THREADNEEDLE MANAGED INCOME FUND

Transcription

1 UNAUDITED INTERIM REPORT AND FINANCIAL STATEMENTS THREADNEEDLE MANAGED INCOME FUND AUGUST 2015 THREADNEEDLE MANAGED INCOME FUND COLUMBIATHREADNEEDLE.COM

2 Contents Introduction... 2 Manager s Report*... 3 Financial Statements Statement of Total Return... 4 Statement of Change in Net Assets Attributable to Unitholders... 4 Balance Sheet... 4 Distribution Table... 4 Notes to the Financial Statements... 5 Portfolio Statement*... 6 Comparative Tables*... 7 Ongoing Charges Figure Summary*... 7 Risk and Reward Profiles* Units Issued and Redeemed Summary*... 8 Total Purchases and Sales*... 8 Further Information*... 9 Directory* Important Information* *Collectively these comprise the Manager s Report 1

3 Introduction The Manager, Threadneedle Investment Services Limited, has pleasure in presenting the Interim Report and Financial Statements for the Threadneedle Managed Income Fund for the six months to 25 August DIRECTORS STATEMENT We hereby certify the Interim Report and Financial Statements on behalf of the directors of Threadneedle Investment Services Limited. We hope that you find the report informative. Should you require any further information regarding any aspect of your investment, or about other Threadneedle products, we would be pleased to help. Alternatively, you may find it helpful to visit columbiathreadneedle.com for further information about Threadneedle. Thank you for your continued support. D Jordison Director 25 September 2015 T N Gillbanks Director 2

4 Manager s Report Investment Objective and Policy To provide a growing income with capital growth prospects from investment in regulated collective investment schemes operated, managed or advised by Threadneedle Investment Services Limited (or any company within the Group of which it is a member). slowdown, China injected extra liquidity into its banking systems, which helped bolster its stock markets. Concerns over the shadow-banking sector abated as the growth rate slowed, while a solid export performance helped mitigate the drag on growth from slowing investment spending, particularly in the real-estate sector. The Trust may invest internationally and will invest primarily in collective investment schemes that invest in equities, fixed interest securities, cash or near cash. The Trust may also invest in collective investment schemes that do not restrict their use of derivatives to efficient portfolio management up to a maximum amount of no more than 20% of the value of the Scheme Property. Further the Trust may also invest directly in cash, near cash and/or money market instruments. Performance Over the six months to 25 August 2015, the offer price of Class A units for the Threadneedle Managed Income Fund has fallen from 79.92p to 73.95p. Over the same period, the offer price of Class B units has fallen from 79.18p to 73.30p and the offer price of Class Z units has fallen from p to p. Looking at performance within its peer group, the total return on the trust* for the 6 month period ending 31 August 2015, including net reinvested income, is -4.52% as compared to a median return of -4.24% over the same period. (For information the FTSE All-Share Total Return Index returned -6.18% over the same period.) In view of the nature of the trust and its investment remit, there is no directly comparable market index. The requirement to maintain a good level of income for investors means that a significant proportion of the portfolio continues to be held in funds with exposure to bonds. *Refers to the Retail Class A units Fund Manager s Report It was a challenging six months for the world s financial markets during the period under review. Investors have continued to focus on the likely timing of the Federal Reserve s decision to raise US interest rates, although earlier speculation that the first move would come in June proved unfounded. In July, the governor of the Bank of England indicated that interest rates could begin to rise at the turn of this year. He also outlined that rates are expected to increase slowly to around 2.5% within the next three years, which is around half of the historical average. In the eurozone, the win by anti-austerity party Syriza in the January general election meant that Greek debt negotiations increasingly took centre stage. The country s creditors grew frustrated by the failure to reach an agreement, and in June global financial markets reacted negatively to the growing uncertainty. On 30 June, Greece became the first developed nation to default on its debt repayments to the International Monetary Fund. Economic news in the UK was dominated by the run-up to the general election and the surprisingly decisive victory of the Conservative Party. However, for all the uncertainty in Europe, economic markers in the UK were broadly positive; unemployment continued to fall, with a record number of people in work. Growth in the UK economy accelerated in the second quarter, with GDP rising by 0.7%. This was stronger than expected and compared with a figure of 0.4% for the previous quarter. Growth in the services and production sectors was 0.7% and 1.0%, respectively, although construction output was flat. The Threadneedle Managed Income Fund provides investors with exposure to a carefully selected portfolio of equity and bond funds. There is an overall UK bias and a tilt towards equities (circa 80% of the fund). During the latter part of the reporting period, the manager increased exposure to UK equities by increasing the position in the Threadneedle UK Equity Alpha Income Fund and the Threadneedle UK Equity Income Fund. This activity was partly funded by taking profits elsewhere in the portfolio, including UK gilts. The manager also realised gains on the European equity portion of the portfolio, reducing the exposure to the Threadneedle Pan European Equity Dividend Fund. The current economic backdrop in the UK seems to be Goldilocks like neither too hot nor too cold to cause much of a worry for domesticallyexposed companies for the moment. Consumer confidence is increasing and unemployment keeps falling steadily, which is finally leading to wage growth moving ahead of inflation. However, there are some clear warning signs ahead. Along with the slowing growth in China and the continued weakness in commodities, focus is turning to possible interest-rate rises. In addition, the UK s current-account deficit is at its worst since records began in 1948, and inward investment in the UK has not been strong enough to act as a counterbalance. This is not yet causing a problem for sterling, but it may well weaken next year when the European Central Bank s quantitativeeasing programme finishes and the UK moves closer to its referendum on EU membership. The outlook is challenging, but we believe that UK equities are a reasonable place to be and our track record in good old-fashioned stock picking should continue to deliver decent returns going forward. Chinese equities experienced a sharp sell-off in June, as the A-share market suffered from a clampdown on margin trading and concerns grew about stretched valuations. Faced with the prospect of an economic 3

