Invesco Advisers Stops Managed Distribution for Key Trusts
Invesco Advisers Inc. Terminates Managed Distribution Plans
Invesco Advisers, Inc., a key subsidiary of Invesco Ltd. (NYSE: IVZ), has made a significant announcement regarding the Managed Distribution Plans associated with two of its funds: Invesco High Income Trust II (NYSE: VLT) and Invesco Senior Income Trust (NYSE: VVR). Effective immediately, the Board of Trustees for both funds has decided to terminate these plans.
The Managed Distribution Plans were initially designed to provide consistent monthly cash payments to shareholders, regardless of the funds' actual income or capital gains earned. Specifically, the VLT Plan had established a fixed monthly distribution rate of 8.5% based on the fund's closing market price as of the implementation date. Conversely, the VVR Plan offered a monthly distribution amount of $0.0380 per share.
The termination of these plans was not a decision taken lightly. After thorough consideration of various factors, the Board at Invesco came to the conclusion that discontinuing these plans was in the best interest of the funds. Shareholders should be aware that this change may impact the market price of both funds' common shares in the coming periods.
Impact on Dividend Distributions
With the cessation of the Managed Distribution Plans, future distributions for both Invesco High Income Trust II and Invesco Senior Income Trust will now align with Invesco’s policies regarding its closed-end funds. Shareholders will be notified about future dividend declarations in accordance with the standard practices of Invesco, which can be expected to reflect the performance of the funds.
While there may be fluctuations in the amounts distributed, it's important to note that past dividends do not guarantee future payments. It’s a reminder for investors to stay informed about the latest insights regarding their investments.
Tax Implications and Reporting on Distributions
For federal income tax purposes, the Form 1099-DIV will provide comprehensive reporting of distributions each calendar year. Each fund’s annual report will detail the tax characteristics related to the distributions made throughout the fiscal year, assisting shareholders in their financial planning.
At the end of the fiscal year, Invesco will determine the source and tax attributes for all distributions in 2025, ensuring attendees are informed of any relevant changes that might affect their tax obligations.
What is the Section 19 Notice?
In adherence to Section 19 of the Investment Company Act of 1940, both funds will issue a Section 19 Notice to their shareholders on record when a dividend payment does not come from net investment income. This notice serves strictly as an informational tool rather than for tax reporting.
Variability in Dividend Payments
The volume of dividends dispensed by both funds can fluctuate, underscoring the need for investors to stay vigilant regarding their investment landscape. Understanding that previous dividend amounts are not indicative of future payouts can help set more realistic expectations.
The Nature of Investment Risks
Investing inherently carries risks, and stakeholders should be prepared for potential losses associated with investments in either fund. It's crucial to embrace a well-rounded understanding of these funds and their operations before making investment decisions.
About Invesco Ltd.
Invesco Ltd. is recognized globally as an independent investment management firm, dedicated to crafting distinct investment experiences that empower people. Its diverse investment teams focus on delivering a wide array of investment capabilities, whether they be active, passive, or alternative. By the end of the previous fiscal year, Invesco managed an impressive $1.85 trillion in assets, reflective of its global outreach, with a presence in more than 20 nations.
Invesco Distributors’ Role
Invesco Distributors, Inc. acts as the U.S. distributor for Invesco Ltd.’s retail products, while Invesco Advisers, Inc. functions as an investment adviser without engaging in the sale of securities. All entities mentioned are wholly owned subsidiaries of Invesco Ltd.
Frequently Asked Questions
What are the Managed Distribution Plans?
These plans were established to provide shareholders with consistent cash payments, regardless of the funds’ investment income.
Who manages Invesco High Income Trust II and Invesco Senior Income Trust?
Both trusts are managed by Invesco Ltd., through its subsidiary Invesco Advisers, Inc.
How often are dividends declared for these funds?
Dividends were typically declared monthly under the previous Managed Distribution Plans.
What does the termination mean for shareholders?
The termination implies that shareholders will now receive distributions based on the funds’ actual performance rather than guaranteed fixed amounts.
Where can I find more details about Invesco funds?
Detailed information can be accessed through Invesco's official website, where updates and reports will be regularly provided.
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