Rathbone Income Fund. Interim report for the half year ended 31 March 2017

Transcription

1 Rathbone Income Fund Interim report for the half year ended 31 March 2017

2 Rathbone Income Fund Authorised Fund Manager (the Manager) Rathbone Unit Trust Management Limited 8 Finsbury Circus London EC2M 7AZ Telephone Facsimile A member of the Rathbone Group Authorised and regulated by the Financial Conduct Authority and member of The Investment Association Dealing office PO Box 9948 Chelmsford CM99 2AG Telephone Facsimile Registrar International Financial Data Services (UK) Limited PO Box 9948 Chelmsford CM99 2AG Telephone Facsimile Authorised and regulated by the Financial Conduct Authority Directors of the Manager PL Howell Chairman MM Webb Chief Executive Officer JR Chillingworth Chief Investment Officer JM Ardouin Finance Director NM Busby Compliance Director CRC Hexton RP Lanyon CR Stick JG Thomson BN Jones Administrator HSBC Securities Services 1-2 Lochside Way Edinburgh Park Edinburgh EH12 9DT Authorised and regulated by the Financial Conduct Authority Trustee The National Westminster Bank Plc Trustee and Depositary Services 135 Bishopsgate London EC2M 3UR Authorised and regulated by the Financial Conduct Authority Independent Auditor Deloitte LLP Chartered Accountants and Statutory Auditor 110 Queen Street Glasgow G1 3BX Rathbone Income Fund Interim Report

3 Manager s report for the half year ended 31 March 2017 This has been a successful period for the Rathbone Income Fund (the fund), a six month spell which included the shock of the US election result, and the cyclical rally that ensued. It is the first three months of 2017 which has proved to be a real fillip to our performance, especially pleasing as so many of our companies report annual numbers at this time. In the period under review, the fund (Institutional units) generated a total return of 8.62%, versus the IA Equity Income sector up 6.89%, and the FTSE All- Share index up 8.07%. Dividend growth in the underlying portfolio has been strong, and visibility for the remainder of the year seems better than 12 months ago, therefore we intend to increase the interim distribution (Institutional units) to 12.64p, an increase of 6.7%. It is also pleasing to note that, following industry consultation and the subsequent amendment to sector qualification criteria, the Rathbone Income Fund is once more part of the IA Equity Income sector. Investment review Although performance has been strong, portfolio activity has reflected our cautious view of market levels. While we do not attempt to predict what may happen in the future, or how markets will actually react to the big events, we do make assessments as to the value of individual shares, and we are seeing less value in the market. This informs the caution behind our current trading. In the US, financial stocks had a terrific run post the elections, driven by the reflationary rhetoric of President Donald Trump. We took advantage to sell our position in BankUnited. CEO John Kanas had announced his retirement, and we concluded that a sale of the business (which we had considered a lucrative potential exit) is less likely. The story changed; the shares were more expensive, we moved on. Rio Tinto was a surprising star of the show last year, with shares doubling from their lows in January Cyclical businesses sit less well in our process, and prudence motivated us to prune this holding. More controversially perhaps, we have sold both Imperial Brands and Howden Joinery. Tobacco company Imperial Brands is a darling of the income world, and an oft mooted take-over candidate. However, we have long fretted about valuation, and the sustainability and justification of dividend and dividend growth. Market expectations of future earnings progression are too high in our opinion, and our conviction has diminished, so we have sold. Kitchen supplier to the building trade Howden Joinery is a very good, well run business. However, again, we contend that market expectations are too optimistic. If the UK economy is frail, and consumers choose to delay their expenditure on projects at home, as may happen while Brexit negotiations drag on (not to mention, stop press, the General Election), there is a danger that earnings are lower than forecast, at a time when the company is maintaining its long-term expansion plans. Again, caution has prevailed and we have sold, but we certainly do not rule out revisiting the stock if prices retreat to a more attractive level. We have established a new holding in UK-listed utility National Grid. We appreciate the defensive nature of their earnings stream, and the security of dividend. The company is also returning 3.2 billion to shareholders following the sale of a 61% stake in their gas distribution business. Furthermore, some 34% of their asset base is established in the US regulated market. This is attractive to us as a lower risk way of playing a reflationary environment in the US, as returns from these assets are indexlinked. This new position dovetails nicely with the increased holding we have established in US utility WEC Energy, which gives us exposure to electricity, gas and infrastructure assets in Wisconsin, Illinois, Michigan and Minnesota. These are undoubtedly defensive positions for us, but they help to secure our dividend. Other large purchases have emphasised high quality earnings. Shares in Unilever have been more volatile this year, as Mr Market expressed displeasure at the early trading statement; became excited and then disappointed as Kraft Heinz announced and then withdrew their bid for the company, and has subsequently reignited enthusiasm as the company has re-educated investors as to its strategy for long term value creation. We like this business; we have bought on the dips, when Mr Market was in a sulk, and appreciate the 12% growth in dividend that the company now offers. In a similar vein, we have continued to add to Reckitt Benckiser, another core 2 Rathbone Income Fund Interim Report 2017

