Threadneedle Global Equity Income Fund

Transcription

1 Interim Short Report 31 October 2018 Fund Manager s Report Jonathan Crown Performance of Class 1 Income shares* Over the six months to 31 October 2018, the published share price of Class 1 Income shares in the Threadneedle Global Equity Income Fund has fallen from p to p. For comparison, using noon prices, the performance of the Class 1 share class was +0.93% and +1.17% for the Class 2 share class compared to a return of +1.29% for the Morningstar UK Unit Trusts/ OEICS (IA) Global Equity Income Peer Group (on a bid to bid basis, with income reinvested for a UK basic rate taxpayer). For information purposes, using global close prices, the total return of the MSCI AC World Free Index was +3.82%. Market Overview and Portfolio Activity Volatility remained a key feature of equity markets in the six months to 31 October Despite being swayed by trading tensions between the US and China, markets accumulated gains between April and September; however, rising inflationary expectations, and concerns around Saudi Arabian news flow and the expansionary nature of the Italian budget, prompted an October pullback. North American equities led returns over the period owing to strong corporate earnings, expectation-topping labour market readings and the outperformance of technology stocks. The Federal Reserve persisted with its rate hiking course. Whilst this previously carried implications for more defensive market segments, it was only following hawkish commentary in October that it drove sharper, widespread moves. Despite healthy earnings, rising commodity prices and a late auto stock rally, European equities lagged. The formation of a Eurosceptic Italian coalition and its budget, along with concerns around Turkey, dampened sentiment. Given the country s proportionately high energy exposure, UK equities were aided by higher oil prices. President Trump s withdrawal of the US from the Iran nuclear deal, Venezuelan economic weakness and Saudi Arabian signals of an $80 oil price target provided a boost to oil. However, despite sterling s weakness, the UK underperformed as Brexit-related uncertainty persisted. Japanese, Far East and emerging market equities were impacted by trading tensions over the period. Investors priced in the tariffs implications on both inflation and economic growth, meaning these regions underperformed; though a weaker yen provided some support to Japan s export-centric market. From a sector perspective, healthcare led returns, with fiscal reform offering prospects of durable support to revenue and earnings. Industrials underperformed on tariff-related headwinds. During the period, key new positions in the portfolio included defence company Lockheed Martin and consumer electronics developer Nintendo. Lockheed Martin offers a multi-year growth runway in an attractive space, given improving defence budgets and the company s strong win rates. For Nintendo, we note the potential for fresh catalysts to materialise from here, including new membership services, and possible additions to its title line-up. The stock has been trading at a material discount to other major game software makers and offers prospects of healthy dividend growth. Elsewhere, we purchased US domestic bank BB&T. Recent earnings implied a quickened pace of loan growth and better-than-expected deposit beta. To fund these, we closed our position in luxury fashion company Tapestry. The stock had outperformed the index year-to-date, supported in the first half by growth within its Coach brand, e-commerce performance and anticipation of future margin expansion. Following this run, we felt that opportunities with greater upside existed elsewhere. Similarly, we exited medical device manufacturer Coloplast, which had appreciated towards our price target on optimism around US market share growth. Another holding to have performed well, investment management company Ares Capital, was also sold. Expectation-topping first-quarter results were driven by growth in the company s loan portfolio and new commitment