5 Financial Statements STATEMENT OF TOTAL RETURN Income Net capital losses (7,953) (1,623) Revenue 2,644 2,405 Expenses (852) (122) Net revenue before taxation 1,792 2,283 Taxation (66) (60) Net revenue after taxation 1,726 2,223 Total return before distributions (6,227) 600 Distributions (1,756) (1,630) Change in net assets attributable to unitholders from investment activities (7,983) (1,030) BALANCE SHEET as at 25 August 2015 February Assets: Fixed assets: Investments 111, ,418 Current assets: Debtors Cash and bank balances Total assets 112, ,230 Liabilities: Creditors: Distribution payable (290) (1,353) Other creditors (476) (251) Total liabilities (766) (1,604) Net assets attributable to unitholders 111, ,626 STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS Opening net assets attributable to unitholders 120, ,299 Movement due to sales and repurchases of units: Amounts receivable on the issue of units 5,080 10,561 Amounts payable on the cancellation of units (6,093) (6,854) (1,013) 3,707 Stamp duty reserve tax (6) Change in net assets attributable to unitholders from investment activities (see statement of total return above) (7,983) (1,030) Unclaimed distributions 7 7 Closing net assets attributable to unitholders 111, ,977 The comparatives used within the Statement of Change in Net Assets Attributable to Unitholders are for the corresponding period of the previous year. Therefore the opening net assets attributable to unitholders for the current year are at 25 February 2015 whilst the figure disclosed in the comparatives closing net assets attributable to unitholders is at 25 August DISTRIBUTION TABLE Dividend distribution in pence per unit Class A Units Net income Distribution Period Net Revenue Equalisation Distribution Distribution Paid/Payable Paid Group 1 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Group 2 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Total distributions in the period Class B Units Net income Distribution Period Net Revenue Equalisation Distribution Distribution Paid/Payable Paid Group 1 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Group 2 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Total distributions in the period Class Z Units Net income* Distribution Period Net Revenue Equalisation Distribution Paid/Payable 2015 Group 1 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Group 2 26/02/15 to 25/03/ /03/15 to 25/04/ /04/15 to 25/05/ /05/15 to 25/06/ /06/15 to 25/07/ /07/15 to 25/08/ Total distributions in the period Group 2: units purchased during a distribution period *Class Z Net income units commenced on 16 December

