SEC Company Response from AIM INVESTMENT SECURITIES FUNDS (INVESCO INVESTMENT SECURITIES FUNDS) (CIK 0000842790) — Jul 8, 2021
AIM INVESTMENT SECURITIES FUNDS (INVESCO INVESTMENT SECURITIES FUNDS) (CIK 0000842790)
Date: July 8, 2021 · CIK: 0000842790 · Accession: 0001137439-21-000637
AI Filing Summary & Sentiment
File numbers found in text: 811-01424, 811-02699, 811-03826, 811-05426, 811-05686, 811-06463, 811-07890, 811-21265, 811-21977, 811-22148, 811-23304
Letter
VIA EDGAR Division of Investment Management Securities and Exchange Commission 100 F Street N.E. Washington DC 20549 AIM Investment Securities Fund (Invesco Investment Securities Funds) (File No. 811-05686; AIM Tax-Exempt Funds (Invesco Tax-Exempt Funds (File No. 811-07890); AIM Sector Funds (Invesco Sector Funds) (File No. 811-03826); AIM Equity Funds (Invesco Equity Funds) (File No. 811-01424); AIM Investment Funds (Invesco Investment Funds) (File No. 811-05426); AIM International Mutual Funds (Invesco International Mutual Funds) (811-06463); AIM Growth Series (Invesco Growth Series) (File No. 811-02699) (each, an “OEF Registrant” and collectively, the “OEF Registrants”) and Invesco Exchange-Traded Fund Trust (File No. 811-21265); Invesco Exchange-Traded Fund Trust II (File No. 811-21977); Invesco Exchange-Traded Self-Indexed Fund Trust (File No. 811-23304); Invesco Actively Managed Exchange-Traded Fund Trust (File No. 811-22148) (the “ETF Registrant”) (each, an “ETF Registrant” and collectively, the “ETF Registrants” and together, with the OEF Registrants, the “Registrants”)
RE:
Dear Mr. Manion:
On behalf of the Registrants and each respective series of the Registrants listed in Exhibit A (each, a “Fund,” and collectively, the “Funds”) this letter responds to comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities Exchange Commission (the “Commission” or “SEC”) to the undersigned on June 3, 2021, with respect to the Registrants’ respective shareholder reports filed on Form N-CSR and the annual reports on Form N-CEN for the fiscal years ended on the dates listed in Exhibit A.
The Staff’s comments are summarized below in italicized text. The Registrants’ responses are set out immediately under the restated comment.
I.
FINANCIAL STATEMENT AND N-CSR COMMENTS
1.
Comment:
The annual report for each of the Funds listed on Exhibit B states that the Fund is non-diversified. Please confirm such Funds continue to qualify as non-diversified funds, and also please identify the compliance testing performed to monitor each Fund’s diversification status. The Staff reminds the Registrants that if any such Fund has been operating as diversified for more than three years, the Fund would be required to obtain shareholder approval prior to changing its operating status back to non-diversified.
Response:
For each of the Funds listed on Exhibit B, a Fund may, from time to time, operate as diversified based on the composition of such Fund’s underlying index. The compliance department of the ETF Registrants’ adviser monitors the diversification status of each Fund on a daily basis. Certain of these Funds have operated as diversified for a continuous three-year period, and as a result (and
subsequent to the date of the Fund’s annual report), the classification status of such Funds has been changed to diversified. That change has been disclosed to shareholders via a supplement to the Fund’s registration statement. The current diversification status of each Fund is listed on Exhibit B. For each Fund that has operated in a diversified manner continuously for a three-year period, we confirm that the Fund would seek shareholder approval prior to changing its operating status back to non-diversified, unless the Fund could rely on the no-action letter issued to Stradley Ronon Stevens & Young, LLP on June 24, 2019. We also confirm that the Funds listed as non-diversified on Exhibit B continue to qualify as non-diversified.
2.
Comment:
In the October 31, 2020 annual report for Invesco Emerging Markets Local Debt Fund, certain column headers of the Financial Highlights table appear to have been transposed as certain figures in the Financial Highlights table do not align with prior years. Please assess whether an amendment to the N-CSR is necessary and explain in correspondence your analysis regarding your proposed approach.