activity. October saw high-dividend-paying stocks outperform after challenges for the asset class over the last two years. We note the scope for further appetite for these names as the top two quintiles of dividendyielding stocks remain cheap relative to their history. By contrast, despite being the focus of last month s rotation, low-dividend-paying companies remain richly valued by comparison. We believe recent rises in inflationary expectations carry a relatively short-term premise, and that factors driving a world which is lower for longer remain in place. This should ensure that companies offering a compelling blend of income and growth remain attractive. Within this context, we continue our focus on quality income, seeking companies which offer high, rising and sustainable dividends. In our view, companies demonstrating superior capital allocation remain well-placed to outperform over the long-term; and we retain our belief that dividends are an underappreciated signal of investment quality. Fund Facts Fund Accounting and Distribution Dates Accounting Dates Payment Dates All classes except Class 1 Monthly Income shares, Class 1 AUD Hedged Monthly Income shares and Class 1 SGD Hedged Monthly Income shares. 30 April 30 June 31 July 30 September 31 October 31 December 31 January 31 March Class 1 Monthly Income shares, Class 1 AUD Hedged Monthly Income shares and Class 1 SGD Hedged Monthly Income shares. 30 April 31 May 31 May 30 June 30 June 31 July 31 July 31 August 31 August 30 September 30 September 31 October 31 October 30 November 30 November 31 December 31 December 31 January 31 January 28 February 28 February 31 March 31 March 30 April Ongoing Charges Figure The Ongoing Charges Figure (OCF) is the European standard method of disclosing the charges of a share class of a fund based on the financial year s expenses and may vary from year to year. It includes charges such as the fund s annual management charge, registration fee, custody fees and distribution cost but ordinarily excludes the costs of buying or selling assets for the fund (unless these assets are shares of another fund). Where published, the Key Investor Information Document (KIID) contains the current OCF. For a more detailed breakdown please visit columbiathreadneedle.com/fees. *In pound Sterling and against UK peer group.

2 Share class 31 October April 2018 Class 1 Income shares 1.63% 1.63% Class 1 EUR Income shares % Class 1 USD Income shares % Class 1 Monthly Income shares 1.63% 1.63% Class 1 SGD Hedged Income shares 1.63% 1.63% Class 1 AUD Hedged Monthly Income shares 1.63% 1.62% Class 1 SGD Hedged Monthly Income shares 1.63% 1.64% Class 1 Accumulation shares 1.64% 1.63% Class 1 EUR Accumulation shares % Class 1 USD Accumulation shares % Class 1 CHF Hedged Accumulation shares 1.62% 1.63% Class 1 SGD Hedged Accumulation shares 1.63% 1.63% Class 2 Income shares 1.06% 1.06% Class 2 EUR Income shares % Class 2 USD Income shares % Class 2 EUR Hedged Income shares 1.05% 1.05% Class 2 Accumulation shares 1.06% 1.06% Class 2 EUR Accumulation shares % Class 2 USD Accumulation shares % Class W Accumulation shares % 1.03% Class X Income shares 0.06% 0.06% Class X Accumulation shares 0.06% 0.06% Class Z Income shares 0.88% 0.88% Class Z EUR Income shares % Class Z USD Income shares % Class Z Accumulation shares 0.88% 0.88% Class Z EUR Accumulation shares % Class Z USD Accumulation shares % Class Z CHF Hedged Accumulation shares 0.87% 0.87% The Ongoing Charges Figure is annualised based on the fees incurred during the accounting period or since commencement date. 1 Commenced 15 June Commenced 3 May Summary of Fund Performance Performance History (%) Share class Class 1 Income shares Class 1 EUR Income shares Class 1 USD Income shares Class 1 Monthly Income shares Class 1 SGD Hedged Income shares Class 1 AUD Hedged Monthly Income shares Class 1 SGD Hedged Monthly Income shares Class 1 Accumulation shares Class 1 EUR Accumulation shares Class 1 USD Accumulation shares Class 1 CHF Hedged Accumulation shares Class 1 SGD Hedged Accumulation shares Class 2 Income shares Class 2 EUR Income shares Class 2 USD Income shares Class 2 EUR Hedged Income shares Class 2 Accumulation shares Class 2 EUR Accumulation shares Class 2 USD Accumulation shares Class W Accumulation shares Class X Income shares Class X Accumulation shares Class Z Income shares Class Z EUR Income shares Class Z USD Income shares Class Z SGD Hedged Income shares 6* Class Z Accumulation shares Class Z EUR Accumulation shares Class Z USD Accumulation shares

