CF Woodford Equity Income Fund A sub-fund of CF Woodford Investment Fund

Transcription

1 CF Woodford Equity Income Fund A sub-fund of CF Woodford Investment Fund ACD s Interim Short Report for the period from 1 January 2015 to 30 June 2015 Investment Objective and Policy The aim of this sub-fund is to provide a reasonable level of income together with capital growth. This will be achieved by investing primarily in UK listed companies. The sub-fund may also invest in unlisted companies and overseas entities. The sub-fund may also invest in other transferable securities, money market instruments, warrants, collective investment schemes and deposits. The Investment Manager may also make use of derivatives for investment purposes (gaining both long and short exposure to the underlying assets) and for efficient portfolio management. It is not anticipated that such use of derivatives will have a significant adverse effect on the risk profile of this sub-fund. Risk Profile The Fund has little exposure to credit or cash flow risk. There are no borrowings or unlisted securities of a material nature and so there is little exposure to liquidity risk. The main risks it faces from its financial instruments are market price, foreign currency and interest rate risk. The ACD reviews the policies for managing these risks in order to follow and achieve the Investment Objective as summarised above. Accounting and Distribution Dates Accounting Distribution First Interim 31 March 31 May Second Interim 30 June 31 August Third Interim 30 September 30 November Final 31 December 28 February 1 CF Woodford Investment Fund

2 Synthetic Risk and Reward Indicator Typically lower rewards Lower risk Typically higher rewards Higher risk This indicator shows how much a sub-fund may have risen and fallen in the past, and therefore how much a sub-fund s returns may have varied. It is a measure of a sub-fund s volatility. The higher a sub-funds past volatility the higher the number on the scale and the greater the risk that investors in that sub-fund may have made losses as well as gains. The lowest number on the scale does not mean that a sub-fund is risk free. This sub-fund has been classed as five because volatility has been measured as above average to high. The indicator is based on historical data and may not be a reliable indication of the future risk profile of this sub-fund. The risk and reward profile shown is not guaranteed to remain the same and may shift over time. Comparative Tables Information for 30 June 2015 relates to the 6 month period ending 30 June 2015, with the exception of the operating charges in the Other Information section. The operating charges relate to the expenses incurred on an ex post basis over the 12 month period ending 30 June 2015, expressed as a percentage of the average net asset value over the same period. CF Woodford Investment Fund 2

3 Comparative Tables (continued) A Accumulation shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (1.15) (1.02) Return after operating charges* Closing net asset value per share Retained distributions on accumulation shares * after direct transaction costs of: PERFORMANCE Return after charges 8.39% 5.86% OTHER INFORMATION Closing net asset value ( 000) 42,766 21,489 Closing number of shares 37,272,898 20,300,375 Operating charges 1.00% 1.00% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund

4 Comparative Tables (continued) A Income shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (1.13) (1.02) Return after operating charges* Distributions on income shares (2.04) (1.28) Closing net asset value per share * after direct transaction costs of: PERFORMANCE Return after charges 8.40% 5.80% OTHER INFORMATION Closing net asset value ( 000) 31,825 19,548 Closing number of shares 28,604,109 18,701,851 Operating charges 1.00% 1.00% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund 4

5 Comparative Tables (continued) C Accumulation shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (0.87) (0.77) Return after operating charges* Closing net asset value per share Retained distributions on accumulation shares * after direct transaction costs of: PERFORMANCE Return after charges 8.52% 5.95% OTHER INFORMATION Closing net asset value ( 000) 1,045, ,170 Closing number of shares 909,338, ,919,713 Operating charges 0.75% 0.75% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund

6 Comparative Tables (continued) C Income shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (0.85) (0.77) Return after operating charges* Distributions on income shares (2.04) (1.28) Closing net asset value per share * after direct transaction costs of: PERFORMANCE Return after charges 8.54% 5.95% OTHER INFORMATION Closing net asset value ( 000) 828, ,623 Closing number of shares 742,785, ,801,301 Operating charges 0.75% 0.75% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund 6

