Fixed Income Unit Trust Brochure
Invesco Unit Trusts Fixed income
Celebrating 40+ years in unit trusts 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 advisors for a prospectus or download one at invesco.com/uit.
About risk There is no assurance a unit trust will achieve its investment objective. An investment in a unit trust is subject to market risk, which is the possibility that the market values of securities owned by a unit trust will decline and that the value of trust units may therefore be less than what you paid for them. The trusts are unmanaged and their portfolios are not intended to change during the trusts’ lives except in limited circumstances. Accordingly, you can lose money investing in a unit trust. An investment in these trusts should be made with an understanding of the risks associated therewith, such as the inability of the issuer or an insurer to pay the principal of or interest on a bond when due, volatile interest rates, early call provisions and changes to the tax status of the bonds. In particular, Qualified Bonds may be redeemed approximately three years after issuance to the extent an issue has unexpected bond sale proceeds. The value of the bonds will generally fall if interest rates, in general, rise. Given the historically low interest rate environment in the US, risks associated with rising rates are heightened. The negative impact on fixed income securities from any interest rate increases could be swift and significant. No one can predict whether interest rates will rise or fall in the future. Should the issuer of any Build America Bonds (BABs) or Qualified Bonds (including Qualified School Construction Bonds, Qualified Energy Conservation Bonds and Clean Renewable Energy Bonds) fail to continue to meet the applicable requirements imposed on the bonds as provided by the American Recovery & Reinvestment Act of 2009, it is possible that such issuer may not receive federal cash subsidy payments, impairing the issuer’s ability to make scheduled interest payments. BABs and Qualified Bonds are not guaranteed by the federal government. If the issuer can not pay the debt service on the municipal obligation, the BABs or Qualified Bonds status would not help the issuer. A particular series of a trust may be concentrated in certain sectors or geographic regions, and to the extent that it is, your investment in units of a trust series would be subject to the risks associated with such concentrations. Please refer to the prospectus associated with the applicable trust. Not all municipals can be sold as Build America Bonds or Qualified Bonds. For BABs on which the issuer receives a direct federal subsidy payment for a portion of their costs, only new money governmental issues for capital expenditures capital qualify. Certain trusts invest in bonds rated below investment grade and are considered to be “junk” bonds. Bonds rated below “BBB” by Standard & Poor’s and Fitch, or below “Baa3” by Moody’s, are considered to be below investment grade. These bonds 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 bonds. In addition, these bonds may be more sensitive to interest rate changes and may be more likely to make early returns of principal. The trust’s price per unit, yield and return may fluctuate more than in a trust consisting of investment grade bonds. Certain of the bonds in a trust’s portfolio may be restricted securities that may be subject to enhanced liquidity risk. This is the risk that the value of a security will fall if trading in the security is limited or absent. Any bonds in the trust designated as “Rule 144A” securities are subject to resale restrictions. The value of trust units may decrease if there is a lack of a liquid market for these securities. Securities of foreign issuers in a Trust present risks beyond those of US issuers. These risks may include market and political factors related to an issuer’s foreign market, international trade conditions, less regulation, smaller or less liquid markets, increased volatility, differing accounting practices and changes in the value of foreign currencies. Discount fixed income unit trusts may realize gains when a municipal bond is sold, is called or matures and unit holders may incur a tax liability from time to time. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under US federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax advisor for information concerning your individual situation. Fixed income investing Striving to preserve wealth while limiting volatility
Fixed income investing entails many facets but its attributes are about income and What is “Fixed Income”? preserving wealth. No one can predict where the financial markets will lead to in the Fixed income is a type of investing, or future. Even during periods when stocks have outperformed bonds, the budgeting style, through which periodic outperformance may often be accompanied by high volatility. income is typically received at regular intervals and at reasonably predictable Bonds have historically been less volatile levels. Fixed-income investors usually rely on their investments to provide a regular, • Stocks • Bonds stable income stream. % 1999 2001 2003 2005 2007 2009 2011 2013 2016 40 30 20 10 0 -10 -20 -30 -40
Source: Lipper, Inc. (12/31/98-12/31/16) Past performance is not a guarantee of future results. This chart is for illustrative purposes only and is not representative of performance for any specific investment. Stocks are represented by the S&P 500 Index. Bonds are represented by the Barclays U.S. Aggregate Bond Index. Investments cannot be made directly into an index.
Interest income potential What is "Interest"? In the search for income, many investors look to fixed income investments to meet Interest is the compensation paid their needs. As the baby boomers continue to retire, it is expected that there will be for the use of borrowing money, an added focus on stable income as they move into their retirement years and pivot typically expressed as annual from a growth outlook to a preservation of wealth and income outlook. percentage rate (APR).
Fixed income may potentially deliver tax benefits Income from municipal bonds is exempt from federal taxes, and for individuals who live in the same state as the agency issuing the bond, the income may be exempt from state income tax, as well. Some bonds also pursue interest income that is exempt from the federal alternative minimum tax (AMT). Invesco and its representatives do not provide tax advice. Individuals should consult their personal tax advisor before making any tax related investment decisions.
invesco.com/uit 1 What is a fixed income unit trust? Providing income, transparency and discipline through maturing portfolios
A fixed income unit trust (“UIT”) is a maturing portfolio product that combines the benefits of individual bonds with the diversification and professional selection of an open-end mutual fund while maintaining a fixed and transparent portfolio of bonds.
Comparison of potential benefits of fixed income investments This chart offers a snapshot of how fixed income unit trust features compare with those of other investment vehicles. Open-end Unit trust Individual bond bond mutual fund Strategy/ Seeks current N/A Seek current income objective income Par value Yes Yes No Distribution Monthly Semi-annual Monthly frequency Variable income No1 No Yes Diversification Yes, typically 20 No Yes to 40 bonds Transparency Yes Yes Portfolio of bonds currently required to be reported semi-annually Liquidity End of day — Depends on bond, End of day — Net Asset Value available prices, Net Asset Value markups / markdowns Expense ratio Typically lower None Typically higher than than mutual funds unit trusts For illustrative purposes only. This chart does not represent characteristics of any particular unit investment trust offered by Invesco. Please see the applicable prospectus for details on any specific trust.
Fixed Income - new sales charge structure2 Fixed Income: Short-term* Target maturity Sales charges Fee-based Less than 5-years 1.95% 0.60% Fixed Income: Intermediate to Limited-term* Target maturity Sales charges Fee-based 5–11.99-years average 2.50% 0.60% Fixed Income: Long-term* Target maturity Sales charges Fee-based 12+ years average 3.50% 0.60% * Based on a $1,000 par value per unit price. Please consult the applicable prospectus for additional details.
1 Income will vary with a fixed income UIT due to factors including but not limited to early redemptions, bonds being called and bonds maturing. 2 Please note that the updated fixed income pricing shown above is as of July 12, 2017. 2 Fixed income unit trusts: Structural benefits of a maturing portfolio What are “maturing unit trust portfolios”? Maturing unit investment trust portfolios are fixed income investments which have a finite life, at the end of which, the investment will cease to exist and the $ principal is repaid with interest.
A defined and The potential A defined initial A portfolio transparent for consistent par value per that is basket of monthly income unit based on professionally diversified payments1 the maturity selected and bonds value of the monitored bonds in the trust
For illustrative purposes only
• A portfolio of professionally selected bonds deposited into a trust and sold in units • Similar to an individual bond, a bond UIT seeks to distribute consistent monthly income1, has a defined maturity, and a stated par value • Portfolio of bonds is supervised throughout life of the trust • Underlying bonds remain in the trust until called or matured
Bond selection process
Bond Universe Selection Process Bond UIT
For illustrative purposes only
1 Income will vary with a fixed income UIT due to factors including but not limited to early redemptions, bonds being called and bonds maturing. invesco.com/uit 3 Par Value and principal amount
What is par value per unit of a UIT? What is par value of a bond? Par value per unit represents the principal amount of the underlying bonds per unit. Par value is the nominal or face value Subsequent to a trust’s deposit date, bonds may be sold to meet redemptions, to pay of a bond. The par value of a bond expenses, or in other limited circumstances. The sale, redemption or maturity of any generally represents the amount of bonds in the trust will affect the principal amount of bonds included in the trust and, money, or principal amount, that the as a result, the principal amount of bonds per unit. bond issuer borrows and promises to repay at some future date to the investor. Understanding the par value for a UIT • A UIT holds a number of bonds, each of which is purchased when a new trust is being assembled. • The par value per unit of a UIT is set at a value of $1000 per unit at the time of the trust’s deposit. • Over the life of the UIT, as bonds mature or get called prior to maturity, principal is returned to the Unitholder. The total principal returned over the life of the trust will represent the actual par value per unit; this actual amount may be above or below the par value per unit at the time of the trust’s deposit.
Risk of early redemptions/calls on bonds/bond maturities If any of the bonds within a UIT are redeemed, called, or reach maturity: 1 For illustrative purposes only. Not representative of the performance of any Invesco UIT. • The total amount of bonds in the UIT will decrease as that principal is paid out 2 Represents, in this illustration, the principal to the unitholders. amount of the underlying bonds per unit as of the close of business on the hypothetical trust’s • The par value per unit of the UIT will decrease accordingly. deposit date. Subsequently, bonds may be sold to meet redemptions, to pay expenses, or in other • The principal will be paid out directly to Unitholders, similar to how returns of limited circumstances. Generally, the sale of principal are made to holders of an individual bond. bonds will affect the principal amount of bonds included in a trust and as a result the principal amount of bonds per unit. There can be no Hypothetical examples of unit trusts priced at discount, par and premium to par value1 assurance that a Unitholder will receive the initial The chart below shows hypothetical example of a trust on the date of deposit (consisting of par value per unit subsequent to the deposit date. 3 For an actual trust, estimates would be calculated one at discount, one at par and one at a premium) and will vary thereafter. as of the close of business on the deposit date and would vary thereafter. Estimated current Trust A Trust A Trust A return shows the estimated interest distributions (Discount) (Par) (Premium) you would be scheduled to receive each year divided by the unit price. Estimated long term Offering price of bonds per unit $861.90 $958.00 $1,121.37 return shows the estimated return over the Sales charge per unit 3.50% $31.50 $35.00 $40.95 estimated life of the trust. We base this estimate on an average of the bond yields over their Organizational costs per unit $3.00 $3.00 $3.00 estimated life. Estimated long-term return also Public offering price per unit $900.00 $1,000.00 $1,170.00 reflects the sales charge and estimated expenses. The average yield for the portfolio is derived by Par value per unit2 $1,000.00 $1,000.00 $1,000.00 weighting each bond’s yield by its value and Estimated current return3 4.25% 4.60% 4.88% estimated life. Unlike estimated current return, estimated long term return accounts for Estimated long term return3 4.85% 4.75% 4.64% maturities, discounts and premiums of the bonds. Average maturity 25 Years 25 Years 25 Years These estimates show a comparison rather than a prediction of returns. No return calculation can Estimated annual Income $38.25 $46.00 $57.12 predict your actual return. Your actual return in a trust may vary from corresponding estimates. Current estimates for deposited trusts are available at www.invesco.com/uit. 4 Potentially decreasing interest rate risk with unit trusts
As with any fixed income investment, there is interest rate risk involved and the longer the maturity of an investment, generally, the more the bonds are affected by interest rate changes. In a UIT, as the bonds in the portfolio get closer to maturity, the interest rate risk (measured by duration) generally declines for the unit trust. • Interest rate risk typically declines over time for a bond held to maturity. • Interest rate risk may remain approximately the same over time for a $100,000 investment in an index/managed fund.
Duration and interest rate risk1
• Cumulative income 7-year bond duration Sample bond index duration
Duration Income ($) (representing interest rate risk) 40k 6.0
35k 5.0 30k 4.0 25k
20k 3.0
15k 2.0 10k 1.0 5k
0.0 0 1 2 3 4 5 6 7 Years from purchase Source: Bloomberg L.P. as of 10/31/17
1 For illustrative purposes only. Does not represent the average duration or income amounts for any particular Invesco unit investment trust. invesco.com/uit 5 Investing for the future with an established leader in fixed income
A proven leader Over the past four decades, our Invesco unit trust team has managed investors’ $46 billion money through many market cycles and industry changes. in initial fixed income unit trust deposits1 Since 19761, individual investors have entrusted Invesco Unit Trusts with their savings; we have delivered more than 5,400 fixed income unit trusts with more than $46 billion in initial deposits.1 Our Fixed Income Investment Research team averages 17 years of experience1, and its diligent processes have kept 99.96% of our initial municipal bond investments since 19862 and 99.79% of our initial $22 billion corporate bond investments since 2001 default-free as of year-end 2016.2 in income paid out to unitholders1
Generations of experience • Invesco Unit Trust default rate2 • S&P Universe default rate3,4 % Investment Grade Municipal Bonds Investment Grade Corporate Bonds 99.96% 5 of our initial municipal bond 4.06 investments default free2 4 3 99.79% 2 of our initial corporate bond investments default free2 1 0.32 0.21 0.04
1 As of Sept. 30, 2017 through Invesco Unit Investment Trusts and predecessor firms. 2 Internal Invesco Database; Municipals 1/1/86–12/31/16, Corporates 1/1/01–12/31/16. 3 S&P Investment Grade Municipal default rate; cumulative average default rate, 1986–2016; S&P Global Fixed Income, published 4/13/17. 4 S&P Corporate Default Rate, 2001–2016 Cumulative Rate, from S&P Global Fixed Income, published 4/13/17. 6 Disciplined investment process Quality investments may offer stability to an overall portfolio, especially in volatile markets. Our taxable fixed income unit trusts are quality investments that select individual securities for portfolios predominantly using investment grade and above credit ratings.
Investment idea generation Constant monitoring of market liquidity and relative value leads to portfolio ideas Investment idea Credit screening Credit analysis generation Outcome: Underlyng credit rating sent to Fixed Income Research for review
Approval decision Portfolio Trust monitoring construction through termination
For illustrative purposes only
Trust monitoring through Active surveillance process termination Research regularly updates the internal Invesco credit rating for all holdings Daily Monthly • Fundamental analysis Outcome: • Review internal credit ratings • Fixed Income investment forum Trust redemptions are met by targeting • Monitor Bloomberg and other • Conference calls with management weaker credits while considering income market news • Default risk assessment levels and par value • Pricing and volume movement • Sector-based quantitative models
Weekly / Bi-weekly Quarterly • Investment research summary report • Sector Outlooks • Watch list report • Rating changes monitored • Continuing disclosure alerts • Analyze new financials report
invesco.com/uit 7 Long-term disciplined investing Fixed income — taxable and tax-exempt
Invesco’s fixed income unit trusts are professionally selected, disciplined long-term fixed income strategies that can be a core component of your fixed income portfolio. They may provide diversification opportunities via varied structures in credit ratings, durations, geographic locations, subcategories and sectors.
Tax-exempt fixed income unit trusts
National municipal portfolios Taxable municipal/Corporate portfolios Trust IMIT Insured Municipals Income Trust IGSC Investment Grade Corporate Trust, 3–7 Year QUAL Quality Municipal Income Trust, 20+ Year IGST Investment Grade Income Trust, 7–13 Year QMLM Quality Municipal Income Trust, 10–20 Year IGLM Investment Grade Income Trust, 10–20 Year IGMT Investment Grade Municipal Trust, 20+ Year IGLT Investment Grade Income Trust, 20+ Year IGIN Investment Grade Municipal Trust, 7–13 Year HIGT Investment Grade Corporate Trust, 5-8 Year IGTT Investment Grade Municipal Trust, 10–20 Year HYCT High Yield Corporate Trust, 4–7 Year TGMT Targeted Maturity Investment Grade Corporate Trust, Series 2021 Snapshot –– Seek current monthly income –– Seek to generate current income –– Seek diversification across various geographies, maturities, –– Seek diversified portfolios of investment grade taxable credit ratings, and municipalities within the US municipals and corporate bonds (except HYCT which seeks –– Intermediate and Limited Maturity. Shorter duration, lower diversified portfolios of below investment grade taxable interest rate risk corporate bonds) Tax Exempt federal and state of residence Income level Bond IMIT A-/A3 or higher IGSC Investment Grade (BBB–/Baa3 or higher) ratings1 QUAL A–/A3 or higher IGST Investment Grade (BBB-/Baa3 or higher) (selection QMLM A–/A3 or higher IGLM Investment Grade (BBB–/Baa3 or higher) criteria) IGMT Investment Grade (BBB–/Baa3 or higher) IGLT Investment Grade (BBB–/Baa3 or higher) IGTT Investment Grade (BBB-/Baa3 or higher) HIGT Investment Grade (BBB–/Baa3 or higher) IGIN Investment Grade (BBB–/Baa3 or higher) HYCT Below investment grade (Caa3/CCC- or higher) TGMT Investment Grade (BBB–/Baa3 or higher) Call protection Approximately 5 years2 Approximately 5 years2 Duration Short-term IGSC 3–7 years TGMT 4–5 years Intermediate IGIN 7–13 years IGST 7–13 years HIGT 5–8 years HYCT 4–7 years Limited IGTT 10–20 years — maturity QMLM 12–18 years IGLM 10–20 years Long-term IMIT 15–40 years QUAL 15–40 years IGLT 20–30 years IGMT 15–40 years Please see each trust prospectus for complete details about the risks associated with each trust.
