Invesco Alpha Strategies EAFE Select 20 Portfolio. An International Unit Trust Investor Guide

Transcription

1 Invesco Alpha Strategies EAFE Select 20 Portfolio An International Unit Trust 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. 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. Investing in foreign securities involves certain risks not typically associated with investing solely in the United States. This may magnify volatility due to changes in foreign exchange rates, the political and economic uncertainties in foreign countries, and the potential lack of liquidity, government supervision and regulation. This trust is concentrated in the utilities sector. Utility companies may be highly susceptible to any economic, political, or regulatory occurrences affecting this industry. This trust is also concentrated in the consumer staples sector. Companies in this sector face risks such as intense competition, the lack of serious barriers to entry for on-line entrants, economic recession and a slowdown in consumer spending trends. The Portfolio is concentrated in securities issued by companies domiciled in the United Kingdom. As a result, political, economic or social developments in the United Kingdom may have a significant impact on the securities included in the Portfolio. 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.

3 Maximize overseas opportunities The EAFE Select 20 Portfolio is an enhanced index unit trust that provides investors with an easy way to tap into the opportunities available in overseas markets. The portfolio seeks above-average total return. The portfolio seeks to achieve its objective by identifying 20 of the highest dividend-yielding stocks of international companies by using a stock selection strategy based on a subset of the Morgan Stanley Capital International (MSCI) EAFE SM Index. The EAFE Select 20 Portfolio may offer: An internationally diversified portfolio of stocks from established companies around the world. An emphasis on international companies that have a record of paying dividends. Proprietary stock selection process based on the MSCI EAFE SM Index. A strategy that has historically been less volatile than the benchmark the MSCI EAFE SM Index. Of course, past performance is no guarantee of future results. Liquidity and a low minimum investment purchase price. The reduction of time, expense and difficulty for an average investor trying to achieve diversification using individual securities. 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. 1

4 Four reasons to consider investing internationally International investments, such as those within the EAFE Select 20 Portfolio, may be a great way for investors to tap into potential global economic growth as well as diversify their holdings beyond U.S. stocks. Adding an international component to an investor s portfolio has compelling potential advantages. 1 Potential for higher returns Although international investments carry additional risks, they may offer the potential for higher returns than are generally available in U.S. markets. This is because many of the world s potentially fastest growing stock markets are found outside the United States. The EAFE Select 20 Portfolio may provide investors with access to these markets and their return potential. Consider the average annual total returns of the EAFE Select 20 Strategy. While past performance is no guarantee of future results, the EAFE Select 20 Strategy has outperformed both the MSCI EAFE SM Index and the S&P 500 Index on a hypothetical basis during the 10-, 15-, 20-, 25- and 30-year periods. Average Annual Total Returns (%) for the Period Ended 12/31/12 (EAFE131) Periods EAFE Select 20 Strategy MSCI EAFE SM Index S&P 500 Index 1-Year Year Year Year Year Year Year Year Average Capture Ratio (%) 12/82 12/12 (EAFE131) Up Years Down Years Looking back since 12/31/1982, the EAFE Select 20 Strategy would have posted compelling absolute and relative results. Capture Ratio is the average ratio of the strategy returns/index returns in index up years and the average ratio of the strategy returns/index returns in index down years. Annual Total Returns (%) (EAFE131) Periods Portfolio Strategy MSCI EAFE SM Index Periods Portfolio Strategy MSCI EAFE SM Index Source: Bloomberg, L.P. Past performance is no guarantee of future results.

5 Performance of a Hypothetical $10,000 Investment from 12/31/ /31/2012 (EAFE131) $ , , , ,000 Portfolio Strategy MSCI EAFE SM Index The graph represents a hypothetical $10,000 investment in the trust strategy (not any actual trust) and the MSCI EAFE SM Index from 12/31/82 through 12/31/12. The graph assumes the sum of the initial investment ($10,000) and all dividends (including those on stocks trading ex-dividend as of the last day of the year) and appreciation during a year are reinvested at the end of that year. All strategy performance is hypothetical (not any actual trust) and reflects trust sales charges (full sales charge in first year of 2.95% and reduced rollover charge thereafter of 1.95%) and expenses but not brokerage commissions on stocks or taxes. Past performance is no guarantee of future results. Actual returns will vary from hypothetical strategy returns due to timing differences and because the trust may not be invested equally in all stocks or be fully invested at all times and may be subject to investment exclusions and restrictions. In any given year the strategy may lose money or underperform the index. Returns are calculated by taking year-end prices, subtracting them from the prices at the end of the following year (adjusting for any stock splits that might have occurred during the year) and adding dividends received for the period divided by starting price. Average annual total return and total return measure change in the value of an investment plus dividends, assuming quarterly reinvestment of dividends. Average annual total return reflects annualized change while total return reflects aggregate change and is not annualized. The Morgan Stanley Capital International Europe, Australasia, and Far East Index ( MSCI EAFE ) is an unmanaged index generally representative of major overseas stock markets. MSCI EAFE data is U.S. dollar adjusted. The S&P 500 Index is an unmanaged index generally representative of the U.S. stock market. Indices 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. The historical performance of the index is shown for illustrative purposes only; it is not meant to forecast, imply or guarantee the future performance of any particular investment or the trust, which will vary. Securities in which the trust invests may differ from those in the index. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. Source: Bloomberg L.P. 2 Potential for less portfolio volatility A long-term investment in the EAFE Select 20 Strategy would have been less volatile than the MSCI EAFE SM Index while providing a higher risk adjusted return as measured by the Sharpe Ratio. 3 Diversification By investing in the EAFE Select 20 Portfolio, unitholders may be able to add a layer of diversification to their overall investment portfolio. Benefits of diversification include exposure to different potential economic cycles and increased growth potential of international markets. In addition, investing in foreign markets may enable U.S. investors to hedge against possible future declines in the value of the U.S. dollar. Of course, diversification does not guarantee a profit or eliminate the risk of loss. 4 Access to industry leaders Rapid globalization of world trade, coupled with growing economic liberalization and privatization initiatives, has fueled the rise in investment opportunities overseas. Investors often seek out the dominant players in a particular industry or market sector; and many of these market leaders are foreign companies. The EAFE Select 20 Portfolio may provide access to these types of companies. For more information on the companies contained within the current portfolio, refer to the EAFE Select 20 Portfolio Fact Card or visit invesco.com/uit. Standard Deviation (%) for the Period Ended 12/31/12 (EAFE131) EAFE Select MSCI EAFE SM Period 20 Strategy Index 30-Year Sharpe Ratio (%) for the Period Ended 12/31/12 (EAFE131) EAFE Select MSCI EAFE SM Period 20 Strategy Index 30-Year Standard deviation is a measure of volatility that represents the degree to which an investment s performance has varied from its average performance over a particular period. Standard deviation does not compare the volatility of an investment relative to other investments or the overall stock market. The more an investment s return varies from the investment s average return, the more volatile the investment. Standard deviation is based on past performance and is no guarantee of future results. Sharpe Ratio is a ratio developed to measure risk-adjusted performance. It is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. 3

6 The EAFE Select 20 Portfolio The EAFE Select 20 Portfolio seeks above-average total return. The portfolio seeks to achieve its objective by investing in a portfolio of stocks. The portfolio is an enhanced-index unit trust that invests in a portfolio consisting of the highest dividend-yielding stocks from a subset of the MSCI EAFE SM Index. The Selection Process as of 12/31/2012 for series EAFE131. Begin with the stocks in the Morgan Stanley Capital International EAFE SM (Europe, Australasia and Far East) Index Stocks MSCI EAFE SM Index Screen these stocks to include only those companies with positive one- and three-year sales and earnings growth. 220 Stocks Positive 1- and 3-year sales growth + Positive 1- and 3-year earnings growth Three years of positive dividend growth Stocks 3 years of consecutive dividend growth Rank the remaining stocks by market capitalization and select the top 75%. 79 Stocks Rank by market-cap Select top 75% Select the 20 highest dividend-yielding stocks. Select 20 highest dividend-yielding stocks The MSCI EAFE SM Index Many consider the MSCI EAFE SM Index to be the premier equity benchmark for international investing. The Index represents more than 921 stocks across 22 developed countries. These countries include Australia, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, 1 Spain, Sweden, Switzerland and the United Kingdom. 1 Stocks traded in Singapore are eliminated from the portfolio strategy to help limit exposure to uncertain political and economic conditions. Stocks which are passive foreign investment companies are also eliminated because of the negative tax treatment which could result from such ownership. 2 Dividend performance screen is defined as three years of consecutive dividend growth. 4

7 Potential benefits of dividends They add up. Dividends paid consistently by certain companies, with even small but regular increases, may add up over the years. You save on taxes. Qualified dividends are currently taxed at a federal rate from zero 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. However, the payment of stock dividends is never guaranteed and may vary over time. Over time you have the potential to get your investment back. Instead of waiting for the stock price to go higher at some point in the future, you can incorporate dividends into your return projection and choose what to do with the cash flow: reinvest in the company or invest elsewhere. 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 from 2012 through 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. 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. 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 additional dimension to your portfolio in any environment. A company that can pay dividends when the market is in flux may demonstrate strength and may add an element of stability to your portfolio. Average Annual Total Returns of S&P 500 Stocks by Dividend Policy 2 30-Year Period Ended December 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 9.50% % % Dividend growth has historically tied to strong performance 3 2 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 12/31/2012: 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. 3 Past performance does not guarantee future results. 5

8 The MSCI EAFE SM Index is the exclusive property of Morgan Stanley Capital International Inc. and has been licensed for use by Invesco. MSCI is a service mark of Morgan Stanley Capital International Inc. This trust is not sponsored, endorsed, sold or promoted by Morgan Stanley Capital International Inc. or Morgan Stanley & Co. Incorporated (collectively, MS ). Neither MS nor any other party makes any representation or warranty, express or implied, to the owners of this trust or any member of the public regarding the advisability of investing in unit investment trusts generally or in this trust particularly or the ability of the Morgan Stanley Capital International EAFE SM Index to track corresponding stock market performance. The Morgan Stanley Capital International Europe, Australasia, and Far East Index ( MSCI EAFE ) is an unmanaged index generally representative of major overseas stock markets. MSCI EAFE data is U.S. dollar adjusted. Indices 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. The historical performance of the index is shown for illustrative purposes only; it is not meant to forecast, imply or guarantee the future performance of any particular investment or the trust, which will vary. Securities in which the trust invests may differ from those in the index. FOR US USE ONLY 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 advisor(s) for a prospectus or download one at invesco.com/unittrust. 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. invesco.com/us U-EAFE-IVG-1 02/13 Invesco Distributors, Inc. 2300