3 Share class Class Z CHF Hedged Accumulation shares Class Z SGD Hedged Acccumulation shares 6* To 31 October Commenced 15 June Commenced 18 February Commenced 10 October Commenced 3 June Commenced 3 June Commenced 3 May Commenced 28 July Commenced 31 March Commenced 18 September *Closed 23 November Source: Morningstar and Threadneedle. Bid to bid prices are quoted (i.e. not including any initial charge) with net income reinvested for a UK basic rate tax payer and gross income reinvested for a non-uk resident. Performance data is quoted in sterling apart from hedged share classes, where applicable, which are in the hedged currency. Past performance is not a guide to future investment performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Net Asset Value (NAV) As at Share class NAV ( ) NAV pence per share Number of shares in issue 31 October 2018 Class 1 Income shares 64,259, ,539, April 2018 Class 1 Income shares 121,196, ,637, April 2017 Class 1 Income shares 176,452, ,827, April 2016 Class 1 Income shares 155,697, ,848, October 2018 Class 1 EUR Income shares 19,073, ,407, October 2018 Class 1 USD Income shares 8,517, ,433, October 2018 Class 1 Monthly Income shares 2,088, ,824, April 2018 Class 1 Monthly Income shares 2,048, ,771, April 2017 Class 1 Monthly Income shares 1,002, , April 2016 Class 1 Monthly Income shares 461, , October 2018 Class 1 SGD Hedged Income shares 5,076, ,716, April 2018 Class 1 SGD Hedged Income shares 6,331, ,541, April 2017 Class 1 SGD Hedged Income shares 9,175, ,255, April 2016 Class 1 SGD Hedged Income shares 12,215, ,510, October 2018 Class 1 AUD Hedged Monthly Income shares 186, , April 2018 Class 1 AUD Hedged Monthly Income shares 175, , April 2017 Class 1 AUD Hedged Monthly Income shares 426, , April 2016 Class 1 AUD Hedged Monthly Income shares 257, , October 2018 Class 1 SGD Hedged Monthly Income shares 2,630, ,355, April 2018 Class 1 SGD Hedged Monthly Income shares 1,552, ,309, April 2017 Class 1 SGD Hedged Monthly Income shares 355, , April 2016 Class 1 SGD Hedged Monthly Income shares 330, , October 2018 Class 1 Accumulation shares 8,166, ,768, April 2018 Class 1 Accumulation shares 68,139, ,726, April 2017 Class 1 Accumulation shares 121,083, ,397, April 2016 Class 1 Accumulation shares 74,378, ,348, October 2018 Class 1 EUR Accumulation shares 43,213, ,942, October 2018 Class 1 USD Accumulation shares 11,107, ,125, October 2018 Class 1 CHF Hedged Accumulation shares 10, , April 2018 Class 1 CHF Hedged Accumulation shares 11, , April 2017 Class 1 CHF Hedged Accumulation shares 11, , April 2016 Class 1 CHF Hedged Accumulation shares 9, , October 2018 Class 1 SGD Hedged Accumulation shares 883, , April 2018 Class 1 SGD Hedged Accumulation shares 1,037, , April 2017 Class 1 SGD Hedged Accumulation shares 1,241, , April 2016 Class 1 SGD Hedged Accumulation shares 1,391, ,289, October 2018 Class 2 Income shares 82,506, ,148, April 2018 Class 2 Income shares 416,554, ,274, April 2017 Class 2 Income shares 161,216, ,332, April 2016 Class 2 Income shares 160,323, ,280, October 2018 Class 2 EUR Income shares 277,130, ,648, October 2018 Class 2 USD Income shares 41,032, ,412, October 2018 Class 2 EUR Hedged Income shares 8, , April 2018 Class 2 EUR Hedged Income shares 8, , April 2017 Class 2 EUR Hedged Income shares 2, , April 2016 Class 2 EUR Hedged Income shares 2, , October 2018 Class 2 Accumulation shares 9,241, ,013, April 2018 Class 2 Accumulation shares 87,296, ,355, April 2017 Class 2 Accumulation shares 143,898, ,719, April 2016 Class 2 Accumulation shares 143,389, ,704,909

