UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 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)
PATRICIA LOUIE, ESQ.
Executive Vice President and General Counsel
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, 2016 - April 30, 2017
| Item 1. | Reports to Stockholders. |
The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
Semi-Annual Report
April 30, 2017
1290 Funds
Semi-Annual Report
April 30, 2017
Table of Contents
Market Overview for the Six Months Ended April 30, 2017
Economy
In the U.S., the economy continued to expand throughout the last six months. For the first time in six years, the Federal Reserve (Fed) raised the short-term interest rate by 0.25% in December 2016, then raised it again by 0.25% in March of 2017, noting a strengthening labor market, moderate economic expansion and a stable unemployment rate. According to experts, the Fed now views the U.S. economy as nearing the central bank’s employment and inflation goals and therefore plans to stay on a gradual normalization path. In April, the U.S. economy added 211,000 jobs, according to the Bureau of Labor Statistics, hourly earnings rose slightly and the unemployment rate declined. Inflation remained subdued. The election of Donald Trump in November appeared to give investors a sense of confidence initially, as equities climbed to new heights late in 2016. In March 2017, the markets pulled back, as the new administration faced challenges passing promised legislation. However, U.S. stocks rallied in April as signs pointed to a greater push for tax reform in Washington.
Outside the U.S., European markets showed modest improvements throughout the last six months. Global stocks rallied in April 2017, led by Europe, after Emmanuel Macron won a first-round victory in the French election. Global inflation remained elusive and major central banks continued their commitment to price stability. Global monetary policies appeared accommodative enough to stimulate price appreciation and grow economic activity.
In the foreign exchange market, the U.S. dollar rallied against most developed-market currencies, gaining strength after the election of President Trump, then weakened early in 2017, helping emerging market assets recover from losses in the fourth quarter of 2016.
Fixed Income
Bonds experienced a sudden sell-off in the U.S. Treasury market as Donald Trump was elected U.S. president in November 2016 and the Fed raised its short-term interest rate late in 2016. Most fixed-income categories rebounded in early 2017, with lower-quality bonds leading the way. The last six months ended with 10-year and 30-year bond yields lowering and the short end of the yield curve rising slightly.
Despite an abundance of geopolitical risks and headlines throughout the time period, investors seemed to look for more risk early in 2017, particularly in the emerging markets, as bond indices denominated in both global hard currencies (U.S. dollar, euro) and those in local-country currencies topped the quarter’s fixed-income performance chart.
U.S. Equity
All major U.S. equity categories were positive throughout the six-month period, with significant gains realized in the weeks following the U.S. presidential election. U.S. stocks were among the strongest performers in 2016, with small-caps surging at the end of 2016, based on expectations that they would benefit disproportionately from President Trump’s policy agenda. In March 2016, market watchers agree that the equity markets pulled back when it became clear, through failures to enact immigration legislation and reforms to the Affordable Care Act, that the new administration might have trouble passing comprehensive tax reform and fiscal stimulus as promised. However, with a renewed push toward tax and health care reform in April, U.S. equity markets rallied a bit. Small caps and cyclicals continued to lag, potentially reflecting a loss of confidence in the President’s agenda. Volatility remained at low levels throughout the year.
With the election of President Trump, luxury and media companies, as well as energy and materials sectors, benefited late in 2016. However, by early 2017, information technology, health care and consumer staples were the best performing sectors, with energy lagging.
International Equity
In the past six months, experts suggested that the primary drivers of international equity returns included U.S. growth and the timing of Fed tightening, concerns over China’s economy and global growth outlook, currency and commodity volatility, the British referendum to exit the European Union, risk in the Middle East and the election of Donald Trump in the U.S.
In Europe, the release of positive economic data and the election of the Dutch center-right candidate in early 2017 apparently helped European equities gain additional momentum, while Russia and Greece struggled to maintain positive returns. In April 2017, Europe led global equities as anxiety over the French election dissipated as business-friendly candidate Emmanuel Macron won a first round victory.
Japanese stocks posted solid gains early in 2017, after weakening sharply at the end of 2016. Increases may be attributed to Japanese companies having more exposure to global growth, better corporate governance, and more support from domestic investors.
China’s equity market stabilized as the economy appeared to be growing modestly as earlier stimulus measures seemed to slowly take effect. In the first quarter of 2017, China, India and South Korea all advanced sharply, with double-digit returns, which analysts generally attributed to the broader “Trump bump” rally in the global markets and rising consumer optimism.
Late in 2016, emerging markets rallied, though only temporarily, as investors seemed to be concerned about the potential impact of a stronger dollar and protectionist policies from the new U.S. administration. In the first four months of 2017, emerging markets gained momentum again to outperform other international equities, as well as U.S. stocks.
2
Source: AXA Equitable Funds Management Group, LLC, doing business as 1290 Asset Managers®. As of 4/30/17.
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.
3
NOTES ON PERFORMANCE
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, formerly known as 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-based securities.
BofA Merrill Lynch 3-Month U.S. Treasury Bill Index 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.
BofA Merrill Lynch All U.S. Convertibles Index consists of U.S. dollar denominated investment grade and non-investment grade convertible bonds 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.
BofA Merrill Lynch USD 3-Month Deposit Offered Rate Constant Maturity Index, formerly known as the BofA Merrill Lynch U.S. Dollar 3-Month LIBOR Constant Maturity Index, tracks the performance of a synthetic asset paying the London interbank offered rate (LIBOR) to a stated maturity. The index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day’s fixing rate. That issue is assumed to be sold the following business day (priced at a yield equal to the current day fixing rate) and rolled into a new instrument.
BofA Merrill Lynch U.S. High Yield Master II Index tracks 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) AC World (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 23 emerging markets. The index covers approximately 85% of the global investment opportunities.
Morgan Stanley Capital International (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 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 Index measures 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.
4
1290 CONVERTIBLE SECURITIES FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISER
| Ø | | Palisade Capital Management, L.L.C. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 9.60 | % | | | 16.08 | % | | | 3.90 | % |
| | | | with Sales Charge (a | ) | | | 4.67 | | | | 10.84 | | | | 1.31 | |
Fund – Class I Shares* | | | | | | | 9.74 | | | | 16.37 | | | | 4.16 | |
Fund – Class R Shares* | | | | | | | 9.46 | | | | 15.79 | | | | 3.64 | |
BofA Merrill Lynch All U.S. Convertibles Index | | | | | | | 10.53 | | | | 17.71 | | | | 5.61 | |
* 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.
Fund performance may 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. Also, 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.
A surprise Trump victory in the Presidential election in early November prompted a broad-based rally in risky assets in the U.S. for the six-month period ended April 30, 2017. Investor sentiment focused on improving economic fundamentals combined with the potential for regulatory and tax reform from the new Administration. All four major U.S. equity indices (Dow Jones Industrial, S&P 500®, Nasdaq Composite, and Russell 2000®) ended the period near record highs, reflecting the broad-based optimism from investors. High yield bonds also continued to rally, helping to offset the rise in interest rates as the Federal Reserve moved to tighten monetary policy twice over the last six months. U.S. convertibles posted solid double-digit gains, benefiting from both equity market and credit market gains.
Fund Highlights
The 1290 Convertible Securities Fund trailed the broader convertible market over the six-month period. In general, the Fund’s emphasis on growth-oriented convertibles such as those in the technology sector helped performance as they outperformed value-oriented convertibles. Offsetting this was weaker performance contributions from the energy and consumer discretionary sectors. At period end, we maintained the Fund’s growth-oriented positioning and remained positive about the outlook for convertibles. As we have seen in past periods of rising interest rates, we believe the potential for equity-related gains from a stronger economic backdrop could more than offset the potential drag from higher rates.
What helped performance during the six-month period ended April 30, 2017:
| • | | An underweight relative to the benchmark in the underperforming utilities sector was a positive contributor to relative performance. |
| • | | Good security selection in the technology sector, driven by double-digit returns from Novellus Systems, Inc. 2.63%, The Priceline Group, Inc. 1.00%, and the Fund’s three Micron Technology, Inc. issues, benefited performance. |
| • | | Elsewhere, good security selection within the telecommunications, transportation and industrials sectors bolstered performance, led by T-Mobile US, Inc. 5.50%, XPO Logistics, Inc. 4.50%, and Tutor Perini Corp. 2.88%, respectively. |
What hurt performance during the six-month period ended April 30, 2017:
| • | | Offsetting the outperformance was unfavorable security selection in the energy sector, held back by a disappointing return from SM Energy Co. 1.500%. |
| • | | A relative underweight to the relatively strong consumer discretionary sector, notably the automakers group, hindered results. |
| • | | The Fund was also hampered by unfavorable security selection within the consumer staples sector, where Tyson Foods, Inc. posted a weak return. |
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
Information Technology | | | 33.9 | % |
Health Care | | | 20.8 | |
Consumer Discretionary | | | 11.6 | |
Financials | | | 10.8 | |
Industrials | | | 7.0 | |
Energy | | | 5.0 | |
Telecommunication Services | | | 2.7 | |
Consumer Staples | | | 1.6 | |
Real Estate | | | 1.5 | |
Materials | | | 1.3 | |
Utilities | | | 0.6 | |
Cash and Other | | | 3.2 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
| | |
Holdings are subject to change without notice. | | | | |
5
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, 2017 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,096.00 | | | | $6.76 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.34 | | | | 6.51 | |
Class I | |
Actual | | | 1,000.00 | | | | 1,097.40 | | | | 5.47 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.58 | | | | 5.27 | |
Class R | |
Actual | | | 1,000.00 | | | | 1,094.60 | | | | 8.06 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,017.10 | | | | 7.76 | |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.30%, 1.05% and 1.55%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). | |
6
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | |
Convertible Bonds (73.2%) | |
Consumer Discretionary (11.6%) | | | | | |
Auto Components (0.2%) | |
Horizon Global Corp. | | | | | | | | |
2.750%, 7/1/22 | | $ | 36,000 | | | $ | 33,345 | |
| | | | | | | | |
Automobiles (0.9%) | |
Tesla, Inc. | | | | | | | | |
2.375%, 3/15/22 | | | 178,000 | | | | 199,026 | |
| | | | | | | | |
Household Durables (2.2%) | |
CalAtlantic Group, Inc. | | | | | | | | |
1.625%, 5/15/18 | | | 399,000 | | | | 486,032 | |
| | | | | | | | |
Internet & Direct Marketing Retail (2.6%) | |
Ctrip.com International Ltd. | | | | | | | | |
1.250%, 9/15/22§ | | | 45,000 | | | | 47,025 | |
Priceline Group, Inc. (The) | | | | | | | | |
1.000%, 3/15/18 | | | 270,000 | | | | 526,162 | |
| | | | | | | | |
| | | | | | | 573,187 | |
| | | | | | | | |
Media (5.0%) | |
DISH Network Corp. | | | | | | | | |
3.375%, 8/15/26§ | | | 520,000 | | | | 636,350 | |
Liberty Interactive LLC | | | | | | | | |
1.750%, 9/30/46§ | | | 241,000 | | | | 283,024 | |
Liberty Media Corp. | | | | | | | | |
1.375%, 10/15/23 | | | 90,000 | | | | 101,419 | |
Liberty Media Corp.-Liberty Formula One | | | | | |
1.000%, 1/30/23§ | | | 12,000 | | | | 13,478 | |
Live Nation Entertainment, Inc. | | | | | | | | |
2.500%, 5/15/19 | | | 56,000 | | | | 62,370 | |
| | | | | | | | |
| | | | | | | 1,096,641 | |
| | | | | | | | |
Specialty Retail (0.7%) | |
Restoration Hardware Holdings, Inc. | | | | | | | | |
(Zero Coupon), 6/15/19§ | | | 160,000 | | | | 142,400 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 2,530,631 | |
| | | | | | | | |
Energy (3.9%) | | | | | |
Energy Equipment & Services (1.5%) | |
Nabors Industries, Inc. | | | | | | | | |
0.750%, 1/15/24§ | | | 119,000 | | | | 102,414 | |
SEACOR Holdings, Inc. | | | | | | | | |
3.000%, 11/15/28 | | | 57,000 | | | | 51,051 | |
Weatherford International Ltd. | | | | | | | | |
5.875%, 7/1/21 | | | 147,000 | | | | 174,746 | |
| | | | | | | | |
| | | | | | | 328,211 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (2.4%) | |
Cheniere Energy, Inc. | | | | | | | | |
4.250%, 3/15/45 | | | 120,000 | | | | 81,600 | |
Chesapeake Energy Corp. | | | | | | | | |
5.500%, 9/15/26§ | | | 139,000 | | | | 136,741 | |
2.500%, 5/15/37 | | | 1,000 | | | | 985 | |
PDC Energy, Inc. | | | | | | | | |
1.125%, 9/15/21 | | | 159,000 | | | | 153,535 | |
SM Energy Co. | | | | | | | | |
1.500%, 7/1/21 | | | 156,000 | | | | 153,855 | |
| | | | | | | | |
| | | | | | | 526,716 | |
| | | | | | | | |
Total Energy | | | | | | | 854,927 | |
| | | | | | | | |
| | | | | | | | |
Financials (1.9%) | | | | | |
Capital Markets (0.3%) | |
New Mountain Finance Corp. | | | | | | | | |
5.000%, 6/15/19 | | $ | 31,000 | | | $ | 31,930 | |
TCP Capital Corp. | | | | | | | | |
4.625%, 3/1/22§ | | | 30,000 | | | | 30,375 | |
| | | | | | | | |
| | | | | | | 62,305 | |
| | | | | | | | |
Consumer Finance (0.1%) | |
Encore Capital Group, Inc. | | | | | | | | |
3.250%, 3/15/22§ | | | 30,000 | | | | 28,631 | |
| | | | | | | | |
Insurance (1.1%) | |
Fidelity National Financial, Inc. | | | | | | | | |
4.250%, 8/15/18 | | | 100,000 | | | | 228,938 | |
| | | | | | | | |
Mortgage Real Estate Investment Trusts (REITs) (0.4%) | |
New York Mortgage Trust, Inc. (REIT) | | | | | |
6.250%, 1/15/22 | | | 30,000 | | | | 29,644 | |
Starwood Property Trust, Inc. (REIT) | | | | | | | | |
4.000%, 1/15/19 | | | 50,000 | | | | 57,062 | |
| | | | | | | | |
| | | | | | | 86,706 | |
| | | | | | | | |
Total Financials | | | | | | | 406,580 | |
| | | | | | | | |
Health Care (15.4%) | | | | | |
Biotechnology (5.9%) | |
Acorda Therapeutics, Inc. | | | | | | | | |
1.750%, 6/15/21 | | | 65,000 | | | | 51,025 | |
AMAG Pharmaceuticals, Inc. | | | | | | | | |
2.500%, 2/15/19 | | | 47,000 | | | | 53,492 | |
BioMarin Pharmaceutical, Inc. | | | | | | | | |
0.750%, 10/15/18 | | | 85,000 | | | | 100,141 | |
1.500%, 10/15/20 | | | 120,000 | | | | 148,725 | |
Clovis Oncology, Inc. | | | | | | | | |
2.500%, 9/15/21 | | | 83,000 | | | | 101,156 | |
Emergent BioSolutions, Inc. | | | | | | | | |
2.875%, 1/15/21 | | | 38,000 | | | | 45,861 | |
Immunomedics, Inc. | | | | | | | | |
4.750%, 2/15/20 | | | 35,000 | | | | 45,631 | |
Incyte Corp. | | | | | | | | |
1.250%, 11/15/20 | | | 75,000 | | | | 183,516 | |
Intercept Pharmaceuticals, Inc. | | | | | | | | |
3.250%, 7/1/23 | | | 29,000 | | | | 27,042 | |
Ionis Pharmaceuticals, Inc. | | | | | | | | |
1.000%, 11/15/21 | | | 128,000 | | | | 133,440 | |
Ironwood Pharmaceuticals, Inc. | | | | | | | | |
2.250%, 6/15/22 | | | 114,000 | | | | 138,225 | |
Merrimack Pharmaceuticals, Inc. | | | | | | | | |
4.500%, 7/15/20 | | | 75,000 | | | | 64,359 | |
Neurocrine Biosciences, Inc. | | | | | | | | |
2.250%, 5/15/24 (b)§ | | | 6,000 | | | | 6,225 | |
Novavax, Inc. | | | | | | | | |
3.750%, 2/1/23 | | | 28,000 | | | | 10,623 | |
TESARO, Inc. | | | | | | | | |
3.000%, 10/1/21 | | | 40,000 | | | | 170,475 | |
| | | | | | | | |
| | | | | | | 1,279,936 | |
| | | | | | | | |
Health Care Equipment & Supplies (1.5%) | |
Hologic, Inc. | | | | | | | | |
0.000%, 12/15/43 (e) | | | 83,000 | | | | 104,736 | |
Insulet Corp. | | | | | | | | |
1.250%, 9/15/21§ | | | 10,000 | | | | 10,119 | |
NuVasive, Inc. | | | | | | | | |
2.250%, 3/15/21 | | | 78,000 | | | | 103,789 | |
See Notes to Financial Statements.
7
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Trinity Biotech Investment Ltd. | | | | | | | | |
4.000%, 4/1/45 | | $ | 43,000 | | | $ | 34,131 | |
Wright Medical Group, Inc. | | | | | | | | |
2.000%, 2/15/20 | | | 58,000 | | | | 67,932 | |
| | | | | | | | |
| | | | | | | 320,707 | |
| | | | | | | | |
Health Care Providers & Services (1.9%) | |
Brookdale Senior Living, Inc. | | | | | | | | |
2.750%, 6/15/18 | | | 55,000 | | | | 54,312 | |
HealthSouth Corp. | | | | | | | | |
2.000%, 12/1/43 | | | 108,000 | | | | 141,548 | |
Molina Healthcare, Inc. | | | | | | | | |
1.125%, 1/15/20 | | | 120,000 | | | | 162,000 | |
1.625%, 8/15/44 | | | 56,000 | | | | 61,180 | |
| | | | | | | | |
| | | | | | | 419,040 | |
| | | | | | | | |
Health Care Technology (0.6%) | |
Allscripts Healthcare Solutions, Inc. | | | | | | | | |
1.250%, 7/1/20 | | | 105,000 | | | | 104,016 | |
Evolent Health, Inc. | | | | | | | | |
2.000%, 12/1/21§ | | | 22,000 | | | | 26,977 | |
| | | | | | | | |
| | | | | | | 130,993 | |
| | | | | | | | |
Life Sciences Tools & Services (0.3%) | |
Albany Molecular Research, Inc. | | | | | | | | |
2.250%, 11/15/18 | | | 65,000 | | | | 75,806 | |
| | | | | | | | |
Pharmaceuticals (5.2%) | |
Depomed, Inc. | | | | | | | | |
2.500%, 9/1/21 | | | 55,000 | | | | 51,081 | |
Horizon Pharma Investment Ltd. | | | | | | | | |
2.500%, 3/15/22 | | | 125,000 | | | | 116,641 | |
Innoviva, Inc. | | | | | | | | |
2.125%, 1/15/23 | | | 136,000 | | | | 122,060 | |
Jazz Investments I Ltd. | | | | | | | | |
1.875%, 8/15/21 | | | 120,000 | | | | 132,900 | |
Medicines Co. (The) | | | | | | | | |
2.500%, 1/15/22 | | | 131,000 | | | | 208,372 | |
Pacira Pharmaceuticals, Inc. | | | | | | | | |
3.250%, 2/1/19 | | | 54,000 | | | | 108,506 | |
2.375%, 4/1/22§ | | | 11,000 | | | | 11,688 | |
Teva Pharmaceutical Finance Co. LLC | | | | | | | | |
Series C | | | | | | | | |
0.250%, 2/1/26 | | | 372,000 | | | | 393,855 | |
| | | | | | | | |
| | | | | | | 1,145,103 | |
| | | | | | | | |
Total Health Care | | | | | | | 3,371,585 | |
| | | | | | | | |
Industrials (5.4%) | | | | | |
Aerospace & Defense (0.1%) | |
Aerojet Rocketdyne Holdings, Inc. | | | | | | | | |
2.250%, 12/15/23§ | | | 21,000 | | | | 23,126 | |
| | | | | | | | |
Air Freight & Logistics (1.3%) | |
Atlas Air Worldwide Holdings, Inc. | | | | | | | | |
2.250%, 6/1/22 | | | 33,000 | | | | 36,073 | |
Echo Global Logistics, Inc. | | | | | | | | |
2.500%, 5/1/20 | | | 73,000 | | | | 68,255 | |
XPO Logistics, Inc. | | | | | | | | |
4.500%, 10/1/17 | | | 60,000 | | | | 180,375 | |
| | | | | | | | |
| | | | | | | 284,703 | |
| | | | | | | | |
Construction & Engineering (1.8%) | |
Dycom Industries, Inc. | | | | | | | | |
0.750%, 9/15/21 | | | 179,000 | | | | 226,099 | |
| | | | | | | | |
Tutor Perini Corp. | | | | | | | | |
2.875%, 6/15/21§ | | $ | 143,000 | | | $ | 176,248 | |
| | | | | | | | |
| | | | | | | 402,347 | |
| | | | | | | | |
Machinery (0.7%) | |
Greenbrier Cos., Inc. (The) | | | | | | | | |
3.500%, 4/1/18 | | | 30,000 | | | | 38,850 | |
2.875%, 2/1/24§ | | | 6,000 | | | | 6,382 | |
Navistar International Corp. | | | | | | | | |
4.750%, 4/15/19 | | | 59,000 | | | | 57,525 | |
Trinity Industries, Inc. | | | | | | | | |
3.875%, 6/1/36 | | | 37,000 | | | | 45,464 | |
| | | | | | | | |
| | | | | | | 148,221 | |
| | | | | | | | |
Professional Services (0.3%) | |
Huron Consulting Group, Inc. | | | | | | | | |
1.250%, 10/1/19 | | | 73,000 | | | | 69,852 | |
| | | | | | | | |
Transportation Infrastructure (1.2%) | |
Macquarie Infrastructure Corp. | | | | | | | | |
2.875%, 7/15/19 | | | 60,000 | | | | 66,937 | |
2.000%, 10/1/23 | | | 191,000 | | | | 188,613 | |
| | | | | | | | |
| | | | | | | 255,550 | |
| | | | | | | | |
Total Industrials | | | | | | | 1,183,799 | |
| | | | | | | | |
Information Technology (32.8%) | | | | | |
Communications Equipment (2.9%) | |
CalAmp Corp. | | | | | | | | |
1.625%, 5/15/20 | | | 60,000 | | | | 60,600 | |
Ciena Corp. | | | | | | | | |
3.750%, 10/15/18§ | | | 150,000 | | | | 192,094 | |
4.000%, 12/15/20 | | | 80,000 | | | | 108,550 | |
Finisar Corp. | | | | | | | | |
0.500%, 12/15/36§ | | | 81,000 | | | | 75,431 | |
Lumentum Holdings, Inc. | | | | | | | | |
0.250%, 3/15/24§ | | | 12,000 | | | | 11,955 | |
Palo Alto Networks, Inc. | | | | | | | | |
(Zero Coupon), 7/1/19 | | | 145,000 | | | | 169,106 | |
Viavi Solutions, Inc. | | | | | | | | |
1.000%, 3/1/24§ | | | 20,000 | | | | 20,338 | |
| | | | | | | | |
| | | | | | | 638,074 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (1.1%) | |
Knowles Corp. | | | | | | | | |
3.250%, 11/1/21§ | | | 59,000 | | | | 71,206 | |
TTM Technologies, Inc. | | | | | | | | |
1.750%, 12/15/20 | | | 62,000 | | | | 112,762 | |
Vishay Intertechnology, Inc. | | | | | | | | |
2.250%, 11/15/40 | | | 50,000 | | | | 64,281 | |
| | | | | | | | |
| | | | | | | 248,249 | |
| | | | | | | | |
Internet Software & Services (3.7%) | |
Akamai Technologies, Inc. | | | | | | | | |
(Zero Coupon), 2/15/19 | | | 61,000 | | | | 60,733 | |
Cornerstone OnDemand, Inc. | | | | | | | | |
1.500%, 7/1/18 | | | 150,000 | | | | 153,750 | |
Pandora Media, Inc. | | | | | | | | |
1.750%, 12/1/20 | | | 110,000 | | | | 107,319 | |
Twitter, Inc. | | | | | | | | |
0.250%, 9/15/19 | | | 125,000 | | | | 118,359 | |
VeriSign, Inc. | | | | | | | | |
4.452%, 8/15/37 | | | 100,000 | | | | 260,500 | |
WebMD Health Corp. | | | | | | | | |
2.625%, 6/15/23§ | | | 40,000 | | | | 38,525 | |
See Notes to Financial Statements.
8
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Yahoo!, Inc. | | | | | | | | |
(Zero Coupon), 12/1/18 | | $ | 67,000 | | | $ | 70,350 | |
| | | | | | | | |
| | | | | | | 809,536 | |
| | | | | | | | |
IT Services (1.4%) | |
Blackhawk Network Holdings, Inc. | | | | | | | | |
1.500%, 1/15/22§ | | | 137,000 | | | | 148,474 | |
Cardtronics, Inc. | | | | | | | | |
1.000%, 12/1/20 | | | 41,000 | | | | 42,102 | |
CSG Systems International, Inc. | | | | | | | | |
4.250%, 3/15/36 | | | 89,000 | | | | 92,226 | |
Square, Inc. | | | | | | | | |
0.375%, 3/1/22§ | | | 12,000 | | | | 12,690 | |
| | | | | | | | |
| | | | | | | 295,492 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (14.9%) | |
Advanced Micro Devices, Inc. | | | | | | | | |
2.125%, 9/1/26 | | | 83,000 | | | | 152,824 | |
Inphi Corp. | | | | | | | | |
1.125%, 12/1/20 | | | 28,000 | | | | 34,685 | |
0.750%, 9/1/21§ | | | 15,000 | | | | 15,347 | |
Integrated Device Technology, Inc. | | | | | | | | |
0.875%, 11/15/22 | | | 150,000 | | | | 152,531 | |
Intel Corp. | | | | | | | | |
3.250%, 8/1/39 | | | 59,000 | | | | 103,176 | |
Microchip Technology, Inc. | | | | | | | | |
1.625%, 2/15/25 | | | 137,000 | | | | 200,277 | |
1.625%, 2/15/27§ | | | 485,000 | | | | 496,519 | |
2.250%, 2/15/37§ | | | 12,000 | | | | 12,390 | |
Micron Technology, Inc. | | | | | | | | |
Series C | | | | | | | | |
2.375%, 5/1/32 | | | 9,000 | | | | 26,106 | |
Series F | | | | | | | | |
2.125%, 2/15/33 | | | 47,000 | | | | 120,672 | |
Series G | | | | | | | | |
3.000%, 11/15/43 | | | 465,000 | | | | 502,200 | |
Novellus Systems, Inc. | | | | | | | | |
2.625%, 5/15/41 | | | 127,000 | | | | 543,481 | |
NVIDIA Corp. | | | | | | | | |
1.000%, 12/1/18 | | | 51,000 | | | | 263,797 | |
ON Semiconductor Corp. | | | | | | | | |
1.000%, 12/1/20 | | | 120,000 | | | | 126,525 | |
Silicon Laboratories, Inc. | | | | | | | | |
1.375%, 3/1/22§ | | | 12,000 | | | | 12,593 | |
Spansion LLC | | | | | | | | |
2.000%, 9/1/20 | | | 56,000 | | | | 152,880 | |
SunPower Corp. | | | | | | | | |
0.750%, 6/1/18 | | | 56,000 | | | | 52,500 | |
4.000%, 1/15/23 | | | 30,000 | | | | 24,056 | |
Teradyne, Inc. | | | | | | | | |
1.250%, 12/15/23§ | | | 9,000 | | | | 11,261 | |
Veeco Instruments, Inc. | | | | | | | | |
2.700%, 1/15/23 | | | 42,000 | | | | 46,148 | |
Xilinx, Inc. | | | | | | | | |
2.625%, 6/15/17 | | | 86,000 | | | | 189,200 | |
| | | | | | | | |
| | | | | | | 3,239,168 | |
| | | | | | | | |
Software (8.5%) | |
Citrix Systems, Inc. | | | | | | | | |
0.500%, 4/15/19 | | | 150,000 | | | | 183,656 | |
| | | | | | | | |
FireEye, Inc. | | | | | | | | |
Series A | | | | | | | | |
1.000%, 6/1/35 | | $ | 148,000 | | | $ | 139,675 | |
Series B | | | | | | | | |
1.625%, 6/1/35 | | | 35,000 | | | | 31,456 | |
Nice Systems, Inc. | | | | | | | | |
1.250%, 1/15/24§ | | | 12,000 | | | | 12,405 | |
Nuance Communications, Inc. | | | | | | | | |
1.000%, 12/15/35 | | | 158,000 | | | | 152,668 | |
Proofpoint, Inc. | | | | | | | | |
0.750%, 6/15/20 | | | 63,000 | | | | 71,938 | |
PROS Holdings, Inc. | | | | | | | | |
2.000%, 12/1/19 | | | 80,000 | | | | 81,650 | |
Red Hat, Inc. | | | | | | | | |
0.250%, 10/1/19 | | | 118,000 | | | | 155,096 | |
Rovi Corp. | | | | | | | | |
0.500%, 3/1/20 | | | 60,000 | | | | 59,250 | |
salesforce.com, Inc. | | | | | | | | |
0.250%, 4/1/18 | | | 354,000 | | | | 469,493 | |
ServiceNow, Inc. | | | | | | | | |
(Zero Coupon), 11/1/18 | | | 70,000 | | | | 94,150 | |
Synchronoss Technologies, Inc. | | | | | | | | |
0.750%, 8/15/19 | | | 95,000 | | | | 80,988 | |
Take-Two Interactive Software, Inc. | | | | | | | | |
1.000%, 7/1/18 | | | 45,000 | | | | 131,316 | |
Verint Systems, Inc. | | | | | | | | |
1.500%, 6/1/21 | | | 129,000 | | | | 124,243 | |
Workday, Inc. | | | | | | | | |
0.750%, 7/15/18 | | | 59,000 | | | | 68,624 | |
| | | | | | | | |
| | | | | | | 1,856,608 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.3%) | |
Electronics For Imaging, Inc. | | | | | | | | |
0.750%, 9/1/19 | | | 65,000 | | | | 69,062 | |
| | | | | | | | |
Total Information Technology | | | | | | | 7,156,189 | |
| | | | | | | | |
Materials (1.3%) | | | | | |
Construction Materials (1.3%) | |
Cemex SAB de CV | | | | | | | | |
3.720%, 3/15/20 | | | 255,000 | | | | 290,541 | |
| | | | | | | | |
Total Materials | | | | | | | 290,541 | |
| | | | | | | | |
Real Estate (0.9%) | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.9%) | |
Colony NorthStar, Inc. (REIT) | | | | | | | | |
5.000%, 4/15/23 | | | 65,000 | | | | 66,462 | |
Colony Starwood Homes (REIT) | | | | | | | | |
3.000%, 7/1/19 | | | 55,000 | | | | 65,656 | |
3.500%, 1/15/22§ | | | 54,000 | | | | 58,118 | |
| | | | | | | | |
Total Real Estate | | | | | | | 190,236 | |
| | | | | | | | |
Total Convertible Bonds | | | | | | | 15,984,488 | |
| | | | | | | | |
Total Long-Term Debt Securities (73.2%)
(Cost $15,110,019) | | | | | | | 15,984,488 | |
| | | | | | | | |
See Notes to Financial Statements.
9
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
CONVERTIBLE PREFERRED STOCKS: | |
Consumer Staples (1.6%) | |
Food Products (1.6%) | |
Bunge Ltd., | | | | | | | | |
4.875% | | | 592 | | | $ | 63,581 | |
Tyson Foods, Inc., | | | | | | | | |
4.750% | | | 3,968 | | | | 275,181 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 338,762 | |
| | | | | | | | |
Energy (1.1%) | |
Oil, Gas & Consumable Fuels (1.1%) | |
Hess Corp., | | | | | | | | |
8.000% | | | 1,390 | | | | 82,913 | |
Kinder Morgan, Inc., | | | | | | | | |
Series A | | | | | | | | |
9.750% | | | 1,691 | | | | 77,871 | |
Southwestern Energy Co., | | | | | | | | |
Series B | | | | | | | | |
6.250% | | | 4,000 | | | | 73,920 | |
| | | | | | | | |
Total Energy | | | | | | | 234,704 | |
| | | | | | | | |
Financials (8.1%) | |
Banks (7.5%) | |
Bank of America Corp., | | | | | | | | |
Series L | | | | | | | | |
7.250% | | | 292 | | | | 354,319 | |
Huntington Bancshares, Inc., | | | | | | | | |
Series A | | | | | | | | |
8.500% | | | 363 | | | | 504,842 | |
Wells Fargo & Co., | | | | | | | | |
Series L | | | | | | | | |
7.500% | | | 610 | | | | 774,700 | |
| | | | | | | | |
| | | | | | | 1,633,861 | |
| | | | | | | | |
Capital Markets (0.4%) | |
AMG Capital Trust II, | | | | | | | | |
5.150% | | | 545 | | | | 31,065 | |
Mandatory Exchangeable Trust, | | | | | | | | |
5.750%§ | | | 432 | | | | 59,395 | |
| | | | | | | | |
| | | | | | | 90,460 | |
| | | | | | | | |
Mortgage Real Estate Investment Trusts (REITs) (0.2%) | |
Great Ajax Corp. (REIT), | | | | | | | | |
7.250%* | | | 1,970 | | | | 49,841 | |
| | | | | | | | |
Total Financials | | | | | | | 1,774,162 | |
| | | | | | | | |
Health Care (5.4%) | |
Health Care Equipment & Supplies (0.9%) | |
Alere, Inc., | | | | | | | | |
Series B | | | | | | | | |
3.000% | | | 500 | | | | 193,000 | |
| | | | | | | | |
Health Care Providers & Services (1.7%) | |
Anthem, Inc., | | | | | | | | |
5.250% | | | 6,880 | | | | 353,494 | |
Envision Healthcare Corp., | | | | | | | | |
Series A-1 | | | | | | | | |
5.250% | | | 295 | | | | 31,279 | |
| | | | | | | | |
| | | | | | | 384,773 | |
| | | | | | | | |
| | | | | | | | |
Pharmaceuticals (2.8%) | |
Allergan plc, | | | | | | | | |
Series A | | | | | | | | |
5.500% | | | 703 | | | $ | 608,643 | |
| | | | | | | | |
Total Health Care | | | | | | | 1,186,416 | |
| | | | | | | | |
Industrials (1.6%) | |
Aerospace & Defense (0.9%) | |
Arconic, Inc., | | | | | | | | |
5.375% | | | 4,821 | | | | 204,700 | |
| | | | | | | | |
Commercial Services & Supplies (0.3%) | |
Stericycle, Inc., | | | | | | | | |
5.250% | | | 798 | | | | 59,060 | |
| | | | | | | | |
Machinery (0.4%) | |
Rexnord Corp., | | | | | | | | |
Series A | | | | | | | | |
5.750% | | | 1,335 | | | | 75,227 | |
| | | | | | | | |
Total Industrials | | | | | | | 338,987 | |
| | | | | | | | |
Information Technology (1.1%) | |
Electronic Equipment, Instruments & Components (1.1%) | |
Belden, Inc., | | | | | | | | |
6.750% | | | 1,528 | | | | 150,462 | |
MTS Systems Corp., | | | | | | | | |
8.750%* | | | 812 | | | | 88,346 | |
| | | | | | | | |
Total Information Technology | | | | | | | 238,808 | |
| | | | | | | | |
Real Estate (0.6%) | |
Equity Real Estate Investment Trusts (REITs) (0.6%) | |
Welltower, Inc. (REIT), | | | | | | | | |
Series I | | | | | | | | |
6.500% | | | 2,076 | | | | 131,224 | |
| | | | | | | | |
Total Real Estate | | | | | | | 131,224 | |
| | | | | | | | |
Telecommunication Services (2.7%) | |
Diversified Telecommunication Services (0.6%) | |
Frontier Communications Corp., | | | | | | | | |
Series A | | | | | | | | |
11.125% | | | 2,857 | | | | 126,680 | |
| | | | | | | | |
Wireless Telecommunication Services (2.1%) | |
T-Mobile US, Inc., | | | | | | | | |
5.500% | | | 4,167 | | | | 457,203 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 583,883 | |
| | | | | | | | |
Utilities (0.6%) | |
Electric Utilities (0.3%) | |
Great Plains Energy, Inc., | | | | | | | | |
7.000% | | | 200 | | | | 10,820 | |
NextEra Energy, Inc., | | | | | | | | |
6.123% | | | 1,095 | | | | 57,378 | |
| | | | | | | | |
| | | | | | | 68,198 | |
| | | | | | | | |
Multi-Utilities (0.3%) | |
Dominion Resources, Inc., | | | | | | | | |
Series A | | | | | | | | |
6.750% | | | 1,210 | | | | 61,250 | |
See Notes to Financial Statements.
