idci matters newsletter - summer 2013 (pdf) - invesco

Plan Sponsor Newsletter Summer 2013

This newsletter is brought to you by

DC Digest

01 Key Developments in the DC Market

Revisiting REITs

02 An Alternative Investment Strategy for Your DC Plan

Strategies for Communicating with Participants

05 The Four Principles of Credible Communication

What’s Up on Capitol Hill?

06 An Update on Proposed Lifetime Income Illustrations on Benefit Statements

Asset Class Score Card

09 The Winners and the Runners-Up

And More…

10 Upcoming Events

11 Compliance Calendar

12 What’s New on the IDCI Website

13 About IDCI

13 About Invesco

14 Index Definitions

The benefits and underutilization of REITs

1 IDCI Matters Newsletter Summer 2013 For Plan Sponsor or Consultant Use Only

At Invesco’s Defined Contribution Institute, our mission is simple: help plan sponsors build better plans through education. In the spirit of this mission, each quarter I would like to provide our readers with important news and developments in the DC marketplace.

This quarter, I want to discuss recent industry surveys that identified a few notable trends among large DC plan sponsors.

Plan menu optionsIn spite of talk over the last few years about reducing the number of DC investment options, in general a good thing, it appears that plan sponsors are willing to add options when they believe it makes sense. According to one major survey of large plan sponsors, 27% of plans increased the number of investment options available in 2012. Of those, 30% added an inflation protection option such as real return, REITs or TIPS. Other popular options added included alternatives (11%) and emerging market equity funds (14%).1

Manager replacementIn 2012, 41% of plan sponsors said they replaced a manager vs. 32% in 2011, and 25% in 2010. Most of the activity took place in large cap equity (65.2%).1 In talking with people around the DC industry, it appears that underperforming managers in Large Cap Growth were the primary catalyst.

A Letter from the IDCI Chairman

DC DigestKey developments in the ever-evolving Defined Contribution market

Fee regulations prompting internal reviewsThe new fee disclosure regulations are prompting DC plan sponsors to review fees and revenue sharing, and in some cases, restructure how they are paid. Another recent survey showed 35% of plan sponsors recently conducted a review of DC plan operations including expenses/revenue sharing, while 62% plan to in 2013. With respect to fee restructuring or “fee-leveling,” 22% of sponsors say they have recently completed this with 26% somewhat or very likely to take action in 2013.3

Fee disclosure is having a profound impact on public DC plans as well. In a recent survey of large public DC plans, 57% said even though not required, they already comply with the new participant disclosure rules for ERISA plans and 33% said they plan to comply in the future. This suggests that public plan sponsors are concerned about the liability and optics associated with not fully disclosing fees to particpants.2

I’d like to hear about the trends and new developments you are seeing in the DC marketplace. Feel free to email me at [email protected].

Regards,Greg Jenkins

According to the Plan Sponsor Council of America, more than 68% of plans offer target date funds and nearly 16% of large plans now offer customized options.4

by Greg Jenkins, CFA senior director and chair, Invesco Defined Contribution Institute

1 Callan 2013 Defined Contribution Trends Survey.2 NAGDCA 2013 Survey of DC Plans.3 Aon Hewitt 2013 Hot Topics in Retirement.4 Plan Sponsor Council of America 55th Annual Survey, December 2012.


While REITs have a healthy adoption rate in DC plans— the funds have a very small portion of total assets

Fund TypePercent of Plans

Offering Fund TypesPercent Distribution

of Fund AssetsBalanced Stock/Bond Fund 54.00 5.80

Bond-Actively Managed, Domestic 77.00 4.80

Bond – Indexed, Domestic 58.30 3.30

Cash Equivalents (CD/Money Markets) 38.80 3.70

Company stock 51.80 22.00

Equity-Actively Managed, Domestic 84.90 15.90

Equity-Actively Managed, International 79.90 4.40

Equity-Indexed, Domestic 89.90 11.60

Equity-Indexed, International 47.50 1.60

Real Estate Fund 22.30 0.20

Stable Value Fund 79.90 15.40

Target Retirement Date/Lifecycle Funds 74.80 8.30

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.