4 As at Share class NAV ( ) NAV pence per share Number of shares in issue 31 October 2018 Class 2 EUR Accumulation shares 93,804, ,738, October 2018 Class 2 USD Accumulation shares 140, , October 2018 Class W Accumulation shares 146,941, ,515, April 2018 Class W Accumulation shares 111,342, ,258, October 2018 Class X Income shares 84,000, ,948, April 2018 Class X Income shares 71,295, ,824, April 2017 Class X Income shares 75,430, ,957, April 2016 Class X Income shares 77,134, ,515, October 2018 Class X Accumulation shares 257,689, ,816, April 2018 Class X Accumulation shares 256,679, ,881, April 2017 Class X Accumulation shares 258,410, ,703, April 2016 Class X Accumulation shares 195,215, ,313, October 2018 Class Z Income shares 175,410, ,782, April 2018 Class Z Income shares 390,807, ,584, April 2017 Class Z Income shares 691,612, ,699, April 2016 Class Z Income shares 597,650, ,775, October 2018 Class Z EUR Income shares 139,041, ,528, October 2018 Class Z USD Income shares 523, , October 2018 Class Z Accumulation shares 57,019, ,758, April 2018 Class Z Accumulation shares 121,887, ,718, April 2017 Class Z Accumulation shares 151,840, ,377, April 2016 Class Z Accumulation shares 115,615, ,371, October 2018 Class Z EUR Accumulation shares 8,476, ,613, October 2018 Class Z USD Accumulation shares 19,752, ,079, October 2018 Class Z CHF Hedged Accumulation shares 11, , April 2018 Class Z CHF Hedged Accumulation shares 11, , April 2017 Class Z CHF Hedged Accumulation shares 11, , April 2016 Class Z CHF Hedged Accumulation shares 9, ,000 Distribution History/Share Price Range Highest share price (pence) Lowest share price (pence) Year to Share class Pence per share 31 October 2018 Class 1 Income shares April 2018 Class 1 Income shares April 2017 Class 1 Income shares April 2016 Class 1 Income shares October 2018 Class 1 EUR Income shares October 2018 Class 1 USD Income shares October 2018 Class 1 Monthly Income shares April 2018 Class 1 Monthly Income shares April 2017 Class 1 Monthly Income shares April 2016 Class 1 Monthly Income shares October 2018 Class 1 SGD Hedged Income shares April 2018 Class 1 SGD Hedged Income shares April 2017 Class 1 SGD Hedged Income shares April 2016 Class 1 SGD Hedged Income shares October 2018 Class 1 AUD Hedged Monthly Income shares April 2018 Class 1 AUD Hedged Monthly Income shares April 2017 Class 1 AUD Hedged Monthly Income shares April 2016 Class 1 AUD Hedged Monthly Income shares October 2018 Class 1 SGD Hedged Monthly Income shares April 2018 Class 1 SGD Hedged Monthly Income shares April 2017 Class 1 SGD Hedged Monthly Income shares April 2016 Class 1 SGD Hedged Monthly Income shares October 2018 Class 1 Accumulation shares April 2018 Class 1 Accumulation shares April 2017 Class 1 Accumulation shares April 2016 Class 1 Accumulation shares October 2018 Class 1 EUR Accumulation shares October 2018 Class 1 USD Accumulation shares October 2018 Class 1 CHF Hedged Accumulation shares April 2018 Class 1 CHF Hedged Accumulation shares April 2017 Class 1 CHF Hedged Accumulation shares April 2016 Class 1 CHF Hedged Accumulation shares October 2018 Class 1 SGD Hedged Accumulation shares April 2018 Class 1 SGD Hedged Accumulation shares April 2017 Class 1 SGD Hedged Accumulation shares April 2016 Class 1 SGD Hedged Accumulation shares

5 Year to Share class Threadneedle Global Equity Income Fund Pence per share Highest share price (pence) Lowest share price (pence) 31 October 2018 Class 2 Income shares April 2018 Class 2 Income shares April 2017 Class 2 Income shares April 2016 Class 2 Income shares October 2018 Class 2 EUR Income shares October 2018 Class 2 USD Income shares October 2018 Class 2 EUR Hedged Income shares April 2018 Class 2 EUR Hedged Income shares April 2017 Class 2 EUR Hedged Income shares April 2016 Class 2 EUR Hedged Income shares October 2018 Class 2 Accumulation shares April 2018 Class 2 Accumulation shares April 2017 Class 2 Accumulation shares April 2016 Class 2 Accumulation shares October 2018 Class 2 EUR Accumulation shares October 2018 Class 2 USD Accumulation shares October 2018 Class W Accumulation shares April 2018 Class W Accumulation shares October 2018 Class X Income shares April 2018 Class X Income shares April 2017 Class X Income shares April 2016 Class X Income shares October 2018 Class X Accumulation shares April 2018 Class X Accumulation shares April 2017 Class X Accumulation shares April 2016 Class X Accumulation shares October 2018 Class Z Income shares April 2018 Class Z Income shares April 2017 Class Z Income shares April 2016 Class Z Income shares October 2018 Class Z EUR Income shares October 2018 Class Z USD Income shares October 2018 Class Z Accumulation shares April 2018 Class Z Accumulation shares April 2017 Class Z Accumulation shares April 2016 Class Z Accumulation shares October 2018 Class Z EUR Accumulation shares October 2018 Class Z USD Accumulation shares October 2018 Class Z CHF Hedged Accumulation shares April 2018 Class Z CHF Hedged Accumulation shares April 2017 Class Z CHF Hedged Accumulation shares April 2016 Class Z CHF Hedged Accumulation shares Commenced 15 June Commenced 3 June Commenced 3 May Past performance is not a guide to future performance.

6 Classification of Investments 31 October 2018 vs 30 April % 25% 31 October April % 15% 10% 5% 0% Financials Consumer Goods Industrials Oil & Gas Health Care Technology Telecommunications Basic Materials Consumer Services Collective Investment Schemes Net other assets Portfolio Information Top Five Holdings as at 31 October 2018 % of Fund Deutsche Telekom 3.00 Wells Fargo 2.91 Pfizer 2.79 British American Tobacco 2.44 Royal Dutch Shell 'A' Shares (London Listing) 2.43 Top Five Holdings as at 30 April 2018 % of Fund British American Tobacco 2.85 Unilever (EUR) 2.79 Deutsche Telekom 2.77 Wells Fargo 2.69 Pfizer 2.58

7 Investment Objective and Policy The investment objective of the Global Equity Income Fund is to achieve a high and growing income over the long term combined with prospects for capital growth. The ACD s investment policy is to invest no less than two-thirds of the gross assets of the Fund in global equities. Income will be in the form of dividend distribution. If the ACD considers it desirable it may further invest up to one third of the total assets of the Fund in derivatives, forward transactions and other securities (including fixed interest securities and money market securities) deposits and cash. 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 obtain the latest KIID from columbiathreadneedle.com. Changes to the management of the ACD The following changes have been made to the directors of the ACD: Resignation of Don Jordison on 1 May 2018; Appointment of Peter Stone on 5 September Changes to the Prospectus During the period from 1 May 2018 to 31 October 2018 the following changes were made to the Prospectus of the Threadneedle Specialist Investment Funds ICVC (the Company): Inclusion of a note regarding the winding up of one sub-fund following successful votes in favour of cross-border mergers; Increase to the initial investment minimum for L Shares; Update to the list of directors of, and funds managed by the ACD; Update to the list of countries where the funds are registered; Update to dilution and performance figures. Changes to the Instrument of Incorporation There were no changes to the Instrument of Incorporation during the period from 1 May 2018 to 31 October Brexit In June 2016 the United Kingdom voted to leave the European Union. While negotiations progress, there is significant uncertainty relating to the UK s withdrawal from the EU, the potential consequences and precise timeframe. It is expected that the UK will exit from the EU on 29 March Depending on the outcome of the UK s negotiations with the European Union, and the existence or otherwise of any formal implementation period, it is possible that the Funds may no longer be eligible to enjoy the rights set out in the UCITS Directive. Ceasing to be so eligible may affect the ability of non-uk domiciled investors to make new investments in the Company. The ACD is monitoring the situation and will keep shareholders informed. The ACD has considered the impact of