ | 374,785,891 | | | $ | 241,072,648 | |
|
| |
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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 12/31/21 | | | $15.80 | | | | $0.13 | | | | $4.28 | | | | $4.41 | | | | $(0.08) | | | | $ - | | | | $(0.08 | ) | | | $20.13 | | | | 27.95 | % | | | $160,576 | | | | 0.89 | % | | | 0.89 | % | | | 0.69 | % | | | 82 | % |
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 | | | | 0.93 | | | | 0.74 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 15.62 | | | | 0.08 | | | | 4.23 | | | | 4.31 | | | | (0.04 | ) | | | - | | | | (0.04 | ) | | | 19.89 | | | | 27.62 | | | | 214,210 | | | | 1.14 | | | | 1.14 | | | | 0.44 | | | | 82 | |
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 | | | | 1.18 | | | | 0.49 | | | | 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 | |
| (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. For the year ended December 31, 2021, the portfolio turnover calculation excludes the value of securities purchased of $61,601,599 in connection with the acquisition of Invesco V.I. Value Opportunities Fund into the Fund. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. American Value 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.
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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, |
|
| Invesco V.I. American Value Fund |
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 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. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Effective April 30, 2021, 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% | |
Prior to April 30, 2021, the Fund accrued daily and paid 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, 2021, 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).
The Adviser has contractually agreed, through at least June 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $2,410.
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
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| Invesco V.I. American Value Fund |
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, 2021, Invesco was paid $47,088 for accounting and fund administrative services and was reimbursed $500,367 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $19,714 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, 2021. 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 | | $ | 369,282,805 | | | $ | – | | | $– | | $ | 369,282,805 | |
Money Market Funds | | | 5,873,483 | | | | 7,601,757 | | | – | | | 13,475,240 | |
Total Investments | | $ | 375,156,288 | | | $ | 7,601,757 | | | $– | | $ | 382,758,045 | |
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
| |
Ordinary income* | | $ | 1,166,078 | | | | | | | $ | 1,822,784 | |
| |
Long-term capital gain | | | – | | | | | | | | 2,489,986 | |
| |
Total distributions | | $ | 1,166,078 | | | | | | | $ | 4,312,770 | |
| |
| * | Includes short-term capital gain distributions, if any. |
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| Invesco V.I. American Value Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
| |
Undistributed ordinary income | | $ | 23,214,490 | |
| |
Undistributed long-term capital gain | | | 33,797,338 | |
| |
Net unrealized appreciation – investments | | | 92,689,018 | |
| |
Net unrealized appreciation – foreign currencies | | | 818 | |
| |
Temporary book/tax differences | | | (89,828 | ) |
| |
Shares of beneficial interest | | | 225,174,055 | |
| |
Total net assets | | $ | 374,785,891 | |
| |
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, 2021.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $257,356,726 and $287,530,373, 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 | | $ | 99,053,227 | |
| |
Aggregate unrealized (depreciation) of investments | | | (6,364,209 | ) |
| |
Net unrealized appreciation of investments | | $ | 92,689,018 | |
| |
Cost of investments for tax purposes is $290,069,027.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of REITs, on December 31, 2021, undistributed net investment income was increased by $102,448 and undistributed net realized gain was decreased by $102,448. Further, as a result of tax deferrals acquired in the reorganization of Invesco V.I. Value Opportunities Fund into the Fund, undistributed net investment income was decreased by $73,889, undistributed net realized gain was decreased by $395,967 and shares of beneficial interest was increased by $469,856. These reclassifications had no effect on the net assets of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 3,261,007 | | | $ | 62,388,981 | | | | 1,298,052 | | | $ | 17,013,794 | |
| |
Series II | | | 1,763,245 | | | | 33,017,641 | | | | 3,049,679 | | | | 38,448,474 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 34,719 | | | | 682,929 | | | | 94,316 | | | | 1,301,570 | |
| |
Series II | | | 24,853 | | | | 483,149 | | | | 220,601 | | | | 3,011,200 | |
| |
| | | | |
Issued in connection with acquisitions:(b) | | | | | | | | | | | | | | | | |
Series I | | | 1,376,056 | | | | 26,200,106 | | | | - | | | | - | |
| |
Series II | | | 1,031,975 | | | | 19,411,453 | | | | - | | | | - | |
| |
|
| Invesco V.I. American Value Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,320,648 | ) | | $ | (24,867,335 | ) | | | (2,091,708 | ) | | $ | (28,556,819 | ) |
| |
Series II | | | (2,802,008 | ) | | | (51,720,431 | ) | | | (7,374,909 | ) | | | (99,815,690 | ) |
| |
Net increase (decrease) in share activity | | | 3,369,199 | | | $ | 65,596,493 | | | | (4,803,969 | ) | | $ | (68,597,471 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 60% 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, 2021, the Fund acquired all the net assets of Invesco V.I. Value Opportunities Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on December 3, 2020 and by the shareholders of the Target Fund on April 5, 2021. 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 2,408,031 shares of the Fund for 6,722,660 shares outstanding of the Target Fund as of the close of business on April 30, 2021. 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, 2021. The Target Fund’s net assets as of the close of business on April 30, 2021 of $45,611,559, including $33,927,458 of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $336,467,391 and $382,078,950 immediately after the acquisition. |
The pro forma results of operations for the year ended December 31, 2021 assuming the reorganization had been completed on January 1, 2021, the beginning of the annual reporting period are as follows:
| | | | |
Net investment income | | $ | 1,797,953 | |
Net realized/unrealized gains | | | 90,164,270 | |
Change in net assets resulting from operations | | $ | 91,962,223 | |
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 have been included in the Fund’s Statement of Operations since May 1, 2021.
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized Expense Ratio |
| Series I | | $1,000.00 | | $1,071.30 | | $4.59 | | $1,020.77 | | $4.48 | | 0.88% |
| Series II | | 1,000.00 | | 1,070.00 | | 5.90 | | 1,019.51 | | 5.75 | | 1.13 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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, 2021:
| | | | | | |
Federal and State Income Tax | | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | |
Corporate Dividends Received Deduction* | | | 99.24 | % | | |
U.S. Treasury Obligations* | | | 0.00 | % | | |
Qualified Business Income* | | | 0.00 | % | | |
Business Interest Income* | | | 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. 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) | | 186 | | 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
| Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | | | |
| 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
| 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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); | | N/A | | N/A |
| | | | | 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. American Value Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Balanced-Risk Allocation Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 9.55 | % |
Series II Shares | | | 9.26 | |
MSCI World Index▼ (Broad Market Index) | | | 21.82 | |
Custom Invesco V.I. Balanced-Risk Allocation Index∎ (Style-Specific Index) | | | 12.07 | |
Lipper VUF Absolute Return Funds Classification Average¨ (Peer Group) | | | 0.91 | |
|
Source(s): ▼RIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ¨Lipper Inc. | |
Market conditions and your Fund
For the fiscal year ended December 31, 2021, the Fund at NAV reported positive absolute performance as two of the macro factors in which the Fund invests (growth and real return assets) contributed to Fund performance. The Fund invests in derivatives, such as swaps and futures, which are expected to correspond to the performance of the US and international fixed-income, equity and commodity markets.
The Fund’s strategic exposure to the growth macro factor, obtained through the use of swaps and futures, contributed to results for the fiscal year with five of the six markets in which the Fund invests delivering positive returns largely due to reopening economies releasing pent-up demand. European equities were the largest contributor to the Fund’s absolute performance over the fiscal year, followed by the exposures to the US, UK and Japan. US and UK equities benefited from the successful rollout of coronavirus (COVID-19) vaccinations. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand. Emerging markets trailed all other regions due to a combination of COVID-19 outbreaks and exposure to China, the index’s largest country weighting. Chinese equities were weighted down by significant regulatory changes in the private tutoring industry, increased regulation in the technology sectors and concerns of the potential default of a large property developer, and signs of slowing economic growth. Tactical positioning in equities improved results, as the Fund maintained overweight positions across each market throughout the fiscal year.
The Fund’s strategic exposure to the real return macro factor, obtained through the use of swaps, futures and commodity-linked notes, also contributed to the Fund’s absolute performance for the fiscal year as tight supplies were unable to keep pace with surging demand. The rally was propelled by rising inflation, supply disruptions and global shortages leading to increased prices. Strategic
exposure to energy was the leading contributor with gains across crude oil, distillates and natural gas. Energy prices were driven higher by increased demand due to the ongoing reopening of the global economy while supplies remained tight given restrained production in the US and across Organization of the Petroleum Exporting Countries (OPEC) member nations. Strategic exposure to agriculture also contributed to performance as the sub-complex benefited from a combination of Chinese buying and weather-related events that negatively impacted grain crop yields and/or delayed plantings. The rising cost of shipping and freight added further pressure. Strategic exposure to industrial metals also contributed to absolute Fund performance as the sub-complex benefited from an increase in manufacturing activity, supply bottlenecks in South America and enthusiasm over President Biden’s infrastructure plan. Strategic exposure to precious metals was a net detractor from the Fund’s absolute performance, as gains from exposure to silver were offset by losses from gold. Gold prices were pressured by a stronger US dollar, higher real rates and lack of safe-haven demand. Tactical positioning in commodities detracted from the Fund’s absolute performance during the fiscal year with losses in positioning in agriculture, energy and precious metals.
The Fund’s strategic exposure to the defensive macro factor, obtained through the use of swaps and futures, detracted from the Fund’s absolute performance during the fiscal year due to a combination of strong growth dampening safe-haven demand and concerns about mounting inflationary pressures. Increasingly hawkish tones emanating from central banks applied additional pressure to bonds. Against this backdrop, prices for Australian, Canadian, UK and US bonds fell, while Japanese bonds saw an uptick over the fiscal year in which the Fund was invested. Bond markets faced a tough environment over the fiscal year with the Fund’s strategic exposure to defensive factor premia generating losses despite gains from the emerging market factor exposures. Tactical positioning across
government bonds detracted from the Fund’s results during the fiscal year largely due to ill-timed overweight positions during the month of September.
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.
Thank you for your continued investment in Invesco V.I. Balanced-Risk Allocation Fund. As always, we welcome your comments and questions.
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. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Invesco, RIMES Technologies Corp.
3 Source: Lipper, Inc.
Past performance cannot guarantee future results.
| | | | |
| | |
Average Annual Total Returns | | | | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (1/23/09) | | | 8.46 | % |
10 Years | | | 6.25 | |
5 Years | | | 7.47 | |
1 Year | | | 9.55 | |
Series II Shares | | | | |
Inception (1/23/09) | | | 8.18 | % |
10 Years | | | 5.99 | |
5 Years | | | 7.18 | |
1 Year | | | 9.26 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 V.I. Balanced-Risk Allocation Index is composed of the MSCI World Index and Bloomberg 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 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, 2021
| | | | | | | | | | |
| Asset Class | | Target Risk
Contribution* | | Notional
Asset
Weights** |
| | |
Equities | | | | 39.66 | % | | | | 71.88 | % |
| | |
Fixed Income | | | | 43.56 | | | | | 74.68 | |
| | |
Commodities | | | | 16.78 | | | | | 21.97 | |
| | |
Total | | | | 100.00 | % | | | | 168.53 | % |
| * | 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, 2021
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount (000) | | | Value | |
|
| |
U.S. Treasury Securities–11.56%(a) | |
| U.S. Treasury Bills–11.56% | |
| | | | |
U.S. Treasury Bills | | | 0.04 | % | | | 03/17/2022 | | | $ | 45,400 | | | $ | 45,395,374 | |
|
| |
| | | | |
U.S. Treasury Bills | | | 0.10 | % | | | 05/26/2022 | | | | 11,700 | | | | 11,695,863 | |
|
| |
| | | | |
U.S. Treasury Bills | | | 0.13 | % | | | 06/09/2022 | | | | 12,100 | | | | 12,094,459 | |
|
| |
| | | | |
U.S. Treasury Bills | | | 0.13 | % | | | 06/16/2022 | | | | 44,300 | | | | 44,274,521 | |
|
| |
Total U.S. Treasury Securities (Cost $113,458,669) | | | | | | | | | | | | | | | 113,460,217 | |
|
| |
| | | | |
| | | | | | Expiration | | | | | | | |
| | | | | | Date | | | | | | | |
Commodity-Linked Securities–3.47% | | | | | | | | | | | | | | | | |
| | | | |
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) | | | | | | | 11/22/2022 | | | | 10,670 | | | | 12,838,807 | |
|
| |
| | | | |
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) | | | | | | | 05/31/2022 | | | | 16,550 | | | | 21,240,663 | |
|
| |
Total Commodity-Linked Securities (Cost $27,220,000) | | | | | | | | | | | | | | | 34,079,470 | |
|
| |
| | | | |
| | | | | | | | | Shares | | | | |
Money Market Funds–76.45%(d) | | | | | | | | | | | | | | | | |
| | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(e) | | | | | | | | | | | 221,762,138 | | | | 221,762,138 | |
|
| |
| | | | |
Invesco Government Money Market Fund, Cash Reserve Shares, 0.01%(e) | | | | | | | | | | | 31,293,325 | | | | 31,293,325 | |
|
| |
| | | | |
Invesco Premier U.S. Government Money Portfolio, Institutional Class, 0.01%(e) | | | | | | | | | | | 99,254,510 | | | | 99,254,510 | |
|
| |
| | | | |
Invesco STIC (Global Series) PLC, U.S. Dollar Liquidity Portfolio (Ireland), Institutional Class, 0.01%(e) | | | | | | | | | | | 49,355,914 | | | | 49,355,914 | |
|
| |
| | | | |
Invesco Treasury Obligations Portfolio, Institutional Class, 0.01%(e) | | | | | | | | | | | 171,324,067 | | | | 171,324,067 | |
|
| |
| | | | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e) | | | | | | | | | | | 160,648,618 | | | | 160,648,618 | |
|
| |
| | | | |
Invesco V.I. Government Money Market Fund, Series I, 0.01%(e) | | | | | | | | | | | 16,640,310 | | | | 16,640,310 | |
|
| |
Total Money Market Funds (Cost $750,278,882) | | | | | | | | | | | | | | | 750,278,882 | |
|
| |
| | | | |
Options Purchased–0.87% | | | | | | | | | | | | | | | | |
(Cost $12,491,700)(f) | | | | | | | | | | | | | | | 8,498,857 | |
|
| |
| | | | |
TOTAL INVESTMENTS IN SECURITIES–92.35% (Cost $903,449,251) | | | | | | | | | | | | | | | 906,317,426 | |
|
| |
| | | | |
OTHER ASSETS LESS LIABILITIES–7.65% | | | | | | | | | | | | | | | 75,053,606 | |
|
| |
| | | | |
NET ASSETS–100.00% | | | | | | | | | | | | | | $ | 981,371,032 | |
|
| |
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, 2021 was $34,079,470, which represented 3.47% 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, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain | | Value
December 31, 2021 | | Dividend Income |
| | | | | | | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $217,347,590 | | | | $ 407,857,975 | | | | $ (403,443,427 | ) | | | $- | | | | $- | | | | $221,762,138 | | | | $ 64,381 | |
| | | | | | | |
Invesco Government Money Market Fund, Cash Reserve Shares | | | 66,946,656 | | | | 36,659,331 | | | | (72,312,662 | ) | | | - | | | | - | | | | 31,293,325 | | | | 2,783 | |
| | | | | | | |
Invesco Premier U.S. Government Money Portfolio, Institutional Class | | | 88,804,736 | | | | 120,694,714 | | | | (110,244,940 | ) | | | - | | | | - | | | | 99,254,510 | | | | 10,437 | |
| | | | | | | |
Invesco STIC (Global Series) PLC, U.S. Dollar Liquidity Portfolio, Institutional Class | | | 59,779,663 | | | | 293,000,792 | | | | (303,424,541 | ) | | | - | | | | - | | | | 49,355,914 | | | | 10,476 | |
| | | | | | | |
Invesco Treasury Obligations Portfolio, Institutional Class | | | 171,324,067 | | | | - | | | | - | | | | - | | | | - | | | | 171,324,067 | | | | 17,509 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | 146,283,230 | | | | 419,397,865 | | | | (405,032,477 | ) | | | - | | | | - | | | | 160,648,618 | | | | 15,592 | |
| | | | | | | |
Invesco V.I. Government Money Market Fund, Series I | | | 16,640,310 | | | | - | | | | - | | | | - | | | | - | | | | 16,640,310 | | | | 1,058 | |
| | | | | | | |
Total | | | $767,126,252 | | | | $1,277,610,677 | | | | $(1,294,458,047 | ) | | | $- | | | | $- | | | | $750,278,882 | | | | $122,236 | |
| (f) | The table below details options purchased. |
| | | | | | | | | | | | | | | | | | | | |
| Open Exchange-Traded Index Options Purchased | |
|
| |
| | | Type of | | Expiration | | Number of | | Exercise | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | Value(a) | | | Value | |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
EURO STOXX 50 Index | | Put | | 03/18/2022 | | 60 | | EUR 3,500.00 | | | EUR | | | | 2,100,000 | | | $ | 14,003 | |
|
| |
EURO STOXX 50 Index | | Put | | 06/17/2022 | | 60 | | EUR 3,750.00 | | | EUR | | | | 2,250,000 | | | | 64,280 | |
|
| |
EURO STOXX 50 Index | | Put | | 06/17/2022 | | 60 | | EUR 3,850.00 | | | EUR | | | | 2,310,000 | | | | 76,029 | |
|
| |
EURO STOXX 50 Index | | Put | | 03/18/2022 | | 60 | | EUR 3,900.00 | | | EUR | | | | 2,340,000 | | | | 32,515 | |
|
| |
EURO STOXX 50 Index | | Put | | 06/17/2022 | | 60 | | EUR 3,800.00 | | | EUR | | | | 2,280,000 | | | | 69,881 | |
|
| |
EURO STOXX 50 Index | | Put | | 03/18/2022 | | 60 | | EUR 3,450.00 | | | EUR | | | | 2,070,000 | | | | 12,706 | |
|
| |
EURO STOXX 50 Index | | Put | | 09/16/2022 | | 60 | | EUR 3,850.00 | | | EUR | | | | 2,310,000 | | | | 109,774 | |
|
| |
EURO STOXX 50 Index | | Put | | 12/16/2022 | | 60 | | EUR 3,800.00 | | | EUR | | | | 2,280,000 | | | | 132,931 | |
|
| |
EURO STOXX 50 Index | | Put | | 12/16/2022 | | 58 | | EUR 4,050.00 | | | EUR | | | | 2,349,000 | | | | 175,318 | |
|
| |
EURO STOXX 50 Index | | Put | | 12/16/2022 | | 60 | | EUR 3,900.00 | | | EUR | | | | 2,340,000 | | | | 150,487 | |
|
| |
EURO STOXX 50 Index | | Put | | 09/16/2022 | | 60 | | EUR 3,900.00 | | | EUR | | | | 2,340,000 | | | | 117,835 | |
|
| |
EURO STOXX 50 Index | | Put | | 09/16/2022 | | 60 | | EUR 4,000.00 | | | EUR | | | | 2,400,000 | | | | 135,800 | |
|
| |
FTSE 100 Index | | Put | | 01/21/2022 | | 35 | | GBP 6,875.00 | | | GBP | | | | 2,406,250 | | | | 4,974 | |
|
| |
FTSE 100 Index | | Put | | 02/18/2022 | | 35 | | GBP 6,850.00 | | | GBP | | | | 2,397,500 | | | | 16,818 | |
|
| |
FTSE 100 Index | | Put | | 03/18/2022 | | 35 | | GBP 6,800.00 | | | GBP | | | | 2,380,000 | | | | 31,504 | |
|
| |
FTSE 100 Index | | Put | | 04/14/2022 | | 35 | | GBP 6,800.00 | | | GBP | | | | 2,380,000 | | | | 48,795 | |
|
| |
FTSE 100 Index | | Put | | 05/20/2022 | | 35 | | GBP 6,775.00 | | | GBP | | | | 2,371,250 | | | | 66,798 | |
|
| |
FTSE 100 Index | | Put | | 06/17/2022 | | 35 | | GBP 6,700.00 | | | GBP | | | | 2,345,000 | | | | 74,378 | |
|
| |
FTSE 100 Index | | Put | | 07/15/2022 | | 35 | | GBP 6,400.00 | | | GBP | | | | 2,240,000 | | | | 65,140 | |
|
| |
FTSE 100 Index | | Put | | 08/19/2022 | | 35 | | GBP 6,625.00 | | | GBP | | | | 2,318,750 | | | | 97,354 | |
|
| |
FTSE 100 Index | | Put | | 09/16/2022 | | 35 | | GBP 6,750.00 | | | GBP | | | | 2,362,500 | | | | 122,462 | |
|
| |
FTSE 100 Index | | Put | | 10/21/2022 | | 35 | | GBP 6,650.00 | | | GBP | | | | 2,327,500 | | | | 125,068 | |
|
| |
FTSE 100 Index | | Put | | 11/18/2022 | | 35 | | GBP 6,900.00 | | | GBP | | | | 2,415,000 | | | | 166,520 | |
|
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Balanced-Risk Allocation Fund |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Open Exchange-Traded Index Options Purchased–(continued) | |
|
| |
| | | Type of | | Expiration | | Number of | | Exercise | | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | | Value(a) | | | Value | |
|
| |
FTSE 100 Index | | Put | | 12/16/2022 | | 35 | | | GBP | | | | 6,800.00 | | | GBP | | | 2,380,000 | | | $ | 163,915 | |
|
| |
MSCI Emerging Markets Index | | Put | | 04/14/2022 | | 33 | | | USD | | | | 1,280.00 | | | USD | | | 4,224,000 | | | | 265,320 | |
|
| |
MSCI Emerging Markets Index | | Put | | 01/21/2022 | | 33 | | | USD | | | | 1,290.00 | | | USD | | | 4,257,000 | | | | 201,135 | |
|
| |
MSCI Emerging Markets Index | | Put | | 02/18/2022 | | 33 | | | USD | | | | 1,290.00 | | | USD | | | 4,257,000 | | | | 226,710 | |
|
| |
MSCI Emerging Markets Index | | Put | | 05/20/2022 | | 33 | | | USD | | | | 1,280.00 | | | USD | | | 4,224,000 | | | | 296,670 | |
|
| |
MSCI Emerging Markets Index | | Put | | 03/18/2022 | | 33 | | | USD | | | | 1,330.00 | | | USD | | | 4,389,000 | | | | 356,400 | |
|
| |
MSCI Emerging Markets Index | | Put | | 06/17/2022 | | 33 | | | USD | | | | 1,330.00 | | | USD | | | 4,389,000 | | | | 437,580 | |
|
| |
MSCI Emerging Markets Index | | Put | | 07/15/2022 | | 33 | | | USD | | | | 1,310.00 | | | USD | | | 4,323,000 | | | | 424,875 | |
|
| |
MSCI Emerging Markets Index | | Put | | 08/19/2022 | | 33 | | | USD | | | | 1,220.00 | | | USD | | | 4,026,000 | | | | 295,020 | |
|
| |
MSCI Emerging Markets Index | | Put | | 09/16/2022 | | 33 | | | USD | | | | 1,250.00 | | | USD | | | 4,125,000 | | | | 357,885 | |
|
| |
MSCI Emerging Markets Index | | Put | | 10/21/2022 | | 33 | | | USD | | | | 1,180.00 | | | USD | | | 3,894,000 | | | | 272,745 | |
|
| |
MSCI Emerging Markets Index | | Put | | 11/18/2022 | | 33 | | | USD | | | | 1,210.00 | | | USD | | | 3,993,000 | | | | 347,325 | |
|
| |
MSCI Emerging Markets Index | | Put | | 12/16/2022 | | 33 | | | USD | | | | 1,170.00 | | | USD | | | 3,861,000 | | | | 292,050 | |
|
| |
Nikkei 225 Index | | Put | | 01/14/2022 | | 16 | | | JPY | | | | 7,000.00 | | | JPY | | | 112,000,000 | | | | 8,763 | |
|
| |
Nikkei 225 Index | | Put | | 06/10/2022 | | 16 | | | JPY | | | | 7,750.00 | | | JPY | | | 124,000,000 | | | | 161,349 | |
|
| |
Nikkei 225 Index | | Put | | 03/11/2022 | | 16 | | | JPY | | | | 7,750.00 | | | JPY | | | 124,000,000 | | | | 81,370 | |
|
| |
Nikkei 225 Index | | Put | | 02/10/2022 | | 16 | | | JPY | | | | 8,000.00 | | | JPY | | | 128,000,000 | | | | 57,724 | |
|
| |
Nikkei 225 Index | | Put | | 06/10/2022 | | 16 | | | JPY | | | | 7,250.00 | | | JPY | | | 116,000,000 | | | | 139,790 | |
|
| |
Nikkei 225 Index | | Put | | 06/10/2022 | | 16 | | | JPY | | | | 7,500.00 | | | JPY | | | 120,000,000 | | | | 150,222 | |
|
| |
Nikkei 225 Index | | Put | | 09/09/2022 | | 16 | | | JPY | | | | 7,500.00 | | | JPY | | | 120,000,000 | | | | 200,296 | |
|
| |
Nikkei 225 Index | | Put | | 09/09/2022 | | 16 | | | JPY | | | | 6,500.00 | | | JPY | | | 104,000,000 | | | | 157,176 | |
|
| |
Nikkei 225 Index | | Put | | 09/09/2022 | | 16 | | | JPY | | | | 7,250.00 | | | JPY | | | 116,000,000 | | | | 188,473 | |
|
| |
Nikkei 225 Index | | Put | | 12/09/2022 | | 16 | | | JPY | | | | 7,250.00 | | | JPY | | | 116,000,000 | | | | 238,546 | |
|
| |
Nikkei 225 Index | | Put | | 12/09/2022 | | 16 | | | JPY | | | | 6,750.00 | | | JPY | | | 108,000,000 | | | | 425,628 | |
|
| |
Nikkei 225 Index | | Put | | 12/09/2022 | | 16 | | | JPY | | | | 8,250.00 | | | JPY | | | 132,000,000 | | | | 294,880 | |
|
| |
S&P 500 Index | | Put | | 03/18/2022 | | 4 | | | USD | | | | 3,750.00 | | | USD | | | 1,500,000 | | | | 5,920 | |
|
| |
S&P 500 Index | | Put | | 04/14/2022 | | 4 | | | USD | | | | 3,925.00 | | | USD | | | 1,570,000 | | | | 13,520 | |
|
| |
S&P 500 Index | | Put | | 05/20/2022 | | 4 | | | USD | | | | 4,050.00 | | | USD | | | 1,620,000 | | | | 25,520 | |
|
| |
S&P 500 Index | | Put | | 06/17/2022 | | 4 | | | USD | | | | 4,050.00 | | | USD | | | 1,620,000 | | | | 32,160 | |
|
| |
S&P 500 Index | | Put | | 01/21/2022 | | 4 | | | USD | | | | 4,075.00 | | | USD | | | 1,630,000 | | | | 1,160 | |
|
| |
S&P 500 Index | | Put | | 02/18/2022 | | 4 | | | USD | | | | 4,075.00 | | | USD | | | 1,630,000 | | | | 4,820 | |
|
| |
S&P 500 Index | | Put | | 07/15/2022 | | 4 | | | USD | | | | 4,150.00 | | | USD | | | 1,660,000 | | | | 44,300 | |
|
| |
S&P 500 Index | | Put | | 08/19/2022 | | 4 | | | USD | | | | 4,250.00 | | | USD | | | 1,700,000 | | | | 60,340 | |
|
| |
S&P 500 Index | | Put | | 09/16/2022 | | 4 | | | USD | | | | 4,375.00 | | | USD | | | 1,750,000 | | | | 77,480 | |
|
| |
S&P 500 Index | | Put | | 10/21/2022 | | 4 | | | USD | | | | 4,175.00 | | | USD | | | 1,670,000 | | | | 69,220 | |
|
| |
S&P 500 Index | | Put | | 11/18/2022 | | 4 | | | USD | | | | 4,450.00 | | | USD | | | 1,780,000 | | | | 101,080 | |
|
| |
S&P 500 Index | | Put | | 12/16/2022 | | 4 | | | USD | | | | 4,475.00 | | | USD | | | 1,790,000 | | | | 110,120 | |
|
| |
Total Index Options Purchased | | | | | | | | | | | | | | | | | | | | | | $ | 8,498,857 | |
|
| |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a) | |
|
| |
| | | | | | | | | | | | Unrealized | |
| | | Number of | | Expiration | | | Notional | | | | Appreciation | |
| Long Futures Contracts | | Contracts | | Month | | | Value | | Value | | (Depreciation) | |
|
| |
Commodity Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
Brent Crude | | | 220 | | | | May-2022 | | | | $ 16,684,800 | | | | $ 1,662,612 | | | | $ 1,662,612 | |
|
| |
Gasoline Reformulated Blendstock Oxygenate Blending | | | 185 | | | | January-2022 | | | | 17,285,142 | | | | 918,006 | | | | 918,006 | |
|
| |
New York Harbor Ultra-Low Sulfur Diesel | | | 8 | | | | March-2022 | | | | 767,693 | | | | (29,059 | ) | | | (29,059 | ) |
|
| |
Silver | | | 186 | | | | March-2022 | | | | 21,717,360 | | | | (1,194,787 | ) | | | (1,194,787 | ) |
|
| |
WTI Crude | | | 167 | | | | February-2022 | | | | 12,504,960 | | | | 1,333,883 | | | | 1,333,883 | |
|
| |
Subtotal | | | | | | | | | | | | | | | 2,690,655 | | | | 2,690,655 | |
|
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Balanced-Risk Allocation Fund |
| | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a)–(continued) | |
|
| |
| | | | | | | | | | | | | | Unrealized | |
| | | Number of | | Expiration | | | Notional | | | | | | Appreciation | |
| Long Futures Contracts | | Contracts | | Month | | | Value | | | Value | | | (Depreciation) | |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
E-Mini Russell 2000 Index | | | 784 | | | | March-2022 | | | $ | 87,917,760 | | | $ | 348,167 | | | $ | 348,167 | |
|
| |
E-Mini S&P 500 Index | | | 123 | | | | March-2022 | | | | 29,264,775 | | | | 408,792 | | | | 408,792 | |
|
| |
EURO STOXX 50 Index | | | 570 | | | | March-2022 | | | | 27,823,508 | | | | 647,984 | | | | 647,984 | |
|
| |
FTSE 100 Index | | | 243 | | | | March-2022 | | | | 24,089,562 | | | | 383,552 | | | | 383,552 | |
|
| |
MSCI Emerging Markets Index | | | 425 | | | | March-2022 | | | | 26,058,875 | | | | 179,676 | | | | 179,676 | |
|
| |
Nikkei 225 Index | | | 9 | | | | March-2022 | | | | 2,251,760 | | | | 18,897 | | | | 18,897 | |
|
| |
Subtotal | | | | | | | | | | | | | | | 1,987,068 | | | | 1,987,068 | |
|
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
Australia 10 Year Bonds | | | 2,054 | | | | March-2022 | | | | 207,969,943 | | | | (142,308 | ) | | | (142,308 | ) |
|
| |
Canada 10 Year Bonds | | | 1,530 | | | | March-2022 | | | | 172,503,735 | | | | 3,709,744 | | | | 3,709,744 | |
|
| |
Japan 10 Year Bonds | | | 70 | | | | March-2022 | | | | 92,248,109 | | | | (227,300 | ) | | | (227,300 | ) |
|
| |
Long Gilt | | | 967 | | | | March-2022 | | | | 163,479,463 | | | | (385,343 | ) | | | (385,343 | ) |
|
| |
U.S. Treasury Long Bonds | | | 567 | | | | March-2022 | | | | 90,968,063 | | | | 565,040 | | | | 565,040 | |
|
| |
Subtotal | | | | | | | | | | | | | | | 3,519,833 | | | | 3,519,833 | |
|
| |
Total Futures Contracts | | | | | | | | | | | | | | $ | 8,197,556 | | | $ | 8,197,556 | |
|
| |
| (a) | Futures contracts collateralized by $49,595,000 cash held with Goldman Sachs & Co., the futures commission merchant. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Over-The-Counter Total Return Swap Agreements(a)(b) | |
|
| |
| | | | | | | | | | | | | | | | | | | | | | | | | Upfront | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Payments | | | | | | |
| | | Pay/ | | | | | Fixed | | | Payment | | | Number of | | | | | | | | | | | Paid | | | | | Unrealized | |
| Counterparty | | Receive | | | Reference Entity(c) | | Rate | | | Frequency | | | Contracts | | | Maturity Date | | Notional Value | | | (Received) | | Value | | | Appreciation | |
|
| |
Commodity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
| |
Barclays Bank PLC | | | Receive | | | Barclays Commodity Strategy 1452 Excess Return Index | | | 0.26 | % | | | Monthly | | | | 11,200 | | | November-2022 | | | USD | | | | 8,349,204 | | | $– | | | $ 488,079 | | | | $ 488,079 | |
|
| |
Canadian Imperial Bank of Commerce | | | Receive | | | Canadian Imperial Bank of Commerce Dynamic Roll LME Copper Excess Return Index 2 | | | 0.30 | | | | Monthly | | | | 169,200 | | | February-2022 | | | USD | | | | 19,307,970 | | | – | | | 589,797 | | | | 589,797 | |
|
| |
Cargill, Inc. | | | Receive | | | Monthly Rebalance Commodity Excess Return Index | | | 0.47 | | | | Monthly | | | | 16,050 | | | February-2022 | | | USD | | | | 16,116,702 | | | – | | | 727,720 | | | | 727,720 | |
|
| |
Cargill, Inc. | | | Receive | | | Single Commodity Index Excess Return | | | 0.12 | | | | Monthly | | | | 4,600 | | | December-2022 | | | USD | | | | 5,170,529 | | | – | | | 151,032 | | | | 151,032 | |
|
| |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | J.P. Morgan Contag Beta Gas Oil Excess Return Index | | | 0.25 | | | | Monthly | | | | 9,500 | | | March-2022 | | | USD | | | | 1,997,112 | | | – | | | 57,151 | | | | 57,151 | |
|
| |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | S&P GSCI Gold Index Excess Return | | | 0.09 | | | | Monthly | | | | 104,000 | | | March-2022 | | | USD | | | | 13,824,450 | | | – | | | 202,509 | | | | 202,509 | |
|
| |
Merrill Lynch International | | | Receive | | | Merrill Lynch Gold Excess Return Index | | | 0.14 | | | | Monthly | | | | 83,000 | | | February-2022 | | | USD | | | | 17,544,274 | | | – | | | 0 | | | | 0 | |
|
| |
Merrill Lynch International | | | Receive | | | MLCX Dynamic Enhanced Copper Excess Return Index | | | 0.25 | | | | Monthly | | | | 6,500 | | | February-2022 | | | USD | | | | 534,886 | | | – | | | 0 | | | | 0 | |
|
| |
Morgan Stanley Capital Services LLC | | | Receive | | | S&P GSCI Aluminum Dynamic Roll Index Excess Return | | | 0.30 | | | | Monthly | | | | 78,000 | | | July-2022 | | | USD | | | | 9,124,869 | | | – | | | 381,350 | | | | 381,350 | |
|
| |
Total – Total Return Swap Agreements | | | | | | | | | | | | | | | | | | | | | | | | $– | | | $2,597,638 | | | | $2,597,638 | |
|
| |
| (a) | Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $1,380,000. |
| (b) | The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
| (c) | The Reference Entity Components 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 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Over-The-Counter Total Return Swap Agreements(a)(b) |
| | | | | | | | | | | | | | | | | | | | | | | | Upfront | | | | |
| | | | | | | | Floating | | | | | | | | | | | | | | | | Payments | | | | |
| | | Pay/ | | | | | Rate | | Payment | | Number of | | | | | | | | | | | | Paid | | | | Unrealized |
| Counterparty | | Receive | | | Reference Entity | | Index | | Frequency | | Contracts | | | Maturity Date | | | Notional Value | | | (Received) | | Value | | Appreciation |
| | | | | | | | | | | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Barclays Bank PLC | | | Receive | | | MSCI Japan Minimum Volatility Index | | 1.0 x
TONAR -
0.06% | | Monthly | | | 857,948 | | | | February-2022 | | | | JPY | | | | 2,268,311,558 | | | | $ – | | | | $ 125,899 | | | $ 125,899 |
| | | | | | | | | | | |
BNP Paribas S.A. | | | Receive | | | MSCI EMU Minimum Volatility Index | | 1 Month
EURIBOR -
0.050% | | Monthly | | | 4,730 | | | | March-2022 | | | | EUR | | | | 15,847,581 | | | | 490 | | | | 416,161 | | | 415,671 |
| | | | | | | | | | | |
BNP Paribas S.A. | | | Receive | | | MSCI EMU Momentum Index | | 1 Month
EURIBOR -
0.380% | | Monthly | | | 2,750 | | | | June-2022 | | | | EUR | | | | 15,932,986 | | | | – | | | | 214,844 | | | 214,844 |
| | | | | | | | | | | |
BNP Paribas S.A. | | | Receive | | | MSCI EMU Quality Index | | 1 Month
EURIBOR +
0.050% | | Monthly | | | 3,535 | | | | March-2022 | | | | EUR | | | | 15,629,331 | | | | – | | | | 374,160 | | | 374,160 |
| | | | | | | | | | | |
BNP Paribas S.A. | | | Receive | | | MSCI USA Minimum Volatility Index | | 1 Month
USD LIBOR
- 0.030% | | Monthly | | | 2,500 | | | | March-2022 | | | | USD | | | | 13,446,650 | | | | – | | | | 228,500 | | | 228,500 |
| | | | | | | | | | | |
Citibank, N.A. | | | Receive | | | MSCI Japan Minimum Volatility Index | | 1.0 x
TONAR -
0.130% | | Monthly | | | 130,000 | | | | January-2022 | | | | JPY | | | | 343,704,400 | | | | – | | | | 19,077 | | | 19,077 |
| | | | | | | | | | | |
Citibank, N.A. | | | Receive | | | MSCI Japan Quality Index | | 1.0 x
TONAR -
0.080% | | Monthly | | | 75,000 | | | | January-2022 | | | | JPY | | | | 229,154,250 | | | | – | | | | 25,350 | | | 25,350 |
| | | | | | | | | | | |
Citibank, N.A. | | | Receive | | | MSCI USA Quality Index | | 1 Month
USD LIBOR
+ 0.100% | | Monthly | | | 2,700 | | | | March-2022 | | | | USD | | | | 12,159,477 | | | | – | | | | 266,355 | | | 266,355 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.720% | | Monthly | | | 5,915 | | | | June-2022 | | | | USD | | | | 12,024,781 | | | | – | | | | 339,994 | | | 339,994 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.740% | | Monthly | | | 500 | | | | April-2022 | | | | USD | | | | 1,030,125 | | | | – | | | | 15,080 | | | 15,080 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Emerging Markets Momentum Index | | 1 Month
USD LIBOR
+ 1.240% | | Monthly | | | 1,003 | | | | April-2022 | | | | USD | | | | 7,595,879 | | | | – | | | | 177,695 | | | 177,695 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Emerging Markets Momentum Index | | 1 Month
USD LIBOR
+ 1.240% | | Monthly | | | 833 | | | | April-2022 | | | | USD | | | | 6,308,442 | | | | – | | | | 147,577 | | | 147,577 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Japan Minimum Volatility Index | | 1.0 x
TONAR -
0.040% | | Monthly | | | 35,000 | | | | February-2022 | | | | JPY | | | | 92,535,800 | | | | – | | | | 5,136 | | | 5,136 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Japan Minimum Volatility Index | | 1.0 x
TONAR -
0.130% | | Monthly | | | 687,052 | | | | February-2022 | | | | JPY | | | | 1,816,483,042 | | | | – | | | | 100,821 | | | 100,821 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Japan Quality Index | | 1.0 x
TONAR -
0.080% | | Monthly | | | 543,463 | | | | February-2022 | | | | JPY | | | | 1,660,491,415 | | | | – | | | | 183,690 | | | 183,690 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Japan Quality Index | | 1.0 x
TONAR +
0.020% | | Monthly | | | 45,000 | | | | February-2022 | | | | JPY | | | | 137,492,550 | | | | – | | | | 15,210 | | | 15,210 |
| | | | | | | | | | | |
Goldman Sachs International | | | Receive | | | MSCI Japan Quality Index | | 1.0 x
TONAR +
0.100% | | Monthly | | | 801,537 | | | | February-2022 | | | | JPY | | | | 2,449,008,134 | | | | – | | | | 270,919 | | | 270,919 |
| | | | | | | | | | | |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.680% | | Monthly | | | 5,169 | | | | March-2022 | | | | USD | | | | 10,649,432 | | | | – | | | | 155,897 | | | 155,897 |
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)–(continued) |
| | | | | | | | | | | | | | | | | | | | | | | | Upfront | | | | |
| | | | | | | | Floating | | | | | | | | | | | | | | | | Payments | | | | |
| | | Pay/ | | | | | Rate | | Payment | | Number of | | | | | | | | | | | | Paid | | | | Unrealized |
| Counterparty | | Receive | | | Reference Entity | | Index | | Frequency | | Contracts | | | Maturity Date | | | Notional Value | | | (Received) | | Value | | Appreciation |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.790% | | Monthly | | | 954 | | | | June-2022 | | | | USD | | | | 12,513,647 | | | | $ – | | | | $ 227,503 | | | $ 227,503 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.790% | | Monthly | | | 797 | | | | June-2022 | | | | USD | | | | 10,454,273 | | | | – | | | | 190,062 | | | 190,062 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.790% | | Monthly | | | 210 | | | | June-2022 | | | | USD | | | | 2,754,576 | | | | – | | | | 50,079 | | | 50,079 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.790% | | Monthly | | | 1,076 | | | | May-2022 | | | | USD | | | | 2,216,829 | | | | – | | | | 32,452 | | | 32,452 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 363 | | | | March-2022 | | | | GBP | | | | 4,840,220 | | | | – | | | | 158,923 | | | 158,923 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 362 | | | | March-2022 | | | | GBP | | | | 4,826,886 | | | | – | | | | 158,485 | | | 158,485 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 763 | | | | March-2022 | | | | GBP | | | | 5,009,815 | | | | – | | | | 156,613 | | | 156,613 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 762 | | | | March-2022 | | | | GBP | | | | 5,003,249 | | | | – | | | | 156,408 | | | 156,408 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 1,375 | | | | March-2022 | | | | GBP | | | | 5,201,618 | | | | – | | | | 144,634 | | | 144,634 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.280% | | Monthly | | | 1,375 | | | | March-2022 | | | | GBP | | | | 5,201,618 | | | | – | | | | 144,634 | | | 144,634 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.300% | | Monthly | | | 565 | | | | March-2022 | | | | GBP | | | | 7,533,676 | | | | – | | | | 247,360 | | | 247,360 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.300% | | Monthly | | | 1,065 | | | | March-2022 | | | | GBP | | | | 6,992,729 | | | | – | | | | 218,602 | | | 218,602 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI United Kingdom Index | | SONIA +
0.300% | | Monthly | | | 1,700 | | | | March-2022 | | | | GBP | | | | 6,431,092 | | | | (168 | ) | | | 178,821 | | | 178,989 |
J.P. Morgan Chase Bank, N.A. | | | Receive | | | MSCI USA Momentum Index | | 1 Month
USD LIBOR+ 0.180% | | Monthly | | | 2,900 | | | | March-2022 | | | | USD | | | | 12,217,404 | | | | – | | | | 236,921 | | | 236,921 |
Merrill Lynch International | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.860% | | Monthly | | | 3,200 | | | | March-2022 | | | | USD | | | | 6,592,800 | | | | (844 | ) | | | 96,512 | | | 97,356 |
Merrill Lynch International | | | Receive | | | MSCI Emerging Markets Minimum Volatility Daily Net Total Return Index | | 1 Month
USD LIBOR
+ 0.950% | | Monthly | | | 3,200 | | | | January-2022 | | | | USD | | | | 6,592,800 | | | | – | | | | 96,512 | | | 96,512 |
Total – Total Return Swap Agreements | | | | | | | | | | | | | | | | | | | | | | | $(522 | ) | | | $5,576,886 | | | $5,577,408 |
| (a) | Open Over-The-Counter Total Return Swap Agreements are collateralized by cash held with the swap Counterparties in the amount of $1,380,000. |
| (b) | The Fund receives or pays payments based on any positive or negative return on the Reference Entity, respectively. |
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’ | | 5.15% |
| | |
| | Corn | | 5.81 |
| | |
| | Cotton No. 2 | | 21.69 |
| | |
| | Lean Hogs | | 0.51 |
| | |
| | Live Cattle | | 0.66 |
| | |
| | Soybean Meal | | 22.52 |
| | |
| | Soybean Oil | | 10.13 |
| | |
| | Soybeans | | 21.05 |
| | |
| | Sugar No. 11 | | 5.60 |
| | |
| | Wheat | | 6.88 |
| | |
| | Total | | 100.00% |
| | |
| | |
| Monthly Rebalance Commodity Excess Return Index | | | | |
| | Long Futures Contracts | | |
| | |
| | Coffee ‘C’ | | 5.15% |
| | |
| | Corn | | 5.81 |
| | |
| | Cotton No. 2 | | 21.69 |
| | |
| | Lean Hogs | | 0.51 |
| | |
| | Live Cattle | | 0.66 |
| | |
| | Soybean Meal | | 22.52 |
| | |
| | Soybean Oil | | 10.13 |
| | |
| | Soybeans | | 21.05 |
| | |
| | Sugar No. 11 | | 5.60 |
| | |
| | Wheat | | 6.88 |
| | |
| | Total | | 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% |
| | |
| | |
| Single Commodity Index Excess Return | | | | |
| | Long Futures Contracts | | |
| | |
| | Gold | | 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% |
| | |
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 |
| | |
| MLCX Dynamic Enhanced Copper Excess Return Index | | | | |
| | |
| | Long Futures Contracts | | |
| | |
| | Copper | | 100.00% |
| | |
| | |
| S&P GSCI Aluminum Dynamic Roll Index Excess Return | | | | |
| | |
| | Long Futures Contracts | | |
| | |
| | Aluminum | | 100.00% |
| | |
| | |
Abbreviations: |
| EMU | | –European Economic and Monetary Union |
| EUR | | –Euro |
| EURIBOR | | –Euro Interbank Offered Rate |
| GBP | | –British Pound Sterling |
| JPY | | –Japanese Yen |
| LIBOR | | –London Interbank Offered Rate |
| SONIA | | –Sterling Overnight Index Average |
| TONAR | | –Tokyo Overnight Average 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 |
| | |
| |
Consolidated Statement of Assets and Liabilities December 31, 2021 | | Consolidated Statement of Operations For the year ended December 31, 2021 |
| | | | |
Assets: | | | | |
| |
Investments in unaffiliated securities, at value (Cost $153,170,369) | | $ | 156,038,544 | |
|
| |
Investments in affiliated money market funds, at value (Cost $750,278,882) | | | 750,278,882 | |
|
| |
Other investments: | | | | |
Swaps receivable – OTC | | | 521,145 | |
|
| |
Unrealized appreciation on swap agreements – OTC | | | 8,175,046 | |
|
| |
Deposits with brokers: | | | | |
Cash collateral – exchange-traded futures contracts | | | 49,595,000 | |
|
| |
Cash collateral – OTC Derivatives | | | 1,380,000 | |
|
| |
Cash | | | 2,843,598 | |
|
| |
Foreign currencies, at value (Cost $20,487,869) | | | 20,565,104 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 993,258 | |
|
| |
Dividends | | | 9,145 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 105,407 | |
|
| |
Other assets | | | 18,827 | |
|
| |
Total assets | | | 990,523,956 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 1,284,241 | |
|
| |
Premiums received on swap agreements – OTC | | | 522 | |
|
| |
Swaps payable – OTC | | | 2,193,499 | |
|
| |
Payable for: | | | | |
Fund shares reacquired | | | 1,516,868 | |
|
| |
Accrued fees to affiliates | | | 769,425 | |
|
| |
Accrued other operating expenses | | | 120,355 | |
|
| |
Collateral with broker - OTC Derivatives | | | 3,150,000 | |
|
| |
Trustee deferred compensation and retirement plans | | | 118,014 | |
|
| |
Total liabilities | | | 9,152,924 | |
|
| |
Net assets applicable to shares outstanding | | $ | 981,371,032 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 876,545,077 | |
|
| |
Distributable earnings | | | 104,825,955 | |
|
| |
| | $ | 981,371,032 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 49,456,197 | |
|
| |
Series II | | $ | 931,914,835 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 4,595,353 | |
|
| |
Series II | | | 88,310,699 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 10.76 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 10.55 | |
|
| |
| | | | |
Investment income: | | | | |
Interest | | $ | 64,979 | |
|
| |
Dividends from affiliated money market funds | | | 122,236 | |
|
| |
Total investment income | | | 187,215 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 9,105,565 | |
|
| |
Administrative services fees | | | 1,625,140 | |
|
| |
Custodian fees | | | 65,542 | |
|
| |
Distribution fees - Series II | | | 2,354,399 | |
|
| |
Transfer agent fees | | | 39,726 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 31,612 | |
|
| |
Reports to shareholders | | | 13,371 | |
|
| |
Professional services fees | | | 74,977 | |
|
| |
Other | | | 64,159 | |
|
| |
Total expenses | | | 13,374,491 | |
|
| |
Less: Fees waived | | | (3,936,280 | ) |
|
| |
Net expenses | | | 9,438,211 | |
|
| |
Net investment income (loss) | | | (9,250,996 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 9,103,385 | |
|
| |
Foreign currencies | | | (1,519,915 | ) |
|
| |
Futures contracts | | | 45,004,876 | |
|
| |
Swap agreements | | | 58,955,017 | |
|
| |
| | | 111,543,363 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | (9,565,586 | ) |
|
| |
Foreign currencies | | | 42,328 | |
|
| |
Futures contracts | | | (7,363,464 | ) |
|
| |
Swap agreements | | | 2,880,400 | |
|
| |
| | | (14,006,322 | ) |
|
| |
Net realized and unrealized gain | | | 97,537,041 | |
|
| |
Net increase in net assets resulting from operations | | $ | 88,286,045 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (9,250,996 | ) | | $ | (4,606,803 | ) |
|
| |
Net realized gain | | | 111,543,363 | | | | 54,569,544 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (14,006,322 | ) | | | 35,805,378 | |
|
| |
Net increase in net assets resulting from operations | | | 88,286,045 | | | | 85,768,119 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (3,189,391 | ) | | | (5,885,904 | ) |
|
| |
Series II | | | (57,937,140 | ) | | | (113,684,097 | ) |
|
| |
Total distributions from distributable earnings | | | (61,126,531 | ) | | | (119,570,001 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 1,372,815 | | | | 2,911,262 | |
|
| |
Series II | | | (27,784,944 | ) | | | (10,389,997 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (26,412,129 | ) | | | (7,478,735 | ) |
|
| |
Net increase (decrease) in net assets | | | 747,385 | | | | (41,280,617 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 980,623,647 | | | | 1,021,904,264 | |
|
| |
End of year | | $ | 981,371,032 | | | $ | 980,623,647 | |
|
| |
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Net asset value, beginning of period | | Net investment income (loss)(a) | | Net gains (losses) on securities (both realized and unrealized) | | Total from investment operations | | Dividends from net investment income | | Distributions from net realized gains | | Return of capital | | Total distributions | | Net asset value, end of period | | Total return (b) | | Net assets, end of period (000’s omitted) | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | Ratio of net investment income (loss) to average net assets | | Portfolio turnover (c) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | $10.48 | | | | $(0.08 | ) | | | $ 1.08 | | | | $ 1.00 | | | | $(0.36 | ) | | | $(0.36 | ) | | | $ - | | | | $(0.72 | ) | | | $10.76 | | | | 9.55 | % | | | $ 49,456 | | | | 0.71 | % | | | 1.11 | % | | | (0.69 | )% | | | 107 | % |
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) | | | 1.10 | | | | (0.25 | ) | | | 82 | |
Year ended 12/31/19 | | | 9.47 | | | | 0.14 | | | | 1.30 | | | | 1.44 | | | | - | | | | - | | | | - | | | | - | | | | 10.91 | | | | 15.21 | | | | 45,427 | | | | 0.64 | (d) | | | 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 | (d) | | | 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 | (d) | | | 1.11 | | | | 0.10 | | | | 52 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 10.29 | | | | (0.10 | ) | | | 1.05 | | | | 0.95 | | | | (0.33 | ) | | | (0.36 | ) | | | - | | | | (0.69 | ) | | | 10.55 | | | | 9.26 | | | | 931,915 | | | | 0.96 | | | | 1.36 | | | | (0.94 | ) | | | 107 | |
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) | | | 1.35 | | | | (0.50 | ) | | | 82 | |
Year ended 12/31/19 | | | 9.34 | | | | 0.12 | | | | 1.27 | | | | 1.39 | | | | - | | | | - | | | | - | | | | - | | | | 10.73 | | | | 14.88 | | | | 976,477 | | | | 0.89 | (d) | | | 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 | (d) | | | 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 | (d) | | | 1.36 | | | | (0.15 | ) | | | 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) | 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% and 0.15% for the years ended December 31, 2020, 2019, 2018 and 2017, 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, 2021
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 Invesco Cayman Commodity Fund IV Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. 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 Subsidiary. 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income |
|
| Invesco V.I. Balanced-Risk Allocation Fund |
| | 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 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. | Put Options Purchased - The Fund may purchase 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. 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 securities hedged. Realized and unrealized gains and losses on put 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. |
| 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, 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
|
| Invesco V.I. Balanced-Risk Allocation Fund |
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. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| P. | 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. |
| Q. | 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, 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
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.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| R. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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, 2021, 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 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”).
|
| Invesco V.I. Balanced-Risk Allocation Fund |
Effective May 1, 2022 through at least April 30, 2023, 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 (including prior fiscal year-end Acquired Fund Fees and Expenses of 0.07% and excluding certain items discussed below) of Series I shares to 0.88% and Series II shares to 1.13% 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. 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $3,936,280.
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, 2021, Invesco was paid $139,709 for accounting and fund administrative services and was reimbursed $1,485,431 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, 2021, 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, 2021, 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, 2021. 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 | | $ | – | | | $ | 113,460,217 | | | | $– | | | $ | 113,460,217 | |
|
| |
Commodity–Linked Securities | | | – | | | | 34,079,470 | | | | – | | | | 34,079,470 | |
|
| |
Money Market Funds | | | 750,278,882 | | | | – | | | | – | | | | 750,278,882 | |
|
| |
Options Purchased | | | 8,498,857 | | | | – | | | | – | | | | 8,498,857 | |
|
| |
Total Investments in Securities | | | 758,777,739 | | | | 147,539,687 | | | | – | | | | 906,317,426 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 10,176,353 | | | | – | | | | – | | | | 10,176,353 | |
|
| |
Swap Agreements | | | – | | | | 8,175,046 | | | | – | | | | 8,175,046 | |
|
| |
| | | 10,176,353 | | | | 8,175,046 | | | | – | | | | 18,351,399 | |
|
| |
|
| Invesco V.I. Balanced–Risk Allocation Fund |
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | $ | (1,978,797 | ) | | $ | – | | | | $– | | | $ | (1,978,797 | ) |
|
| |
Total Other Investments | | | 8,197,556 | | | | 8,175,046 | | | | – | | | | 16,372,602 | |
|
| |
Total Investments | | $ | 766,975,295 | | | $ | 155,714,733 | | | | $– | | | $ | 922,690,028 | |
|
| |
| * | 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, 2021:
| | | | | | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Commodity
Risk | | | Equity Risk | | | Interest Rate Risk | | | Total | |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 3,914,501 | | | $ | 1,987,068 | | | $ | 4,274,784 | | | $ | 10,176,353 | |
|
| |
Unrealized appreciation on swap agreements – OTC | | | 2,597,638 | | | | 5,577,408 | | | | - | | | | 8,175,046 | |
|
| |
Options purchased, at value – Exchange-Traded(b) | | | - | | | | 8,498,857 | | | | - | | | | 8,498,857 | |
|
| |
Total Derivative Assets | | | 6,512,139 | | | | 16,063,333 | | | | 4,274,784 | | | | 26,850,256 | |
|
| |
Derivatives not subject to master netting agreements | | | (3,914,501 | ) | | | (10,485,925 | ) | | | (4,274,784 | ) | | | (18,675,210 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 2,597,638 | | | $ | 5,577,408 | | | $ | - | | | $ | 8,175,046 | |
|
| |
| |
| | | Value | |
| Derivative Liabilities | | Commodity
Risk | | | Equity Risk | | | Interest
Rate Risk | | | Total | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (1,223,846 | ) | | $ | - | | | $ | (754,951 | ) | | $ | (1,978,797 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 1,223,846 | | | | - | | | | 754,951 | | | | 1,978,797 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
|
| |
| (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, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | | Financial
Derivative
Liabilities | | | | | | Collateral
(Received)/Pledged | | | | |
| Counterparty | | Swap
Agreements | | | Swap
Agreements | | | Net Value of
Derivatives | | | Non-Cash | | | Cash | | | Net
Amount(a) | |
|
| |
Fund | | | | | | | | | | | | | | | | | | | | | | | | |
Barclays Bank PLC | | $ | 126,760 | | | $ | (411,043 | ) | | $ | (284,283 | ) | | | $- | | | $ | 284,283 | | | $ | - | |
|
| |
BNP Paribas S.A. | | | 1,251,077 | | | | (347 | ) | | | 1,250,730 | | | | - | | | | (390,000 | ) | | | 860,730 | |
|
| |
Citibank, N.A. | | | 311,130 | | | | (191,077 | ) | | | 120,053 | | | | - | | | | - | | | | 120,053 | |
|
| |
Goldman Sachs International | | | 1,258,204 | | | | (1,488,840 | ) | | | (230,636 | ) | | | - | | | | - | | | | (230,636 | ) |
|
| |
J.P. Morgan Chase Bank, N.A. | | | 2,457,562 | | | | (40,540 | ) | | | 2,417,022 | | | | - | | | | (1,710,000 | ) | | | 707,022 | |
|
| |
Merrill Lynch International | | | 193,868 | | | | (6,311 | ) | | | 187,557 | | | | - | | | | - | | | | 187,557 | |
|
| |
Subtotal-Fund | | | 5,598,601 | | | | (2,138,158 | ) | | | 3,460,443 | | | | - | | | | (1,815,717 | ) | | | 1,644,726 | |
|
| |
|
| Invesco V.I. Balanced-Risk Allocation Fund |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Financial
Derivative
Assets | | | Financial
Derivative
Liabilities | | | | | | Collateral
(Received)/Pledged | | | | |
| Counterparty | | Swap
Agreements | | | Swap
Agreements | | | Net Value of
Derivatives | | | Non-Cash | | | Cash | | | Net
Amount(a) | |
|
| |
Subsidiary | | | | | | | | | | | | | | | | | | | | | | | | |
Barclays Bank PLC | | $ | 488,079 | | | $ | (998 | ) | | $ | 487,081 | | | | $– | | | $ | (320,000 | ) | | $ | 167,081 | |
|
| |
Canadian Imperial Bank of Commerce | | | 589,797 | | | | (2,958 | ) | | | 586,839 | | | | – | | | | – | | | | 586,839 | |
|
| |
Cargill, Inc. | | | 878,752 | | | | (5,678 | ) | | | 873,074 | | | | – | | | | (873,074 | ) | | | – | |
|
| |
J.P. Morgan Chase Bank, N.A. | | | 259,660 | | | | (472 | ) | | | 259,188 | | | | – | | | | – | | | | 259,188 | |
|
| |
Merrill Lynch International | | | 458,237 | | | | (2,217 | ) | | | 456,020 | | | | – | | | | (290,000 | ) | | | 166,020 | |
|
| |
Morgan Stanley Capital Services LLC | | | 381,350 | | | | (1,182 | ) | | | 380,168 | | | | – | | | | (380,168 | ) | | | – | |
|
| |
Subtotal-Subsidiary | | | 3,055,875 | | | | (13,505 | ) | | | 3,042,370 | | | | – | | | | (1,863,242 | ) | | | 1,179,128 | |
|
| |
Total | | $ | 8,654,476 | | | $ | (2,151,663 | ) | | $ | 6,502,813 | | | | $– | | | $ | (3,678,959 | ) | | $ | 2,823,854 | |
|
| |
| | (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, 2021
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
Risk | | | Equity Risk | | | Interest Rate Risk | | | Total | |
|
| |
Realized Gain (Loss): | | | | | | | | | | | | | | | | |
Futures contracts | | $ | 31,172,146 | | | $ | 38,029,250 | | | $ | (24,196,520 | ) | | $ | 45,004,876 | |
|
| |
Options purchased(a) | | | - | | | | (7,776,619 | ) | | | - | | | | (7,776,619 | ) |
|
| |
Swap agreements | | | 30,764,227 | | | | 28,190,790 | | | | - | | | | 58,955,017 | |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | | | | | |
Futures contracts | | | (4,740,325 | ) | | | (4,466,637 | ) | | | 1,843,498 | | | | (7,363,464 | ) |
|
| |
Options purchased(a) | | | - | | | | (3,992,843 | ) | | | - | | | | (3,992,843 | ) |
|
| |
Swap agreements | | | (2,106,284 | ) | | | 4,986,684 | | | | - | | | | 2,880,400 | |
|
| |
Total | | $ | 55,089,764 | | | $ | 54,970,625 | | | $ | (22,353,022 | ) | | $ | 87,707,367 | |
|
| |
| (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.
| | | | | | | | | | | | |
| | | Futures
Contracts | | | Index Options
Purchased | | | Swap
Agreements | |
|
| |
Average notional value | | $ | 927,626,317 | | | $ | 3,006,661,817 | | | $ | 435,840,386 | |
|
| |
Average contracts | | | – | | | | 1,614 | | | | – | |
|
| |
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.
|
| Invesco V.I. Balanced-Risk Allocation 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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 42,646,507 | | | | | | | $ | 89,338,290 | |
|
| |
Long-term capital gain | | | 18,480,024 | | | | | | | | 30,231,711 | |
|
| |
Total distributions | | $ | 61,126,531 | | | | | | | $ | 119,570,001 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 96,007,877 | |
|
| |
Net unrealized appreciation – investments | | | 8,875,772 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 11,132 | |
|
| |
Temporary book/tax differences | | | (68,826 | ) |
|
| |
Shares of beneficial interest | | | 876,545,077 | |
|
| |
Total net assets | | $ | 981,371,032 | |
|
| |
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 derivative instruments and Subsidiary differences.
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $38,939,078 and $37,799,973, 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 | | $ | 15,230,946 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (6,355,174 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 8,875,772 | |
|
| |
Cost of investments for tax purposes is $913,813,734.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of income from the Subsidiary, on December 31, 2021, undistributed net investment income (loss) was increased by $70,831,346 and undistributed net realized gain was decreased by $70,831,346. 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, 2021(a) | | | Year ended
December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 369,779 | | | $ | 4,089,604 | | | | 379,236 | | | $ | 3,960,734 | |
|
| |
Series II | | | 4,573,534 | | | | 49,111,175 | | | | 3,857,886 | | | | 39,526,525 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 298,353 | | | | 3,189,392 | | | | 609,307 | | | | 5,885,904 | |
|
| |
Series II | | | 5,523,083 | | | | 57,937,139 | | | | 11,979,357 | | | | 113,684,097 | |
|
| |
|
| Invesco V.I. Balanced-Risk Allocation Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended
December 31, 2021(a) | | | Year ended
December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (544,502 | ) | | $ | (5,906,181 | ) | | | (682,143 | ) | | $ | (6,935,376 | ) |
|
| |
Series II | | | (12,555,988 | ) | | | (134,833,258 | ) | | | (16,076,040 | ) | | | (163,600,619 | ) |
|
| |
Net increase (decrease) in share activity | | | (2,335,741 | ) | | $ | (26,412,129 | ) | | | 67,603 | | | $ | (7,478,735 | ) |
|
| |
| (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. |
|
| 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, 2021, the related consolidated statement of operations for the year ended December 31, 2021, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the consolidated financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | ACTUAL | | HYPOTHETICAL
(5% annual return before
expenses) | | Annualized
Expense
Ratio2 |
| | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2,3 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2,4 |
| Series I | | $1,000.00 | | $1,019.60 | | $3.67 | | $1,021.58 | | $3.67 | | 0.72% |
| Series II | | 1,000.00 | | 1,018.40 | | 4.93 | | 1,020.32 | | 4.94 | | 0.97 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. Effective May 1, 2022, the Adviser has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses of Series I and Series II shares to 0.88% and 1.13% of average daily net assets, respectively. The annualized expense ratios restated as if these agreements had been in effect throughout the entire most recent fiscal half year are 0.81% and 1.06% for of Series I and Series II shares, respectively. |
| 3 | The actual expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent half year are $4.12 and $5.39 for of Series I and Series II shares, respectively. |
| 4 | The hypothetical expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent half year are $4.13 and $5.40 for of Series I and Series II shares, respectively. |
|
| 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 18,480,024 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.13 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 1.24 | % | | | | |
|
* 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 | | 186 | | None |
| | | | | |
| | | | | 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) | | | | |
| 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Capital Appreciation Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 22.57 | % |
Series II Shares | | | 22.28 | |
S&P 500 Index▼ | | | 28.71 | |
Russell 1000 Growth Index▼ | | | 27.60 | |
Source(s): ▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for
companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year. Meanwhile, the Fund’s benchmark, the Russell 1000 Growth Index, returned 27.60%.
During the fiscal year, stock selection within the health care and financials sectors were the largest contributors to the Fund’s performance versus the Russell 1000 Growth Index. This was offset by weaker stock selection in the consumer discretionary and communication services sectors.
The largest individual contributors to the Fund’s absolute performance during the fiscal year included Microsoft, Alphabet and NVIDIA. Microsoft’s business demonstrated continued strength in the first quarter, with growth continuing to be driven by strength across the company’s commercial cloud segment: Azure, Office 365, LinkedIn and Dynamics 365. In the second quarter, Alphabet’s earnings grew significantly and eclipsed the sharp rebound from the previous quarter and beat consensus estimates by a wide margin. Growth accelerated sharply for the three main advertising revenue sources (Google Search, YouTube and Google Network). NVIDIA designs and manufactures computer graphics processors, chipsets and related multimedia software. The company’s strong revenue growth of 50% led by datacenter GPU and excitement about the Metaverse/Omniverse drove outperformance during the fourth quarter of 2021.
The largest individual detractors from the Fund’s absolute performance during the fiscal year included Trade Desk, RingCentral and
Coupa Software. Trade Desk provides a technology-based self-serve programmatic platform that enables ad buyers to purchase internet advertising more efficiently and effectively. Shares underperformed because first quarter 2021 revenues were only modestly above analyst estimates, along with concerns that second-half earnings will compare unfavorably to prior periods and apprehension about Google’s expected phasing out of cookies. RingCentral is a global provider of cloud enterprise unified communications and collaboration software. The company’s stock underperformed early in the fiscal year due to investors’ rotation into more cyclical companies that benefit from the reopening of the economy. We exited the stock during the fiscal year. Coupa Software offers procurement and expense management software. The company’s growth has stalled as large enterprises have focused on front-office software rather than the back office software that Coupa provides. We exited the stock during the fiscal year.
We expect 2022 to be a year of transition to more normal macro-economic conditions. GDP growth is likely to slow from the 5%+ rate achieved in 2021 as extraordinary fiscal and monetary stimulus moderates. The Fed has already begun to slow the pace of liquidity being added to the financial system and plans to begin raising short-term interest rates by mid-year. As a result, we anticipate the rate of corporate earnings growth will slow, volatility will pick up and equity returns will be tempered. Meanwhile, technology-driven innovation will continue to disrupt large portions of the global economy, providing substantial opportunity via investment in premier growth compounders. Such growth companies may gain advantages as the economic cycle matures. At the same time, growth investors may have to contend with valuation headwinds due to lingering inflation and the Fed’s tightening. We will continue to focus on harnessing the power of compound growth by identifying companies best positioned to thrive in an ever changing environment.
We thank you for your continued investment in the Invesco V.I. Capital Appreciation Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 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. and its affiliates. 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,
|
| Invesco V.I. Capital Appreciation Fund |
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. Capital Appreciation Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (4/3/85) | | | 11.28 | % |
10 Years | | | 16.78 | |
5 Years | | | 22.21 | |
1 Year | | | 22.57 | |
|
Series II Shares | |
Inception (9/18/01) | | | 9.10 | % |
10 Years | | | 16.49 | |
5 Years | | | 21.91 | |
1 Year | | | 22.28 | |
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 (renamed Invesco V.I. Capital Appreciation Fund on April 30, 2021). 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 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 V.I. Capital Appreciation Fund |
Supplemental Information
Invesco 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 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 V.I. Capital Appreciation Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 42.04 | % |
| |
Consumer Discretionary | | | | 14.91 | |
| |
Health Care | | | | 13.05 | |
| |
Communication Services | | | | 12.15 | |
| |
Industrials | | | | 6.05 | |
| |
Financials | | | | 5.95 | |
| |
Other Sectors, Each Less than 2% of Net Assets | | | | 4.91 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.94 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Microsoft Corp. | | | | 9.47 | % |
| | |
2. | | Apple, Inc. | | | | 7.43 | |
| | |
3. | | Alphabet, Inc., Class C | | | | 7.41 | |
| | |
4. | | Amazon.com, Inc. | | | | 4.85 | |
| | |
5. | | NVIDIA Corp. | | | | 3.71 | |
| | |
6. | | UnitedHealth Group, Inc. | | | | 2.43 | |
| | |
7. | | Meta Platforms, Inc., Class A | | | | 2.14 | |
| | |
8. | | Danaher Corp. | | | | 2.13 | |
| | |
9. | | Netflix, Inc. | | | | 1.90 | |
| | |
10. | | Advanced Micro Devices, Inc. | | | | 1.86 | |
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, 2021.
|
| Invesco V.I. Capital Appreciation Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.06% | |
Aerospace & Defense–0.60% | |
TransDigm Group, Inc.(b) | | | 8,580 | | | $ | 5,459,282 | |
|
| |
|
Agricultural & Farm Machinery–1.05% | |
Deere & Co. | | | 27,840 | | | | 9,546,058 | |
|
| |
|
Apparel, Accessories & Luxury Goods–0.80% | |
lululemon athletica, inc.(b) | | | 18,556 | | | | 7,263,746 | |
|
| |
| | |
Application Software–7.51% | | | | | | | | |
Atlassian Corp. PLC, Class A(b) | | | 30,299 | | | | 11,552,706 | |
|
| |
Datadog, Inc., Class A(b) | | | 60,754 | | | | 10,820,895 | |
|
| |
HubSpot, Inc.(b) | | | 17,263 | | | | 11,378,907 | |
|
| |
Intuit, Inc. | | | 17,828 | | | | 11,467,326 | |
|
| |
salesforce.com, inc.(b) | | | 18,034 | | | | 4,582,980 | |
|
| |
Synopsys, Inc.(b) | | | 32,222 | | | | 11,873,807 | |
|
| |
Trade Desk, Inc. (The), Class A(b) | | | 24,078 | | | | 2,206,508 | |
|
| |
Tyler Technologies, Inc.(b) | | | 8,740 | | | | 4,701,683 | |
|
| |
| | | | | | | 68,584,812 | |
|
| |
|
Asset Management & Custody Banks–2.22% | |
BlackRock, Inc. | | | 7,540 | | | | 6,903,322 | |
|
| |
KKR & Co., Inc., Class A | | | 179,545 | | | | 13,376,103 | |
|
| |
| | | | | | | 20,279,425 | |
|
| |
|
Auto Parts & Equipment–1.10% | |
Aptiv PLC(b) | | | 60,854 | | | | 10,037,867 | |
|
| |
|
Automobile Manufacturers–2.11% | |
General Motors Co.(b) | | | 91,790 | | | | 5,381,648 | |
|
| |
Tesla, Inc.(b) | | | 13,155 | | | | 13,901,941 | |
|
| |
| | | | | | | 19,283,589 | |
|
| |
|
Biotechnology–0.36% | |
Alnylam Pharmaceuticals, Inc.(b) | | | 19,567 | | | | 3,318,172 | |
|
| |
| | |
Casinos & Gaming–0.89% | | | | | | | | |
Caesars Entertainment, Inc.(b) | | | 86,565 | | | | 8,096,424 | |
|
| |
|
Data Processing & Outsourced Services–1.17% | |
Mastercard, Inc., Class A | | | 29,742 | | | | 10,686,895 | |
|
| |
|
Electrical Components & Equipment–1.26% | |
Generac Holdings, Inc.(b) | | | 32,679 | | | | 11,500,394 | |
|
| |
|
Environmental & Facilities Services–0.94% | |
Waste Connections, Inc. | | | 63,084 | | | | 8,596,457 | |
|
| |
|
Financial Exchanges & Data–1.62% | |
MSCI, Inc. | | | 10,587 | | | | 6,486,549 | |
|
| |
S&P Global, Inc. | | | 17,610 | | | | 8,310,687 | |
|
| |
| | | | | | | 14,797,236 | |
|
| |
|
General Merchandise Stores–0.76% | |
Target Corp. | | | 29,870 | | | | 6,913,113 | |
|
| |
|
Health Care Equipment–3.13% | |
DexCom, Inc.(b) | | | 8,163 | | | | 4,383,123 | |
|
| |
Edwards Lifesciences Corp.(b) | | | 58,793 | | | | 7,616,633 | |
|
| |
IDEXX Laboratories, Inc.(b) | | | 12,538 | | | | 8,255,772 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Equipment–(continued) | |
Intuitive Surgical, Inc.(b) | | | 23,271 | | | $ | 8,361,270 | |
|
| |
| | | | | | | 28,616,798 | |
|
| |
|
Health Care Facilities–1.00% | |
HCA Healthcare, Inc. | | | 35,459 | | | | 9,110,126 | |
|
| |
|
Health Care Supplies–0.54% | |
Align Technology, Inc.(b) | | | 7,524 | | | | 4,944,622 | |
|
| |
|
Home Improvement Retail–1.02% | |
Home Depot, Inc. (The) | | | 22,524 | | | | 9,347,685 | |
|
| |
|
Hotels, Resorts & Cruise Lines–1.87% | |
Airbnb, Inc., Class A(b) | | | 31,534 | | | | 5,250,096 | |
|
| |
Marriott International, Inc., Class A(b) | | | 71,283 | | | | 11,778,803 | |
|
| |
| | | | | | | 17,028,899 | |
|
| |
|
Industrial Gases–0.75% | |
Linde PLC (United Kingdom) | | | 19,760 | | | | 6,845,457 | |
|
| |
|
Industrial Machinery–0.27% | |
Chart Industries, Inc.(b) | | | 15,668 | | | | 2,498,889 | |
|
| |
|
Industrial REITs–0.55% | |
Prologis, Inc. | | | 29,907 | | | | 5,035,143 | |
|
| |
|
Interactive Media & Services–9.55% | |
Alphabet, Inc., Class C(b) | | | 23,388 | | | | 67,675,283 | |
|
| |
Meta Platforms, Inc., Class A(b) | | | 58,045 | | | | 19,523,436 | |
|
| |
| | | | | | | 87,198,719 | |
|
| |
|
Internet & Direct Marketing Retail–4.85% | |
Amazon.com, Inc.(b) | | | 13,285 | | | | 44,296,707 | |
|
| |
|
Internet Services & Infrastructure–1.26% | |
MongoDB, Inc.(b) | | | 12,758 | | | | 6,753,447 | |
|
| |
Shopify, Inc., Class A (Canada)(b) | | | 3,427 | | | | 4,720,316 | |
|
| |
| | | | | | | 11,473,763 | |
|
| |
|
Investment Banking & Brokerage–0.94% | |
Goldman Sachs Group, Inc. (The) | | | 22,373 | | | | 8,558,791 | |
|
| |
|
IT Consulting & Other Services–1.29% | |
Accenture PLC, Class A | | | 28,313 | | | | 11,737,154 | |
|
| |
|
Life Sciences Tools & Services–4.24% | |
Agilent Technologies, Inc. | | | 43,340 | | | | 6,919,231 | |
|
| |
Danaher Corp. | | | 58,997 | | | | 19,410,603 | |
|
| |
Thermo Fisher Scientific, Inc. | | | 10,485 | | | | 6,996,011 | |
|
| |
West Pharmaceutical Services, Inc. | | | 11,560 | | | | 5,421,756 | |
|
| |
| | | | | | | 38,747,601 | |
|
| |
|
Managed Health Care–2.43% | |
UnitedHealth Group, Inc. | | | 44,111 | | | | 22,149,898 | |
|
| |
|
Movies & Entertainment–2.60% | |
Live Nation Entertainment, Inc.(b) | | | 53,868 | | | | 6,447,461 | |
|
| |
Netflix, Inc.(b) | | | 28,705 | | | | 17,293,040 | |
|
| |
| | | | | | | 23,740,501 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Capital Appreciation Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Oil & Gas Storage & Transportation–0.75% | |
Cheniere Energy, Inc. | | | 67,199 | | | $ | 6,815,323 | |
|
| |
|
Personal Products–1.13% | |
Estee Lauder Cos., Inc. (The), Class A | | | 27,904 | | | | 10,330,061 | |
|
| |
|
Pharmaceuticals–1.34% | |
Catalent, Inc.(b) | | | 34,018 | | | | 4,355,324 | |
|
| |
Eli Lilly and Co. | | | 28,403 | | | | 7,845,477 | |
|
| |
| | | | | | | 12,200,801 | |
|
| |
|
Regional Banks–1.17% | |
SVB Financial Group(b) | | | 15,748 | | | | 10,680,923 | |
|
| |
|
Restaurants–1.52% | |
Chipotle Mexican Grill, Inc.(b) | | | 3,625 | | | | 6,337,406 | |
|
| |
Domino’s Pizza, Inc. | | | 13,323 | | | | 7,518,569 | |
|
| |
| | | | | | | 13,855,975 | |
|
| |
|
Semiconductor Equipment–2.37% | |
Applied Materials, Inc. | | | 50,158 | | | | 7,892,863 | |
|
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 17,216 | | | | 13,706,346 | |
|
| |
| | | | | | | 21,599,209 | |
|
| |
|
Semiconductors–9.88% | |
Advanced Micro Devices, Inc.(b) | | | 117,766 | | | | 16,946,527 | |
|
| |
Marvell Technology, Inc. | | | 136,842 | | | | 11,972,307 | |
|
| |
Monolithic Power Systems, Inc. | | | 32,599 | | | | 16,082,065 | |
|
| |
NVIDIA Corp. | | | 115,230 | | | | 33,890,295 | |
|
| |
QUALCOMM, Inc. | | | 61,729 | | | | 11,288,382 | |
|
| |
| | | | | | | 90,179,576 | |
|
| |
|
Specialized REITs–0.98% | |
Extra Space Storage, Inc. | | | 39,295 | | | | 8,909,355 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Specialty Chemicals–0.75% | |
Albemarle Corp. | | | 29,251 | | | $ | 6,838,006 | |
|
| |
|
Systems Software–11.13% | |
Microsoft Corp. | | | 256,985 | | | | 86,429,195 | |
|
| |
ServiceNow, Inc.(b) | | | 23,441 | | | | 15,215,788 | |
|
| |
| | | | | | | 101,644,983 | |
|
| |
|
Technology Hardware, Storage & Peripherals–7.43% | |
Apple, Inc. | | | 381,949 | | | | 67,822,684 | |
|
| |
|
Trading Companies & Distributors–1.03% | |
United Rentals, Inc.(b) | | | 28,353 | | | | 9,421,418 | |
|
| |
|
Trucking–0.90% | |
Old Dominion Freight Line, Inc. | | | 22,928 | | | | 8,216,937 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $546,580,823) | | | | 904,209,474 | |
|
| |
|
Money Market Funds–1.19% | |
Invesco Government & Agency Portfolio, Institutional
Class, 0.03%(c)(d) | | | 3,798,976 | | | | 3,798,976 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(c)(d) | | | 2,713,010 | | | | 2,713,552 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 4,341,686 | | | | 4,341,686 | |
|
| |
Total Money Market Funds (Cost $10,854,214) | | | | 10,854,214 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-100.25%
(Cost $557,435,037) | | | | 915,063,688 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.25)% | | | | (2,264,505 | ) |
|
| |
NET ASSETS-100.00% | | | $ | 912,799,183 | |
|
| |
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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Unrealized | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | Appreciation | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $2,929,702 | | | | $ 72,513,298 | | | | $ (71,644,024 | ) | | | $ - | | | $ | - | | | | $ 3,798,976 | | | | $ 546 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 2,092,396 | | | | 51,644,166 | | | | (51,022,673 | ) | | | 166 | | | | (503 | ) | | | 2,713,552 | | | | 237 | |
Invesco Treasury Portfolio, Institutional Class | | | 3,348,230 | | | | 82,872,341 | | | | (81,878,885 | ) | | | - | | | | - | | | | 4,341,686 | | | | 238 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 6,904,779 | | | | (6,904,779 | ) | | | - | | | | - | | | | - | | | | 16* | |
Invesco Private Prime Fund | | | - | | | | 14,579,991 | | | | (14,579,991 | ) | | | - | | | | - | | | | - | | | | 209* | |
Total | | | $8,370,328 | | | | $228,514,575 | | | | $(226,030,352 | ) | | | $166 | | | $ | (503 | ) | | | $10,854,214 | | | | $1,246 | |
| | * | 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, 2021. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Capital Appreciation Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $546,580,823) | | $ | 904,209,474 | |
|
| |
Investments in affiliated money market funds, at value (Cost $10,854,214) | | | 10,854,214 | |
|
| |
Cash | | | 1,235,993 | |
|
| |
Foreign currencies, at value (Cost $164) | | | 158 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 22,554 | |
|
| |
Dividends | | | 74,700 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 137,512 | |
|
| |
Other assets | | | 3,489 | |
|
| |
Total assets | | | 916,538,094 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 3,161,289 | |
|
| |
Accrued fees to affiliates | | | 394,478 | |
|
| |
Accrued other operating expenses | | | 45,632 | |
|
| |
Trustee deferred compensation and retirement plans | | | 137,512 | |
|
| |
Total liabilities | | | 3,738,911 | |
|
| |
Net assets applicable to shares outstanding | | $ | 912,799,183 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 328,143,646 | |
|
| |
Distributable earnings | | | 584,655,537 | |
|
| |
| | $ | 912,799,183 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 686,517,157 | |
|
| |
Series II | | $ | 226,282,026 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,385,975 | |
|
| |
Series II | | | 2,843,535 | |
|
| |
Series I:
Net asset value per share | | $ | 81.86 | |
|
| |
Series II:
Net asset value per share | | $ | 79.58 | |
|
| |
| | | | |
Statement of Operations For the year ended December 31, 2021 | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $50,376) | | $ | 4,091,729 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $1,010) | | | 2,031 | |
|
| |
Total investment income | | | 4,093,760 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 6,039,396 | |
|
| |
Administrative services fees | | | 1,370,291 | |
|
| |
Custodian fees | | | 8,008 | |
|
| |
Distribution fees - Series II | | | 559,752 | |
|
| |
Transfer agent fees | | | 53,474 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 29,944 | |
|
| |
Professional services fees | | | 59,715 | |
|
| |
Other | | | (104,659 | ) |
|
| |
Total expenses | | | 8,015,921 | |
|
| |
Less: Fees waived | | | (359,578 | ) |
|
| |
Net expenses | | | 7,656,343 | |
|
| |
Net investment income (loss) | | | (3,562,583 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $552,919) | | | 238,954,487 | |
|
| |
Affiliated investment securities | | | (503 | ) |
|
| |
Foreign currencies | | | 36,547 | |
|
| |
| | | 238,990,531 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (55,673,914 | ) |
|
| |
Affiliated investment securities | | | 166 | |
|
| |
Foreign currencies | | | (12,617 | ) |
|
| |
| | | (55,686,365 | ) |
|
| |
Net realized and unrealized gain | | | 183,304,166 | |
|
| |
Net increase in net assets resulting from operations | | $ | 179,741,583 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Capital Appreciation Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (3,562,583 | ) | | $ | (1,344,835 | ) |
|
| |
Net realized gain | | | 238,990,531 | | | | 44,098,047 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (55,686,365 | ) | | | 187,508,885 | |
|
| |
Net increase in net assets resulting from operations | | | 179,741,583 | | | | 230,262,097 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (35,407,065 | ) | | | (81,814,036 | ) |
|
| |
Series II | | | (12,047,935 | ) | | | (28,225,418 | ) |
|
| |
Total distributions from distributable earnings | | | (47,455,000 | ) | | | (110,039,454 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (38,987,718 | ) | | | (6,360,539 | ) |
|
| |
Series II | | | (22,413,761 | ) | | | (10,935,911 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (61,401,479 | ) | | | (17,296,450 | ) |
|
| |
Net increase in net assets | | | 70,885,104 | | | | 102,926,193 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 841,914,079 | | | | 738,987,886 | |
|
| |
End of year | | $ | 912,799,183 | | | $ | 841,914,079 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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 12/31/21 | | | | $70.34 | | | | | $(0.26 | ) | | | | $16.12 | | | | | $15.86 | | | | | $ – | | | | | $ (4.34 | ) | | | | $ (4.34) | | | | | $81.86 | | | | | 22.57 | % | | | | $686,517 | | | | | 0.80 | % | | | | 0.84 | % | | | | (0.34 | )% | | | | 91 | % |
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 | | | | | 0.88 | | | | | (0.12 | ) | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 68.64 | | | | | (0.45 | ) | | | | 15.73 | | | | | 15.28 | | | | | – | | | | | (4.34 | ) | | | | (4.34 | ) | | | | 79.58 | | | | | 22.28 | | | | | 226,282 | | | | | 1.05 | | | | | 1.09 | | | | | (0.59 | ) | | | | 91 | |
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 | | | | | 1.13 | | | | | (0.37 | ) | | | | 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 | |
| (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 and 2017, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Capital Appreciation Fund |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Capital Appreciation Fund, formerly 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. The Fund is classified as non-diversified. The Fund’s classification changed from diversified to non-diversified on April 30, 2021. 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Capital Appreciation 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. | 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 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
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| Invesco V.I. Capital Appreciation Fund |
| 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 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.
| N. | Other Risks - The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly. |
| O. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 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, 2021, 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 Fund.
The Adviser has contractually agreed, through at least April 30, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $359,578.
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
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| Invesco V.I. Capital Appreciation Fund |
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, 2021, Invesco was paid $124,443 for accounting and fund administrative services and was reimbursed $1,245,848 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as
Distribution fees.
For the year ended December 31, 2021, the Fund incurred $15,587 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, 2021, 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, 2021, the Fund engaged in securities purchases of $6,685,140 and securities sales of $2,732,308, which resulted in net realized gains of $552,919.
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.
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| Invesco 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, 2021 and 2020: | |
| | | 2021 | | | 2020 | |
|
| |
Ordinary income* | | $ | – | | | $ | 4,657,573 | |
|
| |
Long-term capital gain | | | 47,455,000 | | | | 105,381,881 | |
|
| |
Total distributions | | $ | 47,455,000 | | | $ | 110,039,454 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
| | | | |
| Tax Components of Net Assets at Period-End: | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 29,344,302 | |
|
| |
Undistributed long-term capital gain | | | 200,082,750 | |
|
| |
Net unrealized appreciation – investments | | | 355,355,436 | |
|
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (6 | ) |
|
| |
Temporary book/tax differences | | | (126,945 | ) |
|
| |
Shares of beneficial interest | | | 328,143,646 | |
|
| |
Total net assets | | $ | 912,799,183 | |
|
| |
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 does not have a capital loss carryforward as of December 31, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $800,277,244 and $910,547,180, 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 | | $ | 357,772,114 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (2,416,678 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 355,355,436 | |
|
| |
Cost of investments for tax purposes is $559,708,252.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $5,643,360, undistributed net realized gain was decreased by $5,952,178 and shares of beneficial interest was increased by $308,818. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 209,804 | | | $ | 16,035,979 | | | | 286,935 | | | $ | 18,471,044 | |
|
| |
Series II | | | 82,230 | | | | 6,046,853 | | | | 706,142 | | | | 41,437,974 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 433,698 | | | | 35,407,065 | | | | 1,269,813 | | | | 81,814,036 | |
|
| |
Series II | | | 151,756 | | | | 12,047,930 | | | | 448,663 | | | | 28,225,406 | |
|
| |
|
| Invesco V.I. Capital Appreciation Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,161,400 | ) | | $ | (90,430,762 | ) | | | (1,658,108 | ) | | $ | (106,645,619 | ) |
|
| |
Series II | | | (531,413 | ) | | | (40,508,544 | ) | | | (1,435,287 | ) | | | (80,599,291 | ) |
|
| |
Net increase (decrease) in share activity | | | (815,325 | ) | | $ | (61,401,479 | ) | | | (381,842 | ) | | $ | (17,296,450 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 39% 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. |
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| Invesco 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Capital Appreciation Fund/VA (subsequently renamed Invesco V.I. Capital Appreciation Fund) 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,085.00 | | $4.20 | | $1,021.17 | | $4.08 | | 0.80% |
Series II | | 1,000.00 | | 1,083.70 | | 5.51 | | 1,019.91 | | 5.35 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| Invesco 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 47,455,000 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
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| * 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. 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.
| | | | | | | | |
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) | | 186 | | 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. 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 |
| Independent Trustees | | | | | | | | |
| Christopher L. Wilson - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. -1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| Invesco 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 |
| Independent Trustees–(continued) | | | | | | |
| Joel W. Motley - 1952 Trustee | | 2019 | | Director of Office of Finance, Federal Home Loan Bank System; Managing Director of Carmona Motley Inc. (privately held financial advisor); Member of the Council on Foreign Relations and its Finance and Budget Committee; Chairman Emeritus of Board of Human Rights Watch and Member of its Investment Committee; and Member of Investment Committee 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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| Invesco 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 | | | | | | | | |
Sheri Morris – 1964 President and Principal Executive Officer | | 1999 | | Head of Global Fund Services, Invesco Ltd.; President and Principal Executive Officer, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| Invesco 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) | | | | | | | | |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Capital Appreciation Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Comstock Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Comstock Fund (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 33.36 | % |
Series II Shares | | | 33.04 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 1000 Value Index▼ (Style-Specific Index) | | | 25.16 | |
Lipper VUF Large-Cap Value Funds Index∎ (Peer Group Index) | | | 26.33 | |
| |
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September, 3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October, 1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
On the positive side, stock selection and an overweight in energy boosted relative return. Energy stocks were buoyed by rising oil prices resulting from OPEC production cuts and a gas and oil shortage in Europe and Asia. Devon Energy, Marathon Oil and Canadian Natural Resources were leading contributors to absolute and relative returns. We believe the fundamental backdrop for energy companies is the most favorable in a decade. Strong stock selection within industrials also boosted relative returns. Johnson Controls International and Textron added to both absolute and relative returns. Textron benefited from a material uptick in business jet orders. A material underweight to communication services enhanced relative returns, as the sector was the worst performing sector for the year. Stock selection and an overweight in financials were a large contributor to relative return. American International (AIG), Bank of America and Wells Fargo are some of the holdings that aided both absolute and relative returns. Financial companies are well positioned to benefit as interest rates/yields move higher and loan growth recovers.
On the negative side, having a material underweight to real estate was a large detractor from relative returns, as the sector was
the second-best performing sector for the period. Although the average cash allocation averaged close to 2% for the period, cash also dampened relative performance in a strong equity market. Stock selection in consumer discretionary detracted from relative return. Las Vegas Sands and not owning Ford Motor Company were the largest detractors in the sector. Las Vegas Sands stock under-performed due to COVID restrictions, uncertainty surrounding the Macau government’s re-tendering of casino/gaming licenses and divestiture of its US casinos.
We used currency forward contracts during the fiscal year to hedge currency exposure of non-U.S. based companies held in the portfolio. Derivatives were used solely for the purpose of hedging. The use of currency forward contracts had a slightly positive impact on relative performance.
The Fund currently has a cyclical bias with overweight exposures in financial and energy companies and is also overweight in information technology, consumer staples and industrial stocks. Conversely, the Fund is underweight in real estate, utilities, communication services, healthcare and consumer discretionary.
Despite recent fears of inflation and the new Omicron variant causing a decrease in consumer demand, we remain cautiously optimistic about the longer-term outlook for the US and global economies. Though the creation of new vaccines and recently approved COVID treatments should provide a measure of stability, we believe equity markets may experience continued volatility.
Thank you for your investment in Invesco V.I. Comstock Fund and for sharing our long-term investment horizon.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Devin Armstrong - Lead
Kevin Holt - Lead
James Warwick
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (4/30/99) | | | 7.90 | % |
10 Years | | | 12.86 | |
5 Years | | | 11.39 | |
1 Year | | | 33.36 | |
Series II Shares | | | | |
Inception (9/18/00) | | | 7.93 | % |
10 Years | | | 12.59 | |
5 Years | | | 11.12 | |
1 Year | | | 33.04 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 | | | | 23.56 | % |
| |
Health Care | | | | 15.81 | |
| |
Industrials | | | | 12.97 | |
| |
Information Technology | | | | 12.84 | |
| |
Energy | | | | 11.52 | |
| |
Consumer Staples | | | | 8.74 | |
| |
Consumer Discretionary | | | | 4.59 | |
| |
Materials | | | | 4.53 | |
| |
Other Sectors, Each Less than 2% of Net Assets | | | | 4.10 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.34 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Bank of America Corp. | | | | 3.34 | % |
| | |
2. | | Philip Morris International, Inc. | | | | 2.99 | |
| | |
3. | | Citigroup, Inc. | | | | 2.95 | |
| | |
4. | | Anthem, Inc. | | | | 2.56 | |
| | |
5. | | Wells Fargo & Co. | | | | 2.53 | |
| | |
6. | | American International Group, Inc. | | | | 2.35 | |
| | |
7. | | Cisco Systems, Inc. | | | | 2.34 | |
| | |
8. | | Cognizant Technology Solutions Corp., Class A | | | | 2.21 | |
| | |
9. | | General Motors Co. | | | | 2.05 | |
| | |
10. | | Chevron Corp. | | | | 1.98 | |
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, 2021.
|
| Invesco V.I. Comstock Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.66% | |
| Aerospace & Defense–1.31% | |
Textron, Inc. | | | 260,226 | | | $ | 20,089,447 | |
|
| |
|
Air Freight & Logistics–1.61% | |
FedEx Corp. | | | 95,547 | | | | 24,712,276 | |
|
| |
|
Application Software–1.09% | |
CDK Global, Inc.(b) | | | 399,949 | | | | 16,693,871 | |
|
| |
|
Asset Management & Custody Banks–2.62% | |
Bank of New York Mellon Corp. (The) | | | 479,245 | | | | 27,834,550 | |
|
| |
State Street Corp. | | | 133,890 | | | | 12,451,770 | |
|
| |
| | | | 40,286,320 | |
|
| |
|
Automobile Manufacturers–2.05% | |
General Motors Co.(c) | | | 537,273 | | | | 31,500,316 | |
|
| |
|
Building Products–1.95% | |
Johnson Controls International PLC | | | 368,579 | | | | 29,969,159 | |
|
| |
|
Cable & Satellite–1.40% | |
Comcast Corp., Class A | | | 425,497 | | | | 21,415,264 | |
|
| |
|
Casinos & Gaming–0.69% | |
Las Vegas Sands Corp.(c) | | | 281,042 | | | | 10,578,421 | |
|
| |
|
Communications Equipment–2.34% | |
Cisco Systems, Inc. | | | 567,004 | | | | 35,931,043 | |
|
| |
|
Construction Machinery & Heavy Trucks–3.19% | |
Caterpillar, Inc. | | | 127,742 | | | | 26,409,381 | |
|
| |
Wabtec Corp.(b) | | | 245,506 | | | | 22,613,558 | |
|
| |
| | | | 49,022,939 | |
|
| |
|
Consumer Finance–0.41% | |
Capital One Financial Corp. | | | 43,612 | | | | 6,327,665 | |
|
| |
|
Diversified Banks–10.11% | |
Bank of America Corp. | | | 1,153,043 | | | | 51,298,883 | |
|
| |
Citigroup, Inc. | | | 748,855 | | | | 45,223,354 | |
|
| |
JPMorgan Chase & Co. | | | 125,747 | | | | 19,912,038 | |
|
| |
Wells Fargo & Co. | | | 808,187 | | | | 38,776,812 | |
|
| |
| | | | 155,211,087 | |
|
| |
|
Electric Utilities–1.65% | |
Exelon Corp. | | | 438,882 | | | | 25,349,824 | |
|
| |
|
Electrical Components & Equipment–3.70% | |
Eaton Corp. PLC | | | 171,560 | | | | 29,648,999 | |
|
| |
Emerson Electric Co. | | | 291,424 | | | | 27,093,689 | |
|
| |
| | | | 56,742,688 | |
|
| |
|
Fertilizers & Agricultural Chemicals–3.16% | |
CF Industries Holdings, Inc. | | | 330,574 | | | | 23,398,028 | |
|
| |
Corteva, Inc. | | | 531,510 | | | | 25,129,793 | |
|
| |
| | | | 48,527,821 | |
|
| |
|
Health Care Distributors–2.56% | |
Henry Schein, Inc.(c) | | | 201,862 | | | | 15,650,361 | |
|
| |
McKesson Corp. | | | 95,140 | | | | 23,648,950 | |
|
| |
| | | | 39,299,311 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Equipment–0.44% | |
Becton, Dickinson and Co. | | | 27,031 | | | $ | 6,797,756 | |
|
| |
|
Health Care Facilities–2.21% | |
HCA Healthcare, Inc. | | | 75,610 | | | | 19,425,721 | |
|
| |
Universal Health Services, Inc., Class B | | | 112,184 | | | | 14,545,778 | |
|
| |
| | | | 33,971,499 | |
|
| |
|
Health Care Services–1.94% | |
CVS Health Corp. | | | 289,069 | | | | 29,820,358 | |
|
| |
|
Health Care Supplies–0.65% | |
DENTSPLY SIRONA, Inc. | | | 179,246 | | | | 10,000,134 | |
|
| |
|
Hotel & Resort REITs–1.06% | |
Host Hotels & Resorts, Inc.(c) | | | 939,414 | | | | 16,336,409 | |
|
| |
|
Hotels, Resorts & Cruise Lines–1.34% | |
Booking Holdings, Inc.(c) | | | 8,587 | | | | 20,602,188 | |
|
| |
|
Household Products–2.04% | |
Colgate-Palmolive Co. | | | 138,775 | | | | 11,843,058 | |
|
| |
Kimberly-Clark Corp. | | | 136,289 | | | | 19,478,424 | |
|
| |
| | | | 31,321,482 | |
|
| |
|
Industrial Conglomerates–1.22% | |
General Electric Co. | | | 197,989 | | | | 18,704,021 | |
|
| |
|
Integrated Oil & Gas–3.35% | |
Chevron Corp. | | | 259,287 | | | | 30,427,329 | |
|
| |
Suncor Energy, Inc. (Canada) | | | 838,923 | | | | 20,998,243 | |
|
| |
| | | | 51,425,572 | |
|
| |
|
Internet & Direct Marketing Retail–0.51% | |
eBay, Inc. | | | 118,386 | | | | 7,872,669 | |
|
| |
|
Investment Banking & Brokerage–2.97% | |
Goldman Sachs Group, Inc. (The) | | | 65,208 | | | | 24,945,320 | |
|
| |
Morgan Stanley | | | 210,710 | | | | 20,683,294 | |
|
| |
| | | | 45,628,614 | |
|
| |
|
IT Consulting & Other Services–3.43% | |
Cognizant Technology Solutions Corp., Class A | | | 382,860 | | | | 33,967,339 | |
|
| |
DXC Technology Co.(c) | | | 583,265 | | | | 18,775,301 | |
|
| |
| | | | 52,742,640 | |
|
| |
|
Life & Health Insurance–0.94% | |
MetLife, Inc. | | | 230,798 | | | | 14,422,567 | |
|
| |
|
Managed Health Care–3.03% | |
Anthem, Inc. | | | 84,706 | | | | 39,264,619 | |
|
| |
UnitedHealth Group, Inc. | | | 14,365 | | | | 7,213,241 | |
|
| |
| | | | 46,477,860 | |
|
| |
|
Multi-line Insurance–2.35% | |
American International Group, Inc. | | | 635,749 | | | | 36,148,688 | |
|
| |
|
Oil & Gas Exploration & Production–8.17% | |
Canadian Natural Resources Ltd. (Canada) | | | 360,613 | | | | 15,237,571 | |
|
| |
ConocoPhillips | | | 191,472 | | | | 13,820,449 | |
|
| |
Devon Energy Corp. | | | 657,638 | | | | 28,968,954 | |
|
| |
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) | |
Hess Corp. | | | 233,384 | | | $ | 17,277,418 | |
|
| |
Marathon Oil Corp. | | | 1,470,298 | | | | 24,142,293 | |
|
| |
Pioneer Natural Resources Co. | | | 143,279 | | | | 26,059,584 | |
|
| |
| | | | | | | 125,506,269 | |
|
| |
| | |
Packaged Foods & Meats–0.64% | | | | | | | | |
Kraft Heinz Co. (The) | | | 275,000 | | | | 9,872,500 | |
|
| |
| | |
Paper Packaging–1.37% | | | | | | | | |
International Paper Co. | | | 447,226 | | | | 21,010,677 | |
|
| |
| | |
Pharmaceuticals–4.98% | | | | | | | | |
Bristol-Myers Squibb Co. | | | 230,577 | | | | 14,376,476 | |
|
| |
Johnson & Johnson | | | 155,214 | | | | 26,552,459 | |
|
| |
Merck & Co., Inc. | | | 179,737 | | | | 13,775,044 | |
|
| |
Sanofi, ADR (France) | | | 433,765 | | | | 21,731,626 | |
|
| |
| | | | | | | 76,435,605 | |
|
| |
| |
Property & Casualty Insurance–0.85% | | | | | |
Allstate Corp. (The) | | | 111,247 | | | | 13,088,210 | |
|
| |
| | |
Regional Banks–3.31% | | | | | | | | |
Citizens Financial Group, Inc. | | | 456,102 | | | | 21,550,819 | |
|
| |
Fifth Third Bancorp(b) | | | 491,290 | | | | 21,395,680 | |
|
| |
Huntington Bancshares, Inc. | | | 507,750 | | | | 7,829,505 | |
|
| |
| | | | | | | 50,776,004 | |
|
| |
| | |
Semiconductors–4.19% | | | | | | | | |
Intel Corp. | | | 226,035 | | | | 11,640,802 | |
|
| |
NXP Semiconductors N.V. (China) | | | 128,741 | | | | 29,324,625 | |
|
| |
QUALCOMM, Inc. | | | 128,196 | | | | 23,443,203 | |
|
| |
| | | | | | | 64,408,630 | |
|
| |
| | |
Soft Drinks–1.81% | | | | | | | | |
Coca-Cola Co. (The) | | | 469,743 | | | | 27,813,483 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Systems Software–1.78% | | | | | | | | |
Microsoft Corp. | | | 81,478 | | | $ | 27,402,681 | |
|
| |
| | |
Tobacco–4.24% | | | | | | | | |
Altria Group, Inc. | | | 405,168 | | | | 19,200,912 | |
|
| |
Philip Morris International, Inc. | | | 484,024 | | | | 45,982,280 | |
|
| |
| | | | | | | 65,183,192 | |
|
| |
Total Common Stocks & Other Equity Interests (Cost $931,126,736) | | | | 1,515,427,160 | |
|
| |
| | |
Money Market Funds–2.38% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 12,679,687 | | | | 12,679,687 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 9,346,393 | | | | 9,348,262 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 14,491,071 | | | | 14,491,071 | |
|
| |
Total Money Market Funds (Cost $36,519,054) | | | | 36,519,020 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-101.04%
(Cost $967,645,790) | | | | | | | 1,551,946,180 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.14% | | | | | | | | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 655,872 | | | | 655,872 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 1,530,062 | | | | 1,530,368 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $2,186,240) | | | | 2,186,240 | |
|
| |
TOTAL INVESTMENTS IN
SECURITIES–101.18%
(Cost $969,832,030) | | | | 1,554,132,420 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(1.18)% | | | | (18,150,256 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 1,535,982,164 | |
|
| |
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) | All or a portion of this security was out on loan at December 31, 2021. |
| (c) | Non-income producing security. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in Unrealized Appreciation (Depreciation) | | | Realized Gain (Loss) | | | Value December 31, 2021 | | | Dividend Income | |
| | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | |
Invesco Government & Agency Portfolio, Institutional Class | | | $11,190,529 | | | | $88,628,723 | | | | $ (87,139,565) | | | | $ - | | | | $ - | | | | $12,679,687 | | | | $ 2,651 | |
| | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 8,570,721 | | | | 63,056,233 | | | | (62,278,254) | | | | (3,371) | | | | 2,933 | | | | 9,348,262 | | | | 1,261 | |
| | |
Invesco Treasury Portfolio, Institutional Class | | | 12,789,175 | | | | 101,289,969 | | | | (99,588,073) | | | | - | | | | - | | | | 14,491,071 | | | | 1,120 | |
| | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Comstock Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation (Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | $ | - | | | | $ | 94,639,781 | | | | $ | (93,983,909 | ) | | | $ | - | | | | $ | - | | | | $ | 655,872 | | | | $ | 346 | * |
Invesco Private Prime Fund | | | | - | | | | | 198,978,740 | | | | | (197,443,794 | ) | | | | - | | | | | (4,578 | ) | | | | 1,530,368 | | | | | 4,348 | * |
Total | | | $ | 32,550,425 | | | | $ | 546,593,446 | | | | $ | (540,433,595 | ) | | | $ | (3,371 | ) | | | $ | (1,645 | ) | | | $ | 38,705,260 | | | | $ | 9,726 | |
| | * | 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, 2021. |
| (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 | |
|
| |
| | | | | | | | | | | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | | | | Deliver | | | | | | Receive | | | (Depreciation) | |
|
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
01/07/2022 | | Canadian Imperial Bank of Commerce | | | USD | | | | 729,859 | | | | CAD | | | | 931,030 | | | | $ 6,161 | |
|
| |
01/07/2022 | | Deutsche Bank AG | | | USD | | | | 900,688 | | | | CAD | | | | 1,151,006 | | | | 9,233 | |
|
| |
01/07/2022 | | Goldman Sachs International | | | CAD | | | | 618,674 | | | | USD | | | | 489,263 | | | | 175 | |
|
| |
01/07/2022 | | JP Morgan Chase Bank N.A. | | | USD | | | | 375,666 | | | | CAD | | | | 486,128 | | | | 8,639 | |
|
| |
01/07/2022 | | Royal Bank of Canada | | | CAD | | | | 597,941 | | | | USD | | | | 472,954 | | | | 255 | |
|
| |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | 24,463 | |
|
| |
| | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | |
|
| |
01/07/2022 | | Canadian Imperial Bank of Commerce | | | CAD | | | | 22,933,961 | | | | USD | | | | 17,907,696 | | | | (222,603 | ) |
|
| |
01/07/2022 | | Deutsche Bank AG | | | EUR | | | | 567,704 | | | | USD | | | | 641,675 | | | | (4,693 | ) |
|
| |
01/07/2022 | | Royal Bank of Canada | | | CAD | | | | 716,899 | | | | USD | | | | 559,557 | | | | (7,183 | ) |
|
| |
01/07/2022 | | Royal Bank of Canada | | | EUR | | | | 9,112,839 | | | | USD | | | | 10,334,288 | | | | (41,282 | ) |
|
| |
01/07/2022 | | State Street Bank & Trust Co. | | | CAD | | | | 607,048 | | | | USD | | | | 472,996 | | | | (6,902 | ) |
|
| |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | (282,663 | ) |
|
| |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | | $(258,200 | ) |
|
| |
Abbreviations:
CAD – Canadian Dollar
EUR – Euro
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $931,126,736)* | | $ | 1,515,427,160 | |
|
| |
Investments in affiliated money market funds, at value (Cost $38,705,294) | | | 38,705,260 | |
|
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 24,463 | |
|
| |
Foreign currencies, at value (Cost $512) | | | 511 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 79,843 | |
|
| |
Dividends | | | 2,196,020 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 199,178 | |
|
| |
Other assets | | | 5,885 | |
|
| |
Total assets | | | 1,556,638,320 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 282,663 | |
|
| |
Payable for: | | | | |
Fund shares reacquired | | | 16,295,834 | |
|
| |
Amount due custodian | | | 648,092 | |
|
| |
Collateral upon return of securities loaned | | | 2,186,240 | |
|
| |
Accrued fees to affiliates | | | 949,823 | |
|
| |
Accrued other operating expenses | | | 73,902 | |
|
| |
Trustee deferred compensation and retirement plans | | | 219,602 | |
|
| |
Total liabilities | | | 20,656,156 | |
|
| |
Net assets applicable to shares outstanding | | $ | 1,535,982,164 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 911,097,766 | |
|
| |
Distributable earnings | | | 624,884,398 | |
|
| |
| | $ | 1,535,982,164 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 212,549,526 | |
|
| |
Series II | | $ | 1,323,432,638 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 10,052,187 | |
|
| |
Series II | | | 62,872,174 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 21.14 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 21.05 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $2,144,417 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $384,452) | | $ | 33,798,693 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $83,433) | | | 88,465 | |
|
| |
Total investment income | | | 33,887,158 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 8,450,199 | |
|
| |
Administrative services fees | | | 2,444,219 | |
|
| |
Custodian fees | | | 10,789 | |
|
| |
Distribution fees - Series II | | | 3,210,110 | |
|
| |
Transfer agent fees | | | 56,040 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 34,339 | |
|
| |
Reports to shareholders | | | 11,759 | |
|
| |
Professional services fees | | | 49,882 | |
|
| |
Other | | | 21,941 | |
|
| |
Total expenses | | | 14,289,278 | |
|
| |
Less: Fees waived | | | (11,178 | ) |
|
| |
Net expenses | | | 14,278,100 | |
|
| |
Net investment income | | | 19,609,058 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 110,200,213 | |
|
| |
Affiliated investment securities | | | (1,645 | ) |
|
| |
Foreign currencies | | | 54,282 | |
|
| |
Forward foreign currency contracts | | | 751,806 | |
|
| |
| | | 111,004,656 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 283,976,768 | |
|
| |
Affiliated investment securities | | | (3,371 | ) |
|
| |
Foreign currencies | | | (10,208 | ) |
|
| |
Forward foreign currency contracts | | | 289,186 | |
|
| |
| | | 284,252,375 | |
|
| |
Net realized and unrealized gain | | | 395,257,031 | |
|
| |
Net increase in net assets resulting from operations | | $ | 414,866,089 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 19,609,058 | | | $ | 24,065,133 | |
|
| |
Net realized gain (loss) | | | 111,004,656 | | | | (86,067,987 | ) |
|
| |
Change in net unrealized appreciation | | | 284,252,375 | | | | 49,751,316 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | 414,866,089 | | | | (12,251,538 | ) |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (3,720,325 | ) | | | (8,343,228 | ) |
|
| |
Series II | | | (20,542,786 | ) | | | (50,127,365 | ) |
|
| |
Total distributions from distributable earnings | | | (24,263,111 | ) | | | (58,470,593 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (23,075,037 | ) | | | (6,729,781 | ) |
|
| |
Series II | | | (158,052,169 | ) | | | (35,671,961 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (181,127,206 | ) | | | (42,401,742 | ) |
|
| |
Net increase (decrease) in net assets | | | 209,475,772 | | | | (113,123,873 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,326,506,392 | | | | 1,439,630,265 | |
|
| |
End of year | | $ | 1,535,982,164 | | | $ | 1,326,506,392 | |
|
| |
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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 12/31/21 | | | $16.13 | | | | $0.30 | | | | $5.07 | | | | $5.37 | | | | $(0.36) | | | | $ - | | | | $(0.36 | ) | | | $21.14 | | | | 33.36 | % | | | $212,550 | | | | 0.74 | % | | | 0.74 | % | | | 1.53 | % | | | 16 | % |
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 | | | | 0.75 | | | | 2.24 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 16.07 | | | | 0.25 | | | | 5.05 | | | | 5.30 | | | | (0.32 | ) | | | - | | | | (0.32 | ) | | | 21.05 | | | | 33.04 | | | | 1,323,433 | | | | 0.99 | | | | 0.99 | | | | 1.28 | | | | 16 | |
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 | | | | 1.00 | | | | 1.99 | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Comstock 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
|
| Invesco V.I. Comstock Fund |
| 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 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. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2– Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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).
Effective May 1, 2021, the Adviser has contractually agreed, through at least June 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 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). Prior to May 1, 2021, the Adviser had 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 0.78% and Series II shares to 1.03% 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $11,178.
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, 2021, Invesco was paid $209,536 for accounting and fund administrative services and was reimbursed $2,234,683 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $6,665 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.
|
| Invesco V.I. Comstock Fund |
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 1,515,427,160 | | | $ | – | | | | $– | | | $ | 1,515,427,160 | |
| |
Money Market Funds | | | 36,519,020 | | | | 2,186,240 | | | | – | | | | 38,705,260 | |
| |
Total Investments in Securities | | | 1,551,946,180 | | | | 2,186,240 | | | | – | | | | 1,554,132,420 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
| | | | |
Forward Foreign Currency Contracts | | | – | | | | 24,463 | | | | – | | | | 24,463 | |
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
| | | | |
Forward Foreign Currency Contracts | | | – | | | | (282,663 | ) | | | – | | | | (282,663 | ) |
| |
Total Other Investments | | | – | | | | (258,200 | ) | | | – | | | | (258,200 | ) |
| |
Total Investments | | $ | 1,551,946,180 | | | $ | 1,928,040 | | | | $– | | | $ | 1,553,874,220 | |
| |
| * | 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, 2021:
| | | | |
| | | Value | |
| |
| | | | |
| | | Currency | |
| Derivative Assets | | Risk | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 24,463 | |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 24,463 | |
|
| |
| | | | |
| | | Value | |
| |
| | | | |
| | | Currency | |
| Derivative Liabilities | | Risk | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | $ | (282,663 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (282,663 | ) |
|
| |
|
| 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, 2021.
| | | | | | | | | | | | | | |
| | | 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 | |
|
| |
Canadian Imperial Bank of Commerce | | $ 6,161 | | $(222,603) | | $(216,442) | | $– | | $– | | | $(216,442 | ) |
|
| |
Deutsche Bank AG | | 9,233 | | (4,693) | | 4,540 | | – | | – | | | 4,540 | |
|
| |
Goldman Sachs International | | 175 | | - | | 175 | | – | | – | | | 175 | |
|
| |
JP Morgan Chase Bank N.A. | | 8,639 | | - | | 8,639 | | – | | – | | | 8,639 | |
|
| |
Royal Bank of Canada | | 255 | | (48,465) | | (48,210) | | – | | – | | | (48,210 | ) |
|
| |
State Street Bank & Trust Co. | | - | | (6,902) | | (6,902) | | – | | – | | | (6,902 | ) |
|
| |
Total | | $24,463 | | $(282,663) | | $(258,200) | | $– | | $– | | | $(258,200 | ) |
|
| |
Effect of Derivative Investments for the year ended December 31, 2021
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 |
| | | Currency |
| | | Risk |
Realized Gain: | | | | | |
Forward foreign currency contracts | | | $ | 751,806 | |
Change in Net Unrealized Appreciation: | | | | | |
Forward foreign currency contracts | | | | 289,186 | |
Total | | | $ | 1,040,992 | |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Forward | |
| | | Foreign Currency | |
| | | Contracts | |
Average notional value | | | $35,953,892 | |
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 24,263,111 | | | | | | | $ | 26,325,878 | |
|
| |
Long-term capital gain | | | – | | | | | | | | 32,144,715 | |
|
| |
Total distributions | | $ | 24,263,111 | | | | | | | $ | 58,470,593 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Comstock Fund |
| | | | |
Tax Components of Net Assets at Period-End: | | | | |
| | | 2021 | |
|
| |
| |
Undistributed ordinary income | | $ | 34,105,644 | |
|
| |
| |
Undistributed long-term capital gain | | | 27,250,736 | |
|
| |
| |
Net unrealized appreciation – investments | | | 563,657,647 | |
|
| |
| |
Net unrealized appreciation – foreign currencies | | | 426 | |
|
| |
| |
Temporary book/tax differences | | | (130,055 | ) |
|
| |
Shares of beneficial interest | | | 911,097,766 | |
|
| |
Total net assets | | $ | 1,535,982,164 | |
|
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $231,078,447 and $426,590,215, 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 | | $ | 575,432,477 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (11,774,830 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 563,657,647 | |
|
| |
Cost of investments for tax purposes is $990,216,573.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, fair fund distributions and securities litigation, on December 31, 2021, undistributed net investment income was increased by $197,142 and undistributed net realized gain was decreased by $197,142. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,134,757 | | | $ | 22,239,616 | | | | 1,063,167 | | | $ | 14,212,924 | |
|
| |
Series II | | | 3,425,435 | | | | 67,116,132 | | | | 9,025,347 | | | | 114,751,533 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 179,726 | | | | 3,720,325 | | | | 599,370 | | | | 8,343,228 | |
|
| |
Series II | | | 996,739 | | | | 20,542,786 | | | | 3,614,085 | | | | 50,127,365 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,519,229 | ) | | | (49,034,978 | ) | | | (2,029,930 | ) | | | (29,285,933 | ) |
|
| |
Series II | | | (12,795,370 | ) | | | (245,711,087 | ) | | | (13,940,262 | ) | | | (200,550,859 | ) |
|
| |
Net increase (decrease) in share activity | | | (9,577,942 | ) | | $ | (181,127,206 | ) | | | (1,668,223 | ) | | $ | (42,401,742 | ) |
|
| |
| (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. |
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,076.10 | | $3.87 | | $1,021.48 | | $3.77 | | 0.74% |
Series II | | 1,000.00 | | 1,074.90 | | 5.18 | | 1,020.21 | | 5.04 | | 0.99 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 99.98 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
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| * 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. 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| 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; Vice President, Invesco Advisers, Inc.; 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. Comstock Fund |
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| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Conservative Balanced Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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-VICBAL-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2021, Series I shares of Invesco V.I. Conservative Balanced Fund (the Fund) outperformed the Custom Invesco V.I. Conservative Balanced Index. | |
Your Fund’s long-term performance appears later in this report. | | | | |
| | |
Fund vs. Indexes | | | | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 10.63 | % |
Series II Shares | | | 10.30 | |
Russell 3000 Index▼ | | | 25.66 | |
Bloomberg U.S. Aggregate Bond Index▼ | | | -1.54 | |
Custom Invesco V.I. Conservative Balanced Index∎ | | | 7.49 | |
| |
Source(s): ▼RIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
Fixed income markets settled down in the second quarter of 2021, posting gains and rebounding from negative performance experienced during the early part of the fiscal year due to a sharply rising interest rate environment. Despite higher volatility stemming from inflation concerns and the potential for rising interest rates, investors remained optimistic about the strength of the economic recovery as the US COVID-19 vaccination rate neared the 50% threshold, consumers resumed pre-pandemic activities in the third quarter and economically sensitive areas such as the consumer discretionary and industrials sectors began to recover. The broader bond market, as represented by the Bloomberg U.S. Aggregate Bond Index, posted a negative 1.54% return for the fiscal year. The four primary sectors of the Fund’s broad market/style-specific benchmark, Bloomberg U.S. Aggregate Bond Index – government-related, corporate, securitized and treasury – posted negative returns for the fiscal year.
During the fiscal year, stock selection in the information technology, real estate and communication services 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
consumer discretionary, consumer staples and energy sectors.
The largest individual contributors to the Fund’s performance during the fiscal year included Applied Materials, NVIDIA and Alphabet. Applied Materials and semiconductor equipment companies, in general, benefited from the strong secular demand for semiconductors, which has supported positive earnings estimate revisions. NVIDIA experienced strength in both its gaming and data center businesses for accelerated computing. Those end markets had secular growth tailwinds and are in the early stages of new product cycles. Alphabet continues to benefit from strong results in its advertising cloud businesses.
The largest individual detractors to the Fund’s performance during the fiscal year included Zynga, LHC and VMWare. Zynga was under pressure after the rollout of the ATT (application tracking transparency) privacy framework from Apple that adversely impacted the acquisition of new users. LHC was under pressure due to concerns about labor shortages in health care positions and that COVID-19 was causing a lack of referrals from skilled nursing facilities. VMWare completed a spin-off during the fourth quarter of 2021 which included a special dividend of $11.5 billion. The Fund’s underperformance mainly resulted from a share price decline in the amount of the special dividend.
The fixed income portion of the Fund generated negative returns for the fiscal year but 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 Treasuries and other government-related assets was driven by a flattening of the yield curve, signaling inflation concerns. Security selection in the financial institutions, technology, media and telecom also contributed to the Fund’s relative performance during the fiscal year while security selection within the industrials and consumer non-cyclical sectors detracted from relative performance.
Thank you for your investment in Invesco V.I Conservative Balanced Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
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. and its affiliates. 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
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| Invesco V.I. Conservative Balanced Fund |
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. Conservative Balanced Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Invesco, RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| | |
Average Annual Total Returns | | | | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (2/9/87) | | | 7.30 | % |
10 Years | | | 8.47 | |
5 Years | | | 9.08 | |
1 Year | | | 10.63 | |
| |
Series II Shares | | | | |
Inception (5/1/02) | | | 4.80 | % |
10 Years | | | 8.20 | |
5 Years | | | 8.80 | |
1 Year | | | 10.30 | |
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 (renamed Invesco V.I. Conservative Balanced Fund on April 30, 2021). 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 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.
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| Invesco V.I. Conservative Balanced Fund |
Supplemental Information
Invesco 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is provided by Invesco.
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | 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 Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | The Custom Invesco V.I. Conservative Balanced Index is composed of 65% Bloomberg U.S. Aggregate Bond Index/35% Russell 3000® Index. |
| ∎ | 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. Conservative Balanced Fund |
Fund Information
Portfolio Composition
| | | | | |
| By security type | | % of total net assets |
| |
Common Stocks & Other Equity Interests | | | | 51.03 | % |
| |
U.S. Dollar Denominated Bonds & Notes | | | | 21.78 | |
| |
Asset-Backed Securities | | | | 13.78 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | 10.48 | |
| |
U.S. Treasury Securities | | | | 7.11 | |
| |
Security Types Each Less Than 1% of Portfolio | | | | 0.93 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | (5.11 | ) |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Microsoft Corp. | | | | 3.06 | % |
| | |
2. | | Alphabet, Inc., Class A | | | | 3.00 | |
| | |
3. | | Amazon.com, Inc. | | | | 2.38 | |
| | |
4. | | Apple, Inc. | | | | 2.09 | |
| | |
5. | | VMware, Inc., Class A | | | | 1.37 | |
| | |
6. | | JPMorgan Chase & Co. | | | | 1.35 | |
| | |
7. | | UnitedHealth Group, Inc. | | | | 1.23 | |
| | |
8. | | Prologis, Inc. | | | | 1.20 | |
| | |
9. | | NVIDIA Corp. | | | | 1.19 | |
| | |
10. | | QUALCOMM, Inc. | | | | 1.03 | |
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, 2021.
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| Invesco V.I. Conservative Balanced Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | |
| | | Shares | | | Value |
Common Stocks & Other Equity Interests–51.03% |
Aerospace & Defense–0.91% | | | | | | |
Boeing Co. (The)(b) | | | 3,550 | | | $ 714,686 |
| | |
Raytheon Technologies Corp. | | | 13,057 | | | 1,123,685 |
| | |
| | | | | | | 1,838,371 |
| | |
Air Freight & Logistics–0.72% | | | | | | |
United Parcel Service, Inc., Class B | | | 6,833 | | | 1,464,585 |
| | |
Airlines–0.23% | | | | | | |
Spirit Airlines, Inc.(b) | | | 21,568 | | | 471,261 |
| | |
Apparel Retail–0.53% | | | | | | |
Ross Stores, Inc. | | | 9,465 | | | 1,081,660 |
|
Apparel, Accessories & Luxury Goods–0.34% |
Tapestry, Inc. | | | 17,117 | | | 694,950 |
| | |
Application Software–1.64% | | | | | | |
Consensus Cloud Solutions, Inc.(b) | | | 951 | | | 55,034 |
Q2 Holdings, Inc.(b) | | | 4,970 | | | 394,817 |
salesforce.com, inc.(b) | | | 6,472 | | | 1,644,729 |
Workday, Inc., Class A(b) | | | 4,481 | | | 1,224,120 |
| | | | | | | 3,318,700 |
|
Automobile Manufacturers–1.11% |
General Motors Co.(b) | | | 21,468 | | | 1,258,669 |
Tesla, Inc.(b) | | | 944 | | | 997,600 |
| | | | | | | 2,256,269 |
| | |
Automotive Retail–0.55% | | | | | | |
CarMax, Inc.(b) | | | 8,619 | | | 1,122,452 |
| | |
Biotechnology–0.25% | | | | | | |
Seagen, Inc.(b) | | | 3,321 | | | 513,427 |
| | |
Cable & Satellite–0.35% | | | | | | |
Charter Communications, Inc., Class A(b) | | | 1,093 | | | 712,603 |
|
Construction Machinery & Heavy Trucks–0.46% |
Caterpillar, Inc. | | | 4,537 | | | 937,979 |
| | |
Construction Materials–0.45% | | | | | | |
Vulcan Materials Co. | | | 4,405 | | | 914,390 |
| | |
Consumer Finance–0.47% | | | | | | |
Capital One Financial Corp. | | | 6,617 | | | 960,061 |
|
Data Processing & Outsourced Services–0.97% |
Mastercard, Inc., Class A | | | 5,440 | | | 1,954,701 |
|
Distillers & Vintners–0.51% |
Constellation Brands, Inc., Class A | | | 4,072 | | | 1,021,950 |
| | |
Diversified Banks–1.35% | | | | | | |
JPMorgan Chase & Co. | | | 17,302 | | | 2,739,772 |
| | |
Diversified Metals & Mining–0.24% | | | | | | |
Compass Minerals International, Inc. | | | 9,440 | | | 482,195 |
| | | | | | |
| | | Shares | | | Value |
Electric Utilities–0.64% |
Avangrid, Inc. | | | 26,143 | | | $ 1,304,013 |
|
Electrical Components & Equipment–0.30% |
Rockwell Automation, Inc. | | | 1,765 | | | 615,720 |
|
Fertilizers & Agricultural Chemicals–0.17% |
Scotts Miracle-Gro Co. (The) | | | 2,073 | | | 333,753 |
| | |
Financial Exchanges & Data–0.87% | | | | | | |
Intercontinental Exchange, Inc. | | | 12,900 | | | 1,764,333 |
| | |
Food Distributors–0.51% | | | | | | |
Sysco Corp. | | | 13,198 | | | 1,036,703 |
| | |
Gas Utilities–0.81% | | | | | | |
ONE Gas, Inc. | | | 16,995 | | | 1,318,642 |
Suburban Propane Partners L.P. | | | 22,085 | | | 323,545 |
| | | | | | | 1,642,187 |
| | |
Health Care Equipment–1.14% | | | | | | |
Boston Scientific Corp.(b) | | | 17,046 | | | 724,114 |
CryoPort, Inc.(b) | | | 6,532 | | | 386,499 |
DexCom, Inc.(b) | | | 1,118 | | | 600,310 |
Zimmer Biomet Holdings, Inc. | | | 4,627 | | | 587,814 |
| | | | | | | 2,298,737 |
| | |
Health Care Facilities–1.09% | | | | | | |
HCA Healthcare, Inc. | | | 3,859 | | | 991,454 |
Tenet Healthcare Corp.(b) | | | 14,793 | | | 1,208,440 |
| | | | | | | 2,199,894 |
|
Health Care Services–0.28% |
LHC Group, Inc.(b) | | | 4,189 | | | 574,856 |
| | |
Health Care Supplies–0.21% | | | | | | |
Cooper Cos., Inc. (The) | | | 1,006 | | | 421,454 |
| | |
Home Improvement Retail–0.69% | | | | | | |
Home Depot, Inc. (The) | | | 3,379 | | | 1,402,319 |
| | |
Homebuilding–0.52% | | | | | | |
D.R. Horton, Inc. | | | 9,703 | | | 1,052,290 |
|
Hotels, Resorts & Cruise Lines–0.26% |
Airbnb, Inc., Class A(b) | | | 3,184 | | | 530,104 |
|
Human Resource & Employment Services–0.48% |
Korn Ferry | | | 12,820 | | | 970,859 |
| | |
Industrial Conglomerates–0.42% | | | | | | |
Honeywell International, Inc. | | | 4,117 | | | 858,436 |
| | |
Industrial Machinery–0.37% | | | | | | |
Stanley Black & Decker, Inc. | | | 4,005 | | | 755,423 |
| | |
Industrial REITs–1.20% | | | | | | |
Prologis, Inc. | | | 14,481 | | | 2,438,021 |
| | |
Insurance Brokers–0.70% | | | | | | |
Arthur J. Gallagher & Co. | | | 8,364 | | | 1,419,120 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Shares | | | Value |
Integrated Oil & Gas–0.67% |
| | |
Exxon Mobil Corp. | | | 22,051 | | | $ 1,349,301 |
|
Integrated Telecommunication Services–0.79% |
| | |
Verizon Communications, Inc. | | | 30,775 | | | 1,599,069 |
|
Interactive Home Entertainment–0.32% |
| | |
Zynga, Inc., Class A(b) | | | 101,071 | | | 646,854 |
|
Interactive Media & Services–3.79% |
Alphabet, Inc., Class A(b) | | | 2,100 | | | 6,083,784 |
Bumble, Inc., Class A(b) | | | 3,829 | | | 129,650 |
Snap, Inc., Class A(b) | | | 24,137 | | | 1,135,163 |
| | |
Ziff Davis, Inc.(b) | | | 2,854 | | | 316,395 |
| | |
| | | | | | | 7,664,992 |
|
Internet & Direct Marketing Retail–2.38% |
| | |
Amazon.com, Inc.(b) | | | 1,443 | | | 4,811,453 |
|
Internet Services & Infrastructure–0.08% |
| | |
Snowflake, Inc., Class A(b) | | | 480 | | | 162,600 |
|
Investment Banking & Brokerage–0.51% |
| | |
Raymond James Financial, Inc. | | | 10,264 | | | 1,030,506 |
|
Leisure Facilities–0.14% |
| | |
Cedar Fair L.P.(b) | | | 5,485 | | | 274,579 |
|
Life Sciences Tools & Services–0.32% |
| | |
Avantor, Inc.(b) | | | 15,586 | | | 656,794 |
|
Managed Health Care–1.23% |
| | |
UnitedHealth Group, Inc. | | | 4,953 | | | 2,487,099 |
|
Metal & Glass Containers–0.33% |
| | |
Silgan Holdings, Inc. | | | 15,688 | | | 672,074 |
|
Movies & Entertainment–0.39% |
| | |
Netflix, Inc.(b) | | | 1,311 | | | 789,799 |
|
Multi-Utilities–0.27% |
| | |
Dominion Energy, Inc. | | | 6,834 | | | 536,879 |
|
Office REITs–0.25% |
| | |
Alexandria Real Estate Equities, Inc. | | | 2,308 | | | 514,592 |
|
Office Services & Supplies–0.20% |
| | |
ACCO Brands Corp. | | | 48,950 | | | 404,327 |
|
Oil & Gas Exploration & Production–0.21% |
| | |
Coterra Energy, Inc. | | | 22,605 | | | 429,495 |
|
Oil & Gas Storage & Transportation–0.24% |
| | |
Energy Transfer L.P. | | | 58,436 | | | 480,928 |
|
Pharmaceuticals–2.19% |
AstraZeneca PLC, ADR (United Kingdom) | | | 16,954 | | | 987,571 |
Bayer AG (Germany) | | | 12,769 | | | 683,582 |
Catalent, Inc.(b) | | | 6,562 | | | 840,133 |
Eli Lilly and Co. | | | 5,220 | | | 1,441,868 |
| | |
Organon & Co. | | | 15,521 | | | 472,614 |
| | |
| | | | | | | 4,425,768 |
|
Property & Casualty Insurance–0.59% |
Allstate Corp. (The) | | | 10,213 | | | 1,201,559 |
| | | | | | |
| | | Shares | | | Value |
Regional Banks–1.31% |
East West Bancorp, Inc. | | | 8,757 | | | $ 689,001 |
First Citizens BancShares, Inc., Class A | | | 1,020 | | | 846,437 |
| | |
Signature Bank | | | 3,464 | | | 1,120,500 |
| | |
| | | | | | | 2,655,938 |
|
Restaurants–0.65% |
| | |
Starbucks Corp. | | | 11,177 | | | 1,307,374 |
|
Semiconductor Equipment–0.92% |
| | |
Applied Materials, Inc. | | | 11,830 | | | 1,861,569 |
|
Semiconductors–3.10% |
Advanced Micro Devices, Inc.(b) | | | 12,348 | | | 1,776,877 |
NVIDIA Corp. | | | 8,190 | | | 2,408,761 |
| | |
QUALCOMM, Inc. | | | 11,393 | | | 2,083,438 |
| | |
| | | | | | | 6,269,076 |
|
Soft Drinks–0.77% |
Coca-Cola Co. (The) | | | 26,456 | | | 1,566,460 |
| | |
Specialty Chemicals–0.48% | | | | | | |
Diversey Holdings Ltd.(b) | | | 32,753 | | | 435,942 |
| | |
NewMarket Corp. | | | 1,554 | | | 532,587 |
| | |
| | | | | | | 968,529 |
|
Specialty Stores–0.54% |
| | |
Tractor Supply Co. | | | 4,583 | | | 1,093,504 |
|
Systems Software–4.53% |
BlackBerry Ltd. (Canada)(b) | | | 21,186 | | | 198,089 |
Microsoft Corp. | | | 18,439 | | | 6,201,405 |
| | |
VMware, Inc., Class A | | | 23,860 | | | 2,764,897 |
| | |
| | | | | | | 9,164,391 |
|
Technology Hardware, Storage & Peripherals–2.09% |
| | |
Apple, Inc. | | | 23,800 | | | 4,226,166 |
Total Common Stocks & Other Equity Interests
(Cost $66,885,093) | | | 103,355,223 |
| | |
| | | Principal
Amount | | | |
U.S. Dollar Denominated Bonds & Notes–21.78% |
Advertising–0.04% | | | | | | |
Interpublic Group of Cos., Inc. (The), 4.20%, 04/15/2024 | | $ | 27,000 | | | 28,837 |
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | | | 50,000 | | | 52,893 |
| | |
| | | | | | | 81,730 |
|
Aerospace & Defense–0.10% |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, 12/15/2025(c) | | | 39,000 | | | 41,839 |
Boeing Co. (The), 2.20%, 02/04/2026 | | | 112,000 | | | 112,065 |
L3Harris Technologies, Inc., 3.85%, 06/15/2023 | | | 53,000 | | | 55,068 |
| | |
| | | | | | | 208,972 |
|
Agricultural Products–0.10% |
Bunge Ltd. Finance Corp., 2.75%, 05/14/2031 | | | 193,000 | | | 196,081 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Airlines–0.42% |
American Airlines Pass-Through Trust, | | | | | | |
Series 2021-1, Class B, 3.95%, 07/11/2030 | | $ | 106,000 | | | $ 105,349 |
Series 2021-1, Class A, 2.88%, 07/11/2034 | | | 143,000 | | | 142,258 |
British Airways Pass-Through Trust (United Kingdom), Series 2021-1, Class A, 2.90%, 03/15/2035(c) | | | 66,993 | | | 66,989 |
Delta Air Lines, Inc./SkyMiles IP Ltd., | | | | | | |
4.50%, 10/20/2025(c) | | | 118,121 | | | 124,220 |
4.75%, 10/20/2028(c) | | | 231,481 | | | 252,958 |
United Airlines Pass-Through Trust, Series 2020-1, Class A, 5.88%, 10/15/2027 | | | 152,658 | | | 167,506 |
| | | | | | | 859,280 |
|
Apparel Retail–0.03% |
Ross Stores, Inc., 3.38%, 09/15/2024 | | | 59,000 | | | 61,916 |
|
Application Software–0.15% |
salesforce.com, inc., | | | | | | |
2.90%, 07/15/2051 | | | 183,000 | | | 186,711 |
3.05%, 07/15/2061 | | | 111,000 | | | 114,500 |
| | | | | | | 301,211 |
|
Asset Management & Custody Banks–0.38% |
| | |
Ares Capital Corp., 2.88%, 06/15/2028 | | | 120,000 | | | 119,557 |
Bank of New York Mellon Corp. (The), Series I, 3.75%(d)(e) | | | 290,000 | | | 291,760 |
BlackRock, Inc., 2.10%, 02/25/2032 | | | 116,000 | | | 115,192 |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 48,000 | | | 51,342 |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 85,000 | | | 87,314 |
FS KKR Capital Corp., 1.65%, 10/12/2024 | | | 98,000 | | | 96,204 |
| | | | | | | 761,369 |
|
Automobile Manufacturers–0.29% |
Daimler Finance North America LLC (Germany), 2.55%, 08/15/2022(c) | | | 149,000 | | | 150,711 |
General Motors Financial Co., Inc., 4.15%, 06/19/2023 | | | 50,000 | | | 52,019 |
Hyundai Capital America, | | | | | | |
5.75%, 04/06/2023(c) | | | 64,000 | | | 67,587 |
4.13%, 06/08/2023(c) | | | 63,000 | | | 65,476 |
2.00%, 06/15/2028(c) | | | 128,000 | | | 124,889 |
Nissan Motor Acceptance Co. LLC, 1.85%, 09/16/2026(c) | | | 129,000 | | | 125,996 |
| | | | | | | 586,678 |
|
Automotive Retail–0.09% |
Advance Auto Parts, Inc., 1.75%, 10/01/2027 | | | 180,000 | | | 175,056 |
|
Biotechnology–0.05% |
AbbVie, Inc., 3.85%, 06/15/2024 | | | 101,000 | | | 106,970 |
| | |
Brewers–0.02% | | | | | | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | 30,000 | | | 48,798 |
| | | | | | |
| | | Principal
Amount | | | Value |
Building Products–0.05% |
Johnson Controls International PLC/Tyco Fire & Security Finance S.C.A., 2.00%, 09/16/2031 | | $ | 51,000 | | | $ 49,444 |
Masco Corp., 1.50%, 02/15/2028 | | | 64,000 | | | 61,994 |
| | | | | | | 111,438 |
|
Cable & Satellite–0.48% |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | | | | | | |
1.78% (3 mo. USD LIBOR + 1.65%), 02/01/2024(f) | | | 128,000 | | | 130,835 |
3.50%, 06/01/2041 | | | 78,000 | | | 76,185 |
3.50%, 03/01/2042 | | | 139,000 | | | 135,063 |
3.90%, 06/01/2052 | | | 109,000 | | | 109,513 |
3.85%, 04/01/2061 | | | 99,000 | | | 93,639 |
4.40%, 12/01/2061 | | | 52,000 | | | 53,926 |
Comcast Corp., 2.65%, 08/15/2062 | | | 64,000 | | | 56,932 |
Cox Communications, Inc., | | | | | | |
| | |
2.60%, 06/15/2031(c) | | | 100,000 | | | 99,997 |
| | |
3.60%, 06/15/2051(c) | | | 213,000 | | | 223,600 |
| | | | | | | 979,690 |
|
Communications Equipment–0.02% |
Motorola Solutions, Inc., 4.60%, 02/23/2028 | | | 41,000 | | | 46,328 |
|
Computer & Electronics Retail–0.11% |
Dell International LLC/EMC Corp., | | | | | | |
5.30%, 10/01/2029 | | | 61,000 | | | 71,574 |
3.45%, 12/15/2051(c) | | | 94,000 | | | 90,413 |
Leidos, Inc., 2.30%, 02/15/2031 | | | 73,000 | | | 70,402 |
| | | | | | | 232,389 |
|
Consumer Finance–0.06% |
Ally Financial, Inc., 2.20%, 11/02/2028 | | | 73,000 | | | 72,572 |
Synchrony Financial, 4.25%, 08/15/2024 | | | 39,000 | | | 41,331 |
| | | | | | | 113,903 |
|
Data Processing & Outsourced Services–0.03% |
Mastercard, Inc., 2.00%, 11/18/2031 | | | 55,000 | | | 54,882 |
|
Distillers & Vintners–0.07% |
Pernod Ricard S.A. (France), 4.25%, 07/15/2022(c) | | | 134,000 | | | 136,635 |
|
Diversified Banks–4.90% |
ASB Bank Ltd. (New Zealand), 2.38%, 10/22/2031(c) | | | 200,000 | | | 199,018 |
Bank of America Corp., | | | | | | |
3.37%, 01/23/2026(d) | | | 49,000 | | | 51,583 |
3.82%, 01/20/2028(d) | | | 31,000 | | | 33,592 |
4.27%, 07/23/2029(d) | | | 27,000 | | | 30,123 |
2.59%, 04/29/2031(d) | | | 41,000 | | | 41,462 |
2.69%, 04/22/2032(d) | | | 185,000 | | | 187,940 |
2.30%, 07/21/2032(d) | | | 89,000 | | | 87,601 |
2.57%, 10/20/2032(d) | | | 105,000 | | | 105,581 |
2.48%, 09/21/2036(d) | | | 144,000 | | | 139,641 |
7.75%, 05/14/2038 | | | 115,000 | | | 180,482 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Diversified Banks–(continued) |
Barclays PLC (United Kingdom), | | | | | | |
| | |
2.28%, 11/24/2027(d) | | $ | 200,000 | | | $ 200,474 |
3.33%, 11/24/2042(d) | | | 200,000 | | | 203,904 |
BPCE S.A. (France), | | | | | | |
| | |
4.50%, 03/15/2025(c) | | | 184,000 | | | 198,426 |
2.05%, 10/19/2027(c)(d) | | | 250,000 | | | 247,997 |
Citigroup, Inc., | | | | | | |
3.11%, 04/08/2026(d) | | | 54,000 | | | 56,647 |
4.08%, 04/23/2029(d) | | | 44,000 | | | 48,562 |
4.41%, 03/31/2031(d) | | | 46,000 | | | 52,588 |
2.56%, 05/01/2032(d) | | | 119,000 | | | 119,743 |
2.52%, 11/03/2032(d) | | | 70,000 | | | 69,994 |
2.90%, 11/03/2042(d) | | | 105,000 | | | 104,163 |
3.88%(d)(e)(g) | | | 309,000 | | | 309,773 |
Series V, 4.70%(d)(e) | | | 160,000 | | | 162,032 |
Series Y, 4.15%(d)(e) | | | 146,000 | | | 148,738 |
Commonwealth Bank of Australia (Australia), | | | | | | |
2.69%, 03/11/2031(c) | | | 200,000 | | | 196,888 |
3.31%, 03/11/2041(c) | | | 200,000 | | | 204,252 |
Credit Agricole S.A. (France), | | | | | | |
4.38%, 03/17/2025(c) | | | 304,000 | | | 326,947 |
7.88%(c)(d)(e) | | | 200,000 | | | 219,494 |
| | |
Danske Bank A/S (Denmark), 1.55%, 09/10/2027(c)(d) | | | 200,000 | | | 195,517 |
| | |
Discover Bank, 4.65%, 09/13/2028 | | | 122,000 | | | 138,550 |
HSBC Holdings PLC (United Kingdom), | | | | | | |
3.95%, 05/18/2024(d) | | | 109,000 | | | 113,075 |
2.25%, 11/22/2027(d) | | | 200,000 | | | 200,534 |
4.04%, 03/13/2028(d) | | | 135,000 | | | 146,031 |
4.58%, 06/19/2029(d) | | | 183,000 | | | 205,171 |
2.87%, 11/22/2032(d) | | | 200,000 | | | 201,880 |
4.60%(d)(e) | | | 225,000 | | | 225,378 |
6.25%(d)(e) | | | 203,000 | | | 211,120 |
ING Groep N.V. (Netherlands), | | | | | | |
1.06% (SOFR + 1.01%), 04/01/2027(f) | | | 308,000 | | | 310,928 |
6.88%(c)(d)(e) | | | 200,000 | | | 203,500 |
Series NC10, 4.25%(d)(e) | | | 171,000 | | | 161,595 |
JPMorgan Chase & Co., | | | | | | |
3.80%, 07/23/2024(d) | | | 68,000 | | | 70,893 |
2.08%, 04/22/2026(d) | | | 73,000 | | | 74,148 |
3.78%, 02/01/2028(d) | | | 55,000 | | | 59,581 |
3.54%, 05/01/2028(d) | | | 42,000 | | | 45,647 |
2.58%, 04/22/2032(d) | | | 116,000 | | | 117,614 |
3.11%, 04/22/2041(d) | | | 45,000 | | | 46,698 |
Mizuho Financial Group, Inc. (Japan), 2.56%, 09/13/2031 | | | 200,000 | | | 195,148 |
National Australia Bank Ltd. (Australia), 3.93%,
08/02/2034(c)(d) | | | 154,000 | | | 163,420 |
| | |
Nordea Bank Abp (Finland),
3.75%(c)(d)(e) | | | 210,000 | | | 199,605 |
| | |
PNC Bank N.A., 2.50%, 08/27/2024 | | | 252,000 | | | 260,347 |
Royal Bank of Canada (Canada), | | | | | | |
| | |
3.70%, 10/05/2023 | | | 46,000 | | | 48,270 |
2.30%, 11/03/2031 | | | 33,000 | | | 33,191 |
Standard Chartered PLC (United Kingdom), 2.68%, 06/29/2032(c)(d) | | | 200,000 | | | 196,714 |
| | | | | | |
| | | Principal
Amount | | | Value |
Diversified Banks–(continued) |
Sumitomo Mitsui Financial Group, Inc. (Japan), | | | | | | |
1.47%, 07/08/2025 | | $ | 200,000 | | | $ 199,120 |
2.14%, 09/23/2030 | | | 112,000 | | | 107,746 |
2.22%, 09/17/2031 | | | 200,000 | | | 196,390 |
| | |
Sumitomo Mitsui Trust Bank Ltd. (Japan), 1.35%, 09/16/2026(c)(g) | | | 385,000 | | | 378,862 |
| | |
Truist Bank, 2.64%, 09/17/2029(d) | | | 376,000 | | | 386,741 |
U.S. Bancorp, | | | | | | |
Series W, 3.10%, 04/27/2026 | | | 39,000 | | | 41,254 |
1.38%, 07/22/2030 | | | 41,000 | | | 38,622 |
2.49%, 11/03/2036(d) | | | 218,000 | | | 217,401 |
3.70%(d)(e)(g) | | | 320,000 | | | 320,736 |
Wells Fargo & Co., | | | | | | |
3.58%, 05/22/2028(d) | | | 41,000 | | | 44,108 |
4.75%, 12/07/2046 | | | 30,000 | | | 37,530 |
Series BB, 3.90%(d)(e) | | | 128,000 | | | 131,600 |
Westpac Banking Corp. (Australia), 3.13%, 11/18/2041 | | | 71,000 | | | 70,501 |
| | | | | | | 9,922,811 |
|
Diversified Capital Markets–0.61% |
| | |
Credit Suisse AG (Switzerland), 3.63%, 09/09/2024 | | | 197,000 | | | 209,025 |
Credit Suisse Group AG (Switzerland), | | | | | | |
| | |
4.55%, 04/17/2026 | | | 154,000 | | | 169,844 |
4.19%, 04/01/2031(c)(d) | | | 250,000 | | | 276,005 |
5.10%(c)(d)(e) | | | 201,000 | | | 201,754 |
UBS Group AG (Switzerland), | | | | | | |
| | |
4.13%, 04/15/2026(c) | | | 160,000 | | | 174,771 |
4.38%(c)(d)(e) | | | 200,000 | | | 198,060 |
| | | | | | | 1,229,459 |
|
Diversified Chemicals–0.02% |
Dow Chemical Co. (The), 3.63%, 05/15/2026 | | | 34,000 | | | 36,664 |
|
Diversified Metals & Mining–0.06% |
Rio Tinto Finance USA Ltd. (Australia), 2.75%, 11/02/2051 | | | 132,000 | | | 131,112 |
|
Diversified REITs–0.15% |
| | |
American Campus Communities Operating Partnership L.P., 2.25%, 01/15/2029 | | | 66,000 | | | 65,334 |
Brixmor Operating Partnership L.P., | | | | | | |
4.13%, 05/15/2029 | | | 27,000 | | | 29,940 |
4.05%, 07/01/2030 | | | 41,000 | | | 44,788 |
2.50%, 08/16/2031 | | | 58,000 | | | 56,822 |
CubeSmart L.P., | | | | | | |
| | |
2.25%, 12/15/2028 | | | 39,000 | | | 39,038 |
2.50%, 02/15/2032 | | | 71,000 | | | 70,769 |
| | | | | | | 306,691 |
| | |
Drug Retail–0.14% | | | | | | |
CK Hutchison International 21 Ltd. (United Kingdom), 1.50%, 04/15/2026(c) | | | 280,000 | | | 276,457 |
| | |
Electric Utilities–0.44% | | | | | | |
| | |
AEP Texas, Inc., 3.95%, 06/01/2028(c) | | | 172,000 | | | 188,596 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Electric Utilities–(continued) |
Duke Energy Corp., 3.25%, 01/15/2082(d) | | $ | 89,000 | | | $ 86,794 |
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(c) | | | 231,000 | | | 242,556 |
Enel Finance International N.V. (Italy), 2.88%, 07/12/2041(c) | | | 200,000 | | | 192,129 |
PacifiCorp, 2.90%, 06/15/2052 | | | 108,000 | | | 106,262 |
Southern Co. (The), Series 21-A, 3.75%, 09/15/2051(d) | | | 68,000 | | | 68,170 |
| | | | 884,507 |
|
Electronic Equipment & Instruments–0.08% |
Vontier Corp., |
2.40%, 04/01/2028(c) | | | 85,000 | | | 82,273 |
2.95%, 04/01/2031(c) | | | 86,000 | | | 85,311 |
| | | | 167,584 |
|
Electronic Manufacturing Services–0.03% |
| | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 56,000 | | | 57,614 |
|
Financial Exchanges & Data–0.24% |
| | |
Intercontinental Exchange, Inc., 3.00%, 09/15/2060 | | | 42,000 | | | 41,552 |
Moody’s Corp., |
2.00%, 08/19/2031 | | | 95,000 | | | 92,484 |
2.75%, 08/19/2041 | | | 111,000 | | | 108,534 |
3.10%, 11/29/2061 | | | 241,000 | | | 239,637 |
| | | | 482,207 |
|
Food Retail–0.10% |
Alimentation Couche-Tard, Inc. (Canada), | | | | | | |
3.44%, 05/13/2041(c) | | | 80,000 | | | 82,491 |
3.63%, 05/13/2051(c) | | | 123,000 | | | 129,675 |
| | | | 212,166 |
|
Health Care Distributors–0.04% |
| | |
McKesson Corp., 1.30%, 08/15/2026 | | | 86,000 | | | 84,037 |
|
Health Care REITs–0.10% |
Healthcare Trust of America Holdings L.P., | | | | | | |
3.50%, 08/01/2026 | | | 40,000 | | | 42,692 |
2.00%, 03/15/2031 | | | 41,000 | | | 38,844 |
| | |
Omega Healthcare Investors, Inc., 3.25%, 04/15/2033 | | | 115,000 | | | 112,227 |
| |
| | | | 193,763 |
|
Health Care Services–0.32% |
| | |
Cigna Corp., 4.13%, 11/15/2025 | | | 39,000 | | | 42,682 |
| | |
CVS Health Corp., 1.30%, 08/21/2027 | | | 57,000 | | | 55,303 |
| | |
Fresenius Medical Care US Finance II, Inc. (Germany), 5.88%, 01/31/2022(c) | | | 70,000 | | | 70,251 |
| | |
Fresenius Medical Care US Finance III, Inc. (Germany), 1.88%, 12/01/2026(c) | | | 150,000 | | | 148,477 |
Piedmont Healthcare, Inc., |
Series 2032, 2.04%, 01/01/2032 | | | 58,000 | | | 56,465 |
Series 2042, 2.72%, 01/01/2042 | | | 56,000 | | | 54,785 |
2.86%, 01/01/2052 | | | 65,000 | | | 63,571 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Health Care Services–(continued) |
| | |
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%, 10/01/2051 | | $ | 171,000 | | | $ 165,717 |
| |
| | | | 657,251 |
|
Homebuilding–0.11% |
| | |
D.R. Horton, Inc., 4.75%, 02/15/2023 | | | 46,000 | | | 47,525 |
| | |
M.D.C. Holdings, Inc., 3.97%, 08/06/2061 | | | 183,000 | | | 175,255 |
| |
| | | | 222,780 |
|
Hotels, Resorts & Cruise Lines–0.33% |
Expedia Group, Inc., |
4.63%, 08/01/2027 | | | 39,000 | | | 43,456 |
3.25%, 02/15/2030 | | | 423,000 | | | 432,128 |
2.95%, 03/15/2031 | | | 193,000 | | | 192,926 |
| | | | 668,510 |
|
Independent Power Producers & Energy Traders–0.12% |
AES Corp. (The), |
1.38%, 01/15/2026 | | | 40,000 | | | 38,872 |
2.45%, 01/15/2031 | | | 45,000 | | | 43,890 |
| | |
Deutsche Telekom International Finance B.V. (Germany), 4.38%, 06/21/2028(c) | | | 146,000 | | | 163,125 |
| |
| | | | 245,887 |
|
Industrial Machinery–0.02% |
Flowserve Corp., 2.80%, 01/15/2032 | | | 43,000 | | | 41,887 |
|
Industrial REITs–0.03% |
LXP Industrial Trust, 2.38%, 10/01/2031 | | | 73,000 | | | 70,126 |
|
Insurance Brokers–0.13% |
| | |
Arthur J. Gallagher & Co., 3.50%, 05/20/2051 | | | 70,000 | | | 74,100 |
| | |
Assured Guaranty US Holdings, Inc., 3.60%, 09/15/2051 | | | 50,000 | | | 52,119 |
Marsh & McLennan Cos., Inc., |
2.38%, 12/15/2031 | | | 65,000 | | | 65,692 |
2.90%, 12/15/2051 | | | 65,000 | | | 65,038 |
| | | | 256,949 |
|
Integrated Oil & Gas–0.37% |
BP Capital Markets America, Inc., |
3.06%, 06/17/2041 | | | 150,000 | | | 152,081 |
2.94%, 06/04/2051 | | | 73,000 | | | 70,265 |
3.00%, 03/17/2052 | | | 75,000 | | | 73,558 |
| | |
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(c) | | | 50,000 | | | 50,110 |
Shell International Finance B.V. (Netherlands), | | | | | | |
| | |
2.88%, 11/26/2041 | | | 195,000 | | | 195,548 |
3.00%, 11/26/2051 | | | 195,000 | | | 198,632 |
| | | | 740,194 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Integrated Telecommunication Services–0.86% |
AT&T, Inc., | | | | | | |
0.69% (SOFR + 0.64%), 03/25/2024(f) | | $ | 130,000 | | | $ 130,045 |
4.30%, 02/15/2030 | | | 53,000 | | | 59,712 |
2.55%, 12/01/2033 | | | 229,000 | | | 224,238 |
3.10%, 02/01/2043 | | | 62,000 | | | 60,400 |
3.50%, 09/15/2053 | | | 100,000 | | | 101,078 |
3.50%, 02/01/2061 | | | 39,000 | | | 38,473 |
| | |
NBN Co. Ltd. (Australia), 1.63%, 01/08/2027(c) | | | 200,000 | | | 196,353 |
Verizon Communications, Inc., |
1.75%, 01/20/2031 | | | 37,000 | | | 35,063 |
2.55%, 03/21/2031 | | | 50,000 | | | 50,497 |
2.36%, 03/15/2032(c) | | | 416,000 | | | 410,367 |
2.65%, 11/20/2040 | | | 34,000 | | | 32,365 |
3.40%, 03/22/2041 | | | 53,000 | | | 55,587 |
2.85%, 09/03/2041 | | | 157,000 | | | 155,192 |
2.88%, 11/20/2050 | | | 35,000 | | | 33,309 |
3.55%, 03/22/2051 | | | 27,000 | | | 29,144 |
3.00%, 11/20/2060 | | | 50,000 | | | 47,410 |
3.70%, 03/22/2061 | | | 68,000 | | | 73,879 |
| | | | 1,733,112 |
|
Interactive Home Entertainment–0.05% |
| | |
Electronic Arts, Inc., 1.85%, 02/15/2031 | | | 100,000 | | | 95,950 |
|
Internet & Direct Marketing Retail–0.15% |
Amazon.com, Inc., |
2.88%, 05/12/2041 | | | 134,000 | | | 139,414 |
3.10%, 05/12/2051 | | | 162,000 | | | 173,386 |
| | | | 312,800 |
|
Internet Services & Infrastructure–0.03% |
| | |
VeriSign, Inc., 2.70%, 06/15/2031 | | | 71,000 | | | 71,457 |
|
Investment Banking & Brokerage–1.42% |
| | |
Brookfield Finance I (UK) PLC (Canada), 2.34%, 01/30/2032 | | | 113,000 | | | 110,346 |
Goldman Sachs Group, Inc. (The), | | | | | | |
0.63% (SOFR + 0.58%), 03/08/2024(f) | | | 229,000 | | | 229,046 |
3.50%, 04/01/2025 | | | 50,000 | | | 52,909 |
3.50%, 11/16/2026 | | | 27,000 | | | 28,789 |
0.84% (SOFR + 0.79%), 12/09/2026(f) | | | 451,000 | | | 454,050 |
1.09%, 12/09/2026(d) | | | 64,000 | | | 62,399 |
0.86% (SOFR + 0.81%), 03/09/2027(f) | | | 410,000 | | | 412,502 |
0.97% (SOFR + 0.92%), 10/21/2027(f) | | | 334,000 | | | 335,955 |
1.95%, 10/21/2027(d) | | | 104,000 | | | 103,590 |
1.99%, 01/27/2032(d) | | | 70,000 | | | 67,185 |
2.62%, 04/22/2032(d) | | | 46,000 | | | 46,379 |
2.38%, 07/21/2032(d) | | | 89,000 | | | 87,703 |
2.65%, 10/21/2032(d) | | | 126,000 | | | 126,915 |
3.21%, 04/22/2042(d) | | | 50,000 | | | 51,951 |
2.91%, 07/21/2042(d) | | | 71,000 | | | 70,723 |
Series V, 4.13%(d)(e) | | | 91,000 | | | 92,564 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Investment Banking & Brokerage–(continued) |
Morgan Stanley, |
5.00%, 11/24/2025 | | $ | 50,000 | | | $ 56,025 |
2.19%, 04/28/2026(d) | | | 35,000 | | | 35,713 |
3.62%, 04/01/2031(d) | | | 47,000 | | | 51,268 |
2.24%, 07/21/2032(d) | | | 146,000 | | | 142,954 |
2.51%, 10/20/2032(d) | | | 79,000 | | | 79,009 |
2.48%, 09/16/2036(d) | | | 179,000 | | | 172,557 |
| | | | 2,870,532 |
|
IT Consulting & Other Services–0.07% |
| | |
DXC Technology Co., 2.38%, 09/15/2028 | | | 139,000 | | | 135,988 |
|
Life & Health Insurance–1.14% |
| | |
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | | | 66,000 | | | 74,789 |
Athene Global Funding, |
1.20%, 10/13/2023(c) | | | 94,000 | | | 94,170 |
1.45%, 01/08/2026(c) | | | 45,000 | | | 44,243 |
2.95%, 11/12/2026(c) | | | 78,000 | | | 81,593 |
Athene Holding Ltd., |
6.15%, 04/03/2030 | | | 50,000 | | | 61,924 |
3.95%, 05/25/2051 | | | 20,000 | | | 21,627 |
3.45%, 05/15/2052 | | | 149,000 | | | 150,023 |
| | |
Brighthouse Financial Global Funding, 1.20%, 12/15/2023(c) | | | 156,000 | | | 156,332 |
| | |
Brighthouse Financial, Inc., 3.85%, 12/22/2051 | | | 207,000 | | | 204,643 |
| | |
F&G Global Funding, 2.00%, 09/20/2028(c) | | | 132,000 | | | 128,436 |
| | |
GA Global Funding Trust, 1.95%, 09/15/2028(c) | | | 212,000 | | | 206,183 |
| | |
MAG Mutual Holding Co., 4.75%, 04/30/2041(h) | | | 509,000 | | | 512,792 |
| | |
Manulife Financial Corp. (Canada), 4.06%, 02/24/2032(d) | | | 37,000 | | | 39,837 |
| | |
Maple Grove Funding Trust I, 4.16%, 08/15/2051(c) | | | 326,000 | | | 336,734 |
| | |
Pacific LifeCorp, 3.35%, 09/15/2050(c) | | | 53,000 | | | 57,132 |
| | |
Prudential Financial, Inc., 5.20%, 03/15/2044(d) | | | 75,000 | | | 78,152 |
| | |
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(c) | | | 53,000 | | | 55,224 |
| |
| | | | 2,303,834 |
|
Life Sciences Tools & Services–0.02% |
| | |
Illumina, Inc., 2.55%, 03/23/2031 | | | 46,000 | | | 46,037 |
|
Managed Health Care–0.14% |
Kaiser Foundation Hospitals, |
Series 2021,
2.81%, 06/01/2041 | | | 135,000 | | | 135,985 |
3.00%, 06/01/2051 | | | 140,000 | | | 144,432 |
| | | | 280,417 |
|
Multi-line Insurance–0.10% |
| | |
Allianz SE (Germany), 3.20%(c)(d)(e) | | | 203,000 | | | 195,387 |
|
Multi-Utilities–0.07% |
| | |
Ameren Corp., 2.50%, 09/15/2024 | | | 31,000 | | | 31,850 |
| | |
Dominion Energy, Inc., Series C, 3.38%, 04/01/2030 | | | 39,000 | | | 41,432 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Multi-Utilities–(continued) |
WEC Energy Group, Inc., |
1.38%, 10/15/2027 | | $ | 39,000 | | | $ 37,639 |
1.80%, 10/15/2030 | | | 34,000 | | | 32,139 |
| | | | 143,060 |
|
Office REITs–0.18% |
Office Properties Income Trust, |
4.25%, 05/15/2024 | | | 161,000 | | | 167,984 |
4.50%, 02/01/2025 | | | 83,000 | | | 87,539 |
2.65%, 06/15/2026 | | | 23,000 | | | 22,849 |
2.40%, 02/01/2027 | | | 89,000 | | | 86,208 |
| | | | 364,580 |
|
Oil & Gas Exploration & Production–0.14% |
| | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 72,000 | | | 72,751 |
| | |
Cheniere Corpus Christi Holdings LLC, 2.74%, 12/31/2039(c) | | | 96,000 | | | 93,782 |
Continental Resources, Inc., | | | | | | |
2.27%, 11/15/2026(c) | | | 52,000 | | | 51,665 |
2.88%, 04/01/2032(c) | | | 66,000 | | | 64,660 |
| | | | 282,858 |
|
Oil & Gas Storage & Transportation–0.44% |
| | |
El Paso Natural Gas Co. LLC, 8.38%, 06/15/2032 | | | 50,000 | | | 71,802 |
Enbridge, Inc. (Canada), |
1.60%, 10/04/2026 | | | 62,000 | | | 61,151 |
3.40%, 08/01/2051 | | | 63,000 | | | 64,015 |
Energy Transfer L.P., |
4.25%, 03/15/2023 | | | 41,000 | | | 42,141 |
4.00%, 10/01/2027 | | | 32,000 | | | 34,386 |
| | |
Kinder Morgan, Inc., 7.75%, 01/15/2032 | | | 81,000 | | | 113,919 |
MPLX L.P., |
1.75%, 03/01/2026 | | | 52,000 | | | 51,530 |
4.25%, 12/01/2027 | | | 29,000 | | | 32,146 |
| | |
ONEOK, Inc., 6.35%, 01/15/2031 | | | 70,000 | | | 87,985 |
Williams Cos., Inc. (The), |
3.70%, 01/15/2023 | | | 53,000 | | | 54,180 |
2.60%, 03/15/2031 | | | 179,000 | | | 177,970 |
3.50%, 10/15/2051 | | | 92,000 | | | 93,168 |
| | | | 884,393 |
|
Other Diversified Financial Services–1.29% |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), | | | | | | |
2.45%, 10/29/2026 | | | 187,000 | | | 188,641 |
3.00%, 10/29/2028 | | | 154,000 | | | 156,297 |
3.30%, 01/30/2032 | | | 211,000 | | | 215,138 |
3.40%, 10/29/2033 | | | 162,000 | | | 165,137 |
3.85%, 10/29/2041 | | | 160,000 | | | 166,956 |
Avolon Holdings Funding Ltd. (Ireland), |
2.13%, 02/21/2026(c) | | | 56,000 | | | 55,015 |
2.75%, 02/21/2028(c) | | | 69,000 | | | 67,753 |
Blackstone Holdings Finance Co. LLC, |
1.60%, 03/30/2031(c) | | | 73,000 | | | 68,025 |
2.80%, 09/30/2050(c) | | | 33,000 | | | 31,584 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Other Diversified Financial Services–(continued) |
Blackstone Private Credit Fund, |
1.75%, 09/15/2024(c) | | $ | 32,000 | | | $ 31,494 |
2.35%, 11/22/2024(c) | | | 124,000 | | | 123,986 |
2.63%, 12/15/2026(c) | | | 239,000 | | | 233,141 |
3.25%, 03/15/2027(c) | | | 136,000 | | | 137,488 |
Blackstone Secured Lending Fund, |
2.75%, 09/16/2026 | | | 195,000 | | | 195,176 |
2.13%, 02/15/2027(c) | | | 127,000 | | | 123,691 |
2.85%, 09/30/2028(c) | | | 80,000 | | | 78,053 |
| | |
Blue Owl Finance LLC, 3.13%, 06/10/2031(c) | | | 112,000 | | | 109,717 |
| | |
KKR Group Finance Co. X LLC, 3.25%, 12/15/2051(c) | | | 68,000 | | | 67,935 |
LSEGA Financing PLC (United Kingdom), | | | | | | |
| | |
1.38%, 04/06/2026(c) | | | 200,000 | | | 196,217 |
2.00%, 04/06/2028(c) | | | 203,000 | | | 200,527 |
| | | | 2,611,971 |
|
Packaged Foods & Meats–0.13% |
| | |
Conagra Brands, Inc., 4.60%, 11/01/2025 | | | 50,000 | | | 55,020 |
| | |
General Mills, Inc., 2.25%, 10/14/2031 | | | 58,000 | | | 57,374 |
| | |
JDE Peet’s N.V. (Netherlands), 1.38%, 01/15/2027(c) | | | 150,000 | | | 144,937 |
| |
| | | | 257,331 |
|
Paper Packaging–0.21% |
| | |
Berry Global, Inc., 1.65%, 01/15/2027 | | | 325,000 | | | 318,004 |
| | |
Packaging Corp. of America, 3.65%, 09/15/2024 | | | 43,000 | | | 45,449 |
| | |
Sealed Air Corp., 1.57%, 10/15/2026(c) | | | 70,000 | | | 67,911 |
| |
| | | | 431,364 |
|
Pharmaceuticals–0.37% |
| | |
Bayer US Finance II LLC (Germany), 3.88%, 12/15/2023(c) | | | 335,000 | | | 350,240 |
| | |
Mayo Clinic, Series 2021, 3.20%, 11/15/2061 | | | 110,000 | | | 118,599 |
| | |
Mylan, Inc., 3.13%, 01/15/2023(c) | | | 50,000 | | | 51,053 |
| | |
Royalty Pharma PLC, 2.15%, 09/02/2031 | | | 50,000 | | | 47,286 |
| | |
Takeda Pharmaceutical Co. Ltd. (Japan), 5.00%, 11/26/2028 | | | 160,000 | | | 188,127 |
| |
| | | | 755,305 |
|
Precious Metals & Minerals–0.04% |
| | |
Anglo American Capital PLC (South Africa), 3.63%, 09/11/2024(c) | | | 86,000 | | | 90,332 |
|
Property & Casualty Insurance–0.34% |
Chubb INA Holdings, Inc., |
2.85%, 12/15/2051 | | | 38,000 | | | 38,192 |
3.05%, 12/15/2061 | | | 86,000 | | | 88,006 |
| | |
CNA Financial Corp., 3.45%, 08/15/2027 | | | 35,000 | | | 37,690 |
Fidelity National Financial, Inc., |
3.40%, 06/15/2030 | | | 34,000 | | | 35,938 |
2.45%, 03/15/2031 | | | 54,000 | | | 53,059 |
3.20%, 09/17/2051 | | | 49,000 | | | 46,940 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Property & Casualty Insurance–(continued) |
First American Financial Corp., 2.40%, 08/15/2031 | | $ | 93,000 | | | $ 91,089 |
Stewart Information Services Corp., 3.60%, 11/15/2031 | | | 131,000 | | | 132,789 |
W.R. Berkley Corp., |
3.55%, 03/30/2052 | | | 77,000 | | | 84,376 |
3.15%, 09/30/2061 | | | 83,000 | | | 79,041 |
| | | | 687,120 |
|
Railroads–0.07% |
Canadian Pacific Railway Co. (Canada), 1.75%, 12/02/2026 | | | 105,000 | | | 105,436 |
Union Pacific Corp., 2.15%, 02/05/2027 | | | 33,000 | | | 33,914 |
| | | | 139,350 |
|
Real Estate Development–0.04% |
Essential Properties L.P., 2.95%, 07/15/2031 | | | 73,000 | | | 72,031 |
|
Regional Banks–1.15% |
Citizens Financial Group, Inc., | | | | | | |
4.30%, 12/03/2025 | | | 180,000 | | | 195,770 |
3.25%, 04/30/2030 | | | 23,000 | | | 24,316 |
2.64%, 09/30/2032 | | | 285,000 | | | 281,985 |
Fifth Third Bank N.A., 3.85%, 03/15/2026 | | | 160,000 | | | 172,758 |
Huntington Bancshares, Inc., | | | | | | |
4.00%, 05/15/2025 | | | 53,000 | | | 57,048 |
2.49%, 08/15/2036(c)(d) | | | 90,000 | | | 86,330 |
M&T Bank Corp., 3.50%(d)(e) | | | 168,000 | | | 165,026 |
PNC Financial Services Group, Inc. (The), 3.15%, 05/19/2027 | | | 40,000 | | | 43,140 |
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | | | 39,000 | | | 40,673 |
SVB Financial Group, |
2.10%, 05/15/2028 | | | 66,000 | | | 66,075 |
1.80%, 02/02/2031 | | | 88,000 | | | 83,513 |
4.10%(d)(e) | | | 144,000 | | | 143,136 |
Series C, 4.00%(d)(e) | | | 294,000 | | | 295,838 |
Series D, 4.25%(d)(e) | | | 244,000 | | | 247,874 |
Series E, 4.70%(d)(e) | | | 164,000 | | | 169,014 |
Zions Bancorporation N.A., 3.25%, 10/29/2029 | | | 250,000 | | | 258,796 |
| |
| | | | 2,331,292 |
|
Reinsurance–0.05% |
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | | 50,000 | | | 49,403 |
Global Atlantic Fin Co., 3.13%, 06/15/2031(c) | | | 62,000 | | | 61,437 |
| |
| | | | 110,840 |
|
Residential REITs–0.16% |
American Homes 4 Rent L.P., | | | | | | |
2.38%, 07/15/2031 | | | 25,000 | | | 24,545 |
3.38%, 07/15/2051 | | | 24,000 | | | 24,173 |
Invitation Homes Operating Partnership L.P., | | | | | | |
2.30%, 11/15/2028 | | | 35,000 | | | 34,648 |
2.70%, 01/15/2034 | | | 112,000 | | | 109,990 |
Mid-America Apartments L.P., 2.88%, 09/15/2051 | | | 25,000 | | | 24,699 |
| | | | | | |
| | | Principal | | | |
| | | Amount | | | Value |
Residential REITs–(continued) |
Spirit Realty L.P., 3.20%, 01/15/2027 | | $ | 37,000 | | | $ 38,733 |
Sun Communities Operating L.P., |
2.30%, 11/01/2028 | | | 39,000 | | | 38,983 |
2.70%, 07/15/2031 | | | 28,000 | | | 27,803 |
| | | | 323,574 |
|
Retail REITs–0.47% |
Agree L.P., |
2.00%, 06/15/2028 | | | 50,000 | | | 49,021 |
2.60%, 06/15/2033 | | | 66,000 | | | 64,890 |
Kimco Realty Corp., |
1.90%, 03/01/2028 | | | 64,000 | | | 63,394 |
2.70%, 10/01/2030 | | | 30,000 | | | 30,483 |
2.25%, 12/01/2031 | | | 105,000 | | | 102,428 |
Kite Realty Group L.P., 4.00%, 10/01/2026 | | | 99,000 | | | 105,140 |
Kite Realty Group Trust, 4.75%, 09/15/2030 | | | 36,000 | | | 39,881 |
National Retail Properties, Inc., 3.50%, 04/15/2051 | | | 77,000 | | | 79,467 |
Realty Income Corp., |
2.20%, 06/15/2028 | | | 34,000 | | | 34,345 |
3.25%, 01/15/2031 | | | 42,000 | | | 45,212 |
2.85%, 12/15/2032 | | | 31,000 | | | 32,208 |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 44,000 | | | 45,714 |
Scentre Group Trust 2 (Australia), 4.75%, 09/24/2080(c)(d) | | | 133,000 | | | 139,317 |
Simon Property Group L.P., 1.38%, 01/15/2027 | | | 120,000 | | | 117,269 |
| | | | 948,769 |
|
Semiconductors–0.54% |
Broadcom, Inc., |
4.15%, 11/15/2030 | | | 74,000 | | | 82,136 |
2.45%, 02/15/2031(c) | | | 50,000 | | | 49,079 |
3.42%, 04/15/2033(c) | | | 65,000 | | | 68,213 |
3.47%, 04/15/2034(c) | | | 163,000 | | | 170,823 |
3.14%, 11/15/2035(c) | | | 268,000 | | | 269,885 |
Marvell Technology, Inc., 2.95%, 04/15/2031 | | | 148,000 | | | 150,961 |
Micron Technology, Inc., |
2.70%, 04/15/2032 | | | 69,000 | | | 69,197 |
3.37%, 11/01/2041 | | | 48,000 | | | 49,359 |
QUALCOMM, Inc., |
2.15%, 05/20/2030 | | | 62,000 | | | 62,601 |
3.25%, 05/20/2050 | | | 60,000 | | | 66,045 |
Skyworks Solutions, Inc., |
1.80%, 06/01/2026 | | | 20,000 | | | 19,818 |
3.00%, 06/01/2031 | | | 43,000 | | | 43,387 |
| | | | 1,101,504 |
|
Specialized REITs–0.33% |
| American Tower Corp., |
3.00%, 06/15/2023 | | | 51,000 | | | 52,456 |
4.00%, 06/01/2025 | | | 27,000 | | | 28,916 |
2.70%, 04/15/2031 | | | 143,000 | | | 143,586 |
2.95%, 01/15/2051 | | | 80,000 | | | 76,000 |
Crown Castle International Corp., 2.50%, 07/15/2031 | | | 138,000 | | | 137,129 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Specialized REITs–(continued) |
Extra Space Storage L.P., 2.35%, 03/15/2032 | | $ | 118,000 | | | $ 114,843 |
Life Storage L.P., 2.40%, 10/15/2031 | | | 109,000 | | | 107,261 |
| | | | | | | 660,191 |
|
Systems Software–0.05% |
VMware, Inc., | | | | | | |
3.90%, 08/21/2027 | | | 27,000 | | | 29,417 |
2.20%, 08/15/2031 | | | 67,000 | | | 65,880 |
| | | | | | | 95,297 |
|
Technology Hardware, Storage & Peripherals–0.20% |
Apple, Inc., | | | | | | |
4.38%, 05/13/2045 | | | 29,000 | | | 36,655 |
2.55%, 08/20/2060 | | | 185,000 | | | 174,335 |
2.80%, 02/08/2061 | | | 201,000 | | | 200,087 |
| | | | | | | 411,077 |
|
Thrifts & Mortgage Finance–0.08% |
| | |
Nationwide Building Society (United Kingdom), 3.96%, 07/18/2030(c)(d) | | | 150,000 | | | 164,956 |
| | |
Tobacco–0.29% | | | | | | |
Altria Group, Inc., | | | | | | |
2.45%, 02/04/2032 | | | 81,000 | | | 76,989 |
3.70%, 02/04/2051 | | | 95,000 | | | 88,726 |
4.00%, 02/04/2061 | | | 96,000 | | | 91,970 |
Imperial Brands Finance PLC (United Kingdom), 3.75%, 07/21/2022(c) | | | 328,000 | | | 331,657 |
| | | | | | | 589,342 |
| | |
Trucking–0.17% | | | | | | |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | | | | | |
4.00%, 07/15/2025(c) | | | 41,000 | | | 44,041 |
3.40%, 11/15/2026(c) | | | 47,000 | | | 49,833 |
Triton Container International Ltd. (Bermuda), | | | | | | |
2.05%, 04/15/2026(c) | | | 145,000 | | | 144,003 |
3.15%, 06/15/2031(c) | | | 102,000 | | | 102,975 |
| | | | | | | 340,852 |
|
Wireless Telecommunication Services–0.16% |
T-Mobile USA, Inc., 3.40%, 10/15/2052(c) | | | 330,000 | | | 329,092 |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $43,222,787) | | | 44,123,977 |
|
Asset-Backed Securities–13.78% |
Alternative Loan Trust, Series 2005- 29CB, Class A4, 5.00%, 07/25/2035 | | | 89,814 | | | 67,593 |
American Credit Acceptance Receivables Trust, | | | | | | |
Series 2018-3, Class D, 4.14%, 10/15/2024(c) | | | 6,322 | | | 6,346 |
Series 2019-3, Class C, 2.76%, 09/12/2025(c) | | | 66,304 | | | 66,615 |
| | | | | | |
| | | Principal
Amount | | | Value |
AmeriCredit Automobile Receivables Trust, | | | | | | |
Series 2017-4, Class D, 3.08%, 12/18/2023 | | $ | 205,000 | | | $ 207,038 |
Series 2018-3, Class C, 3.74%, 10/18/2024 | | | 260,000 | | | 265,246 |
Series 2019-2, Class C, 2.74%, 04/18/2025 | | | 100,000 | | | 102,048 |
Series 2019-2, Class D, 2.99%, 06/18/2025 | | | 270,000 | | | 276,843 |
Series 2019-3, Class D, 2.58%, 09/18/2025 | | | 130,000 | | | 132,212 |
AMSR Trust, Series 2021-SFR3, Class B, 1.73%, 10/17/2038(c) | | | 235,000 | | | 229,068 |
Angel Oak Mortgage Trust, | | | | | | |
Series 2020-1, Class A1, 2.16%, 12/25/2059(c)(i) | | | 57,069 | | | 57,104 |
Series 2020-3, Class A1, 1.69%, 04/25/2065(c)(i) | | | 177,951 | | | 178,540 |
Series 2021-3, Class A1, 1.07%, 05/25/2066(c)(i) | | | 80,610 | | | 79,973 |
Series 2021-7, Class A1, 1.98%, 10/25/2066(c)(i) | | | 167,055 | | | 166,687 |
Bain Capital Credit CLO Ltd., Series 2017-2A, Class AR2, 1.30% (3 mo. USD LIBOR + 1.18%), 07/25/2034(c)(f) | | | 424,000 | | | 424,476 |
Banc of America Funding Trust, | | | | | | |
Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | 21,380 | | | 21,029 |
Series 2007-C, Class 1A4, 3.03%, 05/20/2036(i) | | | 6,920 | | | 6,956 |
Banc of America Mortgage Trust, Series 2004-E, Class 2A6, 2.80%, 06/25/2034(i) | | | 19,936 | | | 20,398 |
Bank, Series 2019-BNK16, Class XA, IO, 0.95%, 02/15/2052(j) | | | 1,530,184 | | | 85,719 |
Bayview MSR Opportunity Master Fund Trust, | | | | | | |
Series 2021-4, Class A3, 3.00%, 10/25/2051(c)(i) | | | 216,022 | | | 220,794 |
Series 2021-4, Class A4, 2.50%, 10/25/2051(c)(i) | | | 216,022 | | | 215,392 |
Series 2021-4, Class A8, 2.50%, 10/25/2051(c)(i) | | | 213,363 | | | 215,490 |
Series 2021-5, Class A1, 3.00%, 11/25/2051(c)(i) | | | 225,866 | | | 230,731 |
Series 2021-5, Class A2, 2.50%, 11/25/2051(c)(i) | | | 275,602 | | | 276,900 |
Bear Stearns Adjustable Rate Mortgage Trust, | | | | | | |
Series 2005-9, Class A1, 0.76% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(f) | | | 116,070 | | | 118,891 |
Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(f) | | | 36,546 | | | 37,192 |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.50%, 01/15/2051(j) | | | 2,145,401 | | | 52,765 |
BRAVO Residential Funding Trust, Series 2021-NQM2, Class A1, 0.97%, 03/25/2060(c)(i) | | | 115,112 | | | 114,562 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal Amount | | | Value |
BX Commercial Mortgage Trust, | | | | | | |
Series 2021-ACNT, Class A, 0.96% (1 mo. USD LIBOR + 0.85%), 11/15/2026(c)(f) | | $ | 110,000 | | | $ 110,012 |
Series 2021-VOLT, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 09/15/2036(c)(f) | | | 210,000 | | | 209,574 |
Series 2021-VOLT, Class B, 1.06% (1 mo. USD LIBOR + 0.95%), 09/15/2036(c)(f) | | | 190,000 | | | 189,131 |
Series 2021-XL2, Class B, 1.11% (1 mo. USD LIBOR + 1.00%), 10/15/2038(c)(f) | | | 105,000 | | | 104,526 |
CCG Receivables Trust, | | | | | | |
Series 2018-2, Class C, 3.87%, 12/15/2025(c) | | | 60,000 | | | 60,212 |
Series 2019-2, Class B, 2.55%, 03/15/2027(c) | | | 105,000 | | | 106,634 |
Series 2019-2, Class C, 2.89%, 03/15/2027(c) | | | 100,000 | | | 101,383 |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(j) | | | 829,489 | | | 30,090 |
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, 4.00%, 04/25/2049(c)(i) | | | 10,115 | | | 10,218 |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 2.98%, 01/25/2036(i) | | | 48,743 | | | 47,021 |
Citigroup Commercial Mortgage Trust, | | | | | | |
Series 2013-GC17, Class XA, IO, 1.00%, 11/10/2046(j) | | | 387,337 | | | 5,812 |
Series 2014-GC21, Class AA, 3.48%, 05/10/2047 | | | 48,868 | | | 50,259 |
Series 2017-C4, Class XA, IO, 1.08%, 10/12/2050(j) | | | 2,227,646 | | | 97,804 |
Citigroup Mortgage Loan Trust, Inc., | | | | | | |
Series 2006-AR1, Class 1A1, 2.48% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(f) | | | 107,970 | | | 112,982 |
Series 2021-INV3, Class A3, 2.50%, 05/25/2051(c)(i) | | | 220,315 | | | 220,384 |
CNH Equipment Trust, | | | | | | |
Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 70,000 | | | 70,057 |
Series 2019-A, Class A4, 3.22%, 01/15/2026 | | | 120,000 | | | 122,859 |
COLT Mortgage Loan Trust, | | | | | | |
Series 2020-1, Class A1, 2.49%, 02/25/2050(c)(i) | | | 78,092 | | | 78,087 |
Series 2020-2, Class A1, 1.85%, 03/25/2065(c)(i) | | | 55,706 | | | 55,843 |
Series 2021-5, Class A1, 1.73%, 11/26/2066(c)(i) | | | 112,838 | | | 112,627 |
| | | | | | |
| | | Principal
Amount | | | Value |
COMM Mortgage Trust, | | | | | | |
Series 2012-CR5, Class XA, IO, 1.50%, 12/10/2045(j) | | $ | 285,806 | | | $ 2,425 |
Series 2013-CR6, Class AM, 3.15%, 03/10/2046(c) | | | 255,000 | | | 259,683 |
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | | | 40,199 | | | 41,382 |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 865,000 | | | 905,008 |
Series 2014-LC15, Class AM, 4.20%, 04/10/2047 | | | 140,000 | | | 146,980 |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 495,000 | | | 522,683 |
Countrywide Home Loans Mortgage Pass-Through Trust, | | | | | | |
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | 29,500 | | | 23,655 |
Series 2006-6, Class A3, 6.00%, 04/25/2036 | | | 19,461 | | | 13,978 |
Credit Suisse Mortgage Capital Trust, | | | | | | |
Series 2021-NQM1, Class A1, 0.81%, 05/25/2065(c)(i) | | | 60,841 | | | 60,566 |
Series 2021-NQM2, Class A1, 1.18%, 02/25/2066(c)(i) | | | 73,562 | | | 72,901 |
CSAIL Commercial Mortgage Trust,
Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | 571,000 | | | 583,571 |
CSMC Mortgage-Backed Trust,
Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | | 91,526 | | | 64,807 |
Dell Equipment Finance Trust, | | | | | | |
Series 2019-1, Class C, 3.14%, 03/22/2024(c) | | | 330,000 | | | 330,447 |
Series 2019-2, Class D, 2.48%, 04/22/2025(c) | | | 110,000 | | | 110,669 |
Drive Auto Receivables Trust, | | | | | | |
Series 2018-1, Class D, 3.81%, 05/15/2024 | | | 21,253 | | | 21,343 |
Series 2018-2, Class D, 4.14%, 08/15/2024 | | | 80,176 | | | 81,183 |
Series 2018-3, Class D, 4.30%, 09/16/2024 | | | 99,513 | | | 100,890 |
Series 2018-5, Class C, 3.99%, 01/15/2025 | | | 41,229 | | | 41,396 |
| | |
Series 2019-1, Class C, 3.78%, 04/15/2025 | | | 29,931 | | | 29,972 |
| | |
Dryden 93 CLO Ltd., Series 2021-93A, Class A1A, 1.24% (3 mo. USD LIBOR + 1.08%), 01/15/2034(c)(f) | | | 100,056 | | | 100,116 |
Ellington Financial Mortgage Trust, | | | | | | |
Series 2020-1, Class A1, 2.01%, 05/25/2065(c)(i) | | | 33,833 | | | 33,927 |
Series 2021-1, Class A1, 0.80%, 02/25/2066(c)(i) | | | 57,256 | | | 56,795 |
Exeter Automobile Receivables Trust, | | | | | | |
Series 2019-2A, Class C, 3.30%, 03/15/2024(c) | | | 101,657 | | | 102,066 |
Series 2019-4A, Class D, 2.58%, 09/15/2025(c) | | | 230,000 | | | 233,813 |
Extended Stay America Trust, Series 2021-ESH, Class B, 1.49% (1 mo. USD LIBOR + 1.38%), 07/15/2038(c)(f) | | | 104,457 | | | 104,640 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class 1A6, 0.75% (1 mo. USD LIBOR + 0.65%), 11/25/2035(f) | | $ | 43,078 | | | $ 20,497 |
Flagstar Mortgage Trust, | | | | | | |
Series 2021-11IN, Class A6, 3.70%, 11/25/2051(c)(i) | | | 356,589 | | | 360,614 |
Series 2021-8INV, Class A6, 2.50%, 09/25/2051(c)(i) | | | 95,901 | | | 96,988 |
Ford Credit Floorplan Master Owner Trust, Series 2019-3, Class A2, 0.71% (1 mo. USD LIBOR + 0.60%), 09/15/2024(f) | | | 550,000 | | | 551,488 |
FREMF Mortgage Trust, | | | | | | |
Series 2013-K25, Class C, 3.62%, 11/25/2045(c)(i) | | | 60,000 | | | 61,126 |
Series 2013-K26, Class C, 3.60%, 12/25/2045(c)(i) | | | 40,000 | | | 40,796 |
Series 2013-K27, Class C, 3.50%, 01/25/2046(c)(i) | | | 110,000 | | | 112,222 |
Series 2013-K28, Class C, 3.49%, 06/25/2046(c)(i) | | | 450,000 | | | 460,934 |
Golub Capital Partners CLO 40(A) Ltd., Series 2019-40A, Class AR, 1.21% (3 mo. USD LIBOR + 1.09%), 01/25/2032(c)(f) | | | 275,000 | | | 274,789 |
GS Mortgage Securities Trust, | | | | | | |
Series 2013-GC16, Class AS, 4.65%, 11/10/2046 | | | 65,000 | | | 68,241 |
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | | | 7,579 | | | 7,639 |
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | | | 36,842 | | | 37,744 |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 225,000 | | | 228,401 |
GS Mortgage-Backed Securities Trust, Series 2021-INV1, Class A6, 2.50%, 12/25/2051(c)(i) | | | 187,361 | | | 189,476 |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.02%, 07/25/2035(i) | | | 5,346 | | | 5,545 |
Hertz Vehicle Financing III L.P., Series 2021-2A, Class A, 1.68%, 12/27/2027(c) | | | 113,000 | | | 111,570 |
Hertz Vehicle Financing LLC, Series 2021-1A, Class A, 1.21%, 12/26/2025(c) | | | 104,000 | | | 103,113 |
JP Morgan Chase Commercial Mortgage Securities Trust, | | | | | | |
Series 2013-C10, Class AS, 3.37%, 12/15/2047 | | | 325,000 | | | 331,592 |
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | | | 330,000 | | | 346,114 |
Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | 78,000 | | | 79,250 |
Series 2014-C20, Class AS, 4.04%, 07/15/2047 | | | 245,000 | | | 256,634 |
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | | | 27,682 | | | 27,785 |
JP Morgan Mortgage Trust, | | | | | | |
Series 2007-A1, Class 5A1, 2.42%, 07/25/2035(i) | | | 30,545 | | | 31,260 |
Series 2021-LTV2, Class A1, 2.52%, 05/25/2052(c)(i) | | | 255,000 | | | 255,627 |
| | | | | | |
| | | Principal
Amount | | | Value |
JPMBB Commercial Mortgage Securities Trust, | | | | | | |
Series 2014-C24, Class B, 4.12%, 11/15/2047(i) | | $ | 270,000 | | | $ 277,864 |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | 105,000 | | | 109,741 |
Series 2015-C27, Class XA, IO, 1.15%, 02/15/2048(j) | | | 2,012,530 | | | 61,371 |
KKR CLO 30 Ltd., Series 30A, Class A1R, 2.27% (3 mo. USD LIBOR + 1.02%), 10/17/2031(c)(f) | | | 268,000 | | | 267,741 |
Life Mortgage Trust, | | | | | | |
Series 2021-BMR, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 03/15/2038(c)(f) | | | 130,000 | | | 129,877 |
Series 2021-BMR, Class B, 0.99% (1 mo. USD LIBOR + 0.88%), 03/15/2038(c)(f) | | | 215,000 | | | 213,161 |
Series 2021-BMR, Class C, 1.21% (1 mo. USD LIBOR + 1.10%), 03/15/2038(c)(f) | | | 105,000 | | | 104,115 |
| | |
Madison Park Funding XLVIII Ltd., Series 2021-48A, Class A, 1.27% (3 mo. USD LIBOR + 1.15%), 04/19/2033(c)(f) | | | 618,000 | | | 618,308 |
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 2A2, 2.62%, 04/21/2034(i) | | | 11,053 | | | 11,270 |
Med Trust, | | | | | | |
Series 2021-MDLN, Class A, 1.06% (1 mo. USD LIBOR + 0.95%), 11/15/2038(c)(f) | | | 140,000 | | | 140,057 |
Series 2021-MDLN, Class B, 1.56% (1 mo. USD LIBOR + 1.45%), 11/15/2038(c)(f) | | | 222,000 | | | 221,876 |
Mello Mortgage Capital Acceptance Trust, | | | | | | |
Series 2021-INV2, Class A4, 2.50%, 08/25/2051(c)(i) | | | 143,438 | | | 145,071 |
Series 2021-INV3, Class A4, 2.50%, 10/25/2051(c)(i) | | | 141,524 | | | 143,119 |
| MFA Trust, | | | | | | |
Series 2021-AEI1, Class A3, 2.50%, 08/25/2051(c)(i) | | | 148,863 | | | 148,540 |
Series 2021-AEI1, Class A4, 2.50%, 08/25/2051(c)(i) | | | 189,441 | | | 191,843 |
Series 2021-INV2, Class A1, 1.91%, 11/25/2056(c)(i) | | | 182,329 | | | 180,729 |
MHP Commercial Mortgage Trust, | | | | | | |
Series 2021-STOR, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 07/15/2038(c)(f) | | | 105,000 | | | 104,746 |
Series 2021-STOR, Class B, 1.01% (1 mo. USD LIBOR + 0.90%), 07/15/2038(c)(f) | | | 105,000 | | | 104,764 |
Morgan Stanley Bank of America Merrill Lynch Trust, | | | | | | |
Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | 240,000 | | | 245,131 |
Series 2014-C19, Class AS, 3.83%, 12/15/2047 | | | 720,000 | | | 755,575 |
Morgan Stanley Capital I Trust, Series 2017-HR2, Class XA, IO, 0.78%, 12/15/2050(j) | | | 759,859 | | | 28,929 |
Morgan Stanley Re-REMIC Trust, Series 2012-R3, Class 1B, 6.00%, 11/26/2036(c)(i) | | | 137,062 | | | 133,079 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Mortgage-Linked Amortizing Notes, Series 2012-1, Class A10, 2.06%, 01/15/2022 | | $ | 60,237 | | | $ 60,276 |
Motel Trust, Series 2021-MTL6, Class A, 1.01% (1 mo. USD LIBOR + 0.90%), 09/15/2038(c)(f) | | | 100,000 | | | 100,025 |
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 1.14% (3 mo. USD LIBOR + 1.02%), 04/19/2030(c)(f) | | | 276,000 | | | 276,033 |
Neuberger Berman Loan Advisers CLO 40 Ltd., Series 2021-40A, Class A, 1.18% (3 mo. USD LIBOR + 1.06%), 04/16/2033(c)(f) | | | 250,000 | | | 250,401 |
Oceanview Mortgage Trust, Series 2021-3, Class A5, 2.50%, 07/25/2051(c)(i) | | | 171,363 | | | 173,305 |
OCP CLO Ltd. (Cayman Islands), | | | | | | |
Series 2017-13A, Class A1AR, 1.08% (3 mo. USD LIBOR + 0.96%), 07/15/2030(c)(f) | | | 250,000 | | | 250,285 |
Series 2020-8RA, Class A1, 1.34% (3 mo. USD LIBOR + 1.22%), 01/17/2032(c)(f) | | | 366,000 | | | 366,182 |
Octagon Investment Partners 31 LLC, Series 2017-1A, Class AR, 1.18% (3 mo. USD LIBOR + 1.05%), 07/20/2030(c)(f) | | | 250,000 | | | 249,768 |
Octagon Investment Partners 49 Ltd., Series 2020-5A, Class A1, 1.34% (3 mo. USD LIBOR + 1.22%), 01/15/2033(c)(f) | | | 339,000 | | | 339,058 |
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.39% (3 mo. USD LIBOR + 1.26%), 01/20/2033(c)(f) | | | 272,907 | | | 273,031 |
Onslow Bay Mortgage Loan Trust, Series 2021-NQM4, Class A1, 1.96%, 10/25/2061(c)(i) | | | 229,855 | | | 229,206 |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(c) | | | 115,000 | | | 116,021 |
Progress Residential Trust, | | | | | | |
Series 2020-SFR1, Class A, 1.73%, 04/17/2037(c) | | | 360,000 | | | 357,601 |
Series 2021-SFR10, Class A, 2.39%, 12/17/2040(c) | | | 115,000 | | | 115,900 |
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | 4,437 | | | 4,223 |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, 01/26/2060(c)(i) | | | 59,286 | | | 59,601 |
Santander Drive Auto Receivables Trust, | | | | | | |
Series 2017-3, Class D, 3.20%, 11/15/2023 | | | 76,727 | | | 76,803 |
Series 2018-1, Class D, 3.32%, 03/15/2024 | | | 42,017 | | | 42,202 |
Series 2018-2, Class D, 3.88%, 02/15/2024 | | | 97,496 | | | 98,385 |
Series 2019-2, Class D, 3.22%, 07/15/2025 | | | 195,000 | | | 198,872 |
Series 2019-3, Class D, 2.68%, 10/15/2025 | | | 165,000 | | | 167,219 |
| | | | | | |
| | | Principal
Amount | | | Value |
Santander Retail Auto Lease Trust, | | | | | | |
Series 2019-A, Class C, 3.30%, 05/22/2023(c) | | $ | 276,217 | | | $ 276,793 |
Series 2019-B, Class C, 2.77%, 08/21/2023(c) | | | 115,000 | | | 115,959 |
Series 2019-C, Class C, 2.39%, 11/20/2023(c) | | | 205,000 | | | 207,093 |
Sonic Capital LLC, | | | | | | |
Series 2021-1A, Class A2I, 2.19%, 08/20/2051(c) | | | 99,750 | | | 97,865 |
Series 2021-1A, Class A2II, 2.64%, 08/20/2051(c) | | | 99,750 | | | 98,052 |
Star Trust, Series 2021-SFR1, Class A, 0.71% (1 mo. USD LIBOR + 0.60%), 04/17/2038(c)(f) | | | 652,884 | | | 652,516 |
STAR Trust, Series 2021-1, Class A1, 1.22%, 05/25/2065(c)(i) | | | 179,345 | | | 178,898 |
Starwood Mortgage Residential Trust, | | | | | | |
Series 2020-1, Class A1, 2.28%, 02/25/2050(c)(i) | | | 56,729 | | | 56,979 |
Series 2021-6, Class A1, 1.92%, 11/25/2066(c)(i) | | | 278,675 | | | 278,562 |
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, 1.41% (3 mo. USD LIBOR + 1.29%), 04/18/2033(c)(f) | | | 250,000 | | | 250,334 |
Textainer Marine Containers VII Ltd., Series 2021-2A, Class A, 2.23%, 04/20/2046(c) | | | 274,533 | | | 274,082 |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.41% (3 mo. USD LIBOR + 1.28%), 04/20/2033(c)(f) | | | 256,000 | | | 256,330 |
Tricon American Homes Trust, Series 2020-SFR2, Class A, 1.48%, 11/17/2039(c) | | | 277,896 | | | 268,565 |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 0.99%, 11/15/2050(j) | | | 1,478,267 | | | 59,787 |
Verus Securitization Trust, | | | | | | |
Series 2020-1, Class A1, 2.42%, 01/25/2060(c)(k) | | | 93,615 | | | 93,954 |
Series 2020-1, Class A2, 2.64%, 01/25/2060(c)(k) | | | 99,729 | | | 100,153 |
Series 2020-INV1, Class A1, 0.33%, 03/25/2060(c)(i) | | | 42,889 | | | 43,052 |
Series 2021-1, Class A1B, 1.32%, 01/25/2066(c)(i) | | | 79,569 | | | 78,680 |
Series 2021-7, Class A1, 1.83%, 10/25/2066(c)(i) | | | 233,453 | | | 233,111 |
Series 2021-R1, Class A1, 0.82%, 10/25/2063(c)(i) | | | 144,518 | | | 143,982 |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(c) | | | 98,506 | | | 98,116 |
WaMu Mortgage Pass-Through Ctfs. Trust, | | | | | | |
Series 2003-AR10, Class A7, 2.49%, 10/25/2033(i) | | | 29,047 | | | 29,422 |
Series 2005-AR14, Class 1A4, 2.85%, 12/25/2035(i) | | | 33,526 | | | 34,157 |
Series 2005-AR16, Class 1A1, 2.64%, 12/25/2035(i) | | | 32,586 | | | 33,242 |
Wells Fargo Commercial Mortgage Trust, | | | | | | |
Series 2015-NXS1, Class ASB, 2.93%, 05/15/2048 | | | 202,676 | | | 206,748 |
Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(j) | | | 1,057,880 | | | 48,244 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Westlake Automobile Receivables Trust, Series 2019-3A, Class C, 2.49%, 10/15/2024(c) | | $ | 265,000 | | | $ 266,760 |
WFRBS Commercial Mortgage Trust, | | | | | | |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | 155,000 | | | 158,024 |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | 150,000 | | | 156,802 |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(i) | | | 165,000 | | | 173,036 |
World Financial Network Credit Card Master Trust, | | | | | | |
Series 2019-A, Class A, 3.14%, 12/15/2025 | | | 75,000 | | | 75,251 |
Series 2019-B, Class A, 2.49%, 04/15/2026 | | | 260,000 | | | 262,472 |
Series 2019-C, Class A, 2.21%, 07/15/2026 | | | 225,000 | | | 227,664 |
Zaxby’s Funding LLC, Series 2021-1A, Class A2, 3.24%, 07/30/2051(c) | | | 349,125 | | | 356,212 |
Total Asset-Backed Securities
(Cost $ 28,000,619) | | | 27,908,665 |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–10.48% |
Collateralized Mortgage Obligations–0.64% |
Fannie Mae Interest STRIPS, |
IO, | | | | | | |
7.00%, 06/25/2023 to 04/25/2032(l) | | | 16,019 | | | 1,251 |
7.50%, 08/25/2023 to 11/25/2023(l) | | | 16,701 | | | 649 |
6.50%, 02/25/2032 to 02/25/2033(j)(l) | | | 117,870 | | | 20,863 |
6.00%, 06/25/2033 to 09/25/2035(j)(l) | | | 97,867 | | | 16,869 |
5.50%, 09/25/2033 to 06/25/2035(l) | | | 190,456 | | | 31,680 |
Fannie Mae REMICs, | | | | | | |
IO, | | | | | | |
5.50%, 06/25/2023 to 07/25/2046(l) | | | 290,621 | | | 233,134 |
6.60% (6.70% - (1.00 x 1 mo. USD LIBOR)), 02/25/2024 to 05/25/2035(f)(l) | | | 81,279 | | | 13,485 |
3.00%, 11/25/2027(l) | | | 86,781 | | | 4,665 |
7.00% (7.10% - (1.00 x 1 mo. USD LIBOR)), 11/25/2030(f)(l) | | | 28,261 | | | 4,335 |
7.80% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/25/2031(f)(l) | | | 40,834 | | | 7,317 |
7.85% (7.95% - (1.00 x 1 mo. USD LIBOR)), 01/25/2032(f)(l) | | | 9,246 | | | 1,658 |
8.00% (8.10% - (1.00 x 1 mo. USD LIBOR)), 03/25/2032(f)(l) | | | 10,908 | | | 2,234 |
7.90% (8.00% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032 to 12/25/2032(f)(l) | | | 134,511 | | | 27,465 |
8.00% (8.10% - (1.00 x 1 mo. USD LIBOR)), 12/18/2032(f)(l) | | | 13,228 | | | 1,915 |
8.15% (8.25% - (1.00 x 1 mo. USD LIBOR)), 02/25/2033 to 05/25/2033(f)(l) | | | 62,575 | | | 14,295 |
7.45% (7.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2033(f)(l) | | | 8,092 | | | 1,653 |
5.95% (6.05% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035 to 07/25/2038(f)(l) | | | 25,350 | | | 3,413 |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations–(continued) |
6.65% (6.75% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035(f)(l) | | $ | 4,267 | | | $ 653 |
6.50% (6.60% - (1.00 x 1 mo. USD LIBOR)), 05/25/2035(f)(l) | | | 221,842 | | | 30,961 |
3.50%, 08/25/2035(l) | | | 262,212 | | | 32,413 |
6.00% (6.10% - (1.00 x 1 mo. USD LIBOR)), 10/25/2035(f)(l) | | | 20,404 | | | 3,454 |
6.44% (6.54% - (1.00 x 1 mo. USD LIBOR)), 06/25/2037(f)(l) | | | 36,233 | | | 6,264 |
6.45% (6.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2041(f)(l) | | | 53,415 | | | 8,426 |
6.05% (6.15% - (1.00 x 1 mo. USD LIBOR)), 12/25/2042(f)(l) | | | 159,145 | | | 31,673 |
PO, | | | | | | |
0.00%, 09/25/2023(m) | | | 5,089 | | | 5,031 |
4.00%, 08/25/2026 to 08/25/2047(l) | | | 152,910 | | | 21,215 |
6.00%, 11/25/2028 | | | 17,277 | | | 19,132 |
0.35% (1 mo. USD LIBOR + 0.25%), 08/25/2035(f) | | | 17,982 | | | 18,032 |
24.19% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(f) | | | 27,261 | | | 41,883 |
23.83% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(f) | | | 18,215 | | | 28,088 |
1.04% (1 mo. USD LIBOR + 0.94%), 06/25/2037(f) | | | 13,924 | | | 14,029 |
5.00%, 04/25/2040 to
09/25/2047(f)(l) | | | 456,964 | | | 102,634 |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | |
Series KC02, Class X1, IO, 1.91%, 03/25/2024(j) | | | 4,815,328 | | | 32,390 |
Series KC03, Class X1, IO, 0.63%, 11/25/2024(j) | | | 2,708,763 | | | 32,232 |
Series K734, Class X1, IO, 0.65%, 02/25/2026(j) | | | 2,053,055 | | | 47,587 |
Series K735, Class X1, IO, 1.10%, 05/25/2026(j) | | | 2,026,155 | | | 74,959 |
Series K093, Class X1, IO, 0.95%, 05/25/2029(j) | | | 1,647,064 | | | 101,622 |
Freddie Mac REMICs, | | | | | | |
1.50%, 07/15/2023 | | | 40,474 | | | 40,614 |
6.50%, 03/15/2032 to 06/15/2032 | | | 52,651 | | | 60,551 |
3.50%, 05/15/2032 | | | 12,977 | | | 13,656 |
24.35% (24.75% - (3.67 x 1 mo. USD LIBOR)), 08/15/2035(f) | | | 5,673 | | | 8,951 |
0.51% (1 mo. USD LIBOR + 0.40%), 09/15/2035(f) | | | 33,307 | | | 33,627 |
IO, | | | | | | |
7.54% (7.65% - (1.00 x 1 mo. USD LIBOR)), 07/15/2026 to 03/15/2029(f)(l) | | | 41,321 | | | 3,973 |
3.00%, 06/15/2027 to 05/15/2040(l) | | | 285,370 | | | 16,491 |
2.50%, 05/15/2028(l) | | | 57,068 | | | 2,925 |
6.59% (6.70% - (1.00 x 1 mo. USD LIBOR)), 01/15/2035(f)(l) | | | 170,982 | | | 23,298 |
6.64% (6.75% - (1.00 x 1 mo. USD LIBOR)), 02/15/2035(f)(l) | | | 10,050 | | | 1,354 |
6.61% (6.72% - (1.00 x 1 mo. USD LIBOR)), 05/15/2035(f)(l) | | | 72,586 | | | 9,680 |
6.89% (7.00% - (1.00 x 1 mo. USD LIBOR)), 12/15/2037(f)(l) | | | 11,290 | | | 2,256 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations–(continued) |
5.89% (6.00% - (1.00 x 1 mo. USD LIBOR)), 04/15/2038(f)(l) | | $ | 4,868 | | | $ 734 |
5.96% (6.07% - (1.00 x 1 mo. USD LIBOR)), 05/15/2038(f)(l) | | | 35,436 | | | 5,852 |
6.14% (6.25% - (1.00 x 1 mo. USD LIBOR)), 12/15/2039(f)(l) | | | 17,171 | | | 2,719 |
5.99% (6.10% - (1.00 x 1 mo. USD LIBOR)), 01/15/2044(f)(l) | | | 60,980 | | | 6,658 |
4.00%, 03/15/2045(l) | | | 46,156 | | | 2,156 |
Freddie Mac STRIPS, |
IO, | | | | | | |
7.00%, 04/01/2027(l) | | | 19,636 | | | 2,279 |
3.00%, 12/15/2027(l) | | | 110,814 | | | 6,379 |
3.27%, 12/15/2027(j) | | | 26,954 | | | 1,390 |
6.50%, 02/01/2028(l) | | | 5,467 | | | 694 |
6.00%, 12/15/2032(l) | | | 17,566 | | | 2,585 |
PO, | | | | | | |
0.00%, 06/01/2026(m) | | | 5,159 | | | 4,988 |
| | | | | | | 1,293,369 |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.08% |
9.00%, 08/01/2022 to 05/01/2025 | | | 275 | | | 292 |
6.50%, 07/01/2028 to 04/01/2034 | | | 10,406 | | | 11,582 |
7.00%, 10/01/2031 to 10/01/2037 | | | 28,973 | | | 33,289 |
5.00%, 12/01/2034 | | | 1,103 | | | 1,217 |
5.50%, 09/01/2039 | | | 92,791 | | | 106,088 |
| | | | | | | 152,468 |
|
Federal National Mortgage Association (FNMA)–0.04% |
8.50%, 07/01/2032 | | | 524 | | | 525 |
7.50%, 01/01/2033 | | | 22,747 | | | 25,929 |
6.00%, 03/01/2037 | | | 53,082 | | | 61,611 |
| | | | | | | 88,065 |
|
Government National Mortgage Association (GNMA)–2.30% |
7.50%, 01/15/2023 to 06/15/2024 | | | 3,550 | | | 3,569 |
8.00%, 04/15/2023 | | | 554 | | | 556 |
IO, | | | | | | |
7.39% (7.50% - (1.00 x 1 mo. USD LIBOR)), 02/16/2032(f)(l) | | | 17,658 | | | 48 |
6.44% (6.55% - (1.00 x 1 mo. USD LIBOR)), 04/16/2037(f)(l) | | | 146,795 | | | 25,149 |
6.54% (6.65% - (1.00 x 1 mo. USD LIBOR)), 04/16/2041(f)(l) | | | 68,413 | | | 9,760 |
4.50%, 09/16/2047(l) | | | 172,403 | | | 25,078 |
6.09% (6.20% - (1.00 x 1 mo. USD LIBOR)), 10/16/2047(f)(l) | | | 150,349 | | | 25,158 |
TBA, | | | | | | |
2.50%, 01/01/2052(n) | | | 4,465,000 | | | 4,572,783 |
| | | | | | | 4,662,101 |
|
Uniform Mortgage-Backed Securities–7.42% |
TBA, | | | | | | |
2.00%, 01/01/2037 to 01/01/2052(n) | | | 15,012,000 | | | 15,038,758 |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $21,581,013) | | | 21,234,761 |
| | | | | | |
| | | Principal
Amount | | | Value |
U.S. Treasury Securities–7.11% |
U.S. Treasury Bonds–0.63% |
2.00%, 11/15/2041 | | $ | 776,500 | | | $ 785,599 |
2.00%, 08/15/2051 | | | 480,800 | | | 490,266 |
| | | | | | | 1,275,865 |
|
U.S. Treasury Notes–6.48% |
0.50%, 11/30/2023 | | | 2,053,600 | | | 2,045,899 |
1.00%, 12/15/2024 | | | 1,905,200 | | | 1,907,507 |
1.25%, 11/30/2026 | | | 5,385,100 | | | 5,382,576 |
1.50%, 11/30/2028 | | | 331,900 | | | 333,300 |
1.38%, 11/15/2031 | | | 3,494,600 | | | 3,451,464 |
| | | | | | | 13,120,746 |
Total U.S. Treasury Securities
(Cost $14,379,830) | | | 14,396,611 |
| | |
| | | Shares | | | |
Preferred Stocks–0.47% | | | | | | |
Asset Management & Custody Banks–0.04% |
| | |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(d) | | | 68,000 | | | 72,709 |
| | |
Diversified Banks–0.31% | | | | | | |
| | |
Citigroup, Inc., 5.00%, Series U,
Pfd.(d) | | | 240,000 | | | 247,800 |
| | |
JPMorgan Chase & Co., 3.60% (3 mo. USD LIBOR + 3.47%), Series I, Pfd.(f) | | | 377,000 | | | 378,888 |
| | | | | | | 626,688 |
|
Investment Banking & Brokerage–0.07% |
| | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(d) | | | 137,000 | | | 138,541 |
|
Other Diversified Financial Services–0.05% |
| | |
Equitable Holdings, Inc., 4.95%, Series B, Pfd.(d) | | | 105,000 | | | 110,250 |
Total Preferred Stocks (Cost $927,248) | | | 948,188 |
| | |
| | | Principal
Amount | | | |
Municipal Obligations–0.24% | | | | | | |
California State University, | | | | | | |
Series 2021 B, Ref. RB, 2.72%, 11/01/2052 | | $ | 90,000 | | | 90,949 |
Series 2021 B, Ref. RB, 2.94%, 11/01/2052 | | | 140,000 | | | 140,430 |
| | |
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041 | | | 265,000 | | | 265,241 |
Total Municipal Obligations (Cost $495,000) | | | 496,620 |
|
Agency Credit Risk Transfer Notes–0.22% |
Fannie Mae Connecticut Avenue Securities, | | | | | | |
Series 2014-C04, Class 2M2, 5.10% (1 mo. USD LIBOR + 5.00%), 11/25/2024(f) | | | 57,544 | | | 58,380 |
Series 2016-C02, Class 1M2, 6.10% (1 mo. USD LIBOR + 6.00%), 09/25/2028(f) | | | 117,722 | | | 121,777 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
| Freddie Mac, | | | | | | |
Series 2014-DN3, Class M3, STACR®, 4.10% (1 mo. USD LIBOR + 4.00%), 08/25/2024(f) | | $ | 48,525 | | | $ 49,441 |
Series 2018-HQA1, Class M2, STACR®, 2.40% (1 mo. USD LIBOR + 2.30%), 09/25/2030(f) | | | 83,966 | | | 85,005 |
Series 2018-DNA2, Class M1, STACR®, 0.90% (1 mo. USD LIBOR + 0.80%), 12/25/2030(c)(f) | | | 49,435 | | | 49,439 |
Series 2018-DNA3, Class M1, STACR®, 0.85% (1 mo. USD LIBOR + 0.75%), 09/25/2048(c)(f) | | | 177 | | | 177 |
Series 2018-HQA2, Class M1, STACR®, 0.85% (1 mo. USD LIBOR + 0.75%), 10/25/2048(c)(f) | | | 28,180 | | | 28,181 |
Series 2019-HRP1, Class M2, STACR®, 1.50% (1 mo. USD LIBOR + 1.40%), 02/25/2049(c)(f) | | | 59,848 | | | 60,045 |
Total Agency Credit Risk Transfer Notes
(Cost $462,565) | | | 452,445 |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)–105.11%
(Cost $175,954,155) | | | 212,916,490 |
| | |
| 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 |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.51% | | | | | |
Invesco Private Government Fund, 0.02%(o)(p)(q) | | | 307,302 | | | $ | 307,302 | |
| |
Invesco Private Prime Fund,
0.11%(o)(p)(q) | | | 716,894 | | | | 717,037 | |
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $1,024,383) | | | | 1,024,339 | |
| |
TOTAL INVESTMENTS IN SECURITIES–105.62%
(Cost $176,978,538) | | | | 213,940,829 | |
| |
OTHER ASSETS LESS LIABILITIES–(5.62)% | | | | (11,392,958 | ) |
| |
NET ASSETS–100.00% | | | | | | $ | 202,547,871 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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, 2021 was $31,418,512, which represented 15.51% of the Fund’s Net Assets. |
| (d) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (e) | Perpetual bond with no specified maturity date. |
| (f) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2021. |
| (g) | All or a portion of this security was out on loan at December 31, 2021. |
| (h) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (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, 2021. |
| (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, 2021. |
| (k) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (l) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (m) | Zero coupon bond issued at a discount. |
| (n) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1M. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | $ | - | | | | $ | 7,481,761 | | | | $ | (7,174,459 | ) | | | | $ - | | | | $ | - | | | | $ | 307,302 | | | | $ | 49* | |
Invesco Private Prime Fund | | | | - | | | | | 13,016,033 | | | | | (12,298,846 | ) | | | | (44) | | | | | (106) | | | | | 717,037 | | | | | 672* | |
Total | | | $ | - | | | | $ | 20,497,794 | | | | $ | (19,473,305 | ) | | | | $(44) | | | | $ | (106) | | | | $ | 1,024,339 | | | | $ | 721 | |
| | * | 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. |
| (p) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (q) | 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(a) |
| | | | | | | | | | | Unrealized |
| | | Number of | | Expiration | | Notional | | | | Appreciation |
| Long Futures Contracts | | Contracts | | Month | | Value | | Value | | (Depreciation) |
| Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 5 Year Notes | | | | 75 | | | | | March-2022 | | | | $ | 9,073,242 | | | | $ | 21,788 | | | | $ | 21,788 | |
U.S. Treasury 10 Year Notes | | | | 18 | | | | | March-2022 | | | | | 2,348,438 | | | | | 4,862 | | | | | 4,862 | |
U.S. Treasury Long Bonds | | | | 8 | | | | | March-2022 | | | | | 1,283,500 | | | | | 12,000 | | | | | 12,000 | |
U.S. Treasury Ultra Bonds | | | | 19 | | | | | March-2022 | | | | | 3,745,375 | | | | | 57,594 | | | | | 57,594 | |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | | | | | 96,244 | | | | | 96,244 | |
| | | | | |
| Short Futures Contracts | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury 10 Year Ultra Notes | | | | 72 | | | | | March-2022 | | | | | (10,543,500 | ) | | | | (177,750 | ) | | | | (177,750 | ) |
Total Futures Contracts | | | | | | | | | | | | | | | | | | $ | (81,506 | ) | | | $ | (81,506 | ) |
| (a) | Futures contracts collateralized by $146,537 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 V.I. Conservative Balanced Fund |
Statement of Assets and Liabilities
December 31, 2021
| | |
Assets: | | |
Investments in unaffiliated securities, at value (Cost $ 175,954,155)* | | $212,916,490 |
Investments in affiliated money market funds, at value (Cost $ 1,024,383) | | 1,024,339 |
Other investments: | | |
Variation margin receivable – futures contracts | | 70,866 |
Deposits with brokers: | | |
Cash collateral – exchange-traded futures contracts | | 146,537 |
Cash | | 8,889,660 |
Receivable for: | | |
Investments sold | | 32,209 |
Fund shares sold | | 20,288 |
Dividends | | 37,090 |
Interest | | 435,474 |
Investment for trustee deferred compensation and retirement plans | | 76,524 |
Other assets | | 787 |
Total assets | | 223,650,264 |
| |
Liabilities: | | |
Payable for: | | |
Investments purchased | | 19,602,260 |
Fund shares reacquired | | 233,994 |
Collateral upon return of securities loaned | | 1,024,383 |
Accrued fees to affiliates | | 88,927 |
Accrued other operating expenses | | 76,305 |
Trustee deferred compensation and retirement plans | | 76,524 |
Total liabilities | | 21,102,393 |
Net assets applicable to shares outstanding | | $202,547,871 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $150,252,213 |
Distributable earnings | | 52,295,658 |
| | | $202,547,871 |
| |
Net Assets: | | |
Series I | | $151,467,583 |
Series II | | $ 51,080,288 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 8,171,613 |
Series II | | 2,798,242 |
Series I: | | |
Net asset value per share | | $ 18.54 |
Series II: | | |
Net asset value per share | | $ 18.25 |
| * | At December 31, 2021, securities with an aggregate value of $ 997,215 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $39) | | $ | 2,316,940 | |
|
| |
Dividends (net of foreign withholding taxes of $4,434) | | | 1,406,642 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $14,258) | | | 14,258 | |
|
| |
Total investment income | | | 3,737,840 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,488,021 | |
|
| |
Administrative services fees | | | 305,451 | |
|
| |
Custodian fees | | | 11,501 | |
|
| |
Distribution fees - Series II | | | 122,882 | |
|
| |
Transfer agent fees | | | 17,098 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 24,261 | |
|
| |
Professional services fees | | | 56,291 | |
|
| |
Other | | | (79,537 | ) |
|
| |
Total expenses | | | 1,945,968 | |
|
| |
Less: Fees waived | | | (464,059 | ) |
|
| |
Net expenses | | | 1,481,909 | |
|
| |
Net investment income | | | 2,255,931 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $130,213) | | | 13,687,641 | |
|
| |
Affiliated investment securities | | | (106 | ) |
|
| |
Foreign currencies | | | 186 | |
|
| |
Futures contracts | | | (152,933 | ) |
|
| |
| | | 13,534,788 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 4,495,610 | |
|
| |
Affiliated investment securities | | | (44 | ) |
|
| |
Foreign currencies | | | (536 | ) |
|
| |
Futures contracts | | | (47,572 | ) |
|
| |
| | | 4,447,458 | |
|
| |
Net realized and unrealized gain | | | 17,982,246 | |
|
| |
Net increase in net assets resulting from operations | | $ | 20,238,177 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 2,255,931 | | | $ | 2,932,017 | |
|
| |
Net realized gain | | | 13,534,788 | | | | 9,808,548 | |
|
| |
Change in net unrealized appreciation | | | 4,447,458 | | | | 13,778,816 | |
|
| |
Net increase in net assets resulting from operations | | | 20,238,177 | | | | 26,519,381 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (10,034,354 | ) | | | (6,277,496 | ) |
|
| |
Series II | | | (3,192,540 | ) | | | (1,887,499 | ) |
|
| |
Total distributions from distributable earnings | | | (13,226,894 | ) | | | (8,164,995 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (4,887,494 | ) | | | (7,271,309 | ) |
|
| |
Series II | | | 1,364,481 | | | | (2,260,271 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (3,523,013 | ) | | | (9,531,580 | ) |
|
| |
Net increase in net assets | | | 3,488,270 | | | | 8,822,806 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 199,059,601 | | | | 190,236,795 | |
|
| |
End of year | | $ | 202,547,871 | | | $ | 199,059,601 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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 | | 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 12/31/21 | | | | $17.93 | | | | | $0.22 | | | | | $1.67 | | | | | $1.89 | | | | | $(0.29 | ) | | | | $(0.99 | ) | | | | $(1.28 | ) | | | | $18.54 | | | | | 10.63 | % | | | | $151,468 | | | | | 0.67 | % | | | | 0.90 | % | | | | 1.18 | % | | | | 259 | % |
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 | | | | | 0.99 | | | | | 1.60 | | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 17.68 | | | | | 0.17 | | | | | 1.64 | | | | | 1.81 | | | | | (0.25 | ) | | | | (0.99 | ) | | | | (1.24 | ) | | | | 18.25 | | | | | 10.30 | | | | | 51,080 | | | | | 0.92 | | | | | 1.15 | | | | | 0.93 | | | | | 259 | |
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 | | | | | 1.24 | | | | | 1.35 | | | | | 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 | |
| (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 and 2017, 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 for the years ended December 31, 2019, 2018 and 2017, respectively. |
| (e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Conservative Balanced Fund |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Conservative Balanced Fund, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses |
|
| Invesco V.I. Conservative Balanced Fund |
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 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
|
| Invesco V.I. Conservative Balanced Fund |
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 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. |
| M. | 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.