Response:
The Registrant confirms that certain column headers (specifically, the net expense ratio and net investment income ratio headers) of the Financial Highlights table are transposed. The Registrant undertook an assessment to determine whether an amendment to the N-CSR is necessary and believes that such amendment is not necessary. In arriving at that conclusion, the Registrant considered both quantitative and qualitative factors, including that (i) all fiscal year 2020 ratios were correctly reported in the October 31, 2020 annual report and it was only prior fiscal year end ratios impacted by the transposition; (ii) the transposition resulted in the Fund’s net expense ratios and net investment income ratios for certain prior fiscal years appearing worse than they actually were (not better); (iii) all shareholder reports for Invesco Emerging Markets Local Debt Fund issued prior to the October 31, 2020 annual report accurately presented all figures in the Financial Highlights; (iv) the semi-annual report dated April 30, 2021 accurately presents all figures in the Financial Highlights; (v) the transposed numbers, covering the period between May 31, 2016 to October 31, 2019, are approaching two years old; and (vi) the prospectus, which currently reflects the transposed information, will be amended to reflect the correct presentation. Based on all of the foregoing, the Registrant concluded the information is not material and amending the N-CSR would incur additional expense without providing any real additional value.
3.
Comment:
Per the October 31, 2020 annual report for the Invesco S&P 500 Downside Hedged ETF, the Fund held primarily money market funds plus other assets at fiscal year end. Please explain whether this was in connection with a rebalancing or due to defensive positioning. If due to defensive positioning, consider adding disclosure regarding the Fund’s defensive strategy to the Fund’s summary prospectus.
Response:
The ETF Registrant confirms that the Fund’s holding of primarily money market funds plus other assets at the fiscal year end was due to the application of the Fund’s investment strategy, as the Fund sought to reposition its portfolio away from equity holdings during a period of greater volatility, in accordance with the rebalancing of the S&P 500® Dynamic VEQTOR Index. The Fund respectfully notes that the Management’s Discussion of Fund Performance in the annual report states the following regarding such positioning:
Consistent with its investment strategy, the Fund moves to a substantial cash position from time to time during periods of heightened volatility. In this
regard, at the Fund’s fiscal year ended October 31, 2020, the Fund held primarily money market funds plus other assets.
The ETF Registrant further notes that the Fund’s summary prospectus discloses that the Fund will invest in short-term, high quality U.S. Treasury Securities, money market instruments, cash, and cash equivalent securities “to protect the Fund during periods of heightened volatility when the Adviser believes that it is in the best interest of the Fund to do so.” Although the allocation to primarily money market funds was not done as a defensive positioning strategy, the ETF Registrant also notes that its statutory prospectus (which is incorporated by reference into the summary prospectus) discloses that the Fund may take such temporary defensive positions under the bolded heading “Temporary Defensive Strategies.”
4.
Comment:
For the fiscal year ended November 30, 2020 of the Invesco SteelPath MLP Alpha Fund, Invesco SteelPath MLP Alpha Plus Fund, Invesco SteelPath MLP Income Fund and Invesco SteelPath MLP Select 40 Fund, please confirm that the recapture positions of Section 751 of the Internal Revenue Code (“IRC”) were considered in connection with the determination of the Funds’ NAV.
Response:
The Registrant confirms that IRC 751 recapture provisions were considered in connection with the determination of the Funds’ NAV.
5.
Comment:
Please confirm that the Funds have complied with Section 19(a) of the Investment Company Act of 1940, as amended, as applicable.
Response:
The Registrants confirm their belief that the Funds have complied with Section 19(a) of the Investment Company Act of 1940, as amended, as applicable, based on and consistent with the adviser’s internal procedures concerning compliance with Section 19(a), which procedures it believes are appropriate and reasonable.
II.
FORM N-CEN COMMENT
6.