4 Manager s report for the half year ended 31 March 2017 (continued) holding, taking advantage of dips in the share price as investors focussed on more cyclical positions. Finally, we have consolidated a new holding in US tobacco giant Altria as an alternative to the relinquished position in Imperial Brands. Outlook No one knows what the future holds, and no one knows how the market will react to events. Just look at the equity gains made last year, despite a raft of shocks and surprises. We do not attempt to guess the future. We look at shares and attempt to judge whether or not the price of ownership compensates us for the risk that we are accepting. We attempt to create a portfolio that mitigates downside risk through diversification and conviction. We also believe that if we secure organic growth in our distribution, the combined contribution of all the dividends that we receive, then the unit price and the total return of the fund looks after itself in the long term. We do view this year with caution, and this is reflected in our positioning. However, as ever, we believe that our process and discipline allows us to face the challenges ahead with confidence. Carl Stick 24 April 2017 Rathbone Income Fund Interim Report

5 Net asset value per unit and comparative tables R-Class income units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit p p p p Return before operating charges* 74.08p 86.04p p 32.18p Operating charges (6.91p) (12.67p) (13.31p) (12.64p) Return after operating charges* 67.17p 73.37p p 19.54p Distributions on income units (12.00p) (32.51p) (31.64p) (30.26p) Closing net asset value per unit p p p p *after direct transactions costs 1 of: 0.41p 1.13p 1.35p 2.45p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 7.57% 8.67% 14.25% 2.51% Other information Closing net asset value 151,641, ,741, ,187, ,463,796 Closing number of units 16,096,878 17,109,488 27,444,325 35,469,052 Operating charges 1.54% 1.54% 1.55% 1.55% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price p p p p Lowest unit price p p p p 4 Rathbone Income Fund Interim Report 2017

6 Net asset value per unit and comparative tables (continued) R-Class accumulation units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit 1,427.94p 1,314.92p 1,151.98p 1,124.20p Return before operating charges* p p p 46.14p Operating charges (11.19p) (19.73p) (20.06p) (18.36p) Return after operating charges* p p p 27.78p Distributions on accumulation units (19.35p) (50.95p) (47.79p) (44.02p) Retained distributions on accumulation units 19.35p 50.95p 47.79p 44.02p Closing net asset value per unit 1,536.45p 1,427.94p 1,314.92p 1,151.98p *after direct transactions costs 1 of: 0.66p 1.77p 2.04p 3.56p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 7.60% 8.60% 14.14% 2.47% Other information Closing net asset value 126,595, ,651, ,867, ,304,273 Closing number of units 8,239,498 9,009,575 11,701,673 15,043,972 Operating charges 1.54% 1.54% 1.55% 1.55% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price 1,592.19p 1,482.45p 1,407.59p 1,279.29p Lowest unit price 1,366.63p 1,201.03p 1,135.25p 1,116.60p Rathbone Income Fund Interim Report