7 Comparative Tables (continued) Z Accumulation shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (0.75) (0.66) Return after operating charges* Closing net asset value per share Retained distributions on accumulation shares * after direct transaction costs of: PERFORMANCE Return after charges 8.58% 6.03% OTHER INFORMATION Closing net asset value ( 000) 2,247,760 1,464,019 Closing number of shares 1,952,385,838 1,380,722,587 Operating charges 0.65% 0.65% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund

8 Comparative Tables (continued) Z Income shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (0.74) (0.66) Return after operating charges* Distributions on income shares (2.04) (1.28) Closing net asset value per share * after direct transaction costs of: PERFORMANCE Return after charges 8.58% 6.00% OTHER INFORMATION Closing net asset value ( 000) 1,847,557 1,579,092 Closing number of shares 1,654,497,599 1,507,878,466 Operating charges 0.65% 0.65% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund 8

9 Comparative Tables (continued) X Accumulation shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (1.70) (1.55) Return after operating charges* Closing net asset value per share Retained distributions on accumulation shares * after direct transaction costs of: PERFORMANCE Return after charges 8.12% 5.70% OTHER INFORMATION Closing net asset value ( 000) 32,006 45,903 Closing number of shares 28,005,734 43,427,926 Operating charges 1.50% 1.50% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund

10 Comparative Tables (continued) X Income shares to to CHANGE IN NET ASSET VALUE PER SHARE (p/share) (p/share) Opening net asset value per share Return before operating charges* Operating charges (calculated on average price) (1.71) (1.52) Return after operating charges* Distributions on income shares (2.03) (1.28) Closing net asset value per share * after direct transaction costs of: PERFORMANCE Return after charges 8.15% 5.66% OTHER INFORMATION Closing net asset value ( 000) Closing number of shares 222, Operating charges 1.50% 1.50% Direct transaction costs % PRICES Highest share price Lowest share price CF Woodford Investment Fund 10

11 Distributions First Interim Second Interim Share Class (p/share) (p/share) A Income A Accumulation C Income C Accumulation Z Income Z Accumulation X Income X Accumulation Fund Performance to 30 June 2015 (%) 6 months 1 year Since launch* CF Woodford Equity Income Fund 8.34% 16.68% 15.73% * Launch date 2 June The performance of the Fund is based on the published price per A Accumulation share which includes reinvested income. The Fund performance disclosed in the above table differs from the Return after charges disclosed in the Comparative Tables due to Fund performance being calculated based on the latest published price rather than the period end return after operating charges. Risk Warning Please remember that past performance should not be seen as a guide to future performance and that the value of an investment and the income from it can fall as well as rise and may be affected by exchange rate variations. 11 CF Woodford Investment Fund

12 Sector Spread of Investments CONTINENTAL EUROPE 3.17% (7.03%) IRELAND 4.25% (1.92%) CHANNEL ISLANDS 3.31% (1.83%) Software & Computer Services 0.09% (0.26%) Oil Equipment, Services & Distribution 0.00% (0.31%) Net other liabilities -1.04% (0.16%) NORTH AMERICA 8.55% (8.88%) Chemicals 0.10% (0.12%) Aerospace & Defence 4.85% (6.10%) Industrial Engineering 0.39% (0.20%) Industrial Transportation 2.44% (2.15%) Support Services 8.65% (7.69%) Food Producers 0.39% (0.34%) Leisure Goods 1.24% (0.88%) Financial Services 10.80% (8.54%) Real Estate Investment & Services 0.37% (0.34%) Life Insurance 2.96% (2.04%) Nonlife Insurance 0.58% (0.66%) Gas, Water & Multiutilities 2.94% (2.24%) Electricity 2.72% (2.83%) Mobile Telecommunications 0.16% (0.23%) Fixed Line Telecommunications 3.95% (5.39%) Media 0.12% (0.17%) General Retailers 3.09% (2.85%) Pharmaceuticals & Biotechnology 20.00% (19.79%) Tobacco 12.69% (12.67%) Health Care Equipment & Services 3.23% (4.38%) The figures in brackets show allocations at 31 December Major Holdings The top ten holdings at the end of each period are shown below. % of Sub-fund % of Sub-fund Holding as at Holding as at AstraZeneca 7.10 AstraZeneca 7.38 Imperial Tobacco Group 7.03 Imperial Tobacco Group 6.36 GlaxoSmithKline 6.58 GlaxoSmithKline 6.32 British American Tobacco 5.66 British American Tobacco 6.31 BT Group 3.95 BT Group 5.39 Capita 3.46 Capita 4.07 Reynolds American 3.32 Reynolds American 3.20 Legal & General Group 2.96 BAE Systems 3.07 Centrica 2.94 Roche Holding 3.03 Allied Minds 2.87 Rolls-Royce Holdings 3.01 CF Woodford Investment Fund 12