Comment:
For the Invesco BulletShares 2023 Municipal Bond ETF, please reconcile the response to Item C.8.c. (Are the fees waived subject to recoupment?) which was checked “no,” with the response to Item C.8.d. (Were any expenses previously waived recouped during the period?) which was checked “yes.” Please confirm whether fees waived are subject to recoupment and whether any such fees were recouped.
Response:
The ETF Registrant confirms that fees waived for Invesco BulletShares 2023 Municipal Bond ETF are not subject to recoupment and also that the Fund did not recoup any previously waived expenses during the period. The ETF Registrant notes that the response to Item C.8.c. is correct, and that the response to Item C.8.d. should be “no” and that the incorrect box for that item was inadvertently checked.
Please do not hesitate to contact me at (713) 214-4345 if you have any questions or wish to discuss any of the responses presented above.
Sincerely,
/s/Adrien Deberghes
Show Raw Text
CORRESP
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filename1.htm
July 8, 2021
VIA EDGAR
Mr. David Manion
Division of Investment Management
Securities and Exchange Commission
100 F Street N.E.
Washington DC 20549
RE:
AIM Investment Securities Fund (Invesco Investment Securities Funds) (File No. 811-05686; AIM Tax-Exempt Funds (Invesco Tax-Exempt Funds (File No.
811-07890); AIM Sector Funds (Invesco Sector Funds) (File No. 811-03826); AIM Equity Funds (Invesco Equity Funds) (File No. 811-01424); AIM Investment Funds (Invesco Investment Funds) (File No. 811-05426); AIM International Mutual Funds
(Invesco International Mutual Funds) (811-06463); AIM Growth Series (Invesco Growth Series) (File No. 811-02699) (each, an “OEF Registrant” and collectively, the “OEF Registrants”) and Invesco Exchange-Traded Fund Trust (File No. 811-21265);
Invesco Exchange-Traded Fund Trust II (File No. 811-21977); Invesco Exchange-Traded Self-Indexed Fund Trust (File No. 811-23304); Invesco Actively Managed Exchange-Traded Fund Trust (File No. 811-22148) (the “ETF Registrant”) (each, an “ETF
Registrant” and collectively, the “ETF Registrants” and together, with the OEF Registrants, the “Registrants”)
Dear Mr. Manion:
On behalf of the Registrants and each respective series of the Registrants listed in Exhibit A (each, a “Fund,” and collectively, the “Funds”) this letter
responds to comments provided by the staff of the Division of Investment Management (the “Staff”) of the Securities Exchange Commission (the “Commission” or “SEC”) to the undersigned on June 3, 2021, with respect to the Registrants’ respective
shareholder reports filed on Form N-CSR and the annual reports on Form N-CEN for the fiscal years ended on the dates listed in Exhibit A.
The Staff’s comments are summarized below in italicized text. The Registrants’ responses are set out immediately under the restated comment.
I.
FINANCIAL STATEMENT AND N-CSR COMMENTS
1.
Comment:
The annual report for each of the Funds listed on Exhibit B states that the Fund is non-diversified. Please confirm such Funds
continue to qualify as non-diversified funds, and also please identify the compliance testing performed to monitor each Fund’s diversification status. The Staff reminds the Registrants that if any such Fund has been operating as diversified
for more than three years, the Fund would be required to obtain shareholder approval prior to changing its operating status back to non-diversified.
Response:
For each of the Funds listed on Exhibit B, a Fund may, from time to time, operate as diversified based on the composition of such Fund’s underlying
index. The compliance department of the ETF Registrants’ adviser monitors the diversification status of each Fund on a daily basis. Certain of these Funds have operated as diversified for a continuous three-year period, and as a result (and
subsequent to the date of the Fund’s annual report), the classification status of such Funds has been changed to diversified. That change has been
disclosed to shareholders via a supplement to the Fund’s registration statement. The current diversification status of each Fund is listed on Exhibit B. For each Fund that has operated in a diversified manner continuously for a three-year
period, we confirm that the Fund would seek shareholder approval prior to changing its operating status back to non-diversified, unless the Fund could rely on the no-action letter issued to Stradley Ronon Stevens & Young, LLP on June 24,
2019. We also confirm that the Funds listed as non-diversified on Exhibit B continue to qualify as non-diversified.
2.