10
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
DTE Energy Co., | | | | | | | | |
6.500% | | | 200 | | | $ | 10,778 | |
| | | | | | | | |
| | | | | | | 72,028 | |
| | | | | | | | |
Total Utilities | | | | | | | 140,226 | |
| | | | | | | | |
Total Convertible Preferred Stocks (22.8%)
(Cost $4,861,972) | | | | | | | 4,967,172 | |
| | | | | | | | |
Common Stock: | |
Financials (0.8%) | |
Banks (0.8%) | |
KeyCorp | | | 9,574 | | | | 174,630 | |
| | | | | | | | |
Total Common Stocks (0.8%)
(Cost $176,832) | | | | | | | 174,630 | |
| | | | | | | | |
Total Investments (96.8%)
(Cost $20,148,823) | | | | | | | 21,126,290 | |
Other Assets Less Liabilities (3.2%) | | | | | | | 700,263 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 21,826,553 | |
| | | | | | | | |
| § | 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, 2017, the market value of these securities amounted to $2,929,944 or 13.4% 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, 2017, the market value of these securities amounted to $6,225 or 0.0% of net assets. |
| (e) | Step Bond - Coupon rate increases in increments to maturity. Rate disclosed is as of April 30, 2017. Maturity date disclosed is the ultimate maturity date. |
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, 2017:
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 (a) | | | 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 | | | | | | | | | | | | | | | | |
Financials | | $ | 174,630 | | | $ | — | | | $ | — | | | $ | 174,630 | |
Convertible Bonds | | | | | | | | | | | | | | | | |
Consumer Discretionary | | | — | | | | 2,530,631 | | | | — | | | | 2,530,631 | |
Energy | | | — | | | | 854,927 | | | | — | | | | 854,927 | |
Financials | | | — | | | | 406,580 | | | | — | | | | 406,580 | |
Health Care | | | — | | | | 3,371,585 | | | | — | | | | 3,371,585 | |
Industrials | | | — | | | | 1,183,799 | | | | — | | | | 1,183,799 | |
Information Technology | | | — | | | | 7,156,189 | | | | — | | | | 7,156,189 | |
Materials | | | — | | | | 290,541 | | | | — | | | | 290,541 | |
Real Estate | | | — | | | | 190,236 | | | | — | | | | 190,236 | |
Convertible Preferred Stocks | | | | | | | | | | | | | | | | |
Consumer Staples | | | 338,762 | | | | — | | | | — | | | | 338,762 | |
Energy | | | 234,704 | | | | — | | | | — | | | | 234,704 | |
Financials | | | 1,774,162 | | | | — | | | | — | | | | 1,774,162 | |
Health Care | | | 1,186,416 | | | | — | | | | — | | | | 1,186,416 | |
Industrials | | | 338,987 | | | | — | | | | — | | | | 338,987 | |
Information Technology | | | 238,808 | | | | — | | | | — | | | | 238,808 | |
Real Estate | | | 131,224 | | | | — | | | | — | | | | 131,224 | |
See Notes to Financial Statements.
11
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities (a) | | | 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 | |
Telecommunication Services | | $ | 583,883 | | | $ | — | | | $ | — | | | $ | 583,883 | |
Utilities | | | 140,226 | | | | — | | | | — | | | | 140,226 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 5,141,802 | | | $ | 15,984,488 | | | $ | — | | | $ | 21,126,290 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 5,141,802 | | | $ | 15,984,488 | | | $ | — | | | $ | 21,126,290 | |
| | | | | | | | | | | | | | | | |
(a) Securities with a market value of $178,806 transferred from Level 2 to Level 1 at the end of the period due to active trading.
There were no additional transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
The Fund held no derivatives contracts during the six months ended April 30, 2017.
Investment security transactions for the six months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,495,961 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,258,279 | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 2,152,251 | |
Aggregate gross unrealized depreciation | | | (1,304,801 | ) |
| | | | |
Net unrealized appreciation | | $ | 847,450 | |
| | | | |
Federal income tax cost of investments | | $ | 20,278,840 | |
| | | | |
See Notes to Financial Statements.
12
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
| |
ASSETS | | | | |
Investments at value (Cost $20,148,823) | | $ | 21,126,290 | |
Cash | | | 675,196 | |
Dividends, interest and other receivables | | | 77,883 | |
Receivable for securities sold | | | 3,150 | |
Other assets | | | 4 | |
| | | | |
Total assets | | | 21,882,523 | |
| | | | |
LIABILITIES | | | | |
Dividends and distributions payable | | | 21,737 | |
Payable for securities purchased | | | 6,000 | |
Administrative fees payable | | | 2,661 | |
Transfer agent fees payable | | | 487 | |
Payable for Fund shares redeemed | | | 200 | |
Investment management fees payable | | | 131 | |
Distribution fees payable – Class A | | | 83 | |
Distribution fees payable – Class R | | | 42 | |
Trustees’ fees payable | | | 2 | |
Accrued expenses | | | 24,627 | |
| | | | |
Total liabilities | | | 55,970 | |
| | | | |
NET ASSETS | | $ | 21,826,553 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 21,068,278 | |
Accumulated undistributed net investment income (loss) | | | (143,970 | ) |
Accumulated undistributed net realized gain (loss) on investments | | | (75,222 | ) |
Net unrealized appreciation (depreciation) on investments | | | 977,467 | |
| | | | |
Net assets | | $ | 21,826,553 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $419,738 / 40,701 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.31 | |
Maximum sales charge (4.50% of offering price) | | | 0.49 | |
| | | | |
Maximum offering price per share | | $ | 10.80 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $21,303,588 / 2,065,929 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.31 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $103,227 / 10,010 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.31 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
| |
INVESTMENT INCOME | | | | |
Interest | | $ | 163,560 | |
Dividends | | | 152,248 | |
| | | | |
Total income | | | 315,808 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 72,904 | |
Professional fees | | | 43,682 | |
Registration and filing fees | | | 20,943 | |
Administrative fees | | | 15,622 | |
Transfer agent fees | | | 14,869 | |
Printing and mailing expenses | | | 6,762 | |
Custodian fees | | | 2,976 | |
Trustees’ fees | | | 1,047 | |
Distribution fees – Class A | | | 484 | |
Distribution fees – Class R | | | 247 | |
Miscellaneous | | | 9,609 | |
| | | | |
Gross expenses | | | 189,145 | |
Less: Waiver from investment adviser | | | (78,754 | ) |
| | | | |
Net expenses | | | 110,391 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 205,417 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments | | | 276,583 | |
Net change in unrealized appreciation (depreciation) on investments | | | 1,462,316 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 1,738,899 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,944,316 | |
| | | | |
See Notes to Financial Statements.
13
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 205,417 | | | $ | 342,078 | |
Net realized gain (loss) on investments | | | 276,583 | | | | (228,393 | ) |
Net change in unrealized appreciation (depreciation) on investments | | | 1,462,316 | | | | 342,276 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,944,316 | | | | 455,961 | |
| | | | | | | | |
DIVIDENDS : | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (6,224 | ) | | | (5,611 | ) |
Class I | | | (352,349 | ) | | | (416,007 | ) |
Class R | | | (1,463 | ) | | | (1,584 | ) |
| | | | | | | | |
TOTAL DIVIDENDS: | | | (360,036 | ) | | | (423,202 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 2,115 and 19,312 shares, respectively ] | | | 21,374 | | | | 180,592 | |
Capital shares issued in reinvestment of dividends [ 473 and 421 shares, respectively ] | | | 4,638 | | | | 3,933 | |
Capital shares repurchased [ (1,040) and (2,153) shares, respectively ] | | | (10,357 | ) | | | (18,620 | ) |
| | | | | | | | |
Total Class A transactions | | | 15,655 | | | | 165,905 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 26,857 and 64,253 shares, respectively ] | | | 266,003 | | | | 589,211 | |
Capital shares issued in reinvestment of dividends [ 1,381 and 1,062 shares, respectively ] | | | 13,571 | | | | 9,928 | |
Capital shares repurchased [ (10,652) and (12,302) shares, respectively ] | | | (106,671 | ) | | | (119,056 | ) |
| | | | | | | | |
Total Class I transactions | | | 172,903 | | | | 480,083 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 10 shares, respectively ] | | | — | | | | 100 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 1 | | | | — | |
| | | | | | | | |
Total Class R transactions | | | 1 | | | | 100 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 188,559 | | | | 646,088 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,772,839 | | | | 678,847 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 20,053,714 | | | | 19,374,867 | |
| | | | | | | | |
End of period (a) | | $ | 21,826,553 | | | $ | 20,053,714 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | (143,970 | ) | | $ | 10,649 | |
| | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
See Notes to Financial Statements.
14
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.14 | | | | 0.03 | |
Net realized and unrealized gain (loss) on investments | | | 0.82 | | | | 0.04 | | | | (0.44 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.91 | | | | 0.18 | | | | (0.41 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.16 | ) | | | (0.18 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.31 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | |
Total return (b) | | | 9.60 | % | | | 1.97 | % | | | (4.08 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 420 | | | $ | 374 | | | $ | 206 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.30 | % | | | 1.30 | % | | | 1.30 | % |
Before waivers and reimbursements (a) | | | 2.06 | % | | | 2.26 | % | | | 2.09 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.72 | % | | | 1.49 | % | | | 1.09 | %(l) |
Before waivers and reimbursements (a) | | | 0.97 | % | | | 0.52 | % | | | 0.30 | %(l) |
Portfolio turnover rate (z)^ | | | 16 | % | | | 32 | % | | | 6 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.10 | | | | 0.17 | | | | 0.04 | |
Net realized and unrealized gain (loss) on investments | | | 0.82 | | | | 0.04 | | | | (0.44 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.92 | | | | 0.21 | | | | (0.40 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.17 | ) | | | (0.21 | ) | | | (0.04 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.31 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | |
Total return (b) | | | 9.74 | % | | | 2.23 | % | | | (4.00 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 21,304 | | | $ | 19,584 | | | $ | 19,073 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % |
Before waivers and reimbursements (a) | | | 1.81 | % | | | 1.99 | % | | | 1.72 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.98 | % | | | 1.78 | % | | | 1.37 | %(l) |
Before waivers and reimbursements (a) | | | 1.22 | % | | | 0.84 | % | | | 0.70 | %(l) |
Portfolio turnover rate (z)^ | | | 16 | % | | | 32 | % | | | 6 | % |
See Notes to Financial Statements.
15
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.07 | | | | 0.12 | | | | 0.03 | |
Net realized and unrealized gain (loss) on investments | | | 0.83 | | | | 0.04 | | | | (0.45 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.90 | | | | 0.16 | | | | (0.42 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.15 | ) | | | (0.16 | ) | | | (0.02 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.31 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | |
Total return (b) | | | 9.46 | % | | | 1.72 | % | | | (4.16 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 103 | | | $ | 96 | | | $ | 96 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.55 | % | | | 1.55 | % | | | 1.55 | % |
Before waivers and reimbursements (a) | | | 2.31 | % | | | 2.49 | % | | | 2.22 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.48 | % | | | 1.28 | % | | | 0.87 | %(l) |
Before waivers and reimbursements (a) | | | 0.72 | % | | | 0.34 | % | | | 0.20 | %(l) |
Portfolio turnover rate (z)^ | | | 16 | % | | | 32 | % | | | 6 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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. |
| (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.
16
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISER
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 6.25 | % | | | 9.58 | % | | | 10.28 | % |
| | | | with Sales Charge (a | ) | | | 0.43 | | | | 3.60 | | | | 4.99 | |
Fund – Class I Shares* | | | | | | | 6.37 | | | | 9.91 | | | | 10.56 | |
Fund – Class R Shares* | | | | | | | 6.13 | | | | 9.36 | | | | 10.08 | |
S&P 500® Index | | | | | | | 13.32 | | | | 17.92 | | | | 18.89 | |
Bloomberg Barclays U.S. Aggregate Bond Index | | | | | | | (0.67 | ) | | | 0.83 | | | | 2.19 | |
60% S&P 500® Index / 40% Bloomberg Barclays U.S. Aggregate Bond Index | | | | | | | 7.57 | | | | 10.85 | | | | 11.99 | |
* 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 current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
Fund performance may 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. Also, 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
As the six-month period under discussion began, the United States was days away from the Presidential election. At that point, the conventional wisdom believed Hilary Clinton would easily win the election, following a particularly acrimonious campaign season exposing deep divisions and resentments in the electorate. Despite the expected Clinton win, the surprising strength of Trump and Sanders suggested populism was the true winner of the election season.
With the surprise election of Donald Trump, the market quickly discounted the prospect of more inflationary and expansionary fiscal policies, as well as a more business-friendly regulatory environment. Between Election Day and the end of 2016, the S&P 500® Index gained almost five percent, to end the year up almost twelve percent. The index established a number of new highs during December.
We believe it would be a mistake to attribute all of the market’s actions in the last two months of the year to the outcome of the Presidential election. Looking within the market, many of the November and December trends were an acceleration of trends that were already well established since the summer. Specifically, the bottoming of inflation expectations and ten-year Treasury yields in July saw a rotation in the market. Formerly strong-performing and defensive “yield-proxy” sectors such as consumer staples and utilities began to underperform. At the same time, more cyclical sectors such as energy and technology began outperforming the broader index, as did financial services — perceived as a beneficiary of higher rates and a steeper yield curve.
These sector-level trends gained momentum following the election. Financial services was the leadership sector, regarded as the greatest beneficiary from a steeper yield-curve and less regulation. The reaction of health care stocks was somewhat counter-intuitive: the sector initially rallied following the election, only to sell off on the realization that the shape of the next round of health care policy reform is very uncertain.
For the first two months of 2017, the U.S. equity markets continued their post-election march higher. The market moved higher on two broad themes: first, the newly-inaugurated President Trump would pursue fiscal, regulatory and tax policies that would lead to faster corporate earnings growth. Second, the second half of 2016 marked the end of the earnings recession and 2017 would see high single-digit (or even double-digit) earnings growth for the S&P 500® Index.
Fourth quarter earnings released in January and February supported the second thesis, as did the first quarter earnings season which began in April. In March and April, however, there seemed to be a growing realization that the new administration’s agenda would not be quickly passed into law. The failure of the first bill to “repeal and replace” Obamacare reminded the markets that tax and regulatory reform would not come as easily as the post-election euphoria suggested. After setting an all-time high at the end of February, the S&P 500® Index basically moved sideways for the last two months of the six-month period under discussion. At a sector level, some of the post-election trends reversed. Specifically financials, which had been the stand-out leadership group, sold off. With oil prices down, the energy sector continued to underperform while technology continued to move higher.
Fund Highlights
During the six-month period, the Fund maintained a defensive weighting in equities, with an allocation to equities of approximately 45%. The balance of the Fund was invested in a diversified fixed income portfolio allocated across multiple sectors of the bond market. Maintaining an allocation to equities below the 60% baseline target was detrimental to the Fund’s returns relative to the benchmark.
Over this period, the fixed income portion of the Fund was essentially flat, superior to the negative return of the Bloomberg Barclays U.S. Aggregate Bond Index. The Fund’s investments in investment grade corporate bonds, bank loans and emerging markets fixed income were additive to relative returns during the
17
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
period, while the Fund’s investments in mortgage-backed securities, government bonds, and global bonds hurt relative returns. The fourth quarter of 2016 saw the worst rout in bond prices since the “Taper Tantrum” of 2013, the surge in U.S. Treasury yields which resulted from the Federal Reserve’s use of tapering to gradually reduce the amount of money it was feeding into the economy.
The Fund’s allocation to actively managed equities returned less than the S&P 500® Index during the six-month period. The greatest positive contributors to the Fund’s relative returns were: utilities, which was a weak performer within the benchmark and which the Fund avoided entirely; materials, due to good security selection; and real estate, which the Fund largely avoided. The greatest drags on the Fund’s relative returns were energy, industrials and technology, all due to security selection.
The Fund’s allocation to the systematic Shiller Barclays Cyclically Adjusted Price-to-Earnings (CAPE) Total Return Index (the Index) sector strategy was additive to relative returns, gaining over 19% during the period. The Fund gained exposure to the Index by entering into swap contracts. During the period, the Index was exposed to six sectors (four at any one time): consumer discretionary, staples, energy, health care, industrials, and technology. All six sectors contributed positively to returns.
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
U.S. Treasury Obligations | | | 14.1 | % |
Collateralized Mortgage Obligations | | | 13.8 | |
Financials | | | 6.7 | |
Mortgage-Backed Securities | | | 6.7 | |
Information Technology | | | 5.7 | |
Investment Companies | | | 5.5 | |
Health Care | | | 4.9 | |
Consumer Discretionary | | | 3.5 | |
Consumer Staples | | | 2.6 | |
Industrials | | | 2.2 | |
Energy | | | 2.0 | |
Asset-Backed Security | | | 1.7 | |
Telecommunication Services | | | 1.0 | |
Materials | | | 0.7 | |
Utilities | | | 0.6 | |
Foreign Government Securities | | | 0.2 | |
Real Estate | | | 0.1 | |
Cash and Other | | | 28.0 | |
| | | | | |
| | | | 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 the six-month period ended April 30, 2017 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,062.50 | | | | $6.20 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.78 | | | | 6.07 | |
Class I | |
Actual | | | 1,000.00 | | | | 1,063.70 | | | | 4.93 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,020.02 | | | | 4.82 | |
Class R | |
Actual | | | 1,000.00 | | | | 1,061.30 | | | | 7.48 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,017.54 | | | | 7.32 | |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.21%, 0.96% and 1.46%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). | |
18
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | | | | | |
Asset-Backed Security (1.7%) | | | | | | | | |
VOLT LIV LLC, | | | | | | | | |
Series 2017-NPL1 A1 | | | | | | | | |
3.625%, 2/25/47 (e)§ | | $ | 968,307 | | | $ | 969,179 | |
| | | | | | | | |
Total Asset-Backed Securities | | | | | | | 969,179 | |
| | | | | | | | |
Collateralized Mortgage Obligations (13.8%) | | | | | |
CHL Mortgage Pass-Through Trust, | | | | | | | | |
Series 2006-OA5 2A1 | | | | | | | | |
0.792%, 4/25/46 (l) | | | 1,077,231 | | | | 892,833 | |
FHLMC, | | | | | | | | |
Series 3998 AZ | | | | | | | | |
4.000%, 2/15/42 | | | 1,229,150 | | | | 1,314,038 | |
FirstKey Mortgage Trust, | | | | | | | | |
Series 2014-1 A8 | | | | | | | | |
3.500%, 11/25/44 (l)§ | | | 466,402 | | | | 471,673 | |
FNMA, | | | | | | | | |
Series 2013-41 SC | | | | | | | | |
4.514%, 5/25/43 (l) | | | 1,199,297 | | | | 1,035,775 | |
Series 2013-5 EZ | | | | | | | | |
2.000%, 8/25/42 | | | 792,979 | | | | 716,365 | |
Series 2017-13 ML | | | | | | | | |
3.000%, 8/25/41 | | | 987,768 | | | | 1,004,697 | |
Series 2017-4 CH | | | | | | | | |
3.000%, 6/25/42 | | | 246,658 | | | | 250,646 | |
New Residential Mortgage Loan Trust, | | | | | | | | |
Series 2016-1A A1 | | | | | | | | |
3.750%, 3/25/56 (l)§ | | | 745,927 | | | | 765,377 | |
RALI Trust, | | | | | | | | |
Series 2006-QS4 A10 | | | | | | | | |
6.000%, 4/25/36 | | | 877,002 | | | | 754,164 | |
Wells Fargo Mortgage Backed Securities Trust, | | | | | | | | |
Series 2007-7 A1 | | | | | | | | |
6.000%, 6/25/37 | | | 719,216 | | | | 721,731 | |
| | | | | | | | |
Total Collateralized Mortgage Obligations | | | | | | | 7,927,299 | |
| | | | | | | | |
Corporate Bonds (8.6%) | | | | | | | | |
Consumer Discretionary (0.6%) | | | | | | | | |
Auto Components (0.1%) | | | | | | | | |
Delphi Automotive plc | | | | | | | | |
4.250%, 1/15/26 | | | 40,000 | | | | 42,326 | |
| | | | | | | | |
Automobiles (0.1%) | | | | | | | | |
Ford Motor Co. | | | | | | | | |
7.450%, 7/16/31 | | | 40,000 | | | | 50,430 | |
| | | | | | | | |
Household Durables (0.0%) | | | | | | | | |
Newell Brands, Inc. | | | | | | | | |
3.150%, 4/1/21 | | | 10,000 | | | | 10,259 | |
| | | | | | | | |
Media (0.3%) | | | | | | | | |
Charter Communications Operating LLC | | | | | | | | |
4.908%, 7/23/25 | | | 45,000 | | | | 47,889 | |
Comcast Corp. | | | | | | | | |
4.200%, 8/15/34 | | | 40,000 | | | | 40,981 | |
4.400%, 8/15/35 | | | 5,000 | | | | 5,204 | |
| | | | | | | | |
Omnicom Group, Inc. | | | | | | | | |
3.600%, 4/15/26 | | $ | 50,000 | | | $ | 50,361 | |
| | | | | | | | |
| | | | | | | 144,435 | |
| | | | | | | | |
Specialty Retail (0.1%) | | | | | | | | |
Home Depot, Inc. (The) | | | | | | | | |
3.000%, 4/1/26 | | | 50,000 | | | | 50,336 | |
Lowe’s Cos., Inc. | | | | | | | | |
3.100%, 5/3/27 | | | 25,000 | | | | 24,979 | |
| | | | | | | | |
| | | | | | | 75,315 | |
| | | | | | | | |
Textiles, Apparel & Luxury Goods (0.0%) | | | | | |
Cintas Corp. No. 2 | | | | | | | | |
3.700%, 4/1/27 | | | 15,000 | | | | 15,492 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 338,257 | |
| | | | | | | | |
Consumer Staples (0.6%) | | | | | | | | |
Beverages (0.1%) | | | | | | | | |
Anheuser-Busch InBev Finance, Inc. | | | | | | | | |
4.900%, 2/1/46 | | | 20,000 | | | | 21,846 | |
PepsiCo, Inc. | | | | | | | | |
3.450%, 10/6/46 | | | 50,000 | | | | 45,298 | |
| | | | | | | | |
| | | | | | | 67,144 | |
| | | | | | | | |
Food & Staples Retailing (0.1%) | | | | | | | | |
Kroger Co. (The) | | | | | | | | |
6.150%, 1/15/20 | | | 5,000 | | | | 5,512 | |
3.400%, 4/15/22 | | | 50,000 | | | | 51,445 | |
| | | | | | | | |
| | | | | | | 56,957 | |
| | | | | | | | |
Food Products (0.3%) | | | | | | | | |
Kraft Heinz Foods Co. | | | | | | | | |
2.000%, 7/2/18 | | | 50,000 | | | | 50,125 | |
Smithfield Foods, Inc. | | | | | | | | |
4.250%, 2/1/27§ | | | 55,000 | | | | 55,819 | |
Tyson Foods, Inc. | | | | | | | | |
3.950%, 8/15/24 | | | 50,000 | | | | 51,587 | |
| | | | | | | | |
| | | | | | | 157,531 | |
| | | | | | | | |
Tobacco (0.1%) | | | | | | | | |
Reynolds American, Inc. | | | | | | | | |
4.000%, 6/12/22 | | | 45,000 | | | | 47,610 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 329,242 | |
| | | | | | | | |
Energy (0.6%) | | | | | | | | |
Energy Equipment & Services (0.0%) | |
Schlumberger Holdings Corp. | | | | | | | | |
2.350%, 12/21/18§ | | | 25,000 | | | | 25,202 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (0.6%) | |
Apache Corp. | | | | | | | | |
4.750%, 4/15/43 | | | 25,000 | | | | 25,255 | |
BP Capital Markets plc | | | | | | | | |
3.588%, 4/14/27 | | | 14,000 | | | | 14,293 | |
3.723%, 11/28/28 | | | 40,000 | | | | 40,992 | |
Chevron Corp. | | | | | | | | |
1.561%, 5/16/19 | | | 40,000 | | | | 39,914 | |
2.498%, 3/3/22 | | | 15,000 | | | | 15,101 | |
Enable Midstream Partners LP | | | | | | | | |
4.400%, 3/15/27 | | | 50,000 | | | | 49,976 | |
Energy Transfer Partners LP | | | | | | | | |
4.750%, 1/15/26 | | | 45,000 | | | | 47,391 | |
4.200%, 4/15/27 | | | 5,000 | | | | 5,056 | |
See Notes to Financial Statements.
19
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Kinder Morgan Energy Partners LP | | | | | | | | |
6.950%, 1/15/38 | | $ | 35,000 | | | $ | 41,897 | |
Occidental Petroleum Corp. | | | | | | | | |
3.400%, 4/15/26 | | | 10,000 | | | | 10,094 | |
Phillips 66 | | | | | | | | |
5.875%, 5/1/42 | | | 22,000 | | | | 25,664 | |
| | | | | | | | |
| | | | | | | 315,633 | |
| | | | | | | | |
Total Energy | | | | | | | 340,835 | |
| | | | | | | | |
Financials (2.8%) | | | | | | | | |
Banks (1.5%) | | | | | | | | |
Bank of America Corp. | | | | | | | | |
2.000%, 1/11/18 | | | 15,000 | | | | 15,038 | |
2.503%, 10/21/22 | | | 35,000 | | | | 34,423 | |
2.881%, 4/24/23 (l) | | | 35,000 | | | | 34,917 | |
Bank of Montreal | | | | | | | | |
1.900%, 8/27/21 | | | 50,000 | | | | 49,121 | |
Citigroup, Inc. | | | | | | | | |
2.700%, 3/30/21 | | | 45,000 | | | | 45,278 | |
2.750%, 4/25/22 | | | 35,000 | | | | 34,861 | |
Commonwealth Bank of Australia | | | | | | | | |
2.750%, 3/10/22§ | | | 75,000 | | | | 75,589 | |
JPMorgan Chase & Co. | | | | | | | | |
2.972%, 1/15/23 | | | 50,000 | | | | 50,248 | |
4.250%, 10/1/27 | | | 50,000 | | | | 51,765 | |
MUFG Americas Holdings Corp. | | | | | | | | |
1.625%, 2/9/18 | | | 40,000 | | | | 39,964 | |
2.250%, 2/10/20 | | | 10,000 | | | | 10,013 | |
PNC Financial Services Group, Inc. (The) | | | | | | | | |
3.300%, 3/8/22 | | | 50,000 | | | | 51,931 | |
Royal Bank of Canada | | | | | | | | |
2.125%, 3/2/20 | | | 25,000 | | | | 25,055 | |
2.500%, 1/19/21 | | | 10,000 | | | | 10,102 | |
Sumitomo Mitsui Financial Group, Inc. | | | | | | | | |
2.934%, 3/9/21 | | | 50,000 | | | | 50,716 | |
2.058%, 7/14/21 | | | 30,000 | | | | 29,471 | |
Toronto-Dominion Bank (The) | | | | | | | | |
1.800%, 7/13/21 | | | 80,000 | | | | 78,454 | |
Wells Fargo & Co. | | | | | | | | |
3.069%, 1/24/23 | | | 55,000 | | | | 55,645 | |
3.000%, 4/22/26 | | | 10,000 | | | | 9,665 | |
3.000%, 10/23/26 | | | 45,000 | | | | 43,304 | |
Westpac Banking Corp. | | | | | | | | |
2.600%, 11/23/20 | | | 40,000 | | | | 40,331 | |
2.000%, 8/19/21 | | | 15,000 | | | | 14,698 | |
| | | | | | | | |
| | | | | | | 850,589 | |
| | | | | | | | |
Capital Markets (0.4%) | | | | | | | | |
Goldman Sachs Group, Inc. (The) | | | | | | | | |
2.350%, 11/15/21 | | | 35,000 | | | | 34,448 | |
3.000%, 4/26/22 | | | 20,000 | | | | 20,147 | |
Morgan Stanley | | | | | | | | |
2.500%, 4/21/21 | | | 20,000 | | | | 19,921 | |
2.625%, 11/17/21 | | | 35,000 | | | | 34,941 | |
3.625%, 1/20/27 | | | 55,000 | | | | 55,085 | |
S&P Global, Inc. | | | | | | | | |
4.400%, 2/15/26 | | | 20,000 | | | | 21,437 | |
| | | | | | | | |
State Street Corp. | | | | | | | | |
3.550%, 8/18/25 | | $ | 30,000 | | | $ | 30,974 | |
2.650%, 5/19/26 | | | 30,000 | | | | 28,848 | |
| | | | | | | | |
| | | | | | | 245,801 | |
| | | | | | | | |
Consumer Finance (0.5%) | | | | | | | | |
Ally Financial, Inc. | | | | | | | | |
4.125%, 3/30/20 | | | 40,000 | | | | 40,772 | |
4.250%, 4/15/21 | | | 5,000 | | | | 5,094 | |
American Express Credit Corp. | | | | | | | | |
2.250%, 8/15/19 | | | 10,000 | | | | 10,070 | |
2.250%, 5/5/21 | | | 50,000 | | | | 49,733 | |
2.700%, 3/3/22 | | | 40,000 | | | | 40,272 | |
General Motors Financial Co., Inc. | | | | | | | | |
3.950%, 4/13/24 | | | 75,000 | | | | 75,460 | |
John Deere Capital Corp. | | | | | | | | |
2.650%, 1/6/22 | | | 20,000 | | | | 20,202 | |
Synchrony Financial | | | | | | | | |
3.000%, 8/15/19 | | | 50,000 | | | | 50,725 | |
| | | | | | | | |
| | | | | | | 292,328 | |
| | | | | | | | |
Diversified Financial Services (0.1%) | |
National Rural Utilities Cooperative Finance Corp. | | | | | | | | |
2.000%, 1/27/20 | | | 35,000 | | | | 34,894 | |
Shell International Finance BV | | | | | | | | |
1.375%, 5/10/19 | | | 55,000 | | | | 54,597 | |
| | | | | | | | |
| | | | | | | 89,491 | |
| | | | | | | | |
Insurance (0.3%) | | | | | | | | |
Liberty Mutual Group, Inc. | | | | | | | | |
6.500%, 5/1/42§ | | | 60,000 | | | | 75,663 | |
New York Life Global Funding | | | | | | | | |
2.900%, 1/17/24§ | | | 30,000 | | | | 30,304 | |
TIAA Asset Management Finance Co. LLC | | | | | | | | |
2.950%, 11/1/19§ | | | 46,000 | | | | 46,788 | |
| | | | | | | | |
| | | | | | | 152,755 | |
| | | | | | | | |
Total Financials | | | | | | | 1,630,964 | |
| | | | | | | | |
Health Care (1.2%) | | | | | | | | |
Biotechnology (0.1%) | | | | | | | | |
AbbVie, Inc. | | | | | | | | |
4.700%, 5/14/45 | | | 60,000 | | | | 60,268 | |
Celgene Corp. | | | | | | | | |
3.875%, 8/15/25 | | | 20,000 | | | | 20,704 | |
| | | | | | | | |
| | | | | | | 80,972 | |
| | | | | | | | |
Health Care Equipment & Supplies (0.1%) | | | | | |
Zimmer Biomet Holdings, Inc. | | | | | | | | |
2.700%, 4/1/20 | | | 50,000 | | | | 50,573 | |
| | | | | | | | |
Health Care Providers & Services (0.4%) | | | | | |
Anthem, Inc. | | | | | | | | |
2.300%, 7/15/18 | | | 50,000 | | | | 50,251 | |
Cardinal Health, Inc. | | | | | | | | |
1.950%, 6/15/18 | | | 45,000 | | | | 45,084 | |
Express Scripts Holding Co. | | | | | | | | |
4.500%, 2/25/26 | | | 20,000 | | | | 20,665 | |
3.400%, 3/1/27 | | | 15,000 | | | | 14,263 | |
See Notes to Financial Statements.
20
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Laboratory Corp. of America Holdings | | | | | | | | |
2.500%, 11/1/18 | | $ | 50,000 | | | $ | 50,456 | |
UnitedHealth Group, Inc. | | | | | | | | |
4.200%, 1/15/47 | | | 45,000 | | | | 45,998 | |
| | | | | | | | |
| | | | | | | 226,717 | |
| | | | | | | | |
Life Sciences Tools & Services (0.1%) | |
Thermo Fisher Scientific, Inc. | | | | | | | | |
3.300%, 2/15/22 | | | 60,000 | | | | 61,511 | |
| | | | | | | | |
Pharmaceuticals (0.5%) | | | | | | | | |
Actavis Funding SCS | | | | | | | | |
2.350%, 3/12/18 | | | 65,000 | | | | 65,274 | |
AstraZeneca plc | | | | | | | | |
2.375%, 11/16/20 | | | 25,000 | | | | 25,129 | |
Mylan NV | | | | | | | | |
3.150%, 6/15/21 | | | 45,000 | | | | 45,291 | |
Shire Acquisitions Investments Ireland DAC | | | | | | | | |
2.875%, 9/23/23 | | | 50,000 | | | | 48,970 | |
Teva Pharmaceutical Finance Co. BV | | | | | | | | |
2.950%, 12/18/22 | | | 65,000 | | | | 63,748 | |
Teva Pharmaceutical Finance Netherlands III BV | | | | | | | | |
2.800%, 7/21/23 | | | 15,000 | | | | 14,486 | |
| | | | | | | | |
| | | | | | | 262,898 | |
| | | | | | | | |
Total Health Care | | | | | | | 682,671 | |
| | | | | | | | |
Industrials (0.7%) | | | | | | | | |
Aerospace & Defense (0.1%) | | | | | | | | |
Boeing Co. (The) | | | | | | | | |
6.875%, 3/15/39 | | | 21,000 | | | | 29,893 | |
Lockheed Martin Corp. | | | | | | | | |
4.700%, 5/15/46 | | | 45,000 | | | | 49,269 | |
| | | | | | | | |
| | | | | | | 79,162 | |
| | | | | | | | |
Air Freight & Logistics (0.1%) | | | | | | | | |
FedEx Corp. | | | | | | | | |
4.750%, 11/15/45 | | | 45,000 | | | | 46,706 | |
| | | | | | | | |
Airlines (0.1%) | | | | | | | | |
Delta Air Lines, Inc. | | | | | | | | |
3.625%, 3/15/22 | | | 25,000 | | | | 25,578 | |
| | | | | | | | |
Commercial Services & Supplies (0.1%) | |
GW Honos Security Corp. | | | | | | | | |
8.750%, 5/15/25 (b)§ | | | 15,000 | | | | 15,225 | |
Waste Management, Inc. | | | | | | | | |
4.100%, 3/1/45 | | | 35,000 | | | | 35,439 | |
| | | | | | | | |
| | | | | | | 50,664 | |
| | | | | | | | |
Road & Rail (0.2%) | | | | | | | | |
Burlington Northern Santa Fe LLC | | | | | | | | |
4.550%, 9/1/44 | | | 55,000 | | | | 58,933 | |
CSX Corp. | | | | | | | | |
3.800%, 11/1/46 | | | 50,000 | | | | 46,816 | |
Penske Truck Leasing Co. LP | | | | | | | | |
4.200%, 4/1/27§ | | | 25,000 | | | | 25,865 | |
| | | | | | | | |
| | | | | | | 131,614 | |
| | | | | | | | |
| | | | | | | | |
Trading Companies & Distributors (0.1%) | |
Air Lease Corp. | | | | | | | | |
3.750%, 2/1/22 | | $ | 45,000 | | | $ | 46,656 | |
| | | | | | | | |
Total Industrials | | | | | | | 380,380 | |
| | | | | | | | |
Information Technology (0.7%) | | | | | | | | |
Communications Equipment (0.1%) | | | | | | | | |
Cisco Systems, Inc. | | | | | | | | |
1.850%, 9/20/21 | | | 50,000 | | | | 49,183 | |
| | | | | | | | |
IT Services (0.1%) | | | | | | | | |
Fidelity National Information Services, Inc. | | | | | | | | |
3.625%, 10/15/20 | | | 35,000 | | | | 36,473 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (0.2%) | |
Analog Devices, Inc. | | | | | | | | |
2.500%, 12/5/21 | | | 60,000 | | | | 59,856 | |
Applied Materials, Inc. | | | | | | | | |
4.350%, 4/1/47 | | | 25,000 | | | | 25,626 | |
Broadcom Corp. | | | | | | | | |
3.625%, 1/15/24§ | | | 35,000 | | | | 35,485 | |
| | | | | | | | |
| | | | | | | 120,967 | |
| | | | | | | | |
Software (0.2%) | | | | | | | | |
Microsoft Corp. | | | | | | | | |
4.450%, 11/3/45 | | | 45,000 | | | | 47,856 | |
Oracle Corp. | | | | | | | | |
1.900%, 9/15/21 | | | 50,000 | | | | 49,375 | |
4.125%, 5/15/45 | | | 45,000 | | | | 44,581 | |
| | | | | | | | |
| | | | | | | 141,812 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.1%) | |
Hewlett Packard Enterprise Co. | | | | | | | | |
3.600%, 10/15/20 | | | 40,000 | | | | 41,312 | |
| | | | | | | | |
Total Information Technology | | | | | | | 389,747 | |
| | | | | | | | |
Materials (0.3%) | | | | | | | | |
Chemicals (0.0%) | | | | | | | | |
Potash Corp. of Saskatchewan, Inc. | | | | | | | | |
4.000%, 12/15/26 | | | 10,000 | | | | 10,258 | |
| | | | | | | | |
Containers & Packaging (0.0%) | | | | | | | | |
International Paper Co. | | | | | | | | |
3.000%, 2/15/27 | | | 25,000 | | | | 23,851 | |
| | | | | | | | |
Metals & Mining (0.1%) | | | | | | | | |
Vale Overseas Ltd. | | | | | | | | |
5.875%, 6/10/21 | | | 35,000 | | | | 37,611 | |
| | | | | | | | |
Paper & Forest Products (0.2%) | | | | | | | | |
Georgia-Pacific LLC | | | | | | | | |
3.600%, 3/1/25§ | | | 95,000 | | | | 98,022 | |
| | | | | | | | |
Total Materials | | | | | | | 169,742 | |
| | | | | | | | |
Real Estate (0.1%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.1%) | |
Boston Properties LP (REIT) | | | | | | | | |
4.125%, 5/15/21 | | | 45,000 | | | | 47,741 | |
Simon Property Group LP (REIT) | | | | | | | | |
3.300%, 1/15/26 | | | 45,000 | | | | 44,882 | |
| | | | | | | | |
Total Real Estate | | | | | | | 92,623 | |
| | | | | | | | |
See Notes to Financial Statements.
