Invesco 2015 Semi-annual Management Report of Fund Performance

Transcription

1 Invesco 2015 Semi-annual Management Report of Fund Performance for the period ended Trimark Advantage Bond Fund

2 Invesco Canada Ltd., All rights reserved. The views of the management of Invesco Canada Ltd. contained in this report are as of the date they were written, and this report is not intended to provide legal, accounting, tax or specific investment advice. Portfolio holdings and allocations are as at, unless otherwise noted. Views, portfolio holdings and allocations may have changed subsequent to this date. For current Fund information, please call or visit our website at Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Please read the simplified prospectus before investing. The indicated rates of return are the historical and annual compounded total returns, including changes in security value and reinvestment of all dividends/distributions, and do not take into account sales, redemption, dividends/distributions or optional charges, or income taxes payable by any investor, which would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There are no assurances that the money market funds will be able to maintain a constant net asset value per security or that the full amount of your investment will be returned to you. This report includes statements that include information concerning possible or assumed future results of each Fund s operations, earnings, liquidity and cash flows, asset levels, merger activities and the effect of completed merger transactions, regulatory developments, demand for and pricing of each Fund, and general economic and securities market conditions. Such statements may be considered forward-looking statements. When used in this report, words such as believes, expects, anticipates, intends, plans, estimates, projects, and future or conditional verbs such as will, may, could, should and would, or any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, you should carefully consider the areas of risk described in the most recent simplified prospectus of the Funds. You may obtain these documents from the SEDAR website at

3 for the period ended Fund and series details Portfolio management team: Jennifer Hartviksen CFA, Albert Ngo MFE, Alexander Schwiersch CFA, Isam Walji MBA Location: Toronto, Canada Sub-advisor: Invesco Advisers, Inc. (cash portion) Fund(s): refers to any of the mutual fund trusts offered under the Trimark, Invesco or PowerShares names. Start Date: refers to the date on which Securities of a particular series of a Fund first became available to the public. Series A: December 1994 Series F: February 2000 Series I: November 2002 (offered as of February 2002 by way of private placement) Manager: refers to Invesco Canada Ltd., doing business as Invesco. Net assets attributable to Securityholders (Net Asset Value): refers to the value of net assets calculated in accordance with International Financial Reporting Standards (IFRS) as presented in the financial statements which is equal to the value of net assets for purposes of Securityholder transactions (i.e., purchases, switches, redemptions). Securityholder(s): refers to the unitholder(s) of the Fund(s). Securities: refers to the units offered by any of the Funds. Each series of Securities is intended for different types of investors. Series A Securities are available to all investors. Series F Securities are available to investors who have fee-based accounts with their dealer and whose dealer has signed an agreement with the Manager. Series F Securities have a lower management fee than other series Securities of the same Fund because the Manager does not pay any trailing commissions to the dealer. Series F Securities are also available to other groups of investors for whom the Manager does not pay commissions. Series I Securities are special-purpose Securities available only to other Invesco Funds or to eligible institutional investors; they are not sold to the general public. Each Series I investor negotiates its own management and advisory fee that is paid directly to the Manager. Series I Securities are not generally sold through dealers, and no sales commissions are payable to dealers for selling these Securities. Results of operations Investment performance The following table summarizes the performance of Trimark Advantage Bond Fund as at. Returns are after expenses have been deducted. These expenses reduce the Fund s returns. 10-year (%) 5-year (%) 3-year (%) 1-year (%) Six-month (%) Series A 1 (C$) Broad-based index of Canadian fixed-income securities 2 (C$) General benchmark 3 (US$) Specific benchmark The series displayed is typically based on factors such as availability to Securityholders, oldest Start Date and largest asset size. Please refer to the Past performance section for the performance of the other series. The performance of the other series offered by the Fund differs from Series A due largely to the varying level of expenses charged to each series, as explained in the Fund and series details section. 2 The broad-based index of Canadian fixed-income securities is the FTSE TMX Canada Universe Bond Index. 3 The general benchmark is The BofA Merrill Lynch High Yield (MLHY) Master II Index (US$). 4 The specific benchmark is the 50% The BofA MLHY Master II Index (US$)/50% FTSE TMX Canada Universe Bond Index (C$). Performance The Fund returned 2.69% over the six-month period ended, outperforming its specific benchmark, which gained 2.47% over the same period (see Investment performance table above) The Fund s relative outperformance over the period was due to its overweight exposure to below-investment-grade bonds, which outperformed investment grade bonds over the period High-yield credit spreads narrowed over the period from 4.73% at December 31, 2014 to 4.65% at period-end This semi-annual Management Report of Fund Performance contains financial highlights of the Fund, but does not contain either semi-annual or annual financial statements of the Fund. You can get a copy of the semi-annual or annual financial statements at your request, and at no cost, by calling ; writing to us at Invesco at 5140 Yonge Street, Suite 800, Toronto, Ontario, M2N 6X7 or inquiries@invesco.ca; or visiting our website at or SEDAR at Securityholders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record or Quarterly Portfolio Disclosure. 1