13 ACD S REPORT for the period from 1 January 2015 to 30 June 2015 Important Information With effect from 7 November 2014, income distributions are paid two months after the relevant quarter end. The prospectus was updated on 10 April 2015 to clarify that distribution payments are not paid by cheque and are only made by electronic transfer to an investor s bank account. Capita Financial Managers Limited ACD of CF Woodford Equity Income Fund 20 August CF Woodford Investment Fund

14 INVESTMENT MANAGER S REPORT for the period from 1 January 2015 to 30 June 2015 Investment Managers Report The sub-fund continued to deliver a solid performance during the first six months of 2015, producing a +8.5% total return*, compared to a +3.0%** total return from the FTSE All Share index. The UK stock market has traded sideways for the last two years with increasing volatility, struggling with a lack of earnings progression and increasingly full looking valuations. Within the market, however, there has been a stark contrast between the best performing stocks and the worst. For example, during the period under review, stocks within the oil & gas and basic materials sectors have performed poorly, weighed down by the continued weakness in commodity prices. Meanwhile, stocks within the telecoms and consumer sectors have tended to produce more robust returns. This differential has helped relative performance due to the portfolio s lack of exposure to the sectors which have performed poorly. Within the portfolio, many of the portfolio s strongest contributions came from smaller, earlier stage positions. US biotech company, Prothena, performed well as the market warmed to the long-term potential that exists in its drug development pipeline. It reported positive results from early-stage trials of a new potential treatment for Parkinson s disease, PRX-002, which targets the causes, rather than the symptoms, of the condition. Another biotech, 4D Pharma, also performed well, as it continues to make good progress with two new biotherapeutic treatments: Blautix, for irritable bowel syndrome, and Thetanix, for Crohn s disease. The company announced that both drugs were moving towards first-in-man clinical studies. It also confirmed it was making significant progress in other areas, including asthma and rheumatoid arthritis. Meanwhile, Allied Minds, continued its strong run since its IPO in June 2014, rising almost 50% during the period. Our tobacco holdings also contributed positively, with Reynolds American benefiting from the Federal Trade Commission s approval of its acquisition of Lorillard. The deal had been under scrutiny amid antitrust concerns but its clearance marks another round of tobacco industry consolidation which we believe will be of benefit to all of our holdings in the sector. Imperial Tobacco, which is acquiring certain brands from Reynolds and Lorillard, was also a strong contributor. By contrast, some of our more mature pharmaceuticals holdings performed poorly. AstraZeneca weakened after Amgen withdrew from its partnership to develop the psoriasis treatment Brodalumab. Although this is disappointing, it does not undermine an investment case that is supported by an excitingly varied pipeline of potential new therapies. We added to the holding during the period. BTG was also weak as the market reacted negatively to the slow initial sales of its new treatment for varicose veins. We retain our confidence in the long-term potential in this product and elsewhere in company s increasingly diverse and attractive portfolio. Our energy utility holdings were also among the largest detractors. Drax continued to suffer from the government s shifting attitude towards supporting biomass conversion projects. Centrica also disappointed after cutting its dividend with its full year results and has subsequently been sold from the portfolio. * Class C Accumulation ** Source: Morningstar CF Woodford Investment Fund 14