| N. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| 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. | 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
| Q. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and |
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| Invesco V.I. Conservative Balanced Fund |
increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally.
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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 Fund.
The Adviser has contractually agreed, through at least April 30, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $464,059.
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, 2021, Invesco was paid $28,352 for accounting and fund administrative services and was reimbursed $277,099 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $3,639 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 |
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| Invesco V.I. Conservative Balanced 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, 2021. 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 | | $ | 102,671,641 | | | $ | 683,582 | | | $ | – | | | $ | 103,355,223 | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 43,611,185 | | | | 512,792 | | | | 44,123,977 | |
|
| |
Asset-Backed Securities | | | – | | | | 27,908,665 | | | | – | | | | 27,908,665 | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 21,234,761 | | | | – | | | | 21,234,761 | |
|
| |
U.S. Treasury Securities | | | – | | | | 14,396,611 | | | | – | | | | 14,396,611 | |
|
| |
Preferred Stocks | | | – | | | | 948,188 | | | | – | | | | 948,188 | |
|
| |
Municipal Obligations | | | – | | | | 496,620 | | | | – | | | | 496,620 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 452,445 | | | | – | | | | 452,445 | |
|
| |
Money Market Funds | | | – | | | | 1,024,339 | | | | – | | | | 1,024,339 | |
|
| |
Total Investments in Securities | | | 102,671,641 | | | | 110,756,396 | | | | 512,792 | | | | 213,940,829 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 96,244 | | | | – | | | | – | | | | 96,244 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (177,750 | ) | | | – | | | | – | | | | (177,750 | ) |
|
| |
Total Other Investments | | | (81,506 | ) | | | – | | | | – | | | | (81,506 | ) |
|
| |
Total Investments | | $ | 102,590,135 | | | $ | 110,756,396 | | | $ | 512,792 | | | $ | 213,859,323 | |
|
| |
| * | 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, 2021:
| | | | |
| | | Value | |
| Derivative Assets | | Interest
Rate Risk | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 96,244 | |
|
| |
Derivatives not subject to master netting agreements | | | (96,244 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| | | | |
| | | Value | |
| Derivative Liabilities | | Interest
Rate Risk | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (177,750 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 177,750 | |
|
| |
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, 2021
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 | | | $(152,933) | |
|
| |
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| Invesco V.I. Conservative Balanced Fund |
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Interest Rate Risk | |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Futures contracts | | | $ (47,572) | |
|
| |
Total | | | $(200,505) | |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
|
| |
Average notional value | | $ | 47,412,785 | |
|
| |
NOTE 5–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2021, the Fund engaged in securities sales of $437,242, which resulted in net realized gains of $130,213.
NOTE 6–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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 8–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
Ordinary income* | | $ | 8,843,445 | | | | | | | $ | 6,064,889 | |
Long-term capital gain | | | 4,383,449 | | | | | | | | 2,100,106 | |
Total distributions | | $ | 13,226,894 | | | | | | | $ | 8,164,995 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 2,743,003 | |
|
| |
Undistributed long-term capital gain | | | 12,627,299 | |
|
| |
Net unrealized appreciation - investments | | | 37,349,102 | |
|
| |
Net unrealized appreciation (depreciation) - foreign currencies | | | (156 | ) |
|
| |
Temporary book/tax differences | | | (423,590 | ) |
|
| |
Shares of beneficial interest | | | 150,252,213 | |
|
| |
Total net assets | | $ | 202,547,871 | |
|
| |
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 derivative instruments 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 does not have a capital loss carryforward as of December 31, 2021.
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| Invesco V.I. Conservative Balanced Fund |
NOTE 9–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $109,140,035 and $112,098,750, 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 | | $ | 41,083,811 | |
| |
Aggregate unrealized (depreciation) of investments | | | (3,734,709 | ) |
| |
Net unrealized appreciation of investments | | $ | 37,349,102 | |
| |
Cost of investments for tax purposes is $176,510,221.
NOTE 10–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnerships, on December 31, 2021, undistributed net investment income was decreased by $274,765, undistributed net realized gain was increased by $276,780 and shares of beneficial interest was decreased by $2,015. This reclassification had no effect on the net assets of the Fund.
NOTE 11–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended
December 31, 2021(a) | | | Year ended
December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 151,798 | | | $ | 2,855,671 | | | | 293,180 | | | $ | 4,958,390 | |
|
| |
Series II | | | 332,830 | | | | 6,177,469 | | | | 407,137 | | | | 6,648,678 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 546,236 | | | | 10,034,354 | | | | 366,462 | | | | 6,277,496 | |
|
| |
Series II | | | 176,383 | | | | 3,192,540 | | | | 111,753 | | | | 1,887,499 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (946,065 | ) | | | (17,777,519 | ) | | | (1,093,831 | ) | | | (18,507,195 | ) |
|
| |
Series II | | | (430,098 | ) | | | (8,005,528 | ) | | | (649,731 | ) | | | (10,796,448 | ) |
|
| |
Net increase (decrease) in share activity | | | (168,916 | ) | | $ | (3,523,013 | ) | | | (565,030 | ) | | $ | (9,531,580 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 71% 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. |
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| Invesco 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Conservative Balanced Fund/VA (subsequently renamed Invesco V.I. Conservative Balanced Fund) 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,032.10 | | $3.43 | | $1,021.83 | | $3.41 | | 0.67% |
Series II | | 1,000.00 | | 1,030.20 | | 4.71 | | 1,020.57 | | 4.69 | | 0.92 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| Invesco 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 4,383,449 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 14.51 | % | | | | |
U.S. Treasury Obligations* | | | 1.43 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 29.83 | % | | | | |
|
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| Invesco 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) | | 186 | | 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. 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Conservative Balanced Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Core Bond Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. Core Bond Fund (the Fund) underperformed the Bloomberg U.S. Credit Index. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | -1.65 | % |
Series II Shares | | | -1.85 | |
Bloomberg U.S. Credit Index▼ | | | -1.08 | |
Bloomberg U.S. Aggregate Bond Index▼ | | | -1.54 | |
FTSE Broad Investment Grade Bond Index▼ | | | -1.60 | |
| |
Source(s): ▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
In the first quarter of 2021, rising 10-year US Treasury yields increased significantly to 1.74%, 1 its highest level since January 2020, reflecting higher inflation expectations. Largely a result of economic optimism, government bond yields rose globally during the first quarter of 2021 as investors began to price in higher levels of economic growth and inflation moving towards a post-pandemic world. On the fiscal front, another stimulus package was signed into law and COVID-19 vaccine approvals and administration ramped up. 30-year Treasury yields moved higher by 0.75% to end the quarter at 2.41%.1 Importantly, short-term rates, which are closely tied to the US Federal Reserve (the Fed) policy, were quite steady. Two-year US Treasury yields moved up just 0.05% to 0.16%.1
Fixed income markets settled down in the second quarter of 2021, posting gains and rebounding from negative performance experienced during the early part of the year due to a sharply rising interest rate environment. Despite higher volatility stemming from inflation concerns and the potential for rising interest rates, investors remained optimistic about the strength of the economic recovery after the US Bureau of Economic Analysis reported that US gross domestic product grew at a 6.4% annualized rate for the first quarter of 2021.2 As the US COVID-19 vaccination rate neared the 50% threshold, consumers resumed pre-pandemic activities in the third quarter and economically sensitive areas such as the consumer discretionary and industrials sectors began to recover.
In the fourth quarter of 2021, concerns about inflation heightened as US inflation rose 7%,3 its highest level in nearly 40 years. Though the Fed left policy rates unchanged in the quarter, the Fed indicated its accommodative policies were coming to an end in 2022 through a willingness to raise interest rates to combat inflation and the announced reduction of its monthly bond purchase program. Additionally, US interest rate moves and inflation risk significantly affected fixed income valuations during the quarter. The two-year Treasury yield rose moderately from 0.27%
to 0.73%, while the 10-year Treasury yield increased slightly from 1.48% to 1.52%.1 The yield curve, as measured by the yield differential between two- and 10-year Treasuries, flattened during the quarter. Despite the withdrawal of central bank support and coronavirus variants raising concerns about economic reopening and the resumption of travel, we believe that investors are cautiously optimistic and expect corporate balance sheets to continue to recover meaningfully in 2022.
The broader bond market, as represented by the Bloomberg U.S. Aggregate Bond Index, posted a negative 1.54% return for the fiscal year. The four primary sectors of the Fund’s Bloomberg U.S. Aggregate Bond Index – government-related, corporate, securitized and treasury – posted negative returns for the fiscal year.
The Fund generated negative returns for the fiscal year and underperformed its broad market/style-specific benchmark. Overweight exposure to investment-grade was the most notable contributor to the Fund’s relative performance. Underperformance from Treasuries and other government-related assets was driven by a flattening of the yield curve, signaling inflation concerns. Security selection in the financial institutions and technology, media and telecom industries also contributed to the Fund’s relative performance during the fiscal year while security selection within the industrials and consumer non-cyclical sectors detracted from relative performance.
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 fiscal year. The Fund’s out-of-index exposure to US dollar-denominated emerging market (EM) corporate debt during the fiscal year also contributed to the Fund’s relative performance. Out-of-index exposure, such as to high yield bonds, 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 contributed to relative Fund performance, as shorter duration assets rallied during the fiscal year as a result of an overall flattening of the yield curve.
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 fiscal 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 fiscal 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 fiscal 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 magnitude of the increase in interest rates, as well as individual security characteristics, such as price, maturity, duration and coupon
|
| Invesco V.I. Core 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. Core Bond Fund and for sharing our long-term investment horizon.
1 Source US Department of the Treasury
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
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. and its affiliates. 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. Core Bond Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (4/3/85) | | | 5.33 | % |
10 Years | | | 4.19 | |
5 Years | | | 4.11 | |
1 Year | | | -1.65 | |
| |
Series II Shares | | | | |
Inception (5/1/02) | | | 2.39 | % |
10 Years | | | 3.94 | |
5 Years | | | 3.86 | |
1 Year | | | -1.85 | |
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 (renamed Invesco V.I. Core Bond Fund on April 30, 2021). 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 V.I. Core 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.
|
| Invesco V.I. Core Bond Fund |
Supplemental Information
Invesco V.I. Core Bond Fund’s investment objective is to seek total return.
∎ Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is provided by Invesco.
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | The Bloomberg 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 V.I. Core Bond Fund |
Fund Information
Portfolio Composition
| | | | |
| By security type | | % of total net assets | |
| |
U.S. Dollar Denominated Bonds & Notes | | | 43.78% | |
| |
Asset-Backed Securities | | | 25.11 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | 18.94 | |
| |
U.S. Treasury Securities | | | 12.13 | |
| |
Security Types Each Less Than 1% of Portfolio | | | 1.74 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | (1.70) | |
Top Five Debt Issuers*
| | | | | | |
| | | | | % of total net assets | |
| | |
1. | | Uniform Mortgage-Backed Securities | | | 13.65% | |
| | |
2. | | U.S. Treasury | | | 12.13 | |
| | |
3. | | Government National Mortgage Association | | | 3.71 | |
| | |
4. | | Goldman Sachs Group, Inc. (The) | | | 2.20 | |
| | |
5. | | COMM Mortgage Trust | | | 1.44 | |
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, 2021.
|
| Invesco V.I. Core Bond Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | |
| | | Principal
Amount | | | Value |
U.S. Dollar Denominated Bonds & Notes–43.78% |
Advertising–0.09% | | | | | | |
| | |
Interpublic Group of Cos., Inc. (The), 4.20%, 04/15/2024 | | $ | 34,000 | | | $ 36,313 |
| | |
WPP Finance 2010 (United Kingdom), 3.75%, 09/19/2024 | | | 71,000 | | | 75,109 |
| | |
| | | | | | | 111,422 |
|
Aerospace & Defense–0.23% |
| | |
BAE Systems Holdings, Inc. (United Kingdom), 3.85%, 12/15/2025(b) | | | 55,000 | | | 59,004 |
| | |
Boeing Co. (The), 2.20%, 02/04/2026 | | | 137,000 | | | 137,079 |
| | |
L3Harris Technologies, Inc., 3.85%, 06/15/2023 | | | 71,000 | | | 73,770 |
| | |
| | | | | | | 269,853 |
|
Agricultural Products–0.19% |
| | |
Bunge Ltd. Finance Corp., 2.75%, 05/14/2031 | | | 218,000 | | | 221,480 |
| | |
Airlines–0.78% | | | | | | |
American Airlines Pass-Through Trust, | | | | | | |
Series 2021-1, Class B, 3.95%, 07/11/2030 | | | 128,000 | | | 127,214 |
Series 2021-1, Class A, 2.88%, 07/11/2034 | | | 172,000 | | | 171,107 |
| | |
British Airways Pass-Through Trust (United Kingdom), Series 2021-1, Class A, 2.90%, 03/15/2035(b) | | | 72,993 | | | 72,988 |
| | |
Delta Air Lines, Inc./SkyMiles IP Ltd.,
4.50%, 10/20/2025(b) | | | 118,585 | | | 124,708 |
4.75%, 10/20/2028(b) | | | 236,667 | | | 258,625 |
| | |
United Airlines Pass-Through Trust, Series 2020-1, Class A, 5.88%, 10/15/2027 | | | 161,691 | | | 177,418 |
| | |
| | | | | | | 932,060 |
| | |
Apparel Retail–0.07% | | | | | | |
| | |
Ross Stores, Inc., 3.38%, 09/15/2024 | | | 84,000 | | | 88,152 |
|
Application Software–0.28% |
| | |
salesforce.com, inc.,
2.90%, 07/15/2051 | | | 206,000 | | | 210,178 |
3.05%, 07/15/2061 | | | 124,000 | | | 127,909 |
| | | | | | | 338,087 |
|
Asset Management & Custody Banks–0.77% |
| | |
Ares Capital Corp., 2.88%, 06/15/2028 | | | 142,000 | | | 141,476 |
| | |
Bank of New York Mellon Corp. (The), Series I, 3.75%(c)(d) | | | 350,000 | | | 352,125 |
| | |
BlackRock, Inc., 2.10%, 02/25/2032 | | | 140,000 | | | 139,025 |
| | |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 65,000 | | | 69,525 |
| | |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 107,000 | | | 109,913 |
| | |
FS KKR Capital Corp., 1.65%, 10/12/2024 | | | 116,000 | | | 113,874 |
| | |
| | | | | | | 925,938 |
| | | | | | |
| | | Principal
Amount | | | Value |
Automobile Manufacturers–0.71% |
| | |
Daimler Finance North America LLC (Germany), 2.55%, 08/15/2022(b) | | $ | 319,000 | | | $ 322,663 |
| | |
General Motors Financial Co., Inc., 4.15%, 06/19/2023 | | | 69,000 | | | 71,786 |
| | |
Hyundai Capital America,
5.75%, 04/06/2023(b) | | | 87,000 | | | 91,877 |
4.13%, 06/08/2023(b) | | | 77,000 | | | 80,027 |
2.00%, 06/15/2028(b) | | | 144,000 | | | 140,500 |
| | |
Nissan Motor Acceptance Co. LLC, 1.85%, 09/16/2026(b) | | | 150,000 | | | 146,506 |
| | |
| | | | | | | 853,359 |
| | |
Automotive Retail–0.16% | | | | | | |
| | |
Advance Auto Parts, Inc., 1.75%, 10/01/2027 | | | 203,000 | | | 197,424 |
| | |
Biotechnology–0.09% | | | | | | |
| | |
AbbVie, Inc., 3.85%, 06/15/2024 | | | 106,000 | | | 112,266 |
| | |
Brewers–0.06% | | | | | | |
| | |
Anheuser-Busch InBev Worldwide, Inc. (Belgium), 8.20%, 01/15/2039 | | | 42,000 | | | 68,317 |
| | |
Building Products–0.11% | | | | | | |
| | |
Johnson Controls International PLC/Tyco Fire & Security Finance S.C.A., 2.00%, 09/16/2031 | | | 60,000 | | | 58,169 |
| | |
Masco Corp., 1.50%, 02/15/2028 | | | 75,000 | | | 72,649 |
| | |
| | | | | | | 130,818 |
| | |
Cable & Satellite–0.94% | | | | | | |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp.,
|
1.78% (3 mo. USD LIBOR + 1.65%), 02/01/2024(e) | | | 144,000 | | | 147,189 |
3.50%, 06/01/2041 | | | 93,000 | | | 90,836 |
3.50%, 03/01/2042 | | | 163,000 | | | 158,383 |
3.90%, 06/01/2052 | | | 122,000 | | | 122,574 |
3.85%, 04/01/2061 | | | 120,000 | | | 113,502 |
4.40%, 12/01/2061 | | | 58,000 | | | 60,149 |
| | |
Comcast Corp., 2.65%, 08/15/2062 | | | 82,000 | | | 72,944 |
Cox Communications, Inc.,
| | | | | | |
2.60%, 06/15/2031(b) | | | 106,000 | | | 105,997 |
3.60%, 06/15/2051(b) | | | 244,000 | | | 256,142 |
| | | | | | | 1,127,716 |
| |
Computer & Electronics Retail–0.25% | | | |
Dell International LLC/EMC Corp.,
| | | | | | |
5.30%, 10/01/2029 | | | 84,000 | | | 98,561 |
3.45%, 12/15/2051(b) | | | 114,000 | | | 109,650 |
| | |
Leidos, Inc., 2.30%, 02/15/2031 | | | 97,000 | | | 93,547 |
| | |
| | | | | | | 301,758 |
| | |
Consumer Finance–0.13% | | | | | | |
| | |
Ally Financial, Inc., 2.20%, 11/02/2028 | | | 94,000 | | | 93,449 |
| | |
Synchrony Financial, 4.25%, 08/15/2024 | | | 56,000 | | | 59,347 |
| | |
| | | | | | | 152,796 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Data Processing & Outsourced Services–0.06% |
| | |
Mastercard, Inc., 2.00%,
11/18/2031 | | $ | 66,000 | | | $ 65,859 |
|
Distillers & Vintners–0.26% |
| | |
Pernod Ricard S.A. (France), 4.25%, 07/15/2022(b) | | | 307,000 | | | 313,037 |
|
Diversified Banks–9.29% |
| | |
ASB Bank Ltd. (New Zealand), 2.38%, 10/22/2031(b) | | | 202,000 | | | 201,008 |
| | |
Banco Santander S.A. (Spain), 1.72%, 09/14/2027(c) | | | 200,000 | | | 196,474 |
| | |
Bank of America Corp., | | | | | | |
3.82%, 01/20/2028(c) | | | 46,000 | | | 49,847 |
4.27%, 07/23/2029(c) | | | 61,000 | | | 68,055 |
2.59%, 04/29/2031(c) | | | 55,000 | | | 55,619 |
2.69%, 04/22/2032(c) | | | 213,000 | | | 216,385 |
2.30%, 07/21/2032(c) | | | 101,000 | | | 99,412 |
2.57%, 10/20/2032(c) | | | 135,000 | | | 135,747 |
2.48%, 09/21/2036(c) | | | 169,000 | | | 163,884 |
7.75%, 05/14/2038 | | | 232,000 | | | 364,102 |
| | |
Barclays PLC (United Kingdom),
| | | | | | |
2.28%, 11/24/2027(c) | | | 200,000 | | | 200,474 |
3.33%, 11/24/2042(c) | | | 200,000 | | | 203,904 |
| | |
BNP Paribas S.A. (France), 2.16%, 09/15/2029(b)(c) | | | 206,000 | | | 202,108 |
| | |
BPCE S.A. (France),
| | | | | | |
4.50%, 03/15/2025(b) | | | 185,000 | | | 199,505 |
2.05%, 10/19/2027(b)(c) | | | 250,000 | | | 247,997 |
| | |
Citigroup, Inc., | | | | | | |
3.11%, 04/08/2026(c) | | | 73,000 | | | 76,578 |
4.08%, 04/23/2029(c) | | | 62,000 | | | 68,428 |
4.41%, 03/31/2031(c) | | | 62,000 | | | 70,879 |
2.56%, 05/01/2032(c) | | | 137,000 | | | 137,855 |
2.52%, 11/03/2032(c) | | | 89,000 | | | 88,993 |
2.90%, 11/03/2042(c) | | | 136,000 | | | 134,916 |
3.88%(c)(d) | | | 376,000 | | | 376,940 |
Series V, 4.70%(c)(d) | | | 165,000 | | | 167,096 |
Series Y, 4.15%(c)(d) | | | 174,000 | | | 177,262 |
| | |
Commonwealth Bank of Australia (Australia), 2.69%, 03/11/2031(b) | | | 200,000 | | | 196,888 |
| | |
Credit Agricole S.A. (France),
| | | | | | |
4.38%, 03/17/2025(b) | | | 310,000 | | | 333,400 |
7.88%(b)(c)(d) | | | 200,000 | | | 219,494 |
| | |
Danske Bank A/S (Denmark), 1.55%, 09/10/2027(b)(c) | | | 200,000 | | | 195,517 |
| | |
Discover Bank, 4.65%, 09/13/2028 | | | 116,000 | | | 131,736 |
| | |
HSBC Holdings PLC (United Kingdom),
| | | | | | |
3.95%, 05/18/2024(c) | | | 103,000 | | | 106,851 |
2.25%, 11/22/2027(c) | | | 200,000 | | | 200,534 |
2.87%, 11/22/2032(c) | | | 200,000 | | | 201,880 |
4.60%(c)(d) | | | 225,000 | | | 225,378 |
6.25%(c)(d) | | | 243,000 | | | 252,720 |
| | |
ING Groep N.V. (Netherlands),
| | | | | | |
1.06% (SOFR + 1.01%), 04/01/2027(e) | | | 368,000 | | | 371,499 |
6.88%(b)(c)(d) | | | 200,000 | | | 203,500 |
Series NC10, 4.25%(c)(d) | | | 205,000 | | | 193,725 |
| | | | | | |
| | | Principal
Amount | | | Value |
Diversified Banks–(continued) |
| | |
JPMorgan Chase & Co.,
| | | | | | |
3.80%, 07/23/2024(c) | | $ | 91,000 | | | $ 94,872 |
2.08%, 04/22/2026(c) | | | 97,000 | | | 98,526 |
3.78%, 02/01/2028(c) | | | 81,000 | | | 87,746 |
3.54%, 05/01/2028(c) | | | 62,000 | | | 67,384 |
2.58%, 04/22/2032(c) | | | 134,000 | | | 135,865 |
3.11%, 04/22/2041(c) | | | 60,000 | | | 62,264 |
| | |
Mitsubishi UFJ Financial Group, Inc. (Japan), 2.49%, 10/13/2032(c) | | | 211,000 | | | 211,502 |
| | |
Mizuho Financial Group, Inc. (Japan), 2.56%, 09/13/2031 | | | 200,000 | | | 195,148 |
| | |
National Australia Bank Ltd. (Australia), 3.93%, 08/02/2034(b)(c) | | | 153,000 | | | 162,359 |
| | |
Nordea Bank Abp (Finland),
3.75%(b)(c)(d) | | | 210,000 | | | 199,605 |
| | |
PNC Bank N.A., 2.50%, 08/27/2024 | | | 255,000 | | | 263,447 |
| | |
Royal Bank of Canada (Canada), | | | | | | |
3.70%, 10/05/2023 | | | 60,000 | | | 62,961 |
2.30%, 11/03/2031 | | | 42,000 | | | 42,243 |
| | |
Standard Chartered PLC (United Kingdom), 2.68%,
06/29/2032(b)(c) | | | 200,000 | | | 196,714 |
| | |
Sumitomo Mitsui Financial Group, Inc. (Japan),
| | | | | | |
1.47%, 07/08/2025 | | | 200,000 | | | 199,120 |
2.14%, 09/23/2030 | | | 159,000 | | | 152,960 |
2.22%, 09/17/2031 | | | 200,000 | | | 196,390 |
| | |
Sumitomo Mitsui Trust Bank Ltd. (Japan), 1.35%, 09/16/2026(b) | | | 461,000 | | | 453,651 |
| | |
Truist Bank, 2.64%, 09/17/2029(c) | | | 390,000 | | | 401,141 |
| | |
U.S. Bancorp,
| | | | | | |
Series W, 3.10%, 04/27/2026 | | | 54,000 | | | 57,121 |
1.38%, 07/22/2030 | | | 53,000 | | | 49,926 |
2.49%, 11/03/2036(c) | | | 279,000 | | | 278,233 |
3.70%(c)(d) | | | 385,000 | | | 385,885 |
| | |
Wells Fargo & Co.,
| | | | | | |
3.58%, 05/22/2028(c) | | | 62,000 | | | 66,701 |
4.75%, 12/07/2046 | | | 43,000 | | | 53,793 |
Series BB, 3.90%(c)(d) | | | 145,000 | | | 149,078 |
| | |
Westpac Banking Corp. (Australia), 3.13%, 11/18/2041 | | | 86,000 | | | 85,396 |
| | |
| | | | | | | 11,146,621 |
|
Diversified Capital Markets–1.01% |
| | |
Credit Suisse AG (Switzerland), 3.63%, 09/09/2024 | | | 189,000 | | | 200,537 |
| | |
Credit Suisse Group AG (Switzerland),
| | | | | | |
4.55%, 04/17/2026 | | | 147,000 | | | 162,124 |
4.19%, 04/01/2031(b)(c) | | | 250,000 | | | 276,005 |
5.10%(b)(c)(d) | | | 201,000 | | | 201,754 |
| | |
UBS Group AG (Switzerland),
| | | | | | |
4.13%, 04/15/2026(b) | | | 153,000 | | | 167,124 |
4.38%(b)(c)(d) | | | 200,000 | | | 198,060 |
| | | | | | | 1,205,604 |
|
Diversified Chemicals–0.05% |
| | |
Dow Chemical Co. (The), 3.63%, 05/15/2026 | | | 50,000 | | | 53,917 |
|
Diversified Metals & Mining–0.14% |
| | |
Rio Tinto Finance USA Ltd. (Australia), 2.75%, 11/02/2051 | | | 170,000 | | | 168,856 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Diversified REITs–0.32% |
| | |
American Campus Communities Operating Partnership L.P., 2.25%, 01/15/2029 | | $ | 83,000 | | | $ 82,162 |
| | |
Brixmor Operating Partnership L.P., | | | | | | |
4.13%, 05/15/2029 | | | 35,000 | | | 38,812 |
4.05%, 07/01/2030 | | | 55,000 | | | 60,082 |
2.50%, 08/16/2031 | | | 68,000 | | | 66,619 |
CubeSmart L.P., | | | | | | |
2.25%, 12/15/2028 | | | 47,000 | | | 47,046 |
2.50%, 02/15/2032 | | | 86,000 | | | 85,720 |
| | | | | | | 380,441 |
| | |
Drug Retail–0.28% | | | | | | |
| | |
CK Hutchison International 21 Ltd. (United Kingdom), 1.50%, 04/15/2026(b) | | | 339,000 | | | 334,711 |
| | |
Electric Utilities–0.75% | | | | | | |
| | |
AEP Texas, Inc., 3.95%, 06/01/2028(b) | | | 162,000 | | | 177,631 |
| | |
Duke Energy Corp., 3.25%, 01/15/2082(c) | | | 105,000 | | | 102,398 |
| | |
EDP Finance B.V. (Portugal), 3.63%, 07/15/2024(b) | | | 219,000 | | | 229,956 |
| | |
Enel Finance International N.V. (Italy), 2.88%, 07/12/2041(b) | | | 200,000 | | | 192,129 |
| | |
PacifiCorp, 2.90%, 06/15/2052 | | | 122,000 | | | 120,036 |
| | |
Southern Co. (The), Series 21-A, 3.75%, 09/15/2051(c) | | | 78,000 | | | 78,195 |
| | |
| | | | | | | 900,345 |
|
Electronic Equipment & Instruments–0.16% |
Vontier Corp., |
2.40%, 04/01/2028(b) | | | 101,000 | | | 97,760 |
2.95%, 04/01/2031(b) | | | 94,000 | | | 93,246 |
| | | | | | | 191,006 |
|
Electronic Manufacturing Services–0.06% |
| | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 71,000 | | | 73,047 |
|
Financial Exchanges & Data–0.48% |
| | |
Intercontinental Exchange, Inc., 3.00%, 09/15/2060 | | | 54,000 | | | 53,424 |
Moody’s Corp., | | | | | | |
2.00%, 08/19/2031 | | | 110,000 | | | 107,087 |
2.75%, 08/19/2041 | | | 130,000 | | | 127,111 |
3.10%, 11/29/2061 | | | 290,000 | | | 288,360 |
| | | | | | | 575,982 |
|
Food Retail–0.19% |
Alimentation Couche-Tard, Inc. (Canada), |
3.44%, 05/13/2041(b) | | | 84,000 | | | 86,616 |
3.63%, 05/13/2051(b) | | | 139,000 | | | 146,543 |
| | | | | | | 233,159 |
|
Health Care Distributors–0.08% |
| | |
McKesson Corp., 1.30%, 08/15/2026 | | | 101,000 | | | 98,695 |
|
Health Care REITs–0.20% |
Healthcare Trust of America Holdings L.P., |
3.50%, 08/01/2026 | | | 55,000 | | | 58,702 |
2.00%, 03/15/2031 | | | 54,000 | | | 51,160 |
| | | | | | |
| | | Principal
Amount | | | Value |
Health Care REITs–(continued) |
| | |
Omega Healthcare Investors, Inc., 3.25%, 04/15/2033 | | $ | 135,000 | | | $ 131,745 |
| | |
| | | | | | | 241,607 |
|
Health Care Services–0.65% |
| | |
Cigna Corp., 4.13%, 11/15/2025 | | | 55,000 | | | 60,193 |
| | |
CVS Health Corp., 1.30%, 08/21/2027 | | | 73,000 | | | 70,827 |
| | |
Fresenius Medical Care US Finance II, Inc. (Germany), 5.88%, 01/31/2022(b) | | | 92,000 | | | 92,329 |
| | |
Fresenius Medical Care US Finance III, Inc. (Germany), 1.88%, 12/01/2026(b) | | | 150,000 | | | 148,477 |
| | |
Piedmont Healthcare, Inc., | | | | | | |
Series 2032, 2.04%, 01/01/2032 | | | 70,000 | | | 68,147 |
Series 2042, 2.72%, 01/01/2042 | | | 68,000 | | | 66,525 |
2.86%, 01/01/2052 | | | 77,000 | | | 75,307 |
| | |
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%, 10/01/2051 | | | 205,000 | | | 198,667 |
| | |
| | | | | | | 780,472 |
|
Homebuilding–0.22% |
| | |
D.R. Horton, Inc., 4.75%, 02/15/2023 | | | 63,000 | | | 65,089 |
| | |
M.D.C. Holdings, Inc., 3.97%, 08/06/2061 | | | 213,000 | | | 203,985 |
| | |
| | | | | | | 269,074 |
|
Hotels, Resorts & Cruise Lines–0.66% |
Expedia Group, Inc., | | | | | | |
4.63%, 08/01/2027 | | | 50,000 | | | 55,713 |
3.25%, 02/15/2030 | | | 497,000 | | | 507,725 |
2.95%, 03/15/2031 | | | 226,000 | | | 225,913 |
| | | | | | | 789,351 |
|
Independent Power Producers & Energy Traders–0.23% |
AES Corp. (The), |
1.38%, 01/15/2026 | | | 54,000 | | | 52,476 |
2.45%, 01/15/2031 | | | 59,000 | | | 57,545 |
| | |
Deutsche Telekom International Finance B.V. (Germany), 4.38%, 06/21/2028(b) | | | 149,000 | | | 166,477 |
| | |
| | | | | | | 276,498 |
|
Industrial Machinery–0.04% |
| | |
Flowserve Corp., 2.80%,
01/15/2032 | | | 50,000 | | | 48,706 |
|
Industrial REITs–0.07% |
| | |
LXP Industrial Trust, 2.38%, 10/01/2031 | | | 85,000 | | | 81,654 |
|
Insurance Brokers–0.25% |
| | |
Arthur J. Gallagher & Co., 3.50%, 05/20/2051 | | | 78,000 | | | 82,569 |
| | |
Assured Guaranty US Holdings, Inc., 3.60%, 09/15/2051 | | | 57,000 | | | 59,416 |
Marsh & McLennan Cos., Inc., | | | | | | |
2.38%, 12/15/2031 | | | 78,000 | | | 78,830 |
2.90%, 12/15/2051 | | | 78,000 | | | 78,046 |
| | |
| | | | | | | 298,861 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Integrated Oil & Gas–0.68% |
BP Capital Markets America, Inc., |
3.06%, 06/17/2041 | | $ | 172,000 | | | $ 174,386 |
2.94%, 06/04/2051 | | | 21,000 | | | 20,213 |
3.00%, 03/17/2052 | | | 88,000 | | | 86,308 |
| | |
Gray Oak Pipeline LLC, 2.60%, 10/15/2025(b) | | | 63,000 | | | 63,139 |
Shell International Finance B.V. (Netherlands), |
2.88%, 11/26/2041 | | | 235,000 | | | 235,661 |
3.00%, 11/26/2051 | | | 235,000 | | | 239,377 |
| | | | | | | 819,084 |
|
Integrated Telecommunication Services–1.74% |
AT&T, Inc., |
0.69% (SOFR + 0.64%),
03/25/2024(e) | | | 144,000 | | | 144,049 |
4.30%, 02/15/2030 | | | 54,000 | | | 60,839 |
2.55%, 12/01/2033 | | | 289,000 | | | 282,990 |
3.10%, 02/01/2043 | | | 78,000 | | | 75,987 |
3.50%, 09/15/2053 | | | 132,000 | | | 133,423 |
3.50%, 02/01/2061 | | | 50,000 | | | 49,325 |
| | |
NBN Co. Ltd. (Australia), 1.63%, 01/08/2027(b) | | | 203,000 | | | 199,298 |
Verizon Communications, Inc., |
1.75%, 01/20/2031 | | | 54,000 | | | 51,174 |
2.55%, 03/21/2031 | | | 58,000 | | | 58,577 |
2.36%, 03/15/2032(b) | | | 497,000 | | | 490,270 |
2.65%, 11/20/2040 | | | 50,000 | | | 47,596 |
3.40%, 03/22/2041 | | | 62,000 | | | 65,026 |
2.85%, 09/03/2041 | | | 184,000 | | | 181,881 |
2.88%, 11/20/2050 | | | 58,000 | | | 55,198 |
3.55%, 03/22/2051 | | | 33,000 | | | 35,620 |
3.00%, 11/20/2060 | | | 66,000 | | | 62,582 |
3.70%, 03/22/2061 | | | 82,000 | | | 89,089 |
| | |
| | | | | | | 2,082,924 |
|
Interactive Home Entertainment–0.10% |
| | |
Electronic Arts, Inc., 1.85%, 02/15/2031 | | | 123,000 | | | 118,019 |
|
Internet & Direct Marketing Retail–0.29% |
Amazon.com, Inc., |
2.88%, 05/12/2041 | | | 149,000 | | | 155,020 |
3.10%, 05/12/2051 | | | 184,000 | | | 196,932 |
| | |
| | | | | | | 351,952 |
|
Internet Services & Infrastructure–0.07% |
| | |
VeriSign, Inc., 2.70%, 06/15/2031 | | | 81,000 | | | 81,521 |
|
Investment Banking & Brokerage–2.87% |
| | |
Brookfield Finance I (UK) PLC (Canada), 2.34%, 01/30/2032 | | | 133,000 | | | 129,876 |
| | | | | | |
| | | Principal
Amount | | | Value |
Investment Banking & Brokerage–(continued) |
Goldman Sachs Group, Inc. (The), |
0.63% (SOFR + 0.58%), 03/08/2024(e) | | $ | 270,000 | | | $ 270,054 |
3.50%, 04/01/2025 | | | 65,000 | | | 68,782 |
3.50%, 11/16/2026 | | | 38,000 | | | 40,518 |
0.84% (SOFR + 0.79%), 12/09/2026(e) | | | 516,000 | | | 519,490 |
1.09%, 12/09/2026(c) | | | 79,000 | | | 77,023 |
0.86% (SOFR + 0.81%), 03/09/2027(e) | | | 483,000 | | | 485,948 |
0.97% (SOFR + 0.92%), 10/21/2027(e) | | | 400,000 | | | 402,342 |
1.95%, 10/21/2027(c) | | | 133,000 | | | 132,475 |
1.99%, 01/27/2032(c) | | | 84,000 | | | 80,622 |
2.62%, 04/22/2032(c) | | | 53,000 | | | 53,437 |
2.38%, 07/21/2032(c) | | | 101,000 | | | 99,528 |
2.65%, 10/21/2032(c) | | | 161,000 | | | 162,169 |
3.21%, 04/22/2042(c) | | | 55,000 | | | 57,146 |
2.91%, 07/21/2042(c) | | | 80,000 | | | 79,688 |
Series V, 4.13%(c)(d) | | | 109,000 | | | 110,873 |
Morgan Stanley, |
5.00%, 11/24/2025 | | | 71,000 | | | 79,555 |
2.19%, 04/28/2026(c) | | | 50,000 | | | 51,019 |
3.62%, 04/01/2031(c) | | | 62,000 | | | 67,630 |
2.24%, 07/21/2032(c) | | | 165,000 | | | 161,558 |
2.51%, 10/20/2032(c) | | | 100,000 | | | 100,011 |
2.48%, 09/16/2036(c) | | | 227,000 | | | 218,829 |
| | | | | | | 3,448,573 |
|
IT Consulting & Other Services–0.13% |
| | |
DXC Technology Co., 2.38%, 09/15/2028 | | | 162,000 | | | 158,490 |
|
Life & Health Insurance–2.37% |
| | |
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | | | 81,000 | | | 91,787 |
Athene Global Funding, |
1.20%, 10/13/2023(b) | | | 117,000 | | | 117,212 |
1.45%, 01/08/2026(b) | | | 59,000 | | | 58,007 |
2.95%, 11/12/2026(b) | | | 113,000 | | | 118,205 |
Athene Holding Ltd., |
6.15%, 04/03/2030 | | | 67,000 | | | 82,979 |
3.95%, 05/25/2051 | | | 23,000 | | | 24,870 |
3.45%, 05/15/2052 | | | 181,000 | | | 182,243 |
| | |
Brighthouse Financial Global Funding, 1.20%, 12/15/2023(b) | | | 189,000 | | | 189,402 |
| | |
Brighthouse Financial, Inc., 3.85%, 12/22/2051 | | | 251,000 | | | 248,142 |
| | |
F&G Global Funding, 2.00%, 09/20/2028(b) | | | 155,000 | | | 150,815 |
| | |
GA Global Funding Trust, 1.95%, 09/15/2028(b) | | | 255,000 | | | 248,003 |
| | |
MAG Mutual Holding Co., 4.75%, 04/30/2041(f) | | | 612,000 | | | 616,559 |
| | |
Manulife Financial Corp. (Canada), 4.06%, 02/24/2032(c) | | | 52,000 | | | 55,987 |
| | |
Maple Grove Funding Trust I, 4.16%, 08/15/2051(b) | | | 393,000 | | | 405,940 |
| | |
Pacific LifeCorp, 3.35%, 09/15/2050(b) | | | 68,000 | | | 73,301 |
| | |
Prudential Financial, Inc., 5.20%, 03/15/2044(c) | | | 89,000 | | | 92,741 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Life & Health Insurance–(continued) |
| | |
Reliance Standard Life Global Funding II, 2.75%, 01/21/2027(b) | | $ | 78,000 | | | $ 81,273 |
| | |
| | | | | | | 2,837,466 |
|
Life Sciences Tools & Services–0.05% |
| | |
Illumina, Inc., 2.55%, 03/23/2031 | | | 54,000 | | | 54,043 |
|
Managed Health Care–0.28% |
| | |
Kaiser Foundation Hospitals,
Series 2021,
| | | | | | |
2.81%, 06/01/2041 | | | 160,000 | | | 161,167 |
3.00%, 06/01/2051 | | | 170,000 | | | 175,382 |
| | | | | | | 336,549 |
|
Multi-line Insurance–0.19% |
| | |
Allianz SE (Germany), 3.20%(b)(c)(d) | | | 237,000 | | | 228,112 |
|
Multi-Utilities–0.17% |
| | |
Ameren Corp., 2.50%, 09/15/2024 | | | 46,000 | | | 47,262 |
| | |
Dominion Energy, Inc., Series C, 3.38%, 04/01/2030 | | | 53,000 | | | 56,305 |
| | |
WEC Energy Group, Inc.,
| | | | | | |
1.38%, 10/15/2027 | | | 52,000 | | | 50,185 |
1.80%, 10/15/2030 | | | 48,000 | | | 45,373 |
| | | | | | | 199,125 |
|
Office REITs–0.36% |
| | |
| | | | | | |
| | |
Office Properties Income Trust, 4.25%, 05/15/2024 | | | 187,000 | | | 195,111 |
4.50%, 02/01/2025 | | | 106,000 | | | 111,797 |
2.65%, 06/15/2026 | | | 26,000 | | | 25,830 |
2.40%, 02/01/2027 | | | 105,000 | | | 101,706 |
| | | | | | | 434,444 |
|
Oil & Gas Exploration & Production–0.65% |
| | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 97,000 | | | 98,012 |
| | |
Cheniere Corpus Christi Holdings LLC, 2.74%, 12/31/2039(b) | | | 111,000 | | | 108,435 |
| | |
Continental Resources, Inc.,
| | | | | | |
2.27%, 11/15/2026(b) | | | 63,000 | | | 62,594 |
2.88%, 04/01/2032(b) | | | 79,000 | | | 77,396 |
| | |
Lundin Energy Finance B.V. (Netherlands),
| | | | | | |
2.00%, 07/15/2026(b) | | | 216,000 | | | 214,707 |
3.10%, 07/15/2031(b) | | | 216,000 | | | 217,771 |
| | | | | | | 778,915 |
|
Oil & Gas Storage & Transportation–0.94% |
| | |
El Paso Natural Gas Co. LLC, 8.38%, 06/15/2032 | | | 65,000 | | | 93,342 |
| | |
Enbridge, Inc. (Canada),
| | | | | | |
1.60%, 10/04/2026 | | | 73,000 | | | 72,001 |
3.40%, 08/01/2051 | | | 74,000 | | | 75,193 |
| | |
Energy Transfer L.P.,
| | | | | | |
4.25%, 03/15/2023 | | | 54,000 | | | 55,503 |
4.00%, 10/01/2027 | | | 43,000 | | | 46,206 |
| | |
Kinder Morgan, Inc., 7.75%, 01/15/2032 | | | 101,000 | | | 142,048 |
| | |
MPLX L.P.,
| | | | | | |
1.75%, 03/01/2026 | | | 65,000 | | | 64,412 |
4.25%, 12/01/2027 | | | 44,000 | | | 48,774 |
| | |
ONEOK, Inc., 6.35%, 01/15/2031 | | | 93,000 | | | 116,894 |
| | | | | | |
| | | Principal
Amount | | | Value |
Oil & Gas Storage & Transportation–(continued) |
| | |
Williams Cos., Inc. (The),
| | | | | | |
3.70%, 01/15/2023 | | $ | 71,000 | | | $ 72,580 |
2.60%, 03/15/2031 | | | 228,000 | | | 226,688 |
3.50%, 10/15/2051 | | | 118,000 | | | 119,498 |
| | | | | | | 1,133,139 |
|
Other Diversified Financial Services–2.68% |
| | |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland),
| | | | | | |
2.45%, 10/29/2026 | | | 226,000 | | | 227,984 |
3.00%, 10/29/2028 | | | 154,000 | | | 156,297 |
3.30%, 01/30/2032 | | | 211,000 | | | 215,138 |
3.40%, 10/29/2033 | | | 194,000 | | | 197,756 |
3.85%, 10/29/2041 | | | 191,000 | | | 199,303 |
| | |
Avolon Holdings Funding Ltd. (Ireland),
| | | | | | |
2.13%, 02/21/2026(b) | | | 78,000 | | | 76,628 |
2.75%, 02/21/2028(b) | | | 88,000 | | | 86,409 |
| | |
Blackstone Holdings Finance Co. LLC,
| | | | | | |
1.60%, 03/30/2031(b) | | | 97,000 | | | 90,389 |
2.80%, 09/30/2050(b) | | | 46,000 | | | 44,026 |
| | |
Blackstone Private Credit Fund,
| | | | | | |
1.75%, 09/15/2024(b) | | | 38,000 | | | 37,399 |
2.35%, 11/22/2024(b) | | | 150,000 | | | 149,984 |
2.63%, 12/15/2026(b) | | | 299,000 | | | 291,671 |
3.25%, 03/15/2027(b) | | | 164,000 | | | 165,794 |
| | |
Blackstone Secured Lending Fund,
| | | | | | |
2.75%, 09/16/2026 | | | 226,000 | | | 226,204 |
2.13%, 02/15/2027(b) | | | 149,000 | | | 145,118 |
2.85%, 09/30/2028(b) | | | 93,000 | | | 90,737 |
| | |
Blue Owl Finance LLC, 3.13%, 06/10/2031(b) | | | 125,000 | | | 122,452 |
| | |
KKR Group Finance Co. X LLC, 3.25%, 12/15/2051(b) | | | 82,000 | | | 81,921 |
| | |
LSEGA Financing PLC (United Kingdom),
| | | | | | |
1.38%, 04/06/2026(b) | | | 200,000 | | | 196,217 |
2.00%, 04/06/2028(b) | | | 203,000 | | | 200,527 |
3.20%, 04/06/2041(b) | | | 200,000 | | | 209,148 |
| | | | | | | 3,211,102 |
|
Packaged Foods & Meats–0.37% |
| | |
Conagra Brands, Inc., 4.60%, 11/01/2025 | | | 66,000 | | | 72,626 |
| | |
General Mills, Inc., 2.25%, 10/14/2031 | | | 74,000 | | | 73,202 |
| | |
JDE Peet’s N.V. (Netherlands),
1.38%, 01/15/2027(b) | | | 150,000 | | | 144,937 |
2.25%, 09/24/2031(b) | | | 155,000 | | | 149,286 |
| | | | | | | 440,051 |
|
Paper Packaging–0.45% |
| | |
Berry Global, Inc., 1.65%, 01/15/2027 | | | 408,000 | | | 399,218 |
| | |
Packaging Corp. of America, 3.65%, 09/15/2024 | | | 61,000 | | | 64,474 |
| | |
Sealed Air Corp., 1.57%, 10/15/2026(b) | | | 81,000 | | | 78,582 |
| | |
| | | | | | | 542,274 |
|
Pharmaceuticals–0.49% |
| | |
Bayer US Finance II LLC (Germany), 3.88%, 12/15/2023(b) | | | 313,000 | | | 327,239 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Pharmaceuticals–(continued) |
| | |
Mayo Clinic, Series 2021, 3.20%, 11/15/2061 | | $ | 131,000 | | | $ 141,241 |
| | |
Mylan, Inc., 3.13%, 01/15/2023(b) | | | 68,000 | | | 69,432 |
| | |
Royalty Pharma PLC, 2.15%, 09/02/2031 | | | 55,000 | | | 52,014 |
| | |
| | | | | | | 589,926 |
|
Precious Metals & Minerals–0.07% |
| | |
Anglo American Capital PLC (South Africa), 3.63%, 09/11/2024(b) | | | 83,000 | | | 87,181 |
|
Property & Casualty Insurance–0.70% |
Chubb INA Holdings, Inc., | | | | | | |
2.85%, 12/15/2051 | | | 46,000 | | | 46,232 |
3.05%, 12/15/2061 | | | 103,000 | | | 105,403 |
| | |
CNA Financial Corp., 3.45%, 08/15/2027 | | | 54,000 | | | 58,151 |
Fidelity National Financial, Inc., | | | | | | |
3.40%, 06/15/2030 | | | 49,000 | | | 51,792 |
2.45%, 03/15/2031 | | | 71,000 | | | 69,763 |
3.20%, 09/17/2051 | | | 56,000 | | | 53,646 |
| | |
First American Financial Corp., 2.40%, 08/15/2031 | | | 108,000 | | | 105,781 |
| | |
Stewart Information Services Corp., 3.60%, 11/15/2031 | | | 158,000 | | | 160,157 |
W.R. Berkley Corp., | | | | | | |
3.55%, 03/30/2052 | | | 92,000 | | | 100,813 |
3.15%, 09/30/2061 | | | 97,000 | | | 92,373 |
| | |
| | | | | | | 844,111 |
|
Railroads–0.15% |
| | |
Canadian Pacific Railway Co. (Canada), 1.75%, 12/02/2026 | | | 127,000 | | | 127,527 |
| | |
Union Pacific Corp., 2.15%, 02/05/2027 | | | 52,000 | | | 53,440 |
| | |
| | | | | | | 180,967 |
|
Real Estate Development–0.07% |
| | |
Essential Properties L.P., 2.95%, 07/15/2031 | | | 82,000 | | | 80,911 |
|
Regional Banks–2.36% |
| | |
Citizens Financial Group, Inc.,
4.30%, 12/03/2025 | | | 212,000 | | | 230,573 |
2.50%, 02/06/2030 | | | 50,000 | | | 50,236 |
3.25%, 04/30/2030 | | | 30,000 | | | 31,717 |
2.64%, 09/30/2032 | | | 330,000 | | | 326,509 |
| | |
Fifth Third Bank N.A., 3.85%, 03/15/2026 | | | 168,000 | | | 181,396 |
Huntington Bancshares, Inc., | | | | | | |
4.00%, 05/15/2025 | | | 71,000 | | | 76,423 |
2.49%, 08/15/2036(b)(c) | | | 99,000 | | | 94,963 |
| | |
KeyCorp, 2.25%, 04/06/2027 | | | 71,000 | | | 72,218 |
| | |
M&T Bank Corp., 3.50%(c)(d) | | | 194,000 | | | 190,566 |
| | |
PNC Financial Services Group, Inc. (The), 3.15%, 05/19/2027 | | | 53,000 | | | 57,160 |
| | |
Santander Holdings USA, Inc., 3.50%, 06/07/2024 | | | 57,000 | | | 59,445 |
| | | | | | |
| | | Principal
Amount | | | Value |
Regional Banks–(continued) |
SVB Financial Group, | | | | | | |
2.10%, 05/15/2028 | | $ | 74,000 | | | $ 74,084 |
1.80%, 02/02/2031 | | | 106,000 | | | 100,596 |
4.10%(c)(d) | | | 172,000 | | | 170,968 |
Series C, 4.00%(c)(d) | | | 348,000 | | | 350,175 |
Series D, 4.25%(c)(d) | | | 294,000 | | | 298,667 |
Series E, 4.70%(c)(d) | | | 197,000 | | | 203,023 |
| | |
Zions Bancorporation N.A., 3.25%, 10/29/2029 | | | 250,000 | | | 258,796 |
| | |
| | | | | | | 2,827,515 |
|
Reinsurance–0.11% |
| | |
Berkshire Hathaway Finance Corp., 2.85%, 10/15/2050 | | | 66,000 | | | 65,212 |
| | |
Global Atlantic Fin Co., 3.13%, 06/15/2031(b) | | | 71,000 | | | 70,356 |
| | |
| | | | | | | 135,568 |
|
Residential REITs–0.34% |
American Homes 4 Rent L.P., | | | | | | |
2.38%, 07/15/2031 | | | 28,000 | | | 27,490 |
3.38%, 07/15/2051 | | | 27,000 | | | 27,195 |
Invitation Homes Operating Partnership L.P.,
| | | | | | |
2.30%, 11/15/2028 | | | 46,000 | | | 45,537 |
2.70%, 01/15/2034 | | | 143,000 | | | 140,434 |
| | |
Mid-America Apartments L.P., 2.88%, 09/15/2051 | | | 29,000 | | | 28,651 |
| | |
Spirit Realty L.P., 3.20%, 01/15/2027 | | | 51,000 | | | 53,388 |
Sun Communities Operating L.P., | | | | | | |
2.30%, 11/01/2028 | | | 47,000 | | | 46,979 |
2.70%, 07/15/2031 | | | 33,000 | | | 32,768 |
| | | | | | | 402,442 |
|
Retail REITs–0.97% |
Agree L.P., | | | | | | |
2.00%, 06/15/2028 | | | 56,000 | | | 54,904 |
2.60%, 06/15/2033 | | | 74,000 | | | 72,755 |
| | |
Kimco Realty Corp.,
1.90%, 03/01/2028 | | | 83,000 | | | 82,214 |
2.70%, 10/01/2030 | | | 40,000 | | | 40,643 |
2.25%, 12/01/2031 | | | 122,000 | | | 119,012 |
| | |
Kite Realty Group L.P., 4.00%, 10/01/2026 | | | 124,000 | | | 131,691 |
| | |
Kite Realty Group Trust, 4.75%, 09/15/2030 | | | 48,000 | | | 53,174 |
| | |
National Retail Properties, Inc., 3.50%, 04/15/2051 | | | 92,000 | | | 94,948 |
Realty Income Corp., | | | | | | |
2.20%, 06/15/2028 | | | 42,000 | | | 42,426 |
3.25%, 01/15/2031 | | | 55,000 | | | 59,206 |
2.85%, 12/15/2032 | | | 39,000 | | | 40,520 |
| | |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 60,000 | | | 62,338 |
| | |
Scentre Group Trust 2 (Australia), 4.75%, 09/24/2080(b)(c) | | | 166,000 | | | 173,885 |
Simon Property Group L.P., 1.38%, 01/15/2027 | | | 142,000 | | | 138,768 |
| | | | | | | 1,166,484 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Semiconductors–1.17% |
Broadcom, Inc., | | | | | | |
| | |
4.15%, 11/15/2030 | | $ | 97,000 | | | $ 107,665 |
2.45%, 02/15/2031(b) | | | 71,000 | | | 69,692 |
3.42%, 04/15/2033(b) | | | 82,000 | | | 86,053 |
3.47%, 04/15/2034(b) | | | 213,000 | | | 223,223 |
3.14%, 11/15/2035(b) | | | 342,000 | | | 344,406 |
| | |
Marvell Technology, Inc., 2.95%, 04/15/2031 | | | 172,000 | | | 175,441 |
Micron Technology, Inc., | | | | | | |
| | |
2.70%, 04/15/2032 | | | 89,000 | | | 89,254 |
3.37%, 11/01/2041 | | | 59,000 | | | 60,670 |
QUALCOMM, Inc., | | | | | | |
| | |
2.15%, 05/20/2030 | | | 83,000 | | | 83,804 |
3.25%, 05/20/2050 | | | 81,000 | | | 89,160 |
Skyworks Solutions, Inc., | | | | | | |
| | |
1.80%, 06/01/2026 | | | 23,000 | | | 22,791 |
3.00%, 06/01/2031 | | | 50,000 | | | 50,450 |
| | | | | | | 1,402,609 |
|
Specialized REITs–0.65% |
American Tower Corp., | | | | | | |
| | |
3.00%, 06/15/2023 | | | 65,000 | | | 66,856 |
4.00%, 06/01/2025 | | | 38,000 | | | 40,697 |
2.70%, 04/15/2031 | | | 169,000 | | | 169,693 |
2.95%, 01/15/2051 | | | 94,000 | | | 89,299 |
| | |
Crown Castle International Corp., 2.50%, 07/15/2031 | | | 156,000 | | | 155,016 |
| | |
Extra Space Storage L.P., 2.35%, 03/15/2032 | | | 138,000 | | | 134,308 |
| | |
Life Storage L.P., 2.40%, 10/15/2031 | | | 128,000 | | | 125,957 |
| | |
| | | | | | | 781,826 |
|
Systems Software–0.06% |
| | |
VMware, Inc., 2.20%, 08/15/2031 | | | 78,000 | | | 76,696 |
|
Technology Hardware, Storage & Peripherals–0.43% |
Apple, Inc., | | | | | | |
| | |
4.38%, 05/13/2045 | | | 42,000 | | | 53,087 |
2.55%, 08/20/2060 | | | 239,000 | | | 225,222 |
2.80%, 02/08/2061 | | | 243,000 | | | 241,896 |
| | | | | | | 520,205 |
|
Thrifts & Mortgage Finance–0.14% |
| | |
Nationwide Building Society (United Kingdom), 3.96%, 07/18/2030(b)(c) | | | 150,000 | | | 164,956 |
|
Tobacco–0.52% |
| | |
Altria Group, Inc.,
2.45%, 02/04/2032 | | | 98,000 | | | 93,148 |
3.70%, 02/04/2051 | | | 117,000 | | | 109,273 |
4.00%, 02/04/2061 | | | 117,000 | | | 112,088 |
| | |
Imperial Brands Finance PLC (United Kingdom), 3.75%, 07/21/2022(b) | | | 308,000 | | | 311,434 |
| | |
| | | | | | | 625,943 |
|
Trucking–0.53% |
Penske Truck Leasing Co. L.P./PTL Finance Corp., | | | | | | |
| | |
4.00%, 07/15/2025(b) | | | 55,000 | | | 59,079 |
3.40%, 11/15/2026(b) | | | 66,000 | | | 69,979 |
| | | | | | |
| | | Principal
Amount | | | Value |
Trucking–(continued) |
| | |
SMBC Aviation Capital Finance DAC (Ireland), 1.90%, 10/15/2026(b) | | $ | 205,000 | | | $ 203,144 |
Triton Container International Ltd. (Bermuda), | | | | | | |
| | |
2.05%, 04/15/2026(b) | | | 185,000 | | | 183,728 |
3.15%, 06/15/2031(b) | | | 121,000 | | | 122,156 |
| | | | | | | 638,086 |
|
Wireless Telecommunication Services–0.32% |
| | |
T-Mobile USA, Inc., 3.40%, 10/15/2052(b) | | | 390,000 | | | 388,927 |
Total U.S. Dollar Denominated Bonds & Notes (Cost $51,842,613) | | | 52,529,085 |
|
Asset-Backed Securities–25.11% |
American Credit Acceptance Receivables Trust, | | | | | | |
Series 2018-3, Class D, 4.14%, 10/15/2024(b) | | | 6,322 | | | 6,346 |
Series 2019-3, Class C, 2.76%, 09/12/2025(b) | | | 68,443 | | | 68,764 |
AmeriCredit Automobile Receivables Trust, | | | | | | |
Series 2017-4, Class D, 3.08%, 12/18/2023 | | | 190,000 | | | 191,889 |
Series 2018-3, Class C, 3.74%, 10/18/2024 | | | 260,000 | | | 265,246 |
Series 2019-2, Class C, 2.74%, 04/18/2025 | | | 100,000 | | | 102,048 |
Series 2019-2, Class D, 2.99%, 06/18/2025 | | | 280,000 | | | 287,096 |
Series 2019-3, Class D, 2.58%, 09/18/2025 | | | 135,000 | | | 137,297 |
| | |
AMSR Trust, Series 2021-SFR3, Class B, 1.73%, 10/17/2038(b) | | | 280,000 | | | 272,932 |
Angel Oak Mortgage Trust, | | | | | | |
Series 2020-1, Class A1, 2.16%, 12/25/2059(b)(g) | | | 60,636 | | | 60,673 |
Series 2020-3, Class A1, 1.69%, 04/25/2065(b)(g) | | | 181,950 | | | 182,552 |
Series 2021-3, Class A1, 1.07%, 05/25/2066(b)(g) | | | 95,964 | | | 95,206 |
Series 2021-7, Class A1, 1.98%, 10/25/2066(b)(g) | | | 201,619 | | | 201,174 |
| | |
Bain Capital Credit CLO Ltd.,
Series 2017-2A, Class AR2, 1.30% (3 mo. USD LIBOR + 1.18%), 07/25/2034(b)(e) | | | 481,000 | | | 481,540 |
Banc of America Funding Trust, | | | | | | |
Series 2007-1, Class 1A3, 6.00%, 01/25/2037 | | | 39,910 | | | 39,254 |
Series 2007-C, Class 1A4, 3.03%, 05/20/2036(g) | | | 13,407 | | | 13,477 |
| | |
Banc of America Mortgage Trust, Series 2007-1, Class 1A24, 6.00%, 03/25/2037 | | | 25,165 | | | 23,837 |
| | |
Bank, Series 2019-BNK16, Class XA, IO, 0.95%, 02/15/2052(h) | | | 1,535,026 | | | 85,990 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Bayview MSR Opportunity Master Fund Trust, | | | | | | |
Series 2021-4, Class A3, 3.00%, 10/25/2051(b)(g) | | $ | 258,455 | | | $ 264,165 |
Series 2021-4, Class A4, 2.50%, 10/25/2051(b)(g) | | | 259,419 | | | 258,663 |
Series 2021-4, Class A8, 2.50%, 10/25/2051(b)(g) | | | 256,226 | | | 258,780 |
Series 2021-5, Class A1, 3.00%, 11/25/2051(b)(g) | | | 271,821 | | | 277,676 |
Series 2021-5, Class A2, 2.50%, 11/25/2051(b)(g) | | | 331,269 | | | 332,830 |
| | |
Bear Stearns Adjustable Rate Mortgage Trust,
Series 2005-9, Class A1, 0.76% (1 yr. U.S. Treasury Yield Curve Rate + 2.30%), 10/25/2035(e) | | | 31,293 | | | 32,053 |
Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(e) | | | 33,103 | | | 33,689 |
| | |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.50%, 01/15/2051(h) | | | 1,745,395 | | | 42,927 |
| | |
BRAVO Residential Funding Trust, Series 2021-NQM2, Class A1, 0.97%, 03/25/2060(b)(g) | | | 143,889 | | | 143,203 |
| | |
BX Commercial Mortgage Trust, Series 2021-ACNT, Class A, 0.96% (1 mo. USD LIBOR + 0.85%), 11/15/2026(b)(e) | | | 135,000 | | | 135,015 |
Series 2021-VOLT, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 09/15/2036(b)(e) | | | 250,000 | | | 249,493 |
Series 2021-VOLT, Class B, 1.06% (1 mo. USD LIBOR + 0.95%), 09/15/2036(b)(e) | | | 225,000 | | | 223,971 |
Series 2021-XL2, Class B, 1.11% (1 mo. USD LIBOR + 1.00%), 10/15/2038(b)(e) | | | 105,000 | | | 104,526 |
| | |
Capital Lease Funding Securitization L.P., Series 1997-CTL1, Class IO, 1.51%, 06/22/2024(b)(h) | | | 19,196 | | | 72 |
| | |
CCG Receivables Trust,
| | | | | | |
Series 2018-2, Class C, 3.87%, 12/15/2025(b) | | | 60,000 | | | 60,212 |
Series 2019-2, Class B, 2.55%, 03/15/2027(b) | | | 105,000 | | | 106,634 |
Series 2019-2, Class C, 2.89%, 03/15/2027(b) | | | 100,000 | | | 101,383 |
| | |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(h) | | | 703,668 | | | 25,526 |
| | |
Chase Home Lending Mortgage Trust, Series 2019-ATR1, Class A15, 4.00%,
04/25/2049(b)(g) | | | 10,115 | | | 10,218 |
| | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 2.98%, 01/25/2036(g) | | | 38,350 | | | 36,995 |
| | |
Citigroup Commercial Mortgage Trust,
| | | | | | |
Series 2013-GC17, Class XA, IO, 1.00%, 11/10/2046(h) | | | 360,928 | | | 5,415 |
Series 2014-GC21, Class AA, 3.48%, 05/10/2047 | | | 44,214 | | | 45,473 |
Series 2017-C4, Class XA, IO, 1.08%, 10/12/2050(h) | | | 1,955,065 | | | 85,836 |
| | | | | | |
| | | Principal
Amount | | | Value |
Citigroup Mortgage Loan Trust, Inc.,
| | | | | | |
Series 2006-AR1, Class 1A1, 2.48% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(e) | | $ | 96,795 | | | $ 101,289 |
Series 2021-INV3, Class A3, 2.50%, 05/25/2051(b)(g) | | | 263,420 | | | 263,502 |
CNH Equipment Trust, | | | | | | |
Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 65,000 | | | 65,053 |
Series 2019-A, Class A4, 3.22%, 01/15/2026 | | | 125,000 | | | 127,978 |
| | |
COLT Mortgage Loan Trust, | | | | | | |
Series 2020-1, Class A1, 2.49%, 02/25/2050(b)(g) | | | 82,202 | | | 82,197 |
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(g) | | | 61,391 | | | 61,541 |
Series 2021-5, Class A1, 1.73%, 11/26/2066(b)(g) | | | 127,557 | | | 127,318 |
| | |
COMM Mortgage Trust, | | | | | | |
Series 2012-CR5, Class XA, IO, 1.50%, 12/10/2045(h) | | | 1,803,751 | | | 15,304 |
Series 2013-CR6, Class AM, 3.15%, 03/10/2046(b) | | | 245,000 | | | 249,499 |
Series 2014-CR20, Class ASB, 3.31%, 11/10/2047 | | | 37,328 | | | 38,426 |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 715,000 | | | 748,070 |
Series 2014-LC15, Class AM, 4.20%, 04/10/2047 | | | 170,000 | | | 178,476 |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 475,000 | | | 501,565 |
| | |
Countrywide Home Loans Mortgage Pass-Through Trust, | | | | | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | 3,778 | | | 3,798 |
Series 2005-26, Class 1A8, 5.50%, 11/25/2035 | | | 34,935 | | | 28,012 |
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | | | 4,196 | | | 4,130 |
| | |
Credit Suisse Mortgage Capital Trust, | | | | | | |
Series 2021-NQM1, Class A1, 0.81%, 05/25/2065(b)(g) | | | 75,326 | | | 74,986 |
Series 2021-NQM2, Class A1, 1.18%, 02/25/2066(b)(g) | | | 87,574 | | | 86,787 |
| | |
CSAIL Commercial Mortgage Trust, Series 2020-C19, Class A3, 2.56%, 03/15/2053 | | | 637,000 | | | 651,024 |
| | |
CSMC Mortgage-Backed Trust, Series 2006-6, Class 1A4, 6.00%, 07/25/2036 | | | 107,489 | | | 76,111 |
| | |
Dell Equipment Finance Trust, | | | | | | |
Series 2019-1, Class C, 3.14%, 03/22/2024(b) | | | 325,000 | | | 325,440 |
Series 2019-2, Class D, 2.48%, 04/22/2025(b) | | | 115,000 | | | 115,699 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Drive Auto Receivables Trust, | | | | | | |
Series 2018-1, Class D, 3.81%, 05/15/2024 | | $ | 23,909 | | | $ 24,011 |
Series 2018-2, Class D, 4.14%, 08/15/2024 | | | 74,947 | | | 75,888 |
Series 2018-3, Class D, 4.30%, 09/16/2024 | | | 92,570 | | | 93,851 |
Series 2018-5, Class C, 3.99%, 01/15/2025 | | | 41,229 | | | 41,396 |
Series 2019-1, Class C, 3.78%, 04/15/2025 | | | 30,371 | | | 30,413 |
| | |
Dryden 93 CLO Ltd., Series 2021-93A, Class A1A, 1.24% (3 mo. USD LIBOR + 1.08%), 01/15/2034(b)(e) | | | 100,056 | | | 100,116 |
Ellington Financial Mortgage Trust, | | | | | | |
Series 2020-1, Class A1, 2.01%, 05/25/2065(b)(g) | | | 37,055 | | | 37,159 |
Series 2021-1, Class A1, 0.80%, 02/25/2066(b)(g) | | | 57,256 | | | 56,795 |
Exeter Automobile Receivables Trust, | | | | | | |
Series 2019-2A, Class C, 3.30%, 03/15/2024(b) | | | 100,078 | | | 100,481 |
Series 2019-4A, Class D, 2.58%, 09/15/2025(b) | | | 240,000 | | | 243,978 |
| | |
Extended Stay America Trust, Series 2021-ESH, Class B, 1.49% (1 mo. USD LIBOR + 1.38%), 07/15/2038(b)(e) | | | 114,405 | | | 114,606 |
| | |
First Horizon Alternative Mortgage Securities Trust, Series 2005-FA8, Class 1A6, 0.75% (1 mo. USD LIBOR + 0.65%), 11/25/2035(e) | | | 65,269 | | | 31,055 |
Flagstar Mortgage Trust, | | | | | | |
Series 2021-11IN, Class A6, 3.70%, 11/25/2051(b)(g) | | | 424,976 | | | 429,773 |
Series 2021-8INV, Class A6, 2.50%, 09/25/2051(b)(g) | | | 95,901 | | | 96,988 |
| | |
Ford Credit Floorplan Master Owner Trust, Series 2019-3, Class A2, 0.71% (1 mo. USD LIBOR + 0.60%), 09/15/2024(e) | | | 560,000 | | | 561,515 |
FREMF Mortgage Trust, | | | | | | |
Series 2013-K25, Class C, 3.62%, 11/25/2045(b)(g) | | | 90,000 | | | 91,688 |
Series 2013-K26, Class C, 3.60%, 12/25/2045(b)(g) | | | 60,000 | | | 61,194 |
Series 2013-K27, Class C, 3.50%, 01/25/2046(b)(g) | | | 95,000 | | | 96,919 |
Series 2013-K28, Class C, 3.49%, 06/25/2046(b)(g) | | | 285,000 | | | 291,925 |
| | |
GoldenTree Loan Management US CLO 5 Ltd., Series 2019-5A, Class AR, 1.20% (3 mo. USD LIBOR + 1.07%), 10/20/2032(b)(e) | | | 260,000 | | | 260,129 |
| | |
Golub Capital Partners CLO 40(A) Ltd., Series 2019-40A, Class AR, 1.21% (3 mo. USD LIBOR + 1.09%), 01/25/2032(b)(e) | | | 330,000 | | | 329,747 |
| | | | | | |
| | | Principal
Amount | | | Value |
GS Mortgage Securities Trust, | | | | | | |
Series 2013-GC16, Class AS, 4.65%, 11/10/2046 | | $ | 45,000 | | | $ 47,244 |
Series 2013-GCJ12, Class AAB, 2.68%, 06/10/2046 | | | 7,579 | | | 7,639 |
Series 2014-GC18, Class AAB, 3.65%, 01/10/2047 | | | 34,795 | | | 35,647 |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 245,000 | | | 248,703 |
| | |
GS Mortgage-Backed Securities Trust, Series 2021-INV1, Class A6, 2.50%, 12/25/2051(b)(g) | | | 222,373 | | | 224,883 |
| | |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.02%, 07/25/2035(g) | | | 15,104 | | | 15,669 |
Hertz Vehicle Financing III L.P., | | | | | | |
Series 2021-2A, Class A, 1.68%, 12/27/2027(b) | | | 113,000 | | | 111,570 |
Series 2021-2A, Class B, 2.12%, 12/27/2027(b) | | | 103,000 | | | 102,254 |
| | |
Hertz Vehicle Financing LLC, Series 2021-1A, Class A, 1.21%, 12/26/2025(b) | | | 104,000 | | | 103,113 |
JP Morgan Chase Commercial Mortgage Securities Trust, | | | | | | |
Series 2013-C10, Class AS, 3.37%, 12/15/2047 | | | 315,000 | | | 321,389 |
Series 2013-C16, Class AS, 4.52%, 12/15/2046 | | | 300,000 | | | 314,649 |
Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | 40,000 | | | 40,641 |
Series 2014-C20, Class AS, 4.04%, 07/15/2047 | | | 220,000 | | | 230,447 |
Series 2016-JP3, Class A2, 2.43%, 08/15/2049 | | | 26,478 | | | 26,577 |
JP Morgan Mortgage Trust, | | | | | | |
Series 2007-A1, Class 5A1, 2.42%, 07/25/2035(g) | | | 21,649 | | | 22,155 |
Series 2021-LTV2, Class A1, 2.52%, 05/25/2052(b)(g) | | | 310,000 | | | 310,763 |
JPMBB Commercial Mortgage Securities Trust, | | | | | | |
Series 2014-C24, Class B, 4.12%, 11/15/2047(g) | | | 245,000 | | | 252,136 |
Series 2014-C25, Class AS, 4.07%, 11/15/2047 | | | 200,000 | | | 209,031 |
Series 2015-C27, Class XA, IO, 1.15%, 02/15/2048(h) | | | 1,953,913 | | | 59,584 |
| | |
KKR CLO 30 Ltd., Series 30A, Class A1R, 2.27% (3 mo. USD LIBOR + 1.02%), 10/17/2031(b)(e) | | | 268,000 | | | 267,741 |
| | |
LB Commercial Conduit Mortgage Trust, Series 1998-C1, Class IO, 0.91%, 02/18/2030(h) | | | 24,833 | | | 0 |
| | |
Lehman Structured Securities Corp., Series 2002-GE1, Class A, 0.00%, 07/26/2024(b)(g) | | | 12,307 | | | 4,642 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Life Mortgage Trust, | | | | | | |
Series 2021-BMR, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 03/15/2038(b)(e) | | $ | 155,000 | | | $ 154,853 |
Series 2021-BMR, Class B, 0.99% (1 mo. USD LIBOR + 0.88%), 03/15/2038(b)(e) | | | 240,000 | | | 237,947 |
Series 2021-BMR, Class C, 1.21% (1 mo. USD LIBOR + 1.10%), 03/15/2038(b)(e) | | | 110,000 | | | 109,073 |
| | |
Madison Park Funding XLVIII Ltd., Series 2021-48A, Class A, 1.27% (3 mo. USD LIBOR + 1.15%), 04/19/2033(b)(e) | | | 742,000 | | | 742,370 |
| | |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 0.20% (1 mo. USD LIBOR + 0.10%), 08/25/2036(e) | | | 37,733 | | | 16,869 |
Med Trust, | | | | | | |
Series 2021-MDLN, Class A, 1.06% (1 mo. USD LIBOR + 0.95%), 11/15/2038(b)(e) | | | 165,000 | | | 165,067 |
Series 2021-MDLN, Class B, 1.56% (1 mo. USD LIBOR + 1.45%), 11/15/2038(b)(e) | | | 268,000 | | | 267,851 |
Mello Mortgage Capital Acceptance Trust, | | | | | | |
Series 2021-INV2, Class A4, 2.50%, 08/25/2051(b)(g) | | | 171,748 | | | 173,703 |
Series 2021-INV3, Class A4, 2.50%, 10/25/2051(b)(g) | | | 165,925 | | | 167,795 |
MFA Trust, | | | | | | |
Series 2021-AEI1, Class A3, 2.50%, 08/25/2051(b)(g) | | | 177,675 | | | 177,290 |
Series 2021-AEI1, Class A4, 2.50%, 08/25/2051(b)(g) | | | 227,329 | | | 230,211 |
Series 2021-INV2, Class A1, 1.91%, 11/25/2056(b)(g) | | | 218,993 | | | 217,071 |
MHP Commercial Mortgage Trust, | | | | | | |
Series 2021-STOR, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 07/15/2038(b)(e) | | | 125,000 | | | 124,698 |
Series 2021-STOR, Class B, 1.01% (1 mo. USD LIBOR + 0.90%), 07/15/2038(b)(e) | | | 105,000 | | | 104,764 |
Morgan Stanley Bank of America Merrill Lynch Trust, | | | | | | |
Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | 225,000 | | | 229,811 |
Series 2014-C19, Class AS, 3.83%, 12/15/2047 | | | 595,000 | | | 624,399 |
| | |
Morgan Stanley Capital I Trust, Series 2017-HR2, Class XA, IO, 0.78%, 12/15/2050(h) | | | 671,617 | | | 25,569 |
| | |
Morgan Stanley Re-REMIC Trust, Series 2012-R3, Class 1B, 6.00%, 11/26/2036(b)(g) | | | 247,674 | | | 240,477 |
| | |
Mortgage-Linked Amortizing Notes, Series 2012-1, Class A10, 2.06%, 01/15/2022 | | | 113,210 | | | 113,284 |
| | |
Motel Trust, Series 2021-MTL6, Class A, 1.01% (1 mo. USD LIBOR + 0.90%), 09/15/2038(b)(e) | | | 100,000 | | | 100,025 |
| | |
Neuberger Berman Loan Advisers CLO 24 Ltd., Series 2017-24A, Class AR, 1.14% (3 mo. USD LIBOR + 1.02%), 04/19/2030(b)(e) | | | 293,000 | | | 293,035 |
| | | | | | |
| | | Principal
Amount | | | Value |
| | |
Neuberger Berman Loan Advisers CLO 40 Ltd., Series 2021-40A, Class A, 1.18% (3 mo. USD LIBOR + 1.06%), 04/16/2033(b)(e) | | $ | 250,000 | | | $ 250,401 |
| | |
Oceanview Mortgage Trust, Series 2021-3, Class A5, 2.50%, 07/25/2051(b)(g) | | | 204,890 | | | 207,213 |
OCP CLO Ltd. (Cayman Islands), | | | | | | |
Series 2017-13A, Class A1AR, 1.08% (3 mo. USD LIBOR + 0.96%), 07/15/2030(b)(e) | | | 250,000 | | | 250,285 |
Series 2020-8RA, Class A1, 1.34% (3 mo. USD LIBOR + 1.22%), 01/17/2032(b)(e) | | | 433,000 | | | 433,216 |
| | |
Octagon Investment Partners 31 LLC, Series 2017-1A, Class AR, 1.18% (3 mo. USD LIBOR + 1.05%), 07/20/2030(b)(e) | | | 500,000 | | | 499,537 |
| | |
Octagon Investment Partners 49 Ltd., Series 2020-5A, Class A1, 1.34% (3 mo. USD LIBOR + 1.22%), 01/15/2033(b)(e) | | | 400,000 | | | 400,068 |
| | |
OHA Loan Funding Ltd., Series 2016-1A, Class AR, 1.39% (3 mo. USD LIBOR + 1.26%), 01/20/2033(b)(e) | | | 287,936 | | | 288,067 |
| | |
Onslow Bay Mortgage Loan Trust, Series 2021-NQM4, Class A1, 1.96%, 10/25/2061(b)(g) | | | 277,378 | | | 276,595 |
| | |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(b) | | | 115,000 | | | 116,021 |
Progress Residential Trust, | | | | | | |
Series 2020-SFR1, Class A, 1.73%, 04/17/2037(b) | | | 395,000 | | | 392,367 |
Series 2021-SFR10, Class A, 2.39%, 12/17/2040(b) | | | 140,000 | | | 141,095 |
Residential Accredit Loans, Inc. Trust, | | | | | | |
Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | 351 | | | 334 |
Series 2007-QS6, Class A28, 5.75%, 04/25/2037 | | | 4,181 | | | 4,106 |
| | |
Residential Mortgage Loan Trust, Series 2020-1, Class A1, 2.38%, 01/26/2060(b)(g) | | | 63,375 | | | 63,712 |
Santander Drive Auto Receivables Trust, | | | | | | |
Series 2017-3, Class D, 3.20%, 11/15/2023 | | | 72,825 | | | 72,898 |
Series 2018-1, Class D, 3.32%, 03/15/2024 | | | 38,197 | | | 38,365 |
Series 2018-2, Class D, 3.88%, 02/15/2024 | | | 94,628 | | | 95,491 |
Series 2019-2, Class D, 3.22%, 07/15/2025 | | | 195,000 | | | 198,872 |
Series 2019-3, Class D, 2.68%, 10/15/2025 | | | 165,000 | | | 167,219 |
Santander Retail Auto Lease Trust, | | | | | | |
Series 2019-A, Class C, 3.30%, 05/22/2023(b) | | | 271,901 | | | 272,468 |
Series 2019-B, Class C, 2.77%, 08/21/2023(b) | | | 115,000 | | | 115,959 |
Series 2019-C, Class C, 2.39%, 11/20/2023(b) | | | 210,000 | | | 212,144 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Sonic Capital LLC, | | | | | | |
Series 2021-1A, Class A2I, 2.19%, 08/20/2051(b) | | $ | 119,700 | | | $ 117,438 |
Series 2021-1A, Class A2II, 2.64%, 08/20/2051(b) | | | 119,700 | | | 117,662 |
| | |
Star Trust, Series 2021-SFR1, Class A, 0.71% (1 mo. USD LIBOR + 0.60%), 04/17/2038(b)(e) | | | 792,432 | | | 791,985 |
| | |
STAR Trust, Series 2021-1, Class A1, 1.22%, 05/25/2065(b)(g) | | | 215,215 | | | 214,677 |
Starwood Mortgage Residential Trust, | | | | | | |
Series 2020-1, Class A1, 2.28%, 02/25/2050(b)(g) | | | 59,648 | | | 59,911 |
Series 2021-6, Class A1, 1.92%, 11/25/2066(b)(g) | | | 337,606 | | | 337,470 |
| | |
Symphony CLO XXII Ltd., Series 2020-22A, Class A1A, 1.41% (3 mo. USD LIBOR + 1.29%), 04/18/2033(b)(e) | | | 250,000 | | | 250,334 |
| | |
Textainer Marine Containers VII Ltd., Series 2021-2A, Class A, 2.23%, 04/20/2046(b) | | | 321,867 | | | 321,338 |
| | |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.41% (3 mo. USD LIBOR + 1.28%), 04/20/2033(b)(e) | | | 271,000 | | | 271,350 |
| | |
Tricon American Homes Trust, Series 2020-SFR2, Class A, 1.48%, 11/17/2039(b) | | | 307,671 | | | 297,340 |
| | |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 0.99%, 11/15/2050(h) | | | 1,217,396 | | | 49,237 |
Verus Securitization Trust, | | | | | | |
Series 2020-1, Class A1, 2.42%, 01/25/2060(b)(i) | | | 99,856 | | | 100,217 |
Series 2020-1, Class A2, 2.64%, 01/25/2060(b)(i) | | | 99,729 | | | 100,153 |
Series 2020-INV1, Class A1, 0.33%, 03/25/2060(b)(g) | | | 42,889 | | | 43,052 |
Series 2021-1, Class A1B, 1.32%, 01/25/2066(b)(g) | | | 95,483 | | | 94,416 |
Series 2021-7, Class A1, 1.83%, 10/25/2066(b)(g) | | | 281,720 | | | 281,307 |
Series 2021-R1, Class A1, 0.82%, 10/25/2063(b)(g) | | | 174,943 | | | 174,294 |
| | |
Visio Trust, Series 2020-1R, Class A1, 1.31%, 11/25/2055(b) | | | 112,187 | | | 111,743 |
WaMu Mortgage Pass-Through Ctfs. Trust, | | | | | | |
Series 2003-AR10, Class A7, 2.49%, 10/25/2033(g) | | | 25,643 | | | 25,974 |
Series 2005-AR14, Class 1A4, 2.85%, 12/25/2035(g) | | | 57,859 | | | 58,948 |
Series 2005-AR16, Class 1A1, 2.64%, 12/25/2035(g) | | | 26,758 | | | 27,297 |
Wells Fargo Commercial Mortgage Trust, | | | | | | |
Series 2015-NXS1, Class ASB, 2.93%, 05/15/2048 | | | 174,130 | | | 177,629 |
Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(h) | | | 881,567 | | | 40,203 |
| | |
Westlake Automobile Receivables Trust, Series 2019-3A, Class C, 2.49%, 10/15/2024(b) | | | 260,000 | | | 261,727 |
| | | | | | |
| | | Principal
Amount | | | Value |
WFRBS Commercial Mortgage Trust, | | | | | | |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | $ | 150,000 | | | $ 152,927 |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | 130,000 | | | 135,895 |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(g) | | | 145,000 | | | 152,062 |
World Financial Network Credit Card Master Trust, | | | | | | |
Series 2019-A, Class A, 3.14%, 12/15/2025 | | | 75,000 | | | 75,251 |
Series 2019-B, Class A, 2.49%, 04/15/2026 | | | 270,000 | | | 272,567 |
Series 2019-C, Class A, 2.21%, 07/15/2026 | | | 235,000 | | | 237,782 |
| | |
Zaxby’s Funding LLC, Series 2021-1A, Class A2, 3.24%, 07/30/2051(b) | | | 354,112 | | | 361,300 |
Total Asset-Backed Securities (Cost $30,736,699) | | | 30,128,466 |
U.S. Government Sponsored Agency Mortgage-Backed Securities–18.94% |
Collateralized Mortgage Obligations–1.28% | | | |
| | |
Fannie Mae Interest STRIPS, IO,
| | | | | | |
7.50%, 05/25/2023 to 11/25/2029(j) | | | 36,936 | | | 4,227 |
7.00%, 06/25/2023 to 04/25/2032(j) | | | 98,523 | | | 15,825 |
6.50%, 04/25/2029 to 02/25/2033(h)(j) | | | 261,299 | | | 44,912 |
6.00%, 02/25/2033 to 03/25/2036(h)(j) | | | 211,139 | | | 37,425 |
5.50%, 09/25/2033 to 06/25/2035(h)(j) | | | 309,300 | | | 51,416 |
| | |
Fannie Mae REMICs, IO, 5.50%, 04/25/2023 to 07/25/2046(j) | | | 100,865 | | | 44,541 |
6.60% (6.70% - (1.00 x 1 mo. USD LIBOR)), 02/25/2024 to 05/25/2035(e)(j) | | | 103,730 | | | 17,201 |
3.00%, 11/25/2027(j) | | | 70,138 | | | 3,771 |
7.00% (7.10% - (1.00 x 1 mo. USD LIBOR)), 11/25/2030(e)(j) | | | 41,564 | | | 6,375 |
7.80% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/18/2031 to 12/18/2031(e)(j) | | | 2,766 | | | 497 |
7.80% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/25/2031(e)(j) | | | 54,902 | | | 9,843 |
7.15% (7.25% - (1.00 x 1 mo. USD LIBOR)), 01/25/2032(e)(j) | | | 2,967 | | | 544 |
7.85% (7.95% - (1.00 x 1 mo. USD LIBOR)), 01/25/2032(e)(j) | | | 14,026 | | | 2,515 |
7.90% (8.00% - (1.00 x 1 mo. USD LIBOR)), 03/18/2032 to 12/18/2032(e)(j) | | | 5,518 | | | 1,077 |
8.00% (8.10% - (1.00 x 1 mo. USD LIBOR)), 03/25/2032 to 04/25/2032(e)(j) | | | 4,381 | | | 900 |
6.90% (7.00% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032 to 09/25/2032(e)(j) | | | 13,695 | | | 2,204 |
7.70% (7.80% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032(e)(j) | | | 488 | | | 96 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations–(continued) |
7.90% (8.00% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032 to 12/25/2032(e)(j) | | $ | 217,076 | | | $ 44,356 |
8.00% (8.10% - (1.00 x 1 mo. USD LIBOR)), 12/18/2032(e)(j) | | | 21,581 | | | 3,266 |
8.15% (8.25% - (1.00 x 1 mo. USD LIBOR)), 02/25/2033 to 05/25/2033(e)(j) | | | 82,609 | | | 18,819 |
7.00%, 04/25/2033(j) | | | 2,610 | | | 470 |
5.95% (6.05% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035 to 07/25/2038(e)(j) | | | 39,415 | | | 5,780 |
6.65% (6.75% - (1.00 x 1 mo. USD LIBOR)), 03/25/2035 to 05/25/2035(e)(j) | | | 15,411 | | | 2,153 |
6.50% (6.60% - (1.00 x 1 mo. USD LIBOR)), 05/25/2035(e)(j) | | | 28,797 | | | 4,019 |
3.50%, 08/25/2035(j) | | | 239,180 | | | 29,566 |
6.00% (6.10% - (1.00 x 1 mo. USD LIBOR)), 10/25/2035(e)(j) | | | 83,929 | | | 14,208 |
6.45% (6.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2041(e)(j) | | | 26,983 | | | 4,256 |
6.05% (6.15% - (1.00 x 1 mo. USD LIBOR)), 12/25/2042(e)(j) | | | 56,991 | | | 11,342 |
5.00% (5.90% - (1.00 x 1 mo. USD LIBOR)), 09/25/2047(e)(j) | | | 393,778 | | | 69,521 |
6.50%, 06/25/2023 to 10/25/2031 | | | 84,722 | | | 93,129 |
4.00%, 08/25/2026 to 08/25/2047(j) | | | 98,988 | | | 9,475 |
6.00%, 11/25/2028 to 12/25/2031 | | | 69,809 | | | 78,216 |
0.35% (1 mo. USD LIBOR + 0.25%), 08/25/2035(e) | | | 738 | | | 740 |
24.19% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(e) | | | 36,435 | | | 55,976 |
23.83% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(e) | | | 45,723 | | | 69,475 |
1.04% (1 mo. USD LIBOR + 0.94%), 06/25/2037(e) | | | 14,737 | | | 14,848 |
PO, 0.00%, 09/25/2023(k) | | | 7,293 | | | 7,210 |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | |
Series KC02, Class X1, IO, 1.91%, 03/25/2024(h) | | | 4,524,509 | | | 30,434 |
Series KC03, Class X1, IO, 0.63%, 11/25/2024(h) | | | 2,748,671 | | | 32,707 |
Series K734, Class X1, IO, 0.65%, 02/25/2026(h) | | | 2,033,219 | | | 47,128 |
Series K735, Class X1, IO, 1.10%, 05/25/2026(h) | | | 2,040,324 | | | 75,483 |
Series K093, Class X1, IO, 0.95%, 05/25/2029(h) | | | 1,686,872 | | | 104,078 |
| | | | | | |
| | | Principal
Amount | | | Value |
Collateralized Mortgage Obligations–(continued) |
| | |
Freddie Mac REMICs,
1.50%, 07/15/2023 | | $ | 6,107 | | | $ 6,128 |
6.75%, 02/15/2024 | | | 1,734 | | | 1,806 |
6.50%, 02/15/2028 to 06/15/2032 | | | 282,052 | | | 314,076 |
8.00%, 03/15/2030 | | | 545 | | | 637 |
1.11% (1 mo. USD LIBOR + 1.00%), 02/15/2032(e) | | | 576 | | | 589 |
3.50%, 05/15/2032 | | | 10,288 | | | 10,826 |
24.35% (24.75% - (3.67 x 1 mo. USD LIBOR)), 08/15/2035(e) | | | 5,673 | | | 8,951 |
0.51% (1 mo. USD LIBOR + 0.40%), 09/15/2035(e) | | | 961 | | | 970 |
IO, 7.54% (7.65% - (1.00 x 1 mo. USD LIBOR)), 07/15/2026 to 03/15/2029(e)(j) | | | 67,606 | | | 6,457 |
3.00%, 06/15/2027 to 05/15/2040(j) | | | 240,069 | | | 13,886 |
2.50%, 05/15/2028(j) | | | 48,915 | | | 2,507 |
8.59% (8.70% - (1.00 x 1 mo. USD LIBOR)), 07/17/2028(e)(j) | | | 507 | | | 33 |
7.99% (8.10% - (1.00 x 1 mo. USD LIBOR)), 06/15/2029(e)(j) | | | 890 | | | 136 |
6.59% (6.70% - (1.00 x 1 mo. USD LIBOR)), 01/15/2035(e)(j) | | | 217,071 | | | 29,578 |
6.64% (6.75% - (1.00 x 1 mo. USD LIBOR)), 02/15/2035(e)(j) | | | 25,618 | | | 3,451 |
6.61% (6.72% - (1.00 x 1 mo. USD LIBOR)), 05/15/2035(e)(j) | | | 27,021 | | | 3,603 |
6.04% (6.15% - (1.00 x 1 mo. USD LIBOR)), 07/15/2035(e)(j) | | | 7,885 | | | 885 |
6.89% (7.00% - (1.00 x 1 mo. USD LIBOR)), 12/15/2037(e)(j) | | | 5,256 | | | 1,050 |
5.89% (6.00% - (1.00 x 1 mo. USD LIBOR)), 04/15/2038(e)(j) | | | 4,368 | | | 659 |
5.96% (6.07% - (1.00 x 1 mo. USD LIBOR)), 05/15/2038(e)(j) | | | 154,710 | | | 25,548 |
6.14% (6.25% - (1.00 x 1 mo. USD LIBOR)), 12/15/2039(e)(j) | | | 37,204 | | | 5,892 |
5.99% (6.10% - (1.00 x 1 mo. USD LIBOR)), 01/15/2044(e)(j) | | | 55,542 | | | 6,065 |
4.00%, 03/15/2045(j) | | | 37,364 | | | 1,745 |
| | |
Freddie Mac STRIPS,
PO,
0.00%, 06/01/2026(k) | | | 8,598 | | | 8,313 |
IO, 3.00%, 12/15/2027(j) | | | 101,217 | | | 5,820 |
3.27%, 12/15/2027(h) | | | 24,780 | | | 1,278 |
7.00%, 09/01/2029(j) | | | 1,979 | | | 320 |
7.50%, 12/15/2029(j) | | | 37,525 | | | 6,534 |
6.00%, 12/15/2032(j) | | | 23,799 | | | 3,502 |
| | | | | | | 1,541,269 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Principal
Amount | | | Value |
Federal Home Loan Mortgage Corp. (FHLMC)–0.24% |
9.00%, 08/01/2022 to 05/01/2025 | | $ | 1,209 | | | $ 1,287 |
6.00%, 10/01/2022 to 10/01/2029 | | | 72,027 | | | 79,900 |
6.50%, 07/01/2028 to 04/01/2034 | | | 53,701 | | | 59,732 |
7.00%, 10/01/2031 to 10/01/2037 | | | 37,304 | | | 41,017 |
5.00%, 12/01/2034 | | | 1,875 | | | 2,069 |
5.50%, 09/01/2039 | | | 90,436 | | | 103,395 |
| | | | | | | 287,400 |
|
Federal National Mortgage Association (FNMA)–0.06% |
5.00%, 02/01/2022 to 07/01/2022 | | | 30 | | | 31 |
7.00%, 01/01/2030 to 12/01/2032 | | | 7,173 | | | 8,132 |
8.50%, 07/01/2032 | | | 1,234 | | | 1,238 |
7.50%, 01/01/2033 | | | 1,454 | | | 1,657 |
6.50%, 01/01/2034 | | | 3,124 | | | 3,485 |
5.50%, 02/01/2035 to 05/01/2036 | | | 51,470 | | | 58,426 |
| | | | | | | 72,969 |
|
Government National Mortgage Association (GNMA)–3.71% |
7.00%, 12/15/2023 to 03/15/2026 | | | 1,114 | | | 1,171 |
IO, 7.39% (7.50% - (1.00 x 1 mo. USD LIBOR)), 02/16/2032(e)(j) | | | 27,142 | | | 74 |
6.44% (6.55% - (1.00 x 1 mo. USD LIBOR)), 04/16/2037(e)(j) | | | 30,724 | | | 5,264 |
6.54% (6.65% - (1.00 x 1 mo. USD LIBOR)), 04/16/2041(e)(j) | | | 194,899 | | | 27,804 |
4.50%, 09/16/2047(j) | | | 139,249 | | | 20,255 |
6.09% (6.20% - (1.00 x 1 mo. USD LIBOR)), 10/16/2047(e)(j) | | | 137,212 | | | 22,960 |
TBA, 2.50%, 01/01/2052(l) | | | 4,265,000 | | | 4,367,955 |
| | | | | | | 4,445,483 |
| |
Uniform Mortgage-Backed Securities–13.65% | | | |
TBA, 2.00%, 01/01/2037 to 01/01/2052(l) | | | 16,350,000 | | | 16,374,361 |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $23,669,893) | | | 22,721,482 |
| |
U.S. Treasury Securities–12.13% | | | |
U.S. Treasury Bonds–1.95% | | | | | | |
2.00%, 11/15/2041 | | | 828,100 | | | 837,804 |
2.00%, 08/15/2051 | | | 1,467,300 | | | 1,496,188 |
| | | | | | | 2,333,992 |
| | |
U.S. Treasury Notes–10.18% | | | | | | |
0.50%, 11/30/2023 | | | 1,746,000 | | | 1,739,453 |
1.00%, 12/15/2024 | | | 1,939,000 | | | 1,941,348 |
1.25%, 11/30/2026 | | | 5,505,200 | | | 5,502,619 |
1.50%, 11/30/2028 | | | 217,200 | | | 218,116 |
1.38%, 11/15/2031 | | | 2,853,100 | | | 2,817,882 |
| | | | | | | 12,219,418 |
Total U.S. Treasury Securities (Cost $14,525,241) | | | 14,553,410 |
| | | | | | |
| | | Shares | | | Value |
Preferred Stocks–0.90% |
Asset Management & Custody Banks–0.08% | | | |
| | |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(c) | | | 88,000 | | | $ 94,094 |
|
Diversified Banks–0.59% |
| | |
Citigroup, Inc., 5.00%, Series U, Pfd.(c) | | | 249,000 | | | 257,092 |
| | |
JPMorgan Chase & Co., 3.60% (3 mo. USD LIBOR + 3.47%),
Series I, Pfd.(e) | | | 447,000 | | | 449,238 |
| | | | | | | 706,330 |
|
Investment Banking & Brokerage–0.13% |
| | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(c) | | | 163,000 | | | 164,834 |
|
Other Diversified Financial Services–0.10% |
| | |
Equitable Holdings, Inc., 4.95%, Series B, Pfd.(c) | | | 113,000 | | | 118,650 |
Total Preferred Stocks (Cost $1,060,304) | | | 1,083,908 |
| | |
| | | Principal
Amount | | | |
Municipal Obligations–0.47% |
| | |
California State University, | | | | | | |
Series 2021 B, Ref. RB, 2.72%, 11/01/2052 | | $ | 110,000 | | | 111,160 |
Series 2021 B, Ref. RB, 2.94%, 11/01/2052 | | | 170,000 | | | 170,522 |
| | |
Texas (State of) Transportation Commission (Central Texas Turnpike System), Series 2020 C, Ref. RB, 3.03%, 08/15/2041 | | | 280,000 | | | 280,255 |
Total Municipal Obligations (Cost $560,000) | | | 561,937 |
|
Agency Credit Risk Transfer Notes–0.37% |
| | |
Fannie Mae Connecticut Avenue Securities, | | | | | | |
Series 2014-C04, Class 2M2, 5.10% (1 mo. USD LIBOR + 5.00%), 11/25/2024(e) | | | 50,167 | | | 50,896 |
Series 2016-C02, Class 1M2, 6.10% (1 mo. USD LIBOR + 6.00%), 09/25/2028(e) | | | 119,621 | | | 123,741 |
| | |
Freddie Mac, | | | | | | |
Series 2014-DN3, Class M3, STACR® , 4.10% (1 mo. USD LIBOR + 4.00%), 08/25/2024(e) | | | 49,515 | | | 50,450 |
Series 2018-HQA1, Class M2, STACR® , 2.40% (1 mo. USD LIBOR + 2.30%), 09/25/2030(e) | | | 83,966 | | | 85,005 |
Series 2018-DNA2, Class M1, STACR® , 0.90% (1 mo. USD LIBOR + 0.80%), 12/25/2030(b)(e) | | | 42,214 | | | 42,218 |
Series 2018-DNA3, Class M1, STACR® , 0.85% (1 mo. USD LIBOR + 0.75%), 09/25/2048(b)(e) | | | 165 | | | 165 |
Series 2018-HQA2, Class M1, STACR® , 0.85% (1 mo. USD LIBOR + 0.75%), 10/25/2048(b)(e) | | | 27,110 | | | 27,111 |
Series 2019-HRP1, Class M2, STACR® , 1.50% (1 mo. USD LIBOR + 1.40%), 02/25/2049(b)(e) | | | 59,848 | | | 60,045 |
Total Agency Credit Risk Transfer Notes
(Cost $449,494) | | | | | | 439,631 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | |
| | | Shares | | | Value |
Money Market Funds–14.50% | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(m)(n) | | | 6,077,589 | | | $ 6,077,589 |
|
|
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(m)(n) | | | 4,374,565 | | | 4,375,440 |
|
|
Invesco Treasury Portfolio, Institutional Class, 0.01%(m)(n) | | | 6,945,817 | | | 6,945,817 |
|
|
Total Money Market Funds
(Cost $17,399,535) | | | 17,398,846 |
|
|
TOTAL INVESTMENTS IN SECURITIES–116.20%
(Cost $140,243,779) | | | 139,416,765 |
|
|
OTHER ASSETS LESS
LIABILITIES–(16.20)% | | | | | | (19,437,053) |
|
|
NET ASSETS–100.00% | | | | | | $119,979,712 |
|
|
| | |
| 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, 2021 was $36,799,318, which represented 30.67% 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, 2021. |
| (f) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (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, 2021. |
| (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, 2021. |
| (i) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (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. |
| (m) | 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Institutional Class | | | | $13,781,057 | | | | $ | 12,951,645 | | | | $ | (20,655,113 | ) | | | $ | - | | | | $ | - | | | | $ | 6,077,589 | | | | $ | 2,554 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 9,839,218 | | | | | 9,247,145 | | | | | (14,710,925 | ) | | | | 1,470 | | | | | (1,468 | ) | | | | 4,375,440 | | | | | 1,243 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 15,749,779 | | | | | 14,801,880 | | | | | (23,605,842 | ) | | | | - | | | | | - | | | | | 6,945,817 | | | | | 1,070 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Invesco Private Government Fund | | | $ - | | | $ | 1,033,189 | | | $ | (1,033,189 | ) | | $ | - | | | $ | - | | | | $ - | | | | $ 16* | |
| | | | | | | |
| Invesco Private Prime Fund | | | - | | | | 2,354,901 | | | | (2,354,817 | ) | | | - | | | | (84 | ) | | | - | | | | 208* | |
| | | | | | | |
| Total | | | $39,370,054 | | | $ | 40,388,760 | | | $ | (62,359,886 | ) | | $ | 1,470 | | | $ | (1,552 | ) | | | $17,398,846 | | | | $5,091 | |
| * | 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. |
(n) The rate shown is the 7-day SEC standardized yield as of December 31, 2021.
| | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a) |
| Long Futures Contracts | | Number of
Contracts | | | Expiration Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) |
Interest Rate Risk | | | | | | | | | | | | | | | | | | |
| | | | | |
U.S. Treasury 5 Year Notes | | | 107 | | | | March-2022 | | | $ | 12,944,492 | | | $ | 33,458 | | | $ 33,458 |
| | | | | |
U.S. Treasury 10 Year Notes | | | 48 | | | | March-2022 | | | | 6,262,500 | | | | 36,981 | | | 36,981 |
| | | | | |
U.S. Treasury Ultra Bonds | | | 40 | | | | March-2022 | | | | 7,885,000 | | | | 121,250 | | | 121,250 |
Subtotal-Long Futures Contracts | | | | | | | | | | | | | | | 191,689 | | | 191,689 |
| | | | | |
Short Futures Contracts | | | | | | | | | | | | | | | | | | |
| | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | |
| | | | | |
U.S. Treasury 10 Year Ultra Notes | | | 66 | | | | March-2022 | | | | (9,664,875 | ) | | | (162,938 | ) | | (162,938) |
| | | | | |
U.S. Treasury Long Bonds | | | 37 | | | | March-2022 | | | | (5,936,187 | ) | | | (91,055 | ) | | (91,055) |
| | | | | |
Subtotal-Short Futures Contracts | | | | | | | | | | | | | | | (253,993 | ) | | (253,993) |
Total Futures Contracts | | | | | | | | | | | | | | $ | (62,304 | ) | | $ (62,304) |
| (a) | Futures contracts collateralized by $265,865 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 V.I. Core Bond Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $122,844,244) | | $ | 122,017,919 | |
Investments in affiliated money market funds, at value (Cost $17,399,535) | | | 17,398,846 | |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 77,538 | |
Deposits with brokers: | | | | |
Cash collateral – exchange-traded futures contracts | | | 265,865 | |
Cash | | | 353,251 | |
Foreign currencies, at value (Cost $351,232) | | | 338,363 | |
Receivable for: | | | | |
Fund shares sold | | | 29,748 | |
Dividends | | | 254 | |
Interest | | | 498,112 | |
Principal paydowns | | | 1,995 | |
Investment for trustee deferred compensation and retirement plans | | | 66,106 | |
Other assets | | | 480 | |
Total assets | | | 141,048,477 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 20,774,225 | |
Fund shares reacquired | | | 97,653 | |
Accrued fees to affiliates | | | 43,389 | |
Accrued other operating expenses | | | 87,392 | |
Trustee deferred compensation and retirement plans | | | 66,106 | |
Total liabilities | | | 21,068,765 | |
Net assets applicable to shares outstanding | | $ | 119,979,712 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 119,375,162 | |
Distributable earnings | | | 604,550 | |
| | | $ | 119,979,712 | |
| |
Net Assets: | | | | |
Series I | | $ | 82,111,156 | |
Series II | | $ | 37,868,556 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 10,521,722 | |
Series II | | | 4,925,668 | |
Series I: | | | | |
Net asset value per share | | $ | 7.80 | |
Series II: | | | | |
Net asset value per share | | $ | 7.69 | |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $39) | | $ | 2,626,989 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $252) | | | 5,119 | |
|
| |
Total investment income | | | 2,632,108 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 732,732 | |
|
| |
Administrative services fees | | | 203,147 | |
|
| |
Custodian fees | | | 22,242 | |
|
| |
Distribution fees - Series II | | | 101,800 | |
|
| |
Transfer agent fees | | | 13,693 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 23,526 | |
|
| |
Professional services fees | | | 60,583 | |
|
| |
Other | | | (56,555 | ) |
|
| |
Total expenses | | | 1,101,168 | |
|
| |
Less: Fees waived | | | (69,913 | ) |
|
| |
Net expenses | | | 1,031,255 | |
|
| |
Net investment income | | | 1,600,853 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 620,460 | |
|
| |
Affiliated investment securities | | | (1,552 | ) |
|
| |
Foreign currencies | | | (2,681 | ) |
|
| |
Futures contracts | | | (640,797 | ) |
|
| |
| | | (24,570 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (3,824,244 | ) |
|
| |
Affiliated investment securities | | | 1,470 | |
|
| |
Foreign currencies | | | (24,803 | ) |
|
| |
Futures contracts | | | (16,441 | ) |
|
| |
| | | (3,864,018 | ) |
|
| |
Net realized and unrealized gain (loss) | | | (3,888,588 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | $ | (2,287,735 | ) |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 1,600,853 | | | $ | 2,232,742 | |
|
| |
Net realized gain (loss) | | | (24,570 | ) | | | 7,582,017 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (3,864,018 | ) | | | 1,409,324 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (2,287,735 | ) | | | 11,224,083 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (4,905,155 | ) | | | (2,429,653 | ) |
|
| |
Series II | | | (2,187,480 | ) | | | (1,301,736 | ) |
|
| |
Total distributions from distributable earnings | | | (7,092,635 | ) | | | (3,731,389 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 1,361,966 | | | | 9,260,558 | |
|
| |
Series II | | | (5,760,053 | ) | | | (3,393,814 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (4,398,087 | ) | | | 5,866,744 | |
|
| |
Net increase (decrease) in net assets | | | (13,778,457 | ) | | | 13,359,438 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 133,758,169 | | | | 120,398,731 | |
|
| |
End of year | | $ | 119,979,712 | | | $ | 133,758,169 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core 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(c) | | Ratio of net investment income to average net assets | | Portfolio turnover (d)(e) |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | $8.43 | | | | $0.11 | | | | $(0.25 | ) | | | $(0.14 | ) | | | $(0.18 | ) | | | $(0.31 | ) | | | $(0.49 | ) | | | $7.80 | | | | (1.65 | )% | | | $82,111 | | | | 0.74 | % | | | 0.80 | % | | | 1.36 | % | | | 438 | % |
Year ended 12/31/20 | | | 7.93 | | | | 0.16 | | | | 0.61 | | | | 0.77 | | | | (0.27 | ) | | | – | | | | (0.27 | ) | | | 8.43 | | | | 9.71 | | | | 87,077 | | | | 0.73 | | | | 0.90 | | | | 1.90 | | | | 480 | |
Year ended 12/31/19 | | | 7.49 | | | | 0.23 | | | | 0.48 | | | | 0.71 | | | | (0.27 | ) | | | – | | | | (0.27 | ) | | | 7.93 | | | | 9.53 | | | | 73,160 | | | | 0.75 | | | | 0.89 | | | | 2.99 | | | | 93 | |
Year ended 12/31/18 | | | 7.83 | | | | 0.25 | | | | (0.33 | ) | | | (0.08 | ) | | | (0.26 | ) | | | – | | | | (0.26 | ) | | | 7.49 | | | | (1.02 | ) | | | 74,929 | | | | 0.75 | | | | 0.87 | | | | 3.35 | | | | 64 | |
Year ended 12/31/17 | | | 7.67 | | | | 0.19 | | | | 0.16 | | | | 0.35 | | | | (0.19 | ) | | | – | | | | (0.19 | ) | | | 7.83 | | | | 4.59 | | | | 81,481 | | | | 0.75 | | | | 0.85 | | | | 2.38 | | | | 86 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 8.31 | | | | 0.09 | | | | (0.24 | ) | | | (0.15 | ) | | | (0.16 | ) | | | (0.31 | ) | | | (0.47 | ) | | | 7.69 | | | | (1.85 | ) | | | 37,869 | | | | 0.99 | | | | 1.05 | | | | 1.11 | | | | 438 | |
Year ended 12/31/20 | | | 7.82 | | | | 0.14 | | | | 0.59 | | | | 0.73 | | | | (0.24 | ) | | | – | | | | (0.24 | ) | | | 8.31 | | | | 9.43 | | | | 46,681 | | | | 0.98 | | | | 1.15 | | | | 1.65 | | | | 480 | |
Year ended 12/31/19 | | | 7.39 | | | | 0.21 | | | | 0.47 | | | | 0.68 | | | | (0.25 | ) | | | – | | | | (0.25 | ) | | | 7.82 | | | | 9.25 | | | | 47,239 | | | | 1.00 | | | | 1.14 | | | | 2.75 | | | | 93 | |
Year ended 12/31/18 | | | 7.73 | | | | 0.23 | | | | (0.33 | ) | | | (0.10 | ) | | | (0.24 | ) | | | – | | | | (0.24 | ) | | | 7.39 | | | | (1.31 | ) | | | 46,391 | | | | 1.00 | | | | 1.12 | | | | 3.10 | | | | 64 | |
Year ended 12/31/17 | | | 7.57 | | | | 0.16 | | | | 0.17 | | | | 0.33 | | | | (0.17 | ) | | | – | | | | (0.17 | ) | | | 7.73 | | | | 4.38 | | | | 51,030 | | | | 1.00 | | | | 1.10 | | | | 2.13 | | | | 86 | |
| (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% and 0.00% for the years ended December 31, 2019, 2018 and 2017, respectively. |
| (d) | 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 for the years ended December 31, 2019, 2018 and 2017, respectively. |
| (e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Bond Fund |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Core Bond Fund, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses |
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| Invesco V.I. Core Bond Fund |
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. | 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities
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| Invesco V.I. Core Bond Fund |
lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
| 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 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.
| N. | 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. |
| 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| 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. |
| S. | 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
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| Invesco V.I. Core Bond Fund |
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.
| T. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 $1 billion | | | 0.600% | |
|
| |
Over $1 billion | | | 0.500% | |
|
| |
| * | 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, 2021, 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 Fund.
The Adviser has contractually agreed, through at least April 30, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $69,913.
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, 2021, Invesco was paid $17,540 for accounting and fund administrative services and was reimbursed $185,607 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, 2021, 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, 2021, 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 |
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| Invesco V.I. Core Bond 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, 2021. 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 | | $ | – | | | $ | 51,912,526 | | | $ | 616,559 | | | $ | 52,529,085 | |
|
| |
Asset-Backed Securities | | | – | | | | 30,128,466 | | | | – | | | | 30,128,466 | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 22,721,482 | | | | – | | | | 22,721,482 | |
|
| |
U.S. Treasury Securities | | | – | | | | 14,553,410 | | | | – | | | | 14,553,410 | |
|
| |
Preferred Stocks | | | – | | | | 1,083,908 | | | | – | | | | 1,083,908 | |
|
| |
Municipal Obligations | | | – | | | | 561,937 | | | | – | | | | 561,937 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 439,631 | | | | – | | | | 439,631 | |
|
| |
Money Market Funds | | | 17,398,846 | | | | – | | | | – | | | | 17,398,846 | |
|
| |
Total Investments in Securities | | | 17,398,846 | | | | 121,401,360 | | | | 616,559 | | | | 139,416,765 | |
|
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 191,689 | | | | – | | | | – | | | | 191,689 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (253,993 | ) | | | – | | | | – | | | | (253,993 | ) |
|
| |
Total Other Investments | | | (62,304 | ) | | | – | | | | – | | | | (62,304 | ) |
|
| |
Total Investments | | $ | 17,336,542 | | | $ | 121,401,360 | | | $ | 616,559 | | | $ | 139,354,461 | |
|
| |
| * | 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, 2021:
| | | | |
| | | Value | |
| | | Interest | |
| Derivative Assets | | Rate Risk | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 191,689 | |
|
| |
Derivatives not subject to master netting agreements | | | (191,689 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| |
| | | Value | |
| | | Interest | |
| Derivative Liabilities | | Rate Risk | |
|
| |
Unrealized depreciation on futures contracts — Exchange-Traded(a) | | $ | (253,993 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 253,993 | |
|
| |
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, 2021
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 | | | $(640,797) | |
|
| |
|
| Invesco V.I. Core Bond Fund |
| | | | |
| | | Location of Gain (Loss) on
Statement of Operations | |
| | | Interest Rate Risk | |
|
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Futures contracts | | | $ (16,441) | |
|
| |
Total | | | $(657,238) | |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Futures
Contracts |
|
|
Average notional value | | $58,209,711 |
|
|
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
| | |
Ordinary income* | | $ | 6,175,652 | | | $ | 3,731,389 | |
| | |
Long-term capital gain | | | 916,983 | | | | – | |
| | |
Total distributions | | $ | 7,092,635 | | | $ | 3,731,389 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 2,053,103 | |
|
| |
Net unrealized appreciation (depreciation) - investments | | | (851,779 | ) |
|
| |
Net unrealized appreciation (depreciation) - foreign currencies | | | (12,869 | ) |
|
| |
Temporary book/tax differences | | | (57,902 | ) |
|
| |
Capital loss carryforward | | | (526,003 | ) |
|
| |
Shares of beneficial interest | | | 119,375,162 | |
|
| |
Total net assets | | $ | 119,979,712 | |
|
| |
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, amortization and accretion on debt securities 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.
|
| Invesco V.I. Core Bond Fund |
The Fund has a capital loss carryforward as of December 31, 2021, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
| | | |
Not subject to expiration | | | $526,003 | | | | $– | | | | $526,003 | |
| * | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $91,845,200 and $84,079,393, 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 | | $ | 2,004,583 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (2,856,362 | ) |
|
| |
Net unrealized appreciation (depreciation) of investments | | $ | (851,779 | ) |
|
| |
Cost of investments for tax purposes is $140,206,240.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of dollar rolls, on December 31, 2021, undistributed net investment income was increased by $442,877 and undistributed net realized gain (loss) was decreased by $442,877. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,220,788 | | | $ | 18,442,198 | | | | 2,207,694 | | | $ | 18,501,766 | |
|
| |
Series II | | | 700,798 | | | | 5,644,018 | | | | 2,667,997 | | | | 21,953,889 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 628,061 | | | | 4,905,155 | | | | 293,082 | | | | 2,429,653 | |
|
| |
Series II | | | 284,088 | | | | 2,187,480 | | | | 159,136 | | | | 1,301,736 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,654,512 | ) | | | (21,985,387 | ) | | | (1,401,177 | ) | | | (11,670,861 | ) |
|
| |
Series II | | | (1,676,915 | ) | | | (13,591,551 | ) | | | (3,253,104 | ) | | | (26,649,439 | ) |
|
| |
Net increase (decrease) in share activity | | | (497,692 | ) | | $ | (4,398,087 | ) | | | 673,628 | | | $ | 5,866,744 | |
|
| |
| (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–Significant 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. Core Plus Bond 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 March 2022. 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. Core 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Total Return Bond Fund/VA (subsequently renamed Invesco V.I. Core Bond Fund) 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $995.30 | | $3.72 | | $1,021.48 | | $3.77 | | 0.74% |
Series II | | 1,000.00 | | 994.70 | | 4.98 | | 1,020.21 | | 5.04 | | 0.99 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| Invesco V.I. Core 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 916,983 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 1.84 | % | | | | |
U.S. Treasury Obligations* | | | 2.40 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 50.17 | % | | | | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| Invesco V.I. Core 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) | | 186 | | 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 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco V.I. Core 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco V.I. Core 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Core 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Core 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; Vice President, Invesco Advisers, Inc.; 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 |
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| Invesco V.I. Core Bond Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Core Equity Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Core Equity Fund (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 27.74 | % |
Series II Shares | | | 27.38 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 1000 Index▼ (Style-Specific Index) | | | 26.45 | |
Lipper VUF Large-Cap Core Funds Index◾ (Peer Group Index) | | | 26.77 | |
Source(s): ▼RIMES Technologies Corp.; ◾Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a
6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
During the fiscal year, stock selection in the health care, real estate and information technology (IT) sectors 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 communication services, energy and consumer staples sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the fiscal year included Applied Materials, Capital One and Prologis. Applied Materials and semiconductor equipment companies, in general, benefited from the strong secular demand for semiconductors, which has supported positive earnings estimate revisions.
Capital One, along with financials as a group, outperformed as the US continued its path to reopening. Additionally, the company benefited from a pick-up in travel, hotel bookings and dining which helped drive credit card growth. Further, consumers continued to benefit from the aggressive stimulus and forbearance programs that helped limit delinquencies and charge-offs.
Prologis, an industrial real estate investment trust (REIT), continued to post strong tenant demand and same-property rent
growth, driven by its customers’ need to expand and strengthen supply chains to support the growth of e-commerce.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the fiscal year included Fiserv, Amazon and Verizon Communications. Fiserv, a financial technology company that provides payments services, was under pressure due to a more difficult competitive environment for the company’s merchant acquiring business. Additionally, there have been concerns that non-traditional banks will negatively impact the traditional money center banks and by extending Fiserv as a technology provider.
Amazon traded mostly flat during the fiscal year but was a key relative detractor in the context of significant gains for the S&P 500® Index. Amazon’s modest positive total return during the fiscal year came after experiencing significant gains in 2020 as a stay-at-home beneficiary which led to tougher comparisons in 2021.
Verizon Communications underperformed along with the telecommunications group in general as those names tend to be more defensive and value-oriented while the S&P 500 Index experienced strong gains led by the growth sub-segment of the market. Additionally, the company dealt with COVID-19-related retail store restrictions that limited the pool of potential switching subscribers and AT&T used aggressive pricing to defend its subscriber base.
We continue to maintain our discipline around valuation and focus on companies that 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 Fund performance.
We thank you for your continued investment in Invesco V.I. Core Equity Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Manind Govil - Lead
Paul Larson
Benjamin Ram
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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
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| Invesco V.I. Core Equity Fund |
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 Equity Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
| |
Series I Shares | | | | |
Inception (5/2/94) | | | 8.99 | % |
10 Years | | | 12.27 | |
5 Years | | | 13.97 | |
1 Year | | | 27.74 | |
| |
Series II Shares | | | | |
Inception (10/24/01) | | | 8.09 | % |
10 Years | | | 11.99 | |
5 Years | | | 13.69 | |
1 Year | | | 27.38 | |
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.
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 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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. |
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| Invesco V.I. Core Equity Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 26.60 | % |
| |
Health Care | | | | 14.78 | |
| |
Consumer Discretionary | | | | 14.10 | |
| |
Industrials | | | | 10.96 | |
| |
Financials | | | | 10.60 | |
| |
Communication Services | | | | 8.23 | |
| |
Consumer Staples | | | | 6.28 | |
| |
Real Estate | | | | 2.77 | |
| |
Energy | | | | 2.16 | |
| |
Materials | | | | 2.08 | |
| |
Utilities | | | | 1.51 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | (0.07 | ) |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
| 1. | | Microsoft Corp. | | | | 6.76 | % |
| | |
| 2. | | Amazon.com, Inc. | | | | 5.32 | |
| | |
| 3. | | JPMorgan Chase & Co. | | | | 3.13 | |
| | |
| 4. | | United Parcel Service, Inc., Class B | | | | 2.94 | |
| | |
| 5. | | UnitedHealth Group, Inc. | | | | 2.91 | |
| | |
| 6. | | Apple, Inc. | | | | 2.87 | |
| | |
| 7. | | QUALCOMM, Inc. | | | | 2.80 | |
| | |
| 8. | | Procter & Gamble Co. (The) | | | | 2.69 | |
| | |
| 9. | | Prologis, Inc. | | | | 2.67 | |
| | |
| 10. | | Alphabet, Inc., Class A | | | | 2.59 | |
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, 2021.
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| Invesco V.I. Core Equity Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–100.07% | |
Aerospace & Defense–1.70% | |
Raytheon Technologies Corp. | | | 196,324 | | | $ | 16,895,643 | |
|
| |
|
Air Freight & Logistics–2.94% | |
United Parcel Service, Inc., Class B | | | 136,541 | | | | 29,266,198 | |
|
| |
|
Airlines–0.41% | |
Southwest Airlines Co.(b) | | | 95,296 | | | | 4,082,481 | |
|
| |
|
Application Software–3.73% | |
Manhattan Associates, Inc.(b) | | | 19,382 | | | | 3,013,707 | |
|
| |
salesforce.com, inc.(b) | | | 91,836 | | | | 23,338,283 | |
|
| |
Workday, Inc., Class A(b)(c) | | | 39,394 | | | | 10,761,653 | |
|
| |
| | | | | | | 37,113,643 | |
|
| |
|
Automobile Manufacturers–1.85% | |
General Motors Co.(b) | | | 213,445 | | | | 12,514,280 | |
|
| |
Tesla, Inc.(b) | | | 5,602 | | | | 5,920,082 | |
|
| |
| | | | | | | 18,434,362 | |
|
| |
|
Automotive Retail–1.72% | |
CarMax, Inc.(b) | | | 72,055 | | | | 9,383,723 | |
|
| |
O’Reilly Automotive, Inc.(b) | | | 10,975 | | | | 7,750,874 | |
|
| |
| | | | | | | 17,134,597 | |
|
| |
|
Biotechnology–0.87% | |
Seagen, Inc.(b) | | | 55,750 | | | | 8,618,950 | |
|
| |
|
Cable & Satellite–1.43% | |
Comcast Corp., Class A | | | 282,306 | | | | 14,208,461 | |
|
| |
|
Commodity Chemicals–0.78% | |
Valvoline, Inc. | | | 208,484 | | | | 7,774,368 | |
|
| |
|
Communications Equipment–1.09% | |
Motorola Solutions, Inc. | | | 39,976 | | | | 10,861,479 | |
|
| |
|
Construction Machinery & Heavy Trucks–1.25% | |
Caterpillar, Inc. | | | 60,271 | | | | 12,460,427 | |
|
| |
|
Construction Materials–1.30% | |
Vulcan Materials Co. | | | 62,049 | | | | 12,880,131 | |
|
| |
|
Data Processing & Outsourced Services–2.13% | |
Fiserv, Inc.(b) | | | 119,465 | | | | 12,399,272 | |
|
| |
PayPal Holdings, Inc.(b) | | | 46,733 | | | | 8,812,909 | |
|
| |
| | | | | | | 21,212,181 | |
|
| |
|
Distillers & Vintners–0.91% | |
Constellation Brands, Inc., Class A | | | 35,933 | | | | 9,018,105 | |
|
| |
|
Diversified Banks–3.13% | |
JPMorgan Chase & Co. | | | 196,513 | | | | 31,117,834 | |
|
| |
|
Electric Utilities–1.51% | |
FirstEnergy Corp. | | | 361,827 | | | | 15,048,385 | |
|
| |
|
Electrical Components & Equipment–0.98% | |
Hubbell, Inc. | | | 14,182 | | | | 2,953,685 | |
|
| |
Rockwell Automation, Inc. | | | 19,358 | | | | 6,753,038 | |
|
| |
| | | | | | | 9,706,723 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Environmental & Facilities Services–0.69% | |
Waste Connections, Inc. | | | 50,029 | | | $ | 6,817,452 | |
|
| |
|
Financial Exchanges & Data–1.53% | |
Intercontinental Exchange, Inc. | | | 111,112 | | | | 15,196,788 | |
|
| |
|
Food Distributors–0.91% | |
Sysco Corp. | | | 115,646 | | | | 9,083,993 | |
|
| |
|
General Merchandise Stores–1.20% | |
Target Corp. | | | 51,371 | | | | 11,889,304 | |
|
| |
|
Health Care Facilities–2.90% | |
HCA Healthcare, Inc. | | | 87,484 | | | | 22,476,389 | |
|
| |
Tenet Healthcare Corp.(b) | | | 77,970 | | | | 6,369,370 | |
|
| |
| | | | | | | 28,845,759 | |
|
| |
|
Health Care Services–2.11% | |
CVS Health Corp. | | | 203,004 | | | | 20,941,893 | |
|
| |
|
Health Care Supplies–1.28% | |
Cooper Cos., Inc. (The) | | | 25,530 | | | | 10,695,538 | |
|
| |
Quidel Corp.(b)(c) | | | 15,034 | | | | 2,029,440 | |
|
| |
| | | | | | | 12,724,978 | |
|
| |
|
Home Improvement Retail–1.92% | |
Floor & Decor Holdings, Inc., Class A(b) | | | 19,809 | | | | 2,575,368 | |
|
| |
Home Depot, Inc. (The) | | | 39,783 | | | | 16,510,343 | |
|
| |
| | | | | | | 19,085,711 | |
|
| |
|
Homebuilding–0.95% | |
D.R. Horton, Inc. | | | 87,426 | | | | 9,481,350 | |
|
| |
|
Hotels, Resorts & Cruise Lines–1.13% | |
Airbnb, Inc., Class A(b) | | | 67,664 | | | | 11,265,379 | |
|
| |
|
Household Products–2.68% | |
Procter & Gamble Co. (The) | | | 163,132 | | | | 26,685,133 | |
|
| |
|
Industrial Machinery–1.46% | |
Otis Worldwide Corp. | | | 166,467 | | | | 14,494,282 | |
|
| |
|
Industrial REITs–2.67% | |
Prologis, Inc. | | | 157,774 | | | | 26,562,831 | |
|
| |
|
Integrated Oil & Gas–0.65% | |
Exxon Mobil Corp. | | | 105,076 | | | | 6,429,600 | |
|
| |
|
Integrated Telecommunication Services–1.48% | |
Verizon Communications, Inc. | | | 284,006 | | | | 14,756,952 | |
|
| |
|
Interactive Home Entertainment–0.38% | |
Zynga, Inc., Class A(b) | | | 597,524 | | | | 3,824,154 | |
|
| |
|
Interactive Media & Services–2.89% | |
Alphabet, Inc., Class A(b) | | | 8,902 | | | | 25,789,450 | |
|
| |
Snap, Inc., Class A(b) | | | 63,247 | | | | 2,974,506 | |
|
| |
| | | | | | | 28,763,956 | |
|
| |
|
Internet & Direct Marketing Retail–5.32% | |
Amazon.com, Inc.(b) | | | 15,867 | | | | 52,905,973 | |
|
| |
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–0.47% | |
Snowflake, Inc., Class A(b) | | | 13,650 | | | $ | 4,623,938 | |
|
| |
| |
IT Consulting & Other Services–1.74% | | | | | |
Accenture PLC, Class A | | | 36,892 | | | | 15,293,579 | |
|
| |
Amdocs Ltd. | | | 27,380 | | | | 2,049,119 | |
|
| |
| | | | | | | 17,342,698 | |
|
| |
| |
Life Sciences Tools & Services–0.99% | | | | | |
Avantor, Inc.(b) | | | 233,452 | | | | 9,837,667 | |
|
| |
| |
Managed Health Care–2.91% | | | | | |
UnitedHealth Group, Inc. | | | 57,582 | | | | 28,914,225 | |
|
| |
| |
Movies & Entertainment–2.04% | | | | | |
Netflix, Inc.(b) | | | 29,239 | | | | 17,614,743 | |
|
| |
Warner Music Group Corp., Class A | | | 62,435 | | | | 2,695,943 | |
|
| |
| | | | | | | 20,310,686 | |
|
| |
| |
Oil & Gas Refining & Marketing–0.97% | | | | | |
Valero Energy Corp. | | | 128,372 | | | | 9,642,021 | |
|
| |
| |
Oil & Gas Storage & Transportation–0.54% | | | | | |
Magellan Midstream Partners L.P. | | | 116,696 | | | | 5,419,362 | |
|
| |
| |
Other Diversified Financial Services–1.75% | | | | | |
Equitable Holdings, Inc. | | | 530,065 | | | | 17,380,831 | |
|
| |
| |
Packaged Foods & Meats–1.16% | | | | | |
Mondelez International, Inc., Class A | | | 174,079 | | | | 11,543,178 | |
|
| |
| |
Personal Products–0.10% | | | | | |
Coty, Inc., Class A(b) | | | 99,166 | | | | 1,041,243 | |
|
| |
| |
Pharmaceuticals–3.74% | | | | | |
AstraZeneca PLC, ADR (United Kingdom) | | | 239,716 | | | | 13,963,457 | |
|
| |
Bayer AG (Germany) | | | 41,823 | | | | 2,238,972 | |
|
| |
Eli Lilly and Co. | | | 75,927 | | | | 20,972,556 | |
|
| |
| | | | | | | 37,174,985 | |
|
| |
| |
Property & Casualty Insurance–1.18% | | | | | |
Allstate Corp. (The) | | | 100,026 | | | | 11,768,059 | |
|
| |
| |
Railroads–0.96% | | | | | |
Union Pacific Corp. | | | 37,908 | | | | 9,550,162 | |
|
| |
| |
Real Estate Services–0.10% | | | | | |
Zillow Group, Inc., Class C(b)(c) | | | 15,895 | | | | 1,014,896 | |
|
| |
| |
Regional Banks–2.42% | | | | | |
CIT Group, Inc. | | | 105,753 | | | | 5,429,359 | |
|
| |
First Citizens BancShares, Inc., Class A | | | 4,321 | | | | 3,585,739 | |
|
| |
Signature Bank | | | 21,999 | | | | 7,116,016 | |
|
| |
SVB Financial Group(b) | | | 11,692 | | | | 7,929,982 | |
|
| |
| | | | | | | 24,061,096 | |
|
| |
Investment Abbreviations:
ADR - American Depositary Receipt
REIT - Real Estate Investment Trust
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Research & Consulting Services–0.58% | | | | | |
TransUnion | | | 48,438 | | | $ | 5,743,778 | |
|
| |
| |
Semiconductor Equipment–1.43% | | | | | |
Applied Materials, Inc. | | | 90,496 | | | | 14,240,451 | |
|
| |
| |
Semiconductors–4.29% | | | | | |
Advanced Micro Devices, Inc.(b) | | | 102,783 | | | | 14,790,474 | |
|
| |
QUALCOMM, Inc. | | | 152,414 | | | | 27,871,948 | |
|
| |
| | | | | | | 42,662,422 | |
|
| |
| |
Soft Drinks–0.51% | | | | | |
Coca-Cola Co. (The) | | | 86,405 | | | | 5,116,040 | |
|
| |
| |
Systems Software–8.84% | | | | | |
Microsoft Corp. | | | 199,991 | | | | 67,260,973 | |
|
| |
ServiceNow, Inc.(b) | | | 8,963 | | | | 5,817,973 | |
|
| |
VMware, Inc., Class A | | | 128,477 | | | | 14,887,915 | |
|
| |
| | | | | | | 87,966,861 | |
|
| |
|
Technology Hardware, Storage & Peripherals–2.87% | |
Apple, Inc. | | | 160,523 | | | | 28,504,069 | |
|
| |
| |
Thrifts & Mortgage Finance–0.60% | | | | | |
Rocket Cos., Inc., Class A | | | 422,671 | | | | 5,917,394 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $689,008,817) | | | | 995,365,518 | |
|
| |
|
Money Market Funds–0.11% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 389,846 | | | | 389,846 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 286,737 | | | | 286,795 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 445,538 | | | | 445,538 | |
|
| |
Total Money Market Funds
(Cost $1,122,179) | | | | 1,122,179 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.18%
(Cost $690,130,996) | | | | | | | 996,487,697 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
|
Money Market Funds–1.41% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 4,212,863 | | | | 4,212,863 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 9,828,048 | | | | 9,830,013 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $14,042,876) | | | | 14,042,876 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–101.59%
(Cost $704,173,872) | | | | 1,010,530,573 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(1.59)% | | | | (15,846,156 | ) |
|
| |
NET ASSETS–100.00% | | | | $ 994,684,417 | |
|
| |
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) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 1,101,539 | | | | $ | 85,287,812 | | | | $ | (85,999,505 | ) | | | $ | - | | | | $ | - | | | | $ | 389,846 | | | | $ | 364 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 786,738 | | | | | 60,889,055 | | | | | (61,389,018 | ) | | | | 24 | | | | | (4) | | | | | 286,795 | | | | | 127 | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,258,901 | | | | | 97,471,785 | | | | | (98,285,148 | ) | | | | - | | | | | - | | | | | 445,538 | | | | | 156 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 59,524,915 | | | | | (55,312,052 | ) | | | | - | | | | | - | | | | | 4,212,863 | | | | | 534* | |
Invesco Private Prime Fund | | | | - | | | | | 109,127,014 | | | | | (99,296,467 | ) | | | | - | | | | | (534) | | | | | 9,830,013 | | | | | 7,084* | |
Total | | | $ | 3,147,178 | | | | $ | 412,300,581 | | | | $ | (400,282,190 | ) | | | $ | 24 | | | | $ | (538) | | | | $ | 15,165,055 | | | | $ | 8,265 | |
| | * | 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, 2021. |
| (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. Core Equity Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $689,008,817)* | | $ | 995,365,518 | |
|
| |
Investments in affiliated money market funds, at value (Cost $15,165,055) | | | 15,165,055 | |
|
| |
Foreign currencies, at value (Cost $1,420) | | | 1,451 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 1,004 | |
|
| |
Fund shares sold | | | 22,021 | |
|
| |
Dividends | | | 310,661 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 390,423 | |
|
| |
Other assets | | | 3,228 | |
|
| |
Total assets | | | 1,011,259,361 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 1,033,911 | |
|
| |
Amount due custodian | | | 623,914 | |
|
| |
Collateral upon return of securities loaned | | | 14,042,876 | |
|
| |
Accrued fees to affiliates | | | 411,156 | |
|
| |
Accrued other operating expenses | | | 46,824 | |
|
| |
Trustee deferred compensation and retirement plans | | | 416,263 | |
|
| |
Total liabilities | | | 16,574,944 | |
|
| |
Net assets applicable to shares outstanding | | $ | 994,684,417 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 563,804,251 | |
|
| |
Distributable earnings | | | 430,880,166 | |
|
| |
| | $ | 994,684,417 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 969,408,326 | |
|
| |
Series II | | $ | 25,276,091 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 25,655,426 | |
|
| |
Series II | | | 672,747 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 37.79 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 37.57 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $13,667,820 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $7,536) | | $ | 13,188,936 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $233,746) | | | 234,393 | |
|
| |
Total investment income | | | 13,423,329 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 5,422,385 | |
|
| |
Administrative services fees | | | 1,436,185 | |
|
| |
Custodian fees | | | 8,086 | |
|
| |
Distribution fees - Series II | | | 59,334 | |
|
| |
Transfer agent fees | | | 50,762 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 28,354 | |
|
| |
Reports to shareholders | | | 10,405 | |
|
| |
Professional services fees | | | 52,621 | |
|
| |
Other | | | 14,542 | |
|
| |
Total expenses | | | 7,082,674 | |
|
| |
Less: Fees waived | | | (1,154 | ) |
|
| |
Net expenses | | | 7,081,520 | |
|
| |
Net investment income | | | 6,341,809 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
|
| |
Unaffiliated investment securities | | | 120,213,575 | |
|
| |
Affiliated investment securities | | | (538 | ) |
|
| |
Foreign currencies | | | (1,674 | ) |
|
| |
| | | 120,211,363 | |
|
| |
Change in net unrealized appreciation (depreciation) of:
Unaffiliated investment securities | | | 82,778,693 | |
|
| |
Affiliated investment securities | | | 24 | |
|
| |
Foreign currencies | | | (8,403 | ) |
|
| |
| | | 82,770,314 | |
|
| |
Net realized and unrealized gain | | | 202,981,677 | |
|
| |
Net increase in net assets resulting from operations | | $ | 209,323,486 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 6,341,809 | | | $ | 6,765,499 | |
|
| |
Net realized gain | | | 120,211,363 | | | | 22,526,558 | |
|
| |
Change in net unrealized appreciation | | | 82,770,314 | | | | 62,311,367 | |
|
| |
Net increase in net assets resulting from operations | | | 209,323,486 | | | | 91,603,424 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (26,896,119 | ) | | | (165,580,119 | ) |
|
| |
Series II | | | (643,978 | ) | | | (4,892,160 | ) |
|
| |
Total distributions from distributable earnings | | | (27,540,097 | ) | | | (170,472,279 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 52,340,903 | | | | (38,886,728 | ) |
|
| |
Series II | | | (1,793,836 | ) | | | 1,713,650 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 50,547,067 | | | | (37,173,078 | ) |
|
| |
Net increase (decrease) in net assets | | | 232,330,456 | | | | (116,041,933 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 762,353,961 | | | | 878,395,894 | |
|
| |
End of year | | $ | 994,684,417 | | | $ | 762,353,961 | |
|
| |
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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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 12/31/21 | | | $30.43 | | | | $0.25 | | | | $ 8.16 | | | | $ 8.41 | | | | $(0.24 | ) | | | $(0.81 | ) | | | $(1.05 | ) | | | $37.79 | | | | 27.74 | % | | | $ 969,408 | | | | 0.80 | % | | | 0.80 | % | | | 0.72 | % | | | 54 | % |
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 | | | | 0.81 | | | | 0.89 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 30.27 | | | | 0.16 | | | | 8.11 | | | | 8.27 | | | | (0.16 | ) | | | (0.81 | ) | | | (0.97 | ) | | | 37.57 | | | | 27.42 | | | | 25,276 | | | | 1.05 | | | | 1.05 | | | | 0.47 | | | | 54 | |
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 | | | | 1.06 | | | | 0.64 | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
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| Invesco V.I. Core Equity Fund |
| 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 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. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, the effective advisory fee rate incurred by the Fund was 0.61%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $1,154.
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, 2021, Invesco was paid $117,083 for accounting and fund administrative services and was reimbursed $1,319,102 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $2,825 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.
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| Invesco V.I. Core Equity Fund |
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 993,126,546 | | | $ | 2,238,972 | | | | $– | | | $ | 995,365,518 | |
|
| |
Money Market Funds | | | 1,122,179 | | | | 14,042,876 | | | | – | | | | 15,165,055 | |
|
| |
Total Investments | | $ | 994,248,725 | | | $ | 16,281,848 | | | | $– | | | $ | 1,010,530,573 | |
|
| |
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, 2021, the Fund engaged in securities purchases of $2,697,654.
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 6,183,800 | | | | | | | $ | 18,701,208 | |
|
| |
Long-term capital gain | | | 21,356,297 | | | | | | | | 151,771,071 | |
|
| |
Total distributions | | $ | 27,540,097 | | | | | | | $ | 170,472,279 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Core Equity Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 23,034,761 | |
|
| |
Undistributed long-term capital gain | | | 104,761,379 | |
|
| |
Net unrealized appreciation – investments | | | 306,529,963 | |
|
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (6,485 | ) |
|
| |
Temporary book/tax differences | | | (3,439,452 | ) |
|
| |
Shares of beneficial interest | | | 563,804,251 | |
|
| |
Total net assets | | $ | 994,684,417 | |
|
| |
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 does not have a capital loss carryforward as of December 31, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $508,444,096 and $475,326,230, 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 | | | $317,499,906 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (10,969,943 | ) |
|
| |
Net unrealized appreciation of investments | | | $306,529,963 | |
|
| |
Cost of investments for tax purposes is $704,000,610.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnerships, on December 31, 2021, undistributed net investment income was decreased by $1,257,528, undistributed net realized gain was increased by $1,259,331 and shares of beneficial interest was decreased by $1,803. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 4,117,085 | | | $ | 148,736,616 | | | | 698,021 | | | $ | 20,672,935 | |
|
| |
Series II | | | 35,297 | | | | 1,231,364 | | | | 44,947 | | | | 1,413,543 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 733,864 | | | | 26,896,119 | | | | 5,857,096 | | | | 165,580,119 | |
|
| |
Series II | | | 17,668 | | | | 643,978 | | | | 173,851 | | | | 4,892,160 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (3,525,910 | ) | | | (123,291,832 | ) | | | (6,708,456 | ) | | | (225,139,782 | ) |
|
| |
Series II | | | (107,216 | ) | | | (3,669,178 | ) | | | (142,565 | ) | | | (4,592,053 | ) |
|
| |
Net increase (decrease) in share activity | | | 1,270,788 | | | $ | 50,547,067 | | | | (77,106 | ) | | $ | (37,173,078 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 55% 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
�� Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,099.30 | | $4.18 | | $1,021.22 | | $4.02 | | 0.79% |
Series II | | 1,000.00 | | 1,097.90 | | 5.50 | | 1,019.96 | | 5.30 | | 1.04 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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, 2021:
| | | | | | | | |
Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | | $21,356,297 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 99.98 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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) | | 186 | | 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Core Plus Bond Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Core |
Plus Bond Fund (the Fund) outperformed the Bloomberg 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | -0.65 | % |
Series II Shares | | | -1.01 | |
Bloomberg U.S. Aggregate Bond Indexq (Broad Market/Style-Specific Index) | | | -1.54 | |
Lipper VUF Core Plus Bond Funds Index∎ (Peer Group Index) | | | -1.47 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
In the first quarter of 2021, rising 10-year US Treasury yields increased significantly to 1.74%,1 its highest level since January 2020, reflecting higher inflation expectations. Largely a result of economic optimism, government bond yields rose globally during the first quarter of 2021 as investors began to price in higher levels of economic growth and inflation moving towards a post-pandemic world. On the fiscal front, another stimulus package was signed into law and COVID-19 vaccine approvals and administration ramped up. 30-year Treasury yields moved higher by 0.75% to end the quarter at 2.41%.1 Importantly, short-term rates, which are closely tied to the US Federal Reserve (the Fed) policy, were quite steady. Two-year US Treasury yields moved up just 0.05% to 0.16%.1
Fixed income markets settled down in the second quarter of 2021, posting gains and rebounding from negative performance experienced during the early part of the fiscal year due to a sharply rising interest rate environment. Despite higher volatility stemming from inflation concerns and the potential for rising interest rates, investors remained optimistic about the strength of the economic recovery after the Bureau of Economic Analysis reported that US GDP grew at a 6.4% annualized rate for the first quarter of 2021.2 As the US COVID-19 vaccination rate neared the 50% threshold, consumers resumed prepandemic activities in the third quarter and economically sensitive areas such as the consumer discretionary and industrials sectors began to recover.
In the fourth quarter, concerns about inflation heightened as US inflation rose 7%,3 its highest level in nearly 40 years. Though the Fed left policy rates unchanged in the quarter, the Fed indicated its accommodative policies were coming to an end in 2022 through a willingness to raise interest rates to combat inflation and the announced reduction of its monthly bond purchase program. Additionally, US interest rate moves and inflation risk significantly affected fixed income valuations during the quarter. The two-year Treasury yield rose moderately from 0.27% to 0.73%,
while the 10-year Treasury yield increased slightly from 1.48% to 1.52%.1 The yield curve, as measured by the yield differential between two- and 10-year Treasuries, flattened during the quarter. Despite the withdrawal of central bank support and coronavirus variants raising concerns about economic reopening and the resumption of travel, we believe that investors are cautiously optimistic and expect corporate balance sheets to continue to recover meaningfully in 2022.
The broader bond market, as represented by the Bloomberg U.S. Aggregate Bond Index, the Fund’s broad market/style-specific benchmark, posted a negative 1.54% return for the fiscal year. The four primary sectors of the Fund’s broad market/style-specific benchmark, Bloomberg U.S. Aggregate Bond Index – government-related, corporate, securitized and treasury – posted negative returns for the fiscal year.
The Fund, at NAV, generated negative returns for the fiscal year but outperformed its broad market/style-specific benchmark. Overweight exposure to investment-grade was the most notable contributor to the Fund’s relative performance. Positioning in Treasuries and other government related securities detracted from performance, driven by a flattening of the yield curve, signaling inflation concerns. Security selection in the financial institutions and technology, media and telecom industries also contributed to the Fund’s relative performance during the fiscal year while security selection within the utilities and industrials sectors detracted from relative performance.
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 fiscal year. The Fund’s out-of-index exposure to US dollar-denominated emerging market (EM) corporate debt during the fiscal year also contributed to the Fund’s relative performance. Out-of-index exposure, such as to high yield bonds, 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 contributed to relative Fund performance, as shorter duration assets rallied during the fiscal year as a result of an overall flattening of the yield curve.
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 fiscal 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 fiscal 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 fiscal 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 magnitude of the increase in interest rates, as well as individual security characteristics, such as price, maturity, duration and coupon
|
| Invesco V.I. Core Plus 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. Core Plus Bond Fund and for sharing our long-term investment horizon.