21
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Telecommunication Services (0.4%) | | | | | | | | |
Diversified Telecommunication Services (0.4%) | | | | | |
AT&T, Inc. | | | | | | | | |
3.800%, 3/1/24 | | $ | 50,000 | | | $ | 50,807 | |
British Telecommunications plc | | | | | | | | |
5.950%, 1/15/18 | | | 100,000 | | | | 103,020 | |
Orange SA | | | | | | | | |
2.750%, 2/6/19 | | | 50,000 | | | | 50,618 | |
Verizon Communications, Inc. | | | | | | | | |
4.400%, 11/1/34 | | | 50,000 | | | | 47,755 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 252,200 | |
| | | | | | | | |
Utilities (0.6%) | | | | | | | | |
Electric Utilities (0.4%) | | | | | | | | |
Duke Energy Corp. | | | | | | | | |
3.750%, 9/1/46 | | | 15,000 | | | | 13,608 | |
Duke Energy Progress LLC | | | | | | | | |
4.150%, 12/1/44 | | | 45,000 | | | | 46,413 | |
Exelon Corp. | | | | | | | | |
3.400%, 4/15/26 | | | 25,000 | | | | 24,818 | |
Fortis, Inc. | | | | | | | | |
2.100%, 10/4/21§ | | | 55,000 | | | | 53,557 | |
NextEra Energy Capital Holdings, Inc. | | | | | | | | |
3.550%, 5/1/27 | | | 20,000 | | | | 20,061 | |
Southern Co. (The) | | | | | | | | |
2.450%, 9/1/18 | | | 75,000 | | | | 75,823 | |
| | | | | | | | |
| | | | | | | 234,280 | |
| | | | | | | | |
Multi-Utilities (0.2%) | | | | | | | | |
Berkshire Hathaway Energy Co. | | | | | | | | |
6.500%, 9/15/37 | | | 70,000 | | | | 91,590 | |
| | | | | | | | |
Total Utilities | | | | | | | 325,870 | |
| | | | | | | | |
| | |
Total Corporate Bonds | | | | | | | 4,932,531 | |
| | | | | | | | |
Foreign Government Securities (0.2%) | |
Petroleos Mexicanos | | | | | | | | |
6.750%, 9/21/47 | | | 25,000 | | | | 25,283 | |
United Mexican States | | | | | | | | |
4.000%, 10/2/23 | | | 80,000 | | | | 83,000 | |
| | | | | | | | |
Total Foreign Government Securities | | | | | | | 108,283 | |
| | | | | | | | |
Mortgage-Backed Securities (6.7%) | | | | | | | | |
FHLMC | | | | | | | | |
3.000%, 3/1/46 | | | 874,031 | | | | 874,099 | |
3.500%, 5/1/46 | | | 859,797 | | | | 876,086 | |
3.000%, 9/1/46 | | | 771,912 | | | | 771,731 | |
FNMA | | | | | | | | |
3.500%, 7/1/42 | | | 455,565 | | | | 473,770 | |
3.000%, 9/1/46 | | | 869,149 | | | | 869,318 | |
| | | | | | | | |
Total Mortgage-Backed Securities | | | | | | | 3,865,004 | |
| | | | | | | | |
U.S. Treasury Obligations (14.1%) | | | | | | | | |
U.S. Treasury Bonds | | | | | | | | |
2.750%, 11/15/42 | | | 1,120,000 | | | | 1,080,975 | |
U.S. Treasury Inflation Linked Bond | | | | | | | | |
1.000%, 2/15/46 TIPS | | | 164,496 | | | | 168,426 | |
| | | | | | | | |
U.S. Treasury Inflation Linked Note | | | | | | | | |
0.125%, 7/15/26 TIPS | | $ | 162,605 | | | $ | 159,643 | |
U.S. Treasury Notes | | | | | | | | |
0.625%, 5/31/17 | | | 360,000 | | | | 359,928 | |
0.625%, 9/30/17 | | | 560,000 | | | | 559,186 | |
1.000%, 2/15/18 | | | 520,000 | | | | 519,614 | |
1.000%, 5/31/18 | | | 400,000 | | | | 399,286 | |
1.500%, 5/31/20 | | | 740,000 | | | | 740,156 | |
2.000%, 11/30/20 | | | 700,000 | | | | 709,483 | |
2.250%, 3/31/21 | | | 770,000 | | | | 786,784 | |
1.750%, 3/31/22 | | | 1,130,000 | | | | 1,125,842 | |
2.125%, 2/29/24 | | | 690,000 | | | | 691,800 | |
1.625%, 5/15/26 | | | 810,000 | | | | 767,703 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 8,068,826 | |
| | | | | | | | |
Total Long-Term Debt Securities (45.1%)
(Cost $26,029,484) | | | | | | | 25,871,122 | |
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
COMMON STOCKS: | | | | | | | | |
Consumer Discretionary (2.9%) | | | | | | | | |
Automobiles (0.4%) | | | | | | | | |
General Motors Co. | | | 6,778 | | | | 234,790 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (0.3%) | |
Starbucks Corp. | | | 3,195 | | | | 191,892 | |
| | | | | | | | |
Internet & Direct Marketing Retail (1.0%) | | | | | |
Amazon.com, Inc.* | | | 416 | | | | 384,796 | |
JD.com, Inc. (ADR)* | | | 4,919 | | | | 172,509 | |
| | | | | | | | |
| | | | | | | 557,305 | |
| | | | | | | | |
Media (0.9%) | | | | | | | | |
Discovery Communications, Inc., Class A* | | | 8,245 | | | | 237,291 | |
Twenty-First Century Fox, Inc., Class A | | | 9,428 | | | | 287,931 | |
| | | | | | | | |
| | | | | | | 525,222 | |
| | | | | | | | |
Specialty Retail (0.3%) | | | | | | | | |
L Brands, Inc. | | | 2,573 | | | | 135,880 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 1,645,089 | |
| | | | | | | | |
Consumer Staples (2.0%) | | | | | | | | |
Food & Staples Retailing (1.4%) | | | | | | | | |
CVS Health Corp. | | | 3,587 | | | | 295,712 | |
Kroger Co. (The) | | | 9,182 | | | | 272,246 | |
Wal-Mart Stores, Inc. | | | 3,408 | | | | 256,214 | |
| | | | | | | | |
| | | | | | | 824,172 | |
| | | | | | | | |
Household Products (0.3%) | | | | | | | | |
Procter & Gamble Co. (The) | | | 1,745 | | | | 152,391 | |
| | | | | | | | |
Tobacco (0.3%) | | | | | | | | |
Philip Morris International, Inc. | | | 1,354 | | | | 150,077 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 1,126,640 | |
| | | | | | | | |
Energy (1.4%) | | | | | | | | |
Energy Equipment & Services (0.3%) | |
Schlumberger Ltd. | | | 2,297 | | | | 166,740 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (1.1%) | |
Apache Corp. | | | 3,741 | | | | 181,962 | |
See Notes to Financial Statements.
22
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
Exxon Mobil Corp. | | | 1,417 | | | $ | 115,698 | |
Newfield Exploration Co.* | | | 5,463 | | | | 189,129 | |
Pioneer Natural Resources Co. | | | 822 | | | | 142,198 | |
| | | | | | | | |
| | | | | | | 628,987 | |
| | | | | | | | |
Total Energy | | | | | | | 795,727 | |
| | | | | | | | |
Financials (3.9%) | | | | | | | | |
Banks (1.4%) | | | | | | | | |
Citigroup, Inc. | | | 6,896 | | | | 407,691 | |
JPMorgan Chase & Co. | | | 4,853 | | | | 422,211 | |
| | | | | | | | |
| | | | | | | 829,902 | |
| | | | | | | | |
Capital Markets (0.3%) | | | | | | | | |
Intercontinental Exchange, Inc. | | | 3,285 | | | | 197,757 | |
| | | | | | | | |
Consumer Finance (0.5%) | | | | | | | | |
Capital One Financial Corp. | | | 3,568 | | | | 286,796 | |
| | | | | | | | |
Diversified Financial Services (0.6%) | | | | | | | | |
Leucadia National Corp. | | | 13,317 | | | | 338,119 | |
| | | | | | | | |
Insurance (0.9%) | | | | | | | | |
Chubb Ltd. | | | 1,050 | | | | 144,112 | |
MetLife, Inc. | | | 7,176 | | | | 371,789 | |
| | | | | | | | |
| | | | | | | 515,901 | |
| | | | | | | | |
Mortgage Real Estate Investment Trusts (REITs) (0.2%) | |
Annaly Capital Management, Inc. (REIT) | | | 8,165 | | | | 96,429 | |
| | | | | | | | |
Total Financials | | | | | | | 2,264,904 | |
| | | | | | | | |
Health Care (3.7%) | | | | | | | | |
Biotechnology (0.5%) | | | | | | | | |
Amgen, Inc. | | | 1,988 | | | | 324,680 | |
| | | | | | | | |
Health Care Equipment & Supplies (0.5%) | | | | | |
Abbott Laboratories | | | 7,068 | | | | 308,447 | |
| | | | | | | | |
Health Care Providers & Services (0.6%) | |
Cigna Corp. | | | 2,115 | | | | 330,723 | |
| | | | | | | | |
Pharmaceuticals (2.1%) | | | | | | | | |
AstraZeneca plc (ADR) | | | 8,739 | | | | 264,355 | |
Bristol-Myers Squibb Co. | | | 4,422 | | | | 247,853 | |
Novartis AG (ADR) | | | 3,429 | | | | 264,136 | |
Roche Holding AG (ADR) | | | 4,059 | | | | 132,721 | |
Sanofi (ADR) | | | 5,886 | | | | 278,408 | |
| | | | | | | | |
| | | | | | | 1,187,473 | |
| | | | | | | | |
Total Health Care | | | | | | | 2,151,323 | |
| | | | | | | | |
Industrials (1.5%) | | | | | | | | |
Electrical Equipment (0.5%) | | | | | | | | |
Eaton Corp. plc | | | 3,843 | | | | 290,685 | |
| | | | | | | | |
Industrial Conglomerates (0.6%) | | | | | | | | |
General Electric Co. | | | 11,652 | | | | 337,791 | |
| | | | | | | | |
Trading Companies & Distributors (0.4%) | | | | | |
MSC Industrial Direct Co., Inc., Class A | | | 2,659 | | | | 238,060 | |
| | | | | | | | |
Total Industrials | | | | | | | 866,536 | |
| | | | | | | | |
| | | | | | | | |
Information Technology (5.0%) | | | | | | | | |
Communications Equipment (0.4%) | | | | | |
Telefonaktiebolaget LM Ericsson (ADR) | | | 39,231 | | | $ | 254,609 | |
| | | | | | | | |
Internet Software & Services (1.0%) | | | | | |
Alphabet, Inc., Class A* | | | 604 | | | | 558,410 | |
| | | | | | | | |
IT Services (1.7%) | | | | | | | | |
Cognizant Technology Solutions Corp., Class A* | | | 4,645 | | | | 279,769 | |
Leidos Holdings, Inc. | | | 3,615 | | | | 190,366 | |
PayPal Holdings, Inc.* | | | 5,993 | | | | 285,986 | |
Visa, Inc., Class A | | | 2,392 | | | | 218,198 | |
| | | | | | | | |
| | | | | | | 974,319 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (0.4%) | |
QUALCOMM, Inc. | | | 4,380 | | | | 235,381 | |
| | | | | | | | |
Software (1.0%) | | | | | | | | |
Dell Technologies, Inc., Class V* | | | 3,792 | | | | 254,481 | |
Microsoft Corp. | | | 2,042 | | | | 139,795 | |
Oracle Corp. | | | 3,439 | | | | 154,618 | |
| | | | | | | | |
| | | | | | | 548,894 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.5%) | |
Apple, Inc. | | | 2,085 | | | | 299,510 | |
| | | | | | | | |
Total Information Technology | | | | | | | 2,871,123 | |
| | | | | | | | |
Materials (0.4%) | | | | | | | | |
Construction Materials (0.4%) | | | | | | | | |
Cemex SAB de CV (ADR)* | | | 27,082 | | | | 249,696 | |
| | | | | | | | |
Total Materials | | | | | | | 249,696 | |
| | | | | | | | |
Telecommunication Services (0.6%) | | | | | | | | |
Diversified Telecommunication Services (0.6%) | |
Verizon Communications, Inc. | | | 7,168 | | | | 329,082 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 329,082 | |
| | | | | | | | |
Total Common Stocks (21.4%)
(Cost $11,134,521) | | | | | | | 12,300,120 | |
| | | | | | | | |
INVESTMENT COMPANIES: | | | | | | | | |
DoubleLine Floating Rate Fund‡ | | | 180,041 | | | | 1,786,008 | |
DoubleLine Global Bond Fund‡ | | | 135,610 | | | | 1,375,087 | |
| | | | | | | | |
Total Investment Companies (5.5%)
(Cost $3,125,000) | | | | | | | 3,161,095 | |
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
SHORT-TERM INVESTMENT: | | | | | | | | |
U.S. Treasury Obligations (11.3%) | | | | | | | | |
U.S. Treasury Bills | | | | | | | | |
0.69%, 6/22/17 (p) | | $ | 3,000,000 | | | | 2,996,946 | |
0.74%, 7/6/17 (p) | | | 3,500,000 | | | | 3,495,188 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 6,492,134 | |
| | | | | | | | |
Total Short-Term Investment (11.3%)
(Cost $6,494,072) | | | | | | | 6,492,134 | |
| | | | | | | | |
See Notes to Financial Statements.
23
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | | | | Value
(Note 1) | |
| | | | | | | | |
Total Investments (83.3%)
(Cost $46,783,077) | | | | | | $ | 47,824,471 | |
Other Assets Less Liabilities (16.7%) | | | | | | | 9,585,251 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 57,409,722 | |
| | | | | | | | |
| ‡ | 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, 2017, the market value of these securities amounted to $2,743,748 or 4.8% 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, 2017, the market value of these securities amounted to $15,225 or 0.0% of net assets. |
| (e) | Step Bond - Coupon rate increases in increments to maturity. Rate disclosed is as of April 30, 2017. Maturity date disclosed is the ultimate maturity date. |
| (l) | Floating Rate Security. Rate disclosed is as of April 30, 2017. |
Glossary:
| | ADR | — American Depositary Receipt |
| | FHLMC | — Federal Home Loan Mortgage Corp. |
| | FNMA | — Federal National Mortgage Association |
| | TIPS | — Treasury Inflation Protected Security |
Investments in companies which were affiliates for the six months ended April 30, 2017, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
Securities | | Value
October 31,
2016 | | | Purchases
at Cost | | | Sales
at Cost | | | Value
April 30,
2017 | | | Dividend
Income | | | Realized
Gain
(Loss)† | |
DoubleLine Floating Rate Fund | | $ | 1,780,607 | | | $ | — | | | $ | — | | | $ | 1,786,008 | | | $ | 31,299 | | | $ | — | |
DoubleLine Global Bond Fund | | | 774,063 | | | | 600,000 | | | | — | | | | 1,375,087 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2,554,670 | | | $ | 600,000 | | | $ | — | | | $ | 3,161,095 | | | $ | 31,299 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| † | When applicable, realized gain includes net distributions of realized gain received from underlying funds. |
Total Return Swaps
| | | | | | | | | | | | | | | | |
Swap Counterparty | | Payments Made
by the Fund | | Payments Received
by the Fund | | Maturity
Date | | | Notional
Amount | | | Unrealized
Appreciation/
(Depreciation) | |
Barclays Bank plc | | 0.400% | | Shiller Barclays CAPE US Sector II ER USD Index | | | 4/30/18 | | | $ | 11,000,000 | | | $ | 206,787 | |
Barclays Bank plc | | 0.470% | | Shiller Barclays CAPE US Sector ER USD Index | | | 5/30/17 | | | | 1,850,000 | | | | 3,408 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 210,195 | |
| | | | | | | | | | | | | | | | |
Glossary:
| | CAPE | — Cyclically Adjusted Price Earnings |
See Notes to Financial Statements.
24
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (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, 2017:
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 | | $ | — | | | $ | 969,179 | | | $ | — | | | $ | 969,179 | |
Collateralized Mortgage Obligations | | | — | | | | 7,927,299 | | | | — | | | | 7,927,299 | |
Common Stocks | | | | | | | | | | | | | | | | |
Consumer Discretionary | | | 1,645,089 | | | | — | | | | — | | | | 1,645,089 | |
Consumer Staples | | | 1,126,640 | | | | — | | | | — | | | | 1,126,640 | |
Energy | | | 795,727 | | | | — | | | | — | | | | 795,727 | |
Financials | | | 2,264,904 | | | | — | | | | — | | | | 2,264,904 | |
Health Care | | | 2,151,323 | | | | — | | | | — | | | | 2,151,323 | |
Industrials | | | 866,536 | | | | — | | | | — | | | | 866,536 | |
Information Technology | | | 2,871,123 | | | | — | | | | — | | | | 2,871,123 | |
Materials | | | 249,696 | | | | — | | | | — | | | | 249,696 | |
Telecommunication Services | | | 329,082 | | | | — | | | | — | | | | 329,082 | |
Corporate Bonds | | | | | | | | | | | | | | | | |
Consumer Discretionary | | | — | | | | 338,257 | | | | — | | | | 338,257 | |
Consumer Staples | | | — | | | | 329,242 | | | | — | | | | 329,242 | |
Energy | | | — | | | | 340,835 | | | | — | | | | 340,835 | |
Financials | | | — | | | | 1,630,964 | | | | — | | | | 1,630,964 | |
Health Care | | | — | | | | 682,671 | | | | — | | | | 682,671 | |
Industrials | | | — | | | | 380,380 | | | | — | | | | 380,380 | |
Information Technology | | | — | | | | 389,747 | | | | — | | | | 389,747 | |
Materials | | | — | | | | 169,742 | | | | — | | | | 169,742 | |
Real Estate | | | — | | | | 92,623 | | | | — | | | | 92,623 | |
Telecommunication Services | | | — | | | | 252,200 | | | | — | | | | 252,200 | |
Utilities | | | — | | | | 325,870 | | | | — | | | | 325,870 | |
Foreign Government Securities | | | — | | | | 108,283 | | | | — | | | | 108,283 | |
Investment Companies | | | | | | | | | | | | | | | | |
Investment Companies | | | 3,161,095 | | | | — | | | | — | | | | 3,161,095 | |
Mortgage-Backed Securities | | | — | | | | 3,865,004 | | | | — | | | | 3,865,004 | |
Short-Term Investments | | | | | | | | | | | | | | | | |
U.S. Treasury Obligations | | | — | | | | 6,492,134 | | | | — | | | | 6,492,134 | |
Total Return Swaps | | | — | | | | 210,195 | | | | — | | | | 210,195 | |
U.S. Treasury Obligations | | | — | | | | 8,068,826 | | | | — | | | | 8,068,826 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 15,461,215 | | | $ | 32,573,451 | | | $ | — | | | $ | 48,034,666 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 15,461,215 | | | $ | 32,573,451 | | | $ | — | | | $ | 48,034,666 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
See Notes to Financial Statements.
25
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
Fair Values of Derivative Instruments as of April 30, 2017:
| | | | | | |
| | | Statement of Assets and Liabilities | |
Derivatives Not Accounted for as
Hedging Instrument^ | | Asset Derivatives | | Fair Value | |
Equity contracts | | Receivables, Net assets – Unrealized appreciation | | $ | 210,195 | |
| | | | | | |
The Effect of Derivative Instruments on the Statement of Operations for the six-months ended April 30, 2017:
| | | | |
| Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | |
Derivatives Not Accounted for as Hedging Instruments^ | | Swaps | |
Equity contracts | | $ | 2,841,359 | |
| | | | |
| | | | |
| Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |
Derivatives Not Accounted for as Hedging Instruments^ | | Swaps | |
Equity contracts | | $ | (645,821 | ) |
| | | | |
^ 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 $12,450,000 during the six-months ended April 30, 2017.
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, 2017:
| | | | | | | | | | | | | | | | |
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 | | $ | 210,195 | | | $ | — | | | $ | — | | | $ | 210,195 | |
| | | | | | | | | | | | | | | | |
| (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, 2017 were as follows:
| | | | |
Cost of Purchases: | |
Long-term investments other than U.S. government debt securities | | $ | 12,146,859 | |
Long-term U.S. government debt securities | | | 7,559,518 | |
| | | | |
| | $ | 19,706,377 | |
| | | | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 11,976,057 | |
Long-term U.S. government debt securities | | | 7,236,553 | |
| | | | |
| | $ | 19,212,610 | |
| | | | |
See Notes to Financial Statements.
26
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 1,561,806 | |
Aggregate gross unrealized depreciation | | | (513,868 | ) |
| | | | |
Net unrealized appreciation | | $ | 1,047,938 | |
| | | | |
Federal income tax cost of investments | | $ | 46,776,533 | |
| | | | |
See Notes to Financial Statements.
27
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value: | | | | |
Affiliated Issuers (Cost $3,125,000) | | $ | 3,161,095 | |
Unaffiliated Issuers (Cost $43,658,077) | | | 44,663,376 | |
Cash | | | 7,853,617 | |
Receivable for securities sold | | | 2,773,293 | |
Market value on OTC swap contracts | | | 210,195 | |
Dividends, interest and other receivables | | | 168,837 | |
Receivable from investment sub-advisor | | | 121 | |
Receivable for Fund shares sold | | | 95 | |
Other assets | | | 455 | |
| | | | |
Total assets | | | 58,831,084 | |
| | | | |
LIABILITIES | | | | |
Payable for securities purchased | | | 1,132,159 | |
Payable for return of collateral on swaps | | | 250,000 | |
Investment management fees payable | | | 12,217 | |
Administrative fees payable | | | 7,014 | |
Trustees’ fees payable | | | 396 | |
Distribution fees payable – Class A | | | 139 | |
Distribution fees payable – Class R | | | 45 | |
Accrued expenses | | | 19,392 | |
| | | | |
Total liabilities | | | 1,421,362 | |
| | | | |
NET ASSETS | | $ | 57,409,722 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 52,667,226 | |
Accumulated undistributed net investment income (loss) | | | 196,870 | |
Accumulated undistributed net realized gain (loss) on investments and swaps | | | 3,294,037 | |
Net unrealized appreciation (depreciation) on investments and swaps | | | 1,251,589 | |
| | | | |
Net assets | | $ | 57,409,722 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $699,884 / 64,094 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.92 | |
Maximum sales charge (5.50% of offering price) | | | 0.64 | |
| | | | |
Maximum offering price per share | | $ | 11.56 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $56,600,615 / 5,178,796 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.93 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $109,223 / 10,009 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.91 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Interest | | $ | 437,883 | |
Dividends ($31,299 of dividend income received from affiliates) | | | 156,884 | |
| | | | |
Total income | | | 594,767 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 205,514 | |
Professional fees | | | 68,136 | |
Administrative fees | | | 41,103 | |
Registration and filing fees | | | 30,748 | |
Offering costs | | | 23,308 | |
Printing and mailing expenses | | | 17,855 | |
Transfer agent fees | | | 13,995 | |
Custodian fees | | | 3,968 | |
Trustees’ fees | | | 2,768 | |
Distribution fees – Class A | | | 704 | |
Distribution fees – Class R | | | 264 | |
Miscellaneous | | | 11,065 | |
| | | | |
Gross expenses | | | 419,428 | |
Less: Waiver from investment adviser | | | (144,137 | ) |
Reimbursement from sub-adviser | | | (10,071 | ) |
| | | | |
Net expenses | | | 265,220 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 329,547 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments | | | 449,645 | |
Swaps | | | 2,841,359 | |
| | | | |
Net realized gain (loss) | | | 3,291,004 | |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments ($6,425 of change in unrealized appreciation (depreciation) from affiliates) | | | 428,750 | |
Swaps | | | (645,821 | ) |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (217,071 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 3,073,933 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 3,403,480 | |
| | | | |
See Notes to Financial Statements.
28
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | March 7, 2016* to
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 329,547 | | | $ | 385,224 | |
Net realized gain (loss) on investments and swaps | | | 3,291,004 | | | | 899,333 | |
Net change in unrealized appreciation (depreciation) on investments and swaps | | | (217,071 | ) | | | 1,468,660 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 3,403,480 | | | | 2,753,217 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (4,165 | ) | | | — | |
Class I | | | (562,783 | ) | | | — | |
Class R | | | (667 | ) | | | — | |
| | | | | | | | |
| | | (567,615 | ) | | | — | |
| | | | | | | | |
Distributions from net realized capital gains | | | | | | | | |
Class A | | | (7,898 | ) | | | — | |
Class I | | | (854,088 | ) | | | — | |
Class R | | | (1,681 | ) | | | — | |
| | | | | | | | |
| | | (863,667 | ) | | | — | |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (1,431,282 | ) | | | — | |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 30,435 and 34,035 shares, respectively ] | | | 323,920 | | | | 351,466 | |
Capital shares issued in reinvestment of dividends [ 910 and 0 shares, respectively ] | | | 9,497 | | | | — | |
Capital shares repurchased [ (1,089) and (197) shares, respectively ] | | | (11,651 | ) | | | (2,108 | ) |
| | | | | | | | |
Total Class A transactions | | | 321,766 | | | | 349,358 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 112,307 and 5,068,980 shares, respectively ] | | | 1,202,891 | | | | 50,737,212 | |
Capital shares issued in reinvestment of dividends [ 2,772 and 0 shares, respectively ] | | | 28,945 | | | | — | |
Capital shares repurchased [ (5,263) and 0 shares, respectively ] | | | (55,966 | ) | | | — | |
| | | | | | | | |
Total Class I transactions | | | 1,175,870 | | | | 50,737,212 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 10,009 shares, respectively ] | | | — | | | | 100,099 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 2 | | | | — | |
| | | | | | | | |
Total Class R transactions | | | 2 | | | | 100,099 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 1,497,638 | | | | 51,186,669 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 3,469,836 | | | | 53,939,886 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 53,939,886 | | | | — | |
| | | | | | | | |
End of period (a) | | $ | 57,409,722 | | | $ | 53,939,886 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 196,870 | | | $ | 434,938 | |
| | | | | | | | |
* The Fund commenced operations on March 7, 2016. | | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
See Notes to Financial Statements.
29
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | |
| Class A | | Six Months Ended April 30, 2017 (Unaudited) | | | March 7, 2016* to October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.53 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | 0.05 | | | | 0.06 | |
Net realized and unrealized gain (loss) on investments and swaps | | | 0.60 | | | | 0.47 | |
| | | | | | | | |
Total from investment operations | | | 0.65 | | | | 0.53 | |
| | | | | | | | |
Less distributions: | | | | | | | | |
Dividends from net investment income | | | (0.09 | ) | | | — | |
Distributions from net realized gains | | | (0.17 | ) | | | — | |
| | | | | | | | |
Total dividends and distributions | | | (0.26 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 10.92 | | | $ | 10.53 | |
| | | | | | | | |
Total return (b) | | | 6.25 | % | | | 5.30 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 700 | | | $ | 356 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 1.21 | % | | | 1.22 | % |
Before waivers (a)(f) | | | 1.77 | % | | | 1.85 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 0.94 | % | | | 0.89 | %(l) |
Before waivers (a)(f) | | | 0.39 | % | | | 0.26 | %(l) |
Portfolio turnover rate (z)^ | | | 48 | % | | | 56 | % |
| | |
| Class I | | Six Months Ended April 30, 2017 (Unaudited) | | | March 7, 2016* to October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.55 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | 0.06 | | | | 0.08 | |
Net realized and unrealized gain (loss) on investments and swaps | | | 0.60 | | | | 0.47 | |
| | | | | | | | |
Total from investment operations | | | 0.66 | | | | 0.55 | |
| | | | | | | | |
Less distributions: | | | | | | | | |
Dividends from net investment income | | | (0.11 | ) | | | — | |
Distributions from net realized gains | | | (0.17 | ) | | | — | |
| | | | | | | | |
Total dividends and distributions | | | (0.28 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 10.93 | | | $ | 10.55 | |
| | | | | | | | |
Total return (b) | | | 6.37 | % | | | 5.50 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 56,601 | | | $ | 53,478 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 0.96 | % | | | 0.97 | % |
Before waivers (a)(f) | | | 1.53 | % | | | 1.55 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 1.20 | % | | | 1.12 | %(l) |
Before waivers (a)(f) | | | 0.64 | % | | | 0.55 | %(l) |
Portfolio turnover rate (z)^ | | | 48 | % | | | 56 | % |
See Notes to Financial Statements.
30
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | |
| Class R | | Six Months Ended April 30, 2017 (Unaudited) | | | March 7, 2016* to October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.52 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | 0.04 | | | | 0.04 | |
Net realized and unrealized gain (loss) on investments and swaps | | | 0.59 | | | | 0.48 | |
| | | | | | | | |
Total from investment operations | | | 0.63 | | | | 0.52 | |
| | | | | | | | |
Less distributions: | | | | | | | | |
Dividends from net investment income | | | (0.07 | ) | | | — | |
Distributions from net realized gains | | | (0.17 | ) | | | — | |
| | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 10.91 | | | $ | 10.52 | |
| | | | | | | | |
Total return (b) | | | 6.13 | % | | | 5.20 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 109 | | | $ | 105 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 1.46 | % | | | 1.47 | % |
Before waivers (a)(f) | | | 2.03 | % | | | 2.05 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers (a)(f) | | | 0.71 | % | | | 0.62 | %(l) |
Before waivers (a)(f) | | | 0.14 | % | | | 0.05 | %(l) |
Portfolio turnover rate (z)^ | | | 48 | % | | | 56 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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.
31
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISER
| Ø | | GAMCO Asset Management Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6 Months | | | 1 Year | | | Since Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 18.62 | % | | | 19.67 | % | | | 9.90 | % |
| | | | with Sales Charge (a) | | | | 12.08 | | | | 13.12 | | | | 7.42 | |
Fund – Class I Shares* | | | | | | | 18.79 | | | | 19.96 | | | | 10.18 | |
Fund – Class R Shares* | | | | | | | 18.56 | | | | 19.37 | | | | 9.64 | |
Fund – Class T Shares*† | | | without Sales Charge | | | | 18.79 | | | | 19.96 | | | | 10.18 | |
| | | | with Sales Charge (b) | | | | 15.87 | | | | 16.97 | | | | 9.04 | |
Russell 2500TM Value Index | | | | | | | 14.43 | | | | 20.66 | | | | 8.02 | |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. Class T shares were formerly known as Class C shares. (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 current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
Fund performance may 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. Also, 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.
While 2016 was marred by continued unrest in the Middle East and terror incidents around the world, the U.S. Presidential election dominated the national consciousness to such an extent that it impacted football ratings and retail spending. A conclusion to this quadrennial process (some might say ordeal) and greater political certainty would likely have sparked a market rally no matter who was elected, but the rise in the S&P 500® Index since November 8th ranks as the largest market post-election move for a new President since the 1961 inauguration of JFK. The so-called Trump rally has been fueled by the potential for increased fiscal stimulus, lower corporate and individual taxes and deregulation.
The U.S. equity market extended the powerful post-election Trump rally during the first quarter of 2017, with an accelerated move to all-time highs. Until the quarter’s end, stocks remarkably marched steadily upward on rising expectations for lower taxes, regulatory reform, and increased fiscal spending. Those hopes were tempered on March 24th when Congress failed to pass the GOP backed American Health Care Act due to lack of support. The market faltered, questioning whether the bill’s defeat signaled future trouble for the Administration’s more market sensitive plans regarding corporate tax cuts and infrastructure spending, and calling into question the viability of the Trump agenda. Despite several military interventions and geopolitical concerns, including a U.S. military strike in Afghanistan and on an air base in Syria, continued North Korean missile testing and the pending French election, the market held on to its early March all-time highs.
The multi-decade decline in interest rates and inflation may be ending. For the second time in three months, the Federal Reserve increased its overnight funds rate by one quarter point in mid-March. The move was widely anticipated, and rates are still significantly lower than their long-term average. The ten-year Treasury note rose from a low in July while the dollar has strengthened against its trade-weighted basket. With a tighter labor market, higher wages, improved consumer sentiment and spending, and the likelihood of fiscal stimulus, the expectation is for three to four rate hikes for the year.
Fund Highlights
The Fund significantly outperformed the benchmark for the six-months ended April 30, 2017. The Fund’s higher weightings in our firm’s areas of core competency (consumer discretionary, consumer staples and industrials) drove its outperformance for the period.
What helped performance during the six-month period ended April 30, 2017:
| • | | Internap Corp., a data center and cloud computing company, more than doubled during the period under the direction of a new CEO and appears to us to be in the early stages of a turnaround. |
| • | | National Beverage Corp., whose brands include La Croix sugar free sparkling water, was up over 50% during the period and is a natural beneficiary of healthier consumer preferences. |
| • | | Energizer Holdings, Inc. was up over 30% during the period as recent market share gains and an improving battery category may propel the company to stronger than expected growth in 2017. |
| • | | Equipment rental business HERC Holdings, Inc. benefited as companies focused on infrastructure continued their strong performance following the election on expectations of increased fiscal infrastructure spending. |
| • | | The Madison Square Garden Co. had strong performance during the period, especially in the entertainment segment, as it acquired an interest in the Tao Group in February and Forbes recently increased its estimate of the value of the Knicks franchise. |
32
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
What hurt performance during the six-month period ended April 30, 2017:
| • | | Navistar International Corp., which was a top performer for the full year 2016, declined as truck profitability remained challenged by weak end markets and continued pressure on used truck prices in the U.S. |
| • | | Mueller Water Products, Inc., a leading manufacturer of water infrastructure products, was down marginally for the period, as the new CEO’s strategic plan began to take shape. |
| • | | Edgewell Personal Care Co. was off slightly for the period due to the rising dollar and following Proctor & Gamble’s price reduction announcement for the Gillette razor and razor blades portfolio of products in February, a significant step to narrow the price gap to Schick as well as to private label and shave clubs. |
| • | | An underweighting in financials was a relative detractor for the period as the industry faced strong tailwinds from two interest rate increases in three months and expectations for increasing frequency of future rate hikes. |
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
Consumer Discretionary | | | 21.4 | % |
Industrials | | | 20.4 | |
Materials | | | 12.6 | |
Consumer Staples | | | 8.4 | |
Investment Company | | | 7.4 | |
Information Technology | | | 5.7 | |
Telecommunication Services | | | 4.0 | |
Financials | | | 3.6 | |
Utilities | | | 3.5 | |
Health Care | | | 2.9 | |
Energy | | | 2.5 | |
Real Estate | | | 1.4 | |
Cash and Other | | | 6.2 | |
| | | | | |
| | | | 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 the six-month period ended April 30, 2017 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,186.20 | | | | $7.09 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.31 | | | | 6.54 | |
Class I | |
Actual | | | 1,000.00 | | | | 1,187.90 | | | | 5.74 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.55 | | | | 5.30 | |
Class R | |
Actual | | | 1,000.00 | | | | 1,185.60 | | | | 8.48 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,017.03 | | | | 7.83 | |
Class T** | |
Actual | | | 1,000.00 | | | | 1,187.90 | | | | 5.78 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.51 | | | | 5.33 | |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.31%, 1.06%, 1.56% and 1.07%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). ** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | |
33
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
COMMON STOCKS: | | | | | | | | |
Consumer Discretionary (21.4%) | | | | | | | | |
Auto Components (2.1%) | | | | | | | | |
Brembo SpA | | | 500 | | | $ | 39,297 | |
Dana, Inc. | | | 9,000 | | | | 174,780 | |
Lear Corp. | | | 400 | | | | 57,064 | |
Superior Industries International, Inc. | | | 800 | | | | 17,400 | |
| | | | | | | | |
| | | | | | | 288,541 | |
| | | | | | | | |
Diversified Consumer Services (0.4%) | | | | | |
Universal Technical Institute, Inc. | | | 16,000 | | | | 57,920 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (4.2%) | | | | | |
Cheesecake Factory, Inc. (The) | | | 1,000 | | | | 64,160 | |
Golden Entertainment, Inc. | | | 4,000 | | | | 56,160 | |
Panera Bread Co., Class A* | | | 1,000 | | | | 312,680 | |
Wynn Resorts Ltd. | | | 1,400 | | | | 172,214 | |
| | | | | | | | |
| | | | | | | 605,214 | |
| | | | | | | | |
Household Durables (1.9%) | | | | | | | | |
Bassett Furniture Industries, Inc. | | | 3,500 | | | | 105,175 | |
Hunter Douglas NV | | | 2,000 | | | | 161,478 | |
| | | | | | | | |
| | | | | | | 266,653 | |
| | | | | | | | |
Internet & Direct Marketing Retail (0.3%) | | | | | |
Lands’ End, Inc.* | | | 1,600 | | | | 37,760 | |
| | | | | | | | |
Media (8.5%) | | | | | | | | |
Clear Channel Outdoor Holdings, Inc., Class A | | | 14,000 | | | | 72,100 | |
EW Scripps Co. (The), Class A* | | | 9,000 | | | | 200,520 | |
Interpublic Group of Cos., Inc. (The) | | | 1,500 | | | | 35,355 | |
Liberty Media Corp.-Liberty Braves, Class C* | | | 3,604 | | | | 88,370 | |
Live Nation Entertainment, Inc.* | | | 2,000 | | | | 64,320 | |
Loral Space & Communications, Inc.* | | | 500 | | | | 19,175 | |
Madison Square Garden Co. (The), Class A* | | | 901 | | | | 181,795 | |
Meredith Corp. | | | 400 | | | | 23,420 | |
MSG Networks, Inc., Class A* | | | 5,000 | | | | 124,750 | |
Salem Media Group, Inc. | | | 4,000 | | | | 30,600 | |
Tribune Media Co., Class A | | | 10,000 | | | | 365,599 | |
| | | | | | | | |
| | | | | | | 1,206,004 | |
| | | | | | | | |
Multiline Retail (0.2%) | | | | | | | | |
JC Penney Co, Inc.* | | | 4,000 | | | | 21,520 | |
| | | | | | | | |
Specialty Retail (3.8%) | | | | | | | | |
Aaron’s, Inc. | | | 800 | | | | 28,752 | |
CST Brands, Inc. | | | 6,000 | | | | 289,740 | |
Tractor Supply Co. | | | 3,500 | | | | 216,685 | |
| | | | | | | | |
| | | | | | | 535,177 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 3,018,789 | |
| | | | | | | | |
Consumer Staples (8.4%) | | | | | | | | |
Beverages (2.9%) | | | | | | | | |
Cott Corp. | | | 8,000 | | | | 105,360 | |
Davide Campari-Milano SpA | | | 12,000 | | | | 141,958 | |
| | | | | | | | |
National Beverage Corp. | | | 1,300 | | | $ | 115,167 | |
Remy Cointreau SA | | | 400 | | | | 40,356 | |
| | | | | | | | |
| | | | | | | 402,841 | |
| | | | | | | | |
Food & Staples Retailing (0.3%) | | | | | | | | |
Ingles Markets, Inc., Class A | | | 1,000 | | | | 46,700 | |
| | | | | | | | |
Food Products (2.1%) | | | | | | | | |
Maple Leaf Foods, Inc. | | | 5,000 | | | | 125,160 | |
McCormick & Co., Inc. | | | 300 | | | | 29,862 | |
Snyder’s-Lance, Inc. | | | 4,000 | | | | 141,040 | |
| | | | | | | | |
| | | | | | | 296,062 | |
| | | | | | | | |
Household Products (1.2%) | | | | | | | | |
Energizer Holdings, Inc. | | | 1,400 | | | | 82,922 | |
Oil-Dri Corp. of America | | | 2,000 | | | | 81,380 | |
| | | | | | | | |
| | | | | | | 164,302 | |
| | | | | | | | |
Personal Products (1.9%) | | | | | | | | |
Avon Products, Inc.* | | | 11,000 | | | | 53,350 | |
Edgewell Personal Care Co.* | | | 3,000 | | | | 214,470 | |
| | | | | | | | |
| | | | | | | 267,820 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 1,177,725 | |
| | | | | | | | |
Energy (2.5%) | | | | | | | | |
Energy Equipment & Services (2.1%) | | | | | |
Dril-Quip, Inc.* | | | 3,000 | | | | 154,650 | |
Weatherford International plc* | | | 23,000 | | | | 132,710 | |
| | | | | | | | |
| | | | | | | 287,360 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (0.4%) | |
CONSOL Energy, Inc.* | | | 4,000 | | | | 60,720 | |
| | | | | | | | |
Total Energy | | | | | | | 348,080 | |
| | | | | | | | |
Financials (3.6%) | | | | | | | | |
Banks (1.9%) | | | | | | | | |
FCB Financial Holdings, Inc., Class A* | | | 3,400 | | | | 160,650 | |
Flushing Financial Corp. | | | 3,800 | | | | 112,024 | |
| | | | | | | | |
| | | | | | | 272,674 | |
| | | | | | | | |
Capital Markets (1.7%) | | | | | | | | |
Cohen & Steers, Inc. | | | 1,400 | | | | 55,860 | |
Janus Capital Group, Inc. | | | 4,000 | | | | 54,640 | |
Waddell & Reed Financial, Inc., Class A | | | 7,000 | | | | 125,930 | |
| | | | | | | | |
| | | | | | | 236,430 | |
| | | | | | | | |
Total Financials | | | | | | | 509,104 | |
| | | | | | | | |
Health Care (2.9%) | | | | | | | | |
Health Care Equipment & Supplies (0.9%) | | | | | |
CR Bard, Inc. | | | 400 | | | | 122,992 | |
| | | | | | | | |
Health Care Providers & Services (2.0%) | | | | | |
Patterson Cos., Inc. | | | 1,000 | | | | 44,490 | |
VCA, Inc.* | | | 2,600 | | | | 238,082 | |
| | | | | | | | |
| | | | | | | 282,572 | |
| | | | | | | | |
Total Health Care | | | | | | | 405,564 | |
| | | | | | | | |
See Notes to Financial Statements.
