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Invesco Perpetual Income Fund

November 2014 (Content as at 31 October 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.

Guide

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

The FTSE All-Share index generated a negative total return over the month of -0.7%. Year to date, the index remains flat (-0.1%). UK inflation continued to hover at around a 5 year low while the recent fall in oil prices, if sustained, should provide a boost to consumer spending, not least as a result of falling energy bills. Reynolds American saw its share price rise strongly after posting a third quarter profit that beat analysts’ estimates as higher prices offset lower cigarette sale volumes and investment in vapour alternatives. Alkermes, which develops treatments for central nervous system disorders, saw its share price rise by 19% on the back of strong Q3 numbers. Detractors to the fund’s performance included Rolls-Royce which warned that sales would decline this year and could fall again in 2015 as a result of lower demand for defence equipment due to a deteriorating global economic backdrop, client specific order delays, and Russian sanctions.

Fund strategy

The key issues which will continue to overshadow the performance of the equity market remain the interplay between growing investor pessimism on the global economic outlook and the ability of policymakers to create the conditions to reinvigorate growth prospects where necessary. The overall background for revenue growth is likely to remain subdued into 2015 which we believe will give rise to further profit warnings which have been a feature of the recent news-flow in the market. The fund strategy is therefore largely unchanged from the recent past. The fund manager puts a high price on the companies in the market which offer visibility of revenues, profits and cash-flows in this low growth world and which are managed for the sole purpose of delivering shareholder value in the form of a sustainable and growing dividend.

Key facts
Product type ICVC
Launch date 16 June 1979
Fund size £6,494.53m
Historic yield* 3.28%
IMA sector IMA UK All Companies 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
SEDOL ISIN
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

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 '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 0.06% and transfer taxes of 0.04%, 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 0.47% 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.

Schedule 19 SDRT was abolished on 30 March 2014 with the final payment being made in April 2014. We will continue to reflect SDRT as a charge to the fund (if applicable) where this payment occurs within the last financial year ending after 31 March 2014. Thereafter no charge will be shown.

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 0.61% for net inflows or decrease it by 0.40% 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 2014. Figures in these sections are as at 31 March 2014.

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

Top 10 overweights (%)

Fund
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42
Reynolds American 6.42

Top 10 underweights (%)

Fund
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A
HSBC N/A

Top 10 equity holdings (%)

Fund Active Index
AstraZeneca 8.68 6.38 2.30
GlaxoSmithKline 8.19 4.06 4.13
Reynolds American 6.12 6.12 N/A
BT 5.19 4.28 0.91
Roche 5.06 5.06 N/A
Vodafone 5.01 0.04 4.97
British American Tobacco 5 1.68 3.31
BG 4.96 2.19 2.77
Reckitt Benckiser 4.19 2.78 1.41
BAE Systems 4.08 3.51 0.58

 

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
Cash -3.79
£25 - 49.99bn 16.60
£10 - 24.99bn 31.55
£5 - 9.99bn 3.36
£2 - 4.99bn 5.39
£1 - 1.99bn 6.54
£500 - 999m 1.73
£250 - 499m 3.09
£100 - 249m 2.92
£50 - 99m 1.93
£0 - 49m 1.36

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).

Performance figures are shown in sterling on a mid-to-mid basis, inclusive of net reinvested income and net of the ongoing charge and portfolio transaction costs 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, hold or sell.

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