Brexit for investors in its funds and made a recommendation to investors in the Pan European Equity Dividend Fund that they should vote in favour of a resolution to transfer the fund, using a cross-border UCITS merger, to an equivalent Luxembourgbased fund, in order to provide continuity and certainty for investors. For EU investors, the transfer will remove uncertainty regarding the future status of their investment in their home country. Shareholders voted in favour of the proposal at a meeting of shareholders held on 24 August Following the merger the Pan European Equity Dividend Fund has been closed and is in the process of being wound up. Further information, including a Q&A document is available at Key Risks Investment Risk: The value of investments can fall as well as rise and investors might not get back the sum originally invested. Currency Risk: Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments. Derivatives for EPM/Hedging Risk: The investment policy of the fund allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions. Volatility Risk: The fund may exhibit significant price volatility. Further risks applicable to the fund can be found in the Prospectus. Risk and Reward Profile As at 31 October 2018 the figure for the risk and reward profile disclosed in the most recent KIID representing this fund is 5. The fund is in this specific category because historically it has shown a medium to high level of volatility (how much the value of the fund went up and down compared to other categories).it is based on past performance data in pound sterling. If your investment in the fund 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 fund.

8 General Information The information in this report is designed to enable shareholders to make an informed judgement on the activities of the fund during the period it covers and the results of those activities at the end of the period. For further information, please contact Threadneedle Investment Services Limited. The Annual Report and Financial Statements is available free of charge on request from the ACD and on our website. For more information about the activities and performance of the Company during the period and previous periods, please contact the ACD at the administration address noted below, or visit our website at columbiathreadneedle.com. Contacts: Registered Office Cannon Place 78 Cannon Street London EC4N 6AG Authorised Corporate Director (ACD) Threadneedle Investment Services Limited Cannon Place 78 Cannon Street London EC4N 6AG Registrar Threadneedle Investment Services Limited Delegated to: DST Financial Services Europe Limited Authorised and regulated by the Financial Conduct Authority (FCA) St Nicholas Lane Basildon Essex SS15 5FS Investment Manager Threadneedle Asset Management Limited Cannon Place 78 Cannon Street London EC4N 6AG Depositary Citibank Europe plc, UK branch (Authorised by the Prudential Regulatory Authority (PRA) and regulated by the FCA and PRA) Citigroup Centre 33 Canada Square Canary Wharf London E14 5LB Legal Advisers Eversheds Sutherland (International) LLP One Wood Street London EC2V 7WS Baum Financial Services Law Team Grosser Burstah Hamburg Germany Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX *Calls will be recorded. Authorised Corporate Director Client Services Details UK Investors Address: Threadneedle Investment Services Limited PO Box Chelmsford Essex CM99 2AL Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): Asian Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): All Other Investors Address: Threadneedle Investment Services Limited International Financial Data Services 47, avenue JF Kennedy L-1855 Luxembourg Telephone (dealing & customer enquiries): * Fax (dealing): (enquiries): Website: columbiathreadneedle.com Paying and Information Agent in Belgium CACEIS Belgium S.A. avenue du Port 86 C b Brussels Belgium Representative and Paying Agent in Switzerland BNP Paribas Securities Services, Paris, succursale de Zurich Selnaustrasse Zurich Switzerland 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 ENUK