Comment:
In the October 31, 2020 annual report for Invesco Emerging Markets Local Debt Fund, certain column headers of the Financial
Highlights table appear to have been transposed as certain figures in the Financial Highlights table do not align with prior years. Please assess whether an amendment to the N-CSR is necessary and explain in correspondence your analysis
regarding your proposed approach.
Response:
The Registrant confirms that certain column headers (specifically, the net expense ratio and net investment income ratio headers) of the Financial
Highlights table are transposed. The Registrant undertook an assessment to determine whether an amendment to the N-CSR is necessary and believes that such amendment is not necessary. In arriving at that conclusion, the Registrant considered
both quantitative and qualitative factors, including that (i) all fiscal year 2020 ratios were correctly reported in the October 31, 2020 annual report and it was only prior fiscal year end ratios impacted by the transposition; (ii) the
transposition resulted in the Fund’s net expense ratios and net investment income ratios for certain prior fiscal years appearing worse than they actually were (not better); (iii) all shareholder reports for Invesco Emerging Markets Local
Debt Fund issued prior to the October 31, 2020 annual report accurately presented all figures in the Financial Highlights; (iv) the semi-annual report dated April 30, 2021 accurately presents all figures in the Financial Highlights; (v) the
transposed numbers, covering the period between May 31, 2016 to October 31, 2019, are approaching two years old; and (vi) the prospectus, which currently reflects the transposed information, will be amended to reflect the correct
presentation. Based on all of the foregoing, the Registrant concluded the information is not material and amending the N-CSR would incur additional expense without providing any real additional value.
3.
Comment:
Per the October 31, 2020 annual report for the Invesco S&P 500 Downside Hedged ETF, the Fund held primarily money market funds
plus other assets at fiscal year end. Please explain whether this was in connection with a rebalancing or due to defensive positioning. If due to defensive positioning, consider adding disclosure regarding the Fund’s defensive strategy to the
Fund’s summary prospectus.
Response:
The ETF Registrant confirms that the Fund’s holding of primarily money market funds plus other assets at the fiscal year end was due to the
application of the Fund’s investment strategy, as the Fund sought to reposition its portfolio away from equity holdings during a period of greater volatility, in accordance with the rebalancing of the S&P 500® Dynamic VEQTOR
Index. The Fund respectfully notes that the Management’s Discussion of Fund Performance in the annual report states the following regarding such positioning:
Consistent with its investment strategy, the Fund moves to a substantial cash position from time to time during periods of
heightened volatility. In this
2
regard, at the Fund’s fiscal year ended October 31, 2020, the Fund held primarily money market funds plus other assets.
The ETF Registrant further notes that the Fund’s summary prospectus discloses that the Fund will invest in short-term, high quality U.S. Treasury
Securities, money market instruments, cash, and cash equivalent securities “to protect the Fund during periods of heightened volatility when the Adviser believes that it is in the best interest of the Fund to do so.” Although the allocation
to primarily money market funds was not done as a defensive positioning strategy, the ETF Registrant also notes that its statutory prospectus (which is incorporated by reference into the summary prospectus) discloses that the Fund may take
such temporary defensive positions under the bolded heading “Temporary Defensive Strategies.”
4.
Comment:
For the fiscal year ended November 30, 2020 of the Invesco SteelPath MLP Alpha Fund, Invesco SteelPath MLP Alpha Plus Fund,
Invesco SteelPath MLP Income Fund and Invesco SteelPath MLP Select 40 Fund, please confirm that the recapture positions of Section 751 of the Internal Revenue Code (“IRC”) were considered in connection with the determination of the Funds’
NAV.
Response:
The Registrant confirms that IRC 751 recapture provisions were considered in connection with the determination of the Funds’ NAV.
5.
Comment:
Please confirm that the Funds have complied with Section 19(a) of the Investment Company Act of 1940, as amended, as applicable.
Response:
The Registrants confirm their belief that the Funds have complied with Section 19(a) of the Investment Company Act of 1940, as amended, as applicable,
based on and consistent with the adviser’s internal procedures concerning compliance with Section 19(a), which procedures it believes are appropriate and reasonable.