4 Currency The Fund typically hedges 80% to 100% of its foreign-exchange exposure Over the period, the Canadian dollar depreciated against most other major currencies, with the exception of the euro In aggregate, these hedged positions detracted 3.93% from Fund performance. Net of currency hedges, the Fund s remaining foreign-currency exposure increased Fund performance by approximately 1.75% Key contributors to performance The Fund s investment in Trimark Global High Yield Bond Fund (Series I) was the top contributor to relative performance given the strong performance of the high-yield portfolio over the period Regal Entertainment Group was also a top contributor to Fund performance over the period o Regal Entertainment, the largest operator of movie theatres in the U.S., announced in the first quarter of 2015 that it was no longer pursuing a sale. Regal Entertainment s bonds traded up as the event risk that was being priced into the company s bonds was removed. The portfolio management team exited the Fund s position in the company in early March 2015 HSBC USA Inc. also contributed to relative performance o HSBC USA is a global financial institution. The securities are also legacy preferred shares that pay a high dividend and are pulling towards $25 par as they are expected to be called over the next several quarters to comply with new capital requirements. The team continues to view this position as a good source of high-yielding, low-volatility paper Key detractors from performance The primary detractor from the Fund s relative performance over the period was Tuckamore Capital Management Inc. o Tuckamore Capital Management, a diversified holding company, traded in line with energy prices as its largest business provides production and maintenance services to the Canadian oil and gas exploration and production space. The portfolio management team took advantage of improving energy prices during the second quarter of 2015 to exit from the Fund s position in the company BioScrip, Inc. was a top detractor from relative performance over the period o BioScrip is a leading provider of home-infusion services that is undergoing an operational turnaround. It underperformed during the first quarter of 2015 due to weak results and management s commentary that its turnaround will take longer than expected. The portfolio management team exited the Fund s position in the company in early March 2015 Alliance Pipeline L.P. detracted from relative performance over the period o Alliance Pipeline is an integrated Canada-U.S. highpressure natural gas transmission pipeline system. Company results over the period disappointed as demand for natural gas waned over the period. The portfolio management team exited the Fund s position in the company in early May 2015 Portfolio activity During the period, the portfolio management team replaced the Fund s direct investment in sub-investment-grade debt securities with an investment in Series I units of Trimark Global High Yield Bond Fund o As a result, the Fund s turnover rate was higher than normal due to this realignment of the Fund s portfolio. The team bought 19 new holdings and liquidated 66 holdings o Diversification increased within the Fund s allocation to sub-investment-grade debt, as sub-investment-grade debt exposure changed from approximately 20 individual securities to approximately 60 individual securities because of the investment in Series I units of Trimark Global High Yield Bond Fund. The team believes this diversification and the associated improvement in operational efficiency in managing the Fund s allocation to the asset class are beneficial to unitholders The Fund s high-yield exposure was 51.1% of the Fund s assets at period-end, decreasing from 65.4% at the start of the period Foreign securities accounted for 45.6% of the Fund at periodend, decreasing from 54.8% at the start of the period The Fund s cash, cash equivalents, money market funds and other net assets level decreased from 0.68% at the start of the period to a negative 0.53% at period-end Income, fees and expenses During the period: o The average Net Asset Value (NAV) of the Fund was $ million compared to an average NAV of $ million for the six-month period ended June 30, 2014 o The management expense ratio (MER) remained unchanged at 1.44% for Series A Securityholders. Please refer to the Financial highlights section for the MER of each series o At the Fund level, fluctuation in income and expenses is primarily a result of changes in average NAV and investor activity from one period to another o Interest for distribution purposes decreased due to lower yields on fixed-income investments held in the portfolio and due to lower average NAV o The management and advisory fees declined due to lower average NAV o Custody expenses increased as a result of a higher number of portfolio transactions o The Manager has absorbed some operating expenses. Such absorptions may be discontinued at any time Securityholder activity For the six-month period ended, the Fund s NAV decreased 11.02% to $ million from $ million Of this change, an increase of $7.032 million was attributed to operations and a decrease of $ million to net outflows 2

