UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act FileNumber 811-22959
1290 FUNDS
(Exact name of registrant as specified in charter)
1290 Avenue of the Americas
New York, New York 10104
(Address of principal executive offices)
WILLIAM T. MACGREGOR, ESQ.
Executive Vice President and Secretary
AXA Equitable Funds Management Group, LLC
1290 Avenue of the Americas
New York, New York 10104
(Name and Address of Agent for Service)
Copies to:
MARK AMOROSI, ESQ.
K&L Gates LLP
1601 K Street, N.W.
Washington, D.C. 20006
Registrant’s telephone number, including area code:(212) 554-1234
Date of fiscal year end: October 31
Date of reporting period: November 1, 2018 - April 30, 2019
Item 1. | Reports to Stockholders. |
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1).
Semi-Annual Report
April 30, 2019
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the shareholder reports from the Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the shareholder reports will be made available on the Funds’ website (www.1290Funds.com/literature.php), and you will be notified by mail each time a shareholder report is posted and provided with a website link to access the shareholder report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive the Funds’ shareholder reports and other communications electronically by contacting your financial intermediary or, if you invest directly with the Funds, by calling 1-888-310-0416 or by sending an e-mail request to 1290Funds@dfinsolutions.com.
Beginning on January 1, 2019, you may elect to receive all future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you can call 1-888-310-0416 or send an e-mail request to 1290Funds@dfinsolutions.com to let the Funds know that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all 1290 Funds held in your account if you invest through your financial intermediary or all 1290 Funds held with the fund complex if you invest directly with the Funds.
1290 Funds
Semi-Annual Report
April 30, 2019
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Market Overview for the Six Months Ended April 30, 2019
Market Update
The six-month period ended April 30, 2019 was characterized by heightened macroeconomic uncertainty, which translated into sharp market directional changes. By the conclusion of the reporting period, faced with political pressure to cut interest rates, below-target inflation and surging U.S. job growth, the U.S. Federal Reserve (Fed) had decided to place a hold on its anti-inflationary monetary policy. The Fed’s mandate to target maximum employment and stable prices remained in focus, as the long-lived U.S. economic expansion and the bull market rolled onward at the end of the period.
In the bond markets, the Fed’s decision appeared to be supported by the lack of inflation and signs that the U.S. economy may have sidestepped a recession. The European economic outlook remained cloudy, but unexpectedly strong eurozone gross domestic product (GDP) growth in the first quarter and surprise gains in German and Polish inflation figures sent interest rates higher. As U.K. economic data continued to defy Brexit odds and display unexpected strength, bonds also sold off. Meanwhile, some peripheral sovereigns, like Spain and Portugal, rallied. Faced with persistent, below-target inflation, the Bank of Japan held steady on monetary policy, pledging to keep rates accommodative through 2020 while lowering its outlook for growth and price gains. As a result, short- and medium-term Japanese government bond yields remained negative. Mexican bonds also saw yields rise modestly, but short-dated South African bonds rallied. President Trump’s political maneuvers to block Iranian oil exports and influence global supply upset crude prices and global markets and introduced new volatility. Meanwhile, copper prices softened, raising caution around the outlook for Chinese and global growth. However, both the U.S. and China signaled that a trade resolution may be near, which could help lift business sentiment and global growth.
In the U.S. equity markets, the S&P 500 Index rose 9.8%, but the trend was volatile. The last quarter of 2018 saw a substantial drop in equity prices. Investors’ concerns mostly centered on the implications of a possible U.S.-China trade war, as well as hawkish Fed policy in the face of slowing economic trends: by the end of 2018, the S&P 500 was off 14% from its peak in September while the Russell 2000 Index, a measure of small-capitalization stocks, was down 22% from its peak in August. In the first quarter of 2019, however, U.S. stocks registered their best first three months since 1998. The shift in Fed policy and anticipation of a trade deal with China fueled the rally.
Broadly speaking, smaller companies were harder hit at the end of the 4th quarter as the market grappled with the potential slowdown in global growth and these companies did not bounce back as strongly as larger companies during the first quarter. However, going into 2019, smaller-capitalization companies continued to benefit from the corporate tax cut, lower international exposure and some cushion from trade disruptions.
The rally that started in 2019 also brought gains to battered international markets. The eurozone equity markets all advanced, but to varying degrees, as equity market sentiment recovered despite slowing economic activity across the region. In the Asia-Pacific region, Japan underperformed as uncertainty around U.S. trade protectionism, an upcoming sales-tax hike and low levels of growth weighed on sentiment. Hong Kong rallied amid a rebound in mainland Chinese sentiment. Emerging-market equities registered a strong return in the first quarter of 2019, helped by the rebound in Chinese stock prices.
Source: AXA Equitable Funds Management Group, LLC doing business as 1290 Asset Managers®. As of 4/30/19.
This information is provided for general information only and is not intended to provide specific advice or recommendations for any individual investor.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. No investment is risk-free. Bond investments are subject to interest rate risk so that when interest rates rise, the prices of bonds can decrease and the investor can lose principal value. High yield bonds are subject to a high degree of credit and market risk. International securities carry additional risks including currency exchange fluctuation and different government regulations, economic conditions or accounting standards. Smaller company stocks involve a greater risk than is customarily associated with more established companies. Index performance is referenced for illustrative purposes only. You cannot invest directly in an index.
Fund holdings and sector allocations are subject to change. Please see the Portfolio of Investments for a complete list of fund holdings.
2
NOTES ON PERFORMANCE (Unaudited)
Total Returns
Performance of the 1290 Funds as shown on the following pages compares each Fund’s performance to that of a broad-based securities index and, with respect to certain Funds, customized composite benchmarks. Each Fund’s rates of return are net of investment advisory fees and expenses of the Fund. Each Fund has a separate investment objective it seeks to achieve by following a separate investment policy. There is no guarantee that these objectives will be attained. The objectives and policies of each Fund will affect its return and its risk. Keep in mind that past performance is not an indication of future results.
Benchmarks
60% S&P 500® Index/40% Bloomberg Barclays U.S. Aggregate Bond Index is a hypothetical combination of unmanaged indexes. The composite index combines the total return of the S&P 500® Index at a weighting of 60% and the Bloomberg Barclays U.S. Aggregate Bond Index at a weighting of 40%.
Bloomberg Barclays U.S. Aggregate Bond Index covers the U.S. dollar denominated investment-grade, fixed-rate, taxable bond market of securities. The index includes bonds from the Treasury, government-related and corporate securities, agency fixed rate and hybrid adjustable mortgage pass through securities, asset-backed securities and commercial mortgage-backed securities.
ICE BofAML US 3-Month Treasury Bill Index (“ICE BofAML 3 mo T-Bill”) measures the returns of negotiable debt obligations issued by the U.S. government and backed by its full faith and credit, having a maturity of three months.
ICE BofAML US Convertible Indexconsists of U.S. dollar denominated investment grade and non-investment grade convertible securities sold into the U.S. market and publicly traded in the United States. The index constituents are market value weighted based on the convertible securities prices and outstanding shares, and the underlying index is rebalanced daily.
ICE BofAML US High Yield Indextracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. Qualifying securities must have at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million. It is capitalization-weighted.
Morgan Stanley Capital International (MSCI) ACWI (Net) Index (“MSCI ACWI (Net) Index”)is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of 23 developed markets and 24 emerging markets. The index covers approximately 85% of the global investment opportunities.
Morgan Stanley Capital International (MSCI) ACWI Minimum Volatility (Net) Index (“MSCI ACWI Minimum Volatility (Net) Index”) aims to reflect the performance characteristics of a minimum variance strategy applied to large and mid cap equities across 23 developed markets and 23 emerging markets countries. The index is calculated by optimizing the MSCI ACWI Index, its parent index, in USD for the lowest absolute risk (within a given set of constraints). Historically, the index has shown lower beta and volatility characteristics relative to the MSCI ACWI Index.
Morgan Stanley Capital International (MSCI) World (Net) Index (“MSCI World (Net) Index”)is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 23 developed market country indexes.
Russell 2500™ Value Indexmeasures the performance of those Russell 2500TM Index companies with lower price-to-book ratios and lower forecasted growth values. It is market-capitalization weighted.
Standard & Poor’s 500® Composite Stock Price Index (“S&P 500® Index”)is a weighted index of common stocks of 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The index is capitalization weighted, thereby giving greater weight to companies with the largest market capitalizations.
The Standard & Poor’s Target Date Index Series (each, an “S&P Target Date Index”) comprises eleven multi-asset class indices, each corresponding to a particular target retirement date. The asset allocation for each index in the series is determined once a year through survey of large fund management companies that offer target date products. Each index is fully investable, with varying levels of exposure to equities, fixed income and commodities.
Glossary
Derivativeis a financial instrument with a price that is dependent upon or derived from one or more underlying assets.
Diversified spreadis the sale of multiple, diversified futures contracts and the purchase of other multiple, diversified offsetting futures contracts. A spread tracks the difference between a long and short position.
Mortgage backed security (MBS)is a type of asset-backed security that is secured by a mortgage or collection of mortgages.
Quantitative easingis the introduction of new money into the money supply by a central bank.
Shiller Barclays Cyclically Adjusted Price-to-Earnings (CAPE) Total Return Index aims to identify undervalued sectors in the large-cap equity market based on a modified CAPE® ratio, which is designed to assess longer term equity valuations by using an inflation adjusted earnings horizon.
Smart betadefines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization based indices.
Swapis a derivative contract through which two parties exchange financial instruments.
3
1290 CONVERTIBLE SECURITIES FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENT SUB-ADVISER
Ø | Palisade Capital Management, L.L.C. |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||
Fund – Class A Shares* | without Sales Charge | 11.16 | % | 9.84 | % | 6.33 | % | |||||||
with Sales Charge (a) | 6.12 | 4.93 | 5.06 | |||||||||||
Fund – Class I Shares* | 11.30 | 10.09 | 6.59 | |||||||||||
Fund – Class R Shares* | 11.03 | 9.49 | 6.05 | |||||||||||
ICE BofAML US Convertible Index | 9.29 | 10.96 | 7.91 | |||||||||||
* Date of inception 7/6/15.
(a) A 4.50% front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I and R shares were 1.94%, 1.69% and 2.19%, respectively. The net expense ratios for Class A, I and R shares were 1.25%, 1.00% and 1.50%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — Palisade Capital Management, L.L.C.
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, U.S. convertibles benefited from the strength of both asset classes, posting double-digit gains in the first four months of the year.
Fund Highlights
The Fund’s Class I shares returned 11.30% for the six-month period ended April 30, 2019. The Fund’s benchmark, ICE BofAML US Convertible Index, returned 9.29% over the same time period. Positioning in technology helped performance as these issuers benefited from the positive economic backdrop. Offsetting this strength was weaker performance in the industrials sector.
What helped performance during the six-month period ended April 30, 2019:
• | An overweight to the outperforming technology sector, as well as the securities held within the sector, posted strong returns. Notably, Novellus Systems, Inc., Palo Alto Networks, Inc., and Coupa, Inc. generated double-digit returns. |
• | An underweight and outperformance in the financials sector added value, with a notably strong return from LendingTree, Inc. bolstering relative results. |
• | Elsewhere, individual companies in the health care and consumer discretionary sectors produced good results, led by double-digit returns from Exact Sciences Corporation and Mercado Libre, Inc. |
What hurt performance during the six-month period ended April 30, 2019:
• | Only partially offsetting the outperformance was an overweight to the relatively weak health care sector. Notably hampering results was the Fund’s higher exposure in the pharmaceuticals and health care industries. |
• | Disappointing returns from Dycom Industries, Inc. and Greenbrier Companies, Inc. held back results in the industrials sector. |
• | An overweight to the underperforming transportation sector also weighed on results for the period. |
Outlook
Low inflation, low unemployment, stable credit markets, and an accommodative U.S. Federal Reserve stance may provide a supportive environment for both economic growth and convertible valuations. We are mindful that the U.S. and China could potentially resolve their trade dispute soon, which could act as a catalyst for further near-term gains. Offsetting this view is the possibility a positive trade deal is already priced into the market given robust year-to-date gains.
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
Information Technology | 36.3 | % | ||
Health Care | 23.9 | |||
Consumer Discretionary | 8.3 | |||
Industrials | 7.7 | |||
Financials | 7.6 | |||
Communication Services | 4.4 | |||
Energy | 2.9 | |||
Real Estate | 1.9 | |||
Materials | 1.7 | |||
Utilities | 1.2 | |||
Investment Company | 0.6 | |||
Consumer Staples | 0.6 | |||
Cash and Other | 2.9 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
4
1290 CONVERTIBLE SECURITIES FUND (Unaudited)
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class A |
| |||||||||||
Actual | $1,000.00 | $1,111.60 | $6.54 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,018.60 | 6.26 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,113.00 | 5.24 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.84 | 5.01 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,110.30 | 7.85 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,017.36 | 7.50 | |||||||||
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.25%, 1.00% and 1.50%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
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5
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
LONG-TERM DEBT SECURITIES: |
| |||||||
Convertible Bonds (82.1%) | ||||||||
Communication Services (4.4%) | ||||||||
Entertainment (1.0%) | ||||||||
Live Nation Entertainment, Inc. | ||||||||
2.500%, 3/15/23 | $ | 105,000 | $ | 123,434 | ||||
Pandora Media LLC | ||||||||
1.750%, 12/1/23 | 110,000 | 123,495 | ||||||
|
| |||||||
246,929 | ||||||||
|
| |||||||
Interactive Media & Services (1.4%) | ||||||||
Momo, Inc. | ||||||||
1.250%, 7/1/25§ | 61,000 | 57,073 | ||||||
Twitter, Inc. | ||||||||
0.250%, 6/15/24§ | 171,000 | 172,661 | ||||||
Weibo Corp. | ||||||||
1.250%, 11/15/22 | 91,000 | 86,181 | ||||||
Zillow Group, Inc. | ||||||||
1.500%, 7/1/23 | 34,000 | 30,988 | ||||||
|
| |||||||
346,903 | ||||||||
|
| |||||||
Media (2.0%) | ||||||||
DISH Network Corp. | ||||||||
3.375%, 8/15/26 | 395,000 | 362,338 | ||||||
Liberty Interactive LLC | ||||||||
1.750%, 9/30/46§ | 116,000 | 139,226 | ||||||
|
| |||||||
501,564 | ||||||||
|
| |||||||
Total Communication Services | 1,095,396 | |||||||
|
| |||||||
Consumer Discretionary (8.3%) | ||||||||
Diversified Consumer Services (0.7%) |
| |||||||
Chegg, Inc. | ||||||||
0.125%, 3/15/25§ | 166,000 | 158,737 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure (1.2%) |
| |||||||
Caesars Entertainment Corp. | ||||||||
5.000%, 10/1/24 | 207,000 | 306,375 | ||||||
|
| |||||||
Internet & Direct Marketing Retail (4.9%) |
| |||||||
Booking Holdings, Inc. | ||||||||
0.350%, 6/15/20 | 350,000 | 500,121 | ||||||
Ctrip.com International Ltd. | ||||||||
1.250%, 9/15/22 | 45,000 | 45,877 | ||||||
Etsy, Inc. | ||||||||
(Zero Coupon), 3/1/23 | 67,000 | 130,357 | ||||||
IAC FinanceCo, Inc. | ||||||||
0.875%, 10/1/22§ | 147,000 | 228,309 | ||||||
Liberty Expedia Holdings, Inc. | ||||||||
1.000%, 6/30/47§ | 102,000 | 101,981 | ||||||
MercadoLibre, Inc. | ||||||||
2.000%, 8/15/28§ | 64,000 | 82,640 | ||||||
Wayfair, Inc. | ||||||||
0.375%, 9/1/22 | 70,000 | 115,194 | ||||||
|
| |||||||
1,204,479 | ||||||||
|
| |||||||
Specialty Retail (1.5%) | ||||||||
Guess?, Inc. | ||||||||
2.000%, 4/15/24§ | 100,000 | 103,839 | ||||||
RH | ||||||||
(Zero Coupon), 7/15/20 | 61,000 | 67,227 | ||||||
(Zero Coupon), 6/15/23§ | 228,000 | 197,850 | ||||||
|
| |||||||
368,916 | ||||||||
|
| |||||||
Total Consumer Discretionary | 2,038,507 | |||||||
|
| |||||||
Consumer Staples (0.6%) | ||||||||
Personal Products (0.6%) | ||||||||
Herbalife Nutrition Ltd. | ||||||||
2.625%, 3/15/24 | 132,000 | 138,178 | ||||||
|
| |||||||
Total Consumer Staples | 138,178 | |||||||
|
| |||||||
Energy (2.7%) | ||||||||
Energy Equipment & Services (1.4%) |
| |||||||
SEACOR Holdings, Inc. | ||||||||
3.250%, 5/15/30 | 148,000 | 135,961 | ||||||
Transocean, Inc. | ||||||||
0.500%, 1/30/23 | 182,000 | 194,856 | ||||||
|
| |||||||
330,817 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels (1.3%) |
| |||||||
Cheniere Energy, Inc. | ||||||||
4.250%, 3/15/45 | 120,000 | 94,800 | ||||||
Chesapeake Energy Corp. | ||||||||
5.500%, 9/15/26 (e) | 201,000 | 182,274 | ||||||
Oasis Petroleum, Inc. | ||||||||
2.625%, 9/15/23 | 56,000 | 53,543 | ||||||
|
| |||||||
330,617 | ||||||||
|
| |||||||
Total Energy | 661,434 | |||||||
|
| |||||||
Financials (1.6%) | ||||||||
Consumer Finance (0.7%) | ||||||||
Encore Capital Group, Inc. | ||||||||
3.000%, 7/1/20 | 90,000 | 86,281 | ||||||
PRA Group, Inc. | ||||||||
3.500%, 6/1/23 | 99,000 | 91,335 | ||||||
|
| |||||||
177,616 | ||||||||
|
| |||||||
Mortgage Real Estate Investment Trusts (REITs) (0.2%) |
| |||||||
Western Asset Mortgage Capital Corp. (REIT) |
| |||||||
6.750%, 10/1/22 | 60,000 | 58,688 | ||||||
|
| |||||||
Thrifts & Mortgage Finance (0.7%) |
| |||||||
LendingTree, Inc. | ||||||||
0.625%, 6/1/22 | 86,000 | 165,013 | ||||||
|
| |||||||
Total Financials | 401,317 | |||||||
|
| |||||||
Health Care (20.6%) | ||||||||
Biotechnology (8.6%) | ||||||||
Alder Biopharmaceuticals, Inc. | ||||||||
2.500%, 2/1/25 | 115,000 | 110,303 | ||||||
BioMarin Pharmaceutical, Inc. | ||||||||
1.500%, 10/15/20 | 211,000 | 236,584 | ||||||
Clovis Oncology, Inc. | ||||||||
2.500%, 9/15/21 | 128,000 | 113,984 | ||||||
Exact Sciences Corp. | ||||||||
1.000%, 1/15/25 | 296,000 | 446,094 | ||||||
Flexion Therapeutics, Inc. | ||||||||
3.375%, 5/1/24 | 144,000 | 120,343 | ||||||
Incyte Corp. | ||||||||
1.250%, 11/15/20 | 75,000 | 115,296 | ||||||
Inovio Pharmaceuticals, Inc. | ||||||||
6.500%, 3/1/24§ | 66,000 | 66,124 | ||||||
Insmed, Inc. | ||||||||
1.750%, 1/15/25 | 175,000 | 182,109 | ||||||
Ionis Pharmaceuticals, Inc. | ||||||||
1.000%, 11/15/21 | 81,000 | 104,128 |
See Notes to Financial Statements.
6
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Ligand Pharmaceuticals, Inc. | ||||||||
0.750%, 5/15/23§ | $ | 315,000 | $ | 272,973 | ||||
Neurocrine Biosciences, Inc. | ||||||||
2.250%, 5/15/24 | 98,000 | 118,270 | ||||||
Radius Health, Inc. | ||||||||
3.000%, 9/1/24 | 69,000 | 59,823 | ||||||
Retrophin, Inc. | ||||||||
2.500%, 9/15/25 | 58,000 | 51,406 | ||||||
Sarepta Therapeutics, Inc. | ||||||||
1.500%, 11/15/24 | 73,000 | 130,122 | ||||||
|
| |||||||
2,127,559 | ||||||||
|
| |||||||
Health Care Equipment & Supplies (4.2%) |
| |||||||
CONMED Corp. | ||||||||
2.625%, 2/1/24§ | 117,000 | 128,002 | ||||||
DexCom, Inc. | ||||||||
0.750%, 5/15/22 | 170,000 | 231,312 | ||||||
Insulet Corp. | ||||||||
1.375%, 11/15/24§ | 151,000 | 172,056 | ||||||
Nevro Corp. | ||||||||
1.750%, 6/1/21 | 182,000 | 184,523 | ||||||
NuVasive, Inc. | ||||||||
2.250%, 3/15/21 | 71,000 | 81,474 | ||||||
Wright Medical Group NV | ||||||||
2.250%, 11/15/21 | 171,000 | 251,296 | ||||||
|
| |||||||
1,048,663 | ||||||||
|
| |||||||
Health Care Providers & Services (1.8%) |
| |||||||
Anthem, Inc. | ||||||||
2.750%, 10/15/42 | 54,000 | 196,425 | ||||||
Molina Healthcare, Inc. | ||||||||
1.125%, 1/15/20 | 74,000 | 235,807 | ||||||
|
| |||||||
432,232 | ||||||||
|
| |||||||
Health Care Technology (1.8%) | ||||||||
Allscripts Healthcare Solutions, Inc. | ||||||||
1.250%, 7/1/20 | 105,000 | 103,113 | ||||||
Evolent Health, Inc. | ||||||||
2.000%, 12/1/21 | 124,000 | 121,372 | ||||||
Teladoc Health, Inc. | ||||||||
3.000%, 12/15/22 | 152,000 | 230,215 | ||||||
|
| |||||||
454,700 | ||||||||
|
| |||||||
Life Sciences Tools & Services (1.3%) | ||||||||
Illumina, Inc. | ||||||||
0.500%, 6/15/21 | 182,000 | 248,885 | ||||||
(Zero Coupon), 8/15/23§ | 66,000 | 71,141 | ||||||
|
| |||||||
320,026 | ||||||||
|
| |||||||
Pharmaceuticals (2.9%) | ||||||||
Dermira, Inc. | ||||||||
3.000%, 5/15/22 | 174,000 | 152,159 | ||||||
Horizon Pharma Investment Ltd. | ||||||||
2.500%, 3/15/22 | 91,000 | 102,091 | ||||||
Jazz Investments I Ltd. | ||||||||
1.875%, 8/15/21 | 241,000 | 239,042 | ||||||
Medicines Co. (The) | ||||||||
2.500%, 1/15/22 | 131,000 | 141,607 | ||||||
Paratek Pharmaceuticals, Inc. | ||||||||
4.750%, 5/1/24§ | 91,000 | 70,343 | ||||||
|
| |||||||
705,242 | ||||||||
|
| |||||||
Total Health Care | 5,088,422 | |||||||
|
| |||||||
Industrials (6.5%) | ||||||||
Air Freight & Logistics (1.4%) | ||||||||
Atlas Air Worldwide Holdings, Inc. | ||||||||
1.875%, 6/1/24 | 131,000 | 137,406 | ||||||
Echo Global Logistics, Inc. | ||||||||
2.500%, 5/1/20 | 200,000 | 195,774 | ||||||
|
| |||||||
333,180 | ||||||||
|
| |||||||
Building Products (0.5%) | ||||||||
Patrick Industries, Inc. | ||||||||
1.000%, 2/1/23 | 142,000 | 129,859 | ||||||
|
| |||||||
Construction & Engineering (1.5%) | ||||||||
Dycom Industries, Inc. | ||||||||
0.750%, 9/15/21 | 179,000 | 168,905 | ||||||
KBR, Inc. | ||||||||
2.500%, 11/1/23§ | 62,000 | 67,618 | ||||||
Tutor Perini Corp. | ||||||||
2.875%, 6/15/21 | 143,000 | 140,877 | ||||||
|
| |||||||
377,400 | ||||||||
|
| |||||||
Machinery (2.4%) | ||||||||
Chart Industries, Inc. | ||||||||
1.000%, 11/15/24§ | 77,000 | 122,939 | ||||||
Fortive Corp. | ||||||||
0.875%, 2/15/22§ | 198,000 | 208,895 | ||||||
Greenbrier Cos., Inc. (The) | ||||||||
2.875%, 2/1/24 | 270,000 | 270,538 | ||||||
|
| |||||||
602,372 | ||||||||
|
| |||||||
Transportation Infrastructure (0.7%) | ||||||||
Macquarie Infrastructure Corp. | ||||||||
2.000%, 10/1/23 | 191,000 | 167,607 | ||||||
|
| |||||||
Total Industrials | 1,610,418 | |||||||
|
| |||||||
Information Technology (35.7%) | ||||||||
Communications Equipment (1.8%) | ||||||||
Infinera Corp. | ||||||||
2.125%, 9/1/24 | 155,000 | 121,452 | ||||||
Lumentum Holdings, Inc. | ||||||||
0.250%, 3/15/24 | 253,000 | 314,244 | ||||||
|
| |||||||
435,696 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components (0.6%) |
| |||||||
TTM Technologies, Inc. | ||||||||
1.750%, 12/15/20 | 105,000 | 150,453 | ||||||
|
| |||||||
IT Services (3.5%) | ||||||||
Akamai Technologies, Inc. | ||||||||
0.125%, 5/1/25§ | 149,000 | 157,721 | ||||||
Euronet Worldwide, Inc. | ||||||||
0.750%, 3/15/49§ | 27,000 | 30,135 | ||||||
GDS Holdings Ltd. | ||||||||
2.000%, 6/1/25§ | 56,000 | 56,122 | ||||||
Okta, Inc. | ||||||||
0.250%, 2/15/23 | 67,000 | 148,258 | ||||||
Square, Inc. | ||||||||
0.500%, 5/15/23§ | 181,000 | 216,108 | ||||||
Twilio, Inc. | ||||||||
0.250%, 6/1/23§ | 82,000 | 164,197 | ||||||
Wix.com Ltd. | ||||||||
(Zero Coupon), 7/1/23§ | 87,000 | 102,317 | ||||||
|
| |||||||
874,858 | ||||||||
|
|
See Notes to Financial Statements.
7
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Semiconductors & Semiconductor Equipment (14.6%) |
| |||||||
Advanced Micro Devices, Inc. | ||||||||
2.125%, 9/1/26 | $ | 107,000 | $ | 377,288 | ||||
Cypress Semiconductor Corp. | ||||||||
4.500%, 1/15/22 | 162,000 | 225,822 | ||||||
Inphi Corp. | ||||||||
1.125%, 12/1/20 | 87,000 | 109,403 | ||||||
Intel Corp. | ||||||||
3.250%, 8/1/39 | 164,000 | 409,552 | ||||||
Microchip Technology, Inc. | ||||||||
1.625%, 2/15/25 | 259,000 | 514,376 | ||||||
1.625%, 2/15/27 | 485,000 | 629,220 | ||||||
Micron Technology, Inc. | ||||||||
Series F | 19,000 | 72,947 | ||||||
Novellus Systems, Inc. | ||||||||
2.625%, 5/15/41 | 66,000 | 415,213 | ||||||
NXP Semiconductors NV | ||||||||
1.000%, 12/1/19 | 45,000 | 49,754 | ||||||
ON Semiconductor Corp. | ||||||||
1.000%, 12/1/20 | 199,000 | 265,875 | ||||||
Rambus, Inc. | ||||||||
1.375%, 2/1/23 | 91,000 | 86,168 | ||||||
Silicon Laboratories, Inc. | ||||||||
1.375%, 3/1/22 | 116,000 | 147,634 | ||||||
Synaptics, Inc. | ||||||||
0.500%, 6/15/22 | 107,000 | 97,691 | ||||||
Teradyne, Inc. | ||||||||
1.250%, 12/15/23 | 121,000 | 198,339 | ||||||
|
| |||||||
3,599,282 | ||||||||
|
| |||||||
Software (13.8%) | ||||||||
Coupa Software, Inc. | ||||||||
0.375%, 1/15/23§ | 60,000 | 141,102 | ||||||
DocuSign, Inc. | ||||||||
0.500%, 9/15/23§ | 122,000 | 131,380 | ||||||
FireEye, Inc. | ||||||||
0.875%, 6/1/24§ | 255,000 | 255,601 | ||||||
Guidewire Software, Inc. | ||||||||
1.250%, 3/15/25 | 167,000 | 190,008 | ||||||
HubSpot, Inc. | ||||||||
0.250%, 6/1/22 | 91,000 | 181,400 | ||||||
New Relic, Inc. | ||||||||
0.500%, 5/1/23§ | 83,000 | 96,785 | ||||||
Nutanix, Inc. | ||||||||
(Zero Coupon), 1/15/23 | 181,000 | 206,603 | ||||||
Palo Alto Networks, Inc. | ||||||||
0.750%, 7/1/23§ | 388,000 | 439,782 | ||||||
Pluralsight, Inc. | ||||||||
0.375%, 3/1/24§ | 66,000 | 75,226 | ||||||
Q2 Holdings, Inc. | ||||||||
0.750%, 2/15/23 | 75,000 | 105,104 | ||||||
RealPage, Inc. | ||||||||
1.500%, 11/15/22 | 93,000 | 151,766 | ||||||
RingCentral, Inc. | ||||||||
(Zero Coupon), 3/15/23 | 78,000 | 117,803 | ||||||
ServiceNow, Inc. | ||||||||
(Zero Coupon), 6/1/22 | 119,000 | 240,825 | ||||||
Splunk, Inc. | ||||||||
0.500%, 9/15/23§ | 397,000 | 452,089 | ||||||
1.125%, 9/15/25§ | 61,000 | 71,024 | ||||||
Verint Systems, Inc. | ||||||||
1.500%, 6/1/21 | 188,000 | 210,488 | ||||||
Workday, Inc. | ||||||||
0.250%, 10/1/22 | 141,000 | 209,277 | ||||||
Zendesk, Inc. | ||||||||
0.250%, 3/15/23 | 90,000 | 135,361 | ||||||
|
| |||||||
3,411,624 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (1.4%) |
| |||||||
Pure Storage, Inc. | ||||||||
0.125%, 4/15/23 | 217,000 | 239,555 | ||||||
Western Digital Corp. | ||||||||
1.500%, 2/1/24§ | 106,000 | 94,565 | ||||||
|
| |||||||
334,120 | ||||||||
|
| |||||||
Total Information Technology | 8,806,033 | |||||||
|
| |||||||
Materials (0.7%) | ||||||||
Metals & Mining (0.7%) | ||||||||
Allegheny Technologies, Inc. | ||||||||
4.750%, 7/1/22 | 42,000 | 78,228 | ||||||
Cleveland-Cliffs, Inc. | ||||||||
1.500%, 1/15/25 | 61,000 | 83,957 | ||||||
|
| |||||||
Total Materials | 162,185 | |||||||
|
| |||||||
Real Estate (1.0%) | ||||||||
Equity Real Estate Investment Trusts (REITs) (0.6%) |
| |||||||
Colony Capital, Inc. (REIT) | ||||||||
5.000%, 4/15/23 | 111,000 | 104,325 | ||||||
IH Merger Sub LLC (REIT) | ||||||||
3.500%, 1/15/22 | 54,000 | 62,638 | ||||||
|
| |||||||
166,963 | ||||||||
|
| |||||||
Real Estate Management & Development (0.4%) |
| |||||||
Redfin Corp. | ||||||||
1.750%, 7/15/23 | 97,000 | 93,787 | ||||||
|
| |||||||
Total Real Estate | 260,750 | |||||||
|
| |||||||
Total Convertible Bonds | 20,262,640 | |||||||
|
| |||||||
Total Long-Term Debt Securities (82.1%) | 20,262,640 | |||||||
|
| |||||||
Number of Shares | Value (Note 1) | |||||||
CONVERTIBLE PREFERRED STOCKS: |
| |||||||
Energy (0.2%) | ||||||||
Energy Equipment & Services (0.2%) |
| |||||||
Nabors Industries Ltd., | ||||||||
6.000% | 1,466 | 39,421 | ||||||
|
| |||||||
Total Energy | 39,421 | |||||||
|
| |||||||
Financials (6.0%) | ||||||||
Banks (4.5%) | ||||||||
Bank of America Corp., | ||||||||
Series L | 292 | 385,589 | ||||||
Wells Fargo & Co., | ||||||||
Series L | 550 | 719,092 | ||||||
|
| |||||||
1,104,681 | ||||||||
|
|
See Notes to Financial Statements.
8
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Capital Markets (0.9%) | ||||||||
Mandatory Exchangeable Trust, | ||||||||
5.750%§ | 1,083 | $ | 224,300 | |||||
|
| |||||||
Insurance (0.6%) | ||||||||
Assurant, Inc., | ||||||||
Series D | 1,583 | 164,648 | ||||||
|
| |||||||
Total Financials | 1,493,629 | |||||||
|
| |||||||
Health Care (3.3%) | ||||||||
Health Care Equipment & Supplies (3.3%) |
| |||||||
Becton Dickinson and Co., | ||||||||
Series A | 9,652 | 574,391 | ||||||
Danaher Corp., | ||||||||
Series A | 229 | 241,251 | ||||||
|
| |||||||
Total Health Care | 815,642 | |||||||
|
| |||||||
Industrials (1.2%) | ||||||||
Machinery (1.2%) | ||||||||
Fortive Corp., | ||||||||
Series A | 208 | 224,523 | ||||||
Rexnord Corp., | ||||||||
Series A | 1,335 | 78,298 | ||||||
|
| |||||||
Total Industrials | 302,821 | |||||||
|
| |||||||
Information Technology (0.6%) | ||||||||
Electronic Equipment, Instruments & Components (0.6%) |
| |||||||
Belden, Inc., | ||||||||
6.750% | 1,833 | 137,640 | ||||||
|
| |||||||
Total Information Technology | 137,640 | |||||||
|
| |||||||
Materials (1.0%) | ||||||||
Chemicals (1.0%) | ||||||||
International Flavors & Fragrances, Inc., |
| |||||||
6.000% | 3,650 | 191,370 | ||||||
Rayonier Advanced Materials, Inc., |
| |||||||
Series A | 548 | 57,107 | ||||||
|
| |||||||
Total Materials | 248,477 | |||||||
|
| |||||||
Real Estate (0.9%) | ||||||||
Equity Real Estate Investment Trusts (REITs) (0.9%) |
| |||||||
Crown Castle International Corp. (REIT), |
| |||||||
Series A | 186 | 214,642 | ||||||
|
| |||||||
Total Real Estate | 214,642 | |||||||
|
| |||||||
Utilities (1.2%) | ||||||||
Electric Utilities (0.7%) | ||||||||
American Electric Power Co., Inc., |
| |||||||
6.125%* | 1,990 | 103,440 | ||||||
NextEra Energy, Inc., | ||||||||
6.123% | 1,095 | 68,328 | ||||||
|
| |||||||
171,768 | ||||||||
|
| |||||||
Multi-Utilities (0.5%) | ||||||||
Sempra Energy, | ||||||||
Series A | 1,198 | 128,054 | ||||||
|
| |||||||
Total Utilities | 299,822 | |||||||
|
| |||||||
Total Convertible Preferred Stocks (14.4%) | 3,552,094 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT: | ||||||||
Investment Company (0.6%) | ||||||||
JPMorgan Prime Money Market Fund, IM Shares | 150,393 | 150,438 | ||||||
|
| |||||||
Total Short-Term Investment (0.6%) | 150,438 | |||||||
|
| |||||||
Total Investments in Securities (97.1%) | 23,965,172 | |||||||
Other Assets Less Liabilities (2.9%) | 710,622 | |||||||
|
| |||||||
Net Assets (100%) | $ | 24,675,794 | ||||||
|
|
* | Non-income producing. |
§ | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. At April 30, 2019, the market value of these securities amounted to $5,130,861 or 20.8% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
(e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2019. Maturity date disclosed is the ultimate maturity date. |
See Notes to Financial Statements.
9
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Convertible Bonds | ||||||||||||||||
Communication Services | $ | — | $ | 1,095,396 | $ | — | $ | 1,095,396 | ||||||||
Consumer Discretionary | — | 2,038,507 | — | 2,038,507 | ||||||||||||
Consumer Staples | — | 138,178 | — | 138,178 | ||||||||||||
Energy | — | 661,434 | — | 661,434 | ||||||||||||
Financials | — | 401,317 | — | 401,317 | ||||||||||||
Health Care | — | 5,088,422 | — | 5,088,422 | ||||||||||||
Industrials | — | 1,610,418 | — | 1,610,418 | ||||||||||||
Information Technology | — | 8,806,033 | — | 8,806,033 | ||||||||||||
Materials | — | 162,185 | — | 162,185 | ||||||||||||
Real Estate | — | 260,750 | — | 260,750 | ||||||||||||
Convertible Preferred Stocks | ||||||||||||||||
Energy | 39,421 | — | — | 39,421 | ||||||||||||
Financials | 1,269,329 | 224,300 | — | 1,493,629 | ||||||||||||
Health Care | 815,642 | — | — | 815,642 | ||||||||||||
Industrials | 302,821 | — | — | 302,821 | ||||||||||||
Information Technology | 137,640 | — | — | 137,640 | ||||||||||||
Materials | 248,477 | — | — | 248,477 | ||||||||||||
Real Estate | 214,642 | — | — | 214,642 | ||||||||||||
Utilities | 299,822 | — | — | 299,822 | ||||||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 150,438 | — | — | 150,438 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,478,232 | $ | 20,486,940 | $ | — | $ | 23,965,172 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,478,232 | $ | 20,486,940 | $ | — | $ | 23,965,172 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 4,906,623 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 6,040,023 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 2,854,200 | ||
Aggregate gross unrealized depreciation | (1,150,476 | ) | ||
|
| |||
Net unrealized appreciation | $ | 1,703,724 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 22,261,448 | ||
|
|
See Notes to Financial Statements.
10
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value (Cost $22,120,220) | $ | 23,965,172 | ||
Cash | 646,000 | |||
Receivable for securities sold | 94,288 | |||
Dividends, interest and other receivables | 85,348 | |||
Receivable for Fund shares sold | 14,944 | |||
Prepaid registration and filing fees | 11,836 | |||
|
| |||
Total assets | 24,817,588 | |||
|
| |||
LIABILITIES | ||||
Payable for securities purchased | 64,407 | |||
Dividends and distributions payable | 22,932 | |||
Transfer agent fees payable | 2,698 | |||
Administrative fees payable | 2,303 | |||
Payable for Fund shares redeemed | 749 | |||
Trustees’ fees payable | 444 | |||
Distribution fees payable – Class A | 110 | |||
Distribution fees payable – Class R | 58 | |||
Accrued expenses | 48,093 | |||
|
| |||
Total liabilities | 141,794 | |||
|
| |||
NET ASSETS | $ | 24,675,794 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 22,296,995 | ||
Total distributable earnings (loss) | 2,378,799 | |||
|
| |||
Net assets | $ | 24,675,794 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $539,220 / 48,723 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.07 | ||
Maximum sales charge (4.50% of offering price) | 0.52 | |||
|
| |||
Maximum offering price per share | $ | 11.59 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $23,993,337 / 2,167,637 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.07 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $143,237 / 12,946 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.06 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Interest | $ | 155,606 | ||
Dividends | 92,503 | |||
|
| |||
Total income | 248,109 | |||
|
| |||
EXPENSES | ||||
Investment advisory fees | 80,717 | |||
Professional fees | 40,682 | |||
Administrative fees | 17,297 | |||
Registration and filing fees | 16,665 | |||
Printing and mailing expenses | 16,562 | |||
Transfer agent fees | 14,968 | |||
Custodian fees | 4,639 | |||
Trustees’ fees | 1,139 | |||
Distribution fees – Class A | 646 | |||
Distribution fees – Class R | 332 | |||
Miscellaneous | 9,668 | |||
|
| |||
Gross expenses | 203,315 | |||
Less: Waiver from investment adviser | (86,992 | ) | ||
|
| |||
Net expenses | 116,323 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 131,786 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 700,060 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 1,658,035 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 2,358,095 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,489,881 | ||
|
|
See Notes to Financial Statements.
11
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 131,786 | $ | 333,842 | ||||
Net realized gain (loss) | 700,060 | 1,094,133 | ||||||
Net change in unrealized appreciation (depreciation) | 1,658,035 | (1,515,380 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 2,489,881 | (87,405 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (27,007 | ) | (14,254 | ) | ||||
Class I | (1,228,800 | ) | (777,213 | ) | ||||
Class R | (6,882 | ) | (3,914 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (1,262,689 | ) | (795,381 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 5,963 and 10,198 shares, respectively ] | 62,948 | 114,133 | ||||||
Capital shares issued in reinvestment of dividends [ 2,160 and 1,010 shares, respectively ] | 21,434 | 10,820 | ||||||
Capital shares repurchased [ (8,135) and (2,118) shares, respectively ] | (84,463 | ) | (23,402 | ) | ||||
|
|
|
| |||||
Total Class A transactions | (81 | ) | 101,551 | |||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 27,758 and 82,739 shares, respectively ] | 298,478 | 914,895 | ||||||
Capital shares issued in reinvestment of dividends [ 9,978 and 4,466 shares, respectively ] | 99,210 | 47,979 | ||||||
Capital shares repurchased [ (28,127) and (25,797) shares, respectively ] | (294,048 | ) | (283,983 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 103,640 | 678,891 | ||||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 228 and 2,514 shares, respectively ] | 2,309 | 27,506 | ||||||
Capital shares issued in reinvestment of dividends [ 145 and 69 shares, respectively ] | 1,436 | 733 | ||||||
Capital shares repurchased [ (3) and (17) shares, respectively ] | (31 | ) | (185 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 3,714 | 28,054 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 107,273 | 808,496 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 1,334,465 | (74,290 | ) | |||||
NET ASSETS: | ||||||||
Beginning of period | 23,341,329 | 23,415,619 | ||||||
|
|
|
| |||||
End of period | $ | 24,675,794 | $ | 23,341,329 | ||||
|
|
|
|
See Notes to Financial Statements.
12
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 10.52 | $ | 10.91 | $ | 9.56 | $ | 9.56 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.05 | 0.13 | 0.16 | 0.14 | 0.03 | |||||||||||||||
Net realized and unrealized gain (loss) | 1.06 | (0.18 | ) | 1.43 | 0.04 | (0.44 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 1.11 | (0.05 | ) | 1.59 | 0.18 | (0.41 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.23 | ) | (0.24 | ) | (0.18 | ) | (0.03 | ) | ||||||||||
Distributions from net realized gains | (0.37 | ) | (0.11 | ) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.56 | ) | (0.34 | ) | (0.24 | ) | (0.18 | ) | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 11.07 | $ | 10.52 | $ | 10.91 | $ | 9.56 | $ | 9.56 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 11.16 | % | (0.46 | )% | 16.82 | % | 1.97 | % | (4.08 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 539 | $ | 512 | $ | 433 | $ | 374 | $ | 206 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.25 | % | 1.30 | % | 1.30 | % | 1.30 | % | 1.30 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.00 | % | 1.94 | % | 2.07 | % | 2.26 | % | 2.09 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.90 | % | 1.14 | % | 1.54 | % | 1.49 | % | 1.09 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.15 | % | 0.49 | % | 0.78 | % | 0.52 | % | 0.30 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 22 | % | 45 | % | 41 | % | 32 | % | 6 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 10.52 | $ | 10.91 | $ | 9.56 | $ | 9.56 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.06 | 0.15 | 0.18 | 0.17 | 0.04 | |||||||||||||||
Net realized and unrealized gain (loss) | 1.06 | (0.17 | ) | 1.43 | 0.04 | (0.44 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 1.12 | (0.02 | ) | 1.61 | 0.21 | (0.40 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.20 | ) | (0.26 | ) | (0.26 | ) | (0.21 | ) | (0.04 | ) | ||||||||||
Distributions from net realized gains | (0.37 | ) | (0.11 | ) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.57 | ) | (0.37 | ) | (0.26 | ) | (0.21 | ) | (0.04 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 11.07 | $ | 10.52 | $ | 10.91 | $ | 9.56 | $ | 9.56 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 11.30 | % | (0.23 | )% | 17.11 | % | 2.23 | % | (4.00 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 23,993 | $ | 22,697 | $ | 22,874 | $ | 19,584 | $ | 19,073 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.00 | % | 1.05 | % | 1.05 | % | 1.05 | % | 1.05 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.75 | % | 1.69 | % | 1.82 | % | 1.99 | % | 1.72 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.15 | % | 1.40 | % | 1.80 | % | 1.78 | % | 1.37 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.40 | % | 0.75 | % | 1.03 | % | 0.84 | % | 0.70 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 22 | % | 45 | % | 41 | % | 32 | % | 6 | % |
See Notes to Financial Statements.
13
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 10.51 | $ | 10.91 | $ | 9.56 | $ | 9.56 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.03 | 0.10 | 0.13 | 0.12 | 0.03 | |||||||||||||||
Net realized and unrealized gain (loss) | 1.06 | (0.18 | ) | 1.43 | 0.04 | (0.45 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 1.09 | (0.08 | ) | 1.56 | 0.16 | (0.42 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.21 | ) | (0.21 | ) | (0.16 | ) | (0.02 | ) | ||||||||||
Distributions from net realized gains | (0.37 | ) | (0.11 | ) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.54 | ) | (0.32 | ) | (0.21 | ) | (0.16 | ) | (0.02 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 11.06 | $ | 10.51 | $ | 10.91 | $ | 9.56 | $ | 9.56 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 11.03 | % | (0.78 | )% | 16.53 | % | 1.72 | % | (4.16 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 143 | $ | 132 | $ | 109 | $ | 96 | $ | 96 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.50 | % | 1.55 | % | 1.55 | % | 1.55 | % | 1.55 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.25 | % | 2.19 | % | 2.32 | % | 2.49 | % | 2.22 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.65 | % | 0.90 | % | 1.30 | % | 1.28 | % | 0.87 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | (0.10 | )% | 0.25 | % | 0.53 | % | 0.34 | % | 0.20 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 22 | % | 45 | % | 41 | % | 32 | % | 6 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
14
1290 DIVERSIFIED BOND FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISERS
Ø | Brandywine Global Investment Management, LLC (Brandywine Global) |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||
Fund – Class A Shares* | without Sales Charge | 6.28 | % | 4.77 | % | 2.81 | % | |||||||
with Sales Charge (a) | 1.48 | 0.09 | 1.58 | |||||||||||
Fund – Class I Shares* | 6.49 | 5.22 | 3.09 | |||||||||||
Fund – Class R Shares* | 6.17 | 4.54 | 2.56 | |||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | 5.49 | 5.29 | 2.49 | |||||||||||
* Date of inception 7/6/15.
(a) A 4.50%front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I and R shares were 1.69%, 1.38% and 1.93%, respectively. The net expense ratios for Class A, I and R shares were 0.75%, 0.50% and 1.00%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — Brandywine Global Investment Management, LLC
Surprise gains in German and Polish inflation figures sent core European 10-year government bond yields higher. As U.K. economic data continued to defy Brexit odds and display unexpected strength, gilts also sold off. Meanwhile, some peripheral sovereigns, like Spain and Portugal, rallied. Faced with persistent, below-target inflation, the Bank of Japan held steady on monetary policy, pledging to keep rates accommodative through 2020 while lowering its outlook for growth and price gains. As a result, short- and medium-term Japanese government bond yields remained negative. Mexican bonds also saw yields rise modestly, but short-dated South African bonds rallied. President Trump’s political maneuvers to block Iranian oil exports and influence global supply upset crude prices and global markets and introduced new volatility. Meanwhile, copper prices softened, raising caution around the outlook for Chinese and global growth.
Fund Highlights
The Fund’s Class I shares returned 6.49% for the six-month period ended April 30, 2019. The Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, returned 5.49% over the same time period.
On June 15, 2018 the 1290 Unconstrained Bond Managers Fund changed its subadviser to Brandywine Global, changed its strategy, and changed its name to the 1290 Diversified Bond Fund. The 1290 Diversified Bond Fund seeks to maximize total return consisting of income and capital appreciation. Under normal circumstances, the Fund invests in a diversified portfolio of U.S. and foreign bonds or other debt securities of varying maturities and other instruments that provide investment exposure to such debt securities, including forwards or derivatives such as options, futures contracts or swap agreements.
What helped performance during the six-month period ended April 30, 2019:
Virtually all of our broad bucket of themes added to performance including:
• | U.S. Government bonds and bond futures |
• | Select emerging markets, specifically Mexico, South Africa, and Peru |
• | Italian Sovereigns |
• | Non-U.S. Dollar currency positioning in select emerging markets, specifically in the Mexican Peso and South African Rand |
• | Mortgage-backed securities (MBS) |
• | Selectively maneuvering the duration of the portfolio via U.S. Treasuries |
• | In aggregate, derivative positions contributed positively to performance for the period |
What hurt performance during the six-month period ended April 30, 2019:
• | While mortgages added to performance, our selection of non-agency MBS underperformed the index agency MBS positions, and our overall mortgage allocation was underweight to the benchmark. |
• | Our underweight to the benchmark in corporate investment grade bonds underperformed the benchmark’s allocation. |
• | A position in German bunds detracted from performance. |
15
1290 DIVERSIFIED BOND FUND (Unaudited)
Outlook
Through the remainder of the year, we expect to see an orderly, albeit subdued, reflation of the global economy. With major central banks remaining relatively accommodative, the constructive backdrop for bond and currency markets may continue in the near term. Similarly, policy shifts from the two main protagonists, the U.S. and China, may help steer the world economy toward a soft landing. If China continues to bolster domestic activity and a U.S.-China trade deal is forthcoming, a resulting China-led recovery could help keep oil and commodity prices stable, lending support to emerging markets and growth in Europe while taking pressure off the U.S. dollar. Furthermore, a trade deal could reignite capital expenditures and spark global economic growth. As tailwinds from the U.S. tax cuts dissipate and domestic growth reverts to trend, we expect to see further softening in the dollar. We believe emerging markets, which still offer compelling valuations despite anticipated volatility, are poised to benefit as these expected developments materialize.
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
U.S. Treasury Obligations | 31.9 | % | ||
Foreign Government Securities | 23.0 | |||
Collateralized Mortgage Obligations | 10.0 | |||
Asset-Backed Securities | 7.6 | |||
Financials | 7.5 | |||
Information Technology | 3.0 | |||
Energy | 2.7 | |||
Commercial Mortgage-Backed Securities | 2.5 | |||
Materials | 2.1 | |||
Investment Company | 1.8 | |||
Communication Services | 1.7 | |||
Real Estate | 1.1 | |||
Utilities | 0.7 | |||
Industrials | 0.4 | |||
Cash and Other | 4.0 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning 11/1/18 | Ending 4/30/19 | Expenses 11/1/18 - | ||||||||||
Class A | ||||||||||||
Actual | $1,000.00 | $1,062.80 | $3.84 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,021.08 | 3.76 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,064.90 | 2.56 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.32 | 2.51 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,061.70 | 5.11 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.84 | 5.01 | |||||||||
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 0.75%, 0.50% and 1.00%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
16
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
LONG-TERM DEBT SECURITIES: |
| |||||||
Asset-Backed Securities (7.6%) |
| |||||||
Aames Mortgage Investment Trust, |
| |||||||
Series2006-1 A4 | $ | 1,400,000 | $ | 1,383,251 | ||||
Carrington Mortgage Loan Trust, |
| |||||||
Series2005-NC2 M4 | 422,257 | 422,729 | ||||||
Park Place Securities, Inc. Asset-Backed Pass-Through Certificates, |
| |||||||
Series 2005-WHQ2 M2 | 716,521 | 713,731 | ||||||
Popular ABS Mortgage Pass-Through Trust, |
| |||||||
Series2005-5 MV1 | 829,252 | 822,570 | ||||||
Towd Point Mortgage Trust, |
| |||||||
Series2017-6 A1 | 791,202 | 778,732 | ||||||
|
| |||||||
Total Asset-Backed Securities | 4,121,013 | |||||||
|
| |||||||
Collateralized Mortgage Obligations (10.0%) |
| |||||||
COLT Mortgage Loan Trust, |
| |||||||
Series2018-1 A1 | 607,255 | 605,374 | ||||||
Series2018-1 A3 | 1,326,418 | 1,322,079 | ||||||
FHLMC Structured Agency Credit Risk Debt Notes, |
| |||||||
Series 2016-DNA1 M3 | 900,000 | 1,052,518 | ||||||
FNMA, |
| |||||||
Series2016-C03 1M2 | 581,000 | 664,505 | ||||||
Series2016-C04 1M2 | 1,000,000 | 1,100,398 | ||||||
TDA CAM 9 FTA, |
| |||||||
Series 9 B | EUR | 800,000 | 730,074 | |||||
|
| |||||||
Total Collateralized Mortgage Obligations | 5,474,948 | |||||||
|
| |||||||
Commercial Mortgage-Backed Securities (2.5%) |
| |||||||
FHLMC Multifamily Structured Pass-Through Certificates, |
| |||||||
Series K722 X1 | $ | 13,227,872 | 537,145 | |||||
Series K727 A1 | 827,448 | 827,370 | ||||||
|
| |||||||
Total Commercial Mortgage-Backed Securities | 1,364,515 | |||||||
|
| |||||||
Corporate Bonds (19.2%) |
| |||||||
Communication Services (1.7%) |
| |||||||
Wireless Telecommunication Services (1.7%) |
| |||||||
Sprint Corp. | ||||||||
7.250%, 9/15/21 | 870,000 | 911,325 | ||||||
|
| |||||||
Total Communication Services | 911,325 | |||||||
|
| |||||||
Energy (2.7%) |
| |||||||
Oil, Gas & Consumable Fuels (2.7%) |
| |||||||
Petroleos Mexicanos | ||||||||
4.250%, 1/15/25 | 1,015,000 | 956,130 | ||||||
Saudi Arabian Oil Co. | ||||||||
4.375%, 4/16/49§ | 545,000 | 530,230 | ||||||
|
| |||||||
1,486,360 | ||||||||
|
| |||||||
Total Energy | 1,486,360 | |||||||
|
| |||||||
Financials (7.5%) |
| |||||||
Banks (4.2%) |
| |||||||
Bank of America Corp. |
| |||||||
Series L | 610,000 | 607,686 | ||||||
Citigroup, Inc. |
| |||||||
(ICE LIBOR USD 3 Month + 1.25%), 3.842%, 7/1/26 (k) | 605,000 | 610,818 | ||||||
JPMorgan Chase & Co. | ||||||||
2.400%, 6/7/21 | 605,000 | 600,704 | ||||||
UBS Group Funding Switzerland AG |
| |||||||
(ICE LIBOR USD 3 Month + 1.22%), 3.871%, 5/23/23 (k)§ | 450,000 | 455,886 | ||||||
|
| |||||||
2,275,094 | ||||||||
|
| |||||||
Capital Markets (2.2%) |
| |||||||
Goldman Sachs Group, Inc. (The) |
| |||||||
(ICE LIBOR USD 3 Month + 0.75%), 3.401%, 2/23/23 (k) | 1,215,000 | 1,211,601 | ||||||
|
| |||||||
Consumer Finance (1.1%) |
| |||||||
American Express Co. | ||||||||
2.650%, 12/2/22 | 610,000 | 605,437 | ||||||
|
| |||||||
Total Financials | 4,092,132 | |||||||
|
| |||||||
Industrials (0.4%) |
| |||||||
Aerospace & Defense (0.4%) |
| |||||||
Boeing Co. (The) | ||||||||
2.700%, 5/1/22 | 210,000 | 209,628 | ||||||
|
| |||||||
Total Industrials | 209,628 | |||||||
|
| |||||||
Information Technology (3.0%) |
| |||||||
Semiconductors & Semiconductor Equipment (0.8%) |
| |||||||
Qorvo, Inc. | ||||||||
5.500%, 7/15/26§ | 400,000 | 417,500 | ||||||
|
| |||||||
Software (0.3%) |
| |||||||
Symantec Corp. | ||||||||
5.000%, 4/15/25§ | 170,000 | 173,672 | ||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (1.9%) |
| |||||||
Dell International LLC | ||||||||
7.125%, 6/15/24§ | 485,000 | 513,494 | ||||||
6.020%, 6/15/26§ | 480,000 | 519,443 | ||||||
|
| |||||||
1,032,937 | ||||||||
|
| |||||||
Total Information Technology | 1,624,109 | |||||||
|
| |||||||
Materials (2.1%) |
| |||||||
Chemicals (1.2%) |
| |||||||
Methanex Corp. | ||||||||
3.250%, 12/15/19 | 650,000 | 649,981 | ||||||
|
| |||||||
Metals & Mining (0.9%) |
| |||||||
Steel Dynamics, Inc. | ||||||||
5.125%, 10/1/21 | 520,000 | 523,250 | ||||||
|
| |||||||
Total Materials | 1,173,231 | |||||||
|
| |||||||
Real Estate (1.1%) |
| |||||||
Equity Real Estate Investment Trusts (REITs) (1.1%) |
| |||||||
American Tower Corp. (REIT) |
| |||||||
2.800%, 6/1/20 | 605,000 | 604,642 | ||||||
|
| |||||||
Total Real Estate | 604,642 | |||||||
|
|
See Notes to Financial Statements.
17
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Utilities (0.7%) |
| |||||||
Electric Utilities (0.7%) |
| |||||||
DPL, Inc. | ||||||||
7.250%, 10/15/21 | $ | 385,000 | $ | 413,875 | ||||
|
| |||||||
Total Utilities | 413,875 | |||||||
|
| |||||||
Total Corporate Bonds | 10,515,302 | |||||||
|
| |||||||
Foreign Government Securities (19.2%) |
| |||||||
Federative Republic of Brazil |
| |||||||
10.000%, 1/1/21 | BRL | 12,175,000 | 3,232,758 | |||||
Republic of Argentina |
| |||||||
5.875%, 1/11/28 | $ | 650,000 | 450,414 | |||||
Republic of Colombia |
| |||||||
6.000%, 4/28/28 | COP | 4,200,000,000 | 1,244,470 | |||||
Republic of Indonesia |
| |||||||
9.000%, 3/15/29 | IDR | 26,500,000,000 | 1,994,474 | |||||
Republic of Peru |
| |||||||
5.940%, 2/12/29 (m) | PEN | 2,690,000 | 859,513 | |||||
United Mexican States |
| |||||||
7.500%, 6/3/27 | MXN | 9,700,000 | 491,337 | |||||
8.000%, 11/7/47 | 45,200,000 | 2,236,323 | ||||||
|
| |||||||
Total Foreign Government Securities | 10,509,289 | |||||||
|
| |||||||
U.S. Treasury Obligations (31.9%) |
| |||||||
U.S. Treasury Bonds |
| |||||||
2.750%, 8/15/47 | $ | 835,000 | 804,340 | |||||
3.375%, 11/15/48 | 4,050,000 | 4,404,438 | ||||||
U.S. Treasury Notes |
| |||||||
(US Treasury 3 Month Bill Money Market Yield + 0.12%), 2.530%, 1/31/21 (k) | 7,290,000 | 7,288,741 | ||||||
2.750%, 2/15/28 | 4,840,000 | 4,943,228 | ||||||
|
| |||||||
Total U.S. Treasury Obligations | 17,440,747 | |||||||
|
| |||||||
Total Long-Term Debt Securities (90.4%) | 49,425,814 | |||||||
|
| |||||||
Number of Rights | Value (Note 1) | |||||||
RIGHTS: |
| |||||||
Communication Services (0.0%) |
| |||||||
Wireless Telecommunication Services (0.0%) |
| |||||||
T-Mobile US, Inc., CVR (r)* | 22,000 | — | ||||||
T-Mobile USA, Inc., CVR (r)* | 32,000 | — | ||||||
|
| |||||||
Total Rights (0.0%) | — | |||||||
|
| |||||||
Principal Amount | Value (Note 1) | |||||||
SHORT-TERM INVESTMENTS: |
| |||||||
Foreign Government Treasury Bills (3.8%) |
| |||||||
Egypt Treasury Bills |
| |||||||
17.79%, 3/3/20 (p) | EGP | 41,100,000 | 2,081,307 | |||||
|
| |||||||
Number of Shares | Value (Note 1) | |||||||
Investment Company (1.8%) |
| |||||||
JPMorgan Prime Money Market Fund, IM Shares | 999,700 | $ | 1,000,000 | |||||
|
| |||||||
Total Short-Term Investments (5.6%) | 3,081,307 | |||||||
|
| |||||||
Total Investments in Securities (96.0%) | 52,507,121 | |||||||
Other Assets Less Liabilities (4.0%) | 2,200,723 | |||||||
|
| |||||||
Net Assets (100%) | $ | 54,707,844 | ||||||
|
|
* | Non-income producing. |
§ | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. At April 30, 2019, the market value of these securities amounted to $5,316,410 or 9.7% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
(k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2019. |
(l) | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown was the current rate as of April 30, 2019. |
(m) | Regulation S is an exemption for securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. Resale restrictions may apply for purposes of the Securities Act of 1933. At April 30, 2019, the market value of these securities amounted to $1,589,587 or 2.9% of net assets. |
(p) | Yield to maturity. |
(r) | Value determined using significant unobservable inputs. |
Glossary:
ARS | — Argentina Peso |
BRL | — Brazilian Real |
CHF | — Swiss Franc |
CLP | — Chile Peso |
COP | — Colombian Peso |
CVR | — Contingent Value Rights |
EGP | — Egyptian Pound |
EUR | — European Currency Unit |
FHLMC | — Federal Home Loan Mortgage Corp. |
FNMA | — Federal National Mortgage Association |
GBP | — British Pound |
ICE | — Intercontinental Exchange |
IDR | — Indonesian Rupiah |
INR | — India Rupee |
IO | — Interest Only |
LIBOR | — London Interbank Offered Rate |
MXN | — Mexican Peso |
NOK | — Norwegian Krone |
NZD | — New Zealand Dollar |
PEN | — Peruvian Sol |
RUB | — Russian Ruble |
SEK | — Swedish Krona |
SGD | — Singapore Dollar |
USD | — United States Dollar |
See Notes to Financial Statements.
18
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Futures contracts outstanding as of April 30, 2019 (Note 1):
Description | Number of Contracts | Expiration Date | Trading Currency | Notional Amount ($) | Value and Unrealized Appreciation (Depreciation) ($) | |||||||||||||||
Long Contracts |
| |||||||||||||||||||
U.S. Treasury 10 Year Note | 58 | 6/2019 | USD | 7,172,969 | 71,571 | |||||||||||||||
U.S. Treasury Ultra Bond | 18 | 6/2019 | USD | 2,957,062 | (23,727 | ) | ||||||||||||||
|
| |||||||||||||||||||
47,844 | ||||||||||||||||||||
|
|
Forward foreign currency contracts outstanding as of April 30, 2019 (Note 1):
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) ($) | ||||||||||||||||
RUB | 46,100,000 | USD | 692,712 | Citibank NA** | 5/13/2019 | 19,124 | ||||||||||||||
USD | 212,053 | PEN | 700,000 | HSBC Bank plc** | 5/13/2019 | 473 | ||||||||||||||
USD | 1,279,598 | SGD | 1,730,000 | HSBC Bank plc | 5/13/2019 | 7,415 | ||||||||||||||
USD | 1,030,418 | SGD | 1,400,000 | Morgan Stanley | 5/13/2019 | 906 | ||||||||||||||
USD | 475,200 | CLP | 320,000,000 | HSBC Bank plc** | 5/15/2019 | 2,783 | ||||||||||||||
USD | 475,129 | EUR | 420,000 | JPMorgan Chase Bank | 6/12/2019 | 2,338 | ||||||||||||||
USD | 169,268 | CHF | 170,000 | Barclays Bank plc | 6/14/2019 | 1,712 | ||||||||||||||
USD | 480,560 | CHF | 480,000 | HSBC Bank plc | 6/14/2019 | 7,460 | ||||||||||||||
USD | 361,444 | NZD | 530,000 | Goldman Sachs Bank USA | 6/14/2019 | 7,169 | ||||||||||||||
USD | 2,041,917 | NZD | 3,010,000 | Morgan Stanley | 6/14/2019 | 29,904 | ||||||||||||||
USD | 1,446,697 | SEK | 13,600,000 | Morgan Stanley | 6/14/2019 | 9,569 | ||||||||||||||
INR | 34,700,000 | USD | 493,599 | Citibank NA** | 6/17/2019 | 2,340 | ||||||||||||||
USD | 686,352 | NOK | 5,900,000 | Morgan Stanley | 6/24/2019 | 1,017 | ||||||||||||||
USD | 1,274,142 | COP | 4,020,000,000 | JPMorgan Chase Bank** | 6/28/2019 | 34,349 | ||||||||||||||
MXN | 42,300,000 | USD | 2,200,489 | HSBC Bank plc | 7/12/2019 | 4,633 | ||||||||||||||
USD | 1,953,165 | IDR | 27,900,000,000 | JPMorgan Chase Bank** | 7/25/2019 | 17,714 | ||||||||||||||
|
| |||||||||||||||||||
Total unrealized appreciation | 148,906 | |||||||||||||||||||
|
| |||||||||||||||||||
RUB | 15,800,000 | USD | 246,057 | Citibank NA** | 5/13/2019 | (2,087 | ) | |||||||||||||
USD | 538,987 | PEN | 1,800,000 | HSBC Bank plc** | 5/13/2019 | (5,077 | ) | |||||||||||||
CLP | 320,000,000 | USD | 481,949 | HSBC Bank plc** | 5/15/2019 | (9,532 | ) | |||||||||||||
NZD | 2,130,000 | USD | 1,435,513 | National Australia Bank Ltd. | 6/14/2019 | (11,729 | ) | |||||||||||||
SEK | 10,100,000 | USD | 1,114,311 | Citibank NA | 6/14/2019 | (47,032 | ) | |||||||||||||
SEK | 3,500,000 | USD | 379,894 | Morgan Stanley | 6/14/2019 | (10,045 | ) | |||||||||||||
GBP | 260,000 | USD | 344,096 | Citibank NA | 6/17/2019 | (4,202 | ) | |||||||||||||
GBP | 90,000 | USD | 117,686 | National Australia Bank Ltd. | 6/17/2019 | (30 | ) | |||||||||||||
USD | 490,806 | INR | 34,700,000 | Citibank NA** | 6/17/2019 | (5,132 | ) | |||||||||||||
NOK | 5,900,000 | USD | 693,644 | HSBC Bank plc | 6/24/2019 | (8,309 | ) | |||||||||||||
MXN | 14,600,000 | USD | 765,308 | HSBC Bank plc | 7/12/2019 | (4,202 | ) | |||||||||||||
USD | 1,061,359 | MXN | 20,500,000 | HSBC Bank plc | 7/12/2019 | (7,317 | ) | |||||||||||||
ARS | 56,900,000 | USD | 1,188,836 | HSBC Bank plc** | 7/15/2019 | (44,795 | ) | |||||||||||||
USD | 1,114,868 | ARS | 56,900,000 | HSBC Bank plc** | 7/15/2019 | (29,172 | ) | |||||||||||||
|
| |||||||||||||||||||
Total unrealized depreciation | (188,661 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
Net unrealized depreciation | (39,755 | ) | ||||||||||||||||||
|
|
** | Non-deliverable forward. |
See Notes to Financial Statements.
19
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Centrally Cleared Credit default swap contracts outstanding — sell protection as of April 30, 2019 (Note 1):
Reference | Financing Rate (Paid)/ Received by the Fund (%) | Frequency of Payments Made/ Received | Maturity Date | Implied Credit Spread (%) | Notional Amount | Upfront (Payments) Receipts ($) | Unrealized Appreciation (Depreciation) ($) | Value ($) | ||||||||||||||||||||||||
Toll Brothers Finance Corp. | 1.00 | Quarterly | 12/20/2023 | 1.05 | USD 700,000 | (21,558 | ) | 20,763 | (795 | ) | ||||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||||||||
(21,558 | ) | 20,763 | (795 | ) | ||||||||||||||||||||||||||||
|
|
|
|
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Asset-Backed Securities | $ | — | $ | 4,121,013 | $ | — | $ | 4,121,013 | ||||||||
Centrally Cleared Credit Default Swaps | — | 20,763 | — | 20,763 | ||||||||||||
Collateralized Mortgage Obligations | — | 5,474,948 | — | 5,474,948 | ||||||||||||
Commercial Mortgage-Backed Securities | — | 1,364,515 | — | 1,364,515 | ||||||||||||
Corporate Bonds | ||||||||||||||||
Communication Services | — | 911,325 | — | 911,325 | ||||||||||||
Energy | — | 1,486,360 | — | 1,486,360 | ||||||||||||
Financials | — | 4,092,132 | — | 4,092,132 | ||||||||||||
Industrials | — | 209,628 | — | 209,628 | ||||||||||||
Information Technology | — | 1,624,109 | — | 1,624,109 | ||||||||||||
Materials | — | 1,173,231 | — | 1,173,231 | ||||||||||||
Real Estate | — | 604,642 | — | 604,642 | ||||||||||||
Utilities | — | 413,875 | — | 413,875 | ||||||||||||
Foreign Government Securities | — | 10,509,289 | — | 10,509,289 | ||||||||||||
Forward Currency Contracts | — | 148,906 | — | 148,906 | ||||||||||||
Futures | 71,571 | — | — | 71,571 | ||||||||||||
Rights | ||||||||||||||||
Communication Services | — | — | — | (a) | — | (a) | ||||||||||
Short-Term Investments | ||||||||||||||||
Foreign Government Treasury Bills | — | 2,081,307 | — | 2,081,307 | ||||||||||||
Investment Company | 1,000,000 | — | — | 1,000,000 | ||||||||||||
U.S. Treasury Obligations | — | 17,440,747 | — | 17,440,747 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 1,071,571 | $ | 51,676,790 | $ | — | $ | 52,748,361 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities: |
| |||||||||||||||
Forward Currency Contracts | $ | — | $ | (188,661 | ) | $ | — | $ | (188,661 | ) | ||||||
Futures | (23,727 | ) | — | — | (23,727 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | (23,727 | ) | $ | (188,661 | ) | $ | — | $ | (212,388 | ) | |||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 1,047,844 | $ | 51,488,129 | $ | — | $ | 52,535,973 | ||||||||
|
|
|
|
|
|
|
|
(a) | Value is zero. |
See Notes to Financial Statements.
20
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Fair Values of Derivative Instruments as of April 30, 2019:
Statement of Assets and Liabilities | ||||||
Derivatives Not Accounted for as | Asset Derivatives | Fair Value | ||||
Interest rate contracts | Receivables, Net assets – Unrealized appreciation | $ | 71,571 | |||
Foreign exchange contracts | Receivables | 148,906 | ||||
Credit contracts | Receivables | 20,763 | ||||
|
| |||||
Total | $ | 241,240 | ||||
|
| |||||
Liability Derivatives | ||||||
Interest rate contracts | Payables, Net assets – Unrealized depreciation | $ | (23,727 | ) | ||
Foreign exchange contracts | Payables | (188,661 | ) | |||
|
| |||||
Total | $ | (212,388 | ) | |||
|
|
The Effect of Derivative Instruments on the Statement of Operations for the six months ended April 30, 2019:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||
Derivatives Not Accounted for as | Futures | Forward Foreign Currency Contracts | Swaps | Total | ||||||||||||
Interest rate contracts | $ | (52,380 | ) | $ | — | $ | — | $ | (52,380 | ) | ||||||
Foreign exchange contracts | — | (129,027 | ) | — | (129,027 | ) | ||||||||||
Credit contracts | — | — | (54,846 | ) | (54,846 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | (52,380 | ) | $ | (129,027 | ) | $ | (54,846 | ) | $ | (236,253 | ) | ||||
|
|
|
|
|
|
|
| |||||||||
Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||
Derivatives Not Accounted for as | Futures | Forward Foreign Currency Contracts | Swaps | Total | ||||||||||||
Interest rate contracts | $ | 250,169 | $ | — | $ | — | $ | 250,169 | ||||||||
Foreign exchange contracts | — | 199,264 | — | 199,264 | ||||||||||||
Credit contracts | — | — | 51,947 | 51,947 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 250,169 | $ | 199,264 | $ | 51,947 | $ | 501,380 | ||||||||
|
|
|
|
|
|
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only current day’s variation margin is reported within the Statement of Assets & Liabilities. |
^ The Fund held forward foreign currency contracts, futures and swaps contracts as a substitute for investing in conventional securities, hedging and in an attempt to enhance returns.
The Fund held forward foreign currency contracts with an average settlement value of approximately $27,914,000, swaps with an average notional balance of approximately $3,815,000 for four months and futures contracts with an average notional balance of approximately $15,792,000 during the six months ended April 30, 2019.
See Notes to Financial Statements.
21
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
The following table presents the Fund’s gross derivative assets and liabilities by counterparty net of amounts available for offset under netting arrangements and any related collateral received or pledged by the Fund as of April 30, 2019:
Counterparty | Gross Amount of Derivative Assets Presented in the Statement of Assets and Liabilities (a) | Derivatives Available for Offset | Collateral Received | Net Amount Due from Counterparty | ||||||||||||
Barclays Bank plc | $ | 1,712 | $ | — | $ | — | $ | 1,712 | ||||||||
Citibank NA | 21,464 | (21,464 | ) | — | — | |||||||||||
Goldman Sachs Bank USA | 7,169 | — | — | 7,169 | ||||||||||||
HSBC Bank plc | 22,764 | (22,764 | ) | — | — | |||||||||||
JPMorgan Chase Bank | 54,401 | — | — | 54,401 | ||||||||||||
Morgan Stanley | 41,396 | (10,045 | ) | — | 31,351 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 148,906 | $ | (54,273 | ) | $ | — | $ | 94,633 | |||||||
|
|
|
|
|
|
|
| |||||||||
Counterparty | Gross Amount of Derivative Liabilities Presented in the Statement of Assets and Liabilities (a) | Derivatives Available for Offset | Collateral Pledged | Net Amount Due to Counterparty | ||||||||||||
Citibank NA | $ | 58,453 | $ | (21,464 | ) | $ | — | $ | 36,989 | |||||||
HSBC Bank plc | 108,404 | (22,764 | ) | — | 85,640 | |||||||||||
Morgan Stanley | 10,045 | (10,045 | ) | — | — | |||||||||||
National Australia Bank Limited | 11,759 | — | — | 11,759 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 188,661 | $ | (54,273 | ) | $ | — | $ | 134,388 | |||||||
|
|
|
|
|
|
|
|
(a) | For financial reporting purposes the Fund does not offset derivative assets and derivative liabilities subject to master netting arrangements in the Statement of Assets and Liabilities. |
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 22,482,477 | ||
Long-term U.S. government debt securities | 18,823,554 | |||
|
| |||
$ | 41,306,031 | |||
|
| |||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 13,156,239 | ||
Long-term U.S. government debt securities | 10,680,269 | |||
|
| |||
$ | 23,836,508 | |||
|
|
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 882,195 | ||
Aggregate gross unrealized depreciation | (185,855 | ) | ||
|
| |||
Net unrealized appreciation | $ | 696,340 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 51,818,075 | ||
|
|
See Notes to Financial Statements.
22
1290 FUNDS
1290 DIVERSIFIED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value (Cost $52,278,108) | $ | 52,507,121 | ||
Cash | 898,555 | |||
Cash held as collateral for forward foreign currency contracts | 80,000 | |||
Cash held as collateral at broker for swaps | 10,000 | |||
Receivable for Fund shares sold | 1,487,150 | |||
Variation Margin on Centrally Cleared Swaps | 615,297 | |||
Dividends, interest and other receivables | 424,778 | |||
Due from broker for futures variation margin | 171,937 | |||
Unrealized appreciation on forward foreign currency contracts | 148,906 | |||
Due from Custodian | 108,101 | |||
Prepaid registration and filing fees | 15,030 | |||
Receivable from investment adviser | 2,071 | |||
Other assets | 75 | |||
|
| |||
Total assets | 56,469,021 | |||
|
| |||
LIABILITIES | ||||
Foreign currency overdraft payable | 3,020 | |||
Cash collateral due to broker for swaps | 60,000 | |||
Payable for securities purchased | 1,358,667 | |||
Unrealized depreciation on forward foreign currency contracts | 188,661 | |||
Dividends and distributions payable | 53,405 | |||
Payable for Fund shares redeemed | 9,216 | |||
Transfer agent fees payable | 1,705 | |||
Trustees’ fees payable | 952 | |||
Distribution fees payable – Class A | 298 | |||
Distribution fees payable – Class R | 42 | |||
Accrued expenses | 85,211 | |||
|
| |||
Total liabilities | 1,761,177 | |||
|
| |||
NET ASSETS | $ | 54,707,844 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 54,173,898 | ||
Total distributable earnings (loss) | 533,946 | |||
|
| |||
Net assets | $ | 54,707,844 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $1,452,347 / 146,399 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.92 | ||
Maximum sales charge (4.50% of offering price) | 0.47 | |||
|
| |||
Maximum offering price per share | $ | 10.39 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $53,152,478 / 5,348,515 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.94 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $103,019 / 10,392 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.91 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Interest | $ | 671,926 | ||
Dividends | 7,999 | |||
|
| |||
Total income | 679,925 | |||
|
| |||
EXPENSES | ||||
Investment advisory fees | 106,479 | |||
Professional fees | 48,783 | |||
Administrative fees | 26,620 | |||
Printing and mailing expenses | 19,880 | |||
Registration and filing fees | 19,158 | |||
Transfer agent fees | 13,874 | |||
Custodian fees | 12,588 | |||
Trustees’ fees | 1,634 | |||
Distribution fees – Class A | 1,223 | |||
Distribution fees – Class R | 250 | |||
Miscellaneous | 21,294 | |||
|
| |||
Gross expenses | 271,783 | |||
Less: Waiver from investment adviser | (133,099 | ) | ||
Reimbursement from investment adviser | (48,462 | ) | ||
|
| |||
Net expenses | 90,222 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 589,703 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) |
| |||
Realized gain (loss) on: | ||||
Investments in securities | 403,548 | |||
Futures contracts | (52,380 | ) | ||
Forward foreign currency contracts | (129,027 | ) | ||
Foreign currency transactions | (29,177 | ) | ||
Swaps | (54,846 | ) | ||
|
| |||
Net realized gain (loss) | 138,118 | |||
|
| |||
Change in unrealized appreciation (depreciation) on: | ||||
Investments in securities | 833,001 | |||
Futures contracts | 250,169 | |||
Forward foreign currency contracts | 199,264 | |||
Foreign currency translations | 1,189 | |||
Swaps | 51,947 | |||
|
| |||
Net change in unrealized appreciation (depreciation) | 1,335,570 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 1,473,688 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,063,391 | ||
|
|
See Notes to Financial Statements.
23
1290 FUNDS
1290 DIVERSIFIED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 589,703 | $ | 1,486,877 | ||||
Net realized gain (loss) | 138,118 | 937,444 | ||||||
Net change in unrealized appreciation (depreciation) | 1,335,570 | (2,697,799 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 2,063,391 | (273,478 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (17,513 | ) | (5,071 | ) | ||||
Class I | (721,862 | ) | (2,629,214 | ) | ||||
Class R | (1,878 | ) | (4,106 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (741,253 | ) | (2,638,391 | ) | ||||
|
|
|
| |||||
Tax return of capital: | ||||||||
Class A | — | (336 | ) | |||||
Class I | — | (174,340 | ) | |||||
Class R | — | (272 | ) | |||||
|
|
|
| |||||
Total | — | (174,948 | ) | |||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 133,989 and 9,592 shares, respectively ] | 1,297,705 | 93,228 | ||||||
Capital shares issued in reinvestment of dividends [ 1,579 and 83 shares, respectively ] | 15,587 | 803 | ||||||
Capital shares repurchased [ (9,139) and (709) shares, respectively ] | (90,608 | ) | (7,010 | ) | ||||
|
|
|
| |||||
Total Class A transactions | 1,222,684 | 87,021 | ||||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 2,143,426 and 247,326 shares, respectively ] | 21,324,819 | 2,430,045 | ||||||
Capital shares issued in reinvestment of dividends [ 12,544 and 5,368 shares, respectively ] | 123,524 | 52,506 | ||||||
Capital shares repurchased [ (16,623) and (4,058,224) shares, respectively ] | (164,565 | ) | (39,872,855 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 21,283,778 | (37,390,304 | ) | |||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 273 and 113 shares, respectively ] | 2,661 | 1,100 | ||||||
Capital shares issued in reinvestment of dividends [ 5 and 2 shares, respectively ] | 52 | 16 | ||||||
Capital shares repurchased [ (11) and 0 shares, respectively ] | (106 | ) | — | |||||
|
|
|
| |||||
Total Class R transactions | 2,607 | 1,116 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 22,509,069 | (37,302,167 | ) | |||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 23,831,207 | (40,388,984 | ) | |||||
NET ASSETS: | ||||||||
Beginning of period | 30,876,637 | 71,265,621 | ||||||
|
|
|
| |||||
End of period | $ | 54,707,844 | $ | 30,876,637 | ||||
|
|
|
|
See Notes to Financial Statements.
24
1290 FUNDS
1290 DIVERSIFIED BOND FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 9.52 | $ | 10.12 | $ | 9.89 | $ | 9.82 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.15 | 0.26 | 0.19 | 0.16 | 0.01 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.44 | (0.40 | ) | 0.23 | 0.17 | (0.16 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.59 | (0.14 | ) | 0.42 | 0.33 | (0.15 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.43 | ) | (0.19 | ) | (0.10 | ) | (0.03 | ) | ||||||||||
Return of capital | — | (0.03 | ) | — | (0.16 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.19 | ) | (0.46 | ) | (0.19 | ) | (0.26 | ) | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.92 | $ | 9.52 | $ | 10.12 | $ | 9.89 | $ | 9.82 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 6.28 | % | (1.44 | )% | 4.25 | % | 3.39 | % | (1.54 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 1,452 | $ | 190 | $ | 111 | $ | 109 | $ | 98 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.75 | % | 1.05 | % | 1.30 | % | 1.40 | % | 1.40 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.75 | % | 1.85 | % | 1.76 | % | 1.84 | % | 1.62 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 3.10 | % | 2.63 | % | 1.93 | % | 1.68 | % | 0.37 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 2.10 | % | 1.83 | % | 1.48 | % | 1.24 | % | 0.15 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 70 | % | 139 | %*** | 117 | % | 152 | % | 77 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 9.53 | $ | 10.13 | $ | 9.89 | $ | 9.82 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.16 | 0.27 | 0.22 | 0.19 | 0.02 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.45 | (0.38 | ) | 0.23 | 0.16 | (0.17 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.61 | (0.11 | ) | 0.45 | 0.35 | (0.15 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.20 | ) | (0.46 | ) | (0.21 | ) | (0.11 | ) | (0.03 | ) | ||||||||||
Return of capital | — | (0.03 | ) | — | (0.17 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.20 | ) | (0.49 | ) | (0.21 | ) | (0.28 | ) | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.94 | $ | 9.53 | $ | 10.13 | $ | 9.89 | $ | 9.82 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 6.49 | % | (1.19 | )% | 4.58 | % | 3.63 | % | (1.49 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 53,152 | $ | 30,590 | $ | 71,053 | $ | 69,321 | $ | 68,572 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.50 | % | 0.91 | % | 1.05 | % | 1.15 | % | 1.15 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.52 | % | 1.54 | % | 1.51 | % | 1.58 | % | 1.36 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 3.33 | % | 2.70 | % | 2.18 | % | 1.92 | % | 0.68 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 2.31 | % | 2.06 | % | 1.73 | % | 1.49 | % | 0.47 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 70 | % | 139 | %*** | 117 | % | 152 | % | 77 | % |
See Notes to Financial Statements.
25
1290 FUNDS
1290 DIVERSIFIED BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 9.51 | $ | 10.11 | $ | 9.88 | $ | 9.82 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.14 | 0.23 | 0.17 | 0.14 | — | # | ||||||||||||||
Net realized and unrealized gain (loss) | 0.44 | (0.39 | ) | 0.23 | 0.15 | (0.16 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.58 | (0.16 | ) | 0.40 | 0.29 | (0.16 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.41 | ) | (0.17 | ) | (0.09 | ) | (0.02 | ) | ||||||||||
Return of capital | — | (0.03 | ) | — | (0.14 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.18 | ) | (0.44 | ) | (0.17 | ) | (0.23 | ) | (0.02 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.91 | $ | 9.51 | $ | 10.11 | $ | 9.88 | $ | 9.82 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 6.17 | % | (1.69 | )% | 4.04 | % | 3.05 | % | (1.60 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 103 | $ | 96 | $ | 101 | $ | 99 | $ | 98 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.00 | % | 1.32 | % | 1.55 | % | 1.65 | % | 1.65 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.04 | % | 2.09 | % | 2.01 | % | 2.08 | % | 1.88 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 2.82 | % | 2.34 | % | 1.68 | % | 1.42 | % | 0.12 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 1.78 | % | 1.57 | % | 1.23 | % | 0.99 | % | (0.11 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 70 | % | 139 | %*** | 117 | % | 152 | % | 77 | % |
* | Commencement of Operations. |
*** | The portfolio turnover rate calculation includes purchases and sales made as a result of the replacement of thesub-adviser. Excluding such transactions, the portfolio turnover rate would have been 64%. |
# | Per share amount is less than $0.005. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
26
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISER
Ø | DoubleLine Capital LP |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||||
Fund – Class A Shares* | without Sales Charge | 6.79 | % | 7.70 | % | 7.22 | % | |||||||||
with Sales Charge (a) | 0.89 | 1.80 | 5.32 | |||||||||||||
Fund – Class I Shares* | 6.86 | 7.97 | 7.49 | |||||||||||||
Fund – Class R Shares* | 6.61 | 7.32 | 6.95 | |||||||||||||
60% S&P 500® Index/40% Bloomberg Barclays U.S. Aggregate Bond Index | 8.29 | 10.49 | 10.15 | |||||||||||||
S&P 500® Index | 9.76 | 13.49 | 15.36 | |||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index | 5.49 | 5.29 | 2.35 | |||||||||||||
* Date of inception 3/7/16.
(a) A 5.50%front-end sales charge was deducted. Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I and R shares were 1.71%, 1.46% and 1.96%, respectively. The net expense ratios for Class A, I and R shares were 1.20%, 0.95% and 1.45%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — DoubleLine Capital LP
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, other market factors impacted the Fund. For instance, in the face of weakening global macroeconomic indicators, risk markets feared a policy error by the Federal Reserve (Fed) as they simultaneously raised the federal funds rate and shrank their balance sheet though quantitative tightening. The yield curve seemed to confirm these fears by steadily flattening, while the spread of corporate investment-grade and high-yield bond yields to Treasuries widened, and equity volatility spiked. With the shift in Fed policy, risk markets rallied into the New Year and by the end of April the S&P 500 Index had rebounded. This optimism came in the face of weak corporate earnings. By the end of April, over three quarters of S&P 500 Index companies had reported first quarter earnings. Based on these results, it looks as if first quarter earnings were slightly negative year-over-year. This would mark the first year-over-year earnings decline in almost three years.
Fund Highlights
The Fund’s Class I shares returned 6.86%, while the Fund’s benchmark — a blend of the S&P 500 Index (60%) and the Bloomberg Barclays U.S. Aggregate Bond Index (40%) — gained 8.29%. This underperformance was partially due to the Fund’s conservative asset allocation, underweight equities relative to the 60% benchmark weight. During the period, the S&P 500 Index gained 9.76% and the Bloomberg Barclays U.S. Aggregate Bond Index gained 5.49%.
The return of the Fund’s fixed-income investments was positive in the six-month period ended April 30, 2019 but trailed the Bloomberg Barclays U.S. Aggregate Bond Index’s return. All sectors of the fixed-income portfolio delivered positive returns. High yield, investment-grade corporate bonds, and agency mortgage-backed securities delivered the highest returns. Bank loans, non-agency mortgage-backed securities and government bonds, while providing positive total returns, were the lowest returning sectors.
The Fund’s active equity investments slightly underperformed the S&P 500 Index in the semi-annual period. The active equity portfolio benefited from positive stock selection, particularly in the technology, communication services and real estate sectors. Security selection in financials, industrials and energy was a drag on returns relative to the S&P 500 Index. An overweight allocation to technology helped relative returns.
The Fund’s allocation to the Shiller Barclays CAPE U.S. Sector Index (CAPE Index) outperformed the S&P 500 Index in the semi-annual period. During the six-month period ended April 30, 2019, the CAPE Index was allocated to six sectors: communication services, consumer staples, energy, health care, industrials and technology. Four of these sectors contributed positively to returns during the six-month period ended April 30, 2019, with industrials, technology and communications making the greatest positive contributions. The health care and energy sectors were a drag on CAPE Index returns. While no derivatives are used in the fixed income and active equity allocations of the Fund, exposure to the CAPE Index is achieved using derivatives in the form of unfunded index swap agreements.
27
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
Outlook
At the end of April the positioning of the Fund remained conservative. The allocation to equities remained below the benchmark, owing to both valuation and the deterioration we are seeing in earnings and corporate margins. We believe the prospect of higher rates may also prove a headwind for equities. Corporations repurchasing their own shares have represented one of the largest categories of equity buyers in recent years. Higher corporate borrowing costs could lessen this demand for equities. This caution is mirrored in our fixed-income portfolio, where our exposure to interest-rate risk (as measured by duration) was less than that of the Bloomberg Barclays U.S. Aggregate Bond Index, and our allocation to traditional investment-grade corporate bonds was modest compared to that of the benchmark.
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
U.S. Treasury Obligations | 25.6 | % | ||
Collateralized Mortgage Obligations | 12.3 | |||
Information Technology | 8.1 | |||
Investment Companies | 7.4 | |||
Financials | 6.3 | |||
Health Care | 5.7 | |||
Consumer Discretionary | 5.0 | |||
Industrials | 4.9 | |||
Mortgage-Backed Securities | 4.0 | |||
Communication Services | 3.9 | |||
Energy | 3.8 | |||
Asset-Backed Securities | 3.2 | |||
Consumer Staples | 2.6 | |||
Real Estate | 1.8 | |||
Materials | 0.6 | |||
Utilities | 0.4 | |||
Cash and Other | 4.4 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
|
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses 4/30/19 | ||||||||||
Class A | ||||||||||||
Actual | $1,000.00 | $1,067.90 | $5.92 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.07 | 5.78 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,068.60 | 4.64 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,020.31 | 4.53 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,066.10 | 7.19 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,017.83 | 7.02 | |||||||||
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.15%, 0.90% and 1.40%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
28
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
LONG-TERM DEBT SECURITIES: |
| |||||||
Asset-Backed Securities (3.2%) |
| |||||||
CSMC Trust, | ||||||||
Series 2018-RPL8 A1 | $ | 283,501 | $ | 284,762 | ||||
GSAA Home Equity Trust, | ||||||||
Series2007-9 A2A | 447,393 | 339,668 | ||||||
Pretium Mortgage Credit Partners I LLC, |
| |||||||
Series 2018-NPL3 A1 | 275,754 | 275,953 | ||||||
Series 2019-NPL2 A1 | 500,000 | 500,000 | ||||||
PRPM LLC, | ||||||||
Series2019-2A A1 | 500,000 | 500,264 | ||||||
|
| |||||||
Total Asset-Backed Securities | 1,900,647 | |||||||
|
| |||||||
Collateralized Mortgage Obligations (12.3%) |
| |||||||
Banc of America Alternative Loan Trust, | ||||||||
Series2006-5 CB14 | 266,585 | 254,851 | ||||||
CHL Mortgage Pass-Through Trust, | ||||||||
Series2006-OA5 2A1 | 815,939 | 698,648 | ||||||
CSMC Trust, | ||||||||
Series2019-JR1 | 750,000 | 749,999 | ||||||
FHLMC, | ||||||||
Series 3998 AZ | 1,331,345 | 1,399,351 | ||||||
Series 4792 A | 464,456 | 458,863 | ||||||
FNMA, | ||||||||
Series2013-5 EZ | 825,314 | 725,762 | ||||||
Series2017-13 ML | 837,090 | 837,390 | ||||||
Series2017-4 CH | 179,762 | 179,690 | ||||||
Series2018-21 | 465,132 | 361,176 | ||||||
JP Morgan Mortgage Trust, | ||||||||
Series 2018-7FRB A2 | 302,296 | 301,780 | ||||||
New Residential Mortgage Loan Trust, | ||||||||
Series2016-1A A1 | 461,170 | 465,439 | ||||||
RALI Trust, | ||||||||
Series2006-QS4 A10 | 618,881 | 574,825 | ||||||
Wells Fargo Mortgage Backed Securities Trust, | ||||||||
Series2007-7 A1 | 378,414 | 382,845 | ||||||
|
| |||||||
Total Collateralized Mortgage Obligations | 7,390,619 | |||||||
|
| |||||||
Corporate Bonds (16.3%) |
| |||||||
Communication Services (2.1%) |
| |||||||
Diversified Telecommunication Services (0.9%) |
| |||||||
AT&T, Inc. | ||||||||
5.250%, 3/1/37 | 165,000 | 176,579 | ||||||
CCO Holdings LLC | ||||||||
5.750%, 2/15/26§ | 30,000 | 31,260 | ||||||
5.000%, 2/1/28§ | 35,000 | 34,869 | ||||||
Frontier Communications Corp. | ||||||||
8.000%, 4/1/27§ | 45,000 | 46,491 | ||||||
Intelsat Jackson Holdings SA | ||||||||
5.500%, 8/1/23 | 25,000 | 22,625 | ||||||
Level 3 Financing, Inc. | ||||||||
5.375%, 1/15/24 | 50,000 | 50,750 | ||||||
Sprint Capital Corp. | ||||||||
6.875%, 11/15/28 | 50,000 | 47,715 | ||||||
Telesat Canada | ||||||||
8.875%, 11/15/24§ | 30,000 | 32,550 | ||||||
Verizon Communications, Inc. | ||||||||
4.272%, 1/15/36 | 80,000 | 82,113 | ||||||
|
| |||||||
524,952 | ||||||||
|
| |||||||
Entertainment (0.1%) |
| |||||||
Lions Gate Capital Holdings LLC | ||||||||
6.375%, 2/1/24§ | 65,000 | 67,925 | ||||||
|
| |||||||
Interactive Media & Services (0.0%) |
| |||||||
Match Group, Inc. | ||||||||
5.000%, 12/15/27§ | 30,000 | 30,150 | ||||||
|
| |||||||
Media (0.9%) |
| |||||||
Cengage Learning, Inc. | ||||||||
9.500%, 6/15/24§ | 35,000 | 32,463 | ||||||
Charter Communications Operating LLC | ||||||||
4.908%, 7/23/25 | 110,000 | 116,296 | ||||||
Comcast Corp. | ||||||||
3.700%, 4/15/24 | 70,000 | 72,381 | ||||||
CSC Holdings LLC | ||||||||
5.250%, 6/1/24 | 90,000 | 91,800 | ||||||
Gray Television, Inc. | ||||||||
7.000%, 5/15/27§ | 50,000 | 53,953 | ||||||
Interpublic Group of Cos., Inc. (The) | ||||||||
4.650%, 10/1/28 | 50,000 | 52,470 | ||||||
5.400%, 10/1/48 | 55,000 | 57,554 | ||||||
Sirius XM Radio, Inc. | ||||||||
5.375%, 7/15/26§ | 55,000 | 56,581 | ||||||
|
| |||||||
533,498 | ||||||||
|
| |||||||
Wireless Telecommunication Services (0.2%) |
| |||||||
Sprint Corp. | ||||||||
7.125%, 6/15/24 | 45,000 | 45,042 | ||||||
T-Mobile USA, Inc. | ||||||||
4.500%, 2/1/26 | 70,000 | 70,525 | ||||||
|
| |||||||
115,567 | ||||||||
|
| |||||||
Total Communication Services | 1,272,092 | |||||||
|
| |||||||
Consumer Discretionary (1.6%) |
| |||||||
Auto Components (0.3%) |
| |||||||
Allison Transmission, Inc. | ||||||||
5.000%, 10/1/24§ | 70,000 | 70,789 | ||||||
Icahn Enterprises LP | ||||||||
6.375%, 12/15/25 | 60,000 | 62,550 |
See Notes to Financial Statements.
29
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Panther BF Aggregator 2 LP | ||||||||
6.250%, 5/15/26§ | $ | 60,000 | $ | 62,250 | ||||
|
| |||||||
195,589 | ||||||||
|
| |||||||
Automobiles (0.1%) |
| |||||||
Ford Motor Co. | ||||||||
7.450%, 7/16/31 | 45,000 | 51,959 | ||||||
General Motors Co. | ||||||||
(ICE LIBOR USD 3 Month + 0.80%), | 20,000 | 19,988 | ||||||
|
| |||||||
71,947 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure (0.6%) |
| |||||||
1011778 BC ULC | ||||||||
5.000%, 10/15/25§ | 40,000 | 39,550 | ||||||
Caesars Resort Collection LLC | ||||||||
5.250%, 10/15/25§ | 35,000 | 34,212 | ||||||
Eldorado Resorts, Inc. | ||||||||
6.000%, 4/1/25 | 30,000 | 30,957 | ||||||
Golden Nugget, Inc. | ||||||||
6.750%, 10/15/24§ | 60,000 | 61,200 | ||||||
Hilton Domestic Operating Co., Inc. | ||||||||
4.250%, 9/1/24 | 45,000 | 45,005 | ||||||
Royal Caribbean Cruises Ltd. | ||||||||
3.700%, 3/15/28 | 50,000 | 48,040 | ||||||
Scientific Games International, Inc. | ||||||||
5.000%, 10/15/25§ | 75,000 | 74,555 | ||||||
Viking Cruises Ltd. | ||||||||
5.875%, 9/15/27§ | 40,000 | 39,700 | ||||||
|
| |||||||
373,219 | ||||||||
|
| |||||||
Household Durables (0.1%) | ||||||||
Tempur Sealy International, Inc. | ||||||||
5.500%, 6/15/26 | 49,000 | 48,691 | ||||||
|
| |||||||
Leisure Products (0.1%) |
| |||||||
Hasbro, Inc. | ||||||||
3.500%, 9/15/27 | 60,000 | 58,596 | ||||||
|
| |||||||
Multiline Retail (0.2%) |
| |||||||
Dollar Tree, Inc. | ||||||||
4.000%, 5/15/25 | 140,000 | 142,777 | ||||||
|
| |||||||
Specialty Retail (0.2%) |
| |||||||
PetSmart, Inc. | ||||||||
7.125%, 3/15/23§ | 25,000 | 22,125 | ||||||
5.875%, 6/1/25§ | 20,000 | 18,125 | ||||||
Staples, Inc. | ||||||||
7.500%, 4/15/26§ | 45,000 | 44,916 | ||||||
|
| |||||||
85,166 | ||||||||
|
| |||||||
Total Consumer Discretionary | 975,985 | |||||||
|
| |||||||
Consumer Staples (1.3%) |
| |||||||
Beverages (0.1%) |
| |||||||
Anheuser-Busch Cos. LLC | ||||||||
4.900%, 2/1/46§ | 50,000 | 50,427 | ||||||
Cott Holdings, Inc. | ||||||||
5.500%, 4/1/25§ | 30,000 | 30,338 | ||||||
|
| |||||||
80,765 | ||||||||
|
| |||||||
Food & Staples Retailing (0.1%) |
| |||||||
Albertsons Cos. LLC | ||||||||
5.750%, 3/15/25 | 15,000 | 14,831 | ||||||
7.500%, 3/15/26§ | 35,000 | 37,100 | ||||||
|
| |||||||
51,931 | ||||||||
|
| |||||||
Food Products (0.8%) |
| |||||||
B&G Foods, Inc. | ||||||||
5.250%, 4/1/25 | 55,000 | 54,065 | ||||||
JBS USA Lux SA | ||||||||
5.875%, 7/15/24§ | 10,000 | 10,210 | ||||||
5.750%, 6/15/25§ | 5,000 | 5,116 | ||||||
6.750%, 2/15/28§ | 78,000 | 82,195 | ||||||
6.500%, 4/15/29§ | 20,000 | 21,150 | ||||||
Pilgrim’s Pride Corp. | ||||||||
5.750%, 3/15/25§ | 60,000 | 61,275 | ||||||
5.875%, 9/30/27§ | 45,000 | 46,406 | ||||||
Post Holdings, Inc. | ||||||||
5.500%, 3/1/25§ | 70,000 | 71,575 | ||||||
Smithfield Foods, Inc. | ||||||||
4.250%, 2/1/27§ | 115,000 | 111,482 | ||||||
|
| |||||||
463,474 | ||||||||
|
| |||||||
Tobacco (0.3%) |
| |||||||
Altria Group, Inc. | ||||||||
5.950%, 2/14/49 | 55,000 | 59,451 | ||||||
BAT Capital Corp. | ||||||||
(ICE LIBOR USD 3 Month + 0.88%), | 35,000 | 34,860 | ||||||
Reynolds American, Inc. | ||||||||
4.000%, 6/12/22 | 60,000 | 61,325 | ||||||
|
| |||||||
155,636 | ||||||||
|
| |||||||
Total Consumer Staples | 751,806 | |||||||
|
| |||||||
Energy (1.9%) |
| |||||||
Energy Equipment & Services (0.2%) |
| |||||||
Transocean Poseidon Ltd. | ||||||||
6.875%, 2/1/27§ | 30,000 | 31,950 | ||||||
Transocean, Inc. | ||||||||
7.250%, 11/1/25§ | 25,000 | 24,750 | ||||||
USA Compression Partners LP | ||||||||
6.875%, 4/1/26 | 25,000 | 26,297 | ||||||
6.875%, 9/1/27§ | 20,000 | 21,050 | ||||||
|
| |||||||
104,047 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels (1.7%) |
| |||||||
Antero Midstream Partners LP | ||||||||
5.750%, 3/1/27§ | 80,000 | 81,600 | ||||||
Canadian Natural Resources Ltd. | ||||||||
2.950%, 1/15/23 | 120,000 | 118,947 | ||||||
Cenovus Energy, Inc. | ||||||||
5.400%, 6/15/47 | 55,000 | 57,435 | ||||||
Cheniere Energy Partners LP | ||||||||
5.250%, 10/1/25 | 65,000 | 66,300 | ||||||
5.625%, 10/1/26§ | 25,000 | 25,761 | ||||||
Energy Transfer Operating LP | ||||||||
4.750%, 1/15/26 | 45,000 | 47,058 | ||||||
4.200%, 4/15/27 | 5,000 | 5,028 | ||||||
EQM Midstream Partners LP | ||||||||
4.750%, 7/15/23 | 50,000 | 50,920 |
See Notes to Financial Statements.
30
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Gulfport Energy Corp. | ||||||||
6.375%, 5/15/25 | $ | 50,000 | $ | 43,875 | ||||
Hess Infrastructure Partners LP | ||||||||
5.625%, 2/15/26§ | 75,000 | 76,688 | ||||||
Hilcorp Energy I LP | ||||||||
6.250%, 11/1/28§ | 35,000 | 35,656 | ||||||
Indigo Natural Resources LLC | ||||||||
6.875%, 2/15/26§ | 30,000 | 27,797 | ||||||
Kinder Morgan Energy Partners LP | ||||||||
6.950%, 1/15/38 | 50,000 | 61,298 | ||||||
Marathon Petroleum Corp. | ||||||||
5.125%, 12/15/26§ | 55,000 | 59,457 | ||||||
NGL Energy Partners LP | ||||||||
7.500%, 4/15/26§ | 15,000 | 15,506 | ||||||
Oasis Petroleum, Inc. | ||||||||
6.875%, 3/15/22 | 45,000 | 45,169 | ||||||
Parsley Energy LLC | ||||||||
5.625%, 10/15/27§ | 45,000 | 46,238 | ||||||
Peabody Energy Corp. | ||||||||
6.000%, 3/31/22§ | 30,000 | 30,375 | ||||||
QEP Resources, Inc. | ||||||||
5.625%, 3/1/26 | 35,000 | 32,740 | ||||||
Sabine Pass Liquefaction LLC | ||||||||
5.000%, 3/15/27 | 55,000 | 58,494 | ||||||
Sunoco LP | ||||||||
5.500%, 2/15/26 | 25,000 | 25,344 | ||||||
6.000%, 4/15/27§ | 15,000 | 15,562 | ||||||
|
| |||||||
1,027,248 | ||||||||
|
| |||||||
Total Energy | 1,131,295 | |||||||
|
| |||||||
Financials (3.2%) |
| |||||||
Banks (0.8%) |
| |||||||
Bank of America Corp. | ||||||||
(ICE LIBOR USD 3 Month + 1.21%), | 90,000 | 91,764 | ||||||
Bank of Montreal | ||||||||
(USD Swap Semi 5 Year + 1.43%), 3.803%, 12/15/32 (k) | 40,000 | 38,919 | ||||||
Bank of Nova Scotia (The) | ||||||||
3.400%, 2/11/24 | 55,000 | 55,933 | ||||||
Citigroup, Inc. | ||||||||
(ICE LIBOR USD 3 Month + 1.10%), | 115,000 | 116,352 | ||||||
Mitsubishi UFJ Financial Group, Inc. | ||||||||
(ICE LIBOR USD 3 Month + 0.74%), | 90,000 | 89,985 | ||||||
Santander Holdings USA, Inc. | ||||||||
3.400%, 1/18/23 | 120,000 | 119,817 | ||||||
|
| |||||||
512,770 | ||||||||
|
| |||||||
Capital Markets (0.3%) |
| |||||||
Goldman Sachs Group, Inc. (The) | ||||||||
3.625%, 2/20/24 | 60,000 | 60,950 | ||||||
Morgan Stanley | ||||||||
(ICE LIBOR USD 3 Month + 0.85%), | 115,000 | 117,400 | ||||||
|
| |||||||
178,350 | ||||||||
|
| |||||||
Consumer Finance (1.1%) |
| |||||||
Ally Financial, Inc. | ||||||||
4.125%, 3/30/20 | 85,000 | 85,212 | ||||||
4.250%, 4/15/21 | 5,000 | 5,050 | ||||||
American Express Co. | ||||||||
3.400%, 2/22/24 | 90,000 | 91,557 | ||||||
Capital One Financial Corp. | ||||||||
(ICE LIBOR USD 3 Month + 0.72%), | 50,000 | 49,806 | ||||||
Discover Financial Services | ||||||||
4.100%, 2/9/27 | 120,000 | 120,507 | ||||||
General Motors Financial Co., Inc. | ||||||||
(ICE LIBOR USD 3 Month + 0.99%), | 80,000 | 78,739 | ||||||
3.950%, 4/13/24 | 15,000 | 15,135 | ||||||
John Deere Capital Corp. | ||||||||
3.450%, 1/10/24 | 60,000 | 61,762 | ||||||
Synchrony Financial | ||||||||
3.950%, 12/1/27 | 155,000 | 148,310 | ||||||
|
| |||||||
656,078 | ||||||||
|
| |||||||
Diversified Financial Services (0.3%) |
| |||||||
Refinitiv US Holdings, Inc. | ||||||||
6.250%, 5/15/26§ | 65,000 | 66,706 | ||||||
Tempo Acquisition LLC | ||||||||
6.750%, 6/1/25§ | 55,000 | 55,894 | ||||||
Verscend Escrow Corp. | ||||||||
9.750%, 8/15/26§ | 47,000 | 50,055 | ||||||
|
| |||||||
172,655 | ||||||||
|
| |||||||
Insurance (0.6%) |
| |||||||
Alliant Holdings Intermediate LLC | ||||||||
8.250%, 8/1/23§ | 45,000 | 46,237 | ||||||
Athene Global Funding | ||||||||
3.000%, 7/1/22§ | 120,000 | 119,776 | ||||||
Liberty Mutual Group, Inc. | ||||||||
6.500%, 5/1/42§ | 40,000 | 49,501 | ||||||
NFP Corp. | ||||||||
6.875%, 7/15/25§ | 45,000 | 44,213 | ||||||
Willis North America, Inc. | ||||||||
4.500%, 9/15/28 | 115,000 | 119,340 | ||||||
|
| |||||||
379,067 | ||||||||
|
| |||||||
Thrifts & Mortgage Finance (0.1%) |
| |||||||
Nationstar Mortgage Holdings, Inc. | ||||||||
8.125%, 7/15/23§ | 35,000 | 35,263 | ||||||
|
| |||||||
Total Financials | 1,934,183 | |||||||
|
| |||||||
Health Care (1.3%) |
| |||||||
Biotechnology (0.1%) |
| |||||||
AbbVie, Inc. | ||||||||
4.700%, 5/14/45 | 60,000 | 57,517 | ||||||
|
| |||||||
Health Care Equipment & Supplies (0.4%) |
| |||||||
Avantor, Inc. | ||||||||
9.000%, 10/1/25§ | 45,000 | 48,825 | ||||||
Zimmer Biomet Holdings, Inc. | ||||||||
2.700%, 4/1/20 | 170,000 | 169,487 | ||||||
|
| |||||||
218,312 | ||||||||
|
|
See Notes to Financial Statements.
31
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Health Care Providers & Services (0.6%) |
| |||||||
Centene Corp. | ||||||||
4.750%, 1/15/25 | $ | 39,000 | $ | 39,566 | ||||
5.375%, 6/1/26§ | 5,000 | 5,195 | ||||||
Cigna Corp. | ||||||||
(ICE LIBOR USD 3 Month + 0.89%), | 170,000 | 169,478 | ||||||
HCA, Inc. | ||||||||
5.375%, 9/1/26 | 80,000 | 83,714 | ||||||
5.875%, 2/1/29 | 5,000 | 5,375 | ||||||
MPH Acquisition Holdings LLC | ||||||||
7.125%, 6/1/24§ | 45,000 | 45,122 | ||||||
WellCare Health Plans, Inc. | ||||||||
5.375%, 8/15/26§ | 40,000 | 41,792 | ||||||
|
| |||||||
390,242 | ||||||||
|
| |||||||
Pharmaceuticals (0.2%) |
| |||||||
Bausch Health Americas, Inc. | ||||||||
9.250%, 4/1/26§ | 15,000 | 16,650 | ||||||
8.500%, 1/31/27§ | 25,000 | 27,219 | ||||||
Bausch Health Cos., Inc. | ||||||||
7.000%, 3/15/24§ | 20,000 | 21,025 | ||||||
5.750%, 8/15/27§ | 25,000 | 26,018 | ||||||
|
| |||||||
90,912 | ||||||||
|
| |||||||
Total Health Care | 756,983 | |||||||
|
| |||||||
Industrials (2.4%) |
| |||||||
Aerospace & Defense (0.4%) |
| |||||||
Bombardier, Inc. | ||||||||
6.000%, 10/15/22§ | 40,000 | 40,000 | ||||||
Lockheed Martin Corp. | ||||||||
4.700%, 5/15/46 | 100,000 | 112,049 | ||||||
TransDigm, Inc. | ||||||||
6.250%, 3/15/26§ | 55,000 | 57,131 | ||||||
6.375%, 6/15/26 | 15,000 | 15,019 | ||||||
|
| |||||||
224,199 | ||||||||
|
| |||||||
Airlines (0.2%) |
| |||||||
Delta Air Lines, Inc. | ||||||||
3.625%, 3/15/22 | 115,000 | 115,748 | ||||||
|
| |||||||
Building Products (0.2%) |
| |||||||
Builders FirstSource, Inc. | ||||||||
5.625%, 9/1/24§ | 45,000 | 45,056 | ||||||
Masonite International Corp. | ||||||||
5.625%, 3/15/23§ | 45,000 | 46,125 | ||||||
Owens Corning | ||||||||
4.400%, 1/30/48 | 80,000 | 65,576 | ||||||
|
| |||||||
156,757 | ||||||||
|
| |||||||
Commercial Services & Supplies (0.4%) |
| |||||||
Aramark Services, Inc. | ||||||||
5.000%, 4/1/25§ | 30,000 | 30,890 | ||||||
5.000%, 2/1/28§ | 65,000 | 66,076 | ||||||
Garda World Security Corp. | ||||||||
8.750%, 5/15/25§ | 35,000 | 32,900 | ||||||
GFL Environmental, Inc. | ||||||||
8.500%, 5/1/27§ | 10,000 | 10,418 | ||||||
Star Merger Sub, Inc. | ||||||||
6.875%, 8/15/26§ | 45,000 | 46,717 | ||||||
Tervita Escrow Corp. | ||||||||
7.625%, 12/1/21§ | 45,000 | 45,405 | ||||||
|
| |||||||
232,406 | ||||||||
|
| |||||||
Construction & Engineering (0.1%) |
| |||||||
AECOM | ||||||||
5.125%, 3/15/27 | 80,000 | 80,301 | ||||||
|
| |||||||
Industrial Conglomerates (0.2%) |
| |||||||
General Electric Co. | ||||||||
5.875%, 1/14/38 | 55,000 | 59,471 | ||||||
Roper Technologies, Inc. | ||||||||
4.200%, 9/15/28 | 50,000 | 51,432 | ||||||
|
| |||||||
110,903 | ||||||||
|
| |||||||
Machinery (0.0%) |
| |||||||
Colfax Corp. | ||||||||
6.000%, 2/15/24§ | 25,000 | 25,937 | ||||||
6.375%, 2/15/26§ | 10,000 | 10,575 | ||||||
|
| |||||||
36,512 | ||||||||
|
| |||||||
Road & Rail (0.5%) |
| |||||||
Avolon Holdings Funding Ltd. | ||||||||
5.125%, 10/1/23§ | 29,000 | 30,065 | ||||||
5.250%, 5/15/24§ | 30,000 | 31,309 | ||||||
3.950%, 7/1/24§ | 55,000 | 54,611 | ||||||
CSX Corp. | ||||||||
3.800%, 11/1/46 | 55,000 | 51,301 | ||||||
Penske Truck Leasing Co. LP | ||||||||
4.200%, 4/1/27§ | 110,000 | 111,288 | ||||||
|
| |||||||
278,574 | ||||||||
|
| |||||||
Trading Companies & Distributors (0.4%) |
| |||||||
Air Lease Corp. | ||||||||
3.250%, 3/1/25 | 80,000 | 77,343 | ||||||
Beacon Roofing Supply, Inc. | ||||||||
4.875%, 11/1/25§ | 65,000 | 62,543 | ||||||
United Rentals North America, Inc. | ||||||||
6.500%, 12/15/26 | 40,000 | 42,700 | ||||||
5.250%, 1/15/30 | 35,000 | 35,044 | ||||||
|
| |||||||
217,630 | ||||||||
|
| |||||||
Total Industrials | 1,453,030 | |||||||
|
| |||||||
Information Technology (0.8%) |
| |||||||
Communications Equipment (0.2%) |
| |||||||
CommScope, Inc. | ||||||||
5.500%, 3/1/24§ | 20,000 | 20,863 | ||||||
6.000%, 3/1/26§ | 40,000 | 42,350 | ||||||
Gogo Intermediate Holdings LLC | ||||||||
9.875%, 5/1/24§ | 35,000 | 35,777 | ||||||
|
| |||||||
98,990 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components (0.2%) |
| |||||||
Arrow Electronics, Inc. | ||||||||
3.875%, 1/12/28 | 105,000 | 100,962 | ||||||
|
| |||||||
IT Services (0.1%) |
| |||||||
GTT Communications, Inc. | ||||||||
7.875%, 12/31/24§ | 50,000 | 47,125 | ||||||
|
| |||||||
Software (0.3%) |
| |||||||
Genesys Telecommunications Laboratories, Inc. | ||||||||
10.000%, 11/30/24§ | 40,000 | 43,662 | ||||||
Informatica LLC | ||||||||
7.125%, 7/15/23§ | 70,000 | 71,575 | ||||||
Solera LLC | ||||||||
10.500%, 3/1/24§ | 15,000 | 16,238 | ||||||
Sophia LP | ||||||||
9.000%, 9/30/23§ | 30,000 | 31,200 |
See Notes to Financial Statements.
32
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
SS&C Technologies, Inc. | ||||||||
5.500%, 9/30/27§ | $ | 50,000 | $ | 51,125 | ||||
|
| |||||||
213,800 | ||||||||
|
| |||||||
Total Information Technology | 460,877 | |||||||
|
| |||||||
Materials (0.6%) |
| |||||||
Chemicals (0.3%) |
| |||||||
Mosaic Co. (The) | ||||||||
4.050%, 11/15/27 | 120,000 | 120,358 | ||||||
Nutrien Ltd. | ||||||||
4.200%, 4/1/29 | 60,000 | 62,221 | ||||||
|
| |||||||
182,579 | ||||||||
|
| |||||||
Containers & Packaging (0.2%) |
| |||||||
Crown Americas LLC | ||||||||
4.750%, 2/1/26 | 64,000 | 64,020 | ||||||
Flex Acquisition Co., Inc. | ||||||||
6.875%, 1/15/25§ | 25,000 | 23,500 | ||||||
WRKCo, Inc. | ||||||||
3.750%, 3/15/25 | 50,000 | 50,575 | ||||||
|
| |||||||
138,095 | ||||||||
|
| |||||||
Metals & Mining (0.1%) |
| |||||||
SunCoke Energy Partners LP | ||||||||
7.500%, 6/15/25§ | 40,000 | 40,300 | ||||||
|
| |||||||
Total Materials | 360,974 | |||||||
|
| |||||||
Real Estate (0.9%) |
| |||||||
Equity Real Estate Investment Trusts (REITs) (0.9%) |
| |||||||
Alexandria Real Estate Equities, Inc. (REIT) | ||||||||
4.000%, 1/15/24 | 25,000 | 26,083 | ||||||
4.850%, 4/15/49 | 25,000 | 26,461 | ||||||
American Tower Corp. (REIT) | ||||||||
3.950%, 3/15/29 | 90,000 | 90,134 | ||||||
Boston Properties LP (REIT) | ||||||||
4.500%, 12/1/28 | 60,000 | 64,218 | ||||||
Crown Castle International Corp. (REIT) |
| |||||||
3.650%, 9/1/27 | 70,000 | 69,020 | ||||||
3.800%, 2/15/28 | 50,000 | 49,736 | ||||||
ESH Hospitality, Inc. (REIT) | ||||||||
5.250%, 5/1/25§ | 50,000 | 50,312 | ||||||
MPT Operating Partnership LP (REIT) | ||||||||
5.250%, 8/1/26 | 45,000 | 45,788 | ||||||
Public Storage (REIT) | ||||||||
3.385%, 5/1/29 | 60,000 | 60,241 | ||||||
Welltower, Inc. (REIT) | ||||||||
3.950%, 9/1/23 | 60,000 | 62,082 | ||||||
|
| |||||||
544,075 | ||||||||
|
| |||||||
Total Real Estate | 544,075 | |||||||
|
| |||||||
Utilities (0.2%) |
| |||||||
Electric Utilities (0.1%) |
| |||||||
Vistra Operations Co. LLC | ||||||||
5.500%, 9/1/26§ | 35,000 | 36,050 | ||||||
5.625%, 2/15/27§ | 25,000 | 25,688 | ||||||
|
| |||||||
61,738 | ||||||||
|
| |||||||
Gas Utilities (0.1%) |
| |||||||
Brooklyn Union Gas Co. (The) | ||||||||
4.487%, 3/4/49§ | 60,000 | 63,594 | ||||||
|
| |||||||
Total Utilities | 125,332 | |||||||
|
| |||||||
Total Corporate Bonds | 9,766,632 | |||||||
|
| |||||||
Mortgage-Backed Securities (4.0%) |
| |||||||
FHLMC | ||||||||
3.000%, 3/1/46 | 717,831 | 712,099 | ||||||
3.500%, 5/1/46 | 705,311 | 706,817 | ||||||
4.000%, 10/1/48 | 96,919 | 99,972 | ||||||
FNMA | ||||||||
3.500%, 7/1/42 | 306,109 | 311,784 | ||||||
3.500%, 6/1/48 | 572,816 | 578,961 | ||||||
|
| |||||||
Total Mortgage-Backed Securities | 2,409,633 | |||||||
|
| |||||||
U.S. Treasury Obligations (9.0%) |
| |||||||
U.S. Treasury Bonds | ||||||||
3.125%, 2/15/43 | 210,000 | 218,108 | ||||||
3.625%, 8/15/43 | 170,000 | 191,353 | ||||||
3.750%, 11/15/43 | 180,000 | 206,719 | ||||||
2.750%, 11/15/47 | 60,000 | 57,778 | ||||||
U.S. Treasury Inflation Linked Bonds | ||||||||
1.000%, 2/15/46 TIPS | 341,382 | 344,735 | ||||||
U.S. Treasury Inflation Linked Notes |
| |||||||
0.875%, 1/15/29 TIPS | 190,205 | 195,971 | ||||||
U.S. Treasury Notes | ||||||||
1.375%, 2/15/20 | 320,000 | 317,412 | ||||||
1.875%, 3/31/22 | 250,000 | 247,518 | ||||||
1.875%, 4/30/22 | 350,000 | 346,207 | ||||||
1.750%, 5/31/22 | 350,000 | 344,821 | ||||||
2.625%, 2/28/23 | 260,000 | 263,459 | ||||||
2.500%, 3/31/23 | 310,000 | 312,771 | ||||||
2.750%, 4/30/23 | 310,000 | 315,716 | ||||||
1.625%, 5/31/23 | 250,000 | 243,754 | ||||||
1.875%, 8/31/24 | 320,000 | 313,127 | ||||||
2.125%, 9/30/24 | 320,000 | 316,925 | ||||||
2.250%, 10/31/24 | 320,000 | 318,887 | ||||||
3.000%, 9/30/25 | 300,000 | 311,077 | ||||||
2.250%, 8/15/27 | 290,000 | 285,437 | ||||||
2.250%, 11/15/27 | 220,000 | 216,269 | ||||||
|
| |||||||
Total U.S. Treasury Obligations | 5,368,044 | |||||||
|
| |||||||
Total Long-Term Debt Securities (44.8%) | 26,835,575 | |||||||
|
| |||||||
Number of Shares | Value (Note 1) | |||||||
COMMON STOCKS: |
| |||||||
Communication Services (1.8%) |
| |||||||
Interactive Media & Services (1.8%) |
| |||||||
Alphabet, Inc., Class A* | 445 | 533,537 | ||||||
Facebook, Inc., Class A* | 2,759 | 533,591 | ||||||
|
| |||||||
1,067,128 | ||||||||
|
| |||||||
Total Communication Services | 1,067,128 | |||||||
|
|
See Notes to Financial Statements.
33
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Consumer Discretionary (3.4%) |
| |||||||
Internet & Direct Marketing Retail (1.7%) |
| |||||||
Amazon.com, Inc.* | 386 | $ | 743,637 | |||||
Booking Holdings, Inc.* | 148 | 274,538 | ||||||
|
| |||||||
1,018,175 | ||||||||
|
| |||||||
Multiline Retail (1.2%) |
| |||||||
Dollar General Corp. | 3,498 | 441,063 | ||||||
Target Corp. | 3,495 | 270,583 | ||||||
|
| |||||||
711,646 | ||||||||
|
| |||||||
Specialty Retail (0.5%) |
| |||||||
O’Reilly Automotive, Inc.* | 784 | 296,799 | ||||||
|
| |||||||
Total Consumer Discretionary | 2,026,620 | |||||||
|
| |||||||
Consumer Staples (1.3%) |
| |||||||
Beverages (0.3%) |
| |||||||
Constellation Brands, Inc., Class A | 787 | 166,585 | ||||||
|
| |||||||
Food & Staples Retailing (0.2%) |
| |||||||
Sysco Corp. | 2,306 | 162,273 | ||||||
|
| |||||||
Tobacco (0.8%) |
| |||||||
Philip Morris International, Inc. | 5,513 | 477,205 | ||||||
|
| |||||||
Total Consumer Staples | 806,063 | |||||||
|
| |||||||
Energy (1.9%) |
| |||||||
Energy Equipment & Services (0.5%) |
| |||||||
Halliburton Co. | 6,750 | 191,228 | ||||||
Patterson-UTI Energy, Inc. | 9,365 | 127,270 | ||||||
|
| |||||||
318,498 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels (1.4%) |
| |||||||
Continental Resources, Inc.* | 4,558 | 209,622 | ||||||
Devon Energy Corp. | 7,622 | 244,971 | ||||||
Pioneer Natural Resources Co. | 2,183 | 363,382 | ||||||
|
| |||||||
817,975 | ||||||||
|
| |||||||
Total Energy | 1,136,473 | |||||||
|
| |||||||
Financials (3.1%) |
| |||||||
Banks (1.1%) |
| |||||||
Citigroup, Inc. | 5,396 | 381,497 | ||||||
Wells Fargo & Co. | 6,256 | 302,853 | ||||||
|
| |||||||
684,350 | ||||||||
|
| |||||||
Capital Markets (1.0%) |
| |||||||
Charles Schwab Corp. (The) | 4,462 | 204,270 | ||||||
Intercontinental Exchange, Inc. | 4,705 | 382,752 | ||||||
|
| |||||||
587,022 | ||||||||
|
| |||||||
Insurance (1.0%) |
| |||||||
Markel Corp.* | 259 | 277,521 | ||||||
Willis Towers Watson plc | 1,683 | 310,245 | ||||||
|
| |||||||
587,766 | ||||||||
|
| |||||||
Total Financials | 1,859,138 | |||||||
|
| |||||||
Health Care (4.4%) |
| |||||||
Biotechnology (0.2%) |
| |||||||
BioMarin Pharmaceutical, Inc.* | 1,617 | 138,302 | ||||||
|
| |||||||
Health Care Equipment & Supplies (0.8%) |
| |||||||
Abbott Laboratories | 5,279 | 419,998 | ||||||
Alcon, Inc.* | 906 | 52,729 | ||||||
|
| |||||||
472,727 | ||||||||
|
| |||||||
Health Care Providers & Services (1.4%) |
| |||||||
Anthem, Inc. | 1,547 | 406,907 | ||||||
UnitedHealth Group, Inc. | 1,857 | 432,811 | ||||||
|
| |||||||
839,718 | ||||||||
|
| |||||||
Pharmaceuticals (2.0%) |
| |||||||
AstraZeneca plc (ADR) | 11,013 | 414,750 | ||||||
Bristol-Myers Squibb Co. | 2,092 | 97,132 | ||||||
Novartis AG (ADR) | 4,537 | 373,077 | ||||||
Zoetis, Inc. | 2,729 | 277,921 | ||||||
|
| |||||||
1,162,880 | ||||||||
|
| |||||||
Total Health Care | 2,613,627 | |||||||
|
| |||||||
Industrials (2.5%) |
| |||||||
Aerospace & Defense (1.6%) |
| |||||||
Boeing Co. (The) | 965 | 364,471 | ||||||
Lockheed Martin Corp. | 806 | 268,664 | ||||||
Northrop Grumman Corp. | 1,015 | 294,258 | ||||||
|
| |||||||
927,393 | ||||||||
|
| |||||||
Air Freight & Logistics (0.4%) |
| |||||||
FedEx Corp. | 1,312 | 248,572 | ||||||
|
| |||||||
Industrial Conglomerates (0.5%) |
| |||||||
Honeywell International, Inc. | 1,827 | 317,222 | ||||||
|
| |||||||
Total Industrials | 1,493,187 | |||||||
|
| |||||||
Information Technology (7.3%) |
| |||||||
Communications Equipment (0.4%) |
| |||||||
Telefonaktiebolaget LM Ericsson (ADR) | 26,679 | 264,122 | ||||||
|
| |||||||
IT Services (2.8%) |
| |||||||
Automatic Data Processing, Inc. | 1,633 | 268,449 | ||||||
Cognizant Technology Solutions Corp., Class A | 4,199 | 306,359 | ||||||
PayPal Holdings, Inc.* | 4,227 | 476,679 | ||||||
Visa, Inc., Class A | 3,738 | 614,639 | ||||||
|
| |||||||
1,666,126 | ||||||||
|
| |||||||
Semiconductors & Semiconductor Equipment (1.0%) |
| |||||||
Analog Devices, Inc. | 2,805 | 326,053 | ||||||
Lam Research Corp. | 1,243 | 257,836 | ||||||
|
| |||||||
583,889 | ||||||||
|
| |||||||
Software (2.4%) |
| |||||||
Adobe, Inc.* | 1,288 | 372,554 | ||||||
Microsoft Corp. | 6,978 | 911,326 | ||||||
Splunk, Inc.* | 1,008 | 139,144 | ||||||
|
| |||||||
1,423,024 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (0.7%) |
| |||||||
Apple, Inc. | 2,274 | 456,324 | ||||||
|
| |||||||
Total Information Technology | 4,393,485 | |||||||
|
|
See Notes to Financial Statements.
34
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Real Estate (0.9%) |
| |||||||
Equity Real Estate Investment Trusts (REITs) (0.9%) |
| |||||||
American Tower Corp. (REIT) | 2,806 | $ | 548,012 | |||||
|
| |||||||
Total Real Estate | 548,012 | |||||||
|
| |||||||
Utilities (0.2%) |
| |||||||
Electric Utilities (0.2%) |
| |||||||
NextEra Energy, Inc. | 599 | 116,469 | ||||||
|
| |||||||
Total Utilities | 116,469 | |||||||
|
| |||||||
Total Common Stocks (26.8%) | 16,060,202 | |||||||
|
| |||||||
INVESTMENT COMPANIES: |
| |||||||
Fixed Income (7.4%) |
| |||||||
DoubleLine Floating Rate Fund Class I‡ | 280,868 | 2,738,463 | ||||||
DoubleLine Global Bond Fund Class I‡ | 165,022 | 1,694,775 | ||||||
|
| |||||||
Total Investment Companies (7.4%) | 4,433,238 | |||||||
|
| |||||||
Principal Amount | Value (Note 1) | |||||||
SHORT-TERM INVESTMENTS: |
| |||||||
U.S. Treasury Obligations (16.6%) |
| |||||||
U.S. Treasury Bills | ||||||||
2.36%, 7/11/19 (p) | $ | 480,000 | 477,747 | |||||
2.36%, 7/18/19 (p) | 1,000,000 | 994,854 | ||||||
2.38%, 8/15/19 (p) | 8,000,000 | 7,943,883 | ||||||
2.37%, 9/5/19 (p) | 200,000 | 198,328 | ||||||
2.39%, 11/7/19 (p) | 330,000 | 325,864 | ||||||
|
| |||||||
Total U.S. Treasury Obligations | 9,940,676 | |||||||
|
| |||||||
Total Short-Term Investments (16.6%) | 9,940,676 | |||||||
|
| |||||||
Total Investments in Securities (95.6%) | 57,269,691 | |||||||
Other Assets Less Liabilities (4.4%) | 2,645,060 | |||||||
|
| |||||||
Net Assets (100%) | $ | 59,914,751 | ||||||
|
|
* | Non-income producing. |
‡ | All, or a portion, of the security is an affiliated company as defined under the Investment Company Act of 1940. |
§ | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. At April 30, 2019, the market value of these securities amounted to $6,416,900 or 10.7% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
(e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2019. Maturity date disclosed is the ultimate maturity date. |
(k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2019. |
(l) | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown was the current rate as of April 30, 2019. |
(p) | Yield to maturity. |
Glossary:
ADR | — American Depositary Receipt |
CAPE | — Cyclically Adjusted Price Earnings |
FHLMC | — Federal Home Loan Mortgage Corp. |
FNMA | — Federal National Mortgage Association |
ICE | — Intercontinental Exchange |
LIBOR | — London Interbank Offered Rate |
OTC | —Over-the-counter |
PO | — Principal Only |
TIPS | — Treasury Inflation Protected Security |
USD | — United States Dollar |
Investments in companies which were affiliates for the six months ended April 30, 2019, were as follows:
Security | Shares at April 30, 2019 | Market Value October 31, 2018 ($) | Purchases at Cost ($) | Proceeds from Sales ($) | Net Realized Gain (Loss) ($) | Change in Unrealized Appreciation/ (Depreciation) ($) | Market Value April 30, 2019 ($) | Dividend/ Interest Income ($) | Capital Gain Distributions ($) | |||||||||||||||||||||||||||
DoubleLine Floating Rate Fund, Class I | 280,868 | 2,769,359 | — | — | — | (30,896 | ) | 2,738,463 | 74,681 | — | ||||||||||||||||||||||||||
DoubleLine Global Bond Fund, Class I | 165,022 | 1,633,717 | — | — | — | 61,058 | 1,694,775 | 1,607 | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 4,403,076 | — | — | — | 30,162 | 4,433,238 | 76,288 | — | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Financial Statements.
35
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
OTC Total return swap contracts outstanding as of April 30, 2019 (Note 1):
Reference | Payments Made | Payments Received | Frequency of | Counterparty | Maturity Date | Notional Amount | Value and Unrealized Appreciation (Depreciation) ($) | |||||||||||||
Shiller Barclays | 0.40% and decrease in total return of index | Increase in total return of index | At maturity | Barclays Bank plc | 5/28/2019 | USD | 9,199,998 | 1,213,433 | ||||||||||||
|
| |||||||||||||||||||
1,213,433 | ||||||||||||||||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Asset-Backed Securities | $ | — | $ | 1,900,647 | $ | — | $ | 1,900,647 | ||||||||
Collateralized Mortgage Obligations | — | 7,390,619 | — | 7,390,619 | ||||||||||||
Common Stocks | ||||||||||||||||
Communication Services | 1,067,128 | — | — | 1,067,128 | ||||||||||||
Consumer Discretionary | 2,026,620 | — | — | 2,026,620 | ||||||||||||
Consumer Staples | 806,063 | — | — | 806,063 | ||||||||||||
Energy | 1,136,473 | — | — | 1,136,473 | ||||||||||||
Financials | 1,859,138 | — | — | 1,859,138 | ||||||||||||
Health Care | 2,613,627 | — | — | 2,613,627 | ||||||||||||
Industrials | 1,493,187 | — | — | 1,493,187 | ||||||||||||
Information Technology | 4,393,485 | — | — | 4,393,485 | ||||||||||||
Real Estate | 548,012 | — | — | 548,012 | ||||||||||||
Utilities | 116,469 | ��� | — | 116,469 | ||||||||||||
Corporate Bonds | ||||||||||||||||
Communication Services | — | 1,272,092 | — | 1,272,092 | ||||||||||||
Consumer Discretionary | — | 975,985 | — | 975,985 | ||||||||||||
Consumer Staples | — | 751,806 | — | 751,806 | ||||||||||||
Energy | — | 1,131,295 | — | 1,131,295 | ||||||||||||
Financials | — | 1,934,183 | — | 1,934,183 | ||||||||||||
Health Care | — | 756,983 | — | 756,983 | ||||||||||||
Industrials | — | 1,453,030 | — | 1,453,030 | ||||||||||||
Information Technology | — | 460,877 | — | 460,877 | ||||||||||||
Materials | — | 360,974 | — | 360,974 | ||||||||||||
Real Estate | — | 544,075 | — | 544,075 | ||||||||||||
Utilities | — | 125,332 | — | 125,332 | ||||||||||||
Investment Companies | 4,433,238 | — | — | 4,433,238 | ||||||||||||
Mortgage-Backed Securities | — | 2,409,633 | — | 2,409,633 |
See Notes to Financial Statements.
36
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Short-Term Investments | ||||||||||||||||
U.S. Treasury Obligations | $ | — | $ | 9,940,676 | $ | — | $ | 9,940,676 | ||||||||
Total Return Swap | — | 1,213,433 | — | 1,213,433 | ||||||||||||
U.S. Treasury Obligations | — | 5,368,044 | — | 5,368,044 | ||||||||||||
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Total Assets | $ | 20,493,440 | $ | 37,989,684 | $ | — | $ | 58,483,124 | ||||||||
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Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
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Total | $ | 20,493,440 | $ | 37,989,684 | $ | — | $ | 58,483,124 | ||||||||
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Fair Values of Derivative Instruments as of April 30, 2019:
Statement of Assets and Liabilities | ||||||
Derivatives Not Accounted for as | Asset Derivatives | Fair Value | ||||
Equity contracts | Receivables, Net assets – Unrealized appreciation | $ | 1,213,433 | |||
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Total | $ | 1,213,433 | ||||
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The Effect of Derivative Instruments on the Statement of Operations for the six months ended April 30, 2019:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||
Derivatives Not Accounted for as Hedging Instruments^ | Swaps | Total | ||||||
Equity contracts | $ | 342,216 | $ | 342,216 | ||||
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Total | $ | 342,216 | $ | 342,216 | ||||
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Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||
Derivatives Not Accounted for as Hedging Instruments^ | Swaps | Total | ||||||
Equity contracts | $ | 932,284 | $ | 932,284 | ||||
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Total | $ | 932,284 | $ | 932,284 | ||||
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^ The Fund held swap contracts as a substitute for investing in conventional securities.
The Fund held swap contracts with an average notional value of approximately $13,057,000 during the six months ended April 30, 2019.
The following table presents the Fund’s gross derivative assets and liabilities by counterparty net of amounts available for offset under netting arrangements and any related collateral received or pledged by the Fund as of April 30, 2019:
Counterparty | Gross Amount of Derivative Assets Presented in the Statement of Assets and Liabilities (a) | Derivatives Available for Offset | Collateral Received | Net Amount Due from Counterparty | ||||||||||||
Barclays Bank plc | $ | 1,213,433 | $ | — | $ | — | $ | 1,213,433 | ||||||||
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Total | $ | 1,213,433 | $ | — | $ | — | $ | 1,213,433 | ||||||||
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(a) | For financial reporting purposes the Fund does not offset derivative assets and derivative liabilities subject to master netting arrangements in the Statement of Assets and Liabilities. |
See Notes to Financial Statements.
37
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 13,454,413 | ||
Long-term U.S. government debt securities | 6,436,573 | |||
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$ | 19,890,986 | |||
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Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 9,863,698 | ||
Long-term U.S. government debt securities | 6,203,124 | |||
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$ | 16,066,822 | |||
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As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 4,116,795 | ||
Aggregate gross unrealized depreciation | (707,503 | ) | ||
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Net unrealized appreciation | $ | 3,409,292 | ||
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Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 55,073,832 | ||
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See Notes to Financial Statements.
38
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value: | ||||
Affiliated Issuers (Cost $4,425,000) | $ | 4,433,238 | ||
Unaffiliated Issuers (Cost $50,648,202) | 52,836,453 | |||
Cash | 1,364,540 | |||
Market value on OTC swap contracts | 1,213,433 | |||
Dividends, interest and other receivables | 166,972 | |||
Receivable for securities sold | 35,875 | |||
Prepaid registration and filing fees | 28,369 | |||
Due from Custodian | 24,288 | |||
Receivable for Fund shares sold | 2,835 | |||
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Total assets | 60,106,003 | |||
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LIABILITIES | ||||
Payable for securities purchased | 78,863 | |||
Payable for Fund shares redeemed | 21,030 | |||
Investment advisory fees payable | 10,541 | |||
Administrative fees payable | 7,329 | |||
Transfer agent fees payable | 4,395 | |||
Trustees’ fees payable | 1,458 | |||
Distribution fees payable – Class A | 418 | |||
Distribution fees payable – Class R | 66 | |||
Accrued expenses | 67,152 | |||
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Total liabilities | 191,252 | |||
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NET ASSETS | $ | 59,914,751 | ||
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Net assets were comprised of: | ||||
Paid in capital | $ | 55,691,701 | ||
Total distributable earnings (loss) | 4,223,050 | |||
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Net assets | $ | 59,914,751 | ||
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Class A | ||||
Net asset value and redemption price per share, $2,037,012 / 188,157 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.83 | ||
Maximum sales charge (5.50% of offering price) | 0.63 | |||
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Maximum offering price per share | $ | 11.46 | ||
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Class I | ||||
Net asset value and redemption price per share, $57,715,239 / 5,325,892 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.84 | ||
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Class R | ||||
Net asset value and redemption price per share, $162,500 / 15,018 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.82 | ||
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STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Interest | $ | 637,205 | ||
Dividends ($76,288 of dividend income received from affiliates) | 183,059 | |||
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Total income | 820,264 | |||
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EXPENSES | ||||
Investment advisory fees | 214,759 | |||
Professional fees | 58,636 | |||
Administrative fees | 42,952 | |||
Printing and mailing expenses | 27,785 | |||
Registration and filing fees | 22,166 | |||
Transfer agent fees | 20,129 | |||
Custodian fees | 6,749 | |||
Trustees’ fees | 2,846 | |||
Distribution fees – Class A | 2,541 | |||
Distribution fees – Class R | 384 | |||
Miscellaneous | 15,913 | |||
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Gross expenses | 414,860 | |||
Less: Waiver from investment adviser | (153,014 | ) | ||
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Net expenses | 261,846 | |||
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NET INVESTMENT INCOME (LOSS) | 558,418 | |||
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REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Realized gain (loss) on: | ||||
Investments in securities | 135,679 | |||
Swaps | 342,216 | |||
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Net realized gain (loss) | 477,895 | |||
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Change in unrealized appreciation (depreciation) on: | ||||
Investments in securities ($30,162 of change in unrealized appreciation (depreciation) from affiliates) | 1,858,339 | |||
Swaps | 932,284 | |||
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Net change in unrealized appreciation (depreciation) | 2,790,623 | |||
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NET REALIZED AND UNREALIZED GAIN (LOSS) | 3,268,518 | |||
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,826,936 | ||
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See Notes to Financial Statements.
39
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | ||||||||
Net investment income (loss) | $ | 558,418 | $ | 964,904 | ||||
Net realized gain (loss) | 477,895 | 1,692,724 | ||||||
Net change in unrealized appreciation (depreciation) | 2,790,623 | (1,814,177 | ) | |||||
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 3,826,936 | 843,451 | ||||||
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Distributions to shareholders: | ||||||||
Class A | (83,828 | ) | (83,272 | ) | ||||
Class I | (2,637,668 | ) | (4,227,949 | ) | ||||
Class R | (6,450 | ) | (7,506 | ) | ||||
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Total distributions to shareholders | (2,727,946 | ) | (4,318,727 | ) | ||||
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CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 24,024 and 157,314 shares, respectively ] | 249,215 | 1,679,813 | ||||||
Capital shares issued in reinvestment of dividends [ 7,862 and 7,082 shares, respectively ] | 79,177 | 75,498 | ||||||
Capital shares repurchased [ (73,683) and (47,392) shares, respectively ] | (769,946 | ) | (515,495 | ) | ||||
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Total Class A transactions | (441,554 | ) | 1,239,816 | |||||
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Class I | ||||||||
Capital shares sold [ 27,966 and 161,547 shares, respectively ] | 292,454 | 1,758,509 | ||||||
Capital shares issued in reinvestment of dividends [ 18,482 and 20,595 shares, respectively ] | 186,113 | 219,547 | ||||||
Capital shares repurchased [ (92,740) and (51,690) shares, respectively ] | (945,208 | ) | (554,783 | ) | ||||
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Total Class I transactions | (466,641 | ) | 1,423,273 | |||||
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Class R | ||||||||
Capital shares sold [ 126 and 4,880 shares, respectively ] | 1,258 | 51,331 | ||||||
Capital shares issued in reinvestment of dividends [ 205 and 1 shares, respectively ] | 2,068 | 7 | ||||||
Capital shares repurchased [ (6) and (197) shares, respectively ] | (64 | ) | (2,083 | ) | ||||
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Total Class R transactions | 3,262 | 49,255 | ||||||
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NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | (904,933 | ) | 2,712,344 | |||||
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TOTAL INCREASE (DECREASE) IN NET ASSETS | 194,057 | (762,932 | ) | |||||
NET ASSETS: | ||||||||
Beginning of period | 59,720,694 | 60,483,626 | ||||||
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End of period | $ | 59,914,751 | $ | 59,720,694 | ||||
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See Notes to Financial Statements.
40
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | March 7, 2016* to October 31, 2016 | ||||||||||||||
Class A | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 10.61 | $ | 11.25 | $ | 10.53 | $ | 10.00 | ||||||||
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Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e)(x) | 0.09 | 0.15 | 0.11 | 0.06 | ||||||||||||
Net realized and unrealized gain (loss) | 0.60 | (0.01 | ) | 0.87 | 0.47 | |||||||||||
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Total from investment operations | 0.69 | 0.14 | 0.98 | 0.53 | ||||||||||||
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Less distributions: |
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Dividends from net investment income | (0.17 | ) | (0.13 | ) | (0.09 | ) | — | |||||||||
Distributions from net realized gains | (0.30 | ) | (0.65 | ) | (0.17 | ) | — | |||||||||
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Total dividends and distributions | (0.47 | ) | (0.78 | ) | (0.26 | ) | — | |||||||||
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Net asset value, end of period | $ | 10.83 | $ | 10.61 | $ | 11.25 | $ | 10.53 | ||||||||
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Total return (b) | 6.79 | % | 1.19 | % | 9.46 | % | 5.30 | % | ||||||||
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Ratios/Supplemental Data: |
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Net assets, end of period (000’s) | $ | 2,037 | $ | 2,440 | $ | 1,271 | $ | 356 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers (a)(f) | 1.15 | %(j) | 1.20 | %(k) | 1.21 | % | 1.22 | % | ||||||||
Before waivers (a)(f) | 1.69 | % | 1.66 | % | 1.75 | % | 1.85 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers (a)(f)(x) | 1.72 | % | 1.39 | % | 1.02 | % | 0.89 | %(l) | ||||||||
Before waivers (a)(f)(x) | 1.18 | % | 0.93 | % | 0.48 | % | 0.26 | %(l) | ||||||||
Portfolio turnover rate (z)^ | 38 | % | 79 | % | 86 | % | 56 | % | ||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | March 7, 2016* to October 31, 2016 | ||||||||||||||
Class I | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 10.63 | $ | 11.27 | $ | 10.55 | $ | 10.00 | ||||||||
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Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.18 | 0.14 | 0.08 | ||||||||||||
Net realized and unrealized gain (loss) | 0.61 | (0.01 | ) | 0.86 | 0.47 | |||||||||||
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Total from investment operations | 0.71 | 0.17 | 1.00 | 0.55 | ||||||||||||
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Less distributions: |
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Dividends from net investment income | (0.20 | ) | (0.16 | ) | (0.11 | ) | — | |||||||||
Distributions from net realized gains | (0.30 | ) | (0.65 | ) | (0.17 | ) | — | |||||||||
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Total dividends and distributions | (0.50 | ) | (0.81 | ) | (0.28 | ) | — | |||||||||
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Net asset value, end of period | $ | 10.84 | $ | 10.63 | $ | 11.27 | $ | 10.55 | ||||||||
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Total return (b) | 6.86 | % | 1.44 | % | 9.68 | % | 5.50 | % | ||||||||
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Ratios/Supplemental Data: |
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Net assets, end of period (000’s) | $ | 57,715 | $ | 57,126 | $ | 59,101 | $ | 53,478 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers (a)(f) | 0.90 | %(j) | 0.95 | %(k) | 0.96 | % | 0.97 | % | ||||||||
Before waivers (a)(f) | 1.44 | % | 1.41 | % | 1.50 | % | 1.55 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers (a)(f)(x) | 1.96 | % | 1.62 | % | 1.27 | % | 1.12 | %(l) | ||||||||
Before waivers (a)(f)(x) | 1.43 | % | 1.16 | % | 0.72 | % | 0.55 | %(l) | ||||||||
Portfolio turnover rate (z)^ | 38 | % | 79 | % | 86 | % | 56 | % |
See Notes to Financial Statements.
41
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | March 7, 2016* to October 31, 2016 | ||||||||||||||
Class R | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 10.59 | $ | 11.23 | $ | 10.52 | $ | 10.00 | ||||||||
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Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e)(x) | 0.08 | 0.12 | 0.08 | 0.04 | ||||||||||||
Net realized and unrealized gain (loss) | 0.59 | (0.01 | ) | 0.87 | 0.48 | |||||||||||
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Total from investment operations | 0.67 | 0.11 | 0.95 | 0.52 | ||||||||||||
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Less distributions: |
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Dividends from net investment income | (0.14 | ) | (0.10 | ) | (0.07 | ) | — | |||||||||
Distributions from net realized gains | (0.30 | ) | (0.65 | ) | (0.17 | ) | — | |||||||||
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Total dividends and distributions | (0.44 | ) | (0.75 | ) | (0.24 | ) | — | |||||||||
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Net asset value, end of period | $ | 10.82 | $ | 10.59 | $ | 11.23 | $ | 10.52 | ||||||||
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Total return (b) | 6.61 | % | 0.93 | % | 9.15 | % | 5.20 | % | ||||||||
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Ratios/Supplemental Data: |
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Net assets, end of period (000’s) | $ | 163 | $ | 156 | $ | 112 | $ | 105 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers (a)(f) | 1.40 | %(j) | 1.45 | %(k) | 1.46 | % | 1.47 | % | ||||||||
Before waivers (a)(f) | 1.94 | % | 1.91 | % | 2.01 | % | 2.05 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers (a)(f)(x) | 1.46 | % | 1.13 | % | 0.77 | % | 0.62 | %(l) | ||||||||
Before waivers (a)(f)(x) | 0.92 | % | 0.67 | % | 0.22 | % | 0.05 | %(l) | ||||||||
Portfolio turnover rate (z)^ | 38 | % | 79 | % | 86 | % | 56 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.20% for Class A, 0.95% for Class I and 1.45% for Class R. |
(k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.25% for Class A, 1.00% for Class I and 1.50% for Class R. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
42
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISER
Ø | GAMCO Asset Management, Inc. |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||
Fund – Class A Shares* | without Sales Charge | 7.79 | % | 5.39 | % | 8.28 | % | |||||||
with Sales Charge (a) | 1.84 | -0.37 | 6.92 | |||||||||||
Fund – Class I Shares* | 7.90 | 5.60 | 8.56 | |||||||||||
Fund – Class R Shares* | 7.70 | 5.13 | 8.03 | |||||||||||
Fund – Class T Shares*† | without Sales Charge | 7.99 | 5.68 | 8.57 | ||||||||||
with Sales Charge (b) | 5.26 | 3.07 | 7.95 | |||||||||||
Russell 2500TMValue Index | 6.11 | 4.28 | 6.94 | |||||||||||
* Date of inception 11/12/14.
† Class T Shares currently are not offered for sale.
(a) A 5.50%front-end sales charge was deducted.
(b) A 2.50%front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
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The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I, R and T shares were 1.80%, 1.52%, 2.06% and 1.81%, respectively. The net expense ratios for Class A, I, R and T shares were 1.25%, 1.00%, 1.50% and 1.25%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — GAMCO Asset Management, Inc.
December was the culmination of an eventful 2018 for a market summarized by strong corporate earnings and broad U.S. economic strength for much of the year, following the exuberant reaction to the passage of the Tax Cuts and Jobs Act. Fourth quarter gross domestic product (GDP) growth tracked relatively weaker, following peak GDP of 4.2% earlier in 2018. The December rate increase met with more resistance than the prior increases due to pressure from the administration and a fast approaching March 2019 deadline for the ongoing trade negotiations with China. While the market had ignored many of these challenges for most of the year, these factors were squarely in investors’ focus at the end of the fourth quarter.
Following a difficult end of 2018 for the market, U.S. stocks registered their best first quarter since 1998 to start off 2019. A shift in Federal Reserve (Fed) policy and anticipation of a trade deal with China fueled the rally. The Federal Reserve decided to hold rates steady as the U.S. economy showed signs of slower growth. Recent data reports that the economy is still healthy, with employment close to a fifty year low, strong wage growth and inflation inching close to the Fed’s target of 2%.
The U.S. stock rally continued in April topping off the best April return since 2009 while setting four record closing highs with three in a row at month end. Despite political pressure to cut rates, ‘transitory’ below target inflation, and surging U.S. job growth, monetary policy remains on hold. The Fed’s dual mandate of maximum employment and stable prices is currently being met as the long-lived U.S. economic expansion and its reflective bull market rolled onward at the end of the month.
By the end of 2018, the S&P 500 Index was off 14% from its peak in September while the small capitalization Russell 2000 Index was down 22% from its peak in August. During the six-month period ended in April, the S&P 500 Index was up 9.8% and the Russell 2000 Index was up 6.1%. By comparison, the 1290 VT GAMCO Small/Mid Cap Value Fund Class I Shares was up 7.9% during the period vs 6.1% for its benchmark, the Russell 2500 Value Index. Broadly speaking, smaller companies were harder hit at the end of the fourth quarter as the market grappled with the potential slowdown in global growth and these companies did not bounce back as strongly as larger companies during the first quarter. However, smaller capitalization companies continue to have notable advantages including more upside from the corporate tax cut, lower international exposure and hence some cushion from trade disruptions and they are also likely beneficiaries of continued deal activity.
Fund Highlights
We buy businesses we believe are selling at a discount to their Private Market Value (the price an informed industrialist would pay for the entire company), with a catalyst in place that could potentially surface values. Our philosophy and process focus on fundamental company research and individual stock selection. The Fund is significantly different than its benchmark index, and performance will often not closely track it.
The Fund outperformed the Russell 2500 Value Index during thesix-month period ended April 30, 2019. The Fund’s higher exposure to industrial companies drove its outperformance during the period as the broad market brush that painted all of these names with the same trade sensitivity regardless of underlying company fundamentals and global exposure at the end of the year did not apply during the first four months of the year.
We believe we are generally well-positioned for almost any economic environment. Our holdings tend to be domestically focused with strong franchises and often pricing power. We have
43
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
never been top-down allocators, trying to chase every trend. Rather, we rely on fundamental bottom-up research informed by our view of the shifting political and economic tides.
What helped performance during the six-month period ended April 30, 2019:
• | ATM manufacturing and servicing company Diebold Nixdorf, Inc. was up more than 150% during the period. Following an ill-timed merger with Wincor Nixdorf several years ago, CEO Gerard Schmid recently joined the company and has taken quick action to restore liquidity by raising high yield debt, aggressively streamlining the company’s cost structure, and improving its productivity in the service business. The cost cutting initiatives are showing early signs of success and the company’s outlook has improved. |
• | Herc Holdings, Inc., which was spun off of Hertz in 2016, showed strong operating cost improvement and cash flow growth in its most recent quarterly report, and could benefit from expected incremental spending on infrastructure. |
• | The EW Scripps Co. was up over 30% during the period, following the return of automotive advertising and positive commentary on core advertising after a record 2018 political cycle drove share increases. The company is acquiring TV stations from Nexstar, which will increase its reach to 30% of U.S. households. |
What hurt performance during the six-month period ended April 30, 2019:
• | Aerospace and defense products company Aerojet Rocketdyne Holdings, Inc. was down slightly for the period as the market digested its restructuring led by CEO Eileen Drake. |
• | Technology stocks performed well during the period, impacting Fund performance on a relative basis due to an historical underweight. |
• | An underweight in real estate was a relative detractor from performance for the period as market leadership swiftly returned to more defensive areas including real estate investment trusts (REITs) during 2019, consistent with a falling 10-year yield from 3.1% to 2.5%. |
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
Industrials | 33.9 | % | ||
Communication Services | 18.2 | |||
Consumer Staples | 9.9 | |||
Consumer Discretionary | 8.9 | |||
Materials | 7.4 | |||
Investment Company | 5.4 | |||
Health Care | 4.2 | |||
Financials | 3.9 | |||
Information Technology | 2.5 | |||
Utilities | 2.4 | |||
Real Estate | 1.4 | |||
Energy | 1.2 | |||
Cash and Other | 0.7 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A, Class R and Class T shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
44
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class A | ||||||||||||
Actual | $1,000.00 | $1,077.90 | $6.41 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,018.63 | 6.22 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,079.00 | 5.12 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.87 | 4.98 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,077.00 | 7.69 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,017.39 | 7.47 | |||||||||
Class T** | ||||||||||||
Actual | 1,000.00 | 1,079.90 | 5.12 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.87 | 4.98 | |||||||||
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.24%, 0.99%, 1.49% and 0.99%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period).
** Class T shares currently are not offered for sale. |
|
45
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
COMMON STOCKS: |
| |||||||
Communication Services (18.2%) |
| |||||||
Diversified Telecommunication Services (0.7%) |
| |||||||
Intelsat SA* | 34,000 | $ | 688,160 | |||||
|
| |||||||
Entertainment (4.7%) |
| |||||||
AMC Entertainment Holdings, Inc., Class A | 44,000 | 667,040 | ||||||
Entertainment One Ltd. | 90,000 | 559,338 | ||||||
Liberty Media Corp.-Liberty Braves, Class A* | 3,500 | 99,260 | ||||||
Liberty Media Corp.-Liberty Braves, Class C* | 20,000 | 563,000 | ||||||
Lions Gate Entertainment Corp., Class B | 1,000 | 13,600 | ||||||
Madison Square Garden Co. (The), Class A* | 2,501 | 781,412 | ||||||
Viacom, Inc., Class B | 77,000 | 2,226,070 | ||||||
|
| |||||||
4,909,720 | ||||||||
|
| |||||||
Media (10.8%) |
| |||||||
AMC Networks, Inc., Class A* | 9,500 | 554,895 | ||||||
Clear Channel Outdoor Holdings, Inc., Class A* | 185,000 | 904,650 | ||||||
comScore, Inc.* | 28,000 | 351,400 | ||||||
Corus Entertainment, Inc., Class B | 190,000 | 1,080,690 | ||||||
EW Scripps Co. (The), Class A | 44,000 | 1,002,760 | ||||||
Grupo Televisa SAB (ADR) | 50,000 | 507,000 | ||||||
JCDecaux SA | 15,000 | 491,261 | ||||||
Loral Space & Communications, Inc.* | 9,400 | 346,108 | ||||||
Meredith Corp. | 20,000 | 1,180,000 | ||||||
MSG Networks, Inc., Class A* | 32,000 | 736,960 | ||||||
Sirius XM Holdings, Inc. | 34,560 | 200,793 | ||||||
Tribune Media Co., Class A | 80,000 | 3,696,000 | ||||||
WideOpenWest, Inc.* | 40,000 | 319,600 | ||||||
|
| |||||||
11,372,117 | ||||||||
|
| |||||||
Wireless Telecommunication Services (2.0%) |
| |||||||
Gogo, Inc.* | 35,000 | 184,100 | ||||||
Millicom International Cellular SA | 8,000 | 473,200 | ||||||
Millicom International Cellular SA (SDR) | 9,000 | 526,421 | ||||||
United States Cellular Corp.* | 20,000 | 962,000 | ||||||
|
| |||||||
2,145,721 | ||||||||
|
| |||||||
Total Communication Services | 19,115,718 | |||||||
|
| |||||||
Consumer Discretionary (8.9%) |
| |||||||
Auto Components (0.8%) |
| |||||||
Brembo SpA | 2,500 | 32,807 | ||||||
Dana, Inc. | 36,000 | 702,000 | ||||||
Lear Corp. | 600 | 85,800 | ||||||
|
| |||||||
820,607 | ||||||||
|
| |||||||
Diversified Consumer Services (1.4%) |
| |||||||
H&R Block, Inc. | 35,000 | 952,350 | ||||||
ServiceMaster Global Holdings, Inc.* | 10,000 | 490,300 | ||||||
Universal Technical Institute, Inc.* | 12,000 | 40,680 | ||||||
|
| |||||||
1,483,330 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure (2.4%) |
| |||||||
Cheesecake Factory, Inc. (The) | 9,500 | 471,390 | ||||||
Churchill Downs, Inc. | 2,100 | 211,785 | ||||||
Dover Motorsports, Inc. | 15,000 | 32,400 | ||||||
Eldorado Resorts, Inc.* | 6,000 | 296,220 | ||||||
Golden Entertainment, Inc.* | 32,000 | 503,360 | ||||||
Nathan’s Famous, Inc. | 6,500 | 448,825 | ||||||
Wynn Resorts Ltd. | 4,000 | 577,800 | ||||||
|
| |||||||
2,541,780 | ||||||||
|
| |||||||
Household Durables (1.1%) |
| |||||||
Bassett Furniture Industries, Inc. | 36,000 | 639,360 | ||||||
Hunter Douglas NV | 3,000 | 211,982 | ||||||
Lennar Corp., Class B | 8,000 | 333,760 | ||||||
|
| |||||||
1,185,102 | ||||||||
|
| |||||||
Internet & Direct Marketing Retail (0.5%) |
| |||||||
Lands’ End, Inc.* | 9,000 | 157,590 | ||||||
zooplus AG* | 3,500 | 379,606 | ||||||
|
| |||||||
537,196 | ||||||||
|
| |||||||
Leisure Products (2.3%) |
| |||||||
Brunswick Corp. | 25,014 | 1,280,967 | ||||||
Mattel, Inc.* | 18,500 | 225,515 | ||||||
Polaris Industries, Inc. | 9,000 | 867,600 | ||||||
|
| |||||||
2,374,082 | ||||||||
|
| |||||||
Multiline Retail (0.1%) |
| |||||||
JC Penney Co., Inc.* | 50,000 | 68,500 | ||||||
|
| |||||||
Specialty Retail (0.3%) |
| |||||||
Aaron’s, Inc. | 800 | 44,552 | ||||||
Carvana Co.* | 1,500 | 107,340 | ||||||
Tractor Supply Co. | 1,800 | 186,300 | ||||||
|
| |||||||
338,192 | ||||||||
|
| |||||||
Total Consumer Discretionary | 9,348,789 | |||||||
|
| |||||||
Consumer Staples (9.9%) |
| |||||||
Beverages (2.3%) |
| |||||||
Cott Corp. | 12,000 | 186,120 | ||||||
Davide Campari-Milano SpA | 33,000 | 332,560 | ||||||
National Beverage Corp. | 7,000 | 392,000 | ||||||
Remy Cointreau SA | 11,000 | 1,465,707 | ||||||
|
| |||||||
2,376,387 | ||||||||
|
| |||||||
Food & Staples Retailing (1.5%) |
| |||||||
Casey’s General Stores, Inc. | 10,000 | 1,323,500 | ||||||
Ingles Markets, Inc., Class A | 9,500 | 260,775 | ||||||
|
| |||||||
1,584,275 | ||||||||
|
| |||||||
Food Products (4.5%) |
| |||||||
Bunge Ltd. | 25,000 | 1,310,250 | ||||||
Farmer Brothers Co.* | 16,000 | 322,560 | ||||||
Hain Celestial Group, Inc. (The)* | 84,000 | 1,832,880 | ||||||
JM Smucker Co. (The) | 8,000 | 981,040 | ||||||
McCormick & Co., Inc. | 1,800 | 276,858 | ||||||
|
| |||||||
4,723,588 | ||||||||
|
| |||||||
Household Products (0.9%) |
| |||||||
Energizer Holdings, Inc. | 15,000 | 718,350 | ||||||
Oil-Dri Corp. of America | 9,000 | 286,290 | ||||||
|
| |||||||
1,004,640 | ||||||||
|
|
See Notes to Financial Statements.
46
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Personal Products (0.7%) |
| |||||||
Avon Products, Inc.* | 50,000 | $ | 159,000 | |||||
Edgewell Personal Care Co.* | 14,500 | 597,835 | ||||||
|
| |||||||
756,835 | ||||||||
|
| |||||||
Total Consumer Staples | 10,445,725 | |||||||
|
| |||||||
Energy (1.2%) |
| |||||||
Energy Equipment & Services (1.2%) |
| |||||||
Dril-Quip, Inc.* | 10,000 | 435,600 | ||||||
RPC, Inc. | 62,427 | 642,374 | ||||||
Weatherford International plc* | 280,000 | 154,924 | ||||||
|
| |||||||
Total Energy | 1,232,898 | |||||||
|
| |||||||
Financials (3.9%) |
| |||||||
Banks (1.4%) |
| |||||||
Atlantic Capital Bancshares, Inc.* | 14,000 | 244,160 | ||||||
Cadence Bancorp | 10,997 | 250,182 | ||||||
Flushing Financial Corp. | 16,154 | 365,080 | ||||||
Synovus Financial Corp. | 16,005 | 589,944 | ||||||
|
| |||||||
1,449,366 | ||||||||
|
| |||||||
Capital Markets (2.5%) |
| |||||||
Cohen & Steers, Inc. | 1,800 | 90,270 | ||||||
Federated Investors, Inc., Class B | 47,523 | 1,460,382 | ||||||
Legg Mason, Inc. | 30,000 | 1,003,500 | ||||||
Waddell & Reed Financial, Inc., Class A | 7,000 | 131,110 | ||||||
|
| |||||||
2,685,262 | ||||||||
|
| |||||||
Total Financials | 4,134,628 | |||||||
|
| |||||||
Health Care (4.2%) |
| |||||||
Biotechnology (1.2%) |
| |||||||
Clovis Oncology, Inc.* | 13,000 | 237,510 | ||||||
Spark Therapeutics, Inc.* | 9,800 | 1,045,562 | ||||||
|
| |||||||
1,283,072 | ||||||||
|
| |||||||
Health Care Equipment & Supplies (0.3%) |
| |||||||
Cardiovascular Systems, Inc.* | 2,500 | 88,850 | ||||||
Cutera, Inc.* | 15,000 | 266,100 | ||||||
|
| |||||||
354,950 | ||||||||
|
| |||||||
Health Care Providers & Services (1.0%) |
| |||||||
Patterson Cos., Inc. | 46,000 | 1,004,640 | ||||||
|
| |||||||
Health Care Technology (1.6%) |
| |||||||
Evolent Health, Inc., Class A* | 40,000 | 542,000 | ||||||
Teladoc Health, Inc.* | 20,000 | 1,137,600 | ||||||
|
| |||||||
1,679,600 | ||||||||
|
| |||||||
Life Sciences Tools & Services (0.1%) |
| |||||||
Bio-Rad Laboratories, Inc., Class A* | 300 | 90,279 | ||||||
|
| |||||||
Total Health Care | 4,412,541 | |||||||
|
| |||||||
Industrials (33.9%) |
| |||||||
Aerospace & Defense (2.7%) |
| |||||||
AAR Corp. | 12,500 | 422,125 | ||||||
Aerojet Rocketdyne Holdings, Inc.* | 25,000 | 846,500 | ||||||
Moog, Inc., Class A | 10,500 | 983,220 | ||||||
Moog, Inc., Class B | 700 | 60,249 | ||||||
Textron, Inc. | 10,000 | 530,000 | ||||||
|
| |||||||
2,842,094 | ||||||||
|
| |||||||
Building Products (2.6%) |
| |||||||
Armstrong Flooring, Inc.* | 30,000 | 434,700 | ||||||
Griffon Corp. | 115,000 | 2,256,300 | ||||||
|
| |||||||
2,691,000 | ||||||||
|
| |||||||
Commercial Services & Supplies (3.0%) |
| |||||||
KAR Auction Services, Inc. | 8,688 | 490,698 | ||||||
Matthews International Corp., Class A | 30,000 | 1,201,800 | ||||||
Multi-Color Corp. | 20,000 | 998,000 | ||||||
Team, Inc.* | 30,000 | 507,000 | ||||||
|
| |||||||
3,197,498 | ||||||||
|
| |||||||
Construction & Engineering (0.4%) |
| |||||||
Arcosa, Inc. | 14,666 | 456,553 | ||||||
|
| |||||||
Electrical Equipment (0.4%) |
| |||||||
AMETEK, Inc. | 200 | 17,634 | ||||||
AZZ, Inc. | 8,000 | 379,920 | ||||||
|
| |||||||
397,554 | ||||||||
|
| |||||||
Machinery (19.8%) |
| |||||||
Astec Industries, Inc. | 62,000 | 2,090,020 | ||||||
CIRCOR International, Inc.* | 88,000 | 2,967,360 | ||||||
CNH Industrial NV | 30,000 | 327,000 | ||||||
Eastern Co. (The) | 15,000 | 429,900 | ||||||
EnPro Industries, Inc. | 28,500 | 2,118,120 | ||||||
Evoqua Water Technologies Corp.* | 95,500 | 1,300,710 | ||||||
Federal Signal Corp. | 2,500 | 71,925 | ||||||
Flowserve Corp. | 34,000 | 1,667,020 | ||||||
Gardner Denver Holdings, Inc.* | 40,000 | 1,350,000 | ||||||
Graco, Inc. | 4,500 | 230,625 | ||||||
ITT, Inc. | 3,500 | 211,925 | ||||||
Kennametal, Inc. | 28,500 | 1,159,950 | ||||||
Mueller Industries, Inc. | 40,000 | 1,166,800 | ||||||
Mueller Water Products, Inc., Class A | 34,000 | 364,820 | ||||||
Navistar International Corp.* | 17,370 | 593,012 | ||||||
Park-Ohio Holdings Corp. | 15,000 | 549,450 | ||||||
Toro Co. (The) | 6,000 | 438,900 | ||||||
Trinity Industries, Inc. | 74,000 | 1,595,440 | ||||||
Twin Disc, Inc.* | 50,000 | 947,000 | ||||||
Watts Water Technologies, Inc., Class A | 13,000 | 1,112,670 | ||||||
Welbilt, Inc.* | 12,500 | 210,375 | ||||||
|
| |||||||
20,903,022 | ||||||||
|
| |||||||
Road & Rail (0.5%) |
| |||||||
Hertz Global Holdings, Inc.* | 30,000 | 545,400 | ||||||
|
| |||||||
Trading Companies & Distributors (3.5%) |
| |||||||
Ashtead Group plc | 2,000 | 55,342 | ||||||
GATX Corp. | 8,000 | 617,040 | ||||||
Herc Holdings, Inc.* | 50,000 | 2,408,000 | ||||||
Kaman Corp. | 9,000 | 557,190 | ||||||
|
| |||||||
3,637,572 | ||||||||
|
|
See Notes to Financial Statements.
47
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Transportation Infrastructure (1.0%) |
| |||||||
Macquarie Infrastructure Corp. | 26,500 | $ | 1,073,515 | |||||
|
| |||||||
Total Industrials | 35,744,208 | |||||||
|
| |||||||
Information Technology (2.5%) |
| |||||||
Communications Equipment (0.1%) |
| |||||||
Communications Systems, Inc. | 20,000 | 55,400 | ||||||
EchoStar Corp., Class A* | 1,600 | 63,760 | ||||||
|
| |||||||
119,160 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components (0.6%) |
| |||||||
KEMET Corp. | 10,000 | 178,700 | ||||||
Landis+Gyr Group AG* | 6,000 | 418,666 | ||||||
|
| |||||||
597,366 | ||||||||
|
| |||||||
IT Services (0.3%) |
| |||||||
Internap Corp.* | 64,000 | 252,160 | ||||||
MoneyGram International, Inc.* | 25,000 | 82,750 | ||||||
|
| |||||||
334,910 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (1.5%) |
| |||||||
Diebold Nixdorf, Inc.* | 158,000 | 1,594,220 | ||||||
|
| |||||||
Total Information Technology | 2,645,656 | |||||||
|
| |||||||
Materials (7.4%) |
| |||||||
Chemicals (5.2%) |
| |||||||
Chr Hansen Holding A/S | 1,200 | 122,410 | ||||||
Core Molding Technologies, Inc. | 60,000 | 487,200 | ||||||
Element Solutions, Inc.* | 130,000 | 1,411,800 | ||||||
GCP Applied Technologies, Inc.* | 66,000 | 1,900,140 | ||||||
HB Fuller Co. | 4,000 | 195,880 | ||||||
ScottsMiracle-Gro Co. (The) | 7,000 | 595,140 | ||||||
Tredegar Corp. | 15,000 | 270,300 | ||||||
Valvoline, Inc. | 26,000 | 481,000 | ||||||
|
| |||||||
5,463,870 | ||||||||
|
| |||||||
Containers & Packaging (1.5%) |
| |||||||
Greif, Inc., Class A | 30,000 | 1,185,600 | ||||||
Myers Industries, Inc. | 25,000 | 447,250 | ||||||
|
| |||||||
1,632,850 | ||||||||
|
| |||||||
Metals & Mining (0.7%) |
| |||||||
Ampco-Pittsburgh Corp.* | 22,000 | 70,840 | ||||||
Freeport-McMoRan, Inc. | 10,000 | 123,100 | ||||||
TimkenSteel Corp.* | 52,000 | 527,280 | ||||||
|
| |||||||
721,220 | ||||||||
|
| |||||||
Total Materials | 7,817,940 | |||||||
|
| |||||||
Real Estate (1.4%) |
| |||||||
Equity Real Estate Investment Trusts (REITs) (1.0%) |
| |||||||
Ryman Hospitality Properties, Inc. (REIT) | 6,000 | 477,600 | ||||||
Seritage Growth Properties (REIT), Class A | 12,500 | 557,375 | ||||||
|
| |||||||
1,034,975 | ||||||||
|
| |||||||
Real Estate Management & Development (0.4%) |
| |||||||
St Joe Co. (The)* | 28,000 | 477,120 | ||||||
|
| |||||||
Total Real Estate | 1,512,095 | |||||||
|
| |||||||
Utilities (2.4%) |
| |||||||
Electric Utilities (0.0%) |
| |||||||
El Paso Electric Co. | 200 | 12,222 | ||||||
|
| |||||||
Gas Utilities (1.1%) |
| |||||||
National Fuel Gas Co. | 20,000 | 1,184,200 | ||||||
|
| |||||||
Independent Power and Renewable Electricity Producers (1.0%) |
| |||||||
AES Corp. | 60,000 | 1,027,200 | ||||||
|
| |||||||
Water Utilities (0.3%) |
| |||||||
Connecticut Water Service, Inc. | 4,000 | 274,280 | ||||||
|
| |||||||
Total Utilities | 2,497,902 | |||||||
|
| |||||||
Total Common Stocks (93.9%) | 98,908,100 | |||||||
|
| |||||||
CONVERTIBLE PREFERRED STOCK: |
| |||||||
Health Care (0.0%) | ||||||||
Health Care Providers & Services (0.0%) |
| |||||||
BioScrip, Inc. | ||||||||
(Cost $400) | 4 | 210 | ||||||
|
| |||||||
Number of Warrants | Value (Note 1) | |||||||
WARRANTS: | ||||||||
Health Care (0.0%) | ||||||||
Health Care Providers & Services (0.0%) |
| |||||||
BioScrip, Inc., expiring | 22 | 9 | ||||||
|
| |||||||
Number of Shares | Value (Note 1) | |||||||
SHORT-TERM INVESTMENT: | ||||||||
Investment Company (5.4%) | ||||||||
JPMorgan Prime Money Market Fund, IM Shares | 5,676,701 | 5,678,404 | ||||||
|
| |||||||
Total Short-Term Investment (5.4%) | 5,678,404 | |||||||
|
| |||||||
Total Investments in Securities (99.3%) | 104,586,723 | |||||||
Other Assets Less Liabilities (0.7%) | 768,956 | |||||||
|
| |||||||
Net Assets (100%) | $ | 105,355,679 | ||||||
|
|
* | Non-income producing. |
(r) | Value determined using significant unobservable inputs. |
Glossary:
ADR | — American Depositary Receipt |
SDR | — Swedish Depositary Receipt |
See Notes to Financial Statements.
48
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Communication Services | $ | 17,065,498 | $ | 2,050,220 | $ | — | $ | 19,115,718 | ||||||||
Consumer Discretionary | 8,243,169 | 1,105,620 | — | 9,348,789 | ||||||||||||
Consumer Staples | 8,370,600 | 2,075,125 | — | 10,445,725 | ||||||||||||
Energy | 1,232,898 | — | — | 1,232,898 | ||||||||||||
Financials | 4,134,628 | — | — | 4,134,628 | ||||||||||||
Health Care | 4,412,541 | — | — | 4,412,541 | ||||||||||||
Industrials | 35,198,717 | 545,491 | — | 35,744,208 | ||||||||||||
Information Technology | 2,171,590 | 474,066 | — | 2,645,656 | ||||||||||||
Materials | 7,208,330 | 609,610 | — | 7,817,940 | ||||||||||||
Real Estate | 1,512,095 | — | — | 1,512,095 | ||||||||||||
Utilities | 2,497,902 | — | — | 2,497,902 | ||||||||||||
Convertible Preferred Stocks | ||||||||||||||||
Health Care | — | — | 210 | 210 | ||||||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 5,678,404 | — | — | 5,678,404 | ||||||||||||
Warrants | ||||||||||||||||
Health Care | — | — | 9 | 9 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 97,726,372 | $ | 6,860,132 | $ | 219 | $ | 104,586,723 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 97,726,372 | $ | 6,860,132 | $ | 219 | $ | 104,586,723 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 24,791,741 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 21,156,309 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 8,710,106 | ||
Aggregate gross unrealized depreciation | (6,749,881 | ) | ||
|
| |||
Net unrealized appreciation | $ | 1,960,225 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 102,626,498 | ||
|
|
For the six months ended April 30, 2019, the Fund incurred approximately $685 as brokerage commissions with G. Research, an affiliated broker/dealer.
See Notes to Financial Statements.
49
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value (Cost $102,466,293) | $ | 104,586,723 | ||
Cash | 331,000 | |||
Foreign cash (Cost $8,969) | 8,971 | |||
Receivable for securities sold | 459,766 | |||
Receivable for Fund shares sold | 457,835 | |||
Dividends, interest and other receivables | 34,025 | |||
Prepaid registration and filing fees | 28,306 | |||
|
| |||
Total assets | 105,906,626 | |||
|
| |||
LIABILITIES |
| |||
Payable for securities purchased | 291,782 | |||
Payable for Fund shares redeemed | 146,778 | |||
Investment advisory fees payable | 28,385 | |||
Administrative fees payable | 12,930 | |||
Transfer agent fees payable | 4,153 | |||
Trustees’ fees payable | 1,768 | |||
Distribution fees payable – Class A | 833 | |||
Distribution fees payable – Class R | 384 | |||
Accrued expenses | 63,934 | |||
|
| |||
Total liabilities | 550,947 | |||
|
| |||
NET ASSETS | $ | 105,355,679 | ||
|
| |||
Net assets were comprised of: |
| |||
Paid in capital | $ | 102,568,307 | ||
Total distributable earnings (loss) | 2,787,372 | |||
|
| |||
Net assets | $ | 105,355,679 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $4,103,249 / 312,432 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 13.13 | ||
Maximum sales charge (5.50% of offering price) | 0.76 | |||
|
| |||
Maximum offering price per share | $ | 13.89 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $100,179,327 / 7,622,062 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 13.14 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $939,294 / 71,883 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 13.07 | ||
|
| |||
Class T** | ||||
Net asset value and redemption price per share, $133,809 / 10,179 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 13.15 | ||
Maximum sales charge (2.50% of offering price) | 0.34 | |||
|
| |||
Maximum offering price per share | $ | 13.49 | ||
|
|
** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends (net of $7,317 foreign withholding tax) | $ | 744,563 | ||
Interest | 3,724 | |||
|
| |||
Total income | 748,287 | |||
|
| |||
EXPENSES |
| |||
Investment advisory fees | 354,866 | |||
Professional fees | 71,166 | |||
Administrative fees | 70,974 | |||
Transfer agent fees | 56,844 | |||
Printing and mailing expenses | 39,552 | |||
Registration and filing fees | 28,526 | |||
Custodian fees | 8,749 | |||
Trustees’ fees | 4,621 | |||
Distribution fees – Class A | 4,585 | |||
Distribution fees – Class R | 2,104 | |||
Distribution fees – Class T** | 157 | |||
Miscellaneous | 22,199 | |||
|
| |||
Gross expenses | 664,343 | |||
Less: Waiver from investment adviser | (187,267 | ) | ||
Waiver from distributor | (157 | ) | ||
|
| |||
Net expenses | 476,919 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 271,368 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) |
| |||
Realized gain (loss) on: | ||||
Investments in securities | 724,372 | |||
Foreign currency transactions | (720 | ) | ||
|
| |||
Net realized gain (loss) | 723,652 | |||
|
| |||
Change in unrealized appreciation (depreciation) on: |
| |||
Investments in securities | 6,256,533 | |||
Foreign currency translations | 104 | |||
|
| |||
Net change in unrealized appreciation (depreciation) | 6,256,637 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 6,980,289 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 7,251,657 | ||
|
|
** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
50
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | ||||||||
Net investment income (loss) | $ | 271,368 | $ | 293,327 | ||||
Net realized gain (loss) | 723,652 | 803,616 | ||||||
Net change in unrealized appreciation (depreciation) | 6,256,637 | (6,520,592 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 7,251,657 | (5,423,649 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (42,434 | ) | (45,934 | ) | ||||
Class I | (1,255,738 | ) | (549,863 | ) | ||||
Class R | (7,956 | ) | (12,578 | ) | ||||
Class T** | (1,787 | ) | (3,105 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (1,307,915 | ) | (611,480 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 46,337 and 166,645 shares, respectively ] | 587,438 | 2,189,545 | ||||||
Capital shares issued in reinvestment of dividends [ 3,493 and 3,358 shares, respectively ] | 40,904 | 43,044 | ||||||
Capital shares repurchased [ (29,303) and (38,937) shares, respectively ] | (358,058 | ) | (513,240 | ) | ||||
|
|
|
| |||||
Total Class A transactions | 270,284 | 1,719,349 | ||||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 1,188,741 and 5,718,892 shares, respectively ] | 14,848,758 | 75,982,055 | ||||||
Capital shares issued in reinvestment of dividends [ 59,543 and 37,602 shares, respectively ]. | 697,247 | 482,439 | ||||||
Capital shares repurchased [ (650,982) and (389,765) shares, respectively ] | (7,825,640 | ) | (5,160,624 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 7,720,365 | 71,303,870 | ||||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 8,912 and 71,062 shares, respectively ] | 108,541 | 928,020 | ||||||
Capital shares issued in reinvestment of dividends [ 574 and 782 shares, respectively ] | 6,698 | 9,998 | ||||||
Capital shares repurchased [ (2,902) and (32,549) shares, respectively ] | (34,828 | ) | (428,019 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 80,411 | 509,999 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 8,071,060 | 73,533,218 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 14,014,802 | 67,498,089 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 91,340,877 | 23,842,788 | ||||||
|
|
|
| |||||
End of period | $ | 105,355,679 | $ | 91,340,877 | ||||
|
|
|
|
| ||||
** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
See Notes to Financial Statements.
51
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.33 | $ | 12.83 | $ | 10.28 | $ | 10.25 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.02 | 0.03 | 0.06 | ## | 0.05 | (0.01 | ) | |||||||||||||
Net realized and unrealized gain (loss) | 0.92 | (0.25 | ) | 2.67 | 0.25 | 0.33 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.94 | (0.22 | ) | 2.73 | 0.30 | 0.32 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.03 | ) | (0.02 | ) | — | # | (0.07 | ) | ||||||||||
Distributions from net realized gains | (0.12 | ) | (0.25 | ) | (0.16 | ) | (0.27 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.14 | ) | (0.28 | ) | (0.18 | ) | (0.27 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 13.13 | $ | 12.33 | $ | 12.83 | $ | 10.28 | $ | 10.25 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 7.79 | % | (1.84 | )% | 26.72 | % | 3.08 | % | 3.20 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 4,103 | $ | 3,599 | $ | 2,063 | $ | 591 | $ | 997 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.24 | %(j) | 1.24 | %(j) | 1.27 | % | 1.35 | % | 1.35 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.64 | % | 1.79 | % | 2.72 | % | 4.38 | % | 9.28 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.34 | % | 0.26 | % | 0.48 | %(aa) | 0.49 | % | (0.10 | )%(l) | ||||||||||
Before waivers and reimbursements (a)(f) | (0.06 | )% | (0.28 | )% | (0.97 | )%(aa) | (2.53 | )% | (8.03 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 23 | % | 49 | % | 88 | % | 76 | % | 95 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.36 | $ | 12.86 | $ | 10.30 | $ | 10.27 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.04 | 0.07 | 0.08 | ## | 0.05 | 0.02 | ||||||||||||||
Net realized and unrealized gain (loss) | 0.92 | (0.26 | ) | 2.68 | 0.28 | 0.32 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.96 | (0.19 | ) | 2.76 | 0.33 | 0.34 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.06 | ) | (0.04 | ) | (0.03 | ) | (0.07 | ) | ||||||||||
Distributions from net realized gains | (0.12 | ) | (0.25 | ) | (0.16 | ) | (0.27 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.18 | ) | (0.31 | ) | (0.20 | ) | (0.30 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 13.14 | $ | 12.36 | $ | 12.86 | $ | 10.30 | $ | 10.27 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 7.90 | % | (1.60 | )% | 27.09 | % | 3.34 | % | 3.43 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 100,179 | $ | 86,815 | $ | 21,317 | $ | 6,041 | $ | 2,416 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.99 | %(j) | 0.99 | %(j) | 1.02 | % | 1.10 | % | 1.10 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.39 | % | 1.51 | % | 2.47 | % | 4.09 | % | 8.56 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.59 | % | 0.54 | % | 0.69 | %(bb) | 0.49 | % | 0.16 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.19 | % | 0.03 | % | (0.76 | )%(bb) | (2.51 | )% | (7.30 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 23 | % | 49 | % | 88 | % | 76 | % | 95 | % |
See Notes to Financial Statements.
52
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.26 | $ | 12.76 | $ | 10.23 | $ | 10.23 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | — | # | — | # | 0.03 | ## | 0.04 | (0.04 | ) | |||||||||||
Net realized and unrealized gain (loss) | 0.93 | (0.25 | ) | 2.66 | 0.23 | 0.34 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.93 | (0.25 | ) | 2.69 | 0.27 | 0.30 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: |
| |||||||||||||||||||
Dividends from net investment income | — | — | — | — | (0.07 | ) | ||||||||||||||
Distributions from net realized gains | (0.12 | ) | (0.25 | ) | (0.16 | ) | (0.27 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.12 | ) | (0.25 | ) | (0.16 | ) | (0.27 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 13.07 | $ | 12.26 | $ | 12.76 | $ | 10.23 | $ | 10.23 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 7.70 | % | (2.07 | )% | 26.49 | % | 2.77 | % | 2.96 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 939 | $ | 801 | $ | 332 | $ | 168 | $ | 777 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.49 | %(j) | 1.49 | %(j) | 1.53 | % | 1.60 | % | 1.60 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.89 | % | 2.05 | % | 3.00 | % | 4.65 | % | 9.73 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.08 | % | 0.02 | % | 0.27 | %(cc) | 0.42 | % | (0.35 | )%(l) | ||||||||||
Before waivers and reimbursements (a)(f) | (0.31 | )% | (0.54 | )% | (1.21 | )%(cc) | (2.64 | )% | (8.49 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 23 | % | 49 | % | 88 | % | 76 | % | 95 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class T** | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.36 | $ | 12.86 | $ | 10.30 | $ | 10.27 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.04 | 0.07 | 0.11 | ## | 0.08 | 0.01 | ||||||||||||||
Net realized and unrealized gain (loss) | 0.93 | (0.26 | ) | 2.65 | 0.25 | 0.33 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.97 | (0.19 | ) | 2.76 | 0.33 | 0.34 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: |
| |||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.06 | ) | (0.04 | ) | (0.03 | ) | (0.07 | ) | ||||||||||
Distributions from net realized gains | (0.12 | ) | (0.25 | ) | (0.16 | ) | (0.27 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.18 | ) | (0.31 | ) | (0.20 | ) | (0.30 | ) | (0.07 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 13.15 | $ | 12.36 | $ | 12.86 | $ | 10.30 | $ | 10.27 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 7.99 | % | (1.60 | )% | 27.09 | % | 3.34 | % | 3.43 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 134 | $ | 126 | $ | 131 | $ | 105 | $ | 259 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.99 | %(j) | 0.99 | %(j) | 1.03 | % | 1.10 | % | 1.10 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.64 | % | 1.80 | % | 3.02 | % | 5.11 | % | 10.23 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.59 | % | 0.50 | % | 0.89 | %(dd) | 0.77 | % | 0.15 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | (0.05 | )% | (0.31 | )% | (1.10 | )%(dd) | (3.23 | )% | (8.98 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 23 | % | 49 | % | 88 | % | 76 | % | 95 | % |
See Notes to Financial Statements.
53
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS (Continued)
* | Commencement of Operations. |
** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
# | Per share amount is less than $0.005. |
## | Includes income resulting from a special dividend. Without this dividend, the per share income amounts would be $0.02, $0.04, $(0.01) and $0.07 for Class A, Class I, Class R and Class T, respectively. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.25% for Class A, 1.00% for Class I, 1.50% for Class R and 1.00% for Class T. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
(aa) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class A would be 0.14% for income after waivers and reimbursements and (1.31)% before waivers and reimbursements. |
(bb) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class I would be 0.35% for income after waivers and reimbursements and (1.10)% before waivers and reimbursements. |
(cc) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class R would be (0.07)% for income after waivers and reimbursements and (1.55)% before waivers and reimbursements. |
(dd) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class T would be 0.55% for income after waivers and reimbursements and (1.44)% before waivers and reimbursements. |
See Notes to Financial Statements.
54
1290 GLOBAL TALENTS FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISER
Ø | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||||
Fund – Class A Shares* | without Sales Charge | 9.68 | % | 0.51 | % | 10.03 | % | |||||||||
with Sales Charge (a) | 3.63 | -5.00 | 8.02 | |||||||||||||
Fund – Class I Shares* | 9.82 | 0.75 | 10.32 | |||||||||||||
Fund – Class R Shares* | 9.49 | 0.20 | 9.76 | |||||||||||||
MSCI ACWI (Net) Index | 9.37 | 5.06 | 12.04 | |||||||||||||
* Date of inception 4/11/16.
(a) A 5.50%front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I and R shares were 1.94%, 1.69% and 2.19%, respectively. The net expense ratios for Class A, I and R shares were 1.25%, 1.00% and 1.50%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — AXA Investment Managers, Inc.
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, a number of sector trends also impacted the Fund’s performance. Over the period, energy was the worst performer as oil prices dropped rapidly below $50 a barrel at the end of 2018 and only gradually recovered since. Health care was held back due to the growing U.S. political resolve to put a lid on health care costs. Financials lagged in a context of perceived peak margins and concerns around rising credit risks. Real estate, information technology and consumer discretionary showed the strongest performance. They benefited from continued positive structural demand trends and stable interest rates.
Fund Highlights
The Fund’s Class I shares returned 9.82% for the six-month period ended April 30, 2019. The Fund’s benchmark, the MSCI All Country World Index (ACWI), rose 9.37% over the same time period. The outperformance was driven by positive stock selection, particularly within communication services, consumer staples, materials and information technology.
We made a number of changes to portfolio holdings over the period. We sold our stake in Regional Bank following newly elected Mexican president’s policies and talks of scrapping bank fees. We sold Chilean copper miner Antofagasta, given rising costs, lower output and evidence of slowing Chinese industrial growth. We also sold Japanese linear-motion systems leader THK Co., Ltd., as we believe its outlook remains clouded due to the current geopolitical dynamic. We exited medical care conglomerate Fresenius SE & Co. KGaA and media group Publicis Groupe as we believe the respective issues these companies are facing are structural in nature. We added a number of companies. Jazz Pharmaceuticals plc is a specialty pharmaceutical company focusing mainly on sleep disorders but also oncology, hematology, pain management and psychiatry. We believe real estate vehicle Prologis, Inc. is well-positioned to reap the rewards of e-commerce growth and the growing demand for warehousing space and logistics expertise.
What helped performance during the six-month period ended April 30, 2019:
• | Technology related holdings performed strongly. Chinese online giant Tencent Holdings Ltd. surged as the government resumed online game approvals. IT security player Proofpoint, Inc. delivered solid results. Product Lifetime Management (PLM) and 3D design software vendor Dassault Systemes SE raised its long-term organic growth prospects. Japanese conglomerate Softbank Group Corp. announced a large buyback program. IPG Photonics Corp. saw stabilizing order trends in fiber lasers. |
• | A number of consumer stocks outperformed, principally those with exposure to emerging markets, such as Chinese dominant e-commerce player Alibaba Group Holding Ltd. and global beer manufacturer Anheuser-Busch InBev SA/NV. |
• | Players well positioned to benefit from structural demand trends, such as Ecolab, Inc. in water treatment and hygiene services and Prologis, Inc. in smart and agile real estate, moved to new highs. |
What hurt performance during the six-month period ended April 30, 2019:
• | Energy holdings Concho Resources, Inc. and EOG Resources, Inc. came under pressure due to stagnating oil prices. We believe that current macroeconomic developments (e.g., Iran, Venezuela) and the lifting of supply constraints in the U.S. Permian basin could be supportive factors going forward. |
• | Fedex Corp. has been under pressure due to slowing global trade trends, internal execution issues, rising wage pressure and growing investors’ concerns around Amazon.com Inc.’s own delivery plans. While these concerns are real, we believe the stock price is excessively discounted. |
• | Japanese online retailer ZOZO, Inc. is coming out of a rocky period of trialing and testing new ways to entice customers to its growing e-commerce platform. While the entrepreneurial and innovative culture remains a key reason for us to own the stock, we have to acknowledge that execution and communication over the last six months have been disappointing. The company is now returning to more tried and tested methods and reining in spending. |
55
1290 GLOBAL TALENTS FUND (Unaudited)
• | Jazz Pharmaceuticals plc and Fresenius SE & Co. KGaA both missed market expectations. We believe the outlook remains positive for the former. We expect further drug approvals as well as a normalization of trends following ad hoc issues in the last quarter of 2018. We are more cautious in terms of recovery outlook for the latter and decided to exit the stock. |
• | German family conglomerate Henkel AG & Co. KGaA lagged the market recovery as it lowered its medium-term outlook. Its adhesives business has been modestly hampered by slowing industrial trends, but we like its diversified and leading positioning, its profitability profile and the structural demand trends that underpin it. On the consumer side of the business, the laundry and home case division continues to perform solidly while the beauty portfolio remains on an underwhelming trajectory. Management has announced plans to increase spending and revive growth, while valuation is undemanding. |
Outlook
While we do not envision a global economic recession as our base case scenario, we continue to remain cautious in our investment approach, given mixed lead indicators’ economic signals and continued macro uncertainty, in particular with regard to a U.S.-China trade resolution.
Sector Weightings as of April 30, 2019 | Market Value | % of Net Assets | ||||||
Information Technology | $5,418,740 | 19.1 | % | |||||
Financials | 4,170,714 | 14.7 | ||||||
Consumer Staples | 3,759,401 | 13.2 | ||||||
Communication Services | 3,744,824 | 13.2 | ||||||
Health Care | 3,092,056 | 10.9 | ||||||
Consumer Discretionary | 2,575,606 | 9.1 | ||||||
Industrials | 1,575,182 | 5.5 | ||||||
Materials | 1,128,226 | 4.0 | ||||||
Energy | 881,560 | 3.1 | ||||||
Investment Company | 681,987 | 2.4 | ||||||
Real Estate | 627,621 | 2.2 | ||||||
Cash and Other | 743,133 | 2.6 | ||||||
|
| |||||||
100.0 | % | |||||||
|
| |||||||
Holdings are subject to change without notice. |
|
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning 11/1/18 | Ending 4/30/19 | Expenses 11/1/18 - | ||||||||||
Class A | ||||||||||||
Actual | $1,000.00 | $1,096.80 | $6.50 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,018.60 | 6.26 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,098.20 | 5.20 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.84 | 5.01 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,094.90 | 7.79 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,017.36 | 7.50 | |||||||||
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.25%, 1.00% and 1.50%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
56
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
COMMON STOCKS: |
| |||||||
Belgium (3.3%) |
| |||||||
Anheuser-Busch InBev SA/NV | 10,626 | $ | 944,630 | |||||
|
| |||||||
China (5.4%) |
| |||||||
Alibaba Group Holding Ltd. (ADR)* | 3,990 | 740,424 | ||||||
Tencent Holdings Ltd. | 15,700 | 776,515 | ||||||
|
| |||||||
1,516,939 | ||||||||
|
| |||||||
Finland (1.7%) |
| |||||||
Sampo OYJ, Class A | 10,420 | 476,365 | ||||||
|
| |||||||
France (5.0%) |
| |||||||
Dassault Systemes SE | 5,742 | 908,394 | ||||||
Financiere de L’Odet SA | 506 | 515,317 | ||||||
|
| |||||||
1,423,711 | ||||||||
|
| |||||||
Germany (2.4%) |
| |||||||
Henkel AG & Co. KGaA (Preference) (q) | 6,645 | 672,562 | ||||||
|
| |||||||
Israel (2.5%) |
| |||||||
Check Point Software Technologies Ltd.* | 5,878 | 709,827 | ||||||
|
| |||||||
Japan (10.6%) |
| |||||||
Kose Corp. | 4,200 | 786,121 | ||||||
SoftBank Group Corp. | 9,600 | 995,808 | ||||||
Unicharm Corp. | 26,300 | 861,517 | ||||||
ZOZO, Inc. | 21,200 | 373,967 | ||||||
|
| |||||||
3,017,413 | ||||||||
|
| |||||||
Mexico (1.7%) |
| |||||||
Fomento Economico Mexicano SAB de CV | 50,700 | 494,571 | ||||||
|
| |||||||
Peru (2.5%) |
| |||||||
Credicorp Ltd. | 3,007 | 712,358 | ||||||
|
| |||||||
Spain (1.6%) |
| |||||||
Industria de Diseno Textil SA | 14,742 | 445,939 | ||||||
|
| |||||||
Sweden (1.5%) |
| |||||||
Assa Abloy AB, Class B | 20,277 | 432,563 | ||||||
|
| |||||||
Switzerland (3.0%) |
| |||||||
Roche Holding AG | 3,251 | 856,979 | ||||||
|
| |||||||
United States (53.8%) |
| |||||||
Alphabet, Inc., Class A* | 848 | 1,016,718 | ||||||
Amazon.com, Inc.* | 527 | 1,015,276 | ||||||
Apple, Inc. | 5,835 | 1,170,909 | ||||||
Bank OZK | 18,113 | 591,389 | ||||||
Berkshire Hathaway, Inc., Class B* | 5,566 | 1,206,208 | ||||||
BlackRock, Inc. | 1,262 | 612,373 | ||||||
Booz Allen Hamilton Holding Corp. | 8,180 | 484,992 | ||||||
Charles Schwab Corp. (The) | 12,495 | 572,021 | ||||||
Cognex Corp. | 7,880 | 397,388 | ||||||
Concho Resources, Inc. | 3,638 | 419,752 | ||||||
DexCom, Inc.* | 4,456 | 539,488 | ||||||
Ecolab, Inc. | 6,129 | 1,128,226 | ||||||
EOG Resources, Inc. | 4,808 | 461,808 | ||||||
Facebook, Inc., Class A* | 4,942 | 955,783 | ||||||
FedEx Corp. | 3,311 | 627,302 | ||||||
IPG Photonics Corp.* | 3,335 | 582,725 | ||||||
Jazz Pharmaceuticals plc* | 4,198 | 544,775 | ||||||
Prologis, Inc. (REIT) | 8,186 | 627,621 | ||||||
Proofpoint, Inc.* | 5,229 | 655,821 | ||||||
QUALCOMM, Inc. | 5,906 | 508,684 | ||||||
Stryker Corp. | 3,137 | 592,611 | ||||||
UnitedHealth Group, Inc. | 2,395 | 558,203 | ||||||
|
| |||||||
15,270,073 | ||||||||
|
| |||||||
Total Common Stocks (95.0%) | 26,973,930 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT: |
| |||||||
Investment Company (2.4%) |
| |||||||
JPMorgan Prime Money Market Fund, IM Shares | 681,783 | 681,987 | ||||||
|
| |||||||
Total Short-Term Investment (2.4%)(Cost $681,987) | 681,987 | |||||||
|
| |||||||
Total Investments in Securities (97.4%) | 27,655,917 | |||||||
Other Assets Less Liabilities (2.6%) | 743,133 | |||||||
|
| |||||||
Net Assets (100%) | $ | 28,399,050 | ||||||
|
|
* | Non-income producing. |
(q) | Preference Shares are a special type of equity investment that shares in the earnings of the company, has limited voting rights, and receives a greater dividend than applicable Common Shares. |
Glossary:
ADR | — American Depositary Receipt |
REIT | — Real Estate Investment Trust |
Sector Weightings as of April 30, 2019 | Market Value | % of Net Assets | ||||||
Information Technology | $5,418,740 | 19.1 | % | |||||
Financials | 4,170,714 | 14.7 | ||||||
Consumer Staples | 3,759,401 | 13.2 | ||||||
Communication Services | 3,744,824 | 13.2 | ||||||
Health Care | 3,092,056 | 10.9 | ||||||
Consumer Discretionary | 2,575,606 | 9.1 | ||||||
Industrials | 1,575,182 | 5.5 | ||||||
Materials | 1,128,226 | 4.0 | ||||||
Energy | 881,560 | 3.1 | ||||||
Investment Company | 681,987 | 2.4 | ||||||
Real Estate | 627,621 | 2.2 | ||||||
Cash and Other | 743,133 | 2.6 | ||||||
|
| |||||||
100.0 | % | |||||||
|
|
See Notes to Financial Statements.
57
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Common Stocks | ||||||||||||||||
Belgium | $ | — | $ | 944,630 | $ | — | $ | 944,630 | ||||||||
China | 740,424 | 776,515 | — | 1,516,939 | ||||||||||||
Finland | — | 476,365 | — | 476,365 | ||||||||||||
France | — | 1,423,711 | — | 1,423,711 | ||||||||||||
Germany | — | 672,562 | — | 672,562 | ||||||||||||
Israel | 709,827 | — | — | 709,827 | ||||||||||||
Japan | — | 3,017,413 | — | 3,017,413 | ||||||||||||
Mexico | 494,571 | — | — | 494,571 | ||||||||||||
Peru | 712,358 | — | — | 712,358 | ||||||||||||
Spain | — | 445,939 | — | 445,939 | ||||||||||||
Sweden | — | 432,563 | — | 432,563 | ||||||||||||
Switzerland | — | 856,979 | — | 856,979 | ||||||||||||
United States | 15,270,073 | — | — | 15,270,073 | ||||||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 681,987 | — | — | 681,987 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 18,609,240 | $ | 9,046,677 | $ | — | $ | 27,655,917 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 18,609,240 | $ | 9,046,677 | $ | — | $ | 27,655,917 | ||||||||
|
|
|
|
|
|
|
|
The Effect of Derivative Instruments on the Statement of Operations for the six months ended April 30, 2019:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||
Derivatives Not Accounted for as | Forward Foreign Currency Contracts | Total | ||||||
Foreign exchange contracts | $ | (332 | ) | $ | (332 | ) | ||
|
|
|
| |||||
Total | $ | (332 | ) | $ | (332 | ) | ||
|
|
|
|
^ The Fund held forward foreign currency contracts for hedging.
The Fund held forward foreign currency contracts with an average settlement value of approximately $73,000 for three days during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 3,437,397 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 4,548,035 |
See Notes to Financial Statements.
58
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 6,015,589 | ||
Aggregate gross unrealized depreciation | (786,465 | ) | ||
|
| |||
Net unrealized appreciation | $ | 5,229,124 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 22,426,793 | ||
|
|
See Notes to Financial Statements.
59
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value (Cost $22,436,996) | $ | 27,655,917 | ||
Cash | 661,915 | |||
Dividends, interest and other receivables | 69,859 | |||
Receivable for Fund shares sold | 34,829 | |||
Prepaid registration and filing fees | 28,004 | |||
Other assets | 22 | |||
|
| |||
Total assets | 28,450,546 | |||
|
| |||
LIABILITIES |
| |||
Foreign currency overdraft payable | 1,007 | |||
Administrative fees payable | 3,448 | |||
Transfer agent fees payable | 2,669 | |||
Trustees’ fees payable | 513 | |||
Distribution fees payable – Class A | 312 | |||
Investment advisory fees payable | 154 | |||
Distribution fees payable – Class R | 53 | |||
Accrued expenses | 43,340 | |||
|
| |||
Total liabilities | 51,496 | |||
|
| |||
NET ASSETS | $ | 28,399,050 | ||
|
| |||
Net assets were comprised of: |
| |||
Paid in capital | $ | 22,852,551 | ||
Total distributable earnings (loss) | 5,546,499 | |||
|
| |||
Net assets | $ | 28,399,050 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $1,559,659 / 122,900 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.69 | ||
Maximum sales charge (5.50% of offering price) | 0.74 | |||
|
| |||
Maximum offering price per share | $ | 13.43 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $26,707,783 / 2,093,084 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.76 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $131,608 / 10,450 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.59 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends (net of $15,985 foreign withholding tax) | $ | 179,960 | ||
Interest | 5,868 | |||
|
| |||
Total income | 185,828 | |||
|
| |||
EXPENSES |
| |||
Investment advisory fees | 104,018 | |||
Professional fees | 37,501 | |||
Registration and filing fees | 20,819 | |||
Administrative fees | 19,504 | |||
Printing and mailing expenses | 17,583 | |||
Transfer agent fees | 15,100 | |||
Custodian fees | 7,362 | |||
Distribution fees – Class A | 1,632 | |||
Trustees’ fees | 1,292 | |||
Distribution fees – Class R | 300 | |||
Miscellaneous | 11,752 | |||
|
| |||
Gross expenses | 236,863 | |||
Less: Waiver from investment adviser | (104,871 | ) | ||
|
| |||
Net expenses | 131,992 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 53,836 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Realized gain (loss) on: | ||||
Investments in securities | 267,145 | |||
Forward foreign currency contracts | (332 | ) | ||
Foreign currency transactions | 95 | |||
|
| |||
Net realized gain (loss) | 266,908 | |||
|
| |||
Change in unrealized appreciation (depreciation) on: | ||||
Investments in securities | 2,162,811 | |||
Foreign currency translations | (218 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 2,162,593 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 2,429,501 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,483,337 | ||
|
|
See Notes to Financial Statements.
60
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 53,836 | $ | 32,506 | ||||
Net realized gain (loss) | 266,908 | 1,334,825 | ||||||
Net change in unrealized appreciation (depreciation) | 2,162,593 | (2,041,685 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 2,483,337 | (674,354 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (59,488 | ) | — | |||||
Class I | (1,215,312 | ) | (33,488 | ) | ||||
Class R | (5,857 | ) | — | |||||
|
|
|
| |||||
Total distributions to shareholders | (1,280,657 | ) | (33,488 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 17,900 and 49,492 shares, respectively ] | 213,258 | 660,562 | ||||||
Capital shares issued in reinvestment of dividends [ 4,797 and 0 shares, respectively ] | 53,769 | — | ||||||
Capital shares repurchased [ (4,170) and (9,676) shares, respectively ] | (49,241 | ) | (130,124 | ) | ||||
|
|
|
| |||||
Total Class A transactions | 217,786 | 530,438 | ||||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 17,321 and 86,207 shares, respectively ] | 200,676 | 1,178,073 | ||||||
Capital shares issued in reinvestment of dividends [ 5,591 and 33 shares, respectively ] | 62,951 | 422 | ||||||
Capital shares repurchased [ (17,062) and (2,640) shares, respectively ] | (191,468 | ) | (35,891 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 72,159 | 1,142,604 | ||||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 311 and 120 shares, respectively ] | 3,652 | 1,599 | ||||||
Capital shares issued in reinvestment of dividends [ 12 and 0 shares, respectively ] | 137 | — | ||||||
Capital shares repurchased [ (2) and 0# shares, respectively ] | (26 | ) | (2 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 3,763 | 1,597 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 293,708 | 1,674,639 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 1,496,388 | 966,797 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 26,902,662 | 25,935,865 | ||||||
|
|
|
| |||||
End of period | $ | 28,399,050 | $ | 26,902,662 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
61
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | April 11, 2016* to October 31, 2016 | ||||||||||||||
Class A | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 12.16 | $ | 12.44 | $ | 10.33 | $ | 10.00 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e) | 0.01 | (0.02 | ) | (0.03 | ) | (0.01 | ) | |||||||||
Net realized and unrealized gain (loss) | 1.09 | (0.26 | ) | 2.18 | 0.34 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | 1.10 | (0.28 | ) | 2.15 | 0.33 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less distributions: | ||||||||||||||||
Distributions from net realized gains | (0.57 | ) | — | (0.04 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net asset value, end of period | $ | 12.69 | $ | 12.16 | $ | 12.44 | $ | 10.33 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total return (b) | 9.68 | % | (2.25 | )% | 20.89 | % | 3.30 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ratios/Supplemental Data: |
| |||||||||||||||
Net assets, end of period (000’s) | $ | 1,560 | $ | 1,270 | $ | 803 | $ | 103 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | 1.25 | % | 1.25 | % | 1.27 | % | 1.40 | % | ||||||||
Before waivers and reimbursements (a)(f) | 2.06 | % | 1.94 | % | 2.13 | % | 2.31 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | 0.22 | % | (0.13 | )% | (0.25 | )% | (0.19 | )%(l) | ||||||||
Before waivers and reimbursements (a)(f) | (0.58 | )% | (0.82 | )% | (1.11 | )% | (1.10 | )%(l) | ||||||||
Portfolio turnover rate (z)^ | 14 | % | 26 | % | 18 | % | 11 | % | ||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | April 11, 2016* to October 31, 2016 | ||||||||||||||
Class I | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 12.22 | $ | 12.48 | $ | 10.34 | $ | 10.00 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e) | 0.03 | 0.02 | 0.01 | — | # | |||||||||||
Net realized and unrealized gain (loss) | 1.09 | (0.26 | ) | 2.18 | 0.34 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | 1.12 | (0.24 | ) | 2.19 | 0.34 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less distributions: | ||||||||||||||||
Dividends from net investment income | (0.01 | ) | (0.02 | ) | (0.01 | ) | — | |||||||||
Distributions from net realized gains | (0.57 | ) | — | (0.04 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total dividends and distributions | (0.58 | ) | (0.02 | ) | (0.05 | ) | — | |||||||||
|
|
|
|
|
|
|
| |||||||||
Net asset value, end of period | $ | 12.76 | $ | 12.22 | $ | 12.48 | $ | 10.34 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total return (b) | 9.82 | % | (1.95 | )% | 21.23 | % | 3.40 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ratios/Supplemental Data: |
| |||||||||||||||
Net assets, end of period (000’s) | $ | 26,708 | $ | 25,511 | $ | 25,009 | $ | 20,479 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | 1.00 | % | 1.00 | % | 1.05 | % | 1.15 | % | ||||||||
Before waivers and reimbursements (a)(f) | 1.81 | % | 1.69 | % | 1.92 | % | 2.06 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | 0.43 | % | 0.13 | % | 0.09 | % | 0.06 | %(l) | ||||||||
Before waivers and reimbursements (a)(f) | (0.38 | )% | (0.56 | )% | (0.79 | )% | (0.85 | )%(l) | ||||||||
Portfolio turnover rate (z)^ | 14 | % | 26 | % | 18 | % | 11 | % |
See Notes to Financial Statements.
62
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | April 11, 2016* to October 31, 2016 | ||||||||||||||
Class R | 2018 | 2017 | ||||||||||||||
Net asset value, beginning of period | $ | 12.09 | $ | 12.39 | $ | 10.31 | $ | 10.00 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) (e) | — | # | (0.05 | ) | (0.05 | ) | (0.03 | ) | ||||||||
Net realized and unrealized gain (loss) | 1.07 | (0.25 | ) | 2.17 | 0.34 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total from investment operations | 1.07 | (0.30 | ) | 2.12 | 0.31 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Less distributions: | ||||||||||||||||
Distributions from net realized gains | (0.57 | ) | — | (0.04 | ) | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Net asset value, end of period | $ | 12.59 | $ | 12.09 | $ | 12.39 | $ | 10.31 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total return (b) | 9.49 | % | (2.42 | )% | 20.64 | % | 3.10 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Ratios/Supplemental Data: |
| |||||||||||||||
Net assets, end of period (000’s) | $ | 132 | $ | 122 | $ | 124 | $ | 103 | ||||||||
Ratio of expenses to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | 1.50 | % | 1.50 | % | 1.55 | % | 1.65 | % | ||||||||
Before waivers and reimbursements (a)(f) | 2.31 | % | 2.19 | % | 2.42 | % | 2.56 | % | ||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||
After waivers and reimbursements (a)(f) | (0.07 | )% | (0.37 | )% | (0.41 | )% | (0.44 | )%(l) | ||||||||
Before waivers and reimbursements (a)(f) | (0.87 | )% | (1.06 | )% | (1.29 | )% | (1.35 | )%(l) | ||||||||
Portfolio turnover rate (z)^ | 14 | % | 26 | % | 18 | % | 11 | % |
* | Commencement of Operations. |
# | Per share amount is less than $0.005. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
63
1290 HIGH YIELD BOND FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISER
Ø | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||||
Fund – Class A Shares* | without Sales Charge | 5.02 | % | 5.68 | % | 4.09 | % | |||||||||
with Sales Charge (a | ) | 0.31 | 0.91 | 3.02 | ||||||||||||
Fund – Class I Shares* | 5.15 | 5.94 | 4.37 | |||||||||||||
Fund – Class R Shares* | 4.90 | 5.42 | 3.84 | |||||||||||||
Fund – Class T Shares*† | without Sales Charge | 5.27 | 6.06 | 4.37 | ||||||||||||
with Sales Charge (b | ) | 2.63 | 3.44 | 3.77 | ||||||||||||
ICE BofAML US High Yield Index | 5.55 | 6.71 | 5.22 | |||||||||||||
* Date of inception 11/12/14.
† Class T Shares currently are not offered for sale.
(a) A 4.50%front-end sales charge was deducted.
(b) A 2.50%front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I, R and T shares were 1.77%, 1.52%, 2.02% and 1.77%, respectively. The net expense ratios for Class A, I, R and T shares were 1.00%, 0.75%, 1.25% and 1.00%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — AXA Investment Managers, Inc.
Returns for the period were driven by better than expected earnings in the first quarter, strength in the equity market and accommodative Federal Reserve (Fed) policies. Flows into the high yield market were positive for the six-month period ended April 30, 2019. In the same period, there was $12.5 billion of high yield default volume, materially lower than the $22.5 billion of high yield default volume in the same period last year. The par weighted high yield default rate ended the period at 1.29% versus 2.26% at the end of the prior period.
For the six-month period ended April 30, 2019, high yield underperformed U.S. equities and U.S. investment-grade corporates but outperformed U.S. Treasuries. Within U.S high yield, returns were driven by the higher end of the credit quality spectrum, as higher quality BB-rated credits outperformed lower-quality B-rated and CCC-and-lower rated credits. From a sector perspective, all 18 industry sectors posted positive total returns for the period. On a relative basis, retail, utility and media companies were the best performing sectors, while energy, transportation and insurance were the worst performing sectors.
Fund Highlights
The Fund’s Class I shares returned 5.15% for the six-month period ended April 30, 2019. The Fund’s benchmark, the ICE BofAML US High Yield Index, rose 5.55%. The 1290 High Yield Bond Fund performed approximately in-line with the benchmark, after a margin for fees, during the period.
For the full six-month period ended April 30, 2019, the Fund’s relative performance benefited from positive security selection, particularly within the higher-yielding portion of the market. The Fund’s overweight to the short-duration segment of the market detracted from relative performance. Performance benefited from participating in multiple attractively priced new issues, which performed well. From a sector perspective, Fund performance benefited from positive security selection within the energy, services and consumer goods sectors, which was partially offset by negative security selection within the retail, technology and health care sectors.
What helped performance during the six-month period ended April 30, 2019:
• | The top contributors to return for the period were debt positions in Staples Inc., Pilgrim’s Pride Corp. and JBS USA Lux SA. |
• | Staples Inc. is the largest distributor of office products and other professional categories in the business-to-business market in North America. Staples bonds outperformed during the period mainly due to the company’s announcement that it would call its bonds at a premium price, to recapitalize its structure and pay a dividend to its sponsors. |
• | Pilgrim’s Pride Corp. is a poultry producer. Pilgrim’s Pride bonds outperformed despite reporting relatively weak earnings for the fourth quarter of 2018 as management guided to strong results in 2019 driven by improving U.S. chicken demand, moderating costs and a balanced outlook for supply and demand. |
• | JBS USA Lux SA is a global processor of proteins. JBS bonds outperformed as the company reported strong results for the fourth quarter of 2018 mainly driven by continued strong margins in its USA Beef segment and improved results for the Brazil Beef segment. Also, JBS management provided a positive outlook for 2019. |
What hurt performance during the six-month period ended April 30, 2019:
• | The bottom contributors to return for the period were debt positions in Nabors Industries Ltd., Oasis Petroleum, Inc. and Gulfport Energy Corp. |
64
1290 HIGH YIELD BOND FUND (Unaudited)
• | Nabors Industries Ltd. is the largest international land driller with high specification rigs drilling for oil and gas, largely in North America and the Middle East. During the first quarter of 2019 we sold bonds due in 2025 and bought bonds due in 2023, since we believed the shorter maturity offered more attractive relative value at the time. Subsequently, we fully sold the Fund’s position in the 2023 bond at an average price that was materially higher than the Fund’s average purchase price. |
• | Oasis Petroleum, Inc. is an exploration and production company with operations in both the Bakken in North Dakota and the Delaware Basin in Texas. We fully sold the Fund’s position in the Oasis Petroleum 2026 bond early in the period to buy a higher-quality exploration and production company, which limited the position’s contribution to return. |
• | Gulfport Energy Corp. is a natural gas weighted exploration and production company with operations in the Utica Shale in Ohio and the SCOOP in Oklahoma. The bonds underperformed the market due to both its natural gas exposure and because it has assets located in Oklahoma. While Gulfport reported results for its Oklahoma SCOOP assets that were in-line with expectations, Gulfport bonds came under pressure due in part to a competitor reporting weak operating results in this same geographic region. |
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
Communication Services | 16.2 | % | ||
Industrials | 15.8 | |||
Energy | 13.8 | |||
Information Technology | 11.8 | |||
Health Care | 10.7 | |||
Materials | 8.5 | |||
Consumer Discretionary | 7.1 | |||
Consumer Staples | 5.3 | |||
Financials | 2.7 | |||
Real Estate | 2.4 | |||
Investment Company | 1.7 | |||
Cash and Other | 4.0 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A, Class R and Class T shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
65
1290 HIGH YIELD BOND FUND (Unaudited)
EXAMPLE
Beginning 11/1/18 | Ending 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class A | ||||||||||||
Actual | $1,000.00 | $1,050.20 | $5.08 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.84 | 5.01 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,051.50 | 3.82 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,021.08 | 3.76 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,049.00 | 6.35 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,018.60 | 6.26 | |||||||||
Class T** | ||||||||||||
Actual | 1,000.00 | 1,052.70 | 3.82 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,021.08 | 3.76 | |||||||||
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.00%, 0.75%, 1.25% and 0.75%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period).
** Class T shares currently are not offered for sale. |
|
66
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
LONG-TERM DEBT SECURITIES: |
| |||||||
Corporate Bonds (94.3%) |
| |||||||
Communication Services (16.2%) |
| |||||||
Diversified Telecommunication Services (5.3%) |
| |||||||
CCO Holdings LLC | ||||||||
5.250%, 9/30/22 | $ | 197,000 | $ | 199,709 | ||||
5.125%, 5/1/23§ | 136,000 | 139,400 | ||||||
5.750%, 2/15/26§ | 132,000 | 137,544 | ||||||
5.875%, 5/1/27§ | 324,000 | 337,770 | ||||||
5.000%, 2/1/28§ | 108,000 | 107,595 | ||||||
CenturyLink, Inc. | ||||||||
Series G | 128,000 | 125,318 | ||||||
Series W | 96,000 | 101,880 | ||||||
Cincinnati Bell, Inc. | ||||||||
7.000%, 7/15/24§ | 215,000 | 197,806 | ||||||
Level 3 Financing, Inc. | ||||||||
5.375%, 8/15/22 | 282,000 | 282,000 | ||||||
Sprint Capital Corp. | ||||||||
6.900%, 5/1/19 | 60,000 | 59,704 | ||||||
8.750%, 3/15/32 | 164,000 | 171,585 | ||||||
|
| |||||||
1,860,311 | ||||||||
|
| |||||||
Entertainment (2.0%) |
| |||||||
Ascend Learning LLC | ||||||||
6.875%, 8/1/25§ | 100,000 | 101,500 | ||||||
6.875%, 8/1/25§ | 114,000 | 115,710 | ||||||
Live Nation Entertainment, Inc. | ||||||||
4.875%, 11/1/24§ | 246,000 | 250,689 | ||||||
National CineMedia LLC | ||||||||
6.000%, 4/15/22 | 154,000 | 154,963 | ||||||
Netflix, Inc. | ||||||||
4.875%, 4/15/28 | 78,000 | 77,610 | ||||||
|
| |||||||
700,472 | ||||||||
|
| |||||||
Interactive Media & Services (1.0%) |
| |||||||
Match Group, Inc. | ||||||||
6.375%, 6/1/24 | 149,000 | 156,077 | ||||||
Rackspace Hosting, Inc. | ||||||||
8.625%, 11/15/24§ | 231,000 | 214,830 | ||||||
|
| |||||||
370,907 | ||||||||
|
| |||||||
Media (5.6%) |
| |||||||
Altice Luxembourg SA | ||||||||
7.750%, 5/15/22§ | 200,000 | 203,000 | ||||||
Cequel Communications Holdings I LLC |
| |||||||
5.125%, 12/15/21§ | 139,000 | 139,000 | ||||||
DISH DBS Corp. | ||||||||
5.875%, 7/15/22 | 112,000 | 109,208 | ||||||
Getty Images, Inc. | ||||||||
9.750%, 3/1/27§ | 82,000 | 83,230 | ||||||
Lamar Media Corp. | ||||||||
5.375%, 1/15/24 | 74,000 | 75,850 | ||||||
McGraw-Hill Global Education Holdings LLC |
| |||||||
7.875%, 5/15/24§ | 184,000 | 156,285 | ||||||
Meredith Corp. | ||||||||
6.875%, 2/1/26 | 180,000 | 187,200 | ||||||
Quebecor Media, Inc. | ||||||||
5.750%, 1/15/23 | 59,000 | 61,508 | ||||||
Sinclair Television Group, Inc. | ||||||||
5.375%, 4/1/21 | 6,000 | 6,000 | ||||||
6.125%, 10/1/22 | 70,000 | 71,050 | ||||||
Sirius XM Radio, Inc. | ||||||||
6.000%, 7/15/24§ | 171,000 | 176,771 | ||||||
Tribune Media Co. | ||||||||
5.875%, 7/15/22 | 114,000 | 115,596 | ||||||
Unitymedia GmbH | ||||||||
6.125%, 1/15/25§ | 200,000 | 207,500 | ||||||
Ziggo Bond Co. BV | ||||||||
6.000%, 1/15/27§ | 200,000 | 196,000 | ||||||
Ziggo BV | ||||||||
5.500%, 1/15/27§ | 200,000 | 199,500 | ||||||
|
| |||||||
1,987,698 | ||||||||
|
| |||||||
Wireless Telecommunication Services (2.3%) |
| |||||||
Digicel Ltd. | ||||||||
6.000%, 4/15/21§ | 250,000 | 219,500 | ||||||
Sprint Communications, Inc. | ||||||||
7.000%, 8/15/20 | 50,000 | 51,938 | ||||||
Sprint Corp. | ||||||||
7.875%, 9/15/23 | 140,000 | 145,512 | ||||||
7.125%, 6/15/24 | 66,000 | 66,062 | ||||||
7.625%, 3/1/26 | 86,000 | 85,785 | ||||||
T-Mobile USA, Inc. | ||||||||
6.000%, 3/1/23 | 171,000 | 175,916 | ||||||
6.000%, 4/15/24 | 64,000 | 66,720 | ||||||
|
| |||||||
811,433 | ||||||||
|
| |||||||
Total Communication Services | 5,730,821 | |||||||
|
| |||||||
Consumer Discretionary (7.1%) |
| |||||||
Auto Components (0.6%) |
| |||||||
Icahn Enterprises LP | ||||||||
6.000%, 8/1/20 | 78,000 | 78,244 | ||||||
Panther BF Aggregator 2 LP | ||||||||
6.250%, 5/15/26§ | 58,000 | 60,175 | ||||||
8.500%, 5/15/27§ | 84,000 | 86,310 | ||||||
|
| |||||||
224,729 | ||||||||
|
| |||||||
Distributors (0.8%) |
| |||||||
Univar USA, Inc. | ||||||||
6.750%, 7/15/23§ | 265,000 | 268,975 | ||||||
|
| |||||||
Hotels, Restaurants & Leisure (4.5%) |
| |||||||
1011778 BC ULC | ||||||||
4.625%, 1/15/22§ | 282,000 | 282,528 | ||||||
4.250%, 5/15/24§ | 36,000 | 35,460 | ||||||
5.000%, 10/15/25§ | 173,000 | 171,054 | ||||||
Churchill Downs, Inc. | ||||||||
5.500%, 4/1/27§ | 116,000 | 118,972 | ||||||
Eldorado Resorts, Inc. | ||||||||
7.000%, 8/1/23 | 200,000 | 208,750 | ||||||
6.000%, 9/15/26 | 100,000 | 103,875 | ||||||
Golden Entertainment, Inc. | ||||||||
7.625%, 4/15/26§ | 98,000 | 98,245 | ||||||
LTF Merger Sub, Inc. | ||||||||
8.500%, 6/15/23§ | 212,000 | 217,830 | ||||||
MGM Resorts International | ||||||||
6.625%, 12/15/21 | 25,000 | 26,836 | ||||||
Scientific Games International, Inc. | ||||||||
10.000%, 12/1/22 | 167,000 | 175,559 | ||||||
Silversea Cruise Finance Ltd. | ||||||||
7.250%, 2/1/25§ | 57,000 | 61,133 |
See Notes to Financial Statements.
67
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Stars Group Holdings BV | ||||||||
7.000%, 7/15/26§ | $ | 103,000 | $ | 107,635 | ||||
|
| |||||||
1,607,877 | ||||||||
|
| |||||||
Household Durables (0.2%) |
| |||||||
William Lyon Homes, Inc. | ||||||||
6.000%, 9/1/23 | 74,000 | 73,260 | ||||||
|
| |||||||
Multiline Retail (0.2%) |
| |||||||
Cumberland Farms, Inc. | ||||||||
6.750%, 5/1/25§ | 53,000 | 55,915 | ||||||
|
| |||||||
Specialty Retail (0.8%) |
| |||||||
KGA Escrow LLC | ||||||||
7.500%, 8/15/23§ | 144,000 | 148,320 | ||||||
Party City Holdings, Inc. | ||||||||
6.625%, 8/1/26§ | 50,000 | 49,563 | ||||||
Penske Automotive Group, Inc. | ||||||||
5.750%, 10/1/22 | 78,000 | 79,463 | ||||||
|
| |||||||
277,346 | ||||||||
|
| |||||||
Total Consumer Discretionary | 2,508,102 | |||||||
|
| |||||||
Consumer Staples (5.3%) |
| |||||||
Food & Staples Retailing (0.4%) |
| |||||||
Rite Aid Corp. | ||||||||
6.125%, 4/1/23§ | 174,000 | 147,900 | ||||||
|
| |||||||
Food Products (2.4%) |
| |||||||
Clearwater Seafoods, Inc. | ||||||||
6.875%, 5/1/25§ | 83,000 | 82,170 | ||||||
JBS USA Lux SA | ||||||||
6.750%, 2/15/28§ | 222,000 | 233,940 | ||||||
Lamb Weston Holdings, Inc. | ||||||||
4.875%, 11/1/26§ | 87,000 | 88,251 | ||||||
Pilgrim’s Pride Corp. | ||||||||
5.875%, 9/30/27§ | 180,000 | 185,625 | ||||||
Post Holdings, Inc. | ||||||||
5.750%, 3/1/27§ | 170,000 | 174,250 | ||||||
5.625%, 1/15/28§ | 70,000 | 70,761 | ||||||
|
| |||||||
834,997 | ||||||||
|
| |||||||
Household Products (1.2%) |
| |||||||
Central Garden & Pet Co. | ||||||||
6.125%, 11/15/23 | 121,000 | 126,143 | ||||||
Energizer Holdings, Inc. | ||||||||
7.750%, 1/15/27§ | 99,000 | 107,044 | ||||||
Kronos Acquisition Holdings, Inc. | ||||||||
9.000%, 8/15/23§ | 134,000 | 119,595 | ||||||
Spectrum Brands, Inc. | ||||||||
6.625%, 11/15/22 | 68,000 | 69,346 | ||||||
|
| |||||||
422,128 | ||||||||
|
| |||||||
Personal Products (1.3%) |
| |||||||
First Quality Finance Co., Inc. | ||||||||
4.625%, 5/15/21§ | 102,000 | 102,005 | ||||||
Prestige Brands, Inc. | ||||||||
5.375%, 12/15/21§ | 138,000 | 138,690 | ||||||
6.375%, 3/1/24§ | 221,000 | 227,214 | ||||||
|
| |||||||
467,909 | ||||||||
|
| |||||||
Total Consumer Staples | 1,872,934 | |||||||
|
| |||||||
Energy (13.8%) |
| |||||||
Energy Equipment & Services (0.4%) |
| |||||||
Precision Drilling Corp. | ||||||||
7.750%, 12/15/23 | 106,000 | 110,240 | ||||||
7.125%, 1/15/26§ | 35,000 | 35,175 | ||||||
|
| |||||||
145,415 | ||||||||
|
| |||||||
Oil, Gas & Consumable Fuels (13.4%) |
| |||||||
American Midstream Partners LP | ||||||||
9.500%, 12/15/21 (e)§ | 270,000 | 258,862 | ||||||
Antero Resources Corp. | ||||||||
5.375%, 11/1/21 | 68,000 | 68,510 | ||||||
5.625%, 6/1/23 | 117,000 | 118,205 | ||||||
Ascent Resources Utica Holdings LLC |
| |||||||
10.000%, 4/1/22§ | 153,000 | 167,344 | ||||||
7.000%, 11/1/26§ | 178,000 | 173,381 | ||||||
Berry Petroleum Co. LLC | ||||||||
7.000%, 2/15/26§ | 75,000 | 73,594 | ||||||
Blue Racer Midstream LLC | ||||||||
6.125%, 11/15/22§ | 246,000 | 249,382 | ||||||
6.625%, 7/15/26§ | 132,000 | 134,805 | ||||||
Calumet Specialty Products Partners LP |
| |||||||
7.625%, 1/15/22 | 181,000 | 169,235 | ||||||
Chesapeake Energy Corp. | ||||||||
7.000%, 10/1/24 | 98,000 | 96,744 | ||||||
Crestwood Midstream Partners LP | ||||||||
6.250%, 4/1/23 (e) | 164,000 | 168,100 | ||||||
CrownRock LP | ||||||||
5.625%, 10/15/25§ | 228,000 | 225,720 | ||||||
Delek Logistics Partners LP | ||||||||
6.750%, 5/15/25 | 195,000 | 194,025 | ||||||
Genesis Energy LP | ||||||||
5.625%, 6/15/24 | 136,000 | 134,300 | ||||||
6.500%, 10/1/25 | 176,000 | 176,827 | ||||||
Gulfport Energy Corp. | ||||||||
6.375%, 1/15/26 | 138,000 | 119,370 | ||||||
Hilcorp Energy I LP | ||||||||
6.250%, 11/1/28§ | 178,000 | 181,337 | ||||||
Holly Energy Partners LP | ||||||||
6.000%, 8/1/24§ | 74,000 | 76,981 | ||||||
Parsley Energy LLC | ||||||||
6.250%, 6/1/24§ | 166,000 | 172,225 | ||||||
5.625%, 10/15/27§ | 96,000 | 98,640 | ||||||
PBF Holding Co. LLC | ||||||||
7.000%, 11/15/23 | 94,000 | 96,350 | ||||||
PBF Logistics LP | ||||||||
6.875%, 5/15/23 | 220,000 | 224,928 | ||||||
Range Resources Corp. | ||||||||
5.750%, 6/1/21 | 85,000 | 87,473 | ||||||
SemGroup Corp. | ||||||||
5.625%, 7/15/22 | 154,000 | 152,268 | ||||||
5.625%, 11/15/23 | 100,000 | 94,750 | ||||||
SM Energy Co. | ||||||||
6.750%, 9/15/26 | 98,000 | 93,835 | ||||||
Southern Star Central Corp. | ||||||||
5.125%, 7/15/22§ | 234,000 | 240,256 | ||||||
Southwestern Energy Co. | ||||||||
7.750%, 10/1/27 | 125,000 | 126,563 | ||||||
Summit Midstream Holdings LLC | ||||||||
5.500%, 8/15/22 | 150,000 | 148,125 | ||||||
Targa Resources Partners LP | ||||||||
6.750%, 3/15/24 | 207,000 | 215,927 |
See Notes to Financial Statements.
68
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
TransMontaigne Partners LP | ||||||||
6.125%, 2/15/26 | $ | 124,000 | $ | 119,660 | ||||
Whiting Petroleum Corp. | ||||||||
6.625%, 1/15/26 | 64,000 | 63,901 | ||||||
|
| |||||||
4,721,623 | ||||||||
|
| |||||||
Total Energy | 4,867,038 | |||||||
|
| |||||||
Financials (2.7%) |
| |||||||
Capital Markets (0.8%) |
| |||||||
Eagle Holding Co. II LLC | ||||||||
7.625%, 5/15/22 PIK§ | 164,000 | 164,820 | ||||||
MSCI, Inc. | ||||||||
5.250%, 11/15/24§ | 138,000 | 142,313 | ||||||
|
| |||||||
307,133 | ||||||||
|
| |||||||
Consumer Finance (0.5%) |
| |||||||
Curo Group Holdings Corp. | ||||||||
8.250%, 9/1/25§ | 88,000 | 77,000 | ||||||
Enova International, Inc. | ||||||||
8.500%, 9/1/24§ | 110,000 | 105,119 | ||||||
|
| |||||||
182,119 | ||||||||
|
| |||||||
Diversified Financial Services (0.6%) |
| |||||||
Refinitiv US Holdings, Inc. | ||||||||
8.250%, 11/15/26§ | 74,000 | 74,901 | ||||||
Verscend Escrow Corp. | ||||||||
9.750%, 8/15/26§ | 120,000 | 127,800 | ||||||
|
| |||||||
202,701 | ||||||||
|
| |||||||
Insurance (0.3%) | ||||||||
Acrisure LLC | ||||||||
8.125%, 2/15/24§ | 100,000 | 104,250 | ||||||
|
| |||||||
Thrifts & Mortgage Finance (0.5%) | ||||||||
Freedom Mortgage Corp. | ||||||||
8.250%, 4/15/25§ | 192,000 | 169,440 | ||||||
|
| |||||||
Total Financials | 965,643 | |||||||
|
| |||||||
Health Care (10.7%) | ||||||||
Biotechnology (0.6%) | ||||||||
Sotera Health Topco, Inc. | ||||||||
8.125%, 11/1/21 PIK§ | 222,000 | 221,445 | ||||||
|
| |||||||
Health Care Equipment & Supplies (0.8%) |
| |||||||
Hill-Rom Holdings, Inc. | ||||||||
5.750%, 9/1/23§ | 132,000 | 136,620 | ||||||
Sotera Health Holdings LLC | ||||||||
6.500%, 5/15/23§ | 132,000 | 132,660 | ||||||
|
| |||||||
269,280 | ||||||||
|
| |||||||
Health Care Providers & Services (6.6%) |
| |||||||
Centene Corp. | ||||||||
6.125%, 2/15/24 | 168,000 | 175,980 | ||||||
Envision Healthcare Corp. | ||||||||
8.750%, 10/15/26§ | 142,000 | 133,480 | ||||||
HCA, Inc. | ||||||||
7.500%, 2/15/22 | 247,000 | 271,700 | ||||||
7.690%, 6/15/25 | 91,000 | 103,171 | ||||||
MEDNAX, Inc. | ||||||||
6.250%, 1/15/27§ | 104,000 | 106,080 | ||||||
MPH Acquisition Holdings LLC | ||||||||
7.125%, 6/1/24§ | 98,000 | 98,265 | ||||||
NVA Holdings, Inc. | ||||||||
6.875%, 4/1/26§ | 176,000 | 177,760 | ||||||
Polaris Intermediate Corp. | ||||||||
8.500%, 12/1/22 PIK§ | 224,000 | 224,560 | ||||||
Surgery Center Holdings, Inc. | ||||||||
6.750%, 7/1/25§ | 147,000 | 135,240 | ||||||
10.000%, 4/15/27§ | 121,000 | 124,327 | ||||||
Syneos Health, Inc. | ||||||||
7.500%, 10/1/24§ | 158,000 | 165,505 | ||||||
Team Health Holdings, Inc. | ||||||||
6.375%, 2/1/25§ | 166,000 | 140,926 | ||||||
Tenet Healthcare Corp. | ||||||||
5.125%, 5/1/25 | 97,000 | 97,849 | ||||||
7.000%, 8/1/25 | 87,000 | 88,087 | ||||||
Vizient, Inc. | ||||||||
6.250%, 5/15/27§ | 33,000 | 34,073 | ||||||
WellCare Health Plans, Inc. | ||||||||
5.375%, 8/15/26§ | 118,000 | 123,286 | ||||||
West Street Merger Sub, Inc. | ||||||||
6.375%, 9/1/25§ | 142,000 | 137,385 | ||||||
|
| |||||||
2,337,674 | ||||||||
|
| |||||||
Health Care Technology (0.5%) | ||||||||
IQVIA, Inc. | ||||||||
4.875%, 5/15/23§ | 184,000 | 186,300 | ||||||
|
| |||||||
Life Sciences Tools & Services (0.2%) | ||||||||
Charles River Laboratories International, Inc. |
| |||||||
5.500%, 4/1/26§ | 76,000 | 79,420 | ||||||
|
| |||||||
Pharmaceuticals (2.0%) | ||||||||
Bausch Health Americas, Inc. | ||||||||
9.250%, 4/1/26§ | 216,000 | 239,760 | ||||||
Bausch Health Cos., Inc. | ||||||||
7.000%, 3/15/24§ | 280,000 | 294,350 | ||||||
5.500%, 11/1/25§ | 74,000 | 75,850 | ||||||
5.750%, 8/15/27§ | 54,000 | 56,200 | ||||||
Catalent Pharma Solutions, Inc. | ||||||||
4.875%, 1/15/26§ | 39,000 | 38,903 | ||||||
|
| |||||||
705,063 | ||||||||
|
| |||||||
Total Health Care | 3,799,182 | |||||||
|
| |||||||
Industrials (15.8%) | ||||||||
Aerospace & Defense (2.9%) | ||||||||
Bombardier, Inc. | ||||||||
8.750%, 12/1/21§ | 97,000 | 107,307 | ||||||
7.875%, 4/15/27§ | 225,000 | 226,125 | ||||||
TransDigm, Inc. | ||||||||
6.000%, 7/15/22 | 348,000 | 351,915 | ||||||
6.250%, 3/15/26§ | 167,000 | 173,471 | ||||||
Triumph Group, Inc. | ||||||||
7.750%, 8/15/25 | 169,000 | 169,000 | ||||||
|
| |||||||
1,027,818 | ||||||||
|
| |||||||
Building Products (2.0%) | ||||||||
Masonite International Corp. | ||||||||
5.625%, 3/15/23§ | 72,000 | 73,800 | ||||||
Standard Industries, Inc. | ||||||||
5.500%, 2/15/23§ | 236,000 | 239,540 | ||||||
6.000%, 10/15/25§ | 132,000 | 137,803 | ||||||
Summit Materials LLC | ||||||||
6.125%, 7/15/23 | 272,000 | 276,760 | ||||||
|
| |||||||
727,903 | ||||||||
|
|
See Notes to Financial Statements.
69
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
Commercial Services & Supplies (4.0%) |
| |||||||
ACCO Brands Corp. | ||||||||
5.250%, 12/15/24§ | $ | 138,000 | $ | 136,965 | ||||
GFL Environmental, Inc. | ||||||||
7.000%, 6/1/26§ | 162,000 | 156,532 | ||||||
8.500%, 5/1/27§ | 18,000 | 18,752 | ||||||
Matthews International Corp. | ||||||||
5.250%, 12/1/25§ | 85,000 | 82,662 | ||||||
Multi-Color Corp. | ||||||||
6.125%, 12/1/22§ | 163,000 | 167,890 | ||||||
4.875%, 11/1/25§ | 184,000 | 190,670 | ||||||
Nielsen Finance LLC | ||||||||
5.000%, 4/15/22§ | 170,000 | 168,513 | ||||||
Prime Security Services Borrower LLC | ||||||||
9.250%, 5/15/23§ | 183,000 | 192,873 | ||||||
Star Merger Sub, Inc. | ||||||||
6.875%, 8/15/26§ | 116,000 | 120,425 | ||||||
10.250%, 2/15/27§ | 176,000 | 183,480 | ||||||
|
| |||||||
1,418,762 | ||||||||
|
| |||||||
Construction & Engineering (0.7%) | ||||||||
AECOM | ||||||||
5.125%, 3/15/27 | 62,000 | 62,233 | ||||||
AECOM Global II LLC | ||||||||
5.000%, 4/1/22 (e) | 95,000 | 96,425 | ||||||
New Enterprise Stone & Lime Co., Inc. | ||||||||
6.250%, 3/15/26§ | 87,000 | 87,979 | ||||||
|
| |||||||
246,637 | ||||||||
|
| |||||||
Machinery (1.7%) | ||||||||
EnPro Industries, Inc. | ||||||||
5.750%, 10/15/26§ | 134,000 | 137,350 | ||||||
Mueller Water Products, Inc. | ||||||||
5.500%, 6/15/26§ | 52,000 | 52,780 | ||||||
Novelis Corp. | ||||||||
6.250%, 8/15/24§ | 29,000 | 30,178 | ||||||
5.875%, 9/30/26§ | 74,000 | 75,202 | ||||||
Welbilt, Inc. | ||||||||
9.500%, 2/15/24 | 272,000 | 293,420 | ||||||
|
| |||||||
588,930 | ||||||||
|
| |||||||
Professional Services (1.2%) | ||||||||
IHS Markit Ltd. | ||||||||
5.000%, 11/1/22§ | 41,000 | 42,967 | ||||||
Jaguar Holding Co. II | ||||||||
6.375%, 8/1/23§ | 372,000 | 378,510 | ||||||
|
| |||||||
421,477 | ||||||||
|
| |||||||
Road & Rail (3.1%) | ||||||||
Avolon Holdings Funding Ltd. | ||||||||
5.250%, 5/15/24§ | 67,000 | 69,924 | ||||||
DAE Funding LLC | ||||||||
5.250%, 11/15/21§ | 100,000 | 103,087 | ||||||
5.000%, 8/1/24§ | 160,000 | 163,000 | ||||||
Kenan Advantage Group, Inc. (The) | ||||||||
7.875%, 7/31/23§ | 342,000 | 331,740 | ||||||
Park Aerospace Holdings Ltd. | ||||||||
5.500%, 2/15/24§ | 132,000 | 139,169 | ||||||
Watco Cos. LLC | ||||||||
6.375%, 4/1/23§ | 276,000 | 277,380 | ||||||
|
| |||||||
1,084,300 | ||||||||
|
| |||||||
Trading Companies & Distributors (0.2%) |
| |||||||
Beacon Roofing Supply, Inc. | ||||||||
6.375%, 10/1/23 | 84,000 | 87,045 | ||||||
|
| |||||||
Total Industrials | 5,602,872 | |||||||
|
| |||||||
Information Technology (11.8%) | ||||||||
Communications Equipment (0.9%) | ||||||||
CommScope, Inc. | ||||||||
6.000%, 3/1/26§ | 203,000 | 214,926 | ||||||
8.250%, 3/1/27§ | 108,000 | 116,640 | ||||||
|
| |||||||
331,566 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components (0.7%) |
| |||||||
Anixter, Inc. | ||||||||
6.000%, 12/1/25§ | 84,000 | 89,460 | ||||||
Itron, Inc. | ||||||||
5.000%, 1/15/26§ | 176,000 | 174,680 | ||||||
|
| |||||||
264,140 | ||||||||
|
| |||||||
IT Services (3.4%) | ||||||||
Alliance Data Systems Corp. | ||||||||
5.375%, 8/1/22§ | 275,000 | 279,469 | ||||||
Exela Intermediate LLC | ||||||||
10.000%, 7/15/23§ | 226,000 | 228,542 | ||||||
First Data Corp. | ||||||||
5.375%, 8/15/23§ | 32,000 | 32,717 | ||||||
Gartner, Inc. | ||||||||
5.125%, 4/1/25§ | 68,000 | 69,562 | ||||||
GTT Communications, Inc. | ||||||||
7.875%, 12/31/24§ | 176,000 | 165,880 | ||||||
Unisys Corp. | ||||||||
10.750%, 4/15/22§ | 85,000 | 94,138 | ||||||
Zayo Group LLC | ||||||||
6.000%, 4/1/23 | 145,000 | 147,175 | ||||||
5.750%, 1/15/27§ | 184,000 | 186,760 | ||||||
|
| |||||||
1,204,243 | ||||||||
|
| |||||||
Software (4.4%) | ||||||||
ACI Worldwide, Inc. | ||||||||
5.750%, 8/15/26§ | 135,000 | 140,231 | ||||||
CDK Global, Inc. | ||||||||
5.875%, 6/15/26 | 100,000 | 105,625 | ||||||
Change Healthcare Holdings LLC | ||||||||
5.750%, 3/1/25§ | 246,000 | 243,540 | ||||||
HNA Ecotech Panorama Cayman Co. Ltd. |
| |||||||
8.000%, 4/15/21§ | 120,000 | 110,497 | ||||||
Informatica LLC | ||||||||
7.125%, 7/15/23§ | 116,000 | 118,610 | ||||||
Solera LLC | ||||||||
10.500%, 3/1/24§ | 296,000 | 320,420 | ||||||
Sophia LP | ||||||||
9.000%, 9/30/23§ | 318,000 | 330,720 | ||||||
SS&C Technologies, Inc. | ||||||||
5.500%, 9/30/27§ | 169,000 | 172,803 | ||||||
|
| |||||||
1,542,446 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (2.4%) |
| |||||||
Dell International LLC | ||||||||
5.875%, 6/15/21 (b)§ | 320,000 | 324,800 | ||||||
7.125%, 6/15/24§ | 161,000 | 170,459 | ||||||
Everi Payments, Inc. | ||||||||
7.500%, 12/15/25§ | 120,000 | 124,350 |
See Notes to Financial Statements.
70
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Principal Amount | Value (Note 1) | |||||||
NCR Corp. | ||||||||
4.625%, 2/15/21 | $ | 170,000 | $ | 169,575 | ||||
5.875%, 12/15/21 | 43,000 | 43,537 | ||||||
|
| |||||||
832,721 | ||||||||
|
| |||||||
Total Information Technology | 4,175,116 | |||||||
|
| |||||||
Materials (8.5%) | ||||||||
Chemicals (4.8%) | ||||||||
Axalta Coating Systems LLC | ||||||||
4.875%, 8/15/24§ | 150,000 | 150,607 | ||||||
Blue Cube Spinco LLC | ||||||||
10.000%, 10/15/25 | 190,000 | 216,838 | ||||||
INEOS Group Holdings SA | ||||||||
5.625%, 8/1/24§ | 200,000 | 202,500 | ||||||
Koppers, Inc. | ||||||||
6.000%, 2/15/25§ | 149,000 | 144,202 | ||||||
NOVA Chemicals Corp. | ||||||||
4.875%, 6/1/24§ | 119,000 | 116,918 | ||||||
Nufarm Australia Ltd. | ||||||||
5.750%, 4/30/26§ | 210,000 | 195,300 | ||||||
PQ Corp. | ||||||||
6.750%, 11/15/22§ | 161,000 | 166,635 | ||||||
5.750%, 12/15/25§ | 136,000 | 135,660 | ||||||
Rayonier AM Products, Inc. | ||||||||
5.500%, 6/1/24§ | 214,000 | 203,835 | ||||||
Starfruit Finco BV | ||||||||
8.000%, 10/1/26§ | 150,000 | 153,570 | ||||||
|
| |||||||
1,686,065 | ||||||||
|
| |||||||
Containers & Packaging (3.7%) | ||||||||
Berry Global, Inc. | ||||||||
5.500%, 5/15/22 | 136,000 | 137,870 | ||||||
5.125%, 7/15/23 | 174,000 | 176,610 | ||||||
BWAY Holding Co. | ||||||||
5.500%, 4/15/24§ | 118,000 | 117,192 | ||||||
7.250%, 4/15/25§ | 304,000 | 295,640 | ||||||
Flex Acquisition Co., Inc. | ||||||||
7.875%, 7/15/26§ | 149,000 | 139,643 | ||||||
Owens-Brockway Glass Container, Inc. | ||||||||
5.000%, 1/15/22§ | 66,000 | 67,320 | ||||||
Reynolds Group Issuer, Inc. | ||||||||
5.750%, 10/15/20 | 96,911 | 96,838 | ||||||
(ICE LIBOR USD 3 Month + 3.50%), 6.097%, 7/15/21 (k)§ | 182,000 | 182,227 | ||||||
W/S Packaging Holdings, Inc. | ||||||||
9.000%, 4/15/23§ | 100,000 | 108,500 | ||||||
|
| |||||||
1,321,840 | ||||||||
|
| |||||||
Total Materials | 3,007,905 | |||||||
|
| |||||||
Real Estate (2.4%) | ||||||||
Equity Real Estate Investment Trusts (REITs) (1.0%) |
| |||||||
Equinix, Inc. (REIT) | ||||||||
5.375%, 4/1/23 | 82,000 | 83,718 | ||||||
5.875%, 1/15/26 | 90,000 | 95,175 | ||||||
MGM Growth Properties Operating Partnership LP (REIT) | ||||||||
5.750%, 2/1/27§ | 66,000 | 69,217 | ||||||
SBA Communications Corp. (REIT) | ||||||||
4.875%, 9/1/24 | 120,000 | 121,727 | ||||||
|
| |||||||
369,837 | ||||||||
|
| |||||||
Real Estate Management & Development (1.4%) |
| |||||||
Greystar Real Estate Partners LLC | ||||||||
5.750%, 12/1/25§ | 165,000 | 165,413 | ||||||
Howard Hughes Corp. (The) | ||||||||
5.375%, 3/15/25§ | 166,000 | 167,404 | ||||||
Realogy Group LLC | ||||||||
9.375%, 4/1/27§ | 140,000 | 145,418 | ||||||
|
| |||||||
478,235 | ||||||||
|
| |||||||
Total Real Estate | 848,072 | |||||||
|
| |||||||
Total Corporate Bonds | 33,377,685 | |||||||
|
| |||||||
Total Long-Term Debt Securities (94.3%) | 33,377,685 | |||||||
|
| |||||||
Number of Rights | Value (Note 1) | |||||||
RIGHTS: | ||||||||
Communication Services (0.0%) | ||||||||
Wireless Telecommunication Services (0.0%) |
| |||||||
T-Mobile USA, Inc., CVR (r)* | 329,000 | — | ||||||
|
| |||||||
Number of Shares | Value (Note 1) | |||||||
SHORT-TERM INVESTMENT: | ||||||||
Investment Company (1.7%) | ||||||||
JPMorgan Prime Money Market Fund, IM Shares | 587,968 | 588,145 | ||||||
|
| |||||||
Total Short-Term Investment (1.7%) | 588,145 | |||||||
|
| |||||||
Total Investments in Securities (96.0%) | 33,965,830 | |||||||
Other Assets Less Liabilities (4.0%) | 1,409,063 | |||||||
|
| |||||||
Net Assets (100%) | $ | 35,374,893 | ||||||
|
|
* | Non-income producing. |
§ | Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may only be resold to qualified institutional buyers. At April 30, 2019, the market value of these securities amounted to $23,641,409 or 66.8% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
(b) | Rule 144A Illiquid Security. At April 30, 2019, the market value of these securities amounted to $324,800 or 0.9% of net assets. |
(e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2019. Maturity date disclosed is the ultimate maturity date. |
(r) | Value determined using significant unobservable inputs. |
(k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2019. |
See Notes to Financial Statements.
71
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Glossary:
CVR | — Contingent Value Rights |
ICE | — Intercontinental Exchange |
LIBOR | — London Interbank Offered Rate |
PIK | —Payment-in Kind Security |
USD | — United States Dollar |
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 assumptions in | Total | ||||||||||||
Assets: |
| |||||||||||||||
Corporate Bonds | ||||||||||||||||
Communication Services | $ | — | $ | 5,730,821 | $ | — | $ | 5,730,821 | ||||||||
Consumer Discretionary | — | 2,508,102 | — | 2,508,102 | ||||||||||||
Consumer Staples | — | 1,872,934 | — | 1,872,934 | ||||||||||||
Energy | — | 4,867,038 | — | 4,867,038 | ||||||||||||
Financials | — | 965,643 | — | 965,643 | ||||||||||||
Health Care | — | 3,799,182 | — | 3,799,182 | ||||||||||||
Industrials | — | 5,602,872 | — | 5,602,872 | ||||||||||||
Information Technology | — | 4,175,116 | — | 4,175,116 | ||||||||||||
Materials | — | 3,007,905 | — | 3,007,905 | ||||||||||||
Real Estate | — | 848,072 | — | 848,072 | ||||||||||||
Rights | ||||||||||||||||
Communication Services | — | — | — | (a) | — | (a) | ||||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 588,145 | — | — | 588,145 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 588,145 | $ | 33,377,685 | $ | — | $ | 33,965,830 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 588,145 | $ | 33,377,685 | $ | — | $ | 33,965,830 | ||||||||
|
|
|
|
|
|
|
|
(a) Value is zero.
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 7,154,909 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 6,499,136 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 533,489 | ||
Aggregate gross unrealized depreciation | (390,374 | ) | ||
|
| |||
Net unrealized appreciation | $ | 143,115 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 33,822,715 | ||
|
|
See Notes to Financial Statements.
72
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value (Cost $33,821,142) | $ | 33,965,830 | ||
Cash | 911,288 | |||
Dividends, interest and other receivables | 559,277 | |||
Receivable for Fund shares sold | 146,492 | |||
Receivable for securities sold | 129,805 | |||
Prepaid registration and filing fees | 25,100 | |||
Receivable from investment adviser | 1,368 | |||
|
| |||
Total assets | 35,739,160 | |||
|
| |||
LIABILITIES | ||||
Payable for securities purchased | 171,368 | |||
Dividends and distributions payable | 120,885 | |||
Payable for Fund shares redeemed | 11,040 | |||
Transfer agent fees payable | 3,991 | |||
Distribution fees payable – Class A | 524 | |||
Trustees’ fees payable | 339 | |||
Distribution fees payable – Class R | 126 | |||
Accrued expenses | 55,994 | |||
|
| |||
Total liabilities | 364,267 | |||
|
| |||
NET ASSETS | $ | 35,374,893 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 37,895,207 | ||
Total distributable earnings (loss) | (2,520,314 | ) | ||
|
| |||
Net assets | $ | 35,374,893 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $2,614,832 / 286,284 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.13 | ||
Maximum sales charge (4.50% of offering price) | 0.43 | |||
|
| |||
Maximum offering price per share | $ | 9.56 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $32,321,882 / 3,537,341 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.14 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $308,527 / 33,797 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.13 | ||
|
| |||
Class T** | ||||
Net asset value and redemption price per share, $129,652 / 14,192 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 9.14 | ||
Maximum sales charge (2.50% of offering price) | 0.23 | |||
|
| |||
Maximum offering price per share | $ | 9.37 | ||
|
|
** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Interest | $ | 1,053,886 | ||
Dividends | 5,913 | |||
|
| |||
Total income | 1,059,799 | |||
|
| |||
EXPENSES | ||||
Investment advisory fees | 100,138 | |||
Professional fees | 48,818 | |||
Administrative fees | 25,034 | |||
Registration and filing fees | 24,360 | |||
Transfer agent fees | 21,783 | |||
Printing and mailing expenses | 19,888 | |||
Custodian fees | 5,610 | |||
Distribution fees – Class A | 3,097 | |||
Trustees’ fees | 1,644 | |||
Distribution fees – Class R | 728 | |||
Distribution fees – Class T** | 157 | |||
Miscellaneous | 11,901 | |||
|
| |||
Gross expenses | 263,158 | |||
Less: Waiver from investment adviser | (125,172 | ) | ||
Waiver from distributor | (157 | ) | ||
Reimbursement from investment adviser | (8,814 | ) | ||
|
| |||
Net expenses | 129,015 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 930,784 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) |
| |||
Net realized gain (loss) on investments in securities | (100,019 | ) | ||
Net change in unrealized appreciation (depreciation) on investments in securities | 884,060 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 784,041 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,714,825 | ||
|
|
** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
73
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 930,784 | $ | 1,812,872 | ||||
Net realized gain (loss) | (100,019 | ) | (192,330 | ) | ||||
Net change in unrealized appreciation (depreciation) | 884,060 | (1,266,344 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 1,714,825 | 354,198 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (67,457 | ) | (112,357 | ) | ||||
Class I | (872,726 | ) | (1,686,328 | ) | ||||
Class R | (7,607 | ) | (12,914 | ) | ||||
Class T** | (3,592 | ) | (7,105 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (951,382 | ) | (1,818,704 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 8,442 and 211,921 shares, respectively ] | 76,907 | 1,960,500 | ||||||
Capital shares issued in reinvestment of dividends [ 6,922 and 11,169 shares, respectively ] | 62,118 | 101,781 | ||||||
Capital shares repurchased [ (8,964) and (19,204) shares, respectively ] | (80,406 | ) | (176,438 | ) | ||||
|
|
|
| |||||
Total Class A transactions | 58,619 | 1,885,843 | ||||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 175,384 and 230,876 shares, respectively ] | 1,580,355 | 2,137,440 | ||||||
Capital shares issued in reinvestment of dividends [ 13,115 and 21,171 shares, respectively ] | 117,837 | 193,221 | ||||||
Capital shares repurchased [ (51,563) and (84,844) shares, respectively ] | (459,772 | ) | (777,869 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 1,238,420 | 1,552,792 | ||||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 1,573 and 9,078 shares, respectively ] | 14,068 | 82,888 | ||||||
Capital shares issued in reinvestment of dividends [ 293 and 333 shares, respectively ] | 2,627 | 3,029 | ||||||
Capital shares repurchased [ (203) and (641) shares, respectively ] | (1,803 | ) | (5,830 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 14,892 | 80,087 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 1,311,931 | 3,518,722 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 2,075,374 | 2,054,216 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 33,299,519 | 31,245,303 | ||||||
|
|
|
| |||||
End of period | $ | 35,374,893 | $ | 33,299,519 | ||||
|
|
|
|
| ||||
** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
|
See Notes to Financial Statements.
74
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.24 | 0.48 | 0.49 | 0.61 | 0.59 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (0.40 | ) | 0.32 | (0.09 | ) | (0.84 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.44 | 0.08 | 0.81 | 0.52 | (0.25 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.24 | ) | (0.48 | ) | (0.48 | ) | (0.65 | ) | (0.60 | ) | ||||||||||
Return of capital | — | — | (0.01 | ) | (0.01 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.24 | ) | (0.48 | ) | (0.49 | ) | (0.66 | ) | (0.60 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.13 | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 5.02 | % | 0.86 | % | 9.20 | % | 6.17 | % | (2.62 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 2,615 | $ | 2,500 | $ | 709 | $ | 355 | $ | 8,372 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.00 | % | 1.04 | % | 1.06 | % | 1.06 | % | 1.05 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.80 | % | 1.77 | % | 1.84 | % | 1.81 | % | 2.45 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 5.35 | % | 5.20 | % | 5.26 | % | 7.06 | % | 6.39 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 4.55 | % | 4.47 | % | 4.48 | % | 6.31 | % | 4.99 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 20 | % | 45 | % | 54 | % | 79 | % | 57 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 8.94 | $ | 9.34 | $ | 9.01 | $ | 9.15 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.25 | 0.50 | 0.52 | 0.58 | 0.62 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (0.40 | ) | 0.33 | (0.04 | ) | (0.85 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.45 | 0.10 | 0.85 | 0.54 | (0.23 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.25 | ) | (0.50 | ) | (0.51 | ) | (0.67 | ) | (0.62 | ) | ||||||||||
Return of capital | — | — | (0.01 | ) | (0.01 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.25 | ) | (0.50 | ) | (0.52 | ) | (0.68 | ) | (0.62 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.14 | $ | 8.94 | $ | 9.34 | $ | 9.01 | $ | 9.15 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 5.15 | % | 1.09 | % | 9.58 | % | 6.44 | % | (2.39 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 32,322 | $ | 30,386 | $ | 30,185 | $ | 27,710 | $ | 8,395 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.75 | % | 0.80 | % | 0.82 | % | 0.84 | % | 0.80 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.55 | % | 1.52 | % | 1.58 | % | 1.53 | % | 2.20 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 5.60 | % | 5.47 | % | 5.55 | % | 6.62 | % | 6.64 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 4.80 | % | 4.74 | % | 4.79 | % | 5.94 | % | 5.24 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 20 | % | 45 | % | 54 | % | 79 | % | 57 | % |
See Notes to Financial Statements.
75
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.23 | 0.45 | 0.47 | 0.59 | 0.57 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.20 | (0.39 | ) | 0.32 | (0.10 | ) | (0.85 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.43 | 0.06 | 0.79 | 0.49 | (0.28 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.23 | ) | (0.46 | ) | (0.46 | ) | (0.62 | ) | (0.57 | ) | ||||||||||
Return of capital | — | — | (0.01 | ) | (0.01 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.23 | ) | (0.46 | ) | (0.47 | ) | (0.63 | ) | (0.57 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.13 | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 4.90 | % | 0.63 | % | 8.95 | % | 5.91 | % | (2.86 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 309 | $ | 287 | $ | 218 | $ | 195 | $ | 8,339 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.25 | % | 1.30 | % | 1.32 | % | 1.31 | % | 1.30 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.05 | % | 2.02 | % | 2.08 | % | 2.06 | % | 2.70 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 5.10 | % | 4.96 | % | 5.05 | % | 6.83 | % | 6.14 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 4.30 | % | 4.23 | % | 4.28 | % | 6.08 | % | 4.74 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 20 | % | 45 | % | 54 | % | 79 | % | 57 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class T** | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.25 | 0.50 | 0.52 | 0.63 | 0.62 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.21 | (0.40 | ) | 0.32 | (0.09 | ) | (0.85 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.46 | 0.10 | 0.84 | 0.54 | (0.23 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.25 | ) | (0.50 | ) | (0.51 | ) | (0.67 | ) | (0.62 | ) | ||||||||||
Return of capital | — | — | (0.01 | ) | (0.01 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.25 | ) | (0.50 | ) | (0.52 | ) | (0.68 | ) | (0.62 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 9.14 | $ | 8.93 | $ | 9.33 | $ | 9.01 | $ | 9.15 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 5.27 | % | 1.09 | % | 9.46 | % | 6.44 | % | (2.39 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 130 | $ | 127 | $ | 132 | $ | 128 | $ | 2,783 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.75 | % | 0.80 | % | 0.82 | % | 0.81 | % | 0.80 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 1.80 | % | 1.77 | % | 2.08 | % | 2.56 | % | 3.20 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 5.60 | % | 5.46 | % | 5.56 | % | 7.30 | % | 6.64 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 4.55 | % | 4.49 | % | 4.30 | % | 5.55 | % | 4.24 | %(l) | ||||||||||
Portfolio turnover rate (z)^ | 20 | % | 45 | % | 54 | % | 79 | % | 57 | % |
See Notes to Financial Statements.
76
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
* | Commencement of Operations. |
** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
77
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 9.02 | % | 7.72 | % | 8.90 | % | ||||||
MSCI ACWI Minimum Volatility (Net) Index | 8.66 | 9.97 | 9.77 | |||||||||
MSCI ACWI (Net) Index | 9.37 | 5.06 | 10.04 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 5.28%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, global low-volatility equities provided returns slightly lower than those of their broad market counterparts.
Fund Highlights
The Fund’s Class I shares returned 9.02% for the six-month period ended April 30, 2019. The Fund’s benchmark, the MSCI All Country World Index (ACWI), rose 9.37%, while the MSCI All Country World (ACWI) Minimum Volatility Index returned 8.66% over the same time period. The Fund underperformed the MSCI ACWI by 35 basis points (a basis point is one-hundredth of a percentage point), and outperformed the MSCI ACWI Minimum Volatility by a similar margin for the period. The emerging markets low volatility sector was the best-performing asset class in the Fund.
What helped performance during the six-month period ended April 30, 2019:
• | Relative to the MSCI ACWI Minimum Volatility Index, better stock selection was the main contributor to performance. On a country basis, an underweighting to, and stock selection within, Japan was the top contributor to outperformance. On a sector basis, an underweighting to health care and communication services were the top contributors to outperformance. |
• | Relative to MSCI ACWI Index, stock selection within domestic equities was the top contributor to performance. On a sector basis, underweighting energy and health care while overweighting utilities were the top contributors to outperformance. |
What hurt performance during the six-month period ended April 30, 2019:
• | While low volatility was beneficial during the market correction in the fourth quarter of 2018, it underperformed the market-cap weighted benchmark for the six-month period as equities rebounded sharply in the first quarter of 2019. |
• | An underweight to technology hurt performance relative to both the MSCI ACWI Index and MSCI ACWI Minimum Volatility. |
• | Relative to the MSCI ACWI Index, stock selection within communication services was the top detractor from performance. On a regional basis, stock selection within emerging markets detracted the most, specifically China. |
Outlook
The Fund maintains a neutral outlook on the markets. It is designed to offer lower-volatility returns than traditional equity benchmarks, with the potential to smooth investment returns over full market cycles.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 100.0 | % |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Edge MSCI Min Vol Global ETF | 27.8 | % | ||
iShares Edge MSCI Min Vol EAFE ETF | 12.9 | |||
Invesco S&P International Developed Low Volatility ETF | 12.5 | |||
Invesco S&P 500 Low Volatility ETF | 6.6 | |||
Invesco S&P MidCap Low Volatility ETF | 6.5 | |||
Invesco S&P 500 High Dividend Low Volatility ETF | 6.3 | |||
iShares Edge MSCI Min Vol USA ETF | 6.1 | |||
Invesco S&P Emerging Markets Low Volatility ETF | 6.0 | |||
iShares Edge MSCI Min Vol Emerging Markets ETF | 5.8 | |||
SPDR SSGA US Large Cap Low Volatility Index ETF | 3.3 | |||
Holdings are subject to change without notice. |
78
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,090.20 | $2.22 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.67 | 2.14 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.43%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
|
79
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (99.4%) | ||||||||
Invesco S&P 500 High Dividend Low Volatility ETF | 4,830 | $ | 205,999 | |||||
Invesco S&P 500 Low Volatility ETF | 4,020 | 216,155 | ||||||
Invesco S&P Emerging Markets Low Volatility ETF | 8,160 | 197,798 | ||||||
Invesco S&P International Developed Low Volatility ETF | 12,430 | 411,433 | ||||||
Invesco S&P MidCap Low Volatility ETF | 4,150 | 212,563 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 2,080 | 100,589 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 5,890 | 424,257 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 3,180 | 190,530 | ||||||
iShares Edge MSCI Min Vol Global ETF | 10,110 | 912,529 | ||||||
iShares Edge MSCI Min Vol USA ETF | 3,320 | 199,466 | ||||||
SPDR SSGA US Large Cap Low Volatility Index ETF | 1,040 | 108,514 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 1,120 | 105,400 | ||||||
|
| |||||||
Total Investments in Securities (99.4%) | 3,285,233 | |||||||
Other Assets Less Liabilities (0.6%) | 19,174 | |||||||
|
| |||||||
Net Assets (100%) | $ | 3,304,407 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 3,285,233 | $ | — | $ | — | $ | 3,285,233 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,285,233 | $ | — | $ | — | $ | 3,285,233 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,285,233 | $ | — | $ | — | $ | 3,285,233 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 231,889 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 83,640 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 368,222 | ||
Aggregate gross unrealized depreciation | — | |||
|
| |||
Net unrealized appreciation | $ | 368,222 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 2,917,011 | ||
|
|
See Notes to Financial Statements.
80
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 3,285,233 | ||
Cash | 24,374 | |||
Prepaid registration and filing fees | 14,344 | |||
Receivable from investment adviser | 7,009 | |||
Dividends, interest and other receivables | 1 | |||
Other assets | 8 | |||
|
| |||
Total assets | 3,330,969 | |||
|
| |||
LIABILITIES | ||||
Accrued professional fees | 23,118 | |||
Transfer agent fees payable | 914 | |||
Trustees’ fees payable | 83 | |||
Accrued expenses | 2,447 | |||
|
| |||
Total liabilities | 26,562 | |||
|
| |||
NET ASSETS | $ | 3,304,407 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 2,930,365 | ||
Total distributable earnings (loss) | 374,042 | |||
|
| |||
Net assets | $ | 3,304,407 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $3,304,407 / 289,026 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.43 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 38,707 | ||
Interest | 133 | |||
|
| |||
Total income | 38,840 | |||
|
| |||
EXPENSES | ||||
Professional fees | 20,702 | |||
Registration and filing fees | 10,837 | |||
Printing and mailing expenses | 10,020 | |||
Investment advisory fees | 7,381 | |||
Transfer agent fees | 4,633 | |||
Administrative fees | 2,214 | |||
Custodian fees | 1,488 | |||
Trustees’ fees | 144 | |||
Miscellaneous | 2,046 | |||
|
| |||
Gross expenses | 59,465 | |||
Less: Waiver from investment adviser | (9,595 | ) | ||
Reimbursement from investment adviser | (43,556 | ) | ||
|
| |||
Net expenses | 6,314 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 32,526 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 7,806 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 218,386 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 226,192 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 258,718 | ||
|
|
See Notes to Financial Statements.
81
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | ||||||||
Net investment income (loss) | $ | 32,526 | $ | 65,544 | ||||
Net realized gain (loss) | 7,806 | 16,354 | ||||||
Net change in unrealized appreciation (depreciation) | 218,386 | (56,925 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 258,718 | 24,973 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (88,452 | ) | (59,429 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 20,590 and 13,323 shares, respectively ] | 231,820 | 146,974 | ||||||
Capital shares issued in reinvestment of dividends [ 560 and 223 shares, respectively ] | 5,953 | 2,429 | ||||||
Capital shares repurchased [ (107) and (4,888) shares, respectively ] | (1,138 | ) | (53,199 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 236,635 | 96,204 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 406,901 | 61,748 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 2,897,506 | 2,835,758 | ||||||
|
|
|
| |||||
End of period | $ | 3,304,407 | $ | 2,897,506 | ||||
|
|
|
|
See Notes to Financial Statements.
82
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.81 | $ | 10.94 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.12 | 0.25 | 0.12 | |||||||||
Net realized and unrealized gain (loss) | 0.83 | (0.16 | ) | 0.82 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.95 | 0.09 | 0.94 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.27 | ) | (0.22 | ) | — | |||||||
Distributions from net realized gains | (0.06 | ) | — | # | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.33 | ) | (0.22 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.43 | $ | 10.81 | $ | 10.94 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 9.02 | % | 0.88 | % | 9.40 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: |
| |||||||||||
Net assets, end of period (000’s) | $ | 3,304 | $ | 2,898 | $ | 2,836 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.43 | %(j) | 0.43 | %(j) | 0.43 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 4.03 | % | 5.15 | % | 4.87 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 2.20 | % | 2.24 | % | 1.66 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (1.40 | )% | (2.49 | )% | (2.78 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 3 | % | 4 | % | 0 | %‡ |
* | Commencement of Operations. |
‡ | Less than 0.5%. |
# | Per share amount is less than $0.005. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
83
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||||
Fund – Class A Shares* | without Sales Charge | 2.77 | % | 0.57 | % | 1.16 | % | |||||||||
with Sales Charge (a) | -2.85 | -5.00 | -0.32 | |||||||||||||
Fund – Class I Shares* | 2.84 | 0.73 | 1.39 | |||||||||||||
Fund – Class R Shares* | 2.63 | 0.31 | 0.89 | |||||||||||||
ICE BofAML US3-Month Treasury Bill Index | 1.18 | 2.18 | 1.02 | |||||||||||||
* Date of inception 7/6/15.
(a) A 5.50% front-end sales charge was deducted.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I and R shares were 2.41%, 2.16% and 2.64%, respectively. The net expense ratios for Class A, I and R shares were 1.65%, 1.40% and 1.90%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, multi-alternative funds provided returns lower than those of their broad market counterparts.
Fund Highlights
The Fund’s Class I shares returned 2.84% for the six-month period ended April 30, 2019. The Fund’s benchmark, the ICE BofAML US3-Month Treasury Bill Index, rose 1.18%.
What helped performance during the six-month period ended April 30, 2019:
• | Global real estate was the top contributor to performance, up more than 12% for the period. |
• | Convertible securities performance, also up in double digits, was boosted by the strong equity market rebound in the first quarter of 2019. |
• | Exposure to precious and base metals added to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Long/Short equity holdings were the top detractors from performance, with the Fund’s value-style tilt continuing to detract, because growth-style equities outperformed their value counterparts by a substantial margin. |
• | The allocation to a merger-arbitrage strategy experienced negative performance for the period, driven by lower levels of deal activity. |
• | Commodities detracted from performance as a result of negative performance from agricultural commodities, driven by trade tensions. |
Outlook
The Fund maintains a neutral outlook on the markets. We select complementary alternative strategies from a broad universe of non-traditional investments to help reduce the role of overall market direction in determining return.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Alternatives | 45.4 | % | ||
Fixed Income | 18.3 | |||
Commodity | 16.5 | |||
Equity | 10.6 | |||
Specialty | 9.2 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
JPMorgan Diversified Alternatives ETF | 9.3 | % | ||
SPDR Bloomberg Barclays Convertible Securities ETF | 9.3 | |||
WisdomTree Managed Futures Strategy Fund | 9.2 | |||
ProShares Hedge Replication ETF | 9.2 | |||
Invesco DB G10 Currency Harvest Fund | 9.2 | |||
IQ Merger Arbitrage ETF | 8.9 | |||
ProShares RAFI Long/Short | 8.7 | |||
Invesco DB Gold Fund | 6.9 | |||
Invesco DB Commodity Index Tracking Fund | 4.7 | |||
iShares Core US REIT ETF | 4.6 | |||
Holdings are subject to change without notice. |
84
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class A |
| |||||||||||
Actual | $1,000.00 | $1,027.70 | $5.57 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.30 | 5.55 | |||||||||
Class I | ||||||||||||
Actual | 1,000.00 | 1,028.40 | �� | 4.32 | ||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,020.54 | 4.30 | |||||||||
Class R | ||||||||||||
Actual | 1,000.00 | 1,026.30 | 6.83 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,018.06 | 6.80 | |||||||||
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.11%, 0.86% and 1.36%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
|
85
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Alternatives (46.2%) | ||||||||
IQ Merger Arbitrage ETF* | 53,350 | $ | 1,678,924 | |||||
JPMorgan Diversified Alternatives ETF* | 70,820 | 1,766,959 | ||||||
ProShares Hedge Replication ETF | 38,360 | 1,748,449 | ||||||
ProShares RAFI Long/Short | 47,080 | 1,651,576 | ||||||
WisdomTree Managed Futures Strategy Fund | 44,340 | 1,749,213 | ||||||
|
| |||||||
Total Alternatives | 8,595,121 | |||||||
|
| |||||||
Commodity (16.8%) | ||||||||
Invesco DB Base Metals Fund | 17,600 | 291,280 | ||||||
Invesco DB Commodity Index Tracking Fund | 55,520 | 893,317 | ||||||
Invesco DB Gold Fund | 33,250 | 1,308,554 | ||||||
Invesco DB Precious Metals Fund | 520 | 18,673 | ||||||
Invesco DB Silver Fund | 4,020 | 88,581 | ||||||
iShares Commodities Select Strategy ETF | 16,030 | 531,715 | ||||||
|
| |||||||
Total Commodity | 3,132,120 | |||||||
|
| |||||||
Equity (10.8%) | ||||||||
iShares Core US REIT ETF | 16,850 | 869,291 | ||||||
iShares MSCI Global Agriculture Producers ETF | 9,870 | 284,256 | ||||||
Vanguard Global ex-U.S. Real Estate ETF | 14,720 | 861,120 | ||||||
|
| |||||||
Total Equity | 2,014,667 | |||||||
|
| |||||||
Fixed Income (18.7%) | ||||||||
iShares TIPS Bond ETF | 7,470 | 846,501 | ||||||
SPDR Bloomberg Barclays Convertible Securities ETF | 32,870 | 1,758,545 | ||||||
Vanguard Short-Term Inflation-Protected Securities ETF | 17,710 | 866,196 | ||||||
|
| |||||||
Total Fixed Income | 3,471,242 | |||||||
|
| |||||||
Specialty (9.4%) | ||||||||
Invesco DB G10 Currency Harvest Fund | 70,890 | 1,745,666 | ||||||
|
| |||||||
Total Investments in Securities (101.9%) | 18,958,816 | |||||||
Other Assets Less Liabilities (-1.9%) | (361,818 | ) | ||||||
|
| |||||||
Net Assets (100%) | $ | 18,596,998 | ||||||
|
|
* | Non-income producing. |
Investments in companies which were affiliates for the six months ended April 30, 2019, were as follows:
Security Description | Shares at April 30, 2019 | Market Value October 31, 2018 ($) | Purchases at Cost ($) | Proceeds from Sales ($) | Net Realized Gain (Loss) ($) | Change in Unrealized Appreciation/ (Depreciation) ($) | Market Value April 30, 2019 ($) | Dividend/ Interest Income ($) | Capital Gain Distributions ($) | |||||||||||||||||||||||||||
Invesco DB G10 Currency Harvest Fund** | 70,890 | 1,772,352 | — | (36,591 | ) | 1,449 | 8,456 | 1,745,666 | 19,549 | — | ||||||||||||||||||||||||||
ProShares RAFI Long/Short** | 47,080 | 1,713,241 | — | — | — | (61,665 | ) | 1,651,576 | 16,680 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 3,485,593 | — | (36,591 | ) | 1,449 | (53,209 | ) | 3,397,242 | 36,229 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
** | Not affiliated at April 30, 2019. |
See Notes to Financial Statements.
86
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 assumptions in | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 18,958,816 | $ | — | $ | — | $ | 18,958,816 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 18,958,816 | $ | — | $ | — | $ | 18,958,816 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 18,958,816 | $ | — | $ | — | $ | 18,958,816 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 432,647 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 825,026 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 651,481 | ||
Aggregate gross unrealized depreciation | (446,641 | ) | ||
|
| |||
Net unrealized appreciation | $ | 204,840 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 18,753,976 | ||
|
|
See Notes to Financial Statements.
87
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value | $ | 18,958,816 | ||
Cash | 92,867 | |||
Prepaid registration and filing fees | 13,661 | |||
Receivable for Fund shares sold | 8,965 | |||
Receivable from investment adviser | 3,485 | |||
|
| |||
Total assets | 19,077,794 | |||
|
| |||
LIABILITIES | ||||
Payable for Fund shares redeemed | 441,146 | |||
Transfer agent fees payable | 3,804 | |||
Trustees’ fees payable | 383 | |||
Distribution fees payable – Class A | 160 | |||
Distribution fees payable – Class R | 45 | |||
Accrued expenses | 35,258 | |||
|
| |||
Total liabilities | 480,796 | |||
|
| |||
NET ASSETS | $ | 18,596,998 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 18,199,241 | ||
Total distributable earnings (loss) | 397,757 | |||
|
| |||
Net assets | $ | 18,596,998 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $760,786 / 74,587 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.20 | ||
Maximum sales charge (5.50% of offering price) | 0.59 | |||
|
| |||
Maximum offering price per share | $ | 10.79 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $17,726,265 / 1,736,992 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.21 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $109,947 / 10,819 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 10.16 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends ($36,229 of dividend income received from affiliates) | $ | 306,169 | ||
Interest | 1,003 | |||
|
| |||
Total income | 307,172 | |||
|
| |||
EXPENSES | ||||
Investment advisory fees | 46,712 | |||
Professional fees | 28,609 | |||
Transfer agent fees | 18,192 | |||
Registration and filing fees | 17,130 | |||
Printing and mailing expenses | 15,183 | |||
Administrative fees | 14,014 | |||
Custodian fees | 2,083 | |||
Distribution fees – Class A | 957 | |||
Trustees’ fees | 929 | |||
Distribution fees – Class R | 265 | |||
Miscellaneous | 13,940 | |||
|
| |||
Gross expenses | 158,014 | |||
Less: Waiver from investment adviser | (60,726 | ) | ||
Reimbursement from investment adviser | (15,846 | ) | ||
|
| |||
Net expenses | 81,442 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 225,730 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities ($1,449 of realized gain (loss) from affiliates) | 17,259 | |||
Net change in unrealized appreciation (depreciation) on investments in securities ($92,526 of change in unrealized appreciation (depreciation) from affiliates) | 291,787 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 309,046 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 534,776 | ||
|
|
See Notes to Financial Statements.
88
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 225,730 | $ | 118,683 | ||||
Net realized gain (loss) | 17,259 | (452 | ) | |||||
Net change in unrealized appreciation (depreciation) | 291,787 | (379,307 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 534,776 | (261,076 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (7,113 | ) | (2,431 | ) | ||||
Class I | (217,148 | ) | (102,929 | ) | ||||
Class R | (740 | ) | (2,024 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (225,001 | ) | (107,384 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 3,683 and 24,928 shares, respectively ] | 37,219 | 254,309 | ||||||
Capital shares issued in reinvestment of dividends [ 623 and 201 shares, respectively ] | 6,163 | 2,048 | ||||||
Capital shares repurchased [ (12,275) and (7,078) shares, respectively ] | (123,451 | ) | (72,391 | ) | ||||
|
|
|
| |||||
Total Class A transactions | (80,069 | ) | 183,966 | |||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 107,332 and 320,848 shares, respectively ] | 1,079,313 | 3,286,660 | ||||||
Capital shares issued in reinvestment of dividends [ 9,966 and 4,035 shares, respectively ] | 98,568 | 40,993 | ||||||
Capital shares repurchased [ (188,733) and (115,451) shares, respectively ] | (1,896,517 | ) | (1,179,390 | ) | ||||
|
|
|
| |||||
Total Class I transactions | (718,636 | ) | 2,148,263 | |||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 255 and 44,922 shares, respectively ] | 2,547 | 456,502 | ||||||
Capital shares issued in reinvestment of dividends [ 4 and 162 shares, respectively ] | 40 | 1,641 | ||||||
Capital shares repurchased [ (3) and (44,791) shares, respectively ] | (34 | ) | (460,156 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 2,553 | (2,013 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | (796,152 | ) | 2,330,216 | |||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (486,377 | ) | 1,961,756 | |||||
NET ASSETS: | ||||||||
Beginning of period | 19,083,375 | 17,121,619 | ||||||
|
|
|
| |||||
End of period | $ | 18,596,998 | $ | 19,083,375 | ||||
|
|
|
|
See Notes to Financial Statements.
89
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 10.02 | $ | 10.21 | $ | 9.97 | $ | 9.70 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e)(x) | 0.11 | 0.04 | 0.02 | 0.01 | (0.01 | ) | ||||||||||||||
Net realized and unrealized gain (loss) | 0.16 | (0.19 | ) | 0.26 | 0.33 | (0.29 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.27 | (0.15 | ) | 0.28 | 0.34 | (0.30 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.04 | ) | — | (0.01 | ) | (0.05 | ) | — | ||||||||||||
Distributions from net realized gains | (0.05 | ) | (0.04 | ) | (0.03 | ) | — | — | ||||||||||||
Return of capital | — | — | — | (0.02 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.09 | ) | (0.04 | ) | (0.04 | ) | (0.07 | ) | — | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 10.20 | $ | 10.02 | $ | 10.21 | $ | 9.97 | $ | 9.70 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 2.77 | % | (1.49 | )% | 2.78 | % | 3.53 | % | (3.00 | )% | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 761 | $ | 827 | $ | 659 | $ | 410 | $ | 112 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.11 | %**(j) | 1.03 | %(k) | 1.00 | %(k) | 0.98 | %(k) | 0.96 | %(k) | ||||||||||
Before waivers and reimbursements (a)(f) | 1.93 | % | 1.79 | % | 2.08 | % | 2.62 | % | 2.26 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f)(x) | 2.15 | % | 0.39 | % | 0.20 | % | 0.10 | % | (0.25 | )%(l) | ||||||||||
Before waivers and reimbursements (a)(f)(x) | 1.33 | % | (0.37 | )% | (0.88 | )% | (1.55 | )% | (1.55 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 2 | % | 5 | % | 13 | % | 2 | % | 0 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 10.04 | $ | 10.23 | $ | 9.99 | $ | 9.71 | $ | 10.00 | ||||||||||
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| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e)(x) | 0.12 | 0.07 | 0.05 | 0.05 | — | # | ||||||||||||||
Net realized and unrealized gain (loss) | 0.17 | (0.20 | ) | 0.25 | 0.31 | (0.29 | ) | |||||||||||||
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|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 0.29 | (0.13 | ) | 0.30 | 0.36 | (0.29 | ) | |||||||||||||
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|
|
| |||||||||||
Less distributions: |
| |||||||||||||||||||
Dividends from net investment income | (0.07 | ) | (0.02 | ) | (0.03 | ) | (0.05 | ) | — | |||||||||||
Distributions from net realized gains | (0.05 | ) | (0.04 | ) | (0.03 | ) | — | — | ||||||||||||
Return of capital | — | — | — | (0.03 | ) | — | ||||||||||||||
|
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|
| |||||||||||
Total dividends and distributions | (0.12 | ) | (0.06 | ) | (0.06 | ) | (0.08 | ) | — | |||||||||||
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| |||||||||||
Net asset value, end of period | $ | 10.21 | $ | 10.04 | $ | 10.23 | $ | 9.99 | $ | 9.71 | ||||||||||
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|
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| |||||||||||
Total return (b) | 2.84 | % | (1.25 | )% | 3.04 | % | 3.76 | % | (2.90 | )% | ||||||||||
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| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 17,726 | $ | 18,151 | $ | 16,358 | $ | 12,233 | $ | 9,591 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.86 | %**(j) | 0.78 | %(k) | 0.75 | %(k) | 0.73 | %(k) | 0.72 | %(k) | ||||||||||
Before waivers and reimbursements (a)(f) | 1.68 | % | 1.54 | % | 1.82 | % | 2.24 | % | 1.97 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f)(x) | 2.43 | % | 0.66 | % | 0.45 | % | 0.50 | % | (0.03 | )%(l) | ||||||||||
Before waivers and reimbursements (a)(f)(x) | 1.61 | % | (0.11 | )% | (0.62 | )% | (1.02 | )% | (1.29 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 2 | % | 5 | % | 13 | % | 2 | % | 0 | % |
See Notes to Financial Statements.
90
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | July 6, 2015* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 9.97 | $ | 10.19 | $ | 9.95 | $ | 9.69 | $ | 10.00 | ||||||||||
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|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e)(x) | 0.09 | 0.03 | — | # | — | # | (0.02 | ) | ||||||||||||
Net realized and unrealized gain (loss) | 0.17 | (0.21 | ) | 0.27 | 0.32 | (0.29 | ) | |||||||||||||
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|
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| |||||||||||
Total from investment operations | 0.26 | (0.18 | ) | 0.27 | 0.32 | (0.31 | ) | |||||||||||||
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|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | — | — | (0.04 | ) | — | |||||||||||||
Distributions from net realized gains | (0.05 | ) | (0.04 | ) | (0.03 | ) | — | — | ||||||||||||
Return of capital | — | — | — | (0.02 | ) | — | ||||||||||||||
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|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.07 | ) | (0.04 | ) | (0.03 | ) | (0.06 | ) | — | |||||||||||
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| |||||||||||
Net asset value, end of period | $ | 10.16 | $ | 9.97 | $ | 10.19 | $ | 9.95 | $ | 9.69 | ||||||||||
|
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|
|
|
|
| |||||||||||
Total return (b) | 2.63 | % | (1.79 | )% | 2.53 | % | 3.30 | % | (3.10 | )% | ||||||||||
|
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|
| |||||||||||
Ratios/Supplemental Data: |
| |||||||||||||||||||
Net assets, end of period (000’s) | $ | 110 | $ | 105 | $ | 105 | $ | 101 | $ | 97 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.36 | %**(j) | 1.26 | %(k) | 1.25 | %(k) | 1.22 | %(k) | 1.21 | %(k) | ||||||||||
Before waivers and reimbursements (a)(f) | 2.18 | % | 2.02 | % | 2.32 | % | 2.73 | % | 2.47 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.91 | % | 0.27 | % | (0.02 | )% | 0.02 | % | (0.53 | )%(l) | ||||||||||
Before waivers and reimbursements (a)(f)(x) | 1.09 | % | (0.49 | )% | (1.08 | )% | (1.50 | )% | (1.78 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 2 | % | 5 | % | 13 | % | 2 | % | 0 | % |
* | Commencement of Operations. |
** | Includes Tax Expenses of 0.08%. |
# | Per share amount is less than $0.005. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.73% for Class A, 1.48% for Class I and 1.98% for Class R. |
(k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.65% for Class A, 1.40% for Class I and 1.90% for Class R. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
91
1290 RETIREMENT 2020 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 7.51 | % | 6.90 | % | 6.60 | % | ||||||
S&P Target Date 2020 Index | 6.73 | 5.54 | 6.37 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized.
|
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 3.98%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 7.51% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2020 Index, rose 6.73%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
Equity | 54.5 | % | ||
Fixed Income | 45.5 |
Top 10 Holdings(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
iShares Core U.S. Aggregate Bond ETF | 28.2 | % | ||
iShares Core S&P Total US Stock Market ETF | 18.2 | |||
iShares TIPS Bond ETF | 6.8 | |||
iShares Core MSCI EAFE ETF | 6.3 | |||
iShares Edge MSCI Min Vol USA ETF | 6.1 | |||
Invesco S&P 500 Low Volatility ETF | 5.9 | |||
Vanguard Short-Term Bond ETF | 4.1 | |||
Vanguard Total International Bond ETF | 3.3 | |||
Invesco S&P International Developed Low Volatility ETF | 3.3 | |||
Invesco S&P MidCap Low Volatility ETF | 3.2 | |||
Holdings are subject to change without notice. |
|
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the
92
1290 RETIREMENT 2020 FUND (Unaudited)
expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I |
| |||||||||||
Actual | $ | 1,000.00 | $ | 1,075.10 | $ | 2.78 | ||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.11 | 2.71 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
|
93
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (53.2%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 10,250 | $ | 551,143 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 3,330 | 80,719 | ||||||
Invesco S&P International Developed Low Volatility ETF | 9,160 | 303,196 | ||||||
Invesco S&P MidCap Low Volatility ETF | 5,820 | 298,101 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 2,920 | 141,211 | ||||||
iShares Core MSCI EAFE ETF | 9,420 | 589,315 | ||||||
iShares Core MSCI Emerging Markets ETF | 2,890 | 152,708 | ||||||
iShares Core S&P Total US Stock Market ETF | 25,350 | 1,695,915 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 4,000 | 288,120 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 1,360 | 81,484 | ||||||
iShares Edge MSCI Min Vol USA ETF | 9,490 | 570,159 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 1,480 | 139,279 | ||||||
|
| |||||||
Total Equity | 4,891,350 | |||||||
|
| |||||||
Fixed Income (46.0%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 24,140 | 2,621,363 | ||||||
iShares TIPS Bond ETF | 5,600 | 634,592 | ||||||
SPDR Bloomberg Barclays High Yield Bond ETF | 8,120 | 294,512 | ||||||
Vanguard Short-Term Bond ETF | 4,750 | 377,910 | ||||||
Vanguard Total International Bond ETF | 5,480 | 305,839 | ||||||
|
| |||||||
Total Fixed Income | 4,234,216 | |||||||
|
| |||||||
Total Exchange Traded Funds (99.2%) | 9,125,566 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT: | ||||||||
Investment Company (1.9%) | ||||||||
JPMorgan Prime Money Market Fund, IM Shares | 170,829 | 170,880 | ||||||
|
| |||||||
Total Short-Term Investment (1.9%) | 170,880 | |||||||
|
| |||||||
Total Investments in Securities (101.1%) | 9,296,446 | |||||||
Other Assets Less Liabilities (-1.1%) | (103,993 | ) | ||||||
|
| |||||||
Net Assets (100%) | $ | 9,192,453 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 9,125,566 | $ | — | $ | — | $ | 9,125,566 | ||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 170,880 | — | — | 170,880 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 9,296,446 | $ | — | $ | — | $ | 9,296,446 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 9,296,446 | $ | — | $ | — | $ | 9,296,446 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
See Notes to Financial Statements.
94
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 1,649,553 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 670,950 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 425,445 | ||
Aggregate gross unrealized depreciation | (2,902 | ) | ||
|
| |||
Net unrealized appreciation | $ | 422,543 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 8,873,903 | ||
|
|
See Notes to Financial Statements.
95
1290 FUNDS
1290 RETIREMENT 2020 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 9,296,446 | ||
Cash | 75,000 | |||
Prepaid registration and filing fees | 14,765 | |||
Receivable from investment adviser | 5,661 | |||
Receivable for Fund shares sold | 200 | |||
Dividends, interest and other receivables | 36 | |||
Other assets | 1 | |||
|
| |||
Total assets | 9,392,109 | |||
|
| |||
LIABILITIES | ||||
Payable for securities purchased | 163,181 | |||
Payable for Fund shares redeemed | 9,000 | |||
Transfer agent fees payable | 575 | |||
Trustees’ fees payable | 158 | |||
Accrued expenses | 26,742 | |||
|
| |||
Total liabilities | 199,656 | |||
|
| |||
NET ASSETS | $ | 9,192,453 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 8,693,090 | ||
Total distributable earnings (loss) | 499,363 | |||
|
| |||
Net assets | $ | 9,192,453 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $9,192,453 / 830,614 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.07 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 103,583 | ||
Interest | 402 | |||
|
| |||
Total income | 103,985 | |||
|
| |||
EXPENSES | ||||
Professional fees | 23,154 | |||
Investment advisory fees | 20,458 | |||
Printing and mailing expenses | 11,644 | |||
Registration and filing fees | 11,090 | |||
Administrative fees | 6,137 | |||
Transfer agent fees | 4,067 | |||
Custodian fees | 2,207 | |||
Trustees’ fees | 388 | |||
Miscellaneous | 3,005 | |||
|
| |||
Gross expenses | 82,150 | |||
Less: Waiver from investment adviser | (26,595 | ) | ||
Reimbursement from investment adviser | (33,411 | ) | ||
|
| |||
Net expenses | 22,144 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 81,841 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 42,784 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 484,990 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 527,774 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 609,615 | ||
|
|
See Notes to Financial Statements.
96
1290 FUNDS
1290 RETIREMENT 2020 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 81,841 | $ | 76,935 | ||||
Net realized gain (loss) | 42,784 | 29,108 | ||||||
Net change in unrealized appreciation (depreciation) | 484,990 | (190,498 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 609,615 | (84,455 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (142,418 | ) | (49,502 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 156,708 and 511,333 shares, respectively ] | 1,669,031 | 5,469,555 | ||||||
Capital shares issued in reinvestment of dividends [ 9,101 and 0# shares, respectively ] | 93,918 | 2 | ||||||
Capital shares repurchased [ (65,134) and (31,404) shares, respectively ] | (696,410 | ) | (342,217 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 1,066,539 | 5,127,340 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 1,533,736 | 4,993,383 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 7,658,717 | 2,665,334 | ||||||
|
|
|
| |||||
End of period | $ | 9,192,453 | $ | 7,658,717 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
97
1290 FUNDS
1290 RETIREMENT 2020 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.49 | $ | 10.66 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.11 | 0.20 | 0.12 | |||||||||
Net realized and unrealized gain (loss) | 0.67 | (0.17 | ) | 0.54 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.78 | 0.03 | 0.66 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.15 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.05 | ) | (0.02 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.20 | ) | (0.20 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.07 | $ | 10.49 | $ | 10.66 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 7.51 | % | 0.24 | % | 6.60 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 9,192 | $ | 7,659 | $ | 2,665 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.54 | %(j) | 0.53 | %(j) | 0.53 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 2.01 | % | 3.93 | % | 5.32 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 2.00 | % | 1.88 | % | 1.66 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | 0.53 | % | (1.52 | )% | (3.13 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 8 | % | 8 | % | 2 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
98
1290 RETIREMENT 2025 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 8.01 | % | 7.41 | % | 7.42 | % | ||||||
S&P Target Date 2025 Index | 7.20 | 5.69 | 7.08 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 3.30%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 8.01% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2025 Index, rose 7.20%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 64.0 | % | ||
Fixed Income | 36.0 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core U.S. Aggregate Bond ETF | 26.5 | % | ||
iShares Core S&P Total US Stock Market ETF | 21.8 | |||
iShares Core MSCI EAFE ETF | 7.8 | |||
Invesco S&P 500 Low Volatility ETF | 6.9 | |||
iShares Edge MSCI Min Vol USA ETF | 6.9 | |||
iShares TIPS Bond ETF | 5.3 | |||
Invesco S&P International Developed Low Volatility ETF | 4.0 | |||
Invesco S&P MidCap Low Volatility ETF | 4.0 | |||
iShares Edge MSCI Min Vol EAFE ETF | 3.9 | |||
Invesco S&P SmallCap Low Volatility ETF | 1.9 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the
99
1290 RETIREMENT 2025 FUND (Unaudited)
expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I | ||||||||||||
Actual | $1,000.00 | $1,080.10 | $2.80 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.10 | 2.72 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
100
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (63.0%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 21,360 | $ | 1,148,527 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 6,510 | 157,802 | ||||||
Invesco S&P International Developed Low Volatility ETF | 20,140 | 666,634 | ||||||
Invesco S&P MidCap Low Volatility ETF | 12,800 | 655,616 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 6,450 | 311,922 | ||||||
iShares Core MSCI EAFE ETF | 20,710 | 1,295,618 | ||||||
iShares Core MSCI Emerging Markets ETF | 5,810 | 307,000 | ||||||
iShares Core S&P Total US Stock Market ETF | 54,030 | 3,614,607 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 9,050 | 651,871 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 2,410 | 144,395 | ||||||
iShares Edge MSCI Min Vol USA ETF | 19,090 | 1,146,927 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 3,130 | 294,556 | ||||||
|
| |||||||
Total Equity | 10,395,475 | |||||||
|
| |||||||
Fixed Income (36.1%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 40,430 | 4,390,294 | ||||||
iShares TIPS Bond ETF | 7,710 | 873,697 | ||||||
SPDR Bloomberg Barclays High Yield Bond ETF | 5,750 | 208,553 | ||||||
Vanguard Short-Term Bond ETF | 3,380 | 268,913 | ||||||
Vanguard Total International Bond ETF | 3,980 | 222,124 | ||||||
|
| |||||||
Total Fixed Income | 5,963,581 | |||||||
|
| |||||||
Total Exchange Traded Funds (99.1%) | 16,359,056 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT: | ||||||||
Investment Company (1.3%) | ||||||||
JPMorgan Prime Money Market Fund, IM Shares | 209,615 | 209,679 | ||||||
|
| |||||||
Total Short-Term Investment (1.3%) | 209,679 | |||||||
|
| |||||||
Total Investments in Securities (100.4%) | 16,568,735 | |||||||
Other Assets LessLiabilities (-0.4%) | (70,154 | ) | ||||||
|
| |||||||
Net Assets (100%) | $ | 16,498,581 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 16,359,056 | $ | — | $ | — | $ | 16,359,056 | ||||||||
Short-Term Investment | ||||||||||||||||
Investment Company | 209,679 | — | — | 209,679 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 16,568,735 | $ | — | $ | — | $ | 16,568,735 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 16,568,735 | $ | — | $ | — | $ | 16,568,735 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
See Notes to Financial Statements.
101
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 5,489,303 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 388,340 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 861,627 | ||
Aggregate gross unrealized depreciation | (856 | ) | ||
|
| |||
Net unrealized appreciation | $ | 860,771 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 15,707,964 | ||
|
|
See Notes to Financial Statements.
102
1290 FUNDS
1290 RETIREMENT 2025 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 16,568,735 | ||
Cash | 75,001 | |||
Prepaid registration and filing fees | 15,019 | |||
Receivable for Fund shares sold | 8,979 | |||
Receivable from investment adviser | 3,821 | |||
Dividends, interest and other receivables | 161 | |||
|
| |||
Total assets | 16,671,716 | |||
|
| |||
LIABILITIES | ||||
Payable for securities purchased | 144,581 | |||
Transfer agent fees payable | 574 | |||
Trustees’ fees payable | 236 | |||
Accrued expenses | 27,744 | |||
|
| |||
Total liabilities | 173,135 | |||
|
| |||
NET ASSETS | $ | 16,498,581 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 15,566,747 | ||
Total distributable earnings (loss) | 931,834 | |||
|
| |||
Net assets | $ | 16,498,581 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $16,498,581 / 1,461,489 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.29 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 155,159 | ||
Interest | 595 | |||
|
| |||
Total income | 155,754 | |||
|
| |||
EXPENSES | ||||
Investment advisory fees | 33,391 | |||
Professional fees | 25,449 | |||
Printing and mailing expenses | 13,112 | |||
Registration and filing fees | 11,224 | |||
Administrative fees | 10,018 | |||
Transfer agent fees | 4,067 | |||
Custodian fees | 2,744 | |||
Trustees’ fees | 610 | |||
Miscellaneous | 3,649 | |||
|
| |||
Gross expenses | 104,264 | |||
Less: Waiver from investment adviser | (43,409 | ) | ||
Reimbursement from investment adviser | (24,598 | ) | ||
|
| |||
Net expenses | 36,257 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 119,497 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 17,996 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 995,267 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 1,013,263 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,132,760 | ||
|
|
See Notes to Financial Statements.
103
1290 FUNDS
1290 RETIREMENT 2025 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 119,497 | $ | 99,645 | ||||
Net realized gain (loss) | 17,996 | 25,293 | ||||||
Net change in unrealized appreciation (depreciation) | 995,267 | (289,343 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 1,132,760 | (164,405 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (176,541 | ) | (49,002 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 535,806 and 736,783 shares, respectively ] | 5,703,557 | 8,015,082 | ||||||
Capital shares issued in reinvestment of dividends [ 12,850 and 0# shares, respectively ] | 134,541 | 2 | ||||||
Capital shares repurchased [ (55,287) and (18,673) shares, respectively ] | (581,261 | ) | (204,206 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 5,256,837 | 7,810,878 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 6,213,056 | 7,597,471 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 10,285,525 | 2,688,054 | ||||||
|
|
|
| |||||
End of period | $ | 16,498,581 | $ | 10,285,525 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
104
1290 FUNDS
1290 RETIREMENT 2025 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.62 | $ | 10.75 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.21 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.74 | (0.14 | ) | 0.64 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.84 | 0.07 | 0.75 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.14 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.03 | ) | (0.02 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.17 | ) | (0.20 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.29 | $ | 10.62 | $ | 10.75 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 8.01 | % | 0.60 | % | 7.50 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 16,499 | $ | 10,286 | $ | 2,688 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.54 | %(j) | 0.54 | %(j) | 0.53 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 1.56 | % | 3.23 | % | 5.30 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.79 | % | 1.91 | % | 1.62 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | 0.77 | % | (0.79 | )% | (3.15 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 3 | % | 4 | % | 2 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
105
1290 RETIREMENT 2030 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 8.40 | % | 7.60 | % | 7.88 | % | ||||||
S&P Target Date 2030 Index | 7.68 | 5.85 | 7.75 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 4.76%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 8.40% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2030 Index, rose 7.68%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 72.2 | % | ||
Fixed Income | 27.8 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 25.0 | % | ||
iShares Core U.S. Aggregate Bond ETF | 23.6 | |||
iShares Core MSCI EAFE ETF | 9.3 | |||
iShares Edge MSCI Min Vol USA ETF | 8.1 | |||
Invesco S&P 500 Low Volatility ETF | 8.1 | |||
Invesco S&P MidCap Low Volatility ETF | 4.8 | |||
Invesco S&P International Developed Low Volatility ETF | 4.5 | |||
iShares Edge MSCI Min Vol EAFE ETF | 4.4 | |||
iShares TIPS Bond ETF | 4.1 | |||
iShares Core MSCI Emerging Markets ETF | 2.1 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the
106
1290 RETIREMENT 2030 FUND (Unaudited)
expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I | ||||||||||||
Actual | $1,000.00 | $1,084.00 | $2.77 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.13 | 2.69 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
107
1290 FUNDS
1290 RETIREMENT 2030 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (71.7%) |
| |||||||
Invesco S&P 500 Low Volatility ETF | 8,060 | $ | 433,386 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 2,290 | 55,510 | ||||||
Invesco S&P International Developed Low Volatility ETF | 7,300 | 241,630 | ||||||
Invesco S&P MidCap Low Volatility ETF | 5,020 | 257,125 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 2,230 | 107,843 | ||||||
iShares Core MSCI EAFE ETF | 7,940 | 496,726 | ||||||
iShares Core MSCI Emerging Markets ETF | 2,110 | 111,493 | ||||||
iShares Core S&P Total US Stock Market ETF | 20,020 | 1,339,338 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 3,260 | 234,818 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 880 | 52,725 | ||||||
iShares Edge MSCI Min Vol USA ETF | 7,240 | 434,979 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 1,120 | 105,400 | ||||||
|
| |||||||
Total Equity | 3,870,973 | |||||||
|
| |||||||
Fixed Income (27.6%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 11,660 | 1,266,159 | ||||||
iShares TIPS Bond ETF | 1,950 | 220,974 | ||||||
|
| |||||||
Total Fixed Income | 1,487,133 | |||||||
|
| |||||||
Total Investments in Securities (99.3%) | 5,358,106 | |||||||
Other Assets Less Liabilities (0.7%) | 39,426 | |||||||
|
| |||||||
Net Assets (100%) | $ | 5,397,532 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 5,358,106 | $ | — | $ | — | $ | 5,358,106 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 5,358,106 | $ | — | $ | — | $ | 5,358,106 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 5,358,106 | $ | — | $ | — | $ | 5,358,106 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 933,620 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 176,852 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 393,244 | ||
Aggregate gross unrealized depreciation | (90 | ) | ||
|
| |||
Net unrealized appreciation | $ | 393,154 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 4,964,952 | ||
|
|
See Notes to Financial Statements.
108
1290 FUNDS
1290 RETIREMENT 2030 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value | $ | 5,358,106 | ||
Cash | 44,612 | |||
Prepaid registration and filing fees | 14,548 | |||
Receivable from investment adviser | 6,267 | |||
Receivable for Fund shares sold | 493 | |||
|
| |||
Total assets | 5,424,026 | |||
|
| |||
LIABILITIES |
| |||
Transfer agent fees payable | 574 | |||
Trustees’ fees payable | 94 | |||
Accrued expenses | 25,826 | |||
|
| |||
Total liabilities | 26,494 | |||
|
| |||
NET ASSETS | $ | 5,397,532 | ||
|
| |||
Net assets were comprised of: |
| |||
Paid in capital | $ | 4,987,582 | ||
Total distributable earnings (loss) | 409,950 | |||
|
| |||
Net assets | $ | 5,397,532 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $5,397,532 / 475,362 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.35 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends | $ | 52,660 | ||
Interest | 244 | |||
|
| |||
Total income | 52,904 | |||
|
| |||
EXPENSES |
| |||
Professional fees | 21,433 | |||
Investment advisory fees | 11,247 | |||
Registration and filing fees | 11,001 | |||
Printing and mailing expenses | 10,478 | |||
Transfer agent fees | 4,067 | |||
Administrative fees | 3,374 | |||
Custodian fees | 1,773 | |||
Trustees’ fees | 213 | |||
Miscellaneous | 2,256 | |||
|
| |||
Gross expenses | 65,842 | |||
Less: Waiver from investment adviser | (14,621 | ) | ||
Reimbursement from investment adviser | (39,150 | ) | ||
|
| |||
Net expenses | 12,071 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 40,833 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 8,925 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 325,253 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 334,178 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 375,011 | ||
|
|
See Notes to Financial Statements.
109
1290 FUNDS
1290 RETIREMENT 2030 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 40,833 | $ | 58,197 | ||||
Net realized gain (loss) | 8,925 | 13,651 | ||||||
Net change in unrealized appreciation (depreciation) | 325,253 | (103,899 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 375,011 | (32,051 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (88,204 | ) | (46,752 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 82,994 and 154,723 shares, respectively ] | 913,385 | 1,706,177 | ||||||
Capital shares issued in reinvestment of dividends [ 3,168 and 0# shares, respectively ] | 33,204 | 2 | ||||||
Capital shares repurchased [ (10,510) and (5,023) shares, respectively ] | (108,419 | ) | (56,090 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 838,170 | 1,650,089 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 1,124,977 | 1,571,286 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 4,272,555 | 2,701,269 | ||||||
|
|
|
| |||||
End of period | $ | 5,397,532 | $ | 4,272,555 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
110
1290 FUNDS
1290 RETIREMENT 2030 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.69 | $ | 10.80 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.78 | (0.12 | ) | 0.69 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.88 | 0.08 | 0.80 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.18 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.04 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.22 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.35 | $ | 10.69 | $ | 10.80 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 8.40 | % | 0.70 | % | 8.00 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 5,398 | $ | 4,273 | $ | 2,701 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.54 | %(j) | 0.54 | %(j) | 0.53 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 2.93 | % | 4.74 | % | 5.27 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.81 | % | 1.78 | % | 1.59 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (0.57 | )% | (2.41 | )% | (3.15 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 4 | % | 3 | % | 1 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
111
1290 RETIREMENT 2035 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 8.51 | % | 7.71 | % | 8.25 | % | ||||||
S&P Target Date 2035 Index | 8.07 | 5.87 | 8.35 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 4.00%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 8.51% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2035 Index, rose 8.07%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 77.1 | % | ||
Fixed Income | 22.9 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 26.3 | % | ||
iShares Core U.S. Aggregate Bond ETF | 19.6 | |||
iShares Core MSCI EAFE ETF | 9.5 | |||
Invesco S&P 500 Low Volatility ETF | 9.0 | |||
iShares Edge MSCI Min Vol USA ETF | 8.7 | |||
Invesco S&P MidCap Low Volatility ETF | 5.1 | |||
Invesco S&P International Developed Low Volatility ETF | 4.8 | |||
iShares Edge MSCI Min Vol EAFE ETF | 4.8 | |||
iShares TIPS Bond ETF | 3.3 | |||
iShares Core MSCI Emerging Markets ETF | 2.3 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account
112
1290 RETIREMENT 2035 FUND (Unaudited)
value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,085.10 | $2.78 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.13 | 2.70 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
113
1290 FUNDS
1290 RETIREMENT 2035 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (76.5%) |
| |||||||
Invesco S&P 500 Low Volatility ETF | 12,150 | $ | 653,305 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 3,350 | 81,204 | ||||||
Invesco S&P International Developed Low Volatility ETF | 10,550 | 349,205 | ||||||
Invesco S&P MidCap Low Volatility ETF | 7,140 | 365,711 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 3,090 | 149,432 | ||||||
iShares Core MSCI EAFE ETF | 11,010 | 688,786 | ||||||
iShares Core MSCI Emerging Markets ETF | 3,110 | 164,332 | ||||||
iShares Core S&P Total US Stock Market ETF | 28,390 | 1,899,291 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 4,840 | 348,625 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 1,450 | 86,877 | ||||||
iShares Edge MSCI Min Vol USA ETF | 10,450 | 627,836 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 1,620 | 152,454 | ||||||
|
| |||||||
Total Equity | 5,567,058 | |||||||
|
| |||||||
Fixed Income (22.7%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 13,000 | 1,411,670 | ||||||
iShares TIPS Bond ETF | 2,130 | 241,372 | ||||||
|
| |||||||
Total Fixed Income | 1,653,042 | |||||||
|
| |||||||
Total Investments in Securities (99.2%) | 7,220,100 | |||||||
Other Assets Less Liabilities (0.8%) | 55,623 | |||||||
|
| |||||||
Net Assets (100%) | $ | 7,275,723 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: |
| |||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 7,220,100 | $ | — | $ | — | $ | 7,220,100 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 7,220,100 | $ | — | $ | — | $ | 7,220,100 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 7,220,100 | $ | — | $ | — | $ | 7,220,100 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 546,611 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 420,401 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 485,270 | ||
Aggregate gross unrealized depreciation | (1,552 | ) | ||
|
| |||
Net unrealized appreciation | $ | 483,718 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 6,736,382 | ||
|
|
See Notes to Financial Statements.
114
1290 FUNDS
1290 RETIREMENT 2035 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value (Cost $6,736,382) | $ | 7,220,100 | ||
Cash | 57,499 | |||
Prepaid registration and filing fees | 14,712 | |||
Receivable from investment adviser | 5,991 | |||
Receivable for Fund shares sold | 5,321 | |||
|
| |||
Total assets | 7,303,623 | |||
|
| |||
LIABILITIES |
| |||
Transfer agent fees payable | 574 | |||
Trustees’ fees payable | 127 | |||
Accrued expenses | 27,199 | |||
|
| |||
Total liabilities | 27,900 | |||
|
| |||
NET ASSETS | $ | 7,275,723 | ||
|
| |||
Net assets were comprised of: |
| |||
Paid in capital | $ | 6,749,933 | ||
Total distributable earnings (loss) | 525,790 | |||
|
| |||
Net assets | $ | 7,275,723 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $7,275,723 / 633,130 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.49 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends | $ | 80,886 | ||
Interest | 463 | |||
|
| |||
Total income | 81,349 | |||
|
| |||
EXPENSES |
| |||
Professional fees | 22,581 | |||
Investment advisory fees | 16,844 | |||
Printing and mailing expenses | 11,247 | |||
Registration and filing fees | 11,081 | |||
Administrative fees | 5,053 | |||
Transfer agent fees | 4,067 | |||
Custodian fees | 2,480 | |||
Trustees’ fees | 330 | |||
Miscellaneous | 2,784 | |||
|
| |||
Gross expenses | 76,467 | |||
Less: Waiver from investment adviser | (21,897 | ) | ||
Reimbursement from investment adviser | (36,437 | ) | ||
|
| |||
Net expenses | 18,133 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 63,216 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 21,001 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 470,606 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 491,607 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 554,823 | ||
|
|
See Notes to Financial Statements.
115
1290 FUNDS
1290 RETIREMENT 2035 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 63,216 | $ | 70,735 | ||||
Net realized gain (loss) | 21,001 | 10,917 | ||||||
Net change in unrealized appreciation (depreciation) | 470,606 | (169,314 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 554,823 | (87,662 | ) | |||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (107,092 | ) | (46,752 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 37,800 and 372,084 shares, respectively ] | 414,646 | 4,119,218 | ||||||
Capital shares issued in reinvestment of dividends [ 6,076 and 0# shares, respectively ] | 64,342 | 2 | ||||||
Capital shares repurchased [ (32,439) and (401) shares, respectively ] | (342,976 | ) | (4,509 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 136,012 | 4,114,711 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 583,743 | 3,980,297 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 6,691,980 | 2,711,683 | ||||||
|
|
|
| |||||
End of period | $ | 7,275,723 | $ | 6,691,980 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
116
1290 FUNDS
1290 RETIREMENT 2035 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.76 | $ | 10.85 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.19 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.81 | (0.09 | ) | 0.74 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.91 | 0.10 | 0.85 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.16 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.02 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.18 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.49 | $ | 10.76 | $ | 10.85 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 8.51 | % | 0.88 | % | 8.50 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 7,276 | $ | 6,692 | $ | 2,712 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.54 | %**(j) | 0.53 | %(k) | 0.53 | %(k) | ||||||
Before waivers and reimbursements (a)(f) | 2.27 | % | 3.95 | % | 5.28 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.88 | % | 1.73 | % | 1.58 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | 0.14 | % | (1.68 | )% | (3.17 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 6 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
** | Includes Tax Expenses of 0.01%. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
(k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
117
1290 RETIREMENT 2040 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 8.78 | % | 8.19 | % | 8.75 | % | ||||||
S&P Target Date 2040 Index | 8.32 | 5.91 | 8.75 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 5.31%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020.Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date.Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 8.78% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2040 Index, rose 8.32%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 81.9 | % | ||
Fixed Income | 18.1 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 28.6 | % | ||
iShares Core U.S. Aggregate Bond ETF | 15.5 | |||
iShares Core MSCI EAFE ETF | 10.1 | |||
Invesco S&P 500 Low Volatility ETF | 9.6 | |||
iShares Edge MSCI Min Vol USA ETF | 9.4 | |||
Invesco S&P International Developed Low Volatility ETF | 5.1 | |||
Invesco S&P MidCap Low Volatility ETF | 5.1 | |||
iShares Edge MSCI Min Vol EAFE ETF | 5.0 | |||
iShares TIPS Bond ETF | 2.6 | |||
SPDR SSGA US Small Cap Low Volatility Index ETF | 2.4 | |||
Holdings are subject to change without notice. | �� |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
118
1290 RETIREMENT 2040 FUND (Unaudited)
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,087.80 | $2.75 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.16 | 2.66 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.53%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
119
1290 FUNDS
1290 RETIREMENT 2040 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (81.4%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 5,770 | $ | 310,253 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 1,360 | 32,966 | ||||||
Invesco S&P International Developed Low Volatility ETF | 4,960 | 164,176 | ||||||
Invesco S&P MidCap Low Volatility ETF | 3,200 | 163,904 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 1,560 | 75,441 | ||||||
iShares Core MSCI EAFE ETF | 5,260 | 329,066 | ||||||
iShares Core MSCI Emerging Markets ETF | 1,370 | 72,391 | ||||||
iShares Core S&P Total US Stock Market ETF | 13,870 | 927,904 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 2,250 | 162,067 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 580 | 34,751 | ||||||
iShares Edge MSCI Min Vol USA ETF | 5,090 | 305,807 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 820 | 77,168 | ||||||
|
| |||||||
Total Equity | 2,655,894 | |||||||
|
| |||||||
Fixed Income (18.0%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 4,620 | 501,686 | ||||||
iShares TIPS Bond ETF | 750 | 84,990 | ||||||
|
| |||||||
Total Fixed Income | 586,676 | |||||||
|
| |||||||
Total Investments in Securities (99.4%) | 3,242,570 | |||||||
Other Assets Less Liabilities (0.6%) | 19,930 | |||||||
|
| |||||||
Net Assets (100%) | $ | 3,262,500 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 3,242,570 | $ | — | $ | — | $ | 3,242,570 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,242,570 | $ | — | $ | — | $ | 3,242,570 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,242,570 | $ | — | $ | — | $ | 3,242,570 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 170,783 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 79,528 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 384,170 | ||
Aggregate gross unrealized depreciation | (250 | ) | ||
|
| |||
Net unrealized appreciation | $ | 383,920 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 2,858,650 | ||
|
|
See Notes to Financial Statements.
120
1290 FUNDS
1290 RETIREMENT 2040 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 3,242,570 | ||
Cash | 24,010 | |||
Prepaid registration and filing fees | 14,445 | |||
Receivable from investment adviser | 6,824 | |||
Receivable for Fund shares sold | 512 | |||
|
| |||
Total assets | 3,288,361 | |||
|
| |||
LIABILITIES | ||||
Accrued professional fees | 23,145 | |||
Transfer agent fees payable | 432 | |||
Trustees’ fees payable | 82 | |||
Accrued expenses | 2,202 | |||
|
| |||
Total liabilities | 25,861 | |||
|
| |||
NET ASSETS | $ | 3,262,500 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 2,868,558 | ||
Total distributable earnings (loss) | 393,942 | |||
|
| |||
Net assets | $ | 3,262,500 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $3,262,500 / 283,168 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.52 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 35,474 | ||
Interest | 177 | |||
|
| |||
Total income | 35,651 | |||
|
| |||
EXPENSES | ||||
Professional fees | 20,724 | |||
Registration and filing fees | 10,953 | |||
Printing and mailing expenses | 10,038 | |||
Investment advisory fees | 7,476 | |||
Transfer agent fees | 4,029 | |||
Administrative fees | 2,243 | |||
Custodian fees | 1,691 | |||
Trustees’ fees | 146 | |||
Miscellaneous | 2,044 | |||
|
| |||
Gross expenses | 59,344 | |||
Less: Waiver from investment adviser | (9,719 | ) | ||
Reimbursement from investment adviser | (41,687 | ) | ||
|
| |||
Net expenses | 7,938 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 27,713 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 4,621 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 225,537 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 230,158 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 257,871 | ||
|
|
See Notes to Financial Statements.
121
1290 FUNDS
1290 RETIREMENT 2040 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 27,713 | $ | 51,108 | ||||
Net realized gain (loss) | 4,621 | 12,319 | ||||||
Net change in unrealized appreciation (depreciation) | 225,537 | (34,838 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 257,871 | 28,589 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (68,399 | ) | (47,002 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 15,993 and 18,938 shares, respectively ] | 176,504 | 211,909 | ||||||
Capital shares issued in reinvestment of dividends [ 558 and 0# shares, respectively ] | 5,899 | 2 | ||||||
Capital shares repurchased [ (2,306) and (25) shares, respectively ] | (24,870 | ) | (286 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 157,533 | 211,625 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 347,005 | 193,212 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 2,915,495 | 2,722,283 | ||||||
|
|
|
| |||||
End of period | $ | 3,262,500 | $ | 2,915,495 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
122
1290 FUNDS
1290 RETIREMENT 2040 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.84 | $ | 10.89 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.83 | (0.06 | ) | 0.78 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.93 | 0.14 | 0.89 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.20 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.05 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.25 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.52 | $ | 10.84 | $ | 10.89 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 8.78 | % | 1.26 | % | 8.90 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 3,263 | $ | 2,915 | $ | 2,722 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.53 | %(j) | 0.53 | %(j) | 0.53 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 3.97 | % | 5.31 | % | 5.28 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.85 | % | 1.80 | % | 1.57 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (1.58 | )% | (2.99 | )% | (3.18 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 3 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
123
1290 RETIREMENT 2045 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 8.89 | % | 8.30 | % | 9.12 | % | ||||||
S&P Target Date 2045 Index | 8.43 | 5.83 | 8.94 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 4.95%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 8.89% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2045 Index, rose 8.43%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Exposure to high-yield bonds benefited the Fund, as lower-quality fixed-income securities outperformed those of higher quality. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 86.8 | % | ||
Fixed Income | 13.2 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 30.5 | % | ||
iShares Core U.S. Aggregate Bond ETF | 11.2 | |||
iShares Core MSCI EAFE ETF | 10.6 | |||
iShares Edge MSCI Min Vol USA ETF | 10.1 | |||
Invesco S&P 500 Low Volatility ETF | 10.0 | |||
Invesco S&P MidCap Low Volatility ETF | 5.4 | |||
Invesco S&P International Developed Low Volatility ETF | 5.2 | |||
iShares Edge MSCI Min Vol EAFE ETF | 5.2 | |||
Invesco S&P SmallCap Low Volatility ETF | 2.5 | |||
SPDR SSGA US Small Cap Low Volatility Index ETF | 2.5 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
124
1290 RETIREMENT 2045 FUND (Unaudited)
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning 11/1/18 | Ending 4/30/19 | Expenses 11/1/18 - | ||||||||||
Class I | ||||||||||||
Actual | $1,000.00 | $1,088.90 | $2.74 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.17 | 2.66 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.53%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
125
1290 FUNDS
1290 RETIREMENT 2045 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (86.0%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 8,630 | $ | 464,035 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 2,360 | 57,207 | ||||||
Invesco S&P International Developed Low Volatility ETF | 7,330 | 242,623 | ||||||
Invesco S&P MidCap Low Volatility ETF | 4,860 | 248,929 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 2,440 | 117,998 | ||||||
iShares Core MSCI EAFE ETF | 7,850 | 491,096 | ||||||
iShares Core MSCI Emerging Markets ETF | 2,140 | 113,078 | ||||||
iShares Core S&P Total US Stock Market ETF | 21,170 | 1,416,273 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 3,360 | 242,021 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 880 | 52,725 | ||||||
iShares Edge MSCI Min Vol USA ETF | 7,790 | 468,023 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 1,210 | 113,870 | ||||||
|
| |||||||
Total Equity | 4,027,878 | |||||||
|
| |||||||
Fixed Income (13.1%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 4,780 | 519,060 | ||||||
iShares TIPS Bond ETF | 820 | 92,922 | ||||||
|
| |||||||
Total Fixed Income | 611,982 | |||||||
|
| |||||||
Total Investments in Securities (99.1%) | 4,639,860 | |||||||
Other Assets Less Liabilities (0.9%) | 41,323 | |||||||
|
| |||||||
Net Assets (100%) | $ | 4,681,183 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 4,639,860 | $ | — | $ | — | $ | 4,639,860 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 4,639,860 | $ | — | $ | — | $ | 4,639,860 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 4,639,860 | $ | — | $ | — | $ | 4,639,860 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 528,288 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 32,651 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 465,087 | ||
Aggregate gross unrealized depreciation | (4 | ) | ||
|
| |||
Net unrealized appreciation | $ | 465,083 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 4,174,777 | ||
|
|
See Notes to Financial Statements.
126
1290 FUNDS
1290 RETIREMENT 2045 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 4,639,860 | ||
Cash | 43,332 | |||
Prepaid registration and filing fees | 14,507 | |||
Receivable from investment adviser | 6,621 | |||
Receivable for Fund shares sold | 3,852 | |||
Dividends, interest and other receivables | 75 | |||
Other assets | 1 | |||
|
| |||
Total assets | 4,708,248 | |||
|
| |||
LIABILITIES | ||||
Transfer agent fees payable | 967 | |||
Trustees’ fees payable | 99 | |||
Accrued expenses | 25,999 | |||
|
| |||
Total liabilities | 27,065 | |||
|
| |||
NET ASSETS | $ | 4,681,183 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 4,204,821 | ||
Total distributable earnings (loss) | 476,362 | |||
|
| |||
Net assets | $ | 4,681,183 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $4,681,183 / 401,710 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.65 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 46,906 | ||
Interest | 295 | |||
|
| |||
Total income | 47,201 | |||
|
| |||
EXPENSES | ||||
Professional fees | 21,226 | |||
Registration and filing fees | 10,987 | |||
Printing and mailing expenses | 10,357 | |||
Investment advisory fees | 10,067 | |||
Transfer agent fees | 4,463 | |||
Administrative fees | 3,020 | |||
Custodian fees | 2,146 | |||
Trustees’ fees | 194 | |||
Miscellaneous | 2,232 | |||
|
| |||
Gross expenses | 64,692 | |||
Less: Waiver from investment adviser | (13,087 | ) | ||
Reimbursement from investment adviser | (40,932 | ) | ||
|
| |||
Net expenses | 10,673 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 36,528 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | �� | 438 | ||
Net change in unrealized appreciation (depreciation) on investments in securities | 322,247 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 322,685 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 359,213 | ||
|
|
See Notes to Financial Statements.
127
1290 FUNDS
1290 RETIREMENT 2045 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 36,528 | $ | 55,392 | ||||
Net realized gain (loss) | 438 | 11,861 | ||||||
Net change in unrealized appreciation (depreciation) | 322,247 | (61,892 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 359,213 | 5,361 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (75,322 | ) | (47,142 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 48,740 and 100,702 shares, respectively ] | 547,376 | 1,134,558 | ||||||
Capital shares issued in reinvestment of dividends [ 2,113 and 13 shares, respectively ] | 22,572 | 143 | ||||||
Capital shares repurchased [ (609) and (9) shares, respectively ] | (6,585 | ) | (101 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 563,363 | 1,134,600 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 847,254 | 1,092,819 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 3,833,929 | 2,741,110 | ||||||
|
|
|
| |||||
End of period | $ | 4,681,183 | $ | 3,833,929 | ||||
|
|
|
|
See Notes to Financial Statements.
128
1290 FUNDS
1290 RETIREMENT 2045 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.91 | $ | 10.93 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.85 | (0.03 | ) | 0.82 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.95 | 0.17 | 0.93 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.18 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.03 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.21 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.65 | $ | 10.91 | $ | 10.93 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 8.89 | % | 1.53 | % | 9.30 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 4,681 | $ | 3,834 | $ | 2,741 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.53 | %(j) | 0.53 | %(j) | 0.52 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 3.21 | % | 4.91 | % | 5.29 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.81 | % | 1.76 | % | 1.55 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (0.87 | )% | (2.62 | )% | (3.22 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 1 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
129
1290 RETIREMENT 2050 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 9.24 | % | 8.55 | % | 9.55 | % | ||||||
S&P Target Date 2050 Index | 8.51 | 5.82 | 9.12 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 5.21%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 9.24% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2050 Index, rose 8.51%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Within fixed income, the Fund’s overweighting in intermediate-term bonds and an underweighting in short-duration bonds, compared to those of the benchmark, contributed to performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
Equity | 92.0 | % | ||
Fixed Income | 8.0 |
Top 10 Holdings(as a percentage of Total Investments in Securities) | ||||
As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 32.4 | % | ||
iShares Core MSCI EAFE ETF | 11.1 | |||
Invesco S&P 500 Low Volatility ETF | 10.7 | |||
iShares Edge MSCI Min Vol USA ETF | 10.7 | |||
iShares Core U.S. Aggregate Bond ETF | 6.9 | |||
Invesco S&P MidCap Low Volatility ETF | 5.7 | |||
Invesco S&P International Developed Low Volatility ETF | 5.6 | |||
iShares Edge MSCI Min Vol EAFE ETF | 5.4 | |||
Invesco S&P SmallCap Low Volatility ETF | 2.6 | |||
iShares Core MSCI Emerging Markets ETF | 2.6 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
130
1290 RETIREMENT 2050 FUND (Unaudited)
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning 11/1/18 | Ending 4/30/19 | Expenses 11/1/18 - | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,092.40 | $2.72 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.20 | 2.63 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.52%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period). |
|
131
1290 FUNDS
1290 RETIREMENT 2050 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (91.5%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 6,770 | $ | 364,023 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 1,760 | 42,662 | ||||||
Invesco S&P International Developed Low Volatility ETF | 5,720 | 189,332 | ||||||
Invesco S&P MidCap Low Volatility ETF | 3,750 | 192,075 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 1,850 | 89,466 | ||||||
iShares Core MSCI EAFE ETF | 6,050 | 378,488 | ||||||
iShares Core MSCI Emerging Markets ETF | 1,690 | 89,300 | ||||||
iShares Core S&P Total US Stock Market ETF | 16,470 | 1,101,843 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 2,550 | 183,677 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 810 | 48,531 | ||||||
iShares Edge MSCI Min Vol USA ETF | 6,030 | 362,282 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 900 | 84,697 | ||||||
|
| |||||||
Total Equity | 3,126,376 | |||||||
|
| |||||||
Fixed Income (7.9%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 2,150 | 233,468 | ||||||
iShares TIPS Bond ETF | 330 | 37,396 | ||||||
|
| |||||||
Total Fixed Income | 270,864 | |||||||
|
| |||||||
Total Investments in Securities (99.4%) | 3,397,240 | |||||||
Other Assets Less Liabilities (0.6%) | 20,992 | |||||||
|
| |||||||
Net Assets (100%) | $ | 3,418,232 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 3,397,240 | $ | — | $ | — | $ | 3,397,240 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,397,240 | $ | — | $ | — | $ | 3,397,240 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,397,240 | $ | — | $ | — | $ | 3,397,240 | ||||||||
|
|
|
|
|
|
|
| |||||||||
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 151,512 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 77,070 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 436,984 | ||
Aggregate gross unrealized depreciation | (139 | ) | ||
|
| |||
Net unrealized appreciation | $ | 436,845 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 2,960,395 | ||
|
|
See Notes to Financial Statements.
132
1290 FUNDS
1290 RETIREMENT 2050 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 3,397,240 | ||
Cash | 25,608 | |||
Prepaid registration and filing fees | 14,453 | |||
Receivable from investment adviser | 6,814 | |||
Receivable for Fund shares sold | 381 | |||
Other assets | 1 | |||
|
| |||
Total assets | 3,444,497 | |||
|
| |||
LIABILITIES | ||||
Accrued professional fees | 23,131 | |||
Transfer agent fees payable | 874 | |||
Trustees’ fees payable | 84 | |||
Accrued expenses | 2,176 | |||
|
| |||
Total liabilities | 26,265 | |||
|
| |||
NET ASSETS | $ | 3,418,232 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 2,970,588 | ||
Total distributable earnings (loss) | 447,644 | |||
|
| |||
Net assets | $ | 3,418,232 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $3,418,232 / 291,891 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.71 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 36,517 | ||
Interest | 188 | |||
|
| |||
Total income | 36,705 | |||
|
| |||
EXPENSES | ||||
Professional fees | 20,789 | |||
Registration and filing fees | 10,964 | |||
Printing and mailing expenses | 10,080 | |||
Investment advisory fees | 7,803 | |||
Transfer agent fees | 4,165 | |||
Administrative fees | 2,341 | |||
Custodian fees | 1,691 | |||
Trustees’ fees | 152 | |||
Miscellaneous | 2,084 | |||
|
| |||
Gross expenses | 60,069 | |||
Less: Waiver from investment adviser | (10,144 | ) | ||
Reimbursement from investment adviser | (41,742 | ) | ||
|
| |||
Net expenses | 8,183 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 28,522 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 6,188 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 247,657 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 253,845 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 282,367 | ||
|
|
See Notes to Financial Statements.
133
1290 FUNDS
1290 RETIREMENT 2050 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 28,522 | $ | 51,919 | ||||
Net realized gain (loss) | 6,188 | 12,718 | ||||||
Net change in unrealized appreciation (depreciation) | 247,657 | (26,033 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 282,367 | 38,604 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (70,591 | ) | (47,252 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 15,373 and 29,754 shares, respectively ] | 170,649 | 335,197 | ||||||
Capital shares issued in reinvestment of dividends [ 756 and 0# shares, respectively ] | 8,091 | 2 | ||||||
Capital shares repurchased [ (3,787) and (214) shares, respectively ] | (40,280 | ) | (2,461 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 138,460 | 332,738 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 350,236 | 324,090 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 3,067,996 | 2,743,906 | ||||||
|
|
|
| |||||
End of period | $ | 3,418,232 | $ | 3,067,996 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
134
1290 FUNDS
1290 RETIREMENT 2050 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 10.97 | $ | 10.98 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.89 | (0.02 | ) | 0.87 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 0.99 | 0.18 | 0.98 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.20 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.05 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.25 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.71 | $ | 10.97 | $ | 10.98 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 9.24 | % | 1.63 | % | 9.80 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 3,418 | $ | 3,068 | $ | 2,744 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.52 | %(j) | 0.52 | %(j) | 0.52 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 3.85 | % | 5.20 | % | 5.26 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.83 | % | 1.77 | % | 1.54 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (1.50 | )% | (2.90 | )% | (3.20 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 2 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
135
1290 RETIREMENT 2055 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 9.38 | % | 8.69 | % | 9.93 | % | ||||||
S&P Target Date 2055 Index | 8.51 | 5.77 | 9.19 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 5.28%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 9.38% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2055 Index, rose 8.51%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Having no exposure to short-duration bonds, compared to the benchmark, contributed positively to relative performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
Equity | 96.8 | % | ||
Fixed Income | 3.2 |
Top 10 Holdings(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 34.2 | % | ||
iShares Core MSCI EAFE ETF | 11.8 | |||
iShares Edge MSCI Min Vol USA ETF | 11.4 | |||
Invesco S&P 500 Low Volatility ETF | 11.2 | |||
Invesco S&P International Developed Low Volatility ETF | 5.9 | |||
Invesco S&P MidCap Low Volatility ETF | 5.8 | |||
iShares Edge MSCI Min Vol EAFE ETF | 5.7 | |||
SPDR SSGA US Small Cap Low Volatility Index ETF | 2.9 | |||
iShares Core MSCI Emerging Markets ETF | 2.8 | |||
iShares Core U.S. Aggregate Bond ETF | 2.7 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
136
1290 RETIREMENT 2055 FUND (Unaudited)
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,093.80 | $2.70 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.21 | 2.61 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.52%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
|
137
1290 FUNDS
1290 RETIREMENT 2055 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (96.4%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 6,670 | $ | 358,646 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 1,700 | 41,208 | ||||||
Invesco S&P International Developed Low Volatility ETF | 5,740 | 189,994 | ||||||
Invesco S&P MidCap Low Volatility ETF | 3,630 | 185,928 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 1,690 | 81,728 | ||||||
iShares Core MSCI EAFE ETF | 6,030 | 377,237 | ||||||
iShares Core MSCI Emerging Markets ETF | 1,670 | 88,243 | ||||||
iShares Core S&P Total US Stock Market ETF | 16,360 | 1,094,484 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 2,550 | 183,676 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 710 | 42,540 | ||||||
iShares Edge MSCI Min Vol USA ETF | 6,050 | 363,484 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 970 | 91,284 | ||||||
|
| |||||||
Total Equity | 3,098,452 | |||||||
|
| |||||||
Fixed Income (3.2%) | ||||||||
iShares Core U.S. Aggregate Bond ETF | 810 | 87,958 | ||||||
iShares TIPS Bond ETF | 140 | 15,865 | ||||||
|
| |||||||
Total Fixed Income | 103,823 | |||||||
|
| |||||||
Total Investments in Securities (99.6%) | 3,202,275 | |||||||
Other Assets Less Liabilities (0.4%) | 13,700 | |||||||
|
| |||||||
Net Assets (100%) | $ | 3,215,975 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 assumptions in determining the fair | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 3,202,275 | $ | — | $ | — | $ | 3,202,275 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,202,275 | $ | — | $ | — | $ | 3,202,275 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,202,275 | $ | — | $ | — | $ | 3,202,275 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 93,212 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 53,674 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 451,960 | ||
Aggregate gross unrealized depreciation | — | |||
|
| |||
Net unrealized appreciation | $ | 451,960 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 2,750,315 | ||
|
|
See Notes to Financial Statements.
138
1290 FUNDS
1290 RETIREMENT 2055 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 3,202,275 | ||
Cash | 17,714 | |||
Prepaid registration and filing fees | 14,443 | |||
Receivable from investment adviser | 6,840 | |||
Receivable for Fund shares sold | 692 | |||
Other assets | 1 | |||
|
| |||
Total assets | 3,241,965 | |||
|
| |||
LIABILITIES | ||||
Accrued professional fees | 23,145 | |||
Transfer agent fees payable | 574 | |||
Trustees’ fees payable | 83 | |||
Accrued expenses | 2,188 | |||
|
| |||
Total liabilities | 25,990 | |||
|
| |||
NET ASSETS | $ | 3,215,975 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 2,757,034 | ||
Total distributable earnings (loss) | 458,941 | |||
|
| |||
Net assets | $ | 3,215,975 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $3,215,975 / 272,741 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.79 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 34,329 | ||
Interest | 170 | |||
|
| |||
Total income | 34,499 | |||
|
| |||
EXPENSES | ||||
Professional fees | 20,709 | |||
Registration and filing fees | 11,005 | |||
Printing and mailing expenses | 10,028 | |||
Investment advisory fees | 7,373 | |||
Transfer agent fees | 4,067 | |||
Administrative fees | 2,212 | |||
Custodian fees | 1,691 | |||
Trustees’ fees | 145 | |||
Miscellaneous | 2,042 | |||
|
| |||
Gross expenses | 59,272 | |||
Less: Waiver from investment adviser | (9,585 | ) | ||
Reimbursement from investment adviser | (42,009 | ) | ||
|
| |||
Net expenses | 7,678 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 26,821 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 3,942 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 241,297 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 245,239 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 272,060 | ||
|
|
See Notes to Financial Statements.
139
1290 FUNDS
1290 RETIREMENT 2055 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | ||||||||
Net investment income (loss) | $ | 26,821 | $ | 49,960 | ||||
Net realized gain (loss) | 3,942 | 13,439 | ||||||
Net change in unrealized appreciation (depreciation) | 241,297 | (15,674 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 272,060 | 47,725 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (69,041 | ) | (47,252 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 8,300 and 14,321 shares, respectively ] | 93,465 | 163,155 | ||||||
Capital shares issued in reinvestment of dividends [ 376 and 0# shares, respectively ] | 4,041 | 2 | ||||||
Capital shares repurchased [ (239) and (26) shares, respectively ] | (2,740 | ) | (281 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 94,766 | 162,876 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 297,785 | 163,349 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 2,918,190 | 2,754,841 | ||||||
|
|
|
| |||||
End of period | $ | 3,215,975 | $ | 2,918,190 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
140
1290 FUNDS
1290 RETIREMENT 2055 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 11.04 | $ | 11.02 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.91 | 0.01 | † | 0.91 | ||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 1.01 | 0.21 | 1.02 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.21 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.05 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.26 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.79 | $ | 11.04 | $ | 11.02 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 9.38 | % | 1.90 | % | 10.20 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 3,216 | $ | 2,918 | $ | 2,755 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.52 | %(j) | 0.52 | %(j) | 0.52 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 4.02 | % | 5.27 | % | 5.25 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.82 | % | 1.73 | % | 1.53 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (1.68 | )% | (3.02 | )% | (3.21 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 2 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
† | The amount shown for a share outstanding throughout the period does not accord with the aggregate net income and/or gain on investments for that period because of the timing of sales and repurchases of the Fund shares in relation to fluctuating market value of the investments in the Fund. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
141
1290 RETIREMENT 2060 FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||
Fund – Class I Shares* | 9.53 | % | 8.94 | % | 10.15 | % | ||||||
S&P Target Date 2060+ Index | 8.56 | 5.95 | 9.34 | |||||||||
* Date of inception 2/27/17.
Returns for periods less than one year are not annualized.
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratio for Class I shares was 5.28%. The net expense ratio for Class I shares was 0.65%. The net expense ratio reflects the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, the Fund’s holdings performed in line with the holdings within their major asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned 9.53% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2060+ Index, rose 8.56%.
What helped performance during the six-month period ended April 30, 2019:
• | Exposure to low volatility holdings in domestic equities was the top contributor to performance, as it was beneficial for the Fund during the market correction in the fourth quarter of 2018. |
• | Having no exposure to short-duration bonds, compared to the benchmark, contributed positively to relative performance. |
What hurt performance during the six-month period ended April 30, 2019:
• | Having no dedicated position in real estate, which was up over 14% for the period, was a drag on performance compared to the benchmark. |
• | Low-volatility equity exchange-traded funds (ETFs) within the emerging-markets sector underperformed their traditionally market cap-weighted counterparts during the period. |
Outlook
The Fund maintains a neutral outlook on the markets. It aims at a specific retirement target date and is guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
Table by Asset Class(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
Equity | 100.0 | % |
Top 10 Holdings(as a percentage of Total Investments in Securities) As of April 30, 2019 | ||||
iShares Core S&P Total US Stock Market ETF | 35.7 | % | ||
iShares Core MSCI EAFE ETF | 12.1 | |||
Invesco S&P 500 Low Volatility ETF | 11.9 | |||
iShares Edge MSCI Min Vol USA ETF | 11.8 | |||
Invesco S&P MidCap Low Volatility ETF | 6.2 | |||
iShares Edge MSCI Min Vol EAFE ETF | 6.0 | |||
Invesco S&P International Developed Low Volatility ETF | 5.9 | |||
Invesco S&P SmallCap Low Volatility ETF | 2.7 | |||
iShares Core MSCI Emerging Markets ETF | 2.7 | |||
SPDR SSGA US Small Cap Low Volatility Index ETF | 2.6 | |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2019 and held for the entire six-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
142
1290 RETIREMENT 2060 FUND (Unaudited)
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class I |
| |||||||||||
Actual | $1,000.00 | $1,095.30 | $2.69 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,022.22 | 2.60 | |||||||||
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.52%, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). |
|
143
1290 FUNDS
1290 RETIREMENT 2060 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
EXCHANGE TRADED FUNDS (ETF): |
| |||||||
Equity (99.3%) | ||||||||
Invesco S&P 500 Low Volatility ETF | 6,880 | $ | 369,938 | |||||
Invesco S&P Emerging Markets Low Volatility ETF | 1,580 | 38,299 | ||||||
Invesco S&P International Developed Low Volatility ETF | 5,570 | 184,367 | ||||||
Invesco S&P MidCap Low Volatility ETF | 3,740 | 191,563 | ||||||
Invesco S&P SmallCap Low Volatility ETF | 1,710 | 82,696 | ||||||
iShares Core MSCI EAFE ETF | 6,000 | 375,360 | ||||||
iShares Core MSCI Emerging Markets ETF | 1,560 | 82,430 | ||||||
iShares Core S&P Total US Stock Market ETF | 16,580 | 1,109,202 | ||||||
iShares Edge MSCI Min Vol EAFE ETF | 2,580 | 185,837 | ||||||
iShares Edge MSCI Min Vol Emerging Markets ETF | 650 | 38,945 | ||||||
iShares Edge MSCI Min Vol USA ETF | 6,090 | 365,887 | ||||||
SPDR SSGA US Small Cap Low Volatility Index ETF | 870 | 81,873 | ||||||
|
| |||||||
Total Investments in Securities (99.3%) | 3,106,397 | |||||||
Other Assets Less Liabilities (0.7%) | 22,178 | |||||||
|
| |||||||
Net Assets (100%) | $ | 3,128,575 | ||||||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Exchange Traded Funds | ||||||||||||||||
Exchange Traded Funds | $ | 3,106,397 | $ | — | $ | — | $ | 3,106,397 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 3,106,397 | $ | — | $ | — | $ | 3,106,397 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 3,106,397 | $ | — | $ | — | $ | 3,106,397 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 40,471 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 52,690 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 460,454 | ||
Aggregate gross unrealized depreciation | — | |||
|
| |||
Net unrealized appreciation | $ | 460,454 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 2,645,943 | ||
|
|
See Notes to Financial Statements.
144
1290 FUNDS
1290 RETIREMENT 2060 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS | ||||
Investments in Securities, at value | $ | 3,106,397 | ||
Cash | 19,215 | |||
Prepaid registration and filing fees | 14,441 | |||
Receivable from investment adviser | 14,235 | |||
Receivable for Fund shares sold | 120 | |||
Other assets | 1 | |||
|
| |||
Total assets | 3,154,409 | |||
|
| |||
LIABILITIES | ||||
Accrued professional fees | 23,153 | |||
Transfer agent fees payable | 371 | |||
Trustees’ fees payable | 82 | |||
Accrued expenses | 2,228 | |||
|
| |||
Total liabilities | 25,834 | |||
|
| |||
NET ASSETS | $ | 3,128,575 | ||
|
| |||
Net assets were comprised of: | ||||
Paid in capital | $ | 2,658,896 | ||
Total distributable earnings (loss) | 469,679 | |||
|
| |||
Net assets | $ | 3,128,575 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $3,128,575 / 264,078 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 11.85 | ||
|
|
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME | ||||
Dividends | $ | 33,567 | ||
Interest | 138 | |||
|
| |||
Total income | 33,705 | |||
|
| |||
EXPENSES | ||||
Professional fees | 20,682 | |||
Registration and filing fees | 10,958 | |||
Printing and mailing expenses | 10,010 | |||
Investment advisory fees | 7,230 | |||
Transfer agent fees | 3,969 | |||
Administrative fees | 2,169 | |||
Custodian fees | 1,641 | |||
Trustees’ fees | 142 | |||
Miscellaneous | 2,043 | |||
|
| |||
Gross expenses | 58,844 | |||
Less: Waiver from investment adviser | (9,399 | ) | ||
Reimbursement from investment adviser | (41,946 | ) | ||
|
| |||
Net expenses | 7,499 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 26,206 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) | ||||
Net realized gain (loss) on investments in securities | 5,741 | |||
Net change in unrealized appreciation (depreciation) on investments in securities | 239,634 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 245,375 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 271,581 | ||
|
|
See Notes to Financial Statements.
145
1290 FUNDS
1290 RETIREMENT 2060 FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 26,206 | $ | 49,725 | ||||
Net realized gain (loss) | 5,741 | 11,078 | ||||||
Net change in unrealized appreciation (depreciation) | 239,634 | (8,835 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 271,581 | 51,968 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class I | (65,105 | ) | (47,502 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class I | ||||||||
Capital shares sold [ 6,063 and 9,241 shares, respectively ] | 67,673 | 106,171 | ||||||
Capital shares issued in reinvestment of dividends [ 242 and 0# shares, respectively ] | 2,604 | 2 | ||||||
Capital shares repurchased [ (1,313) and (164) shares, respectively ] | (15,031 | ) | (1,908 | ) | ||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 55,246 | 104,265 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 261,722 | 108,731 | ||||||
NET ASSETS: | ||||||||
Beginning of period | 2,866,853 | 2,758,122 | ||||||
|
|
|
| |||||
End of period | $ | 3,128,575 | $ | 2,866,853 | ||||
|
|
|
|
| ||||
# Number of shares is less than 0.5. |
See Notes to Financial Statements.
146
1290 FUNDS
1290 RETIREMENT 2060 FUND
FINANCIAL HIGHLIGHTS
Class I | Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | February 27, 2017* to October 31, 2017 | |||||||||
Net asset value, beginning of period | $ | 11.07 | $ | 11.03 | $ | 10.00 | ||||||
|
|
|
|
|
| |||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) (e)(x) | 0.10 | 0.20 | 0.11 | |||||||||
Net realized and unrealized gain (loss) | 0.93 | 0.03 | 0.92 | |||||||||
|
|
|
|
|
| |||||||
Total from investment operations | 1.03 | 0.23 | 1.03 | |||||||||
|
|
|
|
|
| |||||||
Less distributions: | ||||||||||||
Dividends from net investment income | (0.21 | ) | (0.18 | ) | — | |||||||
Distributions from net realized gains | (0.04 | ) | (0.01 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total dividends and distributions | (0.25 | ) | (0.19 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net asset value, end of period | $ | 11.85 | $ | 11.07 | $ | 11.03 | ||||||
|
|
|
|
|
| |||||||
Total return (b) | 9.53 | % | 2.09 | % | 10.30 | % | ||||||
|
|
|
|
|
| |||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000’s) | $ | 3,129 | $ | 2,867 | $ | 2,758 | ||||||
Ratio of expenses to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f) | 0.52 | %(j) | 0.52 | %(j) | 0.52 | %(j) | ||||||
Before waivers and reimbursements (a)(f) | 4.07 | % | 5.27 | % | 5.25 | % | ||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||
After waivers and reimbursements (a)(f)(x) | 1.81 | % | 1.73 | % | 1.52 | %(l) | ||||||
Before waivers and reimbursements (a)(f)(x) | (1.74 | )% | (3.02 | )% | (3.21 | )%(l) | ||||||
Portfolio turnover rate (z)^ | 1 | % | 2 | % | 1 | % |
* | Commencement of Operations. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
147
1290 SMARTBETA EQUITY FUND (Unaudited)
INVESTMENT ADVISER
Ø | 1290 Asset Managers® |
INVESTMENTSUB-ADVISER
Ø | AXA Rosenberg Investment Management LLC |
PERFORMANCE RESULTS
Total Returns as of 4/30/19 | ||||||||||||||||
6 Months | 1 Year | Since Incept. | ||||||||||||||
Fund – Class A Shares* | without Sales Charge | 9.82 | % | 9.64 | % | 7.90 | % | |||||||||
with Sales Charge (a | ) | 3.81 | 3.65 | 6.55 | ||||||||||||
Fund – Class I Shares* | 10.00 | 9.91 | 8.16 | |||||||||||||
Fund – Class R Shares* | 9.73 | 9.37 | 7.63 | |||||||||||||
Fund – Class T Shares*† | without Sales Charge | 10.00 | 9.91 | 8.16 | ||||||||||||
with Sales Charge (b | ) | 7.25 | 7.16 | 7.54 | ||||||||||||
MSCI World (Net) Index | 8.83 | 6.48 | 7.57 | |||||||||||||
* Date of inception 11/12/14.
† Class T Shares currently are not offered for sale.
(a)A 5.50%front-end sales charge was deducted.
(b)A 2.50%front-end sales charge was deducted.
Returns for periods less than one year are not annualized
Returns for periods greater than one year are annualized. |
|
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2019, the gross expense ratios for Class A, I, R and T shares were 2.42%, 2.16%, 2.66% and 2.41%, respectively. The net expense ratios for Class A, I, R and T shares were 1.15%, 0.90%, 1.40% and 1.15%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2020. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — 1290 Asset Managers®
Against the backdrop of financial market volatility, ending with a substantial equity rally and a moderately higher bond market, notable impacts on the Fund included risk aversion, which returned to markets at the beginning of the period as rising geopolitical tensions and slowing global economic growth encouraged investors to shift into more defensive, less volatile parts of the market. This trend reversed and investors rotated into more cyclical sectors at the opening of the new calendar year.
Fund Highlights
The Fund’s Class I shares returned 10.00% for the six-month period ended April 30, 2019. The Fund’s benchmark, the MSCI World (Net) Index, rose 8.83%. The 1290 Smart Beta Equity Fund outperformed the benchmark, as the strategy exhibited defensiveness when the market fell at the beginning of the period, then kept pace with the market rally which followed
What helped performance during the six-month period ended April 30, 2019:
• | The Fund’s bias toward stocks exhibiting high-quality earnings was rewarded. For example, positions in stocks such as MSCI, Inc. and Starbucks Corp., which our proprietary measure of quality identified as having strong sustainable earnings growth, helped drive Fund return. |
• | The Fund had a lower-than-benchmark exposure to the energy sector, which benefited performance over the period. |
What hurt performance during the six-month period ended April 30, 2019:
• | Despite benefiting performance at the beginning of the period when markets fell, the Fund’s focus on stocks with lower volatility went unrewarded overall due to the rebound in equity markets in 2019. Lower-than-benchmark positions in higher-volatility companies such as Amazon.com, Inc. and Facebook, Inc. held back returns over the whole period. |
• | The Fund’s lower-than-benchmark exposure to the information technology sector weighed on performance over the period, as Microsoft Corp. featured as the top stock detractor. |
148
1290 SMARTBETA EQUITY FUND (Unaudited)
Sector Weightings as of April 30, 2019 | % of Net Assets | |||
Financials | 18.5 | % | ||
Industrials | 15.7 | |||
Consumer Staples | 14.1 | |||
Information Technology | 11.2 | |||
Health Care | 10.7 | |||
Consumer Discretionary | 8.3 | |||
Communication Services | 5.7 | |||
Utilities | 5.5 | |||
Real Estate | 4.3 | |||
Materials | 2.6 | |||
Energy | 2.2 | |||
Cash and Other | 1.2 | |||
|
| |||
100.0 | % | |||
|
| |||
Holdings are subject to change without notice. |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A, Class R and Class T shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2019 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
Beginning Account Value 11/1/18 | Ending Account Value 4/30/19 | Expenses Paid During Period* 11/1/18 - 4/30/19 | ||||||||||
Class A |
| |||||||||||
Actual | $1,000.00 | $1,098.20 | $5.98 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,019.09 | 5.76 | |||||||||
Class I |
| |||||||||||
Actual | 1,000.00 | 1,100.00 | 4.69 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,020.33 | 4.51 | |||||||||
Class R |
| |||||||||||
Actual | 1,000.00 | 1,097.30 | 7.28 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,017.85 | 7.00 | |||||||||
Class T** |
| |||||||||||
Actual | 1,000.00 | 1,100.00 | 4.69 | |||||||||
Hypothetical (5% average annual return before expenses) | 1,000.00 | 1,020.33 | 4.51 | |||||||||
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.15%, 0.90%, 1.40% and 0.90%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect theone-half year period).
** Class T shares currently are not offered for sale. |
|
149
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
COMMON STOCKS: | ||||||||
Communication Services (5.7%) | ||||||||
Diversified Telecommunication Services (3.1%) |
| |||||||
AT&T, Inc. | 4,237 | $ | 131,178 | |||||
BCE, Inc. | 1,200 | 53,690 | ||||||
Deutsche Telekom AG (Registered) | 5,500 | 92,001 | ||||||
Elisa OYJ | 600 | 25,458 | ||||||
Nippon Telegraph & Telephone Corp. | 900 | 37,294 | ||||||
Singapore Telecommunications Ltd. | 12,000 | 27,969 | ||||||
Swisscom AG (Registered) | 120 | 55,905 | ||||||
Telenor ASA | 1,900 | 38,143 | ||||||
Telia Co. AB | 4,000 | 17,032 | ||||||
Verizon Communications, Inc. | 2,900 | 165,851 | ||||||
|
| |||||||
644,521 | ||||||||
|
| |||||||
Entertainment (1.2%) | ||||||||
Walt Disney Co. (The) | 1,800 | 246,546 | ||||||
|
| |||||||
Interactive Media & Services (0.2%) | ||||||||
Alphabet, Inc., Class A* | 40 | 47,959 | ||||||
|
| |||||||
Media (0.3%) | ||||||||
Omnicom Group, Inc. | 800 | 64,024 | ||||||
|
| |||||||
Wireless Telecommunication Services (0.9%) |
| |||||||
KDDI Corp. | 2,000 | 45,612 | ||||||
NTT DOCOMO, Inc. | 2,700 | 58,426 | ||||||
Rogers Communications, Inc., Class B | 1,700 | 85,590 | ||||||
|
| |||||||
189,628 | ||||||||
|
| |||||||
Total Communication Services | 1,192,678 | |||||||
|
| |||||||
Consumer Discretionary (8.3%) | ||||||||
Auto Components (0.1%) | ||||||||
Bridgestone Corp. | 600 | 23,732 | ||||||
|
| |||||||
Automobiles (0.3%) | ||||||||
Bayerische Motoren Werke AG | 600 | 51,078 | ||||||
Suzuki Motor Corp. | 300 | 13,640 | ||||||
|
| |||||||
64,718 | ||||||||
|
| |||||||
Hotels, Restaurants & Leisure (2.9%) | ||||||||
Compass Group plc | 1,923 | 43,707 | ||||||
Darden Restaurants, Inc. | 200 | 23,520 | ||||||
Domino’s Pizza, Inc. | 100 | 27,058 | ||||||
Hilton Worldwide Holdings, Inc. | 300 | 26,097 | ||||||
Marriott International, Inc., Class A | 200 | 27,284 | ||||||
McDonald’s Corp. | 1,100 | 217,327 | ||||||
Restaurant Brands International, Inc. | 500 | 32,634 | ||||||
Starbucks Corp. | 1,700 | 132,056 | ||||||
Yum! Brands, Inc. | 700 | 73,073 | ||||||
|
| |||||||
602,756 | ||||||||
|
| |||||||
Multiline Retail (0.5%) | ||||||||
Dollar General Corp. | 500 | 63,045 | ||||||
Target Corp. | 500 | 38,710 | ||||||
Wesfarmers Ltd. | 500 | 12,693 | ||||||
|
| |||||||
114,448 | ||||||||
|
| |||||||
Specialty Retail (3.3%) | ||||||||
AutoZone, Inc.* | 100 | 102,831 | ||||||
Burlington Stores, Inc.* | 100 | 16,891 | ||||||
Home Depot, Inc. (The) | 900 | 183,330 | ||||||
Industria de Diseno Textil SA | 2,000 | 60,499 | ||||||
Lowe’s Cos., Inc. | 600 | 67,884 | ||||||
Nitori Holdings Co. Ltd. | 100 | 11,895 | ||||||
O’Reilly Automotive, Inc.* | 200 | 75,714 | ||||||
Ross Stores, Inc. | 400 | 39,064 | ||||||
TJX Cos., Inc. (The) | 2,400 | 131,712 | ||||||
|
| |||||||
689,820 | ||||||||
|
| |||||||
Textiles, Apparel & Luxury Goods (1.2%) |
| |||||||
adidas AG | 280 | 71,948 | ||||||
Gildan Activewear, Inc. | 800 | 29,499 | ||||||
LVMH Moet Hennessy Louis Vuitton SE | 200 | 78,299 | ||||||
VF Corp. | 700 | 66,087 | ||||||
|
| |||||||
245,833 | ||||||||
|
| |||||||
Total Consumer Discretionary | 1,741,307 | |||||||
|
| |||||||
Consumer Staples (14.1%) | ||||||||
Beverages (4.1%) | ||||||||
Brown-Forman Corp., Class B | 500 | 26,645 | ||||||
Carlsberg A/S, Class B | 200 | 25,834 | ||||||
Coca-Cola Co. (The) | 5,100 | 250,206 | ||||||
Constellation Brands, Inc., Class A | 200 | 42,334 | ||||||
Diageo plc | 2,400 | 101,196 | ||||||
Heineken NV | 800 | 86,354 | ||||||
Kirin Holdings Co. Ltd. | 1,000 | 22,618 | ||||||
Monster Beverage Corp.* | 500 | 29,800 | ||||||
PepsiCo, Inc. | 1,800 | 230,490 | ||||||
Pernod Ricard SA | 200 | 34,848 | ||||||
Suntory Beverage & Food Ltd. | 500 | 21,994 | ||||||
|
| |||||||
872,319 | ||||||||
|
| |||||||
Food & Staples Retailing (2.7%) | ||||||||
Alimentation Couche-Tard, Inc., Class B | 700 | 41,273 | ||||||
Costco Wholesale Corp. | 600 | 147,318 | ||||||
George Weston Ltd. | 500 | 37,333 | ||||||
Koninklijke Ahold Delhaize NV | 800 | 19,255 | ||||||
Loblaw Cos. Ltd. | 800 | 39,191 | ||||||
Metro, Inc. | 1,400 | 50,683 | ||||||
Seven & i Holdings Co. Ltd. | 900 | 31,178 | ||||||
Sysco Corp. | 1,200 | 84,444 | ||||||
Walgreens Boots Alliance, Inc. | 1,000 | 53,570 | ||||||
Walmart, Inc. | 200 | 20,568 | ||||||
Woolworths Group Ltd. | 2,200 | 49,396 | ||||||
|
| |||||||
574,209 | ||||||||
|
| |||||||
Food Products (2.9%) | ||||||||
Archer-Daniels-Midland Co. | 800 | 35,680 | ||||||
General Mills, Inc. | 1,600 | 82,352 | ||||||
Hershey Co. (The) | 400 | 49,940 | ||||||
Hormel Foods Corp. | 400 | 15,976 | ||||||
Kellogg Co. | 900 | 54,270 | ||||||
McCormick & Co., Inc.(Non-Voting) | 300 | 46,191 | ||||||
Mondelez International, Inc., Class A | 3,300 | 167,805 |
See Notes to Financial Statements.
150
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Mowi ASA | 700 | $ | 15,164 | |||||
Nestle SA (Registered) | 1,400 | 134,717 | ||||||
|
| |||||||
602,095 | ||||||||
|
| |||||||
Household Products (2.5%) | ||||||||
Church & Dwight Co., Inc. | 400 | 29,980 | ||||||
Clorox Co. (The) | 300 | 47,919 | ||||||
Colgate-Palmolive Co. | 1,800 | 131,022 | ||||||
Henkel AG & Co. KGaA (Preference) (q) | 420 | 42,510 | ||||||
Procter & Gamble Co. (The) | 2,500 | 266,200 | ||||||
|
| |||||||
517,631 | ||||||||
|
| |||||||
Personal Products (1.9%) | ||||||||
Beiersdorf AG | 180 | 19,672 | ||||||
Estee Lauder Cos., Inc. (The), Class A | 400 | 68,724 | ||||||
Kao Corp. | 500 | 38,408 | ||||||
L’Oreal SA | 270 | 74,224 | ||||||
Unilever NV (CVA) | 2,000 | 121,043 | ||||||
Unilever plc | 1,300 | 78,954 | ||||||
|
| |||||||
401,025 | ||||||||
|
| |||||||
Total Consumer Staples | 2,967,279 | |||||||
|
| |||||||
Energy (2.2%) | ||||||||
Oil, Gas & Consumable Fuels (2.2%) |
| |||||||
Caltex Australia Ltd. | 900 | 17,263 | ||||||
Chevron Corp. | 200 | 24,012 | ||||||
Enagas SA | 1,200 | 34,186 | ||||||
Eni SpA | 1,400 | 23,896 | ||||||
Exxon Mobil Corp. | 2,000 | 160,560 | ||||||
Galp Energia SGPS SA | 3,000 | 50,371 | ||||||
Phillips 66 | 400 | 37,708 | ||||||
Snam SpA | 6,000 | 30,532 | ||||||
TOTAL SA | 1,400 | 77,798 | ||||||
|
| |||||||
Total Energy | 456,326 | |||||||
|
| |||||||
Financials (18.5%) | ||||||||
Banks (7.4%) | ||||||||
Aozora Bank Ltd. | 1,000 | 24,319 | ||||||
Bank Hapoalim BM | 4,000 | 29,406 | ||||||
Bank LeumiLe-Israel BM | 3,000 | 20,520 | ||||||
Bank of America Corp. | 1,200 | 36,696 | ||||||
Bank of Montreal | 1,100 | 86,887 | ||||||
Bank of Nova Scotia (The) | 1,300 | 71,594 | ||||||
Bankinter SA | 2,000 | 15,967 | ||||||
BB&T Corp. | 800 | 40,960 | ||||||
Canadian Imperial Bank of Commerce | 1,000 | 84,205 | ||||||
Citizens Financial Group, Inc. | 600 | 21,720 | ||||||
Comerica, Inc. | 200 | 15,718 | ||||||
Commonwealth Bank of Australia | 1,200 | 63,039 | ||||||
DNB ASA* | 900 | 17,280 | ||||||
Hang Seng Bank Ltd. | 1,400 | 36,763 | ||||||
JPMorgan Chase & Co. | 300 | 34,815 | ||||||
KBC Group NV | 200 | 14,810 | ||||||
M&T Bank Corp. | 200 | 34,014 | ||||||
Mizrahi Tefahot Bank Ltd. | 1,800 | 38,917 | ||||||
National Australia Bank Ltd. | 1,400 | 25,019 | ||||||
National Bank of Canada | 1,400 | 66,692 | ||||||
Oversea-Chinese Banking Corp. Ltd. | 3,000 | 26,689 | ||||||
PNC Financial Services Group, Inc. (The) | 700 | 95,851 | ||||||
Royal Bank of Canada | 2,300 | 183,303 | ||||||
Skandinaviska Enskilda Banken AB, Class A | 6,000 | 57,251 | ||||||
SunTrust Banks, Inc. | 700 | 45,836 | ||||||
Svenska Handelsbanken AB, Class A | 4,000 | 43,655 | ||||||
Swedbank AB, Class A | 2,600 | 42,174 | ||||||
Toronto-Dominion Bank (The) | 2,900 | 165,424 | ||||||
United Overseas Bank Ltd. | 1,000 | 20,462 | ||||||
US Bancorp | 1,800 | 95,976 | ||||||
|
| |||||||
1,555,962 | ||||||||
|
| |||||||
Capital Markets (3.8%) | ||||||||
Ameriprise Financial, Inc. | 300 | 44,031 | ||||||
ASX Ltd. | 400 | 21,008 | ||||||
Bank of New York Mellon Corp. (The) | 1,500 | 74,490 | ||||||
BlackRock, Inc. | 200 | 97,048 | ||||||
Brookfield Asset Management, Inc., Class A | 1,300 | 62,676 | ||||||
CME Group, Inc. | 300 | 53,670 | ||||||
Deutsche Boerse AG | 400 | 53,343 | ||||||
Hong Kong Exchanges & Clearing Ltd. | 700 | 24,271 | ||||||
Intercontinental Exchange, Inc. | 1,000 | 81,350 | ||||||
MSCI, Inc. | 300 | 67,614 | ||||||
Nasdaq, Inc. | 200 | 18,440 | ||||||
Northern Trust Corp. | 400 | 39,420 | ||||||
S&P Global, Inc. | 500 | 110,330 | ||||||
T. Rowe Price Group, Inc. | 500 | 53,750 | ||||||
|
| |||||||
801,441 | ||||||||
|
| |||||||
Consumer Finance (0.5%) | ||||||||
Ally Financial, Inc. | 800 | 23,768 | ||||||
American Express Co. | 400 | 46,892 | ||||||
Discover Financial Services | 400 | 32,596 | ||||||
|
| |||||||
103,256 | ||||||||
|
| |||||||
Insurance (6.8%) | ||||||||
Aflac, Inc. | 1,600 | 80,608 | ||||||
Allianz SE (Registered) | 500 | 120,460 | ||||||
Allstate Corp. (The) | 1,100 | 108,966 | ||||||
American Financial Group, Inc. | 400 | 41,412 | ||||||
Aon plc | 500 | 90,070 | ||||||
Arch Capital Group Ltd.* | 600 | 20,268 | ||||||
Cincinnati Financial Corp. | 300 | 28,854 | ||||||
Hartford Financial Services Group, Inc. (The) | 800 | 41,848 | ||||||
Intact Financial Corp. | 500 | 40,908 | ||||||
Legal & General Group plc | 8,000 | 29,022 | ||||||
Marsh & McLennan Cos., Inc. | 1,300 | 122,577 | ||||||
Medibank Pvt Ltd. | 8,700 | 17,541 | ||||||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered)* | 330 | 82,539 | ||||||
Progressive Corp. (The) | 1,600 | 125,040 | ||||||
Prudential Financial, Inc. | 600 | 63,426 |
See Notes to Financial Statements.
151
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Reinsurance Group of America, Inc. | 100 | $ | 15,151 | |||||
Sampo OYJ, Class A | 1,600 | 73,146 | ||||||
Sun Life Financial, Inc. | 2,500 | 103,866 | ||||||
Swiss Life Holding AG (Registered)* | 100 | 47,019 | ||||||
Travelers Cos., Inc. (The) | 400 | 57,500 | ||||||
Willis Towers Watson plc | 300 | 55,302 | ||||||
Zurich Insurance Group AG | 200 | 63,771 | ||||||
|
| |||||||
1,429,294 | ||||||||
|
| |||||||
Total Financials | 3,889,953 | |||||||
|
| |||||||
Health Care (10.7%) | ||||||||
Biotechnology (0.4%) | ||||||||
AbbVie, Inc. | 800 | 63,512 | ||||||
CSL Ltd. | 200 | 27,996 | ||||||
|
| |||||||
91,508 | ||||||||
|
| |||||||
Health Care Equipment & Supplies (3.1%) |
| |||||||
Abbott Laboratories | 300 | 23,868 | ||||||
Baxter International, Inc. | 800 | 61,040 | ||||||
Coloplast A/S, Class B | 200 | 21,580 | ||||||
Danaher Corp. | 500 | 66,220 | ||||||
Edwards Lifesciences Corp.* | 200 | 35,214 | ||||||
Hoya Corp. | 400 | 28,062 | ||||||
IDEXX Laboratories, Inc.* | 200 | 46,400 | ||||||
Intuitive Surgical, Inc.* | 100 | 51,063 | ||||||
Koninklijke Philips NV | 600 | 25,549 | ||||||
Medtronic plc | 1,900 | 168,739 | ||||||
Stryker Corp. | 600 | 113,346 | ||||||
|
| |||||||
641,081 | ||||||||
|
| |||||||
Health Care Providers & Services (1.4%) |
| |||||||
AmerisourceBergen Corp. | 200 | 14,952 | ||||||
Anthem, Inc. | 200 | 52,606 | ||||||
Fresenius Medical Care AG & Co. KGaA | 200 | 16,815 | ||||||
HCA Healthcare, Inc. | 400 | 50,892 | ||||||
UnitedHealth Group, Inc. | 700 | 163,149 | ||||||
|
| |||||||
298,414 | ||||||||
|
| |||||||
Life Sciences Tools & Services (0.7%) |
| |||||||
Mettler-Toledo International, Inc.* | 100 | 74,526 | ||||||
Thermo Fisher Scientific, Inc. | 300 | 83,235 | ||||||
|
| |||||||
157,761 | ||||||||
|
| |||||||
Pharmaceuticals (5.1%) | ||||||||
Astellas Pharma, Inc. | 3,000 | 40,639 | ||||||
Eli Lilly & Co. | 1,300 | 152,152 | ||||||
GlaxoSmithKline plc | 2,000 | 41,034 | ||||||
Johnson & Johnson | 1,200 | 169,440 | ||||||
Merck & Co., Inc. | 1,900 | 149,549 | ||||||
Merck KGaA | 200 | 21,284 | ||||||
Novo Nordisk A/S, Class B | 1,100 | 53,791 | ||||||
Otsuka Holdings Co. Ltd. | 400 | 14,252 | ||||||
Pfizer, Inc. | 4,500 | 182,745 | ||||||
Roche Holding AG | 420 | 110,714 | ||||||
Shionogi & Co. Ltd. | 300 | 17,441 | ||||||
Takeda Pharmaceutical Co. Ltd. | 500 | 18,457 | ||||||
Zoetis, Inc. | 900 | 91,656 | ||||||
|
| |||||||
1,063,154 | ||||||||
|
| |||||||
Total Health Care | 2,251,918 | |||||||
|
| |||||||
Industrials (15.7%) | ||||||||
Aerospace & Defense (3.5%) | ||||||||
Boeing Co. (The) | 300 | 113,307 | ||||||
General Dynamics Corp. | 500 | 89,360 | ||||||
Lockheed Martin Corp. | 400 | 133,332 | ||||||
MTU Aero Engines AG | 100 | 23,520 | ||||||
Northrop Grumman Corp. | 400 | 115,964 | ||||||
Raytheon Co. | 600 | 106,554 | ||||||
Safran SA | 400 | 58,278 | ||||||
Thales SA | 200 | 23,879 | ||||||
United Technologies Corp. | 500 | 71,305 | ||||||
|
| |||||||
735,499 | ||||||||
|
| |||||||
Air Freight & Logistics (0.9%) | ||||||||
Expeditors International of Washington, Inc. | 800 | 63,536 | ||||||
FedEx Corp. | 100 | 18,946 | ||||||
United Parcel Service, Inc., Class B | 900 | 95,598 | ||||||
|
| |||||||
178,080 | ||||||||
|
| |||||||
Building Products (0.8%) | ||||||||
Allegion plc | 200 | 19,846 | ||||||
Assa Abloy AB, Class B | 1,200 | 25,599 | ||||||
Daikin Industries Ltd. | 200 | 25,315 | ||||||
Geberit AG (Registered) | 140 | 58,710 | ||||||
Johnson Controls International plc | 500 | 18,750 | ||||||
Lennox International, Inc. | 100 | 27,145 | ||||||
|
| |||||||
175,365 | ||||||||
|
| |||||||
Commercial Services & Supplies (1.3%) |
| |||||||
Brambles Ltd. | 5,100 | 43,323 | ||||||
Cintas Corp. | 200 | 43,428 | ||||||
Copart, Inc.* | 300 | 20,196 | ||||||
Dai Nippon Printing Co. Ltd. | 1,000 | 23,637 | ||||||
Republic Services, Inc. | 400 | 33,128 | ||||||
Secom Co. Ltd. | 300 | 25,148 | ||||||
Waste Management, Inc. | 800 | 85,872 | ||||||
|
| |||||||
274,732 | ||||||||
|
| |||||||
Construction & Engineering (0.5%) | ||||||||
HOCHTIEF AG | 120 | 17,901 | ||||||
Obayashi Corp. | 2,000 | 19,552 | ||||||
Vinci SA | 500 | 50,483 | ||||||
WSP Global, Inc. | 400 | 21,599 | ||||||
|
| |||||||
109,535 | ||||||||
|
| |||||||
Electrical Equipment (0.5%) | ||||||||
Emerson Electric Co. | 300 | 21,297 | ||||||
Legrand SA | 300 | 22,046 | ||||||
Mitsubishi Electric Corp. | 2,000 | 28,404 | ||||||
Rockwell Automation, Inc. | 200 | 36,142 | ||||||
|
| |||||||
107,889 | ||||||||
|
| |||||||
Industrial Conglomerates (1.5%) | ||||||||
3M Co. | 700 | 132,657 | ||||||
Honeywell International, Inc. | 600 | 104,178 |
See Notes to Financial Statements.
152
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Roper Technologies, Inc. | 200 | $ | 71,940 | |||||
|
| |||||||
308,775 | ||||||||
|
| |||||||
Machinery (2.1%) | ||||||||
ANDRITZ AG | 300 | 14,300 | ||||||
Atlas Copco AB, Class A | 1,500 | 46,625 | ||||||
Caterpillar, Inc. | 500 | 69,710 | ||||||
Cummins, Inc. | 100 | 16,629 | ||||||
Epiroc AB, Class A* | 2,000 | 20,680 | ||||||
Hoshizaki Corp. | 300 | 19,390 | ||||||
Illinois Tool Works, Inc. | 500 | 77,815 | ||||||
Ingersoll-Rand plc | 500 | 61,305 | ||||||
Kone OYJ, Class B | 600 | 32,881 | ||||||
PACCAR, Inc. | 500 | 35,835 | ||||||
Sandvik AB | 2,000 | 36,990 | ||||||
|
| |||||||
432,160 | ||||||||
|
| |||||||
Marine (0.1%) | ||||||||
Kuehne + Nagel International AG (Registered) | 180 | 26,153 | ||||||
|
| |||||||
Professional Services (1.2%) | ||||||||
Recruit Holdings Co. Ltd. | 800 | 23,908 | ||||||
SGS SA (Registered) | 17 | 44,863 | ||||||
Thomson Reuters Corp. | 400 | 24,719 | ||||||
TransUnion | 300 | 20,895 | ||||||
Verisk Analytics, Inc. | 400 | 56,456 | ||||||
Wolters Kluwer NV | 1,000 | 69,741 | ||||||
|
| |||||||
240,582 | ||||||||
|
| |||||||
Road & Rail (1.8%) | ||||||||
Canadian National Railway Co. | 1,000 | 92,886 | ||||||
Canadian Pacific Railway Ltd. | 100 | 22,406 | ||||||
DSV A/S | 300 | 27,718 | ||||||
East Japan Railway Co. | 300 | 28,183 | ||||||
Hankyu Hanshin Holdings, Inc. | 1,000 | 37,255 | ||||||
Kintetsu Group Holdings Co. Ltd. | 1,000 | 44,302 | ||||||
MTR Corp. Ltd. | 4,000 | 23,812 | ||||||
Odakyu Electric Railway Co. Ltd. | 2,000 | 46,932 | ||||||
Union Pacific Corp. | 300 | 53,112 | ||||||
|
| |||||||
376,606 | ||||||||
|
| |||||||
Trading Companies & Distributors (1.2%) |
| |||||||
Brenntag AG | 400 | 21,562 | ||||||
Bunzl plc | 600 | 18,066 | ||||||
Fastenal Co. | 500 | 35,275 | ||||||
Ferguson plc | 473 | 33,553 | ||||||
ITOCHU Corp. | 1,500 | 26,931 | ||||||
Marubeni Corp. | 3,000 | 21,413 | ||||||
Mitsubishi Corp. | 1,200 | 32,921 | ||||||
Mitsui & Co. Ltd. | 1,900 | 30,599 | ||||||
Sumitomo Corp. | 2,300 | 32,819 | ||||||
|
| |||||||
253,139 | ||||||||
|
| |||||||
Transportation Infrastructure (0.3%) | ||||||||
Aena SME SA (m) | 270 | 50,073 | ||||||
Sydney Airport | 4,000 | 21,487 | ||||||
|
| |||||||
71,560 | ||||||||
|
| |||||||
Total Industrials | 3,290,075 | |||||||
|
| |||||||
Information Technology (11.2%) | ||||||||
Communications Equipment (0.4%) | ||||||||
Cisco Systems, Inc. | 1,100 | 61,545 | ||||||
F5 Networks, Inc.* | 100 | 15,690 | ||||||
|
| |||||||
77,235 | ||||||||
|
| |||||||
Electronic Equipment, Instruments & Components (1.3%) |
| |||||||
Amphenol Corp., Class A | 600 | 59,736 | ||||||
Hamamatsu Photonics KK | 500 | 20,221 | ||||||
Hexagon AB, Class B | 300 | 16,363 | ||||||
Hitachi Ltd. | 600 | 19,870 | ||||||
Keyence Corp. | 100 | 62,049 | ||||||
Kyocera Corp. | 400 | 25,818 | ||||||
TE Connectivity Ltd. | 700 | 66,955 | ||||||
|
| |||||||
271,012 | ||||||||
|
| |||||||
IT Services (4.4%) | ||||||||
Accenture plc, Class A | 800 | 146,136 | ||||||
Amadeus IT Group SA | 700 | 55,681 | ||||||
Automatic Data Processing, Inc. | 900 | 147,951 | ||||||
Broadridge Financial Solutions, Inc. | 200 | 23,626 | ||||||
CGI, Inc.* | 600 | 43,187 | ||||||
Cognizant Technology Solutions Corp., Class A | 800 | 58,368 | ||||||
Fidelity National Information Services, Inc. | 500 | 57,965 | ||||||
Jack Henry & Associates, Inc. | 300 | 44,718 | ||||||
Mastercard, Inc., Class A | 500 | 127,120 | ||||||
Paychex, Inc. | 600 | 50,586 | ||||||
Visa, Inc., Class A | 1,100 | 180,873 | ||||||
|
| |||||||
936,211 | ||||||||
|
| |||||||
Semiconductors & Semiconductor Equipment (1.2%) |
| |||||||
ASML Holding NV | 240 | 49,944 | ||||||
Infineon Technologies AG | 1,000 | 23,582 | ||||||
Intel Corp. | 900 | 45,936 | ||||||
Texas Instruments, Inc. | 1,100 | 129,613 | ||||||
|
| |||||||
249,075 | ||||||||
|
| |||||||
Software (2.7%) | ||||||||
Adobe, Inc.* | 400 | 115,700 | ||||||
ANSYS, Inc.* | 100 | 19,580 | ||||||
Cadence Design Systems, Inc.* | 400 | 27,752 | ||||||
Citrix Systems, Inc. | 200 | 20,192 | ||||||
Intuit, Inc. | 400 | 100,424 | ||||||
Microsoft Corp. | 500 | 65,300 | ||||||
Oracle Corp. | 1,100 | 60,863 | ||||||
SAP SE | 1,100 | 141,364 | ||||||
VMware, Inc., Class A | 100 | 20,413 | ||||||
|
| |||||||
571,588 | ||||||||
|
| |||||||
Technology Hardware, Storage & Peripherals (1.2%) |
| |||||||
Apple, Inc. | 700 | 140,469 | ||||||
Canon, Inc. | 1,300 | 36,049 | ||||||
FUJIFILM Holdings Corp. | 700 | 32,576 | ||||||
HP, Inc. | 1,900 | 37,905 | ||||||
|
| |||||||
246,999 | ||||||||
|
| |||||||
Total Information Technology | 2,352,120 | |||||||
�� |
|
See Notes to Financial Statements.
153
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Number of Shares | Value (Note 1) | |||||||
Materials (2.6%) | ||||||||
Chemicals (2.2%) | ||||||||
Air Products & Chemicals, Inc. | 300 | $ | 61,737 | |||||
Asahi Kasei Corp. | 2,000 | 20,522 | ||||||
Chr Hansen Holding A/S | 200 | 20,402 | ||||||
Ecolab, Inc. | 600 | 110,448 | ||||||
EMS-Chemie Holding AG (Registered) | 60 | 36,331 | ||||||
Givaudan SA (Registered) | 15 | 38,849 | ||||||
Koninklijke DSM NV | 306 | 34,956 | ||||||
Novozymes A/S, Class B | 400 | 18,641 | ||||||
PPG Industries, Inc. | 500 | 58,750 | ||||||
Shin-Etsu Chemical Co. Ltd. | 300 | 28,089 | ||||||
Symrise AG | 300 | 28,836 | ||||||
|
| |||||||
457,561 | ||||||||
|
| |||||||
Containers & Packaging (0.3%) | ||||||||
Amcor Ltd. | 1,800 | 20,341 | ||||||
Ball Corp. | 800 | 47,952 | ||||||
|
| |||||||
68,293 | ||||||||
|
| |||||||
Paper & Forest Products (0.1%) | ||||||||
UPM-Kymmene OYJ | 600 | 16,898 | ||||||
|
| |||||||
Total Materials | 542,752 | |||||||
|
| |||||||
Real Estate (4.3%) | ||||||||
Equity Real Estate Investment Trusts (REITs) (3.6%) |
| |||||||
Alexandria Real Estate Equities, Inc. (REIT) | 300 | 42,717 | ||||||
Ascendas REIT (REIT) | 12,000 | 26,469 | ||||||
AvalonBay Communities, Inc. (REIT) | 500 | 100,465 | ||||||
Dexus (REIT) | 4,200 | 37,010 | ||||||
Equity Residential (REIT) | 900 | 68,778 | ||||||
Essex Property Trust, Inc. (REIT) | 100 | 28,250 | ||||||
Goodman Group (REIT) | 3,500 | 32,470 | ||||||
GPT Group (The) (REIT) | 10,900 | 44,029 | ||||||
H&R REIT (REIT) | 1,400 | 23,920 | ||||||
Japan Retail Fund Investment Corp. (REIT) | 9 | 17,209 | ||||||
Link REIT (REIT) | 2,000 | 23,328 | ||||||
Mirvac Group (REIT) | 13,600 | 27,132 | ||||||
Public Storage (REIT) | 300 | 66,354 | ||||||
Regency Centers Corp. (REIT) | 300 | 20,151 | ||||||
Simon Property Group, Inc. (REIT) | 600 | 104,220 | ||||||
Stockland (REIT) | 11,900 | 31,626 | ||||||
Unibail-Rodamco-Westfield (REIT) | 160 | 27,502 | ||||||
Vornado Realty Trust (REIT) | 200 | 13,828 | ||||||
Welltower, Inc. (REIT) | 300 | 22,359 | ||||||
|
| |||||||
757,817 | ||||||||
|
| |||||||
Real Estate Management & Development (0.7%) |
| |||||||
CBRE Group, Inc., Class A* | 600 | 31,242 | ||||||
Daiwa House Industry Co. Ltd. | 1,000 | 27,928 | ||||||
First Capital Realty, Inc. | 2,200 | 35,060 | ||||||
Mitsubishi Estate Co. Ltd. | 1,000 | 16,836 | ||||||
Mitsui Fudosan Co. Ltd. | 1,000 | 23,044 | ||||||
|
| |||||||
134,110 | ||||||||
|
| |||||||
Total Real Estate | 891,927 | |||||||
|
| |||||||
Utilities (5.5%) | ||||||||
Electric Utilities (2.2%) | ||||||||
American Electric Power Co., Inc. | 400 | 34,220 | ||||||
Chubu Electric Power Co., Inc. | 3,100 | 44,972 | ||||||
CLP Holdings Ltd. | 2,000 | 22,677 | ||||||
Enel SpA | 12,000 | 75,896 | ||||||
Eversource Energy | 900 | 64,494 | ||||||
Iberdrola SA | 14,000 | 127,158 | ||||||
Red Electrica Corp. SA | 2,000 | 41,466 | ||||||
Terna Rete Elettrica Nazionale SpA | 8,000 | 47,897 | ||||||
|
| |||||||
458,780 | ||||||||
|
| |||||||
Gas Utilities (0.8%) | ||||||||
Atmos Energy Corp. | 500 | 51,170 | ||||||
Hong Kong & China Gas Co. Ltd. | 15,730 | 37,537 | ||||||
Tokyo Gas Co. Ltd. | 2,000 | 50,756 | ||||||
UGI Corp. | 300 | 16,353 | ||||||
|
| |||||||
155,816 | ||||||||
|
| |||||||
Multi-Utilities (2.0%) | ||||||||
CenterPoint Energy, Inc. | 2,200 | 68,200 | ||||||
CMS Energy Corp. | 1,200 | 66,660 | ||||||
Consolidated Edison, Inc. | 900 | 77,544 | ||||||
E.ON SE | 4,000 | 42,926 | ||||||
National Grid plc | 1,400 | 15,263 | ||||||
Public Service Enterprise Group, Inc. | 1,300 | 77,545 | ||||||
Sempra Energy | 600 | 76,770 | ||||||
|
| |||||||
424,908 | ||||||||
|
| |||||||
Water Utilities (0.5%) | ||||||||
American Water Works Co., Inc. | 700 | 75,733 | ||||||
Severn Trent plc | 1,200 | 31,859 | ||||||
|
| |||||||
107,592 | ||||||||
|
| |||||||
Total Utilities | 1,147,096 | |||||||
|
| |||||||
Total Investments in Securities (98.8%) | 20,723,431 | |||||||
Other Assets Less Liabilities (1.2%) | 258,478 | |||||||
|
| |||||||
Net Assets (100%) | $ | 20,981,909 | ||||||
|
|
* | Non-income producing. |
(m) | Regulation S is an exemption for securities offerings that are made outside of the United States and do not involve direct selling efforts in the United States. Resale restrictions may apply for purposes of the Securities Act of 1933. At April 30, 2019, the market value of these securities amounted to $50,073 or 0.2% of net assets. |
(q) | Preference Shares are a special type of equity investment that shares in the earnings of the company, has limited voting rights, and receives a greater dividend than applicable Common Shares. |
Glossary:
CVA | — Dutch Certification |
See Notes to Financial Statements.
154
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Country Diversification As a Percentage of Total Net Assets | ||||
Australia | 2.3 | % | ||
Austria | 0.1 | |||
Belgium | 0.1 | |||
Canada | 7.2 | |||
Denmark | 0.8 | |||
Finland | 0.7 | |||
France | 2.1 | |||
Germany | 4.2 | |||
Hong Kong | 0.8 | |||
Israel | 0.4 | |||
Italy | 0.9 | |||
Japan | 6.4 | |||
Netherlands | 1.4 | |||
Norway | 0.3 | |||
Portugal | 0.2 | |||
Singapore | 0.5 | |||
Spain | 1.8 | |||
Sweden | 1.5 | |||
Switzerland | 2.9 | |||
United Kingdom | 2.3 | |||
United States | 61.9 | |||
Cash and Other | 1.2 | |||
|
| |||
100.0 | % | |||
|
|
The following is a summary of the inputs used to value the Fund’s assets and liabilities carried at fair value as of April 30, 2019:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
Investment Type | Level 1 Quoted Prices in Active Markets for Identical Securities | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | Total | ||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Communication Services | $ | 794,838 | $ | 397,840 | $ | — | $ | 1,192,678 | ||||||||
Consumer Discretionary | 1,373,816 | 367,491 | — | 1,741,307 | ||||||||||||
Consumer Staples | 2,049,914 | 917,365 | — | 2,967,279 | ||||||||||||
Energy | 222,280 | 234,046 | — | 456,326 | ||||||||||||
Financials | 2,881,562 | 1,008,391 | — | 3,889,953 | ||||||||||||
Health Care | 1,814,304 | 437,614 | — | 2,251,918 | ||||||||||||
Industrials | 2,011,123 | 1,278,952 | — | 3,290,075 | ||||||||||||
Information Technology | 1,868,603 | 483,517 | — | 2,352,120 | ||||||||||||
Materials | 278,887 | 263,865 | — | 542,752 | ||||||||||||
Real Estate | 557,344 | 334,583 | — | 891,927 | ||||||||||||
Utilities | 608,689 | 538,407 | — | 1,147,096 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 14,461,360 | $ | 6,262,071 | $ | — | $ | 20,723,431 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 14,461,360 | $ | 6,262,071 | $ | — | $ | 20,723,431 | ||||||||
|
|
|
|
|
|
|
|
The Fund held no derivatives contracts during the six months ended April 30, 2019.
See Notes to Financial Statements.
155
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2019 (Unaudited)
Investment security transactions for the six months ended April 30, 2019 were as follows:
Cost of Purchases: | ||||
Long-term investments other than U.S. government debt securities | $ | 4,722,000 | ||
Net Proceeds of Sales and Redemptions: | ||||
Long-term investments other than U.S. government debt securities | $ | 3,246,869 |
As of April 30, 2019, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
Aggregate gross unrealized appreciation | $ | 3,390,240 | ||
Aggregate gross unrealized depreciation | (360,753 | ) | ||
|
| |||
Net unrealized appreciation | $ | 3,029,487 | ||
|
| |||
Federal income tax cost of investments in securities and derivative instruments, if applicable | $ | 17,693,944 | ||
|
|
See Notes to Financial Statements.
156
1290 FUNDS
1290 SMARTBETA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2019 (Unaudited)
ASSETS |
| |||
Investments in Securities, at value | $ | 20,723,431 | ||
Cash | 156,769 | |||
Foreign cash (Cost $77,307) | 76,655 | |||
Dividends, interest and other receivables | 52,140 | |||
Prepaid registration and filing fees | 24,047 | |||
Receivable for Fund shares sold | 10,890 | |||
Receivable from investment adviser | 4,723 | |||
Other assets | 103 | |||
|
| |||
Total assets | 21,048,758 | |||
|
| |||
LIABILITIES |
| |||
Payable for Fund shares redeemed | 26,410 | |||
Transfer agent fees payable | 3,902 | |||
Distribution fees payable – Class A | 259 | |||
Trustees’ fees payable | 232 | |||
Distribution fees payable – Class R | 58 | |||
Accrued expenses | 35,988 | |||
|
| |||
Total liabilities | 66,849 | |||
|
| |||
NET ASSETS | $ | 20,981,909 | ||
|
| |||
Net assets were comprised of: |
| |||
Paid in capital | $ | 17,650,075 | ||
Total distributable earnings (loss) | 3,331,834 | |||
|
| |||
Net assets | $ | 20,981,909 | ||
|
| |||
Class A | ||||
Net asset value and redemption price per share, $1,303,839 / 103,068 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.65 | ||
Maximum sales charge (5.50% of offering price) | 0.74 | |||
|
| |||
Maximum offering price per share | $ | 13.39 | ||
|
| |||
Class I | ||||
Net asset value and redemption price per share, $19,403,616 / 1,532,444 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.66 | ||
|
| |||
Class R | ||||
Net asset value and redemption price per share, $143,652 / 11,368 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.64 | ||
|
| |||
Class T** | ||||
Net asset value and redemption price per share, $130,802 / 10,332 shares outstanding (unlimited amount authorized: $0.001 par value) | $ | 12.66 | ||
Maximum sales charge (2.50% of offering price) | 0.32 | |||
|
| |||
Maximum offering price per share | $ | 12.98 | ||
|
|
** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2019 (Unaudited)
INVESTMENT INCOME |
| |||
Dividends (net of $15,826 foreign withholding tax) | $ | 239,683 | ||
Interest | 1,409 | |||
|
| |||
Total income | 241,092 | |||
|
| |||
EXPENSES |
| |||
Investment advisory fees | 64,094 | |||
Professional fees | 33,395 | |||
Transfer agent fees | 23,188 | |||
Registration and filing fees | 22,799 | |||
Printing and mailing expenses | 14,919 | |||
Administrative fees | 13,735 | |||
Custodian fees | 9,917 | |||
Distribution fees – Class A | 1,360 | |||
Trustees’ fees | 885 | |||
Distribution fees – Class R | 335 | |||
Distribution fees – Class T** | 153 | |||
Miscellaneous | 9,779 | |||
|
| |||
Gross expenses | 194,559 | |||
Less: Waiver from investment adviser | (77,829 | ) | ||
Waiver from distributor | (153 | ) | ||
Reimbursement from investment adviser | (32,455 | ) | ||
|
| |||
Net expenses | 84,122 | |||
|
| |||
NET INVESTMENT INCOME (LOSS) | 156,970 | |||
|
| |||
REALIZED AND UNREALIZED GAIN (LOSS) |
| |||
Realized gain (loss) on: | ||||
Investments in securities | 199,850 | |||
Foreign currency transactions | 101 | |||
|
| |||
Net realized gain (loss) | 199,951 | |||
|
| |||
Change in unrealized appreciation (depreciation) on: |
| |||
Investments in securities | 1,452,233 | |||
Foreign currency translations | (438 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 1,451,795 | |||
|
| |||
NET REALIZED AND UNREALIZED GAIN (LOSS) | 1,651,746 | |||
|
| |||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,808,716 | ||
|
|
** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
157
1290 FUNDS
1290 SMARTBETA EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, 2018 | |||||||
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: |
| |||||||
Net investment income (loss) | $ | 156,970 | $ | 239,589 | ||||
Net realized gain (loss) | 199,951 | 636,892 | ||||||
Net change in unrealized appreciation (depreciation) | 1,451,795 | (657,820 | ) | |||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | 1,808,716 | 218,661 | ||||||
|
|
|
| |||||
Distributions to shareholders: | ||||||||
Class A | (49,479 | ) | (16,661 | ) | ||||
Class I | (823,783 | ) | (426,857 | ) | ||||
Class R | (6,108 | ) | (3,515 | ) | ||||
Class T** | (6,200 | ) | (3,823 | ) | ||||
|
|
|
| |||||
Total distributions to shareholders | (885,570 | ) | (450,856 | ) | ||||
|
|
|
| |||||
CAPITAL SHARES TRANSACTIONS: | ||||||||
Class A | ||||||||
Capital shares sold [ 28,497 and 51,694 shares, respectively ] | 347,285 | 633,484 | ||||||
Capital shares issued in reinvestment of dividends [ 3,763 and 1,060 shares, respectively ] | 43,270 | 12,925 | ||||||
Capital shares repurchased [ (22,064) and (15,913) shares, respectively ] | (260,536 | ) | (196,268 | ) | ||||
|
|
|
| |||||
Total Class A transactions | 130,019 | 450,141 | ||||||
|
|
|
| |||||
Class I | ||||||||
Capital shares sold [ 193,559 and 218,679 shares, respectively ] | 2,326,320 | 2,716,062 | ||||||
Capital shares issued in reinvestment of dividends [ 21,002 and 5,562 shares, respectively ] | 241,529 | 67,799 | ||||||
Capital shares repurchased [ (30,922) and (30,974) shares, respectively ] | (363,887 | ) | (385,697 | ) | ||||
|
|
|
| |||||
Total Class I transactions | 2,203,962 | 2,398,164 | ||||||
|
|
|
| |||||
Class R | ||||||||
Capital shares sold [ 40 and 72 shares, respectively ] | 485 | 888 | ||||||
Capital shares issued in reinvestment of dividends [ 25 and 12 shares, respectively ] | 283 | 139 | ||||||
Capital shares repurchased [ (1) and (3) shares, respectively ] | (14 | ) | (31 | ) | ||||
|
|
|
| |||||
Total Class R transactions | 754 | 996 | ||||||
|
|
|
| |||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | 2,334,735 | 2,849,301 | ||||||
|
|
|
| |||||
TOTAL INCREASE (DECREASE) IN NET ASSETS | 3,257,881 | 2,617,106 | ||||||
NET ASSETS: |
| |||||||
Beginning of period | 17,724,028 | 15,106,922 | ||||||
|
|
|
| |||||
End of period | $ | 20,981,909 | $ | 17,724,028 | ||||
|
|
|
|
| ||||
** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
|
See Notes to Financial Statements.
158
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class A | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.09 | $ | 12.23 | $ | 10.25 | $ | 10.24 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.09 | 0.15 | 0.13 | 0.12 | ## | 0.11 | ||||||||||||||
Net realized and unrealized gain (loss) | 1.04 | 0.06 | † | 1.96 | 0.04 | 0.16 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 1.13 | 0.21 | 2.09 | 0.16 | 0.27 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.14 | ) | (0.15 | ) | (0.11 | ) | (0.15 | ) | (0.03 | ) | ||||||||||
Distributions from net realized gains | (0.43 | ) | (0.20 | ) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.57 | ) | (0.35 | ) | (0.11 | ) | (0.15 | ) | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 12.65 | $ | 12.09 | $ | 12.23 | $ | 10.25 | $ | 10.24 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 9.82 | % | 1.64 | % | 20.58 | % | 1.58 | % | 2.70 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 1,304 | $ | 1,123 | $ | 685 | $ | 269 | $ | 3,111 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.15 | % | 1.15 | % | 1.20 | % | 1.35 | % | 1.35 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.35 | % | 2.42 | % | 2.77 | % | 2.76 | % | 4.21 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.47 | % | 1.21 | % | 1.17 | % | 1.23 | %(aa) | 1.14 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.27 | % | (0.06 | )% | (0.41 | )% | (0.18 | )%(aa) | (1.73 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 18 | % | 49 | % | 41 | % | 27 | % | 29 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class I | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.11 | $ | 12.25 | $ | 10.27 | $ | 10.26 | $ | 10.00 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.10 | 0.18 | 0.17 | 0.15 | ## | 0.14 | ||||||||||||||
Net realized and unrealized gain (loss) | 1.05 | 0.06 | † | 1.95 | 0.03 | 0.15 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total from investment operations | 1.15 | 0.24 | 2.12 | 0.18 | 0.29 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.18 | ) | (0.14 | ) | (0.17 | ) | (0.03 | ) | ||||||||||
Distributions from net realized gains | (0.43 | ) | (0.20 | ) | — | — | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.60 | ) | (0.38 | ) | (0.14 | ) | (0.17 | ) | (0.03 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 12.66 | $ | 12.11 | $ | 12.25 | $ | 10.27 | $ | 10.26 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total return (b) | 10.00 | % | 1.86 | % | 20.85 | % | 1.84 | % | 2.94 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 19,404 | $ | 16,340 | $ | 14,158 | $ | 10,838 | $ | 3,218 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.90 | % | 0.90 | % | 0.96 | % | 1.10 | % | 1.10 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.10 | % | 2.16 | % | 2.49 | % | 2.51 | % | 3.96 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.73 | % | 1.47 | % | 1.48 | % | 1.44 | %(bb) | 1.38 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.53 | % | 0.21 | % | (0.05 | )% | 0.04 | %(bb) | (1.48 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 18 | % | 49 | % | 41 | % | 27 | % | 29 | % |
See Notes to Financial Statements.
159
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class R | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.06 | $ | 12.20 | $ | 10.23 | $ | 10.22 | $ | 10.00 | ||||||||||
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|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.07 | 0.12 | 0.11 | 0.10 | ## | 0.09 | ||||||||||||||
Net realized and unrealized gain (loss) | 1.05 | 0.06 | † | 1.94 | 0.03 | 0.16 | ||||||||||||||
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|
|
|
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|
|
|
| |||||||||||
Total from investment operations | 1.12 | 0.18 | 2.05 | 0.13 | 0.25 | |||||||||||||||
|
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|
|
|
|
|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.11 | ) | (0.12 | ) | (0.08 | ) | (0.12 | ) | (0.03 | ) | ||||||||||
Distributions from net realized gains | (0.43 | ) | (0.20 | ) | — | — | — | |||||||||||||
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|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.54 | ) | (0.32 | ) | (0.08 | ) | (0.12 | ) | (0.03 | ) | ||||||||||
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|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 12.64 | $ | 12.06 | $ | 12.20 | $ | 10.23 | $ | 10.22 | ||||||||||
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|
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|
|
| |||||||||||
Total return (b) | 9.73 | % | 1.39 | % | 20.21 | % | 1.32 | % | 2.47 | % | ||||||||||
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|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 144 | $ | 136 | $ | 137 | $ | 115 | $ | 3,073 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.40 | % | 1.40 | % | 1.46 | % | 1.60 | % | 1.60 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.61 | % | 2.66 | % | 2.98 | % | 3.01 | % | 4.46 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.21 | % | 0.98 | % | 0.98 | % | 0.98 | %(cc) | 0.89 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | — | %‡‡ | (0.29 | )% | (0.54 | )% | (0.43 | )%(cc) | (1.98 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 18 | % | 49 | % | 41 | % | 27 | % | 29 | % | ||||||||||
Six Months Ended April 30, 2019 (Unaudited) | Year Ended October 31, | November 12, 2014* to October 31, 2015 | ||||||||||||||||||
Class T** | 2018 | 2017 | 2016 | |||||||||||||||||
Net asset value, beginning of period | $ | 12.11 | $ | 12.25 | $ | 10.27 | $ | 10.26 | $ | 10.00 | ||||||||||
|
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|
|
|
| |||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) (e) | 0.10 | 0.18 | 0.17 | 0.15 | ## | 0.14 | ||||||||||||||
Net realized and unrealized gain (loss) | 1.05 | 0.06 | † | 1.95 | 0.03 | 0.15 | ||||||||||||||
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|
|
| |||||||||||
Total from investment operations | 1.15 | 0.24 | 2.12 | 0.18 | 0.29 | |||||||||||||||
|
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|
|
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|
|
| |||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.18 | ) | (0.14 | ) | (0.17 | ) | (0.03 | ) | ||||||||||
Distributions from net realized gains | (0.43 | ) | (0.20 | ) | — | — | — | |||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||
Total dividends and distributions | (0.60 | ) | (0.38 | ) | (0.14 | ) | (0.17 | ) | (0.03 | ) | ||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||
Net asset value, end of period | $ | 12.66 | $ | 12.11 | $ | 12.25 | $ | 10.27 | $ | 10.26 | ||||||||||
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|
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| |||||||||||
Total return (b) | 10.00 | % | 1.86 | % | 20.85 | % | 1.84 | % | 2.94 | % | ||||||||||
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|
|
|
| |||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000’s) | $ | 131 | $ | 125 | $ | 127 | $ | 106 | $ | 1,029 | ||||||||||
Ratio of expenses to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 0.90 | % | 0.90 | % | 0.96 | % | 1.10 | % | 1.10 | % | ||||||||||
Before waivers and reimbursements (a)(f) | 2.36 | % | 2.41 | % | 2.96 | % | 3.51 | % | 4.96 | % | ||||||||||
Ratio of net investment income (loss) to average net assets: | ||||||||||||||||||||
After waivers and reimbursements (a)(f) | 1.71 | % | 1.47 | % | 1.48 | % | 1.48 | %(dd) | 1.39 | %(l) | ||||||||||
Before waivers and reimbursements (a)(f) | 0.25 | % | (0.04 | )% | (0.52 | )% | (0.93 | )%(dd) | (2.48 | )%(l) | ||||||||||
Portfolio turnover rate (z)^ | 18 | % | 49 | % | 41 | % | 27 | % | 29 | % |
See Notes to Financial Statements.
160
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
* | Commencement of Operations. |
** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
† | The amount shown for a share outstanding throughout the period does not accord with the aggregate net income and/or gain on investments for that period because of the timing of sales and repurchases of the Fund shares in relation to fluctuating market value of the investments in the Fund. |
‡‡ | Amount is less than 0.005%. |
## | Includes income resulting from a special dividend. Without this dividend, the per share income amounts would be $0.08, $0.11, $0.06 and $0.11 for Class A, Class I, Class R and Class T, respectively. |
^ | Portfolio turnover rate excludes derivatives, if any. |
(a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
(b) | Total returns for periods less than one year are not annualized. |
(e) | Net investment income (loss) per share is based on average shares outstanding. |
(f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
(l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
(z) | Portfolio turnover rate for periods less than one year is not annualized. |
(aa) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class A would be 0.85% for income after waivers and reimbursements and (0.56)% before waivers and reimbursements. |
(bb) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class I would be 1.07% for income after waivers and reimbursements and (0.34)% before waivers and reimbursements. |
(cc) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class R would be 0.61% for income after waivers and reimbursements and (0.80)% before waivers and reimbursements. |
(dd) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class T would be 1.11% for income after waivers and reimbursements and (1.30)% before waivers and reimbursements. |
See Notes to Financial Statements.
161
1290 FUNDS
April 30, 2019 (Unaudited)
Note 1 | Organization and Significant Accounting Policies |
1290 Funds (the “Trust”) was organized as a Delaware statutory trust on March 1, 2013 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company with eighteen diversified funds in operation (each, a “Fund” and collectively, the “Funds”). The investment adviser to each Fund is AXA Equitable Funds Management Group, LLC d/b/a 1290 Asset Managers® (“1290 Asset Managers” or “FMG LLC” or the “Adviser”), a wholly-owned subsidiary of AXA Equitable Life Insurance Company (“AXA Equitable”).
On June 8, 2018 and June 13, 2018, FMG LLC redeemed capital out of the 1290 Diversified Bond Fund in the amount of $20,000,000 and $19,591,184, respectively, for Class I shares. On June 8, 2018 and June 13, 2018, FMG LLC contributed capital into the 1290 GAMCO Small/Mid Cap Value Fund in the amount of $20,000,000 and $19,591,184, respectively, for Class I shares.
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts with vendors and others that provide for general indemnifications. A Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund. However, based on experience, the Trust and management expect the risk of loss to be remote.
Each of the investmentsub-advisers (each a“Sub-Adviser”) independently chooses and maintains a portfolio of securities for their respective Fund.
The 1290 Retirement 2020 Fund, 1290 Retirement 2025 Fund, 1290 Retirement 2030 Fund, 1290 Retirement 2035 Fund, 1290 Retirement 2040 Fund, 1290 Retirement 2045 Fund, 1290 Retirement 2050 Fund, 1290 Retirement 2055 Fund and the 1290 Retirement 2060 Fund (each, a “1290 Retirement Fund” and together, the “1290 Retirement Funds”) as well as 1290 Multi-Alternative Strategies Fund and 1290 Low Volatility Global Equity Fund are types of mutual funds often described as“fund-of-funds.” These Funds pursue their investment objectives by investing exclusively in other unaffiliated investment companies or exchange-traded funds (“ETFs”). The underlying funds’ financial statements are publicly available through the SEC’s EDGAR database (https://www.sec.gov/edgar/searchedgar/companysearch.html).
The Trust has authorized four classes of shares, Class A, Class I, Class R and Class T on behalf of each of the eighteen Funds. Class T shares are currently not offered for sale. Additionally, 1290 Low Volatility Global Equity Fund and each 1290 Retirement Fund currently only offer Class I shares for sale.
The Class A, Class R and Class T shares are subject to distribution fees imposed under distribution plans (“Distribution Plans”) adopted pursuant to Rule12b-1 under the 1940 Act. Under the Trust’s multiple-class distribution system, all four classes of shares have identical voting, dividend, liquidation and other rights, other than the payment of distribution fees under the applicable Distribution Plan.
Additionally, Class A shares are sold at a maximum front-end sales charge of up to 4.50% for 1290 Convertible Securities Fund, 1290 Diversified Bond Fund and 1290 High Yield Bond Fund, and up to 5.50% for 1290 DoubleLine Dynamic Allocation Fund, 1290 GAMCO Small/Mid Cap Value Fund, 1290 Global Talents Fund, 1290 Low Volatility Global Equity Fund, 1290 Multi-Alternative Strategies Fund, 1290 SmartBeta Equity Fund and each 1290 Retirement Fund. Class A shares sold without a front-end sales charge are subject to a contingent deferred sales charge (“CDSC”) of 1% of the lesser of the original net asset value (“NAV”) of the redeemed shares at the time of purchase or the aggregate NAV of the redeemed shares at the time of redemption, if redeemed within 12 months of purchase. Class T shares are subject to a maximum front-end sales charge of up to 2.50%.
162
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
The investment objectives of each Fund are as follows:
1290 Convertible Securities Fund(sub-advised by Palisade Capital Management, L.L.C.) — Seeks a high level of total return.
1290 Diversified Bond Fund (sub-advised by Brandywine Global Investment Management, LLC (“Brandywine Global”)) — Seeks to maximize total return consisting of income and capital appreciation.
1290 DoubleLine Dynamic Allocation Fund(sub-advised by DoubleLine Capital LP) — Seeks to achieve total return from long-term capital appreciation and income.
1290 GAMCO Small/Mid Cap Value Fund(sub-advised by GAMCO Asset Management Inc.) — Seeks to maximize capital appreciation.
1290 Global Talents Fund(sub-advised by AXA Investment Managers, Inc. (“AXA IM”), an affiliate of 1290 Asset Managers) — Seeks to provide long-term capital growth.
1290 High Yield Bond Fund (sub-advised by AXA IM) — Seeks to maximize current income.
1290 Low Volatility Global Equity Fund — Seeks long-term capital appreciation while managing portfolio volatility.
1290 Multi-Alternative Strategies Fund — Seeks long-term growth of capital.
1290 Retirement 2020 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2025 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2030 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2035 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2040 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2045 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2050 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2055 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2060 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 SmartBeta Equity Fund(sub-advised by AXA Rosenberg Investment Management LLC, an affiliate of 1290 Asset Managers) — Seeks to achieve long-term capital appreciation.
The following is a summary of the significant accounting policies of the Trust:
The preparation of financial statements in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The Funds are investment companies and, accordingly, follow the
163
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
Investment Company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946 —Investment Companies,which is part of U.S. GAAP.
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”)2017-08, “Receivables — Nonrefundable Fees and Other Costs (Subtopic310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU2017-08 shortens the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date rather than the contractual maturity date. The Funds will adopt and apply ASU2017-08 on a modified retrospective basis through a cumulative-effect adjustment as of November 1, 2019. As a result of the adoption of ASU2017-08, as of November 1, 2019, for each Fund within-scope securities, the amortized cost basis of investments will be reduced and unrealized appreciation of investments will be increased, but there will be no impact on net assets or overall results from operations.
The Securities Exchange Commission (“SEC”) adopted changes to RegulationS-X to simplify the reporting of information by registered investment companies in financial statements. The amendments require presentation of the total, rather than the components, of distributable earnings on the Statement of Assets and Liabilities and also require presentation of the total, rather than the components, of distributions to shareholders, except for tax return of capital distributions, if any, on the Statement of Changes in Net Assets. The amendments also removed the requirement for parenthetical disclosure of undistributed net investment income on the Statement of Changes in Net Assets. These RegulationS-X amendments are reflected in the Funds’ financial statements for the six months ended April 30, 2019.
On August 28, 2018, the FASB issued ASU2018-13, “Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement,” which amends the fair value measurement disclosure requirements under U.S. GAAP. The amendments of ASU2018-13 include new, eliminated, and modified disclosure requirements. In addition, the amendments clarify that materiality is an appropriate consideration of entities when evaluating disclosure requirements. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. An entity is permitted to early adopt any eliminated or modified disclosures upon issuance of this ASU and delay adoption of the new disclosures until their effective date. As such, the Funds have early adopted the eliminated and modified disclosures, as permitted by this ASU.
Valuation:
Equity securities (including securities issued by ETFs) listed on national securities exchanges are generally valued at the last sale price or official closing price on the date of valuation or, if there is no sale or official closing price, at the latest available bid price. Securities listed on the NASDAQ stock market will be valued using the NASDAQ Official Closing Price (“NOCP”). Generally, the NOCP will be the last sale price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. Other unlisted stocks are generally valued at their last sale price or official closing price, or if there is no such price, at a bid price estimated by a broker.
Convertible preferred stocks listed on national securities exchanges are generally valued as of their last sale price or, if there is no sale, at the latest available bid price. Convertible bonds and unlisted convertible preferred stocks are generally valued using prices obtained from a pricing service for such investments or, if a pricing service price is not available, at bid prices obtained from one or more of the major dealers in such bonds or stocks. Where there is a discrepancy between dealers, values may be adjusted based on recent premium spreads to the underlying common stocks. Convertible bonds may be matrix-priced based upon the conversion value to the underlying common stocks and market premiums.
164
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
Mortgage-backed and asset-backed securities are generally valued at evaluated prices obtained from a pricing service where available, or at a bid price obtained from one or more of the major dealers in such securities. The pricing service may utilize data such as issuer type, coupon, cash flows, collateral performance, mortgage prepayment projection tables and Adjustable Rate Mortgage evaluations that incorporate index data, periodic and life caps, the next coupon reset date and the convertibility of the bond in making evaluations. If a quoted price is unavailable, an equivalent yield or yield spread quotes may be obtained from a broker and converted to a price.
Options that are traded on an exchange are generally valued at their last sale price or official closing price on the date of valuation. Options not traded on an exchange or actively traded are valued according to fair value methods. The market value of a put or call option will usually reflect, among other factors, the market price of the underlying security.
Corporate and Municipal bonds and notes are generally valued on the basis of prices provided by a pricing service. The pricing services may utilize many inputs that are observable in making evaluations which may include, but are not limited to, trading activity for similar securities, issuer details, yields, default rates, credit spreads, quoted prices and any developments related to the specific securities. However, when such prices are not available, such bonds and notes are generally valued at a bid price estimated by a broker.
U.S. Treasury securities and other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are generally valued at prices obtained from a bond pricing service where available. The pricing service may utilize data received from active market makers and broker-dealers, yield curves and the spread over comparable U.S. Treasury issues in making evaluations.
Foreign securities, including foreign government securities, not traded directly in the U.S., or traded in American Depositary Receipts (“ADR”) or similar form, are generally valued at representative quoted prices from the primary exchange in the currency of the country of origin. Foreign currency is converted into U.S. dollar equivalent at current exchange rates.
Investments in shares ofopen-end investment companies (other than ETFs) held by a Fund are generally valued at the NAV of the shares of such funds as described in the underlying funds’ prospectuses.
Futures contracts are generally valued at their last settlement price or, if there is no sale, at the latest available bid price.
Centrally cleared swaps are priced using the value determined by the central counterparty (“CCP”) at the end of the day. If the CCP price is unavailable, a price provided by an approved pricing service will be used.
Swaptions aremarked-to-market daily based upon values from third party vendors.
Forward foreign currency contracts are generally valued by interpolating between the forward and spot currency rates as quoted by a pricing service as of a designated hour on the valuation date. The pricing service may utilize data such as actual trading information and foreign currency rates gathered from leading market makers and foreign currency trading centers throughout the world in making evaluations. Forward foreign currency contracts may be settled with the counterparty in U.S. Dollars without the delivery of foreign currency.
During the six months ended April 30, 2019, certain Funds held forward foreign currency contracts to either gain exposure to certain currencies, or enter into an economic hedge against changes in the values of securities held in the Fund, that do not qualify for hedge accounting under Accounting Standards Codification (“ASC”) 815. The Statement of Operations for each Fund reflects realized gains or losses, if any, in forward currency transactions and change in unrealized gains or losses in forward foreign currency transactions. Further information on the
165
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
impact of these positions on the Funds’ financial statements can be found in the Statement of Operations and Portfolio of Investments for each Fund.
If market quotations are not readily available for a security or other financial instrument, such security and instrument shall be referred to the Trust’s Valuation Committee (“Committee”), which will value the asset in good faith pursuant to procedures (“Pricing Procedures”) adopted by the Board of Trustees of the Trust (the “Board”).
The Board is responsible for ensuring that appropriate valuation methods are used to price securities for the Funds. The Board has delegated the responsibility of calculating the NAVs of each of the Funds and classes pursuant to these Pricing Procedures to the Trust’s administrator, FMG LLC (in its capacity as administrator, the “Administrator”). The Administrator has entered into asub-administration agreement with JPMorgan Chase Bank, N.A. (the“Sub-Administrator”), which assists in performing certain of the duties described herein. The Committee, established by the Board, determines the value of the Trust’s securities and assets for which market quotations are not readily available or for which valuation cannot otherwise be provided in accordance with procedures adopted by the Board. The Committee is comprised of senior employees from FMG LLC.
Due to the inherent uncertainty of valuations of such securities, the fair value may differ significantly from the values that would have been used had a ready market for such securities existed.
Various inputs are used in determining the value of the Trust’s assets or liabilities carried at fair value. These inputs are summarized in three broad levels below:
• | Level 1 - quoted prices in active markets for identical assets |
• | Level 2 - other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 - significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
A summary of inputs used to value each Fund’s assets and liabilities carried at fair value as of April 30, 2019, is included in the Portfolio of Investments for each Fund. Changes in valuation techniques may result in transfers in or out of an investment’s assigned level.
Transfers into and transfers out of Level 3, are included in the Level 3 reconciliation following the Portfolio of Investments for each Fund, if any. Transfers between levels may be due to a decline, or an increase, in market activity (e.g., frequency of trades), which may result in a lack of, or increase in, available observable market inputs to determine price.
The inputs or methodology used to value securities are not necessarily an indication of the risk associated with investing in those securities. An investment’s level within the fair value hierarchy is based on the lowest level of any input, both individually and in the aggregate, that is significant to the fair value measurement.
The Committee has the ability to meet and review reports based on the valuation techniques used to value Level 3 securities. As part of a review, the Committee would consider obtaining updates from its pricing vendors andSub-Advisers for fair valued securities. For example, with respect to model driven prices, the Committee could receive reports regarding a review and recalculation of pricing models and related discounts. For those securities which are valued based on broker quotes, the Committee may evaluate variances between existing broker quotes and any alternative broker quotes provided by aSub-Adviser or other pricing source.
To substantiate unobservable inputs used in a fair valuation, the Secretary of the Committee can perform an independent verification as well as additional research for fair value notifications received from the pricing agents. Among other factors, particular areas of focus may include: description of security, historical pricing,intra-day price movement, last trade
166
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
information, corporate actions, related securities, any available company news and announcements, any available trade data or other information. The Committee also notes the materiality of holdings and price changes on a Fund’s NAV.
The Committee reviews and considers changes in value for all fair valued securities that have occurred since the last review.
Pursuant to procedures approved by the Board, events or circumstances affecting the values of Fund securities that occur between the closing of their principal markets and the time the NAV is determined may be reflected in the Trust’s calculation of a NAV for each applicable Fund when the Adviser deems that the particular event or circumstance would materially affect such Fund’s NAV. At April 30, 2019, none of the Funds applied these procedures.
Security Transactions and Investment Income:
Securities transactions are recorded on the trade date net of brokerage fees, commissions, and transfer fees. Dividend income (net of withholding taxes) and distributions to shareholders are recorded on theex-dividend date, except that certain dividends from foreign securities, if any, are recognized as soon as the Fund is informed of theex-dividend date. Interest income (including amortization of premium and accretion of discount on long-term securities using the effective yield method) and interest expense are accrued daily. The Trust records paydown gains and losses realized on prepayments received on mortgage-backed securities as an adjustment to interest income.
The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of components of distributions (and consequently its net investment income) as necessary once the issuers provide information about the actual composition of the distributions.
Realized gains and losses on the sale of investments are computed on the basis of the specific identified cost of the investments sold. Unrealized appreciation (depreciation) on investments and foreign currency denominated assets and liabilities, if any, is presented net of deferred taxes on unrealized appreciation in the Statements of Assets and Liabilities.
Allocation of Expenses and Income:
Expenses attributable to a single Fund or class are charged to that Fund or class. Expenses of the Trust not attributable to a single Fund or class are charged to each Fund or class in proportion to the average net assets of each Fund or other appropriate allocation methods.
All income earned and expenses incurred by each Fund are borne on apro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the daily net assets of such class, except for distribution fees which are charged on a class-specific basis.
Foreign Currency Valuation:
The books and records of the Trust are kept in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at current exchange rates at the following dates:
(i) Market value of investment securities, other assets and liabilities — at the valuation date.
(ii) Purchases and sales of investment securities, income and expenses — at the date of such transactions.
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The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Reported realized foreign currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on each Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses are included in Net realized gain (loss) on foreign currency transactions on the Statements of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end and are included in Change in net unrealized appreciation/depreciation on foreign currency translations on the Statements of Operations.
Taxes:
Each Fund intends to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies (“RICs”) and to distribute substantially all of its net investment income and net realized capital gains to shareholders of each Fund. Therefore, no Federal, State and local income tax provisions are required.
The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, the Funds’ conclusions may be subject to future review based on changes in, or the interpretation of, the accounting standards or tax laws and regulations. The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended October 31, 2018, the Funds did not incur any interest or penalties. Each of the tax years in the four year period ended October 31, 2018 remains subject to examination by the Internal Revenue Service, state and local taxing authorities.
Dividends from net investment income, if any, are declared and distributed at least annually for all Funds (1290 Convertible Securities Fund, 1290 Diversified Bond Fund and 1290 High Yield Bond Fund declare and distribute monthly). Dividends to shareholders of a Fund to which such gains are attributable from net realized short-term and long-term capital gains are declared and distributed at least annually. All distributions are calculated on a tax basis and, as such, the amounts may differ from financial statement investment income and realized gains. Short-term capital gains and foreign currency gains are treated as capital gains for U.S. GAAP purposes but are considered ordinary income for tax purposes. Capital and net specified losses incurred after October 31st and within the taxable year are deemed to arise on the first business day of a Fund’s next taxable year. The tax character of distributions for the years ended October 31, 2018 and October 31, 2017 and the tax composition of undistributed ordinary income and undistributed long term gains at October 31, 2018 are presented in the following table. For the Funds, the cumulative timing differences related to the tax composition of undistributed ordinary income and long term gains are primarily due to wash sale loss deferrals (1290 GAMCO Small/Mid Cap Value and 1290 Retirement 2020), capital loss carryover (1290 Diversified Bond and 1290 High Yield Bond), distribution payable (1290 Convertible Securities, 1290 Diversified Bond and 1290 High Yield Bond), investments in contingent preferred debt (1290 Convertible Securities), investments in partnerships (1290 Multi-Alternative Strategies), mark to market of forward foreign currency contracts, mark to market of futures contracts, investments in notional principal contracts and straddle loss deferral (1290 Diversified Bond), deemed dividends on convertible debt (1290 Convertible Securities) and investments in PFICs (1290 SmartBeta Equity).
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Year Ended October 31, 2018 | As of October 31, 2018 | Year Ended October 31, 2017 | ||||||||||||||||||||||
Funds: | Distributed Ordinary Income | Distributed Long Term Gains | Accumulated Undistributed Ordinary Income | Accumulated Undistributed Long Term Gains | Distributed Ordinary Income | Distributed Long Term Gains | ||||||||||||||||||
1290 Convertible Securities | $ | 550,306 | $ | 245,075 | $ | 311,192 | $ | 830,949 | $ | 551,719 | $ | — | ||||||||||||
1290 Diversified Bond | 2,638,391 | — | — | — | 1,465,166 | — | ||||||||||||||||||
1290 DoubleLine Dynamic Allocation | 1,554,308 | 2,764,419 | 884,897 | 1,620,494 | 1,429,740 | 1,542 | ||||||||||||||||||
1290 GAMCO Small/Mid Cap Value | 369,101 | 242,379 | 928,062 | 212,068 | 85,954 | 59,267 | ||||||||||||||||||
1290 Global Talents | 33,488 | — | 19,412 | 1,258,680 | 91,424 | — | ||||||||||||||||||
1290 High Yield Bond | 1,818,704 | — | 20,260 | — | 1,657,498 | — | ||||||||||||||||||
1290 Low Volatility Global Equity | 59,429 | — | 50,310 | 3,630 | — | — | ||||||||||||||||||
1290 Multi-Alternative Strategies | 38,183 | 69,201 | 153,289 | 21,640 | 77,890 | 6,435 | ||||||||||||||||||
1290 Retirement 2020 | 49,252 | 250 | 73,490 | 21,123 | — | — | ||||||||||||||||||
1290 Retirement 2025 | 49,002 | — | 96,153 | 13,958 | — | — | ||||||||||||||||||
1290 Retirement 2030 | 46,752 | — | 52,536 | 2,706 | — | — | ||||||||||||||||||
1290 Retirement 2035 | 46,752 | — | 64,183 | 764 | — | — | ||||||||||||||||||
1290 Retirement 2040 | 47,002 | — | 45,285 | 802 | — | — | ||||||||||||||||||
1290 Retirement 2045 | 47,142 | — | 48,781 | 854 | — | — | ||||||||||||||||||
1290 Retirement 2050 | 47,252 | — | 45,789 | 891 | — | — | ||||||||||||||||||
1290 Retirement 2055 | 47,252 | — | 44,313 | 946 | — | — | ||||||||||||||||||
1290 Retirement 2060 | 47,502 | — | 41,322 | 1,061 | — | — | ||||||||||||||||||
1290 SmartBeta Equity | 290,538 | 160,318 | 202,861 | 629,306 | 151,006 | — |
The following Fund had a Return of Capital during the year ended October 31, 2018:
Funds: | Return of Capital | |||
1290 Diversified Bond | $ | 174,948 |
Additionally, the following Fund had a Return of Capital during the year ended October 31, 2017:
Funds: | Return of Capital | |||
1290 High Yield Bond | $ | 17,878 |
Net capital losses recognized by the Funds may get carried forward indefinitely, and retain their character as short-term and/or long-term losses. The following Funds have capital losses incurred that will be carried forward as follows:
Utilized | Losses Carried Forward | |||||||||||||||
Funds: | Short Term | Long Term | Short Term | Long Term | ||||||||||||
1290 Diversified Bond | $ | 495,097 | $ | 121,748 | $ | 24,831 | $ | — | ||||||||
1290 Global Talents | 75,121 | — | — | — | ||||||||||||
1290 High Yield Bond | — | — | 751,083 | 1,653,226 |
Accounting for Derivative Instruments:
Following is a description of how and why the Funds use derivative instruments, the type of derivatives utilized by the Funds during the reporting period, as well as the primary underlying risk exposures related to each instrument type. Derivatives accounted for as hedging instruments must be disclosed separately from those that do not qualify for hedge accounting. Even though
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the Funds may use derivatives in an attempt to achieve an economic hedge, the Fund’s derivatives are not accounted for as hedging instruments because the Funds account for their derivatives at fair value and record any changes in fair value in current period earnings in the Statements of Operations. All open derivative positions at period end are reflected on each respective Fund’s Portfolio of Investments. The volume of derivative activity, based on month-end notional amounts during the period is also noted in each respective Fund’s Portfolio of Investments. Portfolio securities are reserved and/or pledged with the custodian for current or potential derivative holdings as necessary throughout the year.
Options:
Certain Funds may write (sell) covered options as a hedge to provide protection against adverse movements in the price of securities in the Fund or to enhance investment performance. Certain Funds purchase and sell exchange traded options on foreign currencies. When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted on a daily basis to the current market price of the option written. Premiums received from writing options that expire unexercised are recognized as gains on the expiration date. Premiums received from writing options that are exercised or are cancelled in closing purchase transactions are offset against the cost of any securities purchased or added to the proceeds or netted against the amount paid on the transaction to determine the realized gain or loss. In writing options, a Fund must assume that the option may be exercised at any time prior to the expiration of its obligation as a writer, and that in such circumstances the net proceeds of the sale (or cost of) purchase of the underlying securities and currencies pursuant to the call or put option may be substantially below or above the prevailing market price. A Fund also has the additional risk of not being able to enter into a closing purchase transaction if a liquid secondary market does not exist and bears the risk of unfavorable changes in the price of the financial instruments underlying the options.
Certain Funds may purchase put options on securities to increase the Fund’s total investment return or to protect its holdings against a substantial decline in market value. The purchase of put options on securities will enable a Fund to preserve, at least partially, unrealized gains in an appreciated security in its Fund without actually selling the security. In addition, the Funds will continue to receive interest or dividend income on the security. The Funds may also purchase call options on securities to protect against substantial increases in prices of securities that Funds intend to purchase pending their ability to invest in an orderly manner in those securities. The Funds may sell put or call options they have previously purchased, which could result in a net gain or loss depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid on the put or call option which was bought.
Futures Contracts, Options on Futures Contracts and Foreign Currency Contracts:
The futures contracts used by the Funds are agreements to buy or sell a financial instrument for a set price in the future. Options on futures contracts used by the Funds are rights to buy, or sell a futures contract for a set price in the future. Certain Funds buy or sell futures contracts for the purpose of protecting their Fund securities against future changes in interest rates and indices which might adversely affect the value of the Funds’ securities or the price of securities that they intend to purchase at a later date. Initial margin deposits are made upon entering into futures contracts and can be in cash, certain money market instruments, treasury securities or other liquid, high grade debt securities. During the period the futures contracts are open, changes in the market price of the contracts are recognized as unrealized gains or losses by “marking-to-market” at the end of each trading day. Variation margin payments on futures contracts are received or made, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from or cost of the closing transactions and the Fund’s basis in the contract. Should interest rates or indices move unexpectedly, the Fund may not achieve the
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anticipated benefits of the futures contracts and may incur a loss. The use of futures contracts transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Use of long futures contracts subjects the Funds to risk of loss in excess of the amounts shown on the Statements of Assets and Liabilities, up to the notional value of the futures contracts. Use of short futures contracts subjects the Funds to unlimited risk of loss. The Funds enter into futures contracts only on exchanges or boards of trade. The exchange or board of trade acts as the counterparty to each futures transaction; therefore, a Fund’s credit risk is limited to failure of the exchange or board of trade.
The Funds may be exposed to foreign currency risks associated with Fund investments. Certain Funds may purchase foreign currency on a spot (or cash) basis. In addition, certain Funds enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”). A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Daily fluctuations in the value of such contracts are recognized as unrealized appreciation or depreciation by “marking to market”. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions in the Statements of Operations of the Funds. The Funds may engage in these forward contracts to protect against uncertainty in the level of future rates in connection with the purchase and sale of Fund securities (“transaction hedging”) and to protect the value of specific Fund positions (“position hedging”). The Funds also buy forward foreign currency contracts to gain exposure to currencies. The Funds are subject to off-balance sheet risk to the extent of the value of the contracts for purchase of foreign currency and in an unlimited amount for sales of foreign currency.
Swaps:
Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. Swaps are marked-to-market daily based upon values from third party vendors, which may include a clearing counterparty, registered exchange, or quotations from market makers to the extent available. In the event that market quotes are not readily available and the swap cannot be valued pursuant to one of the valuation methods, the value of the swap will be determined in good faith by the Committee. Changes in market value, if any, are reflected as a component of net changes in unrealized appreciation (depreciation) on the Statements of Operations. Daily changes in valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for the change in value as appropriate (“variation margin”) on the Statements of Assets and Liabilities. There is potential for swaps to be illiquid. Over-the-counter (“OTC”) swap payments received or made at the beginning of the measurement period are reflected as such on the Statements of Assets and Liabilities and represent premiums paid or received upon entering into the swap agreement to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront premiums are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Statement of Operations. Net periodic payments received or paid by a Fund are included as part of realized gains or losses on the Statement of Operations.
The 1290 DoubleLine Dynamic Allocation Fund entered into total return swap agreements to gain or mitigate exposure to the underlying reference. Total return swap agreements involve commitments where cash flows are exchanged based on the price of an underlying reference and based on a fixed or variable rate. Total return swap agreements may involve commitments to pay interest in exchange for a market-linked return. One counterparty pays out the total return of a specific reference asset, which may include an underlying equity, index, or bond, and in
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return receives a fixed or variable rate. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return. In connection with total return swap agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.
Currency swaps involve the exchange by one party with another party of a series of payments in specified currencies. Currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default on its contractual delivery obligations. In addition, a Fund may enter into currency swaps that involve an agreement to pay interest streams in one currency based on a specified index in exchange for receiving interest streams denominated in another currency. Currency swaps may involve initial and final exchanges that correspond to the agreed upon notional amount.
Interest rate swaps involve the exchange between two parties of payments calculated by reference to specified interest rates (e.g., an exchange of floating rate payments for fixed rate payments). The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor. Caps and floors may be less liquid than swaps. In addition, the value of interest rate transactions will fluctuate based on changes in interest rates.
Credit default swap agreements involve greater risks than if a Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A Fund will enter into credit default swap agreements only with counterparties that meet certain standards of creditworthiness. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. A Fund’s obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which a Fund is the buyer, the Fund will segregate or “earmark” cash or assets determined to be liquid, or enter into certain offsetting positions, with a value at least equal to the Fund’s exposure (any accrued but unpaid net amounts owed by the Fund to any counterparty), on amarked-to-market basis. In connection with credit default swaps in which a Fund is the seller, the Fund will segregate or “earmark” cash or assets determined to be liquid, or enter into offsetting positions, with a value at least equal to the full notional amount of the swap (minus any amounts owed to the Fund). Such segregation or “earmarking” is intended to ensure that the Fund has assets available to satisfy its obligations with respect to the transaction and limit any potential leveraging of the Fund. Such segregation or “earmarking” will not limit the Fund’s exposure to loss. To the extent that credit default swaps are entered into for hedging purposes or are covered as described above, the Adviser believes such obligations do not constitute “senior securities” under the 1940 Act and, accordingly, will not treat them as being subject to the Fund’s senior security and borrowing restrictions.
In the case of a credit default swap sold by a Fund (i.e., where the Fund is selling credit default protection), the Fund may value the credit default swap at its notional amount in
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applying certain of the Fund’s investment policies and restrictions, but may value the credit default swap at market value for purposes of applying certain of the Fund’s other investment policies and restrictions.
An option on a swap agreement, also called a “swaption,” is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based “premium.” A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the total return of a specified asset, reference rate, or index. A purchaser of a swaption risks losing only the amount of the premium they have paid should they decide to let the option expire, whereas the seller of a swaption is subject to the risk that they will become obligated if the option is exercised. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.
Collateral:
Collateral on OTC derivatives and centrally cleared derivatives may be in the form of cash or debt securities issued by the U.S. government or related agencies or foreign governments. Cash pledged as collateral by a Fund is reflected as cash held as collateral at the broker in the accompanying financial statements and generally is restricted from withdrawal by the Fund; securities pledged by a Fund are so noted in the accompanying Portfolio of Investments; both remain in the Fund’s assets. Securities received as collateral by counterparties are not included in the Fund’s assets because the Fund does not obtain effective control over those securities. The obligation to return cash collateral received from counterparties is included as a liability in the accompanying financial statements. Collateral posted or received by the Fund may be held in a segregated account at the respective counterparty or Fund’s custodian.
Market and Credit Risk:
A Fund’s investments in financial instruments expose the Fund to various risks such as, but not limited to, interest rate, foreign currency, forward commitments and equity risks.
Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. When nominal interest rates decline, the value of certain fixed-income securities held by a Fund generally rises. Conversely, when nominal interest rates rise, the value of certain fixed income securities held by a Fund generally decreases. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Interest rate changes can be sudden and unpredictable, and a Fund may lose money if these changes are not anticipated by Fund management. A Fund may not be able to hedge against changes in interest rates or may choose not to do so for cost or other reasons. In addition, any hedges may not work as intended. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a security’s market price to interest rate (i.e., yield) movements. As of April 30, 2019, interest rates are near historic lows in the United States, and below zero in other parts of the world, including certain European countries and Japan. A Fund is subject to greater risk of rising interest rates due to these market conditions. A significant or rapid rise in interest rates could result in losses to the Fund.
Foreign(non-U.S.) securities in this report are classified by the country of risk of a holding.
If a Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, it will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in
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interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, a Fund’s investments in foreign currency denominated securities may reduce the Fund’s returns.
Forward commitments and forward foreign currency contracts involve elements of both market and credit risk in excess of the amounts reflected in the Statements of Assets and Liabilities. They are executed directly with the counterparty and not through an exchange and can be terminated only by agreement of both parties to such contracts. With respect to such transactions there is no daily margin settlement. There is also the risk that the security will not be issued or that the other party to the transaction will not meet its obligations. If this occurs, the Fund may lose both the investment opportunity for its assets if set aside to pay for the security and any gain in the security.
The market values of the Fund’s investments may decline due to general market conditions which are not specifically related to a particular company or issuer, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities, although under certain market conditions fixed income securities may have comparable or greater price volatility. Credit ratings downgrades may also negatively affect securities held by a Fund. Even when markets perform well, there is no assurance that the investments held by a Fund will increase in value along with the broader market. In addition, market risk includes the risk that geopolitical events will disrupt the economy on a national or global level.
A Fund will be exposed to credit risk to parties with whom it trades and will also bear the risk of settlement default. A Fund seeks to minimize concentrations of credit risk by undertaking transactions with a large number of counterparties on recognized and reputable exchanges, where applicable. A Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty of a financial derivatives contract, repurchase agreement or a loan of portfolio securities or other transactions, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling to make timely principal and/or interest payments, or otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings.
Certain Funds may invest in below investment grade high-yield securities (commonly known as “junk bonds”). These securities are considered to be high risk investments. Securities rated below investment grade are speculative in nature, involve greater risk of default by the issuing entity and may be subject to greater market fluctuations than higher rated fixed income securities because such securities are generally unsecured and subordinated to other creditors’ claims. The retail secondary market for these “junk bonds” may be less liquid than that of higher rated securities and adverse economic conditions could make it difficult to sell certain securities or could result in lower prices than those used in calculating the Fund’s NAV.
Because certain Funds invest in affiliated mutual funds, unaffiliated investment companies or ETFs, the Funds indirectly pay a portion of the expenses incurred by the underlying funds and ETFs. As a result, the cost of investing in the Funds may be higher than the cost of investing in a Fund that invests directly in individual securities and financial instruments. The Funds are also subject to certain risks related to the underlying funds’ and ETFs’ investments in securities and financial instruments (such as fixed income securities, including high yield, asset-backed and mortgage-related securities, equity securities, foreign and emerging markets securities, commodities and real estate securities) and the ability of the Fund to meet its investment objective will directly depend on the ability of the underlying fund or ETF to meet its investment
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objective. With respect to the Fund’s investments in ETFs, there is also the risk that an ETF’s performance may not match that of the relevant index. It is also possible that an active trading market for an ETF may not develop or be maintained, in which case the liquidity and value of the Fund’s investments in the ETF could be substantially and adversely affected. The extent to which the investment performance and risks associated with the Fund correlate to those of a particular underlying fund or ETF will depend upon the extent to which the Fund’s assets are allocated from time to time for investment in the underlying fund or ETF, which will vary.
Offsetting Assets and Liabilities:
The Funds may be subject to various netting arrangements with select counterparties (“Master Agreements”). Master Agreements govern the terms of certain transactions, and are intended to reduce the counterparty risk associated with relevant transactions by specifying credit protection mechanisms and providing standardization that is intended to improve legal certainty. As the Master Agreements are specific to unique operations of different asset types, they allow a Fund to close out and net its total exposure to counterparty in the event of a default with respect to all the transactions governed under a single Master Agreement with a counterparty. For financial reporting purposes the Statement of Assets and Liabilities generally show derivative assets and liabilities on a gross basis, which reflects the full risks and exposures prior to netting.
Note 2 | Agreements |
The Trust, on behalf of each Fund, has entered into an Investment Advisory Agreement (the “Advisory Agreement”) with the Adviser. Pursuant to the Advisory Agreement, the Adviser supervises the investment program for each Fund in accordance with each Fund’s investment objectives, policies and restrictions. The Adviser is paid a fee for these services. The fee is accrued daily and paid monthly based on the Fund’s average daily net assets, at an annual rate of:
Funds: | Management Fees | |
1290 Retirement 2020 | 0.500% of average daily net assets | |
1290 Retirement 2025 | 0.500% of average daily net assets | |
1290 Retirement 2030 | 0.500% of average daily net assets | |
1290 Retirement 2035 | 0.500% of average daily net assets | |
1290 Retirement 2040 | 0.500% of average daily net assets | |
1290 Retirement 2045 | 0.500% of average daily net assets | |
1290 Retirement 2050 | 0.500% of average daily net assets | |
1290 Retirement 2055 | 0.500% of average daily net assets | |
1290 Retirement 2060 | 0.500% of average daily net assets |
(as a percentage of average daily net assets) | ||||||||||||||||||||
Funds: | First $1 Billion | Next $1 Billion | Next $3 Billion | Next $5 Billion | Thereafter | |||||||||||||||
1290 DoubleLine Dynamic Allocation | 0.750 | % | 0.700 | % | 0.675 | % | 0.650 | % | 0.625 | % | ||||||||||
1290 GAMCO Small/Mid Cap Value | 0.750 | 0.700 | 0.675 | 0.650 | 0.625 | |||||||||||||||
1290 Global Talents | 0.800 | 0.750 | 0.725 | 0.700 | 0.675 | |||||||||||||||
1290 SmartBeta Equity | 0.700 | 0.650 | 0.625 | 0.600 | 0.575 |
(as a percentage of average daily net assets) | ||||||||||||||||
Funds: | First $4 Billion | Next $4 Billion | Next $2 Billion | Thereafter | ||||||||||||
1290 Low Volatility Global Equity | 0.500 | % | 0.490 | % | 0.480 | % | 0.470 | % | ||||||||
1290 Multi-Alternative Strategies | 0.500 | 0.490 | 0.480 | 0.470 |
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(as a percentage of average daily net assets) | ||||||||||||
Funds: | First $4 Billion | Next $4 Billion | Thereafter | |||||||||
1290 Convertible Securities | 0.700 | % | 0.680 | % | 0.660 | % | ||||||
1290 Diversified Bond | 0.600 | 0.580 | 0.560 | |||||||||
1290 High Yield Bond | 0.600 | 0.580 | 0.560 |
On behalf of the Trust, the Adviser has entered into an investmentsub-advisory agreement(“Sub-Advisory Agreements”) with each of theSub-Advisers. Each of theSub-Advisory Agreements obligates theSub-Advisers for the respective Funds to: (i) continuously furnish investment programs for the Funds; (ii) place all orders for the purchase and sale of investments for the Funds with brokers or dealers selected by the Adviser or the respectiveSub-Advisers; and (iii) perform certain limited related administrative functions in connection therewith. The Adviser pays the expenses of providing investmentsub-advisory services to the Funds, including the fees of theSub-Advisers of each Fund.
In addition to the advisory fee, each Fund pays the Administrator its proportionate share of an asset-based administration fee, which is equal to an annual rate of the greater of 0.15% of each Fund’s average daily net assets, or $30,000 per Fund (or $30,000 for each allocated portion (or sleeve) of a Fund, as applicable). The Administrator has contracted with the Sub- Administrator to provide, pursuant to asub-administration agreement, the Funds with certain administrative services, including monitoring of Fund compliance and Fund accounting services.
The Trust, on behalf of the Funds, has entered into a distribution agreement (the “Distribution Agreement”) with ALPS Distributors, Inc. (“ALPS” or the “Distributor”), under which ALPS serves as Distributor for each Fund’s Class A, Class I, Class R and Class T shares. The Board has approved Distribution Plans pursuant to Rule12b-1 under the 1940 Act for Class A, Class R and Class T shares for each Fund. Pursuant to the Distribution Plans, the Funds will pay the Distributor annual fees at the following rates:
Share Class: | Distribution Fee and/or Service Fee (as a % of average daily net assets attributable to the class) | |||
Class A | 0.25 | % | ||
Class R | 0.50 | |||
Class T* | 0.25 |
* | The Distribution Fees for Class T shares are currently being waived. This waiver is voluntary and could be eliminated at any time. |
The Trust, on behalf of the Funds, has entered into a Transfer Agency and Service Agreement (the “Transfer Agency Agreement”) with DST Asset Manager Solutions, Inc. (“DST”), formerly known as Boston Financial Data Services. Pursuant to the Transfer Agency Agreement, DST is responsible for, among other things, the issuance, transfer and redemption of shares, the opening and maintenance of shareholder accounts, the handling of certain communications between shareholders and the Trust, and the payment of dividends and distributions payable by the Funds. Under the Transfer Agency Agreement, DST receives a monthly fee comprised of a fixed base fee plus a fee computed on the basis of the number of shareholder accounts it maintains for the Trust during the month.
The Trust, on behalf of the Funds, has entered into a Custody Agreement with JPMorgan Chase Bank, N.A. (in this capacity, the “Custodian”). The Custody Agreement provides for an annual fee based on the amount of assets under custody plus transaction charges. The Custodian serves as custodian of the Trust’s Fund securities and other assets. Under the terms of the Custody Agreement between the Trust and the Custodian, the Custodian maintains and deposits in each Fund’s account, cash, securities and other assets of the Funds. The Custodian is also required, upon the order of the Trust, to deliver securities held by the Custodian, and to make
176
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
payments for securities purchased by the Trust. The Custodian has also entered into sub-custodian agreements with a number of foreign banks and clearing agencies, pursuant to which Fund securities purchased outside the United States are maintained in the custody of these entities. At period end, certain of the Funds maintain significant cash balances with the Custodian or its affiliates. These balances are presented as cash on each Fund’s Statement of Assets and Liabilities.
The Trust, on behalf of the Funds, has entered into an expense limitation agreement (the “Expense Limitation Agreement”) with 1290 Asset Managers whereby 1290 Asset Managers has contractually agreed to waive fees and/or reduce its fees to the extent that the aggregate expenses incurred by a Fund in any fiscal year, including but not limited to organizational offering costs, and investment advisory fees and administration fees of the Adviser (but excluding interest, taxes, brokerage commissions, dividend and expenses on securities sold short, fees and expenses of other investment companies in which a Fund invests (except as noted in the table below), other expenditures that are capitalized in accordance with generally accepted accounting principles (other than offering costs), other extraordinary expenses not incurred in the ordinary course of such Fund’s business and amounts payable pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act) (“Fund Operating Expenses”), exceed the Maximum Annual Operating Expense Limit of:
Funds: | Total Expense Limited For All Share Classes to (% of daily net assets) | |||
1290 Convertible Securities | 1.00 | % | ||
1290 Diversified Bond | 0.50 | |||
1290 DoubleLine Dynamic Allocation* | 0.95 | |||
1290 GAMCO Small/Mid Cap Value* | 1.00 | |||
1290 Global Talents | 1.00 | |||
1290 High Yield Bond | 0.75 | |||
1290 Low Volatility Global Equity* | 0.65 | |||
1290 Multi-Alternative Strategies* | 1.40 | |||
1290 Retirement 2020* | 0.65 | |||
1290 Retirement 2025* | 0.65 | |||
1290 Retirement 2030* | 0.65 | |||
1290 Retirement 2035* | 0.65 | |||
1290 Retirement 2040* | 0.65 | |||
1290 Retirement 2045* | 0.65 | |||
1290 Retirement 2050* | 0.65 | |||
1290 Retirement 2055* | 0.65 | |||
1290 Retirement 2060* | 0.65 | |||
1290 SmartBeta Equity | 0.90 |
* | Includes fees and expenses of other investment companies in which the Fund invests. |
Prior to January 1, 2019 the expense limitation was as follows:
Total Expense Limited For All Share Classes to (% of daily net assets) | ||||
Funds: | ||||
1290 Convertible Securities | 1.05 | % | ||
1290 DoubleLine Dynamic Allocation* | 1.00 | |||
1290 High Yield Bond | 0.80 |
* | Includes fees and expenses of other investment companies in which the Fund invests. |
177
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2019 (Unaudited)
1290 Asset Managers first waives its advisory fees, then waives its administration fees, and then reimburses the Fund’s expenses out of its own resources. Each Fund may at a later date reimburse to 1290 Asset Managers the advisory fees waived or other expenses assumed and paid for by 1290 Asset Managers pursuant to the Expense Limitation Agreement within three years of payments or waivers being recorded, provided such Fund has reached a sufficient asset size to permit such reimbursement to be made without causing the total annual expense ratio of each Fund to exceed the percentage limits mentioned above for the respective period. Consequently, no reimbursement by a Fund will be made unless the Fund’s total annual expense ratio is less than the respective percentages stated above for the respective period. Any reimbursement, called recoupment fees on the Statement of Operations of the Fund, will be based on the earliest fees waived or assumed by 1290 Asset Managers. During the six months ended April 30, 2019, the Funds did not incur recoupment fees. At April 30, 2019, under the Expense Limitation Agreement, the amount that would be recoverable from each Fund is as follows:
Amount Eligible Through | Total Eligible For Reimbursement | |||||||||||||||||||
Funds: | 2019 | 2020 | 2021 | 2022 | ||||||||||||||||
1290 Convertible Securities | $ | — | $ | — | $ | — | $ | 57,592 | $ | 57,592 | ||||||||||
1290 Diversified Bond | 186,252 | 311,753 | 350,461 | 181,561 | 1,030,027 | |||||||||||||||
1290 DoubleLine Dynamic Allocation | — | — | — | 93,235 | 93,235 | |||||||||||||||
1290 GAMCO Small/Mid Cap Value | 100,712 | 198,074 | 292,540 | 187,267 | 778,593 | |||||||||||||||
1290 Global Talents | 117,886 | 198,217 | 196,463 | 104,871 | 617,437 | |||||||||||||||
1290 High Yield Bond | — | — | — | 89,241 | 89,241 | |||||||||||||||
1290 Low Volatility Global Equity | — | 93,099 | 138,255 | 53,151 | 284,505 | |||||||||||||||
1290 Multi-Alternative Strategies | 98,356 | 163,049 | 141,540 | 76,572 | 479,517 | |||||||||||||||
1290 Retirement 2020 | — | 96,299 | 139,205 | 60,006 | 295,510 | |||||||||||||||
1290 Retirement 2025 | — | 96,317 | 140,647 | 68,007 | 304,971 | |||||||||||||||
1290 Retirement 2030 | — | 95,969 | 136,903 | 53,771 | 286,643 | |||||||||||||||
1290 Retirement 2035 | — | 96,339 | 139,321 | 58,334 | 293,994 | |||||||||||||||
1290 Retirement 2040 | — | 96,423 | 136,054 | 51,406 | 283,883 | |||||||||||||||
1290 Retirement 2045 | — | 97,023 | 138,025 | 54,019 | 289,067 | |||||||||||||||
1290 Retirement 2050 | — | 96,472 | 136,781 | 51,886 | 285,139 | |||||||||||||||
1290 Retirement 2055 | — | 96,529 | 136,944 | 51,594 | 285,067 | |||||||||||||||
1290 Retirement 2060 | — | 96,563 | 136,329 | 51,345 | 284,237 | |||||||||||||||
1290 SmartBeta Equity | 80,965 | 198,111 | 208,207 | 110,284 | 597,567 |
During the six months ended April 30, 2019, the Distributor voluntarily waived distribution fees for the Funds’ Class T shares. These amounts as follows are not eligible for recoupment:
Funds: | Voluntary Waivers | |||
1290 GAMCO Small/Mid Cap Value | $ | 157 | ||
1290 High Yield Bond | 157 | |||
1290 SmartBeta Equity | 153 |
During the six months ended April 30, 2019, FMG LLC voluntarily waived fees for certain Funds. The amounts waived were as follows and are not eligible for recoupment:
Funds: | Voluntary Waivers | |||
1290 Convertible Securities | $ | 29,400 | ||
1290 DoubleLine Dynamic Allocation | 59,779 | |||
1290 High Yield Bond | 44,745 |
178
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Concluded)
April 30, 2019 (Unaudited)
Note 3 | Sales Charges |
The Distributor receives sales charges on the Funds’ Class A and Class T shares and the proceeds of contingent deferred sales charges paid by the investor in connection with certain redemptions of the Funds’ Class A shares. The Distributor has advised the Funds that for the six months ended April 30, 2019, the proceeds retained from sales and redemptions are as follows:
Class A | Class T | |||||||||||
Funds: | Front End Sales Charge | Contingent Deferred Sales Charge | Front End Sales Charge | |||||||||
1290 Convertible Securities | $ | 2,744 | $ | — | $ | — | ||||||
1290 Diversified Bond | 9,124 | — | — | |||||||||
1290 DoubleLine Dynamic Allocation | 9,233 | — | — | |||||||||
1290 GAMCO Small/Mid Cap Value | 21,098 | — | — | |||||||||
1290 Global Talents | 8,594 | — | — | |||||||||
1290 High Yield Bond | 318 | — | — | |||||||||
1290 Multi-Alternative Strategies | 2,125 | — | — | |||||||||
1290 SmartBeta Equity | 11,449 | — | — |
Sales loads and contingent deferred sales charges imposed on purchases and redemptions of Fund shares are retained by the Trust’s Distributors and do not represent expenses or income of the Funds.
Note 4 | Percentage of Ownership by Affiliates |
At April 30, 2019, 1290 Asset Managers and AXA Equitable held investments in each of the Funds as follows:
Funds: | Percentage of Ownership | |||
1290 Convertible Securities | 90 | % | ||
1290 Diversified Bond Managers | 54 | |||
1290 DoubleLine Dynamic Allocation | 90 | |||
1290 GAMCO Small/Mid Cap Value | 40 | |||
1290 Global Talents | 90 | |||
1290 High Yield Bond | 79 | |||
1290 Low Volatility Global Equity | 86 | |||
1290 Multi-Alternative Strategies | 55 | |||
1290 Retirement 2020 | 100 | |||
1290 Retirement 2025 | 100 | |||
1290 Retirement 2030 | 100 | |||
1290 Retirement 2035 | 100 | |||
1290 Retirement 2040 | 100 | |||
1290 Retirement 2045 | 100 | |||
1290 Retirement 2050 | 100 | |||
1290 Retirement 2055 | 100 | |||
1290 Retirement 2060 | 100 | |||
1290 SmartBeta Equity | 60 |
Note 5 | Subsequent Events |
The Adviser evaluated subsequent events from April 30, 2019, the date of these financial statements, through the date these financial statements were issued. There were no subsequent events to disclose.
179
PROXY VOTING RESULTS (UNAUDITED)
At a Special Meeting of Shareholders held on November 1, 2018, shareholders of the 1290 Retirement 2060 Fund approved a new investment advisory agreement between AXA Equitable Funds Management Group, LLC dba 1290 Asset Managers® (the “Adviser”) and the Trust, on behalf of the 1290 Retirement 2060 Fund. The results of the shareholder vote are as follows:
Fund | For | Against | Abstain | |||||||||
1290 Retirement 2060 Fund | 250,001.145 | 0.000 | 0.000 |
At a Special Meeting of Shareholders held on November 1, 2018, shareholders of the 1290 Retirement 2060 Fund approved upon a Change of Control Event prompted by the Sell-Down Plan, a new investment advisory agreement between the Adviser and the Trust, on behalf of the 1290 Retirement 2060 Fund, and under certain circumstances, any future advisory agreements prompted by Change of Control Events that may occur as part of the Sell-Down Plan. The results of the shareholder vote are as follows:
Fund | For | Against | Abstain | |||||||||
1290 Retirement 2060 Fund | 250,001.145 | 0.000 | 0.000 |
At a Special Meeting of Shareholders held on November 27, 2018, shareholders of the 1290 Retirement 2030 Fund approved a new investment advisory agreement between AXA Equitable Funds Management Group, LLC dba 1290 Asset Managers® (the “Adviser”) and the Trust, on behalf of the 1290 Retirement 2030 Fund. The results of the shareholder vote are as follows:
Fund | For | Against | Abstain | |||||||||
1290 Retirement 2030 Fund | 286,711.055 | 0.000 | 313.053 |
At a Special Meeting of Shareholders held on November 27, 2018, shareholders of the 1290 Retirement 2030 Fund approved upon a Change of Control Event prompted by the Sell-Down Plan, a new investment advisory agreement between the Adviser and the Trust, on behalf of the 1290 Retirement 2030 Fund, and under certain circumstances, any future advisory agreements prompted by Change of Control Events that may occur as part of the Sell-Down Plan. The results of the shareholder vote are as follows:
Fund | For | Against | Abstain | |||||||||
1290 Retirement 2030 Fund | 154,055.232 | 132,655.823 | 313.053 |
180
PROXY VOTING POLICIES AND PROCEDURES (UNAUDITED)
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request, by calling a toll-free number at 1-888-310-0416 and (ii) on the Securities and Exchange Commission’s website at http://www.sec.gov. Information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge (i) on the Trust’s website at www.1290Funds.com and (ii) on the Securities and Exchange Commission’s website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Previously, this information was filed on Form N-Q. These filings are available on the Securities and Exchange Commission’s website at http://www.sec.gov.
181
Visit the Funds’ Website: 1290Funds.com
|
Must be accompanied or preceded by a Prospectus. 1290 Funds are distributed by ALPS Distributors, Inc. | DFIN#752513 |
© 2019 AXA Equitable Life Insurance Company. All rights reserved.
1290 Avenue of the Americas, New York, NY 10104.
AXA Equitable Life Insurance Company
Item 2. | Code of Ethics. |
Not required.
Item 3. | Audit Committee Financial Expert. |
Not required.
Item 4. | Principal Accountant Fees and Services. |
Not required.
Item 5. | Audit Committee of Listed Registrants. |
Not applicable
Item 6. | Schedule of Investments. |
The Schedule of Investments is included as part of the Semi-Annual Report to Shareholders filed under Item 1 of thisForm N-CSR.
Item 7. | Disclosure of Proxy Voting Policies and Proceduresfor Closed-End Management Investment Companies. |
Not applicable.
Item 8. | Portfolio Managersof Closed-End Management Investment Companies. |
Not applicable.
Item 9. | Purchases of Equity Securitiesby Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
Item 10 | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
Item 11 | Controls and Procedures. |
(a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined inRule 30a-3(c) under the Investment Company Act of 1940, as amended (“1940 Act”)) are effective as of a date within 90 days prior to the filing date of this report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required byRule 30a-3(b) under the 1940 Act andRule 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
(b) | The registrant’s certifying officers are not aware of any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12. | Disclosure of Securities Lending Activitiesfor Closed-End Management Investment Companies. |
Not Applicable.
Item 13. | Exhibits. |
(a)(1) | Not applicable for the reporting period. | |
(a)(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are filed herewith. | |
(a)(3) | Not applicable. | |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
1290 FUNDS
By: | /s/ Steven M. Joenk | |
Steven M. Joenk | ||
President and Chief Executive Officer | ||
June 27, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Steven M. Joenk | |
Steven M. Joenk | ||
President and Chief Executive Officer | ||
June 27, 2019 |
By: | /s/ Brian E. Walsh | |
Brian E. Walsh | ||
Chief Financial Officer | ||
June 27, 2019 |