7 Net asset value per unit and comparative tables (continued) I-Class income units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit p p p p Return before operating charges* 77.68p 87.70p p 32.25p Operating charges (3.76p) (6.77p) (7.13p) (6.70p) Return after operating charges* 73.92p 80.93p p 25.55p Distributions on income units (12.64p) (34.05p) (32.88p) (31.20p) Closing net asset value per unit p p p p *after direct transactions costs 1 of: 0.43p 1.18p 1.41p 2.54p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 7.98% 9.21% 15.01% 3.20% Other information Closing net asset value 432,847, ,865, ,789, ,275,448 Closing number of units 43,840,249 44,799,281 32,506,826 24,750,516 Operating charges 0.79% 0.79% 0.80% 0.80% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price 1,015.40p p p p Lowest unit price p p p p 6 Rathbone Income Fund Interim Report 2017

8 Net asset value per unit and comparative tables (continued) I-Class accumulation units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit 1,462.29p 1,337.81p 1,164.10p 1,128.24p Return before operating charges* p p p 45.40p Operating charges (5.93p) (10.37p) (10.57p) (9.54p) Return after operating charges* p p p 35.86p Distributions on accumulation units (19.94p) (52.18p) (48.58p) (44.43p) Retained distributions on accumulation units 19.94p 52.18p 48.58p 44.43p Closing net asset value per unit 1,579.21p 1,462.29p 1,337.81p 1,164.10p *after direct transactions costs 1 of: 0.68p 1.81p 2.09p 3.63p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 8.00% 9.30% 14.92% 3.18% Other information Closing net asset value 469,326, ,366, ,781, ,753,262 Closing number of units 29,719,033 31,072,292 23,081,159 12,692,519 Operating charges 0.79% 0.79% 0.80% 0.80% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price 1,601.94p 1,485.65p 1,397.14p 1,263.22p Lowest unit price 1,406.66p 1,228.75p 1,149.88p 1,122.43p Rathbone Income Fund Interim Report

9 Net asset value per unit and comparative tables (continued) S-Class income units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit p p p p Return before operating charges* 78.88p 89.06p p (2.58p) Operating charges (2.54p) (4.62p) (4.88p) (3.12p) Return after operating charges* 76.34p 84.44p p (5.70p) Distributions on income units (12.83p) (34.48p) (33.20p) (25.24p) Closing net asset value per unit 1,002.92p p p p *after direct transactions costs 1 of: 0.44p 1.20p 1.43p 2.58p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 8.13% 9.49% 15.32% (0.69%) Other information Closing net asset value 110,880,155 95,157,176 74,678,336 48,706,090 Closing number of units 11,055,683 10,129,482 8,396,039 6,087,589 Operating charges 0.53% 0.53% 0.54% 0.52% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price 1,031.36p p p p Lowest unit price p p p p 8 Rathbone Income Fund Interim Report 2017

10 Net asset value per unit and comparative tables (continued) S-Class accumulation units Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit 1,472.35p 1,343.63p 1,166.00p 1,173.51p Return before operating charges* p p p (3.11p) Operating charges (3.98p) (7.05p) (7.16p) (4.40p) Return after operating charges* p p p (7.51p) Distributions on accumulation units (20.09p) (52.46p) (48.69p) (35.84p) Retained distributions on accumulation units 20.09p 52.46p 48.69p 35.84p Closing net asset value per unit 1,592.19p 1,472.35p 1,343.63p 1,166.00p *after direct transactions costs 1 of: 0.69p 1.82p 2.10p 3.67p 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 8.14% 9.58% 15.23% (0.64%) Other information Closing net asset value 96,724,988 85,182,808 70,622,491 38,834,682 Closing number of units 6,074,960 5,785,516 5,256,093 3,330,590 Operating charges 0.53% 0.53% 0.54% 0.52% Direct transaction costs 0.05% 0.13% 0.16% 0.30% Prices Highest unit price 1,614.89p 1,495.55p 1,401.90p 1,265.27p Lowest unit price 1,417.06p 1,235.21p 1,152.04p 1,162.92p Rathbone Income Fund Interim Report