6 Financial Statements (continued) Notes to the Financial Statements 1 ACCOUNTING POLICIES (1) Basis of accounting The interim financial statements have been prepared on the historical cost basis, as modified by the revaluation of investments, in compliance with FRS 102 and in accordance with the Statement of Recommended Practice for Authorised Funds (SORP) issued by the Investment Association in May This is the first set of financial statements to be prepared for the trust under the 2014 SORP however the impact is minimal for an interim reporting period and limited to presentational amendments to the Statement of Total Return, Statement of Change in Net Assets Attributable to Unitholders and the Balance Sheet. These presentational amendments have no impact on the total return or the net assets attributable to unitholders in either the current or preceding year. The full disclosures under the new SORP will first be presented for the annual financial statements prepared for the year to 25 February Unless otherwise stated all other accounting policies applied are consistent with those of the annual financial statements for the year ended 25 February 2015 and are described in those financial statements. (2) Basis of valuation of investments The investments of the trust are valued using the single price at close of business of the accounting period (UK time). The single price may include an adjustment to cover dealing costs in the underlying funds. (3) Distribution policy Corporation tax relief is applicable only where the transfer of the benefit is between the revenue and capital property of at least two different unit classes of the fund. Previously, corporation tax relief could apply between the revenue and capital property of the same unit class of the fund. (4) Notes In accordance with the guidelines of the SORP the trust has taken advantage of the facility not to provide further notes to the financial statements. 5

7 Portfolio Statement as at 25 August 2015 Holding Investment Value 000 % of Net Asset Value COLLECTIVE INVESTMENT SCHEMES 99.94% (100.66%) UK equity 64.49% (64.28%) 30,391,403 Threadneedle Monthly Extra Income Fund 22, ,333,220 Threadneedle UK Equity Alpha Income Fund 17, ,690,535 Threadneedle UK Equity Income Fund 14, ,574,204 Threadneedle UK Monthly Income Fund 17, Total UK equity 71, UK bond 11.27% (11.03%) 21,676,168 Threadneedle UK Corporate Bond Fund 12, Total UK bond 12, Overseas equity 19.08% (20.38%) 9,265,100 Threadneedle Global Equity Income Fund 9, ,073,678 Threadneedle Pan European Equity Dividend Fund 11, Total overseas equity 21, Overseas bond 5.10% (4.97%) 13,307,713 Threadneedle High Yield Bond Fund 5, Total overseas bond 5, Total collective investment schemes 111, Total value of investments 111, Net other assets/liabilities (-0.66%) Net assets 111, February 2015 comparatives in brackets. 6

