Your Invesco Partner Anthony Graves. Regional Vice President

Transcription

1 Spring 2015 Edition Your Invesco Partner Anthony Graves Regional Vice President TheInvescoAdvisor Contents 1 Invesco Equity and Income Fund 2 What Are Your Returns Really Telling You? 3 Providing Balanced Exposure to the Uncertainty the Markets Face Invesco Equity and Income Fund An all-weather strategy in a diversified portfolio Retirement readiness is the goal, but retirement reality is that market fluctuations make that goal elusive for many investors. That s why your clients may want to consider systematic withdrawals from a balanced fund with potential to produce both a growing income stream and asset growth. A retirement success story Before retiring, Tom and Kerrie Shepherd worked with their financial advisor to analyze their income needs, investment horizon and risk tolerance. They decided to invest $100,000 a sizable portion of their retirement savings in Invesco Equity and Income Fund. When the Shepherds began their retirement on Dec. 31, 1993, they: Started making annual 4% withdrawals at the end each year. Increased each annual withdrawal by 3% to reflect the average growth of inflation over time. Had withdrawn $217,120 by Dec. 31, 2014, to help pay for vacations, hobbies and home improvements over the years. Had $207,758 remaining in their portfolio as of Dec. 31, While this is a hypothetical scenario, the results are based on actual, historical fund returns. And as the timeline shows, the market encountered some very stormy periods between the Shepherds retirement in 1993 and the end of December But the Shepherds actually more than doubled their original portfolio balance while consistently increasing their retirement income every year. Of course, past performance is no guarantee of future results. Despite Economic Turbulence, the Shepherds All-Weather Portfolio More Doubled Their Original Investment 1 39% 54% By the end of 2000, the Nasdaq Index plummeted by 39% to its worst annual performance since its inception in Equity markets were down three years in a row by the end of 2002, an outcome that happened only three times in the last century. Consumer Price Index posts biggest drop since The Great Recession officially began in December By March 2009, the Dow Jones Industrial Average hit the low point of the recession, down nearly 54% from its October 2007 high. With comprehensive diversification of stocks, bonds and convertible bonds, Invesco Equity and Income Fund offers an all-weather approach that may help your clients benefit during sunny markets, defend against market downturns and generate a consistent income stream.

2 Invesco Equity and Income Checkbook Invesco Equity and Income Fund An all-weather strategy in a diversified portfolio Explore Intentional Investing with Invesco Want a unique way to present this story to clients? The Invesco Equity and Income Checkbook illustrates how a retired couple is able to grow their hypothetical investment principle while making consistent withdrawals during times of market and economic volatility. Contact us to get this resource for your clients. Investment Objective The fund seeks current income and, secondarily, capital appreciation. Share Class Symbols A: ACEIX C: ACERX R: ACESX Y: ACETX Invesco Equity and Income Fund Performance Summary Average Annual Total Returns (%) as of March 31, 2015 Class A Shares w/o sales charges w/max 5.50% sales charge Russell 1000 Value Index 1 year years years Since inception (8/3/60) year beta year standard deviation Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com for the most recent month end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Performance shown at NAV does not include applicable front-end sales charge. If sales charges had been reflected, performance would be lower. Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Had fees not been waived and/or expenses reimbursed in the past, returns would have been lower. Top 10 Holdings (% of Total Net Assets) 3 Citigroup Inc JPMorgan Chase & Co General Electric Co Morgan Stanley 1.49 Royal Dutch Shell PLC 1.45 Bank of America 1.43 Target Corp PNC Financial Services Group 1.19 Carnival Corp Walmart Stores Inc Portfolio Diversification in a Single Investment 4 Domestic Common Stock Domestic Corp Bonds Cash 9.07 Domestic Convertible Bonds 7.50 International Common Stock 7.17 Domestic Government Bonds 4.82 International Corporate Bonds 1.97 Domestic Convertible Preferred Stock 0.97 Domestic Government Agency 0.78 Other 0.55 International Government Bonds 0.37 Domestic Preferred Stock 0.07 Calendar Year Returns (%) Class A Shares at NAV Sources: StyleADVISOR, Bloomberg L.P. The Dow Jones Industrial Average SM (Dow) is a price-weighted index of the 30 largest, most widely held stocks traded on the New York Stock Exchange. The average is unmanaged, and its performance does not include any sales charges or fees that would be paid by an investor purchasing the securities that it represents. Such costs would lower performance. During the time period illustrated, the Dow had a price-only average annualized return of 0.22% and an average annualized total return of 2.55%, including reinvested dividends. 2 Source: StyleADVISOR. Beta is vs. the Russell 1000 Value Index. Russell 1000 Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell is a trademark of the Frank Russell Co. Beta (cash adjusted) is a measure of relative risk and the slope of regression. Standard deviation measures a fund s range of total returns and identifies the spread of a fund s short term fluctuations. 3 Holdings are subject to change and are not buy/sell recommendations. 4 Portfolio holdings are subject to change daily and without notice. Diversification does not guarantee a profit or eliminate the risk of loss. FOR US INSTITUTIONAL INVESTOR USE ONLY - NOT FOR USE WITH THE PUBLIC

