Invesco Municipal Income Opportunities Trust
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Interest
Rate
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Maturity
Date
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Principal
Amount
(000)
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Value
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Washington(continued)
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Washington (State of) Health Care Facilities Authority (Seattle Cancer Care Alliance);
Series 2009, RB
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7.38
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%
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03/01/38
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$
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1,200
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$
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1,505,340
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8,127,000
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West Virginia0.29%
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West Virginia (State of) Hospital Finance Authority (Thomas Health System); Series 2008,
RB
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6.50
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%
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10/01/38
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1,000
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1,047,940
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Wisconsin1.93%
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Wisconsin (State of) Health & Educational Facilities Authority (Beaver Dam Community
Hospitals, Inc.); Series 2004 A, RB
(g)(h)
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6.75
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%
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08/15/14
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1,250
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1,295,513
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Wisconsin (State of) Health & Educational Facilities Authority (Prohealth Care, Inc.
Obligated Group); Series 2009, RB
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6.38
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%
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02/15/29
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1,500
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1,734,210
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Wisconsin (State of) Health & Educational Facilities Authority (St. Johns
Community, Inc.); Series 2009 A, RB
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7.63
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%
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09/15/39
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1,000
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1,150,810
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Wisconsin (State of) Health & Educational Facilities Authority (Wisconsin Illinois
Senior Housing, Inc.); Series 2012, RB
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5.88
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%
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08/01/42
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1,000
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991,630
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Wisconsin (State of) Public Finance Authority (Glenridge Palmer Ranch); Series 2011 A,
Continuing Care Retirement Community RB
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8.25
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%
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06/01/46
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1,000
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1,196,880
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Wisconsin (State of) Public Finance Authority (Voyager Foundation Inc.); Series 2012 A,
Charter School RB
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6.20
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%
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10/01/42
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500
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513,485
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6,882,528
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TOTAL
INVESTMENTS
(i)
107.18% (Cost $359,742,750)
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381,625,874
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FLOATING RATE NOTE OBLIGATIONS(8.63)%
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Notes with interest rates ranging from 0.11% to 0.22% at 05/31/13 and contractual
maturities of collateral ranging from 06/15/21 to 10/01/52 (See Note 1D)
(j)
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(30,725,000
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)
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OTHER ASSETS LESS LIABILITIES1.45%
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5,169,478
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NET ASSETS100.00%
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$
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356,070,352
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See accompanying notes which are an integral part of this schedule.
Invesco Municipal Income Opportunities Trust
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Investment Abbreviations:
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ACA
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ACA Financial Guaranty Corp.
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AGM
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Assured Guaranty Municipal Corp.
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AMBAC
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American Municipal Bond Assurance Corp.
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BAN
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Bond Anticipation Notes
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BHAC
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Berkshire Hathaway Assurance Corp.
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CAB
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Capital Appreciation Bonds
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COP
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Certificates of Participation
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GO
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General Obligation
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IDR
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Industrial Development Revenue Bonds
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INS
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Insurer
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MFH
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Multi-Family Housing
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NATL
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National Public Finance Guarantee Corp.
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PCR
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Pollution Control Revenue Bonds
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PILOT
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Payment-in-Lieu-of-Tax
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RB
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Revenue Bonds
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Ref.
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Refunding
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RN
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Revenue Notes
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Sec.
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Secured
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SGI
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Syncora Guarantee, Inc.
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Sr.
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Senior
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Sub.
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Subordinated
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Notes to
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Schedule of Investments:
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(a)
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Security subject to the alternative minimum tax.
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(b)
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Principal and/or interest payments are secured by the bond insurance company listed.
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(c)
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Zero coupon bond issued at a discount.
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(d)
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Underlying security related to Dealer Trusts entered into by the Trust. See Note 1D.
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(e)
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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 May 31, 2013 was $8,456,175, which represented 2.37% of the Trusts
Net Assets.
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(f)
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Defaulted security. Currently, the issuer is partially or fully in default with respect to interest payments. The aggregate value of these securities
at May 31, 2013 was $3,698,386, which represented 1.04% of the Trusts Net Assets.
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(g)
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Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral.
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(h)
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Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put.
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(i)
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Entities may either issue, guarantee, back or otherwise enhance the credit quality of a security. The entities are not primarily responsible for the
issuers obligation but may be called upon to satisfy issuers obligations. No concentration of any single entity was greater than 5%.
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(j)
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Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at May 31, 2013. At May 31, 2013, the
Trusts investments with a value of $54,874,541 are held by Dealer Trusts and serve as collateral for the $30,725,000 in the floating rate note obligations outstanding at that date.
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See accompanying notes which are an integral part of this schedule.
Invesco Municipal Income Opportunities Trust
Notes to Quarterly Schedule of Portfolio Holdings
May 31, 2013
(Unaudited)
NOTE 1 Significant Accounting Policies
A.
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Security Valuations
Securities, including restricted securities, are valued according to the following policy.
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Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of
Trustees. 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. 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.
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as
determined in good faith by or under the supervision of the Trusts officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating
to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant
factors under the circumstances.