8 Comparative Tables Net Asset Value of Unit Class 000 Net Asset Value per Unit p Units in issue Calendar Year Net income per unit p Highest offer price p Lowest bid price p for the year ended 25 February 2013 Class A Net income units 83, ,903,568 Class B Net income units 19, ,487,450 for the year ended 25 February 2014 Class A Net income units 88, ,097,165 Class B Net income units 24, ,088,427 for the year ended 25 February 2015 Class A Net income units 81, ,376,934 Class B Net income units 36, ,239,305 Class Z Net income units 3, ,157,072 for the period ended 25 August 2015 Class A Net income units 72, ,575,163 Class B Net income units 33, ,358,316 Class Z Net income units 4, ,798, Class A Net income units Class B Net income units Class A Net income units Class B Net income units Class A Net income units Class B Net income units Class A Net income units Class B Net income units Class A Net income units Class B Net income units Class Z Net income units Class A Net income units Class B Net income units Class Z Net income units To 25 August Class Z units commenced on 16 December 2014 Ongoing Charges Figure Summary Trust Unit Class August 2015* February 2015 Threadneedle Managed Income Fund Class A Net income units 1.67% 1.76% Class B Net income units 1.41% 1.55% Class Z Net income units % 1.98%* The Ongoing Charges Figure (OCF) is the European standard method of disclosing the charges of a unit class of a trust based on the financial years expenses* and may vary from year to year. It includes charges such as the trust s annual management charge, registration fee, custody fees and distribution cost but ordinarily excludes the cost of buying or selling assets for the trust (unless these assets are shares of another fund). The Key Investor Information Document (KIID) contains the current OCF. Where the trust invests over 10% of net assets in other funds, the calculation includes the trust s share of the expenses of the underlying fund less any fee rebates received. The share of the costs of the underlying funds may fluctuate due to changes in investment decisions, which may be required as a result of changes in market conditions. For a more detailed breakdown please visit columbiathreadneedle.com/fees. 1 Class Z units commenced on 16 December 2014 *The Ongoing Charges Figure is annualised based on the fees incurred during the accounting period or since commencement date. Risk and Reward Profiles Trust Unit Class SRRI* Threadneedle Managed Income Fund Class A Net income units 5 Class B Net income units 5 Class Z Net income units 5 * As as 25 August 2015 the synthetic risk and reward indicator (SRRI) is explained in the table below: SRRI 1 The trust is in this specific category because historically it has shown a low level of volatility (how much the value of the trust went up and down compared to other categories). 2 The trust is in this specific category because historically it has shown a relatively low level of volatility (how much the value of the trust went up and down compared to other categories). 3 The trust is in this specific category because historically it has shown a medium to low level of volatility (how much the value of the trust went up and down compared to other categories). 4 The trust is in this specific category because historically it has shown a medium level of volatility (how much the value of the trust went up and down compared to other categories). 5 The trust is in this specific category because historically it has shown a medium to high level of volatility (how much the value of the trust went up and down compared to other categories). 6 The trust is in this specific category because historically it has shown a high level of volatility (how much the value of the trust went up and down compared to other categories). 7 The trust is in this specific category because historically it has shown a very high level of volatility (how much the value of the trust went up and down compared to other categories). 7

9 Risk and Reward Profiles (continued) The Risk and Reward Profile is based on past performance data in pound sterling. If your investment in the trust is not in pound sterling, please check the figure for the risk and reward profile disclosed on our website (columbiathreadneedle.com) according to the currency of your investment in the trust. Historical data may not be a reliable indication of the future risk profile of the trusts. The SRRI category shown is not guaranteed to remain unchanged and that the categorisation of the trusts may shift over time. The KIID contains the current SRRI. The lowest category does not mean a risk-free investment. No form of capital protection or capital guarantee applies to any of the trusts. Units Issued and Redeemed Summary Trust Number Issued Number Redeemed Net Conversions Threadneedle Managed Income Fund 5,994,024 (7,805,367) (229,916) Total Purchases and Sales August August Trust Threadneedle Managed Income Fund Total purchases for the period 1,018 2,349 Total sales for the period 2,

10 Further Information The Threadneedle Managed Income Fund (the trust) is an authorised unit trust scheme that has been set up in accordance with the rules contained in the Financial Conduct Authority s (FCA) Collective Investment Scheme (COLL) Sourcebook and operates under Chapter 5 of the COLL Rules. The trust has been certified by the FCA as eligible to enjoy the rights conferred by the Undertakings for Collective Investment in Transferable Securities Directive 2009/65/EC. The prospectus, which describes the trust in detail, is available on request from the Authorised Unit Trust Manager (Manager). Key Investor Information Document (KIID) Subscription requirements The KIID is a pre contractual document and investors have to confirm that they have read the latest KIID before making a subscription. Threadneedle has the right to reject a subscription if the investor does not confirm that they have read the latest KIID at the time of application. Investors can get the latest KIID from columbiathreadneedle.com. Changes to the management of the Manager On 24 June 2015, Mr. Nick Ring resigned from his role as a director of the Manager. Changes to the Prospectus During the period from 26 February 2015 to 25 August 2015 the following changes were made to the prospectus of the trust: Charges and Prices For the trust, two unit prices are quoted, the offer price at which you buy units and the bid price at which you sell them back to us. The difference between these two prices includes the initial charge and is called the bid/ offer spread. The fees and expenses of the Manager, Trustee, Registrar and Auditor and the FCA authorisation fee are payable by the trust. Income Equalisation Since the trust operates equalisation, the first allocation made after the acquisition of units will include an amount of equalisation. This amount represents the Manager s best estimate of the income included in the price at which the units were acquired (subject to grouping where appropriate) and represents a capital repayment for UK tax purposes which should be deducted from the cost of units in arriving at any capital gain realised on their subsequent disposal. Individual Savings Accounts Throughout the accounting period the trust has satisfied the requirements of the Individual Savings Account Regulations 1998 (as amended). It is the Manager s intention that the trust will be managed in such a way as to continue to meet this requirement. Please note that in accordance with HMRC Rules all ISAs applied for after 1 July 2014 are called New ISAs. change name of trustee from Citibank International plc to Citibank International Limited; change in head office and registered address from 30 March 2015 to Cannon Place, 78 Cannon Street, London EN4N 6AG; change of website to include additional disclosures relating to the instruments in which bond funds can invest (CoCos); include additional disclosures relating to the instruments in which equity funds can invest (p-notes / warrants); enhanced disclosures regarding client money; update list of the directors of the Manager to reflect appointments and resignations; update disclosures relating to delegation of functions to other group members and update to conflicts of interests wording; clarification to definition of XD date. Changes to the Trust Deed During the period, the trust deed has been amended following the change of address of the Manager. Characteristics of Units The trust is an authorised unit trust scheme and currently consists of one fund. Several classes of unit may be issued in respect of the trust, distinguished by their criteria for subscription and fee structure. Unit Class Minimum Investment Eligibility Class A GBP 2,000 Retail investors Class B GBP 5,000,000 Non retail investors Class Z GBP 1,000,000 Eligible investors only The limits for minimum initial investment, minimum subsequent investment and minimum holding of units may be waived at the discretion of the Manager. For further information please refer to the prospectus. 9

11 Directory Important Information Manager Threadneedle Investment Services Limited (Authorised and regulated by the Financial Conduct Authority (FCA)) Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Registrar Threadneedle Investment Services Limited Delegated to: International Financial Data Services (UK) Limited (Authorised and regulated by the FCA) St Nicholas Lane Basildon Essex SS15 5FS Client Services Details UK Investors Address: Threadneedle Investment Services Limited PO Box 10033, Chelmsford, Essex CM99 2AL Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): Website: columbiathreadneedle.com Legal Advisers Eversheds LLP One Wood Street London EC2V 7WS Chairman and Chief Executive C D Fleming Other Directors T N Gillbanks D Jordison N J Ring (resigned on 24 June 2015) A Roughead Investment Manager Threadneedle Asset Management Limited (Authorised and regulated by the FCA) Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Trustee Citibank International Limited (Authorised by the Prudential Regulatory Authority (PRA) and regulated by the FCA and PRA) Citigroup Centre Canada Square Canary Wharf London E14 5LB Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Key Risks of the Trust Investment Risk The value of investments can fall as well as rise and investors might not get back the sum originally invested. Investment in Funds Risk The Investment Policy allows the trust to invest principally in units of other collective investment schemes. Investors should consider the investment policy and asset composition in the underlying funds when assessing their portfolio exposure. Issuer Risk The trust invests in securities whose value would be significantly affected if the issuer refused, was unable to or was perceived to be unable to pay. Derivatives for EPM / Hedging Risk The investment policy of the trust allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions. Inflation Risk Most bond and cash funds offer limited capital growth potential and an income that is not linked to inflation. Inflation is likely to affect the value of capital and income over time. Interest Rate Risk Changes in interest rates are likely to affect the trust s value. In general, as interest rates rise, the price of a fixed rate bond will fall, and vice versa. Volatility Risk The trust may exhibit significant price volatility. Effect of Dual Pricing Risk The trust is dual priced and there is a difference between the buying price and the selling price of units. Further risks applicable to the trust can be found in the Prospectus. *Calls will be recorded 10

12 To find out more visit columbiathreadneedle.com Threadneedle Investment Services Limited, ISA Manager, Authorised Corporate Director and Unit Trust Manager. Registered No Registered in England and Wales. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated by the Financial Conduct Authority. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com