3 What Are Your Returns Really Telling You? Part 1 of this series examines the advantages and disadvantages of cumulative returns Tracy Fielder Product Management Director, Invesco Michelle Shwarzman Product Management Director, Invesco Marie Jordon Senior Product Manager, Invesco Little children like to compare themselves with their friends to see who is biggest. But what does that mean? One may be the oldest, but a different one may be the tallest, and yet another one could be the heaviest. Before they can decide who s biggest, they have to understand what they re measuring. Measuring and comparing portfolio returns can present the same type of issues. There are several ways in which portfolio returns can be conveyed. To understand what returns they are getting, it is important for investors to understand the differences between the various methods of measuring returns and the significance of what they represent. In this three-part series, we ll discuss three methods of measuring returns: Cumulative returns Average returns Internal rate of return What are cumulative returns? Cumulative returns express the total percentage change in the value of an investment from the time it was purchased. For example, say an investor purchased ABC shares three years ago for $1,000. At the end of Year 1, that investment grew to $2,000. At the end of Year 2, it fell to $1,200. Today, those ABC shares are worth $1,560. Example 1 shows that over these three years, the cumulative return in ABC stock was 56%. Example 1 Cumulative Return for ABC Shares at the End of Three Years Cumulative Return Quick Calculation $ Current Value of Shares (+) 1,500 Subtract Original Purchase Price of Shares ( ) 1,000 Resulting Value and Gain (=) 560 Divide Gain by Original Purchase Price of Shares ( ) 1,000 Resulting Value (=) 0.56 Multiply the result by 100 (x) 100 Resulting Value and Cumulative Return (=) 56% This information is for illustrative, informational and educational purposes only. We make no guarantee that utilization of any this content will result in increased business. Things to consider about cumulative returns Judging a portfolio based on cumulative returns presents advantages and disadvantages. Advantage. Cumulative returns provide investors with the bottom line they show how an investment has performed since Day 1. Disadvantage. If investors look only at the cumulative return, it s difficult to compare performance across multiple investments purchased on different dates and for different prices. In the next part of this series, we will discuss average annual returns. FOR US INSTITUTIONAL INVESTOR USE ONLY NOT FOR USE WITH THE PUBLIC 3

4 Invesco High Income Allocation Portfolio Providing Balanced Exposure to the Uncertainty the Markets Face A strategy that invests equally in both low volatility (defensive) and high volatility (aggressive) asset classes to provide balanced exposure to the uncertainty the markets face. Balanced approach Income and appreciation Unit trust structure The portfolio seeks to balance the exposure to high and low volatility segments of the equity income market in order to attempt to reduce overall volatility, and to provide exposure to both aggressive and defensive segments of the market. The portfolio combines 10 income producing asset classes that seek both growth and income while seeking to balance risk. Diversified. A basket of securities that are professionally selected and monitored. Disciplined. A consistent, repeatable selection methodology and investment process. Defined. A fixed portfolio that enables investors to always know what they own. High Income Allocation Portfolio Symbol: HIAP Term of trust: 24 months Offering period: 3 months Sales charge: 3.95% Breakpoints: Begin at $50,000 Number of securities: 48 High Income Allocation Portfolio Asset class allocations are approximate and will vary in an actual portfolio Defensive High Income Equity Asset Classes High Income Allocation Portfolio Aggressive High Income Equity Asset Classes Low Volatility / High Income* Focuses on Defensive, Lower volatility, higher income asset classes: High Volatility / High Income* Focuses on Higher volatility asset classes with high income 1. Consumer Staples 10% 1. Mortgage REITs 10% 2. Health Care 10% 2. Real Estate Investment Trusts (REITs) 10% 3. Utilities 10% 3. Business Development Companies 10% 4. Telecom 10% 4. Master Limited Partnerships (MLPs) 10% 5. Dividend Payers 10% 5. Preferreds 10% Total 50% Total 50% Inclusion Criteria Large-Cap names Peer Analysis In-Sector diversification Low Volatility compared to sector Dividend yields, growth and sustainability Growth estimates and company outlook *For illustrative purposes only. Individual series sector allocations will vary. Inclusion Criteria Valuation, Price-Book, Leverage Underlying Portfolio of investments and strategy diversification Credit Quality and Sector Diversification FOR US INSTITUTIONAL INVESTOR USE ONLY NOT FOR USE WITH THE PUBLIC 4

