Invesco High Income II Stock Price, News & Analysis

Invesco High Income Trust II (NYSE: VLT) is a diversified, closed-end management investment company in the finance and insurance sector. According to its stated objective, the fund seeks to provide high current income while aiming to preserve shareholders' capital. It pursues this objective through investment in a professionally managed, diversified portfolio of high-income producing fixed-income securities.

VLT is overseen by a Board of Trustees and is part of the Invesco family of closed-end funds. Invesco Ltd. is described as a global independent investment management firm with investment teams that offer active, passive, and alternative investment capabilities. Invesco Distributors, Inc. serves as the U.S. distributor for Invesco Ltd.'s retail products, and Invesco Advisers, Inc. acts as an investment adviser that provides investment advisory services to individual and institutional clients.

Investment objective and portfolio focus

The fund's stated investment objective is to provide shareholders with high current income while seeking to preserve capital. To support this, VLT invests in a diversified portfolio of fixed-income securities that are described as high-income producing. As a closed-end management investment company, VLT's shares trade on the secondary market, and its net asset value (NAV) is calculated based on the total market value of its securities and other assets minus liabilities, divided by the number of shares outstanding.

Invesco highlights that there is no assurance a closed-end fund will achieve its investment objective and that investing involves risk, including the possibility of losing money. Common shares of closed-end funds are bought on the secondary market and may trade at a discount or premium to NAV, and regular brokerage commissions apply.

Managed Distribution Plan

Effective August 1, 2018, the Board of Invesco High Income Trust II approved a Managed Distribution Plan referred to as the "VLT Plan." Under this plan, the fund increased its monthly dividend to common shareholders to a stated fixed monthly distribution amount based on a distribution rate of 8.5 percent of the closing market price per share as of August 1, 2018, the date the VLT Plan became effective. The VLT Plan is periodically reviewed by the fund's Board, and the Board may terminate or amend the terms of the plan at any time without prior notice to shareholders.

The VLT Plan is described as being intended to provide shareholders with a consistent, but not guaranteed, periodic cash payment, regardless of when or whether income is earned or capital gains are realized. The plan may have the effect of narrowing the discount between the fund's market price and the NAV of its common shares, although there is no assurance that it will be effective in this regard.

Distributions and return of capital

Invesco's disclosures explain that if the fund's investment income is not sufficient to cover its intended monthly distribution, VLT may distribute long-term capital gains and/or return of capital in order to maintain its managed distribution level under the VLT Plan. The fund may at times distribute more than its income and net realized gains, which can result in a portion of the distribution being classified as a return of capital.

Invesco notes that a return of capital may occur, for example, when some or all of the money that shareholders invested in the fund is paid back to them. A return of capital distribution does not necessarily reflect the fund's investment performance and should not be confused with "yield" or "income." Invesco also states that no conclusions should be drawn about the fund's investment performance from the amount of distributions or from the terms of the VLT Plan.

Regulatory notices and tax reporting

To comply with Section 19 of the Investment Company Act of 1940 and an exemptive order granted by the U.S. Securities and Exchange Commission, VLT provides shareholders of record on each distribution date with a Section 19(a) Notice and issues an accompanying press release when a distribution includes anything other than net investment income. These notices disclose the estimated sources of the dividend payment, such as net investment income, net realized capital gains, or return of capital.

The amounts and sources of distributions reported in Section 19(a) Notices are described as estimates and are not provided for tax reporting purposes. The actual amounts and sources for tax reporting depend on the fund's investment experience over its full fiscal year and may change based on tax regulations. Shareholders receive a Form 1099-DIV for the calendar year that explains how to report distributions for federal income tax purposes.

Trading characteristics and risks

Invesco emphasizes that there is no assurance that a closed-end fund such as Invesco High Income Trust II will achieve its investment objective. The fund's shares are bought and sold on the secondary market and may trade at a discount or premium to NAV, reflecting supply and demand for the shares. Regular brokerage commissions apply to such transactions.

Invesco also reiterates that investing in the funds involves risk and that it is possible to lose money on an investment in VLT. Disclosures further state that the amount of dividends paid by the fund may vary from time to time, and past dividend amounts are not a guarantee of future dividend payment levels.

Relationship to Invesco Ltd.

VLT is one of Invesco's closed-end funds and benefits from the broader firm's investment management infrastructure. Invesco Ltd. is described as a global independent investment management firm whose investment teams deliver a range of active, passive, and alternative investment capabilities. Invesco Distributors, Inc. is identified as the U.S. distributor for Invesco Ltd.'s retail products, and Invesco Advisers, Inc. is identified as an investment adviser that provides advisory services to individual and institutional clients and does not sell securities. Each of these entities is a wholly owned indirect subsidiary of Invesco Ltd.

Key characteristics of VLT

• Diversified, closed-end management investment company.
• Stated objective to provide high current income while seeking to preserve shareholders' capital.
• Invests in a professionally managed, diversified portfolio of high-income producing fixed-income securities.
• Trades on the New York Stock Exchange under the symbol VLT.
• Operates under a Managed Distribution Plan (VLT Plan) designed to provide consistent, but not guaranteed, periodic cash payments.
• May distribute net investment income, capital gains, and/or return of capital to maintain its managed distribution level.
• Subject to market risk, NAV fluctuations, and the possibility of trading at a discount or premium to NAV.