5 Recent developments as at July 15, 2015 On April 1, 2015, Alexander Schwiersch joined the Trimark Investments Fixed-Income Investments team as a portfolio manager. He brings additional credit depth and breadth to the team as he has extensive experience in European high-yield credit in addition to having managed a Canadian fixed-income portfolio out of Toronto for the past four years at Aberdeen Asset Management. Like the rest of the team, Alexander is a fundamental credit investor, and he will be focused on Canadian investment-grade credit. The divergence between the Canadian and U.S. economies became more apparent during the second quarter of 2015 as the Canadian economy significantly underperformed its U.S. counterpart on major indicators, such as gross-domestic-product (GDP) growth and unemployment. This underperformance combined with an increasingly uncertain macroeconomic backdrop surrounding Greece and the Chinese economy resulted in the Bank of Canada (BoC) reducing its overnight lending rate by 0.25 percentage points to 0.50% on July 15, The BoC also slashed its 2015 GDP forecast to 1.1% from 1.9%. The portfolio management team believes performance is best measured over a cycle and, at this stage in the cycle, capital preservation is paramount. Spreads across all fixed-income asset classes are tight, and investors are generally not being compensated for incremental risk. Market volatility has been rising and returns are likely to be less correlated. This benefits Trimark s approach of active management and individual credit selection. The Fund remains positioned to act opportunistically, as it has done in recent quarters. The portfolio management team will continue to proceed with caution during this period of volatility brought on by divergent monetary policies and shifting global economies. Despite the U.S. Federal Reserve Board (the Fed ) moving off the 0%-level Federal Funds Target Rate, the team members believe that monetary policy will remain accommodative around the globe and demand for bonds will exceed supply as the European Central Bank continues with its quantitative-easing program. Once the noise around predicting when the Fed will increases rates subsides, the rate environment should remain favourable for select credits, which the team believes is the best way to deliver capital preservation and income generation for the Fund during this period. As always, the team continues to maintain discipline with regard to its portfolio-mix decisions. Security selection will continue to be guided by each issuer s specific risk/reward profile, underpinned by the team s consistent, bottom-up, fundamental and relative-value investment approach. incorporated under the laws of the State of Delaware and an affiliate of the Manager. In consideration of the management and advisory services, the Fund pays management and advisory fees to the Manager or affiliates of the Manager, as applicable, based on the average Net Asset Value of each series of the Fund. The management and advisory fees for Series I are negotiated and paid directly by the Series I Securityholders, and not the Fund. The Manager may agree to reduce the normal management and advisory fee it charges a Fund in respect of large Securityholders of a Fund based on agreements between the Manager and the Securityholders. The Manager incurs operating expenses on behalf of the Fund and is then reimbursed by the Fund for such expenses. The operating expenses for Series I are the responsibility of the Manager. To assist in the discharge of its duties with respect to the Fund, the Manager has appointed the Invesco Canada Funds Advisory Board (the Advisory Board ). The majority of Advisory Board members are independent of the Manager. The Advisory Board reviews the investment performance, investment policies, financial statements, trading policies and other similar matters related to the operations of the Fund, and reports its findings, makes recommendations and gives approvals, as appropriate, to the Manager with respect thereto. In addition, the Manager has appointed the Independent Review Committee (IRC) established under the Canadian Securities Administrators National Instrument Independent Review Committee for Investment Funds. The members of the IRC are the current independent members of the Advisory Board. The mandate of the IRC is to review, and provide input on, the Manager s written policies and procedures that deal with conflict of interest matters in respect of the Funds. The IRC may also approve certain mergers involving the Funds and any change of the auditor of the Funds. Additional information about the IRC is available in the Invesco Simplified Prospectus and Annual Information Form. Independent members of the Advisory Board and members of the IRC receive directors fees for services rendered to the Funds. In the case of certain Funds, the Manager provided start-up investment capital to these Funds. The Manager s investment in the Funds is recorded at the Net Asset Value per Security of each series, as applicable. Certain of the Funds participated in portfolio transactions with other Funds managed or sub-advised by the Manager. These transactions were executed through market intermediaries and under prevailing market terms and conditions. Related party transactions The Manager is responsible for the day-to-day operations of the Fund and provides management services to the Fund, including the marketing, promotion and distribution of the Fund; transfer agency services; and Securityholder reporting and servicing. The Fund receives investment advisory services provided by the Manager or affiliates of the Manager. These services are in the normal course of operations and are recorded at the amount of the consideration agreed to by the parties. The cash portion of the Fund is sub-advised by Invesco Advisers, Inc., a corporation 3