15 Investment Manager s Report (continued) For the period from 1 January 2015 to 30 June 2015 During the period, we introduced several new holdings to the portfolio. These included NewRiver Retail, a property company with a great track record of creating value by improving its second and third tier retail assets, Malin, an Irish company that has been created to acquire early-stage life sciences businesses and help them to fulfil their long-term potential, and BCA Marketplace, a high-quality business with a unique position in the used-vehicle marketplace and strong long-term prospects. We also added several smaller positions in unquoted companies such as pension platform business AJ Bell, and Proton Partners International which is opening three proton beam therapy centres in the UK. Meanwhile, we sold German real estate business, Gagfah, following an agreed bid from its larger competitor Deutsche Annington. We also sold the position in Smith & Nephew with its shares trading near all-time highs on bid speculation. Elsewhere, Sanofi was sold from the portfolio as was gas-to-liquid fuel technology business, Velocys, where our conviction in the company s ability to fulfil its potential has diminished, as we now fear that other technologies may overtake it. We continue to harbour concerns about the global economic outlook in the medium-term, and this makes us reluctant to embrace cyclical risk within the portfolio. This explains the lack of exposure, in particular, to the oil & gas and basic materials sectors. We see further downside risk in commodity prices and, therefore, the share prices of (and indeed, dividends from) commodity-dependent businesses. The core of the portfolio remains positioned towards attractively valued, dependable growth opportunities which are capable of delivering growth even in the difficult macroeconomic environment that we foresee. Meanwhile, the fortunes of our smaller positions in earlier-stage companies with considerable long-term growth potential will be largely determined by their own progress, not by macroeconomic factors. On balance, therefore, we remain confident in the portfolio s ability to continue to deliver attractively positive long-term returns. Woodford Investment Management LLP Investment Manager 3 August CF Woodford Investment Fund

16 Buying and Selling Shares The ACD will accept orders to deal in the shares on normal business days between 9.00am and 5.00pm London time. Instructions to buy or sell shares may be either in writing to: PO BOX 3733, Royal Wootton Bassett, Swindon, SN4 4BG or by telephone on or by fax on Reports and Accounts This document is a short report of the CF Woodford Investment Fund for the period ended 30 June The full Report and Accounts for the Fund is available free of charge upon written request to Capita Financial Managers Limited, 40 Dukes Place, London EC3A 7NH and can be found on our website, by following the link Fund Information. Other Information The information in this report is designed to enable you to make an informed judgement on the activities of the sub-fund during the period it covers and the results of those activities at the end of the period. Valuations Valuations are normally carried out on each Dealing Day. The valuation point for a Fund is 12 noon on each Dealing Day. Publication of Prices The prices of shares for each class in each Fund will be posted on the website of the ACD: Prices can also be obtained by telephoning the Administrator. Neither the Company nor the ACD is responsible for any errors in publication or for non-publication. The ACD issues and redeems shares on a forward pricing basis, not on the basis of published prices. CF Woodford Investment Fund 16

17 Authorised Corporate Director ( ACD ) Capita Financial Managers Limited Head Office: 40 Dukes Place London EC3A 7NH Telephone: Fax: enquiries@capitafinancial.com (Authorised and regulated by the Financial Conduct Authority) Directors of the ACD C. Addenbrooke N. Boyling C. Hayes P. Hugh Smith K.J. Midl J.E. Millan Registrar & Administrator Northern Trust Global Services Limited PO Box 3733 Royal Wootton Bassett Swindon SN4 4BG Telephone Number: Fax Number: address: WoodfordInvestorServices@ntrs.com (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority) Independent Auditor Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU Investment Manager Woodford Investment Management LLP 9400 Garsington Road Oxford OX4 2HN (Authorised and regulated by the Financial Conduct Authority) Depositary Northern Trust Global Services Limited 50 Bank Street Canary Wharf London E14 5NT (Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority)