idci matters newsletter - 2012 issue 4 (pdf) - invesco

Plan Sponsor Newsletter 2012 Issue 4

This newsletter is brought to you by

Investment Corner

01 Collective Trust Funds: An Alternative Investment Vehicle for Your DC Plan

Strategies for Communicating with Participants

03 Top 5 Words to Use and Lose

What’s Up on Capitol Hill?

04 Retirement Landscape: Cliff, Clamor, Clarity and (Dis)closure

Asset Class Score Card

07 The Winners and the Runners-Up

And More…

08 Upcoming Events

09 Compliance Calendar

10 What’s New on the IDCI Website

11 About IDCI

12 About Invesco

13 Index Definitions

A new perspective on collective trust funds

01 IDCI Matters Newsletter 2012 Issue 4For Plan Sponsor or Consultant Use Only

In the aftermath of fee disclosure regulations – and with increased scrutiny over plan fees – plan sponsors are increasingly looking beyond mutual funds to investment vehicles, such as collective trust funds (CTFs), to provide low cost investment alternatives.

Q. Mutual funds have historically been the vehicle of choice for a majority of defined contribution plans. What are some current trends you’re seeing in the CTF market and what are some obstacles to using CTFs?

A: We have seen an uptick in the DC market over the last five years. In fact, Invesco National Trust Company’s CTF business in qualified retirement plans (DC and DB) increased by 65% from the end of 2006 through 2011. Looking at the DC plan industry as a whole, market share overall increased from 10% in 2006 to 20% in 2011. Since it’s not easy to quantify true CTF market share, I suspect this percentage may be higher. If you’re familiar with the US Federal Government Thrift Plan, which is the largest government plan, it consists primarily of CTFs.

One of the obstacles we’ve experienced is the misperception that CTFs are only for medium to large plan sponsors. In fact, many smaller plans can include CTFs in their fund line-up. For example, we work with a large recordkeeper that adopted an omnibus structure so they could offer CTFs to over 3,000 of their small plan clients, whose average balance is less than $10,000 in CTF assets per plan. So, the myth that CTFs are exclusively for large plan sponsors is not always the case.

CTFs have come a long way over the last several years, and DC plan sponsors may not be aware of the progress that’s been made supporting these vehicles.

For example:

•Daily pricing and liquidity has become the norm.

•Website reporting both for plan sponsors and participants has become more robust.

•There is increased capability with electronic trading.

•Fund companies and recordkeepers are advancing their technology and working together to ensure increased administrative efficiencies are in place (e.g. using account access on websites, linking directly to fact sheets, and receiving pricing electronically).

Investment Corner

Collective Trust FundsAn Alternative Investment Vehicle for Your DC Plan

Q&A with Betsy Warrick, vice president, Invesco National Trust Company

Characteristics of Collective Trust Funds vs. Mutual Funds

Low fees

Flexible pricing

Only for qualified retirement plans

Limited product availability

Regulated by the OCC

Collective Trust Funds Mutual Funds

Brand recognition

NAV in the newspaper

Large product availability

Regulated by the SEC

NAVonline

NSCCtraded

Daily Value NAV

Recordkeeperpass-through

options


Investment Corner (continued)

In addition, depending on the provider, there is much greater flexibility in pricing than with mutual funds. Some CTF providers may even offer lower fees as assets increase.

CTFs are worth a second look as an alternate means for a plan sponsor to reduce fund expenses and add flexibility to the plan’s pricing structure.

Q. As plan sponsors look at feasible ways to move away from revenue sharing, how has this trend and renewed focus on fee transparency affected collective trusts?

A. The movement toward fee transparency has actually been a good thing for the CTF market. For example, our participation agreements — required to invest in CTFs — have always offered full disclosure of all fees. And plan sponsors really appreciate this level of transparency.

Think of CTFs as the functional equivalent of a mutual fund, but with the flexibility to exclude or build in revenue sharing if needed. Many CTFs have been offering non-revenue sharing classes long before R6 mutual funds became available. And many CTFs are less expensive due to their non-registered and streamlined infrastructure.

Think of CTFs as the functional equivalent of a mutual fund, but with the flexibility to exclude or build in revenue sharing if needed.

Lastly, the biggest change we’ve seen, as a result of the need for more fee transparency, has been an increased adoption and growing familiarity of recordkeepers with CTFs. They’re becoming more comfortable and open to the idea of including CTFs as available vehicles to their plan sponsor clients. That’s certainly good for our business, but, more importantly, the lower cost and transparent fee structure ultimately benefits the participants and how much they’ll accumulate in their accounts by the time they retire.

Q. How are you seeing collective trust funds used within custom target date funds?

A: Custom target date funds are taking off in the large and mega plan market. According to Cerulli Associates, 2011 asset levels topped $46.4 billion and are expected to increase to $218 billion by 2016.

CTFs have several advantages over other types of vehicles as components within custom target date funds, including:

•Flexibility to eliminate revenue sharing•Better pricing than mutual funds•Ability to use stable value and

alternative investment strategies not available in a mutual fund structure

•Built-in daily valuation and daily liquidity

Within a custom [target date] structure, one of the predominant benefits of using CTFs with no-revenue sharing is that it may eliminate a conflict of interest for plan fiduciaries.

In particular, I would say one of the predominant benefits of using non-revenue sharing investment vehicles within custom funds is that it may eliminate a conflict of interest for plan fiduciaries. For example, since the asset allocation and glide path are determined by the investment committee and/or

consultant, if one of the investments within a custom fund has a higher percentage of revenue sharing and it’s receiving the bulk of the allocation (i.e. equity funds), there could be a perceived conflict. This problem may be avoided by using CTFs with no revenue sharing.

Q. What are some additional considerations for plan sponsors?

A: Historically, CTFs were cumbersome for DC plans to administer. That’s no longer the case. Today, technology has enabled CTFs to operate more seamlessly on recordkeeper platforms, making it easier for plan sponsors to pass any cost benefit on to participants.

One of the most frequent criticisms I hear is CTFs lack the same level of regulatory oversight as mutual funds. Not only are CTFs regulated by the Office of Comptroller of the Currency (OCC), which is one of the oldest regulatory organizations, but most plan sponsors don’t realize there is also oversight by the Department of Labor (DOL) since they’re exclusively used for qualified plans.

There has to be a material benefit to using collective trust funds, and there usually is. If a plan sponsor is looking to reduce fund expenses and has a need for pricing and revenue sharing flexibility, then CTFs are worth a second look.

Collective trust funds hold over a quarter of target date fund assets within large DC plans

Percentage of target date/lifecycle funds by investment vehicle

5927

14

• Mutual Fund 59

• Collective Trust 27

• Separately Managed Account

14

Source: Plan Sponsor Council of America’s 55th Annual Survey of Profit Sharing and 401(k) Plans. Survey reflects 2011 experience for plans with 5,000 or more participants.


Strategies for Communicating with Participants

Top Five Words to Use and Words to Loseby David Saylor, campaign consultant, Invesco Consulting

Which words resonate with investors today? “Dream retirement” or “comfortable retirement?” “Financial freedom” or “financial security?” “Investment solutions” or “investment strategies?”

Invesco Consulting joined forces with the word specialists and political consulting firm, Maslansky Luntz + Partners (ml+p) in an effort to help plan sponsors and advisors communicate more effectively with participants. Maslansky Luntz + Partners, well known for shifting public opinion with phrases like “Contract with America,” “Death Tax” and “Energy Exploration,” applied their unique, scientific research to investments. After five years of research, 15 dial sessions, and 4,300 investors surveyed, Invesco has learned the words to use and the words to lose in today’s New Word Order.

Top 5 words to use when communicating with participants

1. Financial securityWhich is more important to you today? Achieving…?85% Financial security15% Financial freedom

2. CostsWhich of the following do you LEAST like to pay as an investor?53% Fees26% Commissions15% Charges6% Costs

3. StraightforwardWhen it comes to the costs of investing, what kind of fee arrangement do you prefer? One that is…58% Straightforward23% Clear20% Transparent

4. DiversifiedWhat type of investment approach appeals to you most?42% Diversified33% Balanced13% Mixed-asset12% Comprehensive

5. StrategiesWhich of the following do you most want to hear about when managing investments?40% Strategies22% Solutions21% Advice17% Opportunities

Top 5 Toxic words and phrases to never use when communicating with participants

1. You say: Automatic/DefaultThey hear: Loss of choice and control

2. You say: Longevity riskThey hear: Isn’t longevity a benefit… and death a risk?

3. You say: Institutional managementThey hear: Felons are managing the money

4. You say: Outlive your moneyThey hear: You are scaring me into investing – would rather discuss having enough money for as long as I live

5. You say: Beta (or other technical investment terms)They hear: Getting in over my head – this is hard work and confusing

For more information on words to use and words to lose, visit the participant communication strategies page on Invesco’s Defined Contribution Institute website at invesco.com/dc.

1 Based on our firm’s research with Maslansky Luntz + Partners 2007–2012

www.invesco.com/dc


With the November election in the rearview mirror, it’s a good time to scan the retirement landscape. What can plan sponsors and plan participants expect on the regulatory and legislative fronts in the coming year? While I don’t claim to have a crystal ball, there are some likely developments on the near-term retirement horizon.

Tax reformIn the wake of the election, the federal government is considering a possible tax increase to reduce the federal budget deficit. Full-scale tax reform could cut or limit specific tax breaks as a way of lowering overall tax rates.

Government sees its top three tax expenditures as:•Employer-providedhealthcare.•RetirementplanandIRAexemptions.•Mortgageinterestexemptions.

Several ideas have been proposed to curb the current deductions for plan sponsor and plan participant contributions, including:•Limitingpretaxelectivedeferrals—

scheduled to be $17,500 for 401(k) plans in 2013.

•Cappingthecompensationlimitforpretax contributions.

•Eliminatingcatch-upcontributions.•Settinganoverallcaponitemized

deductions. •Removingtheemployertaxdeduction.

The arguments against reducing retirement savings incentives are twofold. First, the amount of “lost” government revenue from these deductions — an estimated $105 billion for defined contribution (DC) and defined benefit (DB) plans — isn’t actually lost because the money is taxed when distributed. Second, eliminating or reducing current incentives for retirement savings may result in employers terminating plans. That will greatly reduce overall retirement savings levels because workplace plans are the primary retirement savings mechanism in the US.

Since workplace plans are the primary retirement savings mechanism in the US, the elimination or reduction of retirement savings incentives may significantly reduce overall retirement savings levels among employees.

Brian Graff, executive director and chief executive officer of the American Society

of Pension Professionals and Actuaries, voices concern about tinkering with tax incentives. “We understand Congress needs to reduce the debt and raise revenue, but raiding the tax incentives for 401(k) plans will put American workers’ retirement security at risk. Tens of millions of Americans participate in these retirement plans, and 80% of them earn less than $100,000 per year. This is a battle that American workers simply can’t afford to lose.”1

“We understand Congress needs to reduce the debt and raise revenue, but raiding the tax incentives for 401(k) plans will put American workers’ retirement security at risk.”1

One possible compromise is a greater emphasis on Roth-type retirement plans that tax at the time of contribution — the government gets more tax revenue up front, but there’s still incentive for people to save for retirement.

RegulationsThe re-election of President Obama has retirement industry experts preparing for further action on the regulatory front. According to Lynn Dudley, senior vice president of the American Benefits Council, it’s likely that agencies in general will have freer rein with regulations because it’s the president’s second administration. As a result, regulations may be more sweeping than during the past four years.2

What’s Up on Capitol Hill?

Retirement Landscape: Cliff, Clamor, Clarity and (Dis)closureby Jon Vogler, senior analyst, retirement research

1 Fiduciary News, “Will fiscal cliff deal harm 401(k) investors?” Christopher Carosa, Nov. 27, 20122 PlanSponsor, “The fight for retirement plan tax advantages,” Rebecca Moore, Nov. 16, 2012


What’s Up on Capitol Hill? (continued)

Here’s a brief look at some of the potential developments on the regulatory front.

Lifetime income and monthly statements. Plan executives and service providers are closely watching how DOL and Treasury Department officials address ways to get participants to focus on lifetime income needs. Discussions in the industry — and the proposed Lifetime Income Disclosure Act — are focusing on requiring participant statements to show not only the personal retirement savings balance, but also the estimated monthly payment participants could expect to receive after retirement, based on their current account balance. It’s unclear at this point whether the DOL will mandate income projections on participant statements in proposed guidance, which is expected very shortly.

Industry discussions and the proposed Lifetime Income Disclosure Act are focusing on requiring participant statements to show estimated monthly payments participants

could expect to receive after retirement, based on their current account balance.

Fee disclosure. It’s too soon to determine if fee disclosures for both plan sponsors and participants have had much effect because they just became effective in 2012. While there hasn’t been much push back from plan participants this year, 2013 could be different as employees become more aware of the fees they’re paying for their retirement plans. The DOL is believed to be ramping up its enforcement capabilities to make sure companies are doing what they’re supposed to do regarding fee disclosure, and that may mean more audits. The DOL issued Field Assistance Bulletin (FAB) 2012-02 to supplement fee disclosure regulations for participant-level disclosures.

Other rules. Finalized rules governing target date funds and qualified default investment alternatives could arrive in 2013. Some experts also expect proposed Internal Revenue Service (IRS) regulations concerning longevity/annuity contracts to be finalized next year. In addition, the


1 Source: Investment News, “Sen. Harkin proposes retirement plan revamp, Social Security fix,” Darla Mercado, July 27, 2012

What’s Up on Capitol Hill? (continued)

IRS could issue some guidance to help plan participants understand their rights and obligations when they leave a job and take their retirement funds with them. We’ll likely see an increased enforcement climate from the IRS, as well as from the DOL. Plan sponsors who don’t self-audit and correct their plans before the IRS gets involved will face stiff penalties.

LegislationHere’s a look at some proposals for 2013. USA retirement funds. We may hear more about a different approach to retirement plans offered by Sen. Tom Harkin (D-IA), chairman of the Senate Committee on Health, Education, Labor and Pensions. Sen. Harkin’s concept is a two-pronged effort.

The first part of his proposal would create the Universal, Secure and Adaptable (USA) Retirement Funds, a private pension plan to which workers will have universal access. The USA Retirement Funds, which would be privately run and professionally managed, would function as a supplement to DC plans and aren’t intended to replace existing pensions. Each USA Retirement Fund would be overseen by a board of trustees consisting of qualified employees, retirees and employer representatives.

Sen. Harkin’s proposal includes these features for USA Retirement Funds:•Portability.•Accesstothefundsforemployees

through their employers’ existing payroll withholding system.

•Amonthlylifetimeincomebenefitbased on the amount of contributions made by or on the behalf of the participant, plus investment performance over time.

The DOL is believed to be ramping up its enforcement capabilities to make sure companies are doing what they’re supposed to do regarding fee disclosure, and that may mean more audits.

Employers’ only obligations would be enrolling workers automatically, ensuring processing of employee contributions and making modest contributions. Low-wage workers would be eligible for refundable retirement savings credits that can be contributed to a USA Retirement Fund.

The second part of Sen. Harkin’s proposal would strengthen Social Security through a series of measures, including:•Phasingoutthecaponwagessubject

to the payroll tax over 10 years. •AdjustingthewaySocialSecurity

payments are calculated.•Changingthecostoflivingadjustment.1

It’s my understanding that this concept is being pushed hard on Capitol Hill and will be discussed at congressional hearings next year.

Retirement Plan Simplification and Enhancement Act. Other retirement-related legislation we may see shortly is from Rep. Richard Neal (D-MA), who released a summary this year of his upcoming 2013 bill, the Retirement Plan Simplification and Enhancement Act. Rep. Neal’s bill includes measures to:•Expandcoverageandincrease

retirement savings.•Promotepreservationofincome.•Simplifyandclarifyqualified

retirement plan rules.

Social Security. Social Security remains a controversial target for trimming costs. Democrats are generally reluctant to delay benefits by increasing retirement age or reduce benefits by modifying cost-of-living adjustments. It’s possible, though, Democrats would agree to

compromise legislation that gradually phases in these types of changes in a package deal to raise revenue by cutting deductions or exemptions.

Social Security remains a controversial target for trimming costs, and Democrats are generally reluctant to delay benefits by increasing retirement age or reduce benefits by modifying cost-of-living adjustments.

Democrats historically believe that Social Security taxes should be progressive and applied to a higher amount of compensation to improve the solvency of the system. A bill repealing limits on applying employment taxes on wages in excess of the Social Security taxable wage base would generally garner Democratic support, especially if it mandated applying the tax to earnings up to the taxable wage base ($113,700 in 2013) and then to earnings beyond a higher level, such as $250,000. It’s unlikely a measure supporting the Republican preference for personal savings accounts will be on the congressional landscape in 2013.

Stay tunedMany vitally important issues affecting spending, taxes and retirement are currently under discussion in Washington, D.C. I’ll keep you posted in subsequent issues of IDCI Matters as key tax deductions and incentives for retirement savings are targeted for review, as well as on other developments relating to retirement savings in 2013.


Source: Lipper, Inc. Data from Jan. 1, 2012, through Dec. 31, 2012. Past performance cannot guarantee future results. An investment cannot be made in an index. For index definitions, see page 13. The index performance shown is not meant to be a proxy for any Invesco product.

Asset Class Scorecard

The Winners and the Runners-Up

Year-to-Date Performance as of Dec. 31, 2012

0 5 10 15 20 25-5 30 35 40

Commodities

Commodities

US

Non-US

Real Estate

Emerging market debt

International

High yield

Intermediate

Government

TIPS

Bonds

Emerging

Developed

Small-cap

Mid-cap

Large-cap

Value

Growth

International

US

Equities

16.00

17.32

15.26

17.51

16.42

17.28

16.35

15.83

18.22

6.98

4.21

15.81

4.09

16.76

38.57

19.70

-1.06

2.02

Equities US — S&P 500 Index International — MSCI EAFE Index Growth — Russell 1000 Growth Index Value — Russell 1000 Value Index Large-cap — Russell 1000 Index Mid-cap — Russell Mid Cap Index Small-cap — Russell 2000 Index Developed — MSCI World Index Emerging — MSCI Emerging Markets Index

Bonds TIPS — Barclays U.S. TIPS Index Government — Barclays U.S. Govt Bond Index Intermediate — Barclays U.S. Aggregate Index High yield — Barclays High Yield Index nternational — Barclays Global Aggregate ex U.S. Index

Emerging Market — JP Morgan EMBI Global Diversified Composite

Real Estate Non-US — FTSE EPRA/NAREIT Dev Ex-U.S. Real Estate Index

US — FTSE NAREIT Equity REIT Index

Commodities Dow Jones — UBS Commodity Index


Speaking engagements at industry conferences

Institutional Investor Defined Contribution Forum

Apr. 23-24, 2013 | Miami Featured Speaker: Christine Thompson, senior vice president, Invesco National Trust CompanySpeaking on: Collective Trust Funds - Are they Right for Your Plan?

Webinars

Hosted by Institutional Investor: Exploring the Income Potential and Possible Inflation Protection Opportunities Offered by Senior Secured Bank Loans and Real Estate

Feb. 1, 2013 | 2pm ETFeatured Speakers: Greg Stoeckle, head of senior secured bank loans and Darin Turner, portfolio manager, Invesco Real Estate

Register for this webinar.

Are you looking for a resource to help benchmark your plan?

Invesco’s DC PlanAnalyzer Web tool or iPad® app can play a key role in helping you and your consultant benchmark your plan. The tools use PLANSPONSOR’s DC Survey data to enable you to compare plan design, investments, participant behavior and plan oversight with all plans in the survey and plans of similar size in the same or similar industry. To request a custom report using Invesco’s DC PlanAnalyzer Web tool or to learn more about the new iPad app, please email us at [email protected] for more information.

Upcoming Events

Invesco’s Defined Contribution Institute Upcoming Events

iPad is a trademark of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc.

https://event.on24.com/eventRegistration/EventLobbyServlet?target=registration.jsp&eventid=529464&sessionid=1&key=E06B83E16EDAB7D56DA51CB4B504CF56&LS=EMS772037&sourcepage=register


Defined Contribution Compliance CalendarFor plans in which the plan year-end falls on Dec. 31

Jan. 31•Generally, the deadline for submitting participant data to recordkeepers for ADP/ACP, top-heavy and 402(g) compliance testing •Deadline for sending Form 1099-R to participants who received distributions during previous year•Deadline for submitting individually designed plans to the Internal Revenue Service (IRS) Determination Letter Program

(For 2013, this applies to employers with identification numbers that end in 2 or 7)

Feb. 28•Deadline for filing Form 1099-R with the IRS to report distributions made in the previous year

Note: The deadline is Apr. 1 if filing electronically

Mar. 15 •Deadline for ADP/ACP refunds without 10% excise tax on employer (due two and a half months following plan year-end)

Note: This deadline is extended to July 1 (The deadline is usually June 30, which falls on a Sunday in 2013) for plans satisfying the requirements of an eligible automatic contribution arrangement (EACA)

•Employer contributions due for Dec. 31 fiscal year-ends in order to take a deduction with no corporate tax extension

Apr. 1•Deadline for electronic filing of Form 1099-Rs for 2012 distributions due to IRS

Note: Deadline is usually March 31, which is a Sunday in 2013•Initial required minimum distribution (RMD) due to participants who turned 70 1/2 in 2012


What’s New

On Invesco’s Defined Contribution Institute website at invesco.com/dc

Understanding the pros and cons of different investment vehicles and mutual fund share classes has always been an important consideration for defined contribution (DC) plan sponsors, but fee disclosure and communication has been a catalyst for additional focus on the topic. As DC plan sponsors are now called to gather, analyze and communicate the fees in their plans by the Department of Labor’s regulations 408(b)(2) and 404(a)(5), plan sponsors are having renewed interest in their options and considering new approaches to paying plan expenses.

We’ve asked two industry experts to share their insights and perspectives on investment vehicle options as well as approaches that plan sponsors and their consultants may want to consider when evaluating fees and revenue sharing investments within their plan.

Greg: Scott, as you have discussions with DC plan sponsors about the challenges of developing a fair and sustainable model for paying plan expenses, what are you hearing? Are there any trends that you’re seeing?

Scott: I thought it might be helpful to first define which plan expenses we’re really talking about here because the question relates to the oversight and administration of DC plans and not to the investments.

It’s important for plan sponsors to distinguish between those two, primarily because administrative cost is generally a fixed cost. Typically, the number of participants determines the cost to turn the recordkeeping crank, so to speak.

Investment costs, on the other hand, are variable in nature. There’s no investment that I know of that charges a flat fee. They’re all based on assets under management.

So in principle, the goal is to try to match the method of paying with the type of expense. In the retirement plan context, this means paying administrative fees on a per-head basis and investment fees on an asset basis. We’ve seen a trend towards charging per-head participant fees, but still I would say the overwhelming majority of plans pay their fees on an asset basis. Essentially, there’s no big difference between the services that the recordkeeper provides from participant to participant, so everybody gets the same experience with some minor variants. Ultimately the goal is to treat all participants similarly.

Moderator:Greg Jenkins, CFASenior Director, Consultant Relations, Invesco

Contributor:Scott Faris, CFA, JDSenior Consultant, Hyas Group

Contributor:Betsy WarrickVice President, Invesco National Trust Company

Brought to you by:

Retirement Round-table Defined Contribution

Plan Investment Vehicles: How Fee Disclosure is Changing the Conversation

Retirement Roundtable: Plan Fees and the Revenue Sharing Debate

Retirement industry experts discuss considerations for plan sponsors when developing a fair and sustainable model for paying plan expenses; leveraging lower cost and zero revenue sharing investment alternatives.

Read the Retirement Roundtable.

Webcast Replay: Defined Contribution Plan Investment Vehicles - How Fee Disclosure is Changing the Conversation

Moderated by Alison Cooke Mintzer, PLANSPONSOR, featuring guest panelists Scott Faris, CFA, JD, Hyas Group, Betsy Warrick, vice president, Invesco National Trust Company, and Greg Jenkins, CFA, Invesco’s senior director of consultant relations.

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1 The above link will direct you to a site not affiliated with Invesco. This site is for informational purposes only. Invesco does not guarantee nor take any responsibility for the content.

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ww2.plansponsor.com/events/invites/DCPlanInvestmentVehiclesHowFeeDisclosureisChangingtheConversation-20121016 1803-1.mp4

www.invesco.com/pdf/II-CLR-WP-2-E.pdf


About IDCI

The Institute’s MissionTo help plan sponsors and their consultants build better plans with insights from Invesco’s experts on specific aspects of plan management. Our areas of expertise include: •Asset allocation frameworks and alternative asset classes.•Legislative and regulatory changes.•Alternative funding options — collective trusts and ETFs.•Participant communication strategies.

The Institute’s WorkWe deliver expert insights for plan sponsors: •Insights and commentary, including investment, legislative and retirement matters•Newsletters designed specifically for plan sponsors•Timely Web forums focused on the latest retirement trends and topics •Industry leadership as subject matter expert panelists at industry forums


About Invesco

Explore Intentional Investing with InvescoSM

Commitment to investment excellenceWe believe the best investment insights come from specialized investment teams with discrete investment perspectives, operating under a disciplined philosophy and process with strong risk oversight and quality controls. This approach enables our portfolio managers, analysts and researchers to pursue consistent, repeatable results — results that are aligned with client expectations.

We support an investment-centric culture that minimizes noninvestment distractions. That allows our investment teams to focus their energy and talent on seeking superior investment opportunities around the globe.

We believe high-quality results begin with specialized insight and disciplined oversight.

Depth of investment capabilitiesInvestors need choices to tailor their financial plans to their objectives. Our long history of providing client-driven investment solutions means we offer a wide range of single-country, regional and global capabilities across major equity, fixed income and alternative asset classes.

We deliver those capabilities through a diverse set of investment vehicles, from open- and closed-end mutual funds to ETFs, unit investment trusts, cash products, collective trusts, separate accounts for retail and institutional clients, and more.

Our wide range of investment capabilities is designed to support a variety of financial objectives.

Organizational strengthAt Invesco, we believe focus brings success. That’s why investment management is all we do. We direct all of our intellectual capital, global strength and operational stability toward helping investors achieve their long-term financial objectives.

As an independent firm, our global organization is solely focused on investment management.

Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence. It’s the philosophy that forms the foundation of our “investors first” approach, exemplified by our:


All data as of Dec. 31, 2011, unless otherwise noted.

Index Definitions

Barclays Global Aggregate ex U.S. Index is an unmanaged index considered representative of bonds of foreign countries.

Barclays High Yield Index is an unmanaged index that covers the US dollar-denominated, non-investment grade, fixed-rate, taxable corporate bond market.

Barclays U.S. Aggregate Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market.

Barclays U.S. Government Bond Index is a market value weighted index of US Government and government agency securities (other than mortgage securities) with maturities of one year or more.

Barclays U.S. TIPS Index is an unmanaged index that measures the performance of The US Treasury Inflation Protected Securities (“TIPS”) market.

Dow Jones-UBS Commodity IndexSM is a broadly diversified index that allows investors to track commodity futures through a single, simple measure.

FTSE EPRA/NAREIT Developed ex U.S. Real Estate Index is an unmanaged index considered representative of real estate companies and REITs outside of the US.

FTSE NAREIT Equity REITs Index is an unmanaged index considered representative of US REITs.

JP Morgan EMBI Global Diversified Index is a uniquely weighted index that tracks total returns for US dollar- denominated Brady bonds, Eurobonds, traded loans, and local market debt instruments issued by sovereign and quasi-sovereign entities.

MSCI All Country Pacific ex-Japan Index is an unmanaged index considered representative of Pacific region stock markets, excluding Japan.

MSCI All Country World ex-US Index is an index considered representative of stock markets of developed and emerging markets, excluding those of the US.

MSCI Emerging Markets Index® is an unmanaged index considered representative of stocks of developing countries.

MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East.

MSCI EAFE® Growth Index is an unmanaged index considered representative of growth stocks of Europe, Australasia and the Far East.

MSCI EAFE® Value Index is an unmanaged index considered representative of value stocks of Europe, Australasia and the Far East.

MSCI Europe IndexSM

is an unmanaged index considered representative of stocks of developed European countries.

MSCI Europe Small Cap Indexis an unmanaged index considered representative of small-cap European stocks.

MSCI Japan Indexis an unmanaged index considered representative of stocks of Japan.

MSCI World Index® is an unmanaged index considered representative of stocks of developed countries.

MSCI World Ex-US Small Cap Index is an unmanaged index considered representative of small-cap stocks of global developed markets, excluding those of the US.

Russell 1000® Growth Index is an unmanaged index considered representative of large-cap growth stocks. The Russell 1000 Growth Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.


All data as of Dec. 31, 2011, unless otherwise noted.

Index Definitions (continued)

Russell 1000® Index is an unmanaged index considered representative of large-cap stocks. The Russell 1000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

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.

Russell 2000® Index is an unmanaged index considered representative of small-cap stocks. The Russell 2000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

Russell Midcap® Index is an unmanaged index considered representative of mid-cap stocks. The Russell Midcap Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.

S&P 500® Index is an unmanaged index considered representative of the US stock market.

This newsletter is not intended to be legal or tax advice or to offer a comprehensive resource for tax-qualified retirement plans. Always consult your own legal or tax professional for information concerning your individual situation. Collective Trusts are available exclusively to qualified retirement plans. 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 and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. Please obtain and review all financial material carefully before investing.

Invesco Distributors, Inc. is the US distributor of Invesco Ltd.’s retail products. Invesco Distributors Inc. and Invesco National Trust Company are wholly owned indirect subsidiaries of Invesco Ltd. Note: For more information on any of the topics discussed please contact your Invesco Representative.

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idci matters newsletter - 2012 issue 4 (pdf) - invesco

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