6 Financial highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the six-month period ended June 30 and the past five financial years ended December 31, if applicable. Periods beginning on or after January 1, 2013 follow International Financial Reporting Standards (IFRS) and periods prior to January 1, 2013 follow Canadian Generally Accepted Accounting Principles (C-GAAP). June 30, December 31, December 31, December 31, December 31, December 31, Series net assets per Security (1) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, beg. of period (2) $ 4.46 $ 4.45 $ 4.45 $ 4.50 $ 4.80 $ 4.73 Increase/(decrease) from operations Total revenue Total expenses (0.03) (0.06) (0.06) (0.06) (0.07) (0.06) Realized gains/(losses) (0.03) (0.30) (0.12) (0.23) Unrealized gains/(losses) 0.01 (0.20) (0.05) 0.48 Total increase/(decrease) from operations (2) $ 0.12 $ 0.17 $ 0.16 $ 0.21 $ 0.04 $ 0.50 Distributions From income (excluding dividends) (0.09) (0.05) (0.14) (0.26) (0.33) (0.42) From dividends From capital gains Return of capital (0.11) (0.02) Total distributions (3) $ (0.09) $ (0.16) $ (0.16) $ (0.26) $ (0.33) $ (0.42) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, end of period (2) $ 4.49 $ 4.46 $ 4.45 $ 4.45 $ 4.50 $ 4.80 Ratios/supplemental data Net Asset Value - end of period ($'000) 231, , , , , ,287 Number of Securities outstanding - end of period ('000) 51,674 58,779 72,855 92, , ,561 Management expense ratio (4) 1.44% 1.44% 1.43% 1.38% 1.37% 1.30% Management expense ratio including fees/expenses waived/absorbed by Manager (4) 1.50% 1.47% 1.43% 1.39% 1.37% 1.30% Net Asset Value (C-GAAP) per Security - end of period N/A N/A N/A $ 4.45 $ 4.50 $ 4.80 Series A June 30, December 31, December 31, December 31, December 31, December 31, Series net assets per Security (1) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, beg. of period (2) $ 7.81 $ 7.79 $ 7.79 $ 7.90 $ 8.43 $ 8.30 Increase/(decrease) from operations Total revenue Total expenses (0.04) (0.08) (0.08) (0.08) (0.08) (0.08) Realized gains/(losses) (0.58) (0.53) (0.21) (0.41) Unrealized gains/(losses) 0.02 (0.34) (0.13) 0.86 Total increase/(decrease) from operations (2) $ 0.22 $ 0.32 $ 0.32 $ 0.36 $ 0.08 $ 0.91 Distributions From income (excluding dividends) (0.17) (0.09) (0.26) (0.51) (0.61) (0.77) From dividends From capital gains Return of capital (0.21) (0.03) Total distributions (3) $ (0.17) $ (0.30) $ (0.29) $ (0.51) $ (0.61) $ (0.77) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, end of period (2) $ 7.86 $ 7.81 $ 7.79 $ 7.79 $ 7.90 $ 8.43 Ratios/supplemental data Net Asset Value - end of period ($'000) 7,521 6,908 6,577 9,302 15,243 16,013 Number of Securities outstanding - end of period ('000) ,194 1,930 1,899 Management expense ratio (4) 1.09% 1.07% 1.07% 0.99% 0.98% 0.95% Management expense ratio including fees/expenses waived/absorbed by Manager (4) 1.10% 1.07% 1.07% 0.99% 0.98% 0.95% Net Asset Value (C-GAAP) per Security - end of period N/A N/A N/A $ 7.79 $ 7.90 $ 8.43 Series F 4

