1. Invesco Trust Company Invesco Stable Asset Fund Fee Disclosure
November 2018
ITC-PPT-1 11/ US13540
FOR US INSTITUTIONAL INVESTOR USE ONLY – NOT FOR USE WITH THE PUBLIC

2. Anatomy of Stable Value Collective Investment Trust fund Fee Disclosure
Q. Why do Stable Value fund providers show the wrap expense as a separate line item if they are netting out of the daily crediting rate?
The Department of Labor fee disclosure requirements from 2012 require that wrap fees be reflected as a separate expense item. The DOL has taken the position that the cost of “wrap” coverage must be included in the total annual operating expenses of a stable value fund for disclosure purposes, since that cost reduces the fund’s rate of return.
Q. Why do you show the client service fee component as a separate line item from the management fee if it is part of the management fee?
We show this breakout so that the plan sponsor and investors have transparency into who they are paying and for what services per the DOL 404a-5 fee disclosure requirements.
Q. Why do you show the acquired fund expenses as part of the expense ratio when those expenses are already taken directly out of the underlying funds and reflected in the underlying fund’s expense ratio?
The SEC requires mutual funds companies to report the expense ratios of underlying fund investments as Acquired Fund fees. In 2012, when the DOL released the 404a-5 Fee Disclosure requirement for retirement plans, they specified in their FAQ follow up that the acquired fund expenses must be disclosed as part of the total expense ratio. The DOL based this decision on the SEC guidance applicable to mutual funds which requires the acquired fund disclosure, but the DOL added applicability to unregistered funds as well.
FOR US INSTITUTIONAL INVESTOR USE ONLY – NOT FOR USE WITH THE PUBLIC

3. Fee paid to the investment manager to manage the fund’s assets
Management Fee
Fee paid to the investment manager to manage the fund’s assets
Trustee Fee, Advisory Fee, Investment Fee
Accrue daily within the unit class and reflected in the daily income of the fund
Yes
Client Service Fee
The portion of the total management fee that the plan sponsor elects to send to a third-party firm for recordkeeping services
Revenue sharing, administrative fee
Accrue daily within the unit class of the fund and reflected in the daily income of the fund
Yes, but it is considered part of the total management fee charged to the unit class of the Fund so it is combined with the management fee for a total number
Operating Expenses
Standard expenses charged to the fund for fund administration, transfer agency, custody, legal, audit services, etc.
Fund expenses, fund operating costs
Accrue daily within the unit class of the fund and reflected the daily income of the fund
Wrap Expenses
This is a unique expense only applicable to all stable value funds. It is the fee charged by the insurance company for “wrap” which allows the fund to use book value accounting ($1 per unit)
Insurance wrap fees, wrap fees, wrapper fees
Accrue daily within the Fund; paid from the daily and reflected in the daily income of the fund
Not in the expenses ratio table, but they are disclosed in the notes as an annual range in basis points of the wrap expense
Acquired Fund Expenses
Expenses that are charged directly to underlying funds that the ISAT fund may invest in. These are the operating expenses of the underlying funds and may also include management fees from third party managers. They are not direct costs paid by Fund investors and are not used to calculate the Fund’s net asset value. They have no impact on the costs associated with fund operations
Fund of fund expenses, underlying fund expenses
Acquired fund expenses are incurred directly by the underlying funds and deducted from their assets and reflected in the daily price of the funds
No, GAAP does not require this. They have no impact on the costs associated with fund operations. Acquired Fund Fees and Expenses are not included in the Fund’s financial statements, which provide a clearer picture of a fund’s actual operating costs
FOR US INSTITUTIONAL INVESTOR USE ONLY – NOT FOR USE WITH THE PUBLIC

4. The Invesco Collective Trust Funds are bank collective trust funds for which Invesco Trust Company serves as trustee and investment manager. The funds are not FDIC-insured or registered with the Securities and Exchange Commission. Fund investors and potential investors are strongly encouraged to review the funds' Declaration of Trust for additional information regarding the operation and investment objectives of the funds.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing.
When evaluating whether a fund is appropriate for your investment goals, fund performance, fees and expenses are only a few of the criteria you should consider. You may also consider the investment objective, strategy and risks
FOR US INSTITUTIONAL INVESTOR USE ONLY – NOT FOR USE WITH THE PUBLIC