1 Source: US Department of Treasury
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
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. and its affiliates. 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. 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 12/31/11
| 2 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (5/5/93) | | | 4.43 | % |
10 Years | | | 4.80 | |
5 Years | | | 4.68 | |
1 Year | | | -0.65 | |
| |
Series II Shares | | | | |
Inception (3/14/02) | | | 4.03 | % |
10 Years | | | 4.52 | |
5 Years | | | 4.40 | |
1 Year | | | -1.01 | |
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.
|
| 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, 2021, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data is provided by Invesco. |
| ∎ | | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | | The Bloomberg 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 | | | | 50.72 | % |
U.S. Treasury Securities | | | | 17.85 | |
Asset-Backed Securities | | | | 15.61 | |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | | 5.97 | |
Preferred Stocks | | | | 1.39 | |
Security Types Each Less Than 1% of Portfolio | | | | 0.70 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 7.76 | |
Top Five Debt Issuers*
| | | | | |
| | | % of total net assets |
1. U.S. Treasury | | | | 17.85 | % |
2. Uniform Mortgage-Backed Securities | | | | 3.12 | |
3. HSBC Holdings PLC | | | | 1.48 | |
4. Standard Chartered PLC | | | | 1.40 | |
5. Bayview MSR Opportunity Master Fund Trust | | | | 1.19 | |
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, 2021.
|
| Invesco V.I. Core Plus Bond Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Principal
Amount | | | Value | |
U.S. Dollar Denominated Bonds & Notes–50.72% | |
| | |
Advertising–0.06% | | | | | | | | |
Lamar Media Corp.,
3.75%, 02/15/2028 | | $
| 26,000
|
| | $ | 26,102 | |
| | |
Aerospace & Defense–0.10% | | | | | | | | |
Boeing Co. (The),
2.75%, 02/01/2026 | | | 15,000 | | | | 15,444 | |
2.20%, 02/04/2026 | | | 26,000 | | | | 26,015 | |
| | | | | | | | 41,459 | |
| | |
Agricultural Products–0.11% | | | | | | | | |
Bunge Ltd. Finance Corp.,
2.75%, 05/14/2031 | | | 46,000 | | | | 46,734 | |
| | |
Airlines–0.73% | | | | | | | | |
American Airlines Pass-Through Trust,
Series 2021-1, Class B, 3.95%, 07/11/2030 | | | 43,000 | | | | 42,736 | |
Series 2021-1, Class A, 2.88%, 07/11/2034 | | | 58,000 | | | | 57,699 | |
British Airways Pass-Through Trust (United Kingdom), Series 2019-1, Class A, 3.35%, 06/15/2029(b) | | | 12,595 | | | | 12,545 | |
Series 2021-1, Class A, 2.90%, 03/15/2035(b) | | | 23,998 | | | | 23,996 | |
Delta Air Lines, Inc.,
7.38%, 01/15/2026 | | | 4,000 | | | | 4,713 | |
Delta Air Lines, Inc./SkyMiles IP Ltd.,
4.50%, 10/20/2025(b) | | | 22,672 | | | | 23,843 | |
4.75%, 10/20/2028(b) | | | 46,160 | | | | 50,443 | |
United Airlines Pass-Through Trust,
Series 2014-2, Class B, 4.63%, 09/03/2022 | | | 22,234 | | | | 22,632 | |
Series 2020-1, Class A, 5.88%, 10/15/2027 | | | 33,422 | | | | 36,673 | |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | 12,021 | | | | 12,563 | |
United Airlines, Inc.,
4.38%, 04/15/2026(b) | | | 6,000 | | | | 6,264 | |
4.63%, 04/15/2029(b) | | | 11,000 | | | | 11,367 | |
| | | | | | | | 305,474 | |
| | |
Application Software–0.23% | | | | | | | | |
salesforce.com, inc.,
2.90%, 07/15/2051 | | | 57,000 | | | | 58,156 | |
3.05%, 07/15/2061 | | | 35,000 | | | | 36,103 | |
| | | | | | | | 94,259 | |
|
Asset Management & Custody Banks–0.56% | |
Ameriprise Financial, Inc.,
3.00%, 04/02/2025 | | | 10,000 | | | | 10,447 | |
Ares Capital Corp.,
2.88%, 06/15/2028 | | | 41,000 | | | | 40,849 | |
Bank of New York Mellon Corp. (The), Series I, 3.75%(c)(d) | | | 71,000 | | | | 71,431 | |
BlackRock, Inc.,
2.10%, 02/25/2032 | | | 48,000 | | | | 47,665 | |
CI Financial Corp. (Canada), 3.20%, 12/17/2030 | | | 23,000 | | | | 23,626 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Asset Management & Custody Banks–(continued) | |
FS KKR Capital Corp.,
1.65%, 10/12/2024 | | $ | 39,000 | | | $ | 38,285 | |
| | | | | | | | 232,303 | |
|
Auto Parts & Equipment–0.19% | |
Avis Budget Car Rental LLC/Avis Budget Finance, Inc.,
4.75%, 04/01/2028(b) | | | 49,000 | | | | 50,175 | |
5.38%, 03/01/2029(b) | | | 27,000 | | | | 28,520 | |
| | | | | | | | 78,695 | |
| |
Automobile Manufacturers–0.83% | | | | | |
Ford Motor Credit Co. LLC,
3.09%, 01/09/2023 | | | 200,000 | | | | 203,644 | |
2.70%, 08/10/2026 | | | 44,000 | | | | 44,440 | |
Hyundai Capital America,
5.75%, 04/06/2023(b) | | | 16,000 | | | | 16,897 | |
5.88%, 04/07/2025(b) | | | 4,000 | | | | 4,479 | |
2.00%, 06/15/2028(b) | | | 37,000 | | | | 36,101 | |
Nissan Motor Acceptance Co. LLC,
1.85%, 09/16/2026(b) | | | 43,000 | | | | 41,998 | |
| | | | | | | | 347,559 | |
| | |
Automotive Retail–0.20% | | | | | | | | |
Asbury Automotive Group, Inc.,
5.00%, 02/15/2032(b) | | | 17,000 | | | | 17,667 | |
Sonic Automotive, Inc.,
4.63%, 11/15/2029(b) | | | 30,000 | | | | 30,336 | |
4.88%, 11/15/2031(b) | | | 35,000 | | | | 35,392 | |
| | | | | | | | 83,395 | |
| | |
Building Products–0.10% | | | | | | | | |
Johnson Controls International PLC/Tyco Fire & Security Finance S.C.A.,
2.00%, 09/16/2031 | | | 16,000 | | | | 15,512 | |
Masco Corp.,
1.50%, 02/15/2028 | | | 14,000 | | | | 13,561 | |
2.00%, 02/15/2031 | | | 6,000 | | | | 5,756 | |
3.13%, 02/15/2051 | | | 6,000 | | | | 5,976 | |
| | | | | | | | 40,805 | |
| | |
Cable & Satellite–0.73% | | | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp.,
4.50%, 06/01/2033(b) | | | 17,000 | | | | 17,371 | |
Charter Communications Operating LLC/ Charter Communications Operating Capital Corp.,
3.50%, 06/01/2041 | | | 18,000 | | | | 17,581 | |
3.50%, 03/01/2042 | | | 47,000 | | | | 45,669 | |
3.90%, 06/01/2052 | | | 30,000 | | | | 30,141 | |
3.85%, 04/01/2061 | | | 24,000 | | | | 22,701 | |
4.40%, 12/01/2061 | | | 9,000 | | | | 9,333 | |
Comcast Corp.,
3.25%, 11/01/2039 | | | 5,000 | | | | 5,285 | |
2.89%, 11/01/2051(b) | | | 4,000 | | | | 3,879 | |
2.99%, 11/01/2063(b) | | | 7,000 | | | | 6,659 | |
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 | |
|
| |
Cable & Satellite–(continued) | | | | | | | | |
| | |
Cox Communications, Inc.,
2.60%, 06/15/2031(b) | | $ | 24,000 | | | $ | 23,999 | |
|
| |
2.95%, 10/01/2050(b) | | | 4,000 | | | | 3,745 | |
|
| |
3.60%, 06/15/2051(b) | | | 60,000 | | | | 62,986 | |
|
| |
Sirius XM Radio, Inc.,
3.88%, 09/01/2031(b) | | | 56,000 | | | | 55,005 | |
|
| |
| | | | | | | 304,354 | |
|
| |
|
Computer & Electronics Retail–0.19% | |
Dell International LLC/EMC Corp.,
6.02%, 06/15/2026 | | | 15,000 | | | | 17,355 | |
|
| |
8.35%, 07/15/2046 | | | 3,000 | | | | 4,998 | |
|
| |
3.45%, 12/15/2051(b) | | | 40,000 | | | | 38,474 | |
|
| |
Leidos, Inc.,
2.30%, 02/15/2031 | | | 18,000 | | | | 17,359 | |
|
| |
| | | | | | | 78,186 | |
|
| |
| | |
Consumer Finance–0.25% | | | | | | | | |
Ally Financial, Inc.,
2.20%, 11/02/2028 | | | 27,000 | | | | 26,842 | |
|
| |
Series C, 4.70%(c)(d) | | | 39,000 | | | | 40,298 | |
|
| |
OneMain Finance Corp.,
3.88%, 09/15/2028 | | | 37,000 | | | | 36,316 | |
|
| |
| | | | | | | 103,456 | |
|
| |
| | |
Copper–0.14% | | | | | | | | |
Freeport-McMoRan, Inc.,
5.00%, 09/01/2027 | | | 33,000 | | | | 34,366 | |
|
| |
Southern Copper Corp. (Peru),
5.88%, 04/23/2045 | | | 18,000 | | | | 24,752 | |
|
| |
| | | | | | | 59,118 | |
|
| |
|
Data Processing & Outsourced Services–0.24% | |
Block, Inc.,
3.50%, 06/01/2031(b) | | | 32,000 | | | | 32,855 | |
|
| |
Clarivate Science Holdings Corp.,
3.88%, 07/01/2028(b) | | | 32,000 | | | | 32,225 | |
|
| |
Fidelity National Information Services, Inc.,
3.10%, 03/01/2041 | | | 5,000 | | | | 5,058 | |
|
| |
Mastercard, Inc.,
2.00%, 11/18/2031 | | | 23,000 | | | | 22,951 | |
|
| |
PayPal Holdings, Inc.,
2.65%, 10/01/2026 | | | 7,000 | | | | 7,352 | |
|
| |
| | | | | | | 100,441 | |
|
| |
| | |
Diversified Banks–11.78% | | | | | | | | |
ASB Bank Ltd. (New Zealand),
2.38%, 10/22/2031(b) | | | 200,000 | | | | 199,018 | |
|
| |
Australia & New Zealand Banking Group Ltd. (Australia),
2.57%, 11/25/2035(b)(c) | | | 81,000 | | | | 77,653 | |
|
| |
Banco Mercantil del Norte S.A. (Mexico), 5.88%(b)(c)(d) | | | 200,000 | | | | 199,750 | |
|
| |
6.63%(b)(c)(d) | | | 200,000 | | | | 199,400 | |
|
| |
Bank of America Corp.,
2.69%, 04/22/2032(c) | | | 46,000 | | | | 46,731 | |
|
| |
2.30%, 07/21/2032(c) | | | 30,000 | | | | 29,528 | |
|
| |
2.57%, 10/20/2032(c) | | | 39,000 | | | | 39,216 | |
|
| |
2.48%, 09/21/2036(c) | | | 50,000 | | | | 48,486 | |
|
| |
Barclays PLC (United Kingdom),
2.28%, 11/24/2027(c) | | | 200,000 | | | | 200,474 | |
|
| |
3.33%, 11/24/2042(c) | | | 200,000 | | | | 203,904 | |
|
| |
BBVA Bancomer S.A. (Mexico),
6.75%, 09/30/2022(b) | | | 150,000 | | | | 155,441 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Diversified Banks–(continued) | | | | | | | | |
| | |
Citigroup, Inc.,
2.88%, 07/24/2023(c) | | $ | 6,000 | | | $ | 6,073 | |
|
| |
3.11%, 04/08/2026(c) | | | 14,000 | | | | 14,686 | |
|
| |
4.41%, 03/31/2031(c) | | | 11,000 | | | | 12,575 | |
|
| |
2.57%, 06/03/2031(c) | | | 23,000 | | | | 23,224 | |
|
| |
2.56%, 05/01/2032(c) | | | 30,000 | | | | 30,187 | |
|
| |
2.52%, 11/03/2032(c) | | | 25,000 | | | | 24,998 | |
|
| |
2.90%, 11/03/2042(c) | | | 40,000 | | | | 39,681 | |
|
| |
3.88%(c)(d) | | | 66,000 | | | | 66,165 | |
|
| |
Series A, 5.95%(c)(d) | | | 11,000 | | | | 11,358 | |
|
| |
Series Y, 4.15%(c)(d) | | | 39,000 | | | | 39,731 | |
|
| |
Commonwealth Bank of Australia (Australia),
2.69%, 03/11/2031(b) | | | 200,000 | | | | 196,888 | |
|
| |
Corp. Andina de Fomento (Supranational),
4.38%, 06/15/2022 | | | 50,000 | | | | 50,844 | |
|
| |
Danske Bank A/S (Denmark),
1.55%, 09/10/2027(b)(c) | | | 200,000 | | | | 195,517 | |
|
| |
HSBC Holdings PLC (United Kingdom),
2.25%, 11/22/2027(c) | | | 200,000 | | | | 200,534 | |
|
| |
2.87%, 11/22/2032(c) | | | 200,000 | | | | 201,880 | |
|
| |
6.00%(c)(d) | | | 200,000 | | | | 215,750 | |
|
| |
ING Groep N.V. (Netherlands),
6.88%(b)(c)(d) | | | 200,000 | | | | 203,500 | |
|
| |
JPMorgan Chase & Co.,
1.01% (3 mo. USD LIBOR + 0.89%), 07/23/2024(e) | | | 32,000 | | | | 32,315 | |
|
| |
2.08%, 04/22/2026(c) | | | 16,000 | | | | 16,252 | |
|
| |
3.63%, 12/01/2027 | | | 4,000 | | | | 4,313 | |
|
| |
2.58%, 04/22/2032(c) | | | 29,000 | | | | 29,404 | |
|
| |
2.55%, 11/08/2032(c) | | | 9,000 | | | | 9,061 | |
|
| |
3.11%, 04/22/2041(c) | | | 7,000 | | | | 7,264 | |
|
| |
Series W, 1.16% (3 mo. USD LIBOR + 1.00%), 05/15/2047(e) | | | 24,000 | | | | 20,234 | |
|
| |
Mizuho Financial Group, Inc. (Japan),
2.56%, 09/13/2031 | | | 200,000 | | | | 195,148 | |
|
| |
National Australia Bank Ltd. (Australia),
2.99%, 05/21/2031(b) | | | 250,000 | | | | 250,989 | |
|
| |
Royal Bank of Canada (Canada),
2.30%, 11/03/2031 | | | 15,000 | | | | 15,087 | |
|
| |
Standard Chartered PLC (United Kingdom),
2.68%, 06/29/2032(b)(c) | | | 200,000 | | | | 196,714 | |
3.27%, 02/18/2036(b)(c) | | | 200,000 | | | | 197,577 | |
4.30%(b)(c)(d) | | | 200,000 | | | | 193,000 | |
|
| |
Sumitomo Mitsui Financial Group, Inc. (Japan),
2.14%, 09/23/2030 | | | 32,000 | | | | 30,785 | |
|
| |
Sumitomo Mitsui Trust Bank Ltd. (Japan),
1.35%, 09/16/2026(b) | | | 200,000 | | | | 196,812 | |
|
| |
U.S. Bancorp,
1.38%, 07/22/2030 | | | 13,000 | | | | 12,246 | |
|
| |
2.49%, 11/03/2036(c) | | | 81,000 | | | | 80,777 | |
|
| |
3.70%(c)(d) | | | 56,000 | | | | 56,129 | |
|
| |
UniCredit S.p.A. (Italy),
1.98%, 06/03/2027(b)(c) | | | 200,000 | | | | 194,947 | |
|
| |
3.13%, 06/03/2032(b)(c) | | | 200,000 | | | | 197,856 | |
|
| |
Wells Fargo & Co.,
3.07%, 04/30/2041(c) | | | 9,000 | | | | 9,248 | |
|
| |
Series BB, 3.90%(c)(d) | | | 17,000 | | | | 17,478 | |
|
| |
Westpac Banking Corp.
(Australia), 3.13%, 11/18/2041 | | | 30,000 | | | | 29,789 | |
|
| |
| | | | | | | 4,926,617 | |
|
| |
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 | |
|
| |
Diversified Capital Markets–1.15% | |
Credit Suisse Group AG (Switzerland),
4.19%, 04/01/2031(b)(c) | | $ | 250,000 | | | $ | 276,005 | |
|
| |
7.13%(b)(c)(d) | | | 200,000 | | | | 205,098 | |
|
| |
| | | | | | | 481,103 | |
|
| |
| | |
Diversified Metals & Mining–0.19% | | | | | | | | |
FMG Resources August 2006 Pty. Ltd. (Australia), 4.38%, 04/01/2031(b) | | | 30,000 | | | | 31,552 | |
|
| |
Rio Tinto Finance USA Ltd. (Australia),
2.75%, 11/02/2051 | | | 50,000 | | | | 49,664 | |
|
| |
| | | | | | | 81,216 | |
|
| |
| | |
Diversified REITs–1.24% | | | | | | | | |
American Campus Communities Operating Partnership L.P.,
2.25%, 01/15/2029 | | | 23,000 | | | | 22,768 | |
|
| |
Brixmor Operating Partnership L.P.,
4.05%, 07/01/2030 | | | 7,000 | | | | 7,647 | |
|
| |
2.50%, 08/16/2031 | | | 19,000 | | | | 18,614 | |
|
| |
CubeSmart L.P.,
2.25%, 12/15/2028 | | | 13,000 | | | | 13,013 | |
|
| |
2.50%, 02/15/2032 | | | 25,000 | | | | 24,918 | |
|
| |
Trust Fibra Uno (Mexico),
5.25%, 01/30/2026(b) | | | 200,000 | | | | 219,210 | |
|
| |
4.87%, 01/15/2030(b) | | | 200,000 | | | | 211,536 | |
|
| |
| | | | | | | 517,706 | |
|
| |
| | |
Drug Retail–0.79% | | | | | | | | |
CK Hutchison International 21 Ltd. (United Kingdom),
1.50%, 04/15/2026(b) | | | 200,000 | | | | 197,470 | |
|
| |
CVS Pass-Through Trust,
5.77%, 01/10/2033(b) | | | 114,765 | | | | 133,737 | |
|
| |
| | | | | | | 331,207 | |
|
| |
| | |
Electric Utilities–1.03% | | | | | | | | |
Alfa Desarrollo S.p.A. (Chile),
4.55%, 09/27/2051(b) | | | 200,000 | | | | 197,724 | |
|
| |
American Electric Power Co., Inc.,
3.88%, 02/15/2062(c) | | | 132,000 | | | | 134,082 | |
|
| |
Duke Energy Corp.,
3.25%, 01/15/2082(c) | | | 30,000 | | | | 29,257 | |
|
| |
Duke Energy Progress LLC,
2.50%, 08/15/2050 | | | 23,000 | | | | 21,307 | |
|
| |
PacifiCorp, 2.90%, 06/15/2052 | | | 35,000 | | | | 34,437 | |
|
| |
Southern Co. (The), Series 21-A,
3.75%, 09/15/2051(c) | | | 16,000 | | | | 16,040 | |
|
| |
| | | | | | | 432,847 | |
|
| |
| | |
Electronic Components–0.15% | | | | | | | | |
Corning, Inc., 5.45%, 11/15/2079 | | | 46,000 | | | | 60,926 | |
|
| |
|
Electronic Equipment & Instruments–0.12% | |
Teledyne Technologies, Inc.,
2.75%, 04/01/2031 | | | 6,000 | | | | 6,091 | |
|
| |
Vontier Corp.,
1.80%, 04/01/2026(b) | | | 7,000 | | | | 6,902 | |
|
| |
2.40%, 04/01/2028(b) | | | 21,000 | | | | 20,326 | |
|
| |
2.95%, 04/01/2031(b) | | | 19,000 | | | | 18,848 | |
|
| |
| | | | | | | 52,167 | |
|
| |
|
Electronic Manufacturing Services–0.04% | |
Jabil, Inc., 3.00%, 01/15/2031 | | | 16,000 | | | | 16,461 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Environmental & Facilities Services–0.06% | |
GFL Environmental, Inc. (Canada),
3.50%, 09/01/2028(b) | | $ | 25,000 | | | $ | 24,666 | |
|
| |
| | |
Financial Exchanges & Data–0.95% | | | | | | | | |
B3 S.A. - Brasil, Bolsa, Balcao (Brazil),
4.13%, 09/20/2031(b) | | | 200,000 | | | | 193,002 | |
|
| |
Coinbase Global, Inc.,
3.38%, 10/01/2028(b) | | | 8,000 | | | | 7,486 | |
|
| |
3.63%, 10/01/2031(b) | | | 11,000 | | | | 10,140 | |
|
| |
Moody’s Corp.,
2.00%, 08/19/2031 | | | 31,000 | | | | 30,179 | |
|
| |
2.75%, 08/19/2041 | | | 37,000 | | | | 36,178 | |
|
| |
5.25%, 07/15/2044 | | | 4,000 | | | | 5,447 | |
|
| |
3.10%, 11/29/2061 | | | 86,000 | | | | 85,514 | |
|
| |
MSCI, Inc.,
3.88%, 02/15/2031(b) | | | 11,000 | | | | 11,471 | |
|
| |
3.63%, 11/01/2031(b) | | | 11,000 | | | | 11,428 | |
|
| |
S&P Global, Inc., 1.25%, 08/15/2030 | | | 5,000 | | | | 4,671 | |
|
| |
| | | | | | | 395,516 | |
|
| |
| | |
Food Distributors–0.08% | | | | | | | | |
American Builders & Contractors Supply Co., Inc., 3.88%, 11/15/2029(b) | | | 33,000 | | | | 32,966 | |
|
| |
| | |
Food Retail–0.11% | | | | | | | | |
Alimentation Couche-Tard, Inc. (Canada), 3.44%, 05/13/2041(b) | | | 12,000 | | | | 12,374 | |
|
| |
3.63%, 05/13/2051(b) | | | 31,000 | | | | 32,682 | |
|
| |
| | | | | | | 45,056 | |
|
| |
| | |
Health Care Distributors–0.07% | | | | | | | | |
McKesson Corp., 1.30%, 08/15/2026 | | | 30,000 | | | | 29,315 | |
|
| |
| | |
Health Care REITs–0.10% | | | | | | | | |
Healthcare Trust of America Holdings L.P., 2.00%, 03/15/2031 | | | 7,000 | | | | 6,632 | |
|
| |
Omega Healthcare Investors, Inc.,
3.25%, 04/15/2033 | | | 27,000 | | | | 26,349 | |
|
| |
Physicians Realty L.P., 4.30%, 03/15/2027 | | | 4,000 | | | | 4,442 | |
|
| |
Welltower, Inc., 3.10%, 01/15/2030 | | | 5,000 | | | | 5,244 | |
|
| |
| | | | | | | 42,667 | |
|
| |
| | |
Health Care Services–0.72% | | | | | | | | |
CVS Health Corp., 1.30%, 08/21/2027 | | | 13,000 | | | | 12,613 | |
|
| |
Fresenius Medical Care US Finance III, Inc. (Germany), 1.88%, 12/01/2026(b) | | | 150,000 | | | | 148,477 | |
|
| |
Piedmont Healthcare, Inc.,
Series 2032, 2.04%, 01/01/2032 | | | 24,000 | | | | 23,365 | |
|
| |
Series 2042, 2.72%, 01/01/2042 | | | 23,000 | | | | 22,501 | |
|
| |
2.86%, 01/01/2052 | | | 27,000 | | | | 26,406 | |
|
| |
Providence St. Joseph Health Obligated Group, Series 21-A, 2.70%,
10/01/2051 | | | 71,000 | | | | 68,807 | |
|
| |
| | | | | | | 302,169 | |
|
| |
| | |
Health Care Supplies–0.67% | | | | | | | | |
Mozart Debt Merger Sub, Inc., 3.88%, 04/01/2029(b) | | | 280,000 | | | | 279,572 | |
|
| |
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 | |
|
| |
Homebuilding–0.19% | | | | | |
M.D.C. Holdings, Inc.,
3.85%, 01/15/2030 | | $ | 22,000 | | | $ | 23,515 | |
|
| |
3.97%, 08/06/2061 | | | 60,000 | | | | 57,461 | |
|
| |
| | | | | | | 80,976 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–0.08% | | | | | |
Expedia Group, Inc.,
4.63%, 08/01/2027 | | | 7,000 | | | | 7,800 | |
|
| |
2.95%, 03/15/2031 | | | 5,000 | | | | 4,998 | |
|
| |
Hilton Domestic Operating Co., Inc., 3.63%, 02/15/2032(b) | | | 19,000 | | | | 18,932 | |
|
| |
| | | | | | | 31,730 | |
|
| |
|
Independent Power Producers & Energy Traders–0.64% | |
AES Corp. (The),
1.38%, 01/15/2026 | | | 5,000 | | | | 4,859 | |
|
| |
2.45%, 01/15/2031 | | | 8,000 | | | | 7,803 | |
|
| |
Calpine Corp., 3.75%, 03/01/2031(b) | | | 40,000 | | | | 38,613 | |
|
| |
EnfraGen Energia Sur S.A./EnfraGen Spain S.A./Prime Energia S.p.A. (Spain), 5.38%, 12/30/2030(b) | | | 200,000 | | | | 182,788 | |
|
| |
Vistra Corp., 7.00%(b)(c)(d) | | | 32,000 | | | | 32,467 | |
|
| |
| | | | | | | 266,530 | |
|
| |
| | |
Industrial Machinery–0.03% | | | | | | | | |
Flowserve Corp., 2.80%, 01/15/2032 | | | 13,000 | | | | 12,664 | |
|
| |
| | |
Industrial REITs–0.05% | | | | | | | | |
LXP Industrial Trust,
2.38%, 10/01/2031 | | | 23,000 | | | | 22,095 | |
|
| |
| | |
Insurance Brokers–0.21% | | | | | | | | |
Arthur J. Gallagher & Co.,
3.50%, 05/20/2051 | | | 16,000 | | | | 16,937 | |
|
| |
Assured Guaranty US Holdings, Inc., 3.60%, 09/15/2051 | | | 15,000 | | | | 15,636 | |
|
| |
Marsh & McLennan Cos., Inc.,
2.38%, 12/15/2031 | | | 27,000 | | | | 27,287 | |
|
| |
2.90%, 12/15/2051 | | | 27,000 | | | | 27,016 | |
|
| |
| | | | | | | 86,876 | |
|
| |
| | |
Integrated Oil & Gas–1.85% | | | | | | | | |
BP Capital Markets America, Inc., 3.06%, 06/17/2041 | | | 42,000 | | | | 42,583 | |
|
| |
2.94%, 06/04/2051 | | | 23,000 | | | | 22,138 | |
|
| |
3.00%, 03/17/2052 | | | 24,000 | | | | 23,538 | |
|
| |
Ecopetrol S.A. (Colombia),
4.63%, 11/02/2031 | | | 11,000 | | | | 10,714 | |
|
| |
5.88%, 05/28/2045 | | | 12,000 | | | | 11,496 | |
|
| |
Gray Oak Pipeline LLC,
2.60%, 10/15/2025(b) | | | 10,000 | | | | 10,022 | |
|
| |
Petrobras Global Finance B.V. (Brazil), 5.50%, 06/10/2051 | | | 10,000 | | | | 9,295 | |
|
| |
Petroleos Mexicanos (Mexico),
6.70%, 02/16/2032(b) | | | 51,000 | | | | 51,611 | |
|
| |
6.63%, 06/15/2035 | | | 23,000 | | | | 22,137 | |
|
| |
Petronas Capital Ltd. (Malaysia), 2.48%, 01/28/2032(b) | | | 200,000 | | | | 200,906 | |
|
| |
Qatar Energy (Qatar), 3.30%, 07/12/2051(b) | | | 200,000 | | | | 206,605 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Integrated Oil & Gas–(continued) | | | | | |
Shell International Finance B.V. (Netherlands),
2.88%, 11/26/2041 | | $ | 81,000 | | | $ | 81,228 | |
|
| |
3.00%, 11/26/2051 | | | 81,000 | | | | 82,509 | |
|
| |
| | | | | | | 774,782 | |
|
| |
|
Integrated Telecommunication Services–0.85% | |
AT&T, Inc.,
3.10%, 02/01/2043 | | | 16,000 | | | | 15,587 | |
|
| |
3.50%, 09/15/2053 | | | 26,000 | | | | 26,280 | |
|
| |
3.55%, 09/15/2055 | | | 33,000 | | | | 33,176 | |
|
| |
3.50%, 02/01/2061 | | | 7,000 | | | | 6,905 | |
|
| |
NBN Co. Ltd. (Australia), 1.63%, 01/08/2027(b) | | | 200,000 | | | | 196,353 | |
|
| |
Verizon Communications, Inc.,
2.55%, 03/21/2031 | | | 8,000 | | | | 8,080 | |
|
| |
2.36%, 03/15/2032(b) | | | 16,000 | | | | 15,783 | |
|
| |
4.81%, 03/15/2039 | | | 5,000 | | | | 6,281 | |
|
| |
2.65%, 11/20/2040 | | | 5,000 | | | | 4,760 | |
|
| |
3.40%, 03/22/2041 | | | 11,000 | | | | 11,537 | |
|
| |
2.88%, 11/20/2050 | | | 9,000 | | | | 8,565 | |
|
| |
3.00%, 11/20/2060 | | | 10,000 | | | | 9,482 | |
|
| |
3.70%, 03/22/2061 | | | 13,000 | | | | 14,124 | |
|
| |
| | | | | | | 356,913 | |
|
| |
| |
Interactive Home Entertainment–0.45% | | | | | |
Electronic Arts, Inc.,
1.85%, 02/15/2031 | | | 24,000 | | | | 23,028 | |
|
| |
2.95%, 02/15/2051 | | | 23,000 | | | | 21,727 | |
|
| |
ROBLOX Corp., 3.88%, 05/01/2030(b) | | | 57,000 | | | | 57,912 | |
|
| |
WMG Acquisition Corp.,
3.75%, 12/01/2029(b) | | | 55,000 | | | | 54,952 | |
|
| |
3.00%, 02/15/2031(b) | | | 31,000 | | | | 29,727 | |
|
| |
| | | | | | | 187,346 | |
|
| |
| |
Interactive Media & Services–0.10% | | | | | |
Alphabet, Inc., 2.25%, 08/15/2060 | | | 16,000 | | | | 14,309 | |
|
| |
Match Group Holdings II LLC,
5.63%, 02/15/2029(b) | | | 25,000 | | | | 26,784 | |
|
| |
| | | | | | | 41,093 | |
|
| |
|
Internet & Direct Marketing Retail–0.06% | |
Amazon.com, Inc., 3.10%, 05/12/2051 | | | 23,000 | | | | 24,616 | |
|
| |
|
Internet Services & Infrastructure–0.32% | |
Twilio, Inc.,
3.63%, 03/15/2029 | | | 29,000 | | | | 29,301 | |
|
| |
3.88%, 03/15/2031 | | | 29,000 | | | | 29,323 | |
|
| |
VeriSign, Inc., 2.70%, 06/15/2031 | | | 18,000 | | | | 18,116 | |
|
| |
ZoomInfo Technologies LLC/ZoomInfo Finance Corp., 3.88%, 02/01/2029(b) | | | 56,000 | | | | 55,601 | |
|
| |
| | | | | | | 132,341 | |
|
| |
|
Investment Banking & Brokerage–1.72% | |
Brookfield Finance I (UK) PLC (Canada), 2.34%, 01/30/2032 | | | 38,000 | | | | 37,107 | |
|
| |
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 | |
|
| |
Investment Banking & Brokerage–(continued) | |
Goldman Sachs Group, Inc. (The),
0.63% (SOFR + 0.58%), 03/08/2024(e) | | $ | 66,000 | | | $ | 66,013 | |
|
| |
3.50%, 04/01/2025 | | | 7,000 | | | | 7,407 | |
|
| |
3.27%, 09/29/2025(c) | | | 10,000 | | | | 10,499 | |
|
| |
0.84% (SOFR + 0.79%), 12/09/2026(e) | | | 56,000 | | | | 56,379 | |
|
| |
1.09%, 12/09/2026(c) | | | 17,000 | | | | 16,575 | |
|
| |
0.86% (SOFR + 0.81%), 03/09/2027(e) | | | 79,000 | | | | 79,482 | |
|
| |
0.97% (SOFR + 0.92%), 10/21/2027(e) | | | 30,000 | | | | 30,176 | |
|
| |
1.95%, 10/21/2027(c) | | | 39,000 | | | | 38,846 | |
|
| |
1.99%, 01/27/2032(c) | | | 17,000 | | | | 16,316 | |
|
| |
2.62%, 04/22/2032(c) | | | 11,000 | | | | 11,091 | |
|
| |
2.38%, 07/21/2032(c) | | | 30,000 | | | | 29,563 | |
|
| |
2.65%, 10/21/2032(c) | | | 46,000 | | | | 46,334 | |
|
| |
3.21%, 04/22/2042(c) | | | 10,000 | | | | 10,390 | |
|
| |
2.91%, 07/21/2042(c) | | | 23,000 | | | | 22,910 | |
|
| |
Series V, 4.13%(c)(d) | | | 25,000 | | | | 25,430 | |
|
| |
Jefferies Group LLC/Jefferies Group Capital Finance, Inc., 4.15%, 01/23/2030 | | | 25,000 | | | | 27,744 | |
|
| |
Morgan Stanley,
2.19%, 04/28/2026(c) | | | 10,000 | | | | 10,204 | |
|
| |
2.70%, 01/22/2031(c) | | | 33,000 | | | | 33,797 | |
|
| |
3.62%, 04/01/2031(c) | | | 11,000 | | | | 11,999 | |
|
| |
2.24%, 07/21/2032(c) | | | 50,000 | | | | 48,957 | |
|
| |
2.51%, 10/20/2032(c) | | | 28,000 | | | | 28,003 | |
|
| |
2.48%, 09/16/2036(c) | | | 36,000 | | | | 34,704 | |
|
| |
3.22%, 04/22/2042(c) | | | 8,000 | | | | 8,397 | |
|
| |
Raymond James Financial, Inc., 3.75%, 04/01/2051 | | | 10,000 | | | | 11,071 | |
|
| |
| | | | | | | 719,394 | |
|
| |
IT Consulting & Other Services–0.11% | |
DXC Technology Co., 2.38%, 09/15/2028 | | | 49,000 | | | | 47,938 | |
|
| |
Life & Health Insurance–1.88% | | | | | |
American Equity Investment Life Holding Co., 5.00%, 06/15/2027 | | | 25,000 | | | | 28,329 | |
|
| |
Athene Global Funding,
1.20%, 10/13/2023(b) | | | 24,000 | | | | 24,043 | |
|
| |
2.50%, 01/14/2025(b) | | | 12,000 | | | | 12,319 | |
|
| |
1.45%, 01/08/2026(b) | | | 8,000 | | | | 7,865 | |
|
| |
Athene Holding Ltd.,
6.15%, 04/03/2030 | | | 10,000 | | | | 12,385 | |
|
| |
3.45%, 05/15/2052 | | | 63,000 | | | | 63,433 | |
|
| |
Brighthouse Financial Global Funding, 1.20%, 12/15/2023(b) | | | 66,000 | | | | 66,141 | |
|
| |
Brighthouse Financial, Inc., 3.85%, 12/22/2051 | | | 73,000 | | | | 72,169 | |
|
| |
F&G Global Funding, 2.00%, 09/20/2028(b) | | | 45,000 | | | | 43,785 | |
|
| |
GA Global Funding Trust, 1.95%, 09/15/2028(b) | | | 150,000 | | | | 145,884 | |
|
| |
MAG Mutual Holding Co., 4.75%, 04/30/2041(f) | | | 172,000 | | | | 173,281 | |
|
| |
Maple Grove Funding Trust I, 4.16%, 08/15/2051(b) | | | 104,000 | | | | 107,424 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Life & Health Insurance–(continued) | |
Nationwide Financial Services, Inc.,
3.90%, 11/30/2049(b) | | $ | 6,000 | | | $ | 7,022 | |
|
| |
Pacific LifeCorp, 3.35%, 09/15/2050(b) | | | 12,000 | | | | 12,935 | |
|
| |
Penn Mutual Life Insurance Co. (The), 3.80%, 04/29/2061(b) | | | 4,000 | | | | 4,345 | |
|
| |
Western & Southern Life Insurance Co. (The), 3.75%, 04/28/2061(b) | | | 4,000 | | | | 4,470 | |
|
| |
| | | | | | | 785,830 | |
|
| |
|
Life Sciences Tools & Services–0.02% | |
Illumina, Inc., 2.55%, 03/23/2031 | | | 7,000 | | | | 7,006 | |
|
| |
| | |
Managed Health Care–0.36% | | | | | | | | |
Centene Corp., 2.50%, 03/01/2031 | | | 57,000 | | | | 55,585 | |
|
| |
Kaiser Foundation Hospitals, Series 2021,
2.81%, 06/01/2041 | | | 45,000 | | | | 45,328 | |
|
| |
3.00%, 06/01/2051 | | | 45,000 | | | | 46,425 | |
|
| |
UnitedHealth Group, Inc., 3.75%, 07/15/2025 | | | 4,000 | | | | 4,341 | |
|
| |
| | | | | | | 151,679 | |
|
| |
|
Metal & Glass Containers–0.01% | |
Silgan Holdings, Inc., 1.40%, 04/01/2026(b) | | | 5,000 | | | | 4,884 | |
|
| |
| | |
Multi-line Insurance–0.36% | | | | | | | | |
American International Group, Inc., 3.40%, 06/30/2030 | | | 16,000 | | | | 17,321 | |
|
| |
Fairfax Financial Holdings Ltd. (Canada),
4.85%, 04/17/2028 | | | 4,000 | | | | 4,453 | |
|
| |
3.38%, 03/03/2031 | | | 8,000 | | | | 8,244 | |
|
| |
Nationwide Mutual Insurance Co., 4.95%, 04/22/2044(b) | | | 100,000 | | | | 121,889 | |
|
| |
| | | | | | | 151,907 | |
|
| |
| | |
Multi-Utilities–0.06% | | | | | | | | |
Dominion Energy, Inc., Series C, 3.38%, 04/01/2030 | | | 6,000 | | | | 6,374 | |
|
| |
WEC Energy Group, Inc.,
1.38%, 10/15/2027 | | | 10,000 | | | | 9,651 | |
|
| |
1.80%, 10/15/2030 | | | 10,000 | | | | 9,453 | |
|
| |
| | | | | | | 25,478 | |
|
| |
| | |
Office REITs–0.18% | | | | | | | | |
Alexandria Real Estate Equities, Inc., 3.95%, 01/15/2027 | | | 8,000 | | | | 8,754 | |
|
| |
Boston Properties L.P., 3.25%, 01/30/2031 | | | 9,000 | | | | 9,440 | |
|
| |
Office Properties Income Trust,
4.50%, 02/01/2025 | | | 23,000 | | | | 24,258 | |
|
| |
2.65%, 06/15/2026 | | | 4,000 | | | | 3,974 | |
|
| |
2.40%, 02/01/2027 | | | 30,000 | | | | 29,059 | |
|
| |
| | | | | | | 75,485 | |
|
| |
|
Oil & Gas Equipment & Services–0.49% | |
Petrofac Ltd. (United Kingdom), 9.75%, 11/15/2026(b) | | | 200,000 | | | | 204,291 | |
|
| |
|
Oil & Gas Exploration & Production–1.21% | |
Canadian Natural Resources Ltd. (Canada), 2.05%, 07/15/2025 | | | 19,000 | | | | 19,198 | |
|
| |
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 | |
|
| |
Oil & Gas Exploration & Production–(continued) | |
Cheniere Corpus Christi Holdings LLC, 2.74%, 12/31/2039(b) | | $ | 31,000 | | | $ | 30,284 | |
|
| |
Continental Resources, Inc.,
2.27%, 11/15/2026(b) | | | 18,000 | | | | 17,884 | |
|
| |
2.88%, 04/01/2032(b) | | | 23,000 | | | | 22,533 | |
|
| |
Galaxy Pipeline Assets Bidco Ltd. (United Arab Emirates), 2.94%, 09/30/2040(b) | | | 200,000 | | | | 199,529 | |
|
| |
Gazprom PJSC Via Gaz Finance PLC (Russia), 2.95%, 01/27/2029(b) | | | 200,000 | | | | 191,645 | |
|
| |
Murphy Oil Corp., 6.38%, 07/15/2028 | | | 23,000 | | | | 24,480 | |
|
| |
| | | | | | | 505,553 | |
|
| |
| | |
Oil & Gas Refining & Marketing–0.05% | | | | | | | | |
Parkland Corp. (Canada), 4.50%, 10/01/2029(b) | | | 20,000 | | | | 20,049 | |
|
| |
|
Oil & Gas Storage & Transportation–0.61% | |
El Paso Natural Gas Co. LLC, 8.38%, 06/15/2032 | | | 22,000 | | | | 31,593 | |
|
| |
Enbridge, Inc. (Canada),
1.60%, 10/04/2026 | | | 20,000 | | | | 19,726 | |
|
| |
3.40%, 08/01/2051 | | | 21,000 | | | | 21,339 | |
|
| |
MPLX L.P., 1.75%, 03/01/2026 | | | 10,000 | | | | 9,910 | |
|
| |
Northern Natural Gas Co., 3.40%, 10/16/2051(b) | | | 12,000 | | | | 12,359 | |
|
| |
ONEOK, Inc., 6.35%, 01/15/2031 | | | 22,000 | | | | 27,652 | |
|
| |
Venture Global Calcasieu Pass LLC, 3.88%, 11/01/2033(b) | | | 37,000 | | | | 38,928 | |
|
| |
Williams Cos., Inc. (The),
2.60%, 03/15/2031 | | | 63,000 | | | | 62,638 | |
|
| |
3.50%, 10/15/2051 | | | 32,000 | | | | 32,406 | |
|
| |
| | | | | | | 256,551 | |
|
| |
|
Other Diversified Financial Services–1.37% | |
AerCap Ireland Capital DAC/AerCap | | | | | | | | |
|
| |
Global Aviation Trust (Ireland), 4.50%, 09/15/2023 DAC | | | 150,000 | | | | 157,389 | |
|
| |
Avolon Holdings Funding Ltd. (Ireland),
2.13%, 02/21/2026(b) | | | 15,000 | | | | 14,736 | |
|
| |
4.25%, 04/15/2026(b) | | | 5,000 | | | | 5,304 | |
|
| |
2.75%, 02/21/2028(b) | | | 16,000 | | | | 15,711 | |
|
| |
Blackstone Holdings Finance Co. LLC,
1.60%, 03/30/2031(b) | | | 18,000 | | | | 16,773 | |
|
| |
2.80%, 09/30/2050(b) | | | 4,000 | | | | 3,828 | |
|
| |
Blackstone Private Credit Fund,
1.75%, 09/15/2024(b) | | | 8,000 | | | | 7,874 | |
|
| |
2.35%, 11/22/2024(b) | | | 43,000 | | | | 42,995 | |
|
| |
2.63%, 12/15/2026(b) | | | 82,000 | | | | 79,990 | |
|
| |
3.25%, 03/15/2027(b) | | | 48,000 | | | | 48,525 | |
|
| |
Blackstone Secured Lending Fund,
2.75%, 09/16/2026 | | | 49,000 | | | | 49,044 | |
|
| |
2.13%, 02/15/2027(b) | | | 41,000 | | | | 39,932 | |
|
| |
2.85%, 09/30/2028(b) | | | 31,000 | | | | 30,246 | |
|
| |
Blue Owl Finance LLC, 3.13%, 06/10/2031(b) | | | 31,000 | | | | 30,368 | |
|
�� | |
KKR Group Finance Co. VIII LLC, 3.50%, 08/25/2050(b) | | | 4,000 | | | | 4,197 | |
|
| |
KKR Group Finance Co. X LLC, 3.25%, 12/15/2051(b) | | | 28,000 | | | | 27,973 | |
|
| |
| | | | | | | 574,885 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Packaged Foods & Meats–0.51% | | | | | | | | |
General Mills, Inc., 2.25%, 10/14/2031 | | $ | 20,000 | | | $ | 19,785 | |
|
| |
JBS USA LUX S.A./JBS USA Food Co./JBS USA Finance, Inc., 3.75%, 12/01/2031(b) | | | 5,000 | | | | 5,082 | |
|
| |
Minerva Luxembourg S.A. (Brazil),
4.38%, 03/18/2031(b) | | | 200,000 | | | | 190,565 | |
|
| |
| | | | | | | 215,432 | |
|
| |
| | |
Paper Packaging–0.22% | | | | | | | | |
Berry Global, Inc.,
0.95%, 02/15/2024 | | | 33,000 | | | | 32,744 | |
|
| |
1.65%, 01/15/2027 | | | 38,000 | | | | 37,182 | |
|
| |
Sealed Air Corp., 1.57%, 10/15/2026(b) | | | 23,000 | | | | 22,314 | |
|
| |
| | | | | | | 92,240 | |
|
| |
| | |
Pharmaceuticals–0.13% | | | | | | | | |
Mayo Clinic, Series 2021, 3.20%, 11/15/2061 | | | 35,000 | | | | 37,736 | |
|
| |
Royalty Pharma PLC, 2.15%, 09/02/2031 | | | 16,000 | | | | 15,132 | |
|
| |
| | | | | | | 52,868 | |
|
| |
|
Property & Casualty Insurance–0.53% | |
Allstate Corp. (The), 4.20%, 12/15/2046 | | | 4,000 | | | | 4,813 | |
|
| |
American Financial Group, Inc., 3.50%, 08/15/2026 | | | 4,000 | | | | 4,283 | |
|
| |
Chubb INA Holdings, Inc.,
2.85%, 12/15/2051 | | | 16,000 | | | | 16,081 | |
|
| |
3.05%, 12/15/2061 | | | 31,000 | | | | 31,723 | |
|
| |
Fidelity National Financial, Inc.,
3.40%, 06/15/2030 | | | 7,000 | | | | 7,399 | |
|
| |
2.45%, 03/15/2031 | | | 13,000 | | | | 12,774 | |
|
| |
3.20%, 09/17/2051 | | | 16,000 | | | | 15,327 | |
|
| |
First American Financial Corp., 2.40%, 08/15/2031 | | | 30,000 | | | | 29,384 | |
|
| |
Stewart Information Services Corp., 3.60%, 11/15/2031 | | | 47,000 | | | | 47,642 | |
|
| |
W.R. Berkley Corp.,
4.00%, 05/12/2050 | | | 4,000 | | | | 4,591 | |
|
| |
3.55%, 03/30/2052 | | | 18,000 | | | | 19,724 | |
|
| |
3.15%, 09/30/2061 | | | 28,000 | | | | 26,664 | |
|
| |
| | | | | | | 220,405 | |
|
| |
| | |
Railroads–0.56% | | | | | | | | |
Canadian Pacific Railway Co. (Canada), 1.75%, 12/02/2026 | | | 38,000 | | | | 38,158 | |
|
| |
Empresa de los Ferrocarriles del Estado (Chile), 3.83%, 09/14/2061(b) | | | 204,000 | | | | 196,209 | |
|
| |
| | | | | | | 234,367 | |
|
| |
| | |
Real Estate Development–0.54% | | | | | | | | |
Arabian Centres Sukuk II Ltd. (Saudi Arabia), 5.63%, 10/07/2026(b) | | | 200,000 | | | | 198,620 | |
|
| |
Essential Properties L.P., 2.95%, 07/15/2031 | | | 23,000 | | | | 22,695 | |
|
| |
Piedmont Operating Partnership L.P.,
3.15%, 08/15/2030 | | | 6,000 | | | | 6,152 | |
|
| |
| | | | | | | 227,467 | |
|
| |
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 | |
|
| |
Regional Banks–1.51% | | | | | | | | |
| | |
Citizens Financial Group, Inc., Series G, 4.00%(c)(d) | | $ | 32,000 | | | $ | 32,080 | |
|
| |
Fifth Third Bancorp,
4.30%, 01/16/2024 | | | 12,000 | | | | 12,696 | |
|
| |
2.55%, 05/05/2027 | | | 4,000 | | | | 4,129 | |
|
| |
Huntington Bancshares, Inc., 2.49%,
08/15/2036(b)(c) | | | 28,000 | | | | 26,858 | |
|
| |
KeyCorp, 2.25%, 04/06/2027 | | | 17,000 | | | | 17,292 | |
|
| |
M&T Bank Corp., 3.50%(c)(d) | | | 30,000 | | | | 29,469 | |
|
| |
SVB Financial Group,
2.10%, 05/15/2028 | | | 16,000 | | | | 16,018 | |
|
| |
1.80%, 02/02/2031 | | | 22,000 | | | | 20,878 | |
|
| |
Series C, 4.00%(c)(d) | | | 98,000 | | | | 98,612 | |
|
| |
Series D, 4.25%(c)(d) | | | 68,000 | | | | 69,079 | |
|
| |
Series E, 4.70%(c)(d) | | | 45,000 | | | | 46,376 | |
|
| |
Zions Bancorporation N.A., 3.25%,
10/29/2029 | | | 250,000 | | | | 258,796 | |
|
| |
| | | | | | | 632,283 | |
|
| |
| | |
Reinsurance–0.32% | | | | | | | | |
Berkshire Hathaway Finance Corp.,
2.85%, 10/15/2050 | | | 11,000 | | | | 10,869 | |
|
| |
Global Atlantic Fin Co.,
4.40%, 10/15/2029(b) | | | 32,000 | | | | 34,486 | |
|
| |
3.13%, 06/15/2031(b) | | | 17,000 | | | | 16,846 | |
|
| |
4.70%, 10/15/2051(b)(c) | | | 65,000 | | | | 65,962 | |
|
| |
Reinsurance Group of America, Inc.,
4.70%, 09/15/2023 | | | 4,000 | | | | 4,237 | |
|
| |
| | | | | | | 132,400 | |
|
| |
| | |
Renewable Electricity–0.50% | | | | | | | | |
Adani Green Energy Ltd. (India), 4.38%,
09/08/2024(b) | | | 208,000 | | | | 211,359 | |
|
| |
| | |
Residential REITs–0.27% | | | | | | | | |
American Homes 4 Rent L.P.,
2.38%, 07/15/2031 | | | 4,000 | | | | 3,927 | |
|
| |
3.38%, 07/15/2051 | | | 6,000 | | | | 6,043 | |
|
| |
Invitation Homes Operating Partnership L.P.,
2.30%, 11/15/2028 | | | 12,000 | | | | 11,879 | |
|
| |
2.70%, 01/15/2034 | | | 42,000 | | | | 41,247 | |
|
| |
Mid-America Apartments L.P., 2.88%,
09/15/2051 | | | 4,000 | | | | 3,952 | |
|
| |
Spirit Realty L.P.,
2.10%, 03/15/2028 | | | 6,000 | | | | 5,844 | |
|
| |
3.40%, 01/15/2030 | | | 16,000 | | | | 16,845 | |
|
| |
2.70%, 02/15/2032 | | | 6,000 | | | | 5,947 | |
|
| |
Sun Communities Operating L.P.,
2.30%, 11/01/2028 | | | 11,000 | | | | 10,995 | |
|
| |
2.70%, 07/15/2031 | | | 7,000 | | | | 6,951 | |
|
| |
| | | | | | | 113,630 | |
|
| |
| | |
Restaurants–0.10% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc.
(Canada), 4.00%, 10/15/2030(b) | | | 43,000 | | | | 42,337 | |
|
| |
| | |
Retail REITs–0.33% | | | | | | | | |
Agree L.P.,
2.00%, 06/15/2028 | | | 9,000 | | | | 8,824 | |
|
| |
2.60%, 06/15/2033 | | | 16,000 | | | | 15,731 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Retail REITs–(continued) | | | | | |
Kimco Realty Corp.,
1.90%, 03/01/2028 | | $ | 16,000 | | | $ | 15,848 | |
|
| |
2.70%, 10/01/2030 | | | 4,000 | | | | 4,064 | |
|
| |
2.25%, 12/01/2031 | | | 17,000 | | | | 16,583 | |
|
| |
Kite Realty Group Trust, 4.75%,
09/15/2030 | | | 5,000 | | | | 5,539 | |
|
| |
National Retail Properties, Inc., 3.50%,
04/15/2051 | | | 18,000 | | | | 18,577 | |
|
| |
Realty Income Corp.,
2.20%, 06/15/2028 | | | 5,000 | | | | 5,051 | |
|
| |
3.25%, 01/15/2031 | | | 8,000 | | | | 8,612 | |
|
| |
Simon Property Group L.P., 1.38%,
01/15/2027 | | | 41,000 | | | | 40,067 | |
|
| |
| | | | | | | 138,896 | |
|
| |
| | |
Semiconductors–0.40% | | | | | | | | |
Broadcom, Inc.,
2.45%, 02/15/2031(b) | | | 14,000 | | | | 13,742 | |
|
| |
3.42%, 04/15/2033(b) | | | 17,000 | | | | 17,840 | |
|
| |
3.47%, 04/15/2034(b) | | | 26,000 | | | | 27,248 | |
|
| |
Marvell Technology, Inc., 2.95%,
04/15/2031 | | | 37,000 | | | | 37,740 | |
|
| |
Micron Technology, Inc., 4.19%, 02/15/2027 | | | 21,000 | | | | 23,025 | |
|
| |
2.70%, 04/15/2032 | | | 24,000 | | | | 24,069 | |
|
| |
3.37%, 11/01/2041 | | | 16,000 | | | | 16,453 | |
|
| |
Skyworks Solutions, Inc., 3.00%,
06/01/2031 | | | 7,000 | | | | 7,063 | |
|
| |
| | | | | | | 167,180 | |
|
| |
| | |
Sovereign Debt–2.40% | | | | | | | | |
China Government International Bond
(China), 2.50%, 10/26/2051(b) | | | 200,000 | | | | 202,719 | |
|
| |
Egypt Government International Bond
(Egypt), 3.88%, 02/16/2026(b) | | | 200,000 | | | | 187,570 | |
|
| |
Indonesia Government International
Bond (Indonesia), 3.20%,
09/23/2061 | | | 200,000 | | | | 192,774 | |
|
| |
Mexico Government International Bond
(Mexico), 4.00%, 10/02/2023 | | | 2,000 | | | | 2,111 | |
|
| |
Peruvian Government International Bond
(Peru), 2.78%, 01/23/2031 | | | 10,000 | | | | 9,975 | |
|
| |
Romanian Government International
Bond (Romania), 3.00%,
02/14/2031(b) | | | 10,000 | | | | 10,180 | |
|
| |
Turkey Government International Bond
(Turkey), 4.75%, 01/26/2026 | | | 200,000 | | | | 184,163 | |
|
| |
UAE International Government Bond
(United Arab Emirates), 3.25%,
10/19/2061(b) | | | 206,000 | | | | 215,220 | |
|
| |
| | | | | | | 1,004,712 | |
|
| |
| | |
Specialized Consumer Services–0.24% | | | | | | | | |
Grand Canyon University, 3.25%,
10/01/2023 | | | 101,000 | | | | 101,523 | |
|
| |
| |
Specialized Finance–0.65% | | | | | |
Mitsubishi HC Capital, Inc. (Japan), 3.64%, 04/13/2025(b) | | | 256,000 | | | | 270,889 | |
|
| |
| | |
Specialized REITs–0.53% | | | | | | | | |
American Tower Corp.,
2.70%, 04/15/2031 | | | 37,000 | | | | 37,152 | |
|
| |
2.95%, 01/15/2051 | | | 27,000 | | | | 25,650 | |
|
| |
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–(continued) | | | | | |
Crown Castle International Corp.,
2.50%, 07/15/2031 | | $ | 41,000 | | | $ | 40,741 | |
|
| |
Extra Space Storage L.P.,
2.55%, 06/01/2031 | | | 14,000 | | | | 13,793 | |
|
| |
2.35%, 03/15/2032 | | | 20,000 | | | | 19,465 | |
|
| |
Life Storage L.P., 2.40%, 10/15/2031 | | | 36,000 | | | | 35,426 | |
|
| |
SBA Communications Corp., 3.13%,
02/01/2029(b) | | | 50,000 | | | | 48,077 | |
|
| |
| | | | | | | 220,304 | |
|
| |
| | |
Specialty Chemicals–0.96% | | | | | | | | |
Sasol Financing USA LLC (South Africa),
4.38%, 09/18/2026 | | | 200,000 | | | | 201,478 | |
|
| |
5.50%, 03/18/2031 | | | 200,000 | | | | 201,988 | |
|
| |
| | | | | | | 403,466 | |
|
| |
| | |
Systems Software–0.11% | | | | | | | | |
Crowdstrike Holdings, Inc., 3.00%,
02/15/2029 | | | 20,000 | | | | 19,781 | |
|
| |
Microsoft Corp., 2.53%, 06/01/2050 | | | 4,000 | | | | 3,912 | |
|
| |
VMware, Inc., 2.20%, 08/15/2031 | | | 23,000 | | | | 22,616 | |
|
| |
| | | | | | | 46,309 | |
|
| |
|
Technology Hardware, Storage & Peripherals–0.13% | |
Apple, Inc.,
4.25%, 02/09/2047 | | | 4,000 | | | | 5,008 | |
|
| |
2.80%, 02/08/2061 | | | 48,000 | | | | 47,782 | |
|
| |
| | | | | | | 52,790 | |
|
| |
| | |
Tobacco–0.14% | | | | | | | | |
Altria Group, Inc.,
2.45%, 02/04/2032 | | | 18,000 | | | | 17,109 | |
|
| |
3.70%, 02/04/2051 | | | 23,000 | | | | 21,481 | |
|
| |
4.00%, 02/04/2061 | | | 23,000 | | | | 22,034 | |
|
| |
| | | | | | | 60,624 | |
|
| |
|
Trading Companies & Distributors–0.04% | |
Air Lease Corp., 3.00%, 09/15/2023 | | | 16,000 | | | | 16,427 | |
|
| |
| | |
Trucking–0.35% | | | | | | | | |
Aviation Capital Group LLC, 4.13%,
08/01/2025(b) | | | 4,000 | | | | 4,223 | |
|
| |
Triton Container International Ltd. (Bermuda),
2.05%, 04/15/2026(b) | | | 41,000 | | | | 40,718 | |
|
| |
3.15%, 06/15/2031(b) | | | 35,000 | | | | 35,334 | |
|
| |
Uber Technologies, Inc., 4.50%,
08/15/2029(b) | | | 63,000 | | | | 64,274 | |
|
| |
| | | | | | | 144,549 | |
|
| |
|
Wireless Telecommunication Services–2.08% | |
Sprint Spectrum Co. LLC/Sprint Spectrum Co. II LLC/Sprint Spectrum Co. III LLC,
4.74%, 03/20/2025(b) | | | 162,500 | | | | 170,221 | |
|
| |
5.15%, 03/20/2028(b) | | | 209,000 | | | | 230,731 | |
|
| |
T-Mobile USA, Inc.,
2.25%, 02/15/2026(b) | | | 31,000 | | | | 31,125 | |
|
| |
2.63%, 04/15/2026 | | | 35,000 | | | | 35,221 | |
|
| |
3.40%, 10/15/2052(b) | | | 120,000 | | | | 119,670 | |
|
| |
VEON Holdings B.V. (Netherlands), 3.38%, 11/25/2027(b) | | | 200,000 | | | | 195,436 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Wireless Telecommunication Services–(continued) | |
Vodafone Group PLC (United Kingdom),
3.25%, 06/04/2081(c) | | $ | 26,000 | | | $ | 25,533 | |
|
| |
4.13%, 06/04/2081(c) | | | 30,000 | | | | 29,747 | |
|
| |
5.13%, 06/04/2081(c) | | | 33,000 | | | | 33,795 | |
|
| |
| | | | | | | 871,479 | |
|
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $21,043,889) | | | | | | | 21,217,345 | |
|
| |
| |
U.S. Treasury Securities–17.85% | | | | | |
U.S. Treasury Bills–0.40% | | | | | | | | |
0.04% - 0.05%, 02/17/2022(g)(h) | | | 168,000 | | | | 167,990 | |
|
| |
U.S. Treasury Bonds–4.69% | | | | | | | | |
2.00%, 11/15/2041 | | | 1,388,000 | | | | 1,404,266 | |
2.00%, 08/15/2051 | | | 546,800 | | | | 557,565 | |
|
| |
| | | | | | | 1,961,831 | |
|
| |
| | |
U.S. Treasury Notes–12.76% | | | | | | | | |
0.50%, 11/30/2023 | | | 4,000 | | | | 3,985 | |
|
| |
1.00%, 12/15/2024 | | | 104,700 | | | | 104,827 | |
|
| |
1.25%, 11/30/2026 | | | 2,781,100 | | | | 2,779,796 | |
|
| |
1.50%, 11/30/2028 | | | 729,100 | | | | 732,176 | |
1.38%, 11/15/2031 | | | 1,736,400 | | | | 1,714,966 | |
|
| |
| | | | | | | 5,335,750 | |
|
| |
Total U.S. Treasury Securities (Cost $7,443,990) | | | | 7,465,571 | |
|
| |
| |
Asset-Backed Securities–15.61% | | | | | |
Adjustable Rate Mortgage Trust,
Series 2004-2, Class 6A1, 0.71%,
02/25/2035(i) | | | 4,812 | | | | 4,981 | |
|
| |
AMSR Trust, Series 2021-SFR3, Class B,
1.73%, 10/17/2038(b) | | | 100,000 | | | | 97,476 | |
|
| |
Angel Oak Mortgage Trust,
Series 2020-1, Class A1, 2.16%,
12/25/2059(b)(i) | | | 17,834 | | | | 17,845 | |
|
| |
Series 2020-3, Class A1, 1.69%, 04/25/2065(b)(i) | | | 47,187 | | | | 47,343 | |
|
| |
Series 2020-5, Class A1, 1.37%, 05/25/2065(b)(i) | | | 35,411 | | | | 35,397 | |
|
| |
Series 2021-3, Class A1, 1.07%, 05/25/2066(b)(i) | | | 38,386 | | | | 38,082 | |
|
| |
Series 2021-7, Class A1, 1.98%, 10/25/2066(b)(i) | | | 70,087 | | | | 69,932 | |
|
| |
Angel Oak Mortgage Trust I LLC,
Series 2018-3, Class A1, 3.65%, 09/25/2048(b)(i) | | | 5,023 | | | | 5,032 | |
|
| |
Series 2019-2, Class A1, 3.63%, 03/25/2049(b)(i) | | | 14,310 | | | | 14,379 | |
|
| |
Bain Capital Credit CLO Ltd.,
Series 2017-2A, Class AR2, 1.30% (3 mo. USD LIBOR + 1.18%), 07/25/2034(b)(e) | | | 250,000 | | | | 250,280 | |
|
| |
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class AS, 3.99%, 09/15/2048(i) | | | 70,000 | | | | 74,475 | |
|
| |
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 | |
|
| |
Bayview MSR Opportunity Master Fund Trust,
Series 2021-4, Class A3, 3.00%,
10/25/2051(b)(i) | | $ | 97,403 | | | $ | 99,555 | |
|
| |
Series 2021-4, Class A4, 2.50%,
10/25/2051(b)(i) | | | 96,438 | | | | 96,157 | |
|
| |
Series 2021-4, Class A8, 2.50%,
10/25/2051(b)(i) | | | 95,251 | | | | 96,201 | |
|
| |
Series 2021-5, Class A1, 3.00%,
11/25/2051(b)(i) | | | 91,911 | | | | 93,890 | |
|
| |
Series 2021-5, Class A2, 2.50%,
11/25/2051(b)(i) | | | 112,248 | | | | 112,777 | |
|
| |
Benchmark Mortgage Trust,
Series 2018-B3, Class C, 4.54%,
04/10/2051(i) | | | 42,000 | | | | 45,357 | |
|
| |
Series 2019-B14, Class A5, 3.05%,
12/15/2062 | | | 90,000 | | | | 95,624 | |
|
| |
Series 2019-B14, Class C, 3.77%,
12/15/2062(i) | | | 83,700 | | | | 86,984 | |
|
| |
Series 2019-B15, Class B, 3.56%,
12/15/2072 | | | 70,000 | | | | 74,397 | |
|
| |
BRAVO Residential Funding Trust,
Series 2021-NQM2, Class A1, 0.97%,
03/25/2060(b)(i) | | | 71,945 | | | | 71,601 | |
|
| |
BX Commercial Mortgage Trust,
Series 2021-ACNT, Class A, 0.96%
(1 mo. USD LIBOR + 0.85%),
11/15/2026(b)(e) | | | 100,000 | | | | 100,011 | |
|
| |
Series 2021-VOLT, Class D, 1.76%
(1 mo. USD LIBOR + 1.65%),
09/15/2036(b)(e) | | | 100,000 | | | | 99,327 | |
Chase Home Lending Mortgage Trust,
Series 2019-ATR2, Class A3, 3.50%,
07/25/2049(b)(i) | | | 32,160 | | | | 32,663 | |
|
| |
Chase Mortgage Finance Corp.,
Series 2016-SH1, Class M3, 3.75%,
04/25/2045(b)(i) | | | 35,743 | | | | 36,016 | |
|
| |
Series 2016-SH2, Class M3, 3.75%,
12/25/2045(b)(i) | | | 41,812 | | | | 42,079 | |
|
| |
Citigroup Mortgage Loan Trust, Inc.,
Series 2019-IMC1, Class A1, 2.72%,
07/25/2049(b)(i) | | | 20,209 | | | | 20,294 | |
|
| |
Series 2021-INV3, Class A3, 2.50%,
05/25/2051(b)(i) | | | 95,789 | | | | 95,819 | |
|
| |
COLT Mortgage Loan Trust,
Series 2020-1, Class A1, 2.49%,
02/25/2050(b)(i) | | | 20,550 | | | | 20,549 | |
|
| |
Series 2020-1R, Class A1, 1.26%,
09/25/2065(b)(i) | | | 35,571 | | | | 35,332 | |
|
| |
Series 2020-2, Class A1, 1.85%,
03/25/2065(b)(i) | | | 22,737 | | | | 22,793 | |
|
| |
Series 2021-5, Class A1, 1.73%,
11/26/2066(b)(i) | | | 98,120 | | | | 97,937 | |
|
| |
COMM Mortgage Trust,
Series 2015- CR25, Class B,
4.53%, 08/10/2048(i) | | | 72,000 | | | | 76,859 | |
|
| |
Credit Suisse Mortgage Capital Ctfs.,
Series 2020-SPT1, Class A1, 1.62%,
04/25/2065(b)(j) | | | 31,523 | | | | 31,577 | |
|
| |
Credit Suisse Mortgage Capital Trust,
Series 2021-NQM2, Class A1, 1.18%,
02/25/2066(b)(i) | | | 70,059 | | | | 69,429 | |
|
| |
CSAIL Commercial Mortgage Trust,
Series 2020-C19, Class A3, 2.56%,
03/15/2053 | | | 139,000 | | | | 142,060 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
CSFB Mortgage-Backed Pass-Through
Ctfs., Series 2004-AR5, Class 3A1,
2.79%, 06/25/2034(i) | | $ | 8,685 | | | $ | 9,066 | |
|
| |
DB Master Finance LLC,
Series 2019-1A, Class A23, 4.35%,
05/20/2049(b) | | | 48,875 | | | | 52,520 | |
|
| |
Series 2019-1A, Class A2II,
4.02%, 05/20/2049(b) | | | 48,875 | | | | 50,829 | |
|
| |
Domino’s Pizza Master Issuer LLC,
Series 2019-1A, Class A2, 3.67%,
10/25/2049(b) | | | 107,093 | | | | 113,122 | |
|
| |
DT Auto Owner Trust,
Series 2019-3A, Class C, 2.74%,
04/15/2025(b) | | | 25,380 | | | | 25,562 | |
|
| |
Series 2019-3A, Class D, 2.96%, 04/15/2025(b) | | | 56,000 | | | | 57,191 | |
|
| |
Ellington Financial Mortgage Trust,
Series 2019-2, Class A1, 2.74%,
11/25/2059(b)(i) | | | 34,655 | | | | 34,909 | |
|
| |
Flagstar Mortgage Trust,
Series 2021-11IN, Class A6, 3.70%,
11/25/2051(b)(i) | | | 146,543 | | | | 148,198 | |
|
| |
Series 2021-8INV, Class A6, 2.50%, 09/25/2051(b)(i) | | | 95,901 | | | | 96,988 | |
|
| |
Galton Funding Mortgage Trust,
Series 2019-H1, Class A1, 2.66%,
10/25/2059(b)(i) | | | 570 | | | | 575 | |
|
| |
GCAT Trust, Series 2019-NQM3,
Class A1, 2.69%, 11/25/2059(b)(i) | | | 33,514 | | | | 33,737 | |
|
| |
GMACM Mortgage Loan Trust,
Series 2006-AR1, Class 1A1, 2.93%,
04/19/2036(i) | | | 35,925 | | | | 31,362 | |
|
| |
GS Mortgage Securities Trust,
Series 2020-GC45, Class A5, 2.91%,
02/13/2053 | | | 50,000 | | | | 52,659 | |
|
| |
Series 2020-GC47, Class A5, 2.38%, 05/12/2053 | | | 55,000 | | | | 55,831 | |
|
| |
GS Mortgage-Backed Securities Trust,
Series 2021-INV1, Class A6, 2.50%,
12/25/2051(b)(i) | | | 94,627 | | | | 95,695 | |
|
| |
JP Morgan Mortgage Trust,
Series 2021-LTV2, Class A1, 2.52%,
05/25/2052(b)(i) | | | 110,000 | | | | 110,271 | |
|
| |
Life Mortgage Trust,
Series 2021-BMR,
Class B, 0.99% (1 mo. USD LIBOR +
0.88%), 03/15/2038(b)(e) | | | 100,000 | | | | 99,145 | |
|
| |
Med Trust,
Series 2021-MDLN, Class A, 1.06% (1 mo. USD LIBOR + 0.95%),
11/15/2038(b)(e) | | | 100,000 | | | | 100,041 | |
|
| |
Series 2021-MDLN, Class B, 1.56% (1 mo. USD LIBOR + 1.45%), 11/15/2038(b)(e) | | | 100,000 | | | | 99,944 | |
|
| |
Mello Mortgage Capital Acceptance Trust,
Series 2021-INV2, Class A4, 2.50%,
08/25/2051(b)(i) | | | 58,508 | | | | 59,173 | |
|
| |
Series 2021-INV3, Class A4, 2.50%, 10/25/2051(b)(i) | | | 58,562 | | | | 59,222 | |
|
| |
Merrill Lynch Mortgage Investors Trust,
Series 2005-3, Class 3A, 2.15%,
11/25/2035(i) | | | 7,561 | | | | 7,607 | |
|
| |
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 | |
|
| |
MFA Trust,
Series 2021-AEI1, Class A3, 2.50%, 08/25/2051(b)(i) | | $ | 96,040 | | | $ | 95,833 | |
|
| |
Series 2021-AEI1, Class A4, 2.50%,
08/25/2051(b)(i) | | | 94,721 | | | | 95,921 | |
|
| |
Series 2021-INV2, Class A1, 1.91%,
11/25/2056(b)(i) | | | 99,092 | | | | 98,222 | |
|
| |
Morgan Stanley Capital I Trust,
Series 2017-CLS, Class A, 0.81% (1 mo. USD LIBOR + 0.70%), 11/15/2034(b)(e) | | | 99,000 | | | | 99,022 | |
|
| |
Series 2017-CLS, Class B, 0.96% (1
mo. USD LIBOR + 0.85%),
11/15/2034(b)(e) | | | 49,000 | | | | 49,000 | |
|
| |
Series 2017-CLS, Class C, 1.11% (1
mo. USD LIBOR + 1.00%),
11/15/2034(b)(e) | | | 33,000 | | | | 32,992 | |
|
| |
Series 2019-L2, Class A4, 4.07%,
03/15/2052 | | | 80,000 | | | | 89,780 | |
|
| |
Series 2019-L3, Class AS, 3.49%,
11/15/2052 | | | 60,000 | | | | 64,622 | |
|
| |
MVW LLC, Series 2019-2A, Class A,
2.22%, 10/20/2038(b) | | | 46,194 | | | | 46,751 | |
|
| |
MVW Owner Trust, Series 2019-1A,
Class A, 2.89%, 11/20/2036(b) | | | 37,564 | | | | 38,134 | |
|
| |
New Residential Mortgage Loan Trust,
Series 2019-NQM4, Class A1, 2.49%, 09/25/2059(b)(i) | | | 26,642 | | | | 26,752 | |
|
| |
Series 2020-NQM1, Class A1, 2.46%,
01/26/2060(b)(i) | | | 34,481 | | | | 34,592 | |
|
| |
Oceanview Mortgage Trust,
Series 2021-3, Class A5, 2.50%, 07/25/2051(b)(i) | | | 93,132 | | | | 94,188 | |
|
| |
One Bryant Park Trust,
Series 2019- OBP, Class A, 2.52%, 09/15/2054(b) | | | 114,000 | | | | 115,621 | |
|
| |
Onslow Bay Mortgage Loan Trust, Series 2021-NQM4, Class A1,
1.96%, 10/25/2061(b)(i) | | | 97,955 | | | | 97,679 | |
|
| |
Progress Residential Trust,
Series 2020-SFR1, Class A,
1.73%, 04/17/2037(b) | | | 100,000 | | | | 99,333 | |
|
| |
Series 2021-SFR10, Class A, 2.39%,
12/17/2040(b) | | | 100,000 | | | | 100,782 | |
|
| |
Sonic Capital LLC,
Series 2020-1A, Class A2I, 3.85%, 01/20/2050(b) | | | 49,333 | | | | 51,302 | |
|
| |
Series 2021-1A, Class A2I, 2.19%, 08/20/2051(b) | | | 39,900 | | | | 39,146 | |
|
| |
Series 2021-1A, Class A2II, 2.64%, 08/20/2051(b) | | | 39,900 | | | | 39,221 | |
|
| |
STAR Trust, Series 2021-1, Class A1, 1.22%, 05/25/2065(b)(i) | | | 58,074 | | | | 57,929 | |
|
| |
Starwood Mortgage Residential Trust, Series 2020-1, Class A1, 2.28%, 02/25/2050(b)(i) | | | 26,386 | | | | 26,502 | |
|
| |
Series 2020-INV1, Class A1, 1.03%, 11/25/2055(b)(i) | | | 51,269 | | | | 51,002 | |
|
| |
Series 2021-6, Class A1, 1.92%, 11/25/2066(b)(i) | | | 117,863 | | | | 117,815 | |
|
| |
Structured Adjustable Rate Mortgage Loan Trust, Series 2004-12, Class 3A2, 2.39%, 09/25/2034(i) | | | 4,983 | | | | 5,104 | |
|
| |
Structured Asset Securities Corp. Mortgage Pass-Through Ctfs., Series 2003-34A, Class 5A5, 2.37%, 11/25/2033(i) | | | 39,847 | | | | 39,985 | |
|
| |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
| |
Textainer Marine Containers VII Ltd.,
Series 2021-2A, Class A, 2.23%, 04/20/2046(b) | | $ | 94,667 | | | $ | 94,511 | |
|
| |
Thornburg Mortgage Securities Trust,
Series 2005-1, Class A3, 4.66%, 04/25/2045(i) | | | 20,770 | | | | 21,193 | |
|
| |
TICP CLO XV Ltd., Series 2020-15A, Class A, 1.41% (3 mo. USD LIBOR + 1.28%), 04/20/2033(b)(e) | | | 250,000 | | | | 250,322 | |
|
| |
Towd Point Mortgage Trust, Series 2017-2, Class A1, 2.75%, 04/25/2057(b)(i) | | | 16,770 | | | | 16,922 | |
|
| |
UBS Commercial Mortgage Trust, Series 2019-C16, Class A4, 3.60%, 04/15/2052 | | | 80,000 | | | | 87,342 | |
|
| |
Verus Securitization Trust,
Series 2020-1, Class A1, 2.42%, 01/25/2060(b)(j) | | | 20,803 | | | | 20,879 | |
|
| |
Series 2021-1, Class A1B, 1.32%, 01/25/2066(b)(i) | | | 63,655 | | | | 62,944 | |
|
| |
Series 2021-7, Class A1, 1.83%, 10/25/2066(b)(i) | | | 98,503 | | | | 98,359 | |
|
| |
Series 2021-R1, Class A1, 0.82%, 10/25/2063(b)(i) | | | 50,708 | | | | 50,520 | |
|
| |
Wendy’s Funding LLC, Series 2018-1A, Class A2II, 3.88%, 03/15/2048(b) | | | 57,600 | | | | 60,059 | |
|
| |
WFRBS Commercial Mortgage Trust, Series 2012-C6, Class B, 4.70%, 04/15/2045 | | | 57,524 | | | | 57,560 | |
|
| |
Zaxby’s Funding LLC, Series 2021-1A, Class A2, 3.24%, 07/30/2051(b) | | | 156,109 | | | | 159,277 | |
|
| |
Total Asset-Backed Securities (Cost $6,498,484) | | | | 6,531,275 | |
|
| |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–5.97% | |
Collateralized Mortgage Obligations–0.48% | |
Freddie Mac Multifamily Structured | | | | | | | | |
Pass-Through Ctfs., Series K083, Class AM, 4.03%, 10/25/2028(i) | | | 23,000 | | | | 26,342 | |
|
| |
Series K085, Class AM, 4.06%, 10/25/2028(i) | | | 23,000 | | | | 26,269 | |
|
| |
Series K089, Class AM, 3.63%, 01/25/2029(i) | | | 39,000 | | | | 43,775 | |
|
| |
Series K088, Class AM, 3.76%, 01/25/2029(i) | | | 92,000 | | | | 104,123 | |
|
| |
| | | | | | | 200,509 | |
|
| |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.30% | |
6.50%, 08/01/2032 | | | 350 | | | | 387 | |
|
| |
4.00%, 11/01/2048 to 07/01/2049 | | | 115,304 | | | | 123,118 | |
|
| |
| | | | | | | 123,505 | |
|
| |
|
Federal National Mortgage Association (FNMA)–1.13% | |
3.50%, 12/01/2030 to 05/01/2047 | | | 438,764 | | | | 469,492 | |
|
| |
6.50%, 09/01/2031 | | | 500 | | | | 570 | |
|
| |
7.00%, 09/01/2032 | | | 3,912 | | | | 4,190 | |
| | | | | | | 474,252 | |
|
| |
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 | |
|
| |
|
Government National Mortgage Association (GNMA)–0.94% | |
7.50%, 06/15/2023 | | $ | 147 | | | $ | 148 | |
|
| |
8.50%, 11/15/2024 | | | 423 | | | | 425 | |
|
| |
7.00%, 07/15/2031 to 08/15/2031 | | | 534 | | | | 600 | |
|
| |
6.50%, 11/15/2031 to 03/15/2032 | | | 924 | | | | 1,014 | |
|
| |
6.00%, 11/15/2032 | | | 638 | | | | 715 | |
|
| |
4.00%, 07/20/2049 | | | 41,054 | | | | 43,262 | |
|
| |
TBA, 2.00%, 01/01/2052(k) | | | 345,000 | | | | 348,142 | |
|
| |
| | | | | | | 394,306 | |
|
| |
| |
Uniform Mortgage-Backed Securities–3.12% | | | | | |
TBA, 2.00%, 01/01/2037 to 01/01/2052(k) | | | 1,286,000 | | | | 1,304,581 | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $2,464,381) | | | | 2,497,153 | |
|
| |
| | |
| | | Shares | | | | | |
| | |
Preferred Stocks–1.39% | | | | | | | | |
Asset Management & Custody Banks–0.04% | | | | | |
Bank of New York Mellon Corp. (The), 4.70%, Series G, Pfd.(c) | | | 14,000 | | | | 14,970 | |
| | |
Diversified Banks–0.51% | | | | | | | | |
Bank of America Corp., 6.50%, Series Z, Pfd.(c) | | | 23,000 | | | | 25,242 | |
Citigroup, Inc., 6.25%, Series T, Pfd.(c) | | | 20,000 | | | | 22,606 | |
Citigroup, Inc., 5.00%, Series U, Pfd.(c) | | | 64,000 | | | | 66,080 | |
Citigroup, Inc., 4.00%, Series W, Pfd.(c) | | | 39,000 | | | | 39,390 | |
JPMorgan Chase & Co., 3.60% (3 mo. USD LIBOR + 3.47%), Series I,
Pfd.(e) | | | 42,000 | | | | 42,210 | |
Wells Fargo & Co., 7.50%, Class A, Series L, Conv. Pfd. | | | 11 | | | | 16,396 | |
| | | | | | | | 211,924 | |
| |
Integrated Telecommunication Services–0.27% | | | | | |
AT&T, Inc., 2.88%, Series B, Pfd.(c) | | | 100,000 | | | | 114,212 | |
| |
Investment Banking & Brokerage–0.44% | | | | | |
Charles Schwab Corp. (The), 4.00%, Series H, Pfd.(c) | | | 20,000 | | | | 20,225 | |
Goldman Sachs Group, Inc. (The), 5.00%, Series P, Pfd.(c) | | | 27,000 | | | | 27,135 | |
Morgan Stanley, 6.88%, Series F, Pfd.(c) | | | 5,000 | | | | 138,550 | |
| | | | | | 185,910 | |
| | |
Life & Health Insurance–0.04% | | | | | | | | |
MetLife, Inc., 3.85%, Series G, Pfd.(c) | | | 16,000 | | | | 16,360 | |
| | |
Multi-Utilities–0.05% | | | | | | | | |
CenterPoint Energy, Inc., 6.13%, Series A, Pfd.(c) | | | 18,000 | | | | 18,731 | |
| | | | | | | | | | |
| | | Shares | | | Value | |
| |
Other Diversified Financial Services–0.04% | | | | | |
Equitable Holdings, Inc., 4.95%, Series B, Pfd.(c) | | | 17,000 | | | $ | 17,850 | |
Total Preferred Stocks (Cost $547,562) | | | | | | | 579,957 | |
| | | |
| | | | | Principal | | | | |
| | | | | Amount | | | | |
|
Non-U.S. Dollar Denominated Bonds & Notes–0.33%(l) | |
Movies & Entertainment–0.33% | | | | | | | | |
Netflix, Inc., 3.88%, 11/15/2029(b) (Cost $111,565) | | EUR | | | 100,000 | | | | 137,670 | |
| | |
Municipal Obligations–0.20% | | | | | | | | |
California State University, Series 2021 B, Ref. RB, 2.72%, 11/01/2052 | | | | $ | 35,000 | | | | 35,369 | |
Series 2021 B, Ref. RB, 2.94%, 11/01/2052 | | | | | 50,000 | | | | 50,154 | |
Total Municipal Obligations (Cost $85,000) | | | | 85,523 | |
| |
Agency Credit Risk Transfer Notes–0.17% | | | | | |
Fannie Mae Connecticut Avenue Securities, Series 2019-R03, Class 1M2, 2.25% (1 mo. USD LIBOR + 2.15%), 09/25/2031(b)(e) | | | 9,046 | | | | 9,085 | |
Series 2019-R06, Class 2M2, 2.20% (1 mo. USD LIBOR + 2.10%),
09/25/2039(b)(e) | | | 9,166 | | | | 9,183 | |
Freddie Mac, Series 2020-DNA5, Class M2, STACR® , 2.85% (30 Day Average SOFR + 2.80%), 10/25/2050(b)(e) | | | | | 53,135 | | | | 53,584 | |
Total Agency Credit Risk Transfer Notes (Cost $71,459) | | | | | | | 71,852 | |
| | | |
| | | | | Shares | | | | |
| | |
Money Market Funds–11.23% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(m)(n) | | | 1,540,969 | | | | 1,540,969 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(m)(n) | | | 1,396,580 | | | | 1,396,860 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(m)(n) | | | 1,761,107 | | | | 1,761,107 | |
Total Money Market Funds (Cost $4,698,760) | | | | 4,698,936 | |
TOTAL INVESTMENTS IN SECURITIES–103.47% (Cost $42,965,090) | | | | | | | 43,285,282 | |
OTHER ASSETS LESS LIABILITIES–(3.47)% | | | | | | | (1,451,305 | ) |
NET ASSETS–100.00% | | | | | | | | $ | 41,833,977 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond Fund |
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 |
| STACR® | | – Structured Agency Credit Risk |
| 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, 2021 was $17,166,775, which represented 41.04% 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, 2021. |
| (f) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (g) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1M. |
| (h) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (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, 2021. |
| (j) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (k) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1P. |
| (l) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (m) | 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | |
| Value
December 31, 2020 |
| | |
| Purchases
at Cost |
| | |
| Proceeds
from Sales |
| | |
| Change in
Unrealized
Appreciation
(Depreciation) |
| | |
| Realized
Gain |
| | |
| Value
December 31, 2021 |
| | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | | $1,152,387 | | | | | $10,942,478 | | | | $ | (10,553,896 | ) | | | | $- | | | | | $- | | | | | $1,540,969 | | | | | $440 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 943,049 | | | | | 7,816,056 | | | | | (7,362,105 | ) | | | | (160 | ) | | | | 20 | | | | | 1,396,860 | | | | | 189 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,317,014 | | | | | 12,505,689 | | | | | (12,061,596 | ) | | | | - | | | | | - | | | | | 1,761,107 | | | | | 191 | |
| | | | | | | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 129,744 | | | | | (129,744 | ) | | | | - | | | | | - | | | | | - | | | | | - | * |
| | | | | | | |
Invesco Private Prime Fund | | | | - | | | | | 302,736 | | | | | (302,736 | ) | | | | - | | | | | - | | | | | - | | | | | 1 | * |
| | | | | | | |
Total | | | | $3,412,450 | | | | | $31,696,703 | | | | $ | (30,410,077 | ) | | | | $ | (160) | | | | $20 | | | | | $4,698,936 | | | | | $821 | |
| | * | 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. |
| (n) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| | | | | | | | | | | | | | | | | | | | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
| | | | | |
U.S. Treasury 2 Year Notes | | | 24 | | | | March-2022 | | | $ | 5,236,125 | | | | $(3,186) | | | | $(3,186) | |
| | | | | |
U.S. Treasury 5 Year Notes | | | 26 | | | | March-2022 | | | | 3,145,391 | | | | 6,418 | | | | 6,418 | |
| | | | | |
U.S. Treasury Long Bonds | | | 3 | | | | March-2022 | | | | 481,313 | | | | 4,500 | | | | 4,500 | |
| | | | | |
U.S. Treasury Ultra Bonds | | | 1 | | | | March-2022 | | | | 197,125 | | | | 3,031 | | | | 3,031 | |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | 10,763 | | | | 10,763 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Core Plus Bond 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 10 Year Notes | | 16 | | | March-2022 | | | $ | (2,087,500 | ) | | $ | (24,750 | ) | | $ | (24,750 | ) |
U.S. Treasury 10 Year Ultra Notes | | 21 | | | March-2022 | | | | (3,075,188 | ) | | | (51,843 | ) | | | (51,843 | ) |
Subtotal—Short Futures Contracts | | | | | | | | | | | | | (76,593 | ) | | | (76,593 | ) |
Total Futures Contracts | | | | | | | | | | | | $ | (65,830 | ) | | $ | (65,830 | ) |
| | | | | | | | | | | | | | | | | | | | | | |
Open Forward Foreign Currency Contracts | |
Settlement | | | |
| Contract to
|
| |
| Unrealized
Appreciation (Depreciation) |
|
Date | | Counterparty | | | Deliver | | | | Receive | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
02/17/2022 | | Citibank N.A. | | | EUR | | | | 259,000 | | | | USD | | | | 300,919 | | | $ | 5,788 | |
01/20/2022 | | Goldman Sachs International | | | JPY | | | | 11,408,000 | | | | USD | | | | 100,000 | | | | 815 | |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | 6,603 | |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/20/2022 | | Barclays Bank PLC | | | USD | | | | 100,505 | | | | JPY | | | | 11,408,000 | | | | (1,320 | ) |
Total Forward Foreign Currency Contracts | | | | | | | | | | | $ | 5,283 | |
Abbreviations:
EUR - Euro
JPY - Japanese Yen
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $38,266,330) | | $ | 38,586,346 | |
Investments in affiliated money market funds, at value (Cost $4,698,760) | | | 4,698,936 | |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 6,603 | |
Foreign currencies, at value (Cost $81,040) | | | 81,574 | |
Receivable for:
Fund shares sold | | | 29,764 | |
Dividends | | | 2,218 | |
Interest | | | 205,038 | |
Investment for trustee deferred compensation and retirement plans | | | 36,336 | |
Other assets | | | 150 | |
Total assets | | | 43,646,965 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 841 | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 1,320 | |
Payable for: | | | | |
Investments purchased | | | 1,654,014 | |
Fund shares reacquired | | | 1,381 | |
Amount due custodian | | | 34,937 | |
Accrued fees to affiliates | | | 11,478 | |
Accrued other operating expenses | | | 70,362 | |
Trustee deferred compensation and retirement plans | | | 38,655 | |
Total liabilities | | | 1,812,988 | |
Net assets applicable to shares outstanding | | $ | 41,833,977 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 40,771,573 | |
Distributable earnings | | | 1,062,404 | |
| | | $41,833,977 | |
| |
Net Assets: | | | | |
Series I | | $ | 39,798,882 | |
Series II | | $ | 2,035,095 | |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 6,079,614 | |
Series II | | | 313,520 | |
Series I: | | | | |
Net asset value per share | | $ | 6.55 | |
Series II: | | | | |
Net asset value per share | | $ | 6.49 | |
| | | | |
Statement of Operations | | | | |
For the year ended December 31, 2021 | | | | |
Investment income: | | | | |
Interest (net of foreign withholding taxes of $(414)) | | $ | 905,977 | |
Dividends | | | 9,419 | |
Dividends from affiliated money market funds (includes securities lending income of $1) | | | 821 | |
Total investment income | | | 916,217 | |
| |
Expenses: | | | | |
Advisory fees | | | 173,379 | |
Administrative services fees | | | 63,181 | |
Custodian fees | | | 28,038 | |
Distribution fees - Series II | | | 3,129 | |
Transfer agent fees | | | 6,188 | |
Trustees’ and officers’ fees and benefits | | | 22,903 | |
Reports to shareholders | | | 6,779 | |
Professional services fees | | | 51,065 | |
Other | | | 3,671 | |
Total expenses | | | 358,333 | |
Less: Fees waived | | | (121,742 | ) |
Net expenses | | | 236,591 | |
Net investment income | | | 679,626 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | (97,988 | ) |
Affiliated investment securities | | | 20 | |
Foreign currencies | | | (4,847 | ) |
Forward foreign currency contracts | | | 8,257 | |
Futures contracts | | | 273,649 | |
Option contracts written | | | 11,701 | |
Swap agreements | | | 939 | |
| | | | 191,731 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (1,104,060 | ) |
Affiliated investment securities | | | (160 | ) |
Foreign currencies | | | (1,864 | ) |
Forward foreign currency contracts | | | 14,903 | |
Futures contracts | | | (67,952 | ) |
| | | | (1,159,133 | ) |
Net realized and unrealized gain (loss) | | | (967,402 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (287,776 | ) |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 679,626 | | | $ | 593,233 | |
|
| |
Net realized gain | | | 191,731 | | | | 1,380,871 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (1,159,133 | ) | | | 896,395 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (287,776 | ) | | | 2,870,499 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (1,922,064 | ) | | | (794,296 | ) |
|
| |
Series II | | | (87,419 | ) | | | (9,108 | ) |
|
| |
Total distributions from distributable earnings | | | (2,009,483 | ) | | | (803,404 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 7,119,057 | | | | 8,069,912 | |
|
| |
Series II | | | 1,501,721 | | | | 245,519 | |
|
| |
Net increase in net assets resulting from share transactions | | | 8,620,778 | | | | 8,315,431 | |
|
| |
Net increase in net assets | | | 6,323,519 | | | | 10,382,526 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 35,510,458 | | | | 25,127,932 | |
|
| |
End of year | | $ | 41,833,977 | | | $ | 35,510,458 | |
|
| |
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 12/31/21 | | | $ | 6.93 | | | | $ | 0.12 | | | | $ | (0.17 | ) | | | $ | (0.05 | ) | | | $ | (0.10 | ) | | | $ | (0.23 | ) | | | $ | (0.33 | ) | | | $ | 6.55 | | | | | (0.65 | )% | | | $ | 39,799 | | | | | 0.61 | % | | | | 0.92 | % | | | | 1.77 | % | | | | 377 | % |
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 | | | | | 0.88 | | | | | 1.92 | | | | | 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 | | | | | 464 | |
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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 6.89 | | | | | 0.10 | | | | | (0.17 | ) | | | | (0.07 | ) | | | | (0.10 | ) | | | | (0.23 | ) | | | | (0.33 | ) | | | | 6.49 | | | | | (1.01 | ) | | | | 2,035 | | | | | 0.86 | | | | | 1.17 | | | | | 1.52 | | | | | 377 | |
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 | | | | | 1.13 | | | | | 1.67 | | | | | 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 | | | | | 464 | |
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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income |
|
| Invesco V.I. Core Plus Bond Fund |
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 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
| 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 |
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| Invesco V.I. Core Plus Bond Fund |
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 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. | 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.
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| Invesco V.I. Core Plus Bond Fund |
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 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 Agreement, 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. | 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.
| Q. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| 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. |
| T. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
| U. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
|
| Invesco V.I. Core Plus Bond Fund |
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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% | |
|
| |
For the year ended December 31, 2021, 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, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $121,742.
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, 2021, Invesco was paid $5,395 for accounting and fund administrative services and was reimbursed $57,786 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, 2021, 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, 2021, 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. Core Plus Bond Fund |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | | $ – | | | | $21,044,064 | | | | $173,281 | | | | $21,217,345 | |
|
| |
U.S. Treasury Securities | | | – | | | | 7,465,571 | | | | – | | | | 7,465,571 | |
|
| |
Asset-Backed Securities | | | – | | | | 6,531,275 | | | | – | | | | 6,531,275 | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 2,497,153 | | | | – | | | | 2,497,153 | |
|
| |
Preferred Stocks | | | 154,946 | | | | 425,011 | | | | – | | | | 579,957 | |
|
| |
Non-U.S. Dollar Denominated Bonds & Notes | | | – | | | | 137,670 | | | | – | | | | 137,670 | |
|
| |
Municipal Obligations | | | – | | | | 85,523 | | | | – | | | | 85,523 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 71,852 | | | | – | | | | 71,852 | |
|
| |
Money Market Funds | | | 4,698,936 | | | | – | | | | – | | | | 4,698,936 | |
|
| |
Total Investments in Securities | | | 4,853,882 | | | | 38,258,119 | | | | 173,281 | | | | 43,285,282 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 13,949 | | | | – | | | | – | | | | 13,949 | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | 6,603 | | | | – | | | | 6,603 | |
|
| |
| | | 13,949 | | | | 6,603 | | | | – | | | | 20,552 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
| | | | | | | | | | | | | | | | |
Futures Contracts | | | (79,779 | ) | | | – | | | | – | | | | (79,779 | ) |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (1,320 | ) | | | – | | | | (1,320 | ) |
|
| |
| | | (79,779 | ) | | | (1,320 | ) | | | – | | | | (81,099 | ) |
|
| |
Total Other Investments | | | (65,830 | ) | | | 5,283 | | | | – | | | | (60,547 | ) |
|
| |
Total Investments | | | $4,788,052 | | | | $38,263,402 | | | | $173,281 | | | | $43,224,735 | |
|
| |
* 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, 2021:
| | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Currency
Risk | | | Interest
Rate Risk | | | Total | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | | $ - | | | | $ 13,949 | | | | $ 13,949 | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 6,603 | | | | - | | | | 6,603 | |
|
| |
Total Derivative Assets | | | 6,603 | | | | 13,949 | | | | 20,552 | |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | (13,949 | ) | | | (13,949 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | | $ 6,603 | | | | $ - | | | | $ 6,603 | |
|
| |
| |
| | | Value | |
| Derivative Liabilities | | Currency
Risk | | | Interest
Rate Risk | | | Total | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | | $ - | | | | $ (79,779) | | | | $ (79,779) | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | (1,320 | ) | | | - | | | | (1,320 | ) |
|
| |
Total Derivative Liabilities | | | (1,320 | ) | | | (79,779 | ) | | | (81,099 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | | | | 79,779 | | | | 79,779 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | | $ (1,320 | ) | | | $ - | | | | $ (1,320) | |
|
| |
(a) The daily variation margin receivable (payable) at period-end is recorded in the Statement of Assets and Liabilities.
|
| Invesco V.I. Core Plus Bond 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, 2021.
| | | | | | | | | | | | |
| | | 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 |
|
|
Barclays Bank PLC | | $ - | | $(1,320) | | $(1,320) | | $- | | $- | | $(1,320) |
|
|
Citibank N.A. | | 5,788 | | - | | 5,788 | | - | | - | | 5,788 |
|
|
Goldman Sachs International | | 815 | | - | | 815 | | - | | - | | 815 |
|
|
Total | | $6,603 | | $(1,320) | | $5,283 | | $- | | $- | | $ 5,283 |
|
|
Effect of Derivative Investments for the year ended December 31, 2021
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 | | | Interest
Rate Risk | | | Total | |
Realized Gain (Loss):
Forward foreign currency contracts | | $ | - | | | $ | 8,257 | | | $ | - | | | $ | 8,257 | |
|
| |
Futures contracts | | | - | | | | - | | | | 273,649 | | | | 273,649 | |
|
| |
Options purchased(a) | | | - | | | | (2,988 | ) | | | - | | | | (2,988 | ) |
|
| |
Options written | | | - | | | | 1,345 | | | | 10,356 | | | | 11,701 | |
|
| |
Swap agreements | | | 939 | | | | - | | | | - | | | | 939 | |
|
| |
Change in Net Unrealized Appreciation (Depreciation):
Forward foreign currency contracts | | | - | | | | 14,903 | | | | - | | | | 14,903 | |
|
| |
Futures contracts | | | - | | | | - | | | | (67,952 | ) | | | (67,952 | ) |
|
| |
Total | | $ | 939 | | | $ | 21,517 | | | $ | 216,053 | | | $ | 238,509 | |
|
| |
| (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 | | Foreign
Currency
Options
Purchased | | Swaptions
Written | | Foreign
Currency
Options
Written | | Swap
Agreements |
|
|
Average notional value | | $331,233 | | $16,142,617 | | $1,733,333 | | $909,000 | | $900,000 | | $785,422 |
|
|
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 V.I. Core Plus 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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | 1,802,191 | | | $ | 803,404 | |
Long-term capital gain | | | 207,292 | | | | - | |
Total distributions | | $ | 2,009,483 | | | $ | 803,404 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed ordinary income | | $ | 706,769 | |
Undistributed long-term capital gain | | | 74,826 | |
Net unrealized appreciation - investments | | | 300,790 | |
Net unrealized appreciation - foreign currencies | | | 467 | |
Temporary book/tax differences | | | (20,448 | ) |
Shares of beneficial interest | | | 40,771,573 | |
Total net assets | | $ | 41,833,977 | |
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 derivative instruments and amortization and accretion on debt securities.
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $37,917,266 and $31,028,397, 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 | | $ | 655,508 | |
Aggregate unrealized (depreciation) of investments | | | (354,718 | ) |
Net unrealized appreciation of investments | | $ | 300,790 | |
Cost of investments for tax purposes is $42,923,945.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, distributions, dollar rolls, paydowns and derivative instruments, on December 31, 2021, undistributed net investment income was increased by $22,931 and undistributed net realized gain was decreased by $22,931. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,744,706 | | | $ | 18,830,992 | | | | 3,180,253 | | | $ | 21,269,042 | |
Series II | | | 253,424 | | | | 1,716,338 | | | | 41,575 | | | | 286,022 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 293,445 | | | | 1,922,064 | | | | 117,326 | | | | 794,296 | |
Series II | | | 13,371 | | | | 86,911 | | | | 1,317 | | | | 8,865 | |
|
| Invesco V.I. Core Plus Bond Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,988,761 | ) | | $ | (13,633,999 | ) | | | (2,092,985 | ) | | $ | (13,993,426 | ) |
Series II | | | (44,587 | ) | | | (301,528 | ) | | | (7,337 | ) | | | (49,368 | ) |
Net increase in share activity | | | 1,271,598 | | | $ | 8,620,778 | | | | 1,240,149 | | | $ | 8,315,431 | |
| (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—Significant 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. Core Bond Fund (the “Target Fund”) in exchange for shares of the Fund.
The reorganization is expected to be consummated around April 2022, or 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.
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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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $997.80 | | $3.07 | | $1,022.13 | | $3.11 | | 0.61% |
Series II | | 1,000.00 | | 995.70 | | 4.33 | | 1,020.87 | | 4.38 | | 0.86 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | |
| | | | | | |
Federal and State Income Tax | | | |
Long-Term Capital Gain Distributions | | $ | 207,292 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 2.79 | % |
U.S. Treasury Obligations* | | | 3.73 | % |
Qualified Business Income* | | | 0.00 | % |
Business Interest Income* | | | 38.58 | % |
| | * | 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962
Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957
Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954
Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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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 |
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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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 |
| 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967
Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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 100 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, 2021 |
Invesco V.I. Discovery Mid Cap Growth Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 19.10 | % |
Series II Shares | | | 18.79 | |
Russell Midcap Growth Index▼ | | | 12.73 | |
| |
Source(s): ▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally,
the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year. Meanwhile, the Fund’s benchmark, the Russell Midcap Growth Index, returned 12.73%.
During the fiscal year, stock selection within the information technology, financials and industrials 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 discretionary and real estate sectors.
The largest individual contributors to the Fund’s absolute performance during the fiscal year included EPAM Systems, Old Dominion Freight Line and HubSpot. EPAM Systems engages in software product development and digital platform engineering services. The company is well positioned in the race to digitize businesses, which is providing a significant tailwind to digital consulting businesses. Old Dominion Freight Line is a less-than-truckload shipping company. The company reported quarterly results that topped analyst estimates as volume growth remained strong and the company’s operating ratio improved. Management stated that unprecedented demand for its best-in-class service, particularly as a carrier with available capacity, enabled the company to post double-digit revenue growth for the third consecutive quarter. HubSpot, a long-time holding, develops internet marketing software solutions. The company continues to execute its plan of becoming a platform for sales and marketing software serving mid-market enterprises.
The largest individual detractors from the Fund’s absolute performance during the fiscal
year included Coupa Software, RingCentral, and Trade Desk. Coupa Software offers procurement and expense management software. The company’s growth has stalled as large enterprises have focused on front-office software rather than the back-office software that Coupa provides. RingCentral is a global provider of cloud enterprise unified communications and collaboration software. The company’s stock underperformed early in the year due to investors’ rotation into more cyclical companies that benefit from the reopening of the economy. Trade Desk provides a technology-based self-serve programmatic platform that enables ad buyers to purchase internet advertising more efficiently and effectively. Shares underperformed because first quarter 2021 revenues were only modestly above analyst estimates, along with concerns that second-half earnings will compare unfavorably to prior periods and apprehension about Google’s expected phasing out of cookies. We exited all three positions during the fiscal year.
We expect 2022 to be a year of transition to more normal macro-economic conditions. Our view is that GDP growth is likely to slow from the 5%+ rate achieved in 2021 as extraordinary fiscal and monetary stimulus moderates. The Fed has already begun to slow the pace of liquidity being added to the financial system and plans to begin raising short-term interest rates by mid-year. As a result, we anticipate the rate of corporate earnings growth will slow, volatility will pick up and equity returns will be tempered. Meanwhile, we believe that technology-driven innovation will likely continue to disrupt large portions of the global economy, providing substantial opportunity via investment in premier growth compounders. Such growth companies may gain advantages as the economic cycle matures. At the same time, growth investors may have to contend with valuation headwinds due to lingering inflation and Fed tightening. We will continue to focus on harnessing the power of compound growth by seeking to identify companies best positioned to thrive in an everchanging environment.
We thank you for your continued investment in the Invesco V.I. Discovery Mid Cap Growth Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
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. and its affiliates. 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. 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 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (8/15/86) | | | 10.85 | % |
10 Years | | | 17.84 | |
5 Years | | | 23.08 | |
1 Year | | | 19.10 | |
Series II Shares | | | | |
Inception (10/16/00) | | | 5.03 | % |
10 Years | | | 17.53 | |
5 Years | | | 22.75 | |
1 Year | | | 18.79 | |
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 (renamed Invesco V.I. Discovery Mid Cap Growth Fund on April 30, 2021). 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 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 V.I. Discovery Mid Cap Growth Fund |
Supplemental Information
Invesco 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 V.I. Discovery Mid Cap Growth Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 33.18 | % |
| |
Industrials | | | | 17.44 | |
| |
Health Care | | | | 17.07 | |
| |
Consumer Discretionary | | | | 11.85 | |
| |
Financials | | | | 9.65 | |
| |
Materials | | | | 3.50 | |
| |
Real Estate | | | | 2.84 | |
| |
Other Sectors, Each Less than 2% of Net Assets | | | | 2.88 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.59 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Synopsys, Inc. | | | | 2.50 | % |
| | |
2. | | Zebra Technologies Corp., Class A | | | | 2.31 | |
| | |
3. | | IDEXX Laboratories, Inc. | | | | 2.26 | |
| | |
4. | | MSCI, Inc. | | | | 2.21 | |
| | |
5. | | Monolithic Power Systems, Inc. | | | | 2.09 | |
| | |
6. | | Old Dominion Freight Line, Inc. | | | | 2.05 | |
| | |
7. | | Marvell Technology, Inc. | | | | 2.03 | |
| | |
8. | | MongoDB, Inc. | | | | 2.02 | |
| | |
9. | | HubSpot, Inc. | | | | 2.00 | |
| | |
10. | | Trimble, Inc. | | | | 1.99 | |
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, 2021.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | |
| | | Shares | | | Value |
|
|
Common Stocks & Other Equity Interests–98.41% |
Application Software–11.23% | | | | | | |
| | |
Avalara, Inc.(b) | | | 23,896 | | | $ 3,085,213 |
| | |
Bill.com Holdings, Inc.(b)(c) | | | 55,539 | | | 13,837,542 |
| | |
Datadog, Inc., Class A(b) | | | 100,081 | | | 17,825,427 |
| | |
HubSpot, Inc.(b) | | | 38,023 | | | 25,062,860 |
| | |
Manhattan Associates, Inc.(b) | | | 111,528 | | | 17,341,489 |
| | |
Paylocity Holding Corp.(b) | | | 65,895 | | | 15,561,763 |
| | |
Synopsys, Inc.(b) | | | 85,047 | | | 31,339,819 |
| | |
Tyler Technologies, Inc.(b) | | | 30,908 | | | 16,626,959 |
| | |
| | | | | | | 140,681,072 |
|
Asset Management & Custody Banks–1.80% |
| | |
KKR & Co., Inc., Class A | | | 303,092 | | | 22,580,354 |
|
Auto Parts & Equipment–1.52% |
| | |
Aptiv PLC(b) | | | 115,321 | | | 19,022,199 |
|
Automotive Retail–0.76% |
| | |
Advance Auto Parts, Inc. | | | 39,430 | | | 9,458,468 |
|
Biotechnology–1.14% |
| | |
Alnylam Pharmaceuticals, Inc.(b) | | | 40,574 | | | 6,880,539 |
| | |
Natera, Inc.(b) | | | 78,718 | | | 7,351,474 |
| | |
| | | | | | | 14,232,013 |
|
Building Products–2.94% |
| | |
Advanced Drainage Systems, Inc. | | | 87,063 | | | 11,851,886 |
| | |
Trane Technologies PLC | | | 54,468 | | | 11,004,170 |
| | |
Trex Co., Inc.(b) | | | 103,332 | | | 13,952,920 |
| | |
| | | | | | | 36,808,976 |
|
Casinos & Gaming–0.34% |
| | |
Caesars Entertainment, Inc.(b) | | | 45,978 | | | 4,300,322 |
|
Commodity Chemicals–0.50% |
| | |
Olin Corp. | | | 108,369 | | | 6,233,385 |
|
Communications Equipment–1.76% |
| | |
Motorola Solutions, Inc. | | | 81,258 | | | 22,077,799 |
|
Construction Materials–0.83% |
| | |
Eagle Materials, Inc. | | | 62,603 | | | 10,420,895 |
|
Distributors–0.97% |
| | |
Pool Corp. | | | 21,551 | | | 12,197,866 |
|
Diversified Support Services–0.85% |
| | |
Copart, Inc.(b) | | | 70,391 | | | 10,672,683 |
|
Electrical Components & Equipment–3.15% |
| | |
AMETEK, Inc. | | | 139,225 | | | 20,471,644 |
| | |
Generac Holdings, Inc.(b) | | | 53,930 | | | 18,979,046 |
| | |
| | | | | | | 39,450,690 |
|
Electronic Equipment & Instruments–4.29% |
| | |
Trimble, Inc.(b) | | | 285,597 | | | 24,901,202 |
| | |
Zebra Technologies Corp., Class A(b) | | | 48,509 | | | 28,872,557 |
| | |
| | | | | | | 53,773,759 |
| | | | | | |
| | | Shares | | | Value |
|
|
Environmental & Facilities Services–1.57% |
| | |
Waste Connections, Inc. | | | 143,954 | | | $ 19,616,612 |
| | |
Financial Exchanges & Data–2.21% | | | | | | |
| | |
MSCI, Inc. | | | 45,211 | | | 27,700,328 |
| | |
Health Care Equipment–4.42% | | | | | | |
| | |
IDEXX Laboratories, Inc.(b) | | | 42,892 | | | 28,242,666 |
| | |
Insulet Corp.(b) | | | 41,216 | | | 10,966,341 |
| | |
Masimo Corp.(b) | | | 55,059 | | | 16,120,174 |
| | |
| | | | | | | 55,329,181 |
|
Health Care Facilities–1.06% |
| | |
Tenet Healthcare Corp.(b) | | | 161,786 | | | 13,216,298 |
|
Health Care Supplies–1.18% |
| | |
Align Technology, Inc.(b) | | | 22,545 | | | 14,816,123 |
|
Health Care Technology–0.49% |
| | |
Veeva Systems, Inc., Class A(b) | | | 23,898 | | | 6,105,461 |
|
Home Improvement Retail–1.23% |
| | |
Floor & Decor Holdings, Inc., Class A(b) | | | 118,041 | | | 15,346,510 |
|
Homebuilding–0.53% |
| | |
TopBuild Corp.(b) | | | 23,933 | | | 6,603,354 |
|
Homefurnishing Retail–0.49% |
| | |
Williams-Sonoma, Inc.(c) | | | 36,614 | | | 6,192,526 |
|
Hotels, Resorts & Cruise Lines–1.68% |
| | |
Hilton Worldwide Holdings, Inc.(b) | | | 134,726 | | | 21,015,909 |
|
Industrial Machinery–4.61% |
| | |
Chart Industries, Inc.(b)(c) | | | 40,366 | | | 6,437,973 |
| | |
IDEX Corp. | | | 77,284 | | | 18,263,755 |
| | |
ITT, Inc. | | | 113,394 | | | 11,587,733 |
| | |
Kornit Digital Ltd. (Israel)(b) | | | 67,402 | | | 10,261,955 |
| | |
Middleby Corp. (The)(b)(c) | | | 56,482 | | | 11,113,398 |
| | |
| | | | | | | 57,664,814 |
|
Insurance Brokers–1.14% |
| | |
Arthur J. Gallagher & Co. | | | 84,322 | | | 14,306,914 |
|
Interactive Media & Services–0.84% |
| | |
ZoomInfo Technologies, Inc., Class A(b) | | | 163,569 | | | 10,501,130 |
|
Internet Services & Infrastructure–2.01% |
| | |
MongoDB, Inc.(b) | | | 47,641 | | | 25,218,763 |
|
Investment Banking & Brokerage–0.86% |
| | |
LPL Financial Holdings, Inc. | | | 67,201 | | | 10,758,208 |
|
IT Consulting & Other Services–5.50% |
| | |
EPAM Systems, Inc.(b) | | | 32,633 | | | 21,813,529 |
| | |
Gartner, Inc.(b) | | | 68,025 | | | 22,742,118 |
| | |
Globant S.A.(b)(c) | | | 77,302 | | | 24,279,785 |
| | |
| | | | | | | 68,835,432 |
|
Leisure Facilities–0.97% |
| | |
Vail Resorts, Inc. | | | 37,161 | | | 12,185,092 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
| | | | | | |
| | | Shares | | | Value |
Life Sciences Tools & Services–7.20% |
| | |
Bio-Rad Laboratories, Inc., Class A(b) | | | 13,190 | | | $ 9,965,968 |
| | |
Charles River Laboratories International, Inc.(b) | | | 58,159 | | | 21,913,148 |
| | |
Mettler-Toledo International, Inc.(b) | | | 10,084 | | | 17,114,666 |
| | |
Repligen Corp.(b)(c) | | | 70,860 | | | 18,766,562 |
| | |
West Pharmaceutical Services, Inc. | | | 47,661 | | | 22,353,486 |
| | |
| | | | | | | 90,113,830 |
|
Movies & Entertainment–0.96% |
| | |
Live Nation Entertainment, Inc.(b) | | | 100,110 | | | 11,982,166 |
|
Office REITs–1.02% |
| | |
Alexandria Real Estate Equities, Inc. | | | 57,195 | | | 12,752,197 |
|
Oil & Gas Storage & Transportation–1.08% |
| | |
Cheniere Energy, Inc. | | | 133,121 | | | 13,501,132 |
|
Paper Packaging–1.63% |
| | |
Avery Dennison Corp. | | | 94,387 | | | 20,441,393 |
|
Pharmaceuticals–1.60% |
| | |
Catalent, Inc.(b) | | | 156,253 | | | 20,005,072 |
|
Real Estate Services–1.04% |
| | |
Jones Lang LaSalle, Inc.(b) | | | 48,148 | | | 12,968,182 |
|
Regional Banks–3.63% |
| | |
First Republic Bank | | | 104,106 | | | 21,498,930 |
| | |
SVB Financial Group(b) | | | 35,391 | | | 24,003,592 |
| | |
| | | | | | | 45,502,522 |
|
Research & Consulting Services–1.15% |
| | |
Equifax, Inc. | | | 49,358 | | | 14,451,529 |
|
Restaurants–1.57% |
| | |
Chipotle Mexican Grill, Inc.(b) | | | 4,770 | | | 8,339,152 |
| | |
Domino’s Pizza, Inc. | | | 19,960 | | | 11,264,027 |
| | |
| | | | | | | 19,603,179 |
|
Semiconductor Equipment–2.31% |
| | |
Enphase Energy, Inc.(b) | | | 45,766 | | | 8,372,432 |
| | |
Entegris, Inc. | | | 148,368 | | | 20,560,838 |
| | |
| | | | | | | 28,933,270 |
|
Semiconductors–4.37% |
| | |
Lattice Semiconductor Corp.(b) | | | 40,969 | | | 3,157,071 |
| | |
Marvell Technology, Inc. | | | 290,154 | | | 25,385,573 |
| | |
Monolithic Power Systems, Inc. | | | 53,139 | | | 26,215,063 |
| | |
| | | | | | | 54,757,707 |
Investment Abbreviations:
REIT – Real Estate Investment Trust
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Specialized REITs–0.79% | | | | | |
Extra Space Storage, Inc. | | | 43,493 | | | $ | 9,861,168 | |
|
| |
| |
Specialty Chemicals–0.54% | | | | | |
Albemarle Corp. | | | 28,779 | | | | 6,727,667 | |
|
| |
| |
Specialty Stores–1.79% | | | | | |
Five Below, Inc.(b) | | | 36,284 | | | | 7,506,797 | |
Tractor Supply Co. | | | 62,666 | | | | 14,952,107 | |
|
| |
| | | | | | | 22,458,904 | |
|
| |
| |
Systems Software–1.69% | | | | | |
Zscaler, Inc.(b) | | | 65,819 | | | | 21,149,619 | |
|
| |
| |
Trading Companies & Distributors–1.12% | | | | | |
SiteOne Landscape Supply, Inc.(b) | | | 58,047 | | | | 14,063,627 | |
|
| |
| |
Trucking–2.05% | | | | | |
Old Dominion Freight Line, Inc. | | | 71,760 | | | | 25,717,349 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $821,053,611) | | | | 1,232,313,649 | |
|
| |
| |
Money Market Funds–1.52% | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 7,063,784 | | | | 7,063,784 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 3,921,831 | | | | 3,922,616 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 8,072,896 | | | | 8,072,896 | |
|
| |
Total Money Market Funds
(Cost $19,059,296) | | | | 19,059,296 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-99.93%
(Cost $840,112,907) | | | | 1,251,372,945 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–2.69% | | | | | | | | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 10,102,831 | | | | 10,102,831 | |
|
| |
Invesco Private Prime Fund, 0.11%(d)(e)(f) | | | 23,568,559 | | | | 23,573,272 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $33,676,103) | | | | 33,676,103 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–102.62%
(Cost $873,789,010) | | | | | | | 1,285,049,048 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(2.62)% | | | | | | | (32,835,052 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 1,252,213,996 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 4,694,901 | | | | $ | 133,774,877 | | | | $ | (131,405,994 | ) | | | $ | - | | | | $ | - | | | | $ | 7,063,784 | | | | $ | 1,647 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 3,353,072 | | | | | 94,431,023 | | | | | (93,861,424 | ) | | | | 5 | | | | | (60 | ) | | | | 3,922,616 | | | | | 615 | |
Invesco Treasury Portfolio, Institutional Class | | | | 5,365,601 | | | | | 152,885,574 | | | | | (150,178,279 | ) | | | | - | | | | | - | | | | | 8,072,896 | | | | | 707 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | - | | | | | 137,591,599 | | | | | (127,488,768 | ) | | | | - | | | | | - | | | | | 10,102,831 | | | | | 1,654 | * |
Invesco Private Prime Fund | | | | - | | | | | 279,264,120 | | | | | (255,682,024 | ) | | | | - | | | | | (8,824 | ) | | | | 23,573,272 | | | | | 22,044 | * |
Total | | | $ | 13,413,574 | | | | $ | 797,947,193 | | | | $ | (758,616,489 | ) | | | $ | 5 | | | | $ | (8,884 | ) | | | $ | 52,735,399 | | | | $ | 26,667 | |
| | * | 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, 2021. |
| (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. Discovery Mid Cap Growth Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value
(Cost $ 821,053,611)* | | $ | 1,232,313,649 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $ 52,735,399) | | | 52,735,399 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 2,160,521 | |
|
| |
Fund shares sold | | | 247,244 | |
|
| |
Dividends | | | 249,386 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 184,566 | |
|
| |
Other assets | | | 4,642 | |
|
| |
Total assets | | | 1,287,895,407 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 1,053,395 | |
|
| |
Amount due custodian | | | 176,281 | |
|
| |
Collateral upon return of securities loaned | | | 33,676,103 | |
|
| |
Accrued fees to affiliates | | | 519,981 | |
|
| |
Accrued other operating expenses | | | 59,742 | |
|
| |
Trustee deferred compensation and retirement plans | | | 195,909 | |
|
| |
Total liabilities | | | 35,681,411 | |
|
| |
Net assets applicable to shares outstanding | | $ | 1,252,213,996 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 590,962,725 | |
|
| |
Distributable earnings | | | 661,251,271 | |
|
| |
| | $ | 1,252,213,996 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 1,043,223,930 | |
|
| |
Series II | | $ | 208,990,066 | |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 9,100,553 | |
|
| |
Series II | | | 2,014,078 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 114.63 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 103.76 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $33,058,814 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $7,046) | | $ | 3,141,083 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $44,733) | | | 47,702 | |
|
| |
Total investment income | | | 3,188,785 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 7,948,411 | |
|
| |
Administrative services fees | | | 1,936,980 | |
|
| |
Custodian fees | | | 19,816 | |
|
| |
Distribution fees - Series II | | | 509,745 | |
|
| |
Transfer agent fees | | | 74,953 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 33,914 | |
|
| |
Professional services fees | | | 67,533 | |
|
| |
Other | | | (48,962 | ) |
|
| |
Total expenses | | | 10,542,390 | |
|
| |
Less: Fees waived | | | (331,374 | ) |
|
| |
Net expenses | | | 10,211,016 | |
|
| |
Net investment income (loss) | | | (7,022,231 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 264,544,605 | |
|
| |
Affiliated investment securities | | | (8,884 | ) |
|
| |
Foreign currencies | | | (19 | ) |
|
| |
| | | 264,535,702 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (46,873,290 | ) |
|
| |
Affiliated investment securities | | | 5 | |
|
| |
| | | (46,873,285 | ) |
|
| |
Net realized and unrealized gain | | | 217,662,417 | |
|
| |
Net increase in net assets resulting from operations | | $ | 210,640,186 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (7,022,231 | ) | | $ | (3,715,026 | ) |
|
| |
Net realized gain | | | 264,535,702 | | | | 129,594,081 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (46,873,285 | ) | | | 232,836,358 | |
|
| |
Net increase in net assets resulting from operations | | | 210,640,186 | | | | 358,715,413 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (107,606,241 | ) | | | (59,869,406 | ) |
|
| |
Series II | | | (23,586,278 | ) | | | (5,791,819 | ) |
|
| |
Total distributions from distributable earnings | | | (131,192,519 | ) | | | (65,661,225 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 11,766,238 | | | | 33,303,183 | |
|
| |
Series II | | | 1,369,232 | | | | 88,537,075 | |
|
| |
Net increase in net assets resulting from share transactions | | | 13,135,470 | | | | 121,840,258 | |
|
| |
Net increase in net assets | | | 92,583,137 | | | | 414,894,446 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,159,630,859 | | | | 744,736,413 | |
|
| |
End of year | | $ | 1,252,213,996 | | | $ | 1,159,630,859 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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 12/31/21 | | | $106.94 | | | | $(0.62 | ) | | | $21.29 | | | | $20.67 | | | | $ - | | | | $(12.98 | ) | | | $(12.98 | ) | | | $114.63 | | | | 19.09 | % | | | $1,043,224 | | | | 0.80 | % | | | 0.83 | % | | | (0.54 | )% | | | 77 | % |
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 | | | | 0.86 | | | | (0.37 | ) | | | 87 | |
Year ended 12/31/19 | | | 68.65 | | | | 0.04 | (e) | | | 26.04 | | | | 26.08 | | | | - | | | | (10.91 | ) | | | (10.91 | ) | | | 83.82 | | | | 39.37 | | | | 693,424 | | | | 0.80 | | | | 0.87 | | | | 0.05 | (e) | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 98.05 | | | | (0.83 | ) | | | 19.52 | | | | 18.69 | | | | - | | | | (12.98 | ) | | | (12.98 | ) | | | 103.76 | | | | 18.79 | | | | 208,990 | | | | 1.05 | | | | 1.08 | | | | (0.79 | ) | | | 77 | |
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 | | | | 1.11 | | | | (0.62 | ) | | | 87 | |
Year ended 12/31/19 | | | 64.41 | | | | (0.14 | )(e) | | | 24.34 | | | | 24.20 | | | | - | | | | (10.91 | ) | | | (10.91 | ) | | | 77.70 | | | | 39.01 | | | | 51,312 | | | | 1.05 | | | | 1.12 | | | | (0.19 | )(e) | | | 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 | |
| (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 and 2017, 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) | 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 V.I. Discovery Mid Cap Growth Fund |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Discovery Mid Cap Growth Fund, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Discovery Mid Cap Growth 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
| K. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 $700 million | | | 0.600% | |
| |
Over $1.5 billion | | | 0.580% | |
| * | 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, 2021, 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 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”). Effective May 1, 2022 through June 30, 2022, 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 of Series I shares to 2.00% and Series II shares to 2.25% of the Fund’s average daily net asset. 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $331,374.
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, 2021, Invesco was paid $170,199 for accounting and fund administrative services and was reimbursed $1,766,781 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, 2021, 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, 2021, 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. |
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| Invesco V.I. Discovery Mid Cap Growth 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, 2021. 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 | | | | | | | | | | | | | | |
Common Stocks & Other Equity Interests | | $ | 1,232,313,649 | | | $ | – | | | $– | | $ | 1,232,313,649 | |
Money Market Funds | | | 19,059,296 | | | | 33,676,103 | | | – | | | 52,735,399 | |
Total Investments | | $ | 1,251,372,945 | | | $ | 33,676,103 | | | $– | | $ | 1,285,049,048 | |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
| | |
Ordinary income* | | $ | – | | | $ | 271,534 | |
|
| |
| | |
Long-term capital gain | | | 131,192,519 | | | | 65,389,691 | |
|
| |
| | |
Total distributions | | $ | 131,192,519 | | | $ | 65,661,225 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
| |
Undistributed ordinary income | | $ | 28,772,012 | |
|
| |
| |
Undistributed long-term capital gain | | | 222,523,782 | |
|
| |
| |
Net unrealized appreciation – investments | | | 410,102,341 | |
|
| |
| |
Temporary book/tax differences | | | (146,864 | ) |
|
| |
| |
Shares of beneficial interest | | | 590,962,725 | |
|
| |
| |
Total net assets | | $ | 1,252,213,996 | |
|
| |
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, 2021.
|
| Invesco V.I. Discovery Mid Cap Growth Fund |
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $915,768,191 and $1,051,012,339, 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 | | $ | 417,362,829 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (7,260,488 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 410,102,341 | |
|
| |
Cost of investments for tax purposes is $874,946,707.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $7,057,492 and undistributed net realized gain was decreased by $7,057,492. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 395,767 | | | $ | 45,813,679 | | | | 1,005,686 | | | $ | 81,011,069 | |
| |
Series II | | | 208,907 | | | | 21,933,005 | | | | 1,316,158 | | | | 93,201,526 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 920,026 | | | | 107,606,241 | | | | 839,683 | | | | 59,869,406 | |
| |
Series II | | | 222,680 | | | | 23,586,278 | | | | 88,384 | | | | 5,791,819 | |
| |
| | | | |
Issued in connection with acquisitions:(b) | | | | | | | | | | | | | | | | |
Series I | | | - | | | | - | | | | 803,912 | | | | 57,978,197 | |
| |
Series II | | | - | | | | - | | | | 775,472 | | | | 51,406,035 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,224,572 | ) | | | (141,653,682 | ) | | | (1,912,557 | ) | | | (165,555,489 | ) |
| |
Series II | | | (418,716 | ) | | | (44,150,051 | ) | | | (839,168 | ) | | | (61,862,305 | ) |
| |
Net increase in share activity | | | 104,092 | | | $ | 13,135,470 | | | | 2,077,570 | | | $ | 121,840,258 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 26% 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 have been included in the Fund’s Statement of Operations since May 1, 2020.
|
| Invesco 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Discovery Mid Cap Growth Fund/VA (subsequently renamed Invesco V.I. Discovery Mid Cap Growth Fund) 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2,3 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2,4 | | Annualized Expense Ratio2 |
| Series I | | $1,000.00 | | $1,089.90 | | $4.21 | | $1,021.17 | | $4.08 | | 0.80% |
| Series II | | 1,000.00 | | 1,088.40 | | 5.53 | | 1,019.91 | | 5.35 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. Effective May 1, 2022, the Adviser has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses of Series I shares and Series II Shares 2.00% and 2.25% of average daily net assets, respectively. The annualized expense ratios restated as if these agreements had been in effect throughout the entire most recent fiscal half year are 0.82% and 1.07% for of Series I shares and Series II shares, respectively. |
| 3 | The actual expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent half year are $4.25 and $5.54 for of Series I and Series II shares, respectively. |
| 4 | The hypothetical expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent half year are $4.11 and $5.36 for of Series I and Series II shares, respectively. |
|
| Invesco 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, 2021:
| | | | | | |
Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 131,192,519 | | | |
Qualified Dividend Income* | | | 0.00 | % | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | |
U.S. Treasury Obligations* | | | 0.00 | % | | |
Qualified Business Income* | | | 0.00 | % | | |
Business Interest Income* | | | 0.00 | % | | |
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Discovery Mid Cap Growth Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Diversified Dividend Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 18.89 | % |
Series II Shares | | | 18.59 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 1000 Value Index▼ (Style-Specific Index) | | | 25.16 | |
Lipper VUF Large-Cap Value Funds Index∎ (Peer Group Index) | | | 26.33 | |
| |
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
Within the Fund’s style-specific benchmark, energy, real estate and financials were the best-performing sectors, while communication services and consumer staples were the worst-performing sectors during the fiscal year. Stock selection in the information technology (IT) sector contributed the most to the Fund’s performance relative to the Russell 1000 Value Index. Stock selection in financials also helped relative Fund performance. Overweight positions in the consumer staples and utilities sectors detracted the most from the Fund’s relative performance. Stock selection in consumer discretionary also hurt the Fund’s performance relative to the style-specific benchmark along with an underweight position in real estate.
During the fiscal year, holdings in the financials and energy sectors were among the largest contributors to the Fund’s absolute performance. Oil & gas exploration and production company ConocoPhillips was the largest contributor to absolute Fund performance. Shares of the company rose along with the energy sector in general during much of the fiscal year. Investors also reacted favorably to the announcement of ConocoPhillips’ acquisition of Royal Dutch Shell’s shale assets in the Permian basin, which closed in
the fourth quarter of 2021. Diversified insurance company Hartford Financial Services was also a large contributor to overall Fund performance for the fiscal year. Shares of Hartford rose sharply in the first quarter of 2021 after the company received an unsolicited acquisition offer from Chubb, which was later rejected by Hartford. Hartford also reported strong financial results for most of 2021, with most of the company’s business lines contributing to the positive results.
While only a few Fund holdings declined in value during the fiscal year, select holdings within the IT and health care sectors were among the largest detractors from absolute Fund performance. Payment services company Fidelity National Information Services was the largest detractor from overall Fund performance. Shares fell after management provided earnings expectations for the third quarter of 2021 that were below consensus expectations. Medical device company Medtronic was also among the largest detractors from absolute performance. The company underperformed due to the announced delays of several new product launches. We believe these delays will have a temporary impact on revenue growth and that the company’s diverse portfolio of innovative products positions it to perform well as medical procedure volumes continue to recover.
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 positive impact on the Fund’s performance during the fiscal year. The currency forward contracts were no longer being used in the Fund at year end.
In the middle of the fiscal year, former lead portfolio manager Meggan Walsh announced her intent to retire from Invesco and the industry. Effective March 24, 2021, Peter Santoro joined Invesco as a lead portfolio manager on the Fund alongside Meggan Walsh and the current team. Peter worked with Meggan to ensure a smooth and successful transition with the team until June 30, 2021, when Meggan ended her tenure on the Fund as a portfolio manager.
Mr. Santoro comes to Invesco from Columbia Threadneedle Investments where he was a senior portfolio manager. We believe Mr. Santoro is well positioned in the lead portfolio manager role for the Dividend Value Team given his 25 years of experience in the industry and his experience in managing dividend-focused strategies.
The investment objective of the Fund remains the same and Mr. Santoro will focus on maintaining the success of the team by employing the same basic tenets of the process. However, there have been some modifications to the investment process under Mr. Santoro’s leadership.
|
| Invesco V.I. Diversified Dividend Fund |
Since taking over as lead manager Mr. Santoro and the team have established new positions in the IT, communication services, health care, financials and energy sectors. While they meaningfully reduced the Fund’s exposure to consumer staples, the sector remained the largest overweight position relative to the style-specific benchmark at year-end. Reductions were also made in utilities, materials and industrials. The largest underweight position was in the real estate sector as of year-end.
We believe the Fund has successfully navigated multiple market cycles during its history 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: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Robert Botard
Caroline Le Feuvre
Chris McMeans
Peter Santoro - Lead
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (3/1/90) | | | 8.25 | % |
10 Years | | | 11.89 | |
5 Years | | | 8.37 | |
1 Year | | | 18.89 | |
| |
Series II Shares | | | | |
Inception (6/5/00) | | | 6.15 | % |
10 Years | | | 11.61 | |
5 Years | | | 8.10 | |
1 Year | | | 18.59 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 |
| |
Financials | | | | 18.72 | % |
| |
Health Care | | | | 16.96 | |
| |
Industrials | | | | 10.81 | |
| |
Consumer Staples | | | | 10.68 | |
| |
Information Technology | | | | 10.17 | |
| |
Utilities | | | | 6.79 | |
| |
Consumer Discretionary | | | | 6.26 | |
| |
Energy | | | | 6.22 | |
| |
Communication Services | | | | 5.73 | |
| |
Materials | | | | 3.82 | |
| |
Real Estate | | | | 1.54 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 2.30 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Johnson & Johnson | | | | 3.18 | % |
| | |
2. | | Cisco Systems, Inc. | | | | 2.65 | |
| | |
3. | | Bank of America Corp. | | | | 2.63 | |
| | |
4. | | Walmart, Inc. | | | | 2.48 | |
| | |
5. | | Comcast Corp., Class A | | | | 2.37 | |
| | |
6. | | CVS Health Corp. | | | | 2.35 | |
| | |
7. | | Merck & Co., Inc. | | | | 2.33 | |
| | |
8. | | Raytheon Technologies Corp. | | | | 2.30 | |
| | |
9. | | Entergy Corp. | | | | 2.17 | |
| | |
10. | | ConocoPhillips | | | | 2.04 | |
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, 2021.
|
| Invesco V.I. Diversified Dividend Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests-97.70% | |
Aerospace & Defense-3.01% | |
General Dynamics Corp. | | | 16,606 | | | $ | 3,461,853 | |
|
| |
Raytheon Technologies Corp. | | | 130,453 | | | | 11,226,785 | |
|
| |
| | | | | | | 14,688,638 | |
|
| |
|
Agricultural & Farm Machinery-0.97% | |
Deere & Co. | | | 13,811 | | | | 4,735,654 | |
|
| |
|
Air Freight & Logistics-1.38% | |
United Parcel Service, Inc., Class B | | | 31,325 | | | | 6,714,200 | |
|
| |
|
Apparel Retail-1.85% | |
Gap, Inc. (The)(b) | | | 86,043 | | | | 1,518,659 | |
|
| |
TJX Cos., Inc. (The) | | | 99,037 | | | | 7,518,889 | |
|
| |
| | | | | | | 9,037,548 | |
|
| |
|
Apparel, Accessories & Luxury Goods-0.52% | |
Columbia Sportswear Co. | | | 26,236 | | | | 2,556,436 | |
|
| |
|
Asset Management & Custody Banks-1.23% | |
State Street Corp. | | | 64,647 | | | | 6,012,171 | |
|
| |
|
Biotechnology-0.82% | |
AbbVie, Inc. | | | 29,656 | | | | 4,015,422 | |
|
| |
|
Brewers-1.80% | |
Anheuser-Busch InBev S.A./N.V. (Belgium) | | | 61,541 | | | | 3,725,898 | |
|
| |
Heineken N.V. (Netherlands) | | | 45,012 | | | | 5,061,305 | |
|
| |
| | | | | | | 8,787,203 | |
|
| |
|
Cable & Satellite-2.37% | |
Comcast Corp., Class A | | | 230,100 | | | | 11,580,933 | |
|
| |
|
Communications Equipment-2.65% | |
Cisco Systems, Inc. | | | 204,180 | | | | 12,938,887 | |
|
| |
|
Construction Machinery & Heavy Trucks-1.00% | |
Caterpillar, Inc. | | | 23,529 | | | | 4,864,385 | |
|
| |
|
Consumer Finance-1.25% | |
American Express Co. | | | 37,347 | | | | 6,109,969 | |
|
| |
|
Data Processing & Outsourced Services-1.85% | |
Automatic Data Processing, Inc. | | | 16,910 | | | | 4,169,668 | |
|
| |
Fidelity National Information Services, Inc. | | | 44,588 | | | | 4,866,780 | |
|
| |
| | | | | | | 9,036,448 | |
|
| |
|
Diversified Banks-3.82% | |
Bank of America Corp. | | | 288,839 | | | | 12,850,447 | |
|
| |
Wells Fargo & Co. | | | 120,044 | | | | 5,759,711 | |
|
| |
| | | | | | | 18,610,158 | |
|
| |
|
Electric Utilities-4.93% | |
American Electric Power Co., Inc. | | | 61,158 | | | | 5,441,227 | |
|
| |
Entergy Corp. | | | 93,868 | | | | 10,574,230 | |
|
| |
Exelon Corp. | | | 139,103 | | | | 8,034,590 | |
|
| |
| | | | | | | 24,050,047 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Electrical Components & Equipment-1.61% | |
ABB Ltd. (Switzerland) | | | 130,725 | | | $ | 4,980,790 | |
|
| |
Emerson Electric Co. | | | 30,905 | | | | 2,873,238 | |
|
| |
| | | | | | | 7,854,028 | |
|
| |
|
Electronic Manufacturing Services-0.75% | |
TE Connectivity Ltd. | | | 22,508 | | | | 3,631,441 | |
|
| |
|
Fertilizers & Agricultural Chemicals-0.71% | |
Nutrien Ltd. (Canada) | | | 46,217 | | | | 3,473,902 | |
|
| |
|
General Merchandise Stores-1.63% | |
Target Corp. | | | 34,318 | | | | 7,942,558 | |
|
| |
|
Gold-0.91% | |
Newmont Corp. | | | 71,495 | | | | 4,434,120 | |
|
| |
|
Health Care Equipment-3.84% | |
Becton, Dickinson and Co. | | | 26,185 | | | | 6,585,004 | |
|
| |
Medtronic PLC | | | 87,440 | | | | 9,045,668 | |
|
| |
Stryker Corp. | | | 11,668 | | | | 3,120,256 | |
|
| |
| | | | | | | 18,750,928 | |
|
| |
|
Health Care Services-2.35% | |
CVS Health Corp. | | | 110,993 | | | | 11,450,038 | |
|
| |
|
Hypermarkets & Super Centers-2.48% | |
Walmart, Inc. | | | 83,550 | | | | 12,088,849 | |
|
| |
|
Industrial Machinery-2.84% | |
Flowserve Corp. | | | 106,434 | | | | 3,256,881 | |
|
| |
Pentair PLC | | | 65,664 | | | | 4,795,442 | |
|
| |
Stanley Black & Decker, Inc. | | | 30,810 | | | | 5,811,382 | |
|
| |
| | | | | | | 13,863,705 | |
|
| |
|
Integrated Oil & Gas-2.80% | |
Chevron Corp. | | | 74,753 | | | | 8,772,264 | |
|
| |
TotalEnergies SE (France) | | | 96,571 | | | | 4,904,915 | |
|
| |
| | | | | | | 13,677,179 | |
|
| |
|
Integrated Telecommunication Services-2.35% | |
AT&T, Inc. | | | 264,467 | | | | 6,505,888 | |
|
| |
Deutsche Telekom AG (Germany) | | | 266,621 | | | | 4,955,188 | |
|
| |
| | | | | | | 11,461,076 | |
|
| |
|
Investment Banking & Brokerage-1.92% | |
Charles Schwab Corp. (The) | | | 111,275 | | | | 9,358,227 | |
|
| |
|
IT Consulting & Other Services-2.77% | |
Cognizant Technology Solutions Corp., Class A | | | 93,161 | | | | 8,265,244 | |
|
| |
International Business Machines Corp. | | | 39,200 | | | | 5,239,472 | |
|
| |
| | | | | | | 13,504,716 | |
|
| |
|
Managed Health Care-1.83% | |
Anthem, Inc. | | | 19,222 | | | | 8,910,166 | |
|
| |
|
Movies & Entertainment-1.01% | |
Walt Disney Co. (The)(c) | | | 31,864 | | | | 4,935,415 | |
|
| |
|
Multi-line Insurance-1.93% | |
Hartford Financial Services Group, Inc. (The) | | | 136,224 | | | | 9,404,905 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Diversified Dividend Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Multi-Utilities-1.86% | |
Dominion Energy, Inc. | | | 115,503 | | | $ | 9,073,916 | |
|
| |
|
Oil & Gas Exploration & Production-3.41% | |
ConocoPhillips | | | 137,737 | | | | 9,941,857 | |
|
| |
Pioneer Natural Resources Co. | | | 36,875 | | | | 6,706,825 | |
|
| |
| | | | | | | 16,648,682 | |
|
| |
|
Packaged Foods & Meats-3.91% | |
Campbell Soup Co. | | | 97,661 | | | | 4,244,347 | |
|
| |
Kraft Heinz Co. (The) | | | 187,495 | | | | 6,731,070 | |
|
| |
Nestle S.A. (Switzerland) | | | 58,041 | | | | 8,113,658 | |
|
| |
| | | | | | | 19,089,075 | |
|
| |
|
Paper Packaging-1.07% | |
Avery Dennison Corp. | | | 13,011 | | | | 2,817,792 | |
|
| |
International Paper Co. | | | 50,778 | | | | 2,385,551 | |
|
| |
| | | | | | | 5,203,343 | |
|
| |
|
Personal Products-1.00% | |
L’Oreal S.A. (France) | | | 10,309 | | | | 4,886,893 | |
|
| |
|
Pharmaceuticals-8.12% | |
Bristol-Myers Squibb Co. | | | 99,271 | | | | 6,189,547 | |
|
| |
Eli Lilly and Co. | | | 23,828 | | | | 6,581,770 | |
|
| |
Johnson & Johnson | | | 90,613 | | | | 15,501,166 | |
|
| |
Merck & Co., Inc. | | | 148,051 | | | | 11,346,629 | |
|
| |
| | | | | | | 39,619,112 | |
|
| |
|
Property & Casualty Insurance-1.91% | |
Travelers Cos., Inc. (The)(b) | | | 59,517 | | | | 9,310,244 | |
|
| |
|
Regional Banks-6.67% | |
Comerica, Inc. | | | 88,983 | | | | 7,741,521 | |
|
| |
Cullen/Frost Bankers, Inc. | | | 40,803 | | | | 5,144,034 | |
|
| |
Fifth Third Bancorp | | | 120,922 | | | | 5,266,153 | |
|
| |
M&T Bank Corp. | | | 42,809 | | | | 6,574,606 | |
|
| |
Zions Bancorporation N.A. | | | 124,027 | | | | 7,833,546 | |
|
| |
| | | | | | | 32,559,860 | |
|
| |
|
Restaurants-2.26% | |
Darden Restaurants, Inc.(b) | | | 16,768 | | | | 2,525,931 | |
|
| |
McDonald’s Corp. | | | 31,609 | | | | 8,473,425 | |
|
| |
| | | | | | | 10,999,356 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Semiconductors-2.15% | |
Broadcom, Inc. | | | 10,507 | | | $ | 6,991,463 | |
|
| |
Microchip Technology, Inc. | | | 40,417 | | | | 3,518,704 | |
|
| |
| | | | | | | 10,510,167 | |
|
| |
|
Soft Drinks-1.49% | |
Coca-Cola Co. (The) | | | 122,604 | | | | 7,259,383 | |
|
| |
|
Specialized REITs-1.54% | |
Weyerhaeuser Co. | | | 182,648 | | | | 7,521,445 | |
|
| |
|
Specialty Chemicals-1.13% | |
DuPont de Nemours, Inc. | | | 68,508 | | | | 5,534,076 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $350,110,272) | | | | 476,694,904 | |
|
| |
|
Money Market Funds-2.21% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 3,208,900 | | | | 3,208,900 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 3,910,596 | | | | 3,911,378 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 3,667,314 | | | | 3,667,314 | |
|
| |
Total Money Market Funds
(Cost $10,787,198) | | | | 10,787,592 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.91%
(Cost $360,897,470) | | | | 487,482,496 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds-1.94% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 2,831,276 | | | | 2,831,276 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 6,604,990 | | | | 6,606,311 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $9,437,587) | | | | 9,437,587 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-101.85%
(Cost $370,335,057) | | | | | | | 496,920,083 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(1.85)% | | | | (9,007,919 | ) |
|
| |
NET ASSETS-100.00% | | | | | | $ | 487,912,164 | |
|
| |
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. Diversified Dividend 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) | All or a portion of this security was out on loan at December 31, 2021. |
| (c) | Non-income producing security. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | | | | | | | | |
| | | | | | | | | | | | Unrealized | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Appreciation | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | (Depreciation) | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 5,256,244 | | | | $ 31,898,641 | | | | $ (33,945,985 | ) | | | $ - | | | | $ - | | | | $ 3,208,900 | | | | $ 1,461 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 5,597,164 | | | | 22,502,731 | | | | (24,188,049 | ) | | | (430) | | | | (38) | | | | 3,911,378 | | | | 907 | |
Invesco Treasury Portfolio, Institutional Class | | | 6,007,135 | | | | 36,455,589 | | | | (38,795,410 | ) | | | - | | | | - | | | | 3,667,314 | | | | 621 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 17,069,027 | | | | (14,237,751 | ) | | | - | | | | - | | | | 2,831,276 | | | | 128* | |
Invesco Private Prime Fund | | | - | | | | 38,420,690 | | | | (31,812,649 | ) | | | - | | | | (1,730) | | | | 6,606,311 | | | | 1,630* | |
Total | | | $ 16,860,543 | | | | $ 146,346,678 | | | | $ (142,979,844 | ) | | | $ (430) | | | | $(1,768) | | | | $ 20,225,179 | | | | $ 4,747 | |
| | * | 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, 2021. |
| (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. Diversified Dividend Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $350,110,272)* | | $ | 476,694,904 | |
Investments in affiliated money market funds, at value (Cost $20,224,785) | | | 20,225,179 | |
Foreign currencies, at value (Cost $781) | | | 765 | |
Receivable for: | | | | |
Fund shares sold | | | 281,695 | |
Dividends | | | 783,756 | |
Investment for trustee deferred compensation and retirement plans | | | 84,436 | |
Other assets | | | 1,883 | |
Total assets | | | 498,072,618 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 181,078 | |
Amount due custodian | | | 111,849 | |
Collateral upon return of securities loaned | | | 9,437,587 | |
Accrued fees to affiliates | | | 252,745 | |
Accrued other operating expenses | | | 62,427 | |
Trustee deferred compensation and retirement plans | | | 114,768 | |
Total liabilities | | | 10,160,454 | |
Net assets applicable to shares outstanding | | $ | 487,912,164 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 297,437,376 | |
Distributable earnings | | | 190,474,788 | |
| | | $ | 487,912,164 | |
| |
Net Assets: | | | | |
Series I | | $ | 242,809,566 | |
Series II | | $ | 245,102,598 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 8,142,634 | |
Series II | | | 8,288,602 | |
Series I: | | | | |
Net asset value per share | | $ | 29.82 | |
Series II: | | | | |
Net asset value per share | | $ | 29.57 | |
| * | At December 31, 2021, securities with an aggregate value of $8,831,909 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
| |
Dividends (net of foreign withholding taxes of $300,120) | | $ | 11,930,259 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $39,174) | | | 42,163 | |
|
| |
Total investment income | | | 11,972,422 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 2,328,055 | |
|
| |
Administrative services fees | | | 786,625 | |
|
| |
Custodian fees | | | 11,128 | |
|
| |
Distribution fees - Series II | | | 588,011 | |
|
| |
Transfer agent fees | | | 25,786 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 27,335 | |
|
| |
Reports to shareholders | | | 11,604 | |
|
| |
Professional services fees | | | 40,354 | |
|
| |
Other | | | 10,249 | |
|
| |
Total expenses | | | 3,829,147 | |
|
| |
Less: Fees waived | | | (7,037 | ) |
|
| |
Net expenses | | | 3,822,110 | |
|
| |
Net investment income | | | 8,150,312 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 56,544,490 | |
|
| |
Affiliated investment securities | | | (1,768 | ) |
|
| |
Foreign currencies | | | 71,793 | |
|
| |
Forward foreign currency contracts | | | (456,889 | ) |
|
| |
| | | 56,157,626 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 16,580,211 | |
|
| |
Affiliated investment securities | | | (430 | ) |
|
| |
Foreign currencies | | | (20,214 | ) |
|
| |
Forward foreign currency contracts | | | 625,279 | |
|
| |
| | | 17,184,846 | |
|
| |
Net realized and unrealized gain | | | 73,342,472 | |
|
| |
Net increase in net assets resulting from operations | | $ | 81,492,784 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 8,150,312 | | | $ | 9,797,518 | |
|
| |
Net realized gain | | | 56,157,626 | | | | 2,111,182 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | 17,184,846 | | | | (18,500,334 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | | 81,492,784 | | | | (6,591,634 | ) |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (6,092,708 | ) | | | (12,417,884 | ) |
|
| |
Series II | | | (5,554,813 | ) | | | (11,140,091 | ) |
|
| |
Total distributions from distributable earnings | | | (11,647,521 | ) | | | (23,557,975 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (26,159,709 | ) | | | (28,690,500 | ) |
|
| |
Series II | | | (7,080,155 | ) | | | (5,459,331 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (33,239,864 | ) | | | (34,149,831 | ) |
|
| |
Net increase (decrease) in net assets | | | 36,605,399 | | | | (64,299,440 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 451,306,765 | | | | 515,606,205 | |
|
| |
End of year | | $ | 487,912,164 | | | $ | 451,306,765 | |
|
| |
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 12/31/21 | | | $25.72 | | | | $0.52 | | | | $4.32 | | | | $4.84 | | | | $(0.63 | ) | | | $(0.11 | ) | | | $(0.74 | ) | | | $29.82 | | | | 18.89 | % | | | $242,810 | | | | 0.68 | % | | | 0.68 | % | | | 1.81 | % | | | 45 | % |
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 | | | | 0.70 | | | | 2.41 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 25.52 | | | | 0.44 | | | | 4.29 | | | | 4.73 | | | | (0.57 | ) | | | (0.11 | ) | | | (0.68 | ) | | | 29.57 | | | | 18.59 | | | | 245,103 | | | | 0.93 | | | | 0.93 | | | | 1.56 | | | | 45 | |
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 | | | | 0.95 | | | | 2.16 | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Diversified Dividend 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
|
| Invesco V.I. Diversified Dividend Fund |
| 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 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. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $7,037.
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, 2021, Invesco was paid $67,706 for accounting and fund administrative services and was reimbursed $718,919 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, 2021, 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, 2021, 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.
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| Invesco V.I. Diversified Dividend Fund |
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 440,066,257 | | | $ | 36,628,647 | | | | $– | | | $ | 476,694,904 | |
Money Market Funds | | | 10,787,592 | | | | 9,437,587 | | | | – | | | | 20,225,179 | |
Total Investments | | $ | 450,853,849 | | | $ | 46,066,234 | | | | $– | | | $ | 496,920,083 | |
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, 2021
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 | | | $(456,889) | |
Change in Net Unrealized Appreciation: | | | | |
Forward foreign currency contracts | | | 625,279 | |
Total | | | $ 168,390 | |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Forward | |
| | | Foreign Currency | |
| | | Contracts | |
Average notional value | | | $16,935,837 | |
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.
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| Invesco V.I. Diversified Dividend 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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
Ordinary income* | | $ | 10,253,430 | | | | | | | $ | 13,287,513 | |
Long-term capital gain | | | 1,394,091 | | | | | | | | 10,270,462 | |
Total distributions | | $ | 11,647,521 | | | | | | | $ | 23,557,975 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 9,999,465 | |
|
| |
Undistributed long-term capital gain | | | 54,557,169 | |
|
| |
Net unrealized appreciation – investments | | | 125,992,866 | |
|
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (211 | ) |
|
| |
Temporary book/tax differences | | | (74,501 | ) |
|
| |
Shares of beneficial interest | | | 297,437,376 | |
|
| |
Total net assets | | $ | 487,912,164 | |
|
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $204,745,902 and $235,971,603, 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 | | $ | 135,507,184 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (9,514,318 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 125,992,866 | |
|
| |
Cost of investments for tax purposes is $370,927,217.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2021, undistributed net investment income was increased by $73,328 and undistributed net realized gain was decreased by $73,328. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 657,168 | | | $ | 18,564,911 | | | | 601,614 | | | $ | 14,369,100 | |
|
| |
Series II | | | 578,551 | | | | 16,315,294 | | | | 566,840 | | | | 13,201,510 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 208,583 | | | | 6,092,708 | | | | 527,075 | | | | 12,417,884 | |
|
| |
Series II | | | 191,677 | | | | 5,554,813 | | | | 476,276 | | | | 11,140,091 | |
|
| |
|
| Invesco V.I. Diversified Dividend Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,784,234 | ) | | $ | (50,817,328 | ) | | | (2,302,436 | ) | | $ | (55,477,484 | ) |
|
| |
Series II | | | (1,032,125 | ) | | | (28,950,262 | ) | | | (1,257,557 | ) | | | (29,800,932 | ) |
|
| |
Net increase (decrease) in share activity | | | (1,180,380 | ) | | $ | (33,239,864 | ) | | | (1,388,188 | ) | | $ | (34,149,831 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 65% 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. |
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,053.40 | | $3.47 | | $1,021.83 | | $3.41 | | 0.67% |
Series II | | 1,000.00 | | 1,052.00 | | 4.76 | | 1,020.57 | | 4.69 | | 0.92 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 1,394,091 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 100.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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. 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) | | 186 | | 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
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| 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
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| 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; Vice President, Invesco Advisers, Inc.; 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 |
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| Invesco V.I. Diversified Dividend Fund |
| | |
|
Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Equally-Weighted S&P 500 Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Equally- Weighted S&P 500 Fund (the Fund) outperformed the S&P 500 Index. | |
Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 29.17 | % |
Series II Shares | | | 28.88 | |
S&P 500 Indexq (Broad Market Index) | | | 28.71 | |
S&P 500 Equal Weight Indexq (Style-Specific Index) | | | 29.63 | |
Lipper VUF Multi-Cap Core Funds Index∎ (Peer Group Index) | | | 23.87 | |
| |
Source(s):q RIMES Technologies Corp.;∎ Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of Sepember due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter,
resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
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 fiscal year, on an absolute basis, all sectors reflected in the S&P 500 Index had positive performance. The financials sector was the largest contributor to Fund performance followed by the information technology (IT) and consumer discretionary sectors, respectively.
Three of the top four individual contributors to Fund results during the fiscal year were energy companies. Devon Energy, an oil, gas and consumable fuels company was the largest single contributor as the company delivered strong operational performance as oil prices surged throughout the year. Marathon Oil, an oil, gas and consumable fuels company and Diamondback Energy, an oil, gas and consumable fuels company, were significant contributors as each company posted strong results aided by rising oil prices. The top detractor from the Fund’s performance for the fiscal year was Penn National Gaming, a casinos and gaming company. Penn was significantly impacted by lingering effects of the COVID-19 pandemic as
the company’s results were impacted by regional outbreaks of the Delta variant causing traffic at the companies locations to stay below pre-pandemic levels. Another detractor was Global Payments, an IT services company, as negative investor sentiment and concerns about future growth rates caused the stock price to decline.
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 fiscal 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: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Pratik Doshi
Peter Hubbard
Michael Jeanette
Tony Seisser
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. 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 12/31/11
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares* | | | | |
Inception (11/9/94) | | | 11.48 | % |
10 Years | | | 15.19 | |
5 Years | | | 15.43 | |
1 Year | | | 29.17 | |
| |
Series II Shares* | | | | |
Inception (7/24/00) | | | 9.92 | % |
10 Years | | | 14.91 | |
5 Years | | | 15.14 | |
1 Year | | | 28.88 | |
*Amount includes the effect of the Adviser pay-in for an economic loss as a result of a delay in rebalancing to the Underlying Index that occurred on April 24, 2020. Had the pay-in not been made, the total return would have been lower. | | | | |
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.
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| 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, 2021, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data is 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. |
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
Information Technology | | | | 14.84 | % |
Industrials | | | | 13.92 | |
Financials | | | | 12.93 | |
Health Care | | | | 12.91 | |
Consumer Discretionary | | | | 11.55 | |
Consumer Staples | | | | 6.42 | |
Real Estate | | | | 5.85 | |
Utilities | | | | 5.60 | |
Materials | | | | 5.53 | |
Communication Services | | | | 4.53 | |
Energy | | | | 3.94 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.98 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Cerner Corp. | | | | 0.24% | |
2. ABIOMED, Inc. | | | | 0.23 | |
3. Citrix Systems, Inc. | | | | 0.22 | |
4. CF Industries Holdings, Inc. | | | | 0.22 | |
5. Activision Blizzard, Inc. | | | | 0.22 | |
6. Eli Lilly and Co. | | | | 0.22 | |
7. Western Digital Corp. | | | | 0.22 | |
8. Incyte Corp. | | | | 0.22 | |
9. Pfizer, Inc. | | | | 0.21 | |
10. Lamb Weston Holdings, Inc. | | | | 0.21 | |
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, 2021.
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
Schedule of Investments(a)
December 31, 2021
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Common Stocks & Other Equity Interests–98.02% | |
Advertising–0.39% | | | | | | | | |
Interpublic Group of Cos., Inc. (The) | | | 22,331 | | | $ | 836,296 | |
Omnicom Group, Inc. | | | 11,665 | | | | 854,695 | |
| | | | | | | | 1,690,991 | |
| | |
Aerospace & Defense–1.95% | | | | | | | | |
Boeing Co. (The)(b) | | | 4,034 | | | | 812,125 | |
General Dynamics Corp. | | | 4,036 | | | | 841,385 | |
Howmet Aerospace, Inc. | | | 26,803 | | | | 853,139 | |
Huntington Ingalls Industries, Inc. | | | 4,448 | | | | 830,620 | |
L3Harris Technologies, Inc. | | | 3,815 | | | | 813,511 | |
Lockheed Martin Corp. | | | 2,398 | | | | 852,273 | |
Northrop Grumman Corp. | | | 2,229 | | | | 862,779 | |
Raytheon Technologies Corp. | | | 9,610 | | | | 827,037 | |
Textron, Inc. | | | 10,969 | | | | 846,807 | |
TransDigm Group, Inc.(b) | | | 1,366 | | | | 869,158 | |
| | | | | | | | 8,408,834 | |
| |
Agricultural & Farm Machinery–0.18% | | | | | |
Deere & Co. | | | 2,308 | | | | 791,390 | |
| | |
Agricultural Products–0.20% | | | | | | | | |
Archer-Daniels-Midland Co. | | | 13,036 | | | | 881,103 | |
| | |
Air Freight & Logistics–0.79% | | | | | | | | |
C.H. Robinson Worldwide, Inc. | | | 7,900 | | | | 850,277 | |
Expeditors International of Washington, Inc. | | | 6,314 | | | | 847,907 | |
FedEx Corp. | | | 3,359 | | | | 868,772 | |
United Parcel Service, Inc., Class B | | | 3,956 | | | | 847,929 | |
| | | | | | | | 3,414,885 | |
| | |
Airlines–0.97% | | | | | | | | |
Alaska Air Group, Inc.(b) | | | 16,008 | | | | 834,017 | |
American Airlines Group, Inc.(b)(c) | | | 45,927 | | | | 824,849 | |
Delta Air Lines, Inc.(b) | | | 21,664 | | | | 846,629 | |
Southwest Airlines Co.(b) | | | 19,708 | | | | 844,291 | |
United Airlines Holdings, Inc.(b)(c) | | | 18,777 | | | | 822,057 | |
| | | | | | | | 4,171,843 | |
| | |
Alternative Carriers–0.20% | | | | | | | | |
Lumen Technologies, Inc.(c) | | | 68,190 | | | | 855,785 | |
| | |
Apparel Retail–0.59% | | | | | | | | |
Gap, Inc. (The)(c) | | | 48,799 | | | | 861,302 | |
Ross Stores, Inc. | | | 7,329 | | | | 837,558 | |
TJX Cos., Inc. (The) | | | 11,068 | | | | 840,283 | |
| | | | | | | | 2,539,143 | |
|
Apparel, Accessories & Luxury Goods–0.92% | |
PVH Corp. | | | 8,134 | | | | 867,491 | |
Ralph Lauren Corp. | | | 6,730 | | | | 799,928 | |
Tapestry, Inc. | | | 19,134 | | | | 776,840 | |
Under Armour, Inc., Class A(b) | | | 18,071 | | | | 382,924 | |
Under Armour, Inc., Class C(b) | | | 19,964 | | | | 360,151 | |
VF Corp. | | | 10,886 | | | | 797,073 | |
| | | | | | | | 3,984,407 | |
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Application Software–2.31% | |
Adobe, Inc.(b) | | | 1,264 | | | $ | 716,764 | |
ANSYS, Inc.(b) | | | 2,076 | | | | 832,725 | |
Autodesk, Inc.(b) | | | 3,075 | | | | 864,659 | |
Cadence Design Systems, Inc.(b) | | | 4,492 | | | | 837,084 | |
Ceridian HCM Holding, Inc.(b) | | | 7,964 | | | | 831,919 | |
Citrix Systems, Inc. | | | 10,148 | | | | 959,899 | |
Intuit, Inc. | | | 1,220 | | | | 784,728 | |
Paycom Software, Inc.(b) | | | 1,971 | | | | 818,340 | |
PTC, Inc.(b) | | | 6,860 | | | | 831,089 | |
salesforce.com, inc.(b) | | | 3,101 | | | | 788,057 | |
Synopsys, Inc.(b) | | | 2,283 | | | | 841,286 | |
Tyler Technologies, Inc.(b) | | | 1,606 | | | | 863,948 | |
| | | | | | | | 9,970,498 | |
|
Asset Management & Custody Banks–1.54% | |
Ameriprise Financial, Inc. | | | 2,777 | | | | 837,710 | |
Bank of New York Mellon Corp. (The) | | | 14,580 | | | | 846,806 | |
BlackRock, Inc. | | | 894 | | | | 818,511 | |
Franklin Resources, Inc.(c) | | | 24,292 | | | | 813,539 | |
Invesco Ltd.(d) | | | 35,745 | | | | 822,850 | |
Northern Trust Corp. | | | 6,989 | | | | 835,954 | |
State Street Corp. | | | 8,846 | | | | 822,678 | |
T. Rowe Price Group, Inc. | | | 4,216 | | | | 829,034 | |
| | | | | | | | 6,627,082 | |
| | |
Auto Parts & Equipment–0.37% | | | | | | | | |
Aptiv PLC(b) | | | 4,895 | | | | 807,430 | |
BorgWarner, Inc. | | | 17,954 | | | | 809,187 | |
| | | | | | | | 1,616,617 | |
|
Automobile Manufacturers–0.56% | |
Ford Motor Co. | | | 38,562 | | | | 800,933 | |
General Motors Co.(b)(e) | | | 13,086 | | | | 767,232 | |
Tesla, Inc.(b) | | | 813 | | | | 859,162 | |
| | | | | | | | 2,427,327 | |
| | |
Automotive Retail–0.76% | | | | | | | | |
Advance Auto Parts, Inc. | | | 3,446 | | | | 826,626 | |
AutoZone, Inc.(b) | | | 413 | | | | 865,809 | |
CarMax, Inc.(b) | | | 5,533 | | | | 720,563 | |
O’Reilly Automotive, Inc.(b) | | | 1,212 | | | | 855,951 | |
| | | | | | | | 3,268,949 | |
| | |
Biotechnology–1.59% | | | | | | | | |
AbbVie, Inc. | | | 6,592 | | | | 892,557 | |
Amgen, Inc. | | | 3,922 | | | | 882,332 | |
Biogen, Inc.(b) | | | 3,556 | | | | 853,155 | |
Gilead Sciences, Inc. | | | 11,774 | | | | 854,910 | |
Incyte Corp.(b) | | | 12,648 | | | | 928,363 | |
Moderna, Inc.(b) | | | 3,218 | | | | 817,308 | |
Regeneron Pharmaceuticals, Inc.(b) | | | 1,235 | | | | 779,927 | |
Vertex Pharmaceuticals, Inc.(b) | | | 3,976 | | | | 873,130 | |
| | | | | | | | 6,881,682 | |
| | |
Brewers–0.19% | | | | | | | | |
Molson Coors Beverage Co., Class B(c) | | | 17,892 | | | | 829,294 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
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Broadcasting–0.57% | |
Discovery, Inc., Class A(b) | | | 13,009 | | | $ | 306,232 | |
Discovery, Inc., Class C(b) | | | 23,369 | | | | 535,150 | |
Fox Corp., Class A | | | 15,748 | | | | 581,101 | |
Fox Corp., Class B | | | 7,210 | | | | 247,087 | |
ViacomCBS, Inc., Class B | | | 26,494 | | | | 799,589 | |
| | | | | | | | 2,469,159 | |
| |
Building Products–1.35% | | | | | |
A.O. Smith Corp. | | | 9,891 | | | | 849,142 | |
Allegion PLC | | | 6,311 | | | | 835,829 | |
Carrier Global Corp. | | | 14,901 | | | | 808,230 | |
Fortune Brands Home & Security, Inc. | | | 7,827 | | | | 836,706 | |
Johnson Controls International PLC | | | 10,428 | | | | 847,901 | |
Masco Corp. | | | 12,038 | | | | 845,308 | |
Trane Technologies PLC | | | 4,081 | | | | 824,485 | |
| | | | | | | | 5,847,601 | |
| |
Cable & Satellite–0.60% | | | | | |
Charter Communications, Inc., Class A(b) | | | 1,354 | | | | 882,768 | |
Comcast Corp., Class A | | | 17,072 | | | | 859,234 | |
DISH Network Corp., Class A(b) | | | 25,744 | | | | 835,135 | |
| | | | | | | | 2,577,137 | |
| |
Casinos & Gaming–0.99% | | | | | |
Caesars Entertainment, Inc.(b) | | | 9,296 | | | | 869,455 | |
Las Vegas Sands Corp.(b) | | | 21,964 | | | | 826,725 | |
MGM Resorts International | | | 19,975 | | | | 896,478 | |
Penn National Gaming, Inc.(b)(c) | | | 16,894 | | | | 875,954 | |
Wynn Resorts Ltd.(b) | | | 9,444 | | | | 803,118 | |
| | | | | | | | 4,271,730 | |
| |
Commodity Chemicals–0.40% | | | | | |
Dow, Inc. | | | 15,127 | | | | 858,003 | |
LyondellBasell Industries N.V., Class A | | | 9,200 | | | | 848,516 | |
| | | | | | | | 1,706,519 | |
| |
Communications Equipment–1.02% | | | | | |
Arista Networks, Inc.(b) | | | 6,329 | | | | 909,794 | |
Cisco Systems, Inc. | | | 13,960 | | | | 884,645 | |
F5, Inc.(b) | | | 3,605 | | | | 882,180 | |
Juniper Networks, Inc. | | | 24,328 | | | | 868,753 | |
Motorola Solutions, Inc. | | | 3,122 | | | | 848,247 | |
| | | | | | | | 4,393,619 | |
| |
Computer & Electronics Retail–0.19% | | | | | |
Best Buy Co., Inc. | | | 7,967 | | | | 809,447 | |
| |
Construction & Engineering–0.19% | | | | | |
Quanta Services, Inc.(c) | | | 7,233 | | | | 829,336 | |
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Construction Machinery & Heavy Trucks–0.77% | |
Caterpillar, Inc. | | | 4,065 | | | | 840,398 | |
Cummins, Inc. | | | 3,793 | | | | 827,405 | |
PACCAR, Inc.(e) | | | 9,279 | | | | 818,964 | |
Wabtec Corp. | | | 9,096 | | | | 837,833 | |
| | | | | | | | 3,324,600 | |
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Construction Materials–0.39% | | | | | |
Martin Marietta Materials, Inc. | | | 1,883 | | | | 829,499 | |
Vulcan Materials Co. | | | 4,026 | | | | 835,717 | |
| | | | | | | | 1,665,216 | |
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Consumer Electronics–0.19% | |
Garmin Ltd. | | | 6,077 | | | $ | 827,505 | |
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Consumer Finance–0.75% | | | | | |
American Express Co.(e) | | | 4,952 | | | | 810,147 | |
Capital One Financial Corp. | | | 5,499 | | | | 797,850 | |
Discover Financial Services | | | 7,084 | | | | 818,627 | |
Synchrony Financial | | | 17,279 | | | | 801,573 | |
| | | | | | | | 3,228,197 | |
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Copper–0.21% | | | | | |
Freeport-McMoRan, Inc. | | | 21,557 | | | | 899,574 | |
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Data Processing & Outsourced Services–2.18% | |
Automatic Data Processing, Inc. | | | 3,494 | | | | 861,551 | |
Broadridge Financial Solutions, Inc. | | | 4,638 | | | | 847,919 | |
Fidelity National Information Services, Inc. | | | 7,915 | | | | 863,922 | |
Fiserv, Inc.(b) | | | 8,016 | | | | 831,981 | |
FleetCor Technologies, Inc.(b) | | | 3,712 | | | | 830,894 | |
Global Payments, Inc. | | | 6,575 | | | | 888,809 | |
Jack Henry & Associates, Inc. | | | 5,227 | | | | 872,857 | |
Mastercard, Inc., Class A | | | 2,364 | | | | 849,432 | |
Paychex, Inc. | | | 6,657 | | | | 908,680 | |
PayPal Holdings, Inc.(b) | | | 4,388 | | | | 827,489 | |
Visa, Inc., Class A | | | 3,876 | | | | 839,968 | |
| | | | | | | | 9,423,502 | |
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Distillers & Vintners–0.40% | | | | | |
Brown-Forman Corp., Class B(c) | | | 11,606 | | | | 845,613 | |
Constellation Brands, Inc., Class A | | | 3,515 | | | | 882,160 | |
| | | | | | | | 1,727,773 | |
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Distributors–0.59% | | | | | |
Genuine Parts Co. | | | 6,135 | | | | 860,127 | |
LKQ Corp. | | | 14,269 | | | | 856,568 | |
Pool Corp. | | | 1,470 | | | | 832,020 | |
| | | | | | | | 2,548,715 | |
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Diversified Banks–0.94% | | | | | |
Bank of America Corp. | | | 18,579 | | | | 826,580 | |
Citigroup, Inc. | | | 13,625 | | | | 822,814 | |
JPMorgan Chase & Co. | | | 5,175 | | | | 819,461 | |
U.S. Bancorp | | | 14,318 | | | | 804,242 | |
Wells Fargo & Co. | | | 16,477 | | | | 790,566 | |
| | | | | | | | 4,063,663 | |
| |
Diversified Support Services–0.38% | | | | | |
Cintas Corp. | | | 1,804 | | | | 799,479 | |
Copart, Inc.(b) | | | 5,544 | | | | 840,581 | |
| | | | | | | | 1,640,060 | |
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Drug Retail–0.20% | | | | | |
Walgreens Boots Alliance, Inc. | | | 16,710 | | | | 871,594 | |
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Electric Utilities–3.01% | | | | | |
Alliant Energy Corp. | | | 14,046 | | | | 863,408 | |
American Electric Power Co., Inc. | | | 9,848 | | | | 876,177 | |
Duke Energy Corp. | | | 8,148 | | | | 854,725 | |
Edison International | | | 12,334 | | | | 841,795 | |
Entergy Corp. | | | 7,701 | | | | 867,518 | |
Evergy, Inc. | | | 12,357 | | | | 847,814 | |
Eversource Energy | | | 9,412 | | | | 856,304 | |
Exelon Corp. | | | 15,343 | | | | 886,212 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
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Electric Utilities–(continued) | | | | | | | | |
FirstEnergy Corp. | | | 20,877 | | | $ | 868,274 | |
NextEra Energy, Inc. | | | 9,162 | | | | 855,364 | |
NRG Energy, Inc. | | | 21,285 | | | | 916,958 | |
Pinnacle West Capital Corp. | | | 12,480 | | | | 880,963 | |
PPL Corp. | | | 28,790 | | | | 865,427 | |
Southern Co. (The) | | | 12,710 | | | | 871,652 | |
Xcel Energy, Inc. | | | 12,436 | | | | 841,917 | |
| | | | | | | | 12,994,508 | |
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Electrical Components & Equipment–0.97% | | | | | |
AMETEK, Inc. | | | 5,794 | | | | 851,950 | |
Eaton Corp. PLC | | | 4,852 | | | | 838,523 | |
Emerson Electric Co. | | | 8,933 | | | | 830,501 | |
Generac Holdings, Inc.(b) | | | 2,375 | | | | 835,810 | |
Rockwell Automation, Inc. | | | 2,359 | | | | 822,937 | |
| | | | | | | | 4,179,721 | |
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Electronic Components–0.39% | | | | | |
Amphenol Corp., Class A | | | 9,815 | | | | 858,420 | |
Corning, Inc. | | | 21,993 | | | | 818,799 | |
| | | | | | | | 1,677,219 | |
Electronic Equipment & Instruments–0.77% | |
Keysight Technologies, Inc.(b) | | | 4,098 | | | | 846,278 | |
Teledyne Technologies, Inc.(b) | | | 1,900 | | | | 830,091 | |
Trimble, Inc.(b) | | | 9,608 | | | | 837,722 | |
Zebra Technologies Corp., Class A(b) | | | 1,346 | | | | 801,139 | |
| | | | | | | | 3,315,230 | |
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Electronic Manufacturing Services–0.39% | | | | | |
IPG Photonics Corp.(b) | | | 4,955 | | | | 852,953 | |
TE Connectivity Ltd. | | | 5,158 | | | | 832,192 | |
| | | | | | | | 1,685,145 | |
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Environmental & Facilities Services–0.60% | | | | | |
Republic Services, Inc. | | | 6,105 | | | | 851,342 | |
Rollins, Inc. | | | 25,921 | | | | 886,757 | |
Waste Management, Inc. | | | 5,022 | | | | 838,172 | |
| | | | | | | | 2,576,271 | |
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Fertilizers & Agricultural Chemicals–0.81% | | | | | |
CF Industries Holdings, Inc. | | | 13,522 | | | | 957,087 | |
Corteva, Inc. | | | 17,247 | | | | 815,438 | |
FMC Corp. | | | 7,647 | | | | 840,329 | |
Mosaic Co. (The) | | | 22,514 | | | | 884,575 | |
| | | | | | | | 3,497,429 | |
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Financial Exchanges & Data–1.74% | | | | | |
Cboe Global Markets, Inc. | | | 6,264 | | | | 816,825 | |
CME Group, Inc., Class A | | | 3,621 | | | | 827,254 | |
FactSet Research Systems, Inc. | | | 1,775 | | | | 862,668 | |
Intercontinental Exchange, Inc. | | | 6,103 | | | | 834,707 | |
MarketAxess Holdings, Inc. | | | 2,144 | | | | 881,763 | |
Moody’s Corp. | | | 2,085 | | | | 814,359 | |
MSCI, Inc. | | | 1,317 | | | | 806,913 | |
Nasdaq, Inc. | | | 4,020 | | | | 844,240 | |
S&P Global, Inc. | | | 1,746 | | | | 823,990 | |
| | | | | | | | 7,512,719 | |
Food Distributors–0.20% | | | | | | | | |
Sysco Corp. | | | 11,228 | | | | 881,959 | |
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Food Retail–0.19% | | | | | | | | |
Kroger Co. (The) | | | 18,546 | | | $ | 839,392 | |
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Footwear–0.19% | | | | | |
NIKE, Inc., Class B | | | 4,876 | | | | 812,683 | |
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Gas Utilities–0.21% | | | | | |
Atmos Energy Corp. | | | 8,640 | | | | 905,213 | |
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General Merchandise Stores–0.58% | | | | | |
Dollar General Corp.(c) | | | 3,719 | | | | 877,052 | |
Dollar Tree, Inc.(b) | | | 5,843 | | | | 821,058 | |
Target Corp. | | | 3,473 | | | | 803,791 | |
| | | | | | | | 2,501,901 | |
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Gold–0.21% | | | | | |
Newmont Corp. | | | 14,744 | | | | 914,423 | |
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Health Care Distributors–0.81% | | | | | |
AmerisourceBergen Corp. | | | 6,718 | | | | 892,755 | |
Cardinal Health, Inc. | | | 17,058 | | | | 878,316 | |
Henry Schein, Inc.(b) | | | 10,930 | | | | 847,403 | |
McKesson Corp. | | | 3,549 | | | | 882,175 | |
| | | | | | | | 3,500,649 | |
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Health Care Equipment–3.17% | | | | | |
Abbott Laboratories | | | 6,156 | | | | 866,395 | |
ABIOMED, Inc.(b) | | | 2,703 | | | | 970,837 | |
Baxter International, Inc. | | | 10,229 | | | | 878,057 | |
Becton, Dickinson and Co. | | | 3,377 | | | | 849,248 | |
Boston Scientific Corp.(b) | | | 20,091 | | | | 853,466 | |
DexCom, Inc.(b) | | | 1,460 | | | | 783,947 | |
Edwards Lifesciences Corp.(b) | | | 6,789 | | | | 879,515 | |
Hologic, Inc.(b) | | | 11,066 | | | | 847,213 | |
IDEXX Laboratories, Inc.(b) | | | 1,361 | | | | 896,164 | |
Intuitive Surgical, Inc.(b) | | | 2,398 | | | | 861,601 | |
Medtronic PLC | | | 7,357 | | | | 761,082 | |
ResMed, Inc. | | | 3,165 | | | | 824,419 | |
STERIS PLC | | | 3,600 | | | | 876,276 | |
Stryker Corp. | | | 3,179 | | | | 850,128 | |
Teleflex, Inc. | | | 2,574 | | | | 845,508 | |
Zimmer Biomet Holdings, Inc. | | | 6,644 | | | | 844,054 | |
| | | | | | | | 13,687,910 | |
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Health Care Facilities–0.40% | | | | | |
HCA Healthcare, Inc. | | | 3,396 | | | | 872,500 | |
Universal Health Services, Inc., Class B | | | 6,442 | | | | 835,270 | |
| | | | | | | | 1,707,770 | |
| |
Health Care REITs–0.61% | | | | | |
Healthpeak Properties, Inc. | | | 24,479 | | | | 883,447 | |
Ventas, Inc. | | | 17,100 | | | | 874,152 | |
Welltower, Inc. | | | 10,001 | | | | 857,786 | |
| | | | | | | | 2,615,385 | |
| |
Health Care Services–1.03% | | | | | |
Cigna Corp. | | | 3,848 | | | | 883,616 | |
CVS Health Corp. | | | 8,367 | | | | 863,140 | |
DaVita, Inc.(b) | | | 7,817 | | | | 889,262 | |
Laboratory Corp. of America Holdings(b) | | | 2,868 | | | | 901,154 | |
Quest Diagnostics, Inc. | | | 5,168 | | | | 894,116 | |
| | | | | | | | 4,431,288 | |
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 Supplies–0.59% | | | | | | | | |
Align Technology, Inc.(b) | | | 1,238 | | | $ | 813,589 | |
Cooper Cos., Inc. (The) | | | 2,070 | | | | 867,206 | |
DENTSPLY SIRONA, Inc. | | | 15,522 | | | | 865,972 | |
| | | | | | | | 2,546,767 | |
| | |
Health Care Technology–0.24% | | | | | | | | |
Cerner Corp. | | | 11,122 | | | | 1,032,900 | |
| | |
Home Furnishings–0.20% | | | | | | | | |
Mohawk Industries, Inc.(b) | | | 4,637 | | | | 844,769 | |
| | |
Home Improvement Retail–0.38% | | | | | | | | |
Home Depot, Inc. (The) | | | 1,991 | | | | 826,285 | |
Lowe’s Cos., Inc. | | | 3,165 | | | | 818,089 | |
| | | | | | | | 1,644,374 | |
| | |
Homebuilding–0.76% | | | | | | | | |
D.R. Horton, Inc. | | | 7,544 | | | | 818,147 | |
Lennar Corp., Class A | | | 7,075 | | | | 821,832 | |
NVR, Inc.(b) | | | 139 | | | | 821,333 | |
PulteGroup, Inc. | | | 14,713 | | | | 840,995 | |
| | | | | | | | 3,302,307 | |
| | |
Hotel & Resort REITs–0.20% | | | | | | | | |
Host Hotels & Resorts, Inc.(b) | | | 49,738 | | | | 864,944 | |
| | |
Hotels, Resorts & Cruise Lines–1.39% | | | | | | | | |
Booking Holdings, Inc.(b) | | | 370 | | | | 887,715 | |
Carnival Corp.(b) | | | 42,902 | | | | 863,188 | |
Expedia Group, Inc.(b) | | | 4,954 | | | | 895,287 | |
Hilton Worldwide Holdings, Inc.(b) | | | 5,660 | | | | 882,903 | |
Marriott International, Inc., Class A(b) | | | 5,144 | | | | 849,995 | |
Norwegian Cruise Line Holdings Ltd.(b)(c) | | | 38,401 | | | | 796,437 | |
Royal Caribbean Cruises Ltd.(b) | | | 10,956 | | | | 842,516 | |
| | | | | | | | 6,018,041 | |
| | |
Household Appliances–0.20% | | | | | | | | |
Whirlpool Corp.(c) | | | 3,596 | | | | 843,837 | |
| | |
Household Products–1.01% | | | | | | | | |
Church & Dwight Co., Inc. | | | 8,648 | | | | 886,420 | |
Clorox Co. (The) | | | 4,908 | | | | 855,759 | |
Colgate Palmolive Co. | | | 10,408 | | | | 888,219 | |
Kimberly Clark Corp. | | | 6,079 | | | | 868,811 | |
Procter & Gamble Co. (The) | | | 5,321 | | | | 870,409 | |
| | | | | | | | 4,369,618 | |
| | |
Housewares & Specialties–0.19% | | | | | | | | |
Newell Brands, Inc.(c) | | | 37,042 | | | | 808,997 | |
|
Human Resource & Employment Services–0.19% | |
Robert Half International, Inc. | | | 7,550 | | | | 841,976 | |
| |
Hypermarkets & Super Centers–0.39% | | | | | |
Costco Wholesale Corp. | | | 1,480 | | | | 840,196 | |
Walmart, Inc. | | | 5,865 | | | | 848,607 | |
| | | | | | | | 1,688,803 | |
|
Independent Power Producers & Energy Traders–0.19% | |
AES Corp. (The) | | | 33,872 | | | | 823,090 | |
| | |
Industrial Conglomerates–0.77% | | | | | | | | |
3M Co.(c) | | | 4,671 | | | | 829,710 | |
| | | | | | | | |
| | | Shares | | | Value | |
Industrial Conglomerates–(continued) | | | | | | | | |
General Electric Co. | | | 8,532 | | | $ | 806,018 | |
Honeywell International, Inc. | | | 3,942 | | | | 821,946 | |
Roper Technologies, Inc. | | | 1,747 | | | | 859,280 | |
| | | | | | | | 3,316,954 | |
| | |
Industrial Gases–0.40% | | | | | | | | |
Air Products and Chemicals, Inc. | | | 2,801 | | | | 852,232 | |
Linde PLC (United Kingdom) | | | 2,476 | | | | 857,761 | |
| | | | | | | | 1,709,993 | |
| | |
Industrial Machinery–2.12% | | | | | | | | |
Dover Corp. | | | 4,827 | | | | 876,583 | |
Fortive Corp. | | | 11,005 | | | | 839,571 | |
IDEX Corp. | | | 3,501 | | | | 827,356 | |
Illinois Tool Works, Inc. | | | 3,407 | | | | 840,848 | |
Ingersoll Rand, Inc. | | | 13,881 | | | | 858,817 | |
Otis Worldwide Corp. | | | 9,609 | | | | 836,656 | |
Parker Hannifin Corp. | | | 2,594 | | | | 825,203 | |
Pentair PLC | | | 10,996 | | | | 803,038 | |
Snap on, Inc. | | | 3,804 | | | | 819,306 | |
Stanley Black & Decker, Inc. | | | 4,251 | | | | 801,824 | |
Xylem, Inc. | | | 6,736 | | | | 807,781 | |
| | | | | | | | 9,136,983 | |
| | |
Industrial REITs–0.41% | | | | | | | | |
Duke Realty Corp. | | | 13,430 | | | | 881,545 | |
Prologis, Inc. | | | 5,200 | | | | 875,472 | |
| | | | | | | | 1,757,017 | |
| | |
Insurance Brokers–0.98% | | | | | | | | |
Aon PLC, Class A | | | 2,816 | | | | 846,377 | |
Arthur J. Gallagher & Co. | | | 4,877 | | | | 827,480 | |
Brown & Brown, Inc. | | | 12,307 | | | | 864,936 | |
Marsh & McLennan Cos., Inc. | | | 4,815 | | | | 836,943 | |
Willis Towers Watson PLC | | | 3,538 | | | | 840,240 | |
| | | | | | | | 4,215,976 | |
| | |
Integrated Oil & Gas–0.56% | | | | | | | | |
Chevron Corp. | | | 6,990 | | | | 820,277 | |
Exxon Mobil Corp. | | | 13,127 | | | | 803,241 | |
Occidental Petroleum Corp. | | | 26,882 | | | | 779,309 | |
| | | | | | | | 2,402,827 | |
| |
Integrated Telecommunication Services–0.40% | | | | | |
AT&T, Inc. | | | 36,215 | | | | 890,889 | |
Verizon Communications, Inc. | | | 16,480 | | | | 856,301 | |
| | | | | | | | 1,747,190 | |
| |
Interactive Home Entertainment–0.62% | | | | | |
Activision Blizzard, Inc. | | | 14,115 | | | | 939,071 | |
Electronic Arts, Inc. | | | 6,583 | | | | 868,298 | |
Take-Two Interactive Software, Inc.(b) | | | 4,995 | | | | 887,711 | |
| | | | | | | | 2,695,080 | |
| | |
Interactive Media & Services–0.76% | | | | | | | | |
Alphabet, Inc., Class A(b) | | | 144 | | | | 417,174 | |
Alphabet, Inc., Class C(b) | | | 135 | | | | 390,635 | |
Match Group, Inc.(b) | | | 6,346 | | | | 839,258 | |
Meta Platforms, Inc., Class A(b) | | | 2,508 | | | | 843,566 | |
Twitter, Inc.(b) | | | 18,155 | | | | 784,659 | |
| | | | | | | | 3,275,292 | |
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 | |
Internet & Direct Marketing Retail–0.56% | | | | | |
Amazon.com, Inc.(b) | | | 240 | | | $ | 800,242 | |
eBay, Inc. | | | 12,366 | | | | 822,339 | |
Etsy, Inc.(b) | | | 3,675 | | | | 804,604 | |
| | | | | | | | 2,427,185 | |
| |
Internet Services & Infrastructure–0.40% | | | | | |
Akamai Technologies, Inc.(b) | | | 7,319 | | | | 856,616 | |
VeriSign, Inc.(b) | | | 3,380 | | | | 857,911 | |
| | | | | | | | 1,714,527 | |
| |
Investment Banking & Brokerage–0.77% | | | | | |
Charles Schwab Corp. (The) | | | 10,236 | | | | 860,848 | |
Goldman Sachs Group, Inc. (The) | | | 2,115 | | | | 809,093 | |
Morgan Stanley | | | 8,403 | | | | 824,838 | |
Raymond James Financial, Inc. | | | 8,475 | | | | 850,890 | |
| | | | | | | | 3,345,669 | |
| |
IT Consulting & Other Services–1.21% | | | | | |
Accenture PLC, Class A | | | 2,180 | | | | 903,719 | |
Cognizant Technology Solutions Corp., | | | | | | | | |
Class A | | | 10,075 | | | | 893,854 | |
DXC Technology Co.(b) | | | 26,803 | | | | 862,789 | |
EPAM Systems, Inc.(b) | | | 1,187 | | | | 793,450 | |
Gartner, Inc.(b) | | | 2,569 | | | | 858,868 | |
International Business Machines Corp. | | | 6,666 | | | | 890,977 | |
| | | | | | | | 5,203,657 | |
| | |
Leisure Products–0.19% | | | | | | | | |
Hasbro, Inc.(c) | | | 8,204 | | | | 835,003 | |
| | |
Life & Health Insurance–1.17% | | | | | | | | |
Aflac, Inc. | | | 14,301 | | | | 835,035 | |
Globe Life, Inc. | | | 8,999 | | | | 843,386 | |
Lincoln National Corp. | | | 12,259 | | | | 836,799 | |
MetLife, Inc. | | | 13,643 | | | | 852,551 | |
Principal Financial Group, Inc. | | | 11,490 | | | | 831,072 | |
Prudential Financial, Inc. | | | 7,727 | | | | 836,371 | |
| | | | | | | | 5,035,214 | |
| | |
Life Sciences Tools & Services–2.42% | | | | | | | | |
Agilent Technologies, Inc. | | | 5,293 | | | | 845,028 | |
Bio-Rad Laboratories, Inc., Class A(b) | | | 1,109 | | | | 837,927 | |
Bio Techne Corp. | | | 1,775 | | | | 918,279 | |
Charles River Laboratories International, | | | | | | | | |
Inc.(b) | | | 2,312 | | | | 871,115 | |
Danaher Corp. | | | 2,605 | | | | 857,071 | |
Illumina, Inc.(b) | | | 2,209 | | | | 840,392 | |
IQVIA Holdings, Inc.(b) | | | 3,062 | | | | 863,913 | |
Mettler-Toledo International, Inc.(b) | | | 521 | | | | 884,246 | |
PerkinElmer, Inc. | | | 4,405 | | | | 885,669 | |
Thermo Fisher Scientific, Inc. | | | 1,287 | | | | 858,738 | |
Waters Corp.(b) | | | 2,426 | | | | 903,928 | |
West Pharmaceutical Services, Inc. | | | 1,917 | | | | 899,092 | |
| | | | | | | | 10,465,398 | |
| | |
Managed Health Care–0.80% | | | | | | | | |
Anthem, Inc. | | | 1,919 | | | | 889,533 | |
Centene Corp.(b) | | | 10,544 | | | | 868,826 | |
Humana, Inc. | | | 1,794 | | | | 832,165 | |
UnitedHealth Group, Inc. | | | 1,730 | | | | 868,702 | |
| | | | | | | | 3,459,226 | |
| | | | | | | | |
| | | Shares | | | Value | |
Metal & Glass Containers–0.20% | | | | | | | | |
Ball Corp. | | | 8,846 | | | $ | 851,604 | |
| | |
Movies & Entertainment–0.59% | | | | | | | | |
Live Nation Entertainment, Inc.(b) | | | 7,394 | | | | 884,988 | |
Netflix, Inc.(b) | | | 1,352 | | | | 814,499 | |
Walt Disney Co. (The)(b) | | | 5,416 | | | | 838,884 | |
| | | | | | | | 2,538,371 | |
| | |
Multi-line Insurance–0.59% | | | | | | | | |
American International Group, Inc. | | | 15,208 | | | | 864,727 | |
Assurant, Inc. | | | 5,336 | | | | 831,669 | |
Hartford Financial Services Group, Inc. (The) | | | 12,137 | | | | 837,938 | |
| | | | | | | | 2,534,334 | |
| | |
Multi-Sector Holdings–0.20% | | | | | | | | |
Berkshire Hathaway, Inc., Class B(b) | | | 2,873 | | | | 859,027 | |
| | |
Multi-Utilities–1.98% | | | | | | | | |
Ameren Corp.(c) | | | 9,481 | | | | 843,904 | |
CenterPoint Energy, Inc. | | | 29,679 | | | | 828,341 | |
CMS Energy Corp. | | | 13,228 | | | | 860,481 | |
Consolidated Edison, Inc. | | | 10,013 | | | | 854,309 | |
Dominion Energy, Inc. | | | 10,889 | | | | 855,440 | |
DTE Energy Co. | | | 7,117 | | | | 850,766 | |
NiSource, Inc. | | | 31,899 | | | | 880,731 | |
Public Service Enterprise Group, Inc. | | | 12,965 | | | | 865,155 | |
Sempra Energy | | | 6,524 | | | | 862,995 | |
WEC Energy Group, Inc. | | | 8,848 | | | | 858,875 | |
| | | | | | | | 8,560,997 | |
| | |
Office REITs–0.59% | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | 3,903 | | | | 870,213 | |
Boston Properties, Inc. | | | 7,249 | | | | 834,940 | |
Vornado Realty Trust(c) | | | 19,675 | | | | 823,595 | |
| | | | | | | | 2,528,748 | |
| |
Oil & Gas Equipment & Services–0.55% | | | | | |
Baker Hughes Co., Class A | | | 32,514 | | | | 782,287 | |
Halliburton Co. | | | 34,565 | | | | 790,502 | |
Schlumberger N.V. | | | 26,691 | | | | 799,395 | |
| | | | | | | | 2,372,184 | |
| |
Oil & Gas Exploration & Production–1.69% | | | | | |
APA Corp. | | | 31,014 | | | | 833,966 | |
ConocoPhillips | | | 11,255 | | | | 812,386 | |
Coterra Energy, Inc. | | | 39,557 | | | | 751,583 | |
Devon Energy Corp. | | | 19,050 | | | | 839,153 | |
Diamondback Energy, Inc. | | | 7,440 | | | | 802,404 | |
EOG Resources, Inc. | | | 9,223 | | | | 819,279 | |
Hess Corp. | | | 10,449 | | | | 773,540 | |
Marathon Oil Corp. | | | 50,996 | | | | 837,354 | |
Pioneer Natural Resources Co. | | | 4,489 | | | | 816,459 | |
| | | | | | | | 7,286,124 | |
| | |
Oil & Gas Refining & Marketing–0.59% | | | | | | | | |
Marathon Petroleum Corp. | | | 12,987 | | | | 831,038 | |
Phillips 66 | | | 11,406 | | | | 826,479 | |
Valero Energy Corp. | | | 11,675 | | | | 876,909 | |
| | | | | | | | 2,534,426 | |
| |
Oil & Gas Storage & Transportation–0.56% | | | | | |
Kinder Morgan, Inc. | | | 51,185 | | | | 811,794 | |
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 Storage & Transportation–(continued) | | | | | |
ONEOK, Inc. | | | 13,341 | | | $ | 783,917 | |
Williams Cos., Inc. (The) | | | 31,049 | | | | 808,516 | |
| | | | | | | | 2,404,227 | |
|
Packaged Foods & Meats–2.41% | |
Campbell Soup Co.(c) | | | 19,169 | | | | 833,085 | |
Conagra Brands, Inc. | | | 25,784 | | | | 880,524 | |
General Mills, Inc. | | | 12,773 | | | | 860,645 | |
Hershey Co. (The) | | | 4,435 | | | | 858,039 | |
Hormel Foods Corp. | | | 17,981 | | | | 877,653 | |
JM Smucker Co. (The) | | | 6,225 | | | | 845,479 | |
Kellogg Co. | | | 13,209 | | | | 850,924 | |
Kraft Heinz Co. (The) | | | 24,221 | | | | 869,534 | |
Lamb Weston Holdings, Inc. | | | 14,499 | | | | 918,947 | |
McCormick & Co., Inc. | | | 9,139 | | | | 882,919 | |
Mondelez International, Inc., Class A | | | 13,243 | | | | 878,143 | |
Tyson Foods, Inc., Class A | | | 9,834 | | | | 857,131 | |
| | | | | | | | 10,413,023 | |
| | |
Paper Packaging–1.19% | | | | | | | | |
Amcor PLC | | | 71,306 | | | | 856,385 | |
Avery Dennison Corp. | | | 3,890 | | | | 842,457 | |
International Paper Co. | | | 18,025 | | | | 846,815 | |
Packaging Corp. of America | | | 6,454 | | | | 878,712 | |
Sealed Air Corp. | | | 12,706 | | | | 857,274 | |
WestRock Co. | | | 18,963 | | | | 841,199 | |
| | | | | | | | 5,122,842 | |
| | |
Personal Products–0.20% | | | | | | | | |
Estee Lauder Cos., Inc. (The), Class A | | | 2,289 | | | | 847,388 | |
| | |
Pharmaceuticals–1.85% | | | | | | | | |
Bristol-Myers Squibb Co.(e) | | | 14,676 | | | | 915,049 | |
Catalent, Inc.(b) | | | 6,762 | | | | 865,739 | |
Eli Lilly and Co. | | | 3,388 | | | | 935,833 | |
Johnson & Johnson | | | 4,998 | | | | 855,008 | |
Merck & Co., Inc. | | | 11,390 | | | | 872,930 | |
Organon & Co. | | | 28,780 | | | | 876,351 | |
Pfizer, Inc. | | | 15,672 | | | | 925,431 | |
Viatris, Inc. | | | 65,130 | | | | 881,209 | |
Zoetis, Inc. | | | 3,574 | | | | 872,163 | |
| | | | | | | | 7,999,713 | |
| |
Property & Casualty Insurance–1.38% | | | | | |
Allstate Corp. (The) | | | 7,657 | | | | 900,846 | |
Chubb Ltd. | | | 4,320 | | | | 835,099 | |
Cincinnati Financial Corp. | | | 7,107 | | | | 809,701 | |
Loews Corp. | | | 14,486 | | | | 836,711 | |
Progressive Corp. (The) | | | 8,701 | | | | 893,158 | |
Travelers Cos., Inc. (The)(c) | | | 5,362 | | | | 838,778 | |
W.R. Berkley Corp. | | | 10,219 | | | | 841,943 | |
| | | | | | | | 5,956,236 | |
| | |
Publishing–0.20% | | | | | | | | |
News Corp., Class A | | | 28,947 | | | | 645,808 | |
News Corp., Class B | | | 9,011 | | | | 202,747 | |
| | | | | | | | 848,555 | |
| | |
Railroads–0.59% | | | | | | | | |
CSX Corp. | | | 22,514 | | | | 846,526 | |
Norfolk Southern Corp. | | | 2,857 | | | | 850,558 | |
| | | | | | | | |
| | | Shares | | | Value | |
Railroads–(continued) | | | | | | | | |
Union Pacific Corp. | | | 3,329 | | | $ | 838,675 | |
| | | | | | | | 2,535,759 | |
| | |
Real Estate Services–0.20% | | | | | | | | |
CBRE Group, Inc., Class A(b) | | | 7,976 | | | | 865,476 | |
| | |
Regional Banks–2.69% | | | | | | | | |
Citizens Financial Group, Inc. | | | 17,450 | | | | 824,512 | |
Comerica, Inc. | | | 9,785 | | | | 851,295 | |
Fifth Third Bancorp | | | 18,902 | | | | 823,182 | |
First Republic Bank | | | 3,964 | | | | 818,606 | |
Huntington Bancshares, Inc. | | | 54,168 | | | | 835,270 | |
KeyCorp | | | 35,947 | | | | 831,454 | |
M&T Bank Corp. | | | 5,434 | | | | 834,554 | |
People’s United Financial, Inc. | | | 46,890 | | | | 835,580 | |
PNC Financial Services Group, Inc. (The) | | | 4,104 | | | | 822,934 | |
Regions Financial Corp. | | | 37,209 | | | | 811,156 | |
Signature Bank | | | 2,712 | | | | 877,251 | |
SVB Financial Group(b) | | | 1,175 | | | | 796,932 | |
Truist Financial Corp. | | | 13,927 | | | | 815,426 | |
Zions Bancorporation N.A. | | | 13,086 | | | | 826,512 | |
| | | | | | | | 11,604,664 | |
| | |
Reinsurance–0.19% | | | | | | | | |
Everest Re Group Ltd. | | | 3,064 | | | | 839,291 | |
| |
Research & Consulting Services–1.15% | | | | | |
Equifax, Inc. | | | 2,803 | | | | 820,690 | |
IHS Markit Ltd. | | | 6,229 | | | | 827,959 | |
Jacobs Engineering Group, Inc. | | | 5,767 | | | | 802,939 | |
Leidos Holdings, Inc. | | | 9,389 | | | | 834,682 | |
Nielsen Holdings PLC | | | 40,102 | | | | 822,492 | |
Verisk Analytics, Inc. | | | 3,649 | | | | 834,636 | |
| | | | | | | | 4,943,398 | |
| | |
Residential REITs–0.99% | | | | | | | | |
AvalonBay Communities, Inc. | | | 3,378 | | | | 853,249 | |
Equity Residential | | | 9,523 | | | | 861,832 | |
Essex Property Trust, Inc. | | | 2,393 | | | | 842,887 | |
Mid America Apartment Communities, Inc. | | | 3,821 | | | | 876,690 | |
UDR, Inc. | | | 14,168 | | | | 849,938 | |
| | | | | | | | 4,284,596 | |
| | |
Restaurants–1.17% | | | | | | | | |
Chipotle Mexican Grill, Inc.(b) | | | 481 | | | | 840,908 | |
Darden Restaurants, Inc.(c) | | | 5,449 | | | | 820,837 | |
Domino’s Pizza, Inc. | | | 1,548 | | | | 873,583 | |
McDonald’s Corp. | | | 3,122 | | | | 836,915 | |
Starbucks Corp. | | | 7,086 | | | | 828,849 | |
Yum! Brands, Inc. | | | 6,179 | | | | 858,016 | |
| | | | | | | | 5,059,108 | |
| | |
Retail REITs–1.01% | | | | | | | | |
Federal Realty Investment Trust | | | 6,348 | | | | 865,359 | |
Kimco Realty Corp.(c) | | | 36,026 | | | | 888,041 | |
Realty Income Corp. | | | 12,357 | | | | 884,638 | |
Regency Centers Corp. | | | 11,289 | | | | 850,626 | |
Simon Property Group, Inc. | | | 5,427 | | | | 867,072 | |
4,355,736 | |
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 | |
Semiconductor Equipment–1.13% | | | | | | | | |
Applied Materials, Inc. | | | 5,416 | | | $ | 852,262 | |
Enphase Energy, Inc.(b) | | | 3,847 | | | | 703,770 | |
KLA Corp. | | | 2,014 | | | | 866,241 | |
Lam Research Corp. | | | 1,172 | | | | 842,844 | |
SolarEdge Technologies, Inc.(b) | | | 2,676 | | | | 750,805 | |
Teradyne, Inc. | | | 5,177 | | | | 846,595 | |
| | | | | | | | 4,862,517 | |
| | |
Semiconductors–2.68% | | | | | | | | |
Advanced Micro Devices, Inc.(b) | | | 5,970 | | | | 859,083 | |
Analog Devices, Inc. | | | 4,509 | | | | 792,547 | |
Broadcom, Inc. | | | 1,309 | | | | 871,022 | |
Intel Corp. | | | 16,350 | | | | 842,025 | |
Microchip Technology, Inc. | | | 9,493 | | | | 826,461 | |
Micron Technology, Inc. | | | 9,670 | | | | 900,761 | |
Monolithic Power Systems, Inc. | | | 1,643 | | | | 810,541 | |
NVIDIA Corp. | | | 2,739 | | | | 805,567 | |
NXP Semiconductors N.V. (China) | | | 3,653 | | | | 832,080 | |
Qorvo, Inc.(b) | | | 5,195 | | | | 812,446 | |
QUALCOMM, Inc. | | | 4,498 | | | | 822,549 | |
Skyworks Solutions, Inc. | | | 5,091 | | | | 789,818 | |
Texas Instruments, Inc. | | | 4,220 | | | | 795,343 | |
Xilinx, Inc. | | | 3,809 | | | | 807,622 | |
| | | | | | | | 11,567,865 | |
| | |
Soft Drinks–0.60% | | | | | | | | |
Coca Cola Co. (The) | | | 14,697 | | | | 870,209 | |
Monster Beverage Corp.(b) | | | 9,237 | | | | 887,122 | |
PepsiCo, Inc. | | | 4,895 | | | | 850,310 | |
| | | | | | | | 2,607,641 | |
| | |
Specialized REITs–1.85% | | | | | | | | |
American Tower Corp. | | | 3,035 | | | | 887,738 | |
Crown Castle International Corp. | | | 4,281 | | | | 893,616 | |
Digital Realty Trust, Inc. | | | 4,950 | | | | 875,507 | |
Equinix, Inc. | | | 1,037 | | | | 877,136 | |
Extra Space Storage, Inc. | | | 3,963 | | | | 898,531 | |
Iron Mountain, Inc. | | | 17,083 | | | | 893,953 | |
Public Storage | | | 2,377 | | | | 890,329 | |
SBA Communications Corp., Class A | | | 2,304 | | | | 896,302 | |
Weyerhaeuser Co. | | | 20,668 | | | | 851,108 | |
| | | | | | | | 7,964,220 | |
| | |
Specialty Chemicals–1.55% | | | | | | | | |
Albemarle Corp. | | | 3,147 | | | | 735,674 | |
Celanese Corp. | | | 5,140 | | | | 863,829 | |
DuPont de Nemours, Inc. | | | 10,334 | | | | 834,781 | |
Eastman Chemical Co. | | | 7,052 | | | | 852,657 | |
Ecolab, Inc. | | | 3,565 | | | | 836,313 | |
International Flavors & Fragrances, Inc. | | | 5,622 | | | | 846,954 | |
PPG Industries, Inc. | | | 5,063 | | | | 873,064 | |
Sherwin Williams Co. (The) | | | 2,387 | | | | 840,606 | |
| | | | | | | | 6,683,878 | |
| | |
Specialty Stores–0.57% | | | | | | | | |
Bath & Body Works, Inc. | | | 10,817 | | | | 754,918 | |
Tractor Supply Co. | | | 3,530 | | | | 842,258 | |
Ulta Beauty, Inc.(b) | | | 2,050 | | | | 845,297 | |
| | | | | | | | 2,442,473 | |
| | | | | | | | |
| | | Shares | | | Value | |
Steel–0.19% | | | | | | | | |
Nucor Corp.(c) | | | 7,306 | | | $ | 833,980 | |
| | |
Systems Software–0.95% | | | | | | | | |
Fortinet, Inc.(b) | | | 2,487 | | | | 893,828 | |
Microsoft Corp. | | | 2,415 | | | | 812,213 | |
NortonLifeLock, Inc. | | | 34,011 | | | | 883,606 | |
Oracle Corp.(c) | | | 8,060 | | | | 702,913 | |
ServiceNow, Inc.(b) | | | 1,278 | | | | 829,562 | |
| | | | | | | | 4,122,122 | |
| | |
Technology Distributors–0.20% | | | | | | | | |
CDW Corp. | | | 4,245 | | | | 869,291 | |
|
Technology Hardware, Storage & Peripherals–1.21% | |
Apple, Inc. | | | 4,609 | | | | 818,420 | |
Hewlett Packard Enterprise Co. | | | 54,382 | | | | 857,604 | |
HP, Inc. | | | 22,705 | | | | 855,297 | |
NetApp, Inc. | | | 9,260 | | | | 851,827 | |
Seagate Technology Holdings PLC | | | 7,960 | | | | 899,321 | |
Western Digital Corp.(b) | | | 14,293 | | | | 932,047 | |
| | | | | | | | 5,214,516 | |
| | |
Tobacco–0.40% | | | | | | | | |
Altria Group, Inc. | | | 18,344 | | | | 869,322 | |
Philip Morris International, Inc. | | | 9,186 | | | | 872,670 | |
| | | | | | | | 1,741,992 | |
| |
Trading Companies & Distributors–0.57% | | | | | |
Fastenal Co. | | | 12,904 | | | | 826,630 | |
United Rentals, Inc.(b) | | | 2,378 | | | | 790,186 | |
W.W. Grainger, Inc. | | | 1,610 | | | | 834,366 | |
| | | | | | | | 2,451,182 | |
| | |
Trucking–0.39% | | | | | | | | |
J.B. Hunt Transport Services, Inc. | | | 4,166 | | | | 851,531 | |
Old Dominion Freight Line, Inc. | | | 2,322 | | | | 832,158 | |
| | | | | | | | 1,683,689 | |
| | |
Water Utilities–0.21% | | | | | | | | |
American Water Works Co., Inc. | | | 4,696 | | | | 886,887 | |
| |
Wireless Telecommunication Services–0.19% | | | | | |
T-Mobile US, Inc.(b) | | | 7,207 | | | | 835,868 | |
Total Common Stocks & Other Equity Interests (Cost $225,823,045) | | | | 423,009,154 | |
| | |
Money Market Funds–2.02% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(f) | | | 3,049,064 | | | | 3,049,064 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(f) | | | 2,200,053 | | | | 2,200,493 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(f) | | | 3,484,645 | | | | 3,484,645 | |
Total Money Market Funds (Cost $8,733,764) | | | | 8,734,202 | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.04% (Cost $234,556,809) | | | | 431,743,356 | |
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 | |
Investments Purchased with Cash Collateral from
Securities on Loan | |
Money Market Funds–3.89% | | | | | | | | |
Invesco Private Government Fund,
0.02%(d)(f)(g) | | | 5,039,466 | | | $ | 5,039,466 | |
|
| |
Invesco Private Prime Fund, 0.11%(d)(f)(g) | | | 11,756,404 | | | | 11,758,755 | |
|
| |
Total Investments Purchased with Cash
Collateral from Securities on Loan
(Cost $16,798,431) | | | | 16,798,221 | |
|
| |
TOTAL INVESTMENTS IN
SECURITIES–103.93%
(Cost $251,355,240) | | | | 448,541,577 | |
|
| |
OTHER ASSETS LESS LIABILITIES—(3.93)% | | | | (16,971,353 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 431,570,224 | |
|
| |
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 this security was out on loan at December 31, 2021. |
| (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 yearended December 31, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
Invesco Ltd. | | $ | 608,394 | | | $ | 247,018 | | | $ | (232,405) | | | $ | 115,615 | | | $ | 84,228 | | | $ | 822,850 | | | $ | 20,139 | |
|
| |
Investments in Affiliated Money Market Funds: | |
|
| |
Invesco Government & AgencyPortfolio,
Institutional Class | | | 2,135,376 | | | | 16,371,013 | | | | (15,457,325 | ) | | | - | | | | - | | | | 3,049,064 | | | | 759 | |
|
| |
Invesco Liquid Assets Portfolio,
Institutional
Class | | | 1,672,074 | | | | 11,569,586 | | | | (11,040,947 | ) | | | 7 | | | | (227 | ) | | | 2,200,493 | | | | 323 | |
|
| |
Invesco Treasury Portfolio,
Institutional
Class | | | 2,440,430 | | | | 18,709,729 | | | | (17,665,514 | ) | | | - | | | | - | | | | 3,484,645 | | | | 324 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | |
|
| |
Invesco Private Government Fund | | | 126,199 | | | | 44,591,980 | | | | (39,678,713 | ) | | | - | | | | - | | | | 5,039,466 | | | | 470* | |
|
| |
Invesco Private Prime Fund | | | 189,298 | | | | 86,370,847 | | | | (74,797,465 | ) | | | (210 | ) | | | (3,715 | ) | | | 11,758,755 | | | | 5,993* | |
|
| |
Total | | $ | 7,171,771 | | | $ | 177,860,173 | | | $ | (158,872,369) | | | $ | 115,412 | | | $ | 80,286 | | | $ | 26,355,273 | | | | $28,008 | |
|
| |
| | * | 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) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. |
| (f) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (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 | | 38 | | March- 2022 | | $ | 9,041,150 | | | $ | 193,268 | | | $ | 193,268 | |
|
| |
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, 2021
| | | | |
Assets: | | | | |
| Investments in unaffiliated securities, at value Cost $225,347,439)* | | $ | 422,186,304 | |
| |
| Investments in affiliates, at value (Cost $26,007,801) | | | 26,355,273 | |
| |
| Receivable for: | | | | |
Investments sold | | | 536 | |
| |
Fund shares sold | | | 3,778 | |
| |
Dividends | | | 437,864 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 37,978 | |
| |
| Other assets | | | 1,501 | |
| |
Total assets | | | 449,023,234 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 26,098 | |
| |
Payable for: | | | | |
Fund shares reacquired | | | 201,157 | |
| |
Amount due custodian | | | 35,851 | |
| |
Collateral upon return of securities loaned | | | 16,798,431 | |
| |
Accrued fees to affiliates | | | 248,397 | |
| |
Accrued other operating expenses | | | 100,397 | |
| |
Trustee deferred compensation and retirement plans | | | 42,679 | |
| |
Total liabilities | | | 17,453,010 | |
| |
Net assets applicable to shares outstanding | | $ | 431,570,224 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 208,176,329 | |
| |
Distributable earnings | | | 223,393,895 | |
| |
| | | $431,570,224 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 36,788,264 | |
| |
Series II | | $ | 394,781,960 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 1,188,309 | |
| |
Series II | | | 13,196,115 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 30.96 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 29.92 | |
| |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $971) | | $ | 5,558,129 | |
| |
Dividends from affiliates (includes securities lending income of $16,902) | | | 38,447 | |
| |
Total investment income | | | 5,596,576 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 461,683 | |
| |
Administrative services fees | | | 655,544 | |
| |
Custodian fees | | | 34,163 | |
| |
Distribution fees - Series II | | | 877,207 | |
| |
Transfer agent fees | | | 12,045 | |
| |
Trustees’ and officers’ fees and benefits | | | 25,694 | |
| |
Licensing fees | | | 71,567 | |
| |
Reports to shareholders | | | 12,059 | |
| |
Professional services fees | | | 46,120 | |
| |
| Other | | | 15,978 | |
| |
Total expenses | | | 2,212,060 | |
| |
Less: Fees waived | | | (2,658 | ) |
| |
Net expenses | | | 2,209,402 | |
| |
Net investment income | | | 3,387,174 | |
| |
| |
Realized and unrealized gain from: | | | | |
Net realized gain from: | | | | |
Unaffiliated investment securities | | | 23,354,524 | |
| |
Affiliated investment securities | | | 80,286 | |
| |
Futures contracts | | | 2,035,883 | |
| |
| | | 25,470,693 | |
| |
Change in net unrealized appreciation of: | | | | |
Unaffiliated investment securities | | | 65,656,100 | |
| |
Affiliated investment securities | | | 115,412 | |
| |
Futures contracts | | | 54,008 | |
| |
| | | 65,825,520 | |
| |
Net realized and unrealized gain | | | 91,296,213 | |
| |
Net increase in net assets resulting from operations | | $ | 94,683,387 | |
| |
| * | At December 31, 2021, securities with an aggregate value of $16,276,137 were on loan to brokers. |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 3,387,174 | | | $ | 4,870,493 | |
|
| |
Net realized gain (loss) | | | 25,470,693 | | | | (1,523,686 | ) |
|
| |
Change in net unrealized appreciation | | | 65,825,520 | | | | 30,849,812 | |
|
| |
Net increase from payments by affiliates | | | - | | | | 4,141,427 | |
|
| |
Net increase in net assets resulting from operations | | | 94,683,387 | | | | 38,338,046 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (392,488 | ) | | | (779,893 | ) |
|
| |
Series II | | | (3,852,414 | ) | | | (7,321,684 | ) |
|
| |
Total distributions from distributable earnings | | | (4,244,902 | ) | | | (8,101,577 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (1,841,293 | ) | | | (2,420,641 | ) |
|
| |
Series II | | | 18,933,241 | | | | 16,839,845 | |
|
| |
Net increase in net assets resulting from share transactions | | | 17,091,948 | | | | 14,419,204 | |
|
| |
Net increase in net assets | | | 107,530,433 | | | | 44,655,673 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 324,039,791 | | | | 279,384,118 | |
|
| |
End of year | | $ | 431,570,224 | | | $ | 324,039,791 | |
|
| |
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 12/31/21 | | $ | 24.24 | | | | $0.31 | | | | $ 6.75 | | | | $ 7.06 | | | | $(0.34) | | | $ | - | | | | $(0.34) | | | | $30.96 | | | | 29.17% | | | | $ 36,788 | | | | 0.35% | | | | 0.35% | | | | 1.10% | | | | 23% | |
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 | | | | 0.33 | | | | 2.00 | | | | 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 | |
|
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 23.45 | | | | 0.24 | | | | 6.52 | | | | 6.76 | | | | (0.29) | | | | - | | | | (0.29) | | | | 29.92 | | | | 28.88 | | | | 394,782 | | | | 0.60 | | | | 0.60 | | | | 0.85 | | | | 23 | |
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 | | | | 0.58 | | | | 1.75 | | | | 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 | |
|
| |
| (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 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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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
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Invesco V.I. Equally-Weighted S&P 500 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.