11 Net asset value per unit and comparative tables (continued) X-Class income units** Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit p n/a n/a n/a Return before operating charges* 7.89p n/a n/a n/a Operating charges (0.02p) n/a n/a n/a Return after operating charges* 7.87p n/a n/a n/a Distributions on income units (1.27p) n/a n/a n/a Closing net asset value per unit p n/a n/a n/a *after direct transactions costs 1 of: 0.05p n/a n/a n/a 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 7.87% n/a n/a n/a Other information Closing net asset value 5,103,278 n/a n/a n/a Closing number of units 4,787,307 n/a n/a n/a Operating charges 0.04% n/a n/a n/a Direct transaction costs 0.05% n/a n/a n/a Prices Highest unit price p n/a n/a n/a Lowest unit price 95.83p n/a n/a n/a **X-Class income was introduced on 17 October Rathbone Income Fund Interim Report 2017

12 Net asset value per unit and comparative tables (continued) X-Class accumulation units*** Change in net assets per unit pence per unit pence per unit pence per unit pence per unit Opening net asset value per unit p n/a n/a n/a Return before operating charges* 7.88p n/a n/a n/a Operating charges (0.02p) n/a n/a n/a Return after operating charges* 7.86p n/a n/a n/a Distributions on accumulation units (1.27p) n/a n/a n/a Retained distributions on accumulation units 1.27p n/a n/a n/a Closing net asset value per unit p n/a n/a n/a *after direct transactions costs 1 of: 0.05p n/a n/a n/a 1 Transaction costs include dealing costs, broker commission, stamp duty and other explicit investment costs. Performance Return after charges 7.86% n/a n/a n/a Other information Closing net asset value 74,528 n/a n/a n/a Closing number of units 69,097 n/a n/a n/a Operating charges 0.04% n/a n/a n/a Direct transaction costs 0.05% n/a n/a n/a Prices Highest unit price p n/a n/a n/a Lowest unit price 95.83p n/a n/a n/a ***X-Class accumulation was introduced on 17 October Risk and reward profile as published in the fund s most recent Key Investor Information Document Lower potential risk/reward (Not risk-free) Higher potential risk/reward This indicator is a measure of the fund s past volatility (the extent and rapidity of up-and-down movements of the value of an investment). It may not be a reliable indication of the fund s future risk. The risk category shown is not a target or a guarantee and may change over time. Rathbone Income Fund Interim Report

13 Net asset value per unit and comparative tables (continued) Discrete annual performance, quarter ending 31 March 2017* R-Class units 21.08% 13.78% 11.49% (0.13%) 16.45% I-Class units 22.02% 14.66% 12.34% 0.63% 17.32% S-Class units 21.08% 13.95% 12.63% 0.89% 17.63% IA UK Equity Income sector 18.52% 13.97% 8.41% (1.21%) 15.14% * Source performance data Financial Express, bid to bid, net income re-invested. Past performance should not be seen as an indication of future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment. 12 Rathbone Income Fund Interim Report 2017