7 Financial highlights June 30, December 31, December 31, December 31, December 31, December 31, Series net assets per Security (1) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, beg. of period (2) $ 7.86 $ 7.88 $ 7.88 $ 7.94 $ 8.47 $ 8.24 Increase/(decrease) from operations Total revenue Total expenses Realized gains/(losses) (0.21) (0.41) Unrealized gains/(losses) 0.03 (0.31) Total increase/(decrease) from operations (2) $ 0.28 $ 0.44 $ 0.36 $ 0.49 $ 0.95 $ 1.03 Distributions From income (excluding dividends) (0.22) (0.11) (0.33) (0.55) (0.70) (0.86) From dividends From capital gains Return of capital (0.30) (0.03) Total distributions (3) $ (0.22) $ (0.41) $ (0.36) $ (0.55) $ (0.70) $ (0.86) Net Asset Value (IFRS)/Net Assets (C-GAAP) per Security, end of period (2) $ 7.92 $ 7.86 $ 7.88 $ 7.88 $ 7.94 $ 8.47 Ratios/supplemental data Net Asset Value - end of period ($'000) 1,438 Number of Securities outstanding - end of period ('000) 170 Management expense ratio (4) ** ** ** ** ** ** Management expense ratio including fees/expenses waived/absorbed by Manager (4) ** ** ** ** ** ** Net Asset Value (C-GAAP) per Security - end of period N/A N/A N/A $ 7.88 $ 7.94 $ 8.48 Series I 5

8 Financial highlights Fund level ratios June 30, December 31, December 31, December 31, December 31, December 31, Portfolio turnover rate (5) 61.09% % 33.80% 36.18% 19.23% 31.91% Trading expense ratio (6) 0.00% 0.00% 0.02% 0.00% 0.00% 0.00% Management fees The management fees and advisory fees are calculated and accrued daily based on the Net Asset Value of each series of the Fund. For the period ended, a breakdown of the services received in consideration of the management fees as a percentage of the management fees is as follows: Investment management and Distribution costs other fees* Series A 39.98% 60.02% Series F 0.51% 99.49% Series I 0.00% % * Includes profits and general administration fees. ** Negotiated and paid directly by each Series I investor, and not to exceed the Series A management and advisory fee of the Fund. (1) This information is derived from the Fund's unaudited semi-annual and audited annual financial statements. Periods beginning on or after January 1, 2013 follow IFRS. For years-ended December 31, 2012 and prior, reported under C-GAAP, the Fund applied Section 3855 of the Chartered Professional Accountants of Canada Handbook for financial reporting purposes resulting in the value of Net Assets being determined based on the bid price of portfolio investments, in place of the closing price. For purposes of Securityholder purchases, switches and redemptions, the Net Asset Value is calculated without regard to Section 3855, but in accordance with the valuation rules as set out in the Fund's Invesco Simplified Prospectus and Invesco Annual Information Form. The Net Assets and Net Assets per Security presented in the financial statements may differ from the Net Asset Value and Net Asset Value per Security calculated for fund pricing purposes. This difference is eliminated under IFRS. (2) Net Asset Value (IFRS) and Net Assets (C-GAAP) per Security and distributions are based on the actual number of Securities outstanding at the relevant time. The increase/(decrease) from operations is calculated based on the average number of Securities outstanding over the period. Therefore, the beginning of period Net Asset Value (IFRS) and Net Assets (C-GAAP) per Security, the increase/(decrease) from operations and distributions, if any, will not sum to the end of period Net Asset Value (IFRS) and Net Assets (C-GAAP) per Security. (3) Distributions were paid in cash/reinvested in additional Securities of the Fund, or both. For each series, distributions to Securityholders are calculated based on the number of Securities outstanding on the record date for each distribution of that series. For the period ended, the allocation of distributions from each of income, dividends and capital gains, if any, will be determined at the Fund's December 15, 2015 taxation year-end and is reported as distributions from income. (4) For each series, the management expense ratio (MER) is calculated based on the total expenses of that series of the Fund (including Goods and Services Tax, Harmonized Sales Tax and interest, but excluding brokerage commissions and other portfolio transaction costs), and the Fund s allocated percentage of Fund of Funds (FOF) expenses with the exception of Series I operating expenses, which are the responsibility of the Manager, and is expressed as an annualized percentage of daily average Net Asset Value of that series of the Fund during the period. At its sole discretion, the Manager may waive a portion of the management and advisory fees or absorb a portion of the operating expenses of certain Funds. Such waivers and absorptions can be terminated at any time, but can be expected to continue for certain series of the Funds until such time as these series of the Funds are of sufficient size to reasonably absorb all management and advisory fees and expenses incurred in their operation. (5) The Fund's portfolio turnover rate indicates how actively the Fund's portfolio manager/management team manages its portfolio investments and it relates to the portfolio investments of the Fund as a whole. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of its portfolio investments once in the course of the period. In general, the higher a fund's portfolio turnover rate in a period, the greater the trading costs payable by the fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of a fund. The portfolio turnover rate is calculated based on the lesser of purchases or sales for the period, excluding money market funds and portfolio investments having maturity dates at acquisition of one year or less, divided by the average market value (at last traded market prices) of the portfolio of investments for the period. Where the reporting period is less than or greater than 12 months, the portfolio turnover rate has not been annualized and will not be comparable to the portfolio turnover rate calculated for reported 12-month periods. (6) The trading expense ratio (TER) represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average Net Asset Value of the Fund during the period and it relates to the Fund as a whole. Fixed-income investments are generally traded on a net basis and do not normally involve brokerage commissions. The TER has been adjusted to include a proportionate share of FOF transaction costs. 6

9 Past performance The following charts show the Fund s past performance. The past performance information shown includes changes in security value; assumes the reinvestment of all distributions; and does not take into account sales, redemption, distribution or optional charges, or income taxes payable by any investor that would have reduced returns. It is important to note that the past performance of the Fund does not tell you how the Fund will perform in the future. Period-by-period returns The following bar charts show you how the Fund s return changes from period to period. They indicate the percentage change in an investment in Series A, Series F and Series I Securities from the first day to the last day of each financial year shown, as applicable. Series A Series F 30% % % 10% 0% % 10% 0% % -10% -20% % Return is for the six-month period of January 1, 2015 to. Return is for the six-month period of January 1, 2015 to. Series I 30% % % 0% % -20% Return is for the six-month period of January 1, 2015 to. 7

10 Benchmarks The FTSE TMX Canada Universe Bond Index is a broad representation of the Canadian bond market, covering approximately 1,100 marketable Canadian federal, provincial, municipal and corporate bonds that are rated BBB or higher with a maturity of greater than one year. The BofA MLHY Master II Index is a broad-based index consisting of all U.S.-dollar-denominated, high-yield bonds with a minimum outstanding amount of $100 million and maturing over one year. The quality rating is less than BBB. The 50% The BofA Merrill Lynch High Yield (MLHY) Master II Index (USD)/50% FTSE TMX Canada Universe Bond Index (CAD) is the blended index made up of a 50% weighting in The BofA MLHY Master II Index and a 50% weighting in the FTSE TMX Canada Universe Bond Index. While the Fund uses these indices for long term performance comparisons, it is not managed relative to the composition of the indices. As a result, the Fund may experience periods when its performance differs from these indices. Please see the Results of operations section of this report for a discussion of recent performance results. Annual compound returns This table compares the Fund s annual compound returns for Series A, Series F and Series I Securities with the Canadian-dollar returns of the Fund s benchmarks for the periods shown ended. Since Start Date 10-year 5-year 3-year 1-year Series A (%) N/A Series F (%) N/A Series I (%) N/A FTSE TMX Canada Universe Bond Index (%) The BofA MLHY Master II Index (USD) (%) % The BofA MLHY Master II Index (USD)/50% FTSE TMX Canada Universe Bond Index (CAD) (%) Reflects the return since Start Date for each series in existence for a period of less than 10 years. Reflects the benchmark return since the Start Date of the Fund s series for a period of less than 10 years. Series A Series F Series I FTSE TMX Canada Universe Bond Index (%) N/A N/A N/A The BofA MLHY Master II Index (USD) (%) N/A N/A N/A 50% The BofA MLHY Master II Index (USD)/50% FTSE TMX Canada Universe Bond Index (CAD) (%) N/A N/A N/A 8

11 Summary of investment portfolio as at The Summary of investment portfolio may change due to ongoing portfolio transactions. Updates are available at for quarterly periods where an annual or semi-annual report is not published. For more information, please contact us at or Top 25 holdings Security/issuer name % of Net Asset Value 1. Trimark Global High Yield Bond Fund 31.28% 2. Canada Housing Trust 9.44% 3. Government of Canada 4.52% 4. Advantage Sales & Marketing Inc. 2.26% 5. HSBC USA Inc.* 2.23% 6. Valeant Pharmaceuticals International, Inc. 2.16% 7. Northgroup Preferred Capital Corp. 2.03% 8. Alimentation Couche-Tard Inc. 2.03% 9. Province of Ontario 1.99% 10. Credit Acceptance Corp. 1.96% 11. Fairfax Financial Holdings Ltd. 1.91% 12. Performance Sports Group Ltd. 1.83% 13. Ford Credit Canada Ltd. 1.81% 14. Quebecor Media Inc. 1.80% 15. Royal Bank of Canada 1.80% 16. Co-operators Financial Services Ltd. 1.80% 17. Shoppers Drug Mart Corp. 1.76% 18. RBS Capital Funding Trust V* 1.69% 19. Hydro One Inc. 1.65% 20. SP LP/SP1 LP 1.62% 21. Cascades Inc. 1.57% 22. TransAlta Corp. 1.51% 23. Atrium Innovations Inc. 1.47% 24. Gateway Casinos & Entertainment Ltd. 1.39% 25. Berry Plastics Group, Inc. 1.38% *Equity holdings Aggregate % of top holdings 84.89% Asset class allocation Canadian corporate bonds 34.76% Fixed-income mutual funds 31.28% Canadian government bonds 15.95% Floating rate loans 10.63% Foreign corporate bonds 3.99% Equities 3.92% Cash, cash equivalents and money market funds 1.02% Other net assets -1.55% Total asset class allocation % Geographic allocation Canada 54.98% Global 31.28% United States 10.53% Netherlands 2.68% Marshall Islands 1.06% Cash, cash equivalents and money market funds 1.02% Other net assets -1.55% Total geographic allocation % Cash and cash equivalents include Canadian and foreign cash, as well as all indebtedness maturing within 90 days from the date of acquisition. 9

12 Notes: 10

13 Notes: 11

14 Notes: 12

15 About Invesco Canada Ltd. Invesco Canada Ltd., operating under three distinct yet complementary product brands (Trimark, Invesco and PowerShares), is one of Canada s leading investment management companies. A subsidiary of Invesco Ltd., Invesco Canada s singular focus is on investment management, offering a diversified suite of solutions to institutions, organizations, companies and individual investors across Canada and around the world. Additional information is available at About Invesco Ltd. Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at

16 Contact us Invesco 5140 Yonge Street, Suite 800 Toronto, Ontario M2N 6X7 Telephone: or Facsimile: or The Fund s management reports of fund performance and financial statements will be available online at or at If you have any questions, please call us at or us at inquiries@invesco.ca. Invesco is a registered business name of Invesco Canada Ltd. * Invesco and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence. PowerShares, Leading the Intelligent ETF Revolution and all associated trademarks are trademarks of Invesco PowerShares Capital Management LLC (Invesco PowerShares), used under licence. Trimark, Knowing pays and all associated trademarks are trademarks of Invesco Canada Ltd. Invesco Canada Ltd., 2015 SRMABFE(08/15) 0140