34
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
Industrials (20.4%) | | | | | | | | |
Aerospace & Defense (1.3%) | | | | | | | | |
Textron, Inc. | | | 4,000 | | | $ | 186,640 | |
| | | | | | | | |
Building Products (0.9%) | | | | | | | | |
Armstrong Flooring, Inc.* | | | 6,500 | | | | 124,735 | |
| | | | | | | | |
Construction & Engineering (0.2%) | | | | | |
Layne Christensen Co.* | | | 3,000 | | | | 23,910 | |
| | | | | | | | |
Machinery (12.4%) | | | | | | | | |
CNH Industrial NV | | | 12,000 | | | | 133,200 | |
Eastern Co. (The) | | | 7,700 | | | | 212,905 | |
EnPro Industries, Inc. | | | 3,000 | | | | 211,950 | |
Federal Signal Corp. | | | 4,500 | | | | 70,245 | |
Graco, Inc. | | | 2,000 | | | | 215,700 | |
ITT, Inc. | | | 1,000 | | | | 42,130 | |
Mueller Industries, Inc. | | | 6,000 | | | | 192,240 | |
Mueller Water Products, Inc., Class A | | | 10,000 | | | | 112,500 | |
Navistar International Corp.* | | | 11,000 | | | | 296,010 | |
Trinity Industries, Inc. | | | 4,000 | | | | 107,600 | |
Twin Disc, Inc.* | | | 5,000 | | | | 98,000 | |
Xylem, Inc. | | | 1,000 | | | | 51,410 | |
| | | | | | | | |
| | | | | | | 1,743,890 | |
| | | | | | | | |
Road & Rail (1.9%) | | | | | | | | |
Hertz Global Holdings, Inc.* | | | 16,000 | | | | 263,840 | |
| | | | | | | | |
Trading Companies & Distributors (3.7%) | | | | | |
GATX Corp. | | | 1,700 | | | | 101,830 | |
Herc Holdings, Inc.* | | | 6,000 | | | | 272,820 | |
Kaman Corp. | | | 3,000 | | | | 144,030 | |
| | | | | | | | |
| | | | | | | 518,680 | |
| | | | | | | | |
Total Industrials | | | | | | | 2,861,695 | |
| | | | | | | | |
Information Technology (5.7%) | | | | | | | | |
Communications Equipment (0.8%) | | | | | | | | |
Communications Systems, Inc. | | | 13,000 | | | | 56,030 | |
EchoStar Corp., Class A* | | | 1,000 | | | | 57,560 | |
| | | | | | | | |
| | | | | | | 113,590 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (0.7%) | |
InvenSense, Inc.* | | | 8,000 | | | | 102,880 | |
| | | | | | | | |
Internet Software & Services (2.3%) | | | | | | | | |
Gogo, Inc.* | | | 13,000 | | | | 163,930 | |
Internap Corp.* | | | 50,000 | | | | 155,000 | |
| | | | | | | | |
| | | | | | | 318,930 | |
| | | | | | | | |
IT Services (0.1%) | | | | | | | | |
MoneyGram International, Inc.* | | | 600 | | | | 10,686 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (0.4%) | |
Sevcon, Inc.* | | | 4,046 | | | | 55,835 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.4%) | |
Diebold Nixdorf, Inc. | | | 7,000 | | | | 197,400 | |
| | | | | | | | |
Total Information Technology | | | | | | | 799,321 | |
| | | | | | | | |
Materials (12.6%) | | | | | | | | |
Chemicals (5.4%) | | | | | | | | |
Ashland Global Holdings, Inc. | | | 800 | | | | 98,800 | |
Chr Hansen Holding A/S | | | 1,200 | | | | 80,876 | |
GCP Applied Technologies, Inc.* | | | 8,000 | | | | 263,200 | |
| | | | | | | | |
International Flavors & Fragrances, Inc. | | | 100 | | | $ | 13,859 | |
Tredegar Corp. | | | 10,000 | | | | 171,500 | |
Valspar Corp. (The) | | | 900 | | | | 101,196 | |
Valvoline, Inc. | | | 1,000 | | | | 22,250 | |
| | | | | | | | |
| | | | | | | 751,681 | |
| | | | | | | | |
Construction Materials (0.8%) | | | | | | | | |
Headwaters, Inc.* | | | 5,000 | | | | 118,800 | |
| | | | | | | | |
Containers & Packaging (1.4%) | | | | | | | | |
Myers Industries, Inc. | | | 12,000 | | | | 195,600 | |
| | | | | | | | |
Metals & Mining (5.0%) | | | | | | | | |
Allegheny Technologies, Inc. | | | 1,000 | | | | 18,350 | |
Ampco-Pittsburgh Corp. | | | 4,000 | | | | 58,200 | |
Dominion Diamond Corp. | | | 4,000 | | | | 48,640 | |
Freeport-McMoRan, Inc.* | | | 10,000 | | | | 127,500 | |
Handy & Harman Ltd.* | | | 6,500 | | | | 177,125 | |
Materion Corp. | | | 2,000 | | | | 76,100 | |
TimkenSteel Corp.* | | | 13,500 | | | | 203,580 | |
| | | | | | | | |
| | | | | | | 709,495 | |
| | | | | | | | |
Total Materials | | | | | | | 1,775,576 | |
| | | | | | | | |
Real Estate (1.4%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (1.4%) | |
Ryman Hospitality Properties, Inc. (REIT) | | | 2,200 | | | | 140,316 | |
Seritage Growth Properties (REIT), Class A | | | 1,200 | | | | 49,800 | |
| | | | | | | | |
Total Real Estate | | | | | | | 190,116 | |
| | | | | | | | |
Telecommunication Services (4.0%) | | | | | | | | |
Wireless Telecommunication Services (4.0%) | | | | | |
Millicom International Cellular SA | | | 2,200 | | | | 121,374 | |
Millicom International Cellular SA (SDR) | | | 2,200 | | | | 120,714 | |
United States Cellular Corp.* | | | 8,000 | | | | 313,440 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 555,528 | |
| | | | | | | | |
Utilities (3.5%) | | | | | | | | |
Electric Utilities (1.1%) | | | | | | | | |
El Paso Electric Co. | | | 200 | | | | 10,320 | |
Westar Energy, Inc. | | | 2,800 | | | | 145,684 | |
| | | | | | | | |
| | | | | | | 156,004 | |
| | | | | | | | |
Gas Utilities (2.4%) | | | | | | | | |
National Fuel Gas Co. | | | 6,000 | | | | 332,280 | |
| | | | | | | | |
Total Utilities | | | | | | | 488,284 | |
| | | | | | | | |
Total Common Stocks (86.4%)
(Cost $10,716,754) | | | | | | | 12,129,782 | |
| | | | | | | | |
|
CONVERTIBLE PREFERRED STOCK: | |
Health Care (0.0%) | | | | | | | | |
Health Care Providers & Services (0.0%) | | | | | |
BioScrip, Inc.
0.000%*†
(Cost $400) | | | 4 | | | | 229 | |
| | | | | | | | |
See Notes to Financial Statements.
35
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Warrants | | | Value
(Note 1) | |
| | | | | | | | |
WARRANTS: | | | | | | | | |
Health Care (0.0%) | | | | | | | | |
Health Care Providers & Services (0.0%) | | | | | |
BioScrip, Inc., expiring 6/30/25*†
(Cost $—) | | | 22 | | | $ | 8 | |
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
SHORT-TERM INVESTMENT: | | | | | | | | |
Investment Company (7.4%) | | | | | | | | |
JPMorgan Prime Money Market Fund,
IM Shares | | | 1,044,366 | | | | 1,044,783 | |
| | | | | | | | |
Total Short-Term Investment (7.4%)
(Cost $1,044,753) | | | | | | | 1,044,783 | |
| | | | | | | | |
| | | | | | | | |
Total Investments (93.8%)
(Cost $11,761,907) | | | | | | $ | 13,174,802 | |
Other Assets Less Liabilities (6.2%) | | | | | | | 874,696 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 14,049,498 | |
| | | | | | | | |
| † | Securities (totaling $237 or 0.0% of net assets) held at fair value by management. |
Glossary:
| | SDR | — Swedish Depositary Receipt |
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, 2017:
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 (a) | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) (b) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | |
Common Stocks | | | | | | | | | | | | | | | | |
Consumer Discretionary | | $ | 2,818,015 | | | $ | 200,774 | | | $ | — | | | $ | 3,018,789 | |
Consumer Staples | | | 995,411 | | | | 182,314 | | | | — | | | | 1,177,725 | |
Energy | | | 348,080 | | | | — | | | | — | | | | 348,080 | |
Financials | | | 509,104 | | | | — | | | | — | | | | 509,104 | |
Health Care | | | 405,564 | | | | — | | | | — | | | | 405,564 | |
Industrials | | | 2,861,695 | | | | — | | | | — | | | | 2,861,695 | |
Information Technology | | | 743,291 | | | | 56,030 | | | | — | | | | 799,321 | |
Materials | | | 1,517,575 | | | | 258,001 | | | | — | | | | 1,775,576 | |
Real Estate | | | 190,116 | | | | — | | | | — | | | | 190,116 | |
Telecommunication Services | | | 313,440 | | | | 242,088 | | | | — | | | | 555,528 | |
Utilities | | | 488,284 | | | | — | | | | — | | | | 488,284 | |
Convertible Preferred Stocks | | | | | | | | | | | | | | | | |
Health Care | | | — | | | | — | | | | 229 | | | | 229 | |
Short-Term Investments | | | | | | | | | | | | | | | | |
Investment Companies | | | 1,044,783 | | | | — | | | | — | | | | 1,044,783 | |
Warrants | | | | | | | | | | | | | | | | |
Health Care | | | — | | | | — | | | | 8 | | | | 8 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 12,235,358 | | | $ | 939,207 | | | $ | 237 | | | $ | 13,174,802 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 12,235,358 | | | $ | 939,207 | | | $ | 237 | | | $ | 13,174,802 | |
| | | | | | | | | | | | | | | | |
(a) Securities with a market value of $268,740 transferred from Level 2 to Level 1 at the end of the period due to active trading.
(b) A security with a market value of $121,374 transferred from Level 1 to Level 2 at the end of the period due to inactive trading.
There were no additional transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
See Notes to Financial Statements.
36
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
The Fund held no derivatives contracts during the six months ended April 30, 2017.
Investment security transactions for the six-months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 9,539,582 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 5,287,874 | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 1,604,480 | |
Aggregate gross unrealized depreciation | | | (267,795 | ) |
| | | | |
Net unrealized appreciation | | $ | 1,336,685 | |
| | | | |
Federal income tax cost of investments | | $ | 11,838,117 | |
| | | | |
For the six-month period ended April 30, 2017, the Fund incurred approximately $7,397 as brokerage commissions with G. Research, an affiliated broker/dealer.
See Notes to Financial Statements.
37
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value (Cost $11,761,907) | | $ | 13,174,802 | |
Cash | | | 628,500 | |
Foreign cash (Cost $7,287) | | | 7,521 | |
Receivable for Fund shares sold | | | 313,488 | |
Dividends, interest and other receivables | | | 6,786 | |
Receivable from investment adviser | | | 5,125 | |
Other assets | | | 190 | |
| | | | |
Total assets | | | 14,136,412 | |
| | | | |
LIABILITIES | | | | |
Payable for securities purchased | | | 66,399 | |
Payable for Fund shares redeemed | | | 19,529 | |
Distribution fees payable – Class A | | | 244 | |
Distribution fees payable – Class R | | | 82 | |
Accrued expenses | | | 660 | |
| | | | |
Total liabilities | | | 86,914 | |
| | | | |
NET ASSETS | | $ | 14,049,498 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 12,475,855 | |
Accumulated undistributed net investment income (loss) | | | 66,868 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | | 93,656 | |
Net unrealized appreciation (depreciation) on investments and foreign currency translations | | | 1,413,119 | |
| | | | |
Net assets | | $ | 14,049,498 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $1,213,285 / 101,036 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.01 | |
Maximum sales charge (5.50% of offering price) | | | 0.70 | |
| | | | |
Maximum offering price per share | | $ | 12.71 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $12,509,506 / 1,040,818 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.02 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $204,355 / 17,091 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.96 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $122,352 / 10,179 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.02 | |
Maximum sales charge (2.50% of offering price) | | | 0.31 | |
| | | | |
Maximum offering price per share | | $ | 12.33 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends (net of $475 foreign withholding tax) | | $ | 125,741 | |
Interest | | | 486 | |
| | | | |
Total income | | | 126,227 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 36,441 | |
Professional fees | | | 28,935 | |
Transfer agent fees | | | 25,572 | |
Registration and filing fees | | | 19,243 | |
Administrative fees | | | 7,288 | |
Custodian fees | | | 3,323 | |
Printing and mailing expenses | | | 3,210 | |
Distribution fees – Class A | | | 1,094 | |
Distribution fees – Class R | | | 472 | |
Trustees’ fees | | | 440 | |
Distribution fees – Class T** | | | 428 | |
Miscellaneous | | | 6,694 | |
| | | | |
Gross expenses | | | 133,140 | |
Less: Waiver from investment adviser | | | (43,729 | ) |
Waiver from distributor | | | (428 | ) |
Reimbursement from investment adviser | | | (35,900 | ) |
| | | | |
Net expenses | | | 53,083 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 73,144 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments | | | 172,350 | |
Net distributions of realized gain received from underlying funds | | | 2 | |
Foreign currency transactions | | | (423 | ) |
| | | | |
Net realized gain (loss) | | | 171,929 | |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments | | | 1,229,990 | |
Foreign currency translations | | | 550 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | 1,230,540 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 1,402,469 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,475,613 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
See Notes to Financial Statements.
38
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 73,144 | | | $ | 27,959 | |
Net realized gain (loss) on investments, foreign currency transactions and net distributions of realized gain received from underlying funds | | | 171,929 | | | | 46,079 | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | | | 1,230,540 | | | | 224,914 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,475,613 | | | | 298,952 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (959 | ) | | | (103 | ) |
Class I | | | (28,206 | ) | | | (6,325 | ) |
Class T** | | | (448 | ) | | | (655 | ) |
| | | | | | | | |
| | | (29,613 | ) | | | (7,083 | ) |
| | | | | | | | |
Distributions from net realized capital gains | | | | | | | | |
Class A | | | (10,105 | ) | | | (27,401 | ) |
Class I | | | (101,286 | ) | | | (64,471 | ) |
Class R | | | (2,609 | ) | | | (20,133 | ) |
Class T** | | | (1,608 | ) | | | (6,672 | ) |
| | | | | | | | |
| | | (115,608 | ) | | | (118,677 | ) |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (145,221 | ) | | | (125,760 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 59,508 and 27,904 shares, respectively ] | | | 685,368 | | | | 282,598 | |
Capital shares issued in reinvestment of dividends [ 821 and 774 shares, respectively ] | | | 9,245 | | | | 7,419 | |
Capital shares repurchased [ (16,839) and (68,347) shares, respectively ] | | | (190,901 | ) | | | (687,343 | ) |
| | | | | | | | |
Total Class A transactions | | | 503,712 | | | | (397,326 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 473,806 and 376,825 shares, respectively ] | | | 5,528,258 | | | | 3,682,275 | |
Capital shares issued in reinvestment of dividends [ 7,547 and 5,089 shares, respectively ] | | | 84,983 | | | | 48,758 | |
Capital shares repurchased [ (27,065) and (30,498) shares, respectively ] | | | (311,104 | ) | | | (304,732 | ) |
| | | | | | | | |
Total Class I transactions | | | 5,302,137 | | | | 3,426,301 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 551 and 5,476 shares, respectively ] | | | 6,420 | | | | 57,323 | |
Capital shares issued in reinvestment of dividends [ 85 and 14 shares, respectively ] | | | 953 | | | | 129 | |
Capital shares repurchased [ (6) and (65,003) shares, respectively ] | | | (70 | ) | | | (651,126 | ) |
| | | | | | | | |
Total Class R transactions | | | 7,303 | | | | (593,674 | ) |
| | | | | | | | |
Class T** | | | | | | | | |
Capital shares repurchased [ 0 and (15,000) shares, respectively ] | | | — | | | | (150,789 | ) |
| | | | | | | | |
Total Class T transactions | | | — | | | | (150,789 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 5,813,152 | | | | 2,284,512 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 7,143,544 | | | | 2,457,704 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 6,905,954 | | | | 4,448,250 | |
| | | | | | | | |
End of period (a) | | $ | 14,049,498 | | | $ | 6,905,954 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 66,868 | | | $ | 23,337 | |
| | | | | | | | |
** ��Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | | | | | |
See Notes to Financial Statements.
39
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended April 30, 2017 (Unaudited) | | | Year Ended October 31, 2016 | | | November 12, 2014* to October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.28 | | | $ | 10.25 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.08 | | | | 0.05 | | | | (0.01 | ) |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.83 | | | | 0.25 | | | | 0.33 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.91 | | | | 0.30 | | | | 0.32 | |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | (0.02 | ) | | | — | # | | | (0.07 | ) |
Distributions from net realized gains | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.18 | ) | | | (0.27 | ) | | | (0.07 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.01 | | | $ | 10.28 | | | $ | 10.25 | |
| | | | | | | | | | | | |
Total return (b) | | | 18.62 | % | | | 3.08 | % | | | 3.20 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 1,213 | | | $ | 591 | | | $ | 997 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.31 | % | | | 1.35 | % | | | 1.35 | % |
Before waivers and reimbursements (a) | | | 2.94 | % | | | 4.38 | % | | | 9.28 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.38 | %(aa) | | | 0.49 | % | | | (0.10 | )%(l) |
Before waivers and reimbursements (a) | | | (0.25 | )%(aa) | | | (2.53 | )% | | | (8.03 | )%(l) |
Portfolio turnover rate (z)^ | | | 59 | % | | | 76 | % | | | 95 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.30 | | | $ | 10.27 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.05 | | | | 0.02 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.83 | | | | 0.28 | | | | 0.32 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.92 | | | | 0.33 | | | | 0.34 | |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | (0.04 | ) | | | (0.03 | ) | | | (0.07 | ) |
Distributions from net realized gains | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.20 | ) | | | (0.30 | ) | | | (0.07 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.02 | | | $ | 10.30 | | | $ | 10.27 | |
| | | | | | | | | | | | |
Total return (b) | | | 18.79 | % | | | 3.34 | % | | | 3.43 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 12,510 | | | $ | 6,041 | | | $ | 2,416 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.06 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a) | | | 2.69 | % | | | 4.09 | % | | | 8.56 | % |
Ratio of net investment income (loss) to average net assets: | |
After waivers and reimbursements (a) | | | 1.53 | %(bb) | | | 0.49 | % | | | 0.16 | %(l) |
Before waivers and reimbursements (a) | | | (0.11 | )%(bb) | | | (2.51 | )% | | | (7.30 | )%(l) |
Portfolio turnover rate (z)^ | | | 59 | % | | | 76 | % | | | 95 | % |
See Notes to Financial Statements.
40
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended April 30, 2017
(Unaudited) | | | Year Ended October 31, 2016 | | | November 12, 2014* to October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.23 | | | $ | 10.23 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.06 | | | | 0.04 | | | | (0.04 | ) |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.83 | | | | 0.23 | | | | 0.34 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.89 | | | | 0.27 | | | | 0.30 | |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | — | | | | — | | | | (0.07 | ) |
Distributions from net realized gains | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.16 | ) | | | (0.27 | ) | | | (0.07 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.96 | | | $ | 10.23 | | | $ | 10.23 | |
| | | | | | | | | | | | |
Total return (b) | | | 18.56 | % | | | 2.77 | % | | | 2.96 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 204 | | | $ | 168 | | | $ | 777 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.56 | % | | | 1.60 | % | | | 1.60 | % |
Before waivers and reimbursements (a) | | | 3.24 | % | | | 4.65 | % | | | 9.73 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.03 | %(cc) | | | 0.42 | % | | | (0.35 | )%(l) |
Before waivers and reimbursements (a) | | | (0.64 | )%(cc) | | | (2.64 | )% | | | (8.49 | )%(l) |
Portfolio turnover rate (z)^ | | | 59 | % | | | 76 | % | | | 95 | % |
| | | |
| Class T** | | Six Months Ended April 30, 2017 (Unaudited) | | | Year Ended October 31, 2016 | | | November 12, 2014* to October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.30 | | | $ | 10.27 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.08 | | | | 0.01 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.83 | | | | 0.25 | | | | 0.33 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.92 | | | | 0.33 | | | | 0.34 | |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | (0.04 | ) | | | (0.03 | ) | | | (0.07 | ) |
Distributions from net realized gains | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.20 | ) | | | (0.30 | ) | | | (0.07 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.02 | | | $ | 10.30 | | | $ | 10.27 | |
| | | | | | | | | | | | |
Total return (b) | | | 18.79 | % | | | 3.34 | % | | | 3.43 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 122 | | | $ | 105 | | | $ | 259 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.07 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a) | | | 3.48 | % | | | 5.11 | % | | | 10.23 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.52 | %(dd) | | | 0.77 | % | | | 0.15 | %(l) |
Before waivers and reimbursements (a) | | | (0.89 | )%(dd) | | | (3.23 | )% | | | (8.98 | )%(l) |
Portfolio turnover rate (z)^ | | | 59 | % | | | 76 | % | | | 95 | % |
See Notes to Financial Statements.
41
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. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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. |
| (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 0.40% for income after waivers and reimbursements and (1.23)% before waivers and reimbursements. |
| (bb) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class I would be 0.04% for income after waivers and reimbursements and (1.63)% before waivers and reimbursements. |
| (cc) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class R would be 0.54% for income after waivers and reimbursements and (1.87)% before waivers and reimbursements. |
| (dd) | Includes income resulting from a special dividend. Without this dividend, the ratios for Class T would be 0.54% for income after waivers and reimbursements and (1.10)% before waivers and reimbursements. |
See Notes to Financial Statements.
42
1290 GLOBAL TALENTS FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISERS
| Ø | | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6 Months | | | 1 Year | | | Since Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 8.94 | % | | | 12.19 | % | | | 11.87 | % |
| | | | with Sales Charge (a | ) | | | 2.96 | | | | 6.06 | | | | 6.04 | |
Fund – Class I Shares* | | | | | | | 9.08 | | | | 12.45 | | | | 12.12 | |
Fund – Class R Shares* | | | | | | | 8.86 | | | | 12.01 | | | | 11.59 | |
MSCI AC World (Net) Index | | | | | | | 11.76 | | | | 15.14 | | | | 16.99 | |
* 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 current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
Fund performance may 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. Also, 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.
Global equity markets were on a strong upward trajectory over the six-month period ended April 30, 2017. The rally started in early November when the world learned that Donald Trump had been elected as the new President of the USA. Markets saw cyclicals and interest rate sensitive equity sectors move up sharply in anticipation of U.S. reflationary policies, while emerging markets sold off over fears of U.S. trade protectionism. The U.S. dollar and U.S. Treasury yields jumped, while equity sectors that are sensitive to bond market factors retreated.
Since the start of the year this trend has partially reversed, to some extent, because the Trump administration has struggled so far to push through its reform agenda. In addition, political risk moderated, particularly in Europe where fears over a eurozone breakup have largely gone away. Over the last four months, emerging markets and European equity markets regained ground versus U.S. equities and their currencies advanced against the dollar. The UK officially put in motion its exit from the European Union by triggering Article 50. The prime minister called a general election to secure a strong hand during negotiations that are expected to be lengthy and difficult. Information from corporate purchasing managers across the regions has been pretty supportive, unemployment is falling, and deflationary pressure is abating, which has led to an improving sentiment on global growth prospects. While most central banks across regions remain accommodative, the U.S. Federal Reserve proceeded with two rate hikes over the period and more may follow. Oil prices reverted to below $50 levels despite Organization of the Petroleum Exporting Countries (OPEC) efforts to curb supply.
Fund Highlights
The Fund lagged the benchmark performance over the period. The ‘Trump rally’ at the end of last year lifted a number of cyclical and ‘value’ companies, which valuations currently look extended. In addition, while stock selection was positive in telecommunications, materials and industrials, this was more than offset by weak selection in particular in the information technology sector and in health care.
The strongest sector over the period was by far the information technology sector, where the Fund had an overweight positioning. Innovation continues at a fast pace and is becoming ubiquitous, impacting virtually all other sectors, from retail to health care to financials. Financials, industrials and consumer discretionary all performed strongly. Energy was the unsurprising laggard, alongside materials and health care, which continues to be weighed down by the expectation of increased drug pricing pressure, particularly in the U.S.
Over the period, we further pruned the Fund, exiting a number of positions. We sold our position in American IT health care provider Cerner following disappointing execution. We also sold our stake in U.S. software vendor Oracle as the legacy business continues to weigh down on revenues and margins despite strong growth in the cloud. We exited Luxottica after the announcement of the merger with Essilor as we expect the deal to be more complex and lengthy than generally expected and see revenue headwinds accelerate. We sold American restaurant chain Chipotle Mexican Grill. The company is finally turning the corner of declining sales following a string of health incidents but we believe the growth trajectory will remain muted going forward and cannot justify the elevated valuation. We exited Alexion Pharmaceuticals after the chairman and main insider announced his retirement and in the context of a disappointing performance, which we expect to continue. We bought a stake in American niche cyber security player Proofpoint, Inc.
What helped performance during the six-month period ended April 30, 2017:
| • | | A number of consumer discretionary holdings moved significantly higher over the period. The LVMH Group decided to simplify its holding structure and made an offer for the shares of Christian Dior at a 15% premium to its market price. Media conglomerate Naspers Ltd., which holds a large stake in Chinese online gaming behemoth Tencent, and automotive LED manufacturer Hella KGaA Hueck & Co. were also among the strong contributors. |
| • | | Two U.S. financials holdings, Bank of the Ozarks, Inc. and The Charles Schwab Corp., outperformed the sector in a context of rising U.S. interest rates and financial deregulation prospects. |
43
1290 GLOBAL TALENTS FUND (Unaudited)
| • | | In telecommunications, Japanese operator SoftBank Group Corp. saw its share price lift on improved prospects for U.S. telecommunications consolidation, which would benefit its American subsidiary (Sprint). It also benefited from Alibaba Group Holding Ltd.’s strong performance, given its meaningful stake. |
| • | | In the technology sector, a number of holdings such as fiber laser manufacturer IPG Photonics Corp., IT security vendor Check Point Software Technologies Ltd., Apple, Inc. and Amazon.com, Inc. were among the Fund’s top performers. |
| • | | Chilean copper miner Antofagasta plc moved higher as copper prices, which had lagged other commodities, rebounded sharply from their lows. |
What hurt performance during the six-month period ended April 30, 2017:
| • | | In information technology, performance was hurt mainly by one company, Synchronoss Technologies, Inc., and to a lesser extent by QUALCOMM, Inc. In the case of Synchronoss Technologies, the company announced a number of significant changes to its business model and to its top management team, which failed to convince investors. The company subsequently issued a profit warning ahead of its first quarter earnings release, further eroding investors’ confidence in management. In the case of QUALCOMM, it was hurt by Apple’s announcement that it is suing its longstanding partner and suspending royalty payments until the dispute is settled. |
| • | | In health care, Cerner, Alexion Pharmaceuticals and Gilead Sciences, Inc. all delivered disappointing results in a context of increased U.S. drug pricing and health care cost pressure. |
| • | | In the consumer sector, Russian value food retailer Magnit PJSC reported declining sales in the context of a continued weak consumer spending environment. Japanese e-commerce retailer Rakuten, Inc. is grappling with a higher level of competition domestically. The share price performance of U.S. auto parts retailer O’Reilly Automotive, Inc. deteriorated over concerns that e-commerce might dent its revenues and over weak first quarter results. |
| | | | | | | | |
Sector Weightings
as of April 30, 2017 | | Market Value | | | % of
Net Assets | |
Information Technology | | | $4,533,054 | | | | 20.1 | % |
Financials | | | 3,878,343 | | | | 17.2 | |
Consumer Discretionary | | | 3,856,778 | | | | 17.1 | |
Health Care | | | 3,040,240 | | | | 13.4 | |
Consumer Staples | | | 2,809,801 | | | | 12.4 | |
Industrials | | | 1,286,216 | | | | 5.7 | |
Energy | | | 1,052,206 | | | | 4.7 | |
Materials | | | 1,041,373 | | | | 4.6 | |
Telecommunication Services | | | 726,259 | | | | 3.2 | |
Cash and Other | | | 370,750 | | | | 1.6 | |
| | | | | | | | | |
| | | | | | | | 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 the six-month period ended April 30, 2017 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.
44
1290 GLOBAL TALENTS FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning Account Value 11/1/16 | | | Ending Account Value 4/30/17 | | | Expenses Paid During Period*
11/1/16 - 4/30/17 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,089.40 | | | | $6.98 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.11 | | | | 6.74 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,090.80 | | | | 5.69 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.35 | | | | 5.50 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,088.60 | | | | 8.28 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,016.87 | | | | 7.99 | |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.35%, 1.10% and 1.60%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). | |
45
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
COMMON STOCKS: | | | | | | | | |
Belgium (1.7%) | |
Anheuser-Busch InBev SA/NV | | | 3,395 | | | $ | 382,391 | |
| | | | | | | | |
Chile (1.9%) | |
Antofagasta plc | | | 39,261 | | | | 426,130 | |
| | | | | | | | |
China (4.1%) | |
Alibaba Group Holding Ltd. (ADR)* | | | 4,837 | | | | 558,674 | |
ANTA Sports Products Ltd. | | | 127,000 | | | | 356,753 | |
| | | | | | | | |
| | | | | | | 915,427 | |
| | | | | | | | |
Finland (1.3%) | |
Sampo OYJ, Class A | | | 6,125 | | | | 293,500 | |
| | | | | | | | |
France (5.9%) | |
Christian Dior SE | | | 1,499 | | | | 411,399 | |
Dassault Systemes SE | | | 4,880 | | | | 435,522 | |
Financiere de L’Odet | | | 465 | | | | 401,168 | |
Iliad SA | | | 340 | | | | 82,554 | |
| | | | | | | | |
| | | | | | | 1,330,643 | |
| | | | | | | | |
Germany (6.0%) | |
Fresenius SE & Co. KGaA | | | 6,711 | | | | 543,959 | |
Hella KGaA Hueck & Co. | | | 7,713 | | | | 381,566 | |
Henkel AG & Co. KGaA (Preference) (q) | | | 3,222 | | | | 438,716 | |
| | | | | | | | |
| | | | | | | 1,364,241 | |
| | | | | | | | |
Israel (2.1%) | |
Check Point Software Technologies Ltd.* | | | 4,463 | | | | 464,197 | |
| | | | | | | | |
Japan (10.3%) | |
Kose Corp. | | | 5,300 | | | | 502,543 | |
Rakuten, Inc. | | | 28,900 | | | | 295,805 | |
SoftBank Group Corp. | | | 8,500 | | | | 643,705 | |
THK Co. Ltd. | | | 15,700 | | | | 404,348 | |
Unicharm Corp. | | | 19,900 | | | | 483,509 | |
| | | | | | | | |
| | | | | | | 2,329,910 | |
| | | | | | | | |
Jordan (2.2%) | |
Hikma Pharmaceuticals plc | | | 20,180 | | | | 506,276 | |
| | | | | | | | |
Mexico (3.4%) | |
Banregio Grupo Financiero SAB de CV | | | 83,400 | | | | 480,900 | |
Fomento Economico Mexicano SAB de CV | | | 31,100 | | | | 279,872 | |
| | | | | | | | |
| | | | | | | 760,772 | |
| | | | | | | | |
Peru (1.4%) | |
Credicorp Ltd. | | | 2,055 | | | | 315,771 | |
| | | | | | | | |
Russia (1.5%) | |
Magnit PJSC (GDR) | | | 9,678 | | | | 338,246 | |
| | | | | | | | |
South Africa (2.2%) | |
Naspers Ltd., Class N | | | 2,589 | | | | 491,801 | |
| | | | | | | | |
Spain (1.7%) | |
Industria de Diseno Textil SA | | | 9,877 | | | | 378,825 | |
| | | | | | | | |
Switzerland (2.8%) | |
Roche Holding AG | | | 2,457 | | | | 642,771 | |
| | | | | | | | |
United Kingdom (1.7%) | |
Reckitt Benckiser Group plc | | | 4,175 | | | | 384,524 | |
| | | | | | | | |
| | | | | | | | |
United States (48.2%) | |
Alphabet, Inc., Class A* | | | 642 | | | $ | 593,542 | |
Amazon.com, Inc.* | | | 774 | | | | 715,942 | |
Apple, Inc. | | | 4,584 | | | | 658,492 | |
Bank of the Ozarks, Inc. | | | 11,366 | | | | 539,544 | |
Berkshire Hathaway, Inc., Class B* | | | 4,161 | | | | 687,439 | |
BlackRock, Inc. | | | 956 | | | | 367,649 | |
Charles Schwab Corp. (The) | | | 16,248 | | | | 631,235 | |
Concho Resources, Inc.* | | | 4,019 | | | | 509,046 | |
DexCom, Inc.* | | | 5,373 | | | | 418,879 | |
Ecolab, Inc. | | | 4,766 | | | | 615,243 | |
EOG Resources, Inc. | | | 5,872 | | | | 543,160 | |
Facebook, Inc., Class A* | | | 3,739 | | | | 561,785 | |
FedEx Corp. | | | 2,534 | | | | 480,700 | |
Gilead Sciences, Inc. | | | 5,277 | | | | 361,738 | |
IPG Photonics Corp.* | | | 4,343 | | | | 548,608 | |
O’Reilly Automotive, Inc.* | | | 1,519 | | | | 376,940 | |
Proofpoint, Inc.* | | | 4,067 | | | | 306,530 | |
QUALCOMM, Inc. | | | 4,637 | | | | 249,192 | |
Starbucks Corp. | | | 7,455 | | | | 447,747 | |
Stryker Corp. | | | 4,155 | | | | 566,617 | |
Synchronoss Technologies, Inc.* | | | 9,782 | | | | 156,512 | |
Wells Fargo & Co. | | | 10,444 | | | | 562,305 | |
| | | | | | | | |
| | | | | | | 10,898,845 | |
| | | | | | | | |
Total Investments (98.4%)
(Cost $19,592,713) | | | | | | | 22,224,270 | |
Other Assets Less Liabilities (1.6%) | | | | | | | 370,750 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 22,595,020 | |
| | | | | | | | |
| (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 |
| | GDR | — Global Depositary Receipt |
| | | | | | | | |
Sector Weightings
as of April 30, 2017 | | Market Value | | | % of
Net Assets | |
Information Technology | | | $4,533,054 | | | | 20.1 | % |
Financials | | | 3,878,343 | | | | 17.2 | |
Consumer Discretionary | | | 3,856,778 | | | | 17.1 | |
Health Care | | | 3,040,240 | | | | 13.4 | |
Consumer Staples | | | 2,809,801 | | | | 12.4 | |
Industrials | | | 1,286,216 | | | | 5.7 | |
Energy | | | 1,052,206 | | | | 4.7 | |
Materials | | | 1,041,373 | | | | 4.6 | |
Telecommunication Services | | | 726,259 | | | | 3.2 | |
Cash and Other | | | 370,750 | | | | 1.6 | |
| | | | | | | | | |
| | | | | | | | 100.0 | % |
| | | | | | | | | |
Holdings are subject to change without notice. | | | | | |
See Notes to Financial Statements.