5 About risk Invesco Equity and Income Fund If interest rates fall, callable security issuers may call or prepay their securities before maturity, causing the fund to reinvest proceeds in securities with lower interest rates and reducing fund income and distributions. Convertible securities may be affected by market interest rates, the risk of issuer default, the value of the underlying stock or the issuer s right to buy back the convertible securities. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer s credit rating. Derivatives may be more volatile and less liquid than traditional investments and are subject to market, interest rate, credit, leverage, counterparty and management risks. An investment in a derivative could lose more than the cash amount invested. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. Income generated from the fund is based primarily on prevailing interest rates, which can vary widely over the short- and long-term. If interest rates drop, the fund s income may also drop. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Preferred securities may include provisions that permit the issuer to defer or omit distributions for a certain period of time, and reporting the distribution for tax purposes may be required, even though the income may not have been received. Further, preferred securities may lose substantial value due to the omission or deferment of dividend payments. A value style of investing is subject to the risk that the valuations never improve or that the returns will trail other styles of investing or the overall stock markets. The fund is subject to certain other risks. Please see the current prospectus for more information regarding the risks associated with an investment in the fund. About risk Invesco High Income Allocation Portfolio (HIAP) There is no assurance a trust will achieve its investment objective. An investment in these unit investment trusts are subject to market risk, which is the possibility that the market values of securities owned by the trust will decline and that the value of trust units may therefore be less than what your client paid for them. Accordingly, your client can lose money investing in these trusts. The trust should be considered as part of a long-term investment strategy and you should consider your ability to pursue it by investing in successive trusts, if available. Common stocks do not assure dividend payments. Dividends are paid only when declared by an issuer s board of directors and the amount of any dividend may vary over time. You will realize tax consequences associated with investing from one series to the next. Certain securities in the Portfolio, as well as certain of the securities held by the underlying funds in the Portfolio, may be rated below investment grade and considered to be junk securities. Securities rated below BBB- by Standard & Poor s or below Baa3 by Moody s are considered to be below investment grade. These securities are considered to be speculative and are subject to greater market and credit risks. Accordingly, the risk of default is higher than with investment grade securities. In addition, these securities may be more sensitive to interest rate changes and may be more likely to make early returns of principal. The financial condition of a security issuer may worsen or its credit ratings may drop, resulting in a reduction in the value of your client s Units. This may occur at any point in time, including during the initial offering period. The Portfolio invests in preferred securities. Preferred securities are typically subordinated to bonds and other debt instruments in a company s capital structure in terms of priority to corporate income and therefore are subject to greater risk than those debt instruments. Preferred securities are subject to interest rate risk, meaning that their values may fall if interest rates, in general, rise. In addition to the other risks described herein, income payments on certain preferred securities may be deferred for 20 consecutive quarters or more, which may reduce the amount of income your client s receive on their Units. The Portfolio invests in MLPs. Most MLPs operate in the energy sector and are subject to the risks generally applicable to companies in that sector, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. MLPs are also subject to the risk that regulatory or legislative changes could eliminate the tax benefits enjoyed by MLPs which could have a negative impact on the after-tax income available for distribution by the MLPs and/or the value of the Portfolio s investments. The Portfolio invests in shares of closed-end funds. In particular, shares of closed-end funds tend to trade at a discount from their net asset value and are subject to risks related to factors such as management s ability to achieve a fund s objective, market conditions affecting a fund s investments and use of leverage. The Portfolio and the underlying funds have management and operating expenses. Your client will bear not only your share of the Portfolio s expenses, but also the expenses of the underlying funds. By investing in other funds, the Portfolio incurs greater expenses than your client would incur if you invested directly in the funds. The Portfolio invests in shares of REITs and other real estate companies. These shares may appreciate or depreciate in value, or pay dividends depending upon global and local economic conditions, changes in interest rates and the strength or weakness of the real estate market. The Portfolio invests in shares of publicly traded business development companies ( BDCs ). BDCs invest in privately-held companies, the securities of which are generally less liquid than are publicly traded securities. BDCs may have relatively concentrated investment portfolios, consisting of a relatively small number of holdings. A BDC s gains and losses may be magnified through the use of leverage. BDCs generally depend on access to capital markets in order to raise cash, acquire suitable investments and monitor and implement certain financial strategies. An inability to access these markets may have a negative impact on the value of BDC shares and the value of your client s units. Many debt investments in which BDCs invest will not be rated by a credit rating agency and will be below investment grade quality. 5 FOR US INSTITUTIONAL INVESTOR USE ONLY - NOT FOR USE WITH THE PUBLIC

6 FOR US INSTITUTIONAL INVESTOR USE ONLY NOT FOR USE WITH THE PUBLIC Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s) and/or trusts, investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus or invesco.com/unittrust. Information contained herein and in the preliminary prospectus is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission, but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication shall not constitute an offer to sell or solicitation of an offer to buy; nor shall there be any sales of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Note: Not all products, materials or services available at all firms. Advisors, please contact your home office. Invesco unit investment trusts are distributed by the sponsor, Invesco Capital Markets, Inc. and broker dealers including Invesco Distributors, Inc. Both firms are indirect, wholly owned subsidiaries of Invesco Ltd. invesco.com/us IADRVP-GRAVES-NLR-1 05/15 Invesco Distributors, Inc. US6065