Investment Corner

Revisiting REITsAn Alternative Investment Strategy for Your DC Plan

Asset Class Underutilization As the seismic shift continues from traditional Defined Benefit (DB) to Defined Contribution plans (DC) in the public and private sector, plan sponsors must provide participants with tools for asset allocation, diversification, and the effective management of risk. The inclusion of real estate investments, specifically Real Estate Investment Trusts (REITs), may provide plans with an important diversification tool. However, while many plans have REITs as part of their investment lineup, the actual adoption among participants may surprise you.

Missed opportunity? Along with the explosive growth of target date funds has come an increased level of structural sophistication. Plan sponsors are customizing these funds in an effort to offer participants more diversification and better outcomes. Many of these “next generation” target date funds hold 3% to 10% allocation to REITs,1 but REITs are absent in many DC plans as either

a core option or are underutilized.Consider the above data from the Plan Sponsor Council of America’s Annual Survey for large plans with more than 5,000 participants. While more than 22% of plans offer Real Estate Fund options, only .02% of plan assets reside in these funds.

REIT structure and listed real estate securities REITs can provide an efficient, liquid, and relatively inexpensive way to diversify a portfolio. Prior to the advent of REITs, the only opportunity for exposure to real estate was limited to direct ownership of commercial real estate. REITs provide access to the commercial real estate market without the high barriers to entry present in the direct ownership of real assets.

REITs – a US-specific structure – are a subset of the overall real estate investment universe. The underlying assets of different US REIT types include regional malls, shopping centers, office buildings, warehouses, health care facilities, apartments, manufactured housing,

While REIT structures around the world vary significantly, the primary distinction between a REIT and other entities that own real estate is, REITs are exempt from corporate income taxes.

by Darin Turner, real estate portfolio manager


Investment Corner (continued)

Over the last 20 years, US and Global real estate annual returns were 10.5% and 10.05% respectively, exceeding other equity and fixed income categories. Average Annual Total Returns as of March 31, 2013

• Global Real Estate (FTSE EPRA/NAREIT Developed Index) • US Real Estate (FTSE NAREIT All Equity REITs Index) • Global Equities (MSCI World Index) • US Equities (S&P 500 Index) • Global Bonds (Baclays Global Aggregate Index) • US Bonds (Barclays US Corp and Gov Index)

5

10

15

20

25

20 Year10 Year5 Year3 Year1 Year%

21.0

9

14.2

4

3.49

12.9

6

10.0

5

17.1

3

17.6

8

7.10

12.5

8

10.5

0

12.5

3

9.08

2.83 9.

46

7.34

13.9

6

12.6

7

5.81

8.53

8.53

1.25

4.52

3.66

5.47 5.99

4.73 6.

17

5.49

5.07 6.

19

Source: Lipper Inc., Bloomberg L.P. Past performance cannot guarantee comparable future results. Results assume reinvestment of dividends unless otherwise noted. An investment cannot be made directly in an index. Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. In general, stock and other equity securities values fluctuate in response to activities specific to the company as well as general market, economic and political conditions.

hotels, timber assets, infrastructure assets, and self storage facilities.

REITs may be publicly traded or private non-traded corporate entities. In order to qualify as a REIT, a company must distribute at least 90% of its taxable income as dividends each year. While REIT structures around the world vary significantly, the primary distinction between a REIT and other corporate entities that own real estate, is REITs are exempt from corporate income taxes (subject to country-specific tax rules).

Potential portfolio benefits1. Competitive total returns. Over the short and long term, REITs have offered competitive total returns versus other assets classes. This is due, in part, to the characteristics that REITs share with both equity and debt. Like a bond, long-term contractual leases generally protect investors from declines in net income during recessions. Second, the capital value of a REIT is subject to similar factors which impact equities, such as expectations for future growth and its relationship to replacement cost.

