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Invesco Perpetual Income Fund

March 2014 (Content as at 28 February 2014)

Objective

The Invesco Perpetual Income Fund aims to achieve a reasonable level of income, together with capital growth. The fund intends to invest primarily in UK companies, with the balance invested internationally. In pursuing this objective, the fund managers may include investments that they consider appropriate which include transferable securities, unlisted securities, money market instruments, warrants, collective investment schemes, deposits and other permitted investments and transactions as detailed in Appendix 2 of the most recent Prospectus.

Dilution adjustment explained

13 November 2013 |

What we mean by a dilution adjustment and what it means for you.

Find out more about dilution adjustments

Market commentary

Despite the modest fall in the FTSE All-Share index in March, the trend over the last year to date remains positive, albeit with a pattern where most ‘up’ months have been followed by a ‘down’ month. UK economic news, however, did not echo this indecisive pattern as the trend of an improving economy has continued. CPI inflation fell in February to 1.7% versus 1.9% in January and the latest unemployment rate was recorded at 7.2% which was at the lower end for recent months. Rolls Royce share price rose, helped by the news it was to complete an acquisition by buying the remaining 50% of Rolls Royce Power Systems from Daimler. Reynolds American also contributed positively to the fund, helped by the continued commentary that it might be part of the consolidation of the industry. Capita share price fell over the month despite being selected as a preferred bidder by the Ministry of Defence to be the strategic business partner for the Defence Infrastructure Organisation.

Fund strategy

The UK stock market’s recent rise has been accompanied by an improving outlook for economic growth in the UK and US. However, the uncertainty about the strength of economic growth in emerging markets, especially China, is not supportive, in our view, for the backdrop for global growth. With valuations now standing at a level anticipating upgrades to forecasts of earnings, we believe that the performance of the UK equity market of the past year is unlikely to be repeated over the next 12 months. However, we believe there are areas within the UK equity market that continue to look attractive. The fund is positioned with a focus on companies which we believe can not only grow revenues and profits in a low growth world, but are also strengthened by management teams that are focused on delivering sustainable, long-term, dividend growth.

Key facts
Product type ICVC
Launch date 16 June 1979
Fund size £8,691.28m
Historic yield* 3.31%
IMA sector IMA UK Equity Income Sector
Available in an ISA? Yes

Fund manager

Mark Barnett

Title: Head of UK Equities

Team: Invesco Perpetual - UK Equities

Fund details
Fund currency GBP
Trading frequency Daily
Accounting period ends 31 March
30 September
Share types
ISIN SEDOL
Accumulation 3303126 GB0033031260
Income 3305382 GB0033053827
Accumulation (No Trail) B1W7HK4 GB00B1W7HK49
Income (No Trail) B1W7HL5 GB00B1W7HL55
Y (Acc) BJ04HW5 GB00BJ04HW53
Y (Inc) BJ04HX6 GB00BJ04HX60
Z (Acc) B8N46V7 GB00B8N46V79
Z (Inc) B8N46W8 GB00B8N46W86
Investment levels
Minimum lump sum £500
Minimum additional lump sum £100
Minimum monthly amount £20

One-off charges taken before you invest

Entry charge

The entry charge for the fund is up to 5%. This is the maximum that might be taken out of your money before it is invested. For example, if you invest £1,000, an entry charge of 5% means £950 of your money will be used to buy shares in the fund.

The entry charge covers the costs of setting up your investment.

If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. For more details see "What share classes are available for your ICVC funds?".

Exit charge

There is no exit charge for the fund.

Charges taken from the fund over a year

Ongoing charge

The ongoing charge figure is based on a fixed, all-inclusive fee and excludes portfolio transaction costs. The ongoing charge for each share class can be found in the relevant Key Investor Information Document available under 'Related features and literature'. Investors will be provided with advance notice if any increases to this figure occur.

The ongoing charge covers all aspects of operating the fund during the year, including fees paid for investment management, administration and the independent oversight functions.

If you invest through a third party (such as a financial adviser), but do not receive financial advice on your investment, this charge may include payments to that third party. Once invested, your contract note or acknowledgement letter will show the amount of any payment in cash terms. For more details see "What share classes are available for your ICVC funds?".

Charges taken from the fund under specific conditions

Performance fee

No performance fee is charged.

Portfolio transaction costs1

On average, over the last three financial years, the fund incurred broker commissions of 0.05% and transfer taxes of 0.05%, as a necessary part of buying and selling the fund's underlying investments in order to achieve the investment objective. A proportion of these costs is recovered directly from investors joining and leaving the fund.