46
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (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, 2017:
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 | | | | | | | | | | | | | | | | |
Consumer Discretionary | | $ | 1,540,628 | | | $ | 2,316,150 | | | $ | — | | | $ | 3,856,778 | |
Consumer Staples | | | 279,872 | | | | 2,529,929 | | | | — | | | | 2,809,801 | |
Energy | | | 1,052,206 | | | | — | | | | — | | | | 1,052,206 | |
Financials | | | 3,584,843 | | | | 293,500 | | | | — | | | | 3,878,343 | |
Health Care | | | 1,347,234 | | | | 1,693,006 | | | | — | | | | 3,040,240 | |
Industrials | | | 480,701 | | | | 805,515 | | | | — | | | | 1,286,216 | |
Information Technology | | | 4,097,532 | | | | 435,522 | | | | — | | | | 4,533,054 | |
Materials | | | 615,243 | | | | 426,130 | | | | — | | | | 1,041,373 | |
Telecommunication Services | | | — | | | | 726,259 | | | | — | | | | 726,259 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 12,998,259 | | | $ | 9,226,011 | | | $ | — | | | $ | 22,224,270 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 12,998,259 | | | $ | 9,226,011 | | | $ | — | | | $ | 22,224,270 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
The Fund held no derivatives contracts during the six-months ended April 30, 2017.
Investment security transactions for the six months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 2,005,172 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 2,161,702 | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 3,256,518 | |
Aggregate gross unrealized depreciation | | | (625,057 | ) |
| | | | |
Net unrealized appreciation | | $ | 2,631,461 | |
| | | | |
Federal income tax cost of investments | | $ | 19,592,809 | |
| | | | |
See Notes to Financial Statements.
47
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value (Cost $19,592,713) | | $ | 22,224,270 | |
Cash | | | 319,972 | |
Dividends, interest and other receivables | | | 55,230 | |
| | | | |
Total assets | | | 22,599,472 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 87 | |
Administrative fees payable | | | 64 | |
Distribution fees payable – Class R | | | 45 | |
Distribution fees payable – Class A | | | 24 | |
Accrued expenses | | | 4,232 | |
| | | | |
Total liabilities | | | 4,452 | |
| | | | |
NET ASSETS | | $ | 22,595,020 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 20,108,857 | |
Accumulated undistributed net investment income (loss) | | | 18,195 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | | (163,621 | ) |
Net unrealized appreciation (depreciation) on investments and foreign currency translations | | | 2,631,589 | |
| | | | |
Net assets | | $ | 22,595,020 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $126,562 / 11,292 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.21 | |
Maximum sales charge (5.50% of offering price) | | | 0.65 | |
| | | | |
Maximum offering price per share | | $ | 11.86 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $22,356,560 / 1,990,416 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.23 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $111,898 / 10,009 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.18 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends (net of $8,791 foreign withholding tax) | | $ | 135,950 | |
Interest | | | 250 | |
| | | | |
Total income | | | 136,200 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 85,406 | |
Professional fees | | | 38,983 | |
Registration and filing fees | | | 24,311 | |
Administrative fees | | | 16,014 | |
Offering costs | | | 15,233 | |
Transfer agent fees | | | 11,830 | |
Printing and mailing expenses | | | 6,925 | |
Custodian fees | | | 4,331 | |
Trustees’ fees | | | 1,076 | |
Distribution fees – Class R | | | 265 | |
Distribution fees – Class A | | | 134 | |
Miscellaneous | | | 8,859 | |
| | | | |
Gross expenses | | | 213,367 | |
Less: Waiver from investment adviser | | | (95,560 | ) |
| | | | |
Net expenses | | | 117,807 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 18,393 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments | | | (161,404 | ) |
Foreign currency transactions | | | (119 | ) |
| | | | |
Net realized gain (loss) | | | (161,523 | ) |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments | | | 2,023,832 | |
Foreign currency translations | | | 360 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | 2,024,192 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 1,862,669 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,881,062 | |
| | | | |
See Notes to Financial Statements.
48
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | April 11, 2016* to
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 18,393 | | | $ | 6,413 | |
Net realized gain (loss) on investments and foreign currency transactions | | | (161,523 | ) | | | 65,542 | |
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | | | 2,024,192 | | | | 607,397 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,881,062 | | | | 679,352 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class I | | | (11,303 | ) | | | — | |
| | | | | | | | |
| | | (11,303 | ) | | | — | |
| | | | | | | | |
Distributions from net realized capital gains | | | | | | | | |
Class A | | | (400 | ) | | | — | |
Class I | | | (79,321 | ) | | | — | |
Class R | | | (400 | ) | | | — | |
| | | | | | | | |
| | | (80,121 | ) | | | — | |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (91,424 | ) | | | — | |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 1,282 and 10,010 shares, respectively ] | | | 14,175 | | | | 100,100 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 1 | | | | — | |
| | | | | | | | |
Total Class A transactions | | | 14,176 | | | | 100,100 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 9,769 and 1,980,634 shares, respectively ] | | | 105,017 | | | | 19,806,500 | |
Capital shares issued in reinvestment of dividends [ 13 and 0 shares, respectively ] | | | 138 | | | | — | |
| | | | | | | | |
Total Class I transactions | | | 105,155 | | | | 19,806,500 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 10,009 shares, respectively ] | | | — | | | | 100,099 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | — | ## | | | — | |
| | | | | | | | |
Total Class R transactions | | | — | ## | | | 100,099 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 119,331 | | | | 20,006,699 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,908,969 | | | | 20,686,051 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 20,686,051 | | | | — | |
| | | | | | | | |
End of period (a) | | $ | 22,595,020 | | | $ | 20,686,051 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 18,195 | | | $ | 11,105 | |
| | | | | | | | |
* The Fund commenced operations on April 11, 2016. | | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
## Amount is less than $0.50. | | | | | | | | |
See Notes to Financial Statements.
49
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | |
| Class A | | Six Months Ended April 30, 2017 (Unaudited) | | | April 11, 2016* to October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.33 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | — | # | | | (0.01 | ) |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 0.92 | | | | 0.34 | |
| | | | | | | | |
Total from investment operations | | | 0.92 | | | | 0.33 | |
| | | | | | | | |
Less distributions: | |
Distributions from net realized gains | | | (0.04 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 11.21 | | | $ | 10.33 | |
| | | | | | | | |
Total return (b) | | | 8.94 | % | | | 3.30 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 127 | | | $ | 103 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | 1.35 | % | | | 1.40 | % |
Before waivers and reimbursements (a) | | | 2.24 | % | | | 2.31 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | (0.06 | )% | | | (0.19 | )%(l) |
Before waivers and reimbursements (a) | | | (0.95 | )% | | | (1.10 | )%(l) |
Portfolio turnover rate (z)^ | | | 9 | % | | | 11 | % |
| | |
| Class I | | Six Months Ended April 30, 2017 (Unaudited) | | | April 11, 2016* to
October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.34 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | 0.01 | | | | — | # |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 0.93 | | | | 0.34 | |
| | | | | | | | |
Total from investment operations | | | 0.94 | | | | 0.34 | |
| | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.01 | ) | | | — | |
Distributions from net realized gains | | | (0.04 | ) | | | — | |
| | | | | | | | |
Total dividends and distributions | | | (0.05 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 11.23 | | | $ | 10.34 | |
| | | | | | | | |
Total return (b) | | | 9.08 | % | | | 3.40 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 22,357 | | | $ | 20,479 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | 1.10 | % | | | 1.15 | % |
Before waivers and reimbursements (a) | | | 1.99 | % | | | 2.06 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | 0.18 | % | | | 0.06 | %(l) |
Before waivers and reimbursements (a) | | | (0.72 | )% | | | (0.85 | )%(l) |
Portfolio turnover rate (z)^ | | | 9 | % | | | 11 | % |
See Notes to Financial Statements.
50
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | |
| Class R | | Six Months Ended April 30, 2017 (Unaudited) | | | April 11, 2016* to October 31, 2016 | |
Net asset value, beginning of period | | $ | 10.31 | | | $ | 10.00 | |
| | | | | | | | |
Income (loss) from investment operations: | | | | | | | | |
Net investment income (loss) (e) | | | (0.02 | ) | | | (0.03 | ) |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 0.93 | | | | 0.34 | |
| | | | | | | | |
Total from investment operations | | | 0.91 | | | | 0.31 | |
| | | | | | | | |
Less distributions: | |
Distributions from net realized gains | | | (0.04 | ) | | | — | |
| | | | | | | | |
Net asset value, end of period | | $ | 11.18 | | | $ | 10.31 | |
| | | | | | | | |
Total return (b) | | | 8.86 | % | | | 3.10 | % |
| | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 112 | | | $ | 103 | |
Ratio of expenses to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | 1.60 | % | | | 1.65 | % |
Before waivers and reimbursements (a) | | | 2.49 | % | | | 2.56 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | |
After waivers and reimbursements (a) | | | (0.33 | )% | | | (0.44 | )%(l) |
Before waivers and reimbursements (a) | | | (1.22 | )% | | | (1.35 | )%(l) |
Portfolio turnover rate (z)^ | | | 9 | % | | | 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. |
| (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. |
| (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.
51
1290 HIGH YIELD BOND FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISER
| Ø | | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | 6 Months | | | 1 Year | | | Since Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | 6.30 | % | | | 12.77 | % | | | 3.91 | % |
| | | with Sales Charge (a) | | | 1.57 | | | | 7.73 | | | | 1.99 | |
Fund – Class I Shares* | | | | | 6.42 | | | | 13.04 | | | | 4.16 | |
Fund – Class R Shares* | | | | | 6.08 | | | | 12.39 | | | | 3.61 | |
Fund – Class T Shares*† | | without Sales Charge | | | 6.42 | | | | 13.04 | | | | 4.16 | |
| | | with Sales Charge (b) | | | 3.77 | | | | 10.27 | | | | 3.08 | |
BofA Merrill Lynch U.S. High Yield Master II Index | | | | | 5.50 | | | | 13.66 | | | | 5.45 | |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. Class T shares were formerly known as Class C shares. (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 current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
Fund performance may 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. Also, 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.
The high yield market posted a positive return in the six-month period ended April 30, 2017. Returns were positive in four of the six months, with only November and March posting negative monthly returns. Returns for the period were driven by rising stock prices, solid economic data, and strong earnings. Flows into the high yield market were negative for the six months ended April 30, 2017. Flows would have been positive were it not for the sixth largest monthly outflow on record in March. The primary market was up significantly during the period, while the high yield default volume was materially lower than the high yield default volume in the same period last year.
For the six-month period ended April 30, 2017, high yield underperformed U.S. equities but outperformed U.S. investment grade corporates and U.S. Treasuries. Within U.S. high yield, returns were driven by the lower end of the credit quality spectrum, as lower quality CCC-and-lower rated credits sharply outperformed higher quality B-rated and BB-rated credits. From a sector perspective, all 18 industry sectors posted positive total returns for the six-month period. On a relative basis, transportation, telecommunications and financial services were the best performing sectors while retail, utility, and automotive were the worst performing sectors. During the period, high yield spreads relative to Treasuries tightened significantly, from 491 basis points (1 basis point = 1/100 of 1%) as of October 31, 2016 to 381 basis points on April 30, 2017, a decrease of 110 basis points. The yield-to-worst (the rate of return generated assuming a bond is redeemed by the issuer on the least desirable date for the investor) for the high yield market ended the period at 5.65%, compared to 6.33% at the start of the period. The average price of the high yield market ended the period at $101.41, up from $99.10 at the start of the period.
Credit ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). All Fund securities except for those labeled “Not Rated” and “Other” have been rated by Moody’s, S&P or Fitch, which are each a Nationally Recognized Statistical Rating Organization (“NRSRO”). All Index securities except for those labeled “Not Rated” have been rated by Moody’s or S&P. Credit ratings are subject to change. One cannot invest directly into an index.
Fund Highlights
What helped performance during the six-month period ended April 30, 2017:
| • | | The Fund experienced positive security selection, particularly within the highest yielding portion of the market. Also, the Fund’s macro positioning had a positive impact on relative performance. The Fund’s overweight to the highest yielding portion of the market, which outperformed, benefited relative performance. The Fund’s underweight to better quality, more interest rate sensitive securities, which underperformed, also helped relative performance. |
| • | | From a sector perspective, the Fund experienced positive security selection within the financial services and telecommunications sectors. In the financial services sector, the Fund benefited from the post-election improvement of several specialty finance credits. Within the telecommunications sector, the positive security selection was led by outperformance within the satellite and wireless subsectors. |
| • | | The top contributors to return for the period were debt positions in Curo Group Holdings (Speedy Cash), Ace Cash Express and Intelsat Jackson Holdings SA. Curo Group Holdings (Speedy Cash) is a consumer focused specialty finance company. The Curo Group bond was a top contributor to return during the period due to this bond being called as part of a larger refinancing of the company’s debt. Ace Cash Express is also a consumer focused, specialty finance company. The Ace Cash Express bond was a top contributor to return during the period as investors focused on the potential for less regulation in this sector following the outcome of the U.S. presidential election. Intelsat is a global satellite services company. Intelsat bonds were a top contributor to return during the period due to news of a proposed credit improving merger as well as better than expected earnings guidance for 2017. |
52
1290 HIGH YIELD BOND FUND (Unaudited)
What hurt performance during the six-month period ended April 30, 2017:
| • | | The Fund’s overweight to the more defensive short duration portion of the market, which underperformed, had a negative impact on performance. |
| • | | Security selection was negative within the energy and health care sectors during the period. |
| • | | The bottom contributors to return for the period were debt positions in Concordia International, Hertz Corporation and L Brands. Concordia International is a pharmaceutical company. Concordia bonds were a bottom contributor to return during the period due to significantly worse than expected earnings in the most recent quarter in addition to management’s weak outlook for 2017. Hertz is a car rental company. Hertz bonds were a bottom contributor to return during the period due to the company reporting disappointing earnings and due to ongoing industry pressures. L Brands sells women’s apparel and beauty products. L Brands bonds were a bottom contributor to return during the period due to an adverse retail environment and near term headwinds associated with the company’s efforts to reposition its women’s apparel segment. |
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
Consumer Discretionary | | | 16.0 | % |
Energy | | | 14.3 | |
Industrials | | | 12.2 | |
Telecommunication Services | | | 11.9 | |
Health Care | | | 11.8 | |
Information Technology | | | 10.7 | |
Materials | | | 6.0 | |
Consumer Staples | | | 6.0 | |
Financials | | | 2.9 | |
Real Estate | | | 2.5 | |
Investment Company | | | 1.8 | |
Utilities | | | 1.5 | |
Cash and Other | | | 2.4 | |
| | | | | |
| | | | 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, 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 the six-month period ended April 30, 2017 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,063.00 | | | | $5.52 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.44 | | | | 5.41 | |
Class I | |
Actual | | | 1,000.00 | | | | 1,064.20 | | | | 4.26 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,020.66 | | | | 4.17 | |
Class R | |
Actual | | | 1,000.00 | | | | 1,060.80 | | | | 6.81 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.18 | | | | 6.67 | |
Class T** | |
Actual | | | 1,000.00 | | | | 1,064.20 | | | | 4.26 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,020.66 | | | | 4.17 | |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.08%, 0.83%, 1.33% and 0.83%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). ** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | |
53
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | | | | | | | | |
Corporate Bonds (95.8%) | | | | | | | | |
Consumer Discretionary (16.0%) | | | | | | | | |
Auto Components (0.3%) | | | | | | | | |
Icahn Enterprises LP | | | | | | | | |
6.250%, 2/1/22§ | | $ | 71,000 | | | $ | 73,840 | |
| | | | | | | | |
Distributors (0.7%) | | | | | | | | |
American Tire Distributors, Inc. | | | | | | | | |
10.250%, 3/1/22§ | | | 210,000 | | | | 214,856 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (3.3%) | | | | | | | | |
1011778 BC ULC | | | | | | | | |
4.625%, 1/15/22 (b)§ | | | 75,000 | | | | 77,085 | |
6.000%, 4/1/22§ | | | 175,000 | | | | 182,000 | |
Eagle II Acquisition Co. LLC | | | | | | | | |
6.000%, 4/1/25§ | | | 61,000 | | | | 62,830 | |
Eldorado Resorts, Inc. | | | | | | | | |
7.000%, 8/1/23 | | | 114,000 | | | | 123,120 | |
LTF Merger Sub, Inc. | | | | | | | | |
8.500%, 6/15/23§ | | | 187,000 | | | | 198,687 | |
MGM Resorts International | | | | | | | | |
11.375%, 3/1/18 | | | 210,000 | | | | 226,275 | |
8.625%, 2/1/19 | | | 85,000 | | | | 93,819 | |
Silversea Cruise Finance Ltd. | | | | | | | | |
7.250%, 2/1/25§ | | | 41,000 | | | | 43,588 | |
| | | | | | | | |
| | | | | | | 1,007,404 | |
| | | | | | | | |
Household Durables (0.9%) | | | | | | | | |
American Greetings Corp. | | | | | | | | |
7.875%, 2/15/25§ | | | 100,000 | | | | 106,500 | |
PulteGroup, Inc. | | | | | | | | |
5.000%, 1/15/27 | | | 167,000 | | | | 169,088 | |
| | | | | | | | |
| | | | | | | 275,588 | |
| | | | | | | | |
Media (9.7%) | | | | | | | | |
Altice Financing SA | | | | | | | | |
7.500%, 5/15/26§ | | | 200,000 | | | | 215,260 | |
Altice Luxembourg SA | | | | | | | | |
7.750%, 5/15/22§ | | | 200,000 | | | | 212,250 | |
AMC Entertainment Holdings, Inc. | | | | | | | | |
5.875%, 11/15/26§ | | | 97,000 | | | | 98,756 | |
6.125%, 5/15/27§ | | | 102,000 | | | | 103,912 | |
Cablevision Systems Corp. | | | | | | | | |
7.750%, 4/15/18 | | | 185,000 | | | | 192,640 | |
Cequel Communications Holdings I LLC | | | | | |
6.375%, 9/15/20§ | | | 190,000 | | | | 195,814 | |
5.125%, 12/15/21§ | | | 106,000 | | | | 108,184 | |
CSC Holdings LLC | | | | | | | | |
7.875%, 2/15/18 | | | 80,000 | | | | 83,600 | |
DISH DBS Corp. | | | | | | | | |
7.875%, 9/1/19 | | | 202,000 | | | | 223,715 | |
Lions Gate Entertainment Corp. | | | | | | | | |
5.875%, 11/1/24§ | | | 102,000 | | | | 105,825 | |
Live Nation Entertainment, Inc. | | | | | | | | |
4.875%, 11/1/24§ | | | 65,000 | | | | 65,488 | |
McGraw-Hill Global Education Holdings LLC | | | | | |
7.875%, 5/15/24§ | | | 109,000 | | | | 106,144 | |
MHGE Parent LLC | | | | | | | | |
8.500%, 8/1/19§ | | | 220,000 | | | | 221,375 | |
Regal Entertainment Group | | | | | | | | |
5.750%, 3/15/22 | | | 134,000 | | | | 139,534 | |
| | | | | | | | |
Sirius XM Radio, Inc. | | | | | | | | |
5.750%, 8/1/21§ | | $ | 225,000 | | | $ | 233,438 | |
Unitymedia GmbH | | | | | | | | |
6.125%, 1/15/25§ | | | 200,000 | | | | 213,125 | |
Ziggo Bond Finance BV | | | | | | | | |
6.000%, 1/15/27§ | | | 200,000 | | | | 203,125 | |
Ziggo Secured Finance BV | | | | | | | | |
5.500%, 1/15/27§ | | | 200,000 | | | | 205,000 | |
| | | | | | | | |
| | | | | | | 2,927,185 | |
| | | | | | | | |
Multiline Retail (0.5%) | | | | | | | | |
Cumberland Farms, Inc. | | | | | | | | |
6.750%, 5/1/25 (b)§ | | | 45,000 | | | | 46,463 | |
Dollar Tree, Inc. | | | | | | | | |
5.250%, 3/1/20 | | | 85,000 | | | | 87,284 | |
| | | | | | | | |
| | | | | | | 133,747 | |
| | | | | | | | |
Specialty Retail (0.6%) | | | | | | | | |
L Brands, Inc. | | | | | | | | |
6.750%, 7/1/36 | | | 100,000 | | | | 96,875 | |
Penske Automotive Group, Inc. | | | | | | | | |
5.750%, 10/1/22 | | | 85,000 | | | | 87,975 | |
| | | | | | | | |
| | | | | | | 184,850 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 4,817,470 | |
| | | | | | | | |
Consumer Staples (6.0%) | | | | | | | | |
Beverages (0.4%) | | | | | | | | |
DS Services of America, Inc. | | | | | | | | |
10.000%, 9/1/21§ | | | 113,000 | | | | 120,698 | |
| | | | | | | | |
Food & Staples Retailing (2.0%) | | | | | | | | |
BI-LO LLC | | | | | | | | |
8.625%, 9/15/18 PIK§ | | | 64,000 | | | | 32,920 | |
9.250%, 2/15/19§ | | | 91,000 | | | | 80,080 | |
Fresh Market, Inc. (The) | | | | | | | | |
9.750%, 5/1/23§ | | | 106,000 | | | | 87,853 | |
Rite Aid Corp. | | | | | | | | |
9.250%, 3/15/20 | | | 100,000 | | | | 103,125 | |
6.750%, 6/15/21 | | | 158,000 | | | | 159,185 | |
6.125%, 4/1/23§ | | | 140,000 | | | | 138,950 | |
| | | | | | | | |
| | | | | | | 602,113 | |
| | | | | | | | |
Food Products (2.9%) | | | | | | | | |
AdvancePierre Foods Holdings, Inc. | | | | | |
5.500%, 12/15/24§ | | | 50,000 | | | | 55,565 | |
Clearwater Seafoods, Inc. | | | | | | | | |
6.875%, 5/1/25 (b)§ | | | 73,000 | | | | 75,555 | |
JBS USA LUX SA | | | | | | | | |
8.250%, 2/1/20§ | | | 210,000 | | | | 215,250 | |
5.750%, 6/15/25§ | | | 254,000 | | | | 260,985 | |
Lamb Weston Holdings, Inc. | | | | | | | | |
4.875%, 11/1/26§ | | | 63,000 | | | | 65,047 | |
Post Holdings, Inc. | | | | | | | | |
6.000%, 12/15/22§ | | | 55,000 | | | | 58,713 | |
5.750%, 3/1/27§ | | | 125,000 | | | | 129,850 | |
| | | | | | | | |
| | | | | | | 860,965 | |
| | | | | | | | |
Household Products (0.5%) | | | | | | | | |
Spectrum Brands, Inc. | | | | | | | | |
6.625%, 11/15/22 | | | 135,000 | | | | 142,087 | |
| | | | | | | | |
See Notes to Financial Statements.
54
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Personal Products (0.2%) | | | | | | | | |
Prestige Brands, Inc. | | | | | | | | |
6.375%, 3/1/24§ | | $ | 71,000 | | | $ | 75,970 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 1,801,833 | |
| | | | | | | | |
Energy (14.3%) | | | | | | | | |
Energy Equipment & Services (0.7%) | | | | | | | | |
Nabors Industries, Inc. | | | | | | | | |
5.500%, 1/15/23§ | | | 61,000 | | | | 61,457 | |
Precision Drilling Corp. | | | | | | | | |
6.625%, 11/15/20 | | | 35,875 | | | | 36,420 | |
7.750%, 12/15/23§ | | | 91,000 | | | | 96,460 | |
Trinidad Drilling Ltd. | | | | | | | | |
6.625%, 2/15/25§ | | | 28,000 | | | | 28,210 | |
| | | | | | | | |
| | | | | | | 222,547 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (13.6%) | |
American Midstream Partners LP | | | | | | | | |
8.500%, 12/15/21§ | | | 147,000 | | | | 149,940 | |
Antero Resources Corp. | | | | | | | | |
5.625%, 6/1/23 | | | 97,000 | | | | 99,794 | |
Blue Racer Midstream LLC | | | | | | | | |
6.125%, 11/15/22§ | | | 206,000 | | | | 210,120 | |
Calumet Specialty Products Partners LP | | | | | | | | |
7.625%, 1/15/22 | | | 145,000 | | | | 122,887 | |
Carrizo Oil & Gas, Inc. | | | | | | | | |
6.250%, 4/15/23 | | | 90,000 | | | | 90,675 | |
Concho Resources, Inc. | | | | | | | | |
5.500%, 4/1/23 | | | 85,000 | | | | 88,136 | |
Crestwood Midstream Partners LP | | | | | | | | |
6.250%, 4/1/23 | | | 124,000 | | | | 129,115 | |
5.750%, 4/1/25§ | | | 74,000 | | | | 76,312 | |
CrownRock LP | | | | | | | | |
7.750%, 2/15/23§ | | | 85,000 | | | | 89,888 | |
Genesis Energy LP | | | | | | | | |
5.750%, 2/15/21 | | | 180,000 | | | | 180,450 | |
5.625%, 6/15/24 | | | 88,000 | | | | 86,020 | |
Gulfport Energy Corp. | | | | | | | | |
6.000%, 10/15/24§ | | | 55,000 | | | | 54,038 | |
Halcon Resources Corp. | | | | | | | | |
6.750%, 2/15/25§ | | | 95,000 | | | | 91,200 | |
Holly Energy Partners LP | | | | | | | | |
6.000%, 8/1/24§ | | | 80,000 | | | | 84,400 | |
MEG Energy Corp. | | | | | | | | |
6.500%, 1/15/25§ | | | 58,000 | | | | 57,205 | |
Murphy Oil Corp. | | | | | | | | |
6.875%, 8/15/24 | | | 68,000 | | | | 72,420 | |
Oasis Petroleum, Inc. | | | | | | | | |
6.875%, 3/15/22 | | | 100,000 | | | | 101,310 | |
Parsley Energy LLC | | | | | | | | |
5.375%, 1/15/25§ | | | 90,000 | | | | 90,900 | |
PBF Holding Co. LLC | | | | | | | | |
7.000%, 11/15/23 | | | 105,000 | | | | 106,575 | |
PBF Logistics LP | | | | | | | | |
6.875%, 5/15/23 | | | 199,000 | | | | 203,975 | |
PDC Energy, Inc. | | | | | | | | |
7.750%, 10/15/22 | | | 90,000 | | | | 94,163 | |
Range Resources Corp. | | | | | | | | |
5.750%, 6/1/21§ | | | 85,000 | | | | 87,125 | |
| | | | | | | | |
Rice Energy, Inc. | | | | | | | | |
7.250%, 5/1/23 | | $ | 95,000 | | | $ | 102,600 | |
RSP Permian, Inc. | | | | | | | | |
6.625%, 10/1/22 | | | 80,000 | | | | 84,452 | |
Sanchez Energy Corp. | | | | | | | | |
6.125%, 1/15/23 | | | 110,000 | | | | 101,200 | |
SemGroup Corp. | | | | | | | | |
5.625%, 7/15/22 | | | 110,000 | | | | 108,900 | |
5.625%, 11/15/23 | | | 75,000 | | | | 74,203 | |
SM Energy Co. | | | | | | | | |
6.750%, 9/15/26 | | | 84,000 | | | | 84,420 | |
Southern Star Central Corp. | | | | | | | | |
5.125%, 7/15/22§ | | | 110,000 | | | | 110,422 | |
Summit Midstream Holdings LLC | | | | | | | | |
5.500%, 8/15/22 | | | 150,000 | | | | 149,625 | |
5.750%, 4/15/25 | | | 80,000 | | | | 81,000 | |
Targa Resources Partners LP | | | | | | | | |
6.375%, 8/1/22 | | | 30,000 | | | | 30,900 | |
6.750%, 3/15/24 | | | 95,000 | | | | 103,313 | |
Tesoro Logistics LP | | | | | | | | |
5.875%, 10/1/20 | | | 89,000 | | | | 90,824 | |
6.125%, 10/15/21 | | | 167,000 | | | | 174,315 | |
5.250%, 1/15/25 | | | 85,000 | | | | 90,211 | |
Ultra Resources, Inc. | | | | | | | | |
6.875%, 4/15/22 (b)§ | | | 60,000 | | | | 60,378 | |
Western Refining Logistics LP | | | | | | | | |
7.500%, 2/15/23 | | | 181,000 | | | | 194,801 | |
Whiting Petroleum Corp. | | | | | | | | |
5.000%, 3/15/19 | | | 80,000 | | | | 80,800 | |
| | | | | | | | |
| | | | | | | 4,089,012 | |
| | | | | | | | |
Total Energy | | | | | | | 4,311,559 | |
| | | | | | | | |
Financials (2.9%) | | | | | | | | |
Capital Markets (0.3%) | | | | | | | | |
Eagle Holding Co. II LLC | | | | | | | | |
7.625%, 5/15/22 (b)§ | | | 98,000 | | | | 99,715 | |
| | | | | | | | |
Consumer Finance (0.7%) | | | | | | | | |
Ally Financial, Inc. | | | | | | | | |
4.625%, 5/19/22 | | | 102,000 | | | | 104,040 | |
TMX Finance LLC | | | | | | | | |
8.500%, 9/15/18§ | | | 120,000 | | | | 112,425 | |
| | | | | | | | |
| | | | | | | 216,465 | |
| | | | | | | | |
Insurance (1.0%) | | | | | | | | |
Hub Holdings LLC | | | | | | | | |
8.125%, 7/15/19 PIK§ | | | 160,000 | | | | 160,800 | |
HUB International Ltd. | | | | | | | | |
7.875%, 10/1/21§ | | | 125,000 | | | | 131,238 | |
| | | | | | | | |
| | | | | | | 292,038 | |
| | | | | | | | |
Thrifts & Mortgage Finance (0.9%) | | | | | | | | |
Stearns Holdings LLC | | | | | | | | |
9.375%, 8/15/20§ | | | 271,000 | | | | 273,710 | |
| | | | | | | | |
Total Financials | | | | | | | 881,928 | |
| | | | | | | | |
Health Care (11.8%) | | | | | | | | |
Biotechnology (0.4%) | | | | | | | | |
Sterigenics-Nordion Topco LLC | | | | | | | | |
8.125%, 11/1/21 PIK§ | | | 111,000 | | | | 114,052 | |
| | | | | | | | |
See Notes to Financial Statements.
55
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Health Care Equipment & Supplies (1.1%) | | | | | |
Alere, Inc. | | | | | | | | |
7.250%, 7/1/18 | | $ | 160,000 | | | $ | 161,600 | |
Greatbatch Ltd. | | | | | | | | |
9.125%, 11/1/23§ | | | 143,000 | | | | 150,865 | |
| | | | | | | | |
| | | | | | | 312,465 | |
| | | | | | | | |
Health Care Providers & Services (5.9%) | | | | | |
Centene Corp. | | | | | | | | |
6.125%, 2/15/24 | | | 95,000 | | | | 102,600 | |
Envision Healthcare Corp. | | | | | | | | |
6.250%, 12/1/24§ | | | 63,000 | | | | 66,150 | |
HCA, Inc. | | | | | | | | |
7.500%, 2/15/22 | | | 195,000 | | | | 224,328 | |
7.690%, 6/15/25 | | | 91,000 | | | | 103,797 | |
5.875%, 2/15/26 | | | 104,000 | | | | 110,500 | |
4.500%, 2/15/27 | | | 150,000 | | | | 150,675 | |
IASIS Healthcare LLC | | | | | | | | |
8.375%, 5/15/19 | | | 80,000 | | | | 78,000 | |
LifePoint Health, Inc. | | | | | | | | |
5.500%, 12/1/21 | | | 123,000 | | | | 127,459 | |
MPH Acquisition Holdings LLC | | | | | | | | |
7.125%, 6/1/24§ | | | 100,000 | | | | 107,500 | |
Opal Acquisition, Inc. | | | | | | | | |
8.875%, 12/15/21§ | | | 150,000 | | | | 137,625 | |
RegionalCare Hospital Partners Holdings, Inc. | | | | | |
8.250%, 5/1/23§ | | | 122,000 | | | | 130,369 | |
Surgical Care Affiliates, Inc. | | | | | | | | |
6.000%, 4/1/23§ | | | 15,000 | | | | 16,266 | |
Team Health Holdings, Inc. | | | | | | | | |
6.375%, 2/1/25§ | | | 96,000 | | | | 92,880 | |
Tenet Healthcare Corp. | | | | | | | | |
4.631%, 6/15/20 (l) | | | 107,000 | | | | 107,193 | |
7.500%, 1/1/22§ | | | 125,000 | | | | 133,750 | |
WellCare Health Plans, Inc. | | | | | | | | |
5.250%, 4/1/25 | | | 95,000 | | | | 98,562 | |
| | | | | | | | |
| | | | | | | 1,787,654 | |
| | | | | | | | |
Health Care Technology (0.4%) | | | | | | | | |
Quintiles IMS, Inc. | | | | | | | | |
4.875%, 5/15/23§ | | | 125,000 | | | | 128,750 | |
| | | | | | | | |
Pharmaceuticals (4.0%) | | | | | | | | |
Capsugel SA | | | | | | | | |
7.000%, 5/15/19 PIK§ | | | 298,000 | | | | 297,255 | |
DPx Holdings BV | | | | | | | | |
7.500%, 2/1/22§ | | | 282,000 | | | | 298,582 | |
Endo Finance LLC | | | | | | | | |
7.250%, 1/15/22§ | | | 128,000 | | | | 126,080 | |
inVentiv Group Holdings, Inc. | | | | | | | | |
7.500%, 10/1/24§ | | | 113,000 | | | | 116,672 | |
Valeant Pharmaceuticals International, Inc. | | | | | |
6.375%, 10/15/20§ | | | 10,000 | | | | 8,588 | |
7.500%, 7/15/21§ | | | 175,000 | | | | 144,813 | |
6.500%, 3/15/22§ | | | 70,000 | | | | 71,666 | |
6.125%, 4/15/25§ | | | 185,000 | | | | 136,345 | |
| | | | | | | | |
| | | | | | | 1,200,001 | |
| | | | | | | | |
Total Health Care | | | | | | | 3,542,922 | |
| | | | | | | | |
Industrials (12.2%) | | | | | | | | |
Aerospace & Defense (0.7%) | | | | | | | | |
Spirit AeroSystems, Inc. | | | | | | | | |
5.250%, 3/15/22 | | | 60,000 | | | | 62,384 | |
| | | | | | | | |
TransDigm, Inc. | | | | | | | | |
5.500%, 10/15/20 | | $ | 11,000 | | | $ | 11,247 | |
6.000%, 7/15/22 | | | 107,000 | | | | 109,943 | |
6.500%, 5/15/25§ | | | 38,000 | | | | 38,950 | |
| | | | | | | | |
| | | | | | | 222,524 | |
| | | | | | | | |
Airlines (0.7%) | | | | | | | | |
Intrepid Aviation Group Holdings LLC | | | | | | | | |
6.875%, 2/15/19§ | | | 230,000 | | | | 218,937 | |
| | | | | | | | |
Building Products (1.7%) | | | | | | | | |
Builders FirstSource, Inc. | | | | | | | | |
10.750%, 8/15/23§ | | | 100,000 | | | | 116,500 | |
Standard Industries, Inc. | | | | | | | | |
5.500%, 2/15/23§ | | | 115,000 | | | | 119,600 | |
6.000%, 10/15/25§ | | | 90,000 | | | | 95,625 | |
Summit Materials LLC | | | | | | | | |
6.125%, 7/15/23 | | | 167,000 | | | | 175,141 | |
| | | | | | | | |
| | | | | | | 506,866 | |
| | | | | | | | |
Commercial Services & Supplies (1.6%) | | | | | |
ACCO Brands Corp. | | | | | | | | |
5.250%, 12/15/24§ | | | 120,000 | | | | 123,300 | |
Covanta Holding Corp. | | | | | | | | |
5.875%, 7/1/25 | | | 47,000 | | | | 47,000 | |
Multi-Color Corp. | | | | | | | | |
6.125%, 12/1/22§ | | | 135,000 | | | | 140,738 | |
Prime Security Services Borrower LLC | | | | | | | | |
9.250%, 5/15/23§ | | | 160,000 | | | | 174,880 | |
| | | | | | | | |
| | | | | | | 485,918 | |
| | | | | | | | |
Construction & Engineering (1.7%) | | | | | | | | |
AECOM | | | | | | | | |
5.750%, 10/15/22 | | | 160,000 | | | | 168,800 | |
AECOM Global II LLC | | | | | | | | |
5.000%, 4/1/22 | | | 95,000 | | | | 96,306 | |
Michael Baker Holdings LLC | | | | | | | | |
8.875%, 4/15/19 PIK (l)§ | | | 74,999 | | | | 74,999 | |
Michael Baker International LLC | | | | | | | | |
8.250%, 10/15/18§ | | | 175,000 | | | | 182,000 | |
| | | | | | | | |
| | | | | | | 522,105 | |
| | | | | | | | |
Machinery (1.8%) | | | | | | | | |
Novelis Corp. | | | | | | | | |
5.875%, 9/30/26§ | | | 121,000 | | | | 123,723 | |
Park-Ohio Industries, Inc. | | | | | | | | |
6.625%, 4/15/27 (b)§ | | | 55,000 | | | | 56,753 | |
Shape Technologies Group, Inc. | | | | | | | | |
7.625%, 2/1/20§ | | | 145,000 | | | | 148,625 | |
Welbilt, Inc. | | | | | | | | |
9.500%, 2/15/24 | | | 172,000 | | | | 198,660 | |
| | | | | | | | |
| | | | | | | 527,761 | |
| | | | | | | | |
Professional Services (0.9%) | | | | | | | | |
Jaguar Holding Co. II | | | | | | | | |
6.375%, 8/1/23§ | | | 260,000 | | | | 271,050 | |
| | | | | | | | |
Road & Rail (2.8%) | | | | | | | | |
Kenan Advantage Group, Inc. (The) | | | | | | | | |
7.875%, 7/31/23§ | | | 292,000 | | | | 302,220 | |
See Notes to Financial Statements.