2. Income generation. Since REITs are required by law to pay out 90%

of their taxable income as dividends, REITs provide a steady flow of income to investors. The income return of REITs – as measured by the FTSE NAREIT All Equity REITs Index – accounted for approximately 60% of the total returns from 1972 through 2012. REITs have also shown a steady growth of dividends over time.2 As REITs are required to distribute majority of their income, growth in cash flows for REITs translates to growth in the dividend payout to investors. From 1994 to 2012, REITs have averaged 7% cash flow growth per annum. This has translated to 6% annual dividend growth.3

3. Diversification. As diversification is crucial to minimizing overall risk, investors should seek to add asset classes with the lowest correlation. As shown in the exhibit below, the US and global listed real estate markets have a fairly low correlation to both US and global equities. The long-term diversification benefit is even more apparent relative to bonds.

4. Inflation protection. Short-term protection can be gained since some companies have lease structures of their underlying assets tied to the Consumer Price Index (CPI). Increases in CPI translate into increases in lease

While more than 22% of plans offer Real Estate Fund options, only .02% of plan assets reside in these funds.4


payments and, ultimately, cash flow. Shorter lease structures also allow for rent resets as prices rise, as the case with apartment companies. Over the long-term, certain listed real estate companies can also provide inflation potential for protection by implementing upward-only rent/lease reviews, providing additional potential for downside protection. Additionally, as inflation rises, so does the cost to construct new buildings. As reproduction costs increase (e.g. cost of concrete, steel, labor), rents tied to leases must also increase for it to be economical for developers to deliver new buildings.

Correlation of Returns with Other Sectors

Market Sector Index FTSE NAREITAll Equity REITs Index

FTSE EPRA/NAREITDeveloped Index

Global Stocks 0.55 0.79US Stocks 0.56 0.67US Small Cap Stocks 0.65 0.66US Bonds 0.14 0.18Global Bonds 0.25 0.38

Available data is from Jan. 31, 1990 to Mar. 31, 2013.Note: Global stocks represented by MSCI World Index; US stocks represented by S&P 500; Small cap stocks represented by Russell 2000; US bonds represented by Barclays US Aggregate Bond; Global bonds represented by Barclays Global Aggregate Bond.Source: StlyeADVISOR. An investment cannot be made directly in an index. For illustrative purposes only. Diversification does not guarantee a profit or eliminate the risk of loss. Correlation indicated the degree to which two investments have historically moved in the same direction and magnitude.

Bottom LineAs fiduciaries, plan sponsors are charged with offering diverse investment strategies for participants to choose from and continually educating them on the importance of diversification. This may include looking beyond traditional equity and fixed income investments to non-traditional, non-correlated options. Plan sponsors should consider using REITs as a stand-alone core investment option or as a component within a target date or target risk portfolio. Through a combination of compelling benefits, REITs offer many attractive investment attributes and may be a sensible way to help participants reach their financial goals.

From 1994 to 2012, REITs have averaged 7% cash flow growth per annum. This has translated to 6% annual dividend growth.3

1. Source: Morningstar Direct2. Source: FTSE. As of December 20123. Source: Bloomberg & FTSE. As of December 2012.4. 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.

Investments in real estate related instruments may be affected by economic, legal, cultural, environmental or technological factors that affect property values, rents or occupancies of real estate related to the Fund’s holdings. Real estate companies, including REITs or similar structures, tend to be small and mid cap companies, and their shares may be more volatile and less liquid. The value of investments in real estate related companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage and financial covenants related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related company defaults, the Fund may own real estate directly, which involves the following additional risks: environmental liabilities, difficulty in valuing and selling the real estate, and economic or regulatory changes. Diversification does not guarantee a profit or eliminate a loss. This information is not intended as tax advice. Investors should consult a tax advisor.