14 Portfolio and net other assets as at 31 March 2017 Percentage Holding Value of total net (Ordinary shares unless otherwise stated) assets Oil and Gas ( : 3.45%) 2,150,000 Royal Dutch Shell B 46,966, Mining ( : 3.48%) 1,200,000 Rio Tinto 38,496, Aerospace and Defence ( : 5.75%) 6,475,000 BAE Systems 41,601, ,000 Lockheed Martin 36,387, ,000,000 Senior 8,236, Industrial Engineering ( : 2.38%) 86,225, ,000 DCC 31,612, Construction and Materials ( : 1.71%) 925,000 Berkeley 29,664, Support Services ( : 4.55%) 1,300,000 Bunzl 30,160, ,750,000 Carillion 15,039, Food Producers ( : 3.02%) 45,199, ,525,000 Unilever 60,077, Household Goods ( : 4.94%) 3,000,000 Headlam 18,675, ,000 Reckitt Benckiser 54,645, Tobacco ( : 5.20%) 73,320, ,000 Altria 21,418, ,060,000 British American Tobacco 56,180, ,598, Rathbone Income Fund Interim Report

15 Portfolio and net other assets as at 31 March 2017 (continued) Percentage Holding Value of total net (Ordinary shares unless otherwise stated) assets Pharmaceuticals and Biotechnology ( : 11.80%) 1,250,000 AstraZeneca 61,406, ,100,000 Dechra Pharmaceuticals 18,414, ,500,000 GlaxoSmithKline 58,082, ,000 Roche 24,524, Food and Drug Retailers ( : 1.59%) 162,427, ,300,000 UDG Healthcare 23,166, Beverages ( : 2.73%) 650,000 Coca-Cola 22,055, General Retailers ( : 4.68%) 6,500,000 Halfords 23,042, ,000 Next 21,595, ,000 TAKKT 16,708, ,345, Media ( : 7.60%) 2,155,434 Daily Mail & General Trust 15,486, ,750,000 ITV 36,582, ,750,000 Relx 42,982, ,250,000 Tarsus 17,750, ,801, Travel and Leisure ( : 7.07%) 700,000 Carnival 32,046, ,400,000 Greene King 23,851, ,000,000 Restaurant Group 23,345, ,500,000 Saga 21,336, ,578, Electricity ( : 2.00%) 1,800,000 SSE 26,568, Gas, Water and Multiutilities ( : 0.00%) 2,000,000 National Grid 20,270, ,000 WEC Energy 21,818, ,088, Rathbone Income Fund Interim Report 2017

16 Portfolio and net other assets as at 31 March 2017 (continued) Percentage Holding Value of total net (Ordinary shares unless otherwise stated) assets Banks ( : 7.08%) 6,500,000 HSBC (London listed) 42,308, ,500,000 Lloyds Banking Group 38,128, Non-Life Insurance ( : 1.90%) 80,436, ,500,000 Hiscox 16,410, General Financial ( : 9.53%) 7,500,000 Aviva 39,900, ,500,000 Hansteen REIT 19,717, ,500,000 Legal & General 30,912, ,000 Provident Financial 26,901, ,000 Sampo Oyj 20,877, ,308, Technology Hardware and Equipment ( : 2.41%) 400,000 Verizon Communications 15,594, Software and Computer Services ( : 1.75%) 1,300,000 Micro Focus International 29,614, Total value of investments ( : 94.62%) 1,320,555, Net other assets ( : 5.38%) 72,639, Total value of the fund as at 31 March ,393,194, Note: The fund has changed its interim reporting period from 15 April to 31 March. Rathbone Income Fund Interim Report

17 Statement of total return for the half year ended 31 March 2017 Income Net capital gains 88,793,412 13,860,586 Revenue 22,102,357 20,915,009 Expenses (6,131,342) (5,616,381) Net revenue before taxation 15,971,015 15,298,628 Taxation (507,537) (300,156) Net revenue after taxation 15,463,478 14,998,472 Total return before distributions 104,256,890 28,859,058 Distributions (18,063,381) (15,026,126) Change in net assets attributable to unitholders from investment activities 86,193,509 13,832,932 Statement of change in net assets attributable to unitholders for the half year ended 31 March Opening net assets attributable to unitholders 1,329,964,836 1,125,925,618 Amounts receivable on issue of units 45,136, ,696,613 Amounts payable on cancellation of units (76,857,313) (15,029,830) (31,721,131) 91,666,783 Change in net assets attributable to unitholders from investment activities (see Statement of total return above) 86,193,509 13,832,932 Retained distributions on accumulation units 8,741,655 7,364,289 Unclaimed distributions 15,755 7,121 Closing net assets attributable to unitholders 1,393,194,624 1,238,796,743 Note: The fund has changed its interim reporting period from 15 April to 31 March. 16 Rathbone Income Fund Interim Report 2017