56
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Park Aerospace Holdings Ltd. | | | | | | | | |
5.500%, 2/15/24§ | | $ | 162,000 | | | $ | 171,518 | |
SPL Logistics Escrow LLC | | | | | | | | |
8.875%, 8/1/20§ | | | 245,000 | | | | 207,025 | |
Watco Cos. LLC | | | | | | | | |
6.375%, 4/1/23§ | | | 160,000 | | | | 165,200 | |
| | | | | | | | |
| | | | | | | 845,963 | |
| | | | | | | | |
Trading Companies & Distributors (0.3%) | | | | | |
International Lease Finance Corp. | | | | | | | | |
6.250%, 5/15/19 | | | 80,000 | | | | 85,894 | |
| | | | | | | | |
Total Industrials | | | | | | | 3,687,018 | |
| | | | | | | | |
Information Technology (10.7%) | | | | | | | | |
Communications Equipment (1.0%) | | | | | | | | |
Aegis Merger Sub, Inc. | | | | | | | | |
10.250%, 2/15/23§ | | | 84,000 | | | | 92,400 | |
CommScope Technologies LLC | | | | | | | | |
6.000%, 6/15/25§ | | | 115,000 | | | | 122,475 | |
ViaSat, Inc. | | | | | | | | |
6.875%, 6/15/20 | | | 96,000 | | | | 98,280 | |
| | | | | | | | |
| | | | | | | 313,155 | |
| | | | | | | | |
Internet Software & Services (1.9%) | | | | | | | | |
Bankrate, Inc. | | | | | | | | |
6.125%, 8/15/18§ | | | 94,000 | | | | 94,823 | |
j2 Cloud Services LLC | | | | | | | | |
8.000%, 8/1/20 | | | 130,000 | | | | 134,306 | |
Match Group, Inc. | | | | | | | | |
6.375%, 6/1/24 | | | 85,000 | | | | 92,331 | |
Rackspace Hosting, Inc. | | | | | | | | |
8.625%, 11/15/24§ | | | 109,000 | | | | 115,676 | |
Zayo Group LLC | | | | | | | | |
5.750%, 1/15/27§ | | | 116,000 | | | | 122,821 | |
| | | | | | | | |
| | | | | | | 559,957 | |
| | | | | | | | |
IT Services (1.5%) | | | | | | | | |
Alliance Data Systems Corp. | | | | | | | | |
6.375%, 4/1/20§ | | | 50,000 | | | | 50,750 | |
5.375%, 8/1/22§ | | | 245,000 | | | | 246,225 | |
Gartner, Inc. | | | | | | | | |
5.125%, 4/1/25§ | | | 63,000 | | | | 65,205 | |
Unisys Corp. | | | | | | | | |
10.750%, 4/15/22 (b)§ | | | 85,000 | | | | 89,887 | |
| | | | | | | | |
| | | | | | | 452,067 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (1.0%) | |
NXP BV | | | | | | | | |
4.625%, 6/1/23§ | | | 270,000 | | | | 289,251 | |
| | | | | | | | |
Software (4.0%) | |
BCP Singapore VI Cayman Financing Co. Ltd. | | | | | |
8.000%, 4/15/21§ | | | 120,000 | | | | 120,900 | |
BMC Software, Inc. | | | | | |
7.250%, 6/1/18 | | | 39,000 | | | | 40,170 | |
Boxer Parent Co., Inc. | | | | | |
9.000%, 10/15/19 PIK§ | | | 259,000 | | | | 258,845 | |
Change Healthcare Holdings LLC | | | | | |
5.750%, 3/1/25§ | | | 175,000 | | | | 180,031 | |
CURO Financial Technologies Corp. | | | | | |
12.000%, 3/1/22§ | | | 173,000 | | | | 180,623 | |
| | | | | | | | |
Informatica LLC | | | | | |
7.125%, 7/15/23§ | | $ | 158,000 | | | $ | 154,840 | |
Sophia LP | | | | | |
9.000%, 9/30/23§ | | | 265,000 | | | | 276,262 | |
| | | | | | | | |
| | | | | | | 1,211,671 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.3%) | |
Diamond 1 Finance Corp. | | | | | |
5.875%, 6/15/21§ | | | 257,000 | | | | 271,469 | |
NCR Corp. | | | | | |
4.625%, 2/15/21 | | | 75,000 | | | | 76,875 | |
5.875%, 12/15/21 | | | 43,000 | | | | 45,258 | |
| | | | | | | | |
| | | | | | | 393,602 | |
| | | | | | | | |
Total Information Technology | | | | | | | 3,219,703 | |
| | | | | | | | |
Materials (6.0%) | | | | | |
Chemicals (3.5%) | |
Blue Cube Spinco, Inc. | | | | | |
10.000%, 10/15/25 | | | 79,000 | | | | 97,170 | |
Eco Services Operations LLC | | | | | |
8.500%, 11/1/22§ | | | 162,000 | | | | 170,910 | |
Huntsman International LLC | | | | | |
4.875%, 11/15/20 | | | 98,000 | | | | 103,027 | |
Koppers, Inc. | | | | | |
6.000%, 2/15/25§ | | | 71,000 | | | | 74,373 | |
Nufarm Australia Ltd. | | | | | |
6.375%, 10/15/19§ | | | 215,000 | | | | 220,644 | |
PQ Corp. | | | | | |
6.750%, 11/15/22§ | | | 75,000 | | | | 80,906 | |
Rayonier AM Products, Inc. | | | | | |
5.500%, 6/1/24§ | | | 327,000 | | | | 299,205 | |
| | | | | | | | |
| | | | | | | 1,046,235 | |
| | | | | | | | |
Containers & Packaging (2.0%) | |
Berry Plastics Corp. | | | | | |
5.125%, 7/15/23 | | | 86,000 | | | | 89,225 | |
BWAY Holding Co. | | | | | |
5.500%, 4/15/24§ | | | 120,000 | | | | 121,356 | |
7.250%, 4/15/25§ | | | 323,000 | | | | 322,612 | |
Reynolds Group Issuer, Inc. | | | | | |
5.750%, 10/15/20 | | | 80,000 | | | | 82,100 | |
| | | | | | | | |
| | | | | | | 615,293 | |
| | | | | | | | |
Metals & Mining (0.5%) | |
ArcelorMittal | | | | | |
7.750%, 10/15/39 | | | 105,000 | | | | 120,947 | |
Kaiser Aluminum Corp. | | | | | |
5.875%, 5/15/24 | | | 24,000 | | | | 25,260 | |
| | | | | | | | |
| | | | | | | 146,207 | |
| | | | | | | | |
Total Materials | | | | | | | 1,807,735 | |
| | | | | | | | |
Real Estate (2.5%) | | | | | |
Equity Real Estate Investment Trusts (REITs) (1.0%) | |
Equinix, Inc. (REIT) | | | | | |
5.875%, 1/15/26 | | | 90,000 | | | | 96,975 | |
SBA Communications Corp. (REIT) | | | | | |
4.875%, 9/1/24§ | | | 95,000 | | | | 95,594 | |
Uniti Group, Inc. (REIT) | | | | | |
7.125%, 12/15/24§ | | | 62,000 | | | | 63,395 | |
7.125%, 12/15/24 (b)§ | | | 60,000 | | | | 61,350 | |
| | | | | | | | |
| | | | | | | 317,314 | |
| | | | | | | | |
See Notes to Financial Statements.
57
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Real Estate Management & Development (1.5%) | |
Greystar Real Estate Partners LLC | | | | | |
8.250%, 12/1/22§ | | $ | 155,000 | | | $ | 167,012 | |
Howard Hughes Corp. (The) | | | | | |
5.375%, 3/15/25§ | | | 190,000 | | | | 191,425 | |
Realogy Group LLC | | | | | |
4.875%, 6/1/23§ | | | 85,000 | | | | 85,850 | |
| | | | | | | | |
| | | | | | | 444,287 | |
| | | | | | | | |
Total Real Estate | | | | | | | 761,601 | |
| | | | | | | | |
Telecommunication Services (11.9%) | | | | | |
Diversified Telecommunication Services (8.0%) | |
CCO Holdings LLC | | | | | |
5.250%, 3/15/21 | | | 95,000 | | | | 97,969 | |
5.250%, 9/30/22 | | | 50,000 | | | | 51,687 | |
5.125%, 5/1/23§ | | | 190,000 | | | | 198,075 | |
5.750%, 2/15/26§ | | | 125,000 | | | | 132,463 | |
5.875%, 5/1/27§ | | | 210,000 | | | | 222,337 | |
CenturyLink, Inc.
Series G
6.875%, 1/15/28 | | | 70,000 | | | | 69,825 | |
Cincinnati Bell, Inc. | | | | | |
7.000%, 7/15/24§ | | | 132,000 | | | | 139,425 | |
Columbus Cable Barbados Ltd. | | | | | |
7.375%, 3/30/21§ | | | 200,000 | | | | 214,250 | |
GTT Escrow Corp. | | | | | |
7.875%, 12/31/24§ | | | 87,000 | | | | 90,697 | |
Intelsat Jackson Holdings SA | | | | | |
7.250%, 10/15/20 | | | 240,000 | | | | 224,400 | |
Intelsat Luxembourg SA | | | | | |
8.125%, 6/1/23 | | | 170,000 | | | | 99,025 | |
Level 3 Financing, Inc. | | | | | |
5.375%, 8/15/22 | | | 130,000 | | | | 133,991 | |
SFR Group SA | | | | | |
6.000%, 5/15/22§ | | | 200,000 | | | | 208,500 | |
Sprint Capital Corp. | | | | | |
6.900%, 5/1/19 | | | 60,000 | | | | 64,350 | |
8.750%, 3/15/32 | | | 210,000 | | | | 257,376 | |
Windstream Services LLC | | | | | |
7.750%, 10/15/20 | | | 202,000 | | | | 206,293 | |
| | | | | | | | |
| | | | | | | 2,410,663 | |
| | | | | | | | |
Wireless Telecommunication Services (3.9%) | |
Digicel Group Ltd. | | | | | |
8.250%, 9/30/20§ | | | 215,000 | | | | 196,188 | |
Digicel Ltd. | | | | | |
6.000%, 4/15/21§ | | | 250,000 | | | | 237,500 | |
Sprint Communications, Inc. | | | | | |
7.000%, 8/15/20 | | | 50,000 | | | | 54,125 | |
Sprint Corp. | | | | | |
7.875%, 9/15/23 | | | 260,000 | | | | 291,200 | |
7.125%, 6/15/24 | | | 135,000 | | | | 146,981 | |
T-Mobile USA, Inc. | | | | | | | | |
6.000%, 3/1/23 | | | 68,000 | | | | 72,678 | |
6.375%, 3/1/25 | | | 80,000 | | | | 87,424 | |
5.375%, 4/15/27 | | | 90,000 | | | | 95,850 | |
| | | | | | | | |
| | | | | | | 1,181,946 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 3,592,609 | |
| | | | | | | | |
| | | | | | | | |
Utilities (1.5%) | | | | | | | | |
Independent Power and Renewable Electricity Producers (1.5%) | |
AES Corp. | | | | | | | | |
4.055%, 6/1/19 (l) | | $ | 91,000 | | | $ | 91,073 | |
Calpine Corp. | | | | | | | | |
5.750%, 1/15/25 | | | 90,000 | | | | 86,512 | |
NRG Energy, Inc. | | | | | | | | |
7.875%, 5/15/21 | | | 80,000 | | | | 81,900 | |
Talen Energy Supply LLC | | | | | | | | |
6.500%, 5/1/18 | | | 71,000 | | | | 72,065 | |
4.600%, 12/15/21 | | | 155,000 | | | | 121,288 | |
| | | | | | | | |
Total Utilities | | | | | | | 452,838 | |
| | | | | | | | |
Total Corporate Bonds | | | | | | | 28,877,216 | |
| | | | | | | | |
Total Long-Term Debt Securities (95.8%)
(Cost $28,418,326) | | | | | | | 28,877,216 | |
| | | | | | | | |
| | | Number of Shares | | | Value
(Note 1) | |
SHORT-TERM INVESTMENT: | | | | | | | | |
Investment Company (1.8%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 526,330 | | | | 526,541 | |
| | | | | | | | |
Total Short-Term Investment (1.8%)
(Cost $526,523) | | | | | | | 526,541 | |
| | | | | | | | |
Total Investments (97.6%)
(Cost $28,944,849) | | | | | | | 29,403,757 | |
Other Assets Less Liabilities (2.4%) | | | | | | | 732,850 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 30,136,607 | |
| | | | | | | | |
| § | 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, 2017, the market value of these securities amounted to $18,153,325 or 60.2% 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, 2017, the market value of these securities amounted to $567,186 or 1.9% of net assets. |
| (l) | Floating Rate Security. Rate disclosed is as of April 30, 2017. |
Glossary:
| | PIK | — Payment-in Kind Security |
See Notes to Financial Statements.
58
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | |
Country Diversification As a Percentage of Total Net Assets | | | |
Australia | | | 0.7 | % |
Bahamas | | | 0.2 | |
Barbados | | | 0.7 | |
Brazil | | | 1.6 | |
Canada | | | 2.2 | |
China | | | 0.4 | |
France | | | 0.7 | |
Germany | | | 0.7 | |
Ireland | | | 0.6 | |
Jamaica | | | 1.4 | |
Luxembourg | | | 2.9 | |
Netherlands | | | 2.3 | |
New Zealand | | | 0.3 | |
United States | | | 82.9 | |
Cash and Other | | | 2.4 | |
| | | | | |
| | | | 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, 2017:
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: | | | | | | | | | | | | | | | | |
Corporate Bonds | | | | | | | | | | | | | | | | |
Consumer Discretionary | | $ | — | | | $ | 4,817,470 | | | $ | — | | | $ | 4,817,470 | |
Consumer Staples | | | — | | | | 1,801,833 | | | | — | | | | 1,801,833 | |
Energy | | | — | | | | 4,311,559 | | | | — | | | | 4,311,559 | |
Financials | | | — | | | | 881,928 | | | | — | | | | 881,928 | |
Health Care | | | — | | | | 3,542,922 | | | | — | | | | 3,542,922 | |
Industrials | | | — | | | | 3,687,018 | | | | — | | | | 3,687,018 | |
Information Technology | | | — | | | | 3,219,703 | | | | — | | | | 3,219,703 | |
Materials | | | — | | | | 1,807,735 | | | | — | | | | 1,807,735 | |
Real Estate | | | — | | | | 761,601 | | | | — | | | | 761,601 | |
Telecommunication Services | | | — | | | | 3,592,609 | | | | — | | | | 3,592,609 | |
Utilities | | | — | | | | 452,838 | | | | — | | | | 452,838 | |
Short-Term Investments | | | | | | | | | | | | | | | | |
Investment Companies | | | 526,541 | | | | — | | | | — | | | | 526,541 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 526,541 | | | $ | 28,877,216 | | | $ | — | | | $ | 29,403,757 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 526,541 | | | $ | 28,877,216 | | | $ | — | | | $ | 29,403,757 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
See Notes to Financial Statements.
59
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
The Fund held no derivatives contracts during the six-months ended April 30, 2017.
Investment security transactions for the six-months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 10,710,093 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 9,365,546 | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 846,468 | |
Aggregate gross unrealized depreciation | | | (391,190 | ) |
| | | | |
Net unrealized appreciation | | $ | 455,278 | |
| | | | |
Federal income tax cost of investments | | $ | 28,948,479 | |
| | | | |
See Notes to Financial Statements.
60
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value (Cost $28,944,849) | | $ | 29,403,757 | |
Cash | | | 648,000 | |
Dividends, interest and other receivables | | | 490,189 | |
Receivable for securities sold | | | 54,945 | |
Receivable for Fund shares sold | | | 48,250 | |
Due from Custodian | | | 18,547 | |
Other assets | | | 220 | |
| | | | |
Total assets | | | 30,663,908 | |
| | | | |
LIABILITIES | |
Payable for securities purchased | | | 368,197 | |
Dividends and distributions payable | | | 125,446 | |
Payable for Fund shares redeemed | | | 3,622 | |
Transfer agent fees payable | | | 417 | |
Distribution fees payable – Class A | | | 111 | |
Distribution fees payable – Class R | | | 82 | |
Administrative fees payable | | | 14 | |
Accrued expenses | | | 29,412 | |
| | | | |
Total liabilities | | | 527,301 | |
| | | | |
NET ASSETS | | $ | 30,136,607 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 32,017,316 | |
Accumulated undistributed net investment income (loss) | | | (145,869 | ) |
Accumulated undistributed net realized gain (loss) on investments | | | (2,193,748 | ) |
Net unrealized appreciation (depreciation) on investments | | | 458,908 | |
| | | | |
Net assets | | $ | 30,136,607 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $546,235 / 58,608 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
Maximum sales charge (4.50% of offering price) | | | 0.44 | |
| | | | |
Maximum offering price per share | | $ | 9.76 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $29,256,899 / 3,138,578 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $201,203 / 21,595 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $132,270 / 14,192 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
Maximum sales charge (2.50% of offering price) | | | 0.24 | |
| | | | |
Maximum offering price per share | | $ | 9.56 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Interest | | $ | 958,932 | |
Dividends | | | 2,100 | |
| | | | |
Total income | | | 961,032 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 87,374 | |
Professional fees | | | 53,287 | |
Administrative fees | | | 21,844 | |
Registration and filing fees | | | 20,103 | |
Transfer agent fees | | | 18,238 | |
Printing and mailing expenses | | | 9,451 | |
Custodian fees | | | 5,389 | |
Trustees’ fees | | | 1,464 | |
Distribution fees – Class A | | | 547 | |
Distribution fees – Class R | | | 491 | |
Distribution fees – Class T** | | | 481 | |
Miscellaneous | | | 9,128 | |
| | | | |
Gross expenses | | | 227,797 | |
Less: Waiver from investment adviser | | | (104,858 | ) |
Waiver from distributor | | | (481 | ) |
| | | | |
Net expenses | | | 122,458 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 838,574 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments | | | (303,674 | ) |
Net change in unrealized appreciation (depreciation) on investments | | | 1,288,670 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 984,996 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,823,570 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
See Notes to Financial Statements.
61
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 838,574 | | | $ | 1,819,249 | |
Net realized gain (loss) on investments | | | (303,674 | ) | | | (1,392,638 | ) |
Net change in unrealized appreciation (depreciation) on investments | | | 1,288,670 | | | | 1,253,717 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,823,570 | | | | 1,680,328 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (12,267 | ) | | | (314,511 | ) |
Class I | | | (818,014 | ) | | | (1,325,494 | ) |
Class R | | | (5,230 | ) | | | (299,260 | ) |
Class T** | | | (3,723 | ) | | | (107,745 | ) |
| | | | | | | | |
| | | (839,234 | ) | | | (2,047,010 | ) |
| | | | | | | | |
Return of capital | | | | | | | | |
Class A | | | — | | | | (2,634 | ) |
Class I | | | — | | | | (11,101 | ) |
Class R | | | — | | | | (2,506 | ) |
Class T** | | | — | | | | (903 | ) |
| | | | | | | | |
| | | — | | | | (17,144 | ) |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (839,234 | ) | | | (2,064,154 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 20,200 and 13,888 shares, respectively ] | | | 186,245 | | | | 118,653 | |
Capital shares issued in reinvestment of dividends [ 726 and 797 shares, respectively ] | | | 6,708 | | | | 7,002 | |
Capital shares repurchased [ (1,731) and (890,407) shares, respectively ] | | | (15,843 | ) | | | (7,602,598 | ) |
| | | | | | | | |
Total Class A transactions | | | 177,110 | | | | (7,476,943 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 71,691 and 2,155,057 shares, respectively ] | | | 656,299 | | | | 18,424,957 | |
Capital shares issued in reinvestment of dividends [ 3,870 and 2,680 shares, respectively ] | | | 35,684 | | | | 23,683 | |
Capital shares repurchased [ (11,241) and (1,232) shares, respectively ] | | | (104,472 | ) | | | (14,555 | ) |
| | | | | | | | |
Total Class I transactions | | | 587,511 | | | | 18,434,085 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 12 shares, respectively ] | | | — | | | | 100 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 3 | | | | — | |
Capital shares repurchased [ 0 and (890,000) shares, respectively ] | | | — | | | | (7,598,807 | ) |
| | | | | | | | |
Total Class R transactions | | | 3 | | | | (7,598,707 | ) |
| | | | | | | | |
Class T** | | | | | | | | |
Capital shares repurchased [ 0 and (290,000) shares, respectively ] | | | — | | | | (2,475,997 | ) |
| | | | | | | | |
Total Class T transactions | | | — | | | | (2,475,997 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 764,624 | | | | 882,438 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,748,960 | | | | 498,612 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 28,387,647 | | | | 27,889,035 | |
| | | | | | | | |
End of period (a) | | $ | 30,136,607 | | | $ | 28,387,647 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | (145,869 | ) | | $ | (145,209 | ) |
| | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | |
See Notes to Financial Statements.
62
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.25 | | | | 0.61 | | | | 0.59 | |
Net realized and unrealized gain (loss) on investments | | | 0.31 | | | | (0.09 | ) | | | (0.84 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.56 | | | | 0.52 | | | | (0.25 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.25 | ) | | | (0.65 | ) | | | (0.60 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.25 | ) | | | (0.66 | ) | | | (0.60 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | |
Total return (b) | | | 6.30 | % | | | 6.17 | % | | | (2.62 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 546 | | | $ | 355 | | | $ | 8,372 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.08 | % | | | 1.06 | % | | | 1.05 | % |
Before waivers and reimbursements (a) | | | 1.80 | % | | | 1.81 | % | | | 2.45 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 5.50 | % | | | 7.06 | % | | | 6.39 | %(l) |
Before waivers and reimbursements (a) | | | 4.78 | % | | | 6.31 | % | | | 4.99 | %(l) |
Portfolio turnover rate (z)^ | | | 33 | % | | | 79 | % | | | 57 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.26 | | | | 0.58 | | | | 0.62 | |
Net realized and unrealized gain (loss) on investments | | | 0.31 | | | | (0.04 | ) | | | (0.85 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.57 | | | | 0.54 | | | | (0.23 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.26 | ) | | | (0.67 | ) | | | (0.62 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.26 | ) | | | (0.68 | ) | | | (0.62 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | |
Total return (b) | | | 6.42 | % | | | 6.44 | % | | | (2.39 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 29,257 | | | $ | 27,710 | | | $ | 8,395 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 0.83 | % | | | 0.84 | % | | | 0.80 | % |
Before waivers and reimbursements (a) | | | 1.55 | % | | | 1.53 | % | | | 2.20 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 5.76 | % | | | 6.62 | % | | | 6.64 | %(l) |
Before waivers and reimbursements (a) | | | 5.04 | % | | | 5.94 | % | | | 5.24 | %(l) |
Portfolio turnover rate (z)^ | | | 33 | % | | | 79 | % | | | 57 | % |
See Notes to Financial Statements.
63
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.24 | | | | 0.59 | | | | 0.57 | |
Net realized and unrealized gain (loss) on investments | | | 0.31 | | | | (0.10 | ) | | | (0.85 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.55 | | | | 0.49 | | | | (0.28 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.24 | ) | | | (0.62 | ) | | | (0.57 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.63 | ) | | | (0.57 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | |
Total return (b) | | | 6.08 | % | | | 5.91 | % | | | (2.86 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 201 | | | $ | 195 | | | $ | 8,339 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.33 | % | | | 1.31 | % | | | 1.30 | % |
Before waivers and reimbursements (a) | | | 2.05 | % | | | 2.06 | % | | | 2.70 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 5.26 | % | | | 6.83 | % | | | 6.14 | %(l) |
Before waivers and reimbursements (a) | | | 4.54 | % | | | 6.08 | % | | | 4.74 | %(l) |
Portfolio turnover rate (z)^ | | | 33 | % | | | 79 | % | | | 57 | % |
| | | |
| Class T** | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.26 | | | | 0.63 | | | | 0.62 | |
Net realized and unrealized gain (loss) on investments | | | 0.31 | | | | (0.09 | ) | | | (0.85 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.57 | | | | 0.54 | | | | (0.23 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.26 | ) | | | (0.67 | ) | | | (0.62 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.26 | ) | | | (0.68 | ) | | | (0.62 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | |
Total return (b) | | | 6.42 | % | | | 6.44 | % | | | (2.39 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 132 | | | $ | 128 | | | $ | 2,783 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 0.83 | % | | | 0.81 | % | | | 0.80 | % |
Before waivers and reimbursements (a) | | | 2.30 | % | | | 2.56 | % | | | 3.20 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 5.76 | % | | | 7.30 | % | | | 6.64 | %(l) |
Before waivers and reimbursements (a) | | | 4.30 | % | | | 5.55 | % | | | 4.24 | %(l) |
Portfolio turnover rate (z)^ | | | 33 | % | | | 79 | % | | | 57 | % |
| * | 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. |
| (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. |
| (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.
64
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 2.10 | % |
MSCI AC World (Net) Index | | | 2.61 | |
MSCI ACWI Minimum Volatility (Net) Index | | | 1.73 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 100.0 | % |
| | | | |
Top 10 Holdings (as a percentage of Total Investments)
As of April 30, 2017 | |
iShares Edge MSCI Min Vol Global Fund | | | 27.8 | % |
iShares Edge MSCI Min Vol EAFE Fund | | | 13.0 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 12.9 | |
PowerShares S&P 500 High Dividend Low Volatility Portfolio | | | 7.0 | |
iShares Edge MSCI Min Vol USA Fund | | | 6.9 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 6.9 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 6.7 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 6.1 | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 6.1 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 3.3 | |
| | |
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 the six-month period ended April 30, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
65
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | |
Actual | | | $1,000.00 | | | | $1,021.00 | | | | $0.73 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.67 | | | | 2.14 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
66
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Edge MSCI Min Vol EAFE Fund | | | 4,980 | | | $ | 334,955 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 2,870 | | | | 155,755 | |
iShares Edge MSCI Min Vol Global Fund | | | 9,110 | | | | 710,306 | |
iShares Edge MSCI Min Vol USA Fund | | | 3,630 | | | | 175,656 | |
PowerShares S&P 500 High Dividend Low Volatility Portfolio | | | 4,470 | | | | 178,487 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 4,000 | | | | 175,360 | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 6,670 | | | | 154,877 | |
| | | | | | | | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 10,610 | | | $ | 332,730 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 4,000 | | | | 170,880 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,930 | | | | 83,801 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 910 | | | | 84,596 | |
| | | | | | | | |
Total Investments (99.1%)
(Cost $2,506,252) | | | | | | | 2,557,403 | |
Other Assets Less Liabilities (0.9%) | | | | | | | 23,020 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,580,423 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,557,403 | | | $ | — | | | $ | — | | | $ | 2,557,403 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,557,403 | | | $ | — | | | $ | — | | | $ | 2,557,403 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,557,403 | | | $ | — | | | $ | — | | | $ | 2,557,403 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,506,252 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 56,771 | |
Aggregate gross unrealized depreciation | | | (5,620 | ) |
| | | | |
Net unrealized appreciation | | $ | 51,151 | |
| | | | |
Federal income tax cost of investments | | $ | 2,506,252 | |
| | | | |
See Notes to Financial Statements.
67
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value (Cost $2,506,252) | | $ | 2,557,403 | |
Cash | | | 19,463 | |
Receivable from investment adviser | | | 7,673 | |
Deferred offering cost | | | 3,883 | |
Other assets | | | 38 | |
| | | | |
Total assets | | | 2,588,460 | |
| | | | |
LIABILITIES | |
Transfer agent fees payable | | | 3,052 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 4,958 | |
| | | | |
Total liabilities | | | 8,037 | |
| | | | |
NET ASSETS | | $ | 2,580,423 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 2,527,500 | |
Accumulated undistributed net investment income (loss) | | | 1,772 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 51,151 | |
| | | | |
Net assets | | $ | 2,580,423 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,580,423 / 252,725 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.21 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 3,557 | |
Interest | | | 55 | |
| | | | |
Total income | | | 3,612 | |
| | | | |
EXPENSES | |
Professional fees | | | 10,373 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,151 | |
Offering costs | | | 795 | |
Administrative fees | | | 645 | |
Custodian fees | | | 618 | |
Printing and mailing expenses | | | 260 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 942 | |
| | | | |
Gross expenses | | | 19,666 | |
Less: Waiver from investment adviser | | | (2,796 | ) |
Reimbursement from investment adviser | | | (15,030 | ) |
| | | | |
Net expenses | | | 1,840 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 1,772 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 51,151 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 51,151 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 52,923 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 1,772 | |
Net change in unrealized appreciation (depreciation) on investments | | | 51,151 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 52,923 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 252,725 shares] | | | 2,527,500 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,527,500 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,580,423 | |
NET ASSETS: | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,580,423 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 1,772 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
68
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.01 | |
Net realized and unrealized gain (loss) on investments | | | 0.20 | |
| | | | |
Total from investment operations | | | 0.21 | |
| | | | |
Net asset value, end of period | | $ | 10.21 | |
| | | | |
Total return (b) | | | 2.10 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,580 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.43 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.67 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 0.41 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.83 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
69
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6 Months | | | 1 Year | | | Since Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 1.07 | % | | | 2.30 | % | | | 0.82 | % |
| | | | with Sales Charge (a | ) | | | (4.48 | ) | | | (3.29 | ) | | | (2.25 | ) |
Fund – Class I Shares* | | | | | | | 1.22 | | | | 2.56 | | | | 1.08 | |
Fund – Class R Shares* | | | | | | | 0.92 | | | | 2.05 | | | | 0.56 | |
BofA Merrill Lynch 3-Month U.S.Treasury Bill Index | | | | | | | 0.23 | | | | 0.40 | | | | 0.30 | |
* 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.
Fund performance may 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. Also, 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.
What helped performance during the six-month period ended April 30, 2017:
| • | | Convertibles were the largest contributor to performance as the asset class benefited from the strong equity market. |
| • | | The Merger Arbitrage strategy contributed to performance. |
| • | | Real estate operating companies and real estate development were the main drivers of performance for the non-U.S. real estate investment trusts (REITs) held by the Fund, while residential and specialized REITs were the main contributors to positive performance for U.S. REITs. |
What hurt performance during the six-month period ended April 30, 2017:
| • | | The Managed Futures strategy was the largest detractor from performance due to a weaker U.S. dollar. |
| • | | Currency strategies negatively impacted the Fund as long positions in the New Zealand Dollar and Australian Dollar depreciated during the period. |
| • | | Multi-strategy detracted from performance as none of the underlying strategies managed to generate positive returns. |
| | | | |
Table by Asset Class (as a percentage of Total Investment Companies) As of April 30, 2017 | |
Alternatives | | | 90.8 | % |
Fixed Income | | | 9.2 | |
| | | | |
Top 10 Holdings (as a percentage of Total Investments) As of April 30, 2017 | |
SPDR Bloomberg Barclays Convertible Securities Fund | | | 9.4 | % |
iShares TIPS Bond Fund | | | 9.2 | |
ProShares Hedge Replication Fund | | | 9.1 | |
WisdomTree Managed Futures Strategy Fund | | | 9.0 | |
IQ Merger Arbitrage Fund | | | 9.0 | |
PowerShares DB G10 Currency Harvest Fund | | | 9.0 | |
ProShares RAFI Long/Short | | | 8.9 | |
PowerShares DB Gold Fund | | | 7.2 | |
PowerShares Multi-Strategy Alternative Portfolio | | | 6.3 | |
Vanguard Global ex-U.S. Real Estate Fund | | | 4.6 | |
| | |
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 (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, 2017 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
70
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,010.70 | | | | $4.96 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.86 | | | | 4.98 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,012.20 | | | | 3.71 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,021.11 | | | | 3.73 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,009.20 | | | | 6.20 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.62 | | | | 6.23 | |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 0.99%, 0.74% and 1.24%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). | |
71
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | | | | | | | | |
IQ Merger Arbitrage Fund | | | 46,990 | | | $ | 1,423,797 | |
iShares Commodities Select Strategy Fund | | | 14,340 | | | | 476,375 | |
iShares MSCI Global Agriculture Producers Fund | | | 9,870 | | | | 261,202 | |
iShares TIPS Bond Fund | | | 12,650 | | | | 1,454,876 | |
JPMorgan Diversified Alternatives Fund | | | 17,140 | | | | 448,725 | |
PowerShares DB Base Metals Fund* | | | 13,050 | | | | 207,625 | |
PowerShares DB Commodity Index Tracking Fund* | | | 48,230 | | | | 713,804 | |
PowerShares DB G10 Currency Harvest Fund* | | | 57,690 | | | | 1,420,905 | |
PowerShares DB Gold Fund* | | | 27,850 | | | | 1,131,267 | |
PowerShares DB Silver Fund* | | | 2,650 | | | | 70,781 | |
PowerShares Multi-Strategy Alternative Portfolio‡ | | | 45,300 | | | | 1,000,224 | |
ProShares Hedge Replication Fund* | | | 32,550 | | | $ | 1,433,502 | |
ProShares RAFI Long/Short | | | 36,720 | | | | 1,410,401 | |
SPDR Bloomberg Barclays Convertible Securities Fund | | | 30,330 | | | | 1,478,891 | |
Vanguard Global ex-U.S. Real Estate Fund | | | 13,410 | | | | 730,309 | |
Vanguard REIT Fund | | | 8,550 | | | | 707,854 | |
WisdomTree Managed Futures Strategy Fund* | | | 35,860 | | | | 1,429,398 | |
| | | | | | | | |
Total Investments (98.2%)
(Cost $15,635,876) | | | | | | | 15,799,936 | |
Other Assets Less Liabilities (1.8%) | | | | | | | 288,670 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 16,088,606 | |
| | | | | | | | |
| ‡ | All, or a portion, of the security is an affiliated company as defined under the Investment Company Act of 1940. |
Investments in companies which were affiliates for the six months ended April 30, 2017, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | |
Securities | | Value
October 31,
2016 | | | Purchases
at Cost | | | Sales
at Cost | | | Value
April 30,
2017 | | | Dividend
Income | | | Realized
Gain
(Loss)† | |
PowerShares Multi-Strategy Alternative Portfolio | | $ | 1,039,635 | | | $ | — | | | $ | — | | | $ | 1,000,224 | | | $ | 15,628 | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| † | When applicable, realized gain includes net distributions of realized gain received from underlying funds. |
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, 2017:
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 | | $ | 15,799,936 | | | $ | — | | | $ | — | | | $ | 15,799,936 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 15,799,936 | | | $ | — | | | $ | — | | | $ | 15,799,936 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 15,799,936 | | | $ | — | | | $ | — | | | $ | 15,799,936 | |
| | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
72
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
There were no transfers between Levels 1, 2 or 3 during the six months ended April 30, 2017.
The Fund held no derivatives contracts during the six-months ended April 30, 2017.
Investment security transactions for the six-months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | |
Investment Companies | | $ | 3,141,928 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 515,352 | |
Aggregate gross unrealized depreciation | | | (170,974 | ) |
| | | | |
Net unrealized appreciation | | $ | 344,378 | |
| | | | |
Federal income tax cost of investments | | $ | 15,455,558 | |
| | | | |
See Notes to Financial Statements.
73
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value: | | | | |
Affiliated Issuers (Cost $1,046,322) | | $ | 1,000,224 | |
Unaffiliated Issuers (Cost $14,589,554) | | | 14,799,712 | |
Cash | | | 224,989 | |
Receivable for Fund shares sold | | | 65,430 | |
Receivable from investment adviser | | | 2,743 | |
Other assets | | | 1,588 | |
| | | | |
Total assets | | | 16,094,686 | |
| | | | |
LIABILITIES | |
Distribution fees payable – Class A | | | 120 | |
Distribution fees payable – Class R | | | 42 | |
Trustees’ fees payable | | | 24 | |
Accrued expenses | | | 5,894 | |
| | | | |
Total liabilities | | | 6,080 | |
| | | | |
NET ASSETS | | $ | 16,088,606 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 15,930,276 | |
Accumulated undistributed net investment income (loss) | | | (30,488 | ) |
Accumulated undistributed net realized gain (loss) on investments | | | 24,758 | |
Net unrealized appreciation (depreciation) on investments | | | 164,060 | |
| | | | |
Net assets | | $ | 16,088,606 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $561,480 / 55,902 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.04 | |
Maximum sales charge (5.50% of offering price) | | | 0.58 | |
| | | | |
Maximum offering price per share | | $ | 10.62 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $15,425,385 / 1,534,973 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.05 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $101,741 / 10,141 shares outstanding (unlimited amount authorized: par value) | | $ | 10.03 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends ($15,628 of dividend income received from affiliates) | | $ | 107,297 | |
Interest | | | 354 | |
| | | | |
Total income | | | 107,651 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 35,988 | |
Professional fees | | | 29,967 | |
Registration and filing fees | | | 19,905 | |
Transfer agent fees | | | 15,015 | |
Administrative fees | | | 10,797 | |
Printing and mailing expenses | | | 4,577 | |
Custodian fees | | | 1,640 | |
Trustees’ fees | | | 702 | |
Distribution fees – Class A | | | 636 | |
Distribution fees – Class R | | | 251 | |
Miscellaneous | | | 3,670 | |
| | | | |
Gross expenses | | | 123,148 | |
Less: Waiver from investment adviser | | | (46,785 | ) |
Reimbursement from investment adviser | | | (21,882 | ) |
| | | | |
Net expenses | | | 54,481 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 53,170 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net change in unrealized appreciation (depreciation) on investments ($(39,411) of change in unrealized appreciation (depreciation) from affiliates) | | | 115,370 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 115,370 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 168,540 | |
| | | | |
See Notes to Financial Statements.