Communication Principle 1Positive: Don’t Sell Fear or RiskWhich is the best way to describe the level of contributions taken from your salary? Voluntary contribution level 57% Automatic contribution level 37% Default contribution level 6%

Communication Principle 2Plausible: Sell Credible BenefitsWhen it comes to retirement, my top priority is:Comfortable retirement 57% Maintain current lifestyle 32% Dream retirement 11%

Strategies for Communicating with Participants

The Four Principles of Credible Communication

by David Saylor, campaign consultant, Invesco Consulting

Which words resonate with participants today? What do they understand? What do they believe? If the language doesn’t resonate, the plan doesn’t resonate.

Invesco Consulting joined forces with the word specialists and political consulting firm, Maslansky Luntz + Partners in an effort to help employers communicate more effectively to their 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.

Communication Principle 3Plain English: Avoid JargonWhich is most appealing? Automatic monthly investments

51%

Regular interval investing 30% Dollar cost averaging 19%

Communication Principle 4Personalize: Personalize the BenefitsHow likely are you to put your entire portfolio into a:Comprehensive diversification strategy that maximizes potential for growth while adjusting for the appropriate level of risk as your needs change over time

63% (What it Does)

Target Date Fund 24% (What it Is)

The language for participants In addition to the “words to use” and “words to lose” when communicating with employees and participants, I-C has found four core communication principles from the research.

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.

Based on our firm’s research with Maslansky Luntz + Partners 2007-2012. Invesco Distributors, Inc. is not affiliated with Maslansky Luntz + Partners.


The DOL believes that illustrating an account balance as a lifetime income stream will help workers in DC plans better prepare for retirement.

On May 7, 2013, the Department of Labor (DOL) released an advance notice of proposed rulemaking (ANPRM) that offers guidance and requests feedback on potential regulations that would mandate disclosure of lifetime benefit projections on defined contribution (DC) plan participant benefit statements. Responses to the ANPRM are due by July 8, 2013.

The amounts projected on the illustrations would be based on both:• The participant’s current account

balance.• A projected balance that factors

in both earnings and contributions.

The DOL believes that illustrating an account balance as a lifetime income stream will help workers in DC plans, such as 401(k)s or 403(b)s, to better prepare for retirement.

Strong response to first initiative In February 2010, the DOL and the Treasury Department (Treasury) published a Request for Information (RFI) on lifetime income options to establish whether they could enhance retirement security for participants by helping them access and use lifetime income arrangements. The RFI drew more than 700 comments. In September 2010, the DOL and Treasury held joint hearings on lifetime income options to consider several specific issues.

Proposed DOL changes to benefit statementsThe ANPRM sets forth language and concepts the DOL is considering as part of future proposed regulations governing quarterly benefit statements, including:• A lifetime income stream illustration

based on the current account balance. The illustration would assume the participant had reached the plan’s normal retirement age (NRA) as of the date of the statement, even if he is much younger.

• A projected future balance at NRA. A participant’s current account balance would be projected to NRA, based on assumed future contributions and investment returns.

• Lifetime income stream based on projected future balance. The projected account balance would be converted to an estimated lifetime income stream of payments — all expressed in current dollars — assuming retirement at NRA. If the participant has a spouse, both lifetime income streams — one linked to the current account balance and one to the projected account balance — would be based on the joint lives of the participant and spouse.

• Explanation of assumptions and calculations. Benefit statements would include:

— An understandable explanation of assumptions underlying the lifetime income stream illustrations.

— A warning that projections and lifetime income stream illustrations are estimates only and not guarantees of future benefits.

What’s Up on Capitol Hill?

Giving Participants the Big Picture Lifetime Income Illustrations on Benefit Statements

by Jon Vogler, senior analyst, retirement research


What’s Up on Capitol Hill? (continued)

Projection and conversion safe harbors The ANPRM requires that plan administrators use only “reasonable assumptions taking into account generally accepted investment theories” for projecting an account balance to a participant’s retirement age and for converting an account balance (current or projected) into a lifetime income stream. The ANPRM does, however, provide two safe harbors under which certain assumptions would be deemed reasonable.