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
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Invesco V.I. Equally-Weighted S&P 500 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.
| 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. |
| L. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2 - Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 $2 billion | | | 0.120 | % |
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Over $ 2 billion | | | 0.100 | % |
For the year ended December 31, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $2,658.
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, 2021, Invesco was paid $54,212 for accounting and fund administrative services and was reimbursed $601,332 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $14,337 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. Equally-Weighted S&P 500 Fund |
| | Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| | Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 423,009,154 | | | $ | – | | | | $– | | | $ | 423,009,154 | |
Money Market Funds | | | 8,734,202 | | | | 16,798,221 | | | | – | | | | 25,532,423 | |
Total Investments in Securities | | | 431,743,356 | | | | 16,798,221 | | | | – | | | | 448,541,577 | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
Futures Contracts | | | 193,268 | | | | – | | | | – | | | | 193,268 | |
Total Investments | | $ | 431,936,624 | | | $ | 16,798,221 | | | | $– | | | $ | 448,734,845 | |
| * | 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, 2021:
| | | | |
| | | Value | |
| | | Equity | |
| Derivative Assets | | Risk | |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 193,268 | |
Derivatives not subject to master netting agreements | | | (193,268 | ) |
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, 2021
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period.
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| | | Location of Gain on
Statement of Operations | |
| | | Equity Risk | |
Realized Gain: | | | | |
Futures contracts | | | $2,035,883 | |
Change in Net Unrealized Appreciation: | | | | |
Futures contracts | | | 54,008 | |
Total | | | $2,089,891 | |
The table below summarizes the average notional value of derivatives held during the period.
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| | | Futures
Contracts | |
| |
Average notional value | | | $7,935,174 | |
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
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| Invesco V.I. Equally-Weighted S&P 500 Fund |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | 4,244,902 | | | $ | 3,644,636 | |
Long-term capital gain | | | - | | | | 4,456,941 | |
Total distributions | | $ | 4,244,902 | | | $ | 8,101,577 | |
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* Includes short-term capital gain distributions, if any. Tax Components of Net Assets at Period-End: | |
| | | 2021 | | | 2020 | |
Undistributed ordinary income | | | | | | $ | 14,644,816 | |
Undistributed long-term capital gain | | | | | | | 13,585,257 | |
Net unrealized appreciation - investments | | | | | | | 195,187,239 | |
Temporary book/tax differences | | | | | | | (23,417 | ) |
Shares of beneficial interest | | | | | | | 208,176,329 | |
Total net assets | | | | | | $ | 431,570,224 | |
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, 2021.
NOTE 8 - Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $102,120,392 and $84,986,243, 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 | | $ | 196,706,768 | |
Aggregate unrealized (depreciation) of investments | | | (1,519,529 | ) |
Net unrealized appreciation of investments | | $ | 195,187,239 | |
Cost of investments for tax purposes is $253,547,606.
NOTE 9 - Share Information
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| | | Summary of Share Activity | |
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| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 143,474 | | | $ | 4,038,895 | | | | 242,669 | | | $ | 5,145,147 | |
Series II | | | 1,787,174 | | | | 48,913,614 | | | | 2,057,242 | | | | 38,865,302 | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 13,087 | | | | 392,488 | | | | 36,257 | | | | 779,893 | |
Series II | | | 132,888 | | | | 3,852,414 | | | | 351,666 | | | | 7,321,684 | |
|
| Invesco V.I. Equally-Weighted S&P 500 Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (224,036 | ) | | $ | (6,272,676 | ) | | | (438,095 | ) | | $ | (8,345,681 | ) |
| |
Series II | | | (1,242,842 | ) | | | (33,832,787 | ) | | | (1,450,855 | ) | | | (29,347,141 | ) |
|
| |
Net increase in share activity | | | 609,745 | | | $ | 17,091,948 | | | | 798,884 | | | $ | 14,419,204 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 93% 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–Significant 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. S&P 500 Index Fund (the “Target Fund”) in exchange for shares of the Fund.
The reorganization is expected to be consummated around April 2022, or 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | ACTUAL | | HYPOTHETICAL
(5% annual return before
expenses) | | |
| | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,086.50 | | $1.89 | | $1,023.39 | | $1.84 | | 0.36% |
Series II | | 1,000.00 | | 1,085.20 | | 3.21 | | 1,022.13 | | 3.11 | | 0.61 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | |
| | | Federal and State Income Tax | | | |
| | Qualified Dividend Income* | |
| 0.00
| %
|
| | Corporate Dividends Received Deduction* | |
| 99.67
| %
|
| | U.S. Treasury Obligations* | | | 0.00 | % |
| | Qualified Business Income* | | | 0.00 | % |
| | Business Interest Income* | | | 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) | | 186 | | 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962
Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School – Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management – Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957
Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes- 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Equity and Income Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Equity and Income 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 18.65 | % |
Series II Shares | | | 18.35 | |
Russell 1000 Value Indexq (Broad Market Index) | | | 25.16 | |
Bloomberg U.S. Government/Credit Indexq (Style-Specific Index) | | | -1.75 | |
Lipper VUF Mixed-Asset Target Allocation Growth Funds Index⬛ (Peer Group Index) | | | 14.28 | |
Source(s): qRIMES Technologies Corp.;⬛ Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
All eleven sectors within the Russell 1000 Value Index had positive returns for the fiscal year. Energy had the highest return for the fiscal year, while the communication services sector had the lowest.
Within the equity allocation, stock selection in health care was the largest detractor during the fiscal year. Medical device makers Zimmer Biomet and Medtronic detracted from both relative and absolute Fund performance. Shares of both companies suffered as the Delta and Omicron COVID-19 variants began to spread rapidly, causing delays or cancellations to elective procedures and reducing revenues. We believe the delays caused by COVID-19 will be transitory and we maintained our position in both stocks at fiscal year end. The Fund’s pharmaceutical holdings also underperformed relative to the broad market index. Specifically, the Fund held a position in Sanofi, which is not in the style-specific index. That stock posted a muted return for the fiscal year that under-performed the index. We maintained our position in Sanofi at fiscal year end.
The information technology (IT) sector also detracted from the Fund’s return relative to the Russell 1000 Value Index. Within the sector, Splunk and Intel had double-digit declines. While Intel’s earnings beat consensus
expectations, the chipmaker provided weaker guidance for the fiscal year, driven in part by shortages of production components for mi-crochips. In November, Splunk announced an abrupt CEO departure that was viewed skeptically by investors. The CEO announcement overshadowed a largely solid earnings report, causing a sharp selloff in the stock. While the departure added uncertainty to the company’s future, we believed it could also present opportunities and we maintained our position at fiscal year end.
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 un-derperformed the Russell 1000 Value Index and were significant detractors from the Fund’s relative performance.
While less than 3.5% on average, the Fund’s cash position also dampened performance relative to the broad market index in the strong market environment.
Within the equity portion of the Fund, stock selection in industrials was the largest contributor to the Fund’s return relative to the broad market index, due primarily to John-son Controls. The company reported better than expected earnings driven in part by strength in its HVAC segment, while orders and backlogs also improved amid a recovery in demand. We held the stock at fiscal year end.
Security selection and an overweight position in financials also contributed to relative Fund performance for the fiscal year. Within the sector, Wells Fargo, Bank of America, American International Group, Goldman Sachs and Morgan Stanley were significant contributors. These companies rallied as a rotation into cyclical areas of the market favored financial stocks early in the fiscal year. Financial companies also benefited from rising interest rates and a recovery in loan growth. We held positions in these stocks at fiscal year end.
Stock selection in energy and an overweight in energy was another strong contributor to performance relative to the broad market index. Energy stocks overall were buoyed by rising oil prices resulting from a rebound in demand, OPEC (Organization of the Petroleum Exporting Countries) production cuts and energy shortages abroad. Shares of Devon Energy rose sharply, particularly following its third-quarter earnings report which exceeded expectations. Even as Devon Energy has benefited from rising oil prices, the company has maintained a commitment to disciplined growth and spending, while returning capital to shareholders. We maintained our position in Devon Energy at fiscal year end.
The Fund held currency forward contracts 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
Invesco V.I. Equity and Income Fund
a small positive impact on the Fund’s relative performance for the fiscal year.
During the fiscal year, the team eliminated equity positions in materials, energy and financials and added positions in communication services, consumer discretionary and health care. At the end of the fiscal year, the Fund’s largest overweight exposures were in IT and consumer discretionary, while the largest underweights were in health care and utilities.
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: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Chuck Burge
Brian Jurkash - Lead
Sergio Marcheli
Matthew Titus - Lead
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers,Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (6/1/10) | | | 10.22 | % |
10 Years | | | 10.55 | |
5 Years | | | 9.55 | |
1 Year | | | 18.65 | |
| |
Series II Shares | | | | |
Inception (4/30/03) | | | 8.45 | % |
10 Years | | | 10.28 | |
5 Years | | | 9.27 | |
1 Year | | | 18.35 | |
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 deduc-
tion 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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is 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 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 | | | 64.28% | |
| U.S. Dollar Denominated Bonds & Notes | | | 20.00 | |
| U.S. Treasury Securities | | | 11.51 | |
| Security Types Each Less Than 1% of Portfolio | | | 0.64 | |
| Money Market Funds Plus Other Assets Less Liabilities | | | 3.57 | |
| |
| Top 10 Equity Holdings* | | | | |
| | |
| | | | | % of total net assets | |
| 1. | | Wells Fargo & Co. | | | 2.48% | |
| 2. | | General Motors Co. | | | 2.33 | |
| 3. | | Cognizant Technology Solutions Corp., Class A | | | 1.99 | |
| 4. | | Bank of America Corp. | | | 1.97 | |
| 5. | | CBRE Group, Inc., Class A | | | 1.83 | |
| 6. | | CSX Corp. | | | 1.61 | |
| 7. | | American International Group, Inc. | | | 1.59 | |
| 8. | | Cisco Systems, Inc. | | | 1.51 | |
| 9. | | Raytheon Technologies Corp. | | | 1.45 | |
| 10. | | Philip Morris International, Inc. | | | 1.42 | |
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, 2021.
Invesco V.I. Equity and Income Fund
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–64.28% | |
|
Aerospace & Defense–3.18% | |
| | |
General Dynamics Corp. | | | 34,751 | | | $ | 7,244,541 | |
| | |
Raytheon Technologies Corp. | | | 229,952 | | | | 19,789,669 | |
Textron, Inc. | | | 211,931 | | | | 16,361,073 | |
| | | | | 43,395,283 | |
|
Apparel Retail–1.15% | |
| | |
TJX Cos., Inc. (The) | | | 206,953 | | | | 15,711,872 | |
|
Application Software–0.48% | |
| | |
Splunk, Inc.(b) | | | 56,984 | | | | 6,594,188 | |
|
Automobile Manufacturers–2.33% | |
| | |
General Motors Co.(b) | | | 542,334 | | | | 31,797,042 | |
|
Building Products–1.01% | |
| | |
Johnson Controls International PLC | | | 170,042 | | | | 13,826,115 | |
|
Cable & Satellite–1.94% | |
| | |
Charter Communications, Inc., Class A(b) | | | 18,985 | | | | 12,377,650 | |
Comcast Corp., Class A | | | 280,893 | | | | 14,137,345 | |
| | | | | 26,514,995 | |
|
Casinos & Gaming–0.46% | |
| | |
Las Vegas Sands Corp.(b) | | | 165,489 | | | | 6,229,006 | |
|
Communications Equipment–1.51% | |
| | |
Cisco Systems, Inc.(c) | | | 324,495 | | | | 20,563,248 | |
|
Construction & Engineering–0.78% | |
| | |
Quanta Services, Inc.(c) | | | 92,826 | | | | 10,643,429 | |
|
Consumer Finance–1.02% | |
| | |
American Express Co. | | | 84,625 | | | | 13,844,650 | |
|
Data Processing & Outsourced Services–0.66% | |
| | |
Fiserv, Inc.(b) | | | 86,448 | | | | 8,972,438 | |
|
Distillers & Vintners–0.79% | |
| | |
Diageo PLC (United Kingdom) | | | 197,659 | | | | 10,774,968 | |
|
Diversified Banks–4.45% | |
| | |
Bank of America Corp. | | | 603,104 | | | | 26,832,097 | |
Wells Fargo & Co. | | | 703,728 | | | | 33,764,869 | |
| | | | | 60,596,966 | |
|
Electric Utilities–1.59% | |
| | |
American Electric Power Co., Inc. | | | 82,167 | | | | 7,310,398 | |
| | |
Exelon Corp. | | | 132,784 | | | | 7,669,604 | |
FirstEnergy Corp. | | | 159,576 | | | | 6,636,766 | |
| | | | | 21,616,768 | |
|
Electrical Components & Equipment–0.56% | |
| | |
Emerson Electric Co. | | | 81,641 | | | | 7,590,164 | |
|
Electronic Components–0.51% | |
| | |
Corning, Inc. | | | 185,420 | | | | 6,903,187 | |
|
Electronic Manufacturing Services–0.65% | |
| | |
TE Connectivity Ltd. | | | 55,170 | | | | 8,901,128 | |
| | | | | | | | |
| | | Shares | | | Value | |
|
Fertilizers & Agricultural Chemicals–0.90% | |
| | |
Corteva, Inc. | | | 259,209 | | | $ | 12,255,402 | |
|
Food Distributors–1.19% | |
| | |
Sysco Corp. | | | 105,156 | | | | 8,260,004 | |
US Foods Holding Corp.(b) | | | 228,927 | | | | 7,973,527 | |
| | | | | 16,233,531 | |
|
Gold–0.45% | |
| | |
Barrick Gold Corp. (Canada) | | | 322,571 | | | | 6,128,849 | |
|
Health Care Distributors–0.82% | |
| | |
McKesson Corp. | | | 44,919 | | | | 11,165,516 | |
|
Health Care Equipment–1.07% | |
| | |
Medtronic PLC | | | 82,842 | | | | 8,570,005 | |
Zimmer Biomet Holdings, Inc. | | | 47,692 | | | | 6,058,792 | |
| | | | | 14,628,797 | |
|
Health Care Facilities–0.50% | |
| | |
Universal Health Services, Inc., Class B | | | 53,116 | | | | 6,887,021 | |
|
Health Care Services–1.66% | |
| | |
Cigna Corp. | | | 52,048 | | | | 11,951,782 | |
CVS Health Corp. | | | 103,593 | | | | 10,686,654 | |
| | | | | 22,638,436 | |
|
Hotels, Resorts & Cruise Lines–0.85% | |
| | |
Booking Holdings, Inc.(b) | | | 4,856 | | | | 11,650,661 | |
|
Industrial Machinery–0.85% | |
| | |
Parker Hannifin Corp. | | | 36,411 | | | | 11,583,067 | |
|
Insurance Brokers–0.76% | |
| | |
Willis Towers Watson PLC | | | 43,390 | | | | 10,304,691 | |
|
Integrated Oil & Gas–1.07% | |
| | |
Chevron Corp. | | | 123,894 | | | | 14,538,961 | |
|
Internet & Direct Marketing Retail–0.49% | |
| | |
Amazon.com, Inc.(b) | | | 2,015 | | | | 6,718,695 | |
|
Investment Banking & Brokerage–3.55% | |
| | |
Charles Schwab Corp. (The) | | | 153,254 | | | | 12,888,661 | |
| | |
Goldman Sachs Group, Inc. (The) | | | 48,171 | | | | 18,427,816 | |
Morgan Stanley | | | 173,428 | | | | 17,023,693 | |
| | | | | 48,340,170 | |
|
IT Consulting & Other Services–1.99% | |
| | |
Cognizant Technology Solutions Corp., Class A | | | 305,625 | | | | 27,115,050 | |
|
Managed Health Care–1.34% | |
| | |
Anthem, Inc. | | | 21,302 | | | | 9,874,329 | |
Centene Corp.(b) | | | 101,515 | | | | 8,364,836 | |
| | | | | 18,239,165 | |
|
Movies & Entertainment–1.80% | |
| | |
Netflix, Inc.(b) | | | 16,483 | | | | 9,930,018 | |
Walt Disney Co. (The)(b) | | | 94,319 | | | | 14,609,070 | |
| | | | | 24,539,088 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
| | | | | | | | |
| | | | | | | |
| | | Shares | | | Value | |
|
Multi-line Insurance–1.59% | |
American International Group, Inc. | | | 381,287 | | | $ | 21,679,979 | |
|
Oil & Gas Exploration & Production–3.30% | |
Canadian Natural Resources Ltd. (Canada) | | | 168,813 | | | | 7,133,131 | |
ConocoPhillips | | | 242,349 | | | | 17,492,751 | |
Devon Energy Corp. | | | 270,601 | | | | 11,919,974 | |
Pioneer Natural Resources Co. | | | 46,543 | | | | 8,465,241 | |
| | | | | | | | 45,011,097 | |
|
Other Diversified Financial Services–0.50% | |
Voya Financial, Inc. 102,932 | | | | 6,825,421 | |
|
Pharmaceuticals–4.44% | |
Bristol-Myers Squibb Co. | | | 201,835 | | | | 12,584,412 | |
GlaxoSmithKline PLC (United Kingdom) | | | 344,904 | | | | 7,499,631 | |
Johnson & Johnson | | | 44,840 | | | | 7,670,779 | |
Merck & Co., Inc. | | | 188,359 | | | | 14,435,834 | |
Pfizer, Inc. | | | 127,186 | | | | 7,510,333 | |
Sanofi (France) | | | 108,009 | | | | 10,852,058 | |
| | | | | | | | 60,553,047 | |
|
Railroads–1.61% | |
CSX Corp. | | | 582,011 | | | | 21,883,614 | |
|
Real Estate Services–1.83% | |
CBRE Group, Inc., Class A(b) | | | 230,391 | | | | 24,999,727 | |
|
Regional Banks–3.06% | |
Citizens Financial Group, Inc. | | | 380,677 | | | | 17,986,988 | |
PNC Financial Services Group, Inc. (The) | | | 42,665 | | | | 8,555,186 | |
Truist Financial Corp.(c) | | | 258,310 | | | | 15,124,051 | |
| | | | | | | | 41,666,225 | |
Semiconductors–2.79% | | | | | | | | |
Intel Corp. | | | 270,844 | | | | 13,948,466 | |
NXP Semiconductors N.V. (China) | | | 46,498 | | | | 10,591,315 | |
QUALCOMM, Inc. | | | 73,530 | | | | 13,446,431 | |
| | | | | | | | 37,986,212 | |
|
Specialty Chemicals–0.57% | |
Axalta Coating Systems Ltd.(b) | | | 233,149 | | | | 7,721,895 | |
Tobacco–1.41% | | | | | | | | |
Philip Morris International, Inc. | | | 202,893 | | | | 19,274,835 | |
|
Wireless Telecommunication Services–0.82% | |
T-Mobile US, Inc.(b) | | | 96,931 | | | | 11,242,057 | |
Total Common Stocks & Other Equity Interests (Cost $559,633,081) | | | | | | | 876,286,656 | |
| | |
| |
| Principal
Amount |
| | | | |
|
U.S. Dollar Denominated Bonds & Notes–20.00% | |
Aerospace & Defense–0.21% | |
Boeing Co. (The), 5.81%, 05/01/2050 | | $ | 1,625,000 | | | | 2,204,649 | |
Precision Castparts Corp., 2.50%, 01/15/2023 | | | 333,000 | | | | 337,978 | |
Raytheon Technologies Corp., 4.45%, 11/16/2038 | | | 308,000 | | | | 371,960 | |
| | | | | | | | 2,914,587 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
Agricultural & Farm Machinery–0.09% | |
Deere & Co., 2.60%, 06/08/2022 | | $ | 1,161,000 | | | $ | 1,166,206 | |
|
Agricultural Products–0.02% | |
Ingredion, Inc., 6.63%, 04/15/2037 | | | 232,000 | | | | 324,671 | |
|
Air Freight & Logistics–0.06% | |
FedEx Corp., 4.90%, 01/15/2034 | | | 402,000 | | | | 485,795 | |
United Parcel Service, Inc., 3.40%, 11/15/2046 | | | 240,000 | | | | 270,598 | |
| | | | | | | | 756,393 | |
|
Airlines–0.29% | |
American Airlines Pass-Through Trust, Series 2014-1, Class A, 3.70%, 04/01/2028 | | | 272,034 | | | | 276,554 | |
JetBlue Airways Corp., Conv., 0.50%, 04/01/2026(d) | | | 1,732,000 | | | | 1,623,261 | |
Spirit Airlines, Inc., Conv., 1.00%, 05/15/2026 | | | 1,157,000 | | | | 1,003,166 | |
United Airlines Pass Through Trust, Series 2012-1, Class A, 4.15%, 04/11/2024 | | | 270,463 | | | | 280,700 | |
Series 2014-2, Class A, 3.75%, 09/03/2026 | | | 349,332 | | | | 365,633 | |
Series 2018-1, Class AA, 3.50%, 03/01/2030 | | | 439,643 | | | | 459,444 | |
| | | | | | | | 4,008,758 | |
|
Alternative Carriers–0.20% | |
Liberty Latin America Ltd. (Chile), Conv., 2.00%, 07/15/2024 | | | 2,743,000 | | | | 2,708,712 | |
|
Application Software–0.96% | |
Dropbox, Inc., Conv., 0.00%, 03/01/2026(d)(e) | | | 5,339,000 | | | | 5,218,872 | |
salesforce.com, inc., 2.70%, 07/15/2041 | | | 1,413,000 | | | | 1,413,935 | |
Splunk, Inc., Conv., 1.13%, 06/15/2027 | | | 6,876,000 | | | | 6,446,250 | |
| | | | | | | | 13,079,057 | |
|
Asset Management & Custody Banks–0.28% | |
Apollo Management Holdings L.P., 4.00%, 05/30/2024(d) | | | 2,755,000 | | | | 2,920,373 | |
Brookfield Asset Management, Inc. (Canada), 4.00%, 01/15/2025 | | | 445,000 | | | | 475,980 | |
KKR Group Finance Co. III LLC, 5.13%, 06/01/2044(d) | | | 372,000 | | | | 480,936 | |
| | | | | | | | 3,877,289 | |
|
Automobile Manufacturers–0.26% | |
General Motors Co., 6.60%, 04/01/2036 | | | 377,000 | | | | 510,705 | |
General Motors Financial Co., Inc., 5.25%, 03/01/2026 | | | 480,000 | | | | 538,775 | |
Toyota Motor Credit Corp., 2.60%, 01/11/2022 | | | 2,460,000 | | | | 2,461,051 | |
| | | | | | | | 3,510,531 | |
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–0.52% | |
AbbVie, Inc., | |
4.50%, 05/14/2035 | | $ | 694,000 | | | $ | 831,508 | |
4.05%, 11/21/2039 | | | 1,322,000 | | | | 1,519,748 | |
4.85%, 06/15/2044 | | | 264,000 | | | | 331,587 | |
Gilead Sciences, Inc., 3.25%, 09/01/2022(c) | | | 2,070,000 | | | | 2,098,172 | |
Neurocrine Biosciences, Inc., Conv., 2.25%, 05/15/2024 | | | 1,875,000 | | | | 2,356,641 | |
| | | | | 7,137,656 | |
|
Brewers–0.24% | |
Anheuser-Busch Cos. LLC/Anheuser- Busch InBev Worldwide, Inc. (Belgium), | | | | | | | | |
4.70%, 02/01/2036 | | | 959,000 | | | | 1,159,166 | |
4.90%, 02/01/2046 | | | 538,000 | | | | 681,563 | |
Heineken N.V. (Netherlands), 3.50%, 01/29/2028(d) | | | 945,000 | | | | 1,018,463 | |
Molson Coors Beverage Co., 4.20%, 07/15/2046 | | | 377,000 | | | | 418,926 | |
| | | | | 3,278,118 | |
|
Cable & Satellite–1.85% | |
BofA Finance LLC, Conv., 0.13%, 09/01/2022 | | | 2,213,000 | | | | 2,491,838 | |
Cable One, Inc., Conv., | |
0.00%, 03/15/2026(d)(e) | | | 5,466,000 | | | | 5,252,826 | |
1.13%, 03/15/2028(d) | | | 2,850,000 | | | | 2,835,253 | |
Charter Communications Operating LLC/Charter Communications Operating Capital Corp., | | | | | | | | |
4.46%, 07/23/2022 | | | 1,029,000 | | | | 1,044,294 | |
3.85%, 04/01/2061 | | | 1,067,000 | | | | 1,009,224 | |
Comcast Corp., | | | | | | | | |
4.15%, 10/15/2028 | | | 935,000 | | | | 1,062,114 | |
3.90%, 03/01/2038 | | | 756,000 | | | | 857,039 | |
2.89%, 11/01/2051(d) | | | 352,000 | | | | 341,370 | |
2.94%, 11/01/2056(d) | | | 265,000 | | | | 253,113 | |
Cox Communications, Inc., 2.95%, 10/01/2050(d) | | | 202,000 | | | | 189,145 | |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 7,604,000 | | | | 7,216,599 | |
Liberty Broadband Corp., Conv., 1.25%, 10/05/2023(d)(f) | | | 2,645,000 | | | | 2,621,195 | |
| | | | | 25,174,010 | |
|
Commodity Chemicals–0.03% | |
| | |
LYB Finance Co. B.V. (Netherlands), 8.10%, 03/15/2027(d) | | | 339,000 | | | | 435,059 | |
|
Computer & Electronics Retail–0.19% | |
Dell International LLC/EMC Corp., 5.45%, 06/15/2023 | | | 163,000 | | | | 172,005 | |
6.02%, 06/15/2026 | | | 2,125,000 | | | | 2,458,621 | |
8.35%, 07/15/2046 | | | 4,000 | | | | 6,664 | |
| | | | | 2,637,290 | |
Consumer Finance–0.14% | | | | | |
| | |
American Express Co., 3.63%, 12/05/2024(c) | | | 324,000 | | | | 346,453 | |
Capital One Financial Corp., 3.20%, 01/30/2023 | | | 958,000 | | | | 981,473 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| |
Consumer Finance–(continued) | | | | | |
Synchrony Financial, 3.95%, 12/01/2027 | | $ | 556,000 | | | $ | 597,519 | |
| | | | | | | | 1,925,445 | |
| |
Data Processing & Outsourced Services–0.11% | | | | | |
Fiserv, Inc., 3.80%, 10/01/2023 | | | 1,412,000 | | | | 1,476,571 | |
| | |
Diversified Banks–1.30% | | | | | | | | |
ANZ New Zealand (Int’l) Ltd. (New Zealand), 2.88%, 01/25/2022(d) | | | 350,000 | | | | 350,479 | |
Bank of America Corp., | | | | | | | | |
3.25%, 10/21/2027 | | | 525,000 | | | | 559,187 | |
2.57%, 10/20/2032(g) | | | 874,000 | | | | 878,835 | |
BBVA Bancomer S.A. (Mexico), 4.38%, 04/10/2024(d) | | | 700,000 | | | | 744,496 | |
Citigroup, Inc., | | | | | | | | |
4.00%, 08/05/2024 | | | 60,000 | | | | 63,974 | |
3.67%, 07/24/2028(g) | | | 511,000 | | | | 551,553 | |
6.68%, 09/13/2043(c) | | | 741,000 | | | | 1,118,857 | |
5.30%, 05/06/2044 | | | 228,000 | | | | 298,194 | |
4.75%, 05/18/2046 | | | 356,000 | | | | 438,834 | |
Discover Bank, 3.35%, 02/06/2023 | | | 1,500,000 | | | | 1,536,256 | |
HSBC Holdings PLC (United Kingdom), 2.63%, 11/07/2025(g) | | | 1,775,000 | | | | 1,821,769 | |
JPMorgan Chase & Co., | | | | | | | | |
3.20%, 06/15/2026 | | | 394,000 | | | | 418,224 | |
3.51%, 01/23/2029(g) | | | 1,058,000 | | | | 1,134,265 | |
4.26%, 02/22/2048(g) | | | 489,000 | | | | 599,265 | |
3.90%, 01/23/2049(g) | | | 1,058,000 | | | | 1,228,700 | |
Series V, 3.53%(3 mo. USD LIBOR + 3.32%)(h)(i) | | | 732,000 | | | | 734,735 | |
Mizuho Financial Group Cayman 3 Ltd. (Japan), 4.60%, 03/27/2024(d) | | | 200,000 | | | | 212,610 | |
Societe Generale S.A. (France), 5.00%, 01/17/2024(d) | | | 735,000 | | | | 782,720 | |
U.S. Bancorp, Series W, 3.10%, 04/27/2026 | | | 2,097,000 | | | | 2,218,194 | |
Wells Fargo & Co., | | | | | | | | |
3.55%, 09/29/2025 | | | 626,000 | | | | 667,647 | |
4.10%, 06/03/2026 | | | 505,000 | | | | 550,970 | |
4.65%, 11/04/2044 | | | 647,000 | | | | 785,049 | |
| | | | | | | | 17,694,813 | |
| |
Diversified Capital Markets–0.34% | | | | | |
Credit Suisse AG (Switzerland), | | | | | | | | |
6.50%, 08/08/2023(d) | | | 686,000 | | | | 739,957 | |
Conv., 0.50%, 06/24/2024(d) | | | 3,965,000 | | | | 3,901,164 | |
| | | | | | | | 4,641,121 | |
| |
Diversified Metals & Mining–0.02% | | | | | |
Rio Tinto Finance USA Ltd. (Australia), 7.13%, 07/15/2028 | | | 182,000 | | | | 237,466 | |
| | |
Diversified REITs–0.08% | | | | | | | | |
CubeSmart L.P., 2.50%, 02/15/2032 | | | 1,063,000 | | | | 1,059,539 | |
| | |
Drug Retail–0.08% | | | | | | | | |
CVS Pass-Through Trust, 6.04%, 12/10/2028 | | | 516,133 | | | | 588,592 | |
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 | |
Drug Retail–(continued) | | | | | | | | |
Walgreens Boots Alliance, Inc., 4.50%, 11/18/2034 | | $ | 428,000 | | | $ | 492,955 | |
| | | | | | | | 1,081,547 | |
| | |
Electric Utilities–0.44% | | | | | | | | |
Electricite de France S.A. (France), 4.88%, 01/22/2044(d) | | | 846,000 | | | | 1,053,694 | |
Georgia Power Co., Series B, 3.70%, 01/30/2050 | | | 350,000 | | | | 373,134 | |
NextEra Energy Capital Holdings, Inc., | | | | | | | | |
0.65%, 03/01/2023 | | | 2,415,000 | | | | 2,410,632 | |
3.55%, 05/01/2027 | | | 530,000 | | | | 574,575 | |
PPL Electric Utilities Corp., 6.25%, 05/15/2039 | | | 46,000 | | | | 66,107 | |
Xcel Energy, Inc., | | | | | | | | |
0.50%, 10/15/2023 | | | 566,000 | | | | 562,430 | |
3.50%, 12/01/2049 | | | 964,000 | | | | 1,027,869 | |
| | | | | | | | 6,068,441 | |
|
Electrical Components & Equipment–0.02% | |
Rockwell Automation, Inc., 1.75%, 08/15/2031 | | | 307,000 | | | | 298,639 | |
| |
General Merchandise Stores–0.03% | | | | | |
Dollar General Corp., 3.25%, 04/15/2023 | | | 353,000 | | | | 361,645 | |
| | |
Health Care Equipment–0.37% | | | | | | | | |
Becton, Dickinson and Co., 4.88%, 05/15/2044 | | | 428,000 | | | | 514,698 | |
Integra LifeSciences Holdings Corp., Conv., 0.50%, 08/15/2025 | | | 3,404,000 | | | | 3,703,892 | |
Medtronic, Inc., 4.38%, 03/15/2035 | | | 249,000 | | | | 306,784 | |
Tandem Diabetes Care, Inc., Conv., 1.50%, 05/01/2025(d) | | | 348,000 | | | | 517,650 | |
| | | | | | | | 5,043,024 | |
|
Health Care Services–0.08% | |
Cigna Corp., 4.80%, 08/15/2038 | | | 307,000 | | | | 378,290 | |
| | |
CVS Health Corp., 3.38%, 08/12/2024 | | | 361,000 | | | | 379,624 | |
| | |
Laboratory Corp. of America Holdings, 4.70%, 02/01/2045 | | | 263,000 | | | | 320,845 | |
| | | | | | | | 1,078,759 | |
|
Health Care Technology–0.23% | |
Teladoc Health, Inc., Conv., 1.25%, 06/01/2027 | | | 3,430,000 | | | | 3,140,594 | |
|
Home Improvement Retail–0.15% | |
Home Depot, Inc. (The), 2.63%, 06/01/2022 | | | 2,010,000 | | | | 2,025,596 | |
|
Hotel & Resort REITs–0.01% | |
Service Properties Trust, 5.00%, 08/15/2022 | | | 182,000 | | | | 182,014 | |
|
Hotels, Resorts & Cruise Lines–0.24% | |
Booking Holdings, Inc., Conv., 0.75%, 05/01/2025 | | | 396,000 | | | | 583,506 | |
Trip.com Group Ltd. (China), Conv., 1.25%, 09/15/2022 | | | 2,834,000 | | | | 2,700,758 | |
| | | | | | | | 3,284,264 | |
| | | | | | | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
|
Industrial Conglomerates–0.04% | |
| | |
Honeywell International, Inc., 0.48%, 08/19/2022 | | $ | 480,000 | | | $ | 480,070 | |
|
Insurance Brokers–0.02% | |
| | |
Willis North America, Inc., 3.60%, 05/15/2024 | | | 233,000 | | | | 244,175 | |
|
Integrated Oil & Gas–0.17% | |
| | |
BP Capital Markets America, Inc., 2.94%, 06/04/2051 | | | 991,000 | | | | 953,874 | |
Chevron Corp., 2.50%, 03/03/2022 | | | 1,345,000 | | | | 1,347,405 | |
| | | | | | | | 2,301,279 | |
|
Integrated Telecommunication Services–0.38% | |
| | |
AT&T, Inc., | | | | | | | | |
3.00%, 06/30/2022 | | | 502,000 | | | | 505,864 | |
4.30%, 02/15/2030 | | | 318,000 | | | | 358,274 | |
3.50%, 09/15/2053 | | | 447,000 | | | | 451,819 | |
3.55%, 09/15/2055 | | | 157,000 | | | | 157,835 | |
3.80%, 12/01/2057 | | | 255,000 | | | | 266,076 | |
Telefonica Emisiones S.A. (Spain), | | | | | | | | |
4.67%, 03/06/2038 | | | 750,000 | | | | 864,399 | |
5.21%, 03/08/2047 | | | 700,000 | | | | 871,169 | |
Verizon Communications, Inc., | | | | | | | | |
4.40%, 11/01/2034 | | | 417,000 | | | | 486,470 | |
4.81%, 03/15/2039 | | | 459,000 | | | | 576,619 | |
3.40%, 03/22/2041 | | | 561,000 | | | | 588,382 | |
| | | | | 5,126,907 | |
Interactive Home Entertainment–0.48% | |
| | |
Zynga, Inc., Conv., 0.00%, 12/15/2026(e) | | | 7,098,000 | | | | 6,513,063 | |
|
Interactive Media & Services–0.16% | |
TripAdvisor, Inc., Conv., 0.25%, 04/01/2026(d) | | | 338,000 | | | | 298,285 | |
Twitter, Inc., Conv., 0.00%, 03/15/2026(d)(e) | | | 2,051,000 | | | | 1,847,131 | |
| | | | | | | | 2,145,416 | |
|
Internet & Direct Marketing Retail–0.23% | |
| | |
Amazon.com, Inc., | | | | | | | | |
4.80%, 12/05/2034 | | | 9,000 | | | | 11,511 | |
2.88%, 05/12/2041 | | | 2,996,000 | | | | 3,117,054 | |
| | | | | 3,128,565 | |
|
Internet Services & Infrastructure–0.28% | |
| | |
Shopify, Inc. (Canada), Conv., 0.13%, 11/01/2025 | | | 3,055,000 | | | | 3,826,387 | |
|
Investment Banking & Brokerage – 0.66% | |
Goldman Sachs Group, Inc. (The), | | | | | | | | |
4.25%, 10/21/2025 | | | 529,000 | | | | 577,441 | |
2.91%, 07/21/2042(g) | | | 323,000 | | | | 321,740 | |
GS Finance Corp., Series 0001, Conv., 0.25%, 07/08/2024 | | | 6,118,000 | | | | 7,441,323 | |
Morgan Stanley, 4.00%, 07/23/2025 | | | 654,000 | | | | 709,364 | |
| | | | | 9,049,868 | |
|
IT Consulting & Other Services–0.11% | |
International Business Machines Corp., 2.88%, 11/09/2022 | | | 1,421,000 | | | | 1,449,295 | |
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 | |
Leisure Products–0.25% | |
Peloton Interactive, Inc., Conv., 0.00%, 02/15/2026(d)(e) | | $ | 4,003,000 | | | $ | 3,412,557 | |
|
Life & Health Insurance–0.86% | |
American Equity Investment Life Holding Co., 5.00%, 06/15/2027(c) | | | 853,000 | | | | 966,595 | |
|
Athene Global Funding, | |
4.00%, 01/25/2022(d) | | | 1,155,000 | | | | 1,157,432 | |
2.75%, 06/25/2024(d) | | | 260,000 | | | | 268,145 | |
Athene Holding Ltd., 3.45%, 05/15/2052 | | | 1,465,000 | | | | 1,475,060 | |
Brighthouse Financial, Inc., 3.85%, 12/22/2051 | | | 1,846,000 | | | | 1,824,984 | |
Delaware Life Global Funding, Series 21-1, 2.66%, 06/29/2026(d) | | | 2,184,000 | | | | 2,223,530 | |
Guardian Life Global Funding, 2.90%, 05/06/2024(c)(d) | | | 689,000 | | | | 719,312 | |
Jackson National Life Global Funding, 3.25%, 01/30/2024(d) | | | 453,000 | | | | 472,373 | |
Nationwide Financial Services, Inc., 5.30%, 11/18/2044(d) | | | 440,000 | | | | 562,677 | |
Protective Life Global Funding, 2.62%, 08/22/2022(d) | | | 1,865,000 | | | | 1,890,607 | |
Prudential Financial, Inc., 3.91%, 12/07/2047 | | | 141,000 | | | | 164,120 | |
| | | | | 11,724,835 | |
|
Managed Health Care–0.05% | |
UnitedHealth Group, Inc., 3.50%, 08/15/2039 | | | 559,000 | | | | 620,984 | |
|
Movies & Entertainment–1.06% | |
Liberty Media Corp., Conv., 1.38%, 10/15/2023 | | | 5,671,000 | | | | 8,562,012 | |
| | |
Liberty Media Corp.-Liberty Formula One, Conv., 1.00%, 01/30/2023 | | | 540,000 | | | | 933,281 | |
| | |
Live Nation Entertainment, Inc., Conv., 2.50%, 03/15/2023 | | | 2,015,000 | | | | 3,647,150 | |
| | |
Walt Disney Co. (The), 3.00%, 09/15/2022 | | | 1,350,000 | | | | 1,373,745 | |
| | | | | 14,516,188 | |
|
Multi-line Insurance–0.13% | |
American International Group, Inc., 4.38%, 01/15/2055 | | | 696,000 | | | | 856,153 | |
Liberty Mutual Group, Inc., 3.95%, 05/15/2060(d) | | | 887,000 | | | | 977,276 | |
| | | | | 1,833,429 | |
|
Multi-Utilities–0.09% | |
NiSource, Inc., 4.38%, 05/15/2047 | | | 571,000 | | | | 674,072 | |
Sempra Energy, 3.80%, 02/01/2038 | | | 559,000 | | | | 614,493 | |
| | | | | 1,288,565 | |
|
Office REITs–0.05% | |
| | |
Office Properties Income Trust, 4.00%, 07/15/2022 | | | 689,000 | | | | 698,238 | |
|
Oil & Gas Exploration & Production–0.07% | |
| | |
Cameron LNG LLC, 3.70%, 01/15/2039(d) | | | 622,000 | | | | 671,860 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
Oil & Gas Exploration & Production–(continued) | |
ConocoPhillips, 4.15%, 11/15/2034 | | $ | 230,000 | | | $ | 261,220 | |
| | | | | 933,080 | |
|
Oil & Gas Storage & Transportation–0.65% | |
Energy Transfer L.P., | |
Series 5Y, 4.20%, 09/15/2023 | | | 1,724,000 | | | | 1,801,051 | |
4.90%, 03/15/2035 | | | 344,000 | | | | 389,816 | |
5.30%, 04/01/2044 | | | 587,000 | | | | 673,638 | |
5.00%, 05/15/2050 | | | 724,000 | | | | 835,131 | |
Enterprise Products Operating LLC, | |
6.45%, 09/01/2040 | | | 23,000 | | | | 31,906 | |
4.25%, 02/15/2048 | | | 696,000 | | | | 789,732 | |
Kinder Morgan, Inc., 5.30%, 12/01/2034 | | | 407,000 | | | | 490,537 | |
MPLX L.P., | |
4.50%, 07/15/2023 | | | 1,721,000 | | | | 1,792,216 | |
4.50%, 04/15/2038 | | | 810,000 | | | | 908,688 | |
Plains All American Pipeline L.P./PAA Finance Corp., 3.65%, 06/01/2022 | | | 323,000 | | | | 324,599 | |
Spectra Energy Partners L.P., 4.50%, 03/15/2045 | | | 488,000 | | | | 565,465 | |
Texas Eastern Transmission L.P., 7.00%, 07/15/2032 | | | 169,000 | | | | 229,202 | |
| | | | | 8,831,981 | |
|
Other Diversified Financial Services–1.02% | |
AerCap Ireland Capital DAC/AerCap Global Aviation Trust (Ireland), 3.85%, 10/29/2041 | | | 410,000 | | | | 427,824 | |
| | |
Convertible Trust - Energy, Series 2019-1, 0.33%, 09/19/2024 | | | 5,856,000 | | | | 6,652,416 | |
Convertible Trust - Media, Series 2019, Class 1, 0.25%, 12/04/2024 | | | 5,872,000 | | | | 6,890,792 | |
| | | | | 13,971,032 | |
|
Packaged Foods & Meats–0.00% | |
Mead Johnson Nutrition Co. (United Kingdom), 4.13%, 11/15/2025 | | | 63,000 | | | | 68,713 | |
|
Paper Packaging–0.02% | |
International Paper Co., 6.00%, 11/15/2041 | | | 223,000 | | | | 308,705 | |
|
Pharmaceuticals–0.79% | |
AstraZeneca PLC (United Kingdom), 2.38%, 06/12/2022 | | | 2,905,000 | | | | 2,923,560 | |
| | |
Bayer US Finance II LLC (Germany), 4.38%, 12/15/2028(d) | | | 985,000 | | | | 1,101,169 | |
| | |
Bristol-Myers Squibb Co., 4.13%, 06/15/2039 | | | 621,000 | | | | 735,887 | |
| | |
GlaxoSmithKline Capital, Inc. (United Kingdom), 6.38%, 05/15/2038 | | | 64,000 | | | | 93,809 | |
Jazz Investments I Ltd., Conv., 2.00%, 06/15/2026 | | | 1,556,000 | | | | 1,764,115 | |
| | |
Pacira BioSciences , Inc., Conv., 0.75%, 08/01/2025 | | | 2,342,000 | | | | 2,601,084 | |
Supernus Pharmaceuticals, Inc., Conv., 0.63%, 04/01/2023 | | | 1,182,000 | | | | 1,170,919 | |
Zoetis, Inc., 4.70%, 02/01/2043 | | | 333,000 | | | | 425,381 | |
| | | | | 10,815,924 | |
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 | |
Property & Casualty Insurance–0.19% | | | | | |
Allstate Corp. (The), 3.28%, 12/15/2026 | | $ | 302,000 | | | $ | 324,553 | |
Markel Corp., | | | | | | | | |
5.00%, 03/30/2043 | | | 351,000 | | | | 429,182 | |
5.00%, 05/20/2049 | | | 497,000 | | | | 635,133 | |
Travelers Cos., Inc. (The), 4.60%, 08/01/2043(c) | | | 605,000 | | | | 774,783 | |
W.R. Berkley Corp., 4.63%, 03/15/2022 | | | 382,000 | | | | 385,057 | |
| | | | | 2,548,708 | |
|
Railroads–0.27% | |
Canadian Pacific Railway Co. (Canada), 3.00%, 12/02/2041 | | | 399,000 | | | | 408,783 | |
| | |
CSX Corp., 5.50%, 04/15/2041 | | | 346,000 | | | | 462,146 | |
Norfolk Southern Corp., 3.40%, 11/01/2049 | | | 461,000 | | | | 496,109 | |
Union Pacific Corp., | | | | | | | | |
3.65%, 02/15/2024 | | | 92,000 | | | | 96,198 | |
3.20%, 05/20/2041 | | | 1,018,000 | | | | 1,085,819 | |
4.15%, 01/15/2045 | | | 426,000 | | | | 506,895 | |
3.84%, 03/20/2060 | | | 519,000 | | | | 613,038 | |
| | | | | | | | 3,668,988 | |
Real Estate Services–0.25% | |
Redfin Corp., Conv., 0.00%, 10/15/2025(e) | | | 3,783,000 | | | | 3,388,149 | |
|
Regional Banks–0.05% | |
PNC Financial Services Group, Inc. (The), 3.45%, 04/23/2029 | | | 689,000 | | | | 750,893 | |
|
Reinsurance–0.07% | |
PartnerRe Finance B LLC, 3.70%, 07/02/2029 | | | 500,000 | | | | 545,166 | |
Reinsurance Group of America, Inc., 4.70%, 09/15/2023 | | | 352,000 | | | | 372,871 | |
| | | | | 918,037 | |
|
Renewable Electricity–0.06% | |
Oglethorpe Power Corp., 4.55%, 06/01/2044 | | | 679,000 | | | | 771,608 | |
|
Restaurants–0.06% | |
Starbucks Corp., 3.55%, 08/15/2029 | | | 705,000 | | | | 770,782 | |
|
Retail REITs–0.08% | |
Regency Centers L.P., 2.95%, 09/15/2029 | | | 750,000 | | | | 779,223 | |
4.65%, 03/15/2049 | | | 256,000 | | | | 318,790 | |
| | | | | 1,098,013 | |
|
Semiconductors–0.73% | |
Broadcom, Inc., | | | | | | | | |
4.25%, 04/15/2026 | | | 1,245,000 | | | | 1,359,026 | |
3.47%, 04/15/2034(d) | | | 640,000 | | | | 670,717 | |
Marvell Technology, Inc., 2.45%, 04/15/2028 | | | 1,210,000 | | | | 1,228,127 | |
Microchip Technology, Inc., Conv., 0.13%, 11/15/2024 | | | 3,865,000 | | | | 4,802,262 | |
Micron Technology, Inc., | | | | | | | | |
4.66%, 02/15/2030 | | | 680,000 | | | | 784,683 | |
3.37%, 11/01/2041 | | | 179,000 | | | | 184,067 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
Semiconductors–(continued) | |
NXP B.V./NXP Funding LLC (China), 5.35%, 03/01/2026(d) | | $ | 676,000 | | | $ | 764,538 | |
Texas Instruments, Inc., 2.63%, 05/15/2024 | | | 215,000 | | | | 223,389 | |
| | | | | 10,016,809 | |
|
Specialized REITs–0.32% | |
American Tower Corp., 1.60%, 04/15/2026 | | | 852,000 | | | | 844,125 | |
Crown Castle International Corp., | | | | | | | | |
2.50%, 07/15/2031 | | | 1,413,000 | | | | 1,404,084 | |
4.75%, 05/15/2047 | | | 46,000 | | | | 56,578 | |
EPR Properties, 4.75%, 12/15/2026 | | | 1,556,000 | | | | 1,663,984 | |
LifeStorage L.P., 3.50%, 07/01/2026 | | | 404,000 | | | | 432,689 | |
| | | | | 4,401,460 | |
|
Specialty Chemicals–0.01% | |
Sherwin-Williams Co. (The), 4.50%, 06/01/2047 | | | 159,000 | | | | 198,657 | |
| |
|
Systems Software–0.47% | |
Mandiant, Inc., | |
Series B, Conv., 1.63%, 06/01/2022(f) | | | 1,795,000 | | | | 1,799,633 | |
| |
Series A, Conv., 1.00%, 06/01/2025(f) | | | 1,642,000 | | | | 1,620,013 | |
| |
Microsoft Corp., 3.50%, 02/12/2035 | | | 404,000 | | | | 462,108 | |
| |
Oracle Corp., 3.60%, 04/01/2040 | | | 965,000 | | | | 969,441 | |
| |
VMware, Inc., 1.00%, 08/15/2024 | | | 1,509,000 | | | | 1,495,304 | |
| |
| | | | 6,346,499 | |
| |
|
Technology Distributors–0.05% | |
Avnet, Inc., 4.63%, 04/15/2026 | | | 671,000 | | | | 736,188 | |
| |
|
Technology Hardware, Storage & Peripherals–0.24% | |
Apple, Inc., | | | | | | | | |
2.15%, 02/09/2022 | | | 691,000 | | | | 692,255 | |
| |
3.35%, 02/09/2027 | | | 315,000 | | | | 342,062 | |
| |
Western Digital Corp., Conv., 1.50%, 02/01/2024 | | | 2,149,000 | | | | 2,179,892 | |
| |
| | | | 3,214,209 | |
| |
|
Tobacco–0.23% | |
Altria Group, Inc., 5.80%, 02/14/2039 | | | 1,124,000 | | | | 1,352,996 | |
| |
Philip Morris International, Inc., 3.60%, 11/15/2023 | | | 369,000 | | | | 387,156 | |
| |
4.88%, 11/15/2043 | | | 1,102,000 | | | | 1,344,159 | |
| |
| | | | 3,084,311 | |
| |
|
Trading Companies & Distributors–0.10% | |
Air Lease Corp., | | | | | | | | |
3.00%, 09/15/2023 | | | 63,000 | | | | 64,682 | |
| |
4.25%, 09/15/2024 | | | 427,000 | | | | 454,500 | |
| |
| | |
Aircastle Ltd., 4.40%, 09/25/2023 | | | 771,000 | | | | 808,156 | |
| |
| | | | 1,327,338 | |
| |
|
Trucking–0.06% | |
Aviation Capital Group LLC, 4.88%, 10/01/2025(d) | | | 709,000 | | | | 767,294 | |
| |
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 | |
Wireless Telecommunication Services–0.35% | |
America Movil S.A.B. de C.V. (Mexico), 4.38%, 07/16/2042 | | $ | 600,000 | | | $ | 713,806 | |
Rogers Communications, Inc. (Canada), | | | | | | | | |
4.50%, 03/15/2043 | | | 533,000 | | | | 613,035 | |
4.30%, 02/15/2048 | | | 1,394,000 | | | | 1,599,171 | |
T-Mobile USA, Inc., | | | | | | | | |
2.70%, 03/15/2032(d) | | | 1,074,000 | | | | 1,081,829 | |
3.40%, 10/15/2052(d) | | | 750,000 | | | | 747,936 | |
| | | | | | | | 4,755,777 | |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $255,110,127) | | | | 272,660,791 | |
|
U.S. Treasury Securities–11.51% | |
U.S. Treasury Bills–0.00% | |
0.05%, 02/17/2022(j)(k) | | | 10,000 | | | | 9,999 | |
|
U.S. Treasury Bonds–1.32% | |
4.50%, 02/15/2036 | | | 2,636,800 | | | | 3,624,776 | |
4.50%, 08/15/2039 | | | 36,400 | | | | 51,415 | |
4.38%, 05/15/2040 | | | 72,800 | | | | 101,923 | |
2.00%, 11/15/2041 | | | 5,787,800 | | | | 5,855,626 | |
2.00%, 08/15/2051 | | | 8,191,700 | | | | 8,352,974 | |
| | | | | | | | 17,986,714 | |
|
U.S. Treasury Notes–10.19% | |
0.50%, 11/30/2023(c) | | | 24,664,300 | | | | 24,571,809 | |
1.00%, 12/15/2024 | | | 24,618,500 | | | | 24,648,312 | |
1.25%, 11/30/2026(c) | | | 54,595,800 | | | | 54,570,208 | |
1.50%, 11/30/2028 | | | 25,222,100 | | | | 25,328,506 | |
1.38%, 11/15/2031(c) | | | 9,916,800 | | | | 9,794,389 | |
| | | | | | | | 138,913,224 | |
Total U.S. Treasury Securities
(Cost $156,445,497) | | | | 156,909,937 | |
| | |
| | | Shares | | | | |
|
Preferred Stocks–0.57% | |
|
Asset Management & Custody Banks–0.19% | |
AMG Capital Trust II, 5.15%, Conv. Pfd. | | | 44,432 | | | | 2,589,497 | |
| | |
Diversified Banks–0.02% | | | | | | | | |
Wells Fargo & Co., 5.85%, Series Q, Pfd.(g) | | | 10,911 | | | | 292,306 | |
|
Oil & Gas Storage & Transportation–0.36% | |
El Paso Energy Capital Trust I, 4.75%, Conv. Pfd. | | | 95,499 | | | | 4,831,294 | |
Total Preferred Stocks
(Cost $5,960,701) | | | | 7,713,097 | |
Investment Abbreviations:
Conv. - Convertible
LIBOR - London Interbank Offered Rate
Pfd. - Preferred
REIT - Real Estate Investment Trust
USD - U.S. Dollar
| | | | | | | | | | | | |
| | | | Principal | | | | |
| | | | Amount | | | Value | |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–0.07% | |
|
Federal Home Loan Mortgage Corp. (FHLMC)–0.07% | |
6.75%, 03/15/2031 | | | $ | 682,000 | | | $ | 980,539 | |
5.50%, 02/01/2037 | | | | 4 | | | | 4 | |
| | | | | | | | | | | | 980,543 | |
Federal National Mortgage Association (FNMA)–0.00% | |
9.50%, 04/01/2030 | | | | 421 | | | | 458 | |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $842,793) | | | | 981,001 | |
Shares | |
|
Money Market Funds–3.51% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(l)(m) | | | | 18,629,728 | | | | 18,629,728 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(l)(m) | | | | 7,881,664 | | | | 7,883,240 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(l)(m) | | | | 21,291,118 | | | | 21,291,118 | |
Total Money Market Funds
(Cost $47,798,900) | | | | 47,804,086 | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-99.94% (Cost $1,025,791,099) | | | | 1,362,355,568 | |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
|
Money Market Funds–5.53% | |
Invesco Private Government Fund, 0.02%(l)(m)(n) | | | | 22,604,761 | | | | 22,604,761 | |
Invesco Private Prime Fund, 0.11%(l)(m)(n) | | | | 52,733,897 | | | | 52,744,442 | |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $75,349,205) | | | | 75,349,203 | |
TOTAL INVESTMENTS IN SECURITIES–105.47% (Cost $1,101,140,304) | | | | 1,437,704,771 | |
OTHER ASSETS LESS LIABILITIES—(5.47)% | | | | (74,550,642 | ) |
NET ASSETS–100.00% | | | $ | 1,363,154,129 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Equity and Income Fund
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021 was $51,127,304, which represented 3.75% of the Fund’s Net Assets. |
| (e) | Zero coupon bond issued at a discount. |
| (f) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
| (g) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (h) | Perpetual bond with no specified maturity date. |
| (i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2021. |
| (j) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L. |
| (k) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at
Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation (Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $ | 22,007,337 | | | $ | 83,704,060 | | | $ | (87,081,669 | ) | | $ | - | | | $ | - | | | $ | 18,629,728 | | | $ | 5,502 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 11,695,851 | | | | 58,243,393 | | | | (62,055,730 | ) | | | (1,649 | ) | | | 1,375 | | | | 7,883,240 | | | | 1,526 | |
Invesco Treasury Portfolio, Institutional Class | | | 25,151,242 | | | | 95,661,783 | | | | (99,521,907 | ) | | | - | | | | - | | | | 21,291,118 | | | | 2,325 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 373,494,852 | | | | (350,890,091 | ) | | | - | | | | - | | | | 22,604,761 | | | | 1,277 | * |
Invesco Private Prime Fund | | | - | | | | 812,269,719 | | | | (759,521,654 | ) | | | (2 | ) | | | (3,621 | ) | | | 52,744,442 | | | | 16,562 | * |
Total | | $ | 58,854,430 | | | $ | 1,423,373,807 | | | $ | (1,359,071,051 | ) | | $ | (1,651 | ) | | $ | (2,246 | ) | | $ | 123,153,289 | | | $ | 27,192 | |
| * | 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, 2021. |
| (n) | 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 | |
| |
| Short Futures Contracts | | | | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
| |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
U.S. Treasury 5 Year Notes | | | | 9 | | | | March-2022 | | | $
| (1,088,789
| )
| | $ | (4,570 | ) | | | $(4,570) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
|
| Open Forward Foreign Currency Contracts | |
| |
| | | | | | | | | | | | Unrealized | |
| Settlement | | | | | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | | | | | Deliver | | | | | | Receive | | | (Depreciation) | |
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
01/07/2022 | | | State Street Bank & Trust Co. | | | | | | | | CAD 423,840 | | | | USD | | | | 335,213 | | | $ | 149 | |
| |
01/07/2022 | | | State Street Bank & Trust Co. | | | | | | | | USD 1,487,231 | | | | CAD | | | | 1,906,023 | | | | 19,564 | |
| |
01/07/2022 | | | State Street Bank & Trust Co. | | | | | | | | USD 525,454 | | | | EUR | | | | 464,710 | | | | 3,648 | |
Subtotal-Appreciation | | | | | | | | | | | | | | | | | | | | | | | 23,361 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
01/07/2022 | | | State Street Bank & Trust Co. | | | | | | | | CAD 8,178,028 | | | | USD | | | | 6,387,956 | | | | (77,132 | ) |
| |
01/07/2022 | | | State Street Bank & Trust Co. | | | | | | | | EUR 7,661,475 | | | | USD | | | | 8,639,430 | | | | (83,666 | ) |
| |
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) |
|
01/07/2022 | | State Street Bank & Trust Co. | | | GBP | | | | 10,188,543 | | | | USD | | | | 13,498,363 | | | $(292,282) |
|
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | (453,080) |
|
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | $(429,719) |
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. Equity and Income Fund
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $977,992,199)* | | $ | 1,314,551,482 | |
Investments in affiliated money market funds, at value
(Cost $123,148,105) | | | 123,153,289 | |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 23,361 | |
Foreign currencies, at value (Cost $725) | | | 728 | |
Receivable for: | | | | |
Fund shares sold | | | 340,221 | |
Dividends | | | 1,012,741 | |
Interest | | | 1,778,216 | |
Investment for trustee deferred compensation and retirement plans | | | 194,510 | |
Other assets | | | 5,298 | |
Total assets | | | 1,441,059,846 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable-futures contracts | | | 614 | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 453,080 | |
Payable for: | | | | |
Fund shares reacquired | | | 515,649 | |
Amount due custodian | | | 492,862 | |
Collateral upon return of securities loaned | | | 75,349,205 | |
Accrued fees to affiliates | | | 767,858 | |
Accrued other operating expenses | | | 112,547 | |
Trustee deferred compensation and retirement plans | | | 213,902 | |
Total liabilities | | | 77,905,717 | |
Net assets applicable to shares outstanding | | $ | 1,363,154,129 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 873,188,401 | |
Distributable earnings | | | 489,965,728 | |
| | | $ | 1,363,154,129 | |
| |
Net Assets: | | | | |
Series I | | $ | 79,349,328 | |
Series II | | $ | 1,283,804,801 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 3,834,817 | |
Series II | | | 62,462,245 | |
Series I: | | | | |
Net asset value per share | | $ | 20.69 | |
Series II: | | | | |
Net asset value per share | | $ | 20.55 | |
| * | At December 31, 2021, securities with an aggregate value of $73,766,595 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Interest | | $ | 6,624,658 | |
Dividends (net of foreign withholding taxes of $188,235) | | | 17,452,284 | |
Dividends from affiliated money market funds (includes securities lending income of $75,520) | | | 84,873 | |
Total investment income | | | 24,161,815 | |
| |
Expenses: | | | | |
Advisory fees | | | 5,097,444 | |
Administrative services fees | | | 2,215,827 | |
Distribution fees-Series II | | | 3,205,948 | |
Transfer agent fees | | | 54,097 | |
Trustees’ and officers’ fees and benefits | | | 33,772 | |
Reports to shareholders | | | 4,454 | |
Professional services fees | | | 53,277 | |
Other | | | 17,626 | |
Total expenses | | | 10,682,445 | |
Less: Fees waived | | | (13,973 | ) |
Net expenses | | | 10,668,472 | |
Net investment income | | | 13,493,343 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 156,586,825 | |
Affiliated investment securities | | | (2,246 | ) |
Foreign currencies | | | 14,746 | |
Forward foreign currency contracts | | | 1,044,796 | |
Futures contracts | | | 30,697 | |
| | | | 157,674,818 | |
Change in net unrealized appreciation (depreciation) of: Unaffiliated investment securities | | | 52,849,868 | |
Affiliated investment securities | | | (1,651 | ) |
Foreign currencies | | | (8,799 | ) |
Forward foreign currency contracts | | | 49,434 | |
Futures contracts | | | (1,581 | ) |
| | | | 52,887,271 | |
Net realized and unrealized gain | | | 210,562,089 | |
Net increase in net assets resulting from operations | | $ | 224,055,432 | |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
Operations: | | | | | | | | |
Net investment income | | $ | 13,493,343 | | | $ | 17,914,424 | |
Net realized gain | | | 157,674,818 | | | | 9,273,219 | |
Change in net unrealized appreciation | | | 52,887,271 | | | | 67,118,598 | |
Net increase in net assets resulting from operations | | | 224,055,432 | | | | 94,306,241 | |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,210,004 | ) | | | (2,664,901 | ) |
Series II | | | (33,156,264 | ) | | | (74,585,577 | ) |
Total distributions from distributable earnings | | | (35,366,268 | ) | | | (77,250,478 | ) |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 28,892,785 | | | | (8,088,300 | ) |
Series II | | | (121,909,012 | ) | | | (27,486,339 | ) |
Net increase (decrease) in net assets resulting from share transactions | | | (93,016,227 | ) | | | (35,574,639 | ) |
Net increase (decrease) in net assets | | | 95,672,937 | | | | (18,518,876 | ) |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,267,481,192 | | | | 1,286,000,068 | |
End of year | | $ | 1,363,154,129 | | | $ | 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
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 12/31/21 | | | $17.93 | | | | $0.25 | | | | $ 3.09 | | | | $ 3.34 | | | | $(0.38) | | | | $(0.20) | | | | $(0.58) | | | | $20.69 | | | | 18.65 | % | | $ | 79,349 | | | | 0.55 | % | | | 0.55 | % | | | 1.24 | % | | | 144 | % |
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 | | | | 0.57 | | | | 1.84 | | | | 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 | (d) | | | 1.58 | | | | 1.93 | | | | (0.31 | ) | | | (0.34 | ) | | | (0.65 | ) | | | 19.04 | | | | 11.03 | | | | 184,768 | | | | 0.55 | | | | 0.56 | | | | 1.93 | (d) | | | 119 | |
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 17.82 | | | | 0.20 | | | | 3.07 | | | | 3.27 | | | | (0.34 | ) | | | (0.20 | ) | | | (0.54 | ) | | | 20.55 | | | | 18.35 | | | | 1,283,805 | | | | 0.80 | | | | 0.80 | | | | 0.99 | | | | 144 | |
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 | | | | 0.82 | | | | 1.59 | | | | 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 | (d) | | | 1.57 | | | | 1.88 | | | | (0.27 | ) | | | (0.34 | ) | | | (0.61 | ) | | | 18.95 | | | | 10.78 | | | | 1,385,490 | | | | 0.80 | | | | 0.81 | | | | 1.68 | (d) | | | 119 | |
| |
| (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. For the year ended December 31, 2021, the portfolio turnover calculation excludes the value of securities purchased of $22,225,472 in connection with the acquisition of Invesco V.I. Managed Volatility Fund into the Fund. |
| (d) | 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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
Invesco V.I. Equity and Income 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.
| 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 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. |
| 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. |
| O. | Other Risks – Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability. |
| P. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 1.50% 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, 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.
Invesco V.I. Equity and Income Fund
Further, the Adviser has contractually agreed, through at least June 30, 2023, 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, 2021, the Adviser waived advisory fees of $13,973.
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, 2021, Invesco was paid $192,287 for accounting and fund administrative services and was reimbursed $2,023,540 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as
Distribution fees.
For the year ended December 31, 2021, the Fund incurred $6,734 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, 2021. 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 | | $ | 847,159,999 | | | $ | 29,126,657 | | | | $- | | | $ | 876,286,656 | |
| |
U.S. Dollar Denominated Bonds & Notes | | | - | | | | 272,660,791 | | | | - | | | | 272,660,791 | |
| |
U.S. Treasury Securities | | | - | | | | 156,909,937 | | | | - | | | | 156,909,937 | |
| |
Preferred Stocks | | | 7,713,097 | | | | – | | | | - | | | | 7,713,097 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | - | | | | 981,001 | | | | - | | | | 981,001 | |
| |
Money Market Funds | | | 47,804,086 | | | | 75,349,203 | | | | - | | | | 123,153,289 | |
| |
Total Investments in Securities | | | 902,677,182 | | | | 535,027,589 | | | | - | | | | 1,437,704,771 | |
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Forward Foreign Currency Contracts | | | - | | | | 23,361 | | | | - | | | | 23,361 | |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | (4,570 | ) | | | – | | | | - | | | | (4,570 | ) |
| |
Forward Foreign Currency Contracts | | | - | | | | (453,080 | ) | | | - | | | | (453,080 | ) |
| |
| | | (4,570 | ) | | | (453,080 | ) | | | - | | | | (457,650 | ) |
| |
Total Other Investments | | | (4,570 | ) | | | (429,719 | ) | | | - | | | | (434,289 | ) |
| |
Total Investments | | $ | 902,672,612 | | | $ | 534,597,870 | | | | $- | | | $ | 1,437,270,482 | |
| |
| * | 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
Invesco V.I. Equity and Income Fund
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, 2021:
| | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Currency
Risk | | | Interest Rate Risk | | | Total | |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 23,361 | | | $ | - | | | $ | 23,361 | |
| |
Derivatives not subject to master netting agreements | | | - | | | | - | | | | - | |
| |
Total Derivative Assets subject to master netting agreements | | $ | 23,361 | | | $ | - | | | $ | 23,361 | |
| |
| | | | | | | | | | | | | | | | |
| | | Value | |
| Derivative Liabilities | | Currency
Risk | | | | | | Interest
Rate Risk | | | Total | |
| |
Unrealized depreciation on futures contracts - Exchange-Traded(a) | | $ | - | | | | | | | $ | (4,570 | ) | | $ | (4,570 | ) |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | (453,080 | ) | | | | | | | - | | | | (453,080 | ) |
| |
Total Derivative Liabilities | | | (453,080 | ) | | | | | | | (4,570 | ) | | | (457,650 | ) |
| |
Derivatives not subject to master netting agreements | | | - | | | | | | | | 4,570 | | | | 4,570 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (453,080 | ) | | | | | | $ | - | | | $ | (453,080 | ) |
| |
| (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, 2021.
| | | | | | | | | | | | | | |
| | | 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. | | $23,361 | | $(453,080) | | $(429,719) | | $- | | $- | | | $(429,719 | ) |
| |
Effect of Derivative Investments for the year ended December 31, 2021
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:
Forward foreign currency contracts | | $ | 1,044,796 | | | $ | - | | | $ | 1,044,796 | |
| |
Futures contracts | | | - | | | | 30,697 | | | | 30,697 | |
| |
Change in Net Unrealized Appreciation (Depreciation):
Forward foreign currency contracts | | | 49,434 | | | | - | | | | 49,434 | |
| |
Futures contracts | | | - | | | | (1,581 | ) | | | (1,581 | ) |
| |
Total | | $ | 1,094,230 | | | $ | 29,116 | | | $ | 1,123,346 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | | | |
| | | Forward | | | | |
| | | Foreign Currency | | | | Futures |
| | | Contracts | | | | Contracts |
|
Average notional value | | $46,751,272 | | | | $1,120,109 |
|
NOTE 5–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2021, the Fund engaged in securities purchases of $1,880,377.
Invesco V.I. Equity and Income Fund
NOTE 6–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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 8–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | 35,366,268 | | | $ | 29,918,266 | |
Long-term capital gain | | | - | | | | 47,332,212 | |
Total distributions | | $ | 35,366,268 | | | $ | 77,250,478 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
| |
Undistributed ordinary income | | $ | 33,569,662 | |
| |
Undistributed long-term capital gain | | | 131,814,457 | |
| |
Net unrealized appreciation - investments | | | 324,694,584 | |
| |
Net unrealized appreciation - foreign currencies | | | 9,258 | |
| |
Temporary book/tax differences | | | (122,233 | ) |
| |
Shares of beneficial interest | | | 873,188,401 | |
| |
Total net assets | | $ | 1,363,154,129 | |
| |
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, convertible securities,equity securities, amortization and accretion on debt securities.
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, 2021.
NOTE 9–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $351,734,714 and $570,045,989, 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 | | $ | 335,999,865 | |
Aggregate unrealized (depreciation) of investments | | | (11,305,281 | ) |
| |
Net unrealized appreciation of investments | | $ | 324,694,584 | |
| |
Cost of investments for tax purposes is $1,112,575,898.
NOTE 10–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of contingent payment debt instruments, grantor trusts, amortization and accretion on debt securities, on December 31, 2021, undistributed net investment income was increased by $4,351,145, undistributed net realized gain was decreased by $2,863,485 and shares of beneficial interest was decreased by $1,487,660. Further, as a result of tax deferrals acquired in the reorganization of Invesco V.I. Managed Volatility Fund into the Fund, undistributed net investment income was decreased by $108,681, undistributed net realized gain was decreased by $2,486,418 and shares of beneficial interest was increased by $2,595,099. These reclassifications had no effect on the net assets of the Fund.
Invesco V.I. Equity and Income Fund
NOTE 11–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 500,860 | | | $ | 10,189,630 | | | | 192,505 | | | $ | 3,212,832 | |
| |
Series II | | | 1,860,777 | | | | 37,310,495 | | | | 8,497,726 | | | | 137,573,138 | |
| |
| | | | |
Issued as reinvestment of dividends:
| | | | | | | | | | | | | | | | |
Series I | | | 107,752 | | | | 2,210,004 | | | | 166,556 | | | | 2,664,901 | |
| |
Series II | | | 1,626,902 | | | | 33,156,264 | | | | 4,685,024 | | | | 74,585,577 | |
| |
| | | | |
Issued in connection with acquisitions:(b)
| | | | | | | | | | | | | | | | |
Series I | | | 1,421,249 | | | | 28,595,529 | | | | - | | | | - | |
| |
Series II | | | 55,570 | | | | 1,110,840 | | | | - | | | | - | |
| |
| | | | |
Reacquired:
| | | | | | | | | | | | | | | | |
Series I | | | (599,027 | ) | | | (12,102,378 | ) | | | (851,279 | ) | | | (13,966,033 | ) |
| |
Series II | | | (9,775,168 | ) | | | (193,486,611 | ) | | | (15,407,946 | ) | | | (239,645,054 | ) |
| |
Net increase (decrease) in share activity | | | (4,801,085 | ) | | $ | (93,016,227 | ) | | | (2,717,414 | ) | | $ | (35,574,639 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 71% 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, 2021, the Fund acquired all the net assets of Invesco V.I. Managed Volatility Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Board of Trustees of the Fund on December 3, 2020 and by the shareholders of the Target Fund on April 5, 2021. 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 1,476,819 shares of the Fund for 2,408,211 shares outstanding of the Target Fund as of the close of business on April 30, 2021. 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, 2021. The Target Fund’s net assets as of the close of business on April 30, 2021 of $29,706,369, including $8,543,643 of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $1,356,523,614 and $1,386,229,983 immediately after the acquisition. |
The pro forma results of operations for the year ended December 31, 2021 assuming the reorganization had been completed on January 1, 2021, the beginning of the annual reporting period are as follows:
| | | | |
Net investment income | | $ | 13,487,872 | |
Net realized/unrealized gains | | | 212,925,767 | |
Change in net assets resulting from operations | | $ | 226,413,639 | |
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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value
(12/31/21) | | Expenses Paid During Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,047.00 | | $2.84 | | $1,022.43 | | $2.80 | | 0.55% |
Series II | | 1,000.00 | | 1,045.60 | | 4.12 | | 1,021.17 | | 4.08 | | 0.80 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
| | | | | | | |
| | Federal and State Income Tax | | | |
| | Qualified Dividend Income* | | | 56.31% | |
| | Corporate Dividends Received Deduction* | | | 44.70% | |
| | U.S. Treasury Obligations* | | | 3.16% | |
| | Qualified Business Income* | | | 0.00% | |
| | Business Interest Income* | | | 16.93% | |
| |
| | * 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.
| | | | | | | | |
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) | | 186 | | 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. Equity 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 – 1957
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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962
Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School–Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959
Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management–Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956
Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
Invesco V.I. Equity 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) |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957
Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954
Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco V.I. Equity 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | | | |
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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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)
| | | | | | | | |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company | | N/A | | N/A |
| | | | | Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes–1967
Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Equity 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; Vice President, Invesco Advisers, Inc.; 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. Equity and Income Fund
| | |
Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Global Core Equity Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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. | | VIGCE-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2021, 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. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| |
Series I Shares | | | 15.97 | % |
Series II Shares | | | 15.71 | |
MSCI World Indexq (Broad Market/Style-Specific Index) | | | 21.82 | |
Lipper VUF Global Multi-Cap Value Funds Classification Average∎ (Peer Group) | | | 17.45 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value stocks outperforming growth stocks. The successful rollout of coronavirus (COVID-19) vaccinations in the US and UK benefited equity markets. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand for goods.
During the second quarter of 2021, global equity markets were again bolstered by the continued acceleration of vaccination rollouts and easing of COVID-related restrictions in most developed markets. In a reversal from the first quarter, growth stocks outperformed value stocks in most regions. Emerging market equities were led by Brazil which benefited from global tailwinds, while regulatory concerns weighed on Chinese equities.
Developed global equity markets were flat in the third quarter of 2021 amid concerns about rising inflation, supply disruptions and the economic growth rate. Emerging market equities declined during the quarter, primarily due to weak performance from Chinese equities, which were affected by significant regulatory changes in the private tutoring industry, increased regulation in the technology sector and the potential default of a large Chinese property developer.
Most developed global equity markets ended the fourth quarter of 2021 in positive territory despite rising inflation and the emergence of Omicron, a new COVID-19 variant. Pandemic-related supply chain disruptions and labor shortages intensified during the quarter, resulting in higher costs for companies and consumers. Emerging market equities declined due to COVID-19 concerns and China’s ongoing regulatory tightening and slowing economic growth. Overall, developed market equities outperformed emerging market equities for the fiscal year.
The Fund underperformed its benchmark, the MSCI World Index, primarily due to investments in the consumer staples, financials and information technology sectors which underperformed those of the benchmark over the
fiscal year. In contrast, the Fund’s investments in the communication services sector outperformed the benchmark over the year partially offsetting these underperformance factors.
The most significant individual contributors over the period included Microsoft and Alphabet. Shares in Alphabet have performed well as a result of posting strong earnings and sales results over the fiscal year. The company’s core internet search and digital advertising business has a dominant market share and is well-positioned to benefit from secular growth trends in digital advertising. Shares in Microsoft, one of the largest software companies in the world, rose over the fiscal year as demand for Microsoft’s cloud-based business services continues to drive strong operating results.
The most significant individual detractors during the fiscal year included Alibaba and Sabre. Alibaba is a Chinese multinational technology company that specializes in e-commerce, retail, internet and technology. Shares in Alibaba fell over the fiscal year due to increased regulatory crackdowns by the Chinese government and fears that more punitive actions by regulators would impair Alibaba’s profitability or assets. Sabre is a leading technology firm, serving the global travel and tourism industry. Shares in Sabre declined over the fiscal year due to the recent surge in COVID-19 cases related to the recent Omicron variant, which depressed travel demand over the quarter.
Thank you for your investment in Invesco V.I. Global Core Equity Fund.
Portfolio manager(s):
Michael Hatcher
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (1/2/97) | | | 5.95 | % |
10 Years | | | 9.72 | |
5 Years | | | 11.34 | |
1 Year | | | 15.97 | |
| |
Series II Shares | | | | |
Inception (6/1/10) | | | 8.75 | % |
10 Years | | | 9.45 | |
5 Years | | | 11.07 | |
1 Year | | | 15.71 | |
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 US issuers.
| ∎ | | Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data is 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 | | | | 52.41 | % |
United Kingdom | | | | 8.82 | |
Germany | | | | 8.64 | |
Switzerland | | | | 6.53 | |
France | | | | 3.02 | |
Hong Kong | | | | 2.79 | |
China | | | | 2.74 | |
Belgium | | | | 2.65 | |
Netherlands | | | | 2.55 | |
| |
Countries, each less than 2% of portfolio | | | | 3.70 | |
Money Market Funds Plus Other Assets Less Liabilities | | | | 6.15 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
1. Visa, Inc., Class A | | | | 4.94 | % |
2. Microsoft Corp. | | | | 4.81 | |
3. Alphabet, Inc., Class A | | | | 4.50 | |
4. SAP SE | | | | 4.48 | |
5. KION Group AG | | | | 4.16 | |
6. Charter Communications, Inc., Class A | | | | 3.81 | |
7. Temenos AG | | | | 3.74 | |
8. Equinix, Inc. | | | | 3.65 | |
9. British American Tobacco PLC | | | | 3.50 | |
10. London Stock Exchange Group 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, 2021.
|
| Invesco V.I. Global Core Equity Fund |
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–93.85% | |
Belgium–2.65% | | | | | | | | |
Anheuser-Busch InBev S.A./N.V., ADR(a) | | | 33,151 | | | $ | 2,007,293 | |
|
| |
| | |
Canada–1.44% | | | | | | | | |
Constellation Software, Inc. | | | 588 | | | | 1,090,953 | |
|
| |
| | |
China–2.74% | | | | | | | | |
Alibaba Group Holding Ltd., ADR(b) | | | 4,740 | | | | 563,065 | |
|
| |
Kweichow Moutai Co. Ltd., A Shares | | | 4,700 | | | | 1,511,600 | |
|
| |
| | | | | | | 2,074,665 | |
|
| |
| | |
Finland–1.25% | | | | | | | | |
Kone OYJ, Class B | | | 13,271 | | | | 943,710 | |
|
| |
| | |
France–3.02% | | | | | | | | |
LVMH Moet Hennessy Louis Vuitton SE | | | 2,770 | | | | 2,285,805 | |
|
| |
| | |
Germany–8.64% | | | | | | | | |
KION Group AG | | | 28,682 | | | | 3,150,882 | |
|
| |
SAP SE | | | 23,783 | | | | 3,396,712 | |
|
| |
| | | | | | | 6,547,594 | |
|
| |
| | |
Hong Kong–2.79% | | | | | | | | |
AIA Group Ltd. | | | 210,000 | | | | 2,117,098 | |
|
| |
| | |
Japan–1.01% | | | | | | | | |
FANUC Corp. | | | 1,900 | | | | 402,773 | |
|
| |
Nabtesco Corp. | | | 12,300 | | | | 364,157 | |
|
| |
| | | | | | | 766,930 | |
|
| |
| | |
Netherlands–2.55% | | | | | | | | |
Topicus.com, Inc.(b) | | | 21,025 | | | | 1,929,723 | |
|
| |
| | |
Switzerland–6.53% | | | | | | | | |
Cie Financiere Richemont S.A., Wts., expiring 11/22/2023(b) | | | 40,270 | | | | 44,195 | |
|
| |
Roche Holding AG | | | 5,006 | | | | 2,075,164 | |
|
| |
Temenos AG | | | 20,510 | | | | 2,830,141 | |
|
| |
| | | | | | | 4,949,500 | |
|
| |
| | |
United Kingdom–8.82% | | | | | | | | |
British American Tobacco PLC | | | 71,624 | | | | 2,653,768 | |
|
| |
Dechra Pharmaceuticals PLC | | | 8,098 | | | | 583,630 | |
|
| |
Imperial Brands PLC | | | 37,267 | | | | 814,933 | |
|
| |
London Stock Exchange Group PLC | | | 28,131 | | | | 2,633,006 | |
|
| |
| | | | | | | 6,685,337 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
United States–52.41% | |
Accenture PLC, Class A | | | 6,328 | | | $ | 2,623,272 | |
|
| |
Alphabet, Inc., Class A(b) | | | 1,177 | | | | 3,409,816 | |
|
| |
Analog Devices, Inc. | | | 14,264 | | | | 2,507,183 | |
|
| |
Aon PLC, Class A | | | 7,349 | | | | 2,208,815 | |
|
| |
Aptiv PLC(b) | | | 14,014 | | | | 2,311,609 | |
|
| |
AutoZone, Inc.(b) | | | 1,190 | | | | 2,494,704 | |
|
| |
Becton, Dickinson and Co. | | | 8,066 | | | | 2,028,438 | |
|
| |
Charter Communications, Inc., Class A(b) | | | 4,422 | | | | 2,883,011 | |
|
| |
Equinix, Inc. | | | 3,272 | | | | 2,767,589 | |
|
| |
Flowserve Corp. | | | 16,083 | | | | 492,140 | |
|
| |
Honeywell International, Inc. | | | 11,006 | | | | 2,294,861 | |
|
| |
Microsoft Corp. | | | 10,827 | | | | 3,641,337 | |
|
| |
Sabre Corp.(a)(b) | | | 240,533 | | | | 2,066,179 | |
|
| |
Visa, Inc., Class A | | | 17,283 | | | | 3,745,399 | |
|
| |
Walt Disney Co. (The)(b) | | | 12,345 | | | | 1,912,117 | |
|
| |
Zoetis, Inc. | | | 9,530 | | | | 2,325,606 | |
|
| |
| | | | | | | 39,712,076 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $56,949,089) | | | | 71,110,684 | |
|
| |
| | |
Money Market Funds–6.17% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(c)(d) | | | 1,638,209 | | | | 1,638,209 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(c)(d) | | | 1,164,553 | | | | 1,164,786 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 1,872,239 | | | | 1,872,239 | |
|
| |
Total Money Market Funds
(Cost $4,675,287) | | | | 4,675,234 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding Investments purchased with cash collateral from securities on loan)-100.02%
(Cost $61,624,376) | | | | | | | 75,785,918 | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–5.30% | | | | | | | | |
Invesco Private Government Fund, 0.02%(c)(d)(e) | | | 1,204,237 | | | | 1,204,237 | |
|
| |
Invesco Private Prime Fund, 0.11%(c)(d)(e) | | | 2,809,324 | | | | 2,809,885 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $4,014,251) | | | | 4,014,122 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–105.32%
(Cost $65,638,627) | | | | | | | 79,800,040 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(5.32)% | | | | | | | (4,030,575 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 75,769,465 | |
|
| |
Investment Abbreviations:
ADR - American Depositary Receipt
Wts. - Warrants
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, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| | | | | | | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 559,248 | | | | $ | 6,080,193 | | | | $ | (5,001,232 | ) | | | $ | - | | | | $ | - | | | | $ | 1,638,209 | | | | $ | 148 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 343,859 | | | | | 4,337,565 | | | | | (3,516,552 | ) | | | | (36 | ) | | | | (50 | ) | | | | 1,164,786 | | | | | 53 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | | 639,140 | | | | | 6,948,792 | | | | | (5,715,693 | ) | | | | - | | | | | - | | | | | 1,872,239 | | | | | 63 | |
| | | | | | | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | | 730,505 | | | | | 11,334,497 | | | | | (10,860,765 | ) | | | | - | | | | | - | | | | | 1,204,237 | | | | | 107* | |
| | | | | | | |
Invesco Private Prime Fund | | | | 1,095,758 | | | | | 24,192,777 | | | | | (22,478,045 | ) | | | | (129 | ) | | | | (476 | ) | | | | 2,809,885 | | | | | 1,363* | |
| | | | | | | |
Total | | | $ | 3,368,510 | | | | $ | 52,893,824 | | | | $ | (47,572,287 | ) | | | $ | (165 | ) | | | $ | (526 | ) | | | $ | 8,689,356 | | | | $ | 1,734 | |
| | * | 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, 2021. |
| (e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Global Core Equity Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value
(Cost $56,949,089)* | | $ | 71,110,684 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $8,689,538) | | | 8,689,356 | |
|
| |
Foreign currencies, at value (Cost $54,951) | | | 54,252 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 84,019 | |
|
| |
Fund shares sold | | | 362 | |
|
| |
Dividends | | | 103,390 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 24,345 | |
|
| |
Other assets | | | 298 | |
|
| |
Total assets | | | 80,066,706 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 39,953 | |
|
| |
Fund shares reacquired | | | 103,666 | |
|
| |
Amount due custodian | | | 38,049 | |
|
| |
Collateral upon return of securities loaned | | | 4,014,251 | |
|
| |
Accrued fees to affiliates | | | 36,136 | |
|
| |
Accrued other operating expenses | | | 37,906 | |
|
| |
Trustee deferred compensation and retirement plans | | | 27,280 | |
|
| |
Total liabilities | | | 4,297,241 | |
|
| |
Net assets applicable to shares outstanding | | $ | 75,769,465 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 57,445,193 | |
|
| |
Distributable earnings | | | 18,324,272 | |
|
| |
| | $ | 75,769,465 | |
|
| |
Net Assets: | | | | |
Series I | | $ | 65,044,152 | |
|
| |
Series II | | $ | 10,725,313 | |
|
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 5,844,590 | |
|
| |
Series II | | | 963,191 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 11.13 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 11.14 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $3,881,053 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $34,117) | | $ | 887,333 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $3,234) | | | 3,498 | |
|
| |
Non-cash dividend income | | | 55,111 | |
|
| |
Total investment income | | | 945,942 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 498,786 | |
|
| |
Administrative services fees | | | 122,225 | |
|
| |
Distribution fees - Series II | | | 27,341 | |
|
| |
Transfer agent fees | | | 7,499 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 23,183 | |
|
| |
Reports to shareholders | | | 9,259 | |
|
| |
Professional services fees | | | 44,895 | |
|
| |
Other | | | 5,705 | |
|
| |
Total expenses | | | 738,893 | |
|
| |
Less: Fees waived | | | (481 | ) |
|
| |
Net expenses | | | 738,412 | |
|
| |
Net investment income | | | 207,530 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from:
Unaffiliated investment securities | | | 4,096,123 | |
|
| |
Affiliated investment securities | | | (526 | ) |
|
| |
Foreign currencies | | | (4,060 | ) |
|
| |
| | | 4,091,537 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 6,513,971 | |
|
| |
Affiliated investment securities | | | (165 | ) |
|
| |
Foreign currencies | | | (2,600 | ) |
|
| |
| | | 6,511,206 | |
|
| |
Net realized and unrealized gain | | | 10,602,743 | |
|
| |
Net increase in net assets resulting from operations | | $ | 10,810,273 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 207,530 | | | $ | 692,045 | |
|
| |
Net realized gain | | | 4,091,537 | | | | 13,216,988 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | 6,511,206 | | | | (6,493,647 | ) |
|
| |
Net increase in net assets resulting from operations | | | 10,810,273 | | | | 7,415,386 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (10,897,710 | ) | | | (704,199 | ) |
|
| |
Series II | | | (1,801,903 | ) | | | (103,806 | ) |
|
| |
Total distributions from distributable earnings | | | (12,699,613 | ) | | | (808,005 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 8,578,868 | | | | (7,426,489 | ) |
|
| |
Series II | | | 316,507 | | | | (1,056,266 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 8,895,375 | | | | (8,482,755 | ) |
|
| |
Net increase (decrease) in net assets | | | 7,006,035 | | | | (1,875,374 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 68,763,430 | | | | 70,638,804 | |
|
| |
End of year | | $ | 75,769,465 | | | $ | 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 |
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 12/31/21 | | | $ | 11.49 | | | | $ | 0.04 | | | | $ | 1.81 | | | | $ | 1.85 | | | | $ | (0.12 | ) | | | $ | (2.09 | ) | | | $ | (2.21 | ) | | | $ | 11.13 | | | | | 15.97 | % | | | $ | 65,044 | | | | | 0.96 | % | | | | 0.96 | % | | | | 0.31 | % | | | | 27 | % |
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 | | | | | 1.00 | | | | | 1.14 | | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 11.50 | | | | | 0.01 | | | | | 1.82 | | | | | 1.83 | | | | | (0.10 | ) | | | | (2.09 | ) | | | | (2.19 | ) | | | | 11.14 | | | | | 15.71 | | | | | 10,725 | | | | | 1.21 | | | | | 1.21 | | | | | 0.06 | | | | | 27 | |
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 | | | | | 1.25 | | | | | 0.89 | | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Global Core Equity 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
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| Invesco V.I. Global Core Equity Fund |
| 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 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. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $481.
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, 2021, Invesco was paid $10,631 for accounting and fund administrative services and was reimbursed $111,594 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $921 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.
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| Invesco V.I. Global Core Equity Fund |
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 - | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 2,007,293 | | | $ | – | | | $ | – | | | $ | 2,007,293 | |
| |
Canada | | | 1,090,953 | | | | – | | | | – | | | | 1,090,953 | |
| |
China | | | 563,065 | | | | 1,511,600 | | | | – | | | | 2,074,665 | |
| |
Finland | | | – | | | | 943,710 | | | | – | | | | 943,710 | |
| |
France | | | – | | | | 2,285,805 | | | | – | | | | 2,285,805 | |
| |
Germany | | | – | | | | 6,547,594 | | | | – | | | | 6,547,594 | |
| |
Hong Kong | | | – | | | | 2,117,098 | | | | – | | | | 2,117,098 | |
| |
Japan | | | – | | | | 766,930 | | | | – | | | | 766,930 | |
| |
Netherlands | | | 1,929,723 | | | | – | | | | – | | | | 1,929,723 | |
| |
Switzerland | | | 44,195 | | | | 4,905,305 | | | | – | | | | 4,949,500 | |
| |
United Kingdom | | | – | | | | 6,685,337 | | | | – | | | | 6,685,337 | |
| |
United States | | | 39,712,076 | | | | – | | | | – | | | | 39,712,076 | |
| |
Money Market Funds | | | 4,675,234 | | | | 4,014,122 | | | | – | | | | 8,689,356 | |
| |
Total Investments | | $ | 50,022,539 | | | $ | 29,777,501 | | | $ | – | | | $ | 79,800,040 | |
| |
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, 2021 and 2020:
| | | | | | |
| | |
| | | 2021 | | 2020 | |
| |
Ordinary income* | | $3,639,471 | | | $808,005 | |
| |
Long-term capital gain | | 9,060,142 | | | – | |
|
| |
Total distributions | | $12,699,613 | | | $808,005 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Global Core Equity Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
| |
Undistributed ordinary income | | $ | 2,249,829 | |
| |
Undistributed long-term capital gain | | | 1,975,061 | |
| |
Net unrealized appreciation – investments | | | 14,115,334 | |
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (608 | ) |
| |
Temporary book/tax differences | | | (15,344 | ) |
| |
Shares of beneficial interest | | | 57,445,193 | |
|
| |
Total net assets | | $ | 75,769,465 | |
|
| |
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, 2021.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $19,268,658 and $26,288,493, 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 | | $ | 15,028,359 | |
| |
Aggregate unrealized (depreciation) of investments | | | (913,025 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 14,115,334 | |
|
| |
Cost of investments for tax purposes is $65,684,706.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2021, undistributed net investment income was decreased by $3,854 and undistributed net realized gain was increased by $3,854. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 422,604 | | | $ | 5,215,802 | | | | 130,346 | | | $ | 1,243,563 | |
| |
Series II | | | 6,831 | | | | 87,378 | | | | 22,355 | | | | 207,894 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 972,142 | | | | 10,897,710 | | | | 67,388 | | | | 704,199 | |
| |
Series II | | | 160,422 | | | | 1,799,935 | | | | 9,908 | | | | 103,806 | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (609,870 | ) | | | (7,534,644 | ) | | | (984,491 | ) | | | (9,374,251 | ) |
|
| |
Series II | | | (128,015 | ) | | | (1,570,806 | ) | | | (135,324 | ) | | | (1,367,966 | ) |
|
| |
Net increase (decrease) in share activity | | | 824,114 | | | $ | 8,895,375 | | | | (889,818 | ) | | $ | (8,482,755 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 84% 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,019.50 | | $4.78 | | $1,020.47 | | $4.79 | | 0.94% |
Series II | | 1,000.00 | | 1,018.90 | | 6.06 | | 1,019.21 | | 6.06 | | 1.19 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | |
|
|
|
Long-Term Capital Gain Distributions | | $ | 9,060,142 | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 10.17 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
Qualified Business Income* | | | 0.00 | % |
Business Interest Income* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| 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) | | 186 | | 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 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
| Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | |
| 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes– 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Global Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Global Fund (the Fund) underperformed the MSCI All Country World Index. | |
Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | | | | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 15.49 | % |
Series II Shares | | | 15.17 | |
MSCI All Country World Indexq | | | 18.54 | |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value stocks outperforming growth stocks. The successful rollout of coronavirus (COVID-19) vaccinations in the US and UK benefited equity markets. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand for goods.
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value stocks outperforming growth stocks. The successful rollout of coronavirus (COVID- 19) vaccinations in the US and UK benefited equity markets. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand for goods.
During the second quarter of 2021, global equity markets were again bolstered by the continued acceleration of vaccination rollouts and easing of COVID-related restrictions in most developed markets. In a reversal from the first quarter, growth stocks outperformed value stocks in most regions. Emerging market equities were led by Brazil which benefited from global tailwinds, while regulatory concerns weighed on Chinese equities.
Developed global equity markets were flat in the third quarter of 2021 amid concerns about rising inflation, supply disruptions and the economic growth rate. Emerging market equities declined during the quarter, primarily due to weak performance from Chinese equities, which were affected by significant regulatory changes in the private tutoring industry, increased regulation in the technology sector and the potential default of a large Chinese property developer.
Most developed global equity markets ended the fourth quarter of 2021 in positive territory despite rising inflation and the emergence of Omicron, a new COVID-19 variant. Pandemic-related supply chain disruptions and labor shortages intensified during the quarter, resulting in higher costs for companies and consumers. Emerging market equities declined due to COVID-19 concerns and China’s ongoing regulatory tightening and slowing economic growth. Overall, developed market equities outperformed emerging market equities for the fiscal year.
The Fund outperformed the MSCI All Country World Index in 6 of 11 sectors. Stock selection in the communication services and real estate sectors, as well as an underweight in the consumer staples sector, added most to relative Fund performance compared to the MSCI All Country World Index. Stock se-
lection in the information technology, consumer discretionary and health care sectors detracted most from relative performance.
On a geographic basis, stock selection in India, France and Sweden contributed most to relative Fund performance during the fiscal year. Stock selection in Japan, Brazil and the United States detracted the most from relative Fund performance.
The top three individual contributors to Fund performance during the year were Alphabet, Intuit and S&P Global. Alphabet is our largest holding. The company has a collection of businesses that possess large competitive moats and are well positioned for the future. It is the leading company in many of the most relevant technology trends now and in the visible future. We do not see credible threats to this on the horizon. Intuit has done some good acquisitions in recent years and executed well against them. This has built nicely upon their foundation of tax and small-medium bookkeeping software. The ecosystem they have built aspires to be the de-facto operating platform for small businesses. S&P Global as we have written before is a big beneficiary of two big trends, debt issuance and passive investing. Neither seems poised to change much in the foreseeable future.
The top three individual detractors from Fund performance during the year were JD.com, StoneCo and Farfetch. JD.com dropped by 20% in 2021. The year was marked by regulatory interventions by the Chinese government into its e-commerce/ internet ecosystem which spread a measure of general fear. Those interventions, however, were an effort to roll back blatantly anticompetitive business practices. JD, on balance, is a beneficiary of it, which is perhaps why it is down far less than most others. StoneCo stumbled in 2021 in a poorly executed effort to expand beyond its core payments business in Brazil, into local lending. That effort halted, having been a fiasco. The economic environment in Brazil has also deteriorated with high inflation and rising interest rates. We still believe that the business can do well but it may take more time. Farfetch Class A shares were down sharply last year for several reasons. First, it had soared by more than 900%1 in 2020 from the lows of March until early 2021. It makes sense that it
would give some of that back. Second, the Chinese government began to discuss the idea of “common prosperity” which caused a pullback in all luxury shares in the second half of the year. Third, there have been rumblings of a deal with Richemont to combine their platforms, which has created some questions about what the future will look like. We did not add or trim the position during the year.
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 issues well and create meaningful economic value for our clients.
We thank you for your continued investment in Invesco V.I. Global Fund.
1 Source: FactSet Research Systems
Portfolio manager(s):
John Delano
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (11/12/90) | | | 10.80 | % |
10 Years | | | 14.24 | |
5 Years | | | 18.18 | |
1 Year | | | 15.49 | |
| |
Series II Shares | | | | |
Inception (7/13/00) | | | 7.74 | % |
10 Years | | | 13.96 | |
5 Years | | | 17.88 | |
1 Year | | | 15.17 | |
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 (renamed Invesco V.I. Global Fund on April 30, 2021). 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 V.I. Global Fund, a series portfolio of AIM Variable Insurance Funds (In-vesco 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 Fund
Supplemental Information
Invesco 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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is 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 V.I. Global Fund
Fund Information
| | | | | | |
| Portfolio Composition | |
| |
| By country | | % of total net assets |
| United States | | | 57.86 | % |
| Japan | | | 11.98 | |
| France | | | 11.44 | |
| India | | | 4.45 | |
| China | | | 3.61 | |
| Sweden | | | 3.47 | |
| Germany | | | 2.53 | |
| Countries, each less than 2% of portfolio | | | 4.06 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 0.60 | |
| |
| Top 10 Equity Holdings* | | | | |
| | |
| | | | | % of total net assets |
1. | | Alphabet, Inc., Class A | | | 11.25 | % |
2. | | Intuit, Inc. | | | 6.47 | |
3. | | S&P Global, Inc. | | | 5.28 | |
4. | | LVMH Moet Hennessy Louis Vuitton SE | | | 5.25 | |
5. | | Meta Platforms, Inc., Class A | | | 5.08 | |
6. | | Adobe, Inc. | | | 4.25 | |
7. | | Analog Devices, Inc. | | | 3.40 | |
8. | | Nidec Corp. | | | 3.30 | |
9. | | JD.com, Inc., ADR | | | 3.27 | |
10. | | Keyence Corp. | | | 3.03 | |
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, 2021.
Invesco V.I. Global Fund
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.40% | |
Brazil–0.24% | | | | | | | | |
| | |
StoneCo Ltd., Class A(a) | | | 382,227 | | | $ | 6,444,347 | |
| | |
China–3.61% | | | | | | | | |
| | |
JD.com, Inc., ADR(a) | | | 1,280,958 | | | | 89,756,727 | |
Meituan, B Shares(a)(b) | | | 322,500 | | | | 9,323,442 | |
| | | | | | | | 99,080,169 | |
| | |
Denmark–0.22% | | | | | | | | |
| | |
Ambu A/S, Class B | | | 234,767 | | | | 6,144,747 | |
| | |
France–11.44% | | | | | | | | |
| | |
Airbus SE(a) | | | 631,308 | | | | 80,626,754 | |
Dassault Systemes SE | | | 179,897 | | | | 10,671,881 | |
Kering S.A. | | | 97,668 | | | | 78,368,156 | |
LVMH Moet Hennessy Louis Vuitton SE | | | 174,526 | | | | 144,018,918 | |
| | | | | | | | 313,685,709 | |
| | |
Germany–2.53% | | | | | | | | |
| | |
SAP SE | | | 485,195 | | | | 69,296,038 | |
| | |
India–4.45% | | | | | | | | |
| | |
DLF Ltd. | | | 14,194,533 | | | | 74,575,357 | |
ICICI Bank Ltd., ADR | | | 2,401,795 | | | | 47,531,524 | |
| | | | | | | | 122,106,881 | |
| | |
Italy–0.39% | | | | | | | | |
| | |
Brunello Cucinelli S.p.A.(a) | | | 155,980 | | | | 10,711,788 | |
| | |
Japan–11.98% | | | | | | | | |
| | |
FANUC Corp. | | | 52,000 | | | | 11,023,263 | |
Keyence Corp. | | | 132,244 | | | | 83,110,346 | |
Murata Manufacturing Co. Ltd. | | | 873,700 | | | | 69,366,997 | |
Nidec Corp. | | | 770,600 | | | | 90,584,718 | |
| | |
Omron Corp. | | | 453,200 | | | | 45,157,901 | |
TDK Corp. | | | 747,700 | | | | 29,189,836 | |
| | | | | | | | 328,433,061 | |
| | |
Netherlands–0.90% | | | | | | | | |
| | |
ASML Holding N.V. | | | 25,640 | | | | 20,444,636 | |
uniQure N.V. (a) | | | 208,190 | | | | 4,317,860 | |
| | | | | | | | 24,762,496 | |
| | |
Spain–0.20% | | | | | | | | |
| | |
Industria de Diseno Textil S.A. | | | 171,775 | | | | 5,566,954 | |
| | |
Sweden–3.47% | | | | | | | | |
| | |
Assa Abloy AB, Class B | | | 1,291,549 | | | | 39,234,591 | |
Atlas Copco AB, Class A | | | 806,804 | | | | 55,849,830 | |
| | | | | | | | 95,084,421 | |
| | |
Switzerland–0.98% | | | | | | | | |
| | |
Lonza Group AG | | | 21,464 | | | | 17,880,445 | |
Zur Rose Group AG(a) | | | 34,870 | | | | 9,001,873 | |
| | | | | | | | 26,882,318 | |
| | |
United Kingdom–1.13% | | | | | | | | |
| | |
Farfetch Ltd., Class A(a) | | | 740,922 | | | | 24,769,022 | |
| | | | | | | | |
| | | Shares | | | Value | |
United Kingdom–(continued) | | | | | |
| | |
Prudential PLC | | | 353,550 | | | $ | 6,096,637 | |
| | |
| | | | | | | | 30,865,659 | |
| | |
United States–57.86% | | | | | | | | |
| | |
Adobe, Inc.(a) | | | 205,512 | | | | 116,537,635 | |
Agilent Technologies, Inc. | | | 374,593 | | | | 59,803,772 | |
Alphabet, Inc., Class A(a) | | | 106,502 | | | | 308,540,554 | |
Amazon.com, Inc.(a) | | | 7,402 | | | | 24,680,785 | |
Analog Devices, Inc. | | | 529,512 | | | | 93,072,324 | |
Avantor, Inc.(a) | | | 1,185,166 | | | | 49,942,895 | |
Boston Scientific Corp.(a) | | | 338,038 | | | | 14,359,854 | |
Castle Biosciences, Inc.(a) | | | 82,077 | | | | 3,518,641 | |
Charles River Laboratories International, Inc.(a) | | | 38,027 | | | | 14,327,813 | |
Danaher Corp. | | | 32,448 | | | | 10,675,717 | |
Dun & Bradstreet Holdings, Inc.(a) | | | 202,371 | | | | 4,146,582 | |
Equifax, Inc. | | | 211,412 | | | | 61,899,320 | |
Fidelity National Information Services, Inc. | | | 235,912 | | | | 25,749,795 | |
Illumina, Inc.(a) | | | 52,668 | | | | 20,037,014 | |
Intuit, Inc. | | | 275,843 | | | | 177,427,734 | |
Intuitive Surgical, Inc.(a) | | | 40,632 | | | | 14,599,078 | |
IQVIA Holdings, Inc.(a) | | | 77,357 | | | | 21,825,504 | |
Marriott International, Inc., Class A(a) | | | 25,239 | | | | 4,170,492 | |
Marvell Technology, Inc. | | | 181,341 | | | | 15,865,524 | |
Meta Platforms, Inc., Class A(a) | | | 413,663 | | | | 139,135,550 | |
Microsoft Corp. | | | 98,691 | | | | 33,191,757 | |
Natera, Inc.(a) | | | 86,000 | | | | 8,031,540 | |
NVIDIA Corp. | | | 51,796 | | | | 15,233,722 | |
Omnicell, Inc.(a) | | | 68,860 | | | | 12,425,098 | |
PayPal Holdings, Inc.(a) | | | 156,442 | | | | 29,501,832 | |
Phathom Pharmaceuticals, Inc.(a) | | | 226,652 | | | | 4,458,245 | |
Qualtrics International, Inc., Class A(a) | | | 318,046 | | | | 11,258,828 | |
S&P Global, Inc. | | | 306,593 | | | | 144,690,435 | |
Splunk, Inc.(a) | | | 83,321 | | | | 9,641,906 | |
United Parcel Service, Inc., Class B | | | 293,673 | | | | 62,945,871 | |
Veracyte, Inc.(a) | | | 334,403 | | | | 13,777,404 | |
Visa, Inc., Class A | | | 155,289 | | | | 33,652,679 | |
Walt Disney Co. (The)(a) | | | 180,161 | | | | 27,905,137 | |
| | | | | | | | 1,587,031,037 | |
Total Common Stocks & Other Equity Interests
(Cost $794,266,812) | | | | | | | 2,726,095,625 | |
| | |
Preferred Stocks–0.00% | | | | | | | | |
| | |
India–0.00% | | | | | | | | |
| | |
Zee Entertainment Enterprises Ltd., 6.00%, Pfd. (acquired 03/13/2001 - 07/04/2001, Cost $2.09)(c)
(Cost $0) | | | 4,053,320 | | | | 113,962 | |
Money Market Funds–0.57% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 5,237,804 | | | | 5,237,805 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 4,385,213 | | | | 4,386,090 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Fund
| | | | | | | | | | |
| | | Shares | | Value |
Money Market Funds–(continued) | | | | | | |
| | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | | 5,986,062 | | | | $ | 5,986,062 | |
Total Money Market Funds (Cost $15,609,957) | | | | | 15,609,957 | |
TOTAL INVESTMENTS IN SECURITIES–99.97%
(Cost $809,876,769) | | | | | 2,741,819,544 | |
OTHER ASSETS LESS LIABILITIES–0.03% | | | | | 829,640 | |
NET ASSETS–100.00% | | | | | | | | $ | 2,742,649,184 | |
Investment Abbreviations:
ADR – American Depositary Receipt
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 value of this security at December 31, 2021 represented less than 1% of the Fund’s Net Assets. |
| (c) | Restricted security. The value of this security at December 31, 2021 represented less than 1% of the Fund’s Net Assets. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | |
Invesco Government & Agency Portfolio, Institutional Class | | | $1,723,917 | | | | $ 92,965,770 | | | | $ (89,451,882 | ) | | | $ - | | | | $ - | | | | $ 5,237,805 | | | | $ 813 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class | | | 1,231,011 | | | | 66,255,807 | | | | (63,100,220 | ) | | | 123 | | | | (631 | ) | | | 4,386,090 | | | | 325 | |
| |
Invesco Treasury Portfolio, Institutional Class | | | 1,970,192 | | | | 106,246,594 | | | | (102,230,724 | ) | | | - | | | | - | | | | 5,986,062 | | | | 348 | |
| |
Total | | | $4,925,120 | | | | $265,468,171 | | | | $(254,782,826 | ) | | | $123 | | | | $(631 | ) | | | $15,609,957 | | | | $1,486 | |
| |
(e) The rate shown is the 7-day SEC standardized yield as of December 31, 2021.
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Fund
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value
(Cost $794,266,812) | | $ | 2,726,209,587 | |
| |
Investments in affiliated money market funds, at value
(Cost $15,609,957) | | | 15,609,957 | |
| |
Cash | | | 134,140 | |
| |
Foreign currencies, at value (Cost $414,268) | | | 410,710 | |
| |
Receivable for:
Fund shares sold | | | 1,897,933 | |
| |
Dividends | | | 3,948,439 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 218,788 | |
| |
Other assets | | | 11,165 | |
| |
Total assets | | | 2,748,440,719 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 775,907 | |
| |
Accrued foreign taxes | | | 3,238,506 | |
| |
Accrued fees to affiliates | | | 1,391,572 | |
| |
Accrued other operating expenses | | | 166,762 | |
| |
Trustee deferred compensation and retirement plans | | | 218,788 | |
| |
Total liabilities | | | 5,791,535 | |
| |
Net assets applicable to shares outstanding | | $ | 2,742,649,184 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 497,710,467 | |
| |
Distributable earnings | | | 2,244,938,717 | |
| |
| | $ | 2,742,649,184 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 1,484,705,766 | |
| |
Series II | | $ | 1,257,943,418 | |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 25,949,295 | |
| |
Series II | | | 22,390,489 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 57.22 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 56.18 | |
| |
| | | | |
Statement of Operations For the year ended December 31, 2021 | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $1,433,166) | | $ | 14,152,447 | |
| |
Dividends from affiliated money market funds | | | 1,486 | |
| |
Non-cash dividend income | | | 982,000 | |
| |
Total investment income | | | 15,135,933 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 17,272,006 | |
| |
Administrative services fees | | | 4,551,967 | |
| |
Custodian fees | | | 72,598 | |
| |
Distribution fees - Series II | | | 3,307,181 | |
| |
Transfer agent fees | | | 118,813 | |
| |
Trustees’ and officers’ fees and benefits | | | 46,419 | |
| |
Professional services fees | | | 183,917 | |
| |
Other | | | (286,361 | ) |
| |
Total expenses | | | 25,266,540 | |
| |
Less: Fees waived | | | (367,632 | ) |
| |
Net expenses | | | 24,898,908 | |
| |
Net investment income (loss) | | | (9,762,975 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $68) | | | 343,320,486 | |
| |
Affiliated investment securities | | | (631 | ) |
| |
Foreign currencies | | | 29,913 | |
| |
| | | 343,349,768 | |
| |
Change in net unrealized appreciation (depreciation) of: Unaffiliated investment securities (net of foreign taxes of $3,033,780) | | | 71,388,681 | |
| |
Affiliated investment securities | | | 123 | |
| |
Foreign currencies | | | (311,062 | ) |
| |
| | | 71,077,742 | |
| |
Net realized and unrealized gain | | | 414,427,510 | |
| |
Net increase in net assets resulting from operations | | $ | 404,664,535 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Fund
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (9,762,975 | ) | | $ | (3,076,160 | ) |
| |
Net realized gain | | | 343,349,768 | | | | 143,400,974 | |
| |
Change in net unrealized appreciation | | | 71,077,742 | | | | 454,163,940 | |
| |
Net increase in net assets resulting from operations | | | 404,664,535 | | | | 594,488,754 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (74,843,220 | ) | | | (54,374,979 | ) |
| |
Series II | | | (64,990,704 | ) | | | (46,721,722 | ) |
| |
Total distributions from distributable earnings | | | (139,833,924 | ) | | | (101,096,701 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (91,025,858 | ) | | | (164,348,638 | ) |
Series II | | | (192,722,461 | ) | | | (89,155,546 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (283,748,319 | ) | | | (253,504,184 | ) |
| |
Net increase (decrease) in net assets | | | (18,917,708 | ) | | | 239,887,869 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 2,761,566,892 | | | | 2,521,679,023 | |
| |
End of year | | $ | 2,742,649,184 | | | $ | 2,761,566,892 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco 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 12/31/21 | | $ | 52.12 | | | | $(0.13) | | | $ | 8.23 | | | $ | 8.10 | | | $ | – | | | $ | (3.00 | ) | | $ | (3.00 | ) | | $ | 57.22 | | | | 15.49 | % | | $ | 1,484,706 | | | 0.77% | | 0.78% | | | (0.23 | )% | | | 7 | % |
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 | | 0.81 | | | (0.01 | ) | | | 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 | |
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 51.36 | | | | (0.27 | ) | | | 8.09 | | | | 7.82 | | | | – | | | | (3.00 | ) | | | (3.00 | ) | | | 56.18 | | | | 15.17 | | | | 1,257,943 | | | 1.02 | | 1.03 | | | (0.48 | ) | | | 7 | |
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 | | 1.06 | | | (0.26 | ) | | | 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 | |
| |
| (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 and 2017, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Fund
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Global Fund, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Global 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. | 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. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 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, 2021, the effective advisory fee rate incurred by the Fund was 0.62%.
Invesco V.I. Global Fund
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 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”). Effective May 1, 2022 through June 30, 2022, 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 of Series I shares to 2.25% and Series II shares to 2.50% of the Fund’s average daily net asset. 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $367,632.
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, 2021, Invesco was paid $393,187 for accounting and fund administrative services and was reimbursed $4,158,780 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as
Distribution fees.
For the year ended December 31, 2021, the Fund incurred $1,523 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, 2021. 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. Global Fund
| | | | | | | | | | | | | | | | |
| | | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
Brazil | | $ | 6,444,347 | | | $ | – | | | $ | – | | | $ | 6,444,347 | |
China | | | 89,756,727 | | | | 9,323,442 | | | | _ | | | | 99,080,169 | |
Denmark | | | – | | | | 6,144,747 | | | | – | | | | 6,144,747 | |
France | | | – | | | | 313,685,709 | | | | – | | | | 313,685,709 | |
Germany | | | – | | | | 69,296,038 | | | | – | | | | 69,296,038 | |
India | | | 47,645,486 | | | | 74,575,357 | | | | – | | | | 122,220,843 | |
Italy | | | – | | | | 10,711,788 | | | | – | | | | 10,711,788 | |
Japan | | | – | | | | 328,433,061 | | | | – | | | | 328,433,061 | |
Netherlands | | | 4,317,860 | | | | 20,444,636 | | | | – | | | | 24,762,496 | |
Spain | | | – | | | | 5,566,954 | | | | – | | | | 5,566,954 | |
Sweden | | | – | | | | 95,084,421 | | | | – | | | | 95,084,421 | |
Switzerland | | | – | | | | 26,882,318 | | | | – | | | | 26,882,318 | |
United Kingdom | | | 24,769,022 | | | | 6,096,637 | | | | – | | | | 30,865,659 | |
United States | | | 1,587,031,037 | | | | – | | | | – | | | | 1,587,031,037 | |
Money Market Funds | | | 15,609,957 | | | | – | | | | – | | | | 15,609,957 | |
Total Investments | | $ | 1,775,574,436 | | | $ | 966,245,108 | | | $ | – | | | $ | 2,741,819,544 | |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | 664,007 | | | $ | 13,783,397 | |
Long-term capital gain | | | 139,169,917 | | | | 87,313,304 | |
Total distributions | | $ | 139,833,924 | | | $ | 101,096,701 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed long-term capital gain | | $ | 325,485,310 | |
Net unrealized appreciation – investments | | | 1,919,815,665 | |
Net unrealized appreciation (depreciation) – foreign currencies | | | (160,337 | ) |
Temporary book/tax differences | | | (201,921 | ) |
Shares of beneficial interest | | | 497,710,467 | |
Total net assets | | $ | 2,742,649,184 | |
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, 2021.
Invesco V.I. Global Fund
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $203,326,826 and $649,381,771, 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 | | $ | 1,943,807,828 | |
Aggregate unrealized (depreciation) of investments | | | (23,992,163 | ) |
Net unrealized appreciation of investments | | $ | 1,919,815,665 | |
Cost of investments for tax purposes is $822,003,879.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $9,754,583, undistributed net realized gain was decreased by $7,850,074 and shares of beneficial interest was decreased by $1,904,509. This reclassification had no effect on the net assets of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,087,526 | | | $ | 61,384,048 | | | | 1,282,828 | | | $ | 53,569,521 | |
Series II | | | 786,412 | | | | 43,542,860 | | | | 4,607,818 | | | | 189,694,783 | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,297,784 | | | | 74,843,220 | | | | 1,182,836 | | | | 54,374,979 | |
Series II | | | 1,147,232 | | | | 64,990,704 | | | | 1,030,929 | | | | 46,721,722 | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (4,038,886 | ) | | | (227,253,126 | ) | | | (6,229,273 | ) | | | (272,293,138 | ) |
Series II | | | (5,300,318 | ) | | | (301,256,025 | ) | | | (8,181,254 | ) | | | (325,572,051 | ) |
Net increase (decrease) in share activity | | | (5,020,250 | ) | | $ | (283,748,319 | ) | | | (6,306,116 | ) | | $ | (253,504,184 | ) |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 30% 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. 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Global Fund/VA (subsequently renamed Invesco V.I. Global Fund) 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value
(12/31/21) | | Expenses Paid During Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,033.70 | | $3.95 | | $1,021.32 | | $3.92 | | 0.77% |
Series II | | 1,000.00 | | 1,032.30 | | 5.22 | | 1,020.06 | | 5.19 | | 1.02 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
Invesco 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, 2021:
| | | | |
| | | | |
| Federal and State Income Tax | | | | |
| Long-Term Capital Gain Distributions | | | $139,169,917 | |
| Qualified Dividend Income* | | | 0.00% | |
| Corporate Dividends Received Deduction* | | | 100.00% | |
| U.S. Treasury Obligations* | | | 0.00% | |
| Qualified Business Income* | | | 0.00% | |
| |
| Business Interest Income* | | | 0.00% | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
Invesco 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) | | 186 | | 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 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School—Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management—Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
Invesco 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) |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes– 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
| Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Global Fund
| | | | |
 | | | | |
| | |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Global Real Estate Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. Global Real Estate Fund (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| Series I Shares | | | 25.71 | % |
| Series II Shares | | | 25.44 | |
| MSCI World Indexq (Broad Market Index) | | | 21.82 | |
| Custom Invesco Global Real Estate Index∎ (Style-Specific Index) | | | 24.22 | |
| Lipper VUF Real Estate Funds Classification Average◆ (Peer Group) | | | 42.52 | |
|
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; ◆Lipper Inc. | |
Market conditions and your Fund
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value and cyclical recovery stocks outperforming growth stocks. The successful rollout of coronavirus (COVID-19) vaccinations in the US and UK benefited equity markets. Listed real estate performed well, with performance led by the US, Hong Kong and Japan, while European and Australian listed real estate lagged.
During the second quarter of 2021, global equity markets were again bolstered by the continued acceleration of vaccination rollouts and easing of COVID-related restrictions in most developed markets. In a reversal from the first quarter, growth stocks outperformed value stocks in most regions. Emerging market equities were led by Brazil which benefited from global tailwinds, while regulatory concerns weighed on Chinese equities. Listed real estate generated returns inline with broader global equities. US REITs performed best, followed by Europe, while Asia lagged.
Developed global equity markets were flat in the third quarter of 2021 amid concerns about rising inflation, supply disruptions and the economic growth rate. Emerging market equities declined during the quarter, primarily due to weak performance from Chinese equities, which were affected by significant regulatory changes in the private tutoring industry, increased regulation in the technology sector and the potential default of a large Chinese property developer. Performance for listed real estate was volatile during the quarter, consistent with the broader macro crosscurrents impacting equities.
Most developed global equity markets ended the fourth quarter of 2021 in positive territory despite rising inflation and the emergence of Omicron, a new COVID-19 variant. Pandemic-related supply chain disruptions and labor shortages intensified during the quarter, resulting in higher costs for companies and consumers. Emerging market equities declined due to COVID-19 concerns and China’s ongoing regulatory tightening and
slowing economic growth. Overall, developed listed real estate outperformed emerging market listed real estate for the fiscal year.
At the start of the fiscal year, market sentiment was focused on expectations of cyclical recovery, with anticipated out-performance for stocks with cheaper valuations and earnings recovery prospects. These factors have performed well in general equity markets, but for real estate, quality, growth, momentum and higher valuation characteristics outperformed. This was a continuation of outperformance for many of the 2020 winners. Throughout the fiscal year, the portfolio retained overweight exposure to these types of companies that have structural growth tailwinds.
From a country perspective, the largest contributors to the Fund’s relative performance in the fiscal year were stock selection and an overweight to the US, stock selection in the United Kingdom and no exposure to Switzerland. The largest detractors to relative performance were an overweight and stock selection in Germany, stock selection in Hong Kong, overweight in Italy, and overweight exposure in China (the benchmark had no exposure).
From a sector perspective, the largest contributors to the Fund’s relative performance during the fiscal year were overweight exposure and security selection to residential, with key contributions from US multi-family properties. Additional relative contributors included overweight exposure to industrial and underweight exposure to retail. The largest detractors to relative performance were stock selection in diversified, overweight exposure to infrastructure and underweight exposure to self-storage. The portfolio’s cash exposure also detracted relatively as the index has no cash exposure.
Top individual absolute contributors to the Fund’s performance during the fiscal year included Prologis and AvalonBay communities. Prologis owns a portfolio of high-quality industrial assets which are primarily located in global gateway markets. Fundamentals for the industrial sector were strong during the
fiscal year, driven by e-commerce and investment in tenant supply chains. The company outperformed partly driven by its strong operating fundamentals, increasing external growth drivers, and access to low-cost capital. AvalonBay owns multi-family assets primarily in the coastal markets of the US. The overall apartment sector outperformed during the fiscal year as the market rewarded sectors expected to experience improving operating results amidst a continued economic recovery.
Top individual detractors from the Fund’s absolute performance included Vonovia and Americold Realty. Vonovia owns a portfolio of apartments in Germany, Sweden and Austria and has an attractive internal and external driven growth profile and a valuation below asset value and replacement cost. The stock underperformed after it made a surprise bid for a competitor, which should be a long-term positive, but will require the issue of new equity upon completion and thus weighed negatively on its stock price. The Fund continues to hold a position in the company. Americold owns a dominant position in cold storage and retains above-average longterm growth characteristics. The stock underperformed during the fiscal year as the company reduced guidance due to higher labor costs and a slow rebound of inventory levels. Longer-term demand trends and a favorable growth outlook remain intact.
The portfolio added exposure to structural growth sectors during the year, including industrial and residential. The portfolio’s industrial exposure benefits from high levels of demand for industrial assets, which is driving more capital value growth. Demand for large, modern warehouses is expanding rapidly and the supply of new assets is dominated by high levels of tenant demand. The portfolio also added residential exposure, focusing on single-family residential and apartments. Residential real estate is under-supplied in most countries around the world. This continues to form a good base for investment in the sector. In contrast, the portfolio reduced exposure to the office sector. Office markets remain somewhat in limbo with working from home still common. The sector faces longterm headwinds such as demand deceleration, supply headwinds, and rising cap-ex burdens. We anticipate these issues will remain very evident in larger office occupiers’ minds and investor preferences for many years to come.
The overall portfolio is biased toward companies with higher-quality assets, supply constrained real estate market exposure, lower leveraged balance sheets and better governance characteristics. The unpredictable macro and geopolitical environments suggest caution in taking significant active factors, country and currency exposures. As such, portfolio risk is still most likely to be allocated to stock-specific opportunities where there is a belief that attractive relative value exists.
Invesco V.I. Global Real Estate Fund
We thank you for your continued investment in Invesco V.I. Global Real Estate Fund.
Portfolio manager(s):
Mark Blackburn
James Cowen - Lead
Grant Jackson
Joe Rodriguez, Jr. - Lead
Darin Turner
Ping-Ying Wang - Lead
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
3 Source: Invesco, RIMES Technologies Corp.
Past performance cannot guarantee future
results.
| | | | |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (3/31/98) | | | 7.71 | % |
10 Years | | | 8.11 | |
5 Years | | | 7.54 | |
1 Year | | | 25.71 | |
| |
Series II Shares | | | | |
Inception (4/30/04) | | | 7.54 | % |
10 Years | | | 7.84 | |
5 Years | | | 7.27 | |
1 Year | | | 25.44 | |
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 can-
not 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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is 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 Feb. 17, 2005; the FTSE EPRA/Nareit Developed Index (net) from Feb. 18, 2005, through June 30, 2014; the FTSE EPRA Nareit Global Index (Net) from July 1, 2014 through June 30, 2021, and the FTSE EPRA Nareit Developed Index (Net) from July 1, 2021 onward. 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 nonresident 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 | | 61.60% |
|
| |
| Japan | | 8.76 |
|
| |
| Germany | | 5.34 |
|
| United Kingdom | | 4.60 |
|
| Hong Kong | | 4.39 |
|
| Australia | | 3.82 |
|
| Canada | | 2.25 |
|
| Sweden | | 2.25 |
|
| Singapore | | 2.14 |
|
|
| Countries, each less than 2% of portfolio | | 3.81 |
|
Money Market Funds Plus Other Assets Less Liabilities | | 1.04 |
|
Top 10 Equity Holdings*
| | |
| | | % of total net assets |
|
1. Prologis, Inc. | | 9.02% |
|
2. Invitation Homes, Inc. | | 4.54 |
|
3. AvalonBay Communities, Inc. | | 4.44 |
|
4. Welltower, Inc. | | 4.43 |
|
5. UDR, Inc. | | 4.06 |
|
6. Equinix, Inc. | | 4.00 |
|
7. Vonovia SE | | 3.61 |
|
8. VICI Properties, Inc. | | 3.20 |
|
9. Mid-America Apartment Communities, Inc. | | 3.19 |
|
10. Duke Realty Corp. | | 3.09 |
|
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, 2021.
Invesco V.I. Global Real Estate Fund
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–98.96% | |
Australia–3.82% | | | | | | | | |
Charter Hall Group | | | 22,029 | | | $ | 330,516 | |
Goodman Group | | | 56,064 | | | | 1,082,611 | |
GPT Group (The) | | | 144,271 | | | | 569,052 | |
Mirvac Group | | | 606,636 | | | | 1,286,243 | |
National Storage REIT | | | 388,130 | | | | 752,211 | |
NEXTDC Ltd.(a) | | | 78,205 | | | | 726,278 | |
Stockland | | | 437,670 | | | | 1,350,717 | |
| | | | | | | | 6,097,628 | |
| | |
Belgium–1.72% | | | | | | | | |
Aedifica S.A. | | | 9,533 | | | | 1,247,219 | |
Cofinimmo S.A. | | | 5,802 | | | | 928,221 | |
Montea N.V. | | | 3,833 | | | | 576,970 | |
| | | | | | | | 2,752,410 | |
| | |
Canada–2.25% | | | | | | | | |
Chartwell Retirement Residences | | | 164,104 | | | | 1,533,428 | |
Killam Apartment REIT | | | 31,937 | | | | 595,592 | |
Summit Industrial Income REIT | | | 79,082 | | | | 1,469,170 | |
| | | | | | | | 3,598,190 | |
| | |
France–0.79% | | | | | | | | |
Gecina S.A. | | | 9,071 | | | | 1,268,759 | |
| | |
Germany–5.34% | | | | | | | | |
Aroundtown S.A. | | | 217,549 | | | | 1,317,662 | |
Instone Real Estate Group SE(b) | | | 14,292 | | | | 270,641 | |
Sirius Real Estate Ltd. | | | 612,928 | | | | 1,173,237 | |
Vonovia SE | | | 104,324 | | | | 5,760,402 | |
| | | | | | | | 8,521,942 | |
| | |
Hong Kong–4.39% | | | | | | | | |
CK Asset Holdings Ltd. | | | 31,000 | | | | 195,491 | |
Hang Lung Properties Ltd. | | | 370,000 | | | | 761,157 | |
Hongkong Land Holdings Ltd. | | | 146,100 | | | | 759,201 | |
Kerry Properties Ltd. | | | 206,500 | | | | 537,810 | |
Link REIT | | | 87,900 | | | | 774,359 | |
New World Development Co. Ltd. | | | 301,000 | | | | 1,191,536 | |
Sun Hung Kai Properties Ltd. | | | 186,500 | | | | 2,263,999 | |
Wharf Real Estate Investment Co. Ltd. | | | 102,000 | | | | 518,135 | |
| | | | | | | | 7,001,688 | |
| | |
Italy–0.56% | | | | | | | | |
Infrastrutture Wireless Italiane S.p.A.(b) | | | 73,696 | | | | 892,273 | |
| | |
Japan–8.76% | | | | | | | | |
Advance Residence Investment Corp. | | | 278 | | | | 919,873 | |
GLP J-Reit | | | 222 | | | | 383,605 | |
Japan Metropolitan Fund Investment Corp. | | | 1,415 | | | | 1,219,084 | |
Japan Prime Realty Investment Corp. | | | 161 | | | | 558,179 | |
Japan Real Estate Investment Corp. | | | 116 | | | | 658,528 | |
Kenedix Office Investment Corp. | | | 122 | | | | 753,734 | |
LaSalle Logiport REIT | | | 181 | | | | 318,593 | |
Mitsubishi Estate Co. Ltd. | | | 73,300 | | | | 1,016,135 | |
Mitsui Fudosan Co. Ltd. | | | 129,058 | | | | 2,556,547 | |
Mitsui Fudosan Logistics Park, Inc. | | | 159 | | | | 891,547 | |
| | | | | | | | |
| | | Shares | | | Value | |
Japan–(continued) | | | | | | | | |
Nippon Accommodations Fund, Inc. | | | 113 | | | $ | 651,564 | |
Nippon Prologis REIT, Inc. | | | 179 | | | | 632,929 | |
Nomura Real Estate Master Fund, Inc. | | | 448 | | | | 630,157 | |
ORIX JREIT, Inc. | | | 484 | | | | 756,536 | |
Tokyo Tatemono Co. Ltd. | | | 21,800 | | | | 318,426 | |
Tokyu Fudosan Holdings Corp. | | | 177,200 | | | | 990,615 | |
United Urban Investment Corp. | | | 620 | | | | 728,746 | |
| | | | | | | | 13,984,798 | |
| | |
Malta–0.00% | | | | | | | | |
BGP Holdings PLC(c) | | | 1,355,927 | | | | 2 | |
| | |
Singapore–2.14% | | | | | | | | |
CapitaLand Integrated Commercial Trust | | | 850,900 | | | | 1,288,700 | |
Digital Core REIT Management Pte
Ltd.(a) | | | 460,300 | | | | 533,948 | |
Mapletree Commercial Trust | | | 388,600 | | | | 576,729 | |
Mapletree Industrial Trust | | | 507,830 | | | | 1,021,737 | |
| | | | | | | | 3,421,114 | |
| | |
Spain–0.74% | | | | | | | | |
Cellnex Telecom S.A.(b) | | | 20,261 | | | | 1,176,355 | |
| | |
Sweden–2.25% | | | | | | | | |
Castellum AB | | | 36,406 | | | | 976,338 | |
Samhallsbyggnadsbolaget i Norden AB, Class B | | | 176,774 | | | | 1,289,774 | |
Wihlborgs Fastigheter AB | | | 58,591 | | | | 1,328,373 | |
| | | | | | | | 3,594,485 | |
| | |
United Kingdom–4.60% | | | | | | | | |
Derwent London PLC | | | 9,664 | | | | 446,458 | |
Grainger PLC | | | 174,660 | | | | 744,783 | |
Safestore Holdings PLC | | | 70,766 | | | | 1,348,191 | |
Segro PLC | | | 139,668 | | | | 2,713,084 | |
Tritax Big Box REIT PLC | | | 410,433 | | | | 1,382,374 | |
UNITE Group PLC (The) | | | 47,214 | | | | 708,572 | |
| | | | | | | | 7,343,462 | |
| | |
United States–61.60% | | | | | | | | |
Alexandria Real Estate Equities, Inc. | | | 4,726 | | | | 1,053,709 | |
American Homes 4 Rent, Class A | | | 43,185 | | | | 1,883,298 | |
Americold Realty Trust | | | 23,018 | | | | 754,760 | |
AvalonBay Communities, Inc. | | | 28,067 | | | | 7,089,444 | |
Brixmor Property Group, Inc. | | | 61,313 | | | | 1,557,963 | |
Camden Property Trust | | | 10,433 | | | | 1,864,168 | |
Duke Realty Corp. | | | 75,048 | | | | 4,926,151 | |
Equinix, Inc. | | | 7,556 | | | | 6,391,167 | |
Essential Properties Realty Trust, Inc. | | | 44,972 | | | | 1,296,543 | |
First Industrial Realty Trust, Inc. | | | 26,596 | | | | 1,760,655 | |
Gaming and Leisure Properties, Inc. | | | 21,881 | | | | 1,064,729 | |
Invitation Homes, Inc. | | | 159,798 | | | | 7,245,241 | |
JBG SMITH Properties | | | 10,280 | | | | 295,139 | |
Life Storage, Inc. | | | 18,420 | | | | 2,821,576 | |
Mid-America Apartment Communities, Inc. | | | 22,166 | | | | 5,085,767 | |
NETSTREIT Corp. | | | 20,365 | | | | 466,359 | |
Outfront Media, Inc. | | | 11,040 | | | | 296,093 | |
PotlatchDeltic Corp. | | | 14,552 | | | | 876,321 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Real Estate Fund
| | | | | | | | |
| | | Shares | | | Value | |
United States–(continued) | | | | | | | | |
Prologis, Inc. | | | 85,564 | | | $ | 14,405,555 | |
Regency Centers Corp. | | | 13,074 | | | | 985,126 | |
Rexford Industrial Realty, Inc. | | | 53,308 | | | | 4,323,812 | |
Ryman Hospitality Properties, Inc.(a) | | | 19,473 | | | | 1,790,737 | |
Simon Property Group, Inc. | | | 16,428 | | | | 2,624,702 | |
SITE Centers Corp. | | | 68,600 | | | | 1,085,938 | |
Sun Communities, Inc. | | | 10,968 | | | | 2,302,951 | |
UDR, Inc. | | | 107,985 | | | | 6,478,020 | |
Urban Edge Properties | | | 73,505 | | | | 1,396,595 | |
Ventas, Inc. | | | 79,006 | | | | 4,038,787 | |
VICI Properties, Inc. | | | 169,663 | | | | 5,108,553 | |
Welltower, Inc. | | | 82,490 | | | | 7,075,167 | |
| | | | | | | | 98,345,026 | |
Total Common Stocks & Other Equity
Interests (Cost $126,027,757) | | | | 157,998,132 | |
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–0.83% | |
Invesco Government & Agency Portfolio
Institutional Class, 0.03%(d)(e) | | | 414,569 | | | $ | 414,569 | |
Invesco Liquid Assets Portfolio,
Institutional Class, 0.02%(d)(e) | | | 431,210 | | | | 431,297 | |
Invesco Treasury Portfolio, Institutional
Class, 0.01%(d)(e) | | | 473,793 | | | | 473,793 | |
Total Money Market Funds
(Cost $1,319,659) | | | | | | | 1,319,659 | |
TOTAL INVESTMENTS IN SECURITIES–99.79%
(Cost $127,347,416) | | | | 159,317,791 | |
OTHER ASSETS LESS LIABILITIES–0.21% | | | | 340,928 | |
NET ASSETS–100.00% | | | | | | $ | 159,658,719 | |
Investment Abbreviations:
REIT - Real Estate Investment Trust
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, 2021 was $2,339,269, which represented 1.47% of the Fund’s Net Assets. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 801,050 | | | | $13,574,528 | | | | $(13,961,009) | | | | $ - | | | | $ - | | | | $ 414,569 | | | | $94 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 598,192 | | | | 9,618,339 | | | | (9,785,255) | | | | 41 | | | | (20) | | | | 431,297 | | | | 49 | |
Invesco Treasury Portfolio, Institutional Class | | | 915,486 | | | | 15,513,747 | | | | (15,955,440) | | | | - | | | | - | | | | 473,793 | | | | 39 | |
Total | | | $2,314,728 | | | | $38,706,614 | | | | $(39,701,704) | | | | $41 | | | | $(20) | | | | $1,319,659 | | | | $182 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (e) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
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, 2021
| | | | |
| |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $126,027,757) | | $ | 157,998,132 | |
Investments in affiliated money market funds, at value (Cost $1,319,659) | | | 1,319,659 | |
Cash | | | 4,176 | |
Foreign currencies, at value (Cost $59,454) | | | 58,482 | |
Receivable for: | | | | |
Investments sold | | | 167,478 | |
Fund shares sold | | | 74,364 | |
Dividends | | | 453,090 | |
Investment for trustee deferred compensation and retirement plans | | | 58,782 | |
Other assets | | | 607 | |
Total assets | | | 160,134,770 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 183,150 | |
Fund shares reacquired | | | 79,323 | |
Accrued fees to affiliates | | | 74,780 | |
Accrued other operating expenses | | | 72,365 | |
Trustee deferred compensation and retirement plans | | | 66,433 | |
Total liabilities | | | 476,051 | |
Net assets applicable to shares outstanding | | $ | 159,658,719 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 132,589,256 | |
Distributable earnings | | | 27,069,463 | |
| | | $159,658,719 | |
| |
Net Assets: | | | | |
Series I | | $ | 116,762,246 | |
Series II | | $ | 42,896,473 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 6,489,033 | |
Series II | | | 2,446,810 | |
Series I: | | | | |
Net asset value per share | | $ | 17.99 | |
Series II: | | | | |
Net asset value per share | | $ | 17.53 | |
Statement of Operations
For the year ended December 31, 2021
| | | | |
| |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $194,468) | | $ | 3,953,882 | |
Dividends from affiliated money market funds | | | 182 | |
Total investment income | | | 3,954,064 | |
| |
Expenses: | | | | |
Advisory fees | | | 1,197,281 | |
Administrative services fees | | | 262,033 | |
Distribution fees - Series II | | | 99,262 | |
Transfer agent fees | | | 21,066 | |
Trustees’ and officers’ fees and benefits | | | 23,708 | |
Reports to shareholders | | | 10,534 | |
Professional services fees | | | 48,678 | |
Other | | | (9,436 | ) |
Total expenses | | | 1,653,126 | |
Less: Fees waived | | | (517 | ) |
Net expenses | | | 1,652,609 | |
Net investment income | | | 2,301,455 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $60,517) | | | 16,077,190 | |
Affiliated investment securities | | | (20 | ) |
Foreign currencies | | | (38,932 | ) |
Forward foreign currency contracts | | | 920 | |
| | | 16,039,158 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities (net of foreign taxes of $34,678) | | | 18,604,268 | |
Affiliated investment securities | | | 41 | |
Foreign currencies | | | (6,842 | ) |
Forward foreign currency contracts | | | 10 | |
| | | 18,597,477 | |
Net realized and unrealized gain | | | 34,636,635 | |
Net increase in net assets resulting from operations | | $ | 36,938,090 | |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
Operations: | | | | | | | | |
Net investment income | | | $ 2,301,455 | | | $ | 2,687,283 | |
Net realized gain (loss) | | | 16,039,158 | | | | (16,808,321 | ) |
Change in net unrealized appreciation (depreciation) | | | 18,597,477 | | | | (10,464,307 | ) |
Net increase (decrease) in net assets resulting from operations | | | 36,938,090 | | | | (24,585,345 | ) |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (3,061,258 | ) | | | (9,161,706 | ) |
Series II | | | (1,034,025 | ) | | | (1,846,585 | ) |
Total distributions from distributable earnings | | | (4,095,283 | ) | | | (11,008,291 | ) |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (27,200,184 | ) | | | (4,013,664 | ) |
Series II | | | (208,852 | ) | | | (1,655,429 | ) |
Net increase (decrease) in net assets resulting from share transactions | | | (27,409,036 | ) | | | (5,669,093 | ) |
Net increase (decrease) in net assets | | | 5,433,771 | | | | (41,262,729 | ) |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 154,224,948 | | | | 195,487,677 | |
End of year | | $ | 159,658,719 | | | $ | 154,224,948 | |
|
| 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 12/31/21 | | | $14.69 | | | | $0.25 | | | | $3.51 | | | | $ 3.76 | | | | $(0.46) | | | | $ – | | | | $(0.46) | | | | $17.99 | | | | 25.71 | % | | | $116,762 | | | | 0.97 | % | | | 0.97 | % | | | 1.51 | % | | | 95 | % |
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 | | | | 1.04 | | | | 1.86 | | | | 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 | (d) | | | 1.62 | | | | 2.07 | | | | (0.56) | | | | (0.28 | ) | | | (0.84 | ) | | | 17.38 | | | | 12.98 | | | | 158,229 | | | | 1.02 | | | | 1.02 | | | | 2.63 | (d) | | | 50 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 14.33 | | | | 0.20 | | | | 3.43 | | | | 3.63 | | | | (0.43 | ) | | | – | | | | (0.43 | ) | | | 17.53 | | | | 25.44 | | | | 42,896 | | | | 1.22 | | | | 1.22 | | | | 1.26 | | | | 95 | |
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 | | | | 1.29 | | | | 1.61 | | | | 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 | (d) | | | 1.58 | | | | 1.97 | | | | (0.52 | ) | | | (0.28 | ) | | | (0.80 | ) | | | 16.86 | | | | 12.73 | | | | 260,083 | | | | 1.27 | | | | 1.27 | | | | 2.38 | (d) | | | 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) | 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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Global Real Estate 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.
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.
Invesco V.I. Global Real Estate Fund
| 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.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| L. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $517.
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, 2021, Invesco was paid $22,589 for accounting and fund administrative services and was reimbursed $239,444 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, 2021, 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, 2021, 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. Global Real Estate 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, 2021. 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 | | $ | – | | | $ | 6,097,628 | | | | $– | | | $ | 6,097,628 | |
| |
Belgium | | | – | | | | 2,752,410 | | | | – | | | | 2,752,410 | |
| |
Canada | | | 3,598,190 | | | | – | | | | – | | | | 3,598,190 | |
| |
France | | | – | | | | 1,268,759 | | | | – | | | | 1,268,759 | |
| |
Germany | | | – | | | | 8,521,942 | | | | – | | | | 8,521,942 | |
| |
Hong Kong | | | – | | | | 7,001,688 | | | | – | | | | 7,001,688 | |
| |
Italy | | | – | | | | 892,273 | | | | – | | | | 892,273 | |
| |
Japan | | | – | | | | 13,984,798 | | | | – | | | | 13,984,798 | |
| |
Malta | | | – | | | | – | | | | 2 | | | | 2 | |
| |
Singapore | | | 533,948 | | | | 2,887,166 | | | | – | | | | 3,421,114 | |
| |
Spain | | | – | | | | 1,176,355 | | | | – | | | | 1,176,355 | |
| |
Sweden | | | – | | | | 3,594,485 | | | | – | | | | 3,594,485 | |
| |
United Kingdom | | | – | | | | 7,343,462 | | | | – | | | | 7,343,462 | |
| |
United States | | | 98,345,026 | | | | – | | | | – | | | | 98,345,026 | |
| |
Money Market Funds | | | 1,319,659 | | | | – | | | | – | | | | 1,319,659 | |
| |
Total Investments | | $ | 103,796,823 | | | $ | 55,520,966 | | | | $2 | | | $ | 159,317,791 | |
| |
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, 2021
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 | |
| | | Currency Risk | |
| |
Realized Gain:
Forward foreign currency contracts | | | $920 | |
| |
Change in Net Unrealized Appreciation:
Forward foreign currency contracts | | | 10 | |
| |
Total | | | $930 | |
| |
The table below summarizes the average notional value of derivatives held during the period. | | | | |
| | | Forward Foreign Currency Contracts | |
| |
Average notional value | | | $69,904 | |
| |
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. Global Real Estate 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.
NOTE7–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
| | |
Ordinary income* | | $ | 4,095,283 | | | $ | 8,147,137 | |
| |
| | |
Long-term capital gain | | | – | | | | 2,861,154 | |
| |
| | |
Total distributions | | $ | 4,095,283 | | | $ | 11,008,291 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed ordinary income | | $ | 3,498,789 | |
| |
Net unrealized appreciation – investments | | | 29,351,311 | |
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (1,317 | ) |
| |
Temporary book/tax differences | | | (38,568 | ) |
| |
Capital loss carryforward | | | (5,740,752 | ) |
| |
Shares of beneficial interest | | | 132,589,256 | |
| |
Total net assets | | $ | 159,658,719 | |
| |
| | | | |
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 has a capital loss carryforward as of December 31, 2021, as follows:
| | | | | | | | | | | | | | |
| Capital Loss Carryforward* | | | | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | $ | 4,130,741 | | | $ | 1,610,011 | | | $ | 5,740,752 | |
| * | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $148,154,639 and $176,636,543, 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 | | | $31,313,246 | |
| |
Aggregate unrealized (depreciation) of investments | | | (1,961,935 | ) |
| |
Net unrealized appreciation of investments | | | $29,351,311 | |
| |
Cost of investments for tax purposes is $129,966,480.
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2021, undistributed net investment income was increased by $2,124,392 and undistributed net realized gain (loss) was decreased by $2,124,392. This reclassification had no effect on the net assets or the distributable earnings of the Fund.
Invesco V.I. Global Real Estate Fund
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended
December 31, 2021(a) | | | Year ended
December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,324,364 | | | $ | 21,722,305 | | | | 2,028,651 | | | $ | 29,520,192 | |
| |
Series II | | | 351,404 | | | | 5,523,380 | | | | 991,547 | | | | 14,154,043 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 175,732 | | | | 3,061,258 | | | | 664,373 | | | | 9,161,706 | |
| |
Series II | | | 60,897 | | | | 1,034,025 | | | | 137,191 | | | | 1,846,585 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (3,121,988 | ) | | | (51,983,747 | ) | | | (2,830,439 | ) | | | (42,695,562 | ) |
| |
Series II | | | (415,673 | ) | | | (6,766,257 | ) | | | (1,223,217 | ) | | | (17,656,057 | ) |
| |
Net increase (decrease) in share activity | | | (1,625,264 | ) | | $ | (27,409,036 | ) | | | (231,894 | ) | | $ | (5,669,093 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 65% 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker; when replies were not received from the broker, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 |
| Series I | | $1,000.00 | | $1,097.90 | | $5.39 | | $1,020.06 | | $5.19 | | 1.02% |
| Series II | | 1,000.00 | | 1,096.80 | | 6.71 | | 1,018.80 | | 6.46 | | 1.27 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 27.07 | % | | | | |
Business Interest Income* | | | 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) | | 186 | | 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School–Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management – Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
|
| Invesco V.I. Global Strategic Income Fund |
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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-VIGLSI-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary | |
For the year ended December 31, 2021, Series I shares of Invesco V.I. Global Strategic Income Fund (the Fund) underperformed the Bloomberg U.S. Aggregate Bond Index. | |
Your Fund’s long-term performance appears later in this report. | |
Fund vs. Indexes | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
| Series I Shares | | | -3.41 | % |
| Series II Shares | | | -3.56 | |
| Bloomberg U.S. Aggregate Bond Indexq | | | -1.54 | |
| Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your Fund
During the fiscal year ended December 31, 2021, global fixed income markets were characterized by volatility as investors grappled with pivots in central bank communications (particularly from the US Federal Reserve (the Fed), which drives markets globally), anticipated growth projections, and inflation concerns on the back of extraordinary monetary and fiscal support globally.
In the first quarter of 2021, US bond yields rose sharply due to an improving economic outlook and concerns about rising inflation. The ability to control COVID-19 continued to be a major determining factor in the growth of economies. Following the swift approval of several COVID-19 vaccines for public distribution, countries rolled out vaccine programs with varying degrees of success. Amid a relatively slow vaccine rollout, the Eurozone experienced a resurgence in COVID-19 infections and reestablished various lockdown measures, which put pressure on the region’s nascent economic recovery. Meanwhile, the US benefited from an expedited vaccine rollout and passage of a $1.9 trillion fiscal stimulus package, further boosting its economic recovery. As growth rebounded, concerns about rising inflation returned and investors reconsidered implications for US monetary policy, triggering a repricing of US interest rates and a subsequent selloff in global fixed income markets. The US dollar ended the first quarter of 2021 up 3.7%.
Nevertheless, central banks across developed countries affirmed their commitment to maintain accommodative monetary policies in support of economic recovery. The Fed reiterated its commitment to maintain the federal funds rate at ultra-low levels given its new policy framework of targeting average inflation. The European Central Bank maintained its main stimulus measures and accelerated its bond-buying program to counter the Euro-zone’s rising borrowing costs. While most central banks across emerging market economies left policy rates unchanged, central banks in Brazil and Russia began to tighten monetary policy.
In the second quarter of 2021, the Fed’s commentary was the primary influence on
global fixed income markets. In early April, the Fed reiterated its average inflation targeting framework and its intent to be patient in reducing accommodative policies. This quelled investor concerns that arose in the first quarter and spurred solid performance across interest rates, currency and corporate credit for much of the second quarter. Nevertheless, the market was spooked again in June when the Fed comments in the face of economic growth and rising inflation were interpreted to suggest earlier policy tightening than investors had anticipated. This perceived “hawkish pivot” drove down Treasury yields as investors questioned the Fed’s ability to avoid a policy error. Volatility rippled outward, roiling global markets and amplifying inflationary pressures in emerging markets, where several central banks (Russia, Brazil and Mexico) tightened monetary policy. After falling in April and May, the US dollar strengthened in the second half of June to end the quarter down only slightly.
In the third quarter of 2021, investor anxiety increased due to concerns about growth prospects, inflation and the Fed’s slightly less accommodative tone, all of which combined to drive volatility in global fixed income markets and push the 10-year US Treasury yield higher. The Delta variant spurred escalating COVID-19 cases globally and subdued optimism for reopening plans (and ultimately growth prospects). Meanwhile, supply chain issues proved more extensive and enduring, which led to elevated inflation data. The Fed anticipated these issues were transitory and driven by COVID-19 disruptions but suggested that tapering its $120 billion in monthly asset purchases could begin earlier than expected. This accelerated the anticipated time frame for future rate hikes. Emerging market central banks generally continued (Russia, Brazil and Mexico) or accelerated (Chile, Czech Republic and Peru) their monetary policy tightening, while China issued an array of new regulations. The US dollar was flat in July, drifted higher in August and rose in September, ending the quarter more than 2% higher.
In the fourth quarter of 2021, global central banks grappled with the continuation of elevated inflation as the Delta and subse
quent Omicron variants of COVID-19 prolonged labor shortages and supply chain disruptions. As was the case through much of the fiscal year, comments from the Fed drove volatility in global fixed income markets. Expectations that the Fed would accelerate the tapering of its bond purchases and raise US interest rates sooner than expected, along with high domestic inflation and upward pressure on inflation expectations, prompted several emerging market central banks to aggressively raise interest rates during the quarter. Brazil, Chile, Peru, Russia, Poland and the Czech Republic each raised rates by at least 1.00%. However, emerging market central banks generally appear poised to slow the pace of tightening going forward. The US dollar drifted sideways in October, rose in November and remained flat in December, ending the quarter 1.8% higher.
Compared to the Bloomberg 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 fiscal year, the Fund’s developed market and US high yield credit contributed to Fund performance, while positioning in emerging market rates and foreign currencies detracted.
Global fixed income markets have remained volatile this fiscal year as investors have continued to recalibrate growth prospects amidst uneven country by country reopening plans and their implications for inflation expectations and subsequent central bank monetary policy actions, particularly by the Fed. In each quarter of 2021, pivots in Fed commentary and perceptions have led to markets pricing in earlier policy tightening than investors anticipated, triggering a repricing in interest rate markets, especially in emerging markets.
Many emerging market central banks preempted the Fed’s anticipated tapering by raising their interest rates in response to higher domestic inflation prints, not having the luxury of seeing through temporary inflation the way the Fed does. That said, we expect inflation to be materially lower in emerging markets in 2022. We believe that we are most likely at or maybe even past peak acceleration in emerging market rate hikes. While uncertainty about US financial conditions drove volatility in emerging markets over the past year, if current projections for US interest rates materialize, we believe emerging market assets may offer an exceptional investment opportunity over the next three years, given current yield differentials.
In contrast, after 15 months of exceptional performance, credit remains expensive by all metrics, in our view. In most markets, spreads are at all time tight levels, or close to them. Easy financial conditions, active funding markets and exceptional equity performance have helped drive strong credit performance. Led by US high yield and resurgent energy prices, emerging markets credit has also performed well.
Invesco V.I. Global Strategic Income Fund
Going forward, we expect credit to generate low excess returns given current tight spread levels. However, we do not expect the default cycle to pick up any time soon, given inflation and the increased pricing power at the corporate level, combined with above-trend growth, easy financial conditions and the buoyant equity market. As a result in credit, we continue to favor taking default risk over spread risk. Higher default risks come with higher required interest rates, while the lower the default risk the lower the required rate as a cushion.
Inflation expectations remain pressure points for global interest rate markets and developed market central banks have begun signaling a gradual removal of the extraordinary monetary stimulus provided over the last 18 months. Higher interest rate expectations have buoyed the US dollar recently, but we believe the factors that have contributed to US dollar strength are now behind us and high US twin deficits will ultimately weigh on the US dollar. While conditions in the US will continue to have an outsized effect on the rest of the world, we expect global growth will remain resilient and continue to find attractive yields abroad, particularly in EMs. In this regard, we believe the environment remains quite favorable for global assets, and the Fund is well positioned to capitalize.
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 fiscal 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 fiscal 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 V.I. Global Strategic Income Fund.
Portfolio manager(s):
Hemant Baijal - Lead
Christopher Kelly
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 Strategic Income Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
Series I Shares | | | | |
Inception (5/3/93) | | | 5.24 | % |
10 Years | | | 3.16 | |
5 Years | | | 2.37 | |
1 Year | | | -3.41 | |
| |
Series II Shares | | | | |
Inception (3/19/01) | | | 4.70 | % |
10 Years | | | 2.90 | |
5 Years | | | 2.15 | |
1 Year | | | -3.56 | |
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 (renamed Invesco V.I. Global Strategic Income Fund on April 30, 2021). 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 deduc-
tion 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 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.
Invesco V.I. Global Strategic Income Fund
Supplemental Information
Invesco 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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is provided by Invesco. |
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The Bloomberg 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 V.I. Global Strategic Income Fund
Fund Information
| | | | |
| Portfolio Composition |
| |
| By security type | | % of total net assets |
| U.S. Dollar Denominated Bonds & Notes | | 37.86% |
| Non-U.S. Dollar Denominated Bonds & Notes | | 31.49 |
| Asset-Backed Securities | | 8.24 |
| Exchange-Traded Funds | | 3.12 |
| Security Types Each Less Than 1% of Portfolio | | 2.49 |
| Money Market Funds Plus Other Assets Less Liabilities | | 16.80 |
| |
| Top Five Debt Issuers* | | |
| | |
| | | | | % of total net assets |
| 1. | | China Development Bank | | 5.48% |
| 2. | | Brazil Notas do Tesouro Nacional | | 4.36 |
| 3. | | Province of Ontario | | 3.06 |
| 4. | | Republic of South Africa Government Bond | | 2.57 |
| 5. | | Mexican Bonos | | 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, 2021.
Invesco V.I. Global Strategic Income Fund
Consolidated Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
U.S. Dollar Denominated Bonds & Notes–37.86% | |
Angola–0.15% | |
Angolan Government International Bond, 8.00%, 11/26/2029(a) | | $ | 1,400,000 | | | $ | 1,385,356 | |
| | |
Argentina–0.16% | | | | | | | | |
Argentine Republic Government International Bond, 0.50%, 07/09/2030(b) | | | 4,350,000 | | | | 1,533,418 | |
| | |
Belgium–0.00% | | | | | | | | |
Telenet Finance Luxembourg Notes S.a r.l., 5.50%, 03/01/2028(a) | | | 5,000 | | | | 5,175 | |
| | |
Brazil–0.78% | | | | | | | | |
Azul Investments L.L.P., 7.25%, 06/15/2026(a) | | | 1,050,000 | | | | 963,165 | |
B2W Digital Lux S.a.r.l., 4.38%, 12/20/2030(a) | | | 815,000 | | | | 735,717 | |
Banco do Brasil S.A., 9.00%(a)(c)(d) | | | 1,400,000 | | | | 1,494,822 | |
Braskem Netherlands Finance B.V., 4.50%, 01/31/2030(a) | | | 1,525,000 | | | | 1,624,476 | |
CSN Inova Ventures, 6.75%, 01/28/2028(a) | | | 725,000 | | | | 764,298 | |
Klabin Austria GmbH, | | | | | | | | |
5.75%, 04/03/2029(a) | | | 290,000 | | | | 316,161 | |
7.00%, 04/03/2049(a) | | | 725,000 | | | | 835,682 | |
Suzano Austria GmbH, 2.50%, 09/15/2028 | | | 701,000 | | | | 677,341 | |
| | | | | 7,411,662 | |
| | |
Canada–0.33% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc., 4.00%, 10/15/2030(a) | | | 527,000 | | | | 518,874 | |
Precision Drilling Corp., | | | | | | | | |
7.13%, 01/15/2026(a) | | | 86,000 | | | | 87,719 | |
6.88%, 01/15/2029(a) | | | 385,000 | | | | 392,940 | |
Ritchie Bros Holdings, Inc., 4.75%, 12/15/2031(a)(e) | | | 501,000 | | | | 523,891 | |
Transcanada Trust, Series16-A, 5.88%, 08/15/2076(c)(e) | | | 1,455,000 | | | | 1,593,225 | |
| | | | | 3,116,649 | |
| | |
Chile–0.22% | | | | | | | | |
AES Andes S.A., 6.35%, 10/07/2079(a)(c) | | | 750,000 | | | | 764,648 | |
Kenbourne Invest S.A., 4.70%, 01/22/2028(a) | | | 1,350,000 | | | | 1,323,722 | |
| | | | | 2,088,370 | |
| | |
China–0.85% | | | | | | | | |
CIFI Holdings Group Co. Ltd., | | | | | | | | |
6.55%, 03/28/2024(a) | | | 290,000 | | | | 287,825 | |
6.45%, 11/07/2024(a) | | | 800,000 | | | | 790,000 | |
6.00%, 07/16/2025(a) | | | 650,000 | | | | 630,500 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| | |
China–(continued) | | | | | | | | |
Country Garden Holdings Co. Ltd., | | | | | | | | |
5.13%, 01/17/2025(a) | | $ | 220,000 | | | $ | 210,172 | |
5.40%, 05/27/2025(a) | | | 1,940,000 | | | | 1,848,382 | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC, 7.50%, 05/01/2025(a) | | | 135,000 | | | | 122,396 | |
KWG Group Holdings Ltd., | | | | | | | | |
5.88%, 11/10/2024(a) | | | 500,000 | | | | 366,250 | |
5.95%, 08/10/2025(a) | | | 435,000 | | | | 312,113 | |
Logan Group Co. Ltd., | | | | | | | | |
7.50%, 08/25/2022(a) | | | 565,000 | | | | 564,152 | |
5.25%, 02/23/2023(a) | | | 1,250,000 | | | | 1,215,625 | |
4.25%, 07/12/2025(a) | | | 550,000 | | | | 506,000 | |
Powerlong Real Estate Holdings Ltd., 6.25%, 08/10/2024(a) | | | 435,000 | | | | 374,818 | |
Shimao Group Holdings Ltd., | | | | | | | | |
6.13%, 02/21/2024(a) | | | 700,000 | | | | 453,950 | |
5.60%, 07/15/2026(a) | | | 700,000 | | | | 434,000 | |
| | | | | | | | 8,116,183 | |
| | |
Colombia–0.89% | | | | | | | | |
Bancolombia S.A., 4.88%, 10/18/2027(c) | | | 2,800,000 | | | | 2,804,242 | |
Colombia Government International Bond, | | | | | | | | |
4.13%, 02/22/2042 | | | 2,225,000 | | | | 1,863,438 | |
5.00%, 06/15/2045 | | | 2,800,000 | | | | 2,537,500 | |
Ecopetrol S.A., 4.63%, 11/02/2031 | | | 1,318,000 | | | | 1,283,745 | |
| | | | | | | | 8,488,925 | |
| | |
Denmark–0.15% | | | | | | | | |
Danske Bank A/S, 7.00%(a)(c)(d) | | | 1,300,000 | | | | 1,431,788 | |
| | |
Dominican Republic–0.16% | | | | | | | | |
| | |
Dominican Republic International Bond, | | | | | | | | |
4.88%, 09/23/2032(a) | | | 920,000 | | | | 937,250 | |
5.30%, 01/21/2041(a) | | | 550,000 | | | | 544,500 | |
| | | | | | | | 1,481,750 | |
| | |
Ecuador–0.06% | | | | | | | | |
Ecuador Government International Bond, 5.00%, 07/31/2030(a)(b) | | | 700,000 | | | | 581,875 | |
| | |
Egypt–0.52% | | | | | | | | |
Egypt Government International Bond, | | | | | | | | |
6.59%, 02/21/2028(a) | | | 1,022,000 | | | | 996,470 | |
7.63%, 05/29/2032(a) | | | 2,100,000 | | | | 1,995,200 | |
8.50%, 01/31/2047(a) | | | 1,500,000 | | | | 1,334,175 | |
8.88%, 05/29/2050(a) | | | 725,000 | | | | 660,330 | |
| | | | | | | | 4,986,175 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
El Salvador–0.11% | |
El Salvador Government International | |
Bond, | | | | | | | | |
7.75%, 01/24/2023(a) | | $ | 500,000 | | | $ | 402,505 | |
5.88%, 01/30/2025(a) | | | 250,000 | | | | 159,378 | |
8.25%, 04/10/2032(a) | | | 750,000 | | | | 465,000 | |
| | | | | 1,026,883 | |
| | |
France–0.70% | | | | | | | | |
Altice France S.A., | | | | | | | | |
8.13%, 02/01/2027(a) | | | 463,000 | | | | 495,422 | |
5.13%, 07/15/2029(a) | | | 248,000 | | | | 242,343 | |
5.50%, 10/15/2029(a) | | | 315,000 | | | | 310,812 | |
BNP Paribas S.A., 7.38%(a)(c)(d) | | | 800,000 | | | | 909,556 | |
Iliad Holding S.A.S., | | | | | | | | |
6.50%, 10/15/2026(a) | | | 200,000 | | | | 210,418 | |
7.00%, 10/15/2028(a)(e) | | | 300,000 | | | | 315,984 | |
Societe Generale S.A.,
4.75%(a)(c)(d) | | | 1,450,000 | | | | 1,475,969 | |
TotalEnergies Capital | | | | | | | | |
International S.A., 3.13%,
05/29/2050 | | | 2,600,000 | | | | 2,672,245 | |
| | | | | | | | 6,632,749 | |
| | |
Ghana–0.40% | | | | | | | | |
Ghana Government International Bond, | | | | | | | | |
7.88%, 03/26/2027(a) | | | 2,150,000 | | | | 1,896,448 | |
7.75%, 04/07/2029(a) | | | 2,250,000 | | | | 1,890,556 | |
| | | | | | 3,787,004 | |
| | |
Guatemala–0.25% | | | | | | | | |
Guatemala Government Bond, | | | | | | | | |
4.90%, 06/01/ 2030(a) | | | 1,240,000 | | | | 1,338,964 | |
3.70%, 10/07/2033(a) | | | 1,087,000 | | | | 1,074,228 | |
| | | | | | 2,413,192 | |
| | |
Hong Kong–0.47% | | | | | | | | |
Melco Resorts Finance Ltd., | | | | | | | | |
4.88%, 06/06/2025(a) | | | 3,750,000 | | | | 3,698,437 | |
5.75%, 07/21/2028(a) | | | 725,000 | | | | 730,032 | |
| | | | | | 4,428,469 | |
| | |
India–0.65% | | | | | | | | |
Adani Green Energy Ltd.,
4.38%, 09/08/2024(a) | | | 1,098,000 | | | | 1,115,733 | |
JSW Steel Ltd., 3.95%,
04/05/2027(a) | | | 1,740,000 | | | | 1,720,097 | |
Muthoot Finance Ltd., 4.40%, 09/02/2023(a) | | | 1,500,000 | | | | 1,533,750 | |
Reliance Industries Ltd., 4.88%, 02/10/2045(a) | | | 1,400,000 | | | | 1,756,078 | |
| | | | | | | | 6,125,658 | |
| | |
Indonesia–1.56% | | | | | | | | |
PT Bank Tabungan Negara (Persero) Tbk, 4.20%,
01/23/2025(a) | | | 2,610,000 | | | | 2,671,238 | |
PT Cikarang Listrindo Tbk,
4.95%, 09/14/2026(a) | | | 2,025,000 | | | | 2,066,006 | |
PT Indofood CBP Sukses Makmur Tbk, 4.75%, 06/09/2051(a) | | | 1,400,000 | | | | 1,442,002 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
| | |
Indonesia–(continued) | | | | | | | | |
PT Indonesia Asahan Aluminium (Persero),
4.75%, 05/15/2025(a) | | $ | 2,950,000 | | | $ | 3,140,540 | |
5.45%, 05/15/2030(a) | | | 1,500,000 | | | | 1,712,430 | |
PT Pertamina (Persero), 4.18%, 01/21/2050(a) | | | 725,000 | | | | 748,040 | |
PT Perusahaan Perseroan (Persero) Perusahaan Listrik Negara,
4.13%, 05/15/2027(a) | | | 1,500,000 | | | | 1,602,435 | |
4.38%, 02/05/2050(a) | | | 1,400,000 | | | | 1,417,486 | |
| | | | | | | | 14,800,177 | |
| | |
Iraq–0.06% | | | | | | | | |
Iraq International Bond, 5.80%, 01/15/2028(a) | | | 568,750 | | | | 545,750 | |
| | |
Ireland–0.45% | | | | | | | | |
Coriolanus DAC, | | | | | | | | |
Series 116, 0.00%, 04/30/2025(a)(f) | | | 498,181 | | | | 491,059 | |
Series 119, 0.00%, 04/30/2025(a)(f) | | | 530,004 | | | | 522,427 | |
Series 120, 0.00%, 04/30/2025(a)(f) | | | 663,431 | | | | 653,946 | |
Series 122, 0.00%, 04/30/2025(a)(f) | | | 581,270 | | | | 572,960 | |
Series 124, 0.00%, 04/30/2025(a)(f) | | | 466,853 | | | | 460,179 | |
Series 126, 0.00%, 04/30/2025(a) | | | 522,281 | | | | 514,814 | |
Series 127, | | | | | | | | |
0.00%, 04/30/2025(a)(f) | | | 604,954 | | | | 596,305 | |
0.00%, 04/30/2025(a)(f) | | | 474,792 | | | | 468,004 | |
| | | | | | | | 4,279,694 | |
| | |
Japan–0.28% | | | | | | | | |
SoftBank Group Corp., 4.63%, 07/06/2028(a) | | | 1,400,000 | | | | 1,367,850 | |
Takeda Pharmaceutical Co. Ltd., 3.18%, 07/09/2050 | | | 1,300,000 | | | | 1,314,131 | |
| | | | | | | | 2,681,981 | |
| | |
Macau–0.52% | | | | | | | | |
MGM China Holdings Ltd., | | | | | | | | |
5.38%, 05/15/2024(a) | | | 1,505,000 | | | | 1,501,629 | |
5.25%, 06/18/2025(a) | | | 1,200,000 | | | | 1,192,272 | |
Wynn Macau Ltd., 4.88%, 10/01/2024(a) | | | 2,335,000 | | | | 2,197,433 | |
| | | | | | | | 4,891,334 | |
| | |
Mexico–2.00% | | | | | | | | |
Alpek S.A.B. de C.V., 3.25%, 02/25/2031(a) | | | 656,000 | | | | 655,301 | |
Banco Mercantil del Norte S.A., | | | | | | | | |
8.38%(a)(c)(d) | | | 650,000 | | | | 746,795 | |
5.88%(a)(c)(d) | | | 710,000 | | | | 709,112 | |
Braskem Idesa S.A.P.I., | | | | | | | | |
7.45%, 11/15/2029(a) | | | 1,450,000 | | | | 1,504,788 | |
6.99%, 02/20/2032(a) | | | 893,000 | | | | 897,822 | |
Cemex S.A.B. de C.V., | | | | | | | | |
5.45%, 11/19/2029(a) | | | 1,015,000 | | | | 1,089,024 | |
3.88%, 07/11/2031(a) | | | 910,000 | | | | 908,103 | |
5.13%(a)(c)(d) | | | 965,000 | | | | 1,000,459 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
Mexico–(continued) | | | | | | | | |
Mexico Remittances Funding Fiduciary Estate Management S.a.r.l., 4.88%, 01/15/2028(a) | | $ | 3,905,000 | | | $ | 3,647,602 | |
Nemak S.A.B. de C.V., 3.63%, 06/28/2031(a) | | | 1,195,000 | | | | 1,166,840 | |
Petroleos Mexicanos,
6.50%, 03/13/2027 | | | 4,518,000 | | | | 4,825,721 | |
6.70%, 02/16/2032(a) | | | 1,167,000 | | | | 1,180,975 | |
7.69%, 01/23/2050 | | | 725,000 | | | | 701,057 | |
| | | | | | | | 19,033,599 | |
| | |
Netherlands–1.32% | | | | | | | | |
ING Groep N.V.,
6.50%(c)(d)(e) | | | 2,800,000 | | | | 3,052,924 | |
6.75%(a)(c)(d) | | | 3,600,000 | | | | 3,890,401 | |
OCI N.V., 4.63%, 10/15/2025(a) | | | 444,000 | | | | 461,119 | |
UPC Holding B.V.,
5.50%, 01/15/2028(a) | | | 2,700,000 | | | | 2,805,003 | |
VEON Holdings B.V.,
3.38%, 11/25/2027(a) | | | 2,355,000 | | | | 2,301,259 | |
| | | | | | | | 12,510,706 | |
| | |
Nigeria–0.09% | | | | | | | | |
Nigeria Government International
Bond, 7.88%, 02/16/2032(a) | | | 855,000 | | | | 844,954 | |
| | |
Oman–0.64% | | | | | | | | |
Oman Government International Bond,
4.75%, 06/15/2026(a) | | | 3,018,000 | | | | 3,112,152 | |
6.75%, 01/17/2048(a) | | | 2,900,000 | | | | 2,957,168 | |
| | | | | | 6,069,320 | |
| | |
Pakistan–0.08% | | | | | | | | |
Pakistan Government
International Bond, 8.88%,
04/08/2051(a) | | | 725,000 | | | | 722,408 | |
| | |
South Africa–0.42% | | | | | | | | |
Eskom Holdings SOC Ltd., 6.35%, 08/10/2028(a) | | | 725,000 | | | | 783,906 | |
Republic of South Africa Government International Bond, | | | | | | | | |
5.00%, 10/12/2046 | | | 725,000 | | | | 658,844 | |
5.65%, 09/27/2047 | | | 725,000 | | | | 697,114 | |
Sasol Financing USA LLC, 4.38%,
09/18/2026 | | | 840,000 | | | | 846,207 | |
Stillwater Mining Co., 4.00%,
11/16/2026(a) | | | 1,000,000 | | | | 983,025 | |
| | | | | | | | 3,969,096 | |
| | |
Spain–0.09% | | | | | | | | |
Banco Bilbao Vizcaya Argentaria
S.A., Series 9, 6.50%(c)(d) | | | 800,000 | | | | 851,000 | |
| | |
Switzerland–1.58% | | | | | | | | |
Consolidated Energy Finance S.A.,
5.63%, 10/15/2028(a) | | | 281,000 | | | | 275,072 | |
Credit Suisse Group AG,
7.50%(a)(c)(d) | | | 725,000 | | | | 767,956 | |
7.50%(a)(c)(d) | | | 725,000 | | | | 784,985 | |
6.25%(a)(c)(d) | | | 3,015,000 | | | | 3,220,020 | |
5.25%(a)(c)(d) | | | 1,400,000 | | | | 1,449,000 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Switzerland–(continued) | | | | | | | | |
Oriflame Investment Holding PLC,
5.13%, 05/04/2026(a) | | $ | 1,421,000 | | | $ | 1,317,225 | |
Swiss Re Finance (Luxembourg) S.A., 5.00%, 04/02/2049(a)(c) | | | 1,680,000 | | | | 1,885,800 | |
UBS Group AG, | | | | | | | | |
7.00%(a)(c)(d) | | | 2,050,000 | | | | 2,211,837 | |
7.00%(a)(c)(d) | | | 2,800,000 | | | | 3,124,800 | |
| | | | | | | | 15,036,695 | |
| | |
Tanzania–0.15% | | | | | | | | |
HTA Group Ltd., 7.00%,12/18/2025(a) | | | 1,370,000 | | | | 1,432,335 | |
| | |
Thailand–0.16% | | | | | | | | |
Krung Thai Bank PCL, 4.40%(a)(c)(d) | | | 780,000 | | | | 785,624 | |
Muang Thai Life Assurance PCL, 3.55%, 01/27/2037(a)(c) | | | 750,000 | | | | 756,424 | |
| | | | | | | | 1,542,048 | |
| | |
Ukraine–0.80% | | | | | | | | |
Metinvest B.V., 8.50%, 04/23/2026(a) | | | 1,250,000 | | | | 1,306,100 | |
NAK Naftogaz Ukraine via Kondor | | | | | | | | |
Finance PLC, 7.63%, 11/08/2026(a) | | | 800,000 | | | | 701,462 | |
Ukraine Government International | | | | | | | | |
Bond,
8.99%, 02/01/2024(a) | | | 1,150,000 | | | | 1,151,665 | |
6.88%, 05/21/2029(a) | | | 1,400,000 | | | | 1,243,690 | |
7.38%, 09/25/2032(a) | | | 2,100,000 | | | | 1,879,773 | |
1.26%, 05/31/2040(a) | | | 1,400,000 | | | | 1,279,565 | |
| | | | | | | | 7,562,255 | |
| | |
United Kingdom–3.02% | | | | | | | | |
abrdn PLC,
4.25%, 06/30/2028(a) | | | 675,000 | | | | 730,687 | |
Barclays PLC, 6.13%(c)(d)(e) | | | 1,450,000 | | | | 1,570,857 | |
BP Capital Markets PLC, 4.88%(c)(d) | | | 910,000 | | | | 985,075 | |
British Telecommunications PLC, 4.25%, 11/23/2081(a)(c)(e) | | | 5,800,000 | | | | 5,830,334 | |
HSBC Holdings PLC,
6.00%(c)(d) | | | 3,625,000 | | | | 3,910,469 | |
6.38%(c)(d) | | | 725,000 | | | | 778,469 | |
6.50%(c)(d) | | | 725,000 | | | | 799,932 | |
M&G PLC,
6.50%, 10/20/2048(a)(c) | | | 675,000 | | | | 790,672 | |
Petrofac Ltd., 9.75%, 11/15/2026(a) | | | 1,283,000 | | | | 1,310,527 | |
Prudential PLC, 4.88%(a)(d) | | | 1,450,000 | | | | 1,479,665 | |
Standard Chartered PLC, 7.75%(a)(c)(d) | | | 2,600,000 | | | | 2,760,524 | |
6.00%(a)(c)(d)(e) | | | 2,825,000 | | | | 3,019,219 | |
4.30%(a)(c)(d)(e) | | | 725,000 | | | | 699,625 | |
Virgin Media Finance PLC, 5.00%,
07/15/2030(a) | | | 348,000 | | | | 346,803 | |
Virgin Media Secured Finance PLC,
5.50%, 05/15/2029(a) | | | 130,000 | | | | 137,490 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
United Kingdom–(continued) | | | | | |
| | |
Vodafone Group PLC, | | | | | | | | |
3.25%, 06/04/2081(c) | | $ | 1,293,000 | | | $ | 1,269,778 | |
4.13%, 06/04/2081(c) | | | 2,224,000 | | | | 2,205,274 | |
| | | | | 28,625,400 | |
| | |
United States–17.37% | | | | | | | | |
| | |
AECOM, 5.13%, 03/15/2027 | | | 189,000 | | | | 206,118 | |
| | |
Aethon United BR L.P./Aethon United Finance Corp., 8.25%, 02/15/2026(a) | | | 1,034,000 | | | | 1,111,922 | |
| | |
Alcoa Nederland Holding B.V., 6.13%, 05/15/2028(a) | | | 2,825,000 | | | | 3,044,305 | |
| | |
Allison Transmission, Inc., 3.75%, 01/30/2031(a) | | | 1,014,000 | | | | 990,450 | |
Ally Financial, Inc., | | | | | | | | |
5.75%, 11/20/2025 | | | 521,000 | | | | 588,134 | |
8.00%, 11/01/2031 | | | 254,000 | | | | 359,977 | |
| | |
American Airlines Group, Inc., 5.00%, 06/01/2022(a) | | | 262,000 | | | | 262,872 | |
American Airlines, Inc./AAdvantage Loyalty IP Ltd., | | | | | | | | |
5.50%, 04/20/2026(a) | | | 2,666,000 | | | | 2,776,452 | |
5.75%, 04/20/2029(a) | | | 451,000 | | | | 482,911 | |
| | |
American Builders & Contractors Supply Co., Inc., 4.00%, 01/15/2028(a) | | | 502,000 | | | | 514,382 | |
| | |
Arconic Corp., 6.13%, 02/15/2028(a) | | | 3,870,000 | | | | 4,124,956 | |
| | |
Ardagh Metal Packaging Finance USA LLC/Ardagh Metal Packaging Finance PLC, 3.25%, 09/01/2028(a) | | | 600,000 | | | | 594,126 | |
| | |
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc., 5.25%, 04/30/2025(a) | | | 479,000 | | | | 495,063 | |
Asbury Automotive Group, Inc., | | | | | | | | |
4.50%, 03/01/2028 | | | 130,000 | | | | 132,787 | |
4.63%, 11/15/2029(a) | | | 628,000 | | | | 640,824 | |
| | |
Audacy Capital Corp., 6.75%, 03/31/2029(a)(e) | | | 491,000 | | | | 480,380 | |
| | |
Bath & Body Works, Inc., 6.88%, 11/01/2035 | | | 418,000 | | | | 520,021 | |
Bausch Health Cos., Inc., | | | | | | | | |
5.75%, 08/15/2027(a) | | | 156,000 | | | | 162,084 | |
5.25%, 02/15/2031(a) | | | 2,100,000 | | | | 1,848,630 | |
| | |
Becton, Dickinson and Co., 3.79%, 05/20/2050 | | | 2,600,000 | | | | 2,925,553 | |
| | |
Bristow Group, Inc., 6.88%, 03/01/2028(a) | | | 735,000 | | | | 765,605 | |
| | |
Callon Petroleum Co., 8.00%, 08/01/2028(a)(e) | | | 488,000 | | | | 493,573 | |
| | |
Calpine Corp., 3.75%, 03/01/2031(a) | | | 527,000 | | | | 508,729 | |
| | |
Camelot Finance S.A., 4.50%, 11/01/2026(a) | | | 1,203,000 | | | | 1,246,392 | |
| | |
Carnival Corp., 10.50%, 02/01/2026(a) | | | 1,778,000 | | | | 2,031,738 | |
| | |
Carriage Services, Inc., 4.25%, 05/15/2029(a) | | | 931,000 | | | | 927,755 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
United States–(continued) | | | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | | | | | | | |
4.00%, 03/01/2023(a) | | $ | 61,000 | | | $ | 61,078 | |
5.13%, 05/01/2027(a) | | | 253,000 | | | | 260,900 | |
5.00%, 02/01/2028(a) | | | 550,000 | | | | 573,100 | |
4.75%, 03/01/2030(a) | | | 1,683,000 | | | | 1,753,307 | |
4.50%, 08/15/2030(a) | | | 2,186,000 | | | | 2,241,164 | |
4.50%, 05/01/2032 | | | 837,000 | | | | 862,457 | |
4.25%, 01/15/2034(a) | | | 175,000 | | | | 172,487 | |
| | |
Centene Corp., 4.63%, 12/15/2029 | | | 474,000 | | | | 512,010 | |
| | |
Charles Schwab Corp. (The), Series G, 5.38%(c)(d) | | | 3,025,000 | | | | 3,304,812 | |
| | |
Cinemark USA, Inc., 5.88%, 03/15/2026(a) | | | 110,000 | | | | 111,513 | |
| | |
Citigroup, Inc., 3.88%(c)(d) | | | 1,523,000 | | | | 1,526,807 | |
Civitas Resources, Inc., | | | | | | | | |
7.50%, 04/30/2026 | | | 12,908 | | | | 13,041 | |
5.00%, 10/15/2026(a) | | | 512,000 | | | | 517,709 | |
| | |
Clarios Global L.P., 6.75%, 05/15/2025(a) | | | 110,000 | | | | 115,337 | |
| | |
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(a) | | | 100,000 | | | | 106,129 | |
| | |
Clarivate Science Holdings Corp., 4.88%, 07/01/2029(a) | | | 519,000 | | | | 527,239 | |
Clearway Energy Operating LLC, | | | | | | | | |
4.75%, 03/15/2028(a) | | | 564,000 | | | | 593,734 | |
3.75%, 02/15/2031(a) | | | 302,000 | | | | 301,710 | |
| | |
Cleveland-Cliffs, Inc., 9.88%, 10/17/2025(a) | | | 444,000 | | | | 503,039 | |
| | |
CNX Midstream Partners L.P., 4.75%, 04/15/2030(a) | | | 522,000 | | | | 520,927 | |
Community Health Systems, Inc., | | | | | | | | |
8.00%, 03/15/2026(a) | | | 1,837,000 | | | | 1,933,149 | |
8.00%, 12/15/2027(a) | | | 585,000 | | | | 632,613 | |
Covanta Holding Corp., | | | | | | | | |
4.88%, 12/01/2029(a) | | | 125,000 | | | | 127,065 | |
5.00%, 09/01/2030 | | | 284,000 | | | | 290,298 | |
| | |
Cox Communications, Inc., 2.95%, 10/01/2050(a) | | | 956,000 | | | | 895,161 | |
| | |
Crowdstrike Holdings, Inc., 3.00%, 02/15/2029(e) | | | 771,000 | | | | 762,561 | |
Crown Castle International Corp., | | | | | | | | |
3.25%, 01/15/2051 | | | 1,300,000 | | | | 1,281,136 | |
CSC Holdings LLC, | | | | | | | | |
5.88%, 09/15/2022 | | | 100,000 | | | | 102,602 | |
5.50%, 04/15/2027(a) | | | 304,000 | | | | 314,622 | |
6.50%, 02/01/2029(a) | | | 280,000 | | | | 300,168 | |
5.75%, 01/15/2030(a) | | | 780,000 | | | | 778,608 | |
4.50%, 11/15/2031(a) | | | 256,000 | | | | 253,215 | |
5.00%, 11/15/2031(a) | | | 200,000 | | | | 193,040 | |
| | |
CTR Partnership L.P./ CareTrust Capital Corp., 3.88%, 06/30/2028(a) | | | 519,000 | | | | 530,125 | |
Dana, Inc., | | | | | | | | |
5.38%, 11/15/2027 | | | 146,000 | | | | 153,344 | |
5.63%, 06/15/2028 | | | 253,000 | | | | 269,162 | |
DaVita, Inc., | | | | | | | | |
4.63%, 06/01/2030(a) | | | 302,000 | | | | 309,719 | |
3.75%, 02/15/2031(a) | | | 746,000 | | | | 728,200 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
United States–(continued) | | | | | | | | |
| | |
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, 06/01/2028(a) | | $ | 513,000 | | | $ | 534,248 | |
| | |
Dell International LLC/EMC Corp., 6.20%, 07/15/2030 | | | 2,600,000 | | | | 3,284,391 | |
Delta Air Lines, Inc., | | | | | | | | |
7.00%,05/01/2025(a) | | | 825,000 | | | | 944,042 | |
7.38%, 01/15/2026(e) | | | 1,671,000 | | | | 1,969,032 | |
| | |
DISH DBS Corp., 7.75%, 07/01/2026 | | | 150,000 | | | | 158,445 | |
| | |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 100,000 | | | | 94,905 | |
Diversified Healthcare Trust, | | | | | | | | |
4.75%, 05/01/2024 | | | 247,000 | | | | 253,175 | |
9.75%, 06/15/2025 | | | 522,000 | | | | 565,438 | |
4.38%, 03/01/2031 | | | 194,000 | | | | 186,604 | |
Dun & Bradstreet Corp. (The), | | | | | | | | |
6.88%,08/15/2026(a) | | | 157,000 | | | | 163,450 | |
5.00%, 12/15/2029(a) | | | 102,000 | | | | 104,523 | |
| | |
Encompass Health Corp., 4.50%, 02/01/2028(e) | | | 494,000 | | | | 508,916 | |
| | |
EnerSys, 5.00%, 04/30/2023(a) | | | 497,000 | | | | 513,764 | |
| | |
EnPro Industries, Inc., 5.75%, 10/15/2026 | | | 606,000 | | | | 633,876 | |
| | |
Everi Holdings, Inc., 5.00%, 07/15/2029(a) | | | 508,000 | | | | 513,916 | |
| | |
Expedia Group, Inc., 2.95%, 03/15/2031 | | | 1,151,000 | | | | 1,150,557 | |
| | |
FirstCash, Inc., 5.63%, 01/01/2030(a) | | | 342,000 | | | | 349,110 | |
| | |
Ford Motor Co., 4.75%, 01/15/2043 | | | 241,000 | | | | 266,432 | |
Ford Motor Credit Co. LLC, | | | | | | | | |
5.13%, 06/16/2025 | | | 204,000 | | | | 222,115 | |
3.38%, 11/13/2025 | | | 206,000 | | | | 214,288 | |
4.39%, 01/08/2026 | | | 138,000 | | | | 148,851 | |
5.11%, 05/03/2029 | | | 638,000 | | | | 726,022 | |
Freeport-McMoRan, Inc., | | | | | | | | |
4.63%, 08/01/2030 | | | 2,210,000 | | | | 2,373,894 | |
5.40%, 11/14/2034(e) | | | 812,000 | | | | 989,755 | |
5.45%, 03/15/2043 | | | 64,000 | | | | 80,579 | |
| | |
Gap, Inc. (The), 3.63%, 10/01/2029(a) | | | 524,000 | | | | 519,103 | |
| | |
Gartner, Inc.,
4.50%, 07/01/2028(a) | | | 482,000 | | | | 504,177 | |
3.63%, 06/15/2029(a) | | | 247,000 | | | | 250,131 | |
Genesis Energy L.P./Genesis Energy Finance Corp., | | | | | | | | |
6.50%, 10/01/2025 | | | 150,000 | | | | 148,281 | |
6.25%, 05/15/2026 | | | 274,000 | | | | 267,435 | |
8.00%, 01/15/2027 | | | 528,000 | | | | 544,727 | |
7.75%, 02/01/2028 | | | 112,000 | | | | 112,998 | |
| | |
Global Medical Response, Inc., 6.50%, 10/01/2025(a) | | | 23,000 | | | | 23,290 | |
| | |
Gray Escrow II, Inc., 5.38%, 11/15/2031(a)(e) | | | 375,000 | | | | 386,454 | |
| | |
Gray Television, Inc., 7.00%, 05/15/2027(a) | | | 560,000 | | | | 599,110 | |
| | |
Great Lakes Dredge & Dock Corp., 5.25%, 06/01/2029(a) | | | 510,000 | | | | 526,068 | |
| | |
Group 1 Automotive, Inc., 4.00%, 08/15/2028(a) | | | 1,010,000 | | | | 1,007,894 | |
| | | | | | | | |
| | | Principal | | | | |
| | | Amount | | | Value | |
United States–(continued) | | | | | | | | |
HCA, Inc., | | | | | | | | |
5.38%, 02/01/2025 | | $ | 133,000 | | | $ | 146,340 | |
5.63%, 09/01/2028 | | | 163,000 | | | | 190,738 | |
4.13%, 06/15/2029 | | | 491,000 | | | | 540,803 | |
3.50%, 09/01/2030 | | | 865,000 | | | | 915,927 | |
| | |
Hess Midstream Operations L.P., 5.63%, 02/15/2026(a) | | | 465,000 | | | | 479,473 | |
Hilcorp Energy I L.P./Hilcorp Finance Co., | | | | | | | | |
6.25%,11/01/2028(a) | | | 313,000 | | | | 329,481 | |
5.75%, 02/01/2029(a) | | | 172,000 | | | | 177,526 | |
| | |
Howard Midstream Energy Partners LLC, 6.75%, 01/15/2027(a) | | | 255,000 | | | | 261,612 | |
| | |
Intrado Corp., 5.38%, 07/15/2022(a) | | | 332,000 | | | | 324,530 | |
iStar, Inc., | | | | | | | | |
4.75%, 10/01/2024 | | | 794,000 | | | | 824,760 | |
5.50%, 02/15/2026 | | | 185,000 | | | | 191,682 | |
| | |
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(a) | | | 346,000 | | | | 362,537 | |
| | |
Jabil, Inc., 3.00%, 01/15/2031(e) | | | 1,300,000 | | | | 1,337,478 | |
| | |
Jane Street Group/JSG Finance, Inc., 4.50%, 11/15/2029(a) | | | 515,000 | | | | 520,995 | |
| | |
JPMorgan Chase & Co., Series KK, 3.65%(c)(d)(e) | | | 3,093,000 | | | | 3,093,000 | |
| | |
Kontoor Brands, Inc., 4.13%, 11/15/2029(a) | | | 508,000 | | | | 508,848 | |
Kraft Heinz Foods Co. (The), | | | | | | | | |
6.88%, 01/26/2039 | | | 235,000 | | | | 346,027 | |
5.00%, 06/04/2042 | | | 265,000 | | | | 330,366 | |
5.20%, 07/15/2045 | | | 3,510,000 | | | | 4,473,240 | |
4.38%, 06/01/2046 | | | 152,000 | | | | 178,380 | |
5.50%, 06/01/2050 | | | 672,000 | | | | 911,763 | |
Lamar Media Corp., | | | | | | | | |
4.88%, 01/15/2029 | | | 764,000 | | | | 798,514 | |
4.00%, 02/15/2030 | | | 1,402,000 | | | | 1,424,341 | |
3.63%, 01/15/2031 | | | 350,000 | | | | 341,346 | |
| | |
LCM Investments Holdings II LLC, 4.88%, 05/01/2029(a) | | | 527,000 | | | | 542,428 | |
Lennar Corp., | | | | | | | | |
4.50%, 04/30/2024 | | | 89,000 | | | | 94,644 | |
4.75%, 05/30/2025 | | | 244,000 | | | | 267,207 | |
5.00%, 06/15/2027 | | | 381,000 | | | | 431,254 | |
| | |
Level 3 Financing, Inc., 3.75%, 07/15/2029(a) | | | 762,000 | | | | 725,134 | |
| | |
Lithia Motors, Inc., 3.88%, 06/01/2029(a) | | | 502,000 | | | | 513,308 | |
| | |
Lumen Technologies, Inc., Series P, 7.60%, 09/15/2039 | | | 445,000 | | | | 477,890 | |
Macy’s Retail Holdings LLC, | | | | | | | | |
5.88%,04/01/2029(a) | | | 480,000 | | | | 512,592 | |
4.50%, 12/15/2034 | | | 269,000 | | | | 266,045 | |
Marriott International, Inc., | | | | | | | | |
Series FF, 4.63%, 06/15/2030 | | | 255,000 | | | | 287,164 | |
Series GG, 3.50%, 10/15/2032 | | | 3,640,000 | | | | 3,817,266 | |
| | |
Match Group Holdings II LLC, 4.63%, 06/01/2028(a) | | | 136,000 | | | | 141,752 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
Mattel, Inc., | | | | | | | | |
6.20%, 10/01/2040 | | $ | 725,000 | | | $ | 939,085 | |
5.45%, 11/01/2041 | | | 725,000 | | | | 866,498 | |
MGM Resorts International, | | | | | | | | |
6.00%, 03/15/2023 | | | 758,000 | | | | 793,069 | |
4.63%, 09/01/2026 | | | 221,000 | | | | 230,073 | |
| | |
Micron Technology, Inc., 4.66%, 02/15/2030 | | | 424,000 | | | | 489,273 | |
| | |
Midwest Gaming Borrower LLC/ Midwest Gaming Finance Corp., 4.88%, 05/01/2029(a) | | | 514,000 | | | | 517,351 | |
| | |
Mohegan Gaming & Entertainment, 8.00%, 02/01/2026(a) | | | 500,000 | | | | 525,597 | |
| | |
MPT Operating Partnership L.P./MPT Finance Corp., 4.63%, 08/01/2029 | | | 466,000 | | | | 492,436 | |
| | |
Mueller Water Products, Inc., | | | | | | | | |
4.00%, 06/15/2029(a) | | | 500,000 | | | | 505,717 | |
| | |
Murphy Oil Corp., 6.38%, 12/01/2042 | | | 195,000 | | | | 195,275 | |
| | |
Murray Energy Corp., 12.00%, 04/15/2024(a)(g)(h) | | | 2,352,945 | | | | 12,000 | |
| | |
Nabors Industries, Inc., 7.38%, 05/15/2027(a) | | | 73,000 | | | | 75,642 | |
Navient Corp., | | | | | | | | |
6.13%, 03/25/2024 | | | 288,000 | | | | 307,369 | |
5.88%, 10/25/2024 | | | 210,000 | | | | 224,123 | |
6.75%, 06/25/2025 | | | 203,000 | | | | 223,503 | |
6.75%, 06/15/2026 | | | 110,000 | | | | 121,707 | |
5.00%, 03/15/2027 | | | 277,000 | | | | 282,782 | |
5.63%, 08/01/2033 | | | 632,000 | | | | 602,871 | |
NESCO Holdings II, Inc., 5.50%, 04/15/2029(a) | | | 494,000 | | | | 510,932 | |
Netflix, Inc.,
5.88%, 11/15/2028 | | | 579,000 | | | | 697,220 | |
5.38%, 11/15/2029(a) | | | 262,000 | | | | 311,573 | |
| | |
NFP Corp., 4.88%, 08/15/2028(a) | | | 199,000 | | | | 201,292 | |
| | |
NGL Energy Operating LLC/NGL Energy Finance Corp., 7.50%, 02/01/2026(a) | | | 400,000 | | | | 413,042 | |
| |
NGL Energy Partners L.P./NGL Energy | | | | | |
| | |
Finance Corp.,
6.13%, 03/01/2025 | | | 245,000 | | | | 209,730 | |
7.50%, 04/15/2026 | | | 98,000 | | | | 84,137 | |
| | |
NMG Holding Co., Inc./Neiman Marcus Group LLC, 7.13%, 04/01/2026(a) | | | 240,000 | | | | 255,106 | |
| | |
Northern Oil and Gas, Inc., 8.13%, 03/01/2028(a) | | | 795,000 | | | | 839,854 | |
| | |
Oasis Midstream Partners L.P./OMP Finance Corp., 8.00%, 04/01/2029(a) | | | 727,000 | | | | 793,462 | |
Occidental Petroleum Corp., | | | | | | | | |
6.95%, 07/01/2024 | | | 165,000 | | | | 183,647 | |
8.50%, 07/15/2027 | | | 87,000 | | | | 108,620 | |
6.13%, 01/01/2031(e) | | | 262,000 | | | | 318,770 | |
6.20%, 03/15/2040 | | | 249,000 | | | | 306,634 | |
4.10%, 02/15/2047 | | | 324,000 | | | | 318,011 | |
| | |
Omnicare, Inc., 4.75%12/01/2022 | | | 1,765,000 | | | | 1,811,797 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
United States–(continued) | | | | | | | | |
OneMain Finance Corp., | | | | | | | | |
6.88%, 03/15/2025 | | $ | 434,000 | | | $ | 483,374 | |
7.13%, 03/15/2026 | | | 543,000 | | | | 619,821 | |
3.88%, 09/15/2028 | | | 274,000 | | | | 268,935 | |
5.38%, 11/15/2029 | | | 456,000 | | | | 496,470 | |
| | |
Papa John’s International, Inc., 3.88%, 09/15/2029(a) | | | 521,000 | | | | 519,163 | |
| | |
PetSmart, Inc./PetSmart Finance Corp., 7.75%, 02/15/2029(a) | | | 250,000 | | | | 272,004 | |
Plains All American Pipeline L.P./PAA Finance Corp., | | | | | | | | |
4.50%, 12/15/2026 | | | 2,900,000 | | | | 3,185,794 | |
3.80%, 09/15/2030 | | | 780,000 | | | | 815,433 | |
| | |
Prestige Brands, Inc., 3.75%, 04/01/2031(a) | | | 775,000 | | | | 752,924 | |
| | |
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(a) | | | 676,000 | | | | 717,405 | |
| | |
RHP Hotel Properties L.P./RHP Finance Corp., 4.75%, 10/15/2027 | | | 535,000 | | | | 546,235 | |
| | |
Rockcliff Energy II LLC, 5.50%, 10/15/2029(a) | | | 519,000 | | | | 535,434 | |
Rockies Express Pipeline LLC, | | | | | | | | |
4.80%, 05/15/2030(a) | | | 445,000 | | | | 464,587 | |
6.88%, 04/15/2040(a) | | | 351,000 | | | | 397,220 | |
| | |
Roller Bearing Co. of America, Inc., 4.38%, 10/15/2029(a) | | | 63,000 | | | | 64,339 | |
| | |
RR Donnelley & Sons Co., 8.25%, 07/01/2027 | | | 165,000 | | | | 197,175 | |
| | |
SBA Communications Corp., 3.88%, 02/15/2027 | | | 747,000 | | | | 770,400 | |
| | |
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(a) | | | 2,198,000 | | | | 2,302,471 | |
| | |
Scientific Games International, Inc., 8.25%, 03/15/2026(a) | | | 542,000 | | | | 571,146 | |
| | |
SCIL IV LLC/SCIL USA Holdings LLC, 5.38%, 11/01/2026(a) | | | 214,000 | | | | 219,885 | |
| | |
Scripps Escrow II, Inc., 3.88%, 01/15/2029(a) | | | 509,000 | | | | 509,155 | |
| | |
Seagate HDD Cayman, 4.13%, 01/15/2031 | | | 1,040,000 | | | | 1,083,508 | |
| | |
Sempra Energy, 4.13%, 04/01/2052(c) | | | 4,350,000 | | | | 4,407,733 | |
Sensata Technologies B.V., | | | | | | | | |
4.88%, 10/15/2023(a) | | | 487,000 | | | | 511,947 | |
5.63%, 11/01/2024(a) | | | 163,000 | | | | 179,613 | |
| | |
Sensata Technologies, Inc., 3.75%, 02/15/2031(a) | | | 307,000 | | | | 306,351 | |
| | |
Service Properties Trust, 4.50%, 03/15/2025 | | | 511,000 | | | | 498,228 | |
Sirius XM Radio, Inc., | | | | | | | | |
3.13%, 09/01/2026(a) | | | 358,000 | | | | 358,575 | |
4.00%, 07/15/2028(a) | | | 404,000 | | | | 406,957 | |
| | |
SM Energy Co.,
10.00%, 01/15/2025(a) | | | 498,000 | | | | 548,624 | |
6.75%, 09/15/2026 | | | 188,000 | | | | 193,366 | |
| | |
Sonic Automotive, Inc., 4.63%, 11/15/2029(a) | | | 722,000 | | | | 730,083 | |
| | |
Southern Co. (The), Series B, 4.00%, 01/15/2051(c) | | | 3,271,000 | | | | 3,352,775 | |
| | |
Series 21-A, 3.75%, 09/15/2051(c) | | | 2,263,000 | | | | 2,268,657 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | |
| | | Principal
Amount | | Value |
United States–(continued) |
Sprint Capital Corp., 8.75%, 03/15/2032 | | $ 341,000 | | $ 512,073 |
Sprint Corp., 7.63%, 03/01/2026 | | 421,000 | | 505,985 |
Standard Industries, Inc., 5.00%, 02/15/2027(a) | | 493,000 | | 508,103 |
SunCoke Energy, Inc., 4.88%, 06/30/2029(a) | | 518,000 | | 516,190 |
Sunoco L.P./Sunoco Finance Corp., | | | | |
6.00%, 04/15/2027 | | 70,000 | | 73,073 |
5.88%, 03/15/2028 | | 487,000 | | 515,675 |
Talen Energy Supply LLC, 7.63%, 06/01/2028(a) | | 727,000 | | 648,131 |
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., 5.50%, 01/15/2028(a) | | 538,000 | | 534,054 |
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., 6.50%, 07/15/2027 | | 70,000 | | 75,116 |
5.00%, 01/15/2028 | | 246,000 | | 259,607 |
5.50%, 03/01/2030 | | 75,000 | | 82,064 |
4.88%, 02/01/2031 | | 82,000 | | 89,190 |
Taylor Morrison Communities, Inc., 6.63%, 07/15/2027(a) | | 707,000 | | 746,334 |
Terminix Co. LLC (The), 7.45%, 08/15/2027 | | 480,000 | | 600,595 |
Trinseo Materials Operating S.C.A./Trinseo Materials Finance, Inc., 5.13%, 04/01/2029(a) | | 502,000 | | 512,798 |
Uber Technologies, Inc., Conv., 0.00%, 12/15/2025(f) | | 2,800,000 | | 2,762,200 |
United Airlines, Inc., 4.38%, 04/15/2026(a) | | 1,969,000 | | 2,055,734 |
Universal Health Services, Inc., 2.65%, 10/15/2030(a) | | 1,460,000 | | 1,450,275 |
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | | 505,000 | | 533,936 |
Valaris Ltd.,
12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(a)(g) | | 177,000 | | 184,451 |
Series 1145, 12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(g) | | 335,000 | | 349,102 |
Valvoline, Inc., 3.63%, 06/15/2031(a) | | 433,000 | | 419,913 |
Viatris, Inc., 3.85%, 06/22/2040 | | 780,000 | | 827,483 |
Vistra Corp., 7.00%(a)(c)(d) | | 83,000 | | 84,211 |
Vistra Operations Co. LLC, | | | | |
5.50%, 09/01/2026(a) | | 87,000 | | 89,957 |
5.63%, 02/15/2027(a) | | 149,000 | | 153,658 |
5.00%, 07/31/2027(a) | | 326,000 | | 338,734 |
4.38%, 05/01/2029(a)(e) | | 517,000 | | 518,884 |
Weatherford International Ltd., 6.50%, 09/15/2028(a)(e) | | 174,000 | | 184,353 |
WMG Acquisition Corp., 3.75%, 12/01/2029(a) | | 517,000 | | 516,548 |
WRKCo, Inc., 3.00%, 06/15/2033 | | 1,820,000 | | 1,874,327 |
| | | | |
| | | Principal
Amount | | Value |
United States–(continued) | | | | |
Wynn Resorts Finance LLC/Wynn Resorts Capital Corp., 5.13%, 10/01/2029(a)(e) | | $ 483,000 | | $ 490,967 |
| | | | | 164,933,120 |
| | |
Uzbekistan–0.10% | | | | |
Uzbekneftegaz JSC, 4.75%, 11/16/2028(a) | | 1,022,000 | | 986,026 |
| | |
Zambia–0.32% | | | | |
First Quantum Minerals Ltd., 6.88%, 10/15/2027(a) | | 2,800,000 | | 3,016,566 |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $362,108,832) | | 359,375,745 |
| | | | | | | | | | |
Non-U.S. Dollar Denominated Bonds & Notes–31.49%(i) | |
Argentina–2.09% | | | | | | | | | | |
Argentina Treasury Bond BONCER, | | | | | | | | | | |
1.20%, 03/18/2022 | | ARS | | | 253,166,380 | | | | 4,700,319 | |
1.40%, 03/25/2023 | | ARS | | | 509,795,100 | | | | 9,402,621 | |
1.50%, 03/25/2024 | | ARS | | | 248,481,000 | | | | 4,481,903 | |
4.00%, 04/27/2025 | | ARS | | | 29,500,000 | | | | 1,213,585 | |
| | | | | | | | | | 19,798,428 | |
|
Austria–0.18% | |
Erste Group Bank AG, 4.25%(a)(c)(d) | | EUR | | | 1,400,000 | | | | 1,671,602 | |
| | | |
Belgium–0.08% | | | | | | | | | | |
KBC Group N.V., 4.75%(a)(c)(d) | | EUR | | | 600,000 | | | | 727,453 | |
|
Brazil–4.44% | |
Brazil Notas do Tesouro Nacional, | | | | | | | | | | |
Series B, 6.00%, 08/15/2026 | | BRL | | | 20,300,000 | | | | 14,293,551 | |
Series B, 6.00%, 05/15/2055 | | BRL | | | 2,300,000 | | | | 1,687,321 | |
Series F, 10.00%, 01/01/2029 | | BRL | | | 145,750,000 | | | | 25,458,428 | |
Swiss Insured Brazil Power Finance S.a r.l., 9.85%, 07/16/2032(a) | | BRL | | | 4,157,100 | | | | 720,216 | |
| | | | | | | | | | 42,159,516 | |
|
Canada–3.06% | |
Province of Ontario, 6.50%, 03/08/2029 | | CAD | | | 28,000,000 | | | | 29,035,930 | |
|
Chile–0.37% | |
Bonos de la Tesoreria de la Republica en pesos, 2.80%, 10/01/2033(a) | | CLP | | | 4,000,000,000 | | | | 3,558,451 | |
|
China–5.48% | |
China Development Bank, Series 2103, 3.30%, 03/03/2026 | | CNY | | | 325,000,000 | | | | 52,068,790 | |
| | | |
Czech Republic–0.16% | | | | | | | | | | |
CPI Property Group S.A., 4.88%(a)(c)(d) | | EUR | | | 1,300,000 | | | | 1,518,990 | |
|
Egypt–0.68% | |
Egypt Government Bond, 14.48%, 04/06/2026 | | EGP | | | 80,000,000 | | | | 5,149,704 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | |
| | | | | | | | | Principal | | | | |
| | | | | | | | | Amount | | | Value | |
Egypt–(continued) | | | | | | | | | | | | | | | | |
Egypt Government International Bond, 4.75%, 04/16/2026(a) | | | | | | | EUR | | | | 1,200,000 | | | $ | 1,323,470 | |
| | | | | | | | | | | | | | | | 6,473,174 | |
France–0.91% | | | | | | | | | | | | | | | | |
| | | | |
Accor S.A., 2.63%(a)(c)(d) | | | | | | | EUR | | | | 700,000 | | | | 759,628 | |
| | | | |
BPCE S.A., Series NC5, 1.50%, 01/13/2042(a)(c) | | | | | | | EUR | | | | 2,000,000 | | | | 2,262,422 | |
Credit Agricole S.A., | | | | | | | | | | | | | | | | |
4.00%(a)(c)(d) | | | | | | | EUR | | | | 800,000 | | | | 989,781 | |
7.50%(a)(c)(d) | | | | | | | GBP | | | | 700,000 | | | | 1,088,423 | |
Electricite de France S.A., | | | | | | | | | | | | | | | | |
3.00%(a)(c)(d) | | | | | | | EUR | | | | 800,000 | | | | 938,829 | |
5.38%(a)(c)(d) | | | | | | | EUR | | | | 2,100,000 | | | | 2,631,400 | |
| | | | | | | | | | | | | | | | 8,670,483 | |
|
Germany–0.52% | |
Bayer AG, 2.38%, 11/12/2079(a)(c) | | | | | | | EUR | | | | 1,500,000 | | | | 1,710,952 | |
Commerzbank AG, 6.13%(a)(c)(d) | | | | | | | EUR | | | | 800,000 | | | | 993,910 | |
Deutsche Lufthansa AG, 4.38%,
08/12/2075(a)(c) | | | | | | | EUR | | | | 1,400,000 | | | | 1,564,572 | |
Volkswagen International Finance
N.V., 4.63%(a)(c)(d) | | | | | | | EUR | | | | 520,000 | | | | 663,221 | |
| | | | | | | | | | | | | | | | 4,932,655 | |
|
Greece–0.55% | |
Hellenic Republic Government Bond,
1.88%, 01/24/2052(a) | | | | | | | EUR | | | | 4,603,000 | | | | 5,169,924 | |
Series GDP, 0.00%, 10/15/2042 | | | | | | | EUR | | | | 23,730,000 | | | | 21,613 | |
| | | | | | | | | | | | | | | | 5,191,537 | |
|
India–0.16% | |
NTPC Ltd., 2.75%, 02/01/2027(a) | | | | | | | EUR | | | | 1,300,000 | | | | 1,562,688 | |
|
Italy–0.96% | |
| | | | |
Italy Buoni Poliennali Del Tesoro,
1.50%, 04/30/2045(a) | | | | | | | EUR | | | | 5,375,000 | | | | 5,752,209 | |
| | | | |
UniCredit S.p.A., 6.63%(a)(c)(d) | | | | | | | EUR | | | | 2,030,000 | | | | 2,451,365 | |
5.38%(a)(c)(d) | | | | | | | EUR | | | | 725,000 | | | | 876,483 | |
| | | | | | | | | | | | | | | | 9,080,057 | |
|
Ivory Coast–0.13% | |
Ivory Coast Government International Bond, 4.88%, 01/30/2032(a) | | | | | | | EUR | | | | 1,150,000 | | | | 1,262,861 | |
|
Mexico–2.25% | |
Mexican Bonos, | | | | | | | | | | | | | | | | |
Series M, 7.75%, 05/29/2031 | | | | | | | MXN | | | | 380,650,000 | | | | 18,806,718 | |
Series M, 7.75%, 11/13/2042 | | | | | | | MXN | | | | 10,000,000 | | | | 474,431 | |
Series M 30, 8.50%, 11/18/2038 | | | | | | | MXN | | | | 40,000,000 | | | | 2,058,451 | |
| | | | | | | | | | | | | | | | 21,339,600 | |
|
Netherlands–0.78% | |
Cooperatieve Rabobank U.A., | | | | | | | | | | | | | | | | |
3.25%(a)(c)(d) | | | | | | | EUR | | | | 1,400,000 | | | | 1,637,228 | |
4.38%(a)(c)(d) | | | | | | | EUR | | | | 1,400,000 | | | | 1,757,322 | |
| | | | | | | | | | | | |
| | | | | | Principal | | | | |
| | | | | | Amount | | | Value | |
|
Netherlands–(continued) | |
Stichting AK Rabobank
Certificaten, 6.50%(a)(b)(d) | | | EUR | | | | 2,550,625 | | | $ | 4,007,362 | |
| | | | | | | | | | | | 7,401,912 | |
|
New Zealand–0.56% | |
New Zealand Government Bond,
Series 551, 2.75%, 05/15/2051 | | | NZD | | | | 8,000,000 | | | | 5,357,158 | |
|
Portugal–0.57% | |
Caixa Geral de Depositos S.A.,
10.75%(a)(c)(d) | | | EUR | | | | 4,600,000 | | | | 5,384,952 | |
|
Romania–0.13% | |
Romanian Government
International Bond, 2.00%,
04/14/2033(a) | | | EUR | | | | 1,209,000 | | | | 1,257,842 | |
|
Russia–1.63% | |
| | | |
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 | | | | 3,133,159 | |
Series 6219, 7.75%, 09/16/2026 | | | RUB | | | | 300,000,000 | | | | 3,920,601 | |
Series 6225, 7.25%, 05/10/2034 | | | RUB | | | | 180,000,000 | | | | 2,219,773 | |
Series 6226, 7.95%, 10/07/2026 | | | RUB | | | | 300,000,000 | | | | 3,945,370 | |
Series 6236, 5.70%, 05/17/2028 | | | RUB | | | | 195,000,000 | | | | 2,276,207 | |
| | | | | | | | | | | 15,495,110 | |
|
South Africa–2.57% | |
| | | |
Republic of South Africa Government Bond, | | | | | | | | | | | | |
Series 2030, 8.00%, 01/31/2030 | | | ZAR | | | | 112,000,000 | | | | 6,488,759 | |
Series 2035, 8.88%, 02/28/2035 | | | ZAR | | | | 70,000,000 | | | | 3,944,721 | |
Series 2037, 8.50%, 01/31/2037 | | | ZAR | | | | 209,400,000 | | | | 11,108,584 | |
Series 2048, 8.75%, 02/28/2048 | | | ZAR | | | | 54,000,000 | | | | 2,819,642 | |
| | | | | 24,361,706 | |
|
Spain–1.24% | |
Banco Bilbao Vizcaya Argentaria S.A., 6.00%(a)(c)(d) | | | EUR | | | | 800,000 | | | | 1,014,403 | |
Banco Santander S.A., | | | | | | | | | | | | |
4.38%(a)(c)(d) | | | EUR | | | | 1,200,000 | | | | 1,409,406 | |
3.63%(a)(c)(d) | | | EUR | | | | 800,000 | | | | 850,408 | |
CaixaBank S.A., | | | | | | | | | | | | |
5.88%(a)(c)(d) | | | EUR | | | | 800,000 | | | | 1,040,019 | |
3.63%(a)(c)(d) | | | EUR | | | | 2,200,000 | | | | 2,377,899 | |
Repsol International Finance B.V., 3.75%(a)(c)(d) | | | EUR | | | | 1,500,000 | | | | 1,806,799 | |
Telefonica Europe B.V., | | | | | | | | | | | | |
2.88%(a)(c)(d) | | | EUR | | | | 1,500,000 | | | | 1,723,799 | |
4.38%(a)(c)(d) | | | EUR | | | | 1,300,000 | | | | 1,592,903 | |
| | | | | 11,815,636 | |
|
Supranational–0.58% | |
African Development Bank, 0.00%, 01/17/2050(f) | | | ZAR | | | | 78,000,000 | | | | 543,106 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | |
| | | | | | Principal
Amount | | | Value | |
Supranational–(continued) | |
| | | |
Corp. Andina de Fomento, 6.82%, 02/22/2031(a) | | | MXN | | | | 81,800,000 | | | $ | 3,553,449 | |
| | | |
International Finance Corp., 0.00%, 02/15/2029(a)(f) | | | TRY | | | | 3,700,000 | | | | 69,922 | |
0.00%, 03/23/2038(f) | | | MXN | | | | 90,000,000 | | | | 1,291,793 | |
| | | |
| | | | | | | | | | | | 5,458,270 | |
Sweden–0.08% | |
| | | |
Heimstaden Bostad AB, 3.38%(a)(c)(d) | | | EUR | | | | 650,000 | | | | 735,718 | |
Switzerland–0.16% | |
| | | |
Dufry One B.V., 2.00%, 02/15/2027(a) | | | EUR | | | | 1,400,000 | | | | 1,483,402 | |
United Kingdom–1.17% | |
| | | |
Gatwick Airport Finance PLC, 4.38%, 04/07/2026(a) | | | GBP | | | | 2,175,000 | | | | 2,897,951 | |
Gatwick Funding Ltd., | | | | | | | | | | | | |
3.13%, 09/28/2039(a) | | | GBP | | | | 175,000 | | | | 239,534 | |
3.25%, 02/26/2048(a) | | | GBP | | | | 675,000 | | | | 943,225 | |
International Consolidated Airlines Group S.A., | | | | | | | | | | | | |
2.75%, 03/25/2025(a) | | | EUR | | | | 600,000 | | | | 670,110 | |
1.50%, 07/04/2027(a) | | | EUR | | | | 800,000 | | | | 812,958 | |
| | | |
Nationwide Building Society, 5.75%(a)(c)(d) | | | GBP | | | | 725,000 | | | | 1,062,406 | |
NatWest Group PLC,
4.50%(c)(d) | | | GBP | | | | 3,300,000 | | | | 4,458,116 | |
| | | | | | | | | | | | 11,084,300 | |
Total Non-U.S. Dollar Denominated Bonds & Notes
(Cost $305,862,220) | | | | | | | | | | | 298,888,221 | |
|
Asset-Backed Securities–8.24% | |
| | | |
American Credit Acceptance Receivables Trust, Series 2019-2, Class D, 3.41%, 06/12/2025(a) | | | | | | $ | 1,720,000 | | | | 1,752,117 | |
| | | |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2006-1, Class A1, 0.65% (1 yr. U.S. Treasury Yield Curve Rate + 2.25%), 02/25/2036(j) | | | | | | | 10,328 | | | | 10,511 | |
| | | |
Benchmark Mortgage Trust, Series 2018-B1, Class XA, IO, 0.50%, 01/15/2051(k) | | | | | | | 5,611,800 | | | | 138,018 | |
CarMax Auto Owner Trust, | | | | | | | | | | | | |
Series 2019-3, Class D, 2.85%, 01/15/2026 | | | | | | | 990,000 | | | | 1,012,704 | |
Series 2018-1, Class D, 3.37%, 07/15/2024 | | | | | | | 195,000 | | | | 195,998 | |
CCG Receivables Trust, | | | | | | | | | | | | |
Series 2019-1, Class B, 3.22%, 09/14/2026(a) | | | | | | | 140,000 | | | | 142,438 | |
Series 2019-1, Class C, 3.57%, 09/14/2026(a) | | | | | | | 35,000 | | | | 35,721 | |
| | | |
CD Mortgage Trust, Series 2017-CD6, Class XA, IO, 0.92%, 11/13/2050(k) | | | | | | | 2,171,585 | | | | 78,774 | |
| | | |
Chase Mortgage Finance Trust, Series 2005-A2, Class 1A3, 2.98%, 01/25/2036(l) | | | | | | | 5,317 | | | | 5,130 | |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
Citigroup Commercial Mortgage Trust, Series 2017-C4, Class XA, IO, 1.08%, 10/12/2050(k) | | $ | 5,794,699 | | | $ | 254,414 | |
Citigroup Mortgage Loan Trust, Inc., | | | | | | | | |
Series 2005-2, Class 1A3, 2.82%, 05/25/2035(l) | | | 231,361 | | | | 233,676 | |
Series 2006-AR1, Class 1A1, 2.48% (1 yr. U.S. Treasury Yield Curve Rate + 2.40%), 10/25/2035(j) | | | 52,254 | | | | 54,679 | |
CNH Equipment Trust, Series 2017-C, Class B, 2.54%, 05/15/2025 | | | 185,000 | | | | 185,152 | |
COMM Mortgage Trust, | | | | | | | | |
Series 2012-CR5, Class XA, IO, 1.50%, 12/10/2045(k) | | | 2,273,742 | | | | 19,291 | |
Series 2014-UBS6, Class AM, 4.05%, 12/10/2047 | | | 1,600,000 | | | | 1,689,481 | |
Series 2014-CR21, Class AM, 3.99%, 12/10/2047 | | | 25,000 | | | | 26,156 | |
Countrywide Home Loans Mortgage Pass-Through Trust, | | | | | | | | |
Series 2005-17, Class 1A8, 5.50%, 09/25/2035 | | | 176,617 | | | | 177,578 | |
Series 2005-JA, Class A7, 5.50%, 11/25/2035 | | | 221,323 | | | | 217,868 | |
Credit Acceptance Auto Loan Trust, | | | | | | | | |
Series 2019-1A, Class B, 3.75%, 04/17/2028(a) | | | 53,753 | | | | 53,975 | |
Series 2019-1A, Class C, 3.94%, 06/15/2028(a) | | | 515,000 | | | | 522,729 | |
CWHEQ Revolving Home Equity Loan Trust, | | | | | | | | |
Series 2005-G, Class 2A, 0.34% (1 mo. USD LIBOR + 0.23%), 12/15/2035(j) | | | 5,236 | | | | 5,204 | |
Series 2006-H, Class 2A1A, 0.26% (1 mo. USD LIBOR + 0.15%), 11/15/2036(j) | | | 9,882 | | | | 7,814 | |
Dell Equipment Finance Trust, | | | | | | | | |
Series 2019-1, Class C, 3.14%, 03/22/2024(a) | | | 270,000 | | | | 270,366 | |
Series 2019-2, Class D, 2.48%, 04/22/2025(a) | | | 1,290,000 | | | | 1,297,842 | |
Deutsche Alt-B Securities, Inc. Mortgage Loan Trust, Series 2006-AB2, Class A1, 5.89%, 06/25/2036(l) | | | 28,505 | | | | 28,367 | |
DT Auto Owner Trust, | | | | | | | | |
Series 2019-2A, Class D, 3.48%, 02/18/2025(a) | | | 285,000 | | | | 291,497 | |
Series 2019-4A, Class D, 2.85%, 07/15/2025(a) | | | 2,050,000 | | | | 2,092,956 | |
Exeter Automobile Receivables Trust, | | | | | | | | |
Series 2019-1A, Class D, 4.13%, 12/16/2024(a) | | | 2,124,382 | | | | 2,167,444 | |
Series 2019-4A, Class D, 2.58%, 09/15/2025(a) | | | 2,730,000 | | | | 2,775,255 | |
FREMF Mortgage Trust, Series 2017-K62, Class B, 3.88%, 01/25/2050(a)(l) | | | 280,000 | | | | 302,375 | |
Series 2016-K54, Class C, 4.05%, 04/25/2048(a)(l) | | | 1,810,000 | | | | 1,904,439 | |
GSR Mortgage Loan Trust, Series 2005-AR, Class 6A1, 3.02%, 07/25/2035(l) | | | 3,170 | | | | 3,289 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | |
| | | | | | Principal
Amount | | | Value | |
| |
JP Morgan Chase Commercial Mortgage Securities Trust, Series 2013-LC11, Class AS, 3.22%, 04/15/2046 | | | | | | $ | 235,000 | | | $ | 238,765 | |
| |
| | | |
JP Morgan Mortgage Trust, Series 2007-A1, Class 5A1, 2.42%, 07/25/2035(l) | | | | | | | 17,645 | | | | 18,058 | |
| |
| | | |
JPMBB Commercial Mortgage Securities Trust, Series 2014-C24, Class B, 4.12%, 11/15/2047(l) | | | | | | | 680,000 | | | | 699,805 | |
| |
| | | |
MASTR Asset Backed Securities Trust, Series 2006-WMC3, Class A3, 0.20% (1 mo. USD LIBOR + 0.10%), 08/25/2036(j) | | | | | | | 706,141 | | | | 315,698 | |
| |
| | | |
Morgan Stanley Bank of America Merrill Lynch Trust, Series 2013-C9, Class AS, 3.46%, 05/15/2046 | | | | | | | 570,000 | | | | 582,187 | |
| |
Series 2014-C14, Class B, 4.86%, 02/15/2047(l) | | | | | | | 240,000 | | | | 253,050 | |
| |
| | | |
Morgan Stanley Capital I Trust, Series 2017-HR2, Class XA, IO, 0.78%, 12/15/2050(k) | | | | | | | 1,985,438 | | | | 75,588 | |
| |
| | | |
Prestige Auto Receivables Trust, Series 2019-1A, Class C, 2.70%, 10/15/2024(a) | | | | | | | 1,410,000 | | | | 1,422,514 | |
| |
| | | |
Residential Accredit Loans, Inc. Trust, Series 2006-QS13, Class 1A8, 6.00%, 09/25/2036 | | | | | | | 7,023 | | | | 6,684 | |
| |
| | | |
Santander Retail Auto Lease Trust, | | | | | | | | | | | | |
| | | |
Series 2019-B, Class C, 2.77%, 08/21/2023(a) | | | | | | | 1,410,000 | | | | 1,421,757 | |
| |
Series 2019-C, Class C, 2.39%, 11/20/2023(a) | | | | | | | 2,365,000 | | | | 2,389,149 | |
| |
| | | |
UBS Commercial Mortgage Trust, Series 2017-C5, Class XA, IO, 0.99%, 11/15/2050(k) | | | | | | | 3,710,159 | | | | 150,054 | |
| |
| | | |
WaMu Mortgage Pass-Through Ctfs. Trust, | | | | | | | | | | | | |
| | | |
Series 2005-AR16, Class 1A1, 2.64%, 12/25/2035(l) | | | | | | | 3,473 | | | | 3,543 | |
| |
Series 2003-AR10, Class A7, 2.49%, 10/25/2033(l) | | | | | | | 21,105 | | | | 21,377 | |
| |
| | | |
Wells Fargo Commercial Mortgage Trust, | | | | | | | | | | | | |
| | | |
Series 2017-C42, Class XA, IO, 0.88%, 12/15/2050(k) | | | | | | | 2,752,447 | | | | 125,524 | |
| |
| | | |
WFRBS Commercial Mortgage Trust, | | | | | | | | | | | | |
| | | |
Series 2013-C14, Class AS, 3.49%, 06/15/2046 | | | | | | | 640,000 | | | | 652,487 | |
| |
Series 2014-LC14, Class AS, 4.35%, 03/15/2047(l) | | | | | | | 395,000 | | | | 414,238 | |
| |
Series 2014-C20, Class AS, 4.18%, 05/15/2047 | | | | | | | 490,000 | | | | 512,221 | |
| |
| | | |
Madison Park Funding XI Ltd., Series 2013-11A, Class DR, 3.37% (3 mo. USD LIBOR + 3.25%), 07/23/2029(a)(j) | | | | | | | 250,000 | | | | 248,058 | |
| |
| | | |
Alba PLC, Series 2007-1, Class F, 3.47% (3 mo. GBP LIBOR + 3.25%), 03/17/2039(a)(i)(j) | | | GBP | | | | 359,503 | | | | 477,872 | |
| |
| | | | | | | | | | | | |
| | | | | | Principal
Amount | | | Value | |
| |
Eurohome UK Mortgages PLC, | | | | | | | | | | | | |
| | | |
Series 2007-1, Class B1, 1.00% (3 mo. GBP LIBOR + 0.90%), 06/15/2044(a)(i)(j) | | | GBP | | | | 780,000 | | | $ | 923,334 | |
| |
Series 2007-2, Class B1, 1.50% (3 mo. GBP LIBOR + 1.40%), 09/15/2044(a)(i)(j) | | | GBP | | | | 872,000 | | | | 1,082,802 | |
| |
| | | |
Eurosail PLC, Series 2006-2X, Class E1C, 3.35% (3 mo. GBP LIBOR + 3.25%),
12/15/2044(a)(i)(j) | | | GBP | | | | 1,830,000 | | | | 2,401,220 | |
| |
Series 2006-4X, Class E1C, 3.08% (3 mo. GBP LIBOR + 3.00%), 12/10/2044(a)(i)(j) | | | GBP | | | | 1,608,337 | | | | 2,093,340 | |
| |
Series 2007-2X, Class D1A, 0.22% (3 mo. EURIBOR + 0.80%), 03/13/2045(a)(i)(j) | | | EUR | | | | 3,360,000 | | | | 3,356,787 | |
| |
| | | |
Gemgarto PLC, Series 2018-1, Class E, 2.44% (SONIA + 2.30%), 09/16/2065(a)(i)(j) | | | GBP | | | | 2,224,480 | | | | 2,992,572 | |
| |
| | | |
Great Hall Mortgages No. 1 PLC, Series 2007-2X, Class EB, 3.16% (3 mo. EURIBOR + 3.75%), 06/18/2039(a)(i)(j) | | | EUR | | | | 1,780,000 | | | | 2,058,095 | |
| |
| | | |
Hawksmoor Mortgage Funding 2019-1 PLC, Series 2019-1X, Class F, 3.60% (SONIA + 3.50%), 05/25/2053(a)(i)(j) | | | GBP | | | | 2,976,000 | | | | 4,057,917 | |
| |
| | | |
Hawksmoor Mortgage Funding PLC, Series 2019-1X, Class G, 3.60% (SONIA + 3.50%), 05/25/2053(a)(i)(j) | | | GBP | | | | 1,654,000 | | | | 2,252,484 | |
| |
| | | |
Ludgate Funding PLC, Series 2007-1, Class MA, 0.72% (3 mo. GBP LIBOR + 0.24%), 01/01/2061(a)(i)(j) | | | GBP | | | | 1,112,618 | | | | 1,427,048 | |
| |
| | | |
Stratton Mortgage Funding PLC, | | | | | | | | | | | | |
Series 2021-1, Class D, 2.29% (SONIA + 2.10%), 09/25/2051(a)(i)(j) | | | GBP | | | | 1,300,000 | | | | 1,773,922 | |
| |
Series 2021-1, Class E, 2.94% (SONIA + 2.75%), 09/25/2051(a)(i)(j) | | | GBP | | | | 780,000 | | | | 1,041,626 | |
| |
Series 2021-2X, Class F, 3.32% (SONIA + 3.25%), 07/20/2060(a)(i)(j) | | | GBP | | | | 1,900,000 | | | | 2,599,738 | |
| |
| | | |
Towd Point Mortgage Funding PLC, | | | | | | | | | | | | |
Series 2019-GR4X, Class ER, 1.47% (SONIA + 1.40%), 10/20/2051(a)(i)(j) | | | GBP | | | | 203,000 | | | | 274,725 | |
| |
Series 2019-GR4X, Class FR, 2.12% (SONIA + 2.05%), 10/20/2051(a)(i)(j) | | | GBP | | | | 870,000 | | | | 1,177,414 | |
| |
Series 2019-GR4X, Class BR, 0.92% (SONIA + 0.85%), 10/20/2051(a)(i)(j) | | | GBP | | | | 2,200,000 | | | | 2,975,770 | |
| |
Series 2019-GR4X, Class CR, 1.12% (SONIA + 1.05%), 10/20/2051(a)(i)(j) | | | GBP | | | | 870,000 | | | | 1,177,378 | |
| |
Series 2019-GR4X, Class DR, 1.27% (SONIA + 1.20%), 10/20/2051(a)(i)(j) | | | GBP | | | | 406,000 | | | | 549,446 | |
| |
Series 2019-GR4X, Class GR, 2.57% (SONIA + 2.50%), 10/20/2051(a)(i)(j) | | | GBP | | | | 725,000 | | | | 981,528 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | |
| | | | | | Principal
Amount | | | Value | |
| |
Prosil Acquisition S.A.,
Series 2019-1, Class A, 1.44% (3 mo. EURIBOR + 2.00%), 10/31/2039(a)(i)(j) | | | EUR | | | | 2,019,892 | | | $ | 2,160,135 | |
| |
Alhambra SME Funding DAC, | | | | | | | | | | | | |
Series 2019-1, Class A,
2.00% (1 mo. EURIBOR + 2.00%), 11/30/2028(a)(i)(j) | | | EUR | | | | 3,139,979 | | | | 3,554,515 | |
| |
Series 2019-1, Class B,
2.50% (1 mo. EURIBOR + 2.50%), 11/30/2028(a)(i)(j) | | | EUR | | | | 625,000 | | | | 695,493 | |
| |
Series 2019-1, Class D,
8.68% (1 mo. EURIBOR + 9.25%), 11/30/2028(a)(i)(j) | | | EUR | | | | 141,425 | | | | 152,664 | |
| |
Lusitano Mortgages No. 5 PLC, Class D, 0.41% (3 mo. EURIBOR + 0.96%), 07/15/2059(a)(i)(j) | | | EUR | | | | 875,851 | | | | 870,795 | |
| |
Futura S.r.l., Series 2019-1, Class A, 2.48% (6 mo. EURIBOR + 3.00%), 07/31/2044(a)(i)(j) | | | EUR | | | | 1,886,697 | | | | 2,157,169 | |
| |
Taurus, Series 2018-IT1, Class A, 1.00% (3 mo. EURIBOR + 1.00%), 05/18/2030(i)(j) | | | EUR | | | | 4,069,950 | | | | 4,622,386 | |
| |
IM Pastor 4, FTA, Series A, 0.00% (3 mo. EURIBOR + 0.14%), 03/22/2044(a)(i)(j) | | | EUR | | | | 803,888 | | | | 855,356 | |
| |
Total Asset-Backed Securities
(Cost $79,073,765) | | | | 78,247,546 | |
| |
| | | | | | Shares | | | | |
Exchange-Traded Funds–3.12% | | | | | |
United States–3.12% | | | | | | | | | | | | |
Invesco Senior Loan ETF(e)(m)
(Cost $29,759,333) | | | | | | | 1,339,840 | | | | 29,610,464 | |
| |
| | | | | | Principal
Amount | | | | |
Variable Rate Senior Loan Interests–0.77%(n)(o) | |
Canada–0.09% | | | | | | | | | | | | |
Four Seasons Hotels Ltd., First Lien Term Loan, 2.10% (3 mo. USD LIBOR + 2.00%), 11/30/2023 | | | | | | $ | 499,739 | | | | 498,491 | |
| |
Valeant Pharmaceuticals International, Inc., First Lien Incremental Term Loan, 2.85% (3 mo. USD LIBOR + 2.75%), 11/27/2025 | | | | | | | 386,252 | | | | 384,440 | |
| |
| | | | | | | | | 882,931 | |
| |
United States–0.68% | | | | | | | | | | | | |
Claire’s Stores, Inc., Term Loan, 6.60% (1 mo. USD LIBOR + 6.50%), 12/18/2026 | | | | | | | 71,514 | | | | 71,321 | |
| |
Covanta Energy Corp., Term Loan B, 3.00% (1 mo. USD LIBOR + 2.50%), 11/17/2028 | | | | | | | 97,913 | | | | 98,133 | |
| |
Covanta Energy Corp., Term Loan C, 3.00% (1 mo. USD LIBOR + 2.50%), 11/17/2028 | | | | | | | 7,334 | | | | 7,351 | |
| |
Dun & Bradstreet Corp. (The), Term Loan, 3.35% (1 mo. USD LIBOR + 3.25%), 02/06/2026 | | | | | | | 424,472 | | | | 423,261 | |
| |
Endo LLC, Term Loan, 5.75% (1 mo. USD LIBOR + 5.00%), 03/10/2028 | | | | | | | 501,212 | | | | 488,777 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
United States–(continued) | | | | | | | | |
Flex Acquisition Co., Inc.,
Incremental Term Loan B, 3.13% (3 mo. USD LIBOR + 3.00%), 06/29/2025 | | $ | 498,722 | | | $ | 494,954 | |
| |
Global Medical Response, Inc.,
Term Loan, 5.25% (1 mo. USD LIBOR + 4.25%), 10/02/2025 | | | 492,030 | | | | 490,677 | |
| |
Graham Packaging Co., Inc.,
Term Loan, 3.75% (1 mo. USD LIBOR + 3.00%), 08/04/2027 | | | 501,213 | | | | 500,506 | |
| |
IRB Holding Corp., First Lien Term Loan B, 4.25% (1 mo. USD LIBOR + 3.25%), 12/01/2027 | | | 1,038,153 | | | | 1,039,611 | |
| |
PetSmart LLC, Term Loan, 4.50% (1 mo. USD LIBOR + 3.75%), 02/11/2028 | | | 748,125 | | | | 750,231 | |
| |
Radiology Partners, Inc.,
First Lien Term Loan B, 4.36% (1 mo. USD LIBOR + 4.25%), 07/09/2025 | | | 34,650 | | | | 34,212 | |
| |
Schweitzer-Mauduit International, Inc. (SWM International), Term Loan B, 4.50% (1 mo. USD LIBOR + 3.75%), 04/20/2028 | | | 1,041,434 | | | | 1,040,132 | |
| |
Surgery Center Holdings, Inc.,
Term Loan, 4.50% (1 mo. USD LIBOR + 3.75%), 09/03/2026 | | | 491,998 | | | | 492,460 | |
| |
United Natural Foods, Inc.,
Term Loan B, 3.35% (3 mo. USD LIBOR + 3.25%), 10/22/2025 | | | 487,812 | | | | 488,558 | |
| |
| | | | | | | 6,420,184 | |
| |
Total Variable Rate Senior Loan Interests
(Cost $7,308,321) | | | | 7,303,115 | |
| |
| | | | | | | | |
Agency Credit Risk Transfer Notes–0.71% | | | | | |
United States–0.71% | | | | | | | | |
Fannie Mae Connecticut Avenue Securities, | | | | | | | | |
Series 2017-C04, Class 2M2, 2.95% (1 mo. USD LIBOR + 2.85%), 11/25/2029(j) | | | 834,023 | | | | 855,830 | |
| |
Series 2017-C07, Class 1M2, 2.50% (1 mo. USD LIBOR + 2.40%), 05/25/2030(j) | | | 394,592 | | | | 401,284 | |
| |
Series 2018-C06, Class 2M2, 2.20% (1 mo. USD LIBOR + 2.10%), 03/25/2031(j) | | | 858,353 | | | | 865,960 | |
| |
Series 2018-R07, Class 1M2, 2.50% (1 mo. USD LIBOR + 2.40%), 04/25/2031(a)(j) | | | 466,849 | | | | 469,013 | |
| |
Series 2019-R02, Class 1M2, 2.40% (1 mo. USD LIBOR + 2.30%), 08/25/2031(a)(j) | | | 117,807 | | | | 118,346 | |
| |
Series 2019-R03, Class 1M2, 2.25% (1 mo. USD LIBOR + 2.15%), 09/25/2031(a)(j) | | | 255,466 | | | | 256,563 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
United States–(continued) | | | | | | | | |
Freddie Mac,
| | | | | | | | |
Series 2016-DNA2, Class M3, STACR® , 4.75% (1 mo. USD LIBOR + 4.65%), 10/25/2028(j) | | $ | 569,638 | | | $ | 590,586 | |
| |
Series 2016-DNA3, Class M3, STACR® , 5.10% (1 mo. USD LIBOR + 5.00%), 12/25/2028(j) | | | 2,374,860 | | | | 2,476,662 | |
| |
Series 2019-HRP1, Class M2, STACR® , 1.50% (1 mo. USD LIBOR + 1.40%), 02/25/2049(a)(j) | | | 743,115 | | | | 745,552 | |
| |
Total Agency Credit Risk Transfer Notes (Cost $6,656,399) | | | | 6,779,796 | |
| |
|
U.S. Government Sponsored Agency Mortgage-Backed Securities–0.43% | |
Fannie Mae Interest STRIPS,
IO, | | | | | | | | |
7.50%, 03/25/2023 -01/25/2024(p) | | | 37,650 | | | | 1,688 | |
| |
6.50%, 04/25/2029 -
07/25/2032(p) | | | 249,548 | | | | 40,445 | |
| |
6.00%, 12/25/2032 -08/25/2035(k)(p) | | | 701,041 | | | | 115,972 | |
| |
5.50%, 01/25/2034 -
06/25/2035(p) | | | 224,525 | | | | 36,748 | |
| |
Fannie Mae REMICs,
IO, | | | | | | | | |
6.60%, 02/25/2024 -05/25/2035(j)(p) | | | 178,258 | | | | 29,417 | |
| |
7.80%, 11/18/2031 -12/18/2031(j)(p) | | | 24,214 | | | | 4,372 | |
| |
7.80% (7.90% - (1.00 x 1 mo. USD LIBOR)), 11/25/2031(j)(p) | | | 3,522 | | | | 666 | |
| |
7.85% (7.95% - (1.00 x 1 mo. USD LIBOR)), 01/25/2032(j)(p) | | | 3,816 | | | | 684 | |
| |
8.00% (8.10% - (1.00 x 1 mo. USD LIBOR)), 03/25/2032(j)(p) | | | 5,695 | | | | 1,167 | |
| |
6.90% (7.00% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032(j)(p) | | | 21,820 | | | | 3,634 | |
| |
7.70% (7.80% - (1.00 x 1 mo. USD LIBOR)), 04/25/2032(j)(p) | | | 3,100 | | | | 610 | |
| |
7.90%, 07/25/2032 -09/25/2032(j)(p) | | | 14,022 | | | | 2,952 | |
| |
8.00%, 12/18/2032(j)(p) | | | 42,613 | | | | 8,169 | |
| |
8.15%, 02/25/2033 -05/25/2033(j)(p) | | | 43,090 | | | | 9,967 | |
| |
7.00%, 03/25/2033 -04/25/2033(p) | | | 115,657 | | | | 20,177 | |
| |
7.45% (7.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2033(j)(p) | | | 164,894 | | | | 33,683 | |
| |
5.95%, 03/25/2035 -07/25/2038(j)(p) | | | 207,151 | | | | 30,594 | |
| |
6.65%, 03/25/2035 -05/25/2035(j)(p) | | | 262,704 | | | | 28,404 | |
| |
6.50% (6.60% - (1.00 x 1 mo. USD LIBOR)), 05/25/2035(j)(p) | | | 107,022 | | | | 14,936 | |
| |
7.13% (7.23% - (1.00 x 1 mo. USD LIBOR)), 09/25/2036(j)(p) | | | 205,608 | | | | 26,222 | |
| |
6.44% (6.54% - (1.00 x 1 mo. USD LIBOR)), 06/25/2037(j)(p) | | | 164,748 | | | | 28,483 | |
| |
4.00%, 04/25/2041(p) | | | 338,376 | | | | 31,028 | |
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
6.45% (6.55% - (1.00 x 1 mo. USD LIBOR)), 10/25/2041(j)(p) | | $ | 79,297 | | | $ | 12,508 | |
| |
6.05% (6.15% - (1.00 x 1 mo. USD LIBOR)), 12/25/2042(j)(p) | | | 204,308 | | | | 40,661 | |
| |
5.50%, 12/25/2025 | | | 114,530 | | | | 118,015 | |
| |
4.00%, 08/25/2026 - 03/25/2041 | | | 23,588 | | | | 25,229 | |
| |
6.00%, 01/25/2032 | | | 31,734 | | | | 35,389 | |
| |
1.10%, 04/25/2032 - 12/25/2032(j) | | | 170,670 | | | | 173,125 | |
| |
0.60% (1 mo. USD LIBOR + 0.50%), 09/25/2032(j) | | | 41,286 | | | | 41,573 | |
| |
0.60% (1 mo. USD LIBOR + 0.50%), 10/18/2032(j) | | | 12,220 | | | | 12,299 | |
| |
0.50% (1 mo. USD LIBOR + 0.40%), 11/25/2033(j) | | | 7,967 | | | | 8,010 | |
| |
24.19% (24.57% - (3.67 x 1 mo. USD LIBOR)), 03/25/2036(j) | | | 42,206 | | | | 64,842 | |
| |
23.83% (24.20% - (3.67 x 1 mo. USD LIBOR)), 06/25/2036(j) | | | 54,012 | | | | 83,782 | |
| |
1.04% (1 mo. USD LIBOR + 0.94%), 06/25/2037(j) | | | 10,072 | | | | 10,148 | |
| |
Federal Home Loan Mortgage Corp., | | | | | | | | |
6.50%, 11/01/2022 -08/01/2031 | | | 56,793 | | | | 62,711 | |
| |
5.00%, 09/01/2033 | | | 99,527 | | | | 112,521 | |
| |
7.00%, 10/01/2037 | | | 9,822 | | | | 11,467 | |
| |
Federal National Mortgage Association, | | | | | | | | |
5.50%, 04/01/2022 -02/01/2035 | | | 10,668 | | | | 12,023 | |
| |
5.00%, 01/01/2024 -07/01/2033 | | | 105,186 | | | | 118,408 | |
| |
7.50%, 10/01/2029 -03/01/2033 | | | 191,444 | | | | 219,772 | |
| |
7.00%, 07/01/2032 -04/01/2033 | | | 24,159 | | | | 27,445 | |
| |
8.50%, 07/01/2032 | | | 181 | | | | 181 | |
| |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | | | |
Series K734, Class X1, IO, 0.65%, 02/25/2026(k) | | | 1,666,248 | | | | 38,622 | |
| |
Series K735, Class X1, IO, 1.10%, 05/25/2026(k) | | | 2,932,965 | | | | 108,507 | |
| |
Series K093, Class X1, IO, 0.95%, 05/25/2029(k) | | | 20,023,518 | | | | 1,235,423 | |
| |
Freddie Mac REMICs, | | | | | | | | |
1.50%, 07/15/2023 | | | 15,764 | | | | 15,818 | |
| |
5.00%, 09/15/2023 | | | 60,986 | | | | 62,449 | |
| |
6.75%, 02/15/2024 | | | 23,404 | | | | 24,375 | |
| |
7.00%, 09/15/2026 | | | 98,092 | | | | 106,531 | |
| |
0.56%, 12/15/2028 -02/15/2029(j) | | | 110,304 | | | | 110,741 | |
| |
6.00%, 04/15/2029 | | | 58,616 | | | | 64,873 | |
| |
6.50%, 10/15/2029 -06/15/2032 | | | 148,221 | | | | 168,596 | |
| |
0.66%, 06/15/2031 -01/15/2032(j) | | | 100,023 | | | | 100,829 | |
| |
1.11%, 02/15/2032 -03/15/2032(j) | | | 63,410 | | | | 64,595 | |
| |
3.50%, 05/15/2032 | | | 19,914 | | | | 20,955 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | |
| | | Principal
Amount | | | Value | |
| |
24.35% (24.75% - (3.67 x 1 mo. USD LIBOR)), 08/15/2035(j) | | $ | 37,922 | | | $ | 59,833 | |
| |
4.00%, 06/15/2038 | | | 26,344 | | | | 28,318 | |
| |
3.00%, 05/15/2040 | | | 1,208 | | | | 1,229 | |
| |
IO, 5.89%, 03/15/2024 -04/15/2038(j)(p) | | | 64,831 | | | | 4,986 | |
| |
7.84% (7.95% - (1.00 x 1 mo. USD LIBOR)), 12/15/2026(j)(p) | | | 72,450 | | | | 5,982 | |
| |
8.59%, 07/17/2028(j)(p) | | | 3,836 | | | | 250 | |
| |
7.54% (7.65% - (1.00 x 1 mo. USD LIBOR)), 03/15/2029(j)(p) | | | 141,731 | | | | 18,745 | |
| |
7.99% (8.10% - (1.00 x 1 mo. USD LIBOR)), 06/15/2029(j)(p) | | | 5,465 | | | | 838 | |
| |
7.89% (8.00% - (1.00 x 1 mo. USD LIBOR)), 04/15/2032(j)(p) | | | 288,837 | | | | 29,659 | |
| |
6.94% (7.05% - (1.00 x 1 mo. USD LIBOR)), 10/15/2033(j)(p) | | | 65,470 | | | | 10,388 | |
| |
6.59% (6.70% - (1.00 x 1 mo. USD LIBOR)), 01/15/2035(j)(p) | | | 70,742 | | | | 9,639 | |
| |
6.64% (6.75% - (1.00 x 1 mo. USD LIBOR)), 02/15/2035(j)(p) | | | 11,867 | | | | 1,599 | |
| |
6.61%, 05/15/2035(j)(p) | | | 226,003 | | | | 33,099 | |
| |
6.89% (7.00% - (1.00 x 1 mo. USD LIBOR)), 12/15/2037(j)(p) | | | 48,858 | | | | 9,764 | |
| |
5.96% (6.07% - (1.00 x 1 mo. USD LIBOR)), 05/15/2038(j)(p) | | | 92,048 | | | | 15,201 | |
| |
6.14% (6.25% - (1.00 x 1 mo. USD LIBOR)), 12/15/2039(j)(p) | | | 25,347 | | | | 4,014 | |
| |
Freddie Mac STRIPS, IO,
6.50%, 02/01/2028(p) | | | 1,957 | | | | 248 | |
| |
7.00%, 09/01/2029(p) | | | 12,229 | | | | 1,979 | |
| |
6.00%, 12/15/2032(p) | | | 28,899 | | | | 4,253 | |
| |
Government National Mortgage Association, ARM, 2.13% (1 yr. U.S. Treasury Yield Curve Rate + 1.50%), 11/20/2025(j) | | | 705 | | | | 719 | |
| |
8.00%, 05/15/2026 | | | 5,224 | | | | 5,245 | |
| |
7.00%, 04/15/2028 -07/15/2028 | | | 25,665 | | | | 27,528 | |
| |
IO,
6.44% (6.55% - (1.00 x 1 mo. USD LIBOR)), 04/16/2037(j)(p) | | | 109,622 | | | | 18,780 | |
| |
6.54% (6.65% - (1.00 x 1 mo. USD LIBOR)), 04/16/2041(j)(p) | | | 177,398 | | | | 25,307 | |
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities (Cost $4,649,511) | | | | 4,100,044 | |
| |
| | | Shares | | | | |
Preferred Stocks–0.18% | | | | | | | | |
United States–0.18% | | | | | | | | |
AT&T, Inc., 2.88%, Series B, Pfd.(c) | | | 1,500,000 | | | | 1,713,182 | |
| |
Claire’s Holdings LLC, Series A, Pfd. | | | 71 | | | | 18,371 | |
| |
Total Preferred Stocks (Cost $1,841,975) | | | | 1,731,553 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Common Stocks & Other Equity Interests–0.07% | |
Argentina–0.05%
TMF Trust Co. S.A.(q) | | | 48,369,214 | | | $ | 471,017 | |
| |
United States–0.02% | | | | | | | | |
ACNR Holdings, Inc. | | | 911 | | | | 42,438 | |
| |
Civitas Resources, Inc. | | | 1,202 | | | | 58,862 | |
| |
Claire’s Holdings LLC | | | 235 | | | | 76,963 | |
| |
Cxloyalty Group, Inc., Wts., expiring 04/10/2024(q) | | | 775 | | | | 0 | |
| |
McDermott International Ltd.(r) | | | 15,957 | | | | 6,542 | |
| |
McDermott International Ltd., Series A, Wts., expiring 06/30/2027(q)(r) | | | 31,946 | | | | 4,153 | |
| |
McDermott International Ltd., Series B, Wts., expiring 06/30/2027(q)(r) | | | 35,496 | | | | 4,614 | |
| |
McDermott International Ltd., Wts., expiring 12/31/2049 | | | 23,067 | | | | 8,985 | |
| |
Party City Holdco, Inc.(r) | | | 3,211 | | | | 17,888 | |
| |
Sabine Oil & Gas Holdings, Inc.(q)(r) | | | 837 | | | | 1,138 | |
| |
Windstream Services LLC | | | 176 | | | | 3,520 | |
| |
| | | | | | 225,103 | |
| |
Total Common Stocks & Other Equity Interests (Cost $3,560,261) | | | | 696,120 | |
| |
Money Market Funds–10.99% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(m)(s) | | | 36,238,696 | | | | 36,238,696 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(m)(s) | | | 26,711,738 | | | | 26,717,080 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(m)(s) | | | 41,415,653 | | | | 41,415,653 | |
| |
Total Money Market Funds (Cost $104,373,557) | | | | 104,371,429 | |
| |
Options Purchased–0.33% | | | | | | | | |
(Cost $4,923,690)(t) | | | | | | | 3,099,385 | |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Investments purchased with cash collateral from securities on loan)-94.19%
(Cost $910,117,864) | | | | | | | 894,203,418 | |
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–4.63% | | | | | | | | |
Invesco Private Government Fund, 0.02%(m)(s)(u) | | | 13,176,631 | | | | 13,176,631 | |
| |
Invesco Private Prime Fund, 0.11%(m)(s)(u) | | | 30,739,325 | | | | 30,745,471 | |
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $43,922,449) | | | | 43,922,102 | |
| |
TOTAL INVESTMENTS IN SECURITIES–98.82%
(Cost $954,040,313) | | | | 938,125,520 | |
| |
OTHER ASSETS LESS LIABILITIES–1.18% | | | | | | | 11,197,455 | |
| |
NET ASSETS–100.00% | | | | | | $ | 949,322,975 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | |
| Investment Abbreviations: |
| ARM | | – Adjustable Rate Mortgage |
| ARS | | – Argentina Peso |
| BRL | | – Brazilian Real |
| CAD | | – Canadian Dollar |
| CLP | | – Chile Peso |
| CNY | | – Chinese Yuan Renminbi |
| Conv. | | – Convertible |
| Ctfs. | | – Certificates |
| EGP | | – Egypt Pound |
| ETF | | – Exchange-Traded Fund |
| EUR | | – Euro |
| EURIBOR | | – Euro Interbank Offered Rate |
| GBP | | – British Pound Sterling |
| IO | | – Interest Only |
| LIBOR | | – London Interbank Offered Rate |
| MXN | | – Mexican Peso |
| NZD | | – New Zealand Dollar |
| Pfd. | | – Preferred |
| PIK | | – Pay-in-Kind |
| REMICs | | – Real Estate Mortgage Investment Conduits |
| RUB | | – Russian Ruble |
| SONIA | | – Sterling Overnight Index Average |
| STACR® | | – Structured Agency Credit Risk |
| STRIPS | | – Separately Traded Registered Interest and Principal Security |
| TRY | | – Turkish Lira |
| USD | | – U.S. Dollar |
| Wts. | | – Warrants |
| ZAR | | – South African Rand |
Notes to Consolidated 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, 2021 was $376,820,186, which represented 39.69% of the Fund’s Net Assets. |
| (b) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
| (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) | All or a portion of this security was out on loan at December 31, 2021. |
| (f) | Zero coupon bond issued at a discount. |
| (g) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| (h) | Defaulted security. Currently, the issuer is in default with respect to principal and/or interest payments. The value of this security at December 31, 2021 represented less than 1% of the Fund’s Net Assets. |
| (i) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (j) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2021. |
| (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, 2021. |
| (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, 2021. |
| (m) | 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| |
Invesco Master Event-Linked Bond
Fund, Class R6 | | $ | 640,083 | | | $ | - | | | $ | (550,968 | ) | | $ | (68,767 | ) | | $ | (20,348 | ) | | $ | - | | | $ | 15,698 | |
| |
Invesco Senior Loan ETF* | | | - | | | | 36,846,905 | | | | (6,999,962 | ) | | | (148,869 | ) | | | (69,705 | ) | | | 29,610,464 | | | | 706,388 | |
| |
Investments in Affiliated Money
Market Funds: | |
| |
Invesco Government & Agency Portfolio, Institutional Class | | | 36,794,763 | | | | 274,513,938 | | | | (275,070,005 | ) | | | - | | | | - | | | | 36,238,696 | | | | 9,846 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class | | | 26,274,733 | | | | 196,081,384 | | | | (195,636,841 | ) | | | 173 | | | | (2,369 | ) | | | 26,717,080 | | | | 4,482 | |
| |
Invesco Treasury Portfolio, Institutional Class | | | 42,051,158 | | | | 313,730,214 | | | | (314,365,719 | ) | | | - | | | | - | | | | 41,415,653 | | | | 4,125 | |
| |
| See | accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements. |
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| |
Investments Purchased with
Cash Collateral from Securities
on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Invesco Private Government Fund | | | $ - | | | | $ 54,624,450 | | | | $ (41,447,819 | ) | | | $ - | | | | $ - | | | | $ 13,176,631 | | | | $ 728** | |
| |
Invesco Private Prime Fund | | | - | | | | 104,863,336 | | | | (74,114,630 | ) | | | (347 | ) | | | (2,888 | ) | | | 30,745,471 | | | | 9,249** | |
| |
Total | | | $105,760,737 | | | | $980,660,227 | | | | $(908,185,944 | ) | | | $(217,810 | ) | | | $(95,310 | ) | | | $177,903,995 | | | | $750,516 | |
| |
| * | Amounts exclude return of capital received from previously held underlying funds due to the timing of the determination of the character of dividends received. |
| ** | Represents the income earned on the investment of cash collateral, which is included in securities lending income on the Consolidated Statement of Operations. |
Does not include rebates and fees paid to lending agent or premiums received from borrowers, if any.
| (n) | 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. |
| (o) | 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. |
| (p) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (q) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (r) | Non-income producing security. |
| (s) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. (t) The table below details options purchased. |
| (u) | 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 1L. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Over-The-Counter Foreign Currency Options Purchased(a) | |
| |
| Description | | Type of
Contract | | | Counterparty | | Expiration
Date | | | Exercise Price | | | Notional
Value | | | Value | |
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
AUD Versus USD | | | Call | | | Bank of America, N.A. | | | 12/05/2022 | | | | USD | | | | 0.80 | | | | AUD | | | | 4,350,000 | | | $ | 378,496 | |
| |
EUR Versus CHF | | | Call | | | Morgan Stanley and Co. International PLC | | | 02/16/2022 | | | | CHF | | | | 1.10 | | | | EUR | | | | 1,000,000 | | | | 3,783 | |
| |
USD Versus JPY | | | Call | | | Goldman Sachs International | | | 04/06/2026 | | | | JPY | | | | 115.00 | | | | USD | | | | 14,000,000 | | | | 393,792 | |
| |
USD Versus JPY | | | Call | | | Goldman Sachs International | | | 04/09/2026 | | | | JPY | | | | 115.00 | | | | USD | | | | 14,000,000 | | | | 393,330 | |
| |
Subtotal – Foreign Currency Call Options Purchased | | | | | | | | | | | | | | | | | | | | 1,169,401 | |
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
EUR Versus CZK | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 11/10/2022 | | | | CZK | | | | 25.00 | | | | EUR | | | | 725,000 | | | | 206,523 | |
| |
EUR Versus PLN | | | Put | | | Bank of America, N.A. | | | 02/15/2022 | | | | PLN | | | | 4.48 | | | | EUR | | | | 1,000,000 | | | | 78,274 | |
| |
EUR Versus SEK | | | Put | | | UBS AG | | | 02/18/2022 | | | | SEK | | | | 9.60 | | | | EUR | | | | 1,000,000 | | | | 1,464 | |
| |
USD Versus BRL | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 03/09/2022 | | | | BRL | | | | 5.10 | | | | USD | | | | 1,300,000 | | | | 79,587 | |
| |
USD Versus BRL | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 03/30/2022 | | | | BRL | | | | 4.75 | | | | USD | | | | 1,300,000 | | | | 15,793 | |
| |
USD Versus BRL | | | Put | | | Morgan Stanley and Co. International PLC | | | 01/14/2022 | | | | BRL | | | | 5.25 | | | | USD | | | | 1,000,000 | | | | 19,828 | |
| |
USD Versus CAD | | | Put | | | Bank of America, N.A. | | | 01/14/2022 | | | | CAD | | | | 1.19 | | | | USD | | | | 1,400,000 | | | | 99 | |
| |
USD Versus CAD | | | Put | | | Bank of America, N.A. | | | 09/20/2022 | | | | CAD | | | | 1.20 | | | | USD | | | | 1,450,000 | | | | 369,415 | |
| |
USD Versus CAD | | | Put | | | Goldman Sachs International | | | 05/12/2022 | | | | CAD | | | | 1.19 | | | | USD | | | | 15,000,000 | | | | 15,045 | |
| |
USD Versus CNH | | | Put | | | Goldman Sachs International | | | 02/10/2022 | | | | CNH | | | | 6.38 | | | | USD | | | | 40,000,000 | | | | 72,520 | |
| |
USD Versus CNH | | | Put | | | Goldman Sachs International | | | 05/17/2022 | | | | CNH | | | | 6.25 | | | | USD | | | | 1,400,000 | | | | 178,055 | |
| |
USD Versus CNH | | | Put | | | Standard Chartered Bank PLC | | | 02/24/2022 | | | | CNH | | | | 6.38 | | | | USD | | | | 30,000,000 | | | | 156,690 | |
| |
USD Versus CNH | | | Put | | | Standard Chartered Bank PLC | | | 03/21/2022 | | | | CNH | | | | 6.34 | | | | USD | | | | 1,000,000 | | | | 315,335 | |
| |
USD Versus COP | | | Put | | | Goldman Sachs International | | | 01/12/2022 | | | | COP | | | | 3,700.00 | | | | USD | | | | 20,000,000 | | | | 40 | |
| |
USD Versus INR | | | Put | | | Merrill Lynch International | | | 02/03/2022 | | | | INR | | | | 75.00 | | | | USD | | | | 20,000,000 | | | | 172,780 | |
| |
USD Versus INR | | | Put | | | Standard Chartered Bank PLC | | | 02/24/2022 | | | | INR | | | | 74.50 | | | | USD | | | | 26,000,000 | | | | 139,698 | |
| |
USD Versus KRW | | | Put | | | Bank of America, N.A. | | | 01/14/2022 | | | | KRW | | | | 1,160.00 | | | | USD | | | | 20,000,000 | | | | 2,380 | |
| |
USD Versus MXN | | | Put | | | Goldman Sachs International | | | 02/10/2022 | | | | MXN | | | | 20.30 | | | | USD | | | | 20,000,000 | | | | 23,760 | |
| |
USD Versus RUB | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 01/28/2022 | | | | RUB | | | | 67.75 | | | | USD | | | | 1,450,000 | | | | 3,482 | |
| |
USD Versus RUB | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 02/07/2022 | | | | RUB | | | | 68.00 | | | | USD | | | | 1,000,000 | | | | 7,146 | |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Over-The-Counter Foreign Currency Options Purchased(a) –(continued) | |
| |
| Description | | Type of
Contract | | Counterparty | | Expiration
Date | | | Exercise
Price | | | Notional
Value | | | Value | |
| |
USD Versus THB | | Put | | Standard Chartered Bank PLC | | | 03/22/2022 | | | | THB | | | | 33.25 | | | | USD | | | | 30,000,000 | | | $ | 51,690 | |
| |
USD Versus ZAR | | Put | | Bank of America, N.A. | | | 02/23/2022 | | | | ZAR | | | | 14.30 | | | | USD | | | | 20,000,000 | | | | 10,560 | |
| |
USD Versus ZAR | | Put | | J.P. Morgan Chase Bank, N.A. | | | 01/17/2022 | | | | ZAR | | | | 15.20 | | | | USD | | | | 20,000,000 | | | | 9,820 | |
| |
Subtotal – Foreign Currency Put Options Purchased | | | | | | | | | | | | | | | | | | | | | | | 1,929,984 | |
| |
Total Foreign Currency Options Purchased | | | | | | | | | | | | | | | | | | | | | | | | $ | 3,099,385 | |
| |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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) | | | Notional
Value | | | Value | |
| |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
J.P. Morgan Chase Bank, N.A. | | | Call | | | | 2.50 | % | | Markit iTraxx Europe Crossover Index, Series 36, Version 1 | | | (5.00)% | | | | Quarterly | | | | 03/16/2022 | | | | 2.421 | % | | | EUR | | | | 14,500,000 | | | $ | (148,508 | ) |
| |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
Goldman Sachs International | | | Put | | | | 1.07 | | | Markit CDX North America High Yield Index, Series 37, Version 1 | | | 5.00 | | | | Quarterly | | | | 01/19/2022 | | | | 2.930 | | | | USD | | | | 14,500,000 | | | | (18,357 | ) |
| |
Goldman Sachs International | | | Put | | | | 1.07 | | | Markit CDX North America High Yield Index, Series 37, Version 1 | | | 5.00 | | | | Quarterly | | | | 01/19/2022 | | | | 2.930 | | | | USD | | | | 14,500,000 | | | | (14,473 | ) |
| |
Goldman Sachs International | | | Put | | | | 1.06 | | | Markit CDX North America High Yield Index, Series 37, Version 1 | | | 5.00 | | | | Quarterly | | | | 01/19/2022 | | | | 2.930 | | | | USD | | | | 14,500,000 | | | | (11,893 | ) |
| |
J.P. Morgan Chase Bank, N.A. | | | Put | | | | 3.25 | | | Markit iTraxx Europe Crossover Index, Series 36, Version 1 | | | 5.00 | | | | Quarterly | | | | 03/16/2022 | | | | 2.421 | | | | EUR | | | | 14,500,000 | | | | (66,574 | ) |
| |
Subtotal – Credit Default Put Swaptions Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (111,297 | ) |
| |
Total Credit Default Swaptions Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (259,805 | ) |
| |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2021, 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 Foreign Currency Options Written(a) | |
| |
| Description | | Type of
Contract | | | Counterparty | | Expiration
Date | | | Exercise
Price | | | Notional
Value | | | Value | |
| |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
EUR Versus NOK | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 04/08/2022 | | | | NOK | | | | 10.40 | | | | EUR | | | | 14,500,000 | | | $ | (146,527 | ) |
| |
EUR Versus NOK | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 08/23/2022 | | | | NOK | | | | 10.70 | | | | EUR | | | | 14,000,000 | | | | (212,993 | ) |
| |
EUR Versus RUB | | | Call | | | Goldman Sachs International | | | 01/31/2022 | | | | RUB | | | | 87.00 | | | | EUR | | | | 20,000,000 | | | | (244,641 | ) |
| |
EUR Versus RUB | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 04/28/2022 | | | | RUB | | | | 91.00 | | | | EUR | | | | 14,500,000 | | | | (355,274 | ) |
| |
USD Versus CAD | | | Call | | | Bank of America, N.A. | | | 09/20/2022 | | | | CAD | | | | 1.40 | | | | USD | | | | 2,320,000 | | | | (124,579 | ) |
| |
USD Versus CAD | | | Call | | | Goldman Sachs International | | | 05/12/2022 | | | | CAD | | | | 1.27 | | | | USD | | | | 15,000,000 | | | | (197,085 | ) |
| |
USD Versus CLP | | | Call | | | Morgan Stanley and Co. International PLC | | | 02/08/2022 | | | | CLP | | | | 900.00 | | | | USD | | | | 7,500,000 | | | | (49,170 | ) |
| |
USD Versus INR | | | Call | | | Merrill Lynch International | | | 02/03/2022 | | | | INR | | | | 77.35 | | | | USD | | | | 20,000,000 | | | | (7,220 | ) |
| |
USD Versus INR | | | Call | | | Standard Chartered Bank PLC | | | 03/15/2022 | | | | INR | | | | 77.00 | | | | USD | | | | 17,000,000 | | | | (40,001 | ) |
| |
USD Versus JPY | | | Call | | | Goldman Sachs International | | | 04/09/2026 | | | | JPY | | | | 130.00 | | | | USD | | | | 14,000,000 | | | | (135,128 | ) |
| |
USD Versus RUB | | | Call | | | Goldman Sachs International | | | 01/17/2022 | | | | RUB | | | | 75.50 | | | | USD | | | | 14,000,000 | | | | (124,292 | ) |
| |
USD Versus RUB | | | Call | | | Goldman Sachs International | | | 09/15/2022 | | | | RUB | | | | 80.00 | | | | USD | | | | 28,000,000 | | | | (1,297,632 | ) |
| |
USD Versus RUB | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 02/24/2022 | | | | RUB | | | | 77.00 | | | | USD | | | | 20,000,000 | | | | (314,220 | ) |
| |
USD Versus ZAR | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 02/18/2022 | | | | ZAR | | | | 15.80 | | | | USD | | | | 29,000,000 | | | | (894,418 | ) |
| |
Subtotal – Foreign Currency Call Options Written | | | | | | | | | | | | | | | | | | | | | | | | | | (4,143,180 | ) |
| |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco 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 | | |
| Notional
Value |
| | | Value | |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | |
USD Versus CLP | | Put | | Morgan Stanley and Co. International
PLC | | 02/08/2022 | | | CLP 800.00 | | | | USD 7,500,000 | | | $ | (12,938 | ) |
USD Versus COP | | Put | | Goldman Sachs International | | 01/12/2022 | | | COP 3,550.00 | | | | USD 20,000,000 | | | | (20 | ) |
USD Versus INR | | Put | | Merrill Lynch International | | 02/03/2022 | | | INR 73.30 | | | | USD 20,000,000 | | | | (13,580 | ) |
Subtotal – Foreign Currency Put Options Written | | | | (26,538) | |
Total – Foreign Currency Options Written | | | $ | (4,169,718) | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 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 | | | Notional
Value | | | Value | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
30 Year Interest Rate Swap | | | Call | | | Bank of America, N.A. | | | 1.21 | % | | | SOFR | | | | Receive | | | | Annually | | | | 01/04/2022 | | | | USD 29,000,000 | | | $ | (54 | ) |
10 Year Interest Rate Swap | | | Call | | | Goldman Sachs International | | | 1.10 | | | | SOFR | | | | Receive | | | | Annually | | | | 12/07/2022 | | | | USD 21,750,000 | | | | (289,001 | ) |
10 Year Interest Rate Swap | | | Call | | | J.P. Morgan Chase Bank, N.A. | | | 1.10 | | | | SOFR | | | | Receive | | | | Annually | | | | 12/08/2022 | | | | USD 21,750,000 | | | | (289,139 | ) |
30 Year Interest Rate Swap | | | Call | | | Morgan Stanley and Co.
International PLC | | | 1.00 | | | | SOFR | | | | Receive | | | | Annually | | | | 12/05/2022 | | | | USD 21,750,000 | | | | (513,562 | ) |
30 Year Interest Rate Swap | | | Call | | | Morgan Stanley and Co.
International PLC | | | 0.53 | | | | SONIA | | | | Receive | | | | Annually | | | | 06/10/2022 | | | | GBP 5,000,000 | | | | (200,880 | ) |
Subtotal – Interest Rate Call Swaptions Written | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,292,636 | ) |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
10 Year Interest Rate Swap | | | Put | | | Goldman Sachs International | | | 2.00 | | | | SOFR | | | | Pay | | | | Annually | | | | 12/07/2022 | | | | USD 21,750,000 | | | | (234,815 | ) |
10 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 1.90 | | | | SOFR | | | | Pay | | | | Annually | | | | 12/08/2022 | | | | USD 7,250,000 | | | | (93,468 | ) |
10 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 2.05 | | | | SOFR | | | | Pay | | | | Annually | | | | 12/08/2022 | | | | USD 7,250,000 | | | | (72,069 | ) |
10 Year Interest Rate Swap | | | Put | | | J.P. Morgan Chase Bank, N.A. | | | 2.20 | | | | SOFR | | | | Pay | | | | Annually | | | | 12/08/2022 | | | | USD 7,250,000 | | | | (55,612 | ) |
30 Year Interest Rate Swap | | | Put | | | Morgan Stanley and Co.
International PLC | | | 2.25 | | | | SOFR | | | | Pay | | | | Annually | | | | 12/05/2022 | | | | USD 21,750,000 | | | | (333,768 | ) |
Subtotal – Interest Rate Put Swaptions Written | | | | | | | | | | | | | | | | | | | | | | | | | | | (789,732 | ) |
Total Open Over-The-Counter Interest Rate Swaptions Written | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (2,082,368 | ) |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
| | | | | | | | | | | | | | | | | | | | |
| Open Futures Contracts(a) | |
| Long Futures Contracts | | Number of
Contracts | | | Expiration
Month | | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | |
Three-Month Canadian Bankers’ Acceptance | | | 145 | | | | December-2022 | | | $ | 28,152,891 | | | $ | 42,106 | | | $ | 42,106 | |
U.S. Treasury 2 Year Notes | | | 110 | | | | March-2022 | | | | 23,998,906 | | | | (14,602 | ) | | | (14,602 | ) |
U.S. Treasury 10 Year Notes | | | 181 | | | | March-2022 | | | | 23,614,844 | | | | 209,881 | | | | 209,881 | |
Subtotal – Long Futures Contracts | | | | | | | | | | | | | | | 237,385 | | | | 237,385 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | | | |
| | | | Open Futures Contracts(a) –(continued) | | | | | | | | | |
| Short Futures Contracts | | Number of
Contracts | | | Expiration
Month | | Notional
Value | | | Value | | | Unrealized
Appreciation
(Depreciation) | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | |
Euro Buxl | | | 107 | | | March-2022 | | $ | (25,184,955 | ) | | $ | 1,268,311 | | | $ | 1,268,311 | |
Euro Bund | | | 130 | | | March-2022 | | | (25,363,608 | ) | | | 454,182 | | | | 454,182 | |
Long Gilt | | | 16 | | | March-2022 | | | (2,704,934 | ) | | | 23,389 | | | | 23,389 | |
U.S. Treasury 5 Year Notes | | | 94 | | | March-2022 | | | (11,371,797 | ) | | | (46,266 | ) | | | (46,266 | ) |
U.S. Treasury 10 Year Ultra Notes | | | 107 | | | March-2022 | | | (15,668,812 | ) | | | (259,797 | ) | | | (259,797 | ) |
U.S. Treasury Long Bonds | | | 27 | | | March-2022 | | | (4,331,813 | ) | | | (66,445 | ) | | | (66,445 | ) |
U.S. Treasury Ultra Bonds | | | 111 | | | March-2022 | | | (21,880,875 | ) | | | (475,937 | ) | | | (475,937 | ) |
Subtotal–Short Futures Contracts | | | | | | | 897,437 | | | | 897,437 | |
Total Futures Contracts | | | | | | | | | | | | $ | 1,134,822 | | | $ | 1,134,822 | |
| (a) | Futures contracts collateralized by $3,310,532 cash held with Merrill Lynch, the futures commission merchant. |
| | | | | | | | | | | | | | | | | | |
| | | Open Forward Foreign Currency Contracts | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | Contract to | | | | Unrealized | |
Settlement
Date | | Counterparty | | Deliver | | | Receive | | | Appreciation
(Depreciation) | |
| Currency Risk | | | | | | | | | | | | | | | | | | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 3,729,009 | | | AUD | | | 5,286,000 | | | $ | 117,487 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 9,137,820 | | | CZK | | | 207,858,000 | | | | 310,430 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 8,461,992 | | | EUR | | | 7,480,214 | | | | 66,739 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 8,252,320 | | | INR | | | 628,954,704 | | | | 118,012 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 10,000,000 | | | NOK | | | 90,000,400 | | | | 206,154 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 9,613,129 | | | NZD | | | 14,270,424 | | | | 150,049 | |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 8,745,920 | | | SEK | | | 79,388,468 | | | | 44,861 | |
| 03/24/2022 | | Bank of America, N.A. | | USD | | | 160,000 | | | RUB | | | 12,827,600 | | | | 8,789 | |
| 03/16/2022 | | Citibank, N.A. | | USD | | | 1,940,068 | | | EUR | | | 1,715,000 | | | | 15,327 | |
| 01/14/2022 | | Goldman Sachs International | | USD | | | 7,057,000 | | | MXN | | | 147,093,285 | | | | 115,133 | |
| 03/16/2022 | | Goldman Sachs International | | USD | | | 26,009,728 | | | CNY | | | 166,831,600 | | | | 80,742 | |
| 03/16/2022 | | Goldman Sachs International | | USD | | | 792,835 | | | MXN | | | 17,040,000 | | | | 28,949 | |
| 05/13/2022 | | Goldman Sachs International | | CAD | | | 8,375,259 | | | USD | | | 6,928,000 | | | | 310,368 | |
| 01/10/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 4,500,000 | | | MXN | | | 93,574,800 | | | | 65,690 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | JPY | | | 1,669,895,792 | | | USD | | | 14,750,583 | | | | 225,255 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 27,873,556 | | | AUD | | | 39,545,373 | | | | 902,665 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 9,261,568 | | | CAD | | | 11,839,062 | | | | 96,369 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 3,301,928 | | | CNY | | | 21,183,519 | | | | 10,921 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 7,944,676 | | | EUR | | | 7,025,659 | | | | 65,783 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 3,037,541 | | | GBP | | | 2,291,000 | | | | 62,500 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 4,681,008 | | | MXN | | | 100,555,625 | | | | 168,461 | |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 6,899,805 | | | NOK | | | 63,000,051 | | | | 244,476 | |
| 01/04/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 45,808,046 | | | BRL | | | 262,816,969 | | | | 1,376,329 | |
| 02/02/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 3,729,511 | | | BRL | | | 21,586,969 | | | | 119,709 | |
| 02/10/2022 | | Morgan Stanley and Co. International PLC | | CLP | | | 256,740,000 | | | USD | | | 300,000 | | | | 246 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | CLP | | | 3,765,000,000 | | | USD | | | 4,442,216 | | | | 71,415 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 7,640,323 | | | AUD | | | 10,833,649 | | | | 243,064 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 4,926,956 | | | CAD | | | 6,297,333 | | | | 50,638 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 367,755 | | | EUR | | | 325,000 | | | | 2,801 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 708,914 | | | GBP | | | 534,497 | | | | 14,335 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 7,551,610 | | | MXN | | | 163,071,725 | | | | 312,807 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 9,613,491 | | | NZD | | | 14,263,911 | | | | 145,231 | |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 123,465 | | | SEK | | | 1,119,795 | | | | 532 | |
| 03/16/2022 | | Royal Bank of Canada | | USD | | | 1,319,463 | | | EUR | | | 1,166,000 | | | | 9,977 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | | | |
| | | Open Forward Foreign Currency Contracts - (continued) | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | Contract to | | | Unrealized | |
Settlement
Date | | Counterparty | | Deliver | | | Receive | | | Appreciation
(Depreciation) | |
| 03/16/2022 | | Standard Chartered Bank PLC | | USD | | | 3,962,307 | | | THB | | | 133,581,250 | | | $ | 35,406 | |
Subtotal—Appreciation | | | | | | | | | | | | | | | 5,797,650 | |
| Currency Risk | | | | | | | | | | | | | | | | | | |
| 03/16/2022 | | Bank of America, N.A. | | AUD | | | 9,282,442 | | | USD | | | 6,548,298 | | | | (206,312 | ) |
| 03/16/2022 | | Bank of America, N.A. | | CAD | | | 3,707,968 | | | USD | | | 2,900,703 | | | | (30,183 | ) |
| 03/16/2022 | | Bank of America, N.A. | | EUR | | | 3,658,000 | | | USD | | | 4,138,113 | | | | (32,637 | ) |
| 03/16/2022 | | Bank of America, N.A. | | GBP | | | 6,782,649 | | | USD | | | 8,994,267 | | | | (183,598 | ) |
| 03/16/2022 | | Bank of America, N.A. | | INR | | | 18,160,350 | | | USD | | | 238,276 | | | | (3,407 | ) |
| 03/16/2022 | | Bank of America, N.A. | | NOK | | | 30,776,112 | | | USD | | | 3,372,725 | | | | (117,324 | ) |
| 03/16/2022 | | Bank of America, N.A. | | RUB | | | 2,296,632,244 | | | USD | | | 30,173,188 | | | | (106,781 | ) |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 16,388,675 | | | JPY | | | 1,855,689,724 | | | | (247,248 | ) |
| 03/16/2022 | | Bank of America, N.A. | | USD | | | 4,000,000 | | | ZAR | | | 64,234,000 | | | | (9,586 | ) |
| 03/16/2022 | | Citibank, N.A. | | EUR | | | 29,516,756 | | | USD | | | 33,390,388 | | | | (263,791 | ) |
| 03/16/2022 | | Citibank, N.A. | | GBP | | | 3,155,000 | | | USD | | | 4,184,792 | | | | (84,361 | ) |
| 03/16/2022 | | Citibank, N.A. | | MXN | | | 600,000 | | | USD | | | 27,780 | | | | (1,156 | ) |
| 03/16/2022 | | Citibank, N.A. | | USD | | | 19,905,250 | | | KRW | | | 23,450,375,000 | | | | (218,611 | ) |
| 03/16/2022 | | Goldman Sachs International | | AUD | | | 7,168,000 | | | USD | | | 5,126,518 | | | | (89,464 | ) |
| 03/16/2022 | | Goldman Sachs International | | CAD | | | 3,296,176 | | | USD | | | 2,578,713 | | | | (26,679 | ) |
| 03/16/2022 | | Goldman Sachs International | | EUR | | | 23,396,985 | | | USD | | | 26,472,303 | | | | (204,286 | ) |
| 03/16/2022 | | Goldman Sachs International | | GBP | | | 9,996,000 | | | USD | | | 13,256,796 | | | | (269,179 | ) |
| 03/16/2022 | | Goldman Sachs International | | MXN | | | 411,515,495 | | | USD | | | 19,211,242 | | | | (634,806 | ) |
| 03/16/2022 | | Goldman Sachs International | | ZAR | | | 138,997,418 | | | USD | | | 8,594,783 | | | | (40,163 | ) |
| 01/10/2022 | | J.P. Morgan Chase Bank, N.A. | | MXN | | | 140,358,825 | | | USD | | | 6,750,000 | | | | (98,371 | ) |
| 01/10/2022 | | J.P. Morgan Chase Bank, N.A. | | USD | | | 2,310,665 | | | MXN | | | 46,784,025 | | | | (27,984 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | AUD | | | 5,286,000 | | | USD | | | 3,725,837 | | | | (120,659 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | CAD | | | 14,006,000 | | | USD | | | 10,956,739 | | | | (114,007 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | CNY | | | 397,507,500 | | | USD | | | 61,953,082 | | | | (212,345 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | EUR | | | 20,041,583 | | | USD | | | 22,670,518 | | | | (180,334 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | GBP | | | 6,275,510 | | | USD | | | 8,320,435 | | | | (171,200 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | MXN | | | 256,015,000 | | | USD | | | 11,854,303 | | | | (492,465 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | SEK | | | 83,266,500 | | | USD | | | 9,175,675 | | | | (44,525 | ) |
| 03/16/2022 | | J.P. Morgan Chase Bank, N.A. | | ZAR | | | 337,395,000 | | | USD | | | 20,877,757 | | | | (82,257 | ) |
| 01/04/2022 | | Morgan Stanley and Co. International PLC | | BRL | | | 262,816,969 | | | USD | | | 46,528,460 | | | | (655,914 | ) |
| 02/02/2022 | | Morgan Stanley and Co. International PLC | | BRL | | | 241,230,000 | | | USD | | | 41,676,529 | | | | (1,337,720 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | EUR | | | 5,269,180 | | | USD | | | 5,962,367 | | | | (45,405 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | GBP | | | 1,913,000 | | | USD | | | 2,537,249 | | | | (51,306 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | NOK | | | 25,475,136 | | | USD | | | 2,790,880 | | | | (98,032 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | NZD | | | 7,908,000 | | | USD | | | 5,329,778 | | | | (80,517 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 1,786,051 | | | JPY | | | 202,232,857 | | | | (26,960 | ) |
| 03/16/2022 | | Morgan Stanley and Co. International PLC | | USD | | | 6,000,000 | | | ZAR | | | 96,519,000 | | | | (3,943 | ) |
| 03/16/2022 | | Natwest Markets PLC | | EUR | | | 120,000 | | | USD | | | 135,782 | | | | (1,038 | ) |
| 03/16/2022 | | Royal Bank of Canada | | CAD | | | 22,638,000 | | | USD | | | 17,712,534 | | | | (181,195 | ) |
| 03/16/2022 | | Royal Bank of Canada | | EUR | | | 23,109,281 | | | USD | | | 26,150,809 | | | | (197,747 | ) |
| 03/16/2022 | | Royal Bank of Canada | | GBP | | | 2,105,000 | | | USD | | | 2,792,188 | | | | (56,169 | ) |
| 03/16/2022 | | Royal Bank of Canada | | USD | | | 1,139,120 | | | JPY | | | 128,968,342 | | | | (17,309 | ) |
Subtotal—Depreciation | | | | | | | | | | | | | | | (7,066,974 | ) |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | $ | (1,269,324 | ) |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 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 Senior Financials,
Series 36, Version 1 | | | Sell | | | | 1.00 | % | | | Quarterly | | | | 12/20/2026 | | | | 0.548% | | | | EUR 14,500,000 | | | $ | 354,347 | | | $ | 368,679 | | | $ | 14,332 | |
Markit CDX Emerging Markets Index,
Series 36, Version 1 | | | Sell | | | | 1.00 | | | | Quarterly | | | | 12/20/2026 | | | | 1.873 | | | | USD 1,450,000 | | | | (61,421 | ) | | | (58,293 | ) | | | 3,128 | |
Colombia Government International Bonds | | | Sell | | | | 1.00 | | | | Quarterly | | | | 12/20/2026 | | | | 2.026 | | | | USD 3,625,000 | | | | (211,115 | ) | | | (173,986 | ) | | | 37,129 | |
Subtotal - Appreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | 81,811 | | | | 136,400 | | | | 54,589 | |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Indonesia Government International Bonds | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 0.755 | | | | USD 3,832,000 | | | | (23,739 | ) | | | (43,631 | ) | | | (19,892 | ) |
Markit iTraxx Europe Index,
Series 36, Version 1 | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 0.477 | | | | EUR 6,235,000 | | | | (180,279 | ) | | | (184,101 | ) | | | (3,822 | ) |
Markit iTraxx Europe Sub Financials Index,
Series 36, Version 1 | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 1.077 | | | | EUR 16,313,000 | | | | 106,522 | | | | 72,395 | | | | (34,127 | ) |
Brazil Government International Bonds | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 2.031 | | | | USD 3,625,000 | | | | 262,688 | | | | 173,554 | | | | (89,134 | ) |
South Africa Republic International Bonds | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 2.020 | | | | USD 2,537,500 | | | | 122,398 | | | | 120,879 | | | | (1,519 | ) |
Markit CDX North America High Yield
Index, Series 37, Version 1 | | | Buy | | | | (5.00 | ) | | | Quarterly | | | | 12/20/2026 | | | | 2.930 | | | | USD 7,250,000 | | | | (643,303 | ) | | | (662,672 | ) | | | (19,369 | ) |
Brazil Government International Bonds | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2024 | | | | 1.383 | | | | USD 1,595,000 | | | | 26,747 | | | | 17,591 | | | | (9,156 | ) |
Subtotal - Depreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | (328,966 | ) | | | (505,985 | ) | | | (177,019 | ) |
Total Centrally Cleared Credit Default Swap Agreements | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (247,155 | ) | | $ | (369,585 | ) | | $ | (122,430 | ) |
| (a) | Centrally cleared swap agreements collateralized by $12,023,516 cash held with Counterparties. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2021, 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Receive | | 3 Month JIBAR | | Quarterly | | | (7.15 | )% | | Quarterly | | 02/24/2031 | | ZAR | | | 17,550,000 | | | $ | 107 | | | $ | 10,623 | | | $ | 10,516 | |
Receive | | 3 Month JIBAR | | Quarterly | | | (7.32 | ) | | Quarterly | | 07/15/2031 | | ZAR | | | 86,900,000 | | | | – | | | | 12,322 | | | | 12,322 | |
Receive | | 6 Month CDOR | | Semi-Annually | | | (1.96 | ) | | Semi-Annually | | 12/15/2031 | | CAD | | | 35,525,000 | | | | 1,097 | | | | 20,157 | | | | 19,060 | |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.75 | ) | | Quarterly | | 02/15/2031 | | ZAR | | | 25,375,000 | | | | – | | | | 57,383 | | | | 57,383 | |
Receive | | 3 Month USD LIBOR | | Quarterly | | | (1.67 | ) | | Semi-Annually | | 06/07/2053 | | USD | | | 2,537,500 | | | | – | | | | 64,847 | | | | 64,847 | |
Receive | | BZDIOVRA | | At Maturity | | | (10.69 | ) | | At Maturity | | 01/02/2024 | | BRL | | | 114,617,783 | | | | – | | | | 77,658 | | | | 77,658 | |
Receive | | 3 Month USD LIBOR | | Quarterly | | | (1.67 | ) | | Semi-Annually | | 07/12/2053 | | USD | | | 3,480,000 | | | | – | | | | 89,388 | | | | 89,388 | |
Receive | | BZDIOVRA | | At Maturity | | | (10.74 | ) | | At Maturity | | 01/02/2024 | | BRL | | | 182,749,148 | | | | – | | | | 96,411 | | | | 96,411 | |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.70 | ) | | Quarterly | | 01/29/2031 | | ZAR | | | 51,000,000 | | | | – | | | | 124,045 | | | | 124,045 | |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.70 | ) | | Quarterly | | 01/27/2031 | | ZAR | | | 52,000,000 | | | | – | | | | 126,191 | | | | 126,191 | |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.63 | ) | | Quarterly | | 02/11/2031 | | ZAR | | | 48,500,000 | | | | – | | | | 133,822 | | | | 133,822 | |
Pay | | BZDIOVRA | | At Maturity | | | 8.68 | | | At Maturity | | 01/04/2027 | | BRL | | | 24,429,011 | | | | – | | | | 175,358 | | | | 175,358 | |
Receive | | SONIA | | Annually | | | (0.80 | ) | | Annually | | 12/02/2031 | | GBP | | | 11,382,500 | | | | – | | | | 218,164 | | | | 218,164 | |
Receive | | 28 Day MXN TIIE | | At Maturity | | | (5.62 | ) | | At Maturity | | 01/29/2031 | | MXN | | | 62,500,000 | | | | – | | | | 389,938 | | | | 389,938 | |
Receive | | 28 Day MXN TIIE | | At Maturity | | | (5.63 | ) | | At Maturity | | 05/29/2031 | | MXN | | | 62,500,000 | | | | – | | | | 399,249 | | | | 399,249 | |
Receive | | 28 Day MXN TIIE | | At Maturity | | | (5.50 | ) | | At Maturity | | 11/29/2030 | | MXN | | | 64,600,000 | | | | – | | | | 422,326 | | | | 422,326 | |
Receive | | 6 Month AUD BBSW | | Semi-Annually | | | (0.99 | ) | | Semi-Annually | | 10/01/2026 | | AUD | | | 20,445,000 | | | | – | | | | 437,449 | | | | 437,449 | |
Receive | | 6 Month AUD BBSW | | Semi-Annually | | | (0.94 | ) | | Semi-Annually | | 09/27/2026 | | AUD | | | 20,082,500 | | | | – | | | | 461,800 | | | | 461,800 | |
Receive | | 6 Month WIBOR | | Semi-Annually | | | (1.45 | ) | | Annually | | 05/05/2026 | | PLN | | | 21,660,000 | | | | – | | | | 468,606 | | | | 468,606 | |
Receive | | SONIA | | Annually | | | (0.75 | ) | | Annually | | 12/06/2031 | | GBP | | | 18,125,000 | | | | – | | | | 473,777 | | | | 473,777 | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco 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) | |
Receive | | 6 Month WIBOR | | Semi-Annually | | | (1.44 | )% | | Annually | | 05/04/2026 | | PLN | | | 21,840,000 | | | $ | – | | | $ | 475,488 | | | $ | 475,488 | |
Receive | | 28 Day MXN TIIE | | At Maturity | | | (5.53 | ) | | At Maturity | | 05/29/2031 | | MXN | | | 108,750,000 | | | | – | | | | 735,684 | | | | 735,684 | |
Receive | | 6 Month CLICP | | Semi-Annually | | | (2.35 | ) | | Semi-Annually | | 03/11/2026 | | CLP | | | 7,500,000,000 | | | | – | | | | 1,010,698 | | | | 1,010,698 | |
Subtotal –Appreciation | | | | | | | | | | | | | | | | | | | 1,204 | | | | 6,481,384 | | | | 6,480,180 | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pay | | 6 Month CDOR | | Semi-Annually | | | 1.14 | | | Semi-Annually | | 02/24/2024 | | CAD | | | 217,650,000 | | | | – | | | | (1,598,996 | ) | | | (1,598,996 | ) |
Pay | | 28 Day MXN TIIE | | At Maturity | | | 4.81 | | | At Maturity | | 07/23/2025 | | MXN | | | 313,500,000 | | | | – | | | | (1,261,439 | ) | | | (1,261,439 | ) |
Pay | | 6 Month CDOR | | Semi-Annually | | | 0.70 | | | Semi-Annually | | 02/04/2023 | | CAD | | | 182,000,000 | | | | – | | | | (732,450 | ) | | | (732,450 | ) |
Pay | | 3 Month NDBB | | Quarterly | | | 1.82 | | | Semi-Annually | | 09/28/2026 | | NZD | | | 21,315,000 | | | | – | | | | (468,534 | ) | | | (468,534 | ) |
Pay | | 3 Month NDBB | | Quarterly | | | 1.87 | | | Semi-Annually | | 10/04/2026 | | NZD | | | 21,909,500 | | | | – | | | | (449,062 | ) | | | (449,062 | ) |
Pay | | 3 Month KORIBOR | | Quarterly | | | 1.19 | | | Quarterly | | 03/14/2023 | | KRW | | | 89,100,000,000 | | | | – | | | | (383,160 | ) | | | (383,160 | ) |
Receive | | 6 Month CDOR | | Semi-Annually | | | (2.09 | ) | | Semi-Annually | | 11/19/2031 | | CAD | | | 34,800,000 | | | | 1,195 | | | | (327,874 | ) | | | (329,069 | ) |
Pay | | 3 Month KORIBOR | | Quarterly | | | 1.51 | | | Quarterly | | 06/16/2023 | | KRW | | | 78,700,000,000 | | | | – | | | | (222,204 | ) | | | (222,204 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 9.27 | | | At Maturity | | 01/04/2027 | | BRL | | | 28,384,589 | | | | – | | | | (220,400 | ) | | | (220,400 | ) |
Pay | | 6 Month CDOR | | Semi-Annually | | | 0.70 | | | Semi-Annually | | 02/03/2023 | | CAD | | | 30,200,000 | | | | – | | | | (118,761 | ) | | | (118,761 | ) |
Pay | | 28 Day MXN TIIE | | At Maturity | | | 7.08 | | | At Maturity | | 06/16/2031 | | MXN | | | 72,760,000 | | | | – | | | | (106,507 | ) | | | (106,507 | ) |
Receive | | SONIA | | Annually | | | (0.89 | ) | | Annually | | 11/15/2051 | | GBP | | | 4,959,000 | | | | – | | | | (89,938 | ) | | | (89,938 | ) |
Pay | | 6 Month CDOR | | Semi-Annually | | | 0.88 | | | Semi-Annually | | 10/20/2022 | | CAD | | | 119,625,000 | | | | – | | | | (82,658 | ) | | | (82,658 | ) |
Pay | | 3 Month JIBAR | | Quarterly | | | 7.48 | | | Quarterly | | 02/15/2036 | | ZAR | | | 40,275,000 | | | | – | | | | (77,238 | ) | | | (77,238 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 11.41 | | | At Maturity | | 01/02/2023 | | BRL | | | 111,931,589 | | | | – | | | | (42,670 | ) | | | (42,670 | ) |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.65 | ) | | Quarterly | | 10/11/2026 | | ZAR | | | 50,750,000 | | | | – | | | | (38,463 | ) | | | (38,463 | ) |
Receive | | 3 Month JIBAR | | Quarterly | | | (6.61 | ) | | Quarterly | | 10/19/2026 | | ZAR | | | 48,800,000 | | | | 259 | | | | (37,271 | ) | | | (37,530 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 10.37 | | | At Maturity | | 01/02/2025 | | BRL | | | 61,407,687 | | | | – | | | | (35,838 | ) | | | (35,838 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 10.31 | | | At Maturity | | 01/02/2025 | | BRL | | | 38,151,485 | | | | – | | | | (33,774 | ) | | | (33,774 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 11.44 | | | At Maturity | | 01/02/2023 | | BRL | | | 88,306,574 | | | | – | | | | (28,313 | ) | | | (28,313 | ) |
Receive | | SOFR | | Annually | | | (1.12 | ) | | Annually | | 12/17/2026 | | USD | | | 59,290,500 | | | | – | | | | (28,015 | ) | | | (28,015 | ) |
Pay | | BZDIOVRA | | At Maturity | | | 11.46 | | | At Maturity | | 01/02/2023 | | BRL | | | 88,291,521 | | | | – | | | | (25,598 | ) | | | (25,598 | ) |
Receive | | 3 Month USD LIBOR | | Quarterly | | | (1.57 | ) | | Semi-Annually | | 11/30/2031 | | USD | | | 18,473,000 | | | | – | | | | (2,815 | ) | | | (2,815 | ) |
Subtotal – Depreciation | | | | | | | | | | | | | | | | | | | 1,454 | | | | (6,411,978 | ) | | | (6,413,432 | ) |
Total Centrally Cleared Interest Rate Swap Agreements | | | | | | | | | | | | | $ | 2,658 | | | $ | 69,406 | | | $ | 66,748 | |
| (a) | Centrally cleared swap agreements collateralized by $12,023,516 cash held with Counterparties. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Citibank, N.A. | | Assicurazioni Generali S.p.A. | | | Sell | | | | 1.00 | % | | | Quarterly | | | | 12/20/2024 | | | | 0.440 | % | | | EUR | | | | 2,500,000 | | | $ | 28,987 | | | $ | 47,894 | | | $ | 18,907 | |
Goldman Sachs
International | | Markit CDX North America
High Yield Index, Series 35,
Version 1 | | Sell | | | 5.00 | | | Quarterly | | | 12/20/2025 | | | 1.057 | | | USD | | | 18,200,000 | | | 2,629,213 | | | 2,811,538 | | | 182,325 | |
Goldman Sach International | | Markit iTraxx Europe Crossover Index, Series 32, Version 5 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2024 | | | | 2.646 | | | | EUR | | | | 2,900,000 | | | | 212,521 | | | | 230,371 | | | | 17,850 | |
J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 28, Version 9 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2022 | | | | 0.101 | | | | EUR | | | | 15,000,000 | | | | 653,569 | | | | 825,344 | | | | 171,775 | |
J.P.Morgan Chase Bank, N.A. | | Markit CDX North America High Yield Index, Series 35, Version 1 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2025 | | | | 1.057 | | | | USD | | | | 5,400,000 | | | | 734,273 | | | | 834,193 | | | | 99,920 | |
J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 30, Version 8 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2023 | | | | 3.923 | | | | EUR | | | | 2,500,000 | | | | 17,215 | | | | 59,939 | | | | 42,724 | |
J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 30, Version 8 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2023 | | | | 3.923 | | | | EUR | | | | 2,900,000 | | | | 64,850 | | | | 69,530 | | | | 4,680 | |
J.P. Morgan Chase Bank, N.A. | | Markit iTraxx Europe Crossover Index, Series 30, Version 8 | | | Sell | | | | 5.00 | | | | Quarterly | | | | 12/20/2023 | | | | 3.923 | | | | EUR | | | | 1,450,000 | | | | 24,542 | | | | 34,765 | | | | 10,223 | |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,365,170 | | | | 4,913,574 | | | | 548,404 | |
Credit Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Citibank, N.A. | | Assicurazioni Generali S.p.A. | | | Buy | | | | (1.00 | ) | | | Quarterly | | | | 12/20/2024 | | | | 0.748 | | | | EUR | | | | 1,250,000 | | | | 9,415 | | | | (10,786 | ) | | | (20,201 | ) |
Total Open Over-The-Counter Credit Default Swap Agreements | | | | | | | | | | | | | | | | | | | | | | | $ | 4,374,585 | | | $ | 4,902,788 | | | $ | 528,203 | |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
| (b) | Implied credit spreads represent the current level, as of December 31, 2021, 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 | | | $ | — | | | $ | 39,734 | | | $ | 39,734 | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Goldman Sachs
International | | Pay | | 3 Month MOSKP | | | Quarterly | | | | 6.77 | | | | Annually | | | | 01/14/2030 | | | | RUB 198,000,000 | | | | — | | | | (312,409 | ) | | | (312,409 | ) |
Goldman Sachs
International | | Pay | | 3 Month MOSKP | | | Quarterly | | | | 6.98 | | | | Annually | | | | 03/25/2026 | | | | RUB 700,000,000 | | | | — | | | | (682,366 | ) | | | (682,366 | ) |
Bank of America, N.A. | | Pay | | 3 Month MOSKP | | | Quarterly | | | | 7.31 | | | | Annually | | | | 08/17/2024 | | | | RUB 385,000,000 | | | | — | | | | (246,435 | ) | | | (246,435 | ) |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | | | | | — | | | | (1,241,210 | ) | | | (1,241,210 | ) |
Total Over-The-Counter Interest Rate Swap Agreements | | | | | | | | | | | | | | | | | | | $ | — | | | $ | (1,201,476 | ) | | $ | (1,201,476 | ) |
| (a) | Over-The-Counter options purchased, options written and swap agreements are collateralized by cash held with Counterparties in the amount of $4,922,000. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
Abbreviations:
| | |
AUD | | –Australian Dollar |
BBSW | | –Bank Bill Swap Rate |
BRL | | –Brazilian Real |
BZDIOVRA | | –Brazil Ceptip DI Interbank Deposit Rate |
CAD | | –Canadian Dollar |
CDOR | | –Canadian Dealer Offered Rate |
CHF | | –Swiss Franc |
CLICP | | –Sinacofi Chile Interbank Rate Avg (CAMARA) |
CLP | | –Chile Peso |
CNH | | –Chinese Renminbi |
CNY | | –Chinese Yuan Renminbi |
COP | | –Colombia Peso |
CZK | | –Czech Koruna |
EUR | | –Euro |
FBIL | | –Financial Benchmarks India Private Ltd. |
GBP | | –British Pound Sterling |
INR | | –Indian Rupee |
JIBAR | | –Johannesburg Interbank Average Rate |
JPY | | –Japanese Yen |
KORIBOR | | –Korea Interbank Offered Rate |
KRW | | –South Korean Won |
LIBOR | | –London Interbank Offered Rate |
MIBOR | | –Mumbai Interbank Offered Rate |
MOSKP | | –MosPrime Rate |
MXN | | –Mexican Peso |
NDBB | | –New Zealand Dollar Bank Bill |
NOK | | –Norwegian Krone |
NZD | | –New Zealand Dollar |
PLN | | –Polish Zloty |
RUB | | –Russian Ruble |
SEK | | –Swedish Krona |
SOFR | | –Secured Overnight Financing Rate |
SONIA | | –Sterling Overnight Index Average |
THB | | –Thai Baht |
TIIE | | –Interbank Equilibrium Interest Rate |
USD | | –U.S. Dollar |
WIBOR | | –Warsaw Interbank Offered Rate |
ZAR | | –South African Rand |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
Consolidated Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $775,984,974)* | | $ | 760,221,525 | |
| |
Investments in affiliates, at value (Cost $178,055,339) | | | 177,903,995 | |
| |
Other investments: | | | | |
Variation margin receivable – futures contracts | | | 1,018,370 | |
| |
Swaps receivable – OTC | | | 920,942 | |
| |
Unrealized appreciation on swap agreements – OTC | | | 588,138 | |
| |
Premiums paid on swap agreements – OTC | | | 4,374,585 | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 5,797,650 | |
| |
Deposits with brokers: | | | | |
Cash collateral – exchange-traded futures contracts | | | 3,310,532 | |
| |
Cash collateral – centrally cleared swap agreements | | | 12,023,516 | |
| |
Cash collateral – OTC Derivatives | | | 4,922,000 | |
| |
Cash | | | 14,158,679 | |
| |
Foreign currencies, at value (Cost $4,951,028) | | | 5,726,155 | |
| |
Receivable for: | | | | |
Investments sold | | | 526,997 | |
| |
Fund shares sold | | | 6,980,377 | |
| |
Dividends | | | 6,743 | |
| |
Interest | | | 11,461,263 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 188,183 | |
| |
Other assets | | | 3,773 | |
Total assets | | | 1,010,133,423 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Options written, at value (premiums received $7,241,993) | | | 6,511,891 | |
| |
Variation margin payable – centrally cleared swap agreements | | | 259,276 | |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 7,066,974 | |
| |
Swaps payable – OTC | | | 116,221 | |
| |
Unrealized depreciation on swap agreements–OTC | | | 1,261,411 | |
| |
| |
Payable for: | | | | |
Investments purchased | | | 104,984 | |
| |
Fund shares reacquired | | | 358,722 | |
| |
Collateral upon return of securities loaned | | | 43,922,449 | |
| |
Accrued fees to affiliates | | | 519,098 | |
| |
Accrued other operating expenses | | | 501,239 | |
| |
Trustee deferred compensation and retirement plans | | | 188,183 | |
| |
Total liabilities | | | 60,810,448 | |
Net assets applicable to shares outstanding | | $ | 949,322,975 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 1,186,158,661 | |
| |
Distributable earnings (loss) | | | (236,835,686 | ) |
| | | $949,322,975 | |
| |
Net Assets: | | | | |
Series I | | $ | 336,327,366 | |
Series II | | $ | 612,995,609 | |
| |
| | | | |
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 75,484,385 | |
Series II | | | 132,902,231 | |
Series I: | | | | |
Net asset value per share | | $ | 4.46 | |
Series II: | | | | |
Net asset value per share | | $ | 4.61 | |
* At December 31, 2021, securities with an aggregate value of $42,968,622 were on loan to brokers. | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
| | |
Consolidated Statement of Operations |
| For the year ended December 31, 2021 | | |
| | | | |
Investment income: | | | | |
| |
Interest (net of foreign withholding taxes of $253,400) | | $ | 32,559,362 | |
Dividends (net of foreign withholding taxes of $3,000) | | | 2,950 | |
Dividends from affiliates (includes securities lending income of $23,419) | | | 763,958 | |
Other income | | | 35,990 | |
Total investment income | | | 33,362,260 | |
| | | | |
Expenses: | | | | |
| |
Advisory fees | | | 6,565,875 | |
| |
Administrative services fees | | | 1,577,696 | |
| |
Custodian fees | | | 363,660 | |
| |
Distribution fees - Series II | | | 1,580,522 | |
| |
Transfer agent fees | | | 54,179 | |
| |
Trustees’ and officers’ fees and benefits | | | 30,990 | |
| |
Professional services fees | | | 112,184 | |
| |
Other | | | (292,072 | ) |
Total expenses | | | 9,993,034 | |
| |
Less: Fees waived | | | (387,289 | ) |
Net expenses | | | 9,605,745 | |
Net investment income | | | 23,756,515 | |
| | | | |
Realized and unrealized gain (loss) from: | | | | |
| |
Net realized gain (loss) from:
Unaffiliated investment securities (net of foreign taxes of $355,639) | | | (17,258,292 | ) |
Affiliated investment securities | | | (95,310 | ) |
| |
Foreign currencies | | | 9,516 | |
| |
Forward foreign currency contracts | | | 7,005,608 | |
| |
Futures contracts | | | 12,781,560 | |
| |
Option contracts written | | | 26,774,559 | |
| |
Swap agreements | | | (47,105,064 | ) |
| | | | (17,887,423 | ) |
Change in net unrealized appreciation (depreciation) of:
Unaffiliated investment securities (net of foreign taxes of $453,498) | | | (34,400,776 | ) |
| |
Affiliated investment securities | | | (217,810 | ) |
| |
Foreign currencies | | | (548,271 | ) |
| |
Forward foreign currency contracts | | | 421,972 | |
| |
Futures contracts | | | 3,111,889 | |
| |
Option contracts written | | | (3,089,692 | ) |
| |
Swap agreements | | | (4,777,062 | ) |
| | | | (39,499,750 | ) |
Net realized and unrealized gain (loss) | | | (57,387,173 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (33,630,658 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco V.I. Global Strategic Income Fund
Consolidated Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 23,756,515 | | | $ | 29,950,879 | |
Net realized gain (loss) | | | (17,887,423 | ) | | | (55,196,511 | ) |
Change in net unrealized appreciation (depreciation) | | | (39,499,750 | ) | | | 49,062,789 | |
| |
| |
Net increase (decrease) in net assets resulting from operations | | | (33,630,658 | ) | | | 23,817,157 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (16,089,003 | ) | | | (21,122,311 | ) |
| |
Series II | | | (27,017,441 | ) | | | (34,704,644 | ) |
| |
Total distributions from distributable earnings | | | (43,106,444 | ) | | | (55,826,955 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 303,104 | | | | (20,356,992 | ) |
| |
Series II | | | 1,076,421 | | | | (54,615,245 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | 1,379,525 | | | | (74,972,237 | ) |
| |
Net increase (decrease) in net assets | | | (75,357,577 | ) | | | (106,982,035 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,024,680,552 | | | | 1,131,662,587 | |
End of year | | $ | 949,322,975 | | | $ | 1,024,680,552 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco 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 12/31/21 | | | $4.83 | | | | $0.12 | | | | $(0.27) | | | | $(0.15) | | | | $(0.22) | | | | $4.46 | | | | (3.00)% | | | | $ 336,327 | | | | 0.82% | | | | 0.86% | | | | 2.59% | | | | 209% | |
Year ended 12/31/20 | | | 4.97 | | | | 0.15 | | | | (0.01) | | | | 0.14 | | | | (0.28) | | | | 4.83 | | | | 3.19 | | | | 363,404 | | | | 0.82 | | | | 0.87 | | | | 3.10 | | | | 324 | |
Year ended 12/31/19 | | | 4.66 | | | | 0.24 | | | | 0.26 | | | | 0.50 | | | | (0.19) | | | | 4.97 | | | | 10.80 | | | | 395,324 | | | | 0.77(f) | | | | 0.82(f) | | | | 4.86(g) | | | | 134 | |
Year ended 12/31/18 | | | 5.13 | | | | 0.25 | | | | (0.47) | | | | (0.22) | | | | (0.25) | | | | 4.66 | | | | (4.40) | | | | 346,707 | | | | 0.81(f) | | | | 0.88(f) | | | | 5.07(g) | | | | 68 | |
Year ended 12/31/17 | | | 4.94 | | | | 0.22 | | | | 0.09 | | | | 0.31 | | | | (0.12) | | | | 5.13 | | | | 6.27 | | | | 393,337 | | | | 0.76(f) | | | | 0.82(f) | | | | 4.40(g) | | | | 74 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 4.99 | | | | 0.11 | | | | (0.28) | | | | (0.17) | | | | (0.21) | | | | 4.61 | | | | (3.37) | | | | 612,996 | | | | 1.07 | | | | 1.11 | | | | 2.34 | | | | 209 | |
Year ended 12/31/20 | | | 5.13 | | | | 0.14 | | | | (0.01) | | | | 0.13 | | | | (0.27) | | | | 4.99 | | | | 2.79 | | | | 661,276 | | | | 1.07 | | | | 1.12 | | | | 2.85 | | | | 324 | |
Year ended 12/31/19 | | | 4.80 | | | | 0.23 | | | | 0.27 | | | | 0.50 | | | | (0.17) | | | | 5.13 | | | | 10.61 | | | | 736,339 | | | | 1.02(f) | | | | 1.08(f) | | | | 4.60(g) | | | | 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(f) | | | | 1.13(f) | | | | 4.82(g) | | | | 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(f) | | | | 1.07(f) | | | | 4.15(g) | | | | 74 | |
| (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% and 0.01% for the years ended December 31, 2019, 2018 and 2017, respectively. |
| (d) | The portfolio turnover rate excludes purchase and sale transactions of To Be Announced (TBA) mortgage-related securities of $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 and $1,225,140,927 and $1,266,426,777 for the years ended December 31, 2019, 2018 and 2017, respectively. |
| (e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (f) | Includes the Fund’s share of the allocated expenses from Invesco Oppenheimer Master Event-Linked Bond Fund and Invesco Oppenheimer Master Loan Fund. |
| (g) | 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 V.I. Global Strategic Income Fund
Notes to Consolidated Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Global Strategic Income Fund, formerly 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 Invesco 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. 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 Subsidiary. 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses |
Invesco V.I. Global Strategic Income Fund
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 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 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. | 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. | 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 |
Invesco V.I. Global Strategic Income Fund
| | short-term money market instruments or affiliated, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “affiliated money market funds”) and is shown as such on the Consolidated 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 Consolidated Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Consolidated Statement of Assets and Liabilities. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| M. | 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 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.
| N. | 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.
| O. | 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. |
| P. | 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.
Invesco V.I. Global Strategic Income Fund
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.
| Q. | 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 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.
| R. | 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
Invesco V.I. Global Strategic Income Fund
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 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, 2021 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.
| S. | 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.
| T. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| 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. |
| W. | 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’ claims. |
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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted.
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| X. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply |
Invesco V.I. Global Strategic Income Fund
chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally.
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 | % |
* 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, 2021, the effective advisory fee rate incurred by the Fund was 0.67%.
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). Invesco has also entered into a sub-advisory agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Fund.
Effective June 1, 2021, the Adviser has contractually agreed, through at least June 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 1.50% and Series II shares to 1.75% of the Fund’s average daily net assets (the “expense limits”). Prior to June 1, 2021, the Adviser had 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 0.84% and Series II shares to 1.09% 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. Acquired Fund Fees and Expenses are not operating expenses of a Fund directly, but are fees and expenses, including management fees, of the investment companies in which a 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 June 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, 2023, 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, 2021, the Adviser waived advisory fees of $387,289.
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, 2021, Invesco was paid $136,921 for accounting and fund administrative services and was reimbursed $1,440,775 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, 2021, 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, 2021, 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
Invesco V.I. Global Strategic Income 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, 2021. 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. Dollar Denominated Bonds & Notes | | $ | – | | | $ | 359,375,745 | | | | $ – | | | $ | 359,375,745 | |
| |
Non-U.S. Dollar Denominated Bonds & Notes | | | – | | | | 298,888,221 | | | | – | | | | 298,888,221 | |
| |
Asset-Backed Securities | | | – | | | | 78,247,546 | | | | – | | | | 78,247,546 | |
| |
Exchange-Traded Funds | | | 29,610,464 | | | | – | | | | – | | | | 29,610,464 | |
| |
Variable Rate Senior Loan Interests | | | – | | | | 7,303,115 | | | | – | | | | 7,303,115 | |
| |
Agency Credit Risk Transfer Notes | | | – | | | | 6,779,796 | | | | – | | | | 6,779,796 | |
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities | | | – | | | | 4,100,044 | | | | – | | | | 4,100,044 | |
| |
Preferred Stocks | | | – | | | | 1,731,553 | | | | – | | | | 1,731,553 | |
| |
Common Stocks & Other Equity Interests | | | 83,292 | | | | 131,906 | | | | 480,922 | | | | 696,120 | |
| |
Money Market Funds | | | 104,371,429 | | | | 43,922,102 | | | | – | | | | 148,293,531 | |
| |
Options Purchased | | | – | | | | 3,099,385 | | | | – | | | | 3,099,385 | |
| |
Total Investments in Securities | | | 134,065,185 | | | | 803,579,413 | | | | 480,922 | | | | 938,125,520 | |
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 1,997,869 | | | | – | | | | – | | | | 1,997,869 | |
| |
Forward Foreign Currency Contracts | | | – | | | | 5,797,650 | | | | – | | | | 5,797,650 | |
| |
Swap Agreements | | | – | | | | 7,122,907 | | | | – | | | | 7,122,907 | |
| |
| | | 1,997,869 | | | 12,920,557 | | | – | | | 14,918,426 | |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | (863,047 | ) | | | – | | | | – | | | | (863,047 | ) |
| |
Forward Foreign Currency Contracts | | | – | | | | (7,066,974 | ) | | | – | | | | (7,066,974 | ) |
| |
Options Written | | | – | | | | (6,511,891 | ) | | | – | | | | (6,511,891 | ) |
| |
Swap Agreements | | | – | | | | (7,851,862 | ) | | | – | | | | (7,851,862 | ) |
| |
| | | (863,047) | | | (21,430,727) | | | – | | | (22,293,774) | |
| |
Total Other Investments | | | 1,134,822 | | | | (8,510,170 | ) | | | – | | | | (7,375,348 | ) |
| |
Total Investments | | $ | 135,200,007 | | | $ | 795,069,243 | | | | $480,922 | | | $ | 930,750,172 | |
| |
| * | 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, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
12/31/20 | | | 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
12/31/21 |
|
Non-U.S. Dollar Denominated Bonds & Notes | | $ | 42,878 | | | $ | - | | | $ | - | | | $ | (42 | ) | | $ | (528,656 | ) | | $ | 485,820 | | | $ | - | | | $ | - | | | $ - |
|
Variable Rate Senior Loan Interests | | | 11,193,807 | | | | - | | | | (11,758,572 | ) | | | 76,409 | | | | 702,519 | | | | (214,163 | ) | | | - | | | | - | | | - |
|
Common Stocks & Other Equity Interests | | | 19,988 | | | | 482,738 | | | | (52,955 | ) | | | - | | | | - | | | | 29,350 | | | | 20,485 | | | | (18,684 | ) | | 480,922 |
|
Total | | $ | 11,256,673 | | | $ | 482,738 | | | $ | (11,811,527 | ) | | $ | 76,367 | | | $ | 173,863 | | | $ | 301,007 | | | $ | 20,485 | | | $ | (18,684 | ) | | $480,922 |
|
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.
Invesco V.I. Global Strategic Income Fund
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, 2021:
| | | | | | | | | | | | | | | | |
| | | Value | |
| Derivative Assets | | Credit
Risk | | | Currency
Risk | | | Interest Rate Risk | | | Total | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | – | | | $ | – | | | $ | 1,997,869 | | | $ | 1,997,869 | |
| |
Unrealized appreciation on swap agreements – Centrally Cleared(a) | | | 54,589 | | | | – | | | | 6,480,180 | | | | 6,534,769 | |
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | | – | | | | 5,797,650 | | | | – | | | | 5,797,650 | |
| |
Unrealized appreciation on swap agreements – OTC | | | 548,404 | | | | – | | | | 39,734 | | | | 588,138 | |
| |
Options purchased, at value – OTC(b) | | | – | | | | 3,099,385 | | | | – | | | | 3,099,385 | |
| |
Total Derivative Assets | | | 602,993 | | | | 8,897,035 | | | | 8,517,783 | | | | 18,017,811 | |
| |
Derivatives not subject to master netting agreements | | | (54,589 | ) | | | – | | | | (8,478,049 | ) | | | (8,532,638 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | 548,404 | | | $ | 8,897,035 | | | $ | 39,734 | | | $ | 9,485,173 | |
| |
| |
| | | Value | |
| Derivative Liabilities | | Credit
Risk | | | Currency
Risk | | | Interest Rate Risk | | | Total | |
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | – | | | $ | – | | | $ | (863,047 | ) | | $ | (863,047 | ) |
| |
Unrealized depreciation on swap agreements – Centrally Cleared(a) | | | (177,019 | ) | | | – | | | | (6,413,432 | ) | | | (6,590,451 | ) |
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | | – | | | | (7,066,974 | ) | | | – | | | | (7,066,974 | ) |
| |
Unrealized depreciation on swap agreements – OTC | | | (20,201 | ) | | | – | | | | (1,241,210 | ) | | | (1,261,411 | ) |
| |
Options written, at value – OTC | | | (259,805 | ) | | | (4,169,718 | ) | | | (2,082,368 | ) | | | (6,511,891 | ) |
| |
Total Derivative Liabilities | | | (457,025 | ) | | | (11,236,692 | ) | | | (10,600,057 | ) | | | (22,293,774 | ) |
| |
Derivatives not subject to master netting agreements | | | 177,019 | | | | – | | | | 7,276,479 | | | | 7,453,498 | |
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (280,006 | ) | | $ | (11,236,692 | ) | | $ | (3,323,578 | ) | | $ | (14,840,276 | ) |
| |
| (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, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 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. | | $ | 1,022,521 | | | $ | 839,224 | | | $ | 184,685 | | | $ | 2,046,430 | | | $ | (937,076 | ) | | $ | (124,633 | ) | | $ | (300,514 | ) | | $ | (1,362,223 | ) | | $ | 684,207 | | | $ | – | | | $ | (440,000 | ) | | $ | 244,207 | |
| |
Citibank, N.A. | | | 15,327 | | | | – | | | | 19,850 | | | | 35,177 | | | | (567,919 | ) | | | – | | | | (20,673 | ) | | | (588,592 | ) | | | (553,415 | ) | | | – | | | | 310,000 | | | | (243,415 | ) |
| |
Goldman Sachs International | | | 535,192 | | | | 1,076,542 | | | | 925,087 | | | | 2,536,821 | | | | (1,264,577 | ) | | | (2,567,337 | ) | | | (1,056,445 | ) | | | (4,888,359 | ) | | | (2,351,538 | ) | | | – | | | | – | | | | (2,351,538 | ) |
| |
J.P. Morgan Chase Bank, N.A. | | | 1,842,120 | | | | 322,351 | | | | 379,458 | | | | 2,543,929 | | | | (1,544,147 | ) | | | (2,648,802 | ) | | | – | | | | (4,192,949 | ) | | | (1,649,020 | ) | | | – | | | | 512,000 | | | | (1,137,020 | ) |
| |
Merrill Lynch International | | | – | | | | 172,780 | | | | – | | | | 172,780 | | | | – | | | | (20,800 | ) | | | – | | | | (20,800 | ) | | | 151,980 | | | | – | | | | – | | | | 151,980 | |
| |
Morgan Stanley and Co. International PLC | | | 2,337,107 | | | | 23,611 | | | | – | | | | 2,360,718 | | | | (2,299,797 | ) | | | (1,110,318 | ) | | | – | | | | (3,410,115 | ) | | | (1,049,397 | ) | | | – | | | | 1,049,397 | | | | – | |
| |
Natwest Markets PLC | | | – | | | | – | | | | – | | | | – | | | | (1,038 | ) | | | – | | | | – | | | | (1,038 | ) | | | (1,038 | ) | | | – | | | | – | | | | (1,038 | ) |
| |
Royal Bank of Canada | | | 9,977 | | | | – | | | | – | | | | 9,977 | | | | (452,420 | ) | | | – | | | | – | | | | (452,420 | ) | | | (442,443 | ) | | | – | | | | – | | | | (442,443 | ) |
| |
Standard Chartered Bank PLC | | | 35,406 | | | | 663,413 | | | | – | | | | 698,819 | | | | – | | | | (40,001 | ) | | | – | | | | (40,001 | ) | | | 658,818 | | | | – | | | | (350,000 | ) | | | 308,818 | |
| |
UBS AG | | | – | | | | 1,464 | | | | – | | | | 1,464 | | | | – | | | | – | | | | – | | | | – | | | | 1,464 | | | | – | | | | – | | | | 1,464 | |
| |
Total | | $ | 5,797,650 | | | $ | 3,099,385 | | | $ | 1,509,080 | | | $ | 10,406,115 | | | $ | (7,066,974 | ) | | $ | (6,511,891 | ) | | $ | (1,377,632 | ) | | $ | (14,956,497 | ) | | $ | (4,550,382 | ) | | $ | – | | | $ | 1,081,397 | | | $ | (3,468,985 | ) |
| |
Invesco V.I. Global Strategic Income Fund
Effect of Derivative Investments for the year ended December 31, 2021
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 | | $ | - | | | $ | 7,005,608 | | | $ | - | | | $ | - | | | $ | 7,005,608 | |
Futures contracts | | | - | | | | - | | | | - | | | | 12,781,560 | | | | 12,781,560 | |
Options purchased(a) | | | - | | | | (13,388,432 | ) | | | (609,857 | ) | | | 2,295,597 | | | | (11,702,692 | ) |
Options written | | | - | | | | 11,152,285 | | | | 305,463 | | | | 15,316,811 | | | | 26,774,559 | |
Swap agreements | | | (914,718 | ) | | | - | | | | 28,458 | | | | (46,218,804 | ) | | | (47,105,064 | ) |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | | | | | | | | | |
Forward foreign currency contracts | | | - | | | | 421,972 | | | | - | | | | - | | | | 421,972 | |
Futures contracts | | | - | | | | - | | | | - | | | | 3,111,889 | | | | 3,111,889 | |
Options purchased(a) | | | (11,425 | ) | | | (1,102,291 | ) | | | - | | | | 338,886 | | | | (774,830 | ) |
Options written | | | 219,861 | | | | (4,094,868 | ) | | | - | | | | 785,315 | | | | (3,089,692 | ) |
Swap agreements | | | 525,853 | | | | - | | | | - | | | | (5,302,915 | ) | | | (4,777,062 | ) |
Total | | $ | (180,429 | ) | | | $ (5,726) | | | | $(275,936) | | | $ | (16,891,661 | ) | | $ | (17,353,752 | ) |
| (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 | | $1,551,032,461 | | $269,696,994 | | $600,717,810 | | $518,192,893 | | $901,504,021 | | $520,244,524 | | $3,301,505,087 |
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–Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Fiscal Years Ended December 31, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | 43,106,444 | | | $ | 55,826,955 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Net unrealized appreciation (depreciation) - investments | | | $ (24,246,560) | |
| |
Net unrealized appreciation - foreign currencies | | | 662,308 | |
| |
Temporary book/tax differences | | | (179,370 | ) |
| |
Capital loss carryforward | | | (213,072,064 | ) |
| |
Shares of beneficial interest | | | 1,186,158,661 | |
| |
Total net assets | | $ | 949,322,975 | |
| |
Invesco V.I. Global Strategic Income Fund
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, amortization and accretion on debt securities, convertible securities, straddles, partnerships, 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, 2021, as follows:
Capital Loss Carryforward*
| | | | | | | | |
| Expiration | | | | Short-Term | | Long-Term | | Total |
Not subject to expiration | | | | $93,721,923 | | $119,350,141 | | $213,072,064 |
| * | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $1,257,851,720 and $1,244,169,785, 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 | | $ | 35,215,626 | |
| |
Aggregate unrealized (depreciation) of investments | | | (59,462,186 | ) |
| |
Net unrealized appreciation (depreciation) of investments | | $ | (24,246,560 | ) |
| |
Cost of investments for tax purposes is $959,371,317.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, net operating losses and partnerships, on December 31, 2021, undistributed net investment income was decreased by $30,142,961, undistributed net realized gain (loss) was increased by $28,775,136 and shares of beneficial interest was increased by $1,367,825. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| |
| | | Year ended
December 31, 2021(a) | | | Year ended
December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 7,410,911 | | | $ | 34,410,387 | | | | 7,198,242 | | | $ | 34,167,624 | |
| |
Series II | | | 6,876,383 | | | | 33,223,398 | | | | 2,731,449 | | | | 13,393,044 | |
| |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 3,640,046 | | | | 16,089,003 | | | | 4,591,807 | | | | 21,122,311 | |
| |
Series II | | | 5,899,005 | | | | 27,017,441 | | | | 7,290,891 | | | | 34,704,644 | |
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (10,741,994 | ) | | | (50,196,286 | ) | | | (16,117,197 | ) | | | (75,646,927 | ) |
| |
Series II | | | (12,265,619 | ) | | | (59,164,418 | ) | | | (21,278,732 | ) | | | (102,712,933 | ) |
| |
Net increase (decrease) in share activity | | | 818,732 | | | $ | 1,379,525 | | | | (15,583,540 | ) | | $ | (74,972,237 | ) |
| |
| (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. |
Invesco 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 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 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, 2021, the related consolidated statement of operations for the year ended December 31, 2021, the consolidated statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the consolidated financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The consolidated financial statements of Oppenheimer Global Strategic Income Fund/VA and its subsidiary (subsequently renamed Invesco V.I. Global Strategic Income Fund) 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 19, 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $994.60 | | $4.12 | | $1,021.07 | | $4.18 | | 0.82% |
Series II | | 1,000.00 | | 994.20 | | 5.38 | | 1,019.81 | | 5.45 | | 1.07 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
Invesco 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 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, 2021:
| | | | | | |
| | | | | | |
| | Federal and State Income Tax | | |
| | Qualified Dividend Income* | | 0.00% |
| | Corporate Dividends Received Deduction* | | 1.44% |
| | U.S. Treasury Obligations* | | 0.00% |
| | Qualified Business Income* | | 0.00% |
| | Business Interest Income* | | 71.70% |
| |
| | * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Invesco 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) | | 186 | | 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 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market)
Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler -1962
Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956
Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
Invesco 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) |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern -1957
Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli -1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort -1954
Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Global Strategic Income Fund
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Government Money Market Fund
The Fund provides a complete list of its portfolio 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/corporate/about-us/ esg. 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. | | 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, 2021. As of December 31, 2021, the Fund’s net assets totaled $767 million. As of the same date, the Fund’s weighted average maturity was 48 days and the Fund’s weighted average life was 112 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
Similar to 2020, 2021 was dominated by the COVID-19 pandemic. Vaccination levels rose in the US, initially causing infection rates to decrease and enabling the economy to reopen. However, the US faced significant headwinds in the form of the Delta variant mid-year, and eventually, the highly infectious Omicron variant towards the end of 2021.
Much of the second half of 2021 was also impacted by the debt ceiling agreement, which was unresolved until the end of the fiscal year. In the fall, a temporary agreement was reached by Congress, where a short-term debt ceiling increase was passed. Subsequently, a longer-term agreement was reached in December by Congress. The debt ceiling had a direct impact on supply during the third quarter, as net US Treasury issuance declined and the US Treasury General Account (TGA) balance decreased by $637 billion.1
The US Federal Reserve (the Fed) maintained monetary policy accommodative throughout the fiscal year and showed a commitment to low rates by keeping the federal funds target range at 0.00% to 0.25% throughout the year.2 For nearly the entirety of 2021, the Fed also maintained its asset purchases (quantitative easing) at a level of at least $120 billion per month and remained on hold until there had been evidence of progress made towards its dual mandate.2 In December, the Federal Open Market Committee (FOMC) announced it had begun its tapering of asset purchases, at a pace that was faster than had been previously anticipated.
Money market curves steepened throughout 2021, with a larger move during the fourth quarter on expectations of a more aggressive Fed in 2022. Year over year, the yield on the three-month Treasury bill decreased from 0.07% to 0.04% while the yield on the three-month and 12-month bills increased from 0.09% to 0.19% and 0.11% to 0.38%, respectively.1 Short-term Treasury notes also increased dramatically, along with longer-term bond yields. The two-year Treasury note increased from 0.12% to 0.73%
and the 10-year from 0.92% to 1.51% over the year.1
Money market fund industry assets increased overall over the year, with industry assets adding $410 billion over the year to end 2021 at $4.705 trillion.3 Government money market funds experienced the largest increase in assets, while prime and tax-exempt money market funds saw a decline in overall assets.
At the close of the year, it is Invesco Global Liquidity’s view that the FOMC monetary policy directive could be moved off the zero bound in 2022, with the potential for at least two or three interest rate hikes.
For over 40 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: Bloomberg LP
2 Source: US Federal Reserve
| 3 | Source: Bloomberg LP, Investment Company Institute (ICI) |
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/2021 | | | | |
| |
| 1-7 | | | 28.0% | |
| 8-30 | | | 5.5 | |
| 31-60 | | | 19.7 | |
| 61-90 | | | 9.9 | |
| 91-180 | | | 15.1 | |
| 181+ | | | 21.8 | |
*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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is 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, 2021
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount
(000) | | | Value | |
| |
U.S. Treasury Securities–58.65% | | | | | | | | | | | | | | | | |
U.S. Treasury Bills–32.31%(a) | | | | | | | | | | | | | | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 01/13/2022 | | | $ | 25,000 | | | $ | 24,999,583 | |
| |
U.S. Treasury Bills | | | 0.05 | % | | | 02/01/2022 | | | | 50,000 | | | | 49,997,783 | |
| |
U.S. Treasury Bills | | | 0.06 | % | | | 02/03/2022 | | | | 15,000 | | | | 14,999,244 | |
| |
U.S. Treasury Bills | | | 0.05 | % | | | 02/15/2022 | | | | 10,000 | | | | 9,999,375 | |
| |
U.S. Treasury Bills | | | 0.05 | % | | | 02/17/2022 | | | | 5,000 | | | | 4,999,674 | |
| |
U.S. Treasury Bills | | | 0.07 | % | | | 02/24/2022 | | | | 5,000 | | | | 4,999,475 | |
| |
U.S. Treasury Bills | | | 0.06 | % | | | 03/01/2022 | | | | 15,000 | | | | 14,998,717 | |
| |
U.S. Treasury Bills | | | 0.07 | % | | | 03/10/2022 | | | | 15,000 | | | | 14,998,017 | |
| |
U.S. Treasury Bills | | | 0.08 | % | | | 03/24/2022 | | | | 15,000 | | | | 14,997,437 | |
| |
U.S. Treasury Bills | | | 0.07 | % | | | 03/29/2022 | | | | 20,000 | | | | 19,996,617 | |
| |
U.S. Treasury Bills | | | 0.09 | % | | | 03/31/2022 | | | | 5,000 | | | | 4,998,949 | |
| |
U.S. Treasury Bills | | | 0.11 | % | | | 04/26/2022 | | | | 25,000 | | | | 24,991,119 | |
| |
U.S. Treasury Bills | | | 0.09 | % | | | 06/02/2022 | | | | 15,000 | | | | 14,994,300 | |
| |
U.S. Treasury Bills | | | 0.07 | % | | | 06/16/2022 | | | | 5,000 | | | | 4,998,386 | |
| |
U.S. Treasury Bills | | | 0.08 | % | | | 08/11/2022 | | | | 5,000 | | | | 4,997,533 | |
| |
U.S. Treasury Bills | | | 0.09 | % | | | 10/06/2022 | | | | 18,000 | | | | 17,987,258 | |
| |
| | | | | | | | | | | | | | | 247,953,467 | |
| |
| | | | |
U.S. Treasury Floating Rate Notes–9.78% | | | | | | | | | | | | | | | | |
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 | | | | 6,999,936 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.11%)(b) | | | 0.20 | % | | | 04/30/2022 | | | | 3,000 | | | | 3,000,802 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | | | 0.14 | % | | | 07/31/2022 | | | | 7,000 | | | | 7,000,562 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | | | 0.14 | % | | | 10/31/2022 | | | | 16,000 | | | | 15,999,857 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.05%)(b) | | | 0.13 | % | | | 01/31/2023 | | | | 6,000 | | | | 6,000,132 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | | | 0.12 | % | | | 04/30/2023 | | | | 10,000 | | | | 10,000,537 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | | | 0.11 | % | | | 07/31/2023 | | | | 16,000 | | | | 16,000,400 | |
| |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | | | 0.12 | % | | | 10/31/2023 | | | | 10,000 | | | | 9,999,722 | |
| |
| | | | | | | | | | | | | | | 75,001,948 | |
| |
| | | | |
U.S. Treasury Notes–16.56% | | | | | | | | | | | | | | | | |
U.S. Treasury Notes | | | 2.50 | % | | | 01/15/2022 | | | | 15,000 | | | | 15,013,912 | |
| |
U.S. Treasury Notes | | | 1.38 | % | | | 01/31/2022 | | | | 15,000 | | | | 15,015,958 | |
| |
U.S. Treasury Notes | | | 1.50 | % | | | 01/31/2022 | | | | 17,000 | | | | 17,019,668 | |
| |
U.S. Treasury Notes | | | 1.88 | % | | | 03/31/2022 | | | | 10,000 | | | | 10,043,767 | |
| |
U.S. Treasury Notes | | | 1.88 | % | | | 04/30/2022 | | | | 29,500 | | | | 29,673,354 | |
| |
U.S. Treasury Notes | | | 1.75 | % | | | 05/15/2022 | | | | 15,000 | | | | 15,090,636 | |
| |
U.S. Treasury Notes | | | 2.13 | % | | | 05/15/2022 | | | | 5,000 | | | | 5,037,756 | |
| |
U.S. Treasury Notes | | | 2.13 | % | | | 06/30/2022 | | | | 5,000 | | | | 5,049,820 | |
| |
U.S. Treasury Notes | | | 2.00 | % | | | 07/31/2022 | | | | 5,000 | | | | 5,055,195 | |
| |
U.S. Treasury Notes | | | 1.50 | % | | | 09/15/2022 | | | | 10,000 | | | | 10,098,609 | |
| |
| | | | | | | | | | | | | | | 127,098,675 | |
| |
Total U.S. Treasury Securities (Cost $450,054,090) | | | | | | | | | | | | | | | 450,054,090 | |
| |
| | | | |
U.S. Government Sponsored Agency Securities–12.34% | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank (FFCB)–6.34% | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank | | | 0.25 | % | | | 04/06/2022 | | | | 1,000 | | | | 1,000,468 | |
| |
Federal Farm Credit Bank | | | 0.25 | % | | | 05/06/2022 | | | | 6,155 | | | | 6,158,169 | |
| |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | 0.14 | % | | | 06/17/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.20%)(b) | | | 0.25 | % | | | 06/23/2022 | | | | 2,500 | | | | 2,501,501 | |
| |
Federal Farm Credit Bank (SOFR + 0.15%)(b) | | | 0.20 | % | | | 07/28/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.07%)(b) | | | 0.12 | % | | | 08/11/2022 | | | | 4,500 | | | | 4,499,999 | |
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 08/26/2022 | | | | 2,500 | | | | 2,499,918 | |
| |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 10/12/2022 | | | | 5,000 | | | | 4,999,882 | |
| |
Federal Farm Credit Bank (SOFR + 0.01%)(b) | | | 0.06 | % | | | 11/16/2022 | | | | 5,000 | | | | 4,999,912 | |
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 02/09/2023 | | | | 6,000 | | | | 6,000,000 | |
| |
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 Farm Credit Bank (FFCB)–(continued) | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 07/07/2023 | | | $ | 3,000 | | | $ | 3,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 09/27/2023 | | | | 1,000 | | | | 1,000,000 | |
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 11/07/2023 | | | | 2,000 | | | | 2,000,000 | |
| |
| | | | | | | | | | | | | | | 48,659,849 | |
| |
| | | | |
Federal Home Loan Bank (FHLB)–2.09% | | | | | | | | | | | | | | | | |
Federal Home Loan Bank (SOFR + 0.07%)(b) | | | 0.12 | % | | | 04/28/2022 | | | | 2,000 | | | | 2,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.13%)(b) | | | 0.18 | % | | | 08/05/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
Federal Home Loan Bank (SOFR + 0.09%)(b) | | | 0.14 | % | | | 08/19/2022 | | | | 7,000 | | | | 7,000,318 | |
| |
Federal Home Loan Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 12/08/2022 | | | | 2,000 | | | | 2,000,000 | |
| |
| | | | | | | | | | | | | | | 16,000,318 | |
| |
| | | | |
Federal Home Loan Mortgage Corp. (FHLMC)–1.39% | | | | | | | | | | | | | | | | |
Federal Home Loan Mortgage Corp. | | | 2.38 | % | | | 01/13/2022 | | | | 1,700 | | | | 1,701,283 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.07%)(b) | | | 0.12 | % | | | 08/12/2022 | | | | 4,000 | | | | 4,000,000 | |
| |
Federal Home Loan Mortgage Corp. (SOFR + 0.09%)(b) | | | 0.14 | % | | | 09/16/2022 | | | | 5,000 | | | | 5,000,000 | |
| |
| | | | | | | | | | | | | | | 10,701,283 | |
| |
| | | | |
Federal National Mortgage Association (FNMA)–0.39% | | | | | | | | | | | | | | | | |
Federal National Mortgage Association (SOFR + 0.30%)(b) | | | 0.35 | % | | | 01/07/2022 | | | | 3,000 | | | | 3,000,000 | |
| |
| | | | |
U.S. International Development Finance Corp. (DFC)–2.13% | | | | | | | | | | | | | | | | |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.09 | % | | | 06/15/2025 | | | | 2,100 | | | | 2,100,000 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.09 | % | | | 07/15/2025 | | | | 194 | | | | 194,167 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.09 | % | | | 02/15/2028 | | | | 6,944 | | | | 6,944,444 | |
| |
U.S. International Development Finance Corp. VRD Bonds (3 mo. U.S. Treasury Bill Rate)(c) | | | 0.09 | % | | | 07/07/2040 | | | | 7,071 | | | | 7,070,685 | |
| |
| | | | | | | | | | | | | | | 16,309,296 | |
| |
Total U.S. Government Sponsored Agency Securities (Cost $94,670,746) | | | | 94,670,746 | |
| |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-70.99%
(Cost $544,724,836) | | | | 544,724,836 | |
| |
| | | | |
| | | | | | | | | Repurchase
Amount | | | | |
Repurchase Agreements–29.59%(d) | | | | | | | | | | | | | | | | |
BNP Paribas Securities Corp., joint term agreement dated 12/28/2021, aggregate maturing value of $500,004,861 (collateralized by domestic agency mortgage-backed securities and U.S. Treasury obligations valued at $510,000,000; 0.00% - 7.00%; 08/31/2022 - 01/01/2052)(e) | | | 0.05 | % | | | 01/04/2022 | | | | 10,000,097 | | | | 10,000,000 | |
| |
Credit Agricole Corporate & Investment Bank, joint open agreement dated 12/01/2021 (collateralized by U.S. Treasury obligations valued at $2,032,860,433; 0.00% - 3.00%; 01/06/2022 - 08/15/2031)(f) | | | 0.05 | % | | | 01/03/2022 | | | | 20,000,911 | | | | 20,000,000 | |
| |
ING Financial Markets, LLC, joint term agreement dated 12/03/2021, aggregate maturing value of $300,047,250 (collateralized by domestic agency mortgage-backed securities valued at $306,000,001; 1.50% - 7.00%; 09/01/2029 - 02/15/2061) | | | 0.07 | % | | | 02/22/2022 | | | | 10,001,575 | | | | 10,000,000 | |
| |
ING Financial Markets, LLC, joint term agreement dated 12/28/2021, aggregate maturing value of $350,070,000 (collateralized by domestic agency mortgage-backed securities valued at $357,000,001; 1.50% - 7.50%; 11/01/2028 - 05/01/2058) | | | 0.08 | % | | | 03/28/2022 | | | | 10,002,000 | | | | 10,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 03/27/2020 (collateralized by U.S. Treasury obligations valued at $867,000,270; 0.00% - 2.50%; 01/13/2022 - 10/31/2026)(f) | | | 0.05 | % | | | 01/03/2022 | | | | 5,000,228 | | | | 5,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 07/01/2021 (collateralized by domestic agency mortgage-backed securities and a U.S. Treasury obligation valued at $255,000,072; 0.38% - 6.50%; 03/31/2022 - 11/15/2062)(f) | | | 0.06 | % | | | 01/03/2022 | | | | 5,000,274 | | | | 5,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 07/01/2021 (collateralized by domestic agency mortgage-backed securities and U.S. Treasury obligations valued at $295,800,028; 0.00% - 8.00%; 04/20/2022 - 01/01/2052)(f) | | | 0.07 | % | | | 01/03/2022 | | | | 5,000,319 | | | | 5,000,000 | |
| |
J.P. Morgan Securities LLC, joint open agreement dated 10/15/2019 (collateralized by domestic agency mortgage-backed securities and a U.S. Treasury obligation valued at $408,000,094; 0.00% - 6.50%; 06/25/2025 - 08/16/2063)(f) | | | 0.07 | % | | | 01/03/2022 | | | | 10,000,639 | | | | 10,000,000 | |
| |
Metropolitan Life Insurance Co., joint term agreement dated 12/29/2021, aggregate maturing value of $350,013,258 (collateralized by U.S. Treasury obligations valued at $358,625,938; 0.00%; 08/15/2027 - 11/15/2045)(e) | | | 0.07 | % | | | 01/05/2022 | | | | 15,001,554 | | | | 15,001,350 | |
| |
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 | |
| |
Mitsubishi UFJ Trust & Banking Corp., joint term agreement dated 12/29/2021, aggregate maturing value of $786,010,698 (collateralized by U.S. Treasury obligations valued at $802,839,144; 1.13%; 02/28/2025 - 02/28/2027)(e) | | | 0.07 | % | | | 01/05/2022 | | | $ | 29,587,903 | | | $ | 29,587,500 | |
| |
RBC Capital Markets LLC, joint term agreement dated 12/31/2021, aggregate maturing value of $750,005,625 (collateralized by domestic agency mortgage-backed securities, U.S.government sponsored agency obligations and U.S. Treasury obligations valued at $765,000,159; 0.00% - 9.00%; 02/01/2022 - 08/20/2065)(e)(g) | | | 0.09 | % | | | 01/03/2022 | | | | 15,000,113 | | | | 15,000,000 | |
| |
RBC Dominion Securities Inc., joint agreement dated 12/31/2021, aggregate maturing value of $1,000,004,167 (collateralized by domestic agency mortgage-backed securities and U.S. Treasury obligations valued at $1,020,000,027; 0.00% - 6.50%; 07/15/2022 - 12/01/2051) | | | 0.05 | % | | | 01/03/2022 | | | | 35,000,146 | | | | 35,000,000 | |
| |
RBC Dominion Securities Inc., joint term agreement dated 12/03/2021, aggregate maturing value of $1,500,080,208 (collateralized by U.S. Treasury obligations valued at $1,530,000,036; 0.13% - 7.63%; 01/15/2022 - 02/15/2050)(e) | | | 0.06 | % | | | 01/07/2022 | | | | 25,001,337 | | | | 25,000,000 | |
| |
Sumitomo Mitsui Banking Corp., joint agreement dated 12/31/2021, aggregate maturing value of $2,500,012,500 (collateralized by domestic agency mortgage-backed securities valued at $2,550,000,000; 2.00% - 5.00%; 12/15/2039 - 10/20/2051) | | | 0.06 | % | | | 01/03/2022 | | | | 32,431,199 | | | | 32,431,037 | |
| |
Total Repurchase Agreements (Cost $227,019,887) | | | | | | | | | | | | | | | 227,019,887 | |
| |
TOTAL INVESTMENTS IN SECURITIES(h)-100.58% (Cost $771,744,723) | | | | | | | | | | | | | | | 771,744,723 | |
| |
OTHER ASSETS LESS LIABILITIES-(0.58)% | | | | | | | | | | | | | | | (4,426,213 | ) |
| |
NET ASSETS-100.00% | | | | | | | | | | | | | | $ | 767,318,510 | |
| |
Investment Abbreviations:
SOFR -Secured Overnight Financing Rate
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, 2021. |
| (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, 2021. |
| (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 periodically. The Maturity Date represents the next reset date, and the Repurchase Amount is calculated based on the next reset date. |
| (g) | Interest rate is redetermined periodically. The Maturity Date represents the next reset date, and the Repurchase Amount is calculated based on the next reset date. |
| (h) | 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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | | | $544,724,836 | |
| |
Repurchase agreements, at value and cost | | | 227,019,887 | |
| |
Cash | | | 151 | |
| |
Receivable for: Fund shares sold | | | 10,275,412 | |
| |
Interest | | | 699,325 | |
| |
Fund expenses absorbed | | | 118,193 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 39,085 | |
| |
Total assets | | | 782,876,889 | |
| |
| |
Liabilities: Payable for: Investments purchased | | | 14,998,717 | |
| |
Fund shares reacquired | | | 16,655 | |
| |
Dividends | | | 3,480 | |
| |
Accrued fees to affiliates | | | 269,180 | |
| |
Accrued trustees’ and officers’ fees and benefits | | | 1,005 | |
| |
Accrued operating expenses | | | 219,375 | |
| |
Trustee deferred compensation and retirement plans | | | 49,967 | |
| |
Total liabilities | | | 15,558,379 | |
| |
Net assets applicable to shares outstanding | | | $767,318,510 | |
| |
| |
Net assets consist of: Shares of beneficial interest | | | $767,317,035 | |
| |
Distributable earnings | | | 1,475 | |
| |
| | | $767,318,510 | |
| |
| |
Net Assets: Series I | | | $688,779,398 | |
| |
Series II | | | $ 78,539,112 | |
| |
| |
Shares outstanding, no par value,unlimited number of shares authorized: Series I | | | 688,737,178 | |
| |
Series II | | | 78,533,995 | |
| |
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, 2021
| | | | |
Investment income: | | | | |
Interest | | | $ 622,618 | |
| |
Expenses: | | | | |
| |
Advisory fees | | | 1,173,415 | |
| |
Administrative services fees | | | 1,122,110 | |
| |
Custodian fees | | | 35,583 | |
| |
Distribution fees - Series II | | | 212,180 | |
| |
Transfer agent fees | | | 88,934 | |
| |
Trustees’ and officers’ fees and benefits | | | 39,996 | |
| |
Reports to shareholders | | | 50,165 | |
| |
Professional services fees | | | 144,434 | |
| |
Other | | | 28,854 | |
| |
Total expenses | | | 2,895,671 | |
| |
Less: Fees waived and expenses reimbursed | | | (2,327,847 | ) |
| |
Net expenses | | | 567,824 | |
| |
Net investment income | | | 54,794 | |
| |
Net increase in net assets resulting from operations | | | $ 54,794 | |
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 54,794 | | | $ | 2,162,974 | |
| |
Net realized gain | | | - | | | | 40,138 | |
| |
Net increase in net assets resulting from operations | | | 54,794 | | | | 2,203,112 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (48,851 | ) | | | (2,008,417 | ) |
| |
Series II | | | (5,943 | ) | | | (154,557 | ) |
| |
Total distributions from distributable earnings | | | (54,794 | ) | | | (2,162,974 | ) |
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (22,868,753 | ) | | | 112,942,473 | |
| |
Series II | | | (12,306,552 | ) | | | 18,863,611 | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (35,175,305 | ) | | | 131,806,084 | |
| |
Net increase (decrease) in net assets | | | (35,175,305 | ) | | | 131,846,222 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 802,493,815 | | | | 670,647,593 | |
| |
End of year | | | $767,318,510 | | | | $802,493,815 | |
| |
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 12/31/21 | | | | $1.00 | | | | | $0.00 | | | | | $ - | | | | | $0.00 | | | | | $(0.00) | | | | | $1.00 | | | | | 0.01 | % | | | | $688,779 | | | | | 0.07 | % | | | | 0.34 | % | | | | 0.01 | % |
Year ended 12/31/20 | | | | 1.00 | | | | | 0.00 | | | | | 0.00 | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.29 | | | | | 711,648 | | | | | 0.29 | | | | | 0.35 | | | | | 0.26 | |
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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 1.00 | | | | | 0.00 | | | | | - | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.01 | | | | | 78,539 | | | | | 0.07 | | | | | 0.59 | | | | | 0.01 | |
Year ended 12/31/20 | | | | 1.00 | | | | | 0.00 | | | | | 0.00 | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.21 | | | | | 90,846 | | | | | 0.36 | | | | | 0.60 | | | | | 0.19 | |
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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of the Fund that holds securities of that entity will be adversely impacted. |
| K. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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, 2022, 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, 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.
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, 2021, Invesco voluntarily waived advisory fees of $1,173,415, reimbursed fund level expenses of $942,252 and waived class level expenses of $212,180 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, 2021, Invesco was paid $344,202 for accounting and fund administrative services and was reimbursed $777,908 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, 2021, 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. 12b-1 fees before fee waivers are shown as Distribution fees in the Statement of Operations. For the year ended December 31, 2021, 12b-1 fees incurred for Series II shares were $0, after voluntary waivers of $212,180.
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 Money Market 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, 2021, 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 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, 2021 and December 31, 2020:
| | | | | | |
| | | 2021 | | 2020 | |
Ordinary income* | | $54,794 | | $ | 2,162,974 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
| |
Undistributed ordinary income | | $ | 33,221 | |
| |
Temporary book/tax differences | | | (31,746 | ) |
| |
Shares of beneficial interest | | | 767,317,035 | |
| |
Total net assets | | $ | 767,318,510 | |
| |
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, 2021.
NOTE 7–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of equalization, on December 31, 2021, undistributed net investment income was decreased by $1,142, undistributed net realized gain was decreased by $31,858 and shares of beneficial interest was increased by $33,000. This reclassification had no effect on the net assets of the Fund.
NOTE 8–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | | | | Years ended December 31, | | | | |
| | | | |
| | | 2021(a) | | | | | | 2020 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,772,925,010 | | | $ | 1,772,925,010 | | | | 1,782,972,429 | | | $ | 1,782,972,429 | |
| |
Series II | | | 39,161,882 | | | | 39,161,882 | | | | 82,180,237 | | | | 82,180,237 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 47,696 | | | | 47,696 | | | | 1,952,855 | | | | 1,952,855 | |
| |
Series II | | | 5,943 | | | | 5,943 | | | | 154,297 | | | | 154,297 | |
| |
Invesco V.I. Government Money Market Fund
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | Years ended December 31, | |
| | | | |
| | | 2021(a) | | | 2020 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,795,841,459 | ) | | $ | (1,795,841,459 | ) | | | (1,671,982,811 | ) | | $ | (1,671,982,811 | ) |
| |
Series II | | | (51,474,377 | ) | | | (51,474,377 | ) | | | (63,470,923 | ) | | | (63,470,923 | ) |
| |
Net increase (decrease) in share activity | | | (35,175,305 | ) | | $ | (35,175,305) | | | | 131,806,084 | | | $ | 131,806,084 | |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 86% 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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) | | |
| Class | | Beginning
Account Value
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending Account Value
(12/31/21) | | Expenses Paid During
Period2 | | Annualized
Expense
Ratio |
Series I | | $1,000.00 | | $1,000.00 | | $0.35 | | $1,024.85 | | $0.36 | | 0.07% |
Series II | | 1,000.00 | | 1,000.00 | | 0.35 | | 1,024.85 | | 0.36 | | 0.07 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Qualified Dividend Income* | | | 0.00 | % |
Qualified Business Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 41.19 | % |
Business Interest Income* | | | 99.50 | % |
| | * | 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.
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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) | | 186 | | 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)
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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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
Invesco V.I. Government Money Market 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco V.I. Government Money Market 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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)
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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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company | | N/A | | N/A |
| | | | | Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco V.I. Government Money Market 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; Vice President, Invesco Advisers, Inc.; 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 V.I. Government Money Market Fund
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| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Government Securities Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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. | | VIGOV-AR-1 |
Management’s Discussion of Fund Performance
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Performance summary | | | | |
For the year ended December 31, 2021, Series I shares of Invesco V.I. Government Securities Fund (the Fund) underperformed the Bloomberg Intermediate U.S. Government Index, the Fund’s style-specific benchmark. | |
Your Fund’s long-term performance appears later in this report. | |
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Fund vs. Indexes | | | | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | -2.27 | % |
Series II Shares | | | -2.43 | |
Bloomberg U.S. Aggregate Bond Index▼ (Broad Market Index) | | | -1.54 | |
Bloomberg Intermediate U.S. Government Index▼ (Style-Specific Index) | | | -1.69 | |
Lipper VUF Intermediate U.S. Government Funds Classification Average∎ (Peer Group) | | | -1.71 | |
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Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
Similar to 2020, 2021 was dominated by the coronavirus (COVID-19) pandemic. Vaccination levels rose in the US, initially causing infection rates to decrease and enabling the economy to re-open. However, the US faced significant headwinds in the form of the Delta variant mid-year, and eventually, the highly infectious Omicron variant towards the end of 2021. Prior to year-end, the Omicron variant was spreading at a rampant pace, with uncertainty on the implications to return-to-work policies, schools, and thus overall consumption. Nevertheless, global demand was relatively resilient as yields were increasingly attractive on a nominal and relative basis.
The US Federal Reserve (the Fed) maintained accommodative monetary policy throughout the fiscal year and showed a commitment to low rates by keeping the federal funds target range at 0.00% to 0.25% throughout the year.1 For nearly the entirety of 2021, the Fed also maintained its asset purchases (quantitative easing) at a level of at least $120 billion per month and remained on hold until there had been evidence of progress made towards its dual mandate.1 In November, the Federal Open Market Committee began its tapering of asset purchases and later announced in December that it would taper at a pace that was faster than had been previously anticipated. This caused markets to anticipate the start of the Fed hiking cycle and the potential for more persistent inflation than previously thought.
The yield curve steepened significantly to begin the year but flattened sharply mid-year and then again to end the year as the market began to price in an active tightening policy. The two-year Treasury yield increased from 0.13% to 0.73%, the five-year yield increased from 0.36% to 1.26% and the 10-year yield increased from 0.93% to 1.52%.2 Yields moved notably higher amid ongoing economic growth, increased inflation risks, and the likelihood of the Fed raising short rates more aggressively in 2022. Despite significant movement during the year, the yield
curve as measured by the yield differential of the two-year Treasury yield versus the 10-year Treasury yield, ended the year at 79 basis points, only 1 basis point flatter than the previous fiscal year.2
Given this market backdrop, the Fund’s total return for the year was negative and underperformed its style-specific benchmark, the Bloomberg U.S. Government Intermediate Index. The Fund’s overweight to duration at the short end of the yield curve proved to be the Fund’s largest detractor as markets began to anticipate the start of the Fed hiking cycle which caused short-term interest rates to rise substantially during the fiscal year.
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 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, 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: Bloomberg LP
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. and its affiliates. 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. Government Securities Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
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Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (5/5/93) | | | 4.00 | % |
10 Years | | | 1.77 | |
5 Years | | | 2.47 | |
1 Year | | | -2.27 | |
| |
Series II Shares | | | | |
Inception (9/19/01) | | | 3.07 | % |
10 Years | | | 1.52 | |
5 Years | | | 2.21 | |
1 Year | | | -2.43 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is provided by Invesco.
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | The Bloomberg 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 | | | | 52.54 | % |
| |
U.S. Treasury Securities | | | | 29.54 | |
| |
Asset-Backed Securities | | | | 9.06 | |
| |
U.S. Government Sponsored Agency Securities | | | | 3.48 | |
| |
Certificates of Deposit | | | | 1.71 | |
| |
Security types each less than 1% portfolio | | | | 1.42 | |
| |
Money Market Funds | | | | 2.25 | |
Top Five Debt Issuers*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | U.S. Treasury | | | | 31.90 | % |
| | |
2. | | Federal National Mortgage Association | | | | 21.02 | |
| | |
3. | | Government National Mortgage Association | | | | 13.35 | |
| | |
4. | | Federal Home Loan Mortgage Corp. | | | | 10.24 | |
| | |
5. | | Freddie Mac Multifamily Structured Pass Through Ctfs. | | | | 5.30 | |
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, 2021.
|
| Invesco V.I. Government Securities Fund |
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Government Sponsored Agency Mortgage-Backed Securities–56.75% | |
Collateralized Mortgage Obligations–12.14% | |
Fannie Mae ACES, | | | | | | | | |
2.76% (1 mo. USD LIBOR + 0.59%), 09/25/2023(a) | | $ | 397,536 | | | $ | 398,545 | |
|
| |
3.27%, 02/25/2029 | | | 5,000,000 | | | | 5,490,958 | |
|
| |
Fannie Mae REMICs, | | | | | | | | |
3.00%, 10/25/2025 | | | 3 | | | | 3 | |
|
| |
2.50%, 03/25/2026 | | | 80 | | | | 80 | |
|
| |
7.00%, 09/18/2027 | | | 73,998 | | | | 79,781 | |
|
| |
1.50%, 01/25/2028 | | | 1,341,416 | | | | 1,346,177 | |
|
| |
6.50%, 03/25/2032 | | | 328,876 | | | | 377,180 | |
|
| |
5.75%, 10/25/2035 | | | 94,710 | | | | 104,503 | |
|
| |
0.40% (1 mo. USD LIBOR + 0.30%), 05/25/2036(a) | | | 1,145,605 | | | | 1,152,500 | |
|
| |
0.55% (1 mo. USD LIBOR + 0.45%), 03/25/2037(a) | | | 578,247 | | | | 585,182 | |
|
| |
6.61%, 06/25/2039(b) | | | 1,501,802 | | | | 1,745,854 | |
|
| |
4.00%, 07/25/2040 | | | 907,743 | | | | 966,643 | |
|
| |
0.65% (1 mo. USD LIBOR + 0.55%), 02/25/2041(a) | | | 520,412 | | | | 522,417 | |
|
| |
0.60% (1 mo. USD LIBOR + 0.50%), 05/25/2041(a) | | | 453,038 | | | | 455,054 | |
|
| |
0.62% (1 mo. USD LIBOR + 0.52%), 11/25/2041(a) | | | 709,412 | | | | 714,993 | |
|
| |
0.41% (1 mo. USD LIBOR + 0.32%), 08/25/2044(a) | | | 914,886 | | | | 914,487 | |
|
| |
0.57% (1 mo. USD LIBOR + 0.48%), 02/25/2056(a) | | | 1,817,188 | | | | 1,830,680 | |
|
| |
0.51% (1 mo. USD LIBOR + 0.42%), 12/25/2056(a) | | | 2,176,596 | | | | 2,177,377 | |
|
| |
Series 2021-11, Class MI, IO, 2.00%, 03/25/2051(c) | | | 2,785,758 | | | | 384,875 | |
|
| |
Freddie Mac Multifamily Structured Pass-Through Ctfs., | | | | | | | | |
Series KLU1, Class A2, 2.51%, 12/25/2025 | | | 5,000,000 | | | | 5,175,184 | |
|
| |
Series KG01, Class A7, 2.88%, 04/25/2026 | | | 5,000,000 | | | | 5,277,476 | |
|
| |
Series KS11, Class AFX1, 2.15%, 12/25/2028 | | | 5,000,000 | | | | 5,049,772 | |
|
| |
Series K093, Class A1, 2.76%, 12/25/2028 | | | 1,872,250 | | | | 1,978,544 | |
|
| |
Series K092, Class AM, 3.02%, 04/25/2029 | | | 5,000,000 | | | | 5,400,623 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Collateralized Mortgage Obligations–(continued) | |
Freddie Mac REMICs, | | | | | | | | |
3.00%, 04/15/2026 | | $ | 23 | | | $ | 23 | |
|
| |
0.61% (1 mo. USD LIBOR + 0.50%), 12/15/2035 to 03/15/2040(a) | | | 1,414,608 | | | | 1,428,020 | |
|
| |
0.41% (1 mo. USD LIBOR + 0.30%), 03/15/2036 to 09/15/2044(a) | | | 1,713,969 | | | | 1,715,954 | |
|
| |
0.44% (1 mo. USD LIBOR + 0.35%), 11/15/2036(a) | | | 1,352,603 | | | | 1,355,804 | |
|
| |
0.48% (1 mo. USD LIBOR + 0.37%), 03/15/2037(a) | | | 640,523 | | | | 646,431 | |
|
| |
0.97% (1 mo. USD LIBOR + 0.86%), 11/15/2039(a) | | | 342,401 | | | | 351,418 | |
|
| |
0.56% (1 mo. USD LIBOR + 0.45%), 03/15/2040 to 02/15/2042(a) | | | 2,884,821 | | | | 2,909,259 | |
|
| |
Series 331, Class AF, 0.51% (1 mo. USD LIBOR + 0.40%), 06/15/2037(a) | | | 911,641 | | | | 920,589 | |
|
| |
Freddie Mac STRIPS, 0.44% (1 mo. USD LIBOR + 0.35%), 10/15/2037(a) | | | 1,067,337 | | | | 1,076,760 | |
|
| |
| | | | | | | 52,533,146 | |
|
| |
|
Federal Home Loan Mortgage Corp. (FHLMC)–10.24% | |
6.50%, 05/01/2022 to 12/01/2035 | | | 1,007,913 | | | | 1,142,575 | |
|
| |
7.50%, 09/01/2022 to 06/01/2035 | | | 454,003 | | | | 508,535 | |
|
| |
8.50%, 11/17/2022 to 08/01/2031 | | | 82,875 | | | | 86,987 | |
|
| |
5.50%, 12/01/2022 | | | 163 | | | | 164 | |
|
| |
7.00%, 01/01/2023 to 11/01/2035 | | | 1,391,889 | | | | 1,571,785 | |
|
| |
8.00%, 04/01/2023 to 02/01/2035 | | | 161,300 | | | | 169,985 | |
|
| |
7.05%, 05/20/2027 | | | 33,203 | | | | 35,212 | |
|
| |
6.00%, 06/01/2029 to 07/01/2038 | | | 136,822 | | | | 151,906 | |
|
| |
6.03%, 10/20/2030 | | | 373,187 | | | | 417,439 | |
|
| |
3.00%, 02/01/2032 to 01/01/2050 | | | 11,750,227 | | | | 12,360,024 | |
|
| |
2.50%, 09/01/2034 to 12/01/2050 | | | 17,413,462 | | | | 18,084,862 | |
|
| |
5.00%, 01/01/2037 to 01/01/2040 | | | 493,268 | | | | 560,033 | |
|
| |
4.50%, 01/01/2040 to 08/01/2041 | | | 2,534,546 | | | | 2,792,776 | |
|
| |
ARM, 2.14% (1 yr. USD LIBOR + 1.88%), 09/01/2035(a) | | | 1,363,170 | | | | 1,437,803 | |
|
| |
2.14% (1 yr. USD LIBOR + 1.87%), 07/01/2036(a) | | | 1,206,172 | | | | 1,268,920 | |
|
| |
1.81% (1 yr. USD LIBOR + 1.56%), 10/01/2036(a) | | | 630,480 | | | | 660,918 | |
|
| |
2.16% (1 yr. USD LIBOR + 1.91%), 10/01/2036(a) | | | 63,514 | | | | 67,267 | |
|
| |
2.23% (1 yr. USD LIBOR + 1.97%), 11/01/2037(a) | | | 223,849 | | | | 237,541 | |
|
| |
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) | |
2.45% (1 yr. USD LIBOR + 2.08%), 01/01/2038(a) | | $ | 18,561 | | | $ | 19,456 | |
|
| |
2.12% (1 yr. USD LIBOR + 1.84%), 07/01/2038(a) | | | 344,354 | | | | 364,385 | |
|
| |
2.07% (1 yr. USD LIBOR + 1.78%), 06/01/2043(a) | | | 435,529 | | | | 457,747 | |
|
| |
2.88%, 01/01/2048(d) | | | 1,859,159 | | | | 1,928,416 | |
|
| |
| | | | | | | 44,324,736 | |
|
| |
|
Federal National Mortgage Association (FNMA)–21.02% | |
7.00%, 02/01/2022 to 04/01/2036 | | | 826,816 | | | | 890,227 | |
|
| |
6.00%, 03/01/2022 to 10/01/2038 | | | 633,188 | | | | 724,405 | |
|
| |
7.50%, 11/01/2022 to 08/01/2037 | | | 1,933,331 | | | | 2,172,937 | |
|
| |
6.50%, 06/01/2023 to 11/01/2037 | | | 933,484 | | | | 1,045,499 | |
|
| |
5.50%, 11/01/2023 to 05/01/2035 | | | 700,699 | | | | 793,793 | |
|
| |
6.75%, 07/01/2024 | | | 39,599 | | | | 43,701 | |
|
| |
8.50%, 09/01/2024 to 08/01/2037 | | | 287,152 | | | | 322,203 | |
|
| |
4.50%, 11/01/2024 to 08/01/2041 | | | 2,187,024 | | | | 2,425,960 | |
|
| |
6.95%, 10/01/2025 | | | 7,608 | | | | 7,708 | |
|
| |
0.50%, 11/07/2025 | | | 4,000,000 | | | | 3,904,186 | |
|
| |
8.00%, 09/01/2026 to 10/01/2037 | | | 1,109,167 | | | | 1,279,247 | |
|
| |
3.50%, 05/01/2027 to 08/01/2027 | | | 1,501,248 | | | | 1,587,171 | |
|
| |
0.75%, 10/08/2027 | | | 6,000,000 | | | | 5,791,639 | |
|
| |
3.59%, 10/01/2028 | | | 4,000,000 | | | | 4,470,386 | |
|
| |
3.79%, 11/01/2028 | | | 4,000,000 | | | | 4,515,583 | |
|
| |
3.00%, 12/01/2031 to 03/01/2050 | | | 6,987,790 | | | | 7,360,167 | |
|
| |
5.00%, 08/01/2033 to 12/01/2033 | | | 132,774 | | | | 141,200 | |
|
| |
2.50%, 12/01/2034 to 07/01/2035 | | | 13,822,820 | | | | 14,427,986 | |
|
| |
2.00%, 09/01/2035 to 01/01/2051 | | | 8,909,543 | | | | 9,016,984 | |
|
| |
4.00%, 09/01/2043 to 12/01/2048 | | | 5,949,636 | | | | 6,500,693 | |
|
| |
ARM, 2.48% (1 yr. U.S. Treasury Yield Curve Rate + 2.36%), 10/01/2034(a) | | | 1,028,580 | | | | 1,092,092 | |
|
| |
2.31% (1 yr. U.S. Treasury Yield Curve Rate + 2.20%), 05/01/2035(a) | | | 83,347 | | | | 88,690 | |
|
| |
2.01% (1 yr. USD LIBOR + 1.69%), 03/01/2038(a) | | | 20,330 | | | | 21,311 | |
|
| |
2.03% (1 yr. USD LIBOR + 1.77%), 02/01/2042(a) | | | 171,515 | | | | 171,867 | |
|
| |
1.77% (1 yr. USD LIBOR + 1.52%), 08/01/2043(a) | | | 352,987 | | | | 361,008 | |
|
| |
1.97% (1 yr. U.S. Treasury Yield Curve Rate + 1.88%), 05/01/2044(a) | | | 578,511 | | | | 597,495 | |
|
| |
TBA, 2.50%, 01/01/2052(e) | | | 20,830,000 | | | | 21,253,210 | |
|
| |
| | | | | | | 91,007,348 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Government National Mortgage Association (GNMA)–13.35% | |
7.50%, 11/15/2022 to 10/15/2035 | | $ | 872,851 | | | $ | 965,269 | |
|
| |
8.00%, 01/15/2023 to 01/15/2037 | | | 554,674 | | | | 615,551 | |
|
| |
7.00%, 09/15/2023 to 12/15/2036 | | | 404,588 | | | | 434,559 | |
|
| |
6.50%, 12/15/2023 to 09/15/2034 | | | 1,462,365 | | | | 1,601,859 | |
|
| |
6.00%, 01/16/2025 to 08/15/2033 | | | 266,622 | | | | 292,020 | |
|
| |
5.00%, 02/15/2025 | | | 41,828 | | | | 46,992 | |
|
| |
6.95%, 08/20/2025 to 08/20/2027 | | | 68,726 | | | | 68,965 | |
|
| |
6.38%, 10/20/2027 to 12/20/2027 | | | 66,635 | | | | 71,050 | |
|
| |
6.10%, 12/20/2033 | | | 2,292,104 | | | | 2,669,308 | |
|
| |
5.69%, 08/20/2034(b) | | | 568,140 | | | | 638,536 | |
|
| |
8.50%, 10/15/2036 to 01/15/2037 | | | 115,885 | | | | 121,431 | |
|
| |
5.90%, 01/20/2039(b) | | | 2,068,563 | | | | 2,369,708 | |
|
| |
0.91% (1 mo. USD LIBOR + 0.80%), 09/16/2039(a) | | | 563,684 | | | | 575,391 | |
|
| |
0.80% (1 mo. USD LIBOR + 0.70%), 05/20/2040(a) | | | 1,138,287 | | | | 1,152,997 | |
|
| |
4.51%, 07/20/2041(b) | | | 302,687 | | | | 331,636 | |
|
| |
1.93%, 09/20/2041 | | | 1,228,835 | | | | 1,265,940 | |
|
| |
0.35% (1 mo. USD LIBOR + 0.25%), 01/20/2042(a) | | | 15,273 | | | | 15,306 | |
|
| |
3.50%, 10/20/2042 to 06/20/2050 | | | 7,587,863 | | | | 7,999,881 | |
|
| |
0.40% (1 mo. USD LIBOR + 0.30%), 08/20/2047(a) | | | 2,149,779 | | | | 2,155,505 | |
|
| |
2.50%, 07/20/2049 | | | 4,104,922 | | | | 4,150,600 | |
|
| |
3.00%, 10/20/2049 to 11/20/2049 | | | 6,799,024 | | | | 7,044,684 | |
|
| |
Series 2019-29, Class PE, 3.00%, 10/20/2048 | | | 2,328,748 | | | | 2,437,247 | |
|
| |
Series 2019-52, Class JL, 3.00%, 11/20/2048 | | | 2,633,943 | | | | 2,712,822 | |
|
| |
Series 2019-30, Class MA, 3.50%, 03/20/2049 | | | 484,010 | | | | 504,144 | |
|
| |
TBA, 2.50%, 01/01/2052(e) | | | 13,790,000 | | | | 14,122,884 | |
|
| |
Series 2020-137, Class A, 1.50%, 04/16/2062 | | | 3,495,522 | | | | 3,419,295 | |
|
| |
| | | | | | | 57,783,580 | |
|
| |
Total U.S. Government Sponsored Agency Mortgage-Backed Securities
(Cost $242,221,086) | | | | 245,648,810 | |
|
| |
|
U.S. Treasury Securities–31.90% | |
U.S. Treasury Bills-0.13%(f)(g) | | | | | | | | |
0.04% - 0.05%, 02/17/2022 | | | 565,000 | | | | 564,966 | |
|
| |
0.10%, 05/26/2022 | | | 8,000 | | | | 7,997 | |
|
| |
| | | | | | | 572,963 | |
|
| |
| | |
U.S. Treasury Bonds–1.17% | | | | | | | | |
5.38%, 02/15/2031 | | | 3,800,000 | | | | 5,086,211 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Government Securities Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Treasury Notes–30.60% | | | | | | | | |
1.50%, 09/15/2022 | | $ | 1,000,000 | | | $ | 1,008,590 | |
|
| |
2.00%, 11/30/2022 | | | 2,700,000 | | | | 2,739,252 | |
|
| |
0.13% - 2.38%, 01/31/2023 | | | 7,557,000 | | | | 7,580,142 | |
|
| |
0.13%, 02/28/2023 | | | 5,557,000 | | | | 5,535,076 | |
|
| |
1.63%, 04/30/2023 | | | 4,000,000 | | | | 4,058,125 | |
|
| |
2.75%, 05/31/2023 | | | 6,300,000 | | | | 6,495,152 | |
|
| |
1.63%, 10/31/2023 | | | 625,000 | | | | 635,571 | |
|
| |
2.63%, 12/31/2023 | | | 1,900,000 | | | | 1,970,953 | |
|
| |
0.25%, 03/15/2024 | | | 7,000,000 | | | | 6,917,148 | |
|
| |
0.25%, 05/15/2024 | | | 3,000,000 | | | | 2,959,453 | |
|
| |
2.00%, 05/31/2024 | | | 2,500,000 | | | | 2,568,945 | |
|
| |
2.25%, 11/15/2024 | | | 5,200,000 | | | | 5,391,547 | |
|
| |
2.13%, 05/15/2025 | | | 8,480,000 | | | | 8,779,119 | |
|
| |
2.25%, 11/15/2025 | | | 8,300,000 | | | | 8,647,563 | |
|
| |
0.38% - 2.88%, 11/30/2025 | | | 11,500,000 | | | | 11,394,082 | |
|
| |
0.38%, 12/31/2025 | | | 7,000,000 | | | | 6,786,172 | |
|
| |
0.88%, 06/30/2026 | | | 7,000,000 | | | | 6,889,805 | |
|
| |
1.50%, 08/15/2026 | | | 8,550,000 | | | | 8,648,191 | |
|
| |
1.13%, 02/28/2027 | | | 9,159,000 | | | | 9,088,876 | |
|
| |
2.38%, 05/15/2027 | | | 1,000,000 | | | | 1,055,625 | |
|
| |
0.50%, 06/30/2027 | | | 1,900,000 | | | | 1,818,508 | |
|
| |
2.25%, 11/15/2027 | | | 2,900,000 | | | | 3,045,340 | |
|
| |
2.75%, 02/15/2028 | | | 1,900,000 | | | | 2,053,930 | |
|
| |
1.25%, 06/30/2028 | | | 4,500,000 | | | | 4,455,000 | |
|
| |
2.88%, 08/15/2028 | | | 8,000,000 | | | | 8,738,750 | |
|
| |
2.38%, 05/15/2029 | | | 2,600,000 | | | | 2,771,742 | |
|
| |
1.63%, 08/15/2029 | | | 400,000 | | | | 405,891 | |
|
| |
| | | | | | | 132,438,548 | |
|
| |
Total U.S. Treasury Securities
(Cost $137,355,506) | | | | 138,097,722 | |
|
| |
|
Asset-Backed Securities–9.78%(h) | |
Angel Oak Mortgage Trust, Series 2020-6, Class A2, 1.52%, 05/25/2065(b)(i) | | | 1,103,184 | | | | 1,101,805 | |
|
| |
Banc of America Commercial Mortgage Trust, Series 2015-UBS7, Class XA, IO, 0.79%, 09/15/2048(j) | | | 15,233,571 | | | | 395,780 | |
|
| |
Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-10, Class 12A1, 2.74%, 01/25/2035(b) | | | 244,582 | | | | 251,727 | |
|
| |
Chase Mortgage Finance Corp., | | | | | | | | |
Series 2016-SH1, Class M3, 3.75%, 04/25/2045(b)(i) | | | 3,500,000 | | | | 1,260,561 | |
|
| |
Series 2016-SH2, Class M3, 3.75%, 12/25/2045(b)(i) | | | 1,547,051 | | | | 1,556,938 | |
|
| |
COLT Mortgage Loan Trust, | | | | | | | | |
Series 2020-1, Class A3, 2.90%, 02/25/2050(b)(i) | | | 1,034,501 | | | | 1,034,202 | |
|
| |
Series 2020-2, Class A1, 1.85%, 03/25/2065(b)(i) | | | 889,031 | | | | 891,211 | |
|
| |
Series 2021-4, Class A1, 1.40%, 10/25/2066(b)(i) | | | 4,958,091 | | | | 4,915,969 | |
|
| |
FRESB Mortgage Trust, Series 2019- SB63, Class A5, 2.55%, 02/25/2039(b) | | | 3,490,536 | | | | 3,548,148 | |
|
| |
GCAT Trust, Series 2020-NQM1, Class A3, 2.55%, 01/25/2060(i)(k) | | | 3,891,145 | | | | 3,897,717 | |
|
| |
Mello Mortgage Capital Acceptance Trust, Series 2021-INV1,
Class A4, 2.50%, 06/25/2051(b)(i) | | | 588,982 | | | | 595,698 | |
|
| |
MFA Trust, Series 2021-INV2, Class A1, 1.91%, 11/25/2056(b)(i) | | | 4,954,594 | | | | 4,911,104 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
New Residential Mortgage Loan Trust, | | | | | | | | |
Series 2018-4A, Class A1S, 0.85% (1 mo. USD LIBOR + 0.75%), 01/25/2048(a)(i) | | $ | 1,655,422 | | | $ | 1,658,117 | |
|
| |
Series 2020-NQM1, Class A3, 2.77%, 01/26/2060(b)(i) | | | 1,726,624 | | | | 1,730,063 | |
|
| |
NextGear Floorplan Master Owner Trust, Series 2021-1A, Class A, 0.85%, 07/15/2026(i) | | | 2,000,000 | | | | 1,971,966 | |
|
| |
SGR Residential Mortgage Trust, Series 2021-2, Class A1, 1.74%, 12/25/2061(b)(i) | | | 3,976,047 | | | | 3,948,684 | |
|
| |
SMB Private Education Loan Trust, Series 2021-D, Class A1A, 1.34%, 03/17/2053(i) | | | 2,727,764 | | | | 2,688,293 | |
|
| |
Textainer Marine Containers VII Ltd., Series 2021-2A, Class B, 2.82%, 04/20/2046(i) | | | 3,786,667 | | | | 3,783,368 | |
|
| |
Textainer Marine Containers VIII Ltd., Series 2020-3A, Class A, 2.11%, 09/20/2045(i) | | | 2,212,080 | | | | 2,202,472 | |
|
| |
Total Asset-Backed Securities (Cost $42,428,144) | | | | 42,343,823 | |
|
| |
|
U.S. Government Sponsored Agency Securities–3.76% | |
Federal Home Loan Bank (FHLB)–3.29% | |
Federal Home Loan Bank, 0.50%, 04/14/2025 | | | 14,500,000 | | | | 14,251,179 | |
|
| |
|
Tennessee Valley Authority (TVA)–0.47% | |
Tennessee Valley Authority, 1.88%, 08/15/2022 | | | 2,000,000 | | | | 2,020,024 | |
|
| |
Total U.S. Government Sponsored Agency Securities
(Cost $16,510,423) | | | | 16,271,203 | |
|
| |
| | |
Certificates of Deposit–1.85% | | | | | | | | |
Regional Banks–1.85% | | | | | | | | |
Svenska Handelsbanken AB (Sweden), 0.28% (SOFR + 0.23%), 11/30/2022(a)
(Cost $8,000,000) | | | 8,000,000 | | | | 7,997,703 | |
|
| |
|
U.S. Dollar Denominated Bonds & Notes–0.97% | |
Sovereign Debt–0.97% | | | | | | | | |
Israel Government AID Bond, 5.13%, 11/01/2024
(Cost $3,807,905) | | | 3,800,000 | | | | 4,206,369 | |
|
| |
|
Agency Credit Risk Transfer Notes–0.57% | |
Fannie Mae Connecticut Avenue Securities, Series 2015-C02, Class 1M2, 4.10% (1 mo. USD LIBOR + 4.00%), 05/25/2025(a) | | | 1,170,712 | | | | 1,192,514 | |
|
| |
Freddie Mac, Series 2021-DNA3, Class M2, STACR® , 2.15% (30 Day Average SOFR + 2.10%), 10/25/2033(a)(i) | | | 1,240,000 | | | | 1,263,560 | |
|
| |
Total Agency Credit Risk Transfer Notes
(Cost $2,353,775) | | | | 2,456,074 | |
|
| |
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–2.44% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(l)(m)
(Cost $10,539,293) | | | 10,539,293 | | | $ | 10,539,293 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES-108.02%
(Cost $463,216,132) | | | | 467,560,997 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(8.02)% | | | | (34,704,651 | ) |
|
| |
NET ASSETS-100.00% | | | $ | 432,856,346 | |
|
| |
| | |
| 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 |
| 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) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2021. |
| (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, 2021. |
| (c) | Interest only security. Principal amount shown is the notional principal and does not reflect the maturity value of the security. |
| (d) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (e) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1L. |
| (f) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K. |
| (g) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
| (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, 2021 was $39,411,728, which represented 9.11% 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, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | |
| | | | | | | | | Change in | | | | | | |
| | | Value | | Purchases | | Proceeds | | Unrealized | | Realized | | Value | | |
| | | December 31, 2020 | | at Cost | | from Sales | | Appreciation | | Gain | | December 31, 2021 | | Dividend Income |
Investments in Affiliated Money
Market Funds: | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $4,863,064 | | $145,158,223 | | $(139,481,994) | | $- | | $- | | $10,539,293 | | $1,428 |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | |
Invesco Private Government Fund | | - | | 498,750 | | (498,750) | | - | | - | | - | | 1* |
Total | | $4,863,064 | | $145,656,973 | | $(139,980,744) | | $- | | $- | | $10,539,293 | | $1,429 |
| | * | 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, 2021. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Government Securities Fund |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | | | 308 | | | | | March-2022 | | | | $ | 67,196,938 | | | | $ | (38,308 | ) | | | $ | (38,308 | ) |
U.S. Treasury 5 Year Notes | | | | 242 | | | | | March-2022 | | | | | 29,276,328 | | | | | 105,828 | | | | | 105,828 | |
U.S. Treasury 10 Year Notes | | | | 123 | | | | | March-2022 | | | | | 16,047,656 | | | | | 114,338 | | | | | 114,338 | |
U.S. Treasury 10 Year Ultra Notes | | | | 86 | | | | | March-2022 | | | | | 12,593,625 | | | | | 178,680 | | | | | 178,680 | |
Subtotal–Long Futures Contracts | | | | | | | | | | | | | | | | | | | 360,538 | | | | | 360,538 | |
| | | | | |
Short Futures Contracts | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest Rate Risk | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury Long Bonds | | | | 90 | | | | | March-2022 | | | | | (14,439,375 | ) | | | | (221,484 | ) | | | | (221,484 | ) |
U.S. Treasury Ultra Bonds | | | | 10 | | | | | March-2022 | | | | | (1,971,250 | ) | | | | (43,438 | ) | | | | (43,438 | ) |
Subtotal–Short Futures Contracts | | | | | | | | | | | | | | | | | | | (264,922 | ) | | | | (264,922 | ) |
Total Futures Contracts | | | | | | | | | | | | | | | | | | $ | 95,616 | | | | $ | 95,616 | |
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value
(Cost $452,676,839) | | $ | 457,021,704 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $10,539,293) | | | 10,539,293 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 41,939 | |
|
| |
Dividends | | | 121 | |
|
| |
Interest | | | 1,073,068 | |
|
| |
Principal paydowns | | | 227,510 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 211,409 | |
|
| |
Other assets | | | 1,724 | |
|
| |
Total assets | | | 469,116,768 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 4,235 | |
|
| |
Payable for: | | | | |
Investments purchased | | | 35,500,305 | |
|
| |
Fund shares reacquired | | | 132,082 | |
|
| |
Amount due custodian | | | 81,666 | |
|
| |
Accrued fees to affiliates | | | 222,385 | |
|
| |
Accrued other operating expenses | | | 94,597 | |
|
| |
Trustee deferred compensation and retirement plans | | | 225,152 | |
|
| |
Total liabilities | | | 36,260,422 | |
|
| |
Net assets applicable to shares outstanding | | $ | 432,856,346 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 432,363,678 | |
|
| |
Distributable earnings | | | 492,668 | |
|
| |
| | $ | 432,856,346 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 235,924,093 | |
|
| |
Series II | | $ | 196,932,253 | |
|
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 20,544,787 | |
|
| |
Series II | | | 17,317,892 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 11.48 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 11.37 | |
|
| |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Interest | | $ | 7,122,470 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $7) | | | 1,435 | |
|
| |
Total investment income | | | 7,123,905 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 2,127,562 | |
|
| |
Administrative services fees | | | 730,270 | |
|
| |
Custodian fees | | | 34,212 | |
|
| |
Distribution fees - Series II | | | 484,527 | |
|
| |
Transfer agent fees | | | 27,136 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 26,755 | |
|
| |
Reports to shareholders | | | 10,444 | |
|
| |
Professional services fees | | | 43,041 | |
|
| |
Other | | | 8,106 | |
|
| |
Total expenses | | | 3,492,053 | |
|
| |
Less: Fees waived | | | (467 | ) |
|
| |
Net expenses | | | 3,491,586 | |
|
| |
Net investment income | | | 3,632,319 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 1,752,273 | |
|
| |
Futures contracts | | | (2,529,350 | ) |
|
| |
| | | (777,077 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | (12,915,981 | ) |
|
| |
Futures contracts | | | (255,163 | ) |
|
| |
| | | (13,171,144 | ) |
|
| |
Net realized and unrealized gain (loss) | | | (13,948,221 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | $ | (10,315,902 | ) |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 3,632,319 | | | $ | 6,859,455 | |
|
| |
Net realized gain (loss) | | | (777,077 | ) | | | 13,926,151 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (13,171,144 | ) | | | 6,053,328 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (10,315,902 | ) | | | 26,838,934 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (5,864,271 | ) | | | (6,407,384 | ) |
|
| |
Series II | | | (4,378,930 | ) | | | (3,963,835 | ) |
|
| |
Total distributions from distributable earnings | | | (10,243,201 | ) | | | (10,371,219 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (10,066,900 | ) | | | (3,683,669 | ) |
|
| |
Series II | | | 21,041,877 | | | | 3,388,007 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 10,974,977 | | | | (295,662 | ) |
|
| |
Net increase (decrease) in net assets | | | (9,584,126 | ) | | | 16,172,053 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 442,440,472 | | | | 426,268,419 | |
|
| |
End of year | | $ | 432,856,346 | | | $ | 442,440,472 | |
|
| |
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 12/31/21 | | | $12.04 | | | | $0.11 | | | | $(0.38 | ) | | | $(0.27 | ) | | | $(0.29 | ) | | | $11.48 | | | | (2.27 | )% | | | $235,924 | | | | 0.68 | % | | | 0.68 | % | | | 0.92 | % | | | 170 | % |
Year ended 12/31/20 | | | 11.61 | | | | 0.20 | | | | 0.53 | | | | 0.73 | | | | (0.30 | ) | | | 12.04 | | | | 6.27 | | | | 257,369 | | | | 0.67 | | | | 0.67 | | | | 1.64 | | | | 346 | |
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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 11.92 | | | | 0.08 | | | | (0.37 | ) | | | (0.29 | ) | | | (0.26 | ) | | | 11.37 | | | | (2.43 | ) | | | 196,932 | | | | 0.93 | | | | 0.93 | | | | 0.67 | | | | 170 | |
Year ended 12/31/20 | | | 11.50 | | | | 0.17 | | | | 0.52 | | | | 0.69 | | | | (0.27 | ) | | | 11.92 | | | | 5.97 | | | | 185,071 | | | | 0.92 | | | | 0.92 | | | | 1.39 | | | | 346 | |
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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. Paydown gains and losses |
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| Invesco V.I. Government Securities Fund |
| | 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. | 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
| 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 |
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| Invesco V.I. Government Securities Fund |
| | delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal Counterparty risk since the exchange’s clearinghouse, as Counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
| L. | 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.
| M. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| 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. |
| P. | 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of a Fund that holds securities of that entity will be adversely impacted. |
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| Q. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 1.50% 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, 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.
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| Invesco V.I. Government Securities Fund |
Further, the Adviser has contractually agreed, through at least June 30, 2023, 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, 2021, the Adviser waived advisory fees of $467.
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, 2021, Invesco was paid $62,749 for accounting and fund administrative services and was reimbursed $667,521 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, 2021, 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, 2021, 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, 2021. 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. Government Sponsored Agency Mortgage-Backed Securities | | | $ – | | | | $245,648,810 | | | | $– | | | | $245,648,810 | |
|
| |
U.S. Treasury Securities | | | – | | | | 138,097,722 | | | | – | | | | 138,097,722 | |
|
| |
Asset-Backed Securities | | | – | | | | 42,343,823 | | | | – | | | | 42,343,823 | |
|
| |
U.S. Government Sponsored Agency Securities | | | – | | | | 16,271,203 | | | | – | | | | 16,271,203 | |
|
| |
Certificates of Deposit | | | – | | | | 7,997,703 | | | | – | | | | 7,997,703 | |
|
| |
U.S. Dollar Denominated Bonds & Notes | | | – | | | | 4,206,369 | | | | – | | | | 4,206,369 | |
|
| |
Agency Credit Risk Transfer Notes | | | – | | | | 2,456,074 | | | | – | | | | 2,456,074 | |
|
| |
Money Market Funds | | | 10,539,293 | | | | – | | | | – | | | | 10,539,293 | |
|
| |
Total Investments in Securities | | | 10,539,293 | | | | 457,021,704 | | | | – | | | | 467,560,997 | |
|
| |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | 398,846 | | | | – | | | | – | | | | 398,846 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Futures Contracts | | | (303,230 | ) | | | – | | | | – | | | | (303,230 | ) |
|
| |
Total Other Investments | | | 95,616 | | | | – | | | | – | | | | 95,616 | |
|
| |
Total Investments | | | $10,634,909 | | | | $457,021,704 | | | | $– | | | | $467,656,613 | |
|
| |
| * | 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.
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| Invesco V.I. Government Securities 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, 2021:
| | | | |
| | | Value | |
| Derivative Assets | | Interest
Rate Risk | |
|
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 398,846 | |
|
| |
Derivatives not subject to master netting agreements | | | (398,846 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| | | | |
| | | Value | |
Derivative Liabilities | | Interest
Rate Risk | |
|
| |
Unrealized depreciation on futures contracts – Exchange-Traded(a) | | $ | (303,230 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 303,230 | |
|
| |
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, 2021
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 | | | $ | (2,529,350 | ) |
Change in Net Unrealized Appreciation (Depreciation): | | | | | |
Futures contracts | | | | (255,163 | ) |
Total | | | $ | (2,784,513 | ) |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
|
| |
Average notional value | | $ | 169,536,251 | |
|
| |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Ordinary income* | | $ | 10,243,201 | | | $ | 10,371,219 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Government Securities Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 6,735,059 | |
|
| |
Net unrealized appreciation – investments | | | 2,946,892 | |
|
| |
Temporary book/tax differences | | | (130,755 | ) |
|
| |
Capital loss carryforward | | | (9,058,528 | ) |
|
| |
Shares of beneficial interest | | | 432,363,678 | |
|
| |
Total net assets | | $ | 432,856,346 | |
|
| |
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 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.
The Fund has a capital loss carryforward as of December 31, 2021, as follows:
Capital Loss Carryforward*
| | | | | | | | | | | | |
|
| |
Expiration | | | Short-Term | | | | Long-Term | | | | Total | |
|
| |
Not subject to expiration | | $ | 6,527,954 | | | $ | 2,530,574 | | | $ | 9,058,528 | |
|
| |
| * | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $28,072,254 and $30,103,126, 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 | | $ | 6,478,877 | |
Aggregate unrealized (depreciation) of investments | | | (3,531,985 | ) |
Net unrealized appreciation of investments | | $ | 2,946,892 | |
Cost of investments for tax purposes is $464,709,721.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of paydowns and dollar rolls, on December 31, 2021, undistributed net investment income was increased by $3,178,391 and undistributed net realized gain (loss) was decreased by $3,178,391. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 2,991,166 | | | $ | 35,652,293 | | | | 6,054,979 | | | $ | 72,781,909 | |
|
| |
Series II | | | 2,806,873 | | | | 33,046,504 | | | | 3,404,583 | | | | 40,292,573 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 508,610 | | | | 5,864,271 | | | | 535,287 | | | | 6,407,384 | |
|
| |
Series II | | | 383,444 | | | | 4,378,930 | | | | 334,219 | | | | 3,963,835 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (4,339,665 | ) | | | (51,583,464 | ) | | | (6,871,977 | ) | | | (82,872,962 | ) |
|
| |
Series II | | | (1,394,975 | ) | | | (16,383,557 | ) | | | (3,421,340 | ) | | | (40,868,401 | ) |
|
| |
Net increase (decrease) in share activity | | | 955,453 | | | $ | 10,974,977 | | | | 35,751 | | | $ | (295,662 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 84% 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $988.00 | | $3.41 | | $1,021.78 | | $3.47 | | 0.68% |
Series II | | 1,000.00 | | 987.30 | | 4.66 | | 1,020.52 | | 4.74 | | 0.93 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
Federal and State Income Tax | | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 14.13 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 89.60 | % | | | | |
|
| * 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) | | 186 | | 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Growth and Income Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. Growth and Income Fund (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 28.51 | % |
Series II Shares | | | 28.19 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 1000 Value Index▼ (Style-Specific Index) | | | 25.16 | |
Lipper VUF Large-Cap Value Funds Index◾ (Peer Group Index) | | | 26.33 | |
Source(s): ▼RIMES Technologies Corp.; ◾Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
All eleven sectors within the Russell 1000 Value Index had positive returns for the fiscal year. Energy had the highest return for the fiscal year, while the communication services sector had the lowest.
Stock selection in industrials was the largest contributor to relative Fund performance, due primarily to Johnson Controls. The company reported better than expected earnings driven in part by strength in its HVAC segment, while orders and backlogs also improved amid a recovery in demand. We held the stock at fiscal year end.
Security selection and an overweight position in the financials sector also contributed to the Fund’s relative Fund performance for the fiscal year. Within the sector, Wells Fargo, Bank of America, AIG and Goldman Sachs were significant contributors. These companies rallied as a rotation into cyclical areas of the market favored financial stocks early in the fiscal year. Financial companies also benefited from rising interest rates and a recovery in loan growth. We held these positions at fiscal year end.
Stock selection in energy and an overweight in energy also aided relative Fund performance during the fiscal year. Energy stocks overall were buoyed by rising oil prices
resulting from a rebound in demand, OPEC (Organization of the Petroleum Exporting Countries) production cuts and energy shortages abroad. Shares of Devon Energy rose sharply, particularly following its third-quarter earnings report which exceeded expectations. Even as Devon Energy has benefited from rising oil prices, the company has maintained a commitment to disciplined growth and spending, while returning capital to shareholders. We maintained our position in Devon Energy at fiscal year end.
Stock selection in health care was the largest relative detractor during the fiscal year. Medical device makers Zimmer Biomet and Medtronic detracted from both relative and absolute performance. Shares of both companies suffered as the Delta and Omicron COVID-19 variants began to spread rapidly, causing delays or cancellations to elective procedures and reducing revenues. We believe the delays caused by COVID-19 will be transitory and we maintained our position in both stocks at fiscal year end. The Fund’s pharmaceutical holdings also underperformed relative to the index. Specifically, the Fund held a position in Sanofi, which is not in the style-specific index. That stock posted a muted return for the fiscal year that underperformed the index. We maintained our position in Sanofi at fiscal year end.
The information technology (IT) sector also detracted from relative returns. Within the sector, Splunk and Intel had double-digit declines. While Intel’s earnings beat consensus expectations, the chipmaker provided weaker guidance for the fiscal year, driven in part by shortages of production components for microchips. In November 2021, Splunk announced an abrupt CEO departure that was viewed skeptically by investors. The CEO announcement overshadowed a largely solid earnings report, causing a sharp selloff in the stock. While the departure added uncertainty to the company’s future, we believe it could also present opportunities and we maintained our position at fiscal year end.
The Fund’s cash position also detracted from relative Fund performance. While less than 2% on average, cash dampened relative returns in the strong market environment.
The Fund held currency forward contracts 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 positive impact on the Fund’s relative performance for the fiscal year.
During the fiscal year, the team eliminated positions in materials, energy and financials, and added positions in communication services, consumer discretionary and health care. At the end of the fiscal year, the Fund’s largest overweight exposures were in IT and consumer discretionary, while the largest underweights were in health care and utilities.
As always, we thank you for your investment in Invesco V.I. Growth and Income Fund
|
| Invesco V.I. Growth and Income Fund |
and for sharing our long-term investment horizon.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Brian Jurkash - Lead
Sergio Marcheli
Matthew Titus - Lead
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
| |
Series I Shares | | | | |
Inception (12/23/96) | | | 9.28 | % |
10 Years | | | 12.33 | |
5 Years | | | 10.22 | |
1 Year | | | 28.51 | |
| |
Series II Shares | | | | |
Inception (9/18/00) | | | 7.43 | % |
10 Years | | | 12.05 | |
5 Years | | | 9.94 | |
1 Year | | | 28.19 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 | | | | 22.92 | % |
| |
Health Care | | | | 14.97 | |
| |
Information Technology | | | | 13.65 | |
| |
Industrials | | | | 12.05 | |
| |
Consumer Discretionary | | | | 8.10 | |
| |
Communication Services | | | | 7.07 | |
| |
Energy | | | | 6.87 | |
| |
Consumer Staples | | | | 5.22 | |
| |
Real Estate | | | | 2.96 | |
| |
Materials | | | | 2.91 | |
| |
Utilities | | | | 2.40 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.88 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
| 1. | | Wells Fargo & Co. | | | | 3.81 | % |
| | |
| 2. | | General Motors Co. | | | | 3.60 | |
| | |
| 3. | | Cognizant Technology Solutions Corp., Class A | | | | 3.23 | |
| | |
| 4. | | Bank of America Corp. | | | | 3.03 | |
| | |
| 5. | | CBRE Group, Inc., Class A | | | | 2.96 | |
| | |
| 6. | | American International Group, Inc. | | | | 2.61 | |
| | |
| 7. | | CSX Corp. | | | | 2.44 | |
| | |
| 8. | | Cisco Systems, Inc. | | | | 2.31 | |
| | |
| 9. | | Raytheon Technologies Corp. | | | | 2.20 | |
| | |
| 10. | | Philip Morris International, Inc. | | | | 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, 2021.
|
| Invesco V.I. Growth and Income Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests-99.12% | |
Aerospace & Defense-4.76% | |
General Dynamics Corp. | | | 63,130 | | | $ | 13,160,711 | |
|
| |
Raytheon Technologies Corp. | | | 424,953 | | | | 36,571,455 | |
|
| |
Textron, Inc. | | | 381,238 | | | | 29,431,574 | |
|
| |
| | | | 79,163,740 | |
|
| |
|
Apparel Retail-1.74% | |
TJX Cos., Inc. (The) | | | 381,727 | | | | 28,980,714 | |
|
| |
|
Application Software-0.73% | |
Splunk, Inc.(b) | | | 105,408 | | | | 12,197,814 | |
|
| |
|
Automobile Manufacturers-3.59% | |
General Motors Co.(b) | | | 1,019,028 | | | | 59,745,612 | |
|
| |
|
Building Products-1.56% | |
Johnson Controls International PLC | | | 317,958 | | | | 25,853,165 | |
|
| |
|
Cable & Satellite-3.12% | |
Charter Communications, Inc., Class A(b) | | | 34,526 | | | | 22,509,916 | |
|
| |
Comcast Corp., Class A | | | 583,527 | | | | 29,368,914 | |
|
| |
| | | | 51,878,830 | |
|
| |
|
Casinos & Gaming-0.70% | |
Las Vegas Sands Corp.(b) | | | 308,031 | | | | 11,594,287 | |
|
| |
|
Communications Equipment-2.31% | |
Cisco Systems, Inc. | | | 606,163 | | | | 38,412,549 | |
|
| |
|
Construction & Engineering-1.19% | |
Quanta Services, Inc.(c) | | | 172,007 | | | | 19,722,323 | |
|
| |
|
Consumer Finance-1.56% | |
American Express Co. | | | 158,228 | | | | 25,886,101 | |
|
| |
|
Data Processing & Outsourced Services-1.00% | |
Fiserv, Inc.(b) | | | 159,789 | | | | 16,584,500 | |
|
| |
|
Distillers & Vintners-1.21% | |
Diageo PLC (United Kingdom) | | | 369,565 | | | | 20,146,066 | |
|
| |
|
Diversified Banks-6.83% | |
Bank of America Corp. | | | 1,131,445 | | | | 50,337,988 | |
|
| |
Wells Fargo & Co. | | | 1,318,508 | | | | 63,262,014 | |
|
| |
| | | | 113,600,002 | |
|
| |
|
Electric Utilities-2.40% | |
American Electric Power Co., Inc. | | | 153,130 | | | | 13,623,976 | |
|
| |
Exelon Corp. | | | 248,270 | | | | 14,340,075 | |
|
| |
FirstEnergy Corp. | | | 285,808 | | | | 11,886,755 | |
|
| |
| | | | 39,850,806 | |
|
| |
|
Electrical Components & Equipment-0.84% | |
Emerson Electric Co. | | | 149,472 | | | | 13,896,412 | |
|
| |
|
Electronic Components-0.85% | |
Corning, Inc. | | | 381,560 | | | | 14,205,479 | |
|
| |
|
Electronic Manufacturing Services-1.07% | |
TE Connectivity Ltd. | | | 110,513 | | | | 17,830,167 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Fertilizers & Agricultural Chemicals-1.39% | |
Corteva, Inc. | | | 490,236 | | | $ | 23,178,358 | |
|
| |
|
Food Distributors-1.84% | |
Sysco Corp. | | | 196,398 | | | | 15,427,063 | |
|
| |
US Foods Holding Corp.(b) | | | 433,415 | | | | 15,095,844 | |
|
| |
| | | | 30,522,907 | |
|
| |
|
Gold-0.66% | |
Barrick Gold Corp. (Canada) | | | 577,580 | | | | 10,974,020 | |
|
| |
|
Health Care Distributors-1.20% | |
McKesson Corp. | | | 80,508 | | | | 20,011,874 | |
|
| |
|
Health Care Equipment-1.62% | |
Medtronic PLC | | | 155,275 | | | | 16,063,199 | |
|
| |
Zimmer Biomet Holdings, Inc. | | | 85,436 | | | | 10,853,789 | |
|
| |
| | | | 26,916,988 | |
|
| |
|
Health Care Facilities-0.77% | |
Universal Health Services, Inc., Class B | | | 98,870 | | | | 12,819,484 | |
|
| |
|
Health Care Services-2.57% | |
Cigna Corp. | | | 101,702 | | | | 23,353,830 | |
|
| |
CVS Health Corp. | | | 187,792 | | | | 19,372,623 | |
|
| |
| | | | 42,726,453 | |
|
| |
|
Hotels, Resorts & Cruise Lines-1.32% | |
Booking Holdings, Inc.(b) | | | 9,149 | | | | 21,950,555 | |
|
| |
|
Industrial Machinery-1.26% | |
Parker-Hannifin Corp. | | | 66,084 | | | | 21,022,642 | |
|
| |
|
Insurance Brokers-1.16% | |
Willis Towers Watson PLC | | | 80,828 | | | | 19,195,842 | |
|
| |
|
Integrated Oil & Gas-1.61% | |
Chevron Corp. | | | 228,394 | | | | 26,802,036 | |
|
| |
|
Internet & Direct Marketing Retail-0.75% | |
Amazon.com, Inc.(b) | | | 3,728 | | | | 12,430,419 | |
|
| |
|
Investment Banking & Brokerage-5.32% | |
Charles Schwab Corp. (The) | | | 289,320 | | | | 24,331,812 | |
|
| |
Goldman Sachs Group, Inc. (The) | | | 89,087 | | | | 34,080,232 | |
|
| |
Morgan Stanley | | | 305,555 | | | | 29,993,279 | |
|
| |
| | | | 88,405,323 | |
|
| |
|
IT Consulting & Other Services-3.23% | |
Cognizant Technology Solutions Corp., Class A | | | 604,566 | | | | 53,637,095 | |
|
| |
|
Managed Health Care-2.03% | |
Anthem, Inc. | | | 39,451 | | | | 18,287,115 | |
|
| |
Centene Corp.(b) | | | 187,247 | | | | 15,429,153 | |
|
| |
| | | | 33,716,268 | |
|
| |
|
Movies & Entertainment-2.71% | |
Netflix, Inc.(b) | | | 29,592 | | | | 17,827,405 | |
|
| |
Walt Disney Co. (The)(b) | | | 175,214 | | | | 27,138,896 | |
|
| |
| | | | 44,966,301 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Growth and Income Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
|
Multi-line Insurance-2.61% | |
American International Group, Inc. | | | 762,961 | | | $ | 43,381,962 | |
|
| |
| |
Oil & Gas Exploration & Production-5.25% | | | | | |
Canadian Natural Resources Ltd. (Canada) | | | 343,760 | | | | 14,525,453 | |
|
| |
ConocoPhillips | | | 469,679 | | | | 33,901,430 | |
|
| |
Devon Energy Corp. | | | 499,735 | | | | 22,013,327 | |
|
| |
Pioneer Natural Resources Co. | | | 92,698 | | | | 16,859,912 | |
|
| |
| | | | | | | 87,300,122 | |
|
| |
| |
Other Diversified Financial Services-0.72% | | | | | |
Voya Financial, Inc.(c) | | | 181,267 | | | | 12,019,815 | |
|
| |
| | |
Pharmaceuticals-6.78% | | | | | | | | |
Bristol-Myers Squibb Co. | | | 348,142 | | | | 21,706,654 | |
|
| |
GlaxoSmithKline PLC (United Kingdom) | | | 636,146 | | | | 13,832,429 | |
|
| |
Johnson & Johnson | | | 87,832 | | | | 15,025,420 | |
|
| |
Merck & Co., Inc. | | | 347,390 | | | | 26,623,969 | |
|
| |
Pfizer, Inc. | | | 248,200 | | | | 14,656,210 | |
|
| |
Sanofi (France) | | | 207,208 | | | | 20,818,943 | |
|
| |
| | | | | | | 112,663,625 | |
|
| |
| | |
Railroads-2.44% | | | | | | | | |
CSX Corp. | | | 1,079,792 | | | | 40,600,179 | |
|
| |
| | |
Real Estate Services-2.96% | | | | | | | | |
CBRE Group, Inc., Class A(b) | | | 453,478 | | | | 49,206,898 | |
|
| |
| | |
Regional Banks-4.72% | | | | | | | | |
Citizens Financial Group, Inc. | | | 719,530 | | | | 33,997,793 | |
|
| |
PNC Financial Services Group, Inc. (The) | | | 79,463 | | | | 15,933,921 | |
|
| |
Truist Financial Corp. | | | 487,326 | | | | 28,532,937 | |
|
| |
| | | | | | | 78,464,651 | |
|
| |
| | |
Semiconductors-4.46% | | | | | | | | |
Intel Corp. | | | 516,074 | | | | 26,577,811 | |
|
| |
NXP Semiconductors N.V. (China) | | | 95,769 | | | | 21,814,263 | |
|
| |
QUALCOMM, Inc. | | | 140,310 | | | | 25,658,489 | |
|
| |
| | | | | | | 74,050,563 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Specialty Chemicals-0.86% | |
Axalta Coating Systems Ltd.(b) | | | 429,613 | | | | $ 14,228,783 | |
|
| |
|
Tobacco-2.17% | |
Philip Morris International, Inc. | | | 379,207 | | | | 36,024,666 | |
|
| |
|
Wireless Telecommunication Services-1.25% | |
T-Mobile US, Inc.(b) | | | 178,504 | | | | 20,702,894 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $1,097,405,884) | | | | 1,647,469,290 | |
|
| |
|
Money Market Funds-1.83% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 11,116,205 | | | | 11,116,205 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 6,628,684 | | | | 6,630,010 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 12,704,234 | | | | 12,704,234 | |
|
| |
Total Money Market Funds
(Cost $30,450,449) | | | | 30,450,449 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.95% (Cost $1,127,856,333) | | | | | | | 1,677,919,739 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
|
Money Market Funds-0.66% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 3,298,019 | | | | 3,298,019 | |
|
| |
Invesco Private Prime Fund, 0.11%(d)(e)(f) | | | 7,693,838 | | | | 7,695,376 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $10,993,395) | | | | 10,993,395 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–101.61%
(Cost $1,138,849,728) | | | | 1,688,913,134 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(1.61)% | | | | (26,821,207 | ) |
|
| |
NET ASSETS–100.00% | | | | $1,662,091,927 | |
|
| |
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, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | 22,913,609 | | | | $ | 101,135,366 | | | | $ | (112,932,770 | ) | | | $ | - | | | | $ | - | | | | $ | 11,116,205 | | | | $ | 2,741 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | 12,925,470 | | | | | 71,790,645 | | | | | (78,086,507 | ) | | | | 1,292 | | | | | (890) | | | | | 6,630,010 | | | | | 837 | |
Invesco Treasury Portfolio, Institutional Class | | | | 26,186,982 | | | | | 115,583,276 | | | | | (129,066,024 | ) | | | | - | | | | | - | | | | | 12,704,234 | | | | | 1,158 | |
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, 2020 | | Purchases at Cost | | Proceeds from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | $ | 4,780,034 | | | | $ | 119,583,287 | | | | $ | (121,065,302 | ) | | | $ | - | | | | $ | - | | | | $ | 3,298,019 | | | | $ | 420* | |
Invesco Private Prime Fund | | | | 7,170,051 | | | | | 232,635,403 | | | | | (232,106,513 | ) | | | | - | | | | | (3,565) | | | | | 7,695,376 | | | | | 6,352* | |
Total | | | $ | 73,976,146 | | | | $ | 640,727,977 | | | | $ | (673,257,116 | ) | | | $ | 1,292 | | | | $ | (4,455) | | | | $ | 41,443,844 | | | | $ | 11,508 | |
| | * | 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, 2021. |
| (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 | |
| | | | | | | | | | | Unrealized | |
| Settlement | | | | Contract to | | | Appreciation | |
| Date | | Counterparty | | | | | Deliver | | | | | | Receive | | | (Depreciation) | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/07/2022 | | State Street Bank & Trust Co. | | | CAD | | | | 854,025 | | | | USD | | | | 675,444 | | | | $ 301 | |
01/07/2022 | | State Street Bank & Trust Co. | | | USD | | | | 2,943,967 | | | | CAD | | | | 3,773,770 | | | | 39,364 | |
01/07/2022 | | State Street Bank & Trust Co. | | | USD | | | | 914,396 | | | | EUR | | | | 808,638 | | | | 6,291 | |
Subtotal–Appreciation | | | | | | | | | | | | | | | | | | | 45,956 | |
| | | | | | |
Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
01/07/2022 | | State Street Bank & Trust Co. | | | CAD | | | | 16,738,897 | | | | USD | | | | 13,075,842 | | | | (156,988 | ) |
01/07/2022 | | State Street Bank & Trust Co. | | | EUR | | | | 14,541,365 | | | | USD | | | | 16,397,497 | | | | (158,807 | ) |
01/07/2022 | | State Street Bank & Trust Co. | | | GBP | | | | 19,065,649 | | | | USD | | | | 25,265,759 | | | | (540,440 | ) |
Subtotal–Depreciation | | | | | | | | | | | | | | | | | | | (856,235 | ) |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | | $(810,279 | ) |
|
| 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. Growth and Income Fund |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $1,097,405,884)* | | $ | 1,647,469,290 | |
|
| |
Investments in affiliated money market funds, at value (Cost $41,443,844) | | | 41,443,844 | |
|
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 45,956 | |
|
| |
Foreign currencies, at value (Cost $181,264) | | | 183,535 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 40,346 | |
|
| |
Dividends | | | 1,653,747 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 219,506 | |
|
| |
Other assets | | | 6,474 | |
|
| |
Total assets | | | 1,691,062,698 | |
|
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Unrealized depreciation on forward foreign currency contracts outstanding | | | 856,235 | |
|
| |
Payable for: | | | | |
Fund shares reacquired | | | 15,033,607 | |
|
| |
Amount due custodian | | | 813,082 | |
|
| |
Collateral upon return of securities loaned | | | 10,993,395 | |
|
| |
Accrued fees to affiliates | | | 969,521 | |
|
| |
Accrued other operating expenses | | | 63,510 | |
|
| |
Trustee deferred compensation and retirement plans | | | 241,421 | |
|
| |
Total liabilities | | | 28,970,771 | |
|
| |
Net assets applicable to shares outstanding | | $ | 1,662,091,927 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 1,023,732,355 | |
|
| |
Distributable earnings | | | 638,359,572 | |
|
| |
| | $ | 1,662,091,927 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 186,507,768 | |
|
| |
Series II | | $ | 1,475,584,159 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 7,867,893 | |
|
| |
Series II | | | 62,355,736 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 23.70 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 23.66 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $10,796,578 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $360,152) | | $ | 31,785,142 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $81,137) | | | 85,873 | |
|
| |
Total investment income | | | 31,871,015 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 9,433,717 | |
|
| |
Administrative services fees | | | 2,746,279 | |
|
| |
Distribution fees - Series II | | | 3,733,387 | |
|
| |
Transfer agent fees | | | 56,393 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 35,053 | |
|
| |
Reports to shareholders | | | 10,189 | |
|
| |
Professional services fees | | | 43,327 | |
|
| |
Other | | | (21,778 | ) |
|
| |
Total expenses | | | 16,036,567 | |
|
| |
Less: Fees waived | | | (12,134 | ) |
|
| |
Net expenses | | | 16,024,433 | |
|
| |
Net investment income | | | 15,846,582 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 206,301,688 | |
|
| |
Affiliated investment securities | | | (4,455 | ) |
|
| |
Foreign currencies | | | 18,398 | |
|
| |
Forward foreign currency contracts | | | 1,896,756 | |
|
| |
| | | 208,212,387 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 188,553,132 | |
|
| |
Affiliated investment securities | | | 1,292 | |
|
| |
Foreign currencies | | | (19,358 | ) |
|
| |
Forward foreign currency contracts | | | 150,142 | |
|
| |
| | | 188,685,208 | |
|
| |
Net realized and unrealized gain | | | 396,897,595 | |
|
| |
Net increase in net assets resulting from operations | | $ | 412,744,177 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 15,846,582 | | | $ | 21,440,640 | |
|
| |
Net realized gain (loss) | | | 208,212,387 | | | | (94,559,403 | ) |
|
| |
Change in net unrealized appreciation | | | 188,685,208 | | | | 59,918,547 | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | 412,744,177 | | | | (13,200,216 | ) |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,756,581 | ) | | | (5,561,715 | ) |
|
| |
Series II | | | (19,533,376 | ) | | | (42,601,032 | ) |
|
| |
Total distributions from distributable earnings | | | (22,289,957 | ) | | | (48,162,747 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (11,294,653 | ) | | | (24,590,096 | ) |
|
| |
Series II | | | (290,467,980 | ) | | | (40,847,878 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (301,762,633 | ) | | | (65,437,974 | ) |
|
| |
Net increase (decrease) in net assets | | | 88,691,587 | | | | (126,800,937 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,573,400,340 | | | | 1,700,201,277 | |
|
| |
End of year | | $ | 1,662,091,927 | | | $ | 1,573,400,340 | |
|
| |
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 12/31/21 | | | $18.72 | | | | $0.26 | | | | $ 5.07 | | | | $ 5.33 | | | | $(0.35 | ) | | | $ – | | | | $(0.35 | ) | | | $23.70 | | | | 28.51 | % | | | $ 186,508 | | | | 0.74 | % | | | 0.74 | % | | | 1.17 | % | | | 29 | % |
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 | | | | 0.75 | | | | 1.90 | | | | 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 | (d) | | | 2.52 | | | | 2.93 | | | | (0.34 | ) | | | (0.94 | ) | | | (1.28 | ) | | | 22.70 | | | | 14.32 | | | | 187,254 | | | | 0.76 | | | | 0.76 | | | | 1.90 | (d) | | | 17 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 18.70 | | | | 0.20 | | | | 5.07 | | | | 5.27 | | | | (0.31 | ) | | | – | | | | (0.31 | ) | | | 23.66 | | | | 28.19 | | | | 1,475,584 | | | | 0.99 | | | | 0.99 | | | | 0.92 | | | | 29 | |
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 | | | | 1.00 | | | | 1.65 | | | | 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 | (d) | | | 2.51 | | | | 2.87 | | | | (0.29 | ) | | | (0.94 | ) | | | (1.23 | ) | | | 22.66 | | | | 14.04 | | | | 1,823,085 | | | | 1.01 | | | | 1.01 | | | | 1.65 | (d) | | | 17 | |
| (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) | 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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Growth and Income 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
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| Invesco V.I. Growth and Income Fund |
| 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 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. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, the effective advisory fee rate incurred by the Fund was 0.56%.
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).
Effective May 1, 2021, the Adviser has contractually agreed, through at least June 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 2.00% and Series II shares to 2.25% of the Fund’s average daily net assets (the “expense limits”). Prior to May 1, 2021, the Adviser had 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 0.78% and Series II shares to 1.03% 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $12,134.
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, 2021, Invesco was paid $243,562 for accounting and fund administrative services and was reimbursed $2,502,717 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $4,261 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.
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| Invesco V.I. Growth and Income Fund |
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| | |
| Level 1 - | | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 - | | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 - | | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | $ | 1,592,671,852 | | | $ | 54,797,438 | | | | $– | | | $ | 1,647,469,290 | |
|
| |
Money Market Funds | | | 30,450,449 | | | | 10,993,395 | | | | – | | | | 41,443,844 | |
|
| |
Total Investments in Securities | | | 1,623,122,301 | | | | 65,790,833 | | | | – | | | | 1,688,913,134 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | 45,956 | | | | – | | | | 45,956 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | (856,235 | ) | | | – | | | | (856,235 | ) |
|
| |
Total Other Investments | | | – | | | | (810,279 | ) | | | – | | | | (810,279 | ) |
|
| |
Total Investments | | $ | 1,623,122,301 | | | $ | 64,980,554 | | | | $– | | | $ | 1,688,102,855 | |
|
| |
| * | 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, 2021:
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Assets | | Risk | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 45,956 | |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 45,956 | |
|
| |
| |
| | | Value | |
| | | Currency | |
| Derivative Liabilities | | Risk | |
|
| |
Unrealized depreciation on forward foreign currency contracts outstanding | | $ | (856,235 | ) |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | (856,235 | ) |
|
| |
|
| Invesco V.I. Growth and Income 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, 2021.
| | | | | | | | | | | | | | |
| | | 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 | |
|
| |
State Street Bank & Trust Co. | | $45,956 | | $(856,235) | | $(810,279) | | $– | | $– | | $ | (810,279 | ) |
|
| |
Effect of Derivative Investments for the year ended December 31, 2021
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 |
| | | Currency |
| | | Risk |
Realized Gain: | | |
| |
Forward foreign currency contracts | | $1,896,756 |
Change in Net Unrealized Appreciation: | | |
| |
Forward foreign currency contracts | | 150,142 |
Total | | $2,046,898 |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward |
| | | Foreign Currency |
| | | Contracts |
|
|
Average notional value | | $90,805,441 |
|
|
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 22,289,957 | | | | | | | $ | 26,309,042 | |
|
| |
Long-term capital gain | | | – | | | | | | | | 21,853,705 | |
|
| |
Total distributions | | $ | 22,289,957 | | | | | | | $ | 48,162,747 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Growth and Income Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 23,685,349 | |
|
| |
Undistributed long-term capital gain | | | 98,032,547 | |
|
| |
Net unrealized appreciation – investments | | | 516,779,639 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 4,167 | |
|
| |
Temporary book/tax differences | | | (142,130 | ) |
|
| |
Shares of beneficial interest | | | 1,023,732,355 | |
|
| |
Total net assets | | $ | 1,662,091,927 | |
|
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $471,215,380 and $759,109,118, 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 | | | $529,579,941 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (12,800,302 | ) |
|
| |
Net unrealized appreciation of investments | | | $516,779,639 | |
|
| |
Cost of investments for tax purposes is $1,171,323,216.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, fair fund distributions and securities litigation, on December 31, 2021, undistributed net investment income was increased by $36,090 and undistributed net realized gain was decreased by $36,090. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 877,576 | | | $ | 19,495,913 | | | | 1,177,028 | | | $ | 18,316,966 | |
|
| |
Series II | | | 312,619 | | | | 6,923,841 | | | | 21,163,497 | | | | 336,267,970 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 118,207 | | | | 2,756,581 | | | | 341,629 | | | | 5,561,715 | |
|
| |
Series II | | | 838,702 | | | | 19,533,376 | | | | 2,618,379 | | | | 42,601,032 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,540,514 | ) | | | (33,547,147 | ) | | | (2,909,124 | ) | | | (48,468,777 | ) |
|
| |
Series II | | | (14,516,749 | ) | | | (316,925,197 | ) | | | (27,458,503 | ) | | | (419,716,880 | ) |
|
| |
Net increase (decrease) in share activity | | | (13,910,159 | ) | | $ | (301,762,633 | ) | | | (5,067,094 | ) | | $ | (65,437,974 | ) |
|
| |
| (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. |
|
| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,074.90 | | $3.82 | | $1,021.53 | | $3.72 | | 0.73% |
Series II | | 1,000.00 | | 1,073.50 | | 5.12 | | 1,020.27 | | 4.99 | | 0.98 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| 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 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, 2021:
| | | | | | | | |
Federal and State Income Tax | | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 100.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| 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.
| | | | | | | | |
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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | 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) | | | | |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. Growth and Income Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Health Care Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2021, Series I shares of Invesco V.I. Health Care Fund (the Fund) underperformed the S&P Composite 1500 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 12.30 | % |
Series II Shares | | | 12.05 | |
MSCI World Index▼ (Broad Market Index) | | | 21.82 | |
S&P Composite 1500 Health Care Index▼ (Style-Specific Index) | | | 24.85 | |
Source(s):▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter,
resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
In this environment, strong stock selection within health care facilities and our overweight allocation to life sciences tools and services contributed the most to relative Fund performance compared to the S&P Composite 1500 Health Care Index during the fiscal year. Stock selection in biotechnology and health care services detracted the most from relative Fund performance.
At the stock level, the top three individual contributors to absolute Fund performance during the fiscal year were UnitedHealth, Eli Lilly and Danaher. UnitedHealth is the largest managed care company in the US and touches almost every segment of US health care. This impressive enterprise has a strong growth profile, with a unique strategy and market position. While COVID-19 has hindered numerous health care companies, the pandemic accelerated many of UnitedHealth’s strategic initiatives, including virtual home care, data-driven coordinated care and specialty pharmacy at home. Eli Lilly’s Alzheimer’s drug Donanemab had positive Phase 2 data released in January 2021 and the stock rose in early June as approval of Biogen’s Alzheimer’s drug Aduhelm increased the likelihood that Donanemab will be approved based on existing data and earlier than expected. In addition, Eli Lilly’s diabetes and metabolic disease drug Tirzepatide continued to put up strong and differentiated data through the
fiscal year. Danaher, a health care equipment company, reported impressive quarterly results over the summer, beating expectations with broad-based performance across its businesses and raising its forward guidance. The stock also performed well during the fiscal year from continued COVID-related demand tailwinds.
At the stock level, the top three individual detractors from absolute Fund performance during the fiscal year were PMV Pharmaceuticals, Amedisys and ACADIA Pharmaceuticals. PMV Pharmaceuticals is a clinical stage biotechnology company researching gene mutations to find targeted cancer treatments. Shares declined after a competitor’s Phase 3 study missed its primary endpoint in a similar gene mutation treatment area. We exited the stock during the fiscal year. Amedisys is a home health and hospice company. Over the summer, the company reported better-than-expected earnings but slightly missed on revenue expectations and provided lower-than-expected full-year guidance. The company’s hospice care segment experienced hiring difficulties, employee turnover issues and referral difficulty as a result of the pandemic. We exited the stock during the fiscal year. ACADIA Pharmaceuticals is a biotechnology company making treatments for central nervous system disorders. Shares declined in March 2021 after the FDA cited deficiencies in the company’s application for Nuplazid, its treatment for dementia-related psychosis, making final FDA approval seem unlikely. We sold the stock during the fiscal year.
Looking ahead, we believe in the tremendous growth potential presented by the health care sector, particularly in the diagnostics, life science tools and medical device industries, among others. We have identified three main themes within health care that we believe are driving growth: Genetic Revolution, The Evolution of the Biotech Ecosystem and Disruptive Medical Technologies. We invest in premier health care companies that we believe are positioned to compound multi-year growth. We combine in-depth health care experience with bottom-up fundamental analysis to evaluate company management, identify growth prospects and manage risk.
We thank you for your investment in the Invesco V.I. Health Care Fund.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
|
| Invesco V.I. Health Care Fund |
Portfolio manager(s):
Justin Livengood
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. Health Care Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (5/21/97) | | | 9.43 | % |
10 Years | | | 13.97 | |
5 Years | | | 14.76 | |
1 Year | | | 12.30 | |
Series II Shares | | | | |
Inception (4/30/04) | | | 9.11 | % |
10 Years | | | 13.68 | |
5 Years | | | 14.48 | |
1 Year | | | 12.05 | |
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.
|
| 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 S&P Composite 1500® Health Care Index comprises those companies included in the S&P Composite 1500 that are classified as members of the GICS® Health Care sector. |
| ∎ | 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. Health Care Fund |
Fund Information
Portfolio Composition
| | | | | |
| By country | | % of total net assets |
| |
United States | | | | 89.55 | % |
| |
Switzerland | | | | 3.28 | |
| |
United Kingdom | | | | 2.53 | |
| |
Denmark | | | | 2.49 | |
| |
Netherlands | | | | 0.72 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.43 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | UnitedHealth Group, Inc. | | | | 7.81 | % |
| | |
2. | | Thermo Fisher Scientific, Inc. | | | | 4.88 | |
| | |
3. | | Danaher Corp. | | | | 4.36 | |
| | |
4. | | Eli Lilly and Co. | | | | 4.30 | |
| | |
5. | | IDEXX Laboratories, Inc. | | | | 3.39 | |
| | |
6. | | Intuitive Surgical, Inc. | | | | 3.32 | |
| | |
7. | | Anthem, Inc. | | | | 3.31 | |
| | |
8. | | HCA Healthcare, Inc. | | | | 3.17 | |
| | |
9. | | Abbott Laboratories | | | | 2.85 | |
| | |
10. | | AbbVie, Inc. | | | | 2.61 | |
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, 2021.
|
| Invesco V.I. Health Care Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.57% | |
Biotechnology–14.31% | | | | | | | | |
AbbVie, Inc.(b) | | | 46,335 | | | $ | 6,273,759 | |
|
| |
Alnylam Pharmaceuticals, Inc.(c) | | | 8,987 | | | | 1,524,015 | |
|
| |
Amgen, Inc. | | | 5,440 | | | | 1,223,837 | |
|
| |
Arcus Biosciences, Inc.(b)(c) | | | 18,763 | | | | 759,339 | |
|
| |
Argenx SE, ADR (Netherlands)(c) | | | 4,924 | | | | 1,724,336 | |
|
| |
Biohaven Pharmaceutical Holding Co. Ltd.(b)(c) | | | 14,228 | | | | 1,960,761 | |
|
| |
Blueprint Medicines Corp.(c) | | | 4,136 | | | | 443,007 | |
|
| |
CareDx, Inc.(c) | | | 14,884 | | | | 676,924 | |
|
| |
Genmab A/S, ADR (Denmark)(b)(c) | | | 35,885 | | | | 1,419,611 | |
|
| |
Gilead Sciences, Inc. | | | 31,471 | | | | 2,285,109 | |
|
| |
Halozyme Therapeutics, Inc.(c) | | | 30,145 | | | | 1,212,130 | |
|
| |
Horizon Therapeutics PLC(c) | | | 25,107 | | | | 2,705,530 | |
|
| |
Intellia Therapeutics, Inc.(c) | | | 3,639 | | | | 430,275 | |
|
| |
Legend Biotech Corp., ADR(c) | | | 5,175 | | | | 241,207 | |
|
| |
Mirati Therapeutics, Inc.(b)(c) | | | 3,403 | | | | 499,186 | |
|
| |
Natera, Inc.(c) | | | 18,472 | | | | 1,725,100 | |
|
| |
Regeneron Pharmaceuticals, Inc.(c) | | | 6,249 | | | | 3,946,369 | |
|
| |
Seagen, Inc.(c) | | | 8,402 | | | | 1,298,949 | |
|
| |
SpringWorks Therapeutics, Inc.(b)(c) | | | 4,794 | | | | 297,132 | |
|
| |
Sutro Biopharma, Inc.(c) | | | 15,622 | | | | 232,455 | |
|
| |
Twist Bioscience Corp.(b)(c) | | | 4,877 | | | | 377,431 | |
|
| |
United Therapeutics Corp.(c) | | | 7,094 | | | | 1,532,872 | |
|
| |
Veracyte, Inc.(b)(c) | | | 16,986 | | | | 699,823 | |
|
| |
Zentalis Pharmaceuticals, Inc.(b)(c) | | | 10,377 | | | | 872,291 | |
|
| |
| | | | | | | 34,361,448 | |
|
| |
| | |
Health Care Equipment–21.15% | | | | | | | | |
Abbott Laboratories | | | 48,542 | | | | 6,831,801 | |
|
| |
AtriCure, Inc.(c) | | | 5,182 | | | | 360,304 | |
|
| |
Axonics, Inc.(c) | | | 12,548 | | | | 702,688 | |
|
| |
DexCom, Inc.(c) | | | 6,065 | | | | 3,256,602 | |
|
| |
Edwards Lifesciences Corp.(c) | | | 31,697 | | | | 4,106,346 | |
|
| |
Globus Medical, Inc., Class A(c) | | | 27,535 | | | | 1,988,027 | |
|
| |
IDEXX Laboratories, Inc.(c) | | | 12,351 | | | | 8,132,640 | |
|
| |
Inari Medical, Inc.(c) | | | 14,122 | | | | 1,288,915 | |
|
| |
Inmode Ltd.(c) | | | 7,764 | | | | 547,983 | |
|
| |
Insulet Corp.(c) | | | 9,444 | | | | 2,512,765 | |
|
| |
Intuitive Surgical, Inc.(c) | | | 22,214 | | | | 7,981,490 | |
|
| |
Masimo Corp.(c) | | | 8,979 | | | | 2,628,872 | |
|
| |
Penumbra, Inc.(b)(c) | | | 6,487 | | | | 1,863,845 | |
|
| |
ResMed, Inc. | | | 7,275 | | | | 1,894,992 | |
|
| |
Shockwave Medical, Inc.(c) | | | 7,948 | | | | 1,417,367 | |
|
| |
Stryker Corp. | | | 15,410 | | | | 4,120,942 | |
|
| |
Tandem Diabetes Care, Inc.(c) | | | 7,759 | | | | 1,167,885 | |
|
| |
| | | | | | | 50,803,464 | |
|
| |
| | |
Health Care Facilities–5.04% | | | | | | | | |
HCA Healthcare, Inc. | | | 29,606 | | | | 7,606,374 | |
|
| |
Surgery Partners, Inc.(b)(c) | | | 33,983 | | | | 1,815,032 | |
|
| |
Tenet Healthcare Corp.(c) | | | 32,758 | | | | 2,676,001 | |
|
| |
| | | | | | | 12,097,407 | |
|
| |
| | |
Health Care Services–1.72% | | | | | | | | |
AMN Healthcare Services, Inc.(c) | | | 6,267 | | | | 766,642 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Health Care Services–(continued) | | | | | | | | |
CVS Health Corp. | | | 27,777 | | | $ | 2,865,475 | |
|
| |
Guardant Health, Inc.(b)(c) | | | 5,099 | | | | 510,002 | |
|
| |
| | | | | | | 4,142,119 | |
|
| |
| | |
Health Care Supplies–2.53% | | | | | | | | |
Alcon, Inc. (Switzerland)(b) | | | 17,632 | | | | 1,536,100 | |
|
| |
Align Technology, Inc.(c) | | | 5,533 | | | | 3,636,177 | |
|
| |
Cooper Cos., Inc. (The) | | | 2,149 | | | | 900,302 | |
|
| |
| | | | | | | 6,072,579 | |
|
| |
| | |
Health Care Technology–2.49% | | | | | | | | |
Certara, Inc.(c) | | | 16,158 | | | | 459,210 | |
|
| |
Health Catalyst, Inc.(b)(c) | | | 17,405 | | | | 689,586 | |
|
| |
Inspire Medical Systems, Inc.(c) | | | 11,949 | | | | 2,748,987 | |
|
| |
Omnicell, Inc.(c) | | | 7,382 | | | | 1,332,008 | |
|
| |
Phreesia, Inc.(b)(c) | | | 17,930 | | | | 746,964 | |
|
| |
| | | | | | | 5,976,755 | |
|
| |
| | |
Life Sciences Tools & Services–22.60% | | | | | | | | |
Agilent Technologies, Inc. | | | 33,795 | | | | 5,395,372 | |
|
| |
Bio-Rad Laboratories, Inc., Class A(c) | | | 3,387 | | | | 2,559,116 | |
|
| |
Bio-Techne Corp. | | | 5,149 | | | | 2,663,784 | |
|
| |
Charles River Laboratories International, Inc.(c) | | | 9,256 | | | | 3,487,476 | |
|
| |
Danaher Corp. | | | 31,823 | | | | 10,470,085 | |
|
| |
IQVIA Holdings, Inc.(c) | | | 16,035 | | | | 4,524,115 | |
|
| |
Lonza Group AG (Switzerland) | | | 2,411 | | | | 2,008,468 | |
|
| |
Maravai LifeSciences Holdings, Inc., Class A(c) | | | 15,167 | | | | 635,497 | |
|
| |
Medpace Holdings, Inc.(c) | | | 4,507 | | | | 980,903 | |
|
| |
Mettler-Toledo International, Inc.(c) | | | 1,586 | | | | 2,691,775 | |
|
| |
Quanterix Corp.(c) | | | 13,121 | | | | 556,330 | |
|
| |
Repligen Corp.(c) | | | 12,984 | | | | 3,438,683 | |
|
| |
Thermo Fisher Scientific, Inc. | | | 17,553 | | | | 11,712,064 | |
|
| |
West Pharmaceutical Services, Inc. | | | 6,740 | | | | 3,161,127 | |
|
| |
| | | | | | | 54,284,795 | |
|
| |
| | |
Managed Health Care–11.83% | | | | | | | | |
Anthem, Inc. | | | 17,139 | | | | 7,944,612 | |
|
| |
Humana, Inc. | | | 3,690 | | | | 1,711,643 | |
|
| |
UnitedHealth Group, Inc. | | | 37,362 | | | | 18,760,955 | |
|
| |
| | | | | | | 28,417,210 | |
|
| |
| | |
Pharmaceuticals–16.90% | | | | | | | | |
Arvinas, Inc.(c) | | | 6,220 | | | | 510,911 | |
|
| |
AstraZeneca PLC (United Kingdom) | | | 5,321 | | | | 620,030 | |
|
| |
AstraZeneca PLC, ADR (United Kingdom) | | | 93,542 | | | | 5,448,821 | |
|
| |
Catalent, Inc.(c) | | | 25,843 | | | | 3,308,679 | |
|
| |
Eli Lilly and Co. | | | 37,399 | | | | 10,330,352 | |
|
| |
Merck & Co., Inc. | | | 25,869 | | | | 1,982,600 | |
|
| |
Novo Nordisk A/S, Class B (Denmark) | | | 40,809 | | | | 4,562,232 | |
|
| |
Pfizer, Inc. | | | 56,933 | | | | 3,361,894 | |
|
| |
Roche Holding AG (Switzerland) | | | 10,449 | | | | 4,331,480 | |
|
| |
Zoetis, Inc. | | | 25,156 | | | | 6,138,819 | |
|
| |
| | | | | | | 40,595,818 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $159,752,452) | | | | 236,751,595 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Health Care Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Money Market Funds–1.45% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 1,179,487 | | | $ | 1,179,487 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 958,250 | | | | 958,442 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 1,347,986 | | | | 1,347,986 | |
|
| |
Total Money Market Funds (Cost $3,485,694) | | | | 3,485,915 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.02%
(Cost $163,238,146) | | | | 240,237,510 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–6.97% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 5,022,223 | | | $ | 5,022,223 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 11,716,177 | | | | 11,718,519 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $16,740,743) | | | | 16,740,742 | |
|
| |
TOTAL INVESTMENTS IN
SECURITIES–106.99%
(Cost $179,978,889) | | | | 256,978,252 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(6.99)% | | | | (16,786,013 | ) |
|
| |
NET ASSETS–100.00% | | | $ | 240,192,239 | |
|
| |
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) | All or a portion of this security was out on loan at December 31, 2021. (c) Non-income producing security. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | | | | | | | | |
| | | | | | | | | | | | Unrealized | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Appreciation | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | (Depreciation) | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 867,698 | | | $ | 17,753,780 | | | | $(17,441,991 | ) | | | $ - | | | $ | - | | | | $ 1,179,487 | | | | $ 316 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 861,656 | | | | 12,554,319 | | | | (12,457,395 | ) | | | 13 | | | | (151 | ) | | | 958,442 | | | | 155 | |
Invesco Treasury Portfolio, Institutional Class | | | 991,654 | | | | 20,290,035 | | | | (19,933,703 | ) | | | - | | | | - | | | | 1,347,986 | | | | 136 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | 220,001 | | | | 41,768,277 | | | | (36,966,055 | ) | | | - | | | | - | | | | 5,022,223 | | | | 460* | |
Invesco Private Prime Fund | | | 330,001 | | | | 80,869,880 | | | | (69,479,686 | ) | | | (1) | | | | (1,675 | ) | | | 11,718,519 | | | | 6,205* | |
Total | | | $3,271,010 | | | $ | 173,236,291 | | | $ | (156,278,830 | ) | | | $12 | | | $ | (1,826 | ) | | | $20,226,657 | | | | $7,272 | |
| | * | 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, 2021. |
| (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. Health Care Fund |
| | |
Statement of Assets and Liabilities December 31, 2021 | | Statement of Operations For the year ended December 31, 2021 |
| | |
Assets: | | |
| |
Investments in unaffiliated securities, at value
(Cost $159,752,452)* | | $236,751,595 |
Investments in affiliated money market funds, at value
(Cost $20,226,437) | | 20,226,657 |
Foreign currencies, at value (Cost $19,039) | | 19,025 |
Receivable for: | | |
Fund shares sold | | 155,438 |
Dividends | | 212,486 |
Investment for trustee deferred compensation and retirement plans | | 65,248 |
Other assets | | 902 |
Total assets | | 257,431,351 |
| |
Liabilities: | | |
Payable for: | | |
Fund shares reacquired | | 91,787 |
Amount due custodian | | 165,060 |
Collateral upon return of securities loaned | | 16,740,743 |
Accrued fees to affiliates | | 113,287 |
Accrued other operating expenses | | 55,119 |
Trustee deferred compensation and retirement plans | | 73,116 |
Total liabilities | | 17,239,112 |
Net assets applicable to shares outstanding | | $240,192,239 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $135,436,465 |
Distributable earnings | | 104,755,774 |
| | | $240,192,239 |
| |
Net Assets: | | |
Series I | | $158,668,628 |
Series II | | $ 81,523,611 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 4,685,538 |
Series II | | 2,578,550 |
Series I: | | |
Net asset value per share | | $ 33.86 |
Series II: | | |
Net asset value per share | | $ 31.62 |
| * | At December 31, 2021, securities with an aggregate value of $16,296,961 were on loan to brokers. |
| | |
Investment income: | | |
| |
Dividends (net of foreign withholding taxes of $44,239) | | $ 1,664,366 |
Dividends from affiliated money market funds (includes securities lending income of $18,975) | | 19,582 |
Total investment income | | 1,683,948 |
| |
Expenses: | | |
Advisory fees | | 1,745,696 |
Administrative services fees | | 381,728 |
Custodian fees | | 1,309 |
Distribution fees - Series II | | 193,997 |
Transfer agent fees | | 24,312 |
Trustees’ and officers’ fees and benefits | | 24,454 |
Reports to shareholders | | 12,925 |
Professional services fees | | 54,459 |
Other | | 6,520 |
Total expenses | | 2,445,400 |
Less: Fees waived | | (1,296) |
Net expenses | | 2,444,104 |
Net investment income (loss) | | (760,156) |
| |
Realized and unrealized gain (loss) from: | | |
Net realized gain (loss) from: | | |
Unaffiliated investment securities | | 29,029,364 |
Affiliated investment securities | | (1,826) |
Foreign currencies | | 4,635 |
| | | 29,032,173 |
Change in net unrealized appreciation (depreciation) of: Unaffiliated investment securities | | (1,306,215) |
Affiliated investment securities | | 12 |
Foreign currencies | | (7,714) |
| | | (1,313,917) |
Net realized and unrealized gain | | 27,718,256 |
Net increase in net assets resulting from operations | | $26,958,100 |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (760,156 | ) | | $ | 121,434 | |
|
| |
Net realized gain | | | 29,032,173 | | | | 24,351,223 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (1,313,917 | ) | | | 4,448,294 | |
|
| |
Net increase in net assets resulting from operations | | | 26,958,100 | | | | 28,920,951 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (16,710,371 | ) | | | (3,835,331 | ) |
|
| |
Series II | | | (8,901,270 | ) | | | (1,795,400 | ) |
|
| |
Total distributions from distributable earnings | | | (25,611,641 | ) | | | (5,630,731 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 1,693,474 | | | | (10,234,970 | ) |
|
| |
Series II | | | 5,567,811 | | | | (2,188,112 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 7,261,285 | | | | (12,423,082 | ) |
|
| |
Net increase in net assets | | | 8,607,744 | | | | 10,867,138 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 231,584,495 | | | | 220,717,357 | |
|
| |
End of year | | $ | 240,192,239 | | | $ | 231,584,495 | |
|
| |
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 12/31/21 | | | $ | 33.69 | | | | $ | (0.08 | ) | | | $ | 4.17 | | | | $ | 4.09 | | | | $ | (0.07 | ) | | | $ | (3.85 | ) | | | $ | (3.92 | ) | | | $ | 33.86 | | | | | 12.30 | % | | | $ | 158,669 | | | | | 0.97 | % | | | | 0.97 | % | | | | (0.25 | )% | | | | 55 | % |
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 | | | | | 0.98 | | | | | 0.13 | | | | | 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 | (d) | | | | 0.59 | | | | | 0.62 | | | | | – | | | | | (3.65 | ) | | | | (3.65 | ) | | | | 23.41 | | | | | 0.90 | | | | | 129,377 | | | | | 1.00 | | | | | 1.00 | | | | | 0.10 | (d) | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 31.70 | | | | | (0.16 | ) | | | | 3.93 | | | | | 3.77 | | | | | (0.00 | )(e) | | | | (3.85 | ) | | | | (3.85 | ) | | | | 31.62 | | | | | 12.05 | | | | | 81,524 | | | | | 1.22 | | | | | 1.22 | | | | | (0.50 | ) | | | | 55 | |
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 | | | | | 1.23 | | | | | (0.12 | ) | | | | 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 | )(d) | | | | 0.58 | | | | | 0.54 | | | | | – | | | | | (3.65 | ) | | | | (3.65 | ) | | | | 22.14 | | | | | 0.62 | | | | | 60,306 | | | | | 1.25 | | | | | 1.25 | | | | | (0.15 | )(d) | | | | 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 | |
| (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) | 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. |
| (e) | Amount represents less than $(0.005) per share. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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
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| Invesco V.I. Health Care 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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.
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| Invesco V.I. Health Care Fund |
| 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 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. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $1,296.
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, 2021, Invesco was paid $32,821 for accounting and fund administrative services and was reimbursed $348,907 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, 2021, 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
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| Invesco V.I. Health Care Fund |
and own Series II shares of the Fund. For the year ended December 31, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $4,734 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, 2021. 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 | | | $225,229,385 | | | | $11,522,210 | | | | $– | | | $236,751,595 |
Money Market Funds | | | 3,485,915 | | | | 16,740,742 | | | | – | | | �� 20,226,657 |
Total Investments | | | $228,715,300 | | | | $28,262,952 | | | | $– | | | $256,978,252 |
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, 2021 and 2020:
| | | | | | | | | | |
| | | 2021 | | | | | | 2020 |
Ordinary income* | | $ | 2,733,642 | | | | | | | $ 799,574 |
Long-term capital gain | | | 22,877,999 | | | | | | | 4,831,157 |
Total distributions | | $ | 25,611,641 | | | | | | | $5,630,731 |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed long-term capital gain | | $ | 27,848,407 | |
|
| |
Net unrealized appreciation – investments | | | 76,948,123 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 1,841 | |
|
| |
Temporary book/tax differences | | | (42,597 | ) |
|
| |
Shares of beneficial interest | | | 135,436,465 | |
|
| |
Total net assets | | $ | 240,192,239 | |
|
| |
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| Invesco V.I. Health Care Fund |
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, 2021.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $125,633,102 and $145,808,084, 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 | | $ | 80,601,295 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (3,653,172 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 76,948,123 | |
|
| |
Cost of investments for tax purposes is $180,030,129.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $999,438, undistributed net realized gain was decreased by $27,315 and shares of beneficial interest was decreased by $972,123. This reclassification had no effect on the net assets of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 472,288 | | | $ | 16,102,493 | | | | 688,939 | | | $ | 20,193,172 | |
|
| |
Series II | | | 247,161 | | | | 7,991,522 | | | | 296,254 | | | | 8,256,245 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 499,861 | | | | 16,710,371 | | | | 124,161 | | | | 3,835,331 | |
|
| |
Series II | | | 285,023 | | | | 8,901,270 | | | | 61,740 | | | | 1,795,400 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (904,760 | ) | | | (31,119,390 | ) | | | (1,155,847 | ) | | | (34,263,473 | ) |
|
| |
Series II | | | (350,544 | ) | | | (11,324,981 | ) | | | (444,589 | ) | | | (12,239,757 | ) |
|
| |
Net increase (decrease) in share activity | | | 249,029 | | | $ | 7,261,285 | | | | (429,342 | ) | | $ | (12,423,082 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 48% of the outstanding shares of the Fund. 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. |
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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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,069.40 | | $5.01 | | $1,020.37 | | $4.89 | | 0.96% |
Series II | | 1,000.00 | | 1,068.20 | | 6.31 | | 1,019.11 | | 6.16 | | 1.21 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | |
Long-Term Capital Gain Distributions | | $ | 22,877,999 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 46.54 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
| | * | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| 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) | | 186 | | 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler -1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. High Yield Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, Series I shares of Invesco V.I. High Yield Fund (the Fund) underperformed the Bloomberg 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 4.38 | % |
Series II Shares | | | 4.00 | |
Bloomberg U.S. Aggregate Bond Index▼ (Broad Market Index) | | | -1.54 | |
Bloomberg U.S. Corporate High Yield 2% Issuer Cap Index▼ (Style-Specific Index) | | | 5.26 | |
Lipper VUF High Yield Bond Funds Classification Average∎ (Peer Group) | | | 4.80 | |
|
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | |
Market conditions and your Fund
Throughout the fiscal year, global financial markets continued to be dominated by the impact of COVID-19. The first quarter of 2021 began with US political unrest and rising coronavirus (COVID-19) infection rates which drove an increase in volatility, but fear was quickly replaced with optimism when developed economies around the world began an aggressive vaccine rollout campaign and eased COVID-19 lockdown measures. US interest rates quickly moved higher, reflecting higher economic growth and inflation expectations as global economies moved towards a post-pandemic world. Contributing to inflation fears was an additional stimulus package signed into law by the Biden administration. 30-year Treasury yields moved higher by 0.77%1 to end the quarter at 2.41%1 while short-term rates, which are closely tied to Federal Reserve policy, were quite steady. Two-year US Treasury yields moved up just 0.04% to 0.16%.1
In the second and third quarters of 2021, fixed income markets stabilized. Investors remained optimistic about the strength of the economic recovery after the Bureau of Economic Analysis reported that US GDP grew at a 6.7% and 2.3% annualized rate for the second and third quarter, respectively.2 As the US COVID-19 vaccination rate neared the 50% threshold, consumers resumed pre-pandemic activities in the third quarter and economically sensitive areas such as the energy and transportation sectors began to recover.
Heading into the end of the year, concerns about inflation heightened as US inflation rose to 7%, its highest level in nearly 40 years.3 Vaccine efficacy remained high, but headwinds emerged when the spread of the COVID-19 delta and omicron variants materialized. Though the US Federal Reserve left policy rates unchanged, although they indicated its accommodative policies were coming to an end in 2022 through a willingness to raise interest rates to combat inflation and the announced reduction of its monthly bond purchase program. In response to the
monetary policy pivot, short term US interest rates moved higher. The two-year Treasury yield rose moderately from 0.27% to 0.73%, while the 10-year increased slightly from 1.48% to 1.52%.1 Despite the withdrawal of central bank support and coronavirus variants raising concerns about economic reopening and the resumption of travel, strong corporate earnings and historically low default rates are driving cautious optimism moving into 2022.
Against this backdrop, the high yield ended the period with positive gains. The high yield default rate ended the year at 0.27%; dropping well below the 25-year average of 3.03%.4 For the second consecutive year, high yield companies took advantage of historically low interest rates, setting a new record with companies issuing $483 billion in debt.4
The Bloomberg 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 5.26% for the year ended December 31, 2021.5 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 midstream and financial institution sectors. The Fund had an overweight 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 the best performing sector in the high yield market as lockdowns were lifted and travel began to resume. The Fund’s underweight allocation to wirelines was also beneficial to relative performance.
During the year, security selection in the healthcare and consumer products sectors detracted from Fund performance relative to the style-specific index. The Fund’s underweight allocation to leisure also detracted from relative performance.
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 rates 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 Department of the Treasury
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: JP Morgan Markets
5 Source: Bloomberg
Portfolio manager(s):
Niklas Nordenfelt
Rahim Shad
Philip Susser
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| | |
Average Annual Total Returns | | | | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (5/1/98) | | | 4.33 | % |
10 Years | | | 5.62 | |
5 Years | | | 4.69 | |
1 Year | | | 4.38 | |
Series II Shares | | | | |
Inception (3/26/02) | | | 6.28 | % |
10 Years | | | 5.34 | |
5 Years | | | 4.38 | |
1 Year | | | 4.00 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is provided by Invesco.
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The Bloomberg U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. |
| ∎ | The Bloomberg 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 |
| |
BBB | | | | 0.49 | % |
| |
BB | | | | 40.52 | |
| |
B | | | | 46.36 | |
| |
CCC | | | | 8.26 | |
| |
Cash | | | | 3.98 | |
| |
Non-rated | | | | 0.39 | |
Top Five Debt Issuers*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | CCO Holdings LLC/CCO Holdings Capital Corp. | | | | 1.94 | % |
| | |
2. | | Ford Motor Credit Co. LLC | | | | 1.76 | |
| | |
3. | | CSC Holdings LLC | | | | 1.69 | |
| | |
4. | | OneMain Finance Corp. | | | | 1.57 | |
| | |
5. | | Occidental Petroleum Corp. | | | | 1.54 | |
† 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, 2021.
|
| Invesco V.I. High Yield Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
U.S. Dollar Denominated Bonds & Notes–88.11% | |
Advertising–0.50% | | | | | | | | |
Lamar Media Corp., | | | | | | | | |
4.00%, 02/15/2030 | | $ | 15,000 | | | $ | 15,239 | |
|
| |
3.63%, 01/15/2031 | | | 770,000 | | | | 750,962 | |
|
| |
| | | | | | | 766,201 | |
|
| |
| | |
Aerospace & Defense–0.41% | | | | | | | | |
TransDigm UK Holdings PLC, 6.88%, 05/15/2026 | | | 600,000 | | | | 627,657 | |
|
| |
| | |
Airlines–2.54% | | | | | | | | |
American Airlines, Inc./AAdvantage Loyalty IP Ltd., | | | | | | | | |
5.50%, 04/20/2026(b) | | | 1,911,000 | | | | 1,990,173 | |
|
| |
5.75%, 04/20/2029(b) | | | 351,000 | | | | 375,835 | |
|
| |
Delta Air Lines, Inc., 7.00%, 05/01/2025(b) | | | 662,000 | | | | 757,522 | |
|
| |
United Airlines, Inc., 4.38%, 04/15/2026(b) | | | 768,000 | | | | 801,830 | |
|
| |
| | | | | | | 3,925,360 | |
|
| |
| | |
Alternative Carriers–0.47% | | | | | | | | |
Lumen Technologies, Inc., Series P, 7.60%, 09/15/2039 | | | 678,000 | | | | 728,111 | |
|
| |
| | |
Apparel Retail–0.54% | | | | | | | | |
Gap, Inc. (The), 3.63%, 10/01/2029(b) | | | 843,000 | | | | 835,122 | |
|
| |
| |
Apparel, Accessories & Luxury Goods–0.49% | | | | | |
Kontoor Brands, Inc., 4.13%, 11/15/2029(b) | | | 763,000 | | | | 764,274 | |
|
| |
| | |
Auto Parts & Equipment–1.98% | | | | | | | | |
Clarios Global L.P., 6.75%, 05/15/2025(b) | | | 148,000 | | | | 155,180 | |
|
| |
Clarios Global L.P./Clarios US Finance Co., 8.50%, 05/15/2027(b) | | | 932,000 | | | | 989,118 | |
|
| |
Dana, Inc., | | | | | | | | |
5.38%, 11/15/2027 | | | 122,000 | | | | 128,137 | |
|
| |
5.63%, 06/15/2028 | | | 614,000 | | | | 653,222 | |
|
| |
NESCO Holdings II, Inc., 5.50%, 04/15/2029(b) | | | 1,103,000 | | | | 1,140,805 | |
|
| |
| | | | | | | 3,066,462 | |
|
| |
| | |
Automobile Manufacturers–3.74% | | | | | | | | |
Allison Transmission, Inc., | | | | | | | | |
4.75%, 10/01/2027(b) | | | 849,000 | | | | 885,083 | |
|
| |
3.75%, 01/30/2031(b) | | | 1,152,000 | | | | 1,125,245 | |
|
| |
Ford Motor Co., 4.75%, 01/15/2043 | | | 315,000 | | | | 348,240 | |
|
| |
Ford Motor Credit Co. LLC, | | | | | | | | |
5.13%, 06/16/2025 | | | 204,000 | | | | 222,115 | |
|
| |
3.38%, 11/13/2025 | | | 251,000 | | | | 261,099 | |
|
| |
4.39%, 01/08/2026 | | | 282,000 | | | | 304,174 | |
|
| |
5.11%, 05/03/2029 | | | 884,000 | | | | 1,005,961 | |
|
| |
4.00%, 11/13/2030 | | | 861,000 | | | | 927,753 | |
|
| |
J.B. Poindexter & Co., Inc., 7.13%, 04/15/2026(b) | | | 686,000 | | | | 718,787 | |
|
| |
| | | | | | | 5,798,457 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Automotive Retail–3.87% | | | | | | | | |
Asbury Automotive Group, Inc., | | | | | | | | |
4.50%, 03/01/2028 | | $ | 205,000 | | | $ | 209,394 | |
|
| |
4.63%, 11/15/2029(b) | | | 985,000 | | | | 1,005,114 | |
|
| |
Group 1 Automotive, Inc., 4.00%, 08/15/2028(b) | | | 1,573,000 | | | | 1,569,720 | |
|
| |
LCM Investments Holdings II LLC, 4.88%, 05/01/2029(b) | | | 1,576,000 | | | | 1,622,138 | |
|
| |
Lithia Motors, Inc., 3.88%, 06/01/2029(b) | | | 755,000 | | | | 772,006 | |
|
| |
Sonic Automotive, Inc., 4.63%, 11/15/2029(b) | | | 804,000 | | | | 813,001 | |
|
| |
| | | | | | | 5,991,373 | |
|
| |
| | |
Broadcasting–0.82% | | | | | | | | |
Gray Television, Inc., 7.00%, 05/15/2027(b) | | | 1,182,000 | | | | 1,264,551 | |
|
| |
| | |
Building Products–0.50% | | | | | | | | |
Standard Industries, Inc., 5.00%, 02/15/2027(b) | | | 748,000 | | | | 770,915 | |
|
| |
| | |
Cable & Satellite–6.64% | | | | | | | | |
CCO Holdings LLC/CCO Holdings Capital Corp., | | | | | | | | |
5.00%, 02/01/2028(b) | | | 222,000 | | | | 231,324 | |
|
| |
4.75%, 03/01/2030(b) | | | 531,000 | | | | 553,183 | |
|
| |
4.50%, 08/15/2030(b) | | | 1,833,000 | | | | 1,879,256 | |
|
| |
4.25%, 01/15/2034(b) | | | 351,000 | | | | 345,959 | |
|
| |
CSC Holdings LLC, | | | | | | | | |
6.50%, 02/01/2029(b) | | | 1,445,000 | | | | 1,549,083 | |
|
| |
5.75%, 01/15/2030(b) | | | 503,000 | | | | 502,102 | |
|
| |
4.50%, 11/15/2031(b) | | | 391,000 | | | | 386,746 | |
|
| |
5.00%, 11/15/2031(b) | | | 200,000 | | | | 193,040 | |
|
| |
DISH DBS Corp., | | | | | | | | |
7.75%, 07/01/2026 | | | 227,000 | | | | 239,780 | |
|
| |
7.38%, 07/01/2028 | | | 302,000 | | | | 306,260 | |
|
| |
DISH Network Corp., Conv., 3.38%, 08/15/2026 | | | 1,216,000 | | | | 1,154,049 | |
|
| |
Gray Escrow II, Inc., 5.38%, 11/15/2031(b) | | | 586,000 | | | | 603,899 | |
|
| |
Sirius XM Radio, Inc., | | | | | | | | |
3.13%, 09/01/2026(b) | | | 961,000 | | | | 962,542 | |
|
| |
4.00%, 07/15/2028(b) | | | 615,000 | | | | 619,502 | |
|
| |
Virgin Media Finance PLC (United Kingdom), 5.00%, 07/15/2030(b) | | | 309,000 | | | | 307,937 | |
|
| |
Virgin Media Secured Finance PLC (United Kingdom), | | | | | | | | |
|
| |
5.50%, 05/15/2029(b) | | | 425,000 | | | | 449,486 | |
|
| |
| | | | | | | 10,284,148 | |
|
| |
| | |
Casinos & Gaming–3.23% | | | | | | | | |
Codere Finance 2 (Luxembourg) S.A. (Spain), 11.63% PIK Rate, 2.00% Cash Rate, 11/30/2027(b)(c) | | | 51,959 | | | | 50,920 | |
|
| |
Everi Holdings, Inc., 5.00%, 07/15/2029(b) | | | 773,000 | | | | 782,002 | |
|
| |
Midwest Gaming Borrower LLC/Midwest Gaming Finance Corp., 4.88%, 05/01/2029(b) | | | 785,000 | | | | 790,118 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Casinos & Gaming–(continued) | | | | | | | | |
Mohegan Gaming & Entertainment, 8.00%, 02/01/2026(b) | | $ | 1,463,000 | | | $ | 1,537,898 | |
|
| |
Scientific Games International, Inc., | | | | | | | | |
8.63%, 07/01/2025(b) | | | 294,000 | | | | 314,198 | |
|
| |
8.25%, 03/15/2026(b) | | | 417,000 | | | | 439,424 | |
|
| |
7.25%, 11/15/2029(b) | | | 341,000 | | | | 380,779 | |
|
| |
Wynn Resorts Finance LLC/Wynn Resorts Capital Corp., 5.13%, 10/01/2029(b) | | | 698,000 | | | | 709,514 | |
|
| |
| | | | | | | 5,004,853 | |
|
| |
| | |
Construction & Engineering–0.76% | | | | | | | | |
Great Lakes Dredge & Dock Corp., 5.25%, 06/01/2029(b) | | | 765,000 | | | | 789,102 | |
|
| |
Howard Midstream Energy Partners LLC, 6.75%, 01/15/2027(b) | | | 382,000 | | | | 391,905 | |
|
| |
| | | | | | | 1,181,007 | |
|
| |
| | |
Consumer Finance–2.55% | | | | | | | | |
FirstCash, Inc., 5.63%, 01/01/2030(b) | | | 765,000 | | | | 780,904 | |
|
| |
Navient Corp., | | | | | | | | |
7.25%, 09/25/2023 | | | 623,000 | | | | 672,292 | |
|
| |
5.00%, 03/15/2027 | | | 78,000 | | | | 79,628 | |
|
| |
OneMain Finance Corp., | | | | | | | | |
7.13%, 03/15/2026 | | | 346,000 | | | | 394,950 | |
|
| |
3.88%, 09/15/2028 | | | 417,000 | | | | 409,292 | |
|
| |
5.38%, 11/15/2029 | | | 1,485,000 | | | | 1,616,794 | |
|
| |
| | | | | | | 3,953,860 | |
|
| |
| | |
Copper–1.00% | | | | | | | | |
First Quantum Minerals Ltd. (Zambia), | | | | | | | | |
7.50%, 04/01/2025(b) | | | 1,028,000 | | | | 1,058,814 | |
|
| |
6.88%, 03/01/2026(b) | | | 477,000 | | | | 496,042 | |
|
| |
| | | | | | | 1,554,856 | |
|
| |
| |
Data Processing & Outsourced Services–0.52% | | | | | |
Clarivate Science Holdings Corp., 4.88%, 07/01/2029(b) | | | 788,000 | | | | 800,509 | |
|
| |
| | |
Department Stores–0.78% | | | | | | | | |
Macy’s Retail Holdings LLC, | | | | | | | | |
5.88%, 04/01/2029(b) | | | 748,000 | | | | 798,789 | |
|
| |
4.50%, 12/15/2034 | | | 407,000 | | | | 402,529 | |
|
| |
| | | | | | | 1,201,318 | |
|
| |
| | |
Diversified Chemicals–0.50% | | | | | | | | |
Trinseo Materials Operating S.C.A./Trinseo Materials Finance, Inc., 5.13%, 04/01/2029(b) | | | 763,000 | | | | 779,412 | |
|
| |
| | |
Diversified REITs–1.20% | | | | | | | | |
DigitalBridge Group, Inc., Conv., 5.00%, 04/15/2023 | | | 268,000 | | | | 277,216 | |
|
| |
iStar, Inc., | | | | | | | | |
4.75%, 10/01/2024 | | | 1,243,000 | | | | 1,291,154 | |
|
| |
5.50%, 02/15/2026 | | | 281,000 | | | | 291,150 | |
|
| |
| | | | | | | 1,859,520 | |
|
| |
| | |
Electric Utilities–1.73% | | | | | | | | |
Talen Energy Supply LLC, 7.63%, 06/01/2028(b) | | | 1,290,000 | | | | 1,150,054 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Electric Utilities–(continued) | | | | | | | | |
Vistra Operations Co. LLC, | | | | | | | | |
5.63%, 02/15/2027(b) | | $ | 259,000 | | | $ | 267,098 | |
|
| |
5.00%, 07/31/2027(b) | | | 458,000 | | | | 475,890 | |
|
| |
4.38%, 05/01/2029(b) | | | 777,000 | | | | 779,832 | |
|
| |
| | | | | | | 2,672,874 | |
|
| |
| |
Electrical Components & Equipment–1.05% | | | | | |
EnerSys, | | | | | | | | |
5.00%, 04/30/2023(b) | | | 342,000 | | | | 353,536 | |
|
| |
4.38%, 12/15/2027(b) | | | 350,000 | | | | 363,627 | |
|
| |
Sensata Technologies B.V., | | | | | | | | |
4.88%, 10/15/2023(b) | | | 546,000 | | | | 573,969 | |
|
| |
4.00%, 04/15/2029(b) | | | 329,000 | | | | 336,560 | |
|
| |
| | | | | | | 1,627,692 | |
|
| |
| | |
Electronic Components–0.12% | | | | | | | | |
Sensata Technologies, Inc., 3.75%, 02/15/2031(b) | | | 185,000 | | | | 184,609 | |
|
| |
| |
Environmental & Facilities Services–1.19% | | | | | |
Covanta Holding Corp., | | | | | | | | |
4.88%, 12/01/2029(b) | | | 199,000 | | | | 202,287 | |
|
| |
5.00%, 09/01/2030 | | | 450,000 | | | | 459,979 | |
|
| |
Waste Pro USA, Inc., 5.50%, 02/15/2026(b) | | | 1,188,000 | | | | 1,183,296 | |
|
| |
| | | | | | | 1,845,562 | |
|
| |
| |
Fertilizers & Agricultural Chemicals–0.97% | | | | | |
Consolidated Energy Finance S.A. (Switzerland), | | | | | | | | |
6.50%, 05/15/2026(b) | | | 350,000 | | | | 356,926 | |
|
| |
5.63%, 10/15/2028(b) | | | 456,000 | | | | 446,381 | |
|
| |
OCI N.V. (Netherlands), 4.63%, 10/15/2025(b) | | | 669,000 | | | | 694,793 | |
|
| |
| | | | | | | 1,498,100 | |
|
| |
| | |
Food Distributors–1.26% | | | | | | | | |
American Builders & Contractors Supply Co., Inc., 4.00%, 01/15/2028(b) | | | 1,173,000 | | | | 1,201,932 | |
|
| |
United Natural Foods, Inc., 6.75%, 10/15/2028(b) | | | 705,000 | | | | 755,954 | |
|
| |
| | | | | | | 1,957,886 | |
|
| |
| | |
Food Retail–0.19% | | | | | | | | |
PetSmart, Inc./PetSmart Finance Corp., 7.75%, 02/15/2029(b) | | | 274,000 | | | | 298,116 | |
|
| |
| | |
Health Care Facilities–1.50% | | | | | | | | |
Encompass Health Corp., 4.50%, 02/01/2028 | | | 749,000 | | | | 771,616 | |
|
| |
HCA, Inc., | | | | | | | | |
5.38%, 02/01/2025 | | | 506,000 | | | | 556,752 | |
|
| |
5.88%, 02/15/2026 | | | 290,000 | | | | 327,452 | |
|
| |
5.88%, 02/01/2029 | | | 205,000 | | | | 244,598 | |
|
| |
3.50%, 09/01/2030 | | | 395,000 | | | | 418,255 | |
|
| |
| | | | | | | 2,318,673 | |
|
| |
| | |
Health Care REITs–1.52% | | | | | | | | |
CTR Partnership L.P./CareTrust Capital Corp., 3.88%, 06/30/2028(b) | | | 786,000 | | | | 802,848 | |
|
| |
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 REITs–(continued) | | | | | | | | |
Diversified Healthcare Trust, | | | | | | | | |
4.75%, 05/01/2024 | | $ | 385,000 | | | $ | 394,625 | |
|
| |
9.75%, 06/15/2025 | | | 71,000 | | | | 76,908 | |
|
| |
4.38%, 03/01/2031 | | | 1,126,000 | | | | 1,083,071 | |
|
| |
| | | | | | | 2,357,452 | |
|
| |
| | |
Health Care Services–2.54% | | | | | | | | |
Community Health Systems, Inc., | | | | | | | | |
8.00%, 03/15/2026(b) | | | 673,000 | | | | 708,225 | |
|
| |
6.13%, 04/01/2030(b) | | | 803,000 | | | | 795,640 | |
|
| |
DaVita, Inc., | | | | | | | | |
4.63%, 06/01/2030(b) | | | 682,000 | | | | 699,432 | |
|
| |
3.75%, 02/15/2031(b) | | | 892,000 | | | | 870,717 | |
|
| |
Global Medical Response, Inc., 6.50%, 10/01/2025(b) | | | 86,000 | | | | 87,084 | |
|
| |
Hadrian Merger Sub, Inc., 8.50%, 05/01/2026(b) | | | 753,000 | | | | 778,207 | |
|
| |
| | | | | | | 3,939,305 | |
|
| |
| | |
Homebuilding–0.69% | | | | | | | | |
Taylor Morrison Communities, Inc., 6.63%, 07/15/2027(b) | | | 1,018,000 | | | | 1,074,636 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–0.43% | | | | | |
Carnival Corp., 10.50%, 02/01/2026(b) | | | 584,000 | | | | 667,343 | |
|
| |
| | |
Household Products–0.74% | | | | | | | | |
Prestige Brands, Inc., 3.75%, 04/01/2031(b) | | | 1,182,000 | | | | 1,148,331 | |
|
| |
|
Independent Power Producers & Energy Traders–1.34% | |
Calpine Corp., 3.75%, 03/01/2031(b) | | | 785,000 | | | | 757,784 | |
|
| |
Clearway Energy Operating LLC, | | | | | | | | |
4.75%, 03/15/2028(b) | | | 715,000 | | | | 752,695 | |
|
| |
3.75%, 02/15/2031(b) | | | 433,000 | | | | 432,584 | |
|
| |
Vistra Corp., 7.00%(b)(d)(e) | | | 125,000 | | | | 126,825 | |
|
| |
| | | | | | | 2,069,888 | |
|
| |
| | |
Industrial Machinery–1.58% | | | | | | | | |
EnPro Industries, Inc., 5.75%, 10/15/2026 | | | 563,000 | | | | 588,898 | |
|
| |
Mueller Water Products, Inc., 4.00%, 06/15/2029(b) | | | 769,000 | | | | 777,794 | |
|
| |
Ritchie Bros Holdings, Inc. (Canada), 4.75%, 12/15/2031(b) | | | 751,000 | | | | 785,313 | |
|
| |
Roller Bearing Co. of America, Inc., 4.38%, 10/15/2029(b) | | | 284,000 | | | | 290,035 | |
|
| |
| | | | | | | 2,442,040 | |
|
| |
| | |
Integrated Oil & Gas–1.54% | | | | | | | | |
Occidental Petroleum Corp., | | | | | | | | |
3.20%, 08/15/2026 | | | 246,000 | | | | 253,767 | |
|
| |
8.50%, 07/15/2027 | | | 216,000 | | | | 269,676 | |
|
| |
6.13%, 01/01/2031 | | | 634,000 | | | | 771,375 | |
|
| |
6.20%, 03/15/2040 | | | 328,000 | | | | 403,919 | |
|
| |
4.10%, 02/15/2047 | | | 691,000 | | | | 678,227 | |
|
| |
| | | | | | | 2,376,964 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Integrated Telecommunication Services–2.29% | | | | | |
Altice France S.A. (France), | | | | | | | | |
8.13%, 02/01/2027(b) | | $ | 355,000 | | | $ | 379,859 | |
|
| |
5.13%, 07/15/2029(b) | | | 401,000 | | | | 391,853 | |
|
| |
5.50%, 10/15/2029(b) | | | 485,000 | | | | 478,552 | |
|
| |
Iliad Holding S.A.S. (France), | | | | | | | | |
6.50%, 10/15/2026(b) | | | 400,000 | | | | 420,836 | |
|
| |
7.00%, 10/15/2028(b) | | | 783,000 | | | | 824,718 | |
|
| |
Level 3 Financing, Inc., 3.75%, 07/15/2029(b) | | | 1,099,000 | | | | 1,045,831 | |
|
| |
| | | | | | | 3,541,649 | |
|
| |
| |
Interactive Home Entertainment–1.01% | | | | | |
Cinemark USA, Inc., 5.88%, 03/15/2026(b) | | | 737,000 | | | | 747,134 | |
|
| |
WMG Acquisition Corp., 3.75%, 12/01/2029(b) | | | 821,000 | | | | 820,281 | |
|
| |
| | | | | | | 1,567,415 | |
|
| |
| | |
Interactive Media & Services–1.56% | | | | | | | | |
Audacy Capital Corp., 6.75%, 03/31/2029(b) | | | 1,121,000 | | | | 1,096,753 | |
|
| |
Match Group Holdings II LLC, 4.63%, 06/01/2028(b) | | | 205,000 | | | | 213,671 | |
|
| |
Scripps Escrow II, Inc., | | | | | | | | |
3.88%, 01/15/2029(b) | | | 729,000 | | | | 729,222 | |
|
| |
5.38%, 01/15/2031(b) | | | 375,000 | | | | 381,654 | |
|
| |
| | | | | | | 2,421,300 | |
|
| |
| |
Investment Banking & Brokerage–0.65% | | | | | |
NFP Corp., | | | | | | | | |
4.88%, 08/15/2028(b) | | | 298,000 | | | | 301,433 | |
|
| |
6.88%, 08/15/2028(b) | | | 705,000 | | | | 708,088 | |
|
| |
| | | | | | | 1,009,521 | |
|
| |
| |
IT Consulting & Other Services–0.49% | | | | | |
Gartner, Inc., | | | | | | | | |
4.50%, 07/01/2028(b) | | | 360,000 | | | | 376,564 | |
|
| |
3.63%, 06/15/2029(b) | | | 374,000 | | | | 378,740 | |
|
| |
| | | | | | | 755,304 | |
|
| |
| | |
Managed Health Care–0.74% | | | | | | | | |
Centene Corp., | | | | | | | | |
4.63%, 12/15/2029 | | | 438,000 | | | | 473,123 | |
|
| |
3.00%, 10/15/2030 | | | 662,000 | | | | 674,075 | |
|
| |
| | | | | | | 1,147,198 | |
|
| |
| | |
Metal & Glass Containers–1.02% | | | | | | | | |
Ardagh Metal Packaging Finance USA LLC/Ardagh Metal Packaging Finance PLC, 3.25%, 09/01/2028(b) | | | 795,000 | | | | 787,217 | |
|
| |
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc., 5.25%, 04/30/2025(b) | | | 759,000 | | | | 784,453 | |
|
| |
| | | | | | | 1,571,670 | |
|
| |
| | |
Oil & Gas Drilling–3.40% | | | | | | | | |
Delek Logistics Partners L.P./Delek Logistics Finance Corp., 7.13%, 06/01/2028(b) | | | 774,000 | | | | 806,059 | |
|
| |
Nabors Industries Ltd., 7.25%, 01/15/2026(b) | | | 400,000 | | | | 370,416 | |
|
| |
Nabors Industries, Inc., 7.38%, 05/15/2027(b) | | | 375,000 | | | | 388,571 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Oil & Gas Drilling–(continued) | | | | | | | | |
NGL Energy Operating LLC/NGL Energy Finance Corp., 7.50%, 02/01/2026(b) | | $ | 977,000 | | | $ | 1,008,855 | |
|
| |
Precision Drilling Corp. (Canada), | | | | | | | | |
7.13%, 01/15/2026(b) | | | 169,000 | | | | 172,378 | |
|
| |
6.88%, 01/15/2029(b) | | | 585,000 | | | | 597,066 | |
|
| |
Rockies Express Pipeline LLC, | | | | | | | | |
4.80%, 05/15/2030(b) | | | 250,000 | | | | 261,004 | |
|
| |
6.88%, 04/15/2040(b) | | | 474,000 | | | | 536,416 | |
|
| |
Valaris Ltd., 12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(b)(c) | | | 277,000 | | | | 288,660 | |
|
| |
Series 1145, 12.00% PIK Rate, 8.25% Cash Rate, 04/30/2028(c) | | | 803,000 | | | | 836,802 | |
|
| |
| | | | | | | 5,266,227 | |
|
| |
| |
Oil & Gas Equipment & Services–1.47% | | | | | |
Bristow Group, Inc., 6.88%, 03/01/2028(b) | | | 1,150,000 | | | | 1,197,886 | |
|
| |
USA Compression Partners L.P./USA Compression Finance Corp., 6.88%, 09/01/2027 | | | 750,000 | | | | 792,975 | |
|
| |
Weatherford International Ltd., 6.50%, 09/15/2028(b) | | | 262,000 | | | | 277,589 | |
|
| |
| | | | | | | 2,268,450 | |
|
| |
| |
Oil & Gas Exploration & Production–8.32% | | | | | |
Aethon United BR L.P./Aethon United Finance Corp., 8.25%, 02/15/2026(b) | | | 2,124,000 | | | | 2,284,065 | |
|
| |
Baytex Energy Corp. (Canada), 8.75%, 04/01/2027(b) | | | 748,000 | | | | 784,278 | |
|
| |
Callon Petroleum Co., | | | | | | | | |
6.13%, 10/01/2024 | | | 458,000 | | | | 451,606 | |
|
| |
8.00%, 08/01/2028(b) | | | 1,548,000 | | | | 1,565,678 | |
|
| |
Civitas Resources, Inc., 5.00%, 10/15/2026(b) | | | 872,000 | | | | 881,723 | |
|
| |
Genesis Energy L.P./Genesis Energy Finance Corp., | | | | | | | | |
6.25%, 05/15/2026 | | | 1,052,000 | | | | 1,026,794 | |
|
| |
8.00%, 01/15/2027 | | | 627,000 | | | | 646,863 | |
|
| |
7.75%, 02/01/2028 | | | 219,000 | | | | 220,952 | |
|
| |
Hilcorp Energy I L.P./Hilcorp Finance Co., | | | | | | | | |
6.25%, 11/01/2028(b) | | | 451,000 | | | | 474,747 | |
|
| |
5.75%, 02/01/2029(b) | | | 246,000 | | | | 253,903 | |
|
| |
Northern Oil and Gas, Inc., 8.13%, 03/01/2028(b) | | | 1,445,000 | | | | 1,526,527 | |
|
| |
Rockcliff Energy II LLC, 5.50%, 10/15/2029(b) | | | 807,000 | | | | 832,554 | |
|
| |
SM Energy Co., | | | | | | | | |
5.00%, 01/15/2024 | | | 383,000 | | | | 381,878 | |
|
| |
6.75%, 09/15/2026 | | | 1,012,000 | | | | 1,040,883 | |
|
| |
6.63%, 01/15/2027 | | | 503,000 | | | | 518,613 | |
|
| |
| | | | | | | 12,891,064 | |
|
| |
| |
Oil & Gas Storage & Transportation–2.43% | | | | | |
CNX Midstream Partners L.P., 4.75%, 04/15/2030(b) | | | 809,000 | | | | 807,338 | |
|
| |
NGL Energy Partners L.P./NGL Energy Finance Corp., | | | | | | | | |
7.50%, 11/01/2023 | | | 111,000 | | | | 109,450 | |
|
| |
7.50%, 04/15/2026 | | | 484,000 | | | | 415,533 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Oil & Gas Storage & Transportation–(continued) | | | | | |
Oasis Midstream Partners L.P./OMP Finance Corp., 8.00%, 04/01/2029(b) | | $ | 1,468,000 | | | $ | 1,602,205 | |
|
| |
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp., 5.50%, 01/15/2028(b) | | | 841,000 | | | | 834,831 | |
|
| |
| | | | | | | 3,769,357 | |
|
| |
| |
Other Diversified Financial Services–0.53% | | | | | |
Jane Street Group/JSG Finance, Inc., 4.50%, 11/15/2029(b) | | | 808,000 | | | | 817,405 | |
|
| |
| | |
Paper Products–0.50% | | | | | | | | |
Schweitzer-Mauduit International, Inc., 6.88%, 10/01/2026(b) | | | 745,000 | | | | 780,410 | |
|
| |
| | |
Pharmaceuticals–0.90% | | | | | | | | |
Bausch Health Americas, Inc., 9.25%, 04/01/2026(b) | | | 384,000 | | | | 406,074 | |
|
| |
Bausch Health Cos., Inc., 9.00%, 12/15/2025(b) | | | 457,000 | | | | 481,897 | |
|
| |
Par Pharmaceutical, Inc., 7.50%, 04/01/2027(b) | | | 497,000 | | | | 508,645 | |
|
| |
| | | | | | | 1,396,616 | |
|
| |
| |
Research & Consulting Services–0.74% | | | | | |
Dun & Bradstreet Corp. (The), | | | | | | | | |
6.88%, 08/15/2026(b) | | | 560,000 | | | | 583,005 | |
|
| |
5.00%, 12/15/2029(b) | | | 551,000 | | | | 564,632 | |
|
| |
| | | | | | | 1,147,637 | |
|
| |
| | |
Restaurants–1.55% | | | | | | | | |
1011778 BC ULC/New Red Finance, Inc. (Canada), 4.00%, 10/15/2030(b) | | | 791,000 | | | | 778,803 | |
|
| |
Papa John’s International, Inc., 3.88%, 09/15/2029(b) | | | 1,624,000 | | | | 1,618,275 | |
|
| |
| | | | | | | 2,397,078 | |
|
| |
| | |
Retail REITs–0.50% | | | | | | | | |
NMG Holding Co., Inc./Neiman Marcus Group LLC, 7.13%, 04/01/2026(b) | | | 726,000 | | | | 771,694 | |
|
| |
| |
Specialized Consumer Services–1.60% | | | | | |
Carriage Services, Inc., 4.25%, 05/15/2029(b) | | | 1,402,000 | | | | 1,397,114 | |
|
| |
Terminix Co. LLC (The), 7.45%, 08/15/2027 | | | 861,000 | | | | 1,077,318 | |
|
| |
| | | | | | | 2,474,432 | |
|
| |
| | |
Specialized REITs–1.03% | | | | | | | | |
SBA Communications Corp., 3.88%, 02/15/2027 | | | 1,553,000 | | | | 1,601,648 | |
|
| |
| | |
Specialty Chemicals–2.02% | | | | | | | | |
Braskem Idesa S.A.P.I. (Mexico), | | | | | | | | |
7.45%, 11/15/2029(b) | | | 338,000 | | | | 350,771 | |
|
| |
6.99%, 02/20/2032(b) | | | 446,000 | | | | 448,408 | |
|
| |
Rayonier A.M. Products, Inc., 7.63%, 01/15/2026(b) | | | 1,389,000 | | | | 1,474,076 | |
|
| |
SCIL IV LLC/SCIL USA Holdings LLC, 5.38%, 11/01/2026(b) | | | 837,000 | | | | 860,018 | |
|
| |
| | | | | | | 3,133,273 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Specialty Stores–0.49% | | | | | | | | |
Bath & Body Works, Inc., | | | | | | | | |
6.88%, 11/01/2035 | | $ | 253,000 | | | $ | 314,750 | |
|
| |
6.75%, 07/01/2036 | | | 354,000 | | | | 437,707 | |
|
| |
| | | | | | | 752,457 | |
|
| |
| | |
Steel–0.50% | | | | | | | | |
SunCoke Energy, Inc., 4.88%, 06/30/2029(b) | | | 784,000 | | | | 781,260 | |
|
| |
| | |
Systems Software–1.51% | | | | | | | | |
Camelot Finance S.A., 4.50%, 11/01/2026(b) | | | 2,251,000 | | | | 2,332,194 | |
|
| |
| | |
Textiles–0.68% | | | | | | | | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 7.50%, 05/01/2025(b) | | | 1,161,000 | | | | 1,052,609 | |
|
| |
| |
Wireless Telecommunication Services–0.75% | | | | | |
Vodafone Group PLC (United Kingdom), 4.13%, 06/04/2081(d) | | | 1,165,000 | | | | 1,155,191 | |
|
| |
Total U.S. Dollar Denominated Bonds & Notes
(Cost $134,240,962) | | | | 136,440,496 | |
|
| |
|
Variable Rate Senior Loan Interests–6.18%(f)(g) | |
Environmental & Facilities Services–0.11% | | | | | |
Covanta Energy Corp., | | | | | | | | |
Term Loan B, -% , 11/17/2028(h) | | | 154,030 | | | | 154,376 | |
|
| |
Term Loan C, -% , 11/17/2028(h) | | | 11,538 | | | | 11,564 | |
|
| |
| | | | | | | 165,940 | |
|
| |
| | |
Health Care Equipment–0.03% | | | | | | | | |
Radiology Partners, Inc., First Lien Term Loan B, 4.36% (1 mo. USD LIBOR + 4.25%), 07/09/2025 | | | 50,050 | | | | 49,418 | |
|
| |
| | |
Health Care Services–0.91% | | | | | | | | |
Global Medical Response, Inc., Term Loan, 5.25% (3 mo. USD LIBOR + 4.25%), 10/02/2025 | | | 708,840 | | | | 706,891 | |
|
| |
Surgery Center Holdings, Inc., Term Loan, 4.50% (1 mo. USD LIBOR + 3.75%), 09/03/2026 | | | 708,794 | | | | 709,460 | |
|
| |
| | | | | | | 1,416,351 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–0.47% | | | | | |
Four Seasons Hotels Ltd. (Canada), First Lien Term Loan, 2.10% (1 mo. USD LIBOR + 2.00%), 11/30/2023 | | | 722,396 | | | | 720,590 | |
|
| |
| | |
Metal & Glass Containers–0.46% | | | | | | | | |
Flex Acquisition Co., Inc., Incremental Term Loan B, 3.13% (3 mo. USD LIBOR + 3.00%), 06/29/2025 | | | 711,049 | | | | 705,677 | |
|
| |
| | |
Paper Packaging–0.46% | | | | | | | | |
Graham Packaging Co., Inc., Term Loan, 3.75% (1 mo. USD LIBOR + 3.00%), 08/04/2027 | | | 714,600 | | | | 713,592 | |
|
| |
| | |
Paper Products–1.02% | | | | | | | | |
Schweitzer-Mauduit International, Inc. (SWM International), Term Loan B, 4.50% (1 mo. USD LIBOR + 3.75%), 04/20/2028 | | | 1,580,060 | | | | 1,578,085 | |
|
| |
| | | | | | | | |
| | | Principal
Amount | | | Value | |
|
| |
Pharmaceuticals–0.94% | | | | | | | | |
Endo LLC, Term Loan, 5.75% (3 mo. USD LIBOR + 5.00%), 03/10/2028 | | $ | 724,525 | | | $ | 706,550 | |
|
| |
Valeant Pharmaceuticals International, Inc. (Canada), First Lien Incremental Term Loan, 2.85% (1 mo. USD LIBOR + 2.75%), 11/27/2025 | | | 755,780 | | | | 752,235 | |
|
| |
| | | | | | | 1,458,785 | |
|
| |
| | |
Restaurants–0.98% | | | | | | | | |
IRB Holding Corp., First Lien Term Loan B, 4.25% (3 mo. USD LIBOR + 3.25%) , 12/01/2027 | | | 1,522,231 | | | | 1,524,370 | |
|
| |
| | |
Specialty Stores–0.80% | | | | | | | | |
PetSmart LLC, Term Loan, 4.50% (3 mo. USD LIBOR + 3.75%) , 02/11/2028 | | | 1,239,227 | | | | 1,242,716 | |
|
| |
Total Variable Rate Senior Loan Interests (Cost $9,577,971) | | | | 9,575,524 | |
|
| |
|
Non-U.S. Dollar Denominated Bonds & Notes–0.31%(i) | |
Casinos & Gaming–0.20% | | | | | | | | |
Codere Finance 2 (Luxembourg) S.A. (Spain), 3.00% PIK Rate, 8.00% Cash Rate, 09/30/2023(b)(c) | | | EUR 253,000 | | | | 305,030 | |
|
| |
| |
Other Diversified Financial Services–0.04% | | | | | |
Codere New Topco S.A. (Luxembourg), 7.50%, 11/30/2027 | | | EUR 56,326 | | | | 65,730 | |
|
| |
| | |
Textiles–0.07% | | | | | | | | |
Eagle Intermediate Global Holding B.V./Ruyi US Finance LLC (China), 5.38%, 05/01/2023(b) | | | EUR 100,000 | | | | 108,385 | |
|
| |
Total Non-U.S. Dollar Denominated Bonds & Notes
(Cost $477,017) | | | | 479,145 | |
|
| |
| | |
| | | Shares | | | | |
Common Stocks & Other Equity Interests–0.07% | |
Oil & Gas Drilling–0.07% | | | | | | | | |
Valaris Ltd.(j) | | | 3,012 | | | | 108,433 | |
|
| |
| |
Other Diversified Financial Services–0.00% | | | | | |
Codere New Topco S.A. (Luxembourg)(k) | | | 2,099 | | | | 0 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $56,222) | | | | 108,433 | |
|
| |
|
Money Market Funds–2.77% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(l)(m) | | | 1,478,960 | | | | 1,478,960 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(l)(m) | | | 1,125,642 | | | | 1,125,866 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(l)(m) | | | 1,690,240 | | | | 1,690,240 | |
|
| |
Total Money Market Funds
(Cost $4,294,997) | | | | 4,295,066 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–97.44% (Cost $148,647,169) | | | | 150,898,664 | |
|
| |
OTHER ASSETS LESS LIABILITIES–2.56% | | | | 3,959,133 | |
|
| |
NET ASSETS–100.00% | | | $ | 154,857,797 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. High Yield Fund |
Investment Abbreviations:
| | | | |
| Conv. | | – | | Convertible |
| EUR | | – | | Euro |
| LIBOR | | – | | London Interbank Offered Rate |
| PIK | | – | | Pay-in-Kind |
| 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) | 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, 2021 was $104,061,474, which represented 67.20% of the Fund’s Net Assets. |
| (c) | All or a portion of this security is Pay-in-Kind. Pay-in-Kind securities pay interest income in the form of securities. |
| (d) | Security issued at a fixed rate for a specific period of time, after which it will convert to a variable rate. |
| (e) | Perpetual bond with no specified maturity date. |
| (f) | 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. |
| (g) | 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. |
| (h) | This variable rate interest will settle after December 31, 2021, at which time the interest rate will be determined. |
| (i) | Foreign denominated security. Principal amount is denominated in the currency indicated. |
| (j) | Non-income producing security. |
| (k) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Unrealized | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | Appreciation | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $ | 1,570,848 | | | $ | 35,323,493 | | | $ | (35,415,381 | ) | | | $- | | | $ | - | | | $ | 1,478,960 | | | $ | 605 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 1,210,198 | | | | 25,094,560 | | | | (25,178,759 | ) | | | 42 | | | | (175) | | | | 1,125,866 | | | | 307 | |
Invesco Treasury Portfolio, Institutional Class | | | 1,795,255 | | | | 40,369,706 | | | | (40,474,721 | ) | | | - | | | | - | | | | 1,690,240 | | | | 253 | |
Total | | $ | 4,576,301 | | | $ | 100,787,759 | | | $ | (101,068,861 | ) | | | $42 | | | $ | (175) | | | $ | 4,295,066 | | | $ | 1,165 | |
| (m) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| | | | | | | | | | | | | | | | | | | | | | |
| Open Forward Foreign Currency Contracts | |
| Settlement | | | | Contract to | | | Unrealized | |
| Date | | Counterparty | | | | | Deliver | | | | | | Receive | | | Appreciation | |
| Currency Risk | | | | | | | | | | | | | | | | | | | | | | |
02/17/2022 | | Citibank, N.A. | | | EUR | | | | 1,039,000 | | | | USD | | | | 1,207,162 | | | $ | 23,218 | |
02/17/2022 | | Goldman Sachs International | | | GBP | | | | 388,000 | | | | USD | | | | 526,434 | | | | 1,329 | |
Total Forward Foreign Currency Contracts | | | | | | | | | | | | | | | | | | $ | 24,547 | |
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, 2021
| | | | |
Assets: | | | | |
| |
Investments in unaffiliated securities, at value (Cost $144,352,172) | | $ | 146,603,598 | |
|
| |
Investments in affiliated money market funds, at value (Cost $4,294,997) | | | 4,295,066 | |
|
| |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 24,547 | |
|
| |
Cash | | | 134,697 | |
|
| |
Foreign currencies, at value (Cost $1,434,066) | | | 1,446,184 | |
|
| |
Receivable for: | | | | |
Investments sold | | | 751,069 | |
|
| |
Fund shares sold | | | 58,109 | |
|
| |
Dividends | | | 29 | |
|
| |
Interest | | | 2,075,720 | |
|
| |
Investments matured, at value and cost | | | 0 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 45,919 | |
|
| |
Other assets | | | 614 | |
|
| |
Total assets | | | 155,435,552 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 309,146 | |
|
| |
Fund shares reacquired | | | 50,754 | |
|
| |
Accrued fees to affiliates | | | 97,231 | |
|
| |
Accrued other operating expenses | | | 68,857 | |
|
| |
Trustee deferred compensation and retirement plans | | | 51,767 | |
|
| |
Total liabilities | | | 577,755 | |
|
| |
Net assets applicable to shares outstanding | | $ | 154,857,797 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 170,774,539 | |
|
| |
Distributable earnings (loss) | | | (15,916,742 | ) |
|
| |
| | $ | 154,857,797 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 40,989,134 | |
|
| |
Series II | | $ | 113,868,663 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 7,844,494 | |
|
| |
Series II | | | 22,049,136 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 5.23 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 5.16 | |
|
| |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
| |
Interest | | $ | 7,412,524 | |
|
| |
Dividends from affiliated money market funds | | | 1,165 | |
|
| |
Total investment income | | | 7,413,689 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 971,693 | |
|
| |
Administrative services fees | | | 256,295 | |
|
| |
Custodian fees | | | 23,221 | |
|
| |
Distribution fees - Series II | | | 271,001 | |
|
| |
Transfer agent fees | | | 18,709 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 25,010 | |
|
| |
Reports to shareholders | | | 7,751 | |
|
| |
Professional services fees | | | 151,584 | |
|
| |
Other | | | 6,552 | |
|
| |
Total expenses | | | 1,731,816 | |
|
| |
Less: Fees waived | | | (2,573 | ) |
|
| |
Net expenses | | | 1,729,243 | |
|
| |
Net investment income | | | 5,684,446 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 2,497,069 | |
|
| |
Affiliated investment securities | | | (175 | ) |
|
| |
Foreign currencies | | | (61,579 | ) |
|
| |
Forward foreign currency contracts | | | 37,181 | |
|
| |
| | | 2,472,496 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
|
| |
Unaffiliated investment securities | | | (2,157,335 | ) |
|
| |
Affiliated investment securities | | | 42 | |
|
| |
Foreign currencies | | | (6,516 | ) |
|
| |
Forward foreign currency contracts | | | 103,710 | |
|
| |
| | | (2,060,099 | ) |
|
| |
Net realized and unrealized gain | | | 412,397 | |
|
| |
Net increase in net assets resulting from operations | | $ | 6,096,843 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 5,684,446 | | | $ | 7,175,065 | |
|
| |
Net realized gain (loss) | | | 2,472,496 | | | | (6,483,781 | ) |
|
| |
Change in net unrealized appreciation (depreciation) | | | (2,060,099 | ) | | | 3,081,935 | |
|
| |
Net increase in net assets resulting from operations | | | 6,096,843 | | | | 3,773,219 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (2,336,863 | ) | | | (2,376,198 | ) |
|
| |
Series II | | | (5,125,668 | ) | | | (5,617,153 | ) |
|
| |
Total distributions from distributable earnings | | | (7,462,531 | ) | | | (7,993,351 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (3,063,988 | ) | | | (4,610,355 | ) |
|
| |
Series II | | | 11,176,700 | | | | 1,822,978 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | 8,112,712 | | | | (2,787,377 | ) |
|
| |
Net increase (decrease) in net assets | | | 6,747,024 | | | | (7,007,509 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 148,110,773 | | | | 155,118,282 | |
|
| |
End of year | | $ | 154,857,797 | | | $ | 148,110,773 | |
|
| |
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 12/31/21 | | | $5.26 | | | | $0.20 | | | | $0.03 | | | | $0.23 | | | | $(0.26 | ) | | | $5.23 | | | | 4.38 | % | | | $40,989 | | | | 0.94 | % | | | 0.94 | % | | | 3.83 | % | | | 103 | % |
Year ended 12/31/20 | | | 5.41 | | | | 0.28 | | | | (0.12 | ) | | | 0.16 | | | | (0.31 | ) | | | 5.26 | | | | 3.32 | | | | 44,543 | | | | 0.93 | | | | 0.94 | | | | 5.39 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 5.20 | | | | 0.19 | | | | 0.02 | | | | 0.21 | | | | (0.25 | ) | | | 5.16 | | | | 4.00 | | | | 113,869 | | | | 1.19 | | | | 1.19 | | | | 3.58 | | | | 103 | |
Year ended 12/31/20 | | | 5.36 | | | | 0.26 | | | | (0.12 | ) | | | 0.14 | | | | (0.30 | ) | | | 5.20 | | | | 2.90 | | | | 103,568 | | | | 1.18 | | | | 1.19 | | | | 5.14 | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income |
|
| Invesco V.I. High Yield Fund |
| | 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 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
|
| 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. | Bank Loan Risk – Although the resale, or secondary market for floating rate loans has grown substantially over the past decade, both in overall size and number of market participants, there is no organized exchange or board of trade on which floating rate loans are traded. Instead, the secondary market for floating rate loans is a private, unregulated interdealer or interbank resale market. Such a market may therefore be subject to irregular trading activity, wide bid/ask spreads, and extended trade settlement periods, which may impair the Fund’s ability to sell bank loans within its desired time frame or at an acceptable price and its ability to accurately value existing and prospective investments. Extended trade settlement periods may result in cash not being immediately available to the Fund. As a result, the Fund may have to sell other investments or engage in borrowing transactions to raise cash to meet its obligations. Similar to other asset classes, bank loan funds may be exposed to counterparty credit risk, or the risk than an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund seeks to manage counterparty credit risk by entering into transactions only with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. |
| N. | 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. Although many LIBOR rates will be phased out at the end of 2021 as originally intended, a selection of widely used USD LIBOR rates will continue to be published until June 2023 in order to assist with the transition. 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. Any such effects of the transition away from LIBOR and the adoption of alternative reference rates could result in losses to the Fund. |
| O. | 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”. |
Active trading of portfolio securities may result in added expenses, a lower return and increased tax liability.
| P. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 | | | 0.625% | |
|
| |
Next $300 million | | | 0.550% | |
|
| |
Next $500 million | | | 0.500% | |
|
| |
Over $1 billion | | | 0.450% | |
|
| |
For the year ended December 31, 2021, 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 has contractually agreed, through at least June 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 1.50% 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $2,573.
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
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| Invesco V.I. High Yield Fund |
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, 2021, Invesco was paid $23,089 for accounting and fund administrative services and was reimbursed $233,206 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, 2021, 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, 2021, 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, 2021. 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 | | | $ – | | | | $136,440,496 | | | | $– | | | | $136,440,496 | |
|
| |
Variable Rate Senior Loan Interests | | | – | | | | 9,575,524 | | | | – | | | | 9,575,524 | |
|
| |
Non-U.S. Dollar Denominated Bonds & Notes | | | – | | | | 479,145 | | | | – | | | | 479,145 | |
|
| |
Common Stocks & Other Equity Interests | | | 108,433 | | | | – | | | | 0 | | | | 108,433 | |
|
| |
Money Market Funds | | | 4,295,066 | | | | – | | | | – | | | | 4,295,066 | |
|
| |
Total Investments in Securities | | | 4,403,499 | | | | 146,495,165 | | | | 0 | | | | 150,898,664 | |
|
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
|
| |
Investments Matured | | | – | | | | – | | | | 0 | | | | 0 | |
|
| |
Forward Foreign Currency Contracts | | | – | | | | 24,547 | | | | – | | | | 24,547 | |
|
| |
Total Investments | | | $4,403,499 | | | | $146,519,712 | | | | $0 | | | | $150,923,211 | |
|
| |
| * | Forward foreign currency contracts are valued at unrealized appreciation. Investments matured are shown at value. |
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, 2021:
| | | | |
| | | Value | |
| | | Currency | |
| Derivative Assets | | Risk | |
|
| |
Unrealized appreciation on forward foreign currency contracts outstanding | | $ | 24,547 | |
|
| |
Derivatives not subject to master netting agreements | | | - | |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | 24,547 | |
|
| |
|
| Invesco V.I. High Yield 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, 2021.
| | | | | | | | | | | | | | | | |
| | | Financial | | | | | | | | | | | |
| | | Derivative | | | | | | Collateral | | | |
| | | Assets | | | | | | (Received)/Pledged | | | |
| | | Forward Foreign | | | Net Value of | | | | | | | Net | |
| Counterparty | | Currency Contracts | | | Derivatives | | | Non-Cash | | Cash | | Amount | |
|
| |
Citibank, N.A. | | | $23,218 | | | | $23,218 | | | $– | | $– | | | $23,218 | |
|
| |
Goldman Sachs International | | | 1,329 | | | | 1,329 | | | – | | – | | | 1,329 | |
|
| |
Total | | | $24,547 | | | | $24,547 | | | $– | | $– | | | $24,547 | |
|
| |
Effect of Derivative Investments for the year ended December 31, 2021
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 | |
| | | Currency | |
| | | Risk | |
|
| |
Realized Gain: | | | | |
Forward foreign currency contracts | | | $ 37,181 | |
|
| |
Change in Net Unrealized Appreciation: | | | | |
Forward foreign currency contracts | | | 103,710 | |
|
| |
Total | | | $140,891 | |
|
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward |
| | | Foreign Currency |
| | | Contracts |
|
|
Average notional value | | $2,329,568 |
|
|
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Ordinary income* | | | $7,462,531 | | | | $7,993,351 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. High Yield Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 6,020,826 | |
|
| |
Net unrealized appreciation - investments | | | 2,092,380 | |
|
| |
Net unrealized appreciation - foreign currencies | | | 12,084 | |
|
| |
Temporary book/tax differences | | | (29,189 | ) |
|
| |
Capital loss carryforward | | | (24,012,843 | ) |
|
| |
Shares of beneficial interest | | | 170,774,539 | |
|
| |
Total net assets | | $ | 154,857,797 | |
|
| |
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, amortization and accretion on debt securities 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, 2021, as follows:
| | | | | | | | | | | | | | |
| | | Capital Loss Carryforward* | | | | | | | |
|
| |
| Expiration | | | | Short-Term | | | Long-Term | | | Total | |
|
| |
Not subject to expiration | | | | $ | 5,685,223 | | | $ | 18,327,620 | | | $ | 24,012,843 | |
|
| |
| * | 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. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $158,470,533 and $152,785,354, 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 | | $ | 3,250,475 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (1,158,095 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 2,092,380 | |
|
| |
Cost of investments for tax purposes is $148,830,831.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of amortization and accretion on debt securities, on December 31, 2021, undistributed net investment income was increased by $247,474 and undistributed net realized gain (loss) was decreased by $247,474. 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 | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 7,893,916 | | | $ | 42,260,178 | | | | 17,479,158 | | | $ | 90,315,593 | |
|
| |
Series II | | | 2,595,725 | | | | 13,694,035 | | | | 2,661,078 | | | | 13,309,998 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 451,132 | | | | 2,336,863 | | | | 476,192 | | | | 2,376,198 | |
|
| |
Series II | | | 1,001,107 | | | | 5,125,668 | | | | 1,137,075 | | | | 5,617,153 | |
|
| |
|
| Invesco V.I. High Yield Fund |
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (8,967,393 | ) | | $ | (47,661,029 | ) | | | (18,762,181 | ) | | $ | (97,302,146 | ) |
|
| |
Series II | | | (1,449,620 | ) | | | (7,643,003 | ) | | | (3,475,105 | ) | | | (17,104,173 | ) |
|
| |
Net increase (decrease) in share activity | | | 1,524,867 | | | $ | 8,112,712 | | | | (483,783 | ) | | $ | (2,787,377 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 76% 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. |
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent, brokers and agent banks. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,013.00 | | $4.77 | | $1,020.47 | | $4.79 | | 0.94% |
Series II | | 1,000.00 | | 1,009.00 | | 6.03 | | 1,019.21 | | 6.06 | | 1.19 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| 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, 2021:
| | | | | | |
Federal and State Income Tax | | | | | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
Qualified Business Income* | | | 0.00 | % |
Business Interest Income* | | | 99.38 | % |
|
* 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. 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. High Yield Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. International Growth Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. International Growth Fund (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 5.89 | % |
Series II Shares | | | 5.61 | |
MSCI All Country World ex USA Indexq (Broad Market Index) | | | 7.82 | |
Custom Invesco International Growth Index∎ (Style-Specific Index) | | | 5.09 | |
Lipper VUF International Large-Cap Growth Funds Indext (Peer Group Index) | | | 9.19 | |
| |
Source(s): qRIMES Technologies Corp.; ∎Invesco, RIMES Technologies Corp.; tLipper Inc. | | | | |
Market conditions and your Fund
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value stocks outperforming growth stocks. The successful rollout of coronavirus (COVID-19) vaccinations in the US and UK benefited equity markets. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand for goods.
During the second quarter of 2021, global equity markets were again bolstered by the continued acceleration of vaccination rollouts and easing of COVID-19-related restrictions in most developed markets. In a reversal from the first quarter, growth stocks outperformed value stocks in most regions. Emerging market equities were led by Brazil which benefited from global tailwinds, while regulatory concerns weighed on Chinese equities.
Developed global equity markets were flat in the third quarter of 2021 amid concerns about rising inflation, supply disruptions and the economic growth rate. Emerging market equities declined during the quarter, primarily due to weak performance from Chinese equities, which were affected by significant regulatory changes in the private tutoring industry, increased regulation in the technology sector and the potential default of a large Chinese property developer.
Most developed global equity markets ended the fourth quarter of 2021 in positive territory despite rising inflation and the emergence of Omicron, a new COVID-19 variant. Pandemic-related supply chain disruptions and labor shortages intensified during the quarter, resulting in higher costs for companies and consumers. Emerging market equities declined due to COVID-19 concerns and China’s ongoing regulatory tightening and slowing economic growth. Overall, developed market equities outperformed emerging market equities for the fiscal 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 health care sector outperformed those of the Fund’s style-specific benchmark, the Custom Invesco International Growth Index, contributing to relative performance. Within the sector, Ireland-based contract research organization ICON and Denmark-based pharmaceutical company Novo Nordisk contributed to both absolute and relative results during the fiscal year. Strong stock selection and an overweight in the industrials sector added to the Fund’s relative results. Netherlands-based global information and solutions provider Wolters Kluwer, Switzerland-based freight forwarder Kuehne + Nagel International and France-based electrical equipment company Schneider Electric were notable absolute and relative contributors within the industrials sector. The Fund’s holdings in the communication services and information technology sectors outperformed those of the benchmark sectors, also positively contributing to the Fund’s relative performance. On a geographic basis, the stock selection in Japan and Ireland were among the largest contributors to relative return. Underweight exposure to Japan relative to the style-specific index and exposure to the US also added to relative results during the fiscal year.
Conversely, stock selection in the consumer discretionary and financials sectors were notable detractors from relative performance versus the style-specific index. Within consumer discretionary, New Oriental Education & Technology, a leader in after-school tutoring in China and Macau-based hotel and casino operator Galaxy Entertainment were key detractors from the Fund’s relative results. We exited the Fund’s position in New Oriental Education & Technology during the third quarter of 2021 because of significant regulatory changes in the private tutoring industry in China. Within the financials sector, weakness was seen in Brazil-based exchange operator B3, India-based HDFC Bank and Hong Kong-based insurance and finance company AIA. Lack of exposure to the energy
sector, one of the year’s best performing sectors, also hampered the Fund’s relative return. Geographically, stock selection in Brazil, India and Germany detracted from relative results. An overweight to Brazil, underweight to India and exposure to Macau had a negative impact on the Fund’s relative performance as well. Given the rising equity market, the Fund’s cash position (averaged 2.4%) dampened relative results. As a reminder, cash is a by-product of our bottom-up stock selection process.
During the fiscal 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 characteristics for each company. We added several new holdings, including UK-based advertising company WPP, France-based specialty materials company Arkema and Spain-based travel technology company Amadeus IT Group. We sold several holdings during the fiscal year, including Brazil-based financial services company Banco Bradesco, industrials company Canadian National Railway and China-based e-commerce company Alibaba.
As always, we remain focused on a bottom-up investment approach of identifying attractive companies that fit our EQV-focused 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.
Portfolio manager(s):
Brent Bates
Mark Jason
Richard Nield
Clas Olsson
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
1 Source: Lipper Inc.
2 Sources: Invesco, RIMES Technologies Corp.
3 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | | | | |
Series I Shares | | | | |
Inception (5/5/93) | | | 7.37 | % |
10 Years | | | 8.09 | |
5 Years | | | 10.17 | |
1 Year | | | 5.89 | |
| |
Series II Shares | | | | |
Inception (9/19/01) | | | 7.56 | % |
10 Years | | | 7.82 | |
5 Years | | | 9.90 | |
1 Year | | | 5.61 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 |
| |
Industrials | | | | 15.97 | % |
| |
Information Technology | | | | 15.89 | |
| |
Consumer Staples | | | | 15.70 | |
| |
Consumer Discretionary | | | | 15.50 | |
| |
Financials | | | | 13.66 | |
| |
Health Care | | | | 9.49 | |
| |
Materials | | | | 6.88 | |
| |
Communication Services | | | | 4.45 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 2.46 | |
Top 10 Equity Holdings*
| | | | | |
| | | % of total net assets |
| |
1. Sony Group Corp. | | | | 3.22 | % |
| |
2. Sandvik AB | | | | 3.03 | |
| |
3. Broadcom, Inc. | | | | 2.93 | |
| |
4. Olympus Corp. | | | | 2.85 | |
| |
5. Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | | | 2.68 | |
| |
6. Schneider Electric SE | | | | 2.67 | |
| |
7. CGI, Inc., Class A | | | | 2.59 | |
| |
8. Philip Morris International, Inc. | | | | 2.54 | |
| |
9. Investor AB, Class B | | | | 2.44 | |
| |
10. Linde PLC | | | | 2.35 | |
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, 2021.
|
| Invesco V.I. International Growth Fund |
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–97.54% | |
Australia–0.66% | | | | | | | | |
CSL Ltd. | | | 43,889 | | | $ | 9,294,128 | |
|
| |
| | |
Brazil–1.07% | | | | | | | | |
B3 S.A. - Brasil, Bolsa, Balcao | | | 7,488,502 | | | | 14,964,813 | |
|
| |
| | |
Canada–6.17% | | | | | | | | |
Bank of Nova Scotia (The) | | | 216,079 | | | | 15,296,948 | |
|
| |
CGI, Inc., Class A(a) | | | 410,963 | | | | 36,338,362 | |
|
| |
Magna International, Inc. | | | 229,309 | | | | 18,553,916 | |
|
| |
Ritchie Bros. Auctioneers, Inc. | | | 270,619 | | | | 16,560,826 | |
|
| |
| | | | | | | 86,750,052 | |
|
| |
| | |
China–7.71% | | | | | | | | |
China Feihe Ltd.(b) | | | 6,170,000 | | | | 8,283,125 | |
|
| |
China Mengniu Dairy Co. Ltd. | | | 4,347,000 | | | | 24,641,898 | |
|
| |
China Resources Beer Holdings Co. Ltd. | | | 854,000 | | | | 6,999,016 | |
|
| |
JD.com, Inc., ADR(a) | | | 224,840 | | | | 15,754,539 | |
|
| |
Tencent Holdings Ltd. | | | 349,700 | | | | 20,514,531 | |
|
| |
Wuliangye Yibin Co. Ltd., A Shares | | | 233,297 | | | | 8,149,738 | |
|
| |
Yum China Holdings, Inc. | | | 481,245 | | | | 23,985,251 | |
|
| |
| | | | | | | 108,328,098 | |
|
| |
| | |
Denmark–2.55% | | | | | | | | |
Carlsberg A/S, Class B | | | 83,637 | | | | 14,366,805 | |
|
| |
Novo Nordisk A/S, Class B | | | 192,133 | | | | 21,479,463 | |
|
| |
| | | | | | | 35,846,268 | |
|
| |
| | |
France–7.76% | | | | | | | | |
Arkema S.A. | | | 168,864 | | | | 23,817,099 | |
|
| |
Kering S.A. | | | 19,806 | | | | 15,892,203 | |
|
| |
LVMH Moet Hennessy Louis Vuitton SE | | | 21,201 | | | | 17,495,073 | |
|
| |
Pernod Ricard S.A. | | | 59,763 | | | | 14,378,836 | |
|
| |
Schneider Electric SE | | | 191,485 | | | | 37,540,436 | |
|
| |
| | | | | | | 109,123,647 | |
|
| |
| | |
Germany–1.62% | | | | | | | | |
Deutsche Boerse AG | | | 83,951 | | | | 14,063,473 | |
|
| |
Knorr-Bremse AG | | | 87,632 | | | | 8,648,216 | |
|
| |
| | | | | | | 22,711,689 | |
|
| |
| | |
Hong Kong–1.91% | | | | | | | | |
AIA Group Ltd. | | | 2,656,000 | | | | 26,776,251 | |
|
| |
| | |
India–2.30% | | | | | | | | |
HDFC Bank Ltd., ADR | | | 496,635 | | | | 32,316,039 | |
|
| |
| | |
Ireland–5.19% | | | | | | | | |
CRH PLC | | | 494,438 | | | | 26,116,373 | |
|
| |
Flutter Entertainment PLC(a) | | | 154,638 | | | | 24,534,051 | |
|
| |
ICON PLC(a) | | | 71,760 | | | | 22,224,072 | |
|
| |
| | | | | | | 72,874,496 | |
|
| |
| | |
Italy–2.29% | | | | | | | | |
FinecoBank Banca Fineco S.p.A. | | | 1,849,728 | | | | 32,213,352 | |
|
| |
| | |
Japan–14.51% | | | | | | | | |
Asahi Group Holdings Ltd. | | | 385,800 | | | | 14,972,476 | |
|
| |
FANUC Corp. | | | 43,500 | | | | 9,221,383 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Japan–(continued) | | | | | | | | |
Hoya Corp. | | | 137,400 | | | $ | 20,372,919 | |
|
| |
Keyence Corp. | | | 16,700 | | | | 10,495,318 | |
|
| |
Koito Manufacturing Co. Ltd. | | | 349,600 | | | | 18,511,677 | |
|
| |
Komatsu Ltd. | | | 357,800 | | | | 8,379,319 | |
|
| |
Nidec Corp. | | | 90,400 | | | | 10,626,601 | |
|
| |
Olympus Corp. | | | 1,742,200 | | | | 40,016,949 | |
|
| |
SMC Corp. | | | 14,100 | | | | 9,512,230 | |
|
| |
Sony Group Corp. | | | 357,900 | | | | 45,241,887 | |
|
| |
TIS, Inc. | | | 558,000 | | | | 16,559,468 | |
|
| |
| | | | | | | 203,910,227 | |
|
| |
| | |
Macau–0.92% | | | | | | | | |
Galaxy Entertainment Group Ltd.(a) | | | 2,496,000 | | | | 12,933,627 | |
|
| |
| | |
Mexico–1.56% | | | | | | | | |
Wal-Mart de Mexico S.A.B. de C.V., Series V | | | 5,914,456 | | | | 21,978,997 | |
|
| |
| | |
Netherlands–5.93% | | | | | | | | |
ASML Holding N.V. | | | 25,877 | | | | 20,633,613 | |
|
| |
Heineken N.V. | | | 188,605 | | | | 21,207,398 | |
|
| |
Prosus N.V. | | | 106,911 | | | | 8,917,795 | |
|
| |
Wolters Kluwer N.V. | | | 277,518 | | | | 32,618,218 | |
|
| |
| | | | | | | 83,377,024 | |
|
| |
| | |
Singapore–1.57% | | | | | | | | |
United Overseas Bank Ltd. | | | 1,102,266 | | | | 22,011,940 | |
|
| |
| | |
South Korea–3.91% | | | | | | | | |
NAVER Corp. | | | 73,859 | | | | 23,447,902 | |
|
| |
Samsung Electronics Co. Ltd. | | | 480,286 | | | | 31,530,846 | |
|
| |
| | | | | | | 54,978,748 | |
|
| |
| | |
Spain–1.08% | | | | | | | | |
Amadeus IT Group S.A.(a) | | | 224,744 | | | | 15,137,528 | |
|
| |
| | |
Sweden–5.47% | | | | | | | | |
Investor AB, Class B | | | 1,370,797 | | | | 34,281,430 | |
|
| |
Sandvik AB | | | 1,526,595 | | | | 42,652,808 | |
|
| |
| | | | | | | 76,934,238 | |
|
| |
| | |
Switzerland–5.91% | | | | | | | | |
Kuehne + Nagel International AG, Class R | | | 52,542 | | | | 16,897,253 | |
|
| |
Logitech International S.A., Class R | | | 164,392 | | | | 13,759,177 | |
|
| |
Nestle S.A. | | | 231,894 | | | | 32,416,887 | |
|
| |
Roche Holding AG | | | 48,355 | | | | 20,044,858 | |
|
| |
| | | | | | | 83,118,175 | |
|
| |
| | |
Taiwan–2.68% | | | | | | | | |
Taiwan Semiconductor Manufacturing Co. Ltd., ADR | | | 312,786 | | | | 37,631,284 | |
|
| |
| | |
United Kingdom–7.19% | | | | | | | | |
Ashtead Group PLC | | | 203,268 | | | | 16,289,375 | |
|
| |
DCC PLC | | | 190,184 | | | | 15,552,071 | |
|
| |
Linde PLC | | | 95,237 | | | | 32,992,954 | |
|
| |
Reckitt Benckiser Group PLC | | | 205,909 | | | | 17,664,427 | |
|
| |
WPP PLC | | | 1,226,476 | | | | 18,538,672 | |
|
| |
| | | | | | | 101,037,499 | |
|
| |
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–7.58% | | | | | | | | |
Amcor PLC, CDI | | | 1,142,962 | | | $ | 13,765,716 | |
|
| |
Booking Holdings, Inc.(a) | | | 6,662 | | | | 15,983,670 | |
|
| |
Broadcom, Inc. | | | 61,916 | | | | 41,199,526 | |
|
| |
Philip Morris International, Inc. | | | 375,258 | | | | 35,649,510 | |
|
| |
| | | | | | | 106,598,422 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $895,652,884) | | | | 1,370,846,542 | |
|
| |
| | |
Money Market Funds–2.23% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(d) | | | 11,153,338 | | | | 11,153,338 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Money Market Funds–(continued) | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(c)(d) | | | 7,460,553 | | | $ | 7,462,045 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(d) | | | 12,746,672 | | | | 12,746,672 | |
|
| |
Total Money Market Funds
(Cost $31,360,602) | | | | 31,362,055 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–99.77%
(Cost $927,013,486) | | | | 1,402,208,597 | |
|
| |
OTHER ASSETS LESS LIABILITIES–0.23% | | | | 3,291,742 | |
|
| |
NET ASSETS–100.00% | | | $ | 1,405,500,339 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
CDI – CREST Depository Interest
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 value of this security at December 31, 2021 represented less than 1% 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain (Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $11,470,872 | | | | $112,506,756 | | | | $(112,824,290 | ) | | | $ - | | | | $ - | | | | $11,153,338 | | | | $ 3,530 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 7,989,157 | | | | 79,761,517 | | | | (80,287,496 | ) | | | (2,848 | ) | | | 1,715 | | | | 7,462,045 | | | | 1,368 | |
Invesco Treasury Portfolio, Institutional Class | | | 13,109,569 | | | | 128,579,150 | | | | (128,942,047 | ) | | | - | | | | - | | | | 12,746,672 | | | | 1,508 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 59,110,661 | | | | (59,110,661 | ) | | | - | | | | - | | | | - | | | | 284* | |
Invesco Private Prime Fund | | | - | | | | 131,651,643 | | | | (131,651,202 | ) | | | - | | | | (441) | | | | - | | | | 4,487* | |
Total | | | $32,569,598 | | | | $511,609,727 | | | | $(512,815,696 | ) | | | $(2,848 | ) | | | $1,274 | | | | $31,362,055 | | | | $11,177 | |
| | * | 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, 2021. |
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value
(Cost $895,652,884) | | $ | 1,370,846,542 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $31,360,602) | | | 31,362,055 | |
|
| |
Cash | | | 185,859 | |
|
| |
Foreign currencies, at value (Cost $1,092,375) | | | 1,103,975 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 1,162,629 | |
|
| |
Dividends | | | 2,509,179 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 237,714 | |
|
| |
Other assets | | | 5,658 | |
|
| |
Total assets | | | 1,407,413,611 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 692,750 | |
|
| |
Accrued fees to affiliates | | | 803,062 | |
|
| |
Accrued other operating expenses | | | 157,125 | |
|
| |
Trustee deferred compensation and retirement plans | | | 260,335 | |
|
| |
Total liabilities | | | 1,913,272 | |
|
| |
Net assets applicable to shares outstanding | | $ | 1,405,500,339 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 822,039,778 | |
|
| |
Distributable earnings | | | 583,460,561 | |
|
| |
| | $ | 1,405,500,339 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 475,731,840 | |
|
| |
Series II | | $ | 929,768,499 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 11,489,697 | |
|
| |
Series II | | | 22,832,119 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 41.41 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 40.72 | |
|
| |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $2,108,550) | | $ | 21,529,032 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $22,824) | | | 29,230 | |
|
| |
Total investment income | | | 21,558,262 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 10,220,397 | |
|
| |
Administrative services fees | | | 2,363,696 | |
|
| |
Custodian fees | | | 37,073 | |
|
| |
Distribution fees - Series II | | | 2,412,929 | |
|
| |
Transfer agent fees | | | 75,752 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 35,207 | |
|
| |
Reports to shareholders | | | 9,057 | |
|
| |
Professional services fees | | | 77,301 | |
|
| |
Other | | | 25,918 | |
|
| |
Total expenses | | | 15,257,330 | |
|
| |
Less: Fees waived | | | (12,024 | ) |
|
| |
Net expenses | | | 15,245,306 | |
|
| |
Net investment income | | | 6,312,956 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 139,974,697 | |
|
| |
Affiliated investment securities | | | 1,274 | |
|
| |
Foreign currencies | | | (119,746 | ) |
|
| |
| | | 139,856,225 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | (66,735,557 | ) |
|
| |
Affiliated investment securities | | | (2,848 | ) |
|
| |
Foreign currencies | | | (155,921 | ) |
|
| |
| | | (66,894,326 | ) |
|
| |
Net realized and unrealized gain | | | 72,961,899 | |
|
| |
Net increase in net assets resulting from operations | | $ | 79,274,855 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 6,312,956 | | | $ | 6,271,215 | |
|
| |
Net realized gain | | | 139,856,225 | | | | 98,458,953 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (66,894,326 | ) | | | 61,571,398 | |
|
| |
Net increase in net assets resulting from operations | | | 79,274,855 | | | | 166,301,566 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (38,110,163 | ) | | | (19,693,113 | ) |
|
| |
Series II | | | (74,422,055 | ) | | | (38,602,388 | ) |
|
| |
Total distributions from distributable earnings | | | (112,532,218 | ) | | | (58,295,501 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 17,745,445 | | | | (34,482,600 | ) |
|
| |
Series II | | | (21,035,067 | ) | | | (103,508,855 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (3,289,622 | ) | | | (137,991,455 | ) |
|
| |
Net increase (decrease) in net assets | | | (36,546,985 | ) | | | (29,985,390 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,442,047,324 | | | | 1,472,032,714 | |
|
| |
End of year | | $ | 1,405,500,339 | | | $ | 1,442,047,324 | |
|
| |
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 12/31/21 | | | $42.52 | | | | $0.27 | | | | $ 2.22 | | | | $ 2.49 | | | | $(0.57 | ) | | | $(3.03 | ) | | | $(3.60 | ) | | | $41.41 | | | | 5.89 | % | | | $ 475,732 | | | | 0.89 | % | | | 0.89 | % | | | 0.60 | % | | | 34 | % |
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 | | | | 0.91 | | | | 0.65 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 41.88 | | | | 0.15 | | | | 2.19 | | | | 2.34 | | | | (0.47 | ) | | | (3.03 | ) | | | (3.50 | ) | | | 40.72 | | | | 5.61 | | | | 929,768 | | | | 1.14 | | | | 1.14 | | | | 0.35 | | | | 34 | |
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 | | | | 1.16 | | | | 0.40 | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. International Growth 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
| 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.
|
| Invesco V.I. International Growth Fund |
| 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 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 - Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information. |
| M. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2– Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $12,024.
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, 2021, Invesco was paid $206,086 for accounting and fund administrative services and was reimbursed $2,157,610 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
|
| Invesco V.I. International Growth Fund |
For the year ended December 31, 2021, the Fund incurred $133 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, 2021. 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 | | $ | – | | | $ | 9,294,128 | | | | $– | | | $ | 9,294,128 | |
|
| |
Brazil | | | – | | | | 14,964,813 | | | | – | | | | 14,964,813 | |
|
| |
Canada | | | 86,750,052 | | | | – | | | | – | | | | 86,750,052 | |
|
| |
China | | | 39,739,790 | | | | 68,588,308 | | | | – | | | | 108,328,098 | |
|
| |
Denmark | | | – | | | | 35,846,268 | | | | – | | | | 35,846,268 | |
|
| |
France | | | – | | | | 109,123,647 | | | | – | | | | 109,123,647 | |
|
| |
Germany | | | – | | | | 22,711,689 | | | | – | | | | 22,711,689 | |
|
| |
Hong Kong | | | – | | | | 26,776,251 | | | | – | | | | 26,776,251 | |
|
| |
India | | | 32,316,039 | | | | – | | | | – | | | | 32,316,039 | |
|
| |
Ireland | | | 22,224,072 | | | | 50,650,424 | | | | – | | | | 72,874,496 | |
|
| |
Italy | | | – | | | | 32,213,352 | | | | – | | | | 32,213,352 | |
|
| |
Japan | | | – | | | | 203,910,227 | | | | – | | | | 203,910,227 | |
|
| |
Macau | | | – | | | | 12,933,627 | | | | – | | | | 12,933,627 | |
|
| |
Mexico | | | 21,978,997 | | | | – | | | | – | | | | 21,978,997 | |
|
| |
Netherlands | | | – | | | | 83,377,024 | | | | – | | | | 83,377,024 | |
|
| |
Singapore | | | – | | | | 22,011,940 | | | | – | | | | 22,011,940 | |
|
| |
South Korea | | | – | | | | 54,978,748 | | | | – | | | | 54,978,748 | |
|
| |
Spain | | | – | | | | 15,137,528 | | | | – | | | | 15,137,528 | |
|
| |
Sweden | | | – | | | | 76,934,238 | | | | – | | | | 76,934,238 | |
|
| |
Switzerland | | | – | | | | 83,118,175 | | | | – | | | | 83,118,175 | |
|
| |
Taiwan | | | 37,631,284 | | | | – | | | | – | | | | 37,631,284 | |
|
| |
United Kingdom | | | 32,992,954 | | | | 68,044,545 | | | | – | | | | 101,037,499 | |
|
| |
United States | | | 92,832,706 | | | | 13,765,716 | | | | – | | | | 106,598,422 | |
|
| |
Money Market Funds | | | 31,362,055 | | | | – | | | | – | | | | 31,362,055 | |
|
| |
Total Investments | | $ | 397,827,949 | | | $ | 1,004,380,648 | | | | $– | | | $ | 1,402,208,597 | |
|
| |
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. International Growth 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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 16,066,824 | | | | | | | $ | 30,977,650 | |
|
| |
Long-term capital gain | | | 96,465,394 | | | | | | | | 27,317,851 | |
|
| |
Total distributions | | $ | 112,532,218 | | | | | | | $ | 58,295,501 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 17,377,121 | |
|
| |
Undistributed long-term capital gain | | | 125,033,313 | |
|
| |
Net unrealized appreciation – investments | | | 441,184,507 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 18,617 | |
|
| |
Temporary book/tax differences | | | (152,997 | ) |
|
| |
Shares of beneficial interest | | | 822,039,778 | |
|
| |
Total net assets | | $ | 1,405,500,339 | |
|
| |
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, 2021.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $473,717,957 and $584,922,589, 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 | | | $454,001,445 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (12,816,938 | ) |
|
| |
Net unrealized appreciation of investments | | | $441,184,507 | |
|
| |
Cost of investments for tax purposes is $961,024,090.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of passive foreign investment companies, on December 31, 2021, undistributed net investment income was increased by $10,713,499 and undistributed net realized gain was decreased by $10,713,499. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,292,791 | | | $ | 56,540,675 | | | | 1,482,979 | | | $ | 52,751,557 | |
|
| |
Series II | | | 2,005,720 | | | | 84,986,713 | | | | 2,437,340 | | | | 85,719,081 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 924,107 | | | | 38,110,163 | | | | 511,763 | | | | 19,559,591 | |
|
| |
Series II | | | 1,833,959 | | | | 74,422,055 | | | | 1,025,024 | | | | 38,602,388 | |
|
| |
|
| Invesco V.I. International Growth Fund |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,751,157 | ) | | $ | (76,905,393 | ) | | | (2,913,014 | ) | | $ | (106,793,748 | ) |
|
| |
Series II | | | (4,249,072 | ) | | | (180,443,835 | ) | | | (6,351,741 | ) | | | (227,830,324 | ) |
|
| |
Net increase (decrease) in share activity | | | 56,348 | | | $ | (3,289,622 | ) | | | (3,807,649 | ) | | $ | (137,991,455 | ) |
|
| |
| (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 10–Significant Event
Effective on or about April 29, 2022, the name of the Fund and all references thereto will change from Invesco V.I. International Growth Fund to Invesco V.I. EQV International Equity Fund.
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $995.40 | | $4.48 | | $1,020.72 | | $4.53 | | 0.89% |
Series II | | 1,000.00 | | 993.90 | | 5.73 | | 1,019.46 | | 5.80 | | 1.14 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | | $96,465,394 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 17.82 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
Foreign Taxes | | | $0.0658 | | | | per share | |
Foreign Source Income | | $ | 0.6336 | | | | 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) | | 186 | | 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. International Growth Fund |
| | | | |
| | |
| Annual Report to Shareholders | | | December 31, 2021 | |
Invesco V.I. Main Street Fund®
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 27.57 | % |
Series II Shares | | | 27.23 | |
S&P 500 Index▼ | | | 28.71 | |
| |
Source(s): ▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally,
the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
During the fiscal year, stock selection in the health care, real estate and information technology (IT) sectors were the largest contributors to the Fund’s performance versus its style-specific benchmark, the S&P 500 Index. This was offset by weaker stock selection in the communication services, energy and consumer staples sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the fiscal year included Applied Materials, Capital One and Prologis. Applied Materials and semiconductor equipment companies, in general, benefited from the strong secular demand for semiconductors, which has supported positive earnings estimate revisions.
Capital One, along with financials as a group, outperformed as the US continued its path to reopening. Additionally, the company benefited from a pick-up in travel, hotel bookings and dining which helped drive credit card growth. Further, consumers continued to benefit from the aggressive stimulus and forbearance programs that helped limit delinquencies and charge-offs. We exited our position during the fiscal year.
Prologis, an industrial real estate investment trust (REIT), continued to post strong tenant demand and same-property rent growth, driven by its customer’s need to expand and strengthen supply chains to support the growth of e-commerce.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the fiscal year
included Fiserv, Amazon and Verizon Communications. Fiserv, a financial technology company that provides payments services, was under pressure due to a more difficult competitive environment for the company’s merchant acquiring business. Additionally, there have been concerns that non-traditional banks will negatively impact the traditional money center banks by extending Fiserv as a technology provider.
Amazon traded mostly flat during the fiscal year but was a key relative detractor in the context of significant gains for the S&P 500 Index. Amazon’s modest positive total return during the fiscal year came after experiencing significant gains in 2020 as a stay-at-home beneficiary which led to tougher comparisons in 2021.
Verizon Communications underperformed along with the telecommunications group in general as those names tend to be more defensive and value-oriented while the S&P 500 Index experienced strong gains led by the growth sub-segment of the market. Additionally, the company dealt with COVID-19-related retail store restrictions that limited the pool of potential switching subscribers and AT&T used aggressive pricing to defend its subscriber base.
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 Fund performance.
We thank you for your continued investment in Invesco V.I. Main Street Fund®.
| 2 | Source: US Bureau of Economic Analysis |
| 3 | Source: US Bureau of Labor Statistics |
Portfolio manager(s):
Manind Govil - Lead
Paul Larson
Benjamin Ram
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. Main Street Fund® |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (7/5/95) | | | 9.93 | % |
10 Years | | | 15.06 | |
5 Years | | | 15.63 | |
1 Year | | | 27.57 | |
| |
Series II Shares | | | | |
Inception (7/13/00) | | | 6.71 | % |
10 Years | | | 14.77 | |
5 Years | | | 15.36 | |
1 Year | | | 27.23 | |
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® (renamed Invesco V.I. Main Street Fund® on April 30, 2021). 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 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 V.I. Main Street Fund® |
Supplemental Information
Invesco 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 V.I. Main Street Fund® |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 26.53 | % |
| |
Health Care | | | | 14.90 | |
| |
Consumer Discretionary | | | | 14.07 | |
| |
Industrials | | | | 10.92 | |
| |
Financials | | | | 10.58 | |
| |
Communication Services | | | | 8.17 | |
| |
Consumer Staples | | | | 6.27 | |
| |
Real Estate | | | | 2.77 | |
| |
Energy | | | | 2.15 | |
| |
Materials | | | | 2.07 | |
| |
Utilities | | | | 1.51 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.06 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Microsoft Corp. | | | | 6.74 | % |
| | |
2. | | Amazon.com, Inc. | | | | 5.34 | |
| | |
3. | | JPMorgan Chase & Co. | | | | 3.12 | |
| | |
4. | | United Parcel Service, Inc., Class B | | | | 2.95 | |
| | |
5. | | UnitedHealth Group, Inc. | | | | 2.90 | |
| | |
6. | | Apple, Inc. | | | | 2.87 | |
| | |
7. | | QUALCOMM, Inc. | | | | 2.80 | |
| | |
8. | | Procter & Gamble Co. (The) | | | | 2.69 | |
| | |
9. | | Prologis, Inc. | | | | 2.66 | |
| | |
10. | | Alphabet, Inc., Class A | | | | 2.57 | |
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, 2021.
|
| Invesco V.I. Main Street Fund® |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.94% | |
Aerospace & Defense–1.69% | | | | | | | | |
Raytheon Technologies Corp. | | | 199,942 | | | $ | 17,207,009 | |
|
| |
| | |
Air Freight & Logistics–2.95% | | | | | | | | |
United Parcel Service, Inc., Class B | | | 140,323 | | | | 30,076,832 | |
|
| |
| | |
Airlines–0.41% | | | | | | | | |
Southwest Airlines Co.(b) | | | 97,441 | | | | 4,174,372 | |
|
| |
| | |
Application Software–3.71% | | | | | | | | |
Manhattan Associates, Inc.(b) | | | 19,845 | | | | 3,085,699 | |
|
| |
salesforce.com, inc.(b) | | | 94,064 | | | | 23,904,485 | |
|
| |
Workday, Inc., Class A(b) | | | 40,001 | | | | 10,927,473 | |
|
| |
| | | | | | | 37,917,657 | |
|
| |
|
Automobile Manufacturers–1.85% | |
General Motors Co.(b) | | | 218,329 | | | | 12,800,630 | |
|
| |
Tesla, Inc.(b) | | | 5,717 | | | | 6,041,611 | |
|
| |
| | | | | | | 18,842,241 | |
|
| |
| | |
Automotive Retail–1.71% | | | | | | | | |
CarMax, Inc.(b) | | | 73,477 | | | | 9,568,910 | |
|
| |
O’Reilly Automotive, Inc.(b) | | | 11,159 | | | | 7,880,820 | |
|
| |
| | | | | | | 17,449,730 | |
|
| |
| | |
Biotechnology–0.87% | | | | | | | | |
Seagen, Inc.(b) | | | 57,385 | | | | 8,871,721 | |
|
| |
| | |
Cable & Satellite–1.42% | | | | | | | | |
Comcast Corp., Class A | | | 288,655 | | | | 14,528,006 | |
|
| |
| | |
Commodity Chemicals–0.78% | | | | | | | | |
Valvoline, Inc. | | | 213,785 | | | | 7,972,043 | |
|
| |
|
Communications Equipment–1.09% | |
Motorola Solutions, Inc. | | | 40,901 | | | | 11,112,802 | |
|
| |
|
Construction Machinery & Heavy Trucks–1.25% | |
Caterpillar, Inc. | | | 61,667 | | | | 12,749,036 | |
|
| |
|
Construction Materials–1.29% | |
Vulcan Materials Co. | | | 63,184 | | | | 13,115,735 | |
|
| |
|
Data Processing & Outsourced Services–2.13% | |
Fiserv, Inc.(b) | | | 122,050 | | | | 12,667,570 | |
|
| |
PayPal Holdings, Inc.(b) | | | 48,099 | | | | 9,070,509 | |
|
| |
| | | | | | | 21,738,079 | |
|
| |
| | |
Distillers & Vintners–0.91% | | | | | | | | |
Constellation Brands, Inc., Class A | | | 36,824 | | | | 9,241,719 | |
|
| |
|
Diversified Banks–3.12% | |
JPMorgan Chase & Co. | | | 201,201 | | | | 31,860,178 | |
|
| |
Electric Utilities–1.51% | | | | | | | | |
FirstEnergy Corp. | | | 371,277 | | | | 15,441,410 | |
|
| |
|
Electrical Components & Equipment–0.97% | |
Hubbell, Inc. | | | 14,535 | | | | 3,027,204 | |
|
| |
Rockwell Automation, Inc. | | | 19,700 | | | | 6,872,345 | |
|
| |
| | | | | | | 9,899,549 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Environmental & Facilities Services–0.68% | |
Waste Connections, Inc. | | | 51,235 | | | $ | 6,981,793 | |
|
| |
|
Financial Exchanges & Data–1.52% | |
Intercontinental Exchange, Inc. | | | 113,685 | | | | 15,548,697 | |
|
| |
|
Food Distributors–0.91% | |
Sysco Corp. | | | 117,795 | | | | 9,252,797 | |
|
| |
|
General Merchandise Stores–1.18% | |
Target Corp. | | | 52,233 | | | | 12,088,806 | |
|
| |
|
Health Care Facilities–2.93% | |
HCA Healthcare, Inc. | | | 91,051 | | | | 23,392,823 | |
|
| |
Tenet Healthcare Corp.(b) | | | 80,247 | | | | 6,555,377 | |
|
| |
| | | | | | | 29,948,200 | |
|
| |
|
Health Care Services–2.11% | |
CVS Health Corp. | | | 208,324 | | | | 21,490,704 | |
|
| |
|
Health Care Supplies–1.26% | |
Cooper Cos., Inc. (The) | | | 25,730 | | | | 10,779,326 | |
|
| |
Quidel Corp.(b)(c) | | | 15,394 | | | | 2,078,036 | |
|
| |
| | | | | | | 12,857,362 | |
|
| |
|
Home Improvement Retail–1.91% | |
Floor & Decor Holdings, Inc.,
Class A(b) | | | 20,115 | | | | 2,615,151 | |
|
| |
Home Depot, Inc. (The) | | | 40,706 | | | | 16,893,397 | |
|
| |
| | | | | | | 19,508,548 | |
|
| |
| | |
Homebuilding–0.95% | | | | | | | | |
D.R. Horton, Inc. | | | 89,423 | | | | 9,697,924 | |
|
| |
|
Hotels, Resorts & Cruise Lines–1.13% | |
Airbnb, Inc., Class A(b) | | | 69,233 | | | | 11,526,602 | |
|
| |
|
Household Products–2.69% | |
Procter & Gamble Co. (The) | | | 167,651 | | | | 27,424,351 | |
|
| |
| | |
Industrial Machinery–1.45% | | | | | | | | |
Otis Worldwide Corp. | | | 169,705 | | | | 14,776,214 | |
|
| |
|
Industrial REITs–2.67% | |
Prologis, Inc. | | | 161,595 | | | | 27,206,134 | |
|
| |
|
Integrated Oil & Gas–0.65% | |
Exxon Mobil Corp. | | | 107,601 | | | | 6,584,105 | |
|
| |
|
Integrated Telecommunication Services–1.47% | |
Verizon Communications, Inc. | | | 289,037 | | | | 15,018,363 | |
|
| |
|
Interactive Home Entertainment–0.38% | |
Zynga, Inc., Class A(b) | | | 612,886 | | | | 3,922,470 | |
|
| |
|
Interactive Media & Services–2.86% | |
Alphabet, Inc., Class A(b) | | | 9,046 | | | | 26,206,624 | |
|
| |
Snap, Inc., Class A(b) | | | 64,434 | | | | 3,030,331 | |
|
| |
| | | | | | | 29,236,955 | |
|
| |
|
Internet & Direct Marketing Retail–5.34% | |
Amazon.com, Inc.(b) | | | 16,341 | | | | 54,486,450 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Internet Services & Infrastructure–0.46% | |
Snowflake, Inc., Class A(b) | | | 13,968 | | | $ | 4,731,660 | |
|
| |
|
IT Consulting & Other Services–1.74% | |
Accenture PLC, Class A | | | 37,772 | | | | 15,658,383 | |
|
| |
Amdocs Ltd. | | | 28,031 | | | | 2,097,840 | |
|
| |
| | | | | | | 17,756,223 | |
|
| |
|
Life Sciences Tools & Services–0.99% | |
Avantor, Inc.(b) | | | 239,004 | | | | 10,071,629 | |
|
| |
|
Managed Health Care–2.90% | |
UnitedHealth Group, Inc. | | | 58,958 | | | | 29,605,170 | |
|
| |
|
Movies & Entertainment–2.03% | |
Netflix, Inc.(b) | | | 29,874 | | | | 17,997,292 | |
|
| |
Warner Music Group Corp., Class A | | | 63,448 | | | | 2,739,685 | |
|
| |
| | | | | | | 20,736,977 | |
|
| |
|
Oil & Gas Refining & Marketing–0.96% | |
Valero Energy Corp. | | | 130,978 | | | | 9,837,758 | |
|
| |
|
Oil & Gas Storage & Transportation–0.54% | |
Magellan Midstream Partners L.P. | | | 119,040 | | | | 5,528,218 | |
|
| |
|
Other Diversified Financial Services–1.74% | |
Equitable Holdings, Inc. | | | 542,080 | | | | 17,774,803 | |
|
| |
|
Packaged Foods & Meats–1.15% | |
Mondelez International, Inc., Class A | | | 177,359 | | | | 11,760,675 | |
|
| |
|
Personal Products–0.10% | |
Coty, Inc., Class A(b) | | | 101,829 | | | | 1,069,204 | |
|
| |
|
Pharmaceuticals–3.84% | |
AstraZeneca PLC, ADR (United Kingdom) | | | 264,711 | | | | 15,419,415 | |
|
| |
Bayer AG (Germany) | | | 42,930 | | | | 2,298,235 | |
|
| |
Eli Lilly and Co. | | | 77,908 | | | | 21,519,748 | |
|
| |
| | | | | | | 39,237,398 | |
|
| |
|
Property & Casualty Insurance–1.18% | |
Allstate Corp. (The) | | | 102,797 | | | | 12,094,067 | |
|
| |
|
Railroads–0.95% | |
Union Pacific Corp. | | | 38,678 | | | | 9,744,149 | |
|
| |
|
Real Estate Services–0.10% | |
Zillow Group, Inc., Class C(b)(c) | | | 16,272 | | | | 1,038,967 | |
|
| |
|
Regional Banks–2.42% | |
CIT Group, Inc. | | | 107,391 | | | | 5,513,454 | |
|
| |
First Citizens BancShares, Inc., Class A | | | 4,429 | | | | 3,675,361 | |
|
| |
Signature Bank | | | 22,688 | | | | 7,338,888 | |
|
| |
SVB Financial Group(b) | | | 12,059 | | | | 8,178,896 | |
|
| |
| | | | | | | 24,706,599 | |
|
| |
Investment Abbreviations:
ADR – American Depositary Receipt
REIT – Real Estate Investment Trust
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Research & Consulting Services–0.58% | |
TransUnion | | | 49,534 | | | $ | 5,873,742 | |
|
| |
|
Semiconductor Equipment–1.43% | |
Applied Materials, Inc. | | | 92,662 | | | | 14,581,292 | |
|
| |
|
Semiconductors–4.28% | |
Advanced Micro Devices, Inc.(b) | | | 105,243 | | | | 15,144,468 | |
|
| |
QUALCOMM, Inc. | | | 156,060 | | | | 28,538,692 | |
|
| |
| | | | | | | 43,683,160 | |
|
| |
|
Soft Drinks–0.51% | |
Coca-Cola Co. (The) | | | 88,487 | | | | 5,239,315 | |
|
| |
|
Systems Software–8.83% | |
Microsoft Corp. | | | 204,608 | | | | 68,813,762 | |
|
| |
ServiceNow, Inc.(b) | | | 9,143 | | | | 5,934,813 | |
|
| |
VMware, Inc., Class A | | | 132,509 | | | | 15,355,143 | |
|
| |
| | | | | | | 90,103,718 | |
|
| |
|
Technology Hardware, Storage & Peripherals–2.87% | |
Apple, Inc. | | | 164,843 | | | | 29,271,172 | |
|
| |
|
Thrifts & Mortgage Finance–0.59% | |
Rocket Cos., Inc., Class A | | | 429,939 | | | | 6,019,147 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $660,169,601) | | | | 1,020,219,637 | |
|
| |
|
Money Market Funds–0.00% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 2 | | | | 2 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 2 | | | | 2 | |
|
| |
Total Money Market Funds (Cost $4) | | | | 4 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)–99.94%
(Cost $660,169,605) | | | | 1,020,219,641 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–0.31% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 931,933 | | | | 931,933 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 2,174,075 | | | | 2,174,510 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $3,106,443) | | | | 3,106,443 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–100.25%
(Cost $663,276,048) | | | | 1,023,326,084 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(0.25)% | | | | (2,522,171 | ) |
|
| |
NET ASSETS–100.00% | | | $ | 1,020,803,913 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Unrealized | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | Appreciation | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $1,204,226 | | | | $105,030,533 | | | | $(106,234,757) | | | | $- | | | | $ - | | | | $ 2 | | | | $ 431 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 860,151 | | | | 74,937,168 | | | | (75,797,362) | | | | - | | | | 43 | | | | - | | | | 148 | |
Invesco Treasury Portfolio, Institutional Class | | | 1,376,258 | | | | 120,034,895 | | | | (121,411,151) | | | | - | | | | - | | | | 2 | | | | 182 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 71,981,910 | | | | (71,049,977) | | | | - | | | | - | | | | 931,933 | | | | 474* | |
Invesco Private Prime Fund | | | - | | | | 128,112,205 | | | | (125,935,812) | | | | - | | | | (1,883) | | | | 2,174,510 | | | | 6,881* | |
Total | | | $3,440,635 | | | | $500,096,711 | | | | $(500,429,059) | | | | $- | | | | $(1,840) | | | | $3,106,447 | | | | $8,116 | |
| | * | 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, 2021. |
| (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 V.I. Main Street Fund® |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
| |
Investments in unaffiliated securities, at value (Cost $660,169,601)* | | $ | 1,020,219,637 | |
Investments in affiliated money market funds, at value
(Cost $3,106,447) | | | 3,106,447 | |
Foreign currencies, at value (Cost $302) | | | 299 | |
Receivable for: | | | | |
Investments sold | | | 2,604,454 | |
Fund shares sold | | | 127,884 | |
Dividends | | | 230,428 | |
Investment for trustee deferred compensation and retirement plans | | | 190,220 | |
Other assets | | | 4,684 | |
Total assets | | | 1,026,484,053 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 431,531 | |
Amount due custodian | | | 1,352,843 | |
Collateral upon return of securities loaned | | | 3,106,443 | |
Accrued fees to affiliates | | | 559,017 | |
Accrued other operating expenses | | | 40,086 | |
Trustee deferred compensation and retirement plans | | | 190,220 | |
Total liabilities | | | 5,680,140 | |
Net assets applicable to shares outstanding | | $ | 1,020,803,913 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 364,294,171 | |
Distributable earnings | | | 656,509,742 | |
| | | $ | 1,020,803,913 | |
| |
Net Assets: | | | | |
Series I | | $ | 428,273,798 | |
Series II | | $ | 592,530,115 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 11,953,675 | |
Series II | | | 16,796,357 | |
Series I: | | | | |
Net asset value per share | | $ | 35.83 | |
Series II: | | | | |
Net asset value per share | | $ | 35.28 | |
| * | At December 31, 2021, securities with an aggregate value of $3,085,807 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
| |
Dividends (net of foreign withholding taxes of $11,161) | | $ | 18,273,035 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $146,207) | | | 146,968 | |
|
| |
Total investment income | | | 18,420,003 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 7,898,492 | |
|
| |
Administrative services fees | | | 1,740,835 | |
|
| |
Custodian fees | | | 6,199 | |
|
| |
Distribution fees - Series II | | | 1,690,778 | |
|
| |
Transfer agent fees | | | 59,002 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 31,794 | |
|
| |
Professional services fees | | | 52,508 | |
|
| |
Other | | | (170,464 | ) |
|
| |
Total expenses | | | 11,309,144 | |
|
| |
Less: Fees waived | | | (1,867 | ) |
|
| |
Net expenses | | | 11,307,277 | |
|
| |
Net investment income | | | 7,112,726 | |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 299,860,820 | |
|
| |
Affiliated investment securities | | | (1,840 | ) |
|
| |
Foreign currencies | | | (5,545 | ) |
|
| |
| | | 299,853,435 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | (10,074,151 | ) |
|
| |
Foreign currencies | | | (1,175 | ) |
|
| |
| | | (10,075,326 | ) |
|
| |
Net realized and unrealized gain | | | 289,778,109 | |
|
| |
Net increase in net assets resulting from operations | | $ | 296,890,835 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Fund® |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income | | $ | 7,112,726 | | | $ | 7,142,961 | |
|
| |
Net realized gain | | | 299,853,435 | | | | 72,217,855 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (10,075,326 | ) | | | 46,843,579 | |
|
| |
Net increase in net assets resulting from operations | | | 296,890,835 | | | | 126,204,395 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (35,554,579 | ) | | | (52,173,015 | ) |
|
| |
Series II | | | (48,316,102 | ) | | | (60,587,458 | ) |
|
| |
Total distributions from distributable earnings | | | (83,870,681 | ) | | | (112,760,473 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (175,913,315 | ) | | | (70,040,502 | ) |
|
| |
Series II | | | (118,915,828 | ) | | | (143,073,768 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (294,829,143 | ) | | | (213,114,270 | ) |
|
| |
Net increase (decrease) in net assets | | | (81,808,989 | ) | | | (199,670,348 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 1,102,612,902 | | | | 1,302,283,250 | |
|
| |
End of year | | $ | 1,020,803,913 | | | $ | 1,102,612,902 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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 12/31/21 | | | $29.91 | | | | $0.25 | | | | $7.93 | | | | $8.18 | | | | $(0.25 | ) | | | $(2.01 | ) | | | $(2.26 | ) | | | $35.83 | | | | 27.57 | % | | | $428,274 | | | | 0.79 | % | | | 0.79 | % | | | 0.73 | % | | | 55 | % |
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 | | | | 0.84 | | | | 0.78 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 29.49 | | | | 0.16 | | | | 7.82 | | | | 7.98 | | | | (0.18 | ) | | | (2.01 | ) | | | (2.19 | ) | | | 35.28 | | | | 27.28 | | | | 592,530 | | | | 1.04 | | | | 1.04 | | | | 0.48 | | | | 55 | |
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 | | | | 1.09 | | | | 0.53 | | | | 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 | |
| (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 and 2017, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Fund® |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Main Street Fund®, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Main Street 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. | 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
|
| Invesco V.I. Main Street 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 Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
| M. | Forward Foreign Currency Contracts – The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to 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.
| N. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, the effective advisory fee rate incurred by the Fund was 0.65%.
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 Fund.
The Adviser has contractually agreed, through at least April 30, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $1,867.
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
|
| Invesco V.I. Main Street Fund® |
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, 2021, Invesco was paid $169,718 for accounting and fund administrative services and was reimbursed $1,571,117 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $3,544 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, 2021. 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 | | | $ | 1,017,921,402 | | | | $ | 2,298,235 | | | | $ | – | | | | $ | 1,020,219,637 | |
Money Market Funds | | | | 4 | | | | | 3,106,443 | | | | | – | | | | | 3,106,447 | |
Total Investments | | | $ | 1,017,921,406 | | | | $ | 5,404,678 | | | | $ | – | | | | $ | 1,023,326,084 | |
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, 2021, the Fund engaged in securities purchases of $3,847,281.
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.
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| Invesco V.I. Main Street 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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
Ordinary income* | | $ | 7,791,256 | | | | | | | $ | 20,517,553 | |
Long-term capital gain | | | 76,079,425 | | | | | | | | 92,242,920 | |
Total distributions | | $ | 83,870,681 | | | | | | | $ | 112,760,473 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 45,490,153 | |
|
| |
Undistributed long-term capital gain | | | 263,018,574 | |
|
| |
Net unrealized appreciation – investments | | | 354,554,567 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 852 | |
|
| |
Temporary book/tax differences | | | (6,554,404 | ) |
|
| |
Shares of beneficial interest | | | 364,294,171 | |
|
| |
Total net assets | | $ | 1,020,803,913 | |
|
| |
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 does not have a capital loss carryforward as of December 31, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $660,358,149 and $1,028,538,997, 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 | | $ | 363,816,506 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (9,261,939 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 354,554,567 | |
|
| |
Cost of investments for tax purposes is $668,771,517.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of partnerships, on December 31, 2021, undistributed net investment income was decreased by $4,352,208, undistributed net realized gain was increased by $4,354,859 and shares of beneficial interest was decreased by $2,651. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 387,014 | | | $ | 13,025,614 | | | | 488,428 | | | $ | 13,734,224 | |
|
| |
Series II | | | 4,770,397 | | | | 166,386,375 | | | | 1,712,042 | | | | 44,161,406 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 1,022,271 | | | | 35,554,579 | | | | 1,877,403 | | | | 52,173,014 | |
|
| |
Series II | | | 1,410,277 | | | | 48,316,100 | | | | 2,210,414 | | | | 60,587,455 | |
|
| |
|
| Invesco V.I. Main Street Fund® |
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (6,367,300 | ) | | $ | (224,493,508 | ) | | | (4,843,261 | ) | | $ | (135,947,740 | ) |
|
| |
Series II | | | (9,616,161 | ) | | | (333,618,303 | ) | | | (8,868,684 | ) | | | (247,822,629 | ) |
|
| |
Net increase (decrease) in share activity | | | (8,393,502 | ) | | $ | (294,829,143 | ) | | | (7,423,658 | ) | | $ | (213,114,270 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 48% of the outstanding shares of the Fund. 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. 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Main Street Fund®/VA (subsequently renamed Invesco V.I. Main Street Fund®) 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,098.00 | | $4.18 | | $1,021.22 | | $4.02 | | 0.79% |
Series II | | 1,000.00 | | 1,096.80 | | 5.50 | | 1,019.96 | | 5.30 | | 1.04 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| Invesco 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 76,079,425 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 99.99 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| Invesco 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) | | 186 | | 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. 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
| 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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Main Street Fund® |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Main Street Mid Cap Fund®
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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. | | VIMCCE-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| |
Performance summary | |
For the year ended December 31, 2021, Series I shares of Invesco V.I. Main Street Mid Cap Fund® (the Fund) outperformed 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 23.24 | % |
Series II Shares | | | 22.86 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell Midcap Index▼ (Style-Specific Index) | | | 22.58 | |
Lipper VUF Mid-Cap Core Funds Index∎ (Peer Group Index) | | | 25.62 | |
| |
Source(s): ▼RIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
During the fiscal year, stock selection in the industrials, consumer discretionary and consumer staples 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 health care, energy and communication services sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the fiscal year included KLA, Evoqua Water Technologies and BJs Wholesale Club. KLA experienced strong demand for its semiconductor equipment and management upgraded its view of the demand for 2022.
Evoqua Water Technologies experienced positive performance as investors focused on the company’s longer-term opportunities to benefit from potentially higher infrastructure spending. President Joe Biden’s administration proposed the American Jobs Plan, which included significant funding for areas that would potentially benefit Evoqua, including a focus on upgrading and modernizing drinking water supplies and enhanced monitoring for harmful substances.
BJs Wholesale Club reported better than expected sales during the fiscal year while
seeing a strong renewal of new customers gained during the onset of the pandemic.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the fiscal year included LHC, Zynga and Fiserv. LHC is a home health care services company and was under pressure due to concerns about labor shortages in health care positions and that COVID-19 was causing a lack of referrals from skilled nursing facilities.
Zynga, an interactive entertainment company providing social game services, was under pressure after the rollout of the ATT (application tracking transparency) privacy framework from Apple that adversely impacted the acquisition of new users.
Fiserv, a global fintech and payments company, was under pressure due to a more difficult competitive environment for the company’s merchant acquiring business. Additionally, there have been concerns that non-traditional banks will negatively impact the traditional money center banks and by extending Fiserv as a technology provider.
We continue to maintain our discipline around valuation and focus on companies that 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 Fund performance.
We thank you for your continued investment in Invesco V.I. Main Street Mid Cap Fund®.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Joy Budzinski
Belinda Cavazos - Lead
Kristin Ketner Pak
Magnus Krantz
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. and its affiliates. 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. Main Street Mid Cap Fund® |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (9/10/01) | | | 8.29 | % |
10 Years | | | 10.81 | |
5 Years | | | 11.44 | |
1 Year | | | 23.24 | |
| |
Series II Shares | | | | |
Inception (9/10/01) | | | 8.02 | % |
10 Years | | | 10.52 | |
5 Years | | | 11.15 | |
1 Year | | | 22.86 | |
Effective April 30, 2021 the Invesco V.I. Mid Cap Core Equity Fund was renamed Invesco V.I. Main Street Mid Cap Fund®.
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. Main Street Mid 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.
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| Invesco V.I. Main Street Mid Cap Fund® |
Supplemental Information
Invesco V.I. Main Street Mid Cap Fund’s® investment objective is long-term growth of capital.
∎ Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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. |
|
| Invesco V.I. Main Street Mid Cap Fund® |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Information Technology | | | | 17.20 | % |
| |
Industrials | | | | 16.27 | |
| |
Consumer Discretionary | | | | 15.12 | |
| |
Health Care | | | | 11.32 | |
| |
Financials | | | | 10.65 | |
| |
Real Estate | | | | 7.73 | |
| |
Materials | | | | 5.33 | |
| |
Consumer Staples | | | | 4.50 | |
| |
Utilities | | | | 3.88 | |
| |
Energy | | | | 3.68 | |
| |
Communication Services | | | | 3.58 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.74 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Alexandria Real Estate Equities, Inc. | | | | 2.42 | % |
| | |
2. | | Keysight Technologies, Inc. | | | | 2.06 | |
| | |
3. | | Synopsys, Inc. | | | | 2.00 | |
| | |
4. | | Vulcan Materials Co. | | | | 1.86 | |
| | |
5. | | CACI International, Inc., Class A | | | | 1.83 | |
| | |
6. | | Duke Realty Corp. | | | | 1.80 | |
| | |
7. | | Hubbell, Inc. | | | | 1.75 | |
| | |
8. | | D.R. Horton, Inc. | | | | 1.70 | |
| | |
9. | | Raymond James Financial, Inc. | | | | 1.65 | |
| | |
10. | | Atmos Energy Corp. | | | | 1.62 | |
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, 2021.
|
| Invesco V.I. Main Street Mid Cap Fund® |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.26% | |
Aerospace & Defense–1.10% | | | | | |
Curtiss-Wright Corp. | | | 20,287 | | | $ | 2,813,198 | |
|
| |
| |
Airlines–0.76% | | | | | |
Spirit Airlines, Inc.(b) | | | 88,673 | | | | 1,937,505 | |
|
| |
| |
Apparel Retail–1.10% | | | | | |
Ross Stores, Inc. | | | 24,493 | | | | 2,799,060 | |
|
| |
| |
Apparel, Accessories & Luxury Goods–1.20% | | | | | |
Tapestry, Inc. | | | 75,314 | | | | 3,057,748 | |
|
| |
| |
Application Software–7.79% | | | | | |
HubSpot, Inc.(b) | | | 2,370 | | | | 1,562,186 | |
|
| |
Manhattan Associates, Inc.(b) | | | 26,219 | | | | 4,076,792 | |
|
| |
Paylocity Holding Corp.(b) | | | 14,939 | | | | 3,527,994 | |
|
| |
Pegasystems, Inc. | | | 17,670 | | | | 1,975,859 | |
|
| |
Q2 Holdings, Inc.(b)(c) | | | 22,427 | | | | 1,781,601 | |
|
| |
Synopsys, Inc.(b) | | | 13,865 | | | | 5,109,252 | |
|
| |
Tyler Technologies, Inc.(b) | | | 3,410 | | | | 1,834,410 | |
|
| |
| | | | 19,868,094 | |
|
| |
|
Asset Management & Custody Banks–1.50% | |
Northern Trust Corp. | | | 32,082 | | | | 3,837,328 | |
|
| |
| |
Auto Parts & Equipment–1.61% | | | | | |
Lear Corp. | | | 8,711 | | | | 1,593,677 | |
|
| |
Visteon Corp.(b) | | | 22,648 | | | | 2,517,099 | |
|
| |
| | | | 4,110,776 | |
|
| |
| |
Automotive Retail–2.36% | | | | | |
CarMax, Inc.(b) | | | 20,761 | | | | 2,703,705 | |
|
| |
O’Reilly Automotive, Inc.(b) | | | 4,691 | | | | 3,312,925 | |
|
| |
| | | | 6,016,630 | |
|
| |
| |
Biotechnology–0.83% | | | | | |
Seagen, Inc.(b) | | | 13,614 | | | | 2,104,724 | |
|
| |
| |
Cable & Satellite–0.78% | | | | | |
Altice USA, Inc., Class A(b) | | | 122,553 | | | | 1,982,908 | |
|
| |
| |
Casinos & Gaming–0.89% | | | | | |
Caesars Entertainment, Inc.(b) | | | 24,284 | | | | 2,271,283 | |
|
| |
| |
Construction & Engineering–0.79% | | | | | |
Valmont Industries, Inc. | | | 8,075 | | | | 2,022,788 | |
|
| |
| |
Construction Materials–1.86% | | | | | |
Vulcan Materials Co. | | | 22,864 | | | | 4,746,109 | |
|
| |
|
Data Processing & Outsourced Services–1.36% | |
Fiserv, Inc.(b) | | | 33,304 | | | | 3,456,622 | |
|
| |
| |
Distillers & Vintners–1.34% | | | | | |
Constellation Brands, Inc., Class A | | | 13,582 | | | | 3,408,675 | |
|
| |
| |
Drug Retail–0.65% | | | | | |
Walgreens Boots Alliance, Inc. | | | 31,781 | | | | 1,657,697 | |
|
| |
| |
Electric Utilities–0.98% | | | | | |
American Electric Power Co., Inc. | | | 28,168 | | | | 2,506,107 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Electrical Components & Equipment–4.50% | | | | | |
Hubbell, Inc. | | | 21,447 | | | $ | 4,466,767 | |
|
| |
Regal Rexnord Corp. | | | 16,976 | | | | 2,888,976 | |
|
| |
Rockwell Automation, Inc. | | | 11,771 | | | | 4,106,313 | |
|
| |
| | | | 11,462,056 | |
|
| |
| |
Electronic Equipment & Instruments–2.06% | | | | | |
Keysight Technologies, Inc.(b) | | | 25,434 | | | | 5,252,375 | |
|
| |
| |
Environmental & Facilities Services–1.36% | | | | | |
Republic Services, Inc. | | | 24,904 | | | | 3,472,863 | |
|
| |
| |
Fertilizers & Agricultural Chemicals–0.79% | | | | | |
Mosaic Co. (The) | | | 51,096 | | | | 2,007,562 | |
|
| |
| |
Financial Exchanges & Data–0.70% | | | | | |
MarketAxess Holdings, Inc. | | | 4,325 | | | | 1,778,743 | |
|
| |
| |
Food Distributors–1.38% | | | | | |
Sysco Corp. | | | 44,771 | | | | 3,516,762 | |
|
| |
| |
Gas Utilities–1.61% | | | | | |
Atmos Energy Corp. | | | 39,289 | | | | 4,116,309 | |
|
| |
| |
General Merchandise Stores–1.14% | | | | | |
Dollar General Corp.(c) | | | 12,277 | | | | 2,895,285 | |
|
| |
| |
Health Care Equipment–0.51% | | | | | |
Boston Scientific Corp.(b) | | | 30,349 | | | | 1,289,226 | |
|
| |
| |
Health Care Facilities–2.00% | | | | | |
Acadia Healthcare Co., Inc.(b) | | | 35,854 | | | | 2,176,338 | |
|
| |
Tenet Healthcare Corp.(b) | | | 35,758 | | | | 2,921,071 | |
|
| |
| | | | 5,097,409 | |
|
| |
| |
Health Care Services–1.00% | | | | | |
LHC Group, Inc.(b) | | | 18,680 | | | | 2,563,456 | |
|
| |
| |
Health Care Supplies–2.05% | | | | | |
Cooper Cos., Inc. (The) | | | 6,937 | | | | 2,906,187 | |
|
| |
DENTSPLY SIRONA, Inc. | | | 41,628 | | | | 2,322,426 | |
|
| |
| | | | 5,228,613 | |
|
| |
| |
Health Care Technology–0.78% | | | | | |
Veeva Systems, Inc., Class A(b) | | | 7,768 | | | | 1,984,569 | |
|
| |
| |
Homebuilding–1.70% | | | | | |
D.R. Horton, Inc. | | | 40,058 | | | | 4,344,290 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–2.36% | | | | | |
Choice Hotels International, Inc. | | | 20,291 | | | | 3,165,193 | |
|
| |
Expedia Group, Inc.(b) | | | 15,718 | | | | 2,840,557 | |
|
| |
| | | | 6,005,750 | |
|
| |
|
Human Resource & Employment Services–1.93% | |
ASGN, Inc.(b) | | | 24,979 | | | | 3,082,408 | |
|
| |
Korn Ferry | | | 24,145 | | | | 1,828,501 | |
|
| |
| | | | 4,910,909 | |
|
| |
| |
Hypermarkets & Super Centers–1.14% | | | | | |
BJ’s Wholesale Club Holdings, Inc.(b) | | | 43,254 | | | | 2,896,720 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Mid Cap Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Industrial Machinery–2.61% | |
Evoqua Water Technologies Corp.(b) | | | 54,956 | | | $ | 2,569,193 | |
|
| |
Stanley Black & Decker, Inc. | | | 21,703 | | | | 4,093,620 | |
|
| |
| | | | 6,662,813 | |
|
| |
|
Industrial REITs–1.80% | |
Duke Realty Corp. | | | 69,741 | | | | 4,577,799 | |
|
| |
|
Insurance Brokers–1.59% | |
Arthur J. Gallagher & Co. | | | 23,894 | | | | 4,054,095 | |
|
| |
|
Interactive Home Entertainment–2.06% | |
Electronic Arts, Inc. | | | 20,918 | | | | 2,759,084 | |
|
| |
Zynga, Inc., Class A(b) | | | 390,576 | | | | 2,499,687 | |
|
| |
| | | | 5,258,771 | |
|
| |
|
Internet & Direct Marketing Retail–0.98% | |
eBay, Inc. | | | 37,750 | | | | 2,510,375 | |
|
| |
|
Internet Services & Infrastructure–0.68% | |
MongoDB, Inc.(b) | | | 3,257 | | | | 1,724,093 | |
|
| |
|
Investment Banking & Brokerage–1.65% | |
Raymond James Financial, Inc. | | | 41,874 | | | | 4,204,150 | |
|
| |
|
Leisure Products–0.40% | |
Peloton Interactive, Inc., Class A(b)(c) | | | 28,651 | | | | 1,024,560 | |
|
| |
|
Life Sciences Tools & Services–1.38% | |
Avantor, Inc.(b) | | | 83,432 | | | | 3,515,824 | |
|
| |
|
Managed Health Care–1.20% | |
Centene Corp.(b) | | | 19,845 | | | | 1,635,228 | |
|
| |
Humana, Inc. | | | 3,085 | | | | 1,431,008 | |
|
| |
| | | | 3,066,236 | |
|
| |
|
Metal & Glass Containers–1.28% | |
Silgan Holdings, Inc. | | | 76,502 | | | | 3,277,346 | |
|
| |
|
Movies & Entertainment–0.74% | |
Endeavor Group Holdings, Inc., Class A(b)(c) | | | 54,409 | | | | 1,898,330 | |
|
| |
|
Multi–Utilities–1.28% | |
CMS Energy Corp. | | | 50,213 | | | | 3,266,356 | |
|
| |
|
Office REITs–2.42% | |
Alexandria Real Estate Equities, Inc. | | | 27,650 | | | | 6,164,844 | |
|
| |
|
Oil & Gas Equipment & Services–2.09% | |
Baker Hughes Co., Class A | | | 117,643 | | | | 2,830,491 | |
|
| |
Schlumberger N.V. | | | 83,138 | | | | 2,489,983 | |
|
| |
| | | | 5,320,474 | |
|
| |
|
Oil & Gas Exploration & Production–1.01% | |
Chesapeake Energy Corp.(c) | | | 40,043 | | | | 2,583,574 | |
|
| |
|
Oil & Gas Storage & Transportation–0.58% | |
Magellan Midstream Partners L.P. | | | 31,673 | | | | 1,470,894 | |
|
| |
|
Pharmaceuticals–1.57% | |
Catalent, Inc.(b) | | | 31,293 | | | | 4,006,443 | |
|
| |
|
Property & Casualty Insurance–1.30% | |
Allstate Corp. (The) | | | 28,099 | | | | 3,305,847 | |
|
| |
|
Real Estate Services–0.69% | |
Zillow Group, Inc., Class C(b)(c) | | | 27,718 | | | | 1,769,794 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Regional Banks–3.20% | |
First Citizens BancShares, Inc., Class A | | | 3,816 | | | $ | 3,166,669 | |
|
| |
Texas Capital Bancshares, Inc.(b) | | | 21,392 | | | | 1,288,868 | |
|
| |
Webster Financial Corp. | | | 66,296 | | | | 3,701,969 | |
|
| |
| | | | 8,157,506 | |
|
| |
|
Research & Consulting Services–3.21% | |
CACI International, Inc., Class A(b) | | | 17,284 | | | | 4,653,025 | |
|
| |
TransUnion | | | 29,872 | | | | 3,542,222 | |
|
| |
| | | | 8,195,247 | |
|
| |
|
Residential REITs–1.53% | |
American Homes 4 Rent, Class A | | | 89,584 | | | | 3,906,758 | |
|
| |
|
Semiconductor Equipment–2.53% | |
KLA Corp. | | | 7,809 | | | | 3,358,729 | |
|
| |
MKS Instruments, Inc. | | | 17,749 | | | | 3,091,343 | |
|
| |
| | | | 6,450,072 | |
|
| |
|
Semiconductors–1.46% | |
Microchip Technology, Inc. | | | 42,772 | | | | 3,723,730 | |
|
| |
|
Specialized REITs–1.29% | |
Lamar Advertising Co., Class A | | | 27,035 | | | | 3,279,346 | |
|
| |
|
Specialty Chemicals–1.40% | |
PPG Industries, Inc. | | | 20,654 | | | | 3,561,576 | |
|
| |
|
Specialty Stores–1.37% | |
Tractor Supply Co. | | | 14,684 | | | | 3,503,602 | |
|
| |
|
Systems Software–1.33% | |
VMware, Inc., Class A | | | 29,357 | | | | 3,401,889 | |
|
| |
|
Thrifts & Mortgage Finance–0.72% | |
Rocket Cos., Inc., Class A | | | 130,562 | | | | 1,827,868 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $191,678,683) | | | | 253,090,361 | |
|
| |
|
Money Market Funds–0.88% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 766,908 | | | | 766,908 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 588,888 | | | | 589,006 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 876,466 | | | | 876,466 | |
|
| |
Total Money Market Funds (Cost $2,232,339) | | | | 2,232,380 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.14%
(Cost $193,911,022) | | | | 255,322,741 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–4.50% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 3,441,734 | | | | 3,441,734 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 8,029,108 | | | | 8,030,714 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $11,472,629) | | | | 11,472,448 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–104.64%
(Cost $205,383,651) | | | | 266,795,189 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(4.64)% | | | | (11,825,130 | ) |
|
| |
NET ASSETS–100.00% | | | $ | 254,970,059 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Mid Cap 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) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at
Cost | | | Proceeds from
Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 664,176 | | | $ | 21,472,806 | | | $ | (21,370,074 | ) | | | $ - | | | $ | - | | | | $ 766,908 | | | | $ 195 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 585,249 | | | | 15,331,162 | | | | (15,327,384 | ) | | | (132) | | | | 111 | | | | 589,006 | | | | 95 | |
Invesco Treasury Portfolio, Institutional Class | | | 759,058 | | | | 24,540,349 | | | | (24,422,941 | ) | | | - | | | | - | | | | 876,466 | | | | 81 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | 743,763 | | | | 28,625,332 | | | | (25,927,361 | ) | | | - | | | | - | | | | 3,441,734 | | | | 279* | |
Invesco Private Prime Fund | | | 1,115,645 | | | | 58,332,992 | | | | (51,416,546 | ) | | | (181) | | | | (1,196) | | | | 8,030,714 | | | | 3,693* | |
Total | | | $3,867,891 | | | $ | 148,302,641 | | | $ | (138,464,306 | ) | | | $(313) | | | $ | (1,085) | | | | $13,704,828 | | | | $ 4,343 | |
| | * | 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, 2021. |
| (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. Main Street Mid Cap Fund® |
Statement of Assets and Liabilities
December 31, 2021
| | |
Assets: | | |
Investments in unaffiliated securities, at value (Cost $ 191,678,683)* | | $253,090,361 |
Investments in affiliated money market funds, at value
(Cost $ 13,704,968) | | 13,704,828 |
Receivable for: | | |
Fund shares sold | | 6,502 |
Dividends | | 114,134 |
Investment for trustee deferred compensation and retirement plans | | 101,347 |
Other assets | | 983 |
Total assets | | 267,018,155 |
| |
Liabilities: | | |
Payable for: | | |
Fund shares reacquired | | 140,257 |
Amount due custodian | | 156,075 |
Collateral upon return of securities loaned | | 11,472,629 |
Accrued fees to affiliates | | 131,772 |
Accrued other operating expenses | | 37,487 |
Trustee deferred compensation and retirement plans | | 109,876 |
Total liabilities | | 12,048,096 |
Net assets applicable to shares outstanding | | $254,970,059 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $150,986,259 |
Distributable earnings | | 103,983,800 |
| | | $254,970,059 |
| |
Net Assets: | | |
Series I | | $155,200,479 |
Series II | | $ 99,769,580 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 11,969,835 |
Series II | | 7,948,861 |
Series I: | | |
Net asset value per share | | $ 12.97 |
Series II: | | |
Net asset value per share | | $ 12.55 |
| * | At December 31, 2021, securities with an aggregate value of $11,244,081 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $376) | | $ | 2,338,707 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $16,126) | | | 16,497 | |
|
| |
Total investment income | | | 2,355,204 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,824,678 | |
|
| |
Administrative services fees | | | 412,921 | |
|
| |
Custodian fees | | | 2,363 | |
|
| |
Distribution fees - Series II | | | 243,302 | |
|
| |
Transfer agent fees | | | 23,566 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 24,683 | |
|
| |
Reports to shareholders | | | 10,607 | |
|
| |
Professional services fees | | | 36,916 | |
|
| |
Other | | | 5,558 | |
|
| |
Total expenses | | | 2,584,594 | |
|
| |
Less: Fees waived | | | (845 | ) |
|
| |
Net expenses | | | 2,583,749 | |
|
| |
Net investment income (loss) | | | (228,545 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 48,539,299 | |
|
| |
Affiliated investment securities | | | (1,085 | ) |
|
| |
| | | 48,538,214 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 3,532,335 | |
|
| |
Affiliated investment securities | | | (313 | ) |
|
| |
Foreign currencies | | | (33 | ) |
|
| |
| | | 3,531,989 | |
|
| |
Net realized and unrealized gain | | | 52,070,203 | |
|
| |
Net increase in net assets resulting from operations | | $ | 51,841,658 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Mid Cap Fund® |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (228,545 | ) | | $ | 865,205 | |
|
| |
Net realized gain (loss) | | | 48,538,214 | | | | (5,498,191 | ) |
|
| |
Change in net unrealized appreciation | | | 3,531,989 | | | | 24,445,678 | |
|
| |
Net increase in net assets resulting from operations | | | 51,841,658 | | | | 19,812,692 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (677,745 | ) | | | (28,871,670 | ) |
|
| |
Series II | | | (246,199 | ) | | | (17,431,471 | ) |
|
| |
Total distributions from distributable earnings | | | (923,944 | ) | | | (46,303,141 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (27,093,711 | ) | | | 9,496,489 | |
|
| |
Series II | | | (10,631,791 | ) | | | 11,755,405 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (37,725,502 | ) | | | 21,251,894 | |
|
| |
Net increase (decrease) in net assets | | | 13,192,212 | | | | (5,238,555 | ) |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 241,777,847 | | | | 247,016,402 | |
|
| |
End of year | | $ | 254,970,059 | | | $ | 241,777,847 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Mid 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 (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 12/31/21 | | | $10.57 | | | | $0.00 | | | | $ 2.46 | | | | $ 2.46 | | | | $(0.06 | ) | | | $ – | | | | $(0.06 | ) | | | $12.97 | | | | 23.24 | % | | | $155,200 | | | | 0.93 | % | | | 0.93 | % | | | 0.01 | % | | | 58 | % |
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 | | | | 0.94 | | | | 0.49 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 10.24 | | | | (0.03 | ) | | | 2.37 | | | | 2.34 | | | | (0.03 | ) | | | – | | | | (0.03 | ) | | | 12.55 | | | | 22.86 | | | | 99,770 | | | | 1.18 | | | | 1.18 | | | | (0.24 | ) | | | 58 | |
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 | | | | 1.19 | | | | 0.24 | | | | 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 | |
| (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. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Mid Cap Fund® |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Main Street Mid Cap Fund®, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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
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| Invesco V.I. Main Street Mid Cap 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.
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
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| Invesco V.I. Main Street Mid Cap 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 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 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. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $845.
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, 2021, Invesco was paid $35,697 for accounting and fund administrative services and was reimbursed $377,224 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.
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| Invesco V.I. Main Street Mid Cap 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $3,677 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, 2021. 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 | | | $253,090,361 | | | | $ – | | | | $– | | | | $253,090,361 | |
|
| |
Money Market Funds | | | 2,232,380 | | | | 11,472,448 | | | | – | | | | 13,704,828 | |
|
| |
Total Investments | | | $255,322,741 | | | | $11,472,448 | | | | $– | | | | $266,795,189 | |
|
| |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Ordinary income* | | $ | 923,944 | | | $ | 1,379,795 | |
|
| |
Long-term capital gain | | | – | | | | 44,923,346 | |
|
| |
Total distributions | | $ | 923,944 | | | $ | 46,303,141 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Main Street Mid Cap Fund® |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 12,576,790 | |
|
| |
Undistributed long-term capital gain | | | 32,003,423 | |
|
| |
Net unrealized appreciation – investments | | | 61,015,780 | |
|
| |
Net unrealized appreciation (depreciation) – foreign currencies | | | (23 | ) |
|
| |
Temporary book/tax differences | | | (1,612,170 | ) |
|
| |
Shares of beneficial interest | | | 150,986,259 | |
|
| |
Total net assets | | $ | 254,970,059 | |
|
| |
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 does not have a capital loss carryforward as of December 31, 2021.
NOTE 7–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $143,666,506 and $182,237,962, 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 | | $ | 66,436,115 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (5,420,335 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 61,015,780 | |
|
| |
Cost of investments for tax purposes is $205,779,409.
NOTE 8–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses and partnerships, on December 31, 2021, undistributed net investment income (loss) was decreased by $438,105, undistributed net realized gain was increased by $439,365 and shares of beneficial interest was decreased by $1,260. This reclassification had no effect on the net assets of the Fund.
NOTE 9–Share Information
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 358,949 | | | $ | 4,352,727 | | | | 650,434 | | | $ | 6,303,263 | |
|
| |
Series II | | | 625,586 | | | | 7,241,868 | | | | 1,003,597 | | | | 10,172,288 | |
|
| |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 53,961 | | | | 677,745 | | | | 3,035,927 | | | | 28,871,668 | |
|
| |
Series II | | | 20,230 | | | | 246,199 | | | | 1,890,615 | | | | 17,431,471 | |
|
| |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (2,726,129 | ) | | | (32,124,183 | ) | | | (2,371,419 | ) | | | (25,678,442 | ) |
|
| |
Series II | | | (1,563,200 | ) | | | (18,119,858 | ) | | | (1,527,486 | ) | | | (15,848,354 | ) |
|
| |
Net increase (decrease) in share activity | | | (3,230,603 | ) | | $ | (37,725,502 | ) | | | 2,681,668 | | | $ | 21,251,894 | |
|
| |
| (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. |
|
| Invesco V.I. Main Street Mid 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 V.I. Main Street Mid Cap 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. Main Street Mid 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. Main Street Mid 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,063.40 | | $4.78 | | $1,020.57 | | $4.69 | | 0.92% |
Series II | | 1,000.00 | | 1,061.70 | | 6.08 | | 1,019.31 | | 5.96 | | 1.17 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| Invesco V.I. Main Street Mid 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 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, 2021:
| | | | | | |
| Federal and State Income Tax | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | |
Corporate Dividends Received Deduction* | | | 98.89 | % | | |
U.S. Treasury Obligations* | | | 0.00 | % | | |
Qualified Business Income* | | | 0.00 | % | | |
Business Interest Income* | | | 0.00 | % | | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
|
| Invesco V.I. Main Street Mid 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) | | 186 | | 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. Main Street Mid 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler -1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco V.I. Main Street Mid 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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco V.I. Main Street Mid 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. Main Street Mid 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
| Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. Main Street Mid 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; Vice President, Invesco Advisers, Inc.; 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. Main Street Mid Cap Fund® |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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. | | VINDQS-AR-1 |
Management’s Discussion of Fund Performance
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately caused a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the Nasdaq 100 Index® returned 27.5%4 for the calendar year.
The Invesco® V.I. Nasdaq 100 Buffer Fund – September seeks, over a specified annual Outcome Period (an “Outcome Period”), to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
The Fund’s Cap for the current Outcome Period, which represents the maximum percentage return (expressed as a percentage of the value of the Underlying Index determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the “Cap”), is 15.77%. This Cap is before considering fees and expenses. A new Cap level for each successive Outcome Period will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period. If the Underlying Index experiences returns over an Outcome Period in excess of the Cap, the Fund, and therefore investors, will not experience those excess gains.
The Fund’s initial Outcome Period is twelve months, commencing on October 1, 2021 and ending on the following September 30, 2022.
The Fund’s performance history is not presented or discussed here because, as of the date of this annual report, the Fund has not had returns for at least six months. The Fund’s performance information is accessible on the Fund’s website.
The Fund has characteristics unlike many other traditional investment products and is not appropriate for all investors. In particular, investment in the Fund may not be appropriate for investors who do not intend to maintain their investment through the entire Outcome Period. There is no guarantee that the Fund will be able to achieve the stated Defined Outcomes.
Thank you for your investment in Invesco® V.I. Nasdaq 100 Buffer Fund - September.
| 2 | Source: US Bureau of Economic Analysis |
| 3 | Source: US Bureau of Labor Statistics |
Portfolio manager(s):
Jacob Borbidge
Alessio de Longis
Duy Nguyen
Ali Zouiten
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. Nasdaq 100 Buffer Fund - September
Supplemental Information
Invesco® V.I. Nasdaq 100 Buffer Fund - September seeks, over a specified annual Outcome Period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The Nasdaq 100 Index® - PR is a price-only index that includes 100 of the largest domestic and international non-financial companies listed on the NASDAQ Stock Market based on market capitalization. |
| ∎ | 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. Nasdaq 100 Buffer Fund - September
Fund Information
| | | | |
| Portfolio Composition |
| |
| By security type | | % of total Investment |
Options Purchased | | 97.13% |
Money Market Funds | | 2.87 |
Data presented here are as of December 31, 2021.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–3.14% | |
| | |
Invesco Government & Agency | | | | | | | | |
| | |
Portfolio, Institutional Class, 0.03%(a)(b) | | | 50,251 | | | $ | 50,251 | |
| | |
Invesco Liquid Assets Portfolio, | | | | | | | | |
| | |
Institutional Class, 0.02%(a)(b) | | | 35,812 | | | | 35,819 | |
| | |
Invesco Treasury Portfolio, Institutional | | | | | | | | |
Class, 0.01%(a)(b) | | | 28,748 | | | | 28,748 | |
Total Money Market Funds (Cost $114,821) | | | | 114,818 | |
| | | | | | | | |
| | | Shares | | | Value | |
Options Purchased–106.26% | | | | | | | | |
(Cost $3,669,960)(c) | | | $ | 3,890,460 | |
TOTAL INVESTMENTS IN SECURITIES–109.40% | | | | | |
(Cost $3,784,781) | | | | 4,005,278 | |
OTHER ASSETS LESS LIABILITIES–(9.40)% | | | | (344,076 | ) |
NET ASSETS–100.00% | | | $ | 3,661,202 | |
Notes to Schedule of Investments:
| (a) | 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 period ended December 31, 2021. |
| | | | | | | | | | | | | | |
| | | Value
December 31, 2020* | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation
(Depreciation) | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
Investments in Affiliated Money Market Funds: |
Invesco Government & Agency Portfolio, Institutional Class | | $- | | $1,197,655 | | $(1,147,404) | | $ - | | $ - | | $50,251 | | $5 |
Invesco Liquid Assets Portfolio, Institutional Class | | - | | 855,468 | | (819,571) | | (3) | | (75) | | 35,819 | | 2 |
Invesco Treasury Portfolio, Institutional Class | | - | | 1,348,203 | | (1,319,455) | | - | | - | | 28,748 | | 2 |
Total | | $- | | $3,401,326 | | $(3,286,430) | | $(3) | | $(75) | | $114,818 | | $9 |
| | * | Commencement date of September 30, 2021. |
| (b) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (c) | The table below details options purchased. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Equity Options Purchased | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number
of
Contracts | | | Exercise Price | | | Notional Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Call | | | | 09/30/2022 | | | | 96 | | | | USD | | | | 10.74 | | | | USD | | | | 103,104 | | | $ | 3,711,622 | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Put | | | | 09/30/2022 | | | | 96 | | | | USD | | | | 357.96 | | | | USD | | | | 3,436,416 | | | | 178,838 | |
Total Open Equity Options Purchased | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 3,890,460 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Equity Options Written | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number
of
Contracts | | | Exercise Price | | | Notional Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Call | | | | 09/30/2022 | | | | 96 | | | | USD | | | | 414.41 | | | | USD | | | | 3,978,336 | | | $ | (229,659 | ) |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Put | | | | 09/30/2022 | | | | 96 | | | | USD | | | | 322.16 | | | | USD | | | | 3,092,736 | | | | (107,364 | ) |
Total Open Equity Options Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (337,023 | ) |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
USD –U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $3,669,960) | | $ | 3,890,460 | |
Investments in affiliated money market funds, at value (Cost $114,821) | | | 114,818 | |
Receivable for: | | | | |
Fund expenses absorbed | | | 46,150 | |
Investment for trustee deferred compensation and retirement plans | | | 160 | |
Total assets | | | 4,051,588 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Options written, at value (premiums received $307,742) | | | 337,023 | |
Payable for: | | | | |
Fund shares reacquired | | | 14 | |
Accrued trustees’ and officers’ fees and benefits | | | 870 | |
Accrued other operating expenses | | | 52,319 | |
Trustee deferred compensation and retirement plans | | | 160 | |
| |
Total liabilities | | | 390,386 | |
| |
Net assets applicable to shares outstanding | | $ | 3,661,202 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 3,470,061 | |
| |
Distributable earnings | | | 191,141 | |
| |
| | $ | 3,661,202 | |
| |
Net Assets: | | | | |
Series I | | $ | 1,589,329 | |
| |
Series II | | $ | 2,071,873 | |
| |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 150,001 | |
| |
Series II | | | 195,669 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 10.60 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 10.59 | |
| |
Statement of Operations
For the period September 30, 2021 (commencement date) through December 31, 2021
| | | | |
Investment income: | | | | |
Dividends from affiliated money market funds | | $ | 9 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 3,557 | |
| |
Administrative services fees | | | 1,377 | |
| |
Custodian fees | | | 1,083 | |
| |
Distribution fees - Series II | | | 1,123 | |
| |
Transfer agent fees | | | 38 | |
| |
Trustees’ and officers’ fees and benefits | | | 4,561 | |
| |
Licensing fees | | | 306 | |
| |
Reports to shareholders | | | 3,777 | |
| |
Professional services fees | | | 47,713 | |
| |
Other | | | 3,032 | |
| |
Total expenses | | | 66,567 | |
| |
Less: Fees waived and/or expenses reimbursed | | | (59,528 | ) |
| |
Net expenses | | | 7,039 | |
| |
Net investment income (loss) | | | (7,030 | ) |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from affiliated investment securities | | | (75 | ) |
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 220,500 | |
| |
Affiliated investment securities | | | (3 | ) |
| |
Option contracts written | | | (29,281 | ) |
| |
| | | 191,216 | |
| |
Net realized and unrealized gain | | | 191,141 | |
| |
Net increase in net assets resulting from operations | | $ | 184,111 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Statement of Changes in Net Assets
For the period September 30, 2021 (commencement date) through December 31, 2021
| | | | | | |
| | | September 30, 2021
(commencement date) through
December 31, 2021 |
Operations: | | | | | | |
Net investment income (loss) | | | $(7,030) | | | |
Net realized gain (loss) | | | (75) | | | |
Change in net unrealized appreciation | | | 191,216 | | | |
Net increase in net assets resulting from operations | | | 184,111 | | | |
| | |
Share transactions–net: | | | | | | |
Series I | | | 1,500,010 | | | |
Series II | | | 1,977,081 | | | |
Net increase in net assets resulting from share transactions | | | 3,477,091 | | | |
Net increase in net assets | | | 3,661,202 | | | |
| | |
Net assets: | | | | | | |
Beginning of period | | | - | | | |
End of period | | | $3,661,202 | | | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period 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 | | | | | | | | | | | | | | | with fee waivers | | | fee waivers | | | income | | | | |
| | | value, | | | investment | | | (both | | | Total from | | | Net asset | | | | | | Net assets, | | | and/or | | | and/or | | | (loss) | | | | |
| | | beginning | | | income | | | realized and | | | investment | | | value, end | | | Total | | | end of period | | | expenses | | | expenses | | | to average | | | Portfolio | |
| | | of period | | | (loss)(a) | | | unrealized) | | | operations | | | of period | | | return (b) | | | (000’s omitted) | | | absorbed | | | absorbed | | | net assets | | | turnover (c) | |
| |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | $10.00 | | | | $ | (0.02) | | | $0.62 | | | | $0.60 | | | | $10.60 | | | | 6.00% | | | | $1,589 | | | | 0.70% | (e) | | | 7.73% | (e) | | | (0.70 | )%(e) | | | 0% | |
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | 10.00 | | | | (0.03 | ) | | | 0.62 | | | | 0.59 | | | | 10.59 | | | | 5.90 | | | | 2,072 | | | | 0.95 | (e) | | | 7.98 | (e) | | | (0.95 | )(e) | | | 0 | |
| |
| (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) | Commencement date of September 30, 2021. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - September (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 seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Nasdaq 100 Index® or options that reference the Invesco QQQ ETF, which is an affiliated exchange-traded unit investment trust that seeks to track the Nasdaq 100 Index®.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
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
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. | Flex Options Purchased and Written – The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by counterparties to certain derivatives contracts and protection from counterparty risk that is associated with Over-the-counter trading. |
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and
Invesco® V.I. Nasdaq 100 Buffer Fund - September
unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
| J. | 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. |
| K. | Buffered Loss Risk – The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Buffer will effectively protect against all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). |
| L. | Non-Diversified Risk – Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 | | | 0.420 | % |
Over $2 billion | | | 0.400 | % |
For the period September 30, 2021 (commencement date) through December 31, 2021, the effective advisory fee rate 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).
Effective September 30, 2021, the Adviser has contractually agreed, through at least April 30, 2023, 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 0.70% and Series II shares to 0.95% 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, 2023. 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, 2023, 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 period September 30, 2021 (commencement date) through December 31, 2021, the Adviser waived advisory fees of $3,557 and reimbursed fund level expenses of $55,971.
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 period September 30, 2021 (commencement date) through December 31, 2021, Invesco was paid $107 for accounting and fund administrative services and was reimbursed $1,270 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 period September 30, 2021 (commencement date) through December 31, 2021, 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. Nasdaq 100 Buffer Fund - September
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 period September 30, 2021 (commencement date) through December 31, 2021, 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, 2021. 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 | | | | | | | | | | | | | | | | |
| |
Money Market Funds | | $ | 114,818 | | | $ | – | | | $ | – | | | $ | 114,818 | |
| |
Options Purchased | | | – | | | | 3,890,460 | | | | – | | | | 3,890,460 | |
| |
Total Investments in Securities | | | 114,818 | | | | 3,890,460 | | | | – | | | | 4,005,278 | |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Options Written | | | – | | | | (337,023 | ) | | | – | | | | (337,023 | ) |
| |
Total Investments | | $ | 114,818 | | | $ | 3,553,437 | | | $ | – | | | $ | 3,668,255 | |
| |
| * | Options written are shown at value. |
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, 2021:
| | | | |
| | | Value |
| Derivative Assets | | Equity
Risk |
Options purchased, at value(a) | | $3,890,460 |
Derivatives not subject to master netting agreements | | (3,890,460) |
Total Derivative Assets subject to master netting agreements | | $ - |
| | | | |
| | | Value |
| Derivative Liabilities | | Equity
Risk |
Options written, at value | | $(337,023) |
Derivatives not subject to master netting agreements | | 337,023 |
Total Derivative Liabilities subject to master netting agreements | | $ - |
| (a) | Options purchased, at value as reported in the Schedule of Investments. |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Effect of Derivative Investments for the period September 30, 2021 (commencement date) through December 31, 2021
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 | |
| | | Equity | |
| | | Risk | |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Options purchased(a) | | | $220,500 | |
Options written | | | (29,281) | |
| (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 for the period September 30, 2021 (commencement date) through December 31, 2021.
| | | | | | | | |
| | | Equity | | | Equity | |
| | | Options | | | Options | |
| | | Purchased | | | Written | |
Average notional value | | $ | 2,885,078 | | | $ | 5,763,660 | |
Average contracts | | | 157 | | | | 157 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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
There were no ordinary income or long-term capital gain distributions paid during the period September 30, 2021 (commencement date) through December 31, 2021.
| | | | |
| Tax Components of Net Assets at Period-End: | | | | |
| | | 2021 | |
Net unrealized appreciation – investments | | $ | 191,212 | |
Capital loss carryforward | | | (71 | ) |
Shares of beneficial interest | | | 3,470,061 | |
Total net assets | | $ | 3,661,202 | |
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.
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, 2021, as follows:
| | | | | | | | | | | | |
| Capital Loss Carryforward* | |
| Expiration | | Short-Term | | | Long-Term | | | Total | |
Not subject to expiration | | $ | 71 | | | $ | – | | | $ | 71 | |
| | | | | | | | | | | | |
| * | 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. Nasdaq 100 Buffer Fund - September
NOTE 8–Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the period September 30, 2021 (commencement date) through December 31, 2021. 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 | | $ | 441,889 | |
Aggregate unrealized (depreciation) of investments | | | (250,677 | ) |
Net unrealized appreciation of investments | | $ | 191,212 | |
Cost of investments for tax purposes is $3,477,043.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of organizational expenses, on December 31, 2021, undistributed net investment income (loss) was increased by $7,030 and shares of beneficial interest was decreased by $7,030. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | |
| | | Summary of Share Activity | |
| | | December 31, 2021(a)(b) | |
| | | Shares | | | Amount | |
Sold:
| | | | | | | | |
Series I | | | 150,001 | | | $ | 1,500,010 | |
Series II | | | 196,330 | | | | 1,984,070 | |
Reacquired: | | | | | | | | |
Series II | | | (661 | ) | | | (6,989 | ) |
Net increase in share activity | | | 345,670 | | | $ | 3,477,091 | |
| (a) | Commencement date of September 30, 2021. |
| (b) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 13% 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. |
In addition, 87% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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. Nasdaq 100 Buffer Fund - September
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - September (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2021, the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period September 30, 2021 (commencement date) through December 31, 2021 (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, 2021, the results of its operations, the changes in its net assets, and the financial highlights for the period September 30, 2021 (commencement date) through December 31, 2021 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 audit. 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 audit 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 audit 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 audit 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, 2021 by correspondence with the custodian, transfer agent and broker; when replies were not received from the broker, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. Nasdaq 100 Buffer Fund - September
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 September 30, 2021 (commencement date) through December 31, 2021.
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 (September 30, 2021 (commencement date) through December 31, 2021). Because the actual ending account value and expense information in the example is not based upon a six month period, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month 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
(07/01/21) | | ACTUAL | | HYPOTHETICAL (5% annual return before
expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During Period3 |
Series I | | $1,000.00 | | $1,600.00 | | $2.32 | | $1,021.68 | | $3.57 | | 0.70% |
Series II | | 1,000.00 | | 1,590.00 | | 3.13 | | 1,020.42 | | 4.84 | | 0.95 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 30, 2021 (commencement date) through December 31, 2021, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 93 (as of close of business September 30, 2021 (commencement date) through December 31, 2021)/365. Because the Fund has not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Fund and other funds because such data is based on a full six month period. |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
Approval of Investment Advisory and Sub-Advisory Contracts
Invesco V.I. S&P 500 Defined Outcome Funds and Invesco V.I. Nasdaq 100 Defined Outcome Fund (collectively, the Funds)
At a meeting held on August 2, 2021, the Board of Trustees (the Board or the Trustees) of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved each Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with 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 contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts), effective September 30, 2021.
The Board noted that it had previously approved establishing each Fund at a Board meeting held on June 10, 2021.
In doing so, the Board followed a process similar to the process that it follows in annually reviewing and approving investment advisory agreements and sub-advisory contracts for the series portfolios of registered investment companies advised by Invesco Advisers (the Invesco Funds) and considered the information provided in the most recent annual review process, as well as the information provided with respect to the Funds. After evaluating the factors discussed below, among others, the Board: (i) approved the investment advisory agreement and the sub-advisory contracts for each Fund and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable and (ii) approved submission of the agreements to the initial shareholder of each Fund.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of the Invesco Funds. The Funds will be assigned to one of the Sub-Committees. The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds.
In evaluating the fairness and reasonableness of compensation under each Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board was assisted in its review by the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees, and by independent legal counsel. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single
determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.
The discussion below is a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. This information is current as of August 2, 2021.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
| A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services to be provided to each Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who will provide these services, including the Fund’s portfolio managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds and will provide to each Fund, such as various back office support functions, third party service provider oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services to be provided to each Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided to each Fund by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which each Fund may invest, make recommendations regarding securities and assist with security trades. In particular, the Board noted that Invesco Asset Management Limited will assist Invesco Advisers with each Fund’s day-to-day portfolio management. The Board concluded that the sub-advisory contracts will benefit each Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
| B. | Fund Investment Performance |
The Board did not consider the performance of any Fund because the Funds are new and have no performance history. The Board did review performance expectations for each Fund as well as information provided regarding the experience of the portfolio managers in managing products with derivatives-based strategies. The Board noted that Invesco Asset Management Limited, an Affiliated Sub-Adviser, will assist Invesco Advisers with each Fund’s day-to-day portfolio management.
| C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board considered the proposed advisory fee schedule of each Fund and the proposed fee waivers and expense limitations. The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to each Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees are not paid directly by each Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers (as applicable).
The Board also considered comparative advisory fee data provided by Invesco Advisers with respect to comparable registered funds managed by other advisers. The Board noted that Invesco Advisers currently does not manage other mutual funds with investment strategies similar to those of the Funds. The Board noted that each Fund’s advisory fee is below the Morningstar “Options Trading” category median and average, and less than the advisory fees associated with other VIT “defined outcome” funds. The Board also considered comparative information regarding each Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers will contractually agree to waive fees and/or limit expenses of each Fund through at least April 30, 2023 (or, for the two “June” vintages of the Funds, through at least June 30, 2023) in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets of Series I and Series II shares of the Fund. The Board noted that Invesco Advisers will contractually agree to waive advisory fees of each Fund relating to certain investments by the Fund in affiliated money market funds through June 30, 2023.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts (as applicable). The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein.
| D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to each Fund. The Board also considered that each Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to
Invesco® V.I. Nasdaq 100 Buffer Fund - September
reduce the Fund’s expense ratio as it grows in size. The Board noted that each Fund will share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that each Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
| E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates will provide to each Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual fund-by-fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers will continue to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under each Fund’s investment advisory agreement and sub-advisory contracts.
| F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates from the relationship with each Fund, including the fees to be received for providing administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services will be provided to each Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of each Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in each Fund bearing costs to purchase research or brokerage services that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it will receive periodic reports from Invesco Advisers representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that each Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 under the Investment Company Act of
1940, as amended (collectively referred to as “affiliated money market funds”), advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to each Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees to be received by Invesco Advisers from each Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for each Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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) | | 186 | | 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. Nasdaq 100 Buffer Fund - September
| | | | | | | | |
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 – 1957
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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962
Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959
Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956
Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
| | | | | | | | |
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; 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957
Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949
Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort –1954
Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes–1967
Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969
Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco® V.I. Nasdaq 100 Buffer Fund - September
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; Vice President, Invesco Advisers, Inc.; 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. Nasdaq 100 Buffer Fund - September
| | | | |
Annual Report to Shareholders | | | | December 31, 2021 |
Invesco® V.I. Nasdaq 100 Buffer Fund - December |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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. | | | | VINDQD-AR-1 |
Management’s Discussion of Fund Performance
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately caused a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the Nasdaq 100 Index® returned 27.5%4 for the calendar year.
The Invesco® V.I. Nasdaq 100 Buffer Fund – December seeks, over a specified annual Outcome Period (an “Outcome Period”), to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
The Fund’s Cap for the current Outcome Period, which represents the maximum percentage return (expressed as a percentage of the value of the Underlying Index determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the “Cap”), is 17.60%. This Cap is before considering fees and expenses. A new Cap level for each successive Outcome Period will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period. If the Underlying Index experiences returns over an Outcome Period in excess of the Cap, the Fund, and therefore investors, will not experience those excess gains.
The Fund’s initial Outcome Period is twelve months, commencing on January 1, 2022 and ending on the following December 31, 2022.
The Fund’s performance history is not presented or discussed here because, as of the date of this annual report, the Fund has not had returns for at least six months. The Fund’s performance information is accessible on the Fund’s website.
The Fund has characteristics unlike many other traditional investment products and is not appropriate for all investors. In particular, investment in the Fund may not be appropriate for investors who do not intend to maintain their investment through the entire Outcome Period. There is no guarantee that the Fund will be able to achieve the stated Defined Outcomes.
Thank you for your investment in Invesco® V.I. Nasdaq 100 Buffer Fund – December.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Nasdaq.com
Portfolio manager(s):
Jacob Borbidge
Alessio de Longis
Duy Nguyen
Ali Zouiten
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. Nasdaq 100 Buffer Fund - December
Supplemental Information
Invesco® V.I. Nasdaq 100 Buffer Fund - December seeks, over a specified annual Outcome Period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
| ∎ | Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About indexes used in this report
| ∎ | The Nasdaq 100 Index®- -PR is a price-only index that includes 100 of the largest domestic and international non-financial companies listed on the NASDAQ Stock Market based on market capitalization. |
| ∎ | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Perfor-mance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Fund Information
| | |
| Portfolio Composition | | |
| By security type | | % of total investments |
| |
Options Purchased | | 70.95% |
| |
Money Market Funds | | 29.05 |
Data presented here are as of December 31, 2021.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds-125.01% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(a)(b) | | | 1,050,007 | | | $ | 1,050,007 | |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(a)(b) | | | 1,499,710 | | | | 1,500,010 | |
Invesco Treasury Portfolio, Institutional Class, 0.01%(a)(b) | | | 1,200,008 | | | | 1,200,008 | |
Total Money Market Funds (Cost $3,750,025) | | | | 3,750,025 | |
| | | | | | | | |
| | | Shares | | | Value | |
Options Purchased-305.23% | | | | | | | | |
(Cost $9,156,757)(c) | | | | | | $ | 9,156,757 | |
TOTAL INVESTMENTS IN SECURITIES-430.24% (Cost $12,906,782) | | | | | | | 12,906,782 | |
OTHER ASSETS LESS LIABILITIES-(330.24)% | | | | | | | (9,906,850 | ) |
NET ASSETS-100.00% | | | | | | $ | 2,999,932 | |
Notes to Schedule of Investments:
| (a) | 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 period ended December 31, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain | | | Value
December 31, 2021 | | | Dividend Income | |
Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $- | | | $ | 1,050,007 | | | | $- | | | | $- | | | | $- | | | $ | 1,050,007 | | | | $- | |
Invesco Liquid Assets Portfolio, Institutional Class | | | - | | | | 1,500,010 | | | | - | | | | - | | | | - | | | | 1,500,010 | | | | - | |
Invesco Treasury Portfolio, Institutional Class | | | - | | | | 1,200,008 | | | | - | | | | - | | | | - | | | | 1,200,008 | | | | - | |
Total | | | $- | | | $ | 3,750,025 | | | | $- | | | | $- | | | | $- | | | $ | 3,750,025 | | | | $- | |
| (b) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (c) | The table below details options purchased. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Equity Options Purchased | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number of
Contracts | | | | | | Exercise
Price | | | | | | Notional
Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Call | | | | 12/30/2022 | | | | 33 | | | | USD | | | | 11.94 | | | | USD | | | | 39,402 | | | $ | 2,923,603 | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Put | | | | 12/30/2022 | | | | 33 | | | | USD | | | | 397.85 | | | | USD | | | | 1,312,905 | | | | 1,650,100 | |
Total Open Equity Options Purchased | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,573,703 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Index Options Purchased | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number of
Contracts | | | | | | Exercise
Price | | | | | | Notional
Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NASDAQ 100 Index | | | Call | | | | 12/30/2022 | | | | 1 | | | | USD | | | | 489.60 | | | | USD | | | | 48,960 | | | $ | 3,083,051 | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NASDAQ 100 Index | | | Put | | | | 12/30/2022 | | | | 1 | | | | USD | | | | 16,320.08 | | | | USD | | | | 1,632,008 | | | | 1,500,003 | |
Total Open Index Options Purchased | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 4,583,054 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Open Equity Options Written | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number of
Contracts | | | Exercise Price | | | | | | Notional
Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Call | | | | 12/30/2022 | | | | 33 | | | | USD | | | | 467.87 | | | | USD | | | | 1,543,971 | | | $ | (1,649,864 | ) |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco QQQ Trust, Series 1 | | | Put | | | | 12/30/2022 | | | | 33 | | | | USD | | | | 358.07 | | | | USD | | | | 1,181,631 | | | | (1,649,891 | ) |
Total Open Equity Options Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (3,299,755 | ) |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Open Index Options Written | |
| Description | | Type of
Contract | | | Expiration
Date | | | Number of
Contracts | | | | | | Exercise
Price | | | | | | Notional
Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NASDAQ 100 Index | | | Call | | | | 12/30/2022 | | | | 1 | | | | USD | | | | 19,192.41 | | | | USD | | | | 1,919,241 | | | $ | (1,499,997 | ) |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NASDAQ 100 Index | | | Put | | | | 12/30/2022 | | | | 1 | | | | USD | | | | 14,688.07 | | | | USD | | | | 1,468,807 | | | | (1,499,997 | ) |
Total Open Index Options Written | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | (2,999,994 | ) |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Statement of Assets and
Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $9,156,757) | | $ | 9,156,757 | |
Investments in affiliated money market funds, at value (Cost $3,750,025) | | | 3,750,025 | |
Receivable for: | | | | |
Investments sold | | | 6,299,749 | |
Fund expenses absorbed | | | 35,194 | |
Total assets | | | 19,241,725 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Options written, at value (premiums received $6,299,749) | | | 6,299,749 | |
Payable for: | | | | |
Investments purchased | | | 9,906,762 | |
Fund shares reacquired | | | 20 | |
Accrued fees to affiliates | | | 59 | |
Accrued trustees’ and officers’ fees and benefits | | | 49 | |
Accrued other operating expenses | | | 35,154 | |
Total liabilities | | | 16,241,793 | |
Net assets applicable to shares outstanding | | $ | 2,999,932 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 2,999,932 | |
| | $ | 2,999,932 | |
| |
Net Assets: | | | | |
Series I | | $ | 1,499,971 | |
Series II | | $ | 1,499,961 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 150,000 | |
Series II | | | 150,000 | |
Series I: | | | | |
Net asset value per share | | $ | 10.00 | |
Series II: | | | | |
Net asset value per share | | $ | 10.00 | |
Statement of Operations
For the period December 31, 2021 (commencement date) through December 31, 2021
| | | | |
Expenses: | | | | |
Advisory fees | | | 35 | |
Administrative services fees | | | 13 | |
Custodian fees | | | 39 | |
Distribution fees- Series II | | | 10 | |
Trustees’ and officers’ fees and benefits | | | 49 | |
Licensing fees | | | 3 | |
Reports to shareholders | | | 4,816 | |
Professional services fees | | | 30,267 | |
Other | | | 30 | |
Total expenses | | | 35,262 | |
Less: Fees waived | | | (35,194 | ) |
Net expenses | | | 68 | |
Net investment income (loss) | | | (68 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (68 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Statement of Changes in Net Assets
For the period December 31, 2021 (commencement date) through December 31, 2021
| | | | |
| | | December 31, 2021
(commencement date) through December 31, 2021 | |
Operations: | | | | |
Net investment income (loss) | | $ | (68) | |
Net increase (decrease) in net assets resulting from operations | | | (68 | ) |
| |
Share transactions–net: | | | | |
Series I | | | 1,500,000 | |
Series II | | | 1,500,000 | |
Net increase in net assets resulting from share transactions | | | 3,000,000 | |
Net increase in net assets | | | 2,999,932 | |
| |
Net assets: | | | | |
Beginning of period | | | – | |
End of period | | | $2,999,932 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 | | | 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
investment
fee waivers
and/or
expenses
absorbed | | | Ratio
of net
income
(loss)
to
average
net
assets | | | Portfolio turnover (c)
| | | | | | | | | | |
| |
Series I | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21 (d) | | $ | 10.00 | | | $ | (0.00 | ) | | $ | — | | | $ | (0.00 | ) | | $ | 10.00 | | | | - | % | | $ | 1,500 | | |
| 0.70
| %(e)
| | | 428.89 | %(e) | | | (0.70 | )%(e) | | | 0 | % | | | | | | | | | | | | |
| |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | 10.00 | | | | (0.00 | ) | | | — | | | | (0.00 | ) | | | 10.00 | | | | — | | | | 1,500 | | | | 0.95 | (e) | | | 429.14 | (e) | | | (0.95 | )(e) | | | 0 | | | | | | | | | | | | | |
| |
| (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) | Commencement date of December 31, 2021. |
| See | accompanying Notes to Financial Statements which are an integral part of the financial statements. |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco® V.I. Nasdaq 100 Buffer Fund - December (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 seeks, over a specified annual outcome period, to provide investors with returns that match those of the Nasdaq 100 Index® (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the Nasdaq 100 Index® or options that reference the Invesco QQQ ETF, which is an affiliated exchange-traded unit investment trust that seeks to track the Nasdaq 100 Index® .
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
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
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. | Flex Options Purchased and Written - The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. |
Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by counterparties to certain derivatives contracts and protection from counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and
Invesco® V.I. Nasdaq 100 Buffer Fund - December
| | unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written. |
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
| J. | 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. |
| K. | Buffered Loss Risk – The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Buffer will effectively protect against all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). |
| L. | Non-Diversified Risk – Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 | | | 0.420 | % |
Over $2 billion | | | 0.400 | % |
For the period December 31, 2021 (commencement date) through December 31, 2021, the effective advisory fee rate 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).
Effective December 31, 2021, the Adviser has contractually agreed, through at least April 30, 2023, 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 0.70% and Series II shares to 0.95% 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, 2023. 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, 2023, 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 period December 31, 2021 (commencement date) through December 31, 2021, the Adviser waived advisory fees of $35,194.
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 period December 31, 2021 (commencement date) through December 31, 2021, Invesco was paid $1 for accounting and fund administrative services and was reimbursed $12 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 period December 31, 2021 (commencement date) through December 31, 2021, 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
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 period December 31, 2021 (commencement date) through December 31, 2021, 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, 2021. 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 | | | | | | | | | | | | | | | | |
| |
Money Market Funds | | $ | 3,750,025 | | | $ | – | | | $ | – | | | $ | 3,750,025 | |
| |
Options Purchased | | | – | | | | 9,156,757 | | | | – | | | | 9,156,757 | |
| |
Total Investments in Securities | | | 3,750,025 | | | | 9,156,757 | | | | – | | | | 12,906,782 | |
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
| |
Options Written | | | – | | | | (6,299,749 | ) | | | – | | | | (6,299,749 | ) |
| |
Total Investments | | $ | 3,750,025 | | | $ | 2,857,008 | | | $ | – | | | $ | 6,607,033 | |
| |
| * | Options written are shown at value. |
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, 2021:
| | | | | |
| | | Value |
| | | Equity |
| Derivative Assets | | Risk |
| |
Options purchased, at value(a) | | | $ | 9,156,757 | |
| |
Derivatives not subject to master netting agreements | | | | (9,156,757 | ) |
| |
Total Derivative Assets subject to master netting agreements | | | $ | - | |
| |
| | | Value |
| | | Equity |
| Derivative Liabilities | | Risk |
Options written, at value | | | $ | (6,299,749 | ) |
| |
Derivatives not subject to master netting agreements | | | | 6,299,749 | |
| |
Total Derivative Liabilities subject to master netting agreements | | | $ | - | |
| (a) | Options purchased, at value as reported in the Schedule of Investments. |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
The table below summarizes the average notional value of derivatives held for the period December 31, 2021 (commencement date) through December 31, 2021.
| | | | | | | | |
| | | Index | | | Index | |
| | | Options | | | Options | |
| | | Purchased | | | Written | |
Average notional value | | $ | 3,033,275 | | | $ | 6,113,650 | |
Average contracts | | | 68 | | | | 68 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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
There were no ordinary income or long-term capital gain distributions paid during the period December 31, 2021 (commencement date) through December 31, 2021.
| | | | |
| Tax Components of Net Assets at Period-End: | | | |
| | | 2021 | |
Shares of beneficial interest | | | 2,999,932 | |
Total net assets | | $ | 2,999,932 | |
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, 2021.
NOTE 8–Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the period December 31, 2021 (commencement date) through December 31, 2021. 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 | | $ | – | |
Aggregate unrealized (depreciation) of investments | | | – | |
Net unrealized appreciation (depreciation) of investments | | $ | – | |
Cost of investments for tax purposes is the same as the cost for financial reporting purposes.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of organizational expenses, on December 31, 2021, undistributed net investment income (loss) was increased by $68 and shares of beneficial interest was decreased by $68. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | |
| | | Summary of Share Activity | |
| | | December 31, 2021(a)(b) | |
| | | Shares | | | Amount | |
Sold: | | | | | | | | |
Series I | | | 150,001 | | | $ | 1,500,010 | |
Series II | | | 150,001 | | | | 1,500,010 | |
| | | | | | | | |
Reacquired: | | | | | | | | |
Series I | | | (1 | ) | | | (10 | ) |
Series II | | | (1 | ) | | | (10 | ) |
Net increase in share activity | | | 300,000 | | | $ | 3,000,000 | |
| (a) | Commencement date of December 31, 2021. |
| (b) | 100% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
| Invesco® | V.I. Nasdaq 100 Buffer Fund - December |
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. Nasdaq 100 Buffer Fund - December
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco® V.I. Nasdaq 100 Buffer Fund - December (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2021, the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period December 31, 2021 (commencement date) through December 31, 2021 (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, 2021, the results of its operations, the changes in its net assets, and the financial highlights for the period December 31, 2021 (commencement date) through December 31, 2021 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 audit. 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 audit 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 audit 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 audit 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, 2021 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 audit provides a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. Nasdaq 100 Buffer Fund - December
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 December 31, 2021 (commencement date) through December 31, 2021.
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 (December 31, 2021 (commencement date) through December 31, 2021). Because the actual ending account value and expense information in the example is not based upon a six month period, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month 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
(07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value
(12/31/21) | | Expenses Paid During Period3 | | Annualized
Expense Ratio2 |
Series I | | $1,000.00 | | $1,000.00 | | $0.02 | | $1,021.68 | | $3.57 | | 0.70% |
Series II | | 1,000.00 | | 1,000.00 | | 0.03 | | 1,020.42 | | 4.84 | | 0.95 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period December 31, 2021 (commencement date) through December 31, 2021, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 1 (as of close of business December 31, 2021 (commencement date) through December 31, 2021)/365. Because the Fund has not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Fund and other funds because such data is based on a full six month period. |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
Approval of Investment Advisory and Sub-Advisory Contracts
Invesco V.I. S&P 500 Defined Outcome Funds and Invesco V.I. Nasdaq 100 Defined Outcome Fund (collectively, the Funds)
At a meeting held on August 2, 2021, the Board of Trustees (the Board or the Trustees) of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved each Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with 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 contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts), effective September 30, 2021.
The Board noted that it had previously approved establishing each Fund at a Board meeting held on June 10, 2021.
In doing so, the Board followed a process similar to the process that it follows in annually reviewing and approving investment advisory agreements and sub-advisory contracts for the series portfolios of registered investment companies advised by Invesco Advisers (the Invesco Funds) and considered the information provided in the most recent annual review process, as well as the information provided with respect to the Funds. After evaluating the factors discussed below, among others, the Board: (i) approved the investment advisory agreement and the sub-advisory contracts for each Fund and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable and (ii) approved submission of the agreements to the initial shareholder of each Fund.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of the Invesco Funds. The Funds will be assigned to one of the Sub-Committees. The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds.
In evaluating the fairness and reasonableness of compensation under each Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board was assisted in its review by the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees, and by independent legal counsel. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single
determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.
The discussion below is a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. This information is current as of August 2, 2021.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
| A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services to be provided to each Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who will provide these services, including the Fund’s portfolio managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds and will provide to each Fund, such as various back office support functions, third party service provider oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services to be provided to each Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided to each Fund by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which each Fund may invest, make recommendations regarding securities and assist with security trades. In particular, the Board noted that Invesco Asset Management Limited will assist Invesco Advisers with each Fund’s day-to-day portfolio management. The Board concluded that the sub-advisory contracts will benefit each Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
| B. | Fund Investment Performance |
The Board did not consider the performance of any Fund because the Funds are new and have no performance history. The Board did review performance expectations for each Fund as well as information provided regarding the experience of the portfolio managers in managing products with derivatives-based strategies. The Board noted that Invesco Asset Management Limited, an Affiliated Sub-Adviser, will assist Invesco Advisers with each Fund’s day-to-day portfolio management.
| C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board considered the proposed advisory fee schedule of each Fund and the proposed fee waivers and expense limitations. The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to each Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees are not paid directly by each Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers (as applicable).
The Board also considered comparative advisory fee data provided by Invesco Advisers with respect to comparable registered funds managed by other advisers. The Board noted that Invesco Advisers currently does not manage other mutual funds with investment strategies similar to those of the Funds. The Board noted that each Fund’s advisory fee is below the Morningstar “Options Trading” category median and average, and less than the advisory fees associated with other VIT “defined outcome” funds. The Board also considered comparative information regarding each Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers will contractually agree to waive fees and/or limit expenses of each Fund through at least April 30, 2023 (or, for the two “June” vintages of the Funds, through at least June 30, 2023) in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets of Series I and Series II shares of the Fund. The Board noted that Invesco Advisers will contractually agree to waive advisory fees of each Fund relating to certain investments by the Fund in affiliated money market funds through June 30, 2023.
The Board also considered the services that mayThe Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein. be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts (as applicable).The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein.
| D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to each Fund. The Board also considered that each Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to
Invesco® V.I. Nasdaq 100 Buffer Fund - December
reduce the Fund’s expense ratio as it grows in size. The Board noted that each Fund will share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that each Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
| E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates will provide to each Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual fund-by-fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers will continue to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under each Fund’s investment advisory agreement and sub-advisory contracts.
| F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates from the relationship with each Fund, including the fees to be received for providing administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services will be provided to each Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for
the operation of each Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in each Fund bearing costs to purchase research or brokerage services that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it will receive periodic reports from Invesco Advisers representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that each Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 under the Investment Company Act of
1940, as amended (collectively referred to as “affiliated money market funds”), advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to each Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees to be received by Invesco Advisers from each Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for each Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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 the period December 31, 2021 (commencement date) through December 31, 2021.
| | | | | | | | |
| | Federal and State Income Tax | | | | | | |
| | Qualified Dividend Income* | | | 0.00% | |
| | Corporate Dividends Received Deduction* | | | 0.00% | |
| | U.S. Treasury Obligations* | | | 0.00% | |
| | Qualified Business Income* | | | 0.00% | |
| | Business Interest Income* | | | 0.00% | |
| | * The above percentages are based on ordinary income dividends paid to shareholders for the period December 31, 2021 (commencement date) through December 31, 2021. |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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) | | 186 | | 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. Nasdaq 100 Buffer Fund - December
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 -1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler -1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
| Eli Jones -1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman -1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. -1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 YWCARetirement Fund; CEO of YWCA of the USA; Board member of the NYMetropolitan Transportation Authority; Commissioner of the NYC Department of Aging; Board member of Johns Hopkins Bioethics Institute | | 186 | | None |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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; 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern -1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli -1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
| 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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes -1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
| Crissie M. Wisdom -1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
Invesco® V.I. Nasdaq 100 Buffer Fund - December
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; Vice President, Invesco Advisers, Inc.; 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. Nasdaq 100 Buffer Fund - December
| | | | |
| | |
| Annual Report to Shareholders | | | December 31, 2021 | |
Invesco® V.I. S&P 500 Buffer Fund - September
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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. | | | VISP500S-AR-1 | |
Management’s Discussion of Fund Performance
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately caused a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
The Invesco® V.I. S&P 500 Buffer Fund – September seeks, over a specified annual Outcome Period (an “Outcome Period”), to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
The Fund’s Cap for the current Outcome Period, which represents the maximum percentage return (expressed as a percentage of the value of the Underlying Index determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the “Cap”), is 13.30%. This Cap is before considering fees and expenses. A new Cap level for each successive Outcome Period will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period. If the Underlying Index experiences returns over an Outcome Period in excess of the Cap, the Fund, and therefore investors, will not experience those excess gains.
The Fund’s initial Outcome Period is twelve months, commencing on October 1, 2021 and ending on the following September 30, 2022.
The Fund’s performance history is not presented or discussed here because, as of the date of this annual report, the Fund has not had returns for at least six months. The Fund’s performance information is accessible on the Fund’s website.
The Fund has characteristics unlike many other traditional investment products and is not appropriate for all investors. In particular, investment in the Fund may not be appropriate for investors who do not intend to maintain their investment through the entire Outcome Period. There is no guarantee that the Fund will be able to achieve the stated Defined Outcomes.
Thank you for your investment in Invesco® V.I. S&P 500 Buffer Fund – September.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Jacob Borbidge
Alessio de Longis
Duy Nguyen
Ali Zouiten
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 Buffer Fund - September |
Supplemental Information
Invesco® V.I. S&P 500 Buffer Fund - September seeks, over a specified annual Outcome Period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
∎ Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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-PR is an unmanaged price-only index considered representative of the US stock market. |
| ∎ | 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 Buffer Fund - September |
Fund Information
Portfolio Composition
| | | | | |
| By security type | | % of total investments |
| |
Options Purchased | | 74.17% |
| |
Money Market Funds | | 25.83 |
Data presented here are as of December 31, 2021.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
| |
Money Market Funds–35.33% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(a)(b) | | | 788,922 | | | $ | 788,922 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(a)(b) | | | 563,403 | | | | 563,516 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(a)(b) | | | 901,625 | | | | 901,625 | |
| |
Total Money Market Funds (Cost $2,254,063) | | | | 2,254,063 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Options Purchased–101.45% | | | | | | | | |
(Cost $6,275,314)(c) | | | | | | $ | 6,472,627 | |
| |
TOTAL INVESTMENTS IN SECURITIES–136.78%
(Cost $8,529,377) | | | | 8,726,690 | |
| |
OTHER ASSETS LESS LIABILITIES–(36.78)% | | | | (2,346,671 | ) |
| |
NET ASSETS–100.00% | | | $ | 6,380,019 | |
| |
Notes to Schedule of Investments:
| (a) | 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 period ended December 31, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020* | | Purchases at Cost | | Proceeds from Sales | | Change in Unrealized Appreciation | | Realized Gain (Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ | - | | | | $ | 2,133,094 | | | | $ | (1,344,172 | ) | | | $ | - | | | | $ | - | | | | $ | 788,922 | | | | $ | 4 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | | - | | | | | 1,543,402 | | | | | (979,819 | ) | | | | - | | | | | (67 | ) | | | | 563,516 | | | | | 2 | |
Invesco Treasury Portfolio, Institutional Class | | | | - | | | | | 2,471,020 | | | | | (1,569,395 | ) | | | | - | | | | | - | | | | | 901,625 | | | | | 2 | |
Total | | | $ | - | | | | $ | 6,147,516 | | | | $ | (3,893,386 | ) | | | $ | - | | | | $ | (67 | ) | | | $ | 2,254,063 | | | | $ | 8 | |
| | * | Commencement date of September 30, 2021. |
| (b) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (c) | The table below details options purchased. |
| | | | | | | | | | | | | | | | | | |
| Open Equity Options Purchased | |
| Description | | Type of Contract | | Expiration Date | | Number of Contracts | | Exercise Price | | | Notional Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | |
SPDR S&P 500 ETF Trust | | Call | | 09/30/2022 | | 45 | | USD | 12.87 | | | USD | 57,915 | | | $ | 2,070,343 | |
Equity Risk | | | | | | | | | | | | | | | | | | |
SPDR S&P 500 ETF Trust | | Put | | 09/30/2022 | | 45 | | USD | 429.15 | | | USD | 1,931,175 | | | | 81,887 | |
Total Open Equity Options Purchased | | | | | | | | | | | | | | | | $ | 2,152,230 | |
|
(a) Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. | |
|
| Open Index Options Purchased | |
| Description | | Type of
Contract | | Expiration Date | | Number of
Contracts | | Exercise Price | | | Notional Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | |
S&P 500® Index | | Call | | 09/30/2022 | | 9 | | USD | 129.23 | | | USD | 116,307 | | | $ | 4,150,309 | |
Equity Risk | | | | | | | | | | | | | | | | | | |
S&P 500® Index | | Put | | 09/30/2022 | | 9 | | USD | 4,307.54 | | | USD | 3,876,786 | | | | 170,088 | |
Total Open Index Options Purchased | | | | | | | | | | | | | | | | $ | 4,320,397 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | |
| Open Equity Options Written | |
| |
| Description | | Type of
Contract | | Expiration
Date | | Number of
Contracts | | Exercise Price | | | Notional Value(a) | | | Value | |
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
| |
SPDR S&P 500 ETF Trust | | Call | | 09/30/2022 | | 45 | | USD | 486.23 | | | USD | 2,188,035 | | | $ | (108,019 | ) |
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
| |
SPDR S&P 500 ETF Trust | | Put | | 09/30/2022 | | 45 | | USD | 386.24 | | | USD | 1,738,080 | | | | (49,970 | ) |
| |
Total Open Equity Options Written | | | | | | | | | | | | | | | | $ | (157,989 | ) |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Open Index Options Written | |
| |
| Description | | Type of
Contract | | | Expiration
Date | | | Number of
Contracts | | | Exercise Price | | | Notional Value(a) | | | Value | |
| |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
S&P 500® Index | | | Call | | | | 09/30/2022 | | | | 9 | | | USD | 4,880.44 | | | USD | 4,392,396 | | | $ | (209,801 | ) |
| |
Equity Risk | | | | | | | | | | | | | | | | | | | | | | | | |
| |
S&P 500® Index | | | Put | | | | 09/30/2022 | | | | 9 | | | USD | 3,876.79 | | | USD | 3,489,111 | | | | (102,975 | ) |
| |
Total Open Index Options Written | | | | | | | | | | | | | | | | | | | | | | $ | (312,776 | ) |
| |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
Abbreviations:
ETF –Exchange-Traded Fund
SPDR –Standard & Poor’s Depositary Receipt
USD –U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
| |
Investments in unaffiliated securities, at value (Cost $6,275,314) | | $ | 6,472,627 | |
Investments in affiliated money market funds, at value (Cost $2,254,063) | | | 2,254,063 | |
Receivable for: | | | | |
Investments sold | | | 148,584 | |
Fund expenses absorbed | | | 52,422 | |
Investment for trustee deferred compensation and retirement plans | | | 160 | |
Total assets | | | 8,927,856 | |
| |
Liabilities: | | | | |
Other investments: | | | | |
Options written, at value (premiums received $449,678) | | | 470,765 | |
Payable for: | | | | |
Investments purchased | | | 2,015,906 | |
Fund shares reacquired | | | 1,123 | |
Accrued fees to affiliates | | | 6,359 | |
Accrued trustees’ and officers’ fees and benefits | | | 871 | |
Accrued other operating expenses | | | 52,653 | |
Trustee deferred compensation and retirement plans | | | 160 | |
Total liabilities | | | 2,547,837 | |
Net assets applicable to shares outstanding | | $ | 6,380,019 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 6,313,881 | |
Distributable earnings | | | 66,138 | |
| | | $ | 6,380,019 | |
| |
Net Assets: | | | | |
Series I | | $ | 1,047,843 | |
Series II | | $ | 5,332,176 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 101,798 | |
Series II | | | 518,383 | |
Series I: | | | | |
Net asset value per share | | $ | 10.29 | |
Series II: | | | | |
Net asset value per share | | $ | 10.29 | |
Statement of Operations
For the period September 30, 2021 (commencement date) through December 31, 2021
| | | | |
Investment income: | | | | |
| |
Dividends from affiliated money market funds | | $ | 8 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 3,597 | |
|
| |
Administrative services fees | | | 1,356 | |
|
| |
Custodian fees | | | 1,030 | |
|
| |
Distribution fees - Series II | | | 1,477 | |
|
| |
Transfer agent fees | | | 25 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 4,561 | |
|
| |
Licensing fees | | | 255 | |
|
| |
Reports to shareholders | | | 3,672 | |
|
| |
Professional services fees | | | 47,616 | |
|
| |
Other | | | 3,673 | |
|
| |
Total expenses | | | 67,262 | |
|
| |
Less: Fees waived and/or expenses reimbursed | | | (59,800 | ) |
|
| |
Net expenses | | | 7,462 | |
|
| |
Net investment income (loss) | | | (7,454 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from affiliated investment securities | | | (67 | ) |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | 197,313 | |
|
| |
Option contracts written | | | (21,087 | ) |
|
| |
| | | 176,226 | |
|
| |
Net realized and unrealized gain | | | 176,159 | |
|
| |
Net increase in net assets resulting from operations | | $ | 168,705 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
Statement of Changes in Net Assets
For the period September 30, 2021 (commencement date) through December 31, 2021
| | | | |
| | | September 30, 2021 | |
| | | (commencement date) through | |
| | | December 31, 2021 | |
|
| |
Operations: | | | | |
Net investment income (loss) | | $ | (7,454) | |
|
| |
Net realized gain (loss) | | | (67) | |
|
| |
Change in net unrealized appreciation | | | 176,226 | |
|
| |
Net increase in net assets resulting from operations | | | 168,705 | |
|
| |
| |
Distributions to shareholders from distributable earnings: | | | | |
Series I | | | (29,538) | |
|
| |
Series II | | | (80,483) | |
|
| |
Total distributions from distributable earnings | | | (110,021) | |
|
| |
| |
Share transactions–net: | | | | |
Series I | | | 1,018,798 | |
|
| |
Series II | | | 5,302,537 | |
|
| |
Net increase in net assets resulting from share transactions | | | 6,321,335 | |
|
| |
Net increase in net assets | | | 6,380,019 | |
|
| |
| |
Net assets: | | | | |
Beginning of period | | | – | |
|
| |
End of period | | $ | 6,380,019 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the period 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | $10.00 | | | | $(0.02) | | | | $0.60 | | | | $0.58 | | | | $(0.29) | | | | $10.29 | | | | 5.84% | | | | $1,048 | | | | 0.70%(e) | | | | 7.68%(e) | | | | (0.70)%(e) | | | | 0% | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | 10.00 | | | | (0.02) | | | | 0.60 | | | | 0.58 | | | | (0.29) | | | | 10.29 | | | | 5.84 | | | | 5,332 | | | | 0.95(e) | | | | 7.93(e) | | | | (0.95)(e) | | | | 0 | |
| (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) | Commencement date of September 30, 2021. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund - September (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 seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the S&P 500® Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the S&P 500® Index.
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The Buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
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
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. | Flex Options Purchased and Written – The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by counterparties to certain derivatives contracts and protection from counterparty risk that is associated with Over-the-counter trading. |
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and
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| Invesco® V.I. S&P 500 Buffer Fund - September |
unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
| J. | 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. |
| K. | Buffered Loss Risk – The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Buffer will effectively protect against all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). |
| L. | Non-Diversified Risk – Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 | | | 0.420% | |
|
| |
Over $2 billion | | | 0.400% | |
|
| |
For the period September 30, 2021 (commencement date) through December 31, 2021, the effective advisory fee rate 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).
Effective September 30, 2021, the Adviser has contractually agreed, through at least April 30, 2023, 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 0.70% and Series II shares to 0.95% 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, 2023. 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, 2023, 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 period September 30, 2021 (commencement date) through December 31, 2021, the Adviser waived advisory fees of $3,597 and reimbursed fund level expenses of $56,203.
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 period September 30, 2021 (commencement date) through December 31, 2021, Invesco was paid $72 for accounting and fund administrative services and was reimbursed $1,284 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 period September 30, 2021 (commencement date) through December 31, 2021, 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
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| Invesco® V.I. S&P 500 Buffer Fund - September |
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 period September 30, 2021 (commencement date) through December 31, 2021, 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, 2021. 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 | | | | | | | | | | | | | | | | |
|
| |
Money Market Funds | | $ | 2,254,063 | | | $ | – | | | | $– | | | $ | 2,254,063 | |
|
| |
Options Purchased | | | – | | | | 6,472,627 | | | | – | | | | 6,472,627 | |
|
| |
Total Investments in Securities | | | 2,254,063 | | | | 6,472,627 | | | | – | | | | 8,726,690 | |
|
| |
| | | | |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Options Written | | | – | | | | (470,765 | ) | | | – | | | | (470,765 | ) |
|
| |
Total Investments | | $ | 2,254,063 | | | $ | 6,001,862 | | | | $– | | | $ | 8,255,925 | |
|
| |
| * | Options written are shown at value. |
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, 2021:
| | | | |
| | | Value | |
| Derivative Assets | | Equity Risk | |
|
| |
Options purchased, at value(a) | | $ | 6,472,627 | |
|
| |
Derivatives not subject to master netting agreements | | | (6,472,627 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| | | | |
| | | Value | |
| Derivative Liabilities | | Equity
Risk | |
|
| |
Options written, at value | | $ | (470,765 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 470,765 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | |
|
| |
| (a) | Options purchased, at value as reported in the Schedule of Investments. |
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| Invesco® V.I. S&P 500 Buffer Fund - September |
Effect of Derivative Investments for the period September 30, 2021 (commencement date) through December 31, 2021
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 |
| | | Equity Risk |
Change in Net Unrealized Appreciation (Depreciation): | | | | | |
Options purchased(a) | | | $ | 197,313 | |
Options written | | | | (21,087 | ) |
| (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 for the period September 30, 2021 (commencement date) through December 31, 2021.
| | | | | | | | | | | | | | | | |
| | | Equity
Options
Purchased | | | Index
Options
Purchased | | | Equity
Options
Written | | | Index
Options
Written | |
Average notional value | | | $1,116,101 | | | | $2,551,143 | | | | $2,202,987 | | | | $5,035,407 | |
Average contracts | | | 51 | | | | 12 | | | | 51 | | | | 12 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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 period September 30, 2021 (commencement date) through December 31, 2021:
| | | | |
| | | 2021 | |
Ordinary income* | | $ | 44,001 | |
Long-term capital gain | | | 66,020 | |
Total distributions | | $ | 110,021 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed ordinary income | | $ | 62,946 | |
Undistributed long-term capital gain | | | 676 | |
Net unrealized appreciation - investments | | | 2,516 | |
Shares of beneficial interest | | | 6,313,881 | |
Total net assets | | $ | 6,380,019 | |
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 options contracts.
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, 2021.
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| Invesco® V.I. S&P 500 Buffer Fund - September |
NOTE 8–Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the period September 30, 2021 (commencement date) through December 31, 2021. 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 | | $ | 226,841 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (224,325 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 2,516 | |
|
| |
Cost of investments for tax purposes is $8,253,409.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of organizational expenses, on December 31, 2021, undistributed net investment income (loss) was increased by $7,454 and shares of beneficial interest was decreased by $7,454. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | December 31, 2021(a)(b) | |
| | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | |
Series I | | | 101,751 | | | $ | 1,018,327 | |
|
| |
Series II | | | 514,276 | | | | 5,261,059 | |
|
| |
| | |
Issued as reinvestment of dividends: | | | | | | | | |
Series I | | | 50 | | | | 508 | |
|
| |
Series II | | | 5,064 | | | | 51,452 | |
|
| |
| | |
Reacquired: | | | | | | | | |
Series I | | | (3 | ) | | | (37 | ) |
|
| |
Series II | | | (957 | ) | | | (9,974 | ) |
|
| |
Net increase in share activity | | | 620,181 | | | $ | 6,321,335 | |
|
| |
| (a) | Commencement date of September 30, 2021. |
| (b) | 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. |
In addition, 32% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser.
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| Invesco® V.I. S&P 500 Buffer Fund - September |
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 Buffer Fund - September
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 Buffer Fund - September (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2021, the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period September 30, 2021 (commencement date) through December 31, 2021 (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, 2021, the results of its operations, the changes in its net assets, and the financial highlights for the period September 30, 2021 (commencement date) through December 31, 2021 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 audit. 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 audit 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 audit 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 audit 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, 2021 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 audit provides a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. S&P 500 Buffer Fund - September |
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 September 30, 2021 (commencement date) through December 31, 2021.
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 (September 30, 2021 (commencement date) through December 31, 2021). Because the actual ending account value and expense information in the example is not based upon a six month period, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month 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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period3 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,058.40 | | $1.84 | | $1,021.68 | | $3.57 | | 0.70% |
Series II | | 1,000.00 | | 1,058.40 | | 2.49 | | 1,020.42 | | 4.84 | | 0.95 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period September 30, 2021 (commencement date) through December 31, 2021, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 93 (as of close of business September 30, 2021 (commencement date) through December 31, 2021)/365. Because the Fund has not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Fund and other funds because such data is based on a full six month period. |
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| Invesco® V.I. S&P 500 Buffer Fund - September |
Approval of Investment Advisory and Sub-Advisory Contracts
Invesco V.I. S&P 500 Defined Outcome Funds and Invesco V.I. Nasdaq 100 Defined Outcome Fund (collectively, the Funds)
At a meeting held on August 2, 2021, the Board of Trustees (the Board or the Trustees) of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved each Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with 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 contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts), effective September 30, 2021.
The Board noted that it had previously approved establishing each Fund at a Board meeting held on June 10, 2021.
In doing so, the Board followed a process similar to the process that it follows in annually reviewing and approving investment advisory agreements and sub-advisory contracts for the series portfolios of registered investment companies advised by Invesco Advisers (the Invesco Funds) and considered the information provided in the most recent annual review process, as well as the information provided with respect to the Funds. After evaluating the factors discussed below, among others, the Board: (i) approved the investment advisory agreement and the sub-advisory contracts for each Fund and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable and (ii) approved submission of the agreements to the initial shareholder of each Fund.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of the Invesco Funds. The Funds will be assigned to one of the Sub-Committees. The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds.
In evaluating the fairness and reasonableness of compensation under each Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board was assisted in its review by the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees, and by independent legal counsel. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single
determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.
The discussion below is a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. This information is current as of August 2, 2021.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
| A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services to be provided to each Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who will provide these services, including the Fund’s portfolio managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds and will provide to each Fund, such as various back office support functions, third party service provider oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services to be provided to each Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided to each Fund by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which each Fund may invest, make recommendations regarding securities and assist with security trades. In particular, the Board noted that Invesco Asset Management Limited will assist Invesco Advisers with each Fund’s day-to-day portfolio management. The Board concluded that the sub-advisory contracts will benefit each Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
| B. | Fund Investment Performance |
The Board did not consider the performance of any Fund because the Funds are new and have no performance history. The Board did review performance expectations for each Fund as well as information provided regarding the experience of the portfolio managers in managing products with derivatives-based strategies. The Board noted that Invesco Asset Management Limited, an Affiliated Sub-Adviser, will assist Invesco Advisers with each Fund’s day-to-day portfolio management.
| C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board considered the proposed advisory fee schedule of each Fund and the proposed fee waivers and expense limitations. The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to each Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees are not paid directly by each Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers (as applicable).
The Board also considered comparative advisory fee data provided by Invesco Advisers with respect to comparable registered funds managed by other advisers. The Board noted that Invesco Advisers currently does not manage other mutual funds with investment strategies similar to those of the Funds. The Board noted that each Fund’s advisory fee is below the Morningstar “Options Trading” category median and average, and less than the advisory fees associated with other VIT “defined outcome” funds. The Board also considered comparative information regarding each Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers will contractually agree to waive fees and/or limit expenses of each Fund through at least April 30, 2023 (or, for the two “June” vintages of the Funds, through at least June 30, 2023) in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets of Series I and Series II shares of the Fund. The Board noted that Invesco Advisers will contractually agree to waive advisory fees of each Fund relating to certain investments by the Fund in affiliated money market funds through June 30, 2023.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts (as applicable). The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein.
| D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to each Fund. The Board also considered that each Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to
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| Invesco® V.I. S&P 500 Buffer Fund - September |
reduce the Fund’s expense ratio as it grows in size. The Board noted that each Fund will share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that each Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
| E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates will provide to each Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual fund-by-fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers will continue to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under each Fund’s investment advisory agreement and sub-advisory contracts.
| F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates from the relationship with each Fund, including the fees to be received for providing administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services will be provided to each Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of each Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in each Fund bearing costs to purchase research or brokerage services that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it will receive periodic reports from Invesco Advisers representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that each Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 under the Investment Company Act of
1940, as amended (collectively referred to as “affiliated money market funds”), advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to each Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees to be received by Invesco Advisers from each Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for each Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
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| Invesco® V.I. S&P 500 Buffer Fund - September |
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 the period September 30, 2021 (commencement date) through December 31, 2021:
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| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 66,020 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 0.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
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| * 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. S&P 500 Buffer Fund - September |
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) | | 186 | | 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 Buffer Fund - September
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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| Invesco® V.I. S&P 500 Buffer Fund - September |
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) | | | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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| Invesco® V.I. S&P 500 Buffer Fund - September |
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco® V.I. S&P 500 Buffer Fund - September |
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; Vice President, Invesco Advisers, Inc.; 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. S&P 500 Buffer Fund - September |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco® V.I. S&P 500 Buffer Fund - December
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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. | | VISP500D-AR-1 |
Management’s Discussion of Fund Performance
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately caused a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
The Invesco® V.I. S&P 500 Buffer Fund – December seeks, over a specified annual Outcome Period (an “Outcome Period”), to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
The Fund’s Cap for the current Outcome Period, which represents the maximum percentage return (expressed as a percentage of the value of the Underlying Index determined at the start of the Outcome Period) that can be achieved from an investment in the Fund over the entire Outcome Period (the “Cap”), is 12.20%. This Cap is before considering fees and expenses. A new Cap level for each successive Outcome Period will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period. If the Underlying Index experiences returns over an Outcome Period in excess of the Cap, the Fund, and therefore investors, will not experience those excess gains.
The Fund’s initial Outcome Period is twelve months, commencing on January 1, 2022 and ending on the following December 31, 2022.
The Fund’s performance history is not presented or discussed here because, as of the date of this annual report, the Fund has not had returns for at least six months. The Fund’s performance information is accessible on the Fund’s website.
The Fund has characteristics unlike many other traditional investment products and is not appropriate for all investors. In particular, investment in the Fund may not be appropriate for investors who do not intend to maintain their investment through the entire Outcome Period. There is no guarantee that the Fund will be able to achieve the stated Defined Outcomes.
Thank you for your investment in Invesco® V.I. S&P 500 Buffer Fund – December.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
Portfolio manager(s):
Jacob Borbidge
Alessio de Longis
Duy Nguyen
Ali Zouiten
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 Buffer Fund - December |
Supplemental Information
Invesco® V.I. S&P 500 Buffer Fund - December seeks, over a specified annual Outcome Period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside Cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses.
∎ Unless otherwise stated, information presented in this report is as of December 31, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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-PR is an unmanaged price-only index considered representative of the US stock market. |
| ∎ | 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 Buffer Fund - December |
Fund Information
Portfolio Composition
| | | | | |
| By security type | | % of total investments |
| |
Money Market Funds | | | | 55.24 | % |
| |
Options Purchased | | | | 44.76 | |
Data presented here are as of December 31, 2021.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
| |
Money Market Funds–125.01% | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(a)(b) | | | 700,007 | | | $ | 700,007 | |
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(a)(b) | | | 999,810 | | | | 1,000,010 | |
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(a)(b) | | | 800,008 | | | | 800,008 | |
| |
Total Money Market Funds (Cost $2,500,025) | | | | 2,500,025 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| |
Options Purchased–101.30% | | | | | | | | |
(Cost $2,025,991)(c) | | | | | | $ | 2,025,991 | |
| |
TOTAL INVESTMENTS IN SECURITIES–226.31% (Cost $4,526,016) | | | | 4,526,016 | |
| |
OTHER ASSETS LESS LIABILITIES–(126.31)% | | | | (2,526,061 | ) |
| |
NET ASSETS–100.00% | | | $ | 1,999,955 | |
| |
Notes to Schedule of Investments:
| (a) | 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 period ended December 31, 2021. |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | Change in | | | | | | | |
| | | Value | | Purchases | | | Proceeds | | Unrealized | | Realized | | Value | | | |
| | | December 31, 2020 | | at Cost | | | from Sales | | Appreciation | | Gain | | December 31, 2021 | | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | $- | | $ | 700,007 | | | $- | | $- | | $- | | | $ 700,007 | | | $- |
Invesco Liquid Assets Portfolio, Institutional Class | | - | | | 1,000,010 | | | - | | - | | - | | | 1,000,010 | | | - |
Invesco Treasury Portfolio, Institutional Class | | - | | | 800,008 | | | - | | - | | - | | | 800,008 | | | - |
Total | | $- | | $ | 2,500,025 | | | $- | | $- | | $- | | | $2,500,025 | | | $- |
| (b) | The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (c) | The table below details options purchased. |
| | | | | | | | | | | | | | | | | | |
| Open Equity Options Purchased | |
| | | Type of | | Expiration | | Number of | | Exercise | | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | | Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | |
SPDR S&P 500 ETF Trust | | Call | | 12/30/2022 | | 11 | | | USD 14.25 | | | | USD 15,675 | | | $ | 498,983 | |
Equity Risk | | | | | | | | | | | | | | | | | | |
SPDR S&P 500 ETF Trust | | Put | | 12/30/2022 | | 11 | | | USD 474.96 | | | | USD 522,456 | | | | 42,086 | |
Total Open Equity Options Purchased | | | | | | | | | | | | | | | | $ | 541,069 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | |
| Open Index Options Purchased | |
| | | Type of | | Expiration | | Number of | | Exercise | | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | | Value(a) | | | Value | |
Equity Risk | | | | | | | | | | | | | | | | | | |
S&P 500® Index | | Call | | 12/30/2022 | | 3 | | | USD 142.99 | | | | USD 42,897 | | | $ | 1,373,385 | |
Equity Risk | | | | | | | | | | | | | | | | | | |
S&P 500® Index | | Put | | 12/30/2022 | | 3 | | | USD 4,766.18 | | | | USD 1,429,854 | | | | 111,537 | |
Total Open Index Options Purchased | | | | | | | | | | | | | | | | $ | 1,484,922 | |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | |
| Open Equity Options Written | |
|
| |
| | | Type of | | Expiration | | Number of | | Exercise | | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | | Value(a) | | | Value | |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
|
| |
SPDR S&P 500 ETF Trust | | Call | | 12/30/2022 | | 11 | | | USD 532.91 | | | | USD 586,201 | | | $ | (6,754 | ) |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
|
| |
SPDR S&P 500 ETF Trust | | Put | | 12/30/2022 | | 11 | | | USD 427.46 | | | | USD 470,206 | | | | (26,608 | ) |
|
| |
Total Open Equity Options Written | | | | | | | | | | | | | | | | $ | (33,362 | ) |
|
| |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
| | | | | | | | | | | | | | | | | | |
| Open Index Options Written | |
|
| |
| | | Type of | | Expiration | | Number of | | Exercise | | | Notional | | | | |
| Description | | Contract | | Date | | Contracts | | Price | | | Value(a) | | | Value | |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
|
| |
S&P 500® Index | | Call | | 12/30/2022 | | 3 | | | USD 5,347.65 | | | | USD 1,604,295 | | | $ | (27,159 | ) |
|
| |
Equity Risk | | | | | | | | | | | | | | | | | | |
|
| |
S&P 500® Index | | Put | | 12/30/2022 | | 3 | | | USD 4,289.56 | | | | USD 1,286,868 | | | | (70,770 | ) |
|
| |
Total Open Index Options Written | | | | | | | | | | | | | | | | $ | (97,929 | ) |
|
| |
| (a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | |
| ETF | | – Exchange-Traded Fund |
| SPDR | | – Standard & Poor’s Depositary Receipt |
| USD | | – U.S. Dollar |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
Statement of Assets and Liabilities
December 31, 2021
| | |
Assets: | | |
| |
Investments in unaffiliated securities, at value
(Cost $2,025,991) | | $2,025,991 |
| |
Investments in affiliated money market funds, at value
(Cost $2,500,025) | | 2,500,025 |
Receivable for: | | |
Investments sold | | 131,291 |
Fund expenses absorbed | | 35,196 |
Total assets | | 4,692,503 |
| |
Liabilities: | | |
Other investments: | | |
Options written, at value (premiums received $131,291) | | 131,291 |
Payable for: | | |
Investments purchased | | 2,525,996 |
Fund shares reacquired | | 20 |
Accrued fees to affiliates | | 40 |
Accrued trustees’ and officers’ fees and benefits | | 49 |
Accrued other operating expenses | | 35,152 |
Total liabilities | | 2,692,548 |
Net assets applicable to shares outstanding | | $1,999,955 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $1,999,955 |
| | | $1,999,955 |
| |
Net Assets: | | |
Series I | | $ 999,981 |
Series II | | $ 999,974 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 100,000 |
Series II | | 100,000 |
| |
Series I:
Net asset value per share | | $ 10.00 |
| |
Series II:
Net asset value per share | | $ 10.00 |
Statement of Operations
For the period December 31, 2021 (commencement date) through December 31, 2021
| | | | |
Expenses: | | | | |
Advisory fees | | | 23 | |
|
| |
Administrative services fees | | | 9 | |
|
| |
Custodian fees | | | 39 | |
|
| |
Distribution fees - Series II | | | 7 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 49 | |
|
| |
Licensing fees | | | 3 | |
|
| |
Reports to shareholders | | | 4,816 | |
|
| |
Professional services fees | | | 30,267 | |
|
| |
Other | | | 28 | |
|
| |
Total expenses | | | 35,241 | |
|
| |
Less: Fees waived | | | (35,196 | ) |
|
| |
Net expenses | | | 45 | |
|
| |
Net investment income (loss) | | | (45 | ) |
|
| |
Net increase (decrease) in net assets resulting from operations | | $ | (45 | ) |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
Statement of Changes in Net Assets
For the period December 31, 2021 (commencement date) through December 31, 2021
| | | | |
| | | December 31, 2021 | |
| | | (commencement date) through | |
| | | December 31, 2021 | |
|
| |
Operations: | | | | |
Net investment income (loss) | | | $ (45) | |
|
| |
Net increase (decrease) in net assets resulting from operations | | | (45) | |
|
| |
| |
Share transactions–net: | | | | |
Series I | | | 1,000,000 | |
|
| |
Series II | | | 1,000,000 | |
|
| |
Net increase in net assets resulting from share transactions | | | 2,000,000 | |
|
| |
Net increase in net assets | | | 1,999,955 | |
|
| |
| |
Net assets: | | | | |
Beginning of period | | | – | |
|
| |
End of period | | | $1,999,955 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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 | | | 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 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | $10.00 | | | | $(0.00) | | | | $- | | | | $(0.00) | | | | $10.00 | | | | -% | | | | $1,000 | | | | 0.70%(e) | | | | 643.01%(e) | | | | (0.70)%(e) | | | | 0% | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Period ended 12/31/21(d) | | | 10.00 | | | | (0.00) | | | | - | | | | (0.00) | | | | 10.00 | | | | - | | | | 1,000 | | | | 0.95(e) | | | | 643.26(e) | | | | (0.95)(e) | | | | 0 | |
| (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) | Commencement date of December 31, 2021. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco® V.I. S&P 500 Buffer Fund - December (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 seeks, over a specified annual outcome period, to provide investors with returns that match those of the S&P 500® Index (the “Underlying Index”) up to an upside cap, while providing a buffer against the first 10% (prior to taking into account any fees and expenses of the Fund) of Underlying Index losses. The Fund invests, under normal circumstances, at least 80% its net assets (plus any borrowings for investment purposes) in options that reference the S&P 500® Index or options that reference the SPDR® S&P 500® ETF Trust, which is an exchange-traded unit investment trust that seeks to track the S&P 500® Index
The Fund employs a “Defined Outcome” strategy, which seeks to replicate the performance of the Underlying Index over a designated period of 12 months (the “Outcome Period”) up to a predetermined cap (the “Cap”), while providing a buffer against the first 10% of Underlying Index losses over the Outcome Period (the “Buffer”). Following the conclusion of the initial Outcome Period, each subsequent Outcome Period will be a one-year period that begins on the trading day that immediately follows the day that the preceding Outcome Period concluded. New Cap levels will be determined at the end of the trading day immediately preceding the first day of each new Outcome Period and will change depending on market conditions. The buffer for each Outcome Period will be 10%. The Fund’s Cap represents the maximum percentage return, expressed as a percentage of the value of the Underlying Index determined at the start of the relevant Outcome Period (the “Underlying Index Start Value”), that can be achieved from an investment in the Fund over an Outcome Period, prior to taking into account any fees and expenses of the Fund. The Fund’s Buffer represents the amount of losses, expressed as a percentage of the Underlying Index Start Value, that the Fund will buffer against if the Underlying Index experiences losses over an Outcome Period, prior to taking into account any fees and expenses of the Fund. Underlying Index losses over an Outcome Period that exceed the Buffer will be borne by shareholders.
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
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. | Flex Options Purchased and Written – The Fund invests primarily in FLexible EXchange® Options (“FLEX® Options”), which are non-standard Options that allow users to negotiate key contract terms, including exercise prices, exercise styles, and expiration dates, on major stock indexes as well as individual equities. |
Other benefits of FLEX® Options, include guarantee for settlement by the Options Clearing Corporation (the “OCC”), a market clearinghouse that guarantees performance by counterparties to certain derivatives contracts and protection from counterparty risk that is associated with Over-the-counter trading.
The Fund will purchase and sell put and call FLEX® Options. Put options give the holder (the buyer of the put) the right to sell an asset (or deliver the cash value of the Underlying Index, in case of an index put option) and gives the seller of the put (the writer) of the put the obligation to buy the asset (or receive cash value of the Underlying Index, in case of an index put option) at a certain defined price. Call options give the holder (the buyer of the call) the right to buy an asset (or receive cash value of the Underlying Index, in case of an index call option) and gives the seller of the call (the writer) the obligation to sell the asset (or deliver cash value of the Underlying Index, in case of an index call option) at a certain defined price.
When the Fund purchases an option, an amount equal to the premium paid by the Fund is recorded as an investment and is subsequently adjusted to the current value of the option purchased. If an option expires on the stipulated expiration date or if the Fund enters into a closing sale transaction, a gain or loss is realized. If a call option is exercised, the cost of the security acquired is increased by the premium paid for the call. If a put option is exercised, a gain or loss is realized from the sale of the underlying security, and the proceeds from such sale are decreased by the premium originally paid. Purchased options are non-income producing securities. Options purchased are reported as Investments in unaffiliated securities on the Statement of Assets and Liabilities. Realized and unrealized gains and losses on options purchased are included on Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities.
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gain from written options. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as the writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Options written are reported as a liability on the Statement of Assets and Liabilities. Realized and
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| Invesco® V.I. S&P 500 Buffer Fund - December |
unrealized gains and losses on options written are included on the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written.
The Fund bears the risk that the OCC could be unable or unwilling to perform its obligations under the FLEX® Options contracts, which could cause significant losses. Additionally, FLEX® Options may be less liquid than certain other securities such as standardized options. In less liquid markets for the FLEX® Options, the Fund may have difficulty closing out certain FLEX® Options positions under the customized terms. The Fund may experience substantial downside from specific FLEX® Option positions and certain FLEX® Option positions may expire worthless. The value of the underlying FLEX® Options will be affected by, among others, changes in the value of the exchange, changes in interest rates, changes in the actual and implied volatility of the Underlying Index and the remaining time to until the FLEX® Options expire. The value of the FLEX® Options does not increase or decrease at the same rate as the level of the Underlying Index (although they generally move in the same direction). However, as a FLEX® Option approaches its expiration date, its value typically increasingly moves with the value of the Underlying Index.
| J. | 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. |
| K. | Buffered Loss Risk – The term “buffer” is a generic term that is widely used in the investment management and financial services industries to describe an investment product or strategy that is designed to mitigate or alleviate downside risk. The Buffer for the Fund is designed to limit downside losses for shares purchased at the beginning and held until the end of the Outcome Period; however, there is no guarantee that the Buffer will effectively protect against all losses. If the Underlying Index declines over an Outcome Period by more than the Buffer, shareholders will bear the amount of the loss in excess of the Buffer at the end of the Outcome Period (plus Fund fees and expenses). |
| L. | Non-Diversified Risk – Under the 1940 Act, a fund designated as “diversified” must limit its holdings such that the securities of issuers which individually represent more than 5% of its total assets must in the aggregate represent less than 25% of its total assets. The Fund is classified as “diversified” for purposes of the 1940 Act. However, the Fund may be “non-diversified,” as defined in the 1940 Act, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Underlying Index. A non-diversified fund can invest a greater portion of its assets in the securities of a small number of issuers or any single issuer than a diversified fund can. In such circumstances, a change in the value of one or a few issuers’ securities will therefore affect the value of the Fund more than if it was a diversified fund. As such, the Fund’s performance may be hurt disproportionately by the poor performance of relatively few stocks, or even a single stock, and the Fund’s shares may experience significant fluctuations in value. |
| M. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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 | | | 0.420% | |
|
| |
Over $2 billion | | | 0.400% | |
|
| |
For the period December 31, 2021 (commencement date) through December 31, 2021, the effective advisory fee rate 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).
Effective December 31, 2021, the Adviser has contractually agreed, through at least April 30, 2023, 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 0.70% and Series II shares to 0.95% 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, 2023. 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, 2023, 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 period December 31, 2021 (commencement date) through December 31, 2021, the Adviser waived advisory fees of $35,196.
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 period December 31, 2021 (commencement date) through December 31, 2021, Invesco was paid $1 for accounting and fund administrative services and was reimbursed $8 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 period December 31, 2021 (commencement date) through December 31, 2021, 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
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| Invesco® V.I. S&P 500 Buffer Fund - December |
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 period December 31, 2021 (commencement date) through December 31, 2021, 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, 2021. 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 | | | | | | | | | | | | | | | | |
|
| |
Money Market Funds | | | $2,500,025 | | | | $ – | | | | $– | | | | $2,500,025 | |
|
| |
Options Purchased | | | – | | | | 2,025,991 | | | | – | | | | 2,025,991 | |
|
| |
Total Investments in Securities | | | 2,500,025 | | | | 2,025,991 | | | | – | | | | 4,526,016 | |
|
| |
Other Investments - Liabilities* | | | | | | | | | | | | | | | | |
|
| |
Options Written | | | – | | | | (131,291 | ) | | | – | | | | (131,291 | ) |
|
| |
Total Investments | | | $2,500,025 | | | | $1,894,700 | | | | $– | | | | $4,394,725 | |
|
| |
| * | Options written are shown at value. |
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, 2021:
| | | | |
| | | Value | |
| Derivative Assets | | Equity Risk | |
|
| |
Options purchased, at value(a) | | $ | 2,025,991 | |
|
| |
Derivatives not subject to master netting agreements | | | (2,025,991 | ) |
|
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
|
| |
| | | | |
| | | Value | |
| Derivative Liabilities | | Equity Risk | |
|
| |
Options written, at value | | $ | (131,291 | ) |
|
| |
Derivatives not subject to master netting agreements | | | 131,291 | |
|
| |
Total Derivative Liabilities subject to master netting agreements | | $ | - | |
|
| |
| (a) | Options purchased, at value as reported in the Schedule of Investments. |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
The table below summarizes the average notional value of derivatives held for the period December 31, 2021 (commencement date) through December 31, 2021.
| | | | | | | | | | | | | | | | |
| | | Equity
Options
Purchased | | | Index
Options
Purchased | | | Equity
Options
Written | | | Index
Options
Written | |
Average notional value | | $ | 538,131 | | | $ | 1,472,751 | | | $ | 1,056,407 | | | $ | 2,891,163 | |
Average contracts | | | 22 | | | | 6 | | | | 22 | | | | 6 | |
NOTE 5–Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Obligations under the deferred compensation plan represent unsecured claims against the general assets of the Fund.
NOTE 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with 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
There were no ordinary income or long-term capital gain distributions paid during the period December 31, 2021 (commencement date) through December 31, 2021.
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Shares of beneficial interest | | | 1,999,955 | |
Total net assets | | $ | 1,999,955 | |
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, 2021.
NOTE 8–Investment Transactions
There were no securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased or sold by the Fund during the period December 31, 2021 (commencement date) through December 31, 2021. 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 | | $ | – | |
Aggregate unrealized (depreciation) of investments | | | – | |
Net unrealized appreciation (depreciation) of investments | | $ | – | |
Cost of investments for tax purposes is the same as the cost for financial reporting purposes.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of organizational expenses, on December 31, 2021, undistributed net investment income (loss) was increased by $45 and shares of beneficial interest was decreased by $45. This reclassification had no effect on the net assets of the Fund.
NOTE 10–Share Information
| | | | | | | | |
| | | Summary of Share Activity | |
|
| |
| | | December 31, 2021(a)(b) | |
| | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | |
Series I | | | 100,001 | | | | $1,000,010 | |
|
| |
Series II | | | 100,001 | | | | 1,000,010 | |
|
| |
| | |
Reacquired: | | | | | | | | |
Series I | | | (1) | | | | (10) | |
|
| |
Series II | | | (1) | | | | (10) | |
|
| |
Net increase in share activity | | | 200,000 | | | | $2,000,000 | |
|
| |
| (a) | Commencement date of December 31, 2021. |
| (b) | 100% of the outstanding shares of the Fund are owned by the Adviser or an affiliate of the Adviser. |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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 Buffer Fund - December
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 Buffer Fund - December (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2021, the related statements of operations and changes in net assets, including the related notes, and the financial highlights for the period December 31, 2021 (commencement date) through December 31, 2021 (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, 2021, the results of its operations, the changes in its net assets, and the financial highlights for the period December 31, 2021 (commencement date) through December 31, 2021 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 audit. 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 audit 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 audit 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 audit 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, 2021 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 audit provides a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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 Buffer Fund - December |
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 December 31, 2021 (commencement date) through December 31, 2021.
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 (December 31, 2021 (commencement date) through December 31, 2021). Because the actual ending account value and expense information in the example is not based upon a six month period, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month 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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period3 | | Annualized
Expense Ratio2 |
Series I | | $1,000.00 | | $1,000.00 | | $0.02 | | $1,021.68 | | $3.57 | | 0.70% |
Series II | | 1,000.00 | | 1,000.00 | | 0.03 | | 1,020.42 | | 4.84 | | 0.95 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period December 31, 2021 (commencement date) through December 31, 2021, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 1 (as of close of business December 31, 2021 (commencement date) through December 31, 2021)/365. Because the Fund has not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Fund and other funds because such data is based on a full six month period. |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
Approval of Investment Advisory and Sub-Advisory Contracts
Invesco V.I. S&P 500 Defined Outcome Funds and Invesco V.I. Nasdaq 100 Defined Outcome Fund (collectively, the Funds)
At a meeting held on August 2, 2021, the Board of Trustees (the Board or the Trustees) of AIM Variable Insurance Funds (Invesco Variable Insurance Funds) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved each Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with 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 contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts), effective September 30, 2021.
The Board noted that it had previously approved establishing each Fund at a Board meeting held on June 10, 2021.
In doing so, the Board followed a process similar to the process that it follows in annually reviewing and approving investment advisory agreements and sub-advisory contracts for the series portfolios of registered investment companies advised by Invesco Advisers (the Invesco Funds) and considered the information provided in the most recent annual review process, as well as the information provided with respect to the Funds. After evaluating the factors discussed below, among others, the Board: (i) approved the investment advisory agreement and the sub-advisory contracts for each Fund and determined that the compensation payable thereunder by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable and (ii) approved submission of the agreements to the initial shareholder of each Fund.
The Board’s Evaluation Process
The Board’s Investments Committee has established Sub-Committees, which meet throughout the year to review the performance of the Invesco Funds. The Funds will be assigned to one of the Sub-Committees. The Sub-Committees meet regularly with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds.
In evaluating the fairness and reasonableness of compensation under each Fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. The Board was assisted in its review by the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees, and by independent legal counsel. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single
determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.
The discussion below is a summary of the material factors and related conclusions that formed the basis for the Board’s approval of each Fund’s investment advisory agreement and sub-advisory contracts. This information is current as of August 2, 2021.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
| A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services to be provided to each Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who will provide these services, including the Fund’s portfolio managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, investment risk management and research capabilities. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds and will provide to each Fund, such as various back office support functions, third party service provider oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. The Board reviewed and considered the benefits to shareholders of investing in a Fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services to be provided to each Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided to each Fund by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which each Fund may invest, make recommendations regarding securities and assist with security trades. In particular, the Board noted that Invesco Asset Management Limited will assist Invesco Advisers with each Fund’s day-to-day portfolio management. The Board concluded that the sub-advisory contracts will benefit each Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
| B. | Fund Investment Performance |
The Board did not consider the performance of any Fund because the Funds are new and have no performance history. The Board did review performance expectations for each Fund as well as information provided regarding the experience of the portfolio managers in managing products with derivatives-based strategies. The Board noted that Invesco Asset Management Limited, an Affiliated Sub-Adviser, will assist Invesco Advisers with each Fund’s day-to-day portfolio management.
| C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board considered the proposed advisory fee schedule of each Fund and the proposed fee waivers and expense limitations. The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to each Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees are not paid directly by each Fund, but rather, are payable by Invesco Advisers to the Affiliated Sub-Advisers (as applicable).
The Board also considered comparative advisory fee data provided by Invesco Advisers with respect to comparable registered funds managed by other advisers. The Board noted that Invesco Advisers currently does not manage other mutual funds with investment strategies similar to those of the Funds. The Board noted that each Fund’s advisory fee is below the Morningstar “Options Trading” category median and average, and less than the advisory fees associated with other VIT “defined outcome” funds. The Board also considered comparative information regarding each Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers will contractually agree to waive fees and/or limit expenses of each Fund through at least April 30, 2023 (or, for the two “June” vintages of the Funds, through at least June 30, 2023) in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets of Series I and Series II shares of the Fund. The Board noted that Invesco Advisers will contractually agree to waive advisory fees of each Fund relating to certain investments by the Fund in affiliated money market funds through June 30, 2023.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts (as applicable). The Board noted that Invesco Advisers retains overall responsibility for, and provides services to, sub-advised Invesco Funds, including oversight of the Affiliated Sub-Advisers as well as the additional services described herein.
| D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to each Fund. The Board also considered that each Fund may benefit from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
reduce the Fund’s expense ratio as it grows in size. The Board noted that each Fund will share directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that each Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements. The Board also considered Invesco’s reinvestment in its business, including investments in business infrastructure, technology and cybersecurity.
| E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates will provide to each Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services in the aggregate and on an individual fund-by-fund basis. The Board considered the methodology used for calculating profitability and noted the periodic review and enhancement of such methodology. The Board noted that Invesco Advisers will continue to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds in the aggregate and to certain funds on an individual fund level. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing such services to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under each Fund’s investment advisory agreement and sub-advisory contracts.
| F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates from the relationship with each Fund, including the fees to be received for providing administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services will be provided to each Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of each Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in each Fund bearing costs to purchase research or brokerage services that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it will receive periodic reports from Invesco Advisers representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that each Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in registered money market funds or, with regard to securities lending cash collateral, unregistered funds that comply with Rule 2a-7 under the Investment Company Act of
1940, as amended (collectively referred to as “affiliated money market funds”), advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to each Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees to be received by Invesco Advisers from each Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for each Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
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| Invesco® V.I. S&P 500 Buffer Fund - December |
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 the period December 31, 2021 (commencement date) through December 31, 2021:
| | | | | | |
| Federal and State Income Tax | | | | | |
Qualified Dividend Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 0.00 | % |
Qualified Business Income* | | | 0.00 | % |
Business Interest Income* | | | 0.00 | % |
|
* The above percentages are based on ordinary income dividends paid to shareholders for the period December 31, 2021 (commencement date) through December 31, 2021. |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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) | | 186 | | 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 Buffer Fund - December |
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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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; 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
| Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco® V.I. S&P 500 Buffer Fund - December |
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; Vice President, Invesco Advisers, Inc.; 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. S&P 500 Buffer Fund - December |
| | | | |
| | |
| Annual Report to Shareholders | | | December 31, 2021 | |
Invesco V.I. Main Street Small Cap Fund®
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. Main Street Small Cap Fund® (the Fund) outperformed the Russell 2000 Index. | |
Your Fund’s long-term performance appears later in this report. | |
| |
Fund vs. Indexes | |
Total returns, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 22.55 | % |
Series II Shares | | | 22.26 | |
Russell 2000 Index▼ | | | 14.82 | |
| |
Source(s): ▼RIMES Technologies Corp. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally,
the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
During the fiscal year, stock selection in the industrials, health care and financials sectors were the largest contributors to the Fund’s performance versus its style-specific benchmark, the Russell 2000 Index. This was partially offset by weaker stock selection in the information technology, energy and materials sectors.
The largest individual contributors to the Fund’s performance relative to the style-specific benchmark during the fiscal year included Atkore, Zurn Water Solutions and Korn Ferry. Atkore benefited from strong price realization as PVC conduit industry-wide was in tight supply which drove earnings before interest, taxes, depreciation and amortization margins to a historically strong level. While some of the strength will likely prove unsustainable, management is demonstrating superior execution by being prepared to reap the benefits from a much stronger market than anyone anticipated, in our view.
Zurn Water Solutions, formerly known as Rexnord, outperformed after announcing and completing a spin-off of its Process and Motion Control Business with the remaining water infrastructure platform, now a stand-alone business.
Korn Ferry experienced a strong rebound in revenues, new business bookings and earnings. Furthermore, the company achieved greater revenue synergies between business units and many cost cuts made during COVID-19 (in areas such as real estate and administrative functions) will be permanent.
The largest individual detractors from the Fund’s performance relative to the style-specific benchmark during the fiscal year included LHC, Q2 Holdings and iRhythm Technologies. LHC was under pressure due to concerns about labor shortages in health care positions and that COVID-19 has caused a lack of referrals from skilled nursing facilities.
Q2’s business momentum for new business wins was adversely impacted by an elongation of sales cycles associated with COVID-19-related push-outs on decision making. We believe the company’s value proposition for banks embarking on digital transformation remains intact and the softness in new business wins was temporary.
iRhythm Technologies underperformed due to a surprise cut to Medicare reimbursement for its ambulatory cardiac monitor, which was announced in February 2021. The position was exited during the fiscal year.
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 V.I. Main Street Small Cap Fund®.
| 2 | Source: US Bureau of Economic Analysis |
| 3 | Source: US Bureau of Labor Statistics |
Portfolio manager(s):
Joy Budzinski
Kristin Ketner Pak
Magnus Krantz
Raman Vardharaj
Adam Weiner - Lead
Matthew P. Ziehl - Lead
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. 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 12/31/11
1 Source: RIMES Technologies Corp.
Past performance cannot guarantee
future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
Series I Shares | | | | |
Inception (5/1/98) | | | 9.42 | % |
10 Years | | | 14.69 | |
5 Years | | | 13.73 | |
1 Year | | | 22.55 | |
| |
Series II Shares | | | | |
Inception (7/16/01) | | | 10.21 | % |
10 Years | | | 14.40 | |
5 Years | | | 13.46 | |
1 Year | | | 22.26 | |
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® (renamed Invesco V.I. Main Street Small Cap Fund® on April 30, 2021). 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 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 V.I. Main Street Small Cap Fund® |
Supplemental Information
Invesco 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 V.I. Main Street Small Cap Fund® |
Fund Information
Portfolio Composition
| | | | | |
| By sector | | % of total net assets |
| |
Industrials | | | | 20.34 | % |
| |
Health Care | | | | 15.17 | |
| |
Financials | | | | 14.97 | |
| |
Information Technology | | | | 11.62 | |
| |
Consumer Discretionary | | | | 11.57 | |
| |
Materials | | | | 5.44 | |
| |
Consumer Staples | | | | 4.79 | |
| |
Real Estate | | | | 4.27 | |
| |
Utilities | | | | 4.04 | |
| |
Communication Services | | | | 3.82 | |
| |
Energy | | | | 2.27 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.70 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
1. | | Tenet Healthcare Corp. | | | | 2.08 | % |
| | |
2. | | Evoqua Water Technologies Corp. | | | | 1.96 | |
| | |
3. | | AutoNation, Inc. | | | | 1.88 | |
| | |
4. | | Ziff Davis, Inc. | | | | 1.87 | |
| | |
5. | | Azenta, Inc. | | | | 1.83 | |
| | |
6. | | Korn Ferry | | | | 1.83 | |
| | |
7. | | National Storage Affiliates Trust | | | | 1.81 | |
| | |
8. | | Stifel Financial Corp. | | | | 1.74 | |
| | |
9. | | ASGN, Inc. | | | | 1.72 | |
| | |
10. | | Sterling Bancorp | | | | 1.70 | |
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, 2021.
|
| Invesco V.I. Main Street Small Cap Fund® |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.30% | |
Aerospace & Defense–1.03% | | | | | | | | |
Curtiss-Wright Corp. | | | 64,431 | | | $ | 8,934,647 | |
|
| |
| | |
Air Freight & Logistics–0.76% | | | | | | | | |
Hub Group, Inc., Class A(b)(c) | | | 78,057 | | | | 6,575,522 | |
|
| |
| | |
Airlines–0.48% | | | | | | | | |
Spirit Airlines, Inc.(b)(c) | | | 188,856 | | | | 4,126,504 | |
|
| |
| | |
Alternative Carriers–0.95% | | | | | | | | |
EchoStar Corp., Class A(b) | | | 312,512 | | | | 8,234,691 | |
|
| |
| | |
Aluminum–0.98% | | | | | | | | |
Kaiser Aluminum Corp.(c) | | | 90,697 | | | | 8,520,076 | |
|
| |
| | |
Application Software–5.42% | | | | | | | | |
Bottomline Technologies (DE), Inc.(b) | | | 217,175 | | | | 12,263,872 | |
|
| |
Consensus Cloud Solutions, Inc.(b) | | | 77,880 | | | | 4,506,916 | |
|
| |
Envestnet, Inc.(b)(c) | | | 66,285 | | | | 5,259,052 | |
|
| |
Everbridge, Inc.(b) | | | 33,861 | | | | 2,279,861 | |
|
| |
Olo, Inc., Class A(b)(c) | | | 153,195 | | | | 3,187,988 | |
|
| |
Paycor HCM, Inc.(b)(c) | | | 260,667 | | | | 7,509,816 | |
|
| |
Q2 Holdings, Inc.(b) | | | 151,148 | | | | 12,007,197 | |
|
| |
| | | | | | | 47,014,702 | |
|
| |
|
Asset Management & Custody Banks–2.28% | |
Federated Hermes, Inc., Class B(c) | | | 230,337 | | | | 8,656,064 | |
|
| |
Focus Financial Partners, Inc.,
Class A(b) | | | 185,768 | | | | 11,094,065 | |
|
| |
| | | | | | | 19,750,129 | |
|
| |
| | |
Auto Parts & Equipment–2.46% | | | | | | | | |
Dorman Products, Inc.(b) | | | 99,570 | | | | 11,252,406 | |
|
| |
Visteon Corp.(b) | | | 91,071 | | | | 10,121,631 | |
|
| |
| | | | | | | 21,374,037 | |
|
| |
| | |
Automotive Retail–3.20% | | | | | | | | |
AutoNation, Inc.(b) | | | 139,557 | | | | 16,307,236 | |
|
| |
Monro, Inc.(c) | | | 196,668 | | | | 11,459,844 | |
|
| |
| | | | | | | 27,767,080 | |
|
| |
| | |
Biotechnology–1.41% | | | | | | | | |
ADC Therapeutics S.A.
(Switzerland)(b)(c) | | | 60,321 | | | | 1,218,484 | |
|
| |
Avid Bioservices, Inc.(b) | | | 221,705 | | | | 6,469,352 | |
|
| |
Twist Bioscience Corp.(b) | | | 58,937 | | | | 4,561,135 | |
|
| |
| | | | | | | 12,248,971 | |
|
| |
| | |
Building Products–2.42% | | | | | | | | |
Masonite International Corp.(b) | | | 81,131 | | | | 9,569,402 | |
|
| |
Zurn Water Solutions Corp. | | | 313,173 | | | | 11,399,497 | |
|
| |
| | | | | | | 20,968,899 | |
|
| |
| | |
Casinos & Gaming–0.52% | | | | | | | | |
Boyd Gaming Corp. | | | 68,852 | | | | 4,514,626 | |
|
| |
| | |
Construction & Engineering–1.62% | | | | | | | | |
Comfort Systems USA, Inc.(c) | | | 70,094 | | | | 6,935,100 | |
|
| |
Valmont Industries, Inc. | | | 28,588 | | | | 7,161,294 | |
|
| |
| | | | | | | 14,096,394 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Construction Machinery & Heavy Trucks–0.55% | |
Allison Transmission Holdings, Inc. | | | 131,537 | | | $ | 4,781,370 | |
|
| |
| | |
Construction Materials–1.55% | | | | | | | | |
Summit Materials, Inc., Class A(b) | | | 335,038 | | | | 13,448,425 | |
|
| |
|
Data Processing & Outsourced Services–0.53% | |
Paya Holdings, Inc., Class A(b)(c) | | | 731,591 | | | | 4,638,287 | |
|
| |
| | |
Diversified Banks–0.75% | | | | | | | | |
Bank of NT Butterfield & Son Ltd. (The) (Bermuda) | | | 170,739 | | | | 6,506,863 | |
|
| |
| | |
Diversified Metals & Mining–0.81% | | | | | | | | |
Compass Minerals International, Inc. | | | 138,321 | | | | 7,065,437 | |
|
| |
| |
Electrical Components & Equipment–3.42% | | | | | |
Atkore, Inc.(b) | | | 121,959 | | | | 13,560,621 | |
|
| |
EnerSys | | | 84,139 | | | | 6,652,030 | |
|
| |
Regal Rexnord Corp.(c) | | | 55,757 | | | | 9,488,726 | |
|
| |
| | | | | | | 29,701,377 | |
|
| |
| | |
Gas Utilities–2.75% | | | | | | | | |
National Fuel Gas Co. | | | 150,838 | | | | 9,644,582 | |
|
| |
Northwest Natural Holding Co. | | | 149,426 | | | | 7,289,000 | |
|
| |
Suburban Propane Partners L.P. | | | 473,982 | | | | 6,943,836 | |
|
| |
| | | | | | | 23,877,418 | |
|
| |
| | |
Health Care Equipment–4.07% | | | | | | | | |
AtriCure, Inc.(b) | | | 147,148 | | | | 10,231,200 | |
|
| |
CryoPort, Inc.(b)(c) | | | 149,972 | | | | 8,873,843 | |
|
| |
Heska Corp.(b)(c) | | | 35,350 | | | | 6,451,022 | |
|
| |
Tandem Diabetes Care, Inc.(b)(c) | | | 64,592 | | | | 9,722,388 | |
|
| |
| | | | | | | 35,278,453 | |
|
| |
| | |
Health Care Facilities–3.57% | | | | | | | | |
Acadia Healthcare Co., Inc.(b) | | | 212,783 | | | | 12,915,928 | |
|
| |
Tenet Healthcare Corp.(b) | | | 220,884 | | | | 18,044,014 | |
|
| |
| | | | | | | 30,959,942 | |
|
| |
| | |
Health Care Services–2.39% | | | | | | | | |
Addus HomeCare Corp.(b)(c) | | | 102,492 | | | | 9,584,027 | |
|
| |
LHC Group, Inc.(b) | | | 81,173 | | | | 11,139,371 | |
|
| |
| | | | | | | 20,723,398 | |
|
| |
| | |
Health Care Supplies–0.65% | | | | | | | | |
BioLife Solutions, Inc.(b)(c) | | | 152,075 | | | | 5,667,835 | |
|
| |
| | |
Health Care Technology–1.51% | | | | | | | | |
Inspire Medical Systems, Inc.(b) | | | 57,075 | | | | 13,130,674 | |
|
| |
| | |
Homebuilding–2.01% | | | | | | | | |
Skyline Champion Corp.(b) | | | 40,127 | | | | 3,169,230 | |
|
| |
TopBuild Corp.(b) | | | 51,859 | | | | 14,308,417 | |
|
| |
| | | | | | | 17,477,647 | |
|
| |
| | |
Hotel & Resort REITs–1.08% | | | | | | | | |
DiamondRock Hospitality Co.(b) | | | 976,033 | | | | 9,379,677 | |
|
| |
| | |
Household Products–0.76% | | | | | | | | |
Energizer Holdings, Inc. | | | 163,615 | | | | 6,560,962 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Small Cap Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Human Resource & Employment Services–3.54% | |
ASGN, Inc.(b) | | | 120,496 | | | $ | 14,869,207 | |
|
| |
Korn Ferry | | | 209,440 | | | | 15,860,891 | |
|
| |
| | | | | | | 30,730,098 | |
|
| |
|
Hypermarkets & Super Centers–1.47% | |
BJ’s Wholesale Club Holdings, Inc.(b) | | | 190,398 | | | | 12,750,954 | |
|
| |
|
Industrial Machinery–3.12% | |
EnPro Industries, Inc. | | | 91,025 | | | | 10,019,122 | |
|
| |
Evoqua Water Technologies Corp.(b) | | | 363,897 | | | | 17,012,184 | |
|
| |
| | | | | | | 27,031,306 | |
|
| |
|
Interactive Home Entertainment–1.00% | |
Zynga, Inc., Class A(b) | | | 1,350,245 | | | | 8,641,568 | |
|
| |
|
Interactive Media & Services–1.87% | |
Ziff Davis, Inc.(b)(c) | | | 146,487 | | | | 16,239,549 | |
|
| |
|
Internet & Direct Marketing Retail–0.65% | |
Overstock.com, Inc.(b) | | | 95,291 | | | | 5,623,122 | |
|
| |
|
Investment Banking & Brokerage–1.74% | |
Stifel Financial Corp.(c) | | | 214,438 | | | | 15,100,724 | |
|
| |
|
Leisure Facilities–0.81% | |
Cedar Fair L.P.(b) | | | 140,118 | | | | 7,014,307 | |
|
| |
|
Life Sciences Tools & Services–1.16% | |
Adaptive Biotechnologies Corp.(b) | | | 136,435 | | | | 3,828,366 | |
|
| |
NeoGenomics, Inc.(b)(c) | | | 182,411 | | | | 6,223,863 | |
|
| |
| | | | | | | 10,052,229 | |
|
| |
|
Metal & Glass Containers–0.72% | |
Silgan Holdings, Inc. | | | 145,947 | | | | 6,252,369 | |
|
| |
|
Multi-Utilities–1.29% | |
Avista Corp. | | | 263,092 | | | | 11,178,779 | |
|
| |
|
Office Services & Supplies–0.54% | |
ACCO Brands Corp. | | | 571,893 | | | | 4,723,836 | |
|
| |
|
Oil & Gas Equipment & Services–0.50% | |
NOV, Inc.(c) | | | 322,971 | | | | 4,376,257 | |
|
| |
|
Oil & Gas Exploration & Production–1.77% | |
Chesapeake Energy Corp.(c) | | | 119,247 | | | | 7,693,816 | |
|
| |
CNX Resources Corp.(b)(c) | | | 555,721 | | | | 7,641,164 | |
|
| |
| | | | | | | 15,334,980 | |
|
| |
|
Packaged Foods & Meats–1.42% | |
Simply Good Foods Co. (The)(b) | | | 295,745 | | | | 12,294,120 | |
|
| |
|
Personal Products–1.15% | |
BellRing Brands, Inc., Class A(b) | | | 349,307 | | | | 9,965,729 | |
|
| |
|
Pharmaceuticals–0.41% | |
Collegium Pharmaceutical, Inc.(b) | | | 191,482 | | | | 3,576,884 | |
|
| |
|
Property & Casualty Insurance-0.87% | |
Definity Financial Corp. (Canada)(b) | | | 324,841 | | | | 7,583,347 | |
|
| |
|
Regional Banks–7.83% | |
BankUnited, Inc.(c) | | | 235,828 | | | | 9,977,883 | |
|
| |
Berkshire Hills Bancorp, Inc.(c) | | | 194,886 | | | | 5,540,609 | |
|
| |
Cathay General Bancorp | | | 197,416 | | | | 8,486,914 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Regional Banks–(continued) | |
FB Financial Corp. | | | 105,435 | | | $ | 4,620,162 | |
|
| |
Heritage Financial Corp. | | | 203,143 | | | | 4,964,815 | |
|
| |
OceanFirst Financial Corp. | | | 249,520 | | | | 5,539,344 | |
|
| |
Pacific Premier Bancorp, Inc. | | | 245,483 | | | | 9,826,684 | |
|
| |
Silvergate Capital Corp., Class A(b) | | | 28,795 | | | | 4,267,419 | |
|
| |
Sterling Bancorp | | | 571,038 | | | | 14,727,070 | |
|
| |
| | | | | | | 67,950,900 | |
|
| |
|
Research & Consulting Services–2.86% | |
CACI International, Inc., Class A(b) | | | 41,379 | | | | 11,139,640 | |
|
| |
KBR, Inc.(c) | | | 287,180 | | | | 13,675,512 | |
|
| |
| | | | | | | 24,815,152 | |
|
| |
|
Restaurants–1.91% | |
Denny’s Corp.(b)(c) | | | 526,249 | | | | 8,419,984 | |
|
| |
Texas Roadhouse, Inc. | | | 91,704 | | | | 8,187,333 | |
|
| |
| | | | | | | 16,607,317 | |
|
| |
|
Semiconductor Equipment–3.02% | |
Azenta, Inc.(c) | | | 154,136 | | | | 15,892,963 | |
|
| |
MKS Instruments, Inc.(c) | | | 59,257 | | | | 10,320,792 | |
|
| |
| | | | | | | 26,213,755 | |
|
| |
|
Semiconductors–2.15% | |
Allegro MicroSystems, Inc. (Japan)(b) | | | 170,599 | | | | 6,172,272 | |
|
| |
Semtech Corp.(b) | | | 140,350 | | | | 12,481,325 | |
|
| |
| | | | | | | 18,653,597 | |
|
| |
|
Specialized REITs–3.19% | |
Four Corners Property Trust, Inc. | | | 408,232 | | | | 12,006,103 | |
|
| |
National Storage Affiliates Trust | | | 226,598 | | | | 15,680,582 | |
|
| |
| | | | | | | 27,686,685 | |
|
| |
|
Specialty Chemicals–1.38% | |
Amyris, Inc.(b)(c) | | | 427,133 | | | | 2,310,789 | |
|
| |
Diversey Holdings Ltd.(b)(c) | | | 378,501 | | | | 5,037,848 | |
|
| |
NewMarket Corp.(c) | | | 13,373 | | | | 4,583,195 | |
|
| |
| | | | | | | 11,931,832 | |
|
| |
|
Systems Software–0.49% | |
BlackBerry Ltd. (Canada)(b) | | | 458,649 | | | | 4,288,368 | |
|
| |
|
Thrifts & Mortgage Finance–1.51% | |
WSFS Financial Corp. | | | 260,561 | | | | 13,059,317 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $544,241,271) | | | | 853,001,124 | |
|
| |
|
Money Market Funds–1.85% | |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(d)(e) | | | 5,719,425 | | | | 5,719,425 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 3,797,192 | | | | 3,797,951 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 6,536,485 | | | | 6,536,485 | |
|
| |
Total Money Market Funds
(Cost $16,053,861) | | | | 16,053,861 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)-100.15%
(Cost $560,295,132) | | | | | | | 869,054,985 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Small Cap Fund® |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Investments Purchased with Cash Collateral from Securities on Loan | |
Money Market Funds–9.67% | | | | | | | | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 25,179,539 | | | $ | 25,179,539 | |
|
| |
Invesco Private Prime Fund,
0.11%(d)(e)(f) | | | 58,740,510 | | | | 58,752,256 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $83,932,322) | | | | 83,931,795 | |
|
| |
TOTAL INVESTMENTS IN
SECURITIES–109.82%
(Cost $644,227,454) | | | | 952,986,780 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(9.82)% | | | | (85,227,721 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 867,759,059 | |
|
| |
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 this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Change in | | | | | | | | | | |
| | | | | | | | | | | | Unrealized | | | Realized | | | | | | | |
| | | Value | | | Purchases | | | Proceeds | | | Appreciation | | | Gain | | | Value | | | | |
| | | December 31, 2020 | | | at Cost | | | from Sales | | | (Depreciation) | | | (Loss) | | | December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 1,875,710 | | | | $ 70,603,609 | | | | $ (66,759,894 | ) | | | $ - | | | | $ - | | | | $5,719,425 | | | | $ 1,029 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 1,339,636 | | | | 49,775,901 | | | | (47,317,327 | ) | | | 92 | | | | (351) | | | | 3,797,951 | | | | 369 | |
Invesco Treasury Portfolio, Institutional Class | | | 2,143,668 | | | | 80,689,839 | | | | (76,297,022 | ) | | | - | | | | - | | | | 6,536,485 | | | | 442 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | 2,231,743 | | | | 149,546,977 | | | | (126,599,181 | ) | | | - | | | | - | | | | 25,179,539 | | | | 2,246* | |
Invesco Private Prime Fund | | | 3,347,614 | | | | 279,190,039 | | | | (223,774,908 | ) | | | (527) | | | | (9,962) | | | | 58,752,256 | | | | 29,773* | |
Total | | | $10,938,371 | | | | $629,806,365 | | | | $(540,748,332 | ) | | | $(435) | | | | $(10,313) | | | | $99,985,656 | | | | $ 33,859 | |
| | * | 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, 2021. |
| (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 V.I. Main Street Small Cap Fund® |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
| |
Investments in unaffiliated securities, at value (Cost $ 544,241,271)* | | $ | 853,001,124 | |
Investments in affiliated money market funds, at value (Cost $ 99,986,183) | | | 99,985,656 | |
Cash | | | 104,338 | |
Receivable for: | | | | |
Fund shares sold | | | 725,868 | |
Dividends | | | 328,485 | |
Investment for trustee deferred compensation and retirement plans | | | 105,993 | |
Other assets | | | 3,296 | |
Total assets | | | 954,254,760 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 1,432,659 | |
Fund shares reacquired | | | 459,136 | |
Collateral upon return of securities loaned | | | 83,932,322 | |
Accrued fees to affiliates | | | 501,958 | |
Accrued other operating expenses | | | 63,633 | |
Trustee deferred compensation and retirement plans | | | 105,993 | |
Total liabilities | | | 86,495,701 | |
Net assets applicable to shares outstanding | | $ | 867,759,059 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 479,418,749 | |
Distributable earnings | | | 388,340,310 | |
| | | $ | 867,759,059 | |
| |
Net Assets: | | | | |
Series I | | $ | 158,060,165 | |
Series II | | $ | 709,698,894 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 5,022,306 | |
Series II | | | 23,019,661 | |
Series I: | | | | |
Net asset value per share | | $ | 31.47 | |
Series II: | | | | |
Net asset value per share | | $ | 30.83 | |
| * | At December 31, 2021, securities with an aggregate value of $81,375,130 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
| |
Dividends | | $ | 6,919,783 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $47,624) | | | 49,464 | |
|
| |
Total investment income | | | 6,969,247 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 5,784,124 | |
|
| |
Administrative services fees | | | 1,383,119 | |
|
| |
Custodian fees | | | 7,729 | |
|
| |
Distribution fees - Series II | | | 1,756,290 | |
|
| |
Transfer agent fees | | | 49,913 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 29,318 | |
|
| |
Professional services fees | | | 51,298 | |
|
| |
Other | | | (251,325 | ) |
|
| |
Total expenses | | | 8,810,466 | |
|
| |
Less: Fees waived | | | (305,668 | ) |
|
| |
Net expenses | | | 8,504,798 | |
|
| |
Net investment income (loss) | | | (1,535,551 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains from securities sold to affiliates of $6,166,991) | | | 91,700,132 | |
|
| |
Affiliated investment securities | | | (10,313 | ) |
|
| |
Foreign currencies | | | (2,463 | ) |
|
| |
| | | 91,687,356 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 74,780,487 | |
|
| |
Affiliated investment securities | | | (435 | ) |
|
| |
| | | 74,780,052 | |
|
| |
Net realized and unrealized gain | | | 166,467,408 | |
|
| |
Net increase in net assets resulting from operations | | $ | 164,931,857 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Small Cap Fund® |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (1,535,551 | ) | | $ | 1,268,260 | |
|
| |
Net realized gain | | | 91,687,356 | | | | 49,208,743 | |
|
| |
Change in net unrealized appreciation | | | 74,780,052 | | | | 81,826,822 | |
|
| |
Net increase in net assets resulting from operations | | | 164,931,857 | | | | 132,303,825 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (9,909,775 | ) | | | (1,994,674 | ) |
|
| |
Series II | | | (45,346,362 | ) | | | (9,921,357 | ) |
|
| |
Total distributions from distributable earnings | | | (55,256,137 | ) | | | (11,916,031 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | 21,710,271 | | | | (7,562,317 | ) |
|
| |
Series II | | | (33,389,733 | ) | | | (58,085,112 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (11,679,462 | ) | | | (65,647,429 | ) |
|
| |
Net increase in net assets | | | 97,996,258 | | | | 54,740,365 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 769,762,801 | | | | 715,022,436 | |
|
| |
End of year | | $ | 867,759,059 | | | $ | 769,762,801 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco 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 (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 12/31/21 | | | $27.42 | | | | $0.01 | | | | $6.19 | | | | $6.20 | | | | $(0.12 | ) | | | $(2.03 | ) | | | $(2.15 | ) | | | $31.47 | | | | 22.55 | % | | | $158,060 | | | | 0.80 | % | | | 0.84 | % | | | 0.03 | % | | | 32 | % |
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 | | | | 0.91 | | | | 0.41 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 26.91 | | | | (0.07 | ) | | | 6.08 | | | | 6.01 | | | | (0.06 | ) | | | (2.03 | ) | | | (2.09 | ) | | | 30.83 | | | | 22.26 | | | | 709,699 | | | | 1.05 | | | | 1.09 | | | | (0.22 | ) | | | 32 | |
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 | | | | 1.16 | | | | 0.16 | | | | 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 | |
| (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 and 2017, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Main Street Small Cap Fund® |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. Main Street Small Cap Fund®, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Main Street Small Cap 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.
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities
|
| Invesco V.I. Main Street Small Cap Fund® |
lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| L. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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 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”). Effective May 1, 2022, the Adviser has contractually agreed, through at least June 30, 2022, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $305,668.
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, 2021, Invesco was paid $118,345 for accounting and fund administrative services and was reimbursed $1,264,774 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, 2021, 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $1,602 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
|
| Invesco V.I. Main Street Small Cap Fund® |
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, 2021. 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 | | $ | 853,001,124 | | | $ | – | | | | $– | | | $ | 853,001,124 | |
Money Market Funds | | | 16,053,861 | | | | 83,931,795 | | | | – | | | | 99,985,656 | |
Total Investments | | $ | 869,054,985 | | | $ | 83,931,795 | | | | $– | | | $ | 952,986,780 | |
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, 2021, the Fund engaged in securities purchases of $776,123 and securities sales of $10,067,723, which resulted in net realized gains of $6,166,991.
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
Ordinary income* | | $ | 9,108,838 | | | | | | | $ | 2,600,095 | |
Long-term capital gain | | | 46,147,299 | | | | | | | | 9,315,936 | |
Total distributions | | $ | 55,256,137 | | | | | | | $ | 11,916,031 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | | $ 14,016,670 | |
|
| |
Undistributed long-term capital gain | | | 76,062,616 | |
|
| |
Net unrealized appreciation – investments | | | 307,767,240 | |
|
| |
Temporary book/tax differences | | | (9,506,216 | ) |
|
| |
Shares of beneficial interest | | | 479,418,749 | |
|
| |
Total net assets | | | $867,759,059 | |
|
| |
|
| Invesco V.I. Main Street Small Cap Fund® |
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 does not have a capital loss carryforward as of December 31, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $260,660,159 and $337,253,903, 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 | | $ | 340,961,286 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (33,194,046 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 307,767,240 | |
|
| |
Cost of investments for tax purposes is $645,219,540.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses and partnerships, on December 31, 2021, undistributed net investment income (loss) was decreased by $1,908,391, undistributed net realized gain was increased by $1,970,091 and shares of beneficial interest was decreased by $61,700. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,168,250 | | | $ | 37,302,772 | | | | 768,674 | | | $ | 16,458,610 | |
|
| |
Series II | | | 2,282,180 | | | | 70,992,182 | | | | 2,822,113 | | | | 51,901,552 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 312,217 | | | | 9,909,775 | | | | 85,498 | | | | 1,994,674 | |
|
| |
Series II | | | 1,457,614 | | | | 45,346,362 | | | | 433,058 | | | | 9,921,357 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (811,387 | ) | | | (25,502,276 | ) | | | (1,204,533 | ) | | | (26,015,601 | ) |
|
| |
Series II | | | (4,884,772 | ) | | | (149,728,277 | ) | | | (5,530,234 | ) | | | (119,908,021 | ) |
|
| |
Net increase (decrease) in share activity | | | (475,898 | ) | | $ | (11,679,462 | ) | | | (2,625,424 | ) | | $ | (65,647,429 | ) |
|
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 54% 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. |
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| Invesco 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 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer Main Street Small Cap Fund/VA (subsequently renamed Invesco V.I. Main Street Small Cap Fund®) 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,039.40 | | $4.11 | | $1,021.17 | | $4.08 | | 0.80% |
Series II | | 1,000.00 | | 1,038.20 | | 5.39 | | 1,019.91 | | 5.35 | | 1.05 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| Invesco 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 46,147,299 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 68.94 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 0.00 | % | | | | |
|
| * The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| Invesco 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| Invesco 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP_ | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco 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; Vice President, Invesco Advisers, Inc.; 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. Atlanta, GA 30309 | | 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 | | 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 | | 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. Main Street Small Cap Fund® |
| | |
Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. S&P 500 Index Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
Series I Shares | | | 28.27 | % |
Series II Shares | | | 27.90 | |
S&P 500 Indexq (Broad Market/Style-Specific Index) | | | 28.71 | |
Lipper VUF S&P 500 Funds Index∎ (Peer Group Index) | | | 28.03 | |
Source(s): qRIMES Technologies Corp.; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and labor shortages intensified during the quarter,
resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
The Invesco V.I. 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 fiscal year, all sectors contributed to the Fund’s overall performance. The information technology sector was the largest contributor, followed by the financials and health care sectors, respectively.
Leading contributors to the Fund’s performance for the fiscal year included Microsoft, Apple, and NVIDIA. Microsoft and Apple repeatedly delivered strong earnings and increased revenue growth during the year. The top detractor from the Fund’s performance was Walt Disney. The stock’s negative return was associated with earnings results missing analyst estimates and underwhelming subscriber growth to its Disney+ platform in the fourth quarter of 2021. Another detractor from Fund performance was PayPal. Paypal’s stock suffered in 2021 as revenue growth slowed and margins narrowed due to rising expenses.
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 fiscal 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, we believe 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.
| 2 | Source: US Bureau of Economic Analysis |
| 3 | Source: US Bureau of Labor Statistics |
Portfolio manager(s):
Pratik Doshi
Peter Hubbard
Michael Jeanette
Tony Seisser
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/11
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
| Series I Shares | | | | |
| Inception (5/18/98) | | | 8.03 | % |
| 10 Years | | | 16.11 | |
| 5 Years | | | 17.99 | |
| 1 Year | | | 28.27 | |
| |
| Series II Shares | | | | |
| Inception (6/5/00) | | | 7.04 | % |
| 10 Years | | | 15.82 | |
| 5 Years | | | 17.70 | |
| 1 Year | | | 27.90 | |
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, 2021, and is based on total net assets. |
| | ∎ | | Unless otherwise noted, all data is 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 | | | 28.92% | |
Health Care | | | 13.16 | |
Consumer Discretionary | | | 12.45 | |
Financials | | | 10.61 | |
Communication Services | | | 10.05 | |
Industrials | | | 7.74 | |
Consumer Staples | | | 5.82 | |
Real Estate | | | 2.74 | |
Energy | | | 2.65 | |
Materials | | | 2.56 | |
Utilities | | | 2.47 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 0.83 | |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
| 1. | | Apple, Inc. | | 6.80% |
| 2. | | Microsoft Corp. | | 6.21 |
| 3. | | Amazon.com, Inc. | | 3.57 |
| 4. | | Alphabet, Inc., Class A | | 2.14 |
| 5. | | Tesla, Inc. | | 2.11 |
| 6. | | Alphabet, Inc., Class C | | 1.99 |
| 7. | | Meta Platforms, Inc., Class A | | 1.96 |
| 8. | | NVIDIA Corp. | | 1.81 |
| 9. | | .Berkshire Hathaway, Inc., Class B | | 1.35 |
| 10. | | UnitedHealth Group, Inc. | | 1.16 |
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, 2021.