1 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 standardandpoors.com and select “Understanding Ratings” under Rating Resources on the homepage or Moody’s at moodys.com and select “Rating Methodologies” under Research and Ratings on the homepage. 2 Call protection will vary based on the maturity of the bonds within each individual portfolio. Diversification does not ensure a profit or eliminate the risk of loss. 8 Simulate a laddered fixed income portfolio with Invesco UITs
Simulate a laddered investment portfolio by selecting multiple unit trusts across Bond strategies: ladder different ranges of maturities so that the unit trusts’ underlying bonds mature at Ladder your taxable bonds across all regular intervals. If interest rates rise, proceeds from your maturing bonds (in the four maturities: IGSC, IGST, IGLM, IGLT form of principal distributions from a trust) may potentially be reinvested into (example of laddered investment) a separate Invesco UIT series to take advantage of improved rates. If interest rates fall, your prior laddered holdings may potentially produce more income than could be achieved at then current levels. The result may be a more consistent yield over time.
Why ladder through fixed income UIT portfolios? • Potentially lower the overall duration by blending varying maturities among multiple unit trusts • Potentially lower volatility risk with several unit trusts of varying duration • Diversify unit trust investments by maturity and by issuer • Low minimum investment of one unit in each unit trust
Ladder your fixed income investments with Invesco Unit Trusts In contrast to a fixed income bond mutual fund, holdings in a fixed income unit trust will always be moving closer to its trust maturity date as the trust ages due to the fact that the trust portfolio is static. The chart below shows how investing in Invesco Unit Trusts of different durations can help you simulate a laddered fixed income investment portfolio.
Offerings 5 10 15 20 30 IGLT by maturity (years) IGLM IGMT Yields QUAL IMIT IGTT QMLM HIGT IGST HYCT TGMT IGSC IGIN
Duration is the most commonly used measure of risk in bond investing. Duration incorporates a bond’s yield, coupon, final maturity and call features into one number, expressed in years, that indicates how price-sensitive a bond or portfolio is to changes in interest rates.
invesco.com/uit 9 Invesco Unit Trusts Specialized insights, global resources
An experienced growth business; Invesco Unit Trusts has been developing and delivering enduring investments for nearly 40 years. Our strategies are designed to deliver core, innovative and tactical investments for clients’ most important investment dollars. In doing so, we draw on our firm’s expert resources as a leading global investment firm with more than $917 billion in assets under management.1 The specialized insight of our investment teams combined with the extensive reach of our global firm results in a powerful combination in strategy development that is unique to Invesco in the industry. Invesco Unit Trusts are built with global collaboration, Intentional Investing, and decades of experience. • Collaboration with global experts. At Invesco, great ideas transcend borders and our investment teams have the ability to access expert perspectives from our investment professionals across the globe. • Broad and expansive unit trust lineup. Every investment strategy we offer is carefully constructed and closely monitored by our experts. • Decades of experience. Over the past four decades, our unit trust team has managed investors’ money through many market cycles and industry changes.
Explore High-Conviction Investing with Invesco
1 As of Sept. 30, 2017
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 advisors for a prospectus or download one at invesco.com/uit.
The information in this prospectus is not complete and may be changed. No one may sell Units of the Portfolio until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell Units and is not soliciting an offer to buy Units in any state where the offer or sale is not permitted.
This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions. Invesco unit investment trusts are distributed by the sponsor, Invesco Capital Markets, Inc. and broker dealers including Invesco Distributors, Inc. Both firms are wholly owned, indirect subsidiaries of Invesco Ltd. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under US federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax advisor for information concerning your individual situation. invesco.com/uit U-FIXINC-BRO-1 12/17 US14247