74
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 53,170 | | | $ | 53,432 | |
Net realized gain (loss) on investments and net distributions of realized gain received from underlying funds | | | — | | | | 17,876 | |
Net change in unrealized appreciation (depreciation) on investments | | | 115,370 | | | | 339,945 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 168,540 | | | | 411,253 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (1,817 | ) | | | (549 | ) |
Class I | | | (82,390 | ) | | | (56,312 | ) |
Class R | | | (118 | ) | | | (382 | ) |
| | | | | | | | |
| | | (84,325 | ) | | | (57,243 | ) |
| | | | | | | | |
Return of capital | | | | | | | | |
Class A | | | — | | | | (269 | ) |
Class I | | | — | | | | (27,633 | ) |
Class R | | | — | | | | (187 | ) |
| | | | | | | | |
| | | — | | | | (28,089 | ) |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (84,325 | ) | | | (85,332 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 17,876 and 29,608 shares, respectively ] | | | 178,583 | | | | 295,245 | |
Capital shares issued in reinvestment of dividends [ 147 and 14 shares, respectively ] | | | 1,453 | | | | 132 | |
Capital shares repurchased [ (3,242) and 0 shares, respectively ] | | | (32,678 | ) | | | — | |
| | | | | | | | |
Total Class A transactions | | | 147,358 | | | | 295,377 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 330,054 and 241,172 shares, respectively ] | | | 3,308,488 | | | | 2,369,178 | |
Capital shares issued in reinvestment of dividends [ 2,242 and 555 shares, respectively ] | | | 22,218 | | | | 5,251 | |
Capital shares repurchased [ (21,747) and (5,192) shares, respectively ] | | | (217,934 | ) | | | (51,841 | ) |
| | | | | | | | |
Total Class I transactions | | | 3,112,772 | | | | 2,322,588 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 141 shares, respectively ] | | | — | | | | 1,398 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 2 | | | | — | |
Capital shares repurchased [ 0# and 0# shares, respectively ] | | | (5 | ) | | | (1 | ) |
| | | | | | | | |
Total Class R transactions | | | (3 | ) | | | 1,397 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 3,260,127 | | | | 2,619,362 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 3,344,342 | | | | 2,945,283 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 12,744,264 | | | | 9,798,981 | |
| | | | | | | | |
End of period (a) | | $ | 16,088,606 | | | $ | 12,744,264 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | (30,488 | ) | | $ | 667 | |
| | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
See Notes to Financial Statements.
75
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended April 30, 2017
(Unaudited) | | | Year Ended October 31, 2016 | | | July 6, 2015* to October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.97 | | | $ | 9.70 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.03 | | | | 0.01 | | | | (0.01 | ) |
Net realized and unrealized gain (loss) on investments | | | 0.08 | | | | 0.33 | | | | (0.29 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.11 | | | | 0.34 | | | | (0.30 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.04 | ) | | | (0.05 | ) | | | — | |
Return of capital | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.04 | ) | | | (0.07 | ) | | | — | |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.04 | | | $ | 9.97 | | | $ | 9.70 | |
| | | | | | | | | | | | |
Total return (b) | | | 1.07 | % | | | 3.53 | % | | | (3.00 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 561 | | | $ | 410 | | | $ | 112 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.99 | %(j) | | | 0.98 | %(j) | | | 0.96 | %(j) |
Before waivers and reimbursements (a)(f) | | | 1.94 | % | | | 2.62 | % | | | 2.26 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 0.51 | % | | | 0.10 | % | | | (0.25 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.44 | )% | | | (1.55 | )% | | | (1.55 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % | | | 2 | % | | | 0 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.99 | | | $ | 9.71 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.04 | | | | 0.05 | | | | — | # |
Net realized and unrealized gain (loss) on investments | | | 0.08 | | | | 0.31 | | | | (0.29 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.12 | | | | 0.36 | | | | (0.29 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.06 | ) | | | (0.05 | ) | | | — | |
Return of capital | | | — | | | | (0.03 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.06 | ) | | | (0.08 | ) | | | — | |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.05 | | | $ | 9.99 | | | $ | 9.71 | |
| | | | | | | | | | | | |
Total return (b) | | | 1.22 | % | | | 3.76 | % | | | (2.90 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 15,425 | | | $ | 12,233 | | | $ | 9,591 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.74 | %(j) | | | 0.73 | %(j) | | | 0.72 | %(j) |
Before waivers and reimbursements (a)(f) | | | 1.70 | % | | | 2.24 | % | | | 1.97 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 0.75 | % | | | 0.50 | % | | | (0.03 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.20 | )% | | | (1.02 | )% | | | (1.29 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % | | | 2 | % | | | 0 | % |
See Notes to Financial Statements.
76
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.95 | | | $ | 9.69 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.01 | | | | — | # | | | (0.02 | ) |
Net realized and unrealized gain (loss) on investments | | | 0.08 | | | | 0.32 | | | | (0.29 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.09 | | | | 0.32 | | | | (0.31 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.01 | ) | | | (0.04 | ) | | | — | |
Return of capital | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.01 | ) | | | (0.06 | ) | | | — | |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.03 | | | $ | 9.95 | | | $ | 9.69 | |
| | | | | | | | | | | | |
Total return (b) | | | 0.92 | % | | | 3.30 | % | | | (3.10 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 102 | | | $ | 101 | | | $ | 97 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.24 | %(j) | | | 1.22 | %(j) | | | 1.21 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.20 | % | | | 2.73 | % | | | 2.47 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 0.28 | % | | | 0.02 | % | | | (0.53 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.68 | )% | | | (1.50 | )% | | | (1.78 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % | | | 2 | % | | | 0 | % |
| * | 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. |
| (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”). |
| (j) | 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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
77
1290 RETIREMENT 2020 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.40 | % |
S&P Target Date 2020 Index | | | 1.31 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 58.2 | % |
Fixed Income | | | 41.8 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | |
iShares Core U.S. Aggregate Bond Fund | | | 27.9 | % |
iShares Core S&P Total US Stock Market Fund | | | 19.9 | |
iShares Core MSCI EAFE Fund | | | 7.5 | |
iShares Edge MSCI Min Vol USA Fund | | | 6.5 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 6.5 | |
iShares TIPS Bond Fund | | | 6.2 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 3.7 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 3.7 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3.5 | |
Vanguard Short-Term Bond Fund | | | 2.9 | |
| | |
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 the six-month period ended April 30, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
78
1290 RETIREMENT 2020 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | |
Actual | | | $1,000.00 | | | | $1,014.00 | | | | $0.90 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.19 | | | | 2.64 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
79
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | | | | | | | | |
iShares Core MSCI EAFE Fund | | | 3,180 | | | $ | 189,274 | |
iShares Core MSCI Emerging Markets Fund | | | 900 | | | | 43,830 | |
iShares Core S&P Total US Stock Market Fund | | | 9,190 | | | | 501,498 | |
iShares Core U.S. Aggregate Bond Fund | | | 6,460 | | | | 705,755 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 1,390 | | | | 93,491 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 400 | | | | 21,708 | |
iShares Edge MSCI Min Vol USA Fund | | | 3,400 | | | | 164,526 | |
iShares TIPS Bond Fund | | | 1,360 | | | | 156,414 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 3,740 | | | | 163,962 | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 940 | | | | 21,827 | |
| | | | | | | | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 2,960 | | | $ | 92,826 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 2,090 | | | | 89,285 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 970 | | | | 42,117 | |
SPDR Bloomberg Barclays High Yield Bond Fund | | | 1,600 | | | | 59,424 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 450 | | | | 41,833 | |
Vanguard Short-Term Bond Fund | | | 930 | | | | 74,344 | |
Vanguard Total International Bond Fund | | | 1,100 | | | | 59,785 | |
| | | | | | | | |
Total Investments (99.5%)
(Cost $2,493,496) | | | | | | | 2,521,899 | |
Other Assets Less Liabilities (0.5%) | | | | | | | 11,881 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,533,780 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,521,899 | | | $ | — | | | $ | — | | | $ | 2,521,899 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,521,899 | | | $ | — | | | $ | — | | | $ | 2,521,899 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,521,899 | | | $ | — | | | $ | — | | | $ | 2,521,899 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,493,496 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
See Notes to Financial Statements.
80
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 29,182 | |
Aggregate gross unrealized depreciation | | | (779 | ) |
| | | | |
Net unrealized appreciation | | $ | 28,403 | |
| | | | |
Federal income tax cost of investments | | $ | 2,493,496 | |
| | | | |
See Notes to Financial Statements.
81
1290 FUNDS
1290 RETIREMENT 2020 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value (Cost $2,493,496) | | $ | 2,521,899 | |
Cash | | | 18,834 | |
Receivable from investment adviser | | | 7,297 | |
Deferred offering cost | | | 2,994 | |
Other assets | | | 1,289 | |
| | | | |
Total assets | | | 2,552,313 | |
| | | | |
LIABILITIES | | | | |
Payable for securities purchased | | | 9,810 | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,355 | |
| | | | |
Total liabilities | | | 18,533 | |
| | | | |
NET ASSETS | | $ | 2,533,780 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 5,375 | |
Accumulated undistributed net realized gain (loss) on investments | | | 2 | |
Net unrealized appreciation (depreciation) on investments | | | 28,403 | |
| | | | |
Net assets | | $ | 2,533,780 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,533,780 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.14 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | $ | 7,588 | |
Interest | | | 23 | |
| | | | |
Total income | | | 7,611 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 10,370 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,126 | |
Administrative fees | | | 638 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 258 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 944 | |
| | | | |
Gross expenses | | | 19,449 | |
Less: Waiver from investment adviser | | | (2,764 | ) |
Reimbursement from investment adviser | | | (14,449 | ) |
| | | | |
Net expenses | | | 2,236 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 5,375 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net distributions of realized gain received from underlying funds | | | 2 | |
Net change in unrealized appreciation (depreciation) on investments | | | 28,403 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 28,405 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 33,780 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | |
Net investment income (loss) | | $ | 5,375 | |
Net realized gain (loss) on investments and net distributions of realized gain received from underlying funds | | | 2 | |
Net change in unrealized appreciation (depreciation) on investments | | | 28,403 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 33,780 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,533,780 | |
NET ASSETS: | | | | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,533,780 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 5,375 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
82
1290 FUNDS
1290 RETIREMENT 2020 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.12 | |
| | | | |
Total from investment operations | | | 0.14 | |
| | | | |
Net asset value, end of period | | $ | 10.14 | |
| | | | |
Total return (b) | | | 1.40 | % |
| | | | |
Ratios/Supplemental Data: | | | | |
Net assets, end of period (000’s) | | $ | 2,534 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.26 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.86 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
83
1290 RETIREMENT 2025 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.50 | % |
S&P Target Date 2025 Index | | | 1.42 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this
report. Please see the 1290funds.com website for more information about the
Fund, its investment process and performance.
| | | | |
Table by Asset Class (as a percentage of Total Investment Companies) As of April 30, 2017 | |
Equity | | | 68.2 | % |
Fixed Income | | | 31.8 | |
| | | | |
Top 10 Holdings (as a percentage of Total Investments) As of April 30, 2017 | |
iShares Core U.S. Aggregate Bond Fund | | | 25.8 | % |
iShares Core S&P Total US Stock Market Fund | | | 23.1 | |
iShares Core MSCI EAFE Fund | | | 9.1 | |
iShares Edge MSCI Min Vol USA Fund | | | 7.5 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 7.5 | |
iShares TIPS Bond Fund | | | 4.7 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 4.5 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4.4 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 4.3 | |
iShares Core MSCI Emerging Markets Fund | | | 2.0 | |
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 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, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
84
1290 RETIREMENT 2025 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning Account Value
11/1/16† | | | Ending Account Value
4/30/17 | | | Expenses Paid During Period* 11/1/16 - 4/30/17 | |
Class I | |
Actual | | | $1,000.00 | | | | $1,015.00 | | | | $0.90 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.18 | | | | 2.65 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
|
85
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Core MSCI EAFE Fund | | | 3,850 | | | $ | 229,152 | |
iShares Core MSCI Emerging Markets Fund | | | 1,040 | | | | 50,648 | |
iShares Core S&P Total US Stock Market Fund | | | 10,680 | | | | 582,808 | |
iShares Core U.S. Aggregate Bond Fund | | | 5,990 | | | | 654,408 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 1,680 | | | | 112,997 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 460 | | | | 24,964 | |
iShares Edge MSCI Min Vol USA Fund | | | 3,920 | | | | 189,689 | |
iShares TIPS Bond Fund | | | 1,040 | | | | 119,610 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 4,310 | | | | 188,950 | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,080 | | | | 25,078 | |
| | | | | | | | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 3,580 | | | $ | 112,269 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 2,520 | | | | 107,654 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,110 | | | | 48,196 | |
SPDR Bloomberg Barclays High Yield Bond Fund | | | 260 | | | | 9,656 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 520 | | | | 48,341 | |
Vanguard Short-Term Bond Fund | | | 150 | | | | 11,991 | |
Vanguard Total International Bond Fund | | | 180 | | | | 9,783 | |
| | | | | | | | |
Total Investments (99.5%)
(Cost $2,493,369) | | | | | | | 2,526,194 | |
Other Assets Less Liabilities (0.5%) | | | | | | | 11,625 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,537,819 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,526,194 | | | $ | — | | | $ | — | | | $ | 2,526,194 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,526,194 | | | $ | — | | | $ | — | | | $ | 2,526,194 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,526,194 | | | $ | — | | | $ | — | | | $ | 2,526,194 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | |
Investment Companies | | $ | 2,493,369 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
See Notes to Financial Statements.
86
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 33,623 | |
Aggregate gross unrealized depreciation | | | (798 | ) |
| | | | |
Net unrealized appreciation | | $ | 32,825 | |
| | | | |
Federal income tax cost of investments | | $ | 2,493,369 | |
| | | | |
See Notes to Financial Statements.
87
1290 FUNDS
1290 RETIREMENT 2025 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value (Cost $2,493,369) | | $ | 2,526,194 | |
Cash | | | 17,495 | |
Receivable from investment adviser | | | 7,291 | |
Deferred offering cost | | | 2,994 | |
Other assets | | | 1,288 | |
| | | | |
Total assets | | | 2,555,262 | |
| | | | |
LIABILITIES | |
Payable for securities purchased | | | 8,720 | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,355 | |
| | | | |
Total liabilities | | | 17,443 | |
| | | | |
NET ASSETS | | $ | 2,537,819 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,993 | |
Accumulated undistributed net realized gain (loss) on investments | | | 1 | |
Net unrealized appreciation (depreciation) on investments | | | 32,825 | |
| | | | |
Net assets | | $ | 2,537,819 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,537,819 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.15 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 7,219 | |
Interest | | | 22 | |
| | | | |
Total income | | | 7,241 | |
| | | | |
EXPENSES | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,128 | |
Administrative fees | | | 638 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 258 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 943 | |
| | | | |
Gross expenses | | | 19,451 | |
Less: Waiver from investment adviser | | | (2,766 | ) |
Reimbursement from investment adviser | | | (14,437 | ) |
| | | | |
Net expenses | | | 2,248 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,993 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net distributions of realized gain received from underlying funds | | | 1 | |
Net change in unrealized appreciation (depreciation) on investments | | | 32,825 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 32,826 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 37,819 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
See Notes to Financial Statements.
88
1290 FUNDS
1290 RETIREMENT 2025 FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 4,993 | |
Net realized gain (loss) on investments and net distributions of realized gain received from underlying funds | | | 1 | |
Net change in unrealized appreciation (depreciation) on investments | | | 32,825 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 37,819 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,537,819 | |
NET ASSETS: | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,537,819 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,993 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
89
1290 FUNDS
1290 RETIREMENT 2025 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.13 | |
| | | | |
Total from investment operations | | | 0.15 | |
| | | | |
Net asset value, end of period | | $ | 10.15 | |
| | | | |
Total return (b) | | | 1.50 | % |
| | | | |
Ratios/Supplemental Data: | | | | |
Net assets, end of period (000’s) | | $ | 2,538 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.17 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.95 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
90
1290 RETIREMENT 2030 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | |
| | | Since Incept. | |
Fund – Class I Shares* | | | 1.60 | % |
S&P Target Date 2030 Index | | | 1.52 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
Table by Asset Class (as a percentage of Total Investment Companies) As of April 30, 2017 | |
Equity | | | 74.3 | % |
Fixed Income | | | 25.7 | |
| | | | |
Top 10 Holdings (as a percentage of Total Investments) As of April 30, 2017 | |
iShares Core S&P Total US Stock Market Fund | | | 25.3 | % |
iShares Core U.S. Aggregate Bond Fund | | | 21.9 | |
iShares Core MSCI EAFE Fund | | | 9.8 | |
iShares Edge MSCI Min Vol USA Fund | | | 8.3 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 8.2 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 4.8 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4.8 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 4.6 | |
iShares TIPS Bond Fund | | | 3.8 | |
iShares Core MSCI Emerging Markets Fund | | | 2.2 | |
| | |
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, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
91
1290 RETIREMENT 2030 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,016.00 | | | | $0.90 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.18 | | | | 2.64 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
92
1290 FUNDS
1290 RETIREMENT 2030 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Core MSCI EAFE Fund | | | 4,160 | | | $ | 247,603 | |
iShares Core MSCI Emerging Markets Fund | | | 1,120 | | | | 54,544 | |
iShares Core S&P Total US Stock Market Fund | | | 11,660 | | | | 636,286 | |
iShares Core U.S. Aggregate Bond Fund | | | 5,050 | | | | 551,713 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 1,810 | | | | 121,741 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 500 | | | | 27,135 | |
iShares Edge MSCI Min Vol USA Fund | | | 4,310 | | | | 208,561 | |
iShares TIPS Bond Fund | | | 840 | | | | 96,608 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 4,740 | | | | 207,802 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,160 | | | $ | 26,935 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 3,870 | | | | 121,363 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 2,730 | | | | 116,626 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,190 | | | | 51,670 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 560 | | | | 52,059 | |
| | | | | | | | |
Total Investments (99.3%)
(Cost $2,485,849) | | | | | | | 2,520,646 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 18,999 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,539,645 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,520,646 | | | $ | — | | | $ | — | | | $ | 2,520,646 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,520,646 | | | $ | — | | | $ | — | | | $ | 2,520,646 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,520,646 | | | $ | — | | | $ | — | | | $ | 2,520,646 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,485,849 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 35,638 | |
Aggregate gross unrealized depreciation | | | (841 | ) |
| | | | |
Net unrealized appreciation | | $ | 34,797 | |
| | | | |
Federal income tax cost of investments | | $ | 2,485,849 | |
| | | | |
See Notes to Financial Statements.
93
1290 FUNDS
1290 RETIREMENT 2030 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value (Cost $2,485,849) | | $ | 2,520,646 | |
Cash | | | 16,193 | |
Receivable from investment adviser | | | 7,294 | |
Deferred offering cost | | | 2,993 | |
Other assets | | | 1,288 | |
| | | | |
Total assets | | | 2,548,414 | |
| | | | |
LIABILITIES | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,401 | |
| | | | |
Total liabilities | | | 8,769 | |
| | | | |
NET ASSETS | | $ | 2,539,645 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,848 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 34,797 | |
| | | | |
Net assets | | $ | 2,539,645 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,539,645 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.16 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 7,070 | |
Interest | | | 22 | |
| | | | |
Total income | | | 7,092 | |
| | | | |
EXPENSES | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,128 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 258 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 944 | |
| | | | |
Gross expenses | | | 19,453 | |
Less: Waiver from investment adviser | | | (2,767 | ) |
Reimbursement from investment adviser | | | (14,442 | ) |
| | | | |
Net expenses | | | 2,244 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,848 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 34,797 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 34,797 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 39,645 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 4,848 | |
Net change in unrealized appreciation (depreciation) on investments | | | 34,797 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 39,645 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares ] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,539,645 | |
NET ASSETS: | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,539,645 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,848 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
94
1290 FUNDS
1290 RETIREMENT 2030 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.14 | |
| | | | |
Total from investment operations | | | 0.16 | |
| | | | |
Net asset value, end of period | | $ | 10.16 | |
| | | | |
Total return (b) | | | 1.60 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,540 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.14 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.99 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
95
1290 RETIREMENT 2035 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.60 | % |
S&P Target Date 2035 Index | | | 1.61 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 79.3 | % |
Fixed Income | | | 20.7 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | |
iShares Core S&P Total US Stock Market Fund | | | 27.2 | % |
iShares Core U.S. Aggregate Bond Fund | | | 17.6 | |
iShares Core MSCI EAFE Fund | | | 10.3 | |
iShares Edge MSCI Min Vol USA Fund | | | 8.9 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 8.9 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 5.1 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 5.1 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 4.9 | |
iShares TIPS Bond Fund | | | 3.1 | |
iShares Core MSCI Emerging Markets Fund | | | 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 the six-month period ended April 30, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
96
1290 RETIREMENT 2035 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,016.00 | | | | $0.90 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.19 | | | | 2.63 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
97
1290 FUNDS
1290 RETIREMENT 2035 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | | | | | | | | |
iShares Core MSCI EAFE Fund | | | 4,380 | | | $ | 260,698 | |
iShares Core MSCI Emerging Markets Fund | | | 1,180 | | | | 57,466 | |
iShares Core S&P Total US Stock Market Fund | | | 12,520 | | | | 683,216 | |
iShares Core U.S. Aggregate Bond Fund | | | 4,070 | | | | 444,648 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 1,910 | | | | 128,467 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 530 | | | | 28,763 | |
iShares Edge MSCI Min Vol USA Fund | | | 4,660 | | | | 225,497 | |
iShares TIPS Bond Fund | | | 680 | | | | 78,207 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 5,130 | | | | 224,899 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,230 | | | $ | 28,561 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4,080 | | | | 127,949 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 2,870 | | | | 122,606 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,270 | | | | 55,143 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 590 | | | | 54,848 | |
| | | | | | | | |
Total Investments (99.2%)
(Cost $2,484,787) | | | | | | | 2,520,968 | |
Other Assets Less Liabilities (0.8%) | | | | | | | 19,964 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,540,932 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,520,968 | | | $ | — | | | $ | — | | | $ | 2,520,968 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,520,968 | | | $ | — | | | $ | — | | | $ | 2,520,968 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,520,968 | | | $ | — | | | $ | — | | | $ | 2,520,968 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,484,787 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
See Notes to Financial Statements.
98
1290 FUNDS
1290 RETIREMENT 2035 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 37,070 | |
Aggregate gross unrealized depreciation | | | (889 | ) |
| | | | |
Net unrealized appreciation | | $ | 36,181 | |
| | | | |
Federal income tax cost of investments | | $ | 2,484,787 | |
| | | | |
See Notes to Financial Statements.
99
1290 FUNDS
1290 RETIREMENT 2035 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value (Cost $2,484,787) | | $ | 2,520,968 | |
Cash | | | 17,109 | |
Receivable from investment adviser | | | 7,298 | |
Deferred offering cost | | | 2,993 | |
Other assets | | | 1,288 | |
| | | | |
Total assets | | | 2,549,656 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,356 | |
| | | | |
Total liabilities | | | 8,724 | |
| | | | |
NET ASSETS | | $ | 2,540,932 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,751 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 36,181 | |
| | | | |
Net assets | | $ | 2,540,932 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,540,932 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.16 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | $ | 6,963 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,985 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,129 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 258 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 942 | |
| | | | |
Gross expenses | | | 19,452 | |
Less: Waiver from investment adviser | | | (2,767 | ) |
Reimbursement from investment adviser | | | (14,451 | ) |
| | | | |
Net expenses | | | 2,234 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,751 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 36,181 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 36,181 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 40,932 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
| | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | |
Net investment income (loss) | | $ | 4,751 | |
Net change in unrealized appreciation (depreciation) on investments | | | 36,181 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 40,932 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares ] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,540,932 | |
NET ASSETS: | | | | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,540,932 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,751 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
100
1290 FUNDS
1290 RETIREMENT 2035 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.14 | |
| | | | |
Total from investment operations | | | 0.16 | |
| | | | |
Net asset value, end of period | | $ | 10.16 | |
| | | | |
Total return (b) | | | 1.60 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,541 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.12 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.01 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
101
1290 RETIREMENT 2040 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since Incept. | |
Fund – Class I Shares* | | | 1.70 | % |
S&P Target Date 2040 Index | | | 1.67 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | | | |
Equity | | | 84.2 | % |
Fixed Income | | | 15.8 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | | | |
iShares Core S&P Total US Stock Market Fund | | | 28.9 | % |
iShares Core U.S. Aggregate Bond Fund | | | 13.4 | |
iShares Core MSCI EAFE Fund | | | 10.8 | |
iShares Edge MSCI Min Vol USA Fund | | | 9.6 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 9.6 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 5.4 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 5.3 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 5.1 | |
iShares Core MSCI Emerging Markets Fund | | | 2.4 | |
iShares TIPS Bond Fund | | | 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 the six-month period ended April 30, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
102
1290 RETIREMENT 2040 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | |
Actual | | | $1,000.00 | | | | $1,017.00 | | | | $0.89 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.20 | | | | 2.62 | |
† Commenced operations on February 27, 2017. | |
* 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
103
1290 FUNDS
1290 RETIREMENT 2040 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | | | | | | | | |
iShares Core MSCI EAFE Fund | | | 4,600 | | | $ | 273,792 | |
iShares Core MSCI Emerging Markets Fund | | | 1,250 | | | | 60,875 | |
iShares Core S&P Total US Stock Market Fund | | | 13,380 | | | | 730,147 | |
iShares Core U.S. Aggregate Bond Fund | | | 3,100 | | | | 338,675 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 2,010 | | | | 135,193 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 560 | | | | 30,391 | |
iShares Edge MSCI Min Vol USA Fund | | | 5,030 | | | | 243,402 | |
iShares TIPS Bond Fund | | | 520 | | | | 59,805 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 5,530 | | | | 242,435 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,300 | | | $ | 30,186 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4,280 | | | | 134,221 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3,020 | | | | 129,014 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,340 | | | | 58,183 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 620 | | | | 57,637 | |
| | | | | | | | |
Total Investments (99.3%)
(Cost $2,486,361) | | | | | | | 2,523,956 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 18,301 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,542,257 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,523,956 | | | $ | — | | | $ | — | | | $ | 2,523,956 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,523,956 | | | $ | — | | | $ | — | | | $ | 2,523,956 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,523,956 | | | $ | — | | | $ | — | | | $ | 2,523,956 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | |
Investment Companies | | $ | 2,486,361 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
See Notes to Financial Statements.
104
1290 FUNDS
1290 RETIREMENT 2040 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 38,531 | |
Aggregate gross unrealized depreciation | | | (936 | ) |
| | | | |
Net unrealized appreciation | | $ | 37,595 | |
| | | | |
Federal income tax cost of investments | | $ | 2,486,361 | |
| | | | |
See Notes to Financial Statements.
105
1290 FUNDS
1290 RETIREMENT 2040 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | | | | |
Investments at value (Cost $2,486,361) | | $ | 2,523,956 | |
Cash | | | 15,442 | |
Receivable from investment adviser | | | 7,303 | |
Deferred offering cost | | | 2,993 | |
Other assets | | | 1,287 | |
| | | | |
Total assets | | | 2,550,981 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,356 | |
| | | | |
Total liabilities | | | 8,724 | |
| | | | |
NET ASSETS | | $ | 2,542,257 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,662 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 37,595 | |
| | | | |
Net assets | | $ | 2,542,257 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,542,257 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.17 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 6,865 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,887 | |
| | | | |
EXPENSES | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,129 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 258 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 943 | |
| | | | |
Gross expenses | | | 19,453 | |
Less: Waiver from investment adviser | | | (2,768 | ) |
Reimbursement from investment adviser | | | (14,460 | ) |
| | | | |
Net expenses | | | 2,225 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,662 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net change in unrealized appreciation (depreciation) on investments | | | 37,595 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 37,595 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 42,257 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
STATEMENT OF CHANGES IN NET ASSETS
| | | | |
| | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 4,662 | |
Net change in unrealized appreciation (depreciation) on investments | | | 37,595 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 42,257 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,542,257 | |
NET ASSETS: | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,542,257 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,662 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
106
1290 FUNDS
1290 RETIREMENT 2040 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.15 | |
| | | | |
Total from investment operations | | | 0.17 | |
| | | | |
Net asset value, end of period | | $ | 10.17 | |
| | | | |
Total return (b) | | | 1.70 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,542 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.09 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.03 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
107
1290 RETIREMENT 2045 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.70 | % |
S&P Target Date 2045 Index | | | 1.73 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 89.2 | % |
Fixed Income | | | 10.8 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | | | |
iShares Core S&P Total US Stock Market Fund | | | 31.0 | % |
iShares Core MSCI EAFE Fund | | | 11.3 | |
iShares Edge MSCI Min Vol USA Fund | | | 10.3 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 10.3 | |
iShares Core U.S. Aggregate Bond Fund | | | 9.2 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 5.6 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 5.6 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 5.3 | |
iShares Core MSCI Emerging Markets Fund | | | 2.5 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 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 the six-month period ended April 30, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
108
1290 RETIREMENT 2045 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,017.00 | | | | $0.89 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.21 | | | | 2.61 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
109
1290 FUNDS
1290 RETIREMENT 2045 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Core MSCI EAFE Fund | | | 4,820 | | | $ | 286,886 | |
iShares Core MSCI Emerging Markets Fund | | | 1,320 | | | | 64,284 | |
iShares Core S&P Total US Stock Market Fund | | | 14,370 | | | | 784,171 | |
iShares Core U.S. Aggregate Bond Fund | | | 2,130 | | | | 232,703 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 2,100 | | | | 141,246 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 590 | | | | 32,019 | |
iShares Edge MSCI Min Vol USA Fund | | | 5,380 | | | | 260,338 | |
iShares TIPS Bond Fund | | | 350 | | | | 40,254 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 5,920 | | | | 259,533 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,370 | | | | 31,811 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4,490 | | | | 140,806 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3,160 | | | | 134,995 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,410 | | | | 61,222 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 660 | | | | 61,356 | |
| | | | | | | | |
Total Investments (99.2%)
(Cost $2,492,494) | | | | | | | 2,531,624 | |
Other Assets Less Liabilities (0.8%) | | | | | | | 19,572 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,551,196 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,531,624 | | | $ | — | | | $ | — | | | $ | 2,531,624 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,531,624 | | | $ | — | | | $ | — | | | $ | 2,531,624 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,531,624 | | | $ | — | | | $ | — | | | $ | 2,531,624 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,492,494 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 40,115 | |
Aggregate gross unrealized depreciation | | | (985 | ) |
| | | | |
Net unrealized appreciation | | $ | 39,130 | |
| | | | |
Federal income tax cost of investments | | $ | 2,492,494 | |
| | | | |
See Notes to Financial Statements.
110
1290 FUNDS
1290 RETIREMENT 2045 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
| |
ASSETS | | | | |
Investments at value (Cost $2,492,494) | | $ | 2,531,624 | |
Cash | | | 16,649 | |
Receivable from investment adviser | | | 7,303 | |
Deferred offering cost | | | 2,993 | |
Other assets | | | 1,287 | |
| | | | |
Total assets | | | 2,559,856 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 3,278 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,355 | |
| | | | |
Total liabilities | | | 8,660 | |
| | | | |
NET ASSETS | | $ | 2,551,196 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,507,500 | |
Accumulated undistributed net investment income (loss) | | | 4,566 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 39,130 | |
| | | | |
Net assets | | $ | 2,551,196 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,551,196 / 250,750 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.17 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
| |
INVESTMENT INCOME | | | | |
Dividends | | $ | 6,764 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,786 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,133 | |
Administrative fees | | | 640 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 259 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 941 | |
| | | | |
Gross expenses | | | 19,457 | |
Less: Waiver from investment adviser | | | (2,773 | ) |
Reimbursement from investment adviser | | | (14,464 | ) |
| | | | |
Net expenses | | | 2,220 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,566 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 39,130 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 39,130 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 43,696 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
| | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | |
Net investment income (loss) | | $ | 4,566 | |
Net change in unrealized appreciation (depreciation) on investments | | | 39,130 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 43,696 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,750 shares] | | | 2,507,500 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,507,500 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,551,196 | |
NET ASSETS: | | | | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,551,196 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,566 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
111
1290 FUNDS
1290 RETIREMENT 2045 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.15 | |
| | | | |
Total from investment operations | | | 0.17 | |
| | | | |
Net asset value, end of period | | $ | 10.17 | |
| | | | |
Total return (b) | | | 1.70 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,551 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.07 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.06 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
112
1290 RETIREMENT 2050 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.80 | % |
S&P Target Date 2050 Index | | | 1.79 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 94.1 | % |
Fixed Income | | | 5.9 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | | | |
iShares Core S&P Total US Stock Market Fund | | | 32.5 | % |
iShares Core MSCI EAFE Fund | | | 12.0 | |
iShares Edge MSCI Min Vol USA Fund | | | 10.9 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 10.9 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 5.9 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 5.9 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 5.6 | |
iShares Core U.S. Aggregate Bond Fund | | | 5.0 | |
iShares Core MSCI Emerging Markets Fund | | | 2.7 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 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, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
113
1290 RETIREMENT 2050 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,018.00 | | | | $0.89 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.23 | | | | 2.60 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
114
1290 FUNDS
1290 RETIREMENT 2050 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Core MSCI EAFE Fund | | | 5,080 | | | $ | 302,361 | |
iShares Core MSCI Emerging Markets Fund | | | 1,390 | | | | 67,693 | |
iShares Core S&P Total US Stock Market Fund | | | 15,050 | | | | 821,278 | |
iShares Core U.S. Aggregate Bond Fund | | | 1,160 | | | | 126,730 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 2,220 | | | | 149,317 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 620 | | | | 33,647 | |
iShares Edge MSCI Min Vol USA Fund | | | 5,690 | | | | 275,339 | |
iShares TIPS Bond Fund | | | 190 | | | | 21,852 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 6,270 | | | | 274,877 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,450 | | | | 33,669 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4,730 | | | | 148,333 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3,330 | | | | 142,258 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,490 | | | | 64,696 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 690 | | | | 64,145 | |
| | | | | | | | |
Total Investments (99.3%)
(Cost $2,485,617) | | | | | | | 2,526,195 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 18,836 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,545,031 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,526,195 | | | $ | — | | | $ | — | | | $ | 2,526,195 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,526,195 | | | $ | — | | | $ | — | | | $ | 2,526,195 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,526,195 | | | $ | — | | | $ | — | | | $ | 2,526,195 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,485,617 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 41,615 | |
Aggregate gross unrealized depreciation | | | (1,037 | ) |
| | | | |
Net unrealized appreciation | | $ | 40,578 | |
| | | | |
Federal income tax cost of investments | | $ | 2,485,617 | |
| | | | |
See Notes to Financial Statements.
115
1290 FUNDS
1290 RETIREMENT 2050 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
| |
ASSETS | | | | |
Investments at value (Cost $2,485,617) | | $ | 2,526,195 | |
Cash | | | 15,968 | |
Receivable from investment adviser | | | 7,311 | |
Deferred offering cost | | | 2,992 | |
Other assets | | | 1,287 | |
| | | | |
Total assets | | | 2,553,753 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,354 | |
| | | | |
Total liabilities | | | 8,722 | |
| | | | |
NET ASSETS | | $ | 2,545,031 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,453 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 40,578 | |
| | | | |
Net assets | | $ | 2,545,031 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,545,031 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.18 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
| |
INVESTMENT INCOME | | | | |
Dividends | | $ | 6,638 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,660 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,130 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 259 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 942 | |
| | | | |
Gross expenses | | | 19,454 | |
Less: Waiver from investment adviser | | | (2,769 | ) |
Reimbursement from investment adviser | | | (14,478 | ) |
| | | | |
Net expenses | | | 2,207 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,453 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 40,578 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 40,578 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 45,031 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
| | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | |
Net investment income (loss) | | $ | 4,453 | |
Net change in unrealized appreciation (depreciation) on investments | | | 40,578 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 45,031 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,545,031 | |
NET ASSETS: | | | | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,545,031 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,453 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
116
1290 FUNDS
1290 RETIREMENT 2050 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.16 | |
| | | | |
Total from investment operations | | | 0.18 | |
| | | | |
Net asset value, end of period | | $ | 10.18 | |
| | | | |
Total return (b) | | | 1.80 | % |
| | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,545 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.04 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.09 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
117
1290 RETIREMENT 2055 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since
Incept. | |
Fund – Class I Shares* | | | 1.90 | % |
S&P Target Date 2055 Index | | | 1.82 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 99.1 | % |
Fixed Income | | | 0.9 | |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | | | |
iShares Core S&P Total US Stock Market Fund | | | 34.3 | % |
iShares Core MSCI EAFE Fund | | | 12.6 | |
iShares Edge MSCI Min Vol USA Fund | | | 11.5 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 11.4 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 6.2 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 6.2 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 5.9 | |
iShares Core MSCI Emerging Markets Fund | | | 2.8 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 2.7 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 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, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
118
1290 RETIREMENT 2055 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,019.00 | | | | $0.88 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.24 | | | | 2.59 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
119
1290 FUNDS
1290 RETIREMENT 2055 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | |
iShares Core MSCI EAFE Fund | | | 5,350 | | | $ | 318,432 | |
iShares Core MSCI Emerging Markets Fund | | | 1,460 | | | | 71,102 | |
iShares Core S&P Total US Stock Market Fund | | | 15,850 | | | | 864,934 | |
iShares Core U.S. Aggregate Bond Fund | | | 190 | | | | 20,758 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 2,340 | | | | 157,388 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 650 | | | | 35,276 | |
iShares Edge MSCI Min Vol USA Fund | | | 6,000 | | | | 290,340 | |
iShares TIPS Bond Fund | | | 30 | | | | 3,450 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 6,600 | | | | 289,344 | |
| | | | | | | | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,530 | | | | 35,527 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 4,980 | | | | 156,173 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3,510 | | | | 149,947 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,570 | | | | 68,169 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 730 | | | | 67,863 | |
| | | | | | | | |
Total Investments (99.3%)
(Cost $2,486,485) | | | | | | | 2,528,703 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 17,849 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,546,552 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,528,703 | | | $ | — | | | $ | — | | | $ | 2,528,703 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,528,703 | | | $ | — | | | $ | — | | | $ | 2,528,703 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,528,703 | | | $ | — | | | $ | — | | | $ | 2,528,703 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Investment Companies | | $ | 2,486,485 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 43,312 | |
Aggregate gross unrealized depreciation | | | (1,094 | ) |
| | | | |
Net unrealized appreciation | | $ | 42,218 | |
| | | | |
Federal income tax cost of investments | | $ | 2,486,485 | |
| | | | |
See Notes to Financial Statements.