Valuations change in response to many factors including the historical and
prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions 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.
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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 is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and
discounts are amortized and/or accreted for financial reporting purposes.
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The Trust may
periodically participate in litigation related to Trust investments. As such, the Trust 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 Trusts net asset value and, accordingly, they reduce the Trusts 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 Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense
limitation arrangements between the Trust and the investment adviser.
C.
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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 issuers 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.
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Invesco Municipal Income Opportunities Trust
D.
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Floating Rate Note Obligations
The Trust invests in inverse floating rate securities, such as Residual Interest Bonds (RIBs) or Tender Option
Bonds (TOBs) for investment purposes and to enhance the yield of the Trust. Inverse floating rate investments tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market
for fixed rate bonds when interest rates decline or remain relatively stable. Such transactions may be purchased in the secondary market without first owning the underlying bond or by the sale of fixed rate bonds by the Trust to special purpose
trusts established by a broker dealer (Dealer Trusts) in exchange for cash and residual interests in the Dealer Trusts assets and cash flows, which are in the form of inverse floating rate securities. The Dealer Trusts finance the
purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Trust to retain residual interests in the bonds. The floating rate notes issued by the Dealer Trusts have interest rates that reset weekly and the
floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each reset date. The residual interests held by the Trust (inverse floating rate investments) include the right of the Trust (1) to
cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Trust, thereby collapsing the Dealer Trusts.
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TOBs are presently classified as private placement securities. Private placement securities are
subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended, or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be
less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Trust or less than what may be considered
the fair value of such securities.
The Trust accounts for the transfer of bonds to the Dealer Trusts as
secured borrowings, with the securities transferred remaining in the Trusts investment assets, and the related floating rate notes reflected as Trust liabilities under the caption
Floating rate note obligations
on the Statement of
Assets and Liabilities. The Trust records the interest income from the fixed rate bonds under the caption
Interest
and records the expenses related to floating rate obligations and any administrative expenses of the Dealer Trusts a component
of
Interest, facilities and maintenance fees
on the Statement of Operations.
The Trust generally
invests in inverse floating rate securities that include embedded leverage, thus exposing the Trust to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and the
changes in the value of such securities in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity
which may cause the Trusts net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate interests created by the special purpose trust may not be able
to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate
bonds may be collapsed. In the case of RIBs or TOBs created by the contribution of long-term fixed income bonds by the Trust, the Trust will then be required to repay the principal amount of the tendered securities. During times of market
volatility, illiquidity or uncertainty, the Trust could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation.
E.
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Other Risks
The value of, payment of interest on, repayment of principal for and the ability to sell a municipal security may be affected by
constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions in which the issuers are located.
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Since many municipal securities are issued to finance similar projects, especially those relating to education, health
care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and a Trusts investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become
taxable as a result of determinations by the Internal Revenue Service.
Invesco Municipal Income Opportunities Trust
NOTE 2 Additional Valuation Information
Generally Accepted Accounting Principles (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 investments assigned level:
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Level 1
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Prices are determined using quoted prices in an active market for identical assets.
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Level 2
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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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Level 3
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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 Trusts 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.
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As of May 31, 2013, all of the securities in this Trust 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
3 Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations
and money market funds, if any) purchased and sold by the Trust during the three months ended May 31, 2013 was $20,729,562 and $12,784,003, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting
purposes as of the most recently completed federal income tax reporting period-end.
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Unrealized Appreciation (Depreciation) of
Investment Securities on a Tax Basis
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Aggregate unrealized appreciation of investment securities
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$
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35,542,423
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Aggregate unrealized (depreciation) of investment securities
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(13,325,936
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Net unrealized appreciation of investment securities
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$
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22,216,487
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Cost of investments for tax purposes is $359,409,387.
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Invesco Municipal Income Opportunities Trust
Item 2. Controls and Procedures.
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(a)
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As of May 23, 2013, 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 Registrants 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 Registrants officers, including the PEO and PFO, concluded that, as of May 23, 2013, the Registrants disclosure controls and procedures were reasonably designed so
as to ensure: (1) that information required to be disclosed by the Registrant on Form N-Q 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.
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(b)
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There have been no changes in the Registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
Registrants last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrants internal control over financial reporting.
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Item 3. Exhibits.
Certifications of PEO and PFO as required by Rule 30a-2(a) under the Investment Company Act of 1940.
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: Invesco Municipal Income Opportunities Trust
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By:
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/s/ Philip A. Taylor
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Philip A. Taylor
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Principal Executive Officer
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Date:
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July 30, 2013
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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.
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By:
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/s/ Philip A. Taylor
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Philip A. Taylor
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Principal Executive Officer
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Date:
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July 30, 2013
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By:
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/s/ Sheri Morris
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Sheri Morris
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Principal Financial Officer
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Date:
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July 30, 2013
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EXHIBIT INDEX
Certifications of Principal Executive Officer (PEO) and Principal Financial Officer (PFO) as required by Rule 30a-2(a) under the Investment Company Act of 1940, as amended.
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