18 Balance sheet as at 31 March 2017 Assets Investments 1,320,555,058 1,258,444,875 Current assets: Debtors 8,480,095 3,598,767 Cash and bank balances 79,067,712 89,967,528 Total current assets 87,547,807 93,566,295 Total assets 1,408,102,865 1,352,011,170 Liabilities Creditors: Other creditors (5,955,965) (6,218,953) Distribution payable on income units (8,952,276) (15,827,381) Total liabilities (14,908,241) (22,046,334) Net assets attributable to unitholders 1,393,194,624 1,329,964,836 Notes to the interim financial statements Accounting policies The interim financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with FRS 102 and the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by The Investment Association (formerly the Investment Management Association) in May Unless otherwise stated all other accounting policies applied are consistent with those of the Annual Report for the year ended 30 September 2016 and are detailed in full in those financial statements. Portfolio transaction costs Total purchases and sales transactions for the half year ended 31 March 2017 were 119,447,669 and 146,386,527 respectively. Rathbone Income Fund Interim Report

19 Distribution table for the half year ended 31 March 2017 Distribution table (pence per unit) Interim Group 1 Units purchased prior to 1 October 2016 Group 2 Units purchased on or after 1 October 2016 and on or before 31 March 2017 R-Class income Net Payable Paid units Income Equalisation Group Group R-Class accumulation Net Allocated Accumulated units Income Equalisation Group Group I-Class income Net Payable Paid units Income Equalisation Group Group I-Class accumulation Net Allocated Accumulated units Income Equalisation Group Group S-Class income Net Payable Paid units Income Equalisation Group Group S-Class accumulation Net Allocated Accumulated units Income Equalisation Group Group X-Class income Net Payable Paid units Income Equalisation Group Group X-Class accumulation Net Allocated Accumulated units Income Equalisation Group Group Rathbone Income Fund Interim Report 2017

20 Distribution table for the half year ended 31 March 2017 (continued) Notes for corporate unitholders Corporate unitholders should read the important information on the reverse of the tax voucher in respect of this distribution. The relevant information required by a corporate unitholder is as follows: Franked investment income % Unfranked investment income 0.00% Depositary net liability to corporation tax Nil pence per unit Equalisation Equalisation applies only to units purchased during the distribution period (Group 2 units). It represents the accrued revenue included in the purchase price of the units. After averaging it is returned with the distribution as a capital repayment. It is not liable to Income Tax but must be deducted from the cost of the units for Capital Gains Tax purposes. Directors statement This report is approved in accordance with the requirements of the Financial Conduct Authority s Collective Investment Schemes Sourcebook. MM Webb for Rathbone Unit Trust Management Limited Manager of Rathbone Income Fund 17 May 2017 Rathbone Income Fund Interim Report

21 General information Authorised status The Rathbone Income Fund is an authorised unit trust scheme, established by a Trust Deed dated 12 February 1971 and launched in February It is a UCITS Scheme authorised under Section 243 of the Financial Services and Markets Act 2000, and the currency of the fund is pounds sterling. Investment objective, policy and strategy The objective of the fund is to achieve above average and maintainable income but without neglecting capital security and growth. The Manager intends to achieve the objective primarily through the purchase of ordinary shares with an above average yield. There is no restriction on the economic sectors or geographical areas in which the fund may invest. However, investments will always be predominantly in the ordinary shares of UK companies. To meet these objectives, the fund may also invest, at the Manager s discretion, in other transferable securities, money market instruments, warrants, cash and near cash, deposits and units in collective investment schemes. Use may be made of stocklending, borrowing, cash holdings, hedging and other investment techniques permitted by the FCA Rules. Valuation of the fund The fund is valued on each business day at 12 noon for the purpose of determining prices at which units in the fund may be bought or sold. Valuations may be made at other times on business days with the Trustee s approval. Stewardship code Rathbone Unit Trust Management Limited fully supports the UK Stewardship Code sponsored by the Financial Reporting Council. Our statement on complying with the Code can be found on our website: rutm.com UCITS V Remuneration The European Securities and Markets Authority (ESMA) published guidelines on sound remuneration policies under the UCITS V Directive in March As a result the ACD will be subject to the UCITS V remuneration guidelines from 1 January In order for the Company to meet its obligations under the UCITS V Directive it will need to ensure that all information provided in the annual report is presented in a manner that provides materially relevant, reliable, comparable and clear information. The Authorised Fund Manager is currently reviewing its remuneration policy as a result of the UCITS V remuneration rules and therefore does not believe that disclosing information for the current financial year would be relevant, comparable and clear. Based on the ESMA guidance published, the Company has omitted any information regarding remuneration at this stage since the first full performance year of the ACD concludes on 31 December The Authorised Fund Manager commits to full disclosure on remuneration for all periods beginning on or after 1 January 2017, when the full UCITS V remuneration rules apply to the Company. Buying and selling of units The Manager is available to receive requests for the buying and selling of units on normal business days between 9.00am and 5.00pm and transactions will be effected at prices determined by the next valuation. Application forms for the purchase of units (obtainable from the Manager) should be completed and sent to the Dealing Office. In respect of telephoned orders, remittances should be sent on receipt of the contract note. Contract notes confirming transactions will be issued by the close of business on the next business day after the dealing date. Purchasers of units are required to enter their registration details on the form supplied with their contract note. Once units are paid for, these details will be entered on the unit register. Units can be sold by telephone, fax or letter followed by despatch to the Dealing Office of the authorisation to sell duly completed by all unitholders. 20 Rathbone Income Fund Interim Report 2017

22 General information (continued) In the absence of clear written instructions signed by all the registered holders, a Form of Renunciation will be sent out together with the repurchase contract note. This will need to be signed by all registered holders, and returned to our Dealing Office before settlement can be made. Settlement will be made on whichever is the later of four business days after the dealing date or four days after the receipt of written confirmation. Unitholders may sell units on submitting the purchase contract note and a duly executed Deed of Transfer. The issue and redemption of units will not take place if dealing in the units is suspended by operation of law or any statute for the time being in place. For R-Class units sales constituting a large deal of 50,000 or more may receive a lower price than the published selling price. The minimum initial investment for R-Class units at present is to the value of 1,000 which may be varied by the Manager. The minimum initial investment for I-Class units is 1,000,000. The minimum initial investment for S-Class units is 30,000,000. Thereafter holders may invest additional amounts to the value of 500 or more from time to time as they wish. Any number of units may be subscribed, sold or transferred so long as transaction complies with applicable minimums. Buying and selling of units (continued) The purchase price of R-Class units includes a preliminary charge of 2.5%. There is no preliminary charge for I-Class or S-Class units. The Manager currently receives an annual remuneration for managing the R-Class property of the fund at the rate of 1.50%. The Manager currently receives an annual remuneration for managing the I-Class property of the fund at the rate of 0.75%. The Manager currently receives an annual remuneration for managing the S-Class property of the fund at the rate of 0.49%. Statements A distribution statement showing the rate per unit and your unit holding will be sent semi-annually on 30 April and 30 November. The current value of your units is shown on a valuation statement, which shows the number of units bought over the previous six months, the total number of units in your account and their current value. Twice yearly on 30 June and 31 December, unitholders will receive a consolidated statement showing, where applicable, their Unit Trust, ICVC and ISA holdings for each fund held. Prices The prices of R-Class units are published in the Financial Times under the heading Rathbone Unit Trust Management Limited. The associated cancellation price is available on request from the Manager. The prices for the I-Class and S-Class units are available on request from the Manager. Other information The Trust Deed, the Key Investor Information Document and Supplementary Information Document, the Prospectus and the most recent half yearly report of each fund may be inspected at the registered offices of the Manager. Copies of the Prospectus, the Key Investor Information Document and Supplementary Information Document and the most recent half yearly report of each fund may be obtained free of charge on application to the Manager. The Register of Unitholders can be inspected during normal business hours at the office of the Registrar, International Financial Data Services (UK) Limited at PO Box 9948, Chelmsford CM99 2AG. Further copies of this Long report are available upon request, free of charge, from Client Services Department, Rathbone Unit Trust Management Limited, 8 Finsbury Circus, London EC2M 7AZ. Unitholders who have any queries or complaints about the operation of the fund should address them in the first instance to the Compliance Officer, Rathbone Unit Trust Management Limited, 8 Finsbury Circus, London EC2M 7AZ. Any complaint we receive will be handled in accordance with our internal complaint procedures. A copy of these are available from the Compliance Officer. Rathbone Income Fund Interim Report

