Invesco Equity Unit Trusts Dividend Sustainability Portfolio. Investor Guide

Transcription

1 Invesco Equity Unit Trusts Dividend Sustainability Portfolio Investor Guide

2 Before investing, investors should carefully read the prospectus and consider the investment objectives, risks, charges and expenses. For this and more complete information about the trust(s), investors should ask their advisers for a prospectus or download one at 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 a solicitation of an offer to buy; nor shall there be any sale 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. Invesco s history of offering unit investment trusts began with the acquisition of the sponsor by Invesco Ltd. in June Invesco unit investment trusts are distributed by the sponsor, Invesco Capital Markets, Inc. (formerly Van Kampen Funds Inc.) and broker dealers including Invesco Distributors, Inc. Both firms are wholly owned, indirect subsidiaries of Invesco Ltd. Risk considerations There is no assurance that the unit investment trust will achieve its investment objective. An investment in this unit investment trust is 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 you paid for them. This trust is unmanaged and its portfolio is not intended to change during the trust s life except in limited circumstances. Accordingly, you can lose money investing in this trust. 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. The actual trust portfolio may be concentrated in certain market sectors/industries or geographic regions. To the extent the trust does so, it is more susceptible to economic, political, regulatory and other occurrences influencing those sectors/industries or geographic regions. The trust should be considered as a part of a long-term investment strategy and you should consider your ability to pursue it by investing in successive trusts, if available. You will realize tax consequences associated with investing from one series to the next. Diversification does not ensure against loss. The opinions expressed are those of the author, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

3 Q. What have our investments done consecutively for the last 25 years? A. Increased their dividends. The constituents of the S&P 500 Dividend Aristocrats Index have consistently delivered dividend yields in the range of 2% to 5% over the past 10 years. 1 To help capitalize on the dividend potential of the Aristocrats, Invesco offers the Dividend Sustainability Portfolio (DVST), which comprises constituents of the Aristocrats Index. Dividend-paying stocks have historically offered solid performance, regardless of the market s ups and downs (see page 5). Of course, there is no guarantee of future results, and the payment of stock dividends is not assured and may vary over time. Historically, dividends have contributed approximately one-third of total equity return. From December 1925 to December 2012, dividend income constituted 45% of the monthly total return of the S&P 500 Index. 1 Invesco believes that sustainable dividend income and capital appreciation potential are both important to total return expectations. Managers use stable and increasing dividends as a sign of confidence in their firm s prospects, while investors consider such track records as signs of corporate maturity and strength. An investment cannot be made directly into an index. Unmanaged index returns do not reflect any fees, expenses or sales charges. 1 Source: Standard & Poor s, Dec. 31,

4 Four reasons to consider dividend related investing To help capitalize on the dividend potential of the Aristocrats, Invesco offers the Dividend Sustainability Portfolio (DVST). The portfolio is selected from constituents of the S&P 500 Dividend Aristocrats Index. 1 Potential for higher returns compared to the S&P 500 Index The S&P 500 Dividend Aristocrats Index measures the performance of S&P 500 companies that have consistently increased dividends for at least 25 consecutive years. The index has both capital growth and dividend income characteristics, as opposed to indexes that are pure yield or pure capital appreciation oriented. The chart below compares the average annual total returns of the S&P 500 Dividend Aristocrats Index to the S&P 500 Index. The dividend-focused index outperformed the broader index for all time periods shown. Average Annual Total Returns (%) for the Period Ended Dec. 31, 2012 % 1 Year 3 Year 5 Year 10 Year 15 Year 20 Year S&P 500 Dividend Aristocrats Index S&P 500 Index Source: S&P Indices. Data is from Jan. 1, 1992 through Dec. 31, Average annual total return and total return measure change in the value of an investment assuming reinvestment of all dividends and capital gains. Average annual total return reflects annualized change while total return reflects aggregate change and is not annualized. As a result of recent market activity, current performance may vary. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. The S&P 500 Index is an unmanaged index generally representative of the US stock market. Indexes are statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results and the payment of dividends is never assured and may vary over time. The performance above is not that of any DVST portfolio or any Invesco product. 2

5 Annual Total Returns (%) for the Period Ended Dec. 31, 2012 Year S&P 500 Dividend Aristocrats Index S&P 500 Index Source: Bloomberg L.P. Returns shown represent price changes plus dividend returns and do not reflect commissions incurred in buying and selling portfolio securities or taxes. The S&P 500 Dividend Aristocrats Index returns reflect reinvestment of dividends. This is not the past performance of any trust or a previous series of any trust and does not indicate the future performance of the trust strategy. Of course past performance is not an indication of future results. 2 Potential dividend sustainability Dividend coverage is a metric calculated by S&P using a sector specific cash flow model. It is believed that companies with strong dividend coverage should theoretically be able to increase dividend payments without stretching their balance sheets. 3 Diversification The portfolio consists of approximately 25 to 30 stocks and will offer exposure to various sectors. 4 Access to industry leaders The S&P 500 Dividend Aristocrats Index tracks the performance of 54 companies 1 in the S&P 500 Index that have increased their dividends for the last 25 consecutive years. A dividend aristocrat tends to be a large blue-chip company and many of the companies listed on the index are familiar household names. Indexes are statistical composites and their returns do not include payment of any sales charges or fees an investor would pay to purchase the securities, as such costs would lower performance. It is not possible to invest directly in an index. 1 Source: Standard & Poor s as of Dec. 31, There can be no guarantee or assurance that companies will declare dividends in the future or that if declared, they will remain at current levels or increase over time. Diversification does not guarantee a profit or eliminate the risk of loss. 3

6 The Dividend Sustainability Portfolio The DVST portfolio seeks above-average capital appreciation by investing in a portfolio of stocks derived from the companies listed on the S&P 500 Dividend Aristocrats Index, which consists of stocks of companies in the S&P 500 Index that have increased their actual dividend payments in each of the last 25 years. Dividend Sustainability Portfolio Selection Process Begin with the S&P Dividend Aristocrats Index (currently 54 companies) Eliminate companies with a share price below $5 at time of selection Select companies that have a S&P Capital IQ Quality Rank* of B or better, and if rated by Standard & Poor s, a credit rating** of BBB or better Select companies based on such factors: market capitalization; earnings over the previous 12 months; debt-to-equity ratio; cash and equivalents and dividend coverage metric DVST For illustrative purposes only S&P 500 Dividend Aristocrats Index The S&P 500 Dividend Aristocrats have both capital growth and dividend income characteristics, in contrast to indexes that are pure yield or pure capital appreciation oriented. Index characteristics The index is balanced between growth and value. Many of the companies listed on the index are familiar household names. Currently there are 54 stocks 1 listed on the index, however, this is subject to change according to the index methodology. 1 Source: Standard & Poor s as of Mar. 31, 2013 * S&P Capital IQ Quality Rankings refl ect the long-term growth and stability of a company s earnings and dividends in a range from A+ (highest) to C (lowest), with a ranking of D reflecting in reorganization and LIQ represents liquidation. See for additional information. ** A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA/Aaa (highest) to D/C (lowest); ratings are subject to change without notice. For more information on Standard and Poor s rating methodology, please visit and select Understanding Ratings under Rating Resources on the homepage or Moody s at and select Rating Methodology under Research and Ratings on the homepage. 4

7 Potential benefits of dividends They add up. Dividends can be paid consistently by companies. Even payments that are small may increase regularly and may add up over the years. They offer tax advantages. Qualified dividends are currently taxed at a federal rate from 0% to 20% depending on the tax bracket of the investor. 1 They often rise. Many companies raise their dividends periodically, which means that these dividend payments may keep up with inflation. Keep in mind, however, that the payment of stock dividends is never guaranteed and may vary over time. 1 This lower rate is subject to various conditions, including a holding period requirement that applies to individual taxpayers and to the trust, and is applicable only for There is no assurance that dividends from the trust will qualify for the lower federal income tax rate. Legislation may be adopted in the future which would increase the tax on dividend income. Please refer to the prospectus for additional information. Invesco and its representatives do not provide tax advice. Individuals should consult their personal tax advisors before making any tax-related investment decisions. Strength of dividend-paying stocks Dividend-paying stocks can add new dimensions to your portfolio in any market environment. A company that can pay dividends when the market is in flux may be demonstrating strength and may add an element of stability to your portfolio. Average Annual Total Returns % of S&P 500 Stocks by Dividend Policy 1 30-year period ended Dec. 31, 2012 % Dividend Cutters and Eliminators Non-Dividend- Paying Stocks Dividend Payers with No Change 7.20 All Dividend- Paying Stocks 8.80 Dividend Growers and Initiators Dividend growth has historically tied to strong performance 2 1 Source: 2012 Ned Davis Research, Inc. Indexes are unmanaged and one cannot invest directly in an index. All stocks were categorized by the following methodology for total return of each 12-month period over the course of the last 30 year period ended Dec. 31, 2012: Dividend Cutters and Eliminators represents stocks in the S&P 500 that have lowered or eliminated their dividend; Non-Dividend-Paying Stocks represents non-dividend paying stocks of the S&P 500; Dividend Payers With No Change represents all dividend-paying stocks of the S&P 500 that have maintained their existing dividend rate; All Dividend-Paying Stocks represents all dividend-paying stocks in the S&P 500; and Dividend Growers and Initiators represents all dividend-paying stocks of the S&P 500 that raised their existing dividend or initiated a new dividend. 2 Past performance does not guarantee future results. 5

8 Contact us Please contact your financial advisor for more information. For unit trust pricing please visit invesco.com/unittrust. Additional disclosure STANDARD & POOR S, S&P, S&P 500 and DIVIDEND ARISTOCRATS are registered trademarks of Standard & Poor s Financial Services LLC ( S&P ), a wholly owned subsidiary of The McGraw-Hill Companies, Inc. Standard & Poor s Investment Advisory Services LLC ( SPIAS ) is a registered investment advisor and a wholly owned subsidiary of The McGraw-Hill Companies, Inc. SPIAS reviews the Van Kampen Funds, Inc. s investment selections for the S&P Dividend Sustainability Portfolio. SPIAS does not provide advice to underlying clients of the firms to which it provides services. SPIAS does not act as a fiduciary or as an investment manager, as defined under ERISA, to any investor. SPIAS is not responsible for client suitability. Past performance is not indicative of future returns. SPIAS, S&P and their affiliates do not sponsor, endorse, sell, promote or manage any investment fund or other vehicle that is offered by third parties and that seeks to provide an investment return based on a SPIAS investment strategy or the constituents or the returns of any index. SPIAS, S&P and their affiliates make no representation regarding the advisability of investing in any such investment fund or other vehicle. With respect to recommendations made by SPIAS, investors should realize that such information is provided only as a general guideline. SPIAS does not take into account any information about any investor or any investor s assets when providing its services. There is no agreement or understanding whatsoever that SPIAS will provide individualized advice to any investor. SPIAS does not have any discretionary authority or control with respect to purchasing or selling securities or making other investments. Individual investors should ultimately rely on their own judgment and/or the judgment of a financial advisor in making their investment decisions. There is no assurance that future dividend payouts will equal or exceed past dividend payouts. Standard & Poor s parent company, The McGraw-Hill Companies, Inc. may be one of the constituents of the S&P 500 Dividend Aristocrats Index and may be included in the portfolio based solely on quantitative measurements. For additional disclaimers and disclosures for SPIAS, please see invesco.com/uit U-DVST-IVG-1 05/13 Invesco Distributors, Inc. 6451