Invesco V.I. S&P 500 Index Fund
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.17% | |
| Advertising–0.08% | |
Interpublic Group of Cos., Inc. (The) | | | 1,033 | | | $ | 38,686 | |
| |
Omnicom Group, Inc. | | | 548 | | | | 40,152 | |
| |
| | | | | | | 78,838 | |
| |
|
| Aerospace & Defense–1.34% | |
Boeing Co. (The)(b) | | | 1,376 | | | | 277,016 | |
| |
General Dynamics Corp. | | | 582 | | | | 121,330 | |
| |
Howmet Aerospace, Inc. | | | 988 | | | | 31,448 | |
| |
Huntington Ingalls Industries, Inc. | | | 103 | | | | 19,234 | |
| |
L3Harris Technologies, Inc. | | | 504 | | | | 107,473 | |
| |
Lockheed Martin Corp. | | | 619 | | | | 219,999 | |
| |
Northrop Grumman Corp. | | | 378 | | | | 146,312 | |
| |
Raytheon Technologies Corp. | | | 3,792 | | | | 326,339 | |
| |
Textron, Inc. | | | 574 | | | | 44,313 | |
| |
TransDigm Group, Inc.(b) | | | 131 | | | | 83,353 | |
| |
| | | | | | | 1,376,817 | |
| |
|
| Agricultural & Farm Machinery–0.24% | |
Deere & Co. | | | 713 | | | | 244,481 | |
| |
|
| Agricultural Products–0.09% | |
Archer-Daniels-Midland Co. | | | 1,428 | | | | 96,518 | |
| |
|
| Air Freight & Logistics–0.63% | |
C.H. Robinson Worldwide, Inc. | | | 337 | | | | 36,272 | |
| |
Expeditors International of Washington, Inc. | | | 435 | | | | 58,416 | |
| |
FedEx Corp. | | | 611 | | | | 158,029 | |
| |
United Parcel Service, Inc., Class B | | | 1,827 | | | | 391,599 | |
| |
| | | | | | | 644,316 | |
| |
|
| Airlines–0.21% | |
Alaska Air Group, Inc.(b) | | | 340 | | | | 17,714 | |
| |
American Airlines Group, Inc.(b) | | | 1,688 | | | | 30,316 | |
| |
Delta Air Lines, Inc.(b) | | | 1,638 | | | | 64,013 | |
| |
Southwest Airlines Co.(b) | | | 1,514 | | | | 64,860 | |
| |
United Airlines Holdings, Inc.(b) | | | 842 | | | | 36,863 | |
| |
| | | | | | | 213,766 | |
| |
|
| Alternative Carriers–0.03% | |
Lumen Technologies, Inc. | | | 2,327 | | | | 29,204 | |
| |
|
| Apparel Retail–0.33% | |
Gap, Inc. (The) | | | 564 | | | | 9,955 | |
| |
Ross Stores, Inc. | | | 898 | | | | 102,623 | |
| |
TJX Cos., Inc. (The) | | | 3,030 | | | | 230,038 | |
| |
| | | | | | | 342,616 | |
| |
|
| Apparel, Accessories & Luxury Goods–0.14% | |
PVH Corp. | | | 182 | | | | 19,410 | |
| |
Ralph Lauren Corp. | | | 133 | | | | 15,809 | |
| |
Tapestry, Inc. | | | 714 | | | | 28,989 | |
| |
Under Armour, Inc., Class A(b) | | | 517 | | | | 10,955 | |
| |
Under Armour, Inc., Class C(b) | | | 534 | | | | 9,633 | |
| |
VF Corp. | | | 850 | | | | 62,237 | |
| |
| | | | | | | 147,033 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Application Software–2.42% | |
Adobe, Inc.(b) | | | 1,195 | | | $ | 677,637 | |
| |
ANSYS, Inc.(b) | | | 223 | | | | 89,450 | |
| |
Autodesk, Inc.(b) | | | 550 | | | | 154,654 | |
| |
Cadence Design Systems, Inc.(b) | | | 694 | | | | 129,327 | |
| |
Ceridian HCM Holding, Inc.(b) | | | 345 | | | | 36,039 | |
| |
Citrix Systems, Inc. | | | 324 | | | | 30,647 | |
| |
Intuit, Inc. | | | 713 | | | | 458,616 | |
| |
Paycom Software, Inc.(b) | | | 123 | | | | 51,068 | |
| |
PTC, Inc.(b) | | | 278 | | | | 33,680 | |
| |
salesforce.com, inc.(b) | | | 2,472 | | | | 628,209 | |
| |
Synopsys, Inc.(b) | | | 383 | | | | 141,135 | |
| |
Tyler Technologies, Inc.(b) | | | 107 | | | | 57,561 | |
| |
| | | | | | | 2,488,023 | |
| |
|
| Asset Management & Custody Banks–0.81% | |
Ameriprise Financial, Inc. | | | 291 | | | | 87,783 | |
| |
Bank of New York Mellon Corp. (The) | | | 1,919 | | | | 111,456 | |
| |
BlackRock, Inc. | | | 359 | | | | 328,686 | |
| |
Franklin Resources, Inc. | | | 708 | | | | 23,711 | |
| |
Invesco Ltd.(c) | | | 874 | | | | 20,119 | |
| |
Northern Trust Corp. | | | 534 | | | | 63,872 | |
| |
State Street Corp. | | | 879 | | | | 81,747 | |
| |
T. Rowe Price Group, Inc. | | | 568 | | | | 111,691 | |
| |
| | | | | | | 829,065 | |
| |
|
| Auto Parts & Equipment–0.14% | |
Aptiv PLC(b) | | | 680 | | | | 112,166 | |
| |
BorgWarner, Inc. | | | 625 | | | | 28,169 | |
| |
| | | | | | | 140,335 | |
| |
|
| Automobile Manufacturers–2.52% | |
Ford Motor Co. | | | 9,864 | | | | 204,875 | |
| |
General Motors Co.(b) | | | 3,642 | | | | 213,531 | |
| |
Tesla, Inc.(b) | | | 2,054 | | | | 2,170,626 | |
| |
| | | | | | | 2,589,032 | |
| |
|
| Automotive Retail–0.32% | |
Advance Auto Parts, Inc. | | | 159 | | | | 38,141 | |
| |
AutoZone, Inc.(b) | | | 53 | | | | 111,109 | |
| |
CarMax, Inc.(b) | | | 417 | | | | 54,306 | |
| |
O’Reilly Automotive, Inc.(b) | | | 171 | | | | 120,765 | |
| |
| | | | | | | 324,321 | |
| |
|
| Biotechnology–1.76% | |
AbbVie, Inc.(d) | | | 4,465 | | | | 604,561 | |
| |
Amgen, Inc. | | | 1,425 | | | | 320,582 | |
| |
Biogen, Inc.(b) | | | 375 | | | | 89,970 | |
| |
Gilead Sciences, Inc. | | | 3,139 | | | | 227,923 | |
| |
Incyte Corp.(b) | | | 493 | | | | 36,186 | |
| |
Moderna, Inc.(b) | | | 880 | | | | 223,502 | |
| |
Regeneron Pharmaceuticals, Inc.(b) | | | 263 | | | | 166,090 | |
| |
Vertex Pharmaceuticals, Inc.(b) | | | 648 | | | | 142,301 | |
| |
| | | | | | | 1,811,115 | |
| |
|
| Brewers–0.02% | |
Molson Coors Beverage Co., Class B | | | 482 | | | | 22,341 | |
| |
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 | |
|
| Broadcasting–0.11% | |
Discovery, Inc., Class A(b) | | | 446 | | | $ | 10,499 | |
| |
Discovery, Inc., Class C(b) | | | 794 | | | | 18,182 | |
| |
Fox Corp., Class A | | | 813 | | | | 30,000 | |
| |
Fox Corp., Class B | | | 380 | | | | 13,023 | |
| |
ViacomCBS, Inc., Class B | | | 1,550 | | | | 46,779 | |
| |
| | | | | | | 118,483 | |
| |
|
| Building Products–0.51% | |
A.O. Smith Corp. | | | 354 | | | | 30,391 | |
| |
Allegion PLC | | | 230 | | | | 30,461 | |
| |
Carrier Global Corp. | | | 2,177 | | | | 118,080 | |
| |
Fortune Brands Home & Security, Inc. | | | 353 | | | | 37,736 | |
| |
Johnson Controls International PLC | | | 1,794 | | | | 145,870 | |
| |
Masco Corp. | | | 621 | | | | 43,607 | |
| |
Trane Technologies PLC | | | 602 | | | | 121,622 | |
| |
| | | | | | | 527,767 | |
| |
|
| Cable & Satellite–0.78% | |
Charter Communications, Inc., Class A(b) | | | 312 | | | | 203,415 | |
| |
Comcast Corp., Class A | | | 11,477 | | | | 577,637 | |
| |
DISH Network Corp., Class A(b) | | | 650 | | | | 21,086 | |
| |
| | | | | | | 802,138 | |
| |
|
| Casinos & Gaming–0.17% | |
Caesars Entertainment, Inc.(b) | | | 550 | | | | 51,442 | |
| |
Las Vegas Sands Corp.(b) | | | 869 | | | | 32,709 | |
| |
MGM Resorts International | | | 1,024 | | | | 45,957 | |
| |
Penn National Gaming, Inc.(b) | | | 408 | | | | 21,155 | |
| |
Wynn Resorts Ltd.(b) | | | 275 | | | | 23,386 | |
| |
| | | | | | | 174,649 | |
| |
|
| Commodity Chemicals–0.16% | |
Dow, Inc. | | | 1,881 | | | | 106,690 | |
| |
LyondellBasell Industries N.V., Class A | | | 681 | | | | 62,809 | |
| |
| | | | | | | 169,499 | |
| |
|
| Communications Equipment–0.92% | |
Arista Networks, Inc.(b) | | | 580 | | | | 83,375 | |
| |
Cisco Systems, Inc. | | | 10,651 | | | | 674,954 | |
| |
F5, Inc.(b) | | | 155 | | | | 37,930 | |
| |
Juniper Networks, Inc. | | | 832 | | | | 29,710 | |
| |
Motorola Solutions, Inc. | | | 427 | | | | 116,016 | |
| |
| | | | | | | 941,985 | |
| |
|
| Computer & Electronics Retail–0.05% | |
Best Buy Co., Inc. | | | 559 | | | | 56,794 | |
| |
|
| Construction & Engineering–0.04% | |
Quanta Services, Inc. | | | 366 | | | | 41,966 | |
| |
|
| Construction Machinery & Heavy Trucks–0.47% | |
Caterpillar, Inc. | | | 1,371 | | | | 283,440 | |
| |
Cummins, Inc. | | | 361 | | | | 78,749 | |
| |
PACCAR, Inc. | | | 889 | | | | 78,463 | |
| |
Wabtec Corp. | | | 469 | | | | 43,200 | |
| |
| | | | | | | 483,852 | |
| |
|
| Construction Materials–0.14% | |
Martin Marietta Materials, Inc. | | | 160 | | | | 70,483 | |
| |
Vulcan Materials Co. | | | 339 | | | | 70,370 | |
| |
| | | | | | | 140,853 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Consumer Electronics–0.05% | |
Garmin Ltd. | | | 396 | | | $ | 53,923 | |
| |
|
| Consumer Finance–0.55% | |
American Express Co. | | | 1,584 | | | | 259,142 | |
| |
Capital One Financial Corp. | | | 1,075 | | | | 155,972 | |
| |
Discover Financial Services | | | 740 | | | | 85,514 | |
| |
Synchrony Financial | | | 1,382 | | | | 64,111 | |
| |
| | | | | | | 564,739 | |
| |
|
| Copper–0.15% | |
Freeport-McMoRan, Inc. | | | 3,682 | | | | 153,650 | |
| |
|
| Data Processing & Outsourced Services–3.10% | |
Automatic Data Processing, Inc. | | | 1,065 | | | | 262,608 | |
| |
Broadridge Financial Solutions, Inc. | | | 297 | | | | 54,297 | |
| |
Fidelity National Information Services, Inc. | | | 1,552 | | | | 169,401 | |
| |
Fiserv, Inc.(b) | | | 1,496 | | | | 155,270 | |
| |
FleetCor Technologies, Inc.(b) | | | 211 | | | | 47,230 | |
| |
Global Payments, Inc. | | | 739 | | | | 99,898 | |
| |
Jack Henry & Associates, Inc. | | | 190 | | | | 31,728 | |
| |
Mastercard, Inc., Class A | | | 2,186 | | | | 785,473 | |
| |
Paychex, Inc. | | | 820 | | | | 111,930 | |
| |
PayPal Holdings, Inc.(b) | | | 2,948 | | | | 555,934 | |
| |
Visa, Inc., Class A | | | 4,236 | | | | 917,984 | |
| |
| | | | | | | 3,191,753 | |
| |
|
| Distillers & Vintners–0.14% | |
Brown-Forman Corp., Class B | | | 482 | | | | 35,119 | |
| |
Constellation Brands, Inc., Class A | | | 424 | | | | 106,411 | |
| |
| | | | | | | 141,530 | |
| |
|
| Distributors–0.15% | |
Genuine Parts Co. | | | 367 | | | | 51,453 | |
| |
LKQ Corp. | | | 692 | | | | 41,541 | |
| |
Pool Corp. | | | 103 | | | | 58,298 | |
| |
| | | | | | | 151,292 | |
| |
|
| Diversified Banks–2.89% | |
Bank of America Corp. | | | 18,188 | | | | 809,184 | |
| |
Citigroup, Inc. | | | 5,011 | | | | 302,614 | |
| |
JPMorgan Chase & Co. | | | 7,463 | | | | 1,181,766 | |
| |
U.S. Bancorp | | | 3,393 | | | | 190,585 | |
| |
Wells Fargo & Co. | | | 10,070 | | | | 483,159 | |
| |
| | | | | | | 2,967,308 | |
| |
|
| Diversified Support Services–0.18% | |
Cintas Corp. | | | 226 | | | | 100,156 | |
| |
Copart, Inc.(b) | | | 550 | | | | 83,391 | |
| |
| | | | | | | 183,547 | |
| |
|
| Drug Retail–0.09% | |
Walgreens Boots Alliance, Inc. | | | 1,835 | | | | 95,714 | |
| |
|
| Electric Utilities–1.59% | |
Alliant Energy Corp. | | | 640 | | | | 39,341 | |
| |
American Electric Power Co., Inc. | | | 1,255 | | | | 111,657 | |
| |
Duke Energy Corp. | | | 1,924 | | | | 201,828 | |
| |
Edison International | | | 971 | | | | 66,271 | |
| |
Entergy Corp. | | | 514 | | | | 57,902 | |
| |
Evergy, Inc. | | | 600 | | | | 41,166 | |
| |
Eversource Energy | | | 874 | | | | 79,517 | |
| |
Exelon Corp. | | | 2,453 | | | | 141,685 | |
| |
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–(continued) | |
FirstEnergy Corp. | | | 1,393 | | | $ | 57,935 | |
| |
NextEra Energy, Inc. | | | 4,910 | | | | 458,398 | |
| |
NRG Energy, Inc. | | | 626 | | | | 26,968 | |
| |
Pinnacle West Capital Corp. | | | 289 | | | | 20,401 | |
| |
PPL Corp. | | | 1,970 | | | | 59,218 | |
| |
Southern Co. (The) | | | 2,649 | | | | 181,668 | |
| |
Xcel Energy, Inc. | | | 1,385 | | | | 93,764 | |
| |
| | | | | | | 1,637,719 | |
| |
|
| Electrical Components & Equipment–0.54% | |
AMETEK, Inc. | | | 588 | | | | 86,460 | |
| |
Eaton Corp. PLC | | | 1,000 | | | | 172,820 | |
| |
Emerson Electric Co. | | | 1,502 | | | | 139,641 | |
| |
Generac Holdings, Inc.(b) | | | 160 | | | | 56,307 | |
| |
Rockwell Automation, Inc. | | | 290 | | | | 101,166 | |
| |
| | | | | | | 556,394 | |
| |
|
| Electronic Components–0.20% | |
Amphenol Corp., Class A | | | 1,496 | | | | 130,840 | |
| |
Corning, Inc. | | | 1,968 | | | | 73,269 | |
| |
| | | | | | | 204,109 | |
| |
|
| Electronic Equipment & Instruments–0.28% | |
Keysight Technologies, Inc.(b) | | | 471 | | | | 97,266 | |
| |
Teledyne Technologies, Inc.(b) | | | 121 | | | | 52,864 | |
| |
Trimble, Inc.(b) | | | 644 | | | | 56,150 | |
| |
Zebra Technologies Corp., Class A(b) | | | 136 | | | | 80,947 | |
| |
| | | | | | | 287,227 | |
| |
|
| Electronic Manufacturing Services–0.15% | |
IPG Photonics Corp.(b) | | | 99 | | | | 17,042 | |
TE Connectivity Ltd. | | | 826 | | | | 133,267 | |
| |
| | | | | | | 150,309 | |
| |
|
| Environmental & Facilities Services–0.25% | |
Republic Services, Inc. | | | 538 | | | | 75,024 | |
| |
Rollins, Inc. | | | 575 | | | | 19,671 | |
| |
Waste Management, Inc. | | | 973 | | | | 162,394 | |
| |
| | | | | | | 257,089 | |
| |
|
| Fertilizers & Agricultural Chemicals–0.20% | |
CF Industries Holdings, Inc. | | | 559 | | | | 39,566 | |
| |
Corteva, Inc. | | | 1,879 | | | | 88,839 | |
| |
FMC Corp. | | | 340 | | | | 37,363 | |
| |
Mosaic Co. (The) | | | 905 | | | | 35,557 | |
| |
| | | | | | | 201,325 | |
| |
|
| Financial Exchanges & Data–1.12% | |
Cboe Global Markets, Inc. | | | 273 | | | | 35,599 | |
| |
CME Group, Inc., Class A | | | 898 | | | | 205,157 | |
| |
FactSet Research Systems, Inc. | | | 95 | | | | 46,171 | |
| |
Intercontinental Exchange, Inc. | | | 1,409 | | | | 192,709 | |
| |
MarketAxess Holdings, Inc. | | | 98 | | | | 40,304 | |
| |
Moody’s Corp. | | | 406 | | | | 158,576 | |
| |
MSCI, Inc. | | | 206 | | | | 126,214 | |
| |
Nasdaq, Inc. | | | 305 | | | | 64,053 | |
| |
S&P Global, Inc. | | | 603 | | | | 284,574 | |
| |
| | | | | | | 1,153,357 | |
| |
|
| Food Distributors–0.10% | |
Sysco Corp. | | | 1,289 | | | | 101,251 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Food Retail–0.08% | |
Kroger Co. (The) | | | 1,741 | | | $ | 78,798 | |
| |
|
| Footwear–0.52% | |
NIKE, Inc., Class B | | | 3,207 | | | | 534,511 | |
| |
|
| Gas Utilities–0.03% | |
Atmos Energy Corp. | | | 339 | | | | 35,517 | |
| |
|
| General Merchandise Stores–0.49% | |
Dollar General Corp. | | | 591 | | | | 139,376 | |
| |
Dollar Tree, Inc.(b) | | | 568 | | | | 79,815 | |
| |
Target Corp. | | | 1,238 | | | | 286,523 | |
| |
| | | | | | | 505,714 | |
| |
|
| Gold–0.12% | |
Newmont Corp. | | | 2,005 | | | | 124,350 | |
| |
|
| Health Care Distributors–0.21% | |
AmerisourceBergen Corp. | | | 389 | | | | 51,694 | |
| |
Cardinal Health, Inc. | | | 718 | | | | 36,970 | |
| |
Henry Schein, Inc.(b) | | | 373 | | | | 28,919 | |
| |
McKesson Corp. | | | 395 | | | | 98,185 | |
| |
| | | | | | | 215,768 | |
| |
|
| Health Care Equipment–2.72% | |
Abbott Laboratories | | | 4,447 | | | | 625,871 | |
| |
ABIOMED, Inc.(b) | | | 119 | | | | 42,741 | |
| |
Baxter International, Inc. | | | 1,284 | | | | 110,219 | |
| |
Becton, Dickinson and Co. | | | 721 | | | | 181,317 | |
| |
Boston Scientific Corp.(b) | | | 3,572 | | | | 151,739 | |
| |
DexCom, Inc.(b) | | | 243 | | | | 130,479 | |
| |
Edwards Lifesciences Corp.(b) | | | 1,556 | | | | 201,580 | |
| |
Hologic, Inc.(b) | | | 649 | | | | 49,687 | |
| |
IDEXX Laboratories, Inc.(b) | | | 214 | | | | 140,911 | |
| |
Intuitive Surgical, Inc.(b) | | | 897 | | | | 322,292 | |
| |
Medtronic PLC | | | 3,367 | | | | 348,316 | |
| |
ResMed, Inc. | | | 373 | | | | 97,159 | |
| |
STERIS PLC | | | 257 | | | | 62,556 | |
| |
Stryker Corp. | | | 842 | | | | 225,168 | |
| |
Teleflex, Inc. | | | 119 | | | | 39,089 | |
| |
Zimmer Biomet Holdings, Inc. | | | 535 | | | | 67,966 | |
| |
| | | | | | | 2,797,090 | |
| |
|
| Health Care Facilities–0.18% | |
HCA Healthcare, Inc. | | | 605 | | | | 155,437 | |
| |
Universal Health Services, Inc., Class B | | | 194 | | | | 25,154 | |
| |
| | | | | | | 180,591 | |
| |
|
| Health Care REITs–0.19% | |
Healthpeak Properties, Inc. | | | 1,380 | | | | 49,804 | |
| |
Ventas, Inc. | | | 991 | | | | 50,660 | |
| |
Welltower, Inc. | | | 1,069 | | | | 91,688 | |
| |
| | | | | | | 192,152 | |
| |
|
| Health Care Services–0.66% | |
Cigna Corp. | | | 837 | | | | 192,200 | |
| |
CVS Health Corp. | | | 3,297 | | | | 340,119 | |
| |
DaVita, Inc.(b) | | | 168 | | | | 19,112 | |
| |
Laboratory Corp. of America Holdings(b) | | | 248 | | | | 77,924 | |
| |
Quest Diagnostics, Inc. | | | 313 | | | | 54,152 | |
| |
| | | | | | | 683,507 | |
| |
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 Supplies–0.20% | |
Align Technology, Inc.(b) | | | 184 | | | $ | 120,921 | |
| |
Cooper Cos., Inc. (The) | | | 126 | | | | 52,786 | |
| |
DENTSPLY SIRONA, Inc. | | | 559 | | | | 31,187 | |
| |
| | | | | | | 204,894 | |
| |
|
| Health Care Technology–0.07% | |
Cerner Corp. | | | 756 | | | | 70,210 | |
| |
|
| Home Furnishings–0.03% | |
Mohawk Industries, Inc.(b) | | | 143 | | | | 26,052 | |
| |
|
| Home Improvement Retail–1.52% | |
Home Depot, Inc. (The) | | | 2,668 | | | | 1,107,247 | |
| |
Lowe’s Cos., Inc. | | | 1,749 | | | | 452,081 | |
| |
| | | | | | | 1,559,328 | |
| |
|
| Homebuilding–0.25% | |
D.R. Horton, Inc. | | | 834 | | | | 90,447 | |
| |
Lennar Corp., Class A | | | 703 | | | | 81,661 | |
| |
NVR, Inc.(b) | | | 8 | | | | 47,271 | |
| |
PulteGroup, Inc. | | | 664 | | | | 37,954 | |
| |
| | | | | | | 257,333 | |
| |
|
| Hotel & Resort REITs–0.03% | |
Host Hotels & Resorts, Inc.(b) | | | 1,852 | | | | 32,206 | |
| |
|
| Hotels, Resorts & Cruise Lines–0.63% | |
Booking Holdings, Inc.(b) | | | 104 | | | | 249,520 | |
| |
Carnival Corp.(b) | | | 2,043 | | | | 41,105 | |
| |
Expedia Group, Inc.(b) | | | 367 | | | | 66,324 | |
| |
Hilton Worldwide Holdings, Inc.(b) | | | 701 | | | | 109,349 | |
| |
Marriott International, Inc., Class A(b) | | | 686 | | | | 113,355 | |
| |
Norwegian Cruise Line Holdings Ltd.(b) | | | 947 | | | | 19,641 | |
| |
Royal Caribbean Cruises Ltd.(b) | | | 578 | | | | 44,448 | |
| |
| | | | | | | 643,742 | |
| |
|
| Household Appliances–0.03% | |
Whirlpool Corp. | | | 153 | | | | 35,903 | |
| |
|
| Household Products–1.38% | |
Church & Dwight Co., Inc. | | | 628 | | | | 64,370 | |
| |
Clorox Co. (The) | | | 315 | | | | 54,923 | |
| |
Colgate-Palmolive Co. | | | 2,118 | | | | 180,750 | |
| |
Kimberly-Clark Corp. | | | 844 | | | | 120,625 | |
| |
Procter & Gamble Co. (The) | | | 6,091 | | | | 996,366 | |
| |
| | | | | | | 1,417,034 | |
| |
|
| Housewares & Specialties–0.02% | |
Newell Brands, Inc. | | | 968 | | | | 21,141 | |
| |
|
| Human Resource & Employment Services–0.03% | |
Robert Half International, Inc. | | | 287 | | | | 32,006 | |
| |
|
| Hypermarkets & Super Centers–1.12% | |
Costco Wholesale Corp. | | | 1,116 | | | | 633,553 | |
Walmart, Inc. | | | 3,586 | | | | 518,858 | |
| |
| | | | | | | 1,152,411 | |
| |
|
| Independent Power Producers & Energy Traders–0.04% | |
AES Corp. (The) | | | 1,705 | | | | 41,431 | |
| |
|
| Industrial Conglomerates–0.98% | |
3M Co. | | | 1,450 | | | | 257,564 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
| Industrial Conglomerates–(continued) | |
General Electric Co. | | | 2,747 | | | $ | 259,509 | |
| |
Honeywell International, Inc. | | | 1,738 | | | | 362,390 | |
| |
Roper Technologies, Inc. | | | 265 | | | | 130,343 | |
| |
| | | | | | | 1,009,806 | |
| |
|
| Industrial Gases–0.60% | |
Air Products and Chemicals, Inc. | | | 554 | | | | 168,560 | |
| |
Linde PLC (United Kingdom) | | | 1,296 | | | | 448,973 | |
| |
| | | | | | | 617,533 | |
| |
|
| Industrial Machinery–0.80% | |
Dover Corp. | | | 369 | | | | 67,010 | |
| |
Fortive Corp. | | | 917 | | | | 69,958 | |
| |
IDEX Corp. | | | 194 | | | | 45,846 | |
| |
Illinois Tool Works, Inc. | | | 720 | | | | 177,696 | |
| |
Ingersoll Rand, Inc. | | | 1,037 | | | | 64,159 | |
| |
Otis Worldwide Corp. | | | 1,092 | | | | 95,080 | |
| |
Parker-Hannifin Corp. | | | 330 | | | | 104,980 | |
| |
Pentair PLC | | | 439 | | | | 32,060 | |
| |
Snap-on, Inc. | | | 142 | | | | 30,584 | |
| |
Stanley Black & Decker, Inc. | | | 417 | | | | 78,655 | |
| |
Xylem, Inc. | | | 462 | | | | 55,403 | |
| |
| | | | | | | 821,431 | |
| |
|
| Industrial REITs–0.37% | |
Duke Realty Corp. | | | 990 | | | | 64,983 | |
| |
Prologis, Inc. | | | 1,852 | | | | 311,803 | |
| |
| | | | | | | 376,786 | |
| |
|
| Insurance Brokers–0.58% | |
Aon PLC, Class A | | | 556 | | | | 167,111 | |
| |
Arthur J. Gallagher & Co. | | | 530 | | | | 89,925 | |
| |
Brown & Brown, Inc. | | | 599 | | | | 42,098 | |
| |
Marsh & McLennan Cos., Inc. | | | 1,273 | | | | 221,273 | |
| |
Willis Towers Watson PLC | | | 315 | | | | 74,809 | |
| |
| | | | | | | 595,216 | |
| |
|
| Integrated Oil & Gas–1.25% | |
Chevron Corp. | | | 4,838 | | | | 567,739 | |
| |
Exxon Mobil Corp. | | | 10,692 | | | | 654,244 | |
| |
Occidental Petroleum Corp. | | | 2,218 | | | | 64,300 | |
| |
| | | | | | | 1,286,283 | |
| |
|
| Integrated Telecommunication Services–0.95% | |
AT&T, Inc. | | | 17,873 | | | | 439,676 | |
| |
Verizon Communications, Inc. | | | 10,364 | | | | 538,513 | |
| |
| | | | | | | 978,189 | |
| |
|
| Interactive Home Entertainment–0.27% | |
Activision Blizzard, Inc. | | | 1,951 | | | | 129,800 | |
| |
Electronic Arts, Inc. | | | 730 | | | | 96,287 | |
| |
Take-Two Interactive Software, Inc.(b) | | | 291 | | | | 51,716 | |
| |
| | | | | | | 277,803 | |
�� | |
|
| Interactive Media & Services–6.26% | |
Alphabet, Inc., Class A(b) | | | 760 | | | | 2,201,750 | |
| |
Alphabet, Inc., Class C(b) | | | 706 | | | | 2,042,875 | |
| |
Match Group, Inc.(b) | | | 694 | | | | 91,781 | |
| |
Meta Platforms, Inc., Class A(b) | | | 5,982 | | | | 2,012,046 | |
| |
Twitter, Inc.(b) | | | 1,998 | | | | 86,354 | |
| |
| | | | | | | 6,434,806 | |
| |
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 | |
Internet & Direct Marketing Retail–3.74% | | | | | |
Amazon.com, Inc.(b) | | | 1,102 | | | $ | 3,674,443 | |
| |
eBay, Inc. | | | 1,581 | | | | 105,136 | |
| |
Etsy, Inc.(b) | | | 323 | | | | 70,718 | |
| |
| | | | | | | 3,850,297 | |
| |
|
| Internet Services & Infrastructure–0.11% | |
Akamai Technologies, Inc.(b) | | | 417 | | | | 48,806 | |
| |
VeriSign, Inc.(b) | | | 250 | | | | 63,455 | |
| |
| | | | | | | 112,261 | |
| |
|
| Investment Banking & Brokerage–1.02% | |
Charles Schwab Corp. (The) | | | 3,755 | | | | 315,796 | |
| |
Goldman Sachs Group, Inc. (The) | | | 846 | | | | 323,637 | |
| |
Morgan Stanley | | | 3,625 | | | | 355,830 | |
| |
Raymond James Financial, Inc. | | | 486 | | | | 48,794 | |
| |
| | | | | | | 1,044,057 | |
| |
|
| IT Consulting & Other Services–1.23% | |
Accenture PLC, Class A | | | 1,590 | | | | 659,135 | |
| |
Cognizant Technology Solutions Corp., Class A | | | 1,321 | | | | 117,199 | |
| |
DXC Technology Co.(b) | | | 663 | | | | 21,342 | |
| |
EPAM Systems, Inc.(b) | | | 142 | | | | 94,920 | |
| |
Gartner, Inc.(b) | | | 214 | | | | 71,544 | |
| |
International Business Machines Corp. | | | 2,249 | | | | 300,601 | |
| |
| | | | | | | 1,264,741 | |
| |
|
| Leisure Products–0.03% | |
Hasbro, Inc. | | | 331 | | | | 33,689 | |
| |
|
| Life & Health Insurance–0.40% | |
Aflac, Inc. | | | 1,579 | | | | 92,198 | |
| |
Globe Life, Inc. | | | 246 | | | | 23,055 | |
| |
Lincoln National Corp. | | | 452 | | | | 30,854 | |
| |
MetLife, Inc. | | | 1,827 | | | | 114,169 | |
| |
Principal Financial Group, Inc. | | | 639 | | | | 46,219 | |
| |
Prudential Financial, Inc. | | | 971 | | | | 105,101 | |
| |
| | | | | | | 411,596 | |
| |
|
| Life Sciences Tools & Services–1.99% | |
Agilent Technologies, Inc. | | | 760 | | | | 121,334 | |
| |
Bio-Rad Laboratories, Inc., Class A(b) | | | 55 | | | | 41,556 | |
| |
Bio-Techne Corp. | | | 100 | | | | 51,734 | |
| |
Charles River Laboratories International, Inc.(b) | | | 129 | | | | 48,605 | |
| |
Danaher Corp. | | | 1,594 | | | | 524,442 | |
| |
Illumina, Inc.(b) | | | 395 | | | | 150,274 | |
| |
IQVIA Holdings, Inc.(b) | | | 480 | | | | 135,427 | |
| |
Mettler-Toledo International, Inc.(b) | | | 59 | | | | 100,135 | |
| |
PerkinElmer, Inc. | | | 319 | | | | 64,138 | |
| |
Thermo Fisher Scientific, Inc. | | | 995 | | | | 663,904 | |
| |
Waters Corp.(b) | | | 155 | | | | 57,753 | |
| |
West Pharmaceutical Services, Inc. | | | 186 | | | | 87,236 | |
| |
| | | | | | | 2,046,538 | |
| |
| | |
Managed Health Care–1.70% | | | | | | | | |
Anthem, Inc. | | | 613 | | | | 284,150 | |
| |
Centene Corp.(b) | | | 1,469 | | | | 121,046 | |
| |
Humana, Inc. | | | 322 | | | | 149,363 | |
| |
UnitedHealth Group, Inc. | | | 2,379 | | | | 1,194,591 | |
| |
| | | | | | | 1,749,150 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Metal & Glass Containers–0.08% | |
Ball Corp. | | | 836 | | | $ | 80,482 | |
| |
|
| Movies & Entertainment–1.38% | |
Live Nation Entertainment, Inc.(b) | | | 337 | | | | 40,336 | |
| |
Netflix, Inc.(b) | | | 1,111 | | | | 669,311 | |
| |
Walt Disney Co. (The)(b) | | | 4,559 | | | | 706,143 | |
| |
| | | | | | | 1,415,790 | |
| |
|
| Multi-line Insurance–0.20% | |
American International Group, Inc. | | | 2,097 | | | | 119,235 | |
| |
Assurant, Inc. | | | 151 | | | | 23,535 | |
| |
Hartford Financial Services Group, Inc. (The) | | | 889 | | | | 61,377 | |
| |
| | | | | | | 204,147 | |
| |
|
| Multi-Sector Holdings–1.34% | |
Berkshire Hathaway, Inc., Class B(b)(e) | | | 4,625 | | | | 1,382,875 | |
| |
|
| Multi-Utilities–0.72% | |
Ameren Corp. | | | 670 | | | | 59,637 | |
| |
CenterPoint Energy, Inc. | | | 1,459 | | | | 40,721 | |
| |
CMS Energy Corp. | | | 742 | | | | 48,267 | |
| |
Consolidated Edison, Inc. | | | 906 | | | | 77,300 | |
| |
Dominion Energy, Inc. | | | 2,020 | | | | 158,691 | |
| |
DTE Energy Co. | | | 496 | | | | 59,292 | |
| |
NiSource, Inc. | | | 1,004 | | | | 27,720 | |
| |
Public Service Enterprise Group, Inc. | | | 1,291 | | | | 86,148 | |
| |
Sempra Energy | | | 802 | | | | 106,088 | |
| |
WEC Energy Group, Inc. | | | 808 | | | | 78,433 | |
| |
| | | | | | | 742,297 | |
| |
|
| Office REITs–0.14% | |
Alexandria Real Estate Equities, Inc. | | | 355 | | | | 79,151 | |
| |
Boston Properties, Inc. | | | 364 | | | | 41,925 | |
| |
Vornado Realty Trust | | | 430 | | | | 18,000 | |
| |
| | | | | | | 139,076 | |
| |
|
| Oil & Gas Equipment & Services–0.20% | |
Baker Hughes Co., Class A | | | 2,120 | | | | 51,007 | |
| |
Halliburton Co. | | | 2,279 | | | | 52,121 | |
| |
Schlumberger N.V. | | | 3,509 | | | | 105,094 | |
| |
| | | | | | | 208,222 | |
| |
|
| Oil & Gas Exploration & Production–0.72% | |
APA Corp. | | | 968 | | | | 26,029 | |
| |
ConocoPhillips | | | 3,331 | | | | 240,432 | |
| |
Coterra Energy, Inc. | | | 2,074 | | | | 39,406 | |
| |
Devon Energy Corp. | | | 1,566 | | | | 68,982 | |
| |
Diamondback Energy, Inc. | | | 436 | | | | 47,023 | |
| |
EOG Resources, Inc. | | | 1,465 | | | | 130,136 | |
| |
Hess Corp. | | | 705 | | | | 52,191 | |
| |
Marathon Oil Corp. | | | 2,053 | | | | 33,710 | |
| |
Pioneer Natural Resources Co. | | | 570 | | | | 103,672 | |
| |
| | | | | | | 741,581 | |
| |
|
| Oil & Gas Refining & Marketing–0.25% | |
Marathon Petroleum Corp. | | | 1,555 | | | | 99,505 | |
| |
Phillips 66 | | | 1,114 | | | | 80,720 | |
| |
Valero Energy Corp. | | | 1,046 | | | | 78,565 | |
| |
| | | | | | | 258,790 | |
| |
Oil & Gas Storage & Transportation–0.22% | | | | | |
Kinder Morgan, Inc. | | | 4,970 | | | | 78,824 | |
| |
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 Storage & Transportation–(continued) | |
ONEOK, Inc. | | | 1,140 | | | $ | 66,986 | |
| |
Williams Cos., Inc. (The) | | | 3,110 | | | | 80,985 | |
| |
| | | | | | | 226,795 | |
| |
|
| Packaged Foods & Meats–0.78% | |
Campbell Soup Co. | | | 527 | | | | 22,903 | |
| |
Conagra Brands, Inc. | | | 1,259 | | | | 42,995 | |
| |
General Mills, Inc. | | | 1,557 | | | | 104,911 | |
| |
Hershey Co. (The) | | | 372 | | | | 71,971 | |
| |
Hormel Foods Corp. | | | 721 | | | | 35,192 | |
| |
JM Smucker Co. (The) | | | 277 | | | | 37,622 | |
| |
Kellogg Co. | | | 672 | | | | 43,290 | |
| |
Kraft Heinz Co. (The) | | | 1,715 | | | | 61,569 | |
| |
Lamb Weston Holdings, Inc. | | | 372 | | | | 23,577 | |
| |
McCormick & Co., Inc. | | | 638 | | | | 61,637 | |
| |
Mondelez International, Inc., Class A | | | 3,516 | | | | 233,146 | |
| |
Tyson Foods, Inc., Class A | | | 754 | | | | 65,719 | |
| |
| | | | | | | 804,532 | |
| |
|
| Paper Packaging–0.22% | |
Amcor PLC | | | 3,826 | | | | 45,950 | |
| |
Avery Dennison Corp. | | | 212 | | | | 45,913 | |
| |
International Paper Co. | | | 1,000 | | | | 46,980 | |
| |
Packaging Corp. of America | | | 251 | | | | 34,174 | |
| |
Sealed Air Corp. | | | 403 | | | | 27,190 | |
| |
WestRock Co. | | | 697 | | | | 30,919 | |
| |
| | | | | | | 231,126 | |
| |
|
| Personal Products–0.21% | |
Estee Lauder Cos., Inc. (The), Class A | | | 579 | | | | 214,346 | |
| |
|
| Pharmaceuticals–3.66% | |
Bristol-Myers Squibb Co. | | | 5,592 | | | | 348,661 | |
| |
Catalent, Inc.(b) | | | 436 | | | | 55,821 | |
| |
Eli Lilly and Co. | | | 1,992 | | | | 550,230 | |
| |
Johnson & Johnson | | | 6,648 | | | | 1,137,274 | |
| |
Merck & Co., Inc. | | | 6,339 | | | | 485,821 | |
| |
Organon & Co. | | | 649 | | | | 19,762 | |
| |
Pfizer, Inc. | | | 14,175 | | | | 837,034 | |
| |
Viatris, Inc. | | | 3,095 | | | | 41,875 | |
| |
Zoetis, Inc. | | | 1,189 | | | | 290,152 | |
| |
| | | | | | | 3,766,630 | |
| |
|
| Property & Casualty Insurance–0.63% | |
Allstate Corp. (The) | | | 724 | | | | 85,179 | |
| |
Chubb Ltd. | | | 1,101 | | | | 212,834 | |
| |
Cincinnati Financial Corp. | | | 384 | | | | 43,749 | |
| |
Loews Corp. | | | 520 | | | | 30,035 | |
| |
Progressive Corp. (The) | | | 1,465 | | | | 150,382 | |
| |
Travelers Cos., Inc. (The) | | | 629 | | | | 98,395 | |
| |
W.R. Berkley Corp. | | | 367 | | | | 30,237 | |
| |
| | | | | | | 650,811 | |
| |
|
| Publishing–0.03% | |
News Corp., Class A | | | 1,001 | | | | 22,332 | |
| |
News Corp., Class B | | | 334 | | | | 7,515 | |
| |
| | | | | | | 29,847 | |
| |
|
| Railroads–0.78% | |
CSX Corp. | | | 5,601 | | | | 210,598 | |
| |
Norfolk Southern Corp. | | | 621 | | | | 184,878 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| Railroads–(continued) | |
Union Pacific Corp. | | | 1,624 | | | $ | 409,134 | |
| |
| | | | | | | 804,610 | |
| |
|
| Real Estate Services–0.09% | |
CBRE Group, Inc., Class A(b) | | | 859 | | | | 93,210 | |
| |
|
| Regional Banks–1.05% | |
Citizens Financial Group, Inc. | | | 1,091 | | | | 51,550 | |
| |
Comerica, Inc. | | | 343 | | | | 29,841 | |
| |
Fifth Third Bancorp | | | 1,767 | | | | 76,953 | |
| |
First Republic Bank | | | 447 | | | | 92,310 | |
| |
Huntington Bancshares, Inc. | | | 3,779 | | | | 58,272 | |
| |
KeyCorp | | | 2,448 | | | | 56,622 | |
| |
M&T Bank Corp. | | | 329 | | | | 50,528 | |
| |
People’s United Financial, Inc. | | | 1,167 | | | | 20,796 | |
| |
PNC Financial Services Group, Inc. (The) | | | 1,064 | | | | 213,353 | |
| |
Regions Financial Corp. | | | 2,443 | | | | 53,257 | |
| |
Signature Bank | | | 153 | | | | 49,491 | |
| |
SVB Financial Group(b) | | | 147 | | | | 99,701 | |
| |
Truist Financial Corp. | | | 3,367 | | | | 197,138 | |
| |
Zions Bancorporation N.A. | | | 428 | | | | 27,033 | |
| |
| | | | | | | 1,076,845 | |
| |
|
| Reinsurance–0.03% | |
Everest Re Group Ltd. | | | 104 | | | | 28,488 | |
| |
|
| Research & Consulting Services–0.40% | |
Equifax, Inc. | | | 311 | | | | 91,058 | |
| |
IHS Markit Ltd. | | | 1,000 | | | | 132,920 | |
| |
Jacobs Engineering Group, Inc. | | | 333 | | | | 46,363 | |
| |
Leidos Holdings, Inc. | | | 353 | | | | 31,382 | |
| |
Nielsen Holdings PLC | | | 918 | | | | 18,828 | |
| |
Verisk Analytics, Inc. | | | 412 | | | | 94,237 | |
| |
| | | | | | | 414,788 | |
| |
|
| Residential REITs–0.33% | |
AvalonBay Communities, Inc. | | | 355 | | | | 89,670 | |
| |
Equity Residential | | | 872 | | | | 78,916 | |
| |
Essex Property Trust, Inc. | | | 167 | | | | 58,822 | |
| |
Mid-America Apartment Communities, Inc. | | | 291 | | | | 66,767 | |
| |
UDR, Inc. | | | 714 | | | | 42,833 | |
| |
| | | | | | | 337,008 | |
| |
|
| Restaurants–1.15% | |
Chipotle Mexican Grill, Inc.(b) | | | 70 | | | | 122,378 | |
| |
Darden Restaurants, Inc. | | | 333 | | | | 50,163 | |
| |
Domino’s Pizza, Inc. | | | 95 | | | | 53,611 | |
| |
McDonald’s Corp. | | | 1,887 | | | | 505,848 | |
| |
Starbucks Corp. | | | 2,950 | | | | 345,062 | |
| |
Yum! Brands, Inc. | | | 740 | | | | 102,756 | |
| |
| | | | | | | 1,179,818 | |
| |
|
| Retail REITs–0.32% | |
Federal Realty Investment Trust | | | 179 | | | | 24,401 | |
| |
Kimco Realty Corp. | | | 1,602 | | | | 39,489 | |
| |
Realty Income Corp. | | | 1,413 | | | | 101,157 | |
| |
Regency Centers Corp. | | | 392 | | | | 29,537 | |
| |
Simon Property Group, Inc. | | | 824 | | | | 131,651 | |
| |
| | | | | | | 326,235 | |
| |
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 |
| Semiconductor Equipment–0.92% |
Applied Materials, Inc. | | | 2,280 | | | $ 358,781 |
Enphase Energy, Inc.(b) | | | 342 | | | 62,565 |
KLA Corp. | | | 384 | | | 165,162 |
Lam Research Corp. | | | 357 | | | 256,736 |
SolarEdge Technologies, Inc.(b) | | | 133 | | | 37,316 |
Teradyne, Inc. | | | 422 | | | 69,010 |
| | | | | | | 949,570 |
|
| Semiconductors–5.38% |
Advanced Micro Devices, Inc.(b) | | | 3,042 | | | 437,744 |
Analog Devices, Inc. | | | 1,350 | | | 237,290 |
Broadcom, Inc. | | | 1,040 | | | 692,026 |
Intel Corp. | | | 10,179 | | | 524,218 |
Microchip Technology, Inc. | | | 1,357 | | | 118,140 |
Micron Technology, Inc. | | | 2,807 | | | 261,472 |
Monolithic Power Systems, Inc. | | | 110 | | | 54,266 |
NVIDIA Corp. | | | 6,314 | | | 1,857,011 |
NXP Semiconductors N.V. (China) | | | 666 | | | 151,701 |
Qorvo, Inc.(b) | | | 281 | | | 43,946 |
QUALCOMM, Inc. | | | 2,823 | | | 516,242 |
Skyworks Solutions, Inc. | | | 423 | | | 65,624 |
Texas Instruments, Inc. | | | 2,312 | | | 435,743 |
Xilinx, Inc. | | | 618 | | | 131,035 |
| | | | | | | 5,526,458 |
|
| Soft Drinks–1.24% |
Coca-Cola Co. (The) | | | 9,747 | | | 577,120 |
Monster Beverage Corp.(b) | | | 951 | | | 91,334 |
PepsiCo, Inc. | | | 3,468 | | | 602,426 |
| | | | | | | 1,270,880 |
|
| Specialized REITs–1.29% |
American Tower Corp. | | | 1,142 | | | 334,035 |
Crown Castle International Corp. | | | 1,082 | | | 225,857 |
Digital Realty Trust, Inc. | | | 709 | | | 125,401 |
Equinix, Inc. | | | 225 | | | 190,314 |
Extra Space Storage, Inc. | | | 342 | | | 77,542 |
Iron Mountain, Inc. | | | 763 | | | 39,928 |
Public Storage | | | 382 | | | 143,082 |
SBA Communications Corp., Class A | | | 274 | | | 106,591 |
Weyerhaeuser Co. | | | 1,919 | | | 79,024 |
| | | | | | | 1,321,774 |
|
| Specialty Chemicals–0.80% |
Albemarle Corp. | | | 299 | | | 69,897 |
Celanese Corp. | | | 278 | | | 46,721 |
DuPont de Nemours, Inc. | | | 1,312 | | | 105,983 |
Eastman Chemical Co. | | | 347 | | | 41,956 |
Ecolab, Inc. | | | 622 | | | 145,915 |
International Flavors & Fragrances, Inc. | | | 638 | | | 96,115 |
PPG Industries, Inc. | | | 608 | | | 104,843 |
Sherwin-Williams Co. (The) | | | 608 | | | 214,113 |
| | | | | | | 825,543 |
|
| Specialty Stores–0.17% |
Bath & Body Works, Inc. | | | 678 | | | 47,318 |
Tractor Supply Co. | | | 288 | | | 68,717 |
Ulta Beauty, Inc.(b) | | | 140 | | | 57,727 |
| | | | | | | 173,762 |
| | | | | | |
| | | Shares | | | Value |
|
| Steel–0.08% |
Nucor Corp. | | | 722 | | | $ 82,416 |
|
| Systems Software–7.02% |
Fortinet, Inc.(b) | | | 338 | | | 121,477 |
Microsoft Corp. | | | 18,969 | | | 6,379,654 |
NortonLifeLock, Inc. | | | 1,487 | | | 38,632 |
Oracle Corp.(d) | | | 4,073 | | | 355,206 |
ServiceNow, Inc.(b) | | | 497 | | | 322,608 |
| | | | | | | 7,217,577 |
|
| Technology Distributors–0.07% |
CDW Corp. | | | 352 | | | 72,083 |
|
| Technology Hardware, Storage & Peripherals–7.12% |
Apple, Inc. | | | 39,391 | | | 6,994,660 |
Hewlett Packard Enterprise Co. | | | 3,342 | | | 52,703 |
HP, Inc. | | | 2,911 | | | 109,657 |
NetApp, Inc. | | | 573 | | | 52,710 |
Seagate Technology Holdings PLC | | | 531 | | | 59,993 |
Western Digital Corp.(b) | | | 784 | | | 51,125 |
| | | | | | | 7,320,848 |
|
| Tobacco–0.57% |
Altria Group, Inc. | | | 4,632 | | | 219,510 |
Philip Morris International, Inc. | | | 3,902 | | | 370,690 |
| | | | | | | 590,200 |
|
| Trading Companies & Distributors–0.21% |
Fastenal Co. | | | 1,466 | | | 93,912 |
United Rentals, Inc.(b) | | | 185 | | | 61,474 |
W.W. Grainger, Inc. | | | 109 | | | 56,488 |
| | | | | | | 211,874 |
|
| Trucking–0.13% |
J.B. Hunt Transport Services, Inc. | | | 221 | | | 45,172 |
Old Dominion Freight Line, Inc. | | | 239 | | | 85,653 |
| | | | | | | 130,825 |
|
| Water Utilities–0.08% |
American Water Works Co., Inc. | | | 463 | | | 87,442 |
|
| Wireless Telecommunication Services–0.17% |
T-Mobile US, Inc.(b) | | | 1,467 | | | 170,143 |
Total Common Stocks & Other Equity Interests
(Cost $20,237,942) | | | 101,949,658 |
|
| Money Market Funds–0.83% |
Invesco Government & Agency Portfolio, Institutional Class, 0.03%(c)(f) | | | 300,432 | | | 300,432 |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(c)(f) | | | 210,066 | | | 210,108 |
Invesco Treasury Portfolio, Institutional Class, 0.01%(c)(f) | | | 343,350 | | | 343,350 |
Total Money Market Funds (Cost $853,901) | | | 853,890 |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.00% (Cost $21,091,843) | | | | | | 102,803,548 |
|
| Investments Purchased with Cash Collateral from Securities on Loan |
Money Market Funds–0.94% | | | | | | |
Invesco Private Government Fund, 0.02%(c)(f)(g) | | | 290,129 | | | 290,129 |
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 Private Prime Fund, 0.11%(c)(f)(g) | | | 676,832 | | | $ | 676,967 | |
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $967,096) | | | | 967,096 | |
| |
TOTAL INVESTMENTS IN SECURITIES–100.94% (Cost $22,058,939) | | | | 103,770,644 | |
| |
OTHER ASSETS LESS
LIABILITIES—(0.94)% | | | | | | | (963,768 | ) |
| |
NET ASSETS–100.00% | | | | | | $ | 102,806,876 | |
| |
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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
Invesco Ltd. | | | $ 19,469 | | | | $ - | | | | $ (6,308) | | | | $6,905 | | | | $ 53 | | | | $ 20,119 | | | | $ 673 | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | 431,341 | | | | 4,386,112 | | | | (4,517,021 | ) | | | - | | | | - | | | | 300,432 | | | | 119 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 321,504 | | | | 3,126,267 | | | | (3,237,624 | ) | | | 32 | | | | (71 | ) | | | 210,108 | | | | 58 | |
Invesco Treasury Portfolio, Institutional Class | | | 492,961 | | | | 5,012,699 | | | | (5,162,310 | ) | | | - | | | | - | | | | 343,350 | | | | 50 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 5,899,151 | | | | (5,609,022 | ) | | | - | | | | - | | | | 290,129 | | | | 9 | * |
Invesco Private Prime Fund | | | - | | | | 11,790,784 | | | | (11,113,714 | ) | | | - | | | | (103 | ) | | | 676,967 | | | | 134 | * |
Total | | | $1,265,275 | | | | $30,215,013 | | | | $(29,645,999) | | | | $6,937 | | | | $(121 | ) | | | $1,841,105 | | | | $1,043 | |
| | * | 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 this security was out on loan at December 31, 2021. |
| (e) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J. (f) The rate shown is the 7-day SEC standardized yield as of December 31, 2021. |
| (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 | | | 3 | | | March-2022 | | | $713,775 | | | | $15,434 | | | | $15,434 | |
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $ 20,219,772)* | | $ | 101,929,539 | |
| |
Investments in affiliates, at value
(Cost $ 1,839,167) | | | 1,841,105 | |
| |
Cash | | | 10,508 | |
| |
Receivable for: | | | | |
Investments sold | | | 101 | |
| |
Fund shares sold | | | 36,601 | |
| |
Dividends | | | 61,390 | |
| |
Investment for trustee deferred compensation and retirement plans | | | 37,836 | |
| |
Other assets | | | 386 | |
| |
Total assets | | | 103,917,466 | |
| |
| |
Liabilities: | | | | |
Other investments: | | | | |
Variation margin payable - futures contracts | | | 1,703 | |
| |
Payable for: | | | | |
Fund shares reacquired | | | 5,764 | |
| |
Collateral upon return of securities loaned | | | 967,096 | |
| |
Accrued fees to affiliates | | | 51,200 | |
| |
Accrued other operating expenses | | | 40,861 | |
| |
Trustee deferred compensation and retirement plans | | | 43,966 | |
| |
Total liabilities | | | 1,110,590 | |
| |
Net assets applicable to shares outstanding | | $ | 102,806,876 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 11,921,879 | |
| |
Distributable earnings | | | 90,884,997 | |
| |
| | $ | 102,806,876 | |
| |
| |
Net Assets: | | | | |
Series I | | $ | 42,430,119 | |
| |
Series II | | $ | 60,376,757 | |
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 1,837,790 | |
| |
Series II | | | 2,637,754 | |
| |
Series I: | | | | |
Net asset value per share | | $ | 23.09 | |
| |
Series II: | | | | |
Net asset value per share | | $ | 22.89 | |
| |
* At December 31, 2021, securities with an aggregate value of $ 941,378 were on loan to brokers. | |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $180) | | $ | 1,330,029 | |
| |
Dividends from affiliates (includes securities lending income of $168) | | | 1,068 | |
| |
Total investment income | | | 1,331,097 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 117,207 | |
| |
Administrative services fees | | | 160,264 | |
| |
Custodian fees | | | 5,704 | |
| |
Distribution fees - Series II | | | 141,316 | |
| |
Transfer agent fees | | | 4,240 | |
| |
Trustees’ and officers’ fees and benefits | | | 23,697 | |
| |
Licensing fees | | | 18,631 | |
| |
Reports to shareholders | | | 10,232 | |
| |
Professional services fees | | | 41,970 | |
| |
Other | | | 5,841 | |
| |
Total expenses | | | 529,102 | |
| |
Less: Fees waived | | | (582 | ) |
| |
Net expenses | | | 528,520 | |
| |
Net investment income | | | 802,577 | |
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 10,059,396 | |
| |
Affiliated investment securities | | | (121 | ) |
| |
Futures contracts | | | 347,231 | |
| |
| | | 10,406,506 | |
| |
Change in net unrealized appreciation (depreciation) of: Unaffiliated investment securities | | | 12,922,935 | |
| |
Affiliated investment securities | | | 6,937 | |
| |
Futures contracts | | | (10,901 | ) |
| |
| | | 12,918,971 | |
| |
Net realized and unrealized gain | | | 23,325,477 | |
| |
Net increase in net assets resulting from operations | | $ | 24,128,054 | |
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 802,577 | | | $ | 1,073,565 | |
| |
Net realized gain | | | 10,406,506 | | | | 10,364,311 | |
| |
Change in net unrealized appreciation | | | 12,918,971 | | | | 2,609,849 | |
| |
Net increase in net assets resulting from operations | | | 24,128,054 | | | | 14,047,725 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (4,643,471 | ) | | | (2,904,454 | ) |
| |
Series II | | | (6,630,158 | ) | | | (3,939,993 | ) |
| |
Total distributions from distributable earnings | | | (11,273,629 | ) | | | (6,844,447 | ) |
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (1,996,289 | ) | | | (1,001,963 | ) |
| |
Series II | | | 44,492 | | | | (3,859,935 | ) |
| |
Net increase (decrease) in net assets resulting from share transactions | | | (1,951,797 | ) | | | (4,861,898 | ) |
| |
Net increase in net assets | | | 10,902,628 | | | | 2,341,380 | |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 91,904,248 | | | | 89,562,868 | |
| |
End of year | | $ | 102,806,876 | | | $ | 91,904,248 | |
| |
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 12/31/21 | | | | $20.29 | | | | | $0.22 | | | | | $5.41 | | | | | $5.63 | | | | | $(0.30 | ) | | | | $(2.53 | ) | | | | $(2.83 | ) | | | | $23.09 | | | | | 28.27 | % | | | | $42,430 | | | | | 0.40 | % | | | | 0.40 | % | | | | 0.96 | % | | | | 3 | % |
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 | | | | | 0.38 | | | | | 1.43 | | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 20.15 | | | | | 0.16 | | | | | 5.36 | | | | | 5.52 | | | | | (0.25 | ) | | | | (2.53 | ) | | | | (2.78 | ) | | | | 22.89 | | | | | 27.90 | | | | | 60,377 | | | | | 0.65 | | | | | 0.65 | | | | | 0.71 | | | | | 3 | |
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 | | | | | 0.63 | | | | | 1.18 | | | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. S&P 500 Index 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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 |
Invesco V.I. S&P 500 Index Fund
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. |
| L. | COVID-19 Risk – The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $582.
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, 2021, Invesco was paid $13,871 for accounting and fund administrative services and was reimbursed $146,393 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, 2021, 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, 2021, 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. S&P 500 Index Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2021. 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 | | | $101,949,658 | | | | $ – | | | | $– | | | | $101,949,658 | |
| |
| | | | |
Money Market Funds | | | 853,890 | | | | 967,096 | | | | – | | | | 1,820,986 | |
| |
Total Investments in Securities | | | 102,803,548 | | | | 967,096 | | | | – | | | | 103,770,644 | |
| |
| | | | |
Other Investments - Assets* | | | | | | | | | | | | | | | | |
| |
Futures Contracts | | | 15,434 | | | | – | | | | – | | | | 15,434 | |
| |
| | | | |
Total Investments | | | $102,818,982 | | | | $967,096 | | | | $– | | | | $103,786,078 | |
| |
| * | 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, 2021:
| | | | |
| | | Value | |
| | | | |
| Derivative Assets | | Equity
Risk | |
| |
Unrealized appreciation on futures contracts – Exchange-Traded(a) | | $ | 15,434 | |
| |
Derivatives not subject to master netting agreements | | | (15,434 | ) |
| |
Total Derivative Assets subject to master netting agreements | | $ | - | |
| |
| (a) | The daily variation margin receivable at period-end is recorded in the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended December 31, 2021
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 | |
| | | Equity
Risk | |
| |
Realized Gain: | | | | |
Futures contracts | | | $347,231 | |
| |
Change in Net Unrealized Appreciation (Depreciation): | | | | |
Futures contracts | | | (10,901) | |
| |
Total | | | $336,330 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | | | |
| | | Futures
Contracts | |
| |
| Average notional value | | $ | 1,181,687 | |
| |
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. S&P 500 Index 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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
| | |
Ordinary income* | | $ | 1,266,284 | | | $ | 1,421,367 | |
| |
| | |
Long-term capital gain | | | 10,007,345 | | | | 5,423,080 | |
| |
| | |
Total distributions | | $ | 11,273,629 | | | $ | 6,844,447 | |
| |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed ordinary income | | $ | 1,021,528 | |
| |
Undistributed long-term capital gain | | | 9,396,587 | |
| |
Net unrealized appreciation – investments | | | 80,491,869 | |
| |
Temporary book/tax differences | | | (24,987 | ) |
| |
Shares of beneficial interest | | | 11,921,879 | |
| |
Total net assets | | $ | 102,806,876 | |
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $2,473,570 and $14,161,986, 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 | | | $81,012,592 | |
| |
| |
Aggregate unrealized (depreciation) of investments | | | (520,723 | ) |
| |
| |
Net unrealized appreciation of investments | | | $80,491,869 | |
| |
Cost of investments for tax purposes is $23,294,209.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of securities litigation, on December 31, 2021, undistributed net investment income was increased by $515 and undistributed net realized gain was decreased by $515. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 75,901 | | | $ | 1,682,535 | | | | 83,700 | | | $ | 1,520,338 | |
| |
Series II | | | 75,743 | | | | 1,706,426 | | | | 95,867 | | | | 1,653,237 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 208,902 | | | | 4,641,810 | | | | 156,018 | | | | 2,903,491 | |
| |
Series II | | | 300,824 | | | | 6,630,158 | | | | 213,088 | | | | 3,939,993 | |
| |
Invesco V.I. S&P 500 Index Fund
| | | | | | | | | | | | | | | | |
| | | Summary of Share Activity | |
| | | Year ended | | | Year ended | |
| | | December 31, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (359,958 | ) | | $ | (8,320,634 | ) | | | (293,468 | ) | | $ | (5,425,792 | ) |
| |
Series II | | | (373,662 | ) | | | (8,292,092 | ) | | | (512,091 | ) | | | (9,453,165 | ) |
| |
Net increase (decrease) in share activity | | | (72,250 | ) | | $ | (1,951,797 | ) | | | (256,886 | ) | | $ | (4,861,898 | ) |
| |
| (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–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. Equally-Weighted S&P 500 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 March 2022. 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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense
Ratio |
| Series I | | $1,000.00 | | $1,114.60 | | $2.19 | | $1,023.14 | | $2.09 | | 0.41% |
| Series II | | 1,000.00 | | 1,113.20 | | 3.52 | | 1,021.88 | | 3.36 | | 0.66 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | |
Long-Term Capital Gain Distributions | | $ | 10,007,345 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 100.00 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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) | | 186 | | 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler – 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961
Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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) | | | | |
| 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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; 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.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | | | |
| 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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | | | |
| 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) | | N/A | | N/A |
| | | | | Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | | | |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
| Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
| Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. S&P 500 Index Fund
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. Small Cap Equity Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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. | | VISCE-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
| | |
Performance summary | | | | |
For the year ended December 31, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 20.41 | % |
Series II Shares | | | 20.09 | |
S&P 500 Index▼ (Broad Market Index) | | | 28.71 | |
Russell 2000 Index▼ (Style-Specific Index) | | | 14.82 | |
Lipper VUF Small-Cap Core Funds Index◾ (Peer Group Index) | | | 22.02 | |
| |
Source(s): ▼RIMES Technologies Corp.; ◾Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant. Pandemic related supply chain disruption and
labor shortages intensified during the quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
Given this environment, the Fund produced a strong, double-digit return and outperformed its style-specific benchmark during the fiscal year.
Relative outperformance was largely attributed to positive security selection across a broad set of sectors including health care, industrials, materials, information technology (IT), real estate, financials and utilities. The Fund’s allocation to many of these sectors also provided a positive impact to relative results with overweight allocations in the industrials, materials and financials sectors contributing, while an underweight in the health care and utilities sectors also added to Fund performance. Conversely, the leading detractor from relative return was due to an underweight in the energy sector, which benefited from rising oil prices as economies reopened driving increased demand. Stock selection in the consumer discretionary, consumer staples and communications services sectors also detracted from Fund performance for the fiscal year. Finally, the Fund’s ancillary cash position was a headwind as well.
Top individual contributors to the Fund’s absolute performance during the fiscal year included Crocs, Plug Power and Piper Sandler.
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 fiscal year, the company generated better than expected results driven by strong demand for its core comfort foam shoes, leading to full-price sales with minimal discounting. Crocs also announced plans to enter the sandals category which was well received by investors. The team exited its Crocs position during the fiscal year due to valuation concerns.
Another leading contributor to portfolio performance on an absolute basis was Plug Power, which develops hydrogen fuel cell systems to replace conventional batteries in electric-powered vehicles and other equipment. Early in the fiscal year, the company benefited from an announced joint venture to build a hydrogen plant in Asia as well as a joint venture to manufacture hydrogen fuel cells in Europe for the light commercial vehicle market. These announcements were well received by investors as Europe and Asia represent brand new markets for Plug Power. After capturing significant performance in this business, we sold our position during the fiscal year due to market capitalization concerns.
Financial services company, Piper Sandler also contributed to absolute results during the year benefiting from the rising interest rate environment. Outside of interest rates, Piper Sandler continues to execute well in its Capital Markets business in terms of brand recognition and share gains, which has provided a tailwind. Additionally, Piper is doing well in its health care and financials verticals.
Top individual detractors from the Fund’s absolute performance included NeoGenomics, Pennant and Q2.
NeoGenomics was the leading detractor from absolute performance during the fiscal year. The Biotechnology and diagnostics firm has faced headwinds due to COVID-19’s impact on patient access resulting in subdued testing volumes. That being said, we believe this impact is transitory and expect testing volumes to improve as COVID-19 subsides eventually.
Home health and hospice provider, Pennant, experienced a decline in share price during the fiscal year as they contended with lower referral rates, higher death rates among seniors leading to reduced utilization of hospice care and labor pressures resulting from staffing challenges, all related to COVID-19.
Cloud-based banking solutions provider, Q2 was also among the leading detractors during the fiscal year following underwhelming quarterly reports due in large part to less than expected bookings growth, which is a leading indicator of revenue growth. Additionally, as with many software companies during the
|
| Invesco V.I. Small Cap Equity Fund |
fiscal year, concerns about interest rates and difficult comparisons from the previous fiscal year also weighed on investor sentiment and ultimately stock performance.
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 within modest over and underweights. At the close of the fiscal year, the Fund’s largest underweight exposures relative to the Russell 2000® Index were in the health care, energy, real estate, consumer staples, utilities and communication services sectors. Conversely, the Fund’s largest overweight exposures were in the industrials, materials and IT sectors.
We are observing high single-digit nominal GDP and sales growth and see inflation limiting profit margins and earnings growth. We expect the Fed to raise rates in 2022 in an effort to offset inflationary pressures. In this environment, at the margin, we are seeking high quality, stable and larger size small-cap companies that we believe market conditions will favor in the coming months. We continue to believe that digitization in technology and innovation in health care will drive secular growth.
Thank you for your commitment to the Invesco V.I. Small Cap Equity Fund and for sharing our long-term investment horizon.
1 Source: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 Source: Lipper Inc.
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. and its affiliates. 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 12/31/11
1 Source: RIMES Technologies Corp.
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
| |
Series I Shares | | | | |
Inception (8/29/03) | | | 9.89 | % |
10 Years | | | 12.29 | |
5 Years | | | 13.44 | |
1 Year | | | 20.41 | |
| |
Series II Shares | | | | |
Inception (8/29/03) | | | 9.63 | % |
10 Years | | | 12.01 | |
5 Years | | | 13.15 | |
1 Year | | | 20.09 | |
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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is 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 |
| |
Industrials | | | | 21.62 | % |
| |
Information Technology | | | | 16.64 | |
| |
Financials | | | | 16.45 | |
| |
Health Care | | | | 12.94 | |
| |
Consumer Discretionary | | | | 12.33 | |
| |
Materials | | | | 8.22 | |
| |
Real Estate | | | | 4.93 | |
| |
Other Sectors, Each Less than 2% of Net Assets | | | | 5.12 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 1.75 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
| 1. | | Piper Sandler Cos. | | | | 1.97 | % |
| | |
| 2. | | NV5 Global, Inc. | | | | 1.75 | |
| | |
| 3. | | Helios Technologies, Inc. | | | | 1.73 | |
| | |
| 4. | | Summit Materials, Inc., Class A | | | | 1.73 | |
| | |
| 5. | | LPL Financial Holdings, Inc. | | | | 1.71 | |
| | |
| 6. | | Taylor Morrison Home Corp., Class A | | | | 1.69 | |
| | |
| 7. | | WillScot Mobile Mini Holdings Corp. | | | | 1.63 | |
| | |
| 8. | | Medpace Holdings, Inc. | | | | 1.50 | |
| | |
| 9. | | Eagle Materials, Inc. | | | | 1.48 | |
| | |
| 10. | | OneMain Holdings, Inc. | | | | 1.45 | |
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, 2021.
|
| Invesco V.I. Small Cap Equity Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–98.25% | |
Air Freight & Logistics–0.74% | |
Air Transport Services Group, Inc.(b) | | | 67,493 | | | $ | 1,982,944 | |
|
| |
| | |
Alternative Carriers–0.84% | | | | | | | | |
Iridium Communications, Inc.(b) | | | 54,674 | | | | 2,257,489 | |
|
| |
| | |
Apparel Retail–1.47% | | | | | | | | |
American Eagle Outfitters, Inc.(c) | | | 101,415 | | | | 2,567,828 | |
|
| |
Children’s Place, Inc. (The)(b)(c) | | | 17,678 | | | | 1,401,688 | |
|
| |
| | | | | | | 3,969,516 | |
|
| |
| |
Apparel, Accessories & Luxury Goods–1.10% | | | | | |
Oxford Industries, Inc. | | | 29,300 | | | | 2,974,536 | |
|
| |
| | |
Application Software–5.92% | | | | | | | | |
Avalara, Inc.(b) | | | 13,623 | | | | 1,758,866 | |
|
| |
Descartes Systems Group, Inc. (The) (Canada)(b) | | | 35,566 | | | | 2,940,597 | |
|
| |
LivePerson, Inc.(b)(c) | | | 41,732 | | | | 1,490,667 | |
|
| |
Manhattan Associates, Inc.(b) | | | 19,756 | | | | 3,071,860 | |
|
| |
Q2 Holdings, Inc.(b) | | | 27,031 | | | | 2,147,343 | |
|
| |
Verint Systems, Inc.(b)(c) | | | 39,365 | | | | 2,067,056 | |
|
| |
Workiva, Inc.(b) | | | 18,970 | | | | 2,475,395 | |
|
| |
| | | | | | | 15,951,784 | |
|
| |
| |
Asset Management & Custody Banks–0.35% | | | | | |
Blucora, Inc.(b) | | | 54,680 | | | | 947,058 | |
|
| |
| | |
Auto Parts & Equipment–0.98% | | | | | | | | |
Visteon Corp.(b) | | | 23,677 | | | | 2,631,462 | |
|
| |
| | |
Automotive Retail–0.92% | | | | | | | | |
Lithia Motors, Inc., Class A | | | 8,340 | | | | 2,476,563 | |
|
| |
| | |
Biotechnology–1.68% | | | | | | | | |
CRISPR Therapeutics AG
(Switzerland)(b)(c) | | | 9,939 | | | | 753,177 | |
|
| |
Emergent BioSolutions, Inc.(b)(c) | | | 18,173 | | | | 789,980 | |
|
| |
Natera, Inc.(b)(c) | | | 26,207 | | | | 2,447,472 | |
|
| |
TG Therapeutics, Inc.(b)(c) | | | 27,752 | | | | 527,288 | |
|
| |
| | | | | | | 4,517,917 | |
|
| |
| | |
Building Products–3.16% | | | | | | | | |
AZEK Co., Inc. (The)(b) | | | 63,904 | | | | 2,954,921 | |
|
| |
Masonite International Corp.(b) | | | 23,293 | | | | 2,747,409 | |
|
| |
Owens Corning | | | 31,139 | | | | 2,818,080 | |
|
| |
| | | | | | | 8,520,410 | |
|
| |
| | |
Casinos & Gaming–0.67% | | | | | | | | |
Penn National Gaming, Inc.(b)(c) | | | 34,596 | | | | 1,793,803 | |
|
| |
| | |
Communications Equipment–0.94% | | | | | | | | |
Ciena Corp.(b) | | | 32,913 | | | | 2,533,314 | |
|
| |
| | |
Construction & Engineering–3.38% | | | | | | | | |
NV5 Global, Inc.(b) | | | 34,087 | | | | 4,708,097 | |
|
| |
WillScot Mobile Mini Holdings Corp.(b) | | | 107,393 | | | | 4,385,930 | |
|
| |
| | | | | | | 9,094,027 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Construction Machinery & Heavy Trucks–0.77% | |
Manitowoc Co., Inc. (The)(b) | | | 111,767 | | | $ | 2,077,749 | |
|
| |
| | |
Construction Materials–3.20% | | | | | | | | |
Eagle Materials, Inc. | | | 23,911 | | | | 3,980,225 | |
|
| |
Summit Materials, Inc., Class A(b) | | | 115,849 | | | | 4,650,179 | |
|
| |
| | | | | | | 8,630,404 | |
|
| |
| | |
Consumer Finance–1.45% | | | | | | | | |
OneMain Holdings, Inc. | | | 77,808 | | | | 3,893,512 | |
|
| |
| | |
Diversified Metals & Mining–1.33% | | | | | | | | |
MP Materials Corp.(b)(c) | | | 79,186 | | | | 3,596,628 | |
|
| |
| |
Electrical Components & Equipment–2.75% | | | | | |
Array Technologies, Inc.(b)(c) | | | 143,391 | | | | 2,249,805 | |
|
| |
EnerSys | | | 26,346 | | | | 2,082,915 | |
|
| |
Vertiv Holdings Co. | | | 123,396 | | | | 3,081,198 | |
|
| |
| | | | | | | 7,413,918 | |
|
| |
| |
Electronic Equipment & Instruments–1.22% | | | | | |
Badger Meter, Inc. | | | 30,821 | | | | 3,284,286 | |
|
| |
| |
Electronic Manufacturing Services–0.95% | | | | | |
Flex Ltd.(b) | | | 140,030 | | | | 2,566,750 | |
|
| |
| |
Environmental & Facilities Services–1.97% | | | | | |
Casella Waste Systems, Inc., Class A(b) | | | 33,312 | | | | 2,845,511 | |
|
| |
Montrose Environmental Group, Inc.(b) | | | 34,933 | | | | 2,463,126 | |
|
| |
| | | | | | | 5,308,637 | |
|
| |
| |
Fertilizers & Agricultural Chemicals–0.70% | | | | | |
Scotts Miracle-Gro Co. (The) | | | 11,736 | | | | 1,889,496 | |
|
| |
| | |
Financial Exchanges & Data–0.96% | | | | | | | | |
TMX Group Ltd. (Canada) | | | 25,593 | | | | 2,594,808 | |
|
| |
| | |
Food Retail–0.85% | | | | | | | | |
Sprouts Farmers Market, Inc.(b) | | | 76,933 | | | | 2,283,371 | |
|
| |
| | |
Footwear–0.95% | | | | | | | | |
Wolverine World Wide, Inc. | | | 88,694 | | | | 2,555,274 | |
|
| |
| | |
Health Care Distributors–0.98% | | | | | | | | |
Owens & Minor, Inc. | | | 60,465 | | | | 2,630,228 | |
|
| |
| | |
Health Care Equipment–2.47% | | | | | | | | |
AtriCure, Inc.(b) | | | 49,164 | | | | 3,418,373 | |
|
| |
CONMED Corp. | | | 22,744 | | | | 3,224,189 | |
|
| |
| | | | | | | 6,642,562 | |
|
| |
| | |
Health Care Facilities–1.11% | | | | | | | | |
Encompass Health Corp. | | | 31,431 | | | | 2,051,187 | |
|
| |
Pennant Group, Inc. (The)(b) | | | 40,732 | | | | 940,095 | |
|
| |
| | | | | | | 2,991,282 | |
|
| |
| | |
Health Care Services–1.28% | | | | | | | | |
Castle Biosciences, Inc.(b) | | | 37,860 | | | | 1,623,058 | |
|
| |
LHC Group, Inc.(b) | | | 13,236 | | | | 1,816,377 | |
|
| |
| | | | | | | 3,439,435 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Small Cap Equity Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
| | |
Health Care Supplies–1.90% | | | | | | | | |
ICU Medical, Inc.(b) | | | 8,609 | | | $ | 2,043,260 | |
|
| |
OrthoPediatrics Corp.(b)(c) | | | 51,526 | | | | 3,084,346 | |
|
| |
| | | | | | | 5,127,606 | |
|
| |
| | |
Health Care Technology–0.73% | | | | | | | | |
Simulations Plus, Inc. | | | 41,464 | | | | 1,961,247 | |
|
| |
| | |
Homebuilding–1.69% | | | | | | | | |
Taylor Morrison Home Corp., Class A(b) | | | 130,289 | | | | 4,554,903 | |
|
| |
| | |
Hotel & Resort REITs–0.73% | | | | | | | | |
Ryman Hospitality Properties, Inc.(b) | | | 21,260 | | | | 1,955,070 | |
|
| |
| |
Hotels, Resorts & Cruise Lines–1.26% | | | | | |
Travel + Leisure Co. | | | 61,272 | | | | 3,386,503 | |
|
| |
|
Human Resource & Employment Services–0.91% | |
Alight, Inc., Class A(b)(c) | | | 227,653 | | | | 2,460,929 | |
|
| |
| | |
Industrial Machinery–3.83% | | | | | | | | |
Gates Industrial Corp. PLC(b) | | | 161,802 | | | | 2,574,270 | |
|
| |
Helios Technologies, Inc. | | | 44,359 | | | | 4,665,236 | |
|
| |
ITT, Inc. | | | 30,231 | | | | 3,089,306 | |
|
| |
| | | | | | | 10,328,812 | |
|
| |
| | |
Industrial REITs–2.51% | | | | | | | | |
EastGroup Properties, Inc. | | | 15,627 | | | | 3,560,612 | |
|
| |
STAG Industrial, Inc. | | | 66,643 | | | | 3,196,198 | |
|
| |
| | | | | | | 6,756,810 | |
|
| |
| | |
Interactive Media & Services–0.89% | | | | | | | | |
Eventbrite, Inc., Class A(b)(c) | | | 137,706 | | | | 2,401,593 | |
|
| |
| |
Internet & Direct Marketing Retail–0.98% | | | | | |
Overstock.com, Inc.(b) | | | 44,940 | | | | 2,651,909 | |
|
| |
| |
Investment Banking & Brokerage–3.68% | | | | | |
LPL Financial Holdings, Inc. | | | 28,848 | | | | 4,618,277 | |
|
| |
Piper Sandler Cos. | | | 29,718 | | | | 5,304,960 | |
|
| |
| | | | | | | 9,923,237 | |
|
| |
| | |
Leisure Products–0.99% | | | | | | | | |
Acushnet Holdings Corp. | | | 50,210 | | | | 2,665,147 | |
|
| |
| | |
Life & Health Insurance–0.93% | | | | | | | | |
Primerica, Inc. | | | 16,339 | | | | 2,504,279 | |
|
| |
| |
Life Sciences Tools & Services–2.80% | | | | | |
Medpace Holdings, Inc.(b) | | | 18,506 | | | | 4,027,646 | |
|
| |
NeoGenomics, Inc.(b)(c) | | | 81,011 | | | | 2,764,095 | |
|
| |
Quanterix Corp.(b) | | | 17,875 | | | | 757,900 | |
|
| |
| | | | | | | 7,549,641 | |
|
| |
| | |
Multi-line Insurance–0.91% | | | | | | | | |
Assurant, Inc. | | | 15,668 | | | | 2,442,014 | |
|
| |
| |
Oil & Gas Equipment & Services–1.01% | | | | | |
Weatherford International PLC(b) | | | 98,484 | | | | 2,729,976 | |
|
| |
| | |
Packaged Foods & Meats–0.35% | | | | | | | | |
Calavo Growers, Inc. | | | 22,538 | | | | 955,611 | |
|
| |
| | |
Paper Packaging–0.78% | | | | | | | | |
Graphic Packaging Holding Co. | | | 107,295 | | | | 2,092,253 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
| |
Property & Casualty Insurance–0.65% | | | | | |
Hanover Insurance Group, Inc. (The) | | | 13,272 | | | $ | 1,739,428 | |
|
| |
| | |
Real Estate Services–0.62% | | | | | | | | |
FirstService Corp. (Canada) | | | 8,517 | | | | 1,673,842 | |
|
| |
| | |
Regional Banks–6.22% | | | | | | | | |
Columbia Banking System, Inc.(c) | | | 58,603 | | | | 1,917,490 | |
|
| |
Community Bank System, Inc. | | | 29,625 | | | | 2,206,470 | |
|
| |
Glacier Bancorp, Inc.(c) | | | 45,732 | | | | 2,593,004 | |
|
| |
Pacific Premier Bancorp, Inc. | | | 60,790 | | | | 2,433,424 | |
|
| |
Pinnacle Financial Partners, Inc. | | | 32,483 | | | | 3,102,127 | |
|
| |
South State Corp. | | | 23,453 | | | | 1,878,820 | |
|
| |
Webster Financial Corp. | | | 46,981 | | | | 2,623,419 | |
|
| |
| | | | | | | 16,754,754 | |
|
| |
| |
Research & Consulting Services–0.78% | | | | | |
Huron Consulting Group, Inc.(b) | | | 41,854 | | | | 2,088,515 | |
|
| |
| | |
Restaurants–0.90% | | | | | | | | |
Papa John’s International, Inc. | | | 18,191 | | | | 2,427,953 | |
|
| |
| | |
Semiconductors–6.68% | | | | | | | | |
Diodes, Inc.(b) | | | 35,305 | | | | 3,876,842 | |
|
| |
Lattice Semiconductor Corp.(b) | | | 47,521 | | | | 3,661,968 | |
|
| |
MACOM Technology Solutions Holdings, Inc.(b) | | | 44,294 | | | | 3,468,220 | |
|
| |
Power Integrations, Inc. | | | 34,619 | | | | 3,215,759 | |
|
| |
Semtech Corp.(b) | | | 42,277 | | | | 3,759,694 | |
|
| |
| | | | | | | 17,982,483 | |
|
| |
| | |
Specialized REITs–1.07% | | | | | | | | |
Gaming and Leisure Properties, Inc. | | | 59,516 | | | | 2,896,049 | |
|
| |
| | |
Specialty Chemicals–1.07% | | | | | | | | |
Ashland Global Holdings, Inc. | | | 26,708 | | | | 2,875,383 | |
|
| |
| | |
Steel–1.14% | | | | | | | | |
Cleveland–Cliffs, Inc.(b)(c) | | | 140,584 | | | | 3,060,514 | |
|
| |
| | |
Systems Software–0.93% | | | | | | | | |
CommVault Systems, Inc.(b) | | | 36,287 | | | | 2,500,900 | |
|
| |
| | |
Thrifts & Mortgage Finance–1.30% | | | | | | | | |
Essent Group Ltd. | | | 41,234 | | | | 1,877,384 | |
|
| |
Radian Group, Inc. | | | 76,949 | | | | 1,625,932 | |
|
| |
| | | | | | | 3,503,316 | |
|
| |
| | |
Tires & Rubber–0.42% | | | | | | | | |
Goodyear Tire & Rubber Co. (The)(b) | | | 52,866 | | | | 1,127,103 | |
|
| |
|
Trading Companies & Distributors–2.36% | |
Applied Industrial Technologies, Inc. | | | 30,838 | | | | 3,167,062 | |
|
| |
Univar Solutions, Inc.(b) | | | 112,911 | | | | 3,201,027 | |
|
| |
| | | | | | | 6,368,089 | |
|
| |
| | |
Trucking–0.96% | | | | | | | | |
Knight-Swift Transportation Holdings, Inc. | | | 42,514 | | | | 2,590,803 | |
|
| |
| | |
Water Utilities–1.18% | | | | | | | | |
California Water Service Group | | | 44,147 | | | | 3,172,403 | |
|
| |
Total Common Stocks & Other Equity Interests
(Cost $184,260,791) | | | | 264,658,238 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Small Cap Equity Fund |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
|
Money Market Funds–1.86% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(d)(e) | | | 1,751,611 | | | $ | 1,751,611 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(d)(e) | | | 1,258,354 | | | | 1,258,606 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(d)(e) | | | 2,001,841 | | | | 2,001,841 | |
|
| |
Total Money Market Funds (Cost $5,012,058) | | | | 5,012,058 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.11% (Cost $189,272,849) | | | | | | | 269,670,296 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
|
Money Market Funds–10.75% | |
Invesco Private Government Fund, 0.02%(d)(e)(f) | | | 8,691,666 | | | $ | 8,691,666 | |
|
| |
Invesco Private Prime Fund, 0.11%(d)(e)(f) | | | 20,276,498 | | | | 20,280,552 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $28,973,232) | | | | 28,972,218 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–110.86%
(Cost $218,246,081) | | | | 298,642,514 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(10.86)% | | | | (29,262,290 | ) |
|
| |
NET ASSETS–100.00% | | | | | | $ | 269,380,224 | |
|
| |
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 this security was out on loan at December 31, 2021. |
| (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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation
(Depreciation) | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $ 622,027 | | | | $ 22,590,811 | | | | $ (21,461,227 | ) | | | $ - | | | | $ - | | | | $ 1,751,611 | | | | $ 490 | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 398,835 | | | | 16,136,293 | | | | (15,276,329 | ) | | | - | | | | (193) | | | | 1,258,606 | | | | 189 | |
Invesco Treasury Portfolio, Institutional Class | | | 710,888 | | | | 25,818,069 | | | | (24,527,116 | ) | | | - | | | | - | | | | 2,001,841 | | | | 195 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | - | | | | 68,361,229 | | | | (59,669,563 | ) | | | - | | | | - | | | | 8,691,666 | | | | 1,137* | |
Invesco Private Prime Fund | | | - | | | | 119,480,763 | | | | (99,194,679 | ) | | | (1,014 | ) | | | (4,518) | | | | 20,280,552 | | | | 15,005* | |
Total | | | $1,731,750 | | | | $252,387,165 | | | | $(220,128,914 | ) | | | $(1,014 | ) | | | $(4,711) | | | | $33,984,276 | | | | $17,016 | |
| | * | 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, 2021. |
| (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. Small Cap Equity Fund |
Statement of Assets and Liabilities
December 31, 2021
| | |
Assets: | | |
Investments in unaffiliated securities, at value (Cost $184,260,791)* | | $264,658,238 |
Investments in affiliated money market funds, at value
(Cost $33,985,290) | | 33,984,276 |
Foreign currencies, at value (Cost $13,400) | | 13,469 |
Receivable for: | | |
Fund shares sold | | 55,622 |
Dividends | | 92,847 |
Investment for trustee deferred compensation and retirement plans | | 62,739 |
Other assets | | 1,063 |
Total assets | | 298,868,254 |
| |
Liabilities: | | |
Payable for: | | |
Investments purchased | | 35,317 |
Fund shares reacquired | | 107,033 |
Amount due custodian | | 116,696 |
Collateral upon return of securities loaned | | 28,973,232 |
Accrued fees to affiliates | | 140,858 |
Accrued other operating expenses | | 44,342 |
Trustee deferred compensation and retirement plans | | 70,552 |
Total liabilities | | 29,488,030 |
Net assets applicable to shares outstanding | | $269,380,224 |
| |
Net assets consist of: | | |
Shares of beneficial interest | | $150,725,661 |
Distributable earnings | | 118,654,563 |
| | | $269,380,224 |
| |
Net Assets: | | |
Series I | | $142,095,335 |
Series II | | $127,284,889 |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
Series I | | 6,048,397 |
Series II | | 5,851,455 |
Series I: | | |
Net asset value per share | | $ 23.49 |
Series II: | | |
Net asset value per share | | $ 21.75 |
| * | At December 31, 2021, securities with an aggregate value of $28,138,047 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $10,320) | | $ | 2,655,897 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $37,725) | | | 38,599 | |
|
| |
Total investment income | | | 2,694,496 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 2,015,608 | |
|
| |
Administrative services fees | | | 445,109 | |
|
| |
Custodian fees | | | 3,466 | |
|
| |
Distribution fees - Series II | | | 321,766 | |
|
| |
Transfer agent fees | | | 20,737 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 24,831 | |
|
| |
Reports to shareholders | | | 10,191 | |
|
| |
Professional services fees | | | 40,454 | |
|
| |
Other | | | 4,845 | |
|
| |
Total expenses | | | 2,887,007 | |
|
| |
Less: Fees waived | | | (1,755 | ) |
|
| |
Net expenses | | | 2,885,252 | |
|
| |
Net investment income (loss) | | | (190,756 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities | | | 40,459,830 | |
|
| |
Affiliated investment securities | | | (4,711 | ) |
|
| |
Foreign currencies | | | (282 | ) |
|
| |
| | | 40,454,837 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | |
Unaffiliated investment securities | | | 7,981,832 | |
|
| |
Affiliated investment securities | | | (1,014 | ) |
|
| |
Foreign currencies | | | 34 | |
|
| |
| | | 7,980,852 | |
|
| |
Net realized and unrealized gain | | | 48,435,689 | |
|
| |
Net increase in net assets resulting from operations | | $ | 48,244,933 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (190,756 | ) | | $ | 202,960 | |
|
| |
Net realized gain | | | 40,454,837 | | | | 13,012,954 | |
|
| |
Change in net unrealized appreciation | | | 7,980,852 | | | | 40,098,932 | |
|
| |
Net increase in net assets resulting from operations | | | 48,244,933 | | | | 53,314,846 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (7,741,480 | ) | | | (9,700,819 | ) |
|
| |
Series II | | | (7,308,525 | ) | | | (8,807,533 | ) |
|
| |
Total distributions from distributable earnings | | | (15,050,005 | ) | | | (18,508,352 | ) |
|
| |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | (5,565,314 | ) | | | (7,393,188 | ) |
|
| |
Series II | | | (2,537,132 | ) | | | 623,910 | |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (8,102,446 | ) | | | (6,769,278 | ) |
|
| |
Net increase in net assets | | | 25,092,482 | | | | 28,037,216 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 244,287,742 | | | | 216,250,526 | |
|
| |
End of year | | $ | 269,380,224 | | | $ | 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 |
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 12/31/21 | | | $20.62 | | | | $ 0.01 | | | | $ 4.19 | | | | $ 4.20 | | | | $(0.04 | ) | | | $(1.29 | ) | | | $(1.33 | ) | | | $23.49 | | | | 20.41 | % | | | $142,095 | | | | 0.95 | % | | | 0.95 | % | | | 0.04 | % | | | 21 | % |
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 | | | | 0.96 | | | | 0.21 | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | 19.19 | | | | (0.04 | ) | | | 3.89 | | | | 3.85 | | | | (0.00 | ) | | | (1.29 | ) | | | (1.29 | ) | | | 21.75 | | | | 20.09 | | | | 127,285 | | | | 1.20 | | | | 1.20 | | | | (0.21 | ) | | | 21 | |
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 | | | | 1.21 | | | | (0.04 | ) | | | 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 | |
| (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. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Small Cap Equity 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.
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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, fees paid to the Adviser were less than $500.
| 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, |
|
| Invesco V.I. Small Cap Equity Fund |
| | 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 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. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, the effective advisory fee rate incurred by the Fund was 0.744%.
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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $1,755.
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, 2021, Invesco was paid $38,851 for accounting and fund administrative services and was reimbursed $406,258 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, 2021, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
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| Invesco V.I. Small Cap Equity 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $768 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, 2021. 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 | | $ | 264,658,238 | | | | $ – | | | | $– | | | $264,658,238 |
Money Market Funds | | | 5,012,058 | | | | 28,972,218 | | | | – | | | 33,984,276 |
Total Investments | | $ | 269,670,296 | | | | $28,972,218 | | | | $– | | | $298,642,514 |
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, 2021, the Fund engaged in securities purchases of $2,555,915.
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, 2021 and 2020:
| | | | | | | | | | |
| | | 2021 | | | | | | 2020 |
Ordinary income* | | $ | 6,875,002 | | | | | | | $ 2,363,813 |
Long-term capital gain | | | 8,175,003 | | | | | | | 16,144,539 |
Total distributions | | $ | 15,050,005 | | | | | | | $18,508,352 |
| * | Includes short-term capital gain distributions, if any. |
|
| Invesco V.I. Small Cap Equity Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 7,174,735 | |
|
| |
Undistributed long-term capital gain | | | 32,195,093 | |
|
| |
Net unrealized appreciation – investments | | | 79,325,551 | |
|
| |
Net unrealized appreciation – foreign currencies | | | 69 | |
|
| |
Temporary book/tax differences | | | (40,885 | ) |
|
| |
Shares of beneficial interest | | | 150,725,661 | |
|
| |
Total net assets | | $ | 269,380,224 | |
|
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $54,096,580 and $77,350,857, 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 | | $ | 89,678,654 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (10,353,103 | ) |
|
| |
Net unrealized appreciation of investments | | $ | 79,325,551 | |
|
| |
Cost of investments for tax purposes is $219,316,963.
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, 2021, undistributed net investment income (loss) was increased by $230,145 and undistributed net realized gain was decreased by $230,145. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 1,024,540 | | | $ | 24,082,437 | | | | 1,036,038 | | | $ | 15,659,643 | |
|
| |
Series II | | | 1,032,659 | | | | 22,351,025 | | | | 1,139,291 | | | | 16,592,309 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 331,541 | | | | 7,741,480 | | | | 559,125 | | | | 9,700,819 | |
|
| |
Series II | | | 337,888 | | | | 7,308,525 | | | | 545,358 | | | | 8,807,533 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,605,120 | ) | | | (37,389,231 | ) | | | (1,963,194 | ) | | | (32,753,650 | ) |
|
| |
Series II | | | (1,480,025 | ) | | | (32,196,682 | ) | | | (1,631,642 | ) | | | (24,775,932 | ) |
|
| |
Net increase (decrease) in share activity | | | (358,517 | ) | | $ | (8,102,446 | ) | | | (315,024 | ) | | $ | (6,769,278 | ) |
|
| |
| (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. 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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
(07/01/21) | | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 | | Annualized
Expense Ratio |
Series I | | $1,000.00 | | $1,020.80 | | $4.84 | | $1,020.42 | | $4.84 | | 0.95% |
Series II | | 1,000.00 | | 1,019.30 | | 6.11 | | 1,019.16 | | 6.11 | | 1.20 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | $ | 8,175,003 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 29.14 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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) | | 186 | | 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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| 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) | | | | | | |
| 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort - 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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, 2021 |
Invesco V.I. Technology Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/esg. 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, 2021, Series I shares of Invesco V.I. Technology Fund (the Fund) underperformed the NASDAQ Composite Total Return 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | |
Series I Shares | | | 14.41 | % |
Series II Shares | | | 14.08 | |
NASDAQ Composite Total Return Index▼ (Broad Market/Style-Specific Index) | | | 22.18 | |
Lipper VUF Science & Technology Funds Classification Average∎ (Peer Group) | | | 18.97 | |
Source(s):▼Bloomberg LP; ∎Lipper Inc. | | | | |
Market conditions and your Fund
US political unrest and rising coronavirus (COVID-19) infection rates marked the start of the first quarter of 2021. Additionally, retail investors bid up select stocks like GameStop and AMC Theaters, ultimately causing a sharp selloff in late January. Corporate earnings generally beat expectations, but market volatility rose during the quarter as investors worried about rising bond yields and inflation. Despite the US Federal Reserve’s (the Fed’s) commitment to an accommodative policy, the 10-year US Treasury yield rose from 0.92% at the end of 2020 to 1.75%1 at the end of March 2021. Approval of a third COVID-19 vaccine boosted investors’ optimism for faster economic recovery. Although March saw increased volatility with consecutive down days in the US stock market, stocks continued to hit all-time highs through April 2021.
The US stock market once again hit new highs in the second quarter of 2021, despite higher volatility stemming from inflation concerns and the potential for rising interest rates. Investors remained optimistic about the strength of the economic recovery after the US gross domestic product (GDP) grew at a 6.4% annualized rate for the first quarter of 2021.2 Corporate earnings also remained strong as the majority of S&P 500 companies beat Wall Street earnings forecasts. US equity markets continued to move higher in July despite inflation concerns and increasing COVID-19 infection rates due to the rapidly spreading Delta variant. Despite the Consumer Price Index (CPI) increasing in June through September,3 the Fed declined to raise interest rates at its September Federal Open Market Committee (FOMC) meeting. The US stock market saw continued volatility in August and a selloff through most of September due to increasing concerns of inflation due to a spike in oil prices and supply chain shortages causing rising costs.
Equity markets were volatile in the fourth quarter of 2021 amid record inflation and the emergence of a new COVID-19 variant Omicron. Pandemic related supply chain disruption and labor shortages intensified during the
quarter, resulting in broadly higher input costs for companies and consumers alike. Additionally, the price of oil (West Texas Intermediate) rose to nearly $85 per barrel in October,1 causing higher gas prices for consumers and pushing energy stocks higher. The CPI report for November increased 0.8%, resulting in a 6.8% increase over the last 12 months, the highest since 1982.3 To combat inflation, the Fed announced a faster pace of “tapering” at its December meeting, pledging to end its asset purchase program by March 2022. The Fed also announced the potential for three interest rate increases in 2022. With solid corporate earnings and optimism about the COVID-19 Omicron strain reporting milder symptoms, stocks rallied at year-end and the S&P 500 Index returned 28.71%4 for the calendar year.
In 2021, the market was more risk-averse, favoring staple-like, value-oriented and very liquid large caps. Energy stocks, financials (especially equity real estate investment trusts/REITs) and select mega cap information technology (IT) stocks led the market. Utilities, consumer staples and communication services were laggards. In this landscape, the Fund produced a double-digit return, however, underperformed its broad market/style-specific benchmark during the fiscal year.
Stock selection in IT and consumer discretionary sectors were key detractors from relative returns. Within the IT sector, stock selection in software and a combination of stock selection and an overweight exposure in IT services were detractors, though this was offset by positive relative returns from stock selection and an overweight exposure in semiconductors. In addition to semiconductors, stock selection in the health care sector was also beneficial to relative returns, with life sciences tools & services being the key driver of stock selection with the sector. An underweight exposure in biotechnology also contributed positively to returns relative to the style-specific benchmark.
Top individual contributors to the Fund’s absolute performance during the fiscal year included Microsoft, Alphabet and Applied Materials.
Strong earnings results reflecting broad-based growth in digital advertising spending contributed to Alphabet’s strong performance during the fiscal year. Work-from-home and virtual school created a need for many Alphabet products including their cloud platform and streaming services. Their core product, the Google Search engine, has been enhanced through artificial intelligence to increase accuracy and allow for searching with images as well as words through Google Lens. They also sought to improve lives through eco-friendly routing and an emergency wildfire layer for drivers in the US using Google Maps.
Microsoft is the second largest provider of cloud infrastructure and services and continued to benefit from digital transformation tailwinds despite tough comparisons from the beginning of the pandemic. Alphabet and Microsoft also benefited from the defensive flight to larger, more liquid stocks as investors reduced cyclical exposure given higher inflation and the rise of particularly contagious COVID-19 variants of concern.
Applied Materials makes capital equipment used to manufacture semiconductor chips, liquid crystal displays and light-emitting diodes (LED’s). Long-term digital transformation has driven strong demand for semiconductor chips as content is growing in virtually every product from vehicles to toys. However, curtailments in spending in recent years, combined with supply disruptions from the pandemic, led to lean inventories and chip shortages. Governments globally are looking to expand onshore semiconductor manufacturing capacity to protect economic prosperity, innovation and national security. We believe Applied Materials would be a prime beneficiary of this increase in demand and capital spending.
Top individual detractors from the Fund’s absolute performance included RingCentral, Penn National Gaming and Reata Pharmaceuticals.
RingCentral is a rapidly growing leader which targets its cloud-based and integrated communications platforms at existing corporate phone systems. A fairly recent investment and partnership with Avaya (not a Fund holding) provides what we believe is a massive opportunity to drive rapid growth with Avaya’s existing user base. RingCentral suffered from the market’s rotation away from high growth stocks in favor of more defensive and value-oriented stocks. There had also been concerns that Microsoft (also a Fund holding) could take market share in this segment. We believe these fears were overblown.
Our primary reason for holding Penn National Gaming came after a 2018 U.S. Supreme Court ruling, where sports betting and online gambling became subject to the approval of any US state which chooses to legalize them. Regional casinos already have licenses and relationships to operate in many states, thus would be likely candidates for online and sports betting licenses. We also
|
| Invesco V.I. Technology Fund |
believe regional casinos would benefit from an economic reopening in 2021 while travel restrictions kept consumers close to home. Penn detracted primarily because economics from the legalization of individual state gambling contracts were at times lower than expected. The position in Penn National Gaming was sold as we sought to replace select cyclically-oriented stocks with longer term secular growth exposure given the prospect of slowing economic growth ahead.
Reata Pharmaceuticals was positioned for success but experienced a regulatory set back. Reata has two lead drugs, each targets rare but fatal diseases that have no alternative treatments. The drugs had completed pivotal points in clinical trials but were pending U.S. Food and Drug Administration (FDA) filings. Uncertainty entered when the Cardiovascular and Renal Drug Advisory Committee questioned whether the evidence presented in one of the trials demonstrated effectiveness of slowing progression of the disease and whether the benefits outweighed the risks. Ultimately, the committee decided more evidence would be needed, which caused the stock to sell off significantly.
At the close of the fiscal 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, the increased pace of health care innovation will continue to drive attractive long-term growth rates due to successful mapping of the human genome and recent productivity improvements, both of which have fostered faster and more effective targeting of promising therapeutics. We attempt to harness multi-year secular trends, which may benefit long-term investors regardless of near-term economic strength.
On the margin, we began reducing cyclical exposure and rotating towards what we believe will be a slowing growth environment, one which favors companies able to generate attractive growth rates. We expect higher inflation in the first half of 2022, though it may recede toward the second half as labor issues are resolved, inventories are rebuilt and supply chain disruptions fade. Importantly, the average consumer remains in a very strong position today with high savings and still pent-up demand for travel and experiences. As ever, we believe that change is the fuel for growth and portfolios, thus we seek “sharetakers”, companies that can gain market share through technology-enabled advantages in their business models and with offerings that benefit from the continued 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: Bloomberg LP
2 Source: US Bureau of Economic Analysis
3 Source: US Bureau of Labor Statistics
4 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. and its affiliates. 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 12/31/11
1 Source: Bloomberg LP
2 Source: Lipper Inc.
Past performance cannot guarantee future results.
| | | | |
| |
Average Annual Total Returns | |
As of 12/31/21 | |
| |
Series I Shares | | | | |
Inception (5/20/97) | | | 8.63 | % |
10 Years | | | 17.48 | |
5 Years | | | 25.03 | |
1 Year | | | 14.41 | |
| |
Series II Shares | | | | |
Inception (4/30/04) | | | 11.22 | % |
10 Years | | | 17.19 | |
5 Years | | | 24.71 | |
1 Year | | | 14.08 | |
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.
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| 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, 2021, and is based on total net assets.
∎ Unless otherwise noted, all data is provided by Invesco.
∎ To access your Fund’s reports/prospectus, visit invesco.com/fundreports.
About indexes used in this report
| ∎ | The NASDAQ Composite Total Return 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 | | | | 75.44 | % |
| |
Communication Services | | | | 14.13 | |
| |
Health Care | | | | 5.51 | |
| |
Consumer Discretionary | | | | 4.10 | |
| |
Money Market Funds Plus Other Assets Less Liabilities | | | | 0.82 | |
Top 10 Equity Holdings*
| | | | | | | |
| | | | | % of total net assets |
| | |
| 1. | | Microsoft Corp. | | | | 10.12 | % |
| | |
| 2. | | Alphabet, Inc., Class A | | | | 8.38 | |
| | |
| 3. | | Apple, Inc. | | | | 7.68 | |
| | |
| 4. | | NVIDIA Corp. | | | | 7.61 | |
| | |
| 5. | | Applied Materials, Inc. | | | | 3.93 | |
| | |
| 6. | | QUALCOMM, Inc. | | | | 3.31 | |
| | |
| 7. | | Amazon.com, Inc. | | | | 3.29 | |
| | |
| 8. | | ServiceNow, Inc. | | | | 3.15 | |
| | |
| 9. | | Meta Platforms, Inc., Class A | | | | 2.49 | |
| | |
| 10. | | salesforce.com, inc. | | | | 2.47 | |
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, 2021.
|
| Invesco V.I. Technology Fund |
Schedule of Investments(a)
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Common Stocks & Other Equity Interests–99.18% | |
Application Software–13.86% | |
Adobe, Inc.(b) | | | 5,754 | | | $ | 3,262,863 | |
|
| |
Couchbase, Inc.(b)(c) | | | 32,136 | | | | 802,114 | |
|
| |
Datadog, Inc., Class A(b) | | | 14,705 | | | | 2,619,107 | |
|
| |
DocuSign, Inc.(b) | | | 2,176 | | | | 331,427 | |
|
| |
Expensify, Inc., Class A(b)(c) | | | 29,869 | | | | 1,314,236 | |
|
| |
HubSpot, Inc.(b) | | | 5,958 | | | | 3,927,216 | |
|
| |
Matterport, Inc.(b)(c) | | | 32,237 | | | | 665,372 | |
|
| |
RingCentral, Inc., Class A(b) | | | 18,744 | | | | 3,511,688 | |
|
| |
salesforce.com, inc.(b) | | | 19,293 | | | | 4,902,930 | |
|
| |
Synopsys, Inc.(b) | | | 12,610 | | | | 4,646,785 | |
|
| |
Workday, Inc., Class A(b) | | | 5,487 | | | | 1,498,939 | |
|
| |
| | | | 27,482,677 | |
|
| |
|
Data Processing & Outsourced Services–4.05% | |
Adyen N.V. (Netherlands)(b)(d) | | | 698 | | | | 1,826,124 | |
|
| |
Block, Inc., Class A(b)(c) | | | 8,553 | | | | 1,381,395 | |
|
| |
PayPal Holdings, Inc.(b) | | | 25,567 | | | | 4,821,425 | |
|
| |
| | | | 8,028,944 | |
|
| |
|
Health Care Equipment–2.17% | |
Intuitive Surgical, Inc.(b) | | | 8,822 | | | | 3,169,744 | |
|
| |
Shockwave Medical, Inc.(b) | | | 6,414 | | | | 1,143,809 | |
|
| |
| | | | 4,313,553 | |
|
| |
|
Hotels, Resorts & Cruise Lines–0.81% | |
Booking Holdings, Inc.(b) | | | 669 | | | | 1,605,085 | |
|
| |
|
Interactive Home Entertainment–1.45% | |
Electronic Arts, Inc. | | | 14,132 | | | | 1,864,011 | |
|
| |
Sea Ltd., ADR (Taiwan)(b) | | | 4,499 | | | | 1,006,471 | |
|
| |
| | | | 2,870,482 | |
|
| |
|
Interactive Media & Services–12.68% | |
Alphabet, Inc., Class A(b) | | | 5,736 | | | | 16,617,421 | |
|
| |
Meta Platforms, Inc., Class A(b) | | | 14,691 | | | | 4,941,318 | |
|
| |
ZoomInfo Technologies, Inc., Class A(b) | | | 55,835 | | | | 3,584,607 | |
|
| |
| | | | 25,143,346 | |
|
| |
|
Internet & Direct Marketing Retail–3.29% | |
Amazon.com, Inc.(b) | | | 1,958 | | | | 6,528,638 | |
|
| |
|
Internet Services & Infrastructure–6.19% | |
Cloudflare, Inc., Class A(b) | | | 18,507 | | | | 2,433,671 | |
|
| |
MongoDB, Inc.(b) | | | 7,269 | | | | 3,847,845 | |
|
| |
Shopify, Inc., Class A (Canada)(b) | | | 1,773 | | | | 2,442,112 | |
|
| |
Snowflake, Inc., Class A(b) | | | 10,487 | | | | 3,552,471 | |
|
| |
| | | | 12,276,099 | |
|
| |
|
Life Sciences Tools & Services–3.24% | |
Avantor, Inc.(b) | | | 94,689 | | | | 3,990,195 | |
|
| |
IQVIA Holdings, Inc.(b) | | | 8,629 | | | | 2,434,586 | |
|
| |
| | | | 6,424,781 | |
|
| |
|
Pharmaceuticals–0.10% | |
Reata Pharmaceuticals, Inc., Class A(b) | | | 7,367 | | | | 194,268 | |
|
| |
| | | | | | | | |
| | | Shares | | | Value | |
|
| |
Semiconductor Equipment–7.20% | |
Applied Materials, Inc. | | | 49,451 | | | $ | 7,781,609 | |
|
| |
ASML Holding N.V., New York Shares (Netherlands) | | | 5,220 | | | | 4,155,851 | |
|
| |
KLA Corp. | | | 5,443 | | | | 2,341,089 | |
|
| |
| | | | 14,278,549 | |
|
| |
|
Semiconductors–17.31% | |
Advanced Micro Devices, Inc.(b) | | | 27,851 | | | | 4,007,759 | |
|
| |
Lattice Semiconductor Corp.(b) | | | 44,541 | | | | 3,432,330 | |
|
| |
Monolithic Power Systems, Inc. | | | 4,261 | | | | 2,102,079 | |
|
| |
NVIDIA Corp. | | | 51,326 | | | | 15,095,490 | |
|
| |
ON Semiconductor Corp.(b) | | | 46,347 | | | | 3,147,888 | |
|
| |
QUALCOMM, Inc. | | | 35,866 | | | | 6,558,815 | |
|
| |
| | | | 34,344,361 | |
|
| |
|
Systems Software–19.15% | |
Darktrace PLC (United Kingdom)(b) | | | 107,166 | | | | 607,035 | |
|
| |
Gitlab, Inc., Class A(b)(c) | | | 3,779 | | | | 328,773 | |
|
| |
KnowBe4, Inc., Class A(b) | | | 98,660 | | | | 2,263,261 | |
|
| |
Microsoft Corp. | | | 59,655 | | | | 20,063,170 | |
|
| |
Palo Alto Networks, Inc.(b) | | | 8,757 | | | | 4,875,547 | |
|
| |
ServiceNow, Inc.(b) | | | 9,620 | | | | 6,244,438 | |
|
| |
Zscaler, Inc.(b) | | | 11,178 | | | | 3,591,827 | |
|
| |
| | | | 37,974,051 | |
|
| |
|
Technology Hardware, Storage & Peripherals–7.68% | |
Apple, Inc. | | | 85,771 | | | | 15,230,356 | |
|
| |
Total Common Stocks & Other Equity Interests (Cost $107,646,341) | | | | 196,695,190 | |
|
| |
|
Money Market Funds–0.99% | |
Invesco Government & Agency Portfolio, Institutional Class,
0.03%(e)(f) | | | 687,446 | | | | 687,446 | |
|
| |
Invesco Liquid Assets Portfolio, Institutional Class, 0.02%(e)(f) | | | 490,904 | | | | 491,002 | |
|
| |
Invesco Treasury Portfolio, Institutional Class, 0.01%(e)(f) | | | 785,653 | | | | 785,653 | |
|
| |
Total Money Market Funds
(Cost $1,964,101) | | | | 1,964,101 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding investments purchased with cash collateral from securities on loan)-100.17%
(Cost $109,610,442) | | | | | | | 198,659,291 | |
|
| |
|
Investments Purchased with Cash Collateral from Securities on Loan | |
|
Money Market Funds–2.30% | |
Invesco Private Government Fund, 0.02%(e)(f)(g) | | | 1,370,979 | | | | 1,370,979 | |
|
| |
Invesco Private Prime Fund,
0.11%(e)(f)(g) | | | 3,198,311 | | | | 3,198,950 | |
|
| |
Total Investments Purchased with Cash Collateral from Securities on Loan
(Cost $4,569,929) | | | | 4,569,929 | |
|
| |
TOTAL INVESTMENTS IN SECURITIES–102.47%
(Cost $114,180,371) | | | | 203,229,220 | |
|
| |
OTHER ASSETS LESS LIABILITIES–(2.47)% | | | | (4,897,665 | ) |
|
| |
NET ASSETS–100.00% | | | | $198,331,555 | |
|
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. Technology Fund |
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at December 31, 2021. |
| (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, 2021 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | Purchases
at Cost | | Proceeds
from Sales | | Change in
Unrealized
Appreciation | | Realized
Gain
(Loss) | | Value
December 31, 2021 | | Dividend Income |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Government & Agency Portfolio, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Institutional Class | | | $ | 1,133,386 | | | | $ | 25,710,378 | | | | $ | (26,156,318 | ) | | | $ | - | | | | $ | - | | | | $ | 687,446 | | | | $ | 141 | |
Invesco Liquid Assets Portfolio, Institutional | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class | | | | 617,507 | | | | | 18,364,556 | | | | | (18,491,102 | ) | | | | 26 | | | | | 15 | | | | | 491,002 | | | | | 64 | |
Invesco Treasury Portfolio, Institutional Class | | | | 1,295,298 | | | | | 29,383,289 | | | | | (29,892,934 | ) | | | | - | | | | | - | | | | | 785,653 | | | | | 59 | |
Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco Private Government Fund | | | | 684,163 | | | | | 34,943,704 | | | | | (34,256,888 | ) | | | | - | | | | | - | | | | | 1,370,979 | | | | | 194* | |
Invesco Private Prime Fund | | | | 1,026,245 | | | | | 73,176,363 | | | | | (71,003,093 | ) | | | | - | | | | | (565) | | | | | 3,198,950 | | | | | 2,442* | |
Total | | | $ | 4,756,599 | | | | $ | 181,578,290 | | | | $ | (179,800,335 | ) | | | $ | 26 | | | | $ | (550) | | | | $ | 6,534,030 | | | | $ | 2,900 | |
| | * | 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, 2021. |
| (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. Technology Fund |
Statement of Assets and Liabilities
December 31, 2021
Assets:
| | | | |
Investments in unaffiliated securities, at value
(Cost $107,646,341)* | | $ | 196,695,190 | |
|
| |
Investments in affiliated money market funds, at value
(Cost $6,534,030) | | | 6,534,030 | |
|
| |
Foreign currencies, at value (Cost $151) | | | 144 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 98,723 | |
|
| |
Dividends | | | 13,980 | |
|
| |
Investment for trustee deferred compensation and retirement plans | | | 51,257 | |
|
| |
Other assets | | | 787 | |
|
| |
Total assets | | | 203,394,111 | |
|
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 113,043 | |
|
| |
Amount due custodian | | | 193,750 | |
|
| |
Collateral upon return of securities loaned | | | 4,569,929 | |
|
| |
Accrued fees to affiliates | | | 91,647 | |
|
| |
Accrued other operating expenses | | | 35,524 | |
|
| |
Trustee deferred compensation and retirement plans | | | 58,663 | |
|
| |
Total liabilities | | | 5,062,556 | |
|
| |
Net assets applicable to shares outstanding | | $ | 198,331,555 | |
|
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 57,889,354 | |
|
| |
Distributable earnings | | | 140,442,201 | |
|
| |
| | $ | 198,331,555 | |
|
| |
| |
Net Assets: | | | | |
Series I | | $ | 185,270,090 | |
|
| |
Series II | | $ | 13,061,465 | |
|
| |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Series I | | | 4,865,830 | |
|
| |
Series II | | | 371,034 | |
|
| |
Series I: | | | | |
Net asset value per share | | $ | 38.08 | |
|
| |
Series II: | | | | |
Net asset value per share | | $ | 35.20 | |
|
| |
| * | At December 31, 2021, securities with an aggregate value of $4,445,109 were on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
Investment income:
| | | | |
Dividends (net of foreign withholding taxes of $12,462) | | $ | 566,369 | |
|
| |
Dividends from affiliated money market funds (includes securities lending income of $42,327) | | | 42,591 | |
|
| |
Total investment income | | | 608,960 | |
|
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,523,095 | |
|
| |
Administrative services fees | | | 334,466 | |
|
| |
Distribution fees - Series II | | | 33,463 | |
|
| |
Transfer agent fees | | | 19,571 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 24,286 | |
|
| |
Reports to shareholders | | | 33,181 | |
|
| |
Professional services fees | | | 51,223 | |
|
| |
Other | | | (374 | ) |
|
| |
Total expenses | | | 2,018,911 | |
|
| |
Less: Fees waived | | | (510 | ) |
|
| |
Net expenses | | | 2,018,401 | |
|
| |
Net investment income (loss) | | | (1,409,441 | ) |
|
| |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (includes net gains (losses) from securities sold to affiliates of $(817,372)) | | | 52,711,822 | |
|
| |
Affiliated investment securities | | | (550 | ) |
|
| |
Foreign currencies | | | 25,610 | |
|
| |
| | | 52,736,882 | |
|
| |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities | | | (24,327,385 | ) |
|
| |
Affiliated investment securities | | | 26 | |
|
| |
Foreign currencies | | | (176 | ) |
|
| |
| | | (24,327,535 | ) |
|
| |
Net realized and unrealized gain | | | 28,409,347 | |
|
| |
Net increase in net assets resulting from operations | | $ | 26,999,906 | |
|
| |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
|
| |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (1,409,441 | ) | | $ | (869,121 | ) |
|
| |
Net realized gain | | | 52,736,882 | | | | 19,539,973 | |
|
| |
Change in net unrealized appreciation (depreciation) | | | (24,327,535 | ) | | | 43,894,069 | |
|
| |
Net increase in net assets resulting from operations | | | 26,999,906 | | | | 62,564,921 | |
|
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (17,158,247 | ) | | | (14,122,842 | ) |
|
| |
Series II | | | (1,327,101 | ) | | | (1,087,242 | ) |
|
| |
Total distributions from distributable earnings | | | (18,485,348 | ) | | | (15,210,084 | ) |
|
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | (10,621,033 | ) | | | 16,335,060 | |
|
| |
Series II | | | (577,965 | ) | | | (165,991 | ) |
|
| |
Net increase (decrease) in net assets resulting from share transactions | | | (11,198,998 | ) | | | 16,169,069 | |
|
| |
Net increase (decrease) in net assets | | | (2,684,440 | ) | | | 63,523,906 | |
|
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 201,015,995 | | | | 137,492,089 | |
|
| |
End of year | | $ | 198,331,555 | | | $ | 201,015,995 | |
|
| |
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 12/31/21 | | | $ | 36.55 | | | | $ | (0.27 | ) | | | $ | 5.62 | | | | $ | 5.35 | | | | $ | (3.82 | ) | | | $ | 38.08 | | | | | 14.41 | % | | | $ | 185,270 | | | | | 0.98 | % | | | | 0.98 | % | | | | (0.68 | )% | | | | 90 | % |
Year ended 12/31/20 | | | | 27.23 | | | | | (0.17 | ) | | | | 12.49 | | | | | 12.32 | | | | | (3.00 | ) | | | | 36.55 | | | | | 46.11 | | | | | 187,801 | | | | | 0.98 | | | | | 0.98 | | | | | (0.53 | ) | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 34.13 | | | | | (0.34 | ) | | | | 5.23 | | | | | 4.89 | | | | | (3.82 | ) | | | | 35.20 | | | | | 14.08 | | | | | 13,061 | | | | | 1.23 | | | | | 1.23 | | | | | (0.93 | ) | | | | 90 | |
Year ended 12/31/20 | | | | 25.63 | | | | | (0.23 | ) | | | | 11.73 | | | | | 11.50 | | | | | (3.00 | ) | | | | 34.13 | | | | | 45.79 | | | | | 13,215 | | | | | 1.23 | | | | | 1.23 | | | | | (0.78 | ) | | | | 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 | |
| (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. |
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, 2021
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. The Fund is classified as non-diversified. The Fund’s classification changed from diversified to non-diversified on April 30, 2021. 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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. Technology 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, the Fund paid the Adviser $1,076 in fees for securities lending agent services.
| 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.
|
| Invesco V.I. Technology Fund |
| 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 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. The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly.
| M. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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, 2021, 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, 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 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, 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, 2023, 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, 2021, the Adviser waived advisory fees of $510.
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, 2021, Invesco was paid $28,896 for accounting and fund administrative services and was reimbursed $305,570 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, 2021, 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
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| Invesco V.I. Technology 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, 2021, expenses incurred under the Plan are detailed in the Statement of Operations as Distribution fees.
For the year ended December 31, 2021, the Fund incurred $4,405 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, 2021. 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 | | $ | 194,262,031 | | | $ | 2,433,159 | | | | $– | | | $ | 196,695,190 | |
Money Market Funds | | | 1,964,101 | | | | 4,569,929 | | | | – | | | | 6,534,030 | |
|
| |
Total Investments | | $ | 196,226,132 | | | $ | 7,003,088 | | | | $– | | | $ | 203,229,220 | |
|
| |
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, 2021, the Fund engaged in securities sales of $1,770,187, which resulted in net realized gains (losses) of $(817,372).
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, 2021 and 2020:
| | | | | | | | | | | | |
| | | 2021 | | | | | | 2020 | |
|
| |
Ordinary income* | | $ | 1,934,423 | | | | | | | $ | 1,043,018 | |
|
| |
Long-term capital gain | | | 16,550,925 | | | | | | | | 14,167,066 | |
|
| |
Total distributions | | $ | 18,485,348 | | | | | | | $ | 15,210,084 | |
|
| |
| * | Includes short-term capital gain distributions, if any. |
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| Invesco V.I. Technology Fund |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed long-term capital gain | | $ | 51,841,746 | |
|
| |
Net unrealized appreciation — investments | | | 88,634,476 | |
|
| |
Net unrealized appreciation (depreciation) — foreign currencies | | | (7 | ) |
|
| |
Temporary book/tax differences | | | (34,014 | ) |
|
| |
Shares of beneficial interest | | | 57,889,354 | |
|
| |
Total net assets | | $ | 198,331,555 | |
|
| |
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, 2021.
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $180,734,525 and $210,377,655, 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 | | | $93,827,212 | |
|
| |
Aggregate unrealized (depreciation) of investments | | | (5,192,736 | ) |
|
| |
Net unrealized appreciation of investments | | | $88,634,476 | |
|
| |
Cost of investments for tax purposes is $114,594,744.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on December 31, 2021, undistributed net investment income (loss) was increased by $1,431,727, undistributed net realized gain was decreased by $25,818 and shares of beneficial interest was decreased by $1,405,909. 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, 2021(a) | | | December 31, 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
|
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 781,529 | | | $ | 30,696,876 | | | | 1,316,336 | | | $ | 40,969,639 | |
|
| |
Series II | | | 35,254 | | | | 1,276,578 | | | | 91,668 | | | | 2,566,999 | |
|
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 441,313 | | | | 17,158,247 | | | | 417,589 | | | | 14,122,842 | |
|
| |
Series II | | | 36,905 | | | | 1,327,101 | | | | 34,417 | | | | 1,087,242 | |
|
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (1,494,672 | ) | | | (58,476,156 | ) | | | (1,271,839 | ) | | | (38,757,421 | ) |
|
| |
Series II | | | (88,379 | ) | | | (3,181,644 | ) | | | (136,171 | ) | | | (3,820,232 | ) |
|
| |
Net increase (decrease) in share activity | | | (288,050 | ) | | $ | (11,198,998 | ) | | | 452,000 | | | $ | 16,169,069 | |
|
| |
| (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. |
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| 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the five years in the period ended December 31, 2021 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, 2021 by correspondence with the custodian, transfer agent and broker. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. 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, 2021 through December 31, 2021.
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 (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,026.40 | | $4.90 | | $1,020.37 | | $4.89 | | 0.96% |
Series II | | 1,000.00 | | 1,024.90 | | 6.18 | | 1,019.11 | | 6.16 | | 1.21 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
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| 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 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 their fiscal year ended December 31, 2021:
| | | | | | | | |
Federal and State Income Tax | | | | | | |
Long-Term Capital Gain Distributions | | | $16,550,925 | | | | | |
Qualified Dividend Income* | | | 0.00 | % | | | | |
Corporate Dividends Received Deduction* | | | 28.13 | % | | | | |
U.S. Treasury Obligations* | | | 0.00 | % | | | | |
Qualified Business Income* | | | 0.00 | % | | | | |
Business Interest Income* | | | 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. 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) | | 186 | | 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. 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 – 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| 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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
| Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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| 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) | | | | |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort – 1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| 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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes – 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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. Technology Fund |
| | |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco V.I. U.S. Government Money Portfolio
The Fund provides a complete list of its portfolio 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/corporate/about-us/esg. 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-VIGMKT-AR-1 |
Management’s Discussion
| | | | |
Fund Information | | | | |
This annual report for Invesco V.I. U.S. Government Money Portfolio (the Fund) covers the year ended December 31, 2021. As of December 31, 2021, the Fund’s net assets totaled $461 million. As of the same date, the Fund’s weighted average maturity was 30 days and the Fund’s weighted average life was 102 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
Similar to 2020, 2021 was dominated by the COVID-19 pandemic. Vaccination levels rose in the US, initially causing infection rates to decrease and enabling the economy to reopen. However, the US faced significant headwinds in the form of the Delta variant mid-year, and eventually, the highly infectious Omicron variant towards the end of 2021.
Much of the second half of 2021 was also impacted by the debt ceiling agreement, which was unresolved until the end of the fiscal year. In the fall, a temporary agreement was reached by Congress, where a short-term debt ceiling increase was passed. Subsequently, a longer-term agreement was reached in December by Congress. The debt ceiling had a direct impact on supply during the third quarter, as net US Treasury issuance declined and the US Treasury General Account (TGA) balance decreased by $637 billion.1
The US Federal Reserve (the Fed) maintained monetary policy accommodative throughout the fiscal year and showed a commitment to low rates by keeping the federal funds target range at 0.00% to 0.25% throughout the year.2 For nearly the entirety of 2021, the Fed also maintained its asset purchases (quantitative easing) at a level of at least $120 billion per month and remained on hold until there had been evidence of progress made towards its dual mandate.2 In December, the Federal Open Market Committee (FOMC) announced it had begun its tapering of asset purchases, at a pace that was faster than had been previously anticipated.
Money market curves steepened throughout 2021, with a larger move during the fourth quarter on expectations of a more aggressive Fed in 2022. Year over year, the yield on the three-month Treasury bill decreased from 0.07% to 0.04% while the yield on the three-month and 12-month bills increased from 0.09% to 0.19% and 0.11% to 0.38%, respectively.1 Short-term Treasury notes also increased dramatically, along with longer-term bond yields. The two-year Treasury note increased from 0.12% to 0.73%
and the 10-year from 0.92% to 1.51% over the year.1
Money market fund industry assets increased overall over the year, with industry assets adding $410 billion over the year to end 2021 at $4.705 trillion.3 Government money market funds experienced the largest increase in assets, while prime and tax-exempt money market funds saw a decline in overall assets.
At the close of the year, it is Invesco Global Liquidity’s view that the FOMC monetary policy directive could be moved off the zero bound in 2022, with the potential for at least two or three interest rate hikes.
For over 40 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. U.S. Government Money Portfolio.
1 Source: Bloomberg LP
2 Source: US Federal Reserve
| 3 | Source: Bloomberg LP, Investment Company Institute (ICI) |
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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 12/31/2021 | | | | |
| |
| 1-7 | | | 32.8% | |
| 8-30 | | | 14.5 | |
| 31-60 | | | 18.0 | |
| 61-90 | | | 12.7 | |
| 91-180 | | | 5.7 | |
| 181+ | | | 16.3 | |
*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. U.S. Government Money Portfolio |
Supplemental Information
Invesco V.I. U.S. Government Money Portfolio’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, 2021, and is based on total net assets. |
| ∎ | Unless otherwise noted, all data is provided by Invesco. |
| ∎ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
|
| Invesco V.I. U.S. Government Money Portfolio |
Schedule of Investments
December 31, 2021
| | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount
(000) | | | Value |
U.S. Treasury Securities-59.19% | | | | | | | | | | | | | | |
U.S. Treasury Bills-49.63%(a) | | | | | | | | | | | | | | |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 01/04/2022 | | | $ | 8,000 | | | $ 7,999,969 |
| | | | |
U.S. Treasury Bills | | | 0.04 | % | | | 01/11/2022 | | | | 4,000 | | | 3,999,957 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 01/13/2022 | | | | 17,000 | | | 16,999,717 |
| | | | |
U.S. Treasury Bills | | | 0.04 | % | | | 01/18/2022 | | | | 10,000 | | | 9,999,811 |
| | | | |
U.S. Treasury Bills | | | 0.04%-0.06 | % | | | 01/20/2022 | | | | 11,000 | | | 10,999,704 |
| | | | |
U.S. Treasury Bills | | | 0.04%-0.05 | % | | | 01/25/2022 | | | | 10,000 | | | 9,999,722 |
| | | | |
U.S. Treasury Bills | | | 0.06%-0.09 | % | | | 01/27/2022 | | | | 8,000 | | | 7,999,632 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 02/01/2022 | | | | 16,000 | | | 15,999,321 |
| | | | |
U.S. Treasury Bills | | | 0.05%-0.06 | % | | | 02/03/2022 | | | | 14,000 | | | 13,999,345 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 02/08/2022 | | | | 10,000 | | | 9,999,472 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 02/10/2022 | | | | 2,184 | | | 2,183,891 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 02/15/2022 | | | | 10,000 | | | 9,999,391 |
| | | | |
U.S. Treasury Bills | | | 0.05%-0.06 | % | | | 02/22/2022 | | | | 17,000 | | | 16,998,722 |
| | | | |
U.S. Treasury Bills | | | 0.05%-0.06 | % | | | 02/24/2022 | | | | 6,000 | | | 5,999,550 |
| | | | |
U.S. Treasury Bills | | | 0.06 | % | | | 03/01/2022 | | | | 6,000 | | | 5,999,459 |
| | | | |
U.S. Treasury Bills | | | 0.05 | % | | | 03/03/2022 | | | | 10,000 | | | 9,999,153 |
| | | | |
U.S. Treasury Bills | | | 0.06 | % | | | 03/10/2022 | | | | 12,000 | | | 11,998,753 |
| | | | |
U.S. Treasury Bills | | | 0.06 | % | | | 03/17/2022 | | | | 11,000 | | | 10,998,740 |
| | | | |
U.S. Treasury Bills | | | 0.07 | % | | | 03/29/2022 | | | | 3,000 | | | 2,999,489 |
| | | | |
U.S. Treasury Bills | | | 0.09 | % | | | 03/31/2022 | | | | 10,000 | | | 9,997,899 |
| | | | |
U.S. Treasury Bills | | | 0.07 | % | | | 04/21/2022 | | | | 6,000 | | | 5,998,808 |
| | | | |
U.S. Treasury Bills | | | 0.11 | % | | | 04/26/2022 | | | | 14,000 | | | 13,995,080 |
| | | | |
U.S. Treasury Bills | | | 0.09 | % | | | 06/02/2022 | | | | 2,000 | | | 1,999,240 |
| | | | |
U.S. Treasury Bills | | | 0.11 | % | | | 06/09/2022 | | | | 2,000 | | | 1,999,072 |
| | | | |
U.S. Treasury Bills | | | 0.07 | % | | | 06/16/2022 | | | | 2,500 | | | 2,499,193 |
| | | | |
U.S. Treasury Bills | | | 0.08 | % | | | 07/14/2022 | | | | 2,000 | | | 1,999,192 |
| | | | |
U.S. Treasury Bills | | | 0.08 | % | | | 08/11/2022 | | | | 5,000 | | | 4,997,533 |
| | | | |
| | | | | | | | | | | | | | | 228,659,815 |
| | | | |
U.S. Treasury Floating Rate Notes-8.03% | | | | | | | | | | | | | | |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.15%)(b) | | | 0.24 | % | | | 01/31/2022 | | | | 2,000 | | | 1,999,972 |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.06%)(b) | | | 0.14 | % | | | 10/31/2022 | | | | 1,000 | | | 999,958 |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.05%)(b) | | | 0.13 | % | | | 01/31/2023 | | | | 3,000 | | | 3,000,406 |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | | | 0.12 | % | | | 04/30/2023 | | | | 11,000 | | | 11,000,376 |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.03%)(b) | | | 0.11 | % | | | 07/31/2023 | | | | 6,000 | | | 6,000,096 |
| | | | |
U.S. Treasury Floating Rate Notes (3 mo. U.S. Treasury Bill Money Market Yield Rate + 0.04%)(b) | | | 0.12 | % | | | 10/31/2023 | | | | 14,000 | | | 14,000,630 |
| | | | |
| | | | | | | | | | | | | | | 37,001,438 |
| | | | |
U.S. Treasury Notes-1.53% | | | | | | | | | | | | | | |
| | | | |
U.S. Treasury Notes | | | 2.50 | % | | | 01/15/2022 | | | | 5,000 | | | 5,004,620 |
| | | | |
U.S. Treasury Notes | | | 2.00 | % | | | 07/31/2022 | | | | 2,000 | | | 2,022,078 |
| | | | |
| | | | | | | | | | | | | | | 7,026,698 |
| | | | |
Total U.S. Treasury Securities (Cost $272,687,951) | | | | | | | | | | | | | | 272,687,951 |
| | | | |
U.S. Government Sponsored Agency Securities-14.43% | | | | | | | | | | | | | | |
Federal Farm Credit Bank (FFCB)-7.49% | | | | | | | | | | | | | | |
| | | | |
Federal Farm Credit Bank (SOFR + 0.08%)(b) | | | 0.13 | % | | | 03/10/2022 | | | | 3,000 | | | 3,000,000 |
| | | | |
Federal Farm Credit Bank (SOFR + 0.19%)(b) | | | 0.24 | % | | | 07/14/2022 | | | | 3,000 | | | 3,000,000 |
| | | | |
Federal Farm Credit Bank (SOFR + 0.07%)(b) | | | 0.12 | % | | | 08/11/2022 | | | | 5,000 | | | 5,000,000 |
| | | | |
Federal Farm Credit Bank (SOFR + 0.09%)(b) | | | 0.13 | % | | | 10/07/2022 | | | | 5,000 | | | 5,000,000 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. U.S. Government Money Portfolio |
| | | | | | | | | | | | | | | | |
| | | Interest
Rate | | | Maturity
Date | | | Principal
Amount (000) | | | Value | |
Federal Farm Credit Bank (FFCB)-(continued) | | | | | | | | | | | | | | | | |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 10/12/2022 | | | $ | 2,000 | | | $ | 1,999,953 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.01%)(b) | | | 0.06 | % | | | 11/16/2022 | | | | 2,000 | | | | 1,999,964 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 02/09/2023 | | | | 1,000 | | | | 1,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.05%)(b) | | | 0.10 | % | | | 02/17/2023 | | | | 2,000 | | | | 2,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.04%)(b) | | | 0.09 | % | | | 03/10/2023 | | | | 1,000 | | | | 1,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.04%)(b) | | | 0.09 | % | | | 05/19/2023 | | | | 1,000 | | | | 1,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 06/14/2023 | | | | 1,000 | | | | 1,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.03%)(b) | | | 0.08 | % | | | 07/07/2023 | | | | 2,000 | | | | 2,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.05%)(b) | | | 0.10 | % | | | 09/29/2023 | | | | 1,000 | | | | 1,000,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 11/07/2023 | | | | 3,500 | | | | 3,500,000 | |
|
| |
Federal Farm Credit Bank (SOFR + 0.06%)(b) | | | 0.11 | % | | | 12/13/2023 | | | | 2,000 | | | | 2,000,000 | |
| |
| | | | | | | | | | | | | | | 34,499,917 | |
| |
| | | | |
Federal Home Loan Bank (FHLB)-0.43% | | | | | | | | | | | | | | | | |
Federal Home Loan Bank(a) | | | 0.05 | % | | | 01/19/2022 | | | | 2,000 | | | | 1,999,955 | |
| |
| | | | |
Federal National Mortgage Association (FNMA)-6.51% | | | | | | | | | | | | | | | | |
Federal National Mortgage Association (SOFR + 0.30%)(b) | | | 0.35 | % | | | 01/07/2022 | | | | 20,000 | | | | 20,000,000 | |
|
| |
Federal National Mortgage Association (SOFR + 0.22%)(b) | | | 0.27 | % | | | 03/16/2022 | | | | 10,000 | | | | 10,000,000 | |
| |
| | | | | | | | | | | | | | | 30,000,000 | |
| |
Total U.S. Government Sponsored Agency Securities
(Cost $66,499,872) | | | | | | | | | | | | | | | 66,499,872 | |
| |
TOTAL INVESTMENTS IN SECURITIES (excluding Repurchase Agreements)-73.62% (Cost $339,187,823) | | | | | | | | | | | | | | | 339,187,823 | |
| |
| | | | |
| | | | | | | | | Repurchase
Amount | | | | |
Repurchase Agreements-26.70%(c) | | | | | | | | | | | | | | | | |
RBC Dominion Securities Inc., agreement dated 12/31/2021, maturing value of $63,000,263 (collateralized by domestic agency mortgage-backed securities and U.S. Treasury obligations valued at $64,260,269; 0.00% - 6.50%; 01/15/2022 - 12/01/2051) | | | 0.05 | % | | | 01/03/2022 | | | | 63,000,263 | | | | 63,000,000 | |
|
| |
TD Securities (USA) LLC, term agreement dated 12/29/2021, maturing value of $60,000,642 (collateralized by U.S. Treasury obligations valued at $61,200,524; 2.00% - 2.38%; 06/30/2024 - 05/15/2027)(d) | | | 0.06 | % | | | 01/05/2022 | | | | 60,000,642 | | | | 60,000,000 | |
| |
Total Repurchase Agreements (Cost $123,000,000) | | | | | | | | | | | | | | | 123,000,000 | |
| |
TOTAL INVESTMENTS IN SECURITIES(e) -100.32%
(Cost $462,187,823) | | | | | | | | | | | | | | | 462,187,823 | |
| |
OTHER ASSETS LESS LIABILITIES-(0.32)% | | | | | | | | | | | | | | | (1,492,582 | ) |
| |
NET ASSETS-100.00% | | | | | | | | | | | | | | $ | 460,695,241 | |
| |
Investment Abbreviations:
SOFR -Secured Overnight Financing Rate
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, 2021. |
| (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 V.I. U.S. Government Money Portfolio |
Statement of Assets and Liabilities
December 31, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, excluding repurchase agreements, at value and cost | | | $339,187,823 | |
|
| |
Repurchase agreements, at value and cost | | | 123,000,000 | |
|
| |
Cash | | | 831,018 | |
|
| |
Receivable for: | | | | |
Fund shares sold | | | 9,338 | |
|
| |
Interest | | | 105,001 | |
|
| |
Fund expenses absorbed | | | 164,053 | |
|
| |
Total assets | | | 463,297,233 | |
| |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 2,302,648 | |
|
| |
Dividends | | | 1,898 | |
|
| |
Accrued fees to affiliates | | | 186,962 | |
|
| |
Accrued trustees’ and officers’ fees and benefits | | | 882 | |
|
| |
Accrued operating expenses | | | 109,602 | |
|
| |
Total liabilities | | | 2,601,992 | |
| |
Net assets applicable to shares outstanding | | | $460,695,241 | |
| |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | | $460,774,556 | |
|
| |
Distributable earnings | | | (79,315 | ) |
|
| |
| | | $460,695,241 | |
| |
|
Net Assets: | |
Series I | | | $460,684,888 | |
| |
Series II | | | $ 10,353 | |
| |
| |
Shares outstanding, no par value, unlimited number of shares authorized: | | | | |
Series I | | | 460,566,390 | |
| |
Series II | | | 10,350 | |
| |
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, 2021
| | | | |
Investment income: | | | | |
Interest | | $ | 368,845 | |
| |
| |
Expenses: | | | | |
Advisory fees | | | 1,578,030 | |
|
| |
Administrative services fees | | | 192,005 | |
|
| |
Distribution fees - Series II | | | 25 | |
|
| |
Transfer agent fees | | | 10,886 | |
|
| |
Trustees’ and officers’ fees and benefits | | | 26,106 | |
|
| |
Reports to shareholders | | | 25,882 | |
|
| |
Professional services fees | | | 34,849 | |
|
| |
Other | | | 11,211 | |
| |
Total expenses | | | 1,878,994 | |
| |
Less: Fees waived and expenses reimbursed | | | (1,535,141 | ) |
| |
Net expenses | | | 343,853 | |
| |
Net investment income | | | 24,992 | |
| |
Net realized gain (loss) from unaffiliated investment securities | | | (8,089 | ) |
| |
Net increase in net assets resulting from operations | | $ | 16,903 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. U.S. Government Money Portfolio |
Statement of Changes in Net Assets
For the years ended December 31, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
| |
Operations: | | | | | | | | |
Net investment income | | $ | 24,992 | | | $ | 1,145,966 | |
| |
Net realized gain (loss) | | | (8,089 | ) | | | 90,321 | |
| |
Net increase in net assets resulting from operations | | | 16,903 | | | | 1,236,287 | |
| |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (24,988 | ) | | | (1,145,947 | ) |
| |
Series II | | | (4 | ) | | | (19 | ) |
| |
Total distributions from distributable earnings | | | (24,992 | ) | | | (1,145,966 | ) |
| |
| | |
Share transactions-net: | | | | | | | | |
Series I | | | 96,087,722 | | | | (5,244,425 | ) |
| |
Series II | | | 350 | | | | - | |
| |
Net increase (decrease) in net assets resulting from share transactions | | | 96,088,072 | | | | (5,244,425 | ) |
| |
Net increase (decrease) in net assets | | | 96,079,983 | | | | (5,154,104 | ) |
| |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 364,615,258 | | | | 369,769,362 | |
| |
End of year | | | $460,695,241 | | | | $364,615,258 | |
| |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
|
| Invesco V.I. U.S. Government Money Portfolio |
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 12/31/21 | | | | $1.00 | | | | | $0.00 | | | | | $(0.00 | ) | | | | $0.00 | | | | | $(0.00) | | | | | $1.00 | | | | | 0.01 | % | | | | $ 460,685 | | | | | 0.10 | % | | | | 0.52 | % | | | | 0.00 | % |
Year ended 12/31/20 | | | | 1.00 | | | | | 0.00 | | | | | 0.00 | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.22 | | | | | 364,605 | | | | | 0.24 | | | | | 0.48 | | | | | 0.09 | |
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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 1.00 | | | | | 0.00 | | | | | (0.00 | ) | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.01 | | | | | 10 | | | | | 0.10 | | | | | 0.77 | | | | | 0.00 | |
Year ended 12/31/20 | | | | 1.00 | | | | | 0.00 | | | | | 0.00 | | | | | 0.00 | | | | | (0.00) | | | | | 1.00 | | | | | 0.17 | | | | | 10 | | | | | 0.29 | | | | | 0.73 | | | | | 0.04 | |
Period ended 12/31/19(d) | | | | 1.00 | | | | | 0.01 | | | | | 0.00 | | | | | 0.01 | | | | | (0.01) | | | | | 1.00 | | | | | 0.78 | | | | | 10 | | | | | 0.72 | (e) | | | | 0.72 | (e) | | | | 1.61 | (e) |
| (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 and 2017, respectively. |
| (d) | 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 V.I. U.S. Government Money Portfolio |
Notes to Financial Statements
December 31, 2021
NOTE 1–Significant Accounting Policies
Invesco V.I. U.S. Government Money Portfolio, formerly 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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. Pay-in-kind interest income and non-cash dividend income received in the form of securities in-lieu of cash are recorded at the fair value of the securities received. 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. U.S. Government Money Portfolio |
| 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. Additionally, from time to time, uncertainty regarding the status of negotiations in the U.S. Government to increase the statutory debt limit, commonly called the “debt ceiling”, could increase the risk that the U.S. Government may default on payments on certain U.S. Government securities, cause the credit rating of the U.S. Government to be downgraded, increase volatility in the stock and bond markets, result in higher interest rates, reduce prices of U.S. Treasury securities, and/or increase the costs of various kinds of debt. If a U.S. Government-sponsored entity is negatively impacted by legislative or regulatory action, is unable to meet its obligations, or its creditworthiness declines, the performance of the Fund that holds securities of that entity will be adversely impacted. |
| K. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
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, 2021, the effective advisory fees incurred by the Fund was 0.44%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. 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 Fund.
Effective June 1, 2021, the Adviser has contractually agreed, through at least June 30, 2022, 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”). Prior to June 1, 2021, the Adviser had contractually agreed to limit expenses (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. 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, 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 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, 2021, Invesco contractually waived fund level advisory fees of $7,150, voluntarily waived advisory fees of $1,527,966 and reimbursed class level expenses of $25 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, 2021, Invesco was paid $159,293 for accounting and fund administrative services and was reimbursed $32,712 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, 2021, 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, 2021, 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.
|
| Invesco V.I. U.S. Government Money Portfolio |
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, 2021, 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, 2021 and December 31, 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
| | |
Ordinary income* | | $ | 24,992 | | | $ | 1,135,576 | |
| | |
Long-term capital gain | | | - | | | | 10,390 | |
| | |
Total distributions | | $ | 24,992 | | | $ | 1,145,966 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
|
| |
Undistributed ordinary income | | $ | 18,404 | |
|
| |
Temporary book/tax differences | | | (89,630 | ) |
|
| |
Capital loss carryforward | | | (8,089 | ) |
|
| |
Shares of beneficial interest | | | 460,774,556 | |
|
| |
Total net assets | | $ | 460,695,241 | |
|
| |
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, 2021 as follows:
| | | | | | |
| Capital Loss Carryforward* |
| Expiration | | Short-Term | | Long-Term | | Total |
| | | |
Not subject to expiration | | $8,089 | | $- | | $8,089 |
| * | Capital loss carryforwards are 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. U.S. Government Money Portfolio |
NOTE 7–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of equalization and deemed distributions, on December 31, 2021, undistributed net investment income was decreased by $168,160 and shares of beneficial interest was increased by $168,160. This reclassification had no effect on the net assets of the Fund.
NOTE 8–Share Information
| | | | | | | | | | | | | | | | |
| | | | | | Summary of Share Activity | | | | |
| |
| | | Years ended December 31, | |
| | | 2021(a) | | | 2020 | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 192,727,638 | | | $ | 192,727,638 | | | | 2,362,230,625 | | | $ | 2,362,230,625 | |
| |
Series II | | | 350 | | | | 350 | | | | - | | | | - | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 24,987 | | | | 24,987 | | | | 1,144,201 | | | | 1,144,201 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (96,664,903 | ) | | | (96,664,903 | ) | | | (2,368,619,251 | ) | | | (2,368,619,251 | ) |
| |
Net increase (decrease) in share activity | | | 96,088,072 | | | $ | 96,088,072 | | | | (5,244,425 | ) | | $ | (5,244,425 | ) |
| |
| (a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 92% 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. |
|
| Invesco V.I. U.S. Government Money Portfolio |
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. U.S. Government Money Portfolio
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Invesco V.I. U.S. Government Money Portfolio (one of the funds constituting AIM Variable Insurance Funds (Invesco Variable Insurance Funds), referred to hereafter as the “Fund”) as of December 31, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, 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, 2021, 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, 2021 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 two years ended December 31, 2021 and the year ended December 31, 2019 for Series I. |
| For the two years ended December 31, 2021 and the period May 24, 2019 (commencement date) through December 31, 2019 for Series II. |
The financial statements of Oppenheimer Government Money Fund/VA (subsequently renamed Invesco V.I. U.S. Government Money Portfolio) 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, 2021 by correspondence with the custodian, transfer agent and brokers; when replies were not received from the brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Houston, Texas
February 14, 2022
We have served as the auditor of one or more of the 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. U.S. Government Money Portfolio |
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, 2021 through December 31, 2021.
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) | | |
| Class | | Beginning Account Value (07/01/21) | | Ending Account Value (12/31/21)1 | | Expenses Paid During Period2 | | Ending Account Value (12/31/21) | | Expenses Paid During Period2 | | Annualized Expense Ratio |
Series I | | $1,000.00 | | $1,000.00 | | $0.45 | | $1,024.75 | | $0.46 | | 0.09% |
Series II | | 1,000.00 | | 1,000.00 | | 0.45 | | 1,024.75 | | 0.46 | | 0.09 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 to reflect the most recent fiscal half year. |
|
| Invesco V.I. U.S. Government Money Portfolio |
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, 2021:
| | | | | | | | |
| Federal and State Income Tax | | | | | | | | |
Qualified Dividend Income* | | | 0.00 | % |
Qualified Business Income* | | | 0.00 | % |
Corporate Dividends Received Deduction* | | | 0.00 | % |
U.S. Treasury Obligations* | | | 20.34 | % |
Business Interest Income* | | | 100.00 | % |
|
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. | |
|
| Invesco V.I. U.S. Government Money Portfolio |
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) | | 186 | | 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. U.S. Government Money Portfolio |
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 - 1957 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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler - 1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones - 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School - Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
Elizabeth Krentzman - 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management - Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
Anthony J. LaCava, Jr. - 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
|
| Invesco V.I. U.S. Government Money Portfolio |
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; 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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern - 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
Robert C. Troccoli - 1949 Trustee | | 2016 | | Retired Formerly: Adjunct Professor, University of Denver - Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
Daniel S. Vandivort -1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
|
| Invesco V.I. U.S. Government Money Portfolio |
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; Managing Director and Principal Executive Officer, Invesco Capital Management LLC | | N/A | | N/A |
|
| Invesco V.I. U.S. Government Money Portfolio |
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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes - 1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom - 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | N/A | | N/A |
|
| Invesco V.I. U.S. Government Money Portfolio |
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; Vice President, Invesco Advisers, Inc.; 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. | | Bank of New York Mellon |
| 2005 Market Street, Suite 2600 | | 901 New York Avenue, N.W. | | 11 Greenway Plaza, Suite 1000 | | 2 Hanson Place |
| Philadelphia, PA 19103-7018 | | Washington, D.C. 20001 | | Houston, TX 77046-1173 | | Brooklyn, NY 11217-1431 |
|
| Invesco V.I. U.S. Government Money Portfolio |
| | |
| Annual Report to Shareholders | | December 31, 2021 |
Invesco Oppenheimer V.I. International Growth Fund
The Fund provides a complete list of its portfolio holdings four times each year, at the end of each fiscal quarter. For the second and fourth quarters, the list appears, respectively, in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the list 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/corporate/about-us/ esg. 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-VIIGR-AR-1 |
Management’s Discussion of Fund Performance
| | | | |
Performance summary For the year ended December 31, 2021, 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, 12/31/20 to 12/31/21, excluding variable product issuer charges. If variable product issuer charges were included, returns would be lower. | | | | |
| |
Series I Shares | | | 10.22 | % |
Series II Shares | | | 10.12 | |
MSCI All Country World ex-USA Indexq | | | 7.82 | |
| |
Source(s): qRIMES Technologies Corp. | | | | |
Market conditions and your fund
Global equity markets ended the first quarter of 2021 in positive territory amid concerns about rising bond yields and inflation, with value stocks outperforming growth stocks. The successful rollout of coronavirus (COVID-19) vaccinations in the US and UK benefited equity markets. However, even regions facing slower rollouts, including the Eurozone and Japan, performed well, driven by a rebound in global demand for goods.
During the second quarter of 2021, global equity markets were again bolstered by the continued acceleration of vaccination rollouts and easing of COVID-19-related restrictions in most developed markets. In a reversal from the first quarter, growth stocks outperformed value stocks in most regions. Emerging market equities were led by Brazil which benefited from global tailwinds, while regulatory concerns weighed on Chinese equities.
Developed global equity markets were flat in the third quarter of 2021 amid concerns about rising inflation, supply disruptions and the economic growth rate. Emerging market equities declined during the quarter, primarily due to weak performance from Chinese equities, which were affected by significant regulatory changes in the private tutoring industry, increased regulation in the technology sector and the potential default of a large Chinese property developer.
Most developed global equity markets ended the fourth quarter of 2021 in positive territory despite rising inflation and the emergence of Omicron, a new COVID-19 variant. Pandemic-related
supply chain disruptions and labor shortages intensified during the quarter, resulting in higher costs for companies and consumers. Emerging market equities declined due to COVID-19 concerns and China’s ongoing regulatory tightening and slowing economic growth. Overall, developed market equities outperformed emerging market equities for the fiscal 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 25 years. The Fund delivered strong absolute and relative returns for the fiscal year ending December 31, 2021.
Relative to the benchmark, the Fund performed most strongly in the consumer discretionary and health care sectors due to stock selection and in the information technology sector as a result of an overweight to the sector. Relative to the benchmark, the Fund underperformed in the financials and energy sectors due to underweights and in the consumer staples sector due to stock selection.
The three largest contributors to absolute Fund performance during the fiscal year were ASML Holding, Hermès and EPAM Systems.
ASML Holding is a Dutch company that makes the equipment needed for producing semiconductors. ASML Holding is the only supplier of the extreme ultraviolet lithography equipment that is required to produce the next generation of semiconductor chips.
Hermès is a leading luxury goods producer. Demand for Hermès products has been strong both during the pandemic and as economies reopen and the share price has reacted favorably.
EPAM Systems is an Eastern European information technology services company that focuses on helping businesses digitize their operations. In our opinion, the digitization of business operations is still in its early phase.
The three largest detractors from absolute Fund performance during the fiscal year were Worldline, boohoo and Flutter Entertainment.
Worldline, based in France, is the leading payments processor in Continental Europe. We added it to the portfolio a few years ago to benefit from the trend towards credit card and virtual payments and away from cash. The COVID-19 pandemic has accelerated this trend and the stock reached new highs in 2021. However, COVID-19 has also suppressed overall spending growth, and this led to subsequent profit taking.
boohoo, based in the UK, is an online retailer of fast, low-cost fashion. We decided to exit our position during the fiscal year.
Flutter Entertainment, a UK company that owns FanDuel, is one of the two dominant sports betting services here in the US. Recent legal and regulatory changes in the US have opened the potential for gambling in many states. Flutter‘s share price was relatively volatile in 2021 as it has reached new highs and then experienced profit taking.
Thank you for your continued investment in Invesco Oppenheimer V.I. International Growth Fund.
Portfolio manager(s):
Robert B. Dunphy
George R. Evans
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. and its affiliates. 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. International Growth Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class(es)
Fund and index data from 12/31/11
| 1 | Source: RIMES Technologies Corp. |
Past performance cannot guarantee future
results.
| | | | |
| Average Annual Total Returns | |
As of 12/31/21 | | | | |
| |
| Series I Shares | | | | |
| Inception (5/13/92) | | | 7.70% | |
| 10 Years | | | 9.74 | |
| 5 Years | | | 11.88 | |
| 1 Year | | | 10.22 | |
| |
| Series II Shares | | | | |
| Inception (3/19/01) | | | 6.85% | |
| 10 Years | | | 9.47 | |
| 5 Years | | | 11.65 | |
| 1 Year | | | 10.12 | |
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, 2021, and is based on total net assets. |
| ∎ | | Unless otherwise noted, all data is 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 | | 22.64% |
Industrials | | 21.26 |
Consumer Discretionary | | 17.18 |
Health Care | | 13.56 |
Consumer Staples | | 11.48 |
Materials | | 4.08 |
Communication Services | | 3.27 |
Energy | | 2.43 |
Financials | | 2.42 |
Real Estate | | 0.76 |
Money Market Funds Plus Other Assets Less Liabilities | | 0.92 |
Top 10 Equity Holdings*
| | | | |
| | | | | % of total net assets |
1. | | Hermes International | | 3.47% |
2. | | ASML Holding N.V. | | 3.21 |
3. | | EPAM Systems, Inc. | | 2.70 |
4. | | Novo Nordisk A/S, Class B | | 2.57 |
5. | | Reliance Industries Ltd. | | 2.43 |
6. | | LVMH Moet Hennessy Louis Vuitton SE | | 2.39 |
7. | | Epiroc AB, Class A | | 2.30 |
8. | | James Hardie Industries PLC, CDI | | 2.14 |
9. | | Taiwan Semiconductor Manufacturing Co. Ltd. | | 2.13 |
10. | | ResMed, Inc. | | 2.01 |
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, 2021.
Invesco Oppenheimer V.I. International Growth Fund
Schedule of Investments
December 31, 2021
| | | | | | | | |
| | | Shares | | | Value | |
Common Stocks & Other Equity Interests–99.08% | |
Australia–1.26% | |
CSL Ltd. | | | 26,325 | | | $ | 5,574,698 | |
| |
| | |
Belgium–0.23% | | | | | | | | |
Galapagos N.V.(a) | | | 17,848 | | | | 1,000,148 | |
| |
| | |
Canada–4.60% | | | | | | | | |
Alimentation Couche-Tard, Inc. | | | 172,801 | | | | 7,240,170 | |
| |
CAE, Inc.(a) | | | 205,644 | | | | 5,187,636 | |
| |
Dollarama, Inc. | | | 86,745 | | | | 4,341,536 | |
| |
Shopify, Inc., Class A(a) | | | 2,667 | | | | 3,672,151 | |
| |
| | | | | | | 20,441,493 | |
| |
| | |
Denmark–3.16% | | | | | �� | | | |
Ascendis Pharma A/S, ADR(a) | | | 19,747 | | | | 2,656,564 | |
| |
Novo Nordisk A/S, Class B | | | 101,971 | | | | 11,399,823 | |
| |
| | | | | | | 14,056,387 | |
| |
| | |
France–16.22% | | | | | | | | |
Adevinta ASA, Class B(a) | | | 198,360 | | | | 2,636,219 | |
| |
Airbus SE(a) | | | 53,611 | | | | 6,846,865 | |
| |
Dassault Systemes SE | | | 104,228 | | | | 6,183,032 | |
| |
Edenred | | | 76,036 | | | | 3,509,250 | |
| |
EssilorLuxottica S.A. | | | 13,409 | | | | 2,854,362 | |
| |
Hermes International | | | 8,822 | | | | 15,404,743 | |
| |
Kering S.A. | | | 5,529 | | | | 4,436,433 | |
| |
L’Oreal S.A. | | | 10,778 | | | | 5,109,218 | |
| |
LVMH Moet Hennessy Louis Vuitton SE | | | 12,887 | | | | 10,634,357 | |
| |
Sartorius Stedim Biotech | | | 12,710 | | | | 6,960,893 | |
| |
SEB S.A. | | | 19,272 | | | | 3,001,754 | |
| |
Worldline S.A.(a)(b) | | | 80,681 | | | | 4,495,912 | |
| |
| | | | | | | 72,073,038 | |
| |
| | |
Germany–6.29% | | | | | | | | |
CTS Eventim AG & Co. KGaA(a) | | | 85,250 | | | | 6,255,102 | |
| |
Hypoport SE(a) | | | 2,051 | | | | 1,194,315 | |
| |
Infineon Technologies AG | | | 160,599 | | | | 7,446,823 | |
| |
SAP SE | | | 16,270 | | | | 2,323,698 | |
| |
Siemens AG | | | 22,035 | | | | 3,830,182 | |
| |
Siemens Healthineers AG(b) | | | 92,012 | | | | 6,894,781 | |
| |
| | | | | | | 27,944,901 | |
| |
| | |
India–3.37% | | | | | | | | |
Dr Lal PathLabs Ltd.(b) | | | 81,401 | | | | 4,185,877 | |
| |
Reliance Industries Ltd. | | | 338,679 | | | | 10,783,163 | |
| |
| | | | | | | 14,969,040 | |
| |
| | |
Ireland–1.81% | | | | | | | | |
Flutter Entertainment PLC(a) | | | 50,786 | | | | 8,057,439 | |
| |
| | |
Italy–1.70% | | | | | | | | |
Davide Campari-Milano N.V. | | | 518,758 | | | | 7,552,697 | |
| |
| | |
Japan–9.35% | | | | | | | | |
Benefit One, Inc. | | | 89,400 | | | | 3,835,882 | |
| |
Daikin Industries Ltd. | | | 30,200 | | | | 6,850,989 | |
| |
Hitachi Ltd. | | | 50,900 | | | | 2,757,100 | |
| |
Hoya Corp. | | | 26,593 | | | | 3,943,064 | |
| |
| | | | | | | | |
| | | Shares | | | Value | |
Japan–(continued) | | | | | | | | |
Keyence Corp. | | | 11,924 | | | $ | 7,493,782 | |
| |
Kobe Bussan Co. Ltd. | | | 112,000 | | | | 4,333,136 | |
| |
Nidec Corp. | | | 53,300 | | | | 6,265,463 | |
| |
Nihon M&A Center Holdings, Inc. | | | 175,300 | | | | 4,285,870 | |
| |
Nitori Holdings Co. Ltd. | | | 12,000 | | | | 1,794,588 | |
| |
| | | | | | | 41,559,874 | |
| |
| | |
Netherlands–6.50% | | | | | | | | |
Aalberts N.V. | | | 86,233 | | | | 5,673,847 | |
| |
Adyen N.V.(a)(b) | | | 2,663 | | | | 6,967,002 | |
| |
ASML Holding N.V. | | | 17,887 | | | | 14,262,605 | |
| |
Boskalis Westminster | | | 7,228 | | | | 211,064 | |
| |
Shop Apotheke Europe N.V.(a)(b) | | | 13,629 | | | | 1,757,403 | |
| |
| | | | | | | 28,871,921 | |
| |
| | |
New Zealand–1.13% | | | | | | | | |
Xero Ltd.(a) | | | 49,091 | | | | 5,028,258 | |
| |
| | |
Singapore–0.85% | | | | | | | | |
STMicroelectronics N.V. | | | 76,738 | | | | 3,761,464 | |
| |
| | |
Spain–1.16% | | | | | | | | |
Amadeus IT Group S.A.(a) | | | 76,702 | | | | 5,166,228 | |
| |
| | |
Sweden–6.86% | | | | | | | | |
Atlas Copco AB, Class A | | | 117,844 | | | | 8,157,579 | |
| |
Epiroc AB, Class A | | | 402,268 | | | | 10,198,711 | |
| |
SKF AB, Class B | | | 257,332 | | | | 6,066,306 | |
| |
Swedish Match AB | | | 764,660 | | | | 6,075,561 | |
| |
| | | | | | | 30,498,157 | |
| |
| | | | | | | | |
Switzerland–6.50% | | | | | | | | |
Barry Callebaut AG | | | 1,799 | | | | 4,371,111 | |
| |
IWG PLC(a) | | | 859,245 | | | | 3,375,742 | |
| |
Lonza Group AG | | | 3,980 | | | | 3,315,513 | |
| |
Sika AG | | | 20,693 | | | | 8,589,573 | |
| |
Temenos AG | | | 14,012 | | | | 1,933,493 | |
| |
VAT Group AG(b) | | | 12,138 | | | | 6,001,298 | |
| |
Zur Rose Group AG(a) | | | 4,980 | | | | 1,285,613 | |
| |
| | | | | | | 28,872,343 | |
| |
| | |
Taiwan–2.13% | | | | | | | | |
Taiwan Semiconductor Manufacturing Co. Ltd. | | | 427,000 | | | | 9,454,957 | |
| |
| | |
United Kingdom–15.62% | | | | | | | | |
Alphawave IP Group PLC(a)(c) | | | 415,868 | | | | 1,123,208 | |
| |
Britvic PLC | | | 367,540 | | | | 4,575,665 | |
| |
Ceres Power Holdings PLC(a) | | | 161,917 | | | | 2,191,843 | |
| |
Compass Group PLC(a) | | | 315,204 | | | | 7,021,569 | |
| |
ConvaTec Group PLC(b) | | | 868,452 | | | | 2,268,601 | |
| |
Electrocomponents PLC | | | 225,770 | | | | 3,675,001 | |
| |
Entain PLC(a) | | | 307,873 | | | | 6,990,215 | |
| |
Legal & General Group PLC | | | 853,385 | | | | 3,435,251 | |
| |
London Stock Exchange Group PLC | | | 65,550 | | | | 6,135,350 | |
| |
Melrose Industries PLC | | | 2,679,692 | | | | 5,814,574 | |
| |
Next PLC | | | 80,696 | | | | 8,878,406 | |
| |
Ocado Group PLC(a) | | | 383,485 | | | | 8,700,792 | |
| |
Rightmove PLC | | | 525,208 | | | | 5,639,692 | |
| |
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) | | | | | | | | |
Trainline PLC(a)(b) | | | 781,342 | | | $ | 2,942,611 | |
| |
| | | | | | | 69,392,778 | |
| |
| | |
United States–10.34% | | | | | | | | |
Atlassian Corp. PLC, Class A(a) | | | 15,187 | | | | 5,790,651 | |
| |
EPAM Systems, Inc.(a) | | | 17,947 | | | | 11,996,672 | |
| |
Ferguson PLC | | | 37,111 | | | | 6,592,428 | |
| |
James Hardie Industries PLC, CDI | | | 236,546 | | | | 9,520,970 | |
| |
Medtronic PLC | | | 29,944 | | | | 3,097,707 | |
| |
ResMed, Inc. | | | 34,333 | | | | 8,943,060 | |
| |
| | | | | | | 45,941,488 | |
| |
Total Common Stocks & Other Equity Interests
(Cost $210,045,231) | | | | 440,217,309 | |
| |
| | |
Preferred Stocks–0.00%
India–0.00% Zee Entertainment Enterprises Ltd., 6.00%,
Pfd.(Acquired 07/17/2001; Cost $0)(d)
(Cost $0) | | | 599,541 | | | | 16,857 | |
| |
| | | | | | | | |
Money Market Funds–0.62% | | | | | | | | |
Invesco Government & Agency
Portfolio, Institutional Class, 0.03%(e)(f) | | | 963,741 | | | | 963,741 | |
| | | | | | | | |
| | | Shares | | | Value | |
Money Market Funds–(continued) | | | | | | | | |
| |
Invesco Liquid Assets Portfolio, Institutional
Class, 0.02%(e)(f) | | | 688,054 | | | $ | 688,191 | |
| |
Invesco Treasury Portfolio, Institutional Class,
0.01%(e)(f) | | | 1,101,419 | | | | 1,101,419 | |
| |
Total Money Market Funds (Cost $2,753,351) | | | | 2,753,351 | |
| |
TOTAL INVESTMENTS IN SECURITIES
(excluding Investments purchased with
cash collateral from securities on
loan)-99.70% (Cost $212,798,582) | | | | | | | 442,987,517 | |
| |
Investments Purchased with Cash Collateral from Securities on Loan
| | | | | | | | |
Money Market Funds–0.05% | | | | | | | | |
Invesco Private Government Fund,
0.02%(e)(f)(g) | | | 63,225 | | | | 63,225 | |
Invesco Private Prime Fund, 0.11%(e)(f)(g) | | | 147,495 | | | | 147,525 | |
| |
Total Investments Purchased with Cash Collateral
from Securities on Loan (Cost $210,750) | | | 210,750 | |
| |
TOTAL INVESTMENTS IN SECURITIES—99.75% | | | | | | | | |
(Cost $213,009,332) | | | | | | | 443,198,267 | |
| |
OTHER ASSETS LESS LIABILITIES–0.25% | | | | | | | 1,128,523 | |
NET ASSETS–100.00% | | | | | | $ | 444,326,790 | |
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, 2021 was $35,513,485, which represented 7.99% of the Fund’s Net Assets. |
| (c) | All or a portion of this security was out on loan at December 31, 2021. |
| (d) | Restricted security. The value of this security at December 31, 2021 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, 2021. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Value
December 31, 2020 | | | Purchases
at Cost | | | Proceeds
from Sales | | | Change in
Unrealized
Appreciation | | | Realized
Gain
(Loss) | | | Value
December 31, 2021 | | | Dividend Income | |
| Investments in Affiliated Money Market Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Government & Agency Portfolio, Institutional Class | | | $3,150,830 | | | | $ 36,061,674 | | | | $ (38,248,763) | | | | $ - | | | | $ - | | | | $ 963,741 | | | | $ 930 | |
| | | | | | | |
Invesco Liquid Assets Portfolio, Institutional Class | | | 2,250,059 | | | | 25,670,966 | | | | (27,232,858) | | | | 143 | | | | (119 | ) | | | 688,191 | | | | 369 | |
| | | | | | | |
Invesco Treasury Portfolio, Institutional Class | | | 3,600,948 | | | | 41,213,341 | | | | (43,712,870) | | | | - | | | | - | | | | 1,101,419 | | | | 400 | |
| Investments Purchased with Cash Collateral from Securities on Loan: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Invesco Private Government Fund | | | - | | | | 1,235,030 | | | | (1,171,805) | | | | - | | | | - | | | | 63,225 | | | | 3* | |
| | | | | | | |
Invesco Private Prime Fund | | | - | | | | 2,234,374 | | | | (2,086,849) | | | | - | | | | - | | | | 147,525 | | | | 83* | |
Total | | | $9,001,837 | | | | $106,415,385 | | | | $(112,453,145) | | | | $143 | | | | $(119) | | | | $2,964,101 | | | | $1,785 | |
| | * | 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, 2021. |
| (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 1J. |
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, 2021
| | | | |
Assets: | | | | |
Investments in unaffiliated securities, at value (Cost $210,045,231)* | | $ | 440,234,166 | |
Investments in affiliated money market funds, at value (Cost $2,964,101) | | | 2,964,101 | |
Cash | | | 143,547 | |
Foreign currencies, at value (Cost $191,200) | | | 194,559 | |
Receivable for: | | | | |
Fund shares sold | | | 502,025 | |
Dividends | | | 1,213,422 | |
Investment for trustee deferred compensation and retirement plans | | | 63,466 | |
Other assets | | | 2,022 | |
Total assets | | | 445,317,308 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 83,621 | |
Accrued foreign taxes | | | 329,109 | |
Collateral upon return of securities loaned | | | 210,750 | |
Accrued fees to affiliates | | | 246,749 | |
Accrued other operating expenses | | | 56,823 | |
Trustee deferred compensation and retirement plans | | | 63,466 | |
Total liabilities | | | 990,518 | |
Net assets applicable to shares outstanding | | $ | 444,326,790 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 154,013,235 | |
Distributable earnings | | | 290,313,555 | |
| | | $444,326,790 | |
| |
Net Assets: | | | | |
Series I | | $ | 235,425,409 | |
Series II | | $ | 208,901,381 | |
| |
Shares outstanding, no par value, with an unlimited number of shares authorized: | | | | |
Series I | | | 80,541,112 | |
Series II | | | 68,177,301 | |
Series I: | | | | |
Net asset value per share | | $ | 2.92 | |
Series II: | | | | |
Net asset value per share | | $ | 3.06 | |
| * | At December 31, 2021, security with a value of $202,964 was on loan to brokers. |
Statement of Operations
For the year ended December 31, 2021
| | | | |
Investment income: | | | | |
Interest | | $ | 86,369 | |
Dividends (net of foreign withholding taxes of $600,454) | | | 3,851,736 | |
Dividends from affiliated money market funds (includes securities lending income of $1,746) | | | 3,445 | |
Foreign withholding tax claims | | | 373,847 | |
Total investment income | | | 4,315,397 | |
| |
Expenses: | | | | |
Advisory fees | | | 4,778,808 | |
Administrative services fees | | | 838,940 | |
Custodian fees | | | 25,158 | |
Distribution fees - Series II | | | 696,052 | |
Transfer agent fees | | | 36,064 | |
Trustees’ and officers’ fees and benefits | | | 26,789 | |
Professional services fees | | | 86,784 | |
Other | | | (31,364 | ) |
Total expenses | | | 6,457,231 | |
Less: Fees waived | | | (643,701 | ) |
Net expenses | | | 5,813,530 | |
Net investment income (loss) | | | (1,498,133 | ) |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Unaffiliated investment securities (net of foreign taxes of $3,037) | | | 65,007,772 | |
Affiliated investment securities | | | (119 | ) |
Foreign currencies | | | (2,990 | ) |
Forward foreign currency contracts | | | 2,285 | |
| | | 65,006,948 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Unaffiliated investment securities (net of foreign taxes of $329,109) | | | (10,287,372 | ) |
Affiliated investment securities | | | 143 | |
Foreign currencies | | | (101,649 | ) |
| | | (10,388,878) | |
Net realized and unrealized gain | | | 54,618,070 | |
Net increase in net assets resulting from operations | | $ | 53,119,937 | |
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, 2021 and 2020
| | | | | | | | |
| | | 2021 | | | 2020 | |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (1,498,133 | ) | | $ | (604,947 | ) |
Net realized gain | | | 65,006,948 | | | | 47,589,964 | |
Change in net unrealized appreciation (depreciation) | | | (10,388,878 | ) | | | 42,465,384 | |
Net increase in net assets resulting from operations | | | 53,119,937 | | | | 89,450,401 | |
| | |
Distributions to shareholders from distributable earnings: | | | | | | | | |
Series I | | | (21,477,246 | ) | | | (4,813,313 | ) |
Series II | | | (25,805,990 | ) | | | (4,638,613 | ) |
Total distributions from distributable earnings | | | (47,283,236 | ) | | | (9,451,926 | ) |
| | |
Share transactions–net: | | | | | | | | |
Series I | | | 3,387,374 | | | | (28,064,430 | ) |
Series II | | | (66,781,008 | ) | | | (24,747,573 | ) |
Net increase (decrease) in net assets resulting from share transactions | | | (63,393,634 | ) | | | (52,812,003 | ) |
Net increase (decrease) in net assets | | | (57,556,933 | ) | | | 27,186,472 | |
| | |
Net assets: | | | | | | | | |
Beginning of year | | | 501,883,723 | | | | 474,697,251 | |
End of year | | $ | 444,326,790 | | | $ | 501,883,723 | |
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 12/31/21 | | | $ | 2.91 | | | | $ | (0.00 | ) | | | $ | 0.30 | | | | $ | 0.30 | | | | $ | - | | | | $ | (0.29 | ) | | | $ | (0.29 | ) | | $2.92 | | | | 10.22 | % | | | $ | 235,425 | | | | | 1.00 | % | | | | 1.13 | % | | | | (0.16 | )% | | | | 22 | % |
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 | | | | | 1.15 | | | | | (0.01 | ) | | | | 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 | |
Series II | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Year ended 12/31/21 | | | | 3.04 | | | | | (0.01 | ) | | | | 0.32 | | | | | 0.31 | | | | | - | | | | | (0.29 | ) | | | | (0.29 | ) | | 3.06 | | | | 10.12 | | | | | 208,901 | | | | | 1.25 | | | | | 1.38 | | | | | (0.41 | ) | | | | 22 | |
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 | | | | | 1.40 | | | | | (0.26 | ) | | | | 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 | |
| (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 and 2017, respectively. |
| (d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
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, 2021
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 and includes coupon interest and amortization of premium and accretion of discount on debt securities as applicable. 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 Oppenheimer V.I. International Growth 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. | Foreign Withholding Taxes – The Fund is subject to foreign withholding tax imposed by certain foreign countries in which the Fund may invest. Withholding taxes are incurred on certain foreign dividends and are accrued at the time the dividend is recognized based on applicable foreign tax laws. The Fund may file withholding tax refunds in certain jurisdictions to recover a portion of amounts previously withheld. The Fund will record a receivable for such tax refunds based on several factors including; an assessment of a jurisdiction’s legal obligation to pay reclaims, administrative practices and payment history. Any receivables recorded will be shown under receivables for Tax reclaims on the Statement of Assets and Liabilities. |
As a result of recent court rulings in certain countries across the European Union, tax refunds for previously withheld taxes on dividends earned in those countries have been received. These tax refund payments are reflected as Foreign withholding tax claims in the Statement of Operations, and any related interest is included in Interest income. The Fund may incur fees paid to third party providers that assist in the recovery of the tax reclaims. These fees are reflected on the Statement of Operations as Professional fees, if any. In the event tax refunds received by the Fund during the fiscal year exceed the foreign withholding taxes paid by the Fund for the year, and the Fund previously passed foreign tax credits on to its shareholders, the Fund intends to enter into a closing agreement with the Internal Revenue Service in order to pay the associated liability on behalf of the Funds’ shareholders. For the fiscal year ended December 31, 2021, the Fund did not enter into any closing agreements.
| 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, unregistered investment companies that comply with Rule 2a-7 under the Investment Company Act and money market funds (collectively, “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. |
On September 29, 2021, the Board of Trustees appointed Invesco Advisers, Inc. (the “Adviser” or “Invesco”) to serve as an affiliated securities lending agent for the Fund. Prior to September 29, 2021, the Bank of New York Mellon (“BNYM”) served as the sole securities lending agent for the Fund under the securities lending program. BNYM also continues to serve as a lending agent. To the extent the Fund utilizes the Adviser as an affiliated securities lending agent, the Fund conducts its securities lending in accordance with, and in reliance upon, no-action letters issued by the SEC staff that provide guidance on how an affiliate may act as a direct agent lender and receive compensation for those services in a manner consistent with the federal securities laws. For the year ended December 31, 2021, there were no securities lending transactions with the Adviser.
| 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 |
Invesco Oppenheimer V.I. International Growth 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 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 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. | Other Risks - Emerging markets (also referred to as developing markets) are generally subject to greater market volatility, political, social and economic instability, uncertainty regarding the existence of trading markets and more governmental limitations on foreign investment than more developed markets. In addition, companies operating in emerging markets may be subject to lower trading volume and greater price fluctuations than companies in more developed markets. Securities law in many emerging market countries is relatively new and unsettled. Therefore, laws regarding foreign investment in emerging market securities, securities regulation, title to securities, and shareholder rights may change quickly and unpredictably. In addition, the enforcement of systems of taxation at federal, regional and local levels in emerging market countries may be inconsistent, and subject to sudden change. Other risks of investing in emerging markets securities may include additional transaction costs, delays in settlement procedures, and lack of timely information. |
| N. | COVID-19 Risk - The COVID-19 strain of coronavirus has resulted in instances of market closures and dislocations, extreme volatility, liquidity constraints and increased trading costs. Efforts to contain its spread have resulted in travel restrictions, disruptions of healthcare systems, business operations and supply chains, layoffs, lower consumer demand, and defaults, among other significant economic impacts that have disrupted global economic activity across many industries. Such economic impacts may exacerbate other pre-existing political, social and economic risks locally or globally. |
The ongoing effects of COVID-19 are unpredictable and may result in significant and prolonged effects on the Fund’s performance.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. 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 | | | 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, 2021, the effective advisory fee rate incurred by the Fund was 0.93%.
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 Fund.
The Adviser has contractually agreed, through at least April 30, 2023, 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, 2023. 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, 2023, 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, 2021, the Adviser waived advisory fees of $643,701.
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
Invesco Oppenheimer V.I. International Growth Fund
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, 2021, Invesco was paid $71,713 for accounting and fund administrative services and was reimbursed $767,227 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, 2021, 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, 2021, 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, 2021. 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 | | $ | – | | | $ | 5,574,698 | | | $ | – | | | $ | 5,574,698 | |
Belgium | | | 1,000,148 | | | | – | | | | – | | | | 1,000,148 | |
Canada | | | 20,441,493 | | | | – | | | | – | | | | 20,441,493 | |
Denmark | | | 2,656,564 | | | | 11,399,823 | | | | – | | | | 14,056,387 | |
France | | | – | | | | 72,073,038 | | | | – | | | | 72,073,038 | |
Germany | | | – | | | | 27,944,901 | | | | – | | | | 27,944,901 | |
India | | | 16,857 | | | | 14,969,040 | | | | – | | | | 14,985,897 | |
Ireland | | | – | | | | 8,057,439 | | | | – | | | | 8,057,439 | |
Italy | | | – | | | | 7,552,697 | | | | – | | | | 7,552,697 | |
Japan | | | – | | | | 41,559,874 | | | | – | | | | 41,559,874 | |
Netherlands | | | – | | | | 28,871,921 | | | | – | | | | 28,871,921 | |
New Zealand | | | – | | | | 5,028,258 | | | | – | | | | 5,028,258 | |
Singapore | | | – | | | | 3,761,464 | | | | – | | | | 3,761,464 | |
Spain | | | – | | | | 5,166,228 | | | | – | | | | 5,166,228 | |
Sweden | | | – | | | | 30,498,157 | | | | – | | | | 30,498,157 | |
Switzerland | | | – | | | | 28,872,343 | | | | – | | | | 28,872,343 | |
Taiwan | | | – | | | | 9,454,957 | | | | – | | | | 9,454,957 | |
United Kingdom | | | – | | | | 69,392,778 | | | | – | | | | 69,392,778 | |
United States | | | 29,828,090 | | | | 16,113,398 | | | | – | | | | 45,941,488 | |
Money Market Funds | | | 2,753,351 | | | | 210,750 | | | | – | | | | 2,964,101 | |
Total Investments | | $ | 56,696,503 | | | $ | 386,501,764 | | | | $– | | | $ | 443,198,267 | |
| |
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.
Invesco Oppenheimer V.I. International Growth Fund
Effect of Derivative Investments for the year ended December 31, 2021
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 | |
| | | Currency
Risk | |
| |
Realized Gain: | | | | |
Forward foreign currency contracts | | | $2,285 | |
| |
The table below summarizes the average notional value of derivatives held during the period.
| | |
| | | Forward
Foreign Currency
Contracts |
|
Average notional value | | $46,842 |
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, 2021 and 2020:
| | | | | | | | |
| | | 2021 | | | 2020 | |
Ordinary income* | | $ | - | | | $ | 3,427,490 | |
Long-term capital gain | | | 47,283,236 | | | | 6,024,436 | |
Total distributions | | $ | 47,283,236 | | | $ | 9,451,926 | |
| * | Includes short-term capital gain distributions, if any. |
Tax Components of Net Assets at Period-End:
| | | | |
| | | 2021 | |
Undistributed long-term capital gain | | $ | 61,879,522 | |
Net unrealized appreciation – investments | | | 228,462,727 | |
Net unrealized appreciation – foreign currencies | | | 25,324 | |
Temporary book/tax differences | | | (54,018 | ) |
Shares of beneficial interest | | | 154,013,235 | |
Total net assets | | $ | 444,326,790 | |
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, 2021.
Invesco Oppenheimer V.I. International Growth Fund
NOTE 8–Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Government obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2021 was $109,561,535 and $214,959,782, 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 | | $ | 238,135,314 | |
| |
Aggregate unrealized (depreciation) of investments | | | (9,672,587 | ) |
| |
Net unrealized appreciation of investments | | $ | 228,462,727 | |
| |
Cost of investments for tax purposes is $214,735,540.
NOTE 9–Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses and distributions, on December 31, 2021, undistributed net investment income (loss) was increased by $1,494,840, undistributed net realized gain was decreased by $756,074 and shares of beneficial interest was decreased by $738,766. 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, 2021(a) | | | December 31, 2020 | |
| | | | | | | | |
| | | Shares | | | Amount | | | Shares | | | Amount | |
| |
Sold: | | | | | | | | | | | | | | | | |
Series I | | | 11,253,855 | | | $ | 34,403,309 | | | | 12,200,099 | | | $ | 28,925,077 | |
| |
Series II | | | 11,397,486 | | | | 36,490,806 | | | | 9,099,234 | | | | 22,431,074 | |
| |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Series I | | | 7,207,130 | | | | 21,477,246 | | | | 1,865,625 | | | | 4,813,313 | |
| |
Series II | | | 8,271,150 | | | | 25,805,990 | | | | 1,718,005 | | | | 4,638,613 | |
| |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Series I | | | (17,177,393 | ) | | | (52,493,181 | ) | | | (25,538,177 | ) | | | (61,802,820 | ) |
| |
Series II | | | (40,674,516 | ) | | | (129,077,804 | ) | | | (20,462,841 | ) | | | (51,817,260 | ) |
| |
Net increase (decrease) in share activity | | | (19,722,288 | ) | | $ | (63,393,634 | ) | | | (21,118,055 | ) | | $ | (52,812,003 | ) |
| |
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 41% of the outstanding shares of the Fund. 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 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, 2021, the related statement of operations for the year ended December 31, 2021, the statement of changes in net assets for each of the two years in the period ended December 31, 2021, including the related notes, and the financial highlights for each of the three years in the period ended December 31, 2021 (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, 2021, 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, 2021 and the financial highlights for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
The financial statements of Oppenheimer International Growth Fund/VA (subsequently renamed Invesco Oppenheimer V.I. International Growth Fund) 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, 2021 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 14, 2022
We have served as the auditor of one or more of the 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, 2021 through December 31, 2021.
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
(07/01/21) | | ACTUAL | | HYPOTHETICAL
(5% annual return before expenses) | | Annualized
Expense
Ratio |
| | Ending
Account Value
(12/31/21)1 | | Expenses
Paid During
Period2 | | Ending
Account Value
(12/31/21) | | Expenses
Paid During
Period2 |
Series I | | $1,000.00 | | $1,031.30 | | $5.12 | | $1,020.16 | | $5.09 | | 1.00% |
Series II | | 1,000.00 | | 1,030.00 | | 6.40 | | 1,018.90 | | 6.36 | | 1.25 |
| 1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2021 through December 31, 2021, 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 184/365 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 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, 2021:
| | | | | | | | | | | | |
| | Federal and State Income Tax | | | | | | | | | | |
| | Long-Term Capital Gain Distributions | | $ | 47,283,236 | | | | | | | |
| | Qualified Dividend Income* | | | 0.00 | % | | | | | | |
| | Corporate Dividends Received Deduction* | | | 0.00 | % | | | | | | |
| | U.S. Treasury Obligations* | | | 0.00 | % | | | | | | |
| | Qualified Business Income* | | | 0.00 | % | | | | | | |
| | Business Interest Income* | | | 0.00 | % | | | | | | |
| | Foreign Taxes | | $ | 0.0009 | | | | per share | | | |
| | Foreign Source Income | | $ | 0.0337 | | | | per share | | | |
* 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) | | 186 | | 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 – 1957
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 | | 186 | | Director, ISO New England, Inc. (non-profit organization managing regional electricity market) Formerly: enaible, Inc. (artificial intelligence technology) |
| | | | | |
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 | | 186 | | 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 President and Director of Grahamtastic Connection (non-profit) |
Cynthia Hostetler –1962 Trustee | | 2017 | | Non-Executive Director and Trustee of a number of public and private business corporations
Formerly: Director, Aberdeen Investment Funds (4 portfolios); Director, Artio Global Investment LLC (mutual fund complex); Director, Edgen Group, Inc. (specialized energy and infrastructure products distributor); Director, Genesee & Wyoming, Inc. (railroads); Head of Investment Funds and Private Equity, Overseas Private Investment Corporation; President, First Manhattan Bancorporation, Inc.; Attorney, Simpson Thacher & Bartlett LLP | | 186 | | Resideo Technologies, Inc. (smart home technology); Vulcan Materials Company (construction materials company); Trilinc Global Impact Fund; Textainer Group Holdings, (shipping container leasing company); Investment Company Institute (professional organization); Independent Directors Council (professional organization) Eisenhower Foundation (non-profit) |
Eli Jones – 1961 Trustee | | 2016 | | Professor and Dean Emeritus, Mays Business School – Texas A&M University Formerly: Dean of Mays Business School-Texas A&M University; Professor and Dean, Walton College of Business, University of Arkansas and E.J. Ourso College of Business, Louisiana State University; Director, Arvest Bank | | 186 | | Insperity, Inc. (formerly known as Administaff) (human resources provider); First Financial Bancorp (regional bank) |
| Elizabeth Krentzman – 1959 Trustee | | 2019 | | Formerly: Principal and Chief Regulatory Advisor for Asset Management Services and U.S. Mutual Fund Leader of Deloitte & Touche LLP; General Counsel of the Investment Company Institute (trade association); National Director of the Investment Management Regulatory Consulting Practice, Principal, Director and Senior Manager of Deloitte & Touche LLP; Assistant Director of the Division of Investment Management - Office of Disclosure and Investment Adviser Regulation of the U.S. Securities and Exchange Commission and various positions with the Division of Investment Management – Office of Regulatory Policy of the U.S. Securities and Exchange Commission; Associate at Ropes & Gray LLP; and Trustee of certain Oppenheimer Funds | | 186 | | Trustee of the University of Florida National Board Foundation; Member of the Cartica Funds Board of Directors (private investment funds) Formerly: Member of the University of Florida Law Center Association, Inc. Board of Trustees, Audit Committee and Membership Committee |
| Anthony J. LaCava, Jr. – 1956 Trustee | | 2019 | | Formerly: Director and Member of the Audit Committee, Blue Hills Bank (publicly traded financial institution) and Managing Partner, KPMG LLP | | 186 | | 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 | | 186 | | None |
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) |
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; Director of Columbia Equity Financial Corp. (privately held financial advisor); and Member of the Vestry of Trinity Church Wall Street | | 186 | | Member of Board of Trust for Mutual Understanding (non-profit promoting the arts and environment); Member of Board of Greenwall Foundation (bioethics research foundation) and its Investment Committee; Member of Board of Friends of the LRC (non-profit legal advocacy); Board Member and Investment Committee Member of Pulitzer Center for Crisis Reporting (non-profit journalism) |
| 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; Director, Atlantic Power Corporation (power generation company) and ON Semiconductor Corporation (semiconductor manufacturing) | | 186 | | Formerly: Elucida Oncology (nanotechnology & medical particles company) |
| Ann Barnett Stern – 1957 Trustee | | 2017 | | President, Chief Executive Officer and Board Member, Houston Endowment, Inc. a private philanthropic institution
Formerly: Executive Vice President, Texas Children’s Hospital; Vice President, General Counsel and Corporate Compliance Officer, Texas Children’s Hospital; Attorney at Beck, Redden and Secrest, LLP and Andrews and Kurth LLP | | 186 | | Director and Audit Committee member of Federal Reserve Bank of Dallas; Trustee and Board Chair of Good Reason Houston (nonprofit); Trustee, Vice Chair, Chair of Nomination/Governance Committee, Chair of Personnel Committee of Holdsworth Center (nonprofit); Trustee and Investment Committee member of University of Texas Law School Foundation (nonprofit); Board Member of Greater Houston Partnership |
| Robert C. Troccoli – 1949 Trustee | | 2016 | | Retired
Formerly: Adjunct Professor, University of Denver – Daniels College of Business; and Managing Partner, KPMG LLP | | 186 | | None |
| Daniel S. Vandivort –1954 Trustee | | 2019 | | President, Flyway Advisory Services LLC (consulting and property management) | | 186 | | Formerly: Trustee, Board of Trustees, Treasurer and Chairman of the Audit and Finance Committee, Huntington Disease Foundation of America; Trustee and Governance Chair, of certain Oppenheimer Funds |
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; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; and Vice President, OppenheimerFunds, Inc. Formerly: Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco AIM Advisers, Inc., Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds; Vice President and Assistant Vice President, Invesco Advisers, Inc.; Assistant Vice President, Invesco AIM Capital Management, Inc. and Invesco AIM Private Asset Management, Inc.; Treasurer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust and Invesco Actively Managed Exchange-Traded Fund Trust and Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) | | N/A | | N/A |
| 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 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.; Secretary, Sovereign G./P. Holdings Inc.; and Secretary, Invesco Indexing LLC; Secretary, W.L. Ross & Co., LLC | | 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) Formerly: Director, President and Chairman, Invesco Insurance Agency, Inc.; Director, Invesco UK Limited; Director and Chief Executive, Invesco Asset Management Limited and Invesco Fund Managers Limited; Assistant Vice President, The Invesco Funds; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director and Chief Executive, Invesco Administration Services Limited and Invesco Global Investment Funds Limited; Director, Invesco Distributors, Inc.; Head of EMEA, Invesco Ltd.; President, Invesco Actively Managed Exchange-Traded Commodity Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II and Invesco India Exchange-Traded Fund Trust; 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; 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; President, Trimark Investments Ltd./Placements Trimark Ltée and Director and Chairman, Invesco Trust Company Formerly: Director and Senior Vice President, Invesco Insurance Agency, Inc.; Director and Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco AIM Management Group, Inc.); Secretary, Invesco Investment Services, Inc. (formerly known as Invesco AIM Investment Services, Inc.); Chief Legal Officer and Secretary, The Invesco Funds; Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.); Chief Legal Officer, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust; Secretary, Invesco Indexing LLC; Director, Secretary, General Counsel and Senior Vice President, Van Kampen Exchange Corp.; Director, Vice President and Secretary, IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.;Director and Secretary, Invesco Distributors, Inc. (formerly known as Invesco AIM Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco AIM Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco AIM Capital Management, Inc.; 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.; Senior Vice President, The Invesco Funds; President, SNW Asset Management Corporation and Invesco Managed Accounts, LLC; Chairman and Director, Invesco Private Capital, Inc.; Chairman and Director, INVESCO Private Capital Investments, Inc.; Chairman and Director, INVESCO Realty, Inc.; and Senior Vice President, Invesco Group Services, Inc. Formerly: Senior Vice President, Invesco Management Group, Inc. and Invesco Advisers, Inc.; Assistant Vice President, The Invesco Funds | | N/A | | N/A |
Adrien Deberghes—1967 Principal Financial Officer, Treasurer and Vice President | | 2020 | | Head of the Fund Office of the CFO and Fund Administration; Vice President, Invesco Advisers, Inc.; Principal Financial Officer, Treasurer and Vice President, The Invesco Funds; Vice President, Invesco Exchange-Traded Fund Trust, Invesco Exchange-Traded Fund Trust II, Invesco India Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Fund Trust, Invesco Actively Managed Exchange-Traded Commodity Fund Trust and Invesco Exchange-Traded Self-Indexed Fund Trust Formerly: Senior Vice President and Treasurer, Fidelity Investments | | N/A | | N/A |
Crissie M. Wisdom – 1969 Anti-Money Laundering Compliance Officer | | 2013 | | Anti-Money Laundering and OFAC Compliance Officer for Invesco U.S. entities including: Invesco Advisers, Inc. and its affiliates, Invesco Capital Markets, Inc., Invesco Distributors, Inc., Invesco Investment Services, Inc., The Invesco Funds, Invesco Capital Management, LLC, Invesco Trust Company; and Fraud Prevention Manager for Invesco Investment Services, Inc. | | 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; Vice President, Invesco Advisers, Inc.; 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 | | Investament 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
ITEM 2. CODE OF ETHICS.
There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial experts are Cynthia Hostetler, Anthony J. LaCava, Jr., Robert C. Troccoli and James Vaughn. Cynthia Hostetler, Anthony J. LaCava, 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.
(a) to (d)
Fees Billed by PwC Related to the Registrant
PricewaterhouseCoopers LLC (“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 2021 | | | Fees Billed for
Services Rendered
to the Registrant for
fiscal year end 2020 | |
| | |
Audit Fees | | $ | 908,403 | | | $ | 992,930 | |
Audit-Related Fees(1) | | $ | 0 | | | $ | 33,000 | |
Tax Fees(2) | | $ | 745,826 | | | $ | 511,931 | |
All Other Fees | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Total Fees | | $ | 1,654,229 | | | $ | 1,537,861 | |
| (1) | Audit-Related Fees for the fiscal year ended December 31, 2020 includes fees billed for reviewing regulatory filings. |
| (2) | Tax Fees for the fiscal years ended December 31, 2021 and December 31, 2020 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 2021
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
2020 That Were Required
to be Pre-Approved
by the Registrant’s
Audit Committee | |
| | |
Audit-Related Fees(1) | | $ | 801,000 | | | $ | 701,000 | |
Tax Fees | | $ | 0 | | | $ | 0 | |
All Other Fees | | $ | 0 | | | $ | 0 | |
| | | | | | | | |
Total Fees | | $ | 801,000 | | | $ | 701,000 | |
| (1) | Audit-Related Fees for the fiscal years ended 2021 and 2020 include fees billed related to reviewing controls at a service organization. |
(e)(1)
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees
of the Invesco Funds (the “Funds”)
Last Amended March 29, 2017
| | I. | Statement of Principles |
The Audit Committees (the “Audit Committee”) of the Boards of Trustees of the Funds (the “Board”) have adopted these policies and procedures (the “Procedures”) with respect to the pre-approval of audit and non-audit services to be provided by the Funds’ independent auditor (the “Auditor”) to the Funds, and to the Funds’ investment adviser(s) and any entity controlling, controlled by, or under common control with the investment adviser(s) that provides ongoing services to the Funds (collectively, “Service Affiliates”).
Under Section 202 of the Sarbanes-Oxley Act of 2002, all audit and non-audit services provided to the Funds by the Auditor must be preapproved by the Audit Committee. Rule 2-01 of Regulation S-X requires that the Audit Committee also pre-approve a Service Affiliate’s engagement of the Auditor for non-audit services if the engagement relates directly to the operations and financial reporting of the Funds (a “Service Affiliate’s Covered Engagement”).
These Procedures set forth the procedures and the conditions pursuant to which the Audit Committee may pre-approve audit and non-audit services for the Funds and a Service Affiliate’s Covered Engagement pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and other
organizations and regulatory bodies applicable to the Funds (“Applicable Rules”).1 They address both general pre-approvals without consideration of specific case-by-case services (“general pre-approvals”) and pre-approvals on a case-by-case basis (“specific pre-approvals”). Any services requiring pre-approval that are not within the scope of general pre-approvals hereunder are subject to specific pre-approval. These Procedures also address the delegation by the Audit Committee of pre-approval authority to the Audit Committee Chair or Vice Chair.
| | II. | Pre-Approval of Fund Audit Services |
The annual Fund audit services engagement, including terms and fees, is subject to specific pre-approval by the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by an independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committee will receive, review and consider sufficient information concerning a proposed Fund audit engagement to make a reasonable evaluation of the Auditor’s qualifications and independence. The Audit Committee will oversee the Fund audit services engagement as necessary, including approving any changes in terms, audit scope, conditions and fees.
In addition to approving the Fund audit services engagement at least annually and specifically approving any changes, the Audit Committee may generally or specifically pre-approve engagements for other audit services, which are those services that only an independent auditor reasonably can provide. Other audit 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
| 1 | Applicable Rules include, for example, New York Stock Exchange (“NYSE”) rules applicable to closed-end funds managed by Invesco and listed on NYSE. |
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 $5,931,000 for the fiscal year ended December 31, 2021 and $6,219,000 for the fiscal year ended December 31, 2020. In total, PwC billed the Registrant, Invesco and Invesco Affiliates aggregate non-audit fees of $7,477,826 for the fiscal year ended December 31, 2021 and $7,431,931 for the fiscal year ended December 31, 2020.
PwC provided audit services to the Investment Company complex of approximately $30 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 INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
| ITEM 11. | CONTROLS AND PROCEDURES. |
| | (a) | As of February 10, 2022, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“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 (“Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of February 10, 2022, the Registrant’s disclosure controls and procedures were reasonably designed so as 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 23, 2022 |
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 23, 2022 |
| | |
| By: | | /s/ Adrien Deberghes |
| | Adrien Deberghes |
| | Principal Financial Officer |
| |
| Date: | | February 23, 2022 |