23 General information (continued) If you have occasion to complain, and in the unlikely event that you do not receive a satisfactory response, you may direct your complaint to the Financial Ombudsman Service at South Quay Plaza, 183 Marsh Wall, London E14 9SR. Further details about the Financial Ombudsman Service are available on their website at financial-ombudsman.org.uk. ISA eligibility The fund has been managed throughout the year to ensure that it is eligible to qualify and be included in an Individual Savings Account (ISA). The fund will at all times be invested in such a way that the units will constitute Qualifying Investments for the purposes of the Individual Savings Account (ISA) Regulations 1998, as amended from time to time. Risk factors An investment in a unit trust should be regarded as a medium to long term investment. Investors should be aware that the price of units and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance should not be seen as an indication of future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. Where periodic charge is wholly or partly taken out of the fund s capital, distributable income will be increased at the expense of capital which will either be eroded or future growth restrained. Other funds Rathbone Unit Trust Management Limited is also the Manager of the following funds: Rathbone Active Income and Growth Fund Rathbone Blue Chip Income and Growth Fund Rathbone Core Investment for Charities Fund Rathbone Dragon Trust Rathbone Ethical Bond Fund Rathbone Global Opportunities Fund Rathbone Heritage Fund Rathbone Recovery Fund Rathbone Spenser Fund Rathbone Strategic Bond Fund and the Authorised Corporate Director of: Rathbone Global Alpha Fund Rathbone Enhanced Growth Portfolio Rathbone Strategic Growth Portfolio Rathbone Strategic Income Portfolio Rathbone Total Return Portfolio Rathbone Pharaoh Fund Rathbone Quercus Growth Fund Rathbone Sherwood Fund Rathbone Sussex Income Fund Rathbone Sussex Growth Fund Further details Should you require further details of this fund or any of the other funds managed by Rathbone Unit Trust Management Limited, a Prospectus, Key Investor Information Document and Supplementary Information Document or an application form for the purchase of shares or units, please write to: Client Services Department Rathbone Unit Trust Management Limited 8 Finsbury Circus London EC2M 7AZ All literature is available free of charge. Information is also available on our website: rutm.com Data protection If you do not wish to receive information on other products and services offered by the Rathbone Group, please write to us at the following address: Data Protection Officer Rathbone Unit Trust Management Limited 8 Finsbury Circus London EC2M 7AZ 22 Rathbone Income Fund Interim Report 2017

24 Rathbone Unit Trust Management Limited 8 Finsbury Circus, London EC2M 7AZ Tel Fax Information line rutm@rathbones.com rutm.com Authorised and regulated by the Financial Conduct Authority A member of The Investment Association A member of the Rathbone Group. Registered No