II.
FORM N-CEN COMMENT
6.
Comment:
For the Invesco BulletShares 2023 Municipal Bond ETF, please reconcile the response to Item C.8.c. (Are the fees waived subject to
recoupment?) which was checked “no,” with the response to Item C.8.d. (Were any expenses previously waived recouped during the period?) which was checked “yes.” Please confirm whether fees waived are subject to recoupment and whether any
such fees were recouped.
Response:
The ETF Registrant confirms that fees waived for Invesco BulletShares 2023 Municipal Bond ETF are not subject to recoupment and also that the Fund did
not recoup any previously waived expenses during the period. The ETF Registrant notes that the response to Item C.8.c. is correct, and that the response to Item C.8.d. should be “no” and that the incorrect box for that item was inadvertently
checked.
Please do not hesitate to contact me at (713) 214-4345 if you have any questions or wish to discuss any of the responses presented above.
Sincerely,
/s/Adrien Deberghes
Adrien Deberghes
Principal Financial Officer, Treasurer and Vice President of the OEF Registrants
3
Vice President of the ETF Registrants
cc:
Kelli Gallegos
Sheri Morris
Taylor Edwards
Mark Greer
Mena Larmour
4
EXHIBIT A
File #
Registrant Name
Series ID
Series Name
FYE Reviewed
811-05686
AIM INVESTMENT SECURITIES FUNDS (INVESCO INVESTMENT SECURITIES FUNDS)
S000064666
Invesco High Yield Bond Factor Fund
2/29/2020
811-05686
AIM INVESTMENT SECURITIES FUNDS (INVESCO INVESTMENT SECURITIES FUNDS)
S000064669
Invesco U.S. Government Money Portfolio
2/29/2020
811-07890
AIM TAX-EXEMPT FUNDS (INVESCO TAX-EXEMPT FUNDS)
S000064643
Invesco Rochester AMT-Free New York Municipal Fund
2/29/2020
811-03826
AIM SECTOR FUNDS (INVESCO SECTOR FUNDS)
S000064611
Invesco Gold & Special Minerals Fund
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000063395
Invesco S&P 500(R) Equal Weight Communication Services ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060788
Invesco S&P 500(R) Equal Weight Real Estate ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060798
Invesco S&P 500 Equal Weight Consumer Discretionary ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060811
Invesco S&P 500 Equal Weight Energy ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060812
Invesco S&P 500 Equal Weight ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060813
Invesco S&P 500 Equal Weight Financials ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060814
Invesco S&P 500 Equal Weight Health Care ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060815
Invesco S&P 500 Equal Weight Industrials ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060816
Invesco S&P 500 Equal Weight Materials ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060789
Invesco S&P 500 Equal Weight Technology ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060790
Invesco S&P 500 Equal Weight Utilities ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060791
Invesco S&P 500 Pure Growth ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060792
Invesco S&P 500 Pure Value ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060793
Invesco S&P 500 Top 50 ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060794
Invesco S&P MidCap 400 Equal Weight ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060795
Invesco S&P MidCap 400 Pure Growth ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060796
Invesco S&P MidCap 400 Pure Value ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060797
Invesco S&P SmallCap 600 Equal Weight ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060799
Invesco S&P SmallCap 600 Pure Growth ETF
4/30/2020
5
File #
Registrant Name
Series ID
Series Name
FYE Reviewed
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060800
Invesco S&P SmallCap 600 Pure Value ETF
4/30/2020
811-21265
INVESCO EXCHANGE-TRADED FUND TRUST
S000060809
Invesco S&P 500 Equal Weight Consumer Staples ETF
8/31/2020
811-21977
Invesco Exchange-Traded Fund Trust II
S000058746
Invesco PureBeta MSCI USA ETF
8/31/2020
811-21977
Invesco Exchange-Traded Fund Trust II
S000058747
Invesco PureBeta MSCI USA Small Cap ETF
8/31/2020
811-21977
Invesco Exchange-Traded Fund Trust II
S000058750
Invesco PureBeta US Aggreg