When projecting account balances under the projection safe harbor, plan administrators could reasonably assume:• Contributions continue to NRA at

the current annual dollar amount, increased at a rate of 3% per year.

• Investment returns are 7% per year (nominal).

• A discount rate of 3% per year to show the projected account balance in today’s dollars.

When converting current and projected account balances into lifetime income streams under the conversion safe harbor, plan administrators could reasonably assume: • A rate of interest equal to the 10-year

constant maturity Treasury securities rate.

• Mortality as reflected in the applicable mortality table under Section 417(e)(3) of the Internal Revenue Code.

• If the participant is married, his spouse is the same age as the participant.

• Payments commence immediately, and the participant is NRA, even if he is younger.

Sample calculation and online calculatorAppendix A of the ANPRM includes a sample calculation of a lifetime income illustration under the regulatory framework. The DOL has also created an online calculator in conjunction with the ANPRM that computes both a projected balance and lifetime income streams. The calculator is located at dol.gov/ebsa/regs/lifetimeincomecalculator.html.

Hopefully, the regulation will provide for more flexibility in the calculation of projected account balances and the presentation of lifetime income streams to permit a variety of reasonable approaches.


What’s Up on Capitol Hill? (continued)

Conclusions and caveats Four thoughts on the ANPRM process, product and potential:

1. The ANPRM feedback requested by the DOL implies a willingness to listen and a degree of flexibility in how the future regulation will be shaped. It’s likely, though, that the projections and lifetime income illustrations will remain mandatory rather than voluntary, as requested by some earlier commentators.

2. Hopefully, the regulation will provide for more flexibility in the calculation of projected account balances and the presentation of lifetime income streams to permit a variety of reasonable approaches and to accommodate firms that already provide similar information on participant statements or elsewhere.

3. Simple, understandable language is critical for:• Explaining assumptions used in

the calculations, with clarification emphasizing that assumptions are essentially “what ifs.”

• Clearly expressing — without a surfeit of legalese — that the amounts shown are simple estimates based on the assumptions and not a guarantee of future benefits. Striking a balance between “plain English” and sufficient cautionary language will be challenging.

Providing illustrations of lifetime income based on current and projected account balances is a worthy idea — it should help give participants a better understanding of their progress in meeting their retirement savings goals.

4. Providing illustrations of lifetime income based on current and projected account balances is a worthy idea — it should help give participants a better understanding of their progress in meeting their retirement savings goals. But the concept raises an intriguing behavioral finance question. Will participants with low or moderate projected monthly income streams actually be:• Encouraged to save because they

realize they will need more to live on in the future?

• Discouraged from saving because seeing how little monthly income their accumulated savings will provide makes saving seem a hopeless cause?

Here are results from a study1 cited in the ANPRM that addresses this point: • Fully 60% of respondents said they

would “start saving more immediately” if an illustration showed that the lifetime income generated by their retirement plan accounts would not be enough to meet their retirement needs.

• Another 32% said they would continue to monitor how their savings affected the illustration and would consider saving more later.

• Only 6% said they would continue saving the same amount.

• Less than 1% said they would save less as a result of seeing the illustration.

Best case scenario, this study accurately reflects reactions of the wider plan participant population when they receive the lifetime income illustrations proposed by the ANPRM. 60% of survey respondents said they would “start saving more immediately” if an illustration showed that the lifetime income generated by their retirement plan accounts would not be enough to meet their retirement needs.