When the fund buys or sells shares, broker commissions and transfer taxes are paid by the fund on each transaction. In addition, there is a dealing spread between the buying and selling prices of the underlying investments. Unlike shares, other types of investments (such as bonds, money market instruments and derivatives) have no separately identifiable transaction costs; these costs form part of the dealing spread. Dealing spreads vary considerably depending on the transaction value and market sentiment. The estimated average dealing spread for the fund is 0.30% of the transaction value.

Comparing portfolio transaction costs for a range of funds may give a false impression of the relative costs of investing in them, for the following reasons:

  • Transaction costs do not necessarily reduce returns. The net impact of dealing is the combination of the effectiveness of the manager's investment decisions in improving returns and the associate costs of investment
  • Historic transaction costs are not an effective indicator of the future impact on performance
  • Transaction costs for buying and selling investments due to other investors joining or leaving the fund may be recovered from those investors. For further information see Pricing policy note below
  • Transaction costs vary from country to country
  • Transaction costs vary depending on the types of investment in which a fund invests
  • As the manager's investment decisions are not predictable, transaction costs are also not predictable

Stamp duty reserve tax (SDRT)1

SDRT is payable by funds which invest wholly or in part in UK equities.

During the last financial year the fund incurred stamp duty reserve tax of 0.04% as a result of investors joining and leaving the fund.

Pricing policy note1

We operate a single pricing methodology for this fund and reserve the right to adjust the fund's price to protect your investment from the costs of buying and selling investments that result from other investors joining or leaving the fund. The amount of any such adjustment is calculated by reference to the estimated costs of dealing in the underlying investments, including any dealing spreads, broker commissions and transfer taxes.

Typical adjustments to the fund's price are to increase it by 0.67% for net inflows or decrease it by 0.29% for net outflows.

We usually adjust the price to the maximum extent possible when the value of net contributions or withdrawals is significant, which helps to protect your investment from the costs of the resultant transactions.

1The fund's financial year end is 31 March 2013. Figures in these sections are as at 31 March 2013.

Top 10 holdings (%)

Fund
AstraZeneca 8.68
GlaxoSmithKline 8.19
Reynolds American 6.12
BT 5.19
Roche 5.06
Vodafone 5.01
British American Tobacco 5
BG 4.96
Reckitt Benckiser 4.19
BAE Systems 4.08

 

Breakdown by country of investment

Chart | Table

Region Fund
United Kingdom 82.63
Switzerland 9.85
United States 8.97
Ireland 1.10
France 0.84
Luxembourg 0.22
Finland 0.18
Cash -3.79

Breakdown by market cap

Chart | Table

Market Fund
£25 - 49.99bn 16.60

Breakdown by sector

Chart | Table

Sector Fund
Health Care 32.25
Consumer Goods 24.21
Industrials 14.51
Telecommunications 10.48
Financials 7.46
Utilities 7.40
Oil & Gas 5.07
Consumer Services 2.02
Basic Materials 0.19
Unit/Investment Trust/Other 0.18
Technology N/A
Cash -3.79

Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested. Past performance is not a guide to future returns.

The fund may use derivatives (complex instruments) in an attempt to reduce the overall risk of its investments, reduce the costs of investing or generate additional capital or income, although this may not be achieved. The use of such complex instruments may result in greater fluctuations of the value of the fund. The Manager, however, will ensure that the use of derivatives within the fund does not materially alter the overall risk profile of the fund.

Important information

Yield and performance figures are based on the income share class.

All fund portfolio figures are as at date shown (source: Invesco Perpetual). The Industry Classification Benchmark is a joint product of FTSE International Limited and Dow Jones & Company, Inc. and has been licensed for use in our industry sector breakdown.

Performance figures are shown in sterling on a mid-to-mid basis, inclusive of net reinvested income and net of the ongoing charge charge and all other fund expenses to date shown. The figures do not reflect the entry charge paid by individual investors (source: Lipper).

The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market price of the fund, as at the date shown. It does not include any entry charge and investors may be subject to tax on their distributions. The fund’s ongoing charge is charged to capital. This has the effect of increasing the distributions for the year by the amount of the ongoing charge and constraining the fund’s capital performance to an equivalent extent.

Where Invesco Perpetual has expressed views and opinions, these may change. Where securities are mentioned they do not necessarily represent a specific portfolio holding and do not constitute a recommendation to purchase or sell.

For more information on our funds, please refer to the most up to date relevant fund and share class-specific Key Investor Information Documents, the Supplementary Information Document, the latest Annual or Interim Short Reports and the latest Prospectus. This information is available using the contact details shown.