1 Greenwald & Associates, ACLI Retirement Choices Study, April 2010

09 IDCI Matters Newsletter Spring 2013 For Plan Sponsor or Consultant Use Only

Source: Lipper, Inc. Data from Jan. 1, 2013, through June 30, 2013. 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

-12 -8 -4 40 8 12 16

13.82

4.10

11.80

15.90

13.91

15.45

15.86

8.43

-9.57

-7.39

-2.04

-2.44

1.42

-6.48

-7.15

-0.95

5.79

-10.47

Year-to-date Performances as of June 30, 2013

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

International — 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

PLANSPONSOR National Conference

June 4-6, 2013 | Chicago Featured Speaker: Kevin Petrovcik Speaking on: Thinking Outside the Box - Alternative Investment Strategies in DC Plans

SPARK National Conference

June 16-18 | Washington DCFeatured Speaker: Scott West Speaking on: The Language of Fees: Communicating Fees to Participants

Webinars

Hosted by aiCIO - Moving to Main Street: Alternatives in DC

July 16, 2013 | 12pm ETFeatured Speakers: Greg Jenkins, CFA, senior director,Institutional Markets and board chair of IDCI and Kevin Petrovcik, senior client portfolio manager, Invesco Fixed Income

Visit invesco.com/dc for more information.

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.


July 1

July 29

July 31

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

• Deadline for processing corrective distributions for failed ADP/ACP test from plan with EACA without 10% excise tax Note: This deadline is usually June 30, which falls on a Sunday in 2013

• Summary of Material Modification due to participants (due no later than 210 days after the end of the plan year in which the plan change is adopted) Note: The deadline is Apr. 1 if filing electronically

• Deadline for filing Form 5330 (Return of Excise Taxes Related to Employee Benefit Plans) used to report and pay excise taxes on prohibited transactions and excess 401(k) plan contributions that occurred in prior year

• Deadline for filing Form 5500 without extension (due seven months after year-end)• Deadline for filing Form 5558 to request automatic extension of time to file

Form 5500 (2 1/2 months)


Webcast Replays

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

Risk Parity - Calling All Skeptics

Retirement industry experts address common skepticisms of using risk parity strategies in DC plans.

Visit the Retirement Insights page for more information.

Risk Parity - Calling All Skeptics

Moderated by Kip McDaniel, aiCIO editor-in-chief, featuring guest panelists Dave Gluch, CFA, global asset allocation client portfolio manager, and Greg Jenkins, CFA, Invesco’s senior director of consultant relations.

Realizing Value in Fixed Income

Bloomberg News anchor Tom Keene hosted a live discussion with fixed income panelists Rob Waldner, Joe Portera and Tom Ewald about factors that will help define success in fixed income investing in the next 12 to 18 months.

Visit the Educational Webcasts page for more information.

Retirement Roundtable


Invesco

About Us

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

Manage investments. Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk.

Provide choices. We manage investment strategies across all major asset classes and deliver them through a variety of vehicles to meet your needs.1

Connect with our clients. We’re committed to giving you the expert insights and support you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisors.

Explore Intentional Investing with Invesco®

At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. It’s a philosophy we call Intentional Investing®, and it guides the way we:

IDCI Board Members

Chair Greg Jenkins, CFASenior Director, Consultant Relations

Alternative VehiclesChristine ThompsonSenior Vice President, Invesco National Trust Company

Betsy WarrickVice President, Invesco National Trust Company

Asset Allocation FrameworkDave Gluch, CFAClient Portfolio Manager, Global Asset Allocation

Scott Wolle, CFACIO, Global Asset Allocation

Legislative & RegulatoryJohn VoglerSenior Analyst, Retirement Research

Participant CommunicationsGary DeMossManaging Director, Invesco Consulting

Dave SaylorExecutive Director, Invesco Consulting

Plan Sponsor ExperienceRuth Hughes-GudenManaging Director, Institutional Markets

1 Not all investors are eligible to invest in each investment vehicle. Invesco Advisers, Inc. is an investment advisor; it provides investment advisory services and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco’s retail products. Both entities are indirect, wholly owned subsidiaries of Invesco Ltd.


All data as of Dec. 31, 2012, 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 Index is an unmanaged index considered representative of small-cap European stocks.

MSCI Japan Index is 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.

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. 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.

Note: For more information on any of the topics discussed please contact your Invesco Representative.

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idci matters newsletter - summer 2013 (pdf) - invesco

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