120
1290 FUNDS
1290 RETIREMENT 2055 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
| |
ASSETS | | | | |
Investments at value (Cost $2,486,485) | | $ | 2,528,703 | |
Cash | | | 14,978 | |
Receivable from investment adviser | | | 7,316 | |
Deferred offering cost | | | 2,992 | |
Other assets | | | 1,287 | |
| | | | |
Total assets | | | 2,555,276 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,356 | |
| | | | |
Total liabilities | | | 8,724 | |
| | | | |
NET ASSETS | | $ | 2,546,552 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,334 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 42,218 | |
| | | | |
Net assets | | $ | 2,546,552 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,546,552 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.19 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
| |
INVESTMENT INCOME | | | | |
Dividends | | $ | 6,510 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,532 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,131 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 259 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 942 | |
| | | | |
Gross expenses | | | 19,455 | |
Less: Waiver from investment adviser | | | (2,770 | ) |
Reimbursement from investment adviser | | | (14,487 | ) |
| | | | |
Net expenses | | | 2,198 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,334 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 42,218 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 42,218 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 46,552 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
| | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | |
Net investment income (loss) | | $ | 4,334 | |
Net change in unrealized appreciation (depreciation) on investments | | | 42,218 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 46,552 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,546,552 | |
NET ASSETS: | | | | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,546,552 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,334 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
121
1290 FUNDS
1290 RETIREMENT 2055 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.17 | |
| | | | |
Total from investment operations | | | 0.19 | |
| | | | |
Net asset value, end of period | | $ | 10.19 | |
| | | | |
Total return (b) | | | 1.90 | % |
| | | | |
Ratios/Supplemental Data: | | | | |
Net assets, end of period (000’s) | | $ | 2,547 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.02 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.12 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
122
1290 RETIREMENT 2060 FUND (Unaudited)
INVESTMENT ADVISER
PERFORMANCE RESULTS
| | | | |
| Total Returns as of 4/30/17 | | | |
| | | Since Incept. | |
Fund – Class I Shares* | | | 1.90 | % |
S&P Target Date 2060 Index | | | 1.84 | |
* Date of inception 2/27/17. Returns for periods less than one year are not 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.
Fund performance may 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. Also, 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.
There is insufficient history available to provide meaningful highlights in this report. Please see the 1290funds.com website for more information about the Fund, its investment process and performance.
| | | | |
| Table by Asset Class (as a percentage of Total Investment Companies) | |
| As of April 30, 2017 | |
Equity | | | 100.0 | % |
| | | | |
| Top 10 Holdings (as a percentage of Total Investments) | |
| As of April 30, 2017 | |
iShares Core S&P Total US Stock Market Fund | | | 34.6 | % |
iShares Core MSCI EAFE Fund | | | 12.7 | |
iShares Edge MSCI Min Vol USA Fund | | | 11.6 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 11.6 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 6.3 | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 6.2 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 6.0 | |
iShares Core MSCI Emerging Markets Fund | | | 2.8 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 2.7 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 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, 2017 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.
Please note that while the Fund commenced operations on February 27, 2017, the ‘Hypothetical Expenses Paid during the period’ reflect projected activity for the full six months for the purpose of comparability.
123
1290 RETIREMENT 2060 FUND (Unaudited)
EXAMPLE
| | | | | | | | | | | | |
| | | Beginning
Account
Value
11/1/16† | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,019.00 | | | | $0.88 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,022.24 | | | | 2.58 | |
† Commenced operations on February 27, 2017. * 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 for the hypothetical example (to reflect the one-half year period), and multiplied by 62/365 for the actual example (to reflect the actual number of days the Fund was in operation in the period). | |
124
1290 FUNDS
1290 RETIREMENT 2060 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS: | | | | | | | | |
iShares Core MSCI EAFE Fund | | | 5,410 | | | $ | 322,003 | |
iShares Core MSCI Emerging Markets Fund | | | 1,480 | | | | 72,076 | |
iShares Core S&P Total US Stock Market Fund | | | 16,010 | | | | 873,665 | |
iShares Edge MSCI Min Vol EAFE Fund | | | 2,360 | | | | 158,734 | |
iShares Edge MSCI Min Vol Emerging Markets Fund | | | 660 | | | | 35,818 | |
iShares Edge MSCI Min Vol USA Fund | | | 6,060 | | | | 293,243 | |
PowerShares S&P 500 Low Volatility Portfolio | | | 6,670 | | | | 292,413 | |
PowerShares S&P Emerging Markets Low Volatility Portfolio | | | 1,540 | | | | 35,759 | |
| | | | | | | | |
PowerShares S&P International Developed Low Volatility Portfolio | | | 5,030 | | | | 157,741 | |
PowerShares S&P MidCap Low Volatility Portfolio | | | 3,550 | | | | 151,656 | |
PowerShares S&P SmallCap Low Volatility Portfolio | | | 1,580 | | | | 68,604 | |
SPDR SSGA US Small Cap Low Volatility Index Fund | | | 740 | | | | 68,793 | |
| | | | | | | | |
Total Investments (99.4%)
(Cost $2,487,930) | | | | | | | 2,530,505 | |
Other Assets Less Liabilities (0.6%) | | | | | | | 16,382 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 2,546,887 | |
| | | | | | | | |
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, 2017:
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 | | $ | 2,530,505 | | | $ | — | | | $ | — | | | $ | 2,530,505 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,530,505 | | | $ | — | | | $ | — | | | $ | 2,530,505 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,530,505 | | | $ | — | | | $ | — | | | $ | 2,530,505 | |
| | | | | | | | | | | | | | | | |
There were no transfers between Levels 1, 2 or 3 during the period ended April 30, 2017.
The Fund held no derivatives contracts during the period ended April 30, 2017.
Investment security transactions for the period ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | |
Investment Companies | | $ | 2,487,930 | |
Net Proceeds of Sales and Redemptions: | | | | |
Investment Companies | | $ | — | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 43,680 | |
Aggregate gross unrealized depreciation | | | (1,105 | ) |
| | | | |
Net unrealized appreciation | | $ | 42,575 | |
| | | | |
Federal income tax cost of investments | | $ | 2,487,930 | |
| | | | |
See Notes to Financial Statements.
125
1290 FUNDS
1290 RETIREMENT 2060 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
ASSETS | |
Investments at value (Cost $2,487,930) | | $ | 2,530,505 | |
Cash | | | 13,510 | |
Receivable from investment adviser | | | 7,317 | |
Deferred offering cost | | | 2,992 | |
Other assets | | | 1,286 | |
| | | | |
Total assets | | | 2,555,610 | |
| | | | |
LIABILITIES | |
Transfer agent fees payable | | | 3,341 | |
Trustees’ fees payable | | | 27 | |
Accrued expenses | | | 5,355 | |
| | | | |
Total liabilities | | | 8,723 | |
| | | | |
NET ASSETS | | $ | 2,546,887 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 2,500,000 | |
Accumulated undistributed net investment income (loss) | | | 4,312 | |
Accumulated undistributed net realized gain (loss) on investments | | | — | |
Net unrealized appreciation (depreciation) on investments | | | 42,575 | |
| | | | |
Net assets | | $ | 2,546,887 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,546,887 / 250,000 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.19 | |
| | | | |
STATEMENT OF OPERATIONS
For the Period Ended April 30, 2017* (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 6,487 | |
Interest | | | 22 | |
| | | | |
Total income | | | 6,509 | |
| | | | |
EXPENSES | |
Professional fees | | | 10,371 | |
Transfer agent fees | | | 3,843 | |
Investment advisory fees | | | 2,131 | |
Administrative fees | | | 639 | |
Custodian fees | | | 618 | |
Offering costs | | | 613 | |
Printing and mailing expenses | | | 259 | |
Trustees’ fees | | | 39 | |
Miscellaneous | | | 943 | |
| | | | |
Gross expenses | | | 19,456 | |
Less: Waiver from investment adviser | | | (2,770 | ) |
Reimbursement from investment adviser | | | (14,489 | ) |
| | | | |
Net expenses | | | 2,197 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 4,312 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net change in unrealized appreciation (depreciation) on investments | | | 42,575 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 42,575 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 46,887 | |
| | | | |
| * | The Fund commenced operations on February 27, 2017. |
| | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 4,312 | |
Net change in unrealized appreciation (depreciation) on investments | | | 42,575 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 46,887 | |
| | | | |
CAPITAL SHARES TRANSACTIONS: | | | | |
Class I | | | | |
Capital shares sold [ 250,000 shares ] | | | 2,500,000 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 2,500,000 | |
| | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 2,546,887 | |
NET ASSETS: | |
Beginning of period | | | — | |
| | | | |
End of period (a) | | $ | 2,546,887 | |
| | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 4,312 | |
| | | | |
* The Fund commenced operations on February 27, 2017. | | | | |
See Notes to Financial Statements.
126
1290 FUNDS
1290 RETIREMENT 2060 FUND
FINANCIAL HIGHLIGHTS
| | | | |
| Class I | | February 27, 2017* to
April 30, 2017
(Unaudited) | |
Net asset value, beginning of period | | $ | 10.00 | |
| | | | |
Income (loss) from investment operations: | | | | |
Net investment income (loss) (e)(x) | | | 0.02 | |
Net realized and unrealized gain (loss) on investments | | | 0.17 | |
| | | | |
Total from investment operations | | | 0.19 | |
| | | | |
Net asset value, end of period | | $ | 10.19 | |
| | | | |
Total return (b) | | | 1.90 | % |
| | | | |
Ratios/Supplemental Data: | | | | |
Net assets, end of period (000’s) | | $ | 2,547 | |
Ratio of expenses to average net assets: | | | | |
After waivers and reimbursements (a)(f) | | | 0.52 | %(j) |
Before waivers and reimbursements (a)(f) | | | 2.65 | % |
Ratio of net investment income (loss) to average net assets: | | | | |
After waivers and reimbursements (a)(f)(x) | | | 1.01 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (1.12 | )%(l) |
Portfolio turnover rate (z)^ | | | 0 | % |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. |
| (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”). |
| (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 Portfolio invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
127
1290 SMARTBETA EQUITY FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISER
| Ø | | AXA Rosenberg Investment Management LLC |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 10.72 | % | | | 10.82 | % | | | 6.03 | % |
| | | | with Sales Charge (a) | | | | 4.59 | | | | 4.69 | | | | 3.63 | |
Fund – Class I Shares* | | | | | | | 10.79 | | | | 11.00 | | | | 6.26 | |
Fund – Class R Shares* | | | | | | | 10.55 | | | | 10.55 | | | | 5.75 | |
Fund – Class T Shares*† | | | without Sales Charge | | | | 10.79 | | | | 11.11 | | | | 6.26 | |
| | | | with Sales Charge (b) | | | | 8.05 | | | | 8.36 | | | | 5.16 | |
MSCI World (Net) Index | | | | | | | 12.12 | | | | 14.65 | | | | 5.80 | |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. Class T shares were formerly known as Class C shares. (a) A 5.50% front-end sales charge was deducted. (b) A 2.5% 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.
Fund performance may 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. Also, 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 Rosenberg Investment Management LLC
The six-month period ended April 30, 2017 was generally positive for equity markets across the globe. The election of Donald Trump as the President in the U.S. at the beginning of the period triggered a strong rally, particularly among more cyclically driven areas of the market. The U.S. dollar strengthened in the wake of the election and U.S. economic data continued to improve, leading the Federal Reserve’s rate-setting committee to raise rates in December. Meanwhile eurozone stocks performed well as the European Central Bank extended its quantitative easing program to stimulate economic growth.
Global equities continued to climb into the new year with U.S. stocks reaching record highs, driven by optimism about the economic outlook; however, the rally moderated somewhat in March as investor concerns about President Donald Trump’s ability to enact pro-growth policies dampened sentiment. Nonetheless, the economic news from the country was broadly positive, encouraging the Federal Reserve to raise interest rates. European economic data also showed improvement, although politics attracted the most attention amid elections in the Netherlands and France and the UK’s triggering of Article 50. Japanese equities were held back by a stronger yen as the economy registered its fourth consecutive quarter of growth.
There had been a marked recovery in value styles of investing in the second half of 2016, but this reversed as we moved closer to the new year, giving way to return of the reward to quality styles in the first quarter of 2017. The financials and information technology sectors led the market over the six-month period. The energy sector was the notable laggard — giving back recent gains — as rising oil inventories led to falling prices for crude.
Fund Highlights
The Fund rose in value over the period, capturing the bulk of returns delivered by equity markets during the period, but slightly underperformed the MSCI World (Net) Index. The strategy’s bias toward companies demonstrating higher-quality earnings growth proved beneficial, although the Fund’s low volatility profile went unrewarded.
What helped performance during the six-month period ended April 30, 2017:
| • | | The Fund’s bias toward stocks with superior earnings sustainability — a proprietary measure of earnings quality — was rewarded, driven by the latter half of the period. The positions in McDonald’s Corp. and Actelion Pharmaceuticals Ltd. were among the higher-quality names which contributed positively to active performance. |
| • | | The Fund’s lower-than-benchmark exposure to the energy sector proved beneficial. The zero weight in Chevron and Schlumberger featured among the top contributors to relative performance at the individual stock level. |
What hurt performance during the six-month period ended April 30, 2017:
| • | | The Fund’s avoidance of companies with higher volatility weighed on performance, as stocks exhibiting low volatility characteristics underperformed. |
| • | | The Fund’s underweight exposure to the financial sector weighed on performance. At the individual stock level, not holding JPMorgan Chase and Bank of America were among the top detractors from relative performance over the period. |
128
1290 SMARTBETA EQUITY FUND (Unaudited)
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
Consumer Staples | | | 16.9 | % |
Industrials | | | 16.3 | |
Financials | | | 15.8 | |
Information Technology | | | 11.4 | |
Health Care | | | 11.1 | |
Consumer Discretionary | | | 10.1 | |
Utilities | | | 6.1 | |
Materials | | | 3.3 | |
Telecommunication Services | | | 2.8 | |
Real Estate | | | 2.3 | |
Energy | | | 2.1 | |
Investment Company | | | 0.5 | |
Cash and Other | | | 1.3 | |
| | | | | |
| | | | 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 the six-month period ended April 30, 2017 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,107.20 | | | | $6.66 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.47 | | | | 6.38 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,107.90 | | | | 5.38 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.69 | | | | 5.15 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,105.50 | | | | 7.99 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,017.21 | | | | 7.65 | |
Class T** | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,107.90 | | | | 5.38 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.69 | | | | 5.16 | |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.28%, 1.03%, 1.53% and 1.03%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). ** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | |
129
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
COMMON STOCKS: | | | | | | | | |
Consumer Discretionary (10.1%) | | | | | | | | |
Auto Components (0.9%) | | | | | | | | |
Bridgestone Corp. | | | 600 | | | $ | 25,017 | |
Continental AG | | | 100 | | | | 22,385 | |
Delphi Automotive plc | | | 300 | | | | 24,120 | |
Lear Corp. | | | 100 | | | | 14,266 | |
Magna International, Inc. | | | 300 | | | | 12,532 | |
Valeo SA | | | 270 | | | | 19,411 | |
| | | | | | | | |
| | | | | | | 117,731 | |
| | | | | | | | |
Automobiles (0.5%) | | | | | | | | |
Bayerische Motoren Werke AG | | | 300 | | | | 28,643 | |
Subaru Corp. | | | 400 | | | | 15,114 | |
Suzuki Motor Corp. | | | 300 | | | | 12,519 | |
Toyota Motor Corp. | | | 200 | | | | 10,828 | |
| | | | | | | | |
| | | | | | | 67,104 | |
| | | | | | | | |
Distributors (0.2%) | | | | | | | | |
Genuine Parts Co. | | | 300 | | | | 27,606 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (2.0%) | | | | | | | | |
Compass Group plc | | | 2,000 | | | | 40,359 | |
McDonald’s Corp. | | | 800 | | | | 111,944 | |
Sodexo SA | | | 200 | | | | 25,424 | |
Starbucks Corp. | | | 900 | | | | 54,054 | |
Whitbread plc | | | 200 | | | | 10,452 | |
Yum Brands, Inc. | | | 400 | | | | 26,300 | |
| | | | | | | | |
| | | | | | | 268,533 | |
| | | | | | | | |
Household Durables (0.2%) | | | | | | | | |
Persimmon plc | | | 300 | | | | 9,054 | |
Sekisui House Ltd. | | | 1,000 | | | | 16,591 | |
Techtronic Industries Co. Ltd. | | | 500 | | | | 2,147 | |
| | | | | | | | |
| | | | | | | 27,792 | |
| | | | | | | | |
Leisure Products (0.2%) | | | | | | | | |
Bandai Namco Holdings, Inc. | | | 200 | | | | 6,270 | |
Shimano, Inc. | | | 100 | | | | 15,277 | |
| | | | | | | | |
| | | | | | | 21,547 | |
| | | | | | | | |
Media (1.4%) | | | | | | | | |
CBS Corp. (Non-Voting), Class B | | | 300 | | | | 19,968 | |
Comcast Corp., Class A | | | 1,700 | | | | 66,623 | |
Omnicom Group, Inc. | | | 200 | | | | 16,424 | |
Singapore Press Holdings Ltd. | | | 2,000 | | | | 4,967 | |
Walt Disney Co. (The) | | | 600 | | | | 69,360 | |
WPP plc | | | 400 | | | | 8,564 | |
| | | | | | | | |
| | | | | | | 185,906 | |
| | | | | | | | |
Multiline Retail (0.2%) | | | | | | | | |
Dollar General Corp. | | | 300 | | | | 21,813 | |
| | | | | | | | |
Specialty Retail (3.4%) | | | | | | | | |
Foot Locker, Inc. | | | 200 | | | | 15,468 | |
Hennes & Mauritz AB, Class B | | | 1,200 | | | | 29,725 | |
Home Depot, Inc. (The) | | | 700 | | | | 109,270 | |
Industria de Diseno Textil SA | | | 1,200 | | | | 46,025 | |
L Brands, Inc. | | | 200 | | | | 10,562 | |
Lowe’s Cos., Inc. | | | 600 | | | | 50,928 | |
Nitori Holdings Co. Ltd. | | | 100 | | | | 13,016 | |
O’Reilly Automotive, Inc.* | | | 100 | | | | 24,815 | |
Ross Stores, Inc. | | | 500 | | | | 32,500 | |
TJX Cos., Inc. (The) | | | 900 | | | | 70,776 | |
Ulta Beauty, Inc.* | | | 100 | | | | 28,144 | |
USS Co. Ltd. | | | 500 | | | | 8,836 | |
| | | | | | | | |
| | | | | | | 440,065 | |
| | | | | | | | |
Textiles, Apparel & Luxury Goods (1.1%) | | | | | |
Burberry Group plc | | | 400 | | | | 8,362 | |
Luxottica Group SpA | | | 300 | | | | 17,385 | |
LVMH Moet Hennessy Louis Vuitton SE | | | 150 | | | | 37,009 | |
NIKE, Inc., Class B | | | 1,000 | | | | 55,410 | |
Pandora A/S | | | 100 | | | | 10,808 | |
VF Corp. | | | 400 | | | | 21,852 | |
| | | | | | | | |
| | | | | | | 150,826 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 1,328,923 | |
| | | | | | | | |
Consumer Staples (16.9%) | |
Beverages (3.7%) | |
Asahi Group Holdings Ltd. | | | 600 | | | | 22,633 | |
Brown-Forman Corp., Class B | | | 400 | | | | 18,928 | |
Coca-Cola Co. (The) | | | 3,000 | | | | 129,450 | |
Constellation Brands, Inc., Class A | | | 100 | | | | 17,254 | |
Diageo plc | | | 2,400 | | | | 69,832 | |
Dr Pepper Snapple Group, Inc. | | | 300 | | | | 27,495 | |
Heineken NV | | | 300 | | | | 26,748 | |
Kirin Holdings Co. Ltd. | | | 1,000 | | | | 19,430 | |
PepsiCo, Inc. | | | 1,100 | | | | 124,608 | |
Pernod Ricard SA | | | 200 | | | | 25,021 | |
| | | | | | | | |
| | | | | | | 481,399 | |
| | | | | | | | |
Food & Staples Retailing (2.1%) | |
Alimentation Couche-Tard, Inc., Class B | | | 400 | | | | 18,396 | |
Costco Wholesale Corp. | | | 500 | | | | 88,760 | |
Kroger Co. (The) | | | 1,000 | | | | 29,650 | |
Seven & i Holdings Co. Ltd. | | | 900 | | | | 38,027 | |
Sysco Corp. | | | 900 | | | | 47,583 | |
Wal-Mart Stores, Inc. | | | 400 | | | | 30,072 | |
Wesfarmers Ltd. | | | 400 | | | | 12,879 | |
Woolworths Ltd. | | | 800 | | | | 16,102 | |
| | | | | | | | |
| | | | | | | 281,469 | |
| | | | | | | | |
Food Products (3.2%) | |
Campbell Soup Co. | | | 200 | | | | 11,508 | |
Danone SA | | | 800 | | | | 55,929 | |
General Mills, Inc. | | | 900 | | | | 51,759 | |
Hershey Co. (The) | | | 200 | | | | 21,640 | |
Hormel Foods Corp. | | | 400 | | | | 14,032 | |
Kellogg Co. | | | 300 | | | | 21,300 | |
Kraft Heinz Co. (The) | | | 600 | | | | 54,234 | |
McCormick & Co., Inc. (Non-Voting) | | | 200 | | | | 19,980 | |
MEIJI Holdings Co. Ltd. | | | 100 | | | | 8,487 | |
Mondelez International, Inc., Class A | | | 1,600 | | | | 72,048 | |
Nestle SA (Registered) | | | 1,000 | | | | 77,035 | |
WH Group Ltd.§ | | | 14,000 | | | | 12,509 | |
| | | | | | | | |
| | | | | | | 420,461 | |
| | | | | | | | |
Household Products (3.4%) | |
Church & Dwight Co., Inc. | | | 400 | | | | 19,812 | |
Clorox Co. (The) | | | 200 | | | | 26,738 | |
See Notes to Financial Statements.
130
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Colgate-Palmolive Co. | | | 1,200 | | | $ | 86,448 | |
Henkel AG & Co. KGaA (Preference) (q) | | | 400 | | | | 54,465 | |
Kimberly-Clark Corp. | | | 500 | | | | 64,875 | |
Procter & Gamble Co. (The) | | | 1,400 | | | | 122,262 | |
Reckitt Benckiser Group plc | | | 600 | | | | 55,261 | |
Svenska Cellulosa AB SCA, Class B | | | 500 | | | | 16,563 | |
| | | | | | | | |
| | | | | | | 446,424 | |
| | | | | | | | |
Personal Products (2.0%) | |
Beiersdorf AG | | | 200 | | | | 19,899 | |
Estee Lauder Cos., Inc. (The), Class A | | | 200 | | | | 17,428 | |
Kao Corp. | | | 500 | | | | 27,576 | |
L’Oreal SA | | | 270 | | | | 53,778 | |
Unilever NV (CVA) | | | 1,400 | | | | 73,422 | |
Unilever plc | | | 1,300 | | | | 66,879 | |
| | | | | | | | |
| | | | | | | 258,982 | |
| | | | | | | | |
Tobacco (2.5%) | |
Altria Group, Inc. | | | 1,400 | | | | 100,492 | |
British American Tobacco plc | | | 900 | | | | 60,790 | |
Imperial Brands plc | | | 600 | | | | 29,391 | |
Japan Tobacco, Inc. | | | 1,000 | | | | 33,245 | |
Philip Morris International, Inc. | | | 1,000 | | | | 110,840 | |
| | | | | | | | |
| | | | | | | 334,758 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 2,223,493 | |
| | | | | | | | |
Energy (2.1%) | | | | | | | | |
Oil, Gas & Consumable Fuels (2.1%) | | | | | |
Enbridge, Inc. | | | 400 | | | | 16,580 | |
Exxon Mobil Corp. | | | 1,300 | | | | 106,145 | |
Royal Dutch Shell plc, Class A | | | 400 | | | | 10,405 | |
Snam SpA | | | 3,000 | | | | 13,261 | |
TOTAL SA | | | 1,100 | | | | 56,520 | |
TransCanada Corp. | | | 1,500 | | | | 69,646 | |
| | | | | | | | |
Total Energy | | | | | | | 272,557 | |
| | | | | | | | |
Financials (15.8%) | | | | | | | | |
Banks (7.0%) | | | | | | | | |
Bank Hapoalim BM | | | 2,000 | | | | 12,486 | |
Bank of Montreal | | | 1,000 | | | | 70,811 | |
Bank of Nova Scotia (The) | | | 700 | | | | 38,911 | |
BB&T Corp. | | | 400 | | | | 17,272 | |
Canadian Imperial Bank of Commerce | | | 700 | | | | 56,536 | |
Commonwealth Bank of Australia | | | 400 | | | | 26,178 | |
Danske Bank A/S | | | 400 | | | | 14,528 | |
DBS Group Holdings Ltd. | | | 1,000 | | | | 13,850 | |
Hang Seng Bank Ltd. | | | 1,400 | | | | 28,384 | |
ING Groep NV | | | 1,400 | | | | 22,791 | |
Lloyds Banking Group plc | | | 27,000 | | | | 24,200 | |
M&T Bank Corp. | | | 200 | | | | 31,082 | |
Mizuho Financial Group, Inc. | | | 7,300 | | | | 13,333 | |
National Australia Bank Ltd. | | | 600 | | | | 15,276 | |
Nordea Bank AB | | | 2,000 | | | | 24,612 | |
Oversea-Chinese Banking Corp. Ltd. | | | 1,000 | | | | 7,014 | |
PNC Financial Services Group, Inc. (The) | | | 400 | | | | 47,900 | |
Resona Holdings, Inc. | | | 1,500 | | | | 8,340 | |
Royal Bank of Canada | | | 1,200 | | | | 82,168 | |
Skandinaviska Enskilda Banken AB, Class A | | | 1,000 | | | | 11,516 | |
Svenska Handelsbanken AB, Class A | | | 2,000 | | | | 28,383 | |
Swedbank AB, Class A | | | 1,200 | | | | 28,438 | |
Toronto-Dominion Bank (The) | | | 1,900 | | | | 89,401 | |
United Overseas Bank Ltd. | | | 1,000 | | | | 15,603 | |
US Bancorp | | | 1,800 | | | | 92,304 | |
Wells Fargo & Co. | | | 1,600 | | | | 86,144 | |
Westpac Banking Corp. | | | 500 | | | | 13,126 | |
| | | | | | | | |
| | | | | | | 920,587 | |
| | | | | | | | |
Capital Markets (1.8%) | | | | | | | | |
ASX Ltd. | | | 200 | | | | 7,596 | |
Brookfield Asset Management, Inc., Class A | | | 1,200 | | | | 44,359 | |
CME Group, Inc. | | | 300 | | | | 34,857 | |
Macquarie Group Ltd. | | | 200 | | | | 13,928 | |
Moody’s Corp. | | | 200 | | | | 23,664 | |
S&P Global, Inc. | | | 200 | | | | 26,838 | |
Singapore Exchange Ltd. | | | 1,000 | | | | 5,296 | |
T Rowe Price Group, Inc. | | | 300 | | | | 21,267 | |
Thomson Reuters Corp. | | | 700 | | | | 31,809 | |
UBS Group AG (Registered) | | | 1,800 | | | | 30,754 | |
| | | | | | | | |
| | | | | | | 240,368 | |
| | | | | | | | |
Consumer Finance (0.8%) | | | | | | | | |
American Express Co. | | | 600 | | | | 47,550 | |
Discover Financial Services | | | 400 | | | | 25,036 | |
Synchrony Financial | | | 900 | | | | 25,020 | |
| | | | | | | | |
| | | | | | | 97,606 | |
| | | | | | | | |
Diversified Financial Services (1.0%) | | | | | | | | |
Berkshire Hathaway, Inc., Class B* | | | 800 | | | | 132,168 | |
| | | | | | | | |
Insurance (5.2%) | | | | | | | | |
AIA Group Ltd. | | | 4,200 | | | | 29,077 | |
Allianz SE (Registered) | | | 210 | | | | 39,986 | |
Allstate Corp. (The) | | | 400 | | | | 32,516 | |
Aon plc | | | 400 | | | | 47,936 | |
Arch Capital Group Ltd.* | | | 200 | | | | 19,394 | |
Assicurazioni Generali SpA | | | 1,000 | | | | 15,828 | |
Baloise Holding AG (Registered) | | | 90 | | | | 13,197 | |
Chubb Ltd. | | | 500 | | | | 68,625 | |
Cincinnati Financial Corp. | | | 300 | | | | 21,627 | |
Hannover Rueck SE | | | 100 | | | | 11,993 | |
Legal & General Group plc | | | 3,000 | | | | 9,563 | |
Marsh & McLennan Cos., Inc. | | | 700 | | | | 51,891 | |
Medibank Pvt Ltd. | | | 1,800 | | | | 3,922 | |
MS&AD Insurance Group Holdings, Inc. | | | 300 | | | | 9,774 | |
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered) | | | 250 | | | | 47,916 | |
Progressive Corp. (The) | | | 900 | | | | 35,748 | |
Prudential plc | | | 1,200 | | | | 26,671 | |
Sampo OYJ, Class A | | | 600 | | | | 28,751 | |
SCOR SE* | | | 400 | | | | 15,825 | |
Sun Life Financial, Inc. | | | 600 | | | | 21,190 | |
Suncorp Group Ltd. | | | 1,000 | | | | 10,333 | |
See Notes to Financial Statements.
131
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Swiss Re AG | | | 400 | | | $ | 34,814 | |
T&D Holdings, Inc. | | | 900 | | | | 13,350 | |
Tokio Marine Holdings, Inc. | | | 500 | | | | 21,045 | |
Travelers Cos., Inc. (The) | | | 300 | | | | 36,498 | |
Zurich Insurance Group AG | | | 50 | | | | 13,839 | |
| | | | | | | | |
| | | | | | | 681,309 | |
| | | | | | | | |
Total Financials | | | | | | | 2,072,038 | |
| | | | | | | | |
Health Care (11.1%) | | | | | | | | |
Biotechnology (1.2%) | | | | | | | | |
AbbVie, Inc. | | | 400 | | | | 26,376 | |
Amgen, Inc. | | | 400 | | | | 65,328 | |
Biogen, Inc.* | | | 200 | | | | 54,242 | |
CSL Ltd. | | | 200 | | | | 19,851 | |
| | | | | | | | |
| | | | | | | 165,797 | |
| | | | | | | | |
Health Care Equipment & Supplies (2.4%) | | | | | |
Baxter International, Inc. | | | 500 | | | | 27,840 | |
Becton Dickinson and Co. | | | 200 | | | | 37,394 | |
Boston Scientific Corp.* | | | 700 | | | | 18,466 | |
Coloplast A/S, Class B | | | 200 | | | | 17,120 | |
CR Bard, Inc. | | | 100 | | | | 30,748 | |
Danaher Corp. | | | 500 | | | | 41,665 | |
Edwards Lifesciences Corp.* | | | 200 | | | | 21,934 | |
Hoya Corp. | | | 400 | | | | 19,104 | |
IDEXX Laboratories, Inc.* | | | 100 | | | | 16,773 | |
Stryker Corp. | | | 500 | | | | 68,185 | |
Sysmex Corp. | | | 200 | | | | 12,164 | |
| | | | | | | | |
| | | | | | | 311,393 | |
| | | | | | | | |
Health Care Providers & Services (1.4%) | | | | | |
Fresenius Medical Care AG & Co. KGaA | | | 200 | | | | 17,745 | |
HCA Holdings, Inc.* | | | 200 | | | | 16,842 | |
Henry Schein, Inc.* | | | 100 | | | | 17,380 | |
McKesson Corp. | | | 100 | | | | 13,829 | |
Sonic Healthcare Ltd. | | | 600 | | | | 9,924 | |
UnitedHealth Group, Inc. | | | 600 | | | | 104,928 | |
| | | | | | | | |
| | | | | | | 180,648 | |
| | | | | | | | |
Life Sciences Tools & Services (0.4%) | |
Quintiles IMS Holdings, Inc.* | | | 200 | | | | 16,856 | |
Thermo Fisher Scientific, Inc. | | | 100 | | | | 16,533 | |
Waters Corp.* | | | 100 | | | | 16,989 | |
| | | | | | | | |
| | | | | | | 50,378 | |
| | | | | | | | |
Pharmaceuticals (5.7%) | |
Astellas Pharma, Inc. | | | 1,400 | | | | 18,436 | |
Bayer AG (Registered) | | | 400 | | | | 49,498 | |
Bristol-Myers Squibb Co. | | | 700 | | | | 39,235 | |
Eli Lilly & Co. | | | 900 | | | | 73,854 | |
GlaxoSmithKline plc | | | 900 | | | | 18,068 | |
Johnson & Johnson | | | 1,200 | | | | 148,164 | |
Merck & Co., Inc. | | | 1,700 | | | | 105,961 | |
Mitsubishi Tanabe Pharma Corp. | | | 700 | | | | 14,204 | |
Novo Nordisk A/S, Class B | | | 800 | | | | 31,130 | |
Orion OYJ, Class B | | | 200 | | | | 11,470 | |
Otsuka Holdings Co. Ltd. | | | 500 | | | | 22,996 | |
Pfizer, Inc. | | | 2,900 | | | | 98,368 | |
Roche Holding AG | | | 240 | | | | 62,786 | |
Sanofi | | | 200 | | | | 18,869 | |
Shionogi & Co. Ltd. | | | 200 | | | | 10,286 | |
Zoetis, Inc. | | | 400 | | | | 22,444 | |
| | | | | | | | |
| | | | | | | 745,769 | |
| | | | | | | | |
Total Health Care | | | | | | | 1,453,985 | |
| | | | | | | | |
Industrials (16.3%) | |
Aerospace & Defense (4.1%) | |
Airbus SE | | | 400 | | | | 32,343 | |
BAE Systems plc | | | 2,000 | | | | 16,242 | |
Boeing Co. (The) | | | 400 | | | | 73,932 | |
General Dynamics Corp. | | | 400 | | | | 77,516 | |
Lockheed Martin Corp. | | | 300 | | | | 80,835 | |
Northrop Grumman Corp. | | | 300 | | | | 73,788 | |
Raytheon Co. | | | 400 | | | | 62,084 | |
Rockwell Collins, Inc. | | | 200 | | | | 20,818 | |
Rolls-Royce Holdings plc* | | | 800 | | | | 8,414 | |
Rolls-Royce Holdings plc, Class C* | | | 56,800 | | | | 74 | |
Safran SA | | | 200 | | | | 16,562 | |
Singapore Technologies Engineering Ltd. | | | 2,000 | | | | 5,425 | |
Thales SA | | | 100 | | | | 10,514 | |
United Technologies Corp. | | | 500 | | | | 59,495 | |
| | | | | | | | |
| | | | | | | 538,042 | |
| | | | | | | | |
Air Freight & Logistics (1.2%) | |
CH Robinson Worldwide, Inc. | | | 200 | | | | 14,540 | |
Deutsche Post AG (Registered) | | | 1,200 | | | | 43,136 | |
Expeditors International of Washington, Inc. | | | 200 | | | | 11,218 | |
United Parcel Service, Inc., Class B | | | 800 | | | | 85,968 | |
| | | | | | | | |
| | | | | | | 154,862 | |
| | | | | | | | |
Building Products (0.5%) | |
Assa Abloy AB, Class B | | | 1,200 | | | | 25,999 | |
Daikin Industries Ltd. | | | 200 | | | | 19,421 | |
Geberit AG (Registered) | | | 50 | | | | 22,774 | |
| | | | | | | | |
| | | | | | | 68,194 | |
| | | | | | | | |
Commercial Services & Supplies (0.9%) | |
Cintas Corp. | | | 100 | | | | 12,247 | |
Republic Services, Inc. | | | 400 | | | | 25,196 | |
Secom Co. Ltd. | | | 300 | | | | 21,761 | |
Waste Management, Inc. | | | 800 | | | | 58,224 | |
| | | | | | | | |
| | | | | | | 117,428 | |
| | | | | | | | |
Construction & Engineering (0.5%) | |
Skanska AB, Class B | | | 600 | | | | 14,354 | |
Taisei Corp. | | | 1,000 | | | | 7,625 | |
Vinci SA | | | 500 | | | | 42,537 | |
| | | | | | | | |
| | | | | | | 64,516 | |
| | | | | | | | |
Electrical Equipment (0.7%) | |
Emerson Electric Co. | | | 500 | | | | 30,140 | |
Legrand SA | | | 300 | | | | 19,421 | |
Mitsubishi Electric Corp. | | | 1,000 | | | | 13,941 | |
Nidec Corp. | | | 100 | | | | 9,168 | |
Rockwell Automation, Inc. | | | 100 | | | | 15,735 | |
| | | | | | | | |
| | | | | | | 88,405 | |
| | | | | | | | |
Industrial Conglomerates (2.2%) | |
3M Co. | | | 400 | | | | 78,332 | |
General Electric Co. | | | 600 | | | | 17,394 | |
See Notes to Financial Statements.
132
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Honeywell International, Inc. | | | 700 | | | $ | 91,798 | |
Roper Technologies, Inc. | | | 200 | | | | 43,740 | |
Siemens AG (Registered) | | | 400 | | | | 57,341 | |
| | | | | | | | |
| | | | | | | 288,605 | |
| | | | | | | | |
Machinery (1.7%) | |
Atlas Copco AB, Class A | | | 1,000 | | | | 37,393 | |
Cummins, Inc. | | | 100 | | | | 15,094 | |
Deere & Co. | | | 100 | | | | 11,161 | |
FANUC Corp. | | | 100 | | | | 20,323 | |
Fortive Corp. | | | 700 | | | | 44,282 | |
Illinois Tool Works, Inc. | | | 400 | | | | 55,236 | |
Schindler Holding AG | | | 70 | | | | 14,303 | |
Snap-on, Inc. | | | 100 | | | | 16,753 | |
Wartsila OYJ Abp | | | 200 | | | | 12,178 | |
| | | | | | | | |
| | | | | | | 226,723 | |
| | | | | | | | |
Professional Services (0.9%) | |
Equifax, Inc. | | | 200 | | | | 27,062 | |
Experian plc | | | 400 | | | | 8,595 | |
Intertek Group plc | | | 200 | | | | 10,532 | |
SGS SA (Registered) | | | 7 | | | | 15,752 | |
Verisk Analytics, Inc.* | | | 300 | | | | 24,843 | |
Wolters Kluwer NV | | | 600 | | | | 25,483 | |
| | | | | | | | |
| | | | | | | 112,267 | |
| | | | | | | | |
Road & Rail (2.4%) | |
Canadian National Railway Co. | | | 1,200 | | | | 86,740 | |
Canadian Pacific Railway Ltd. | | | 100 | | | | 15,322 | |
Central Japan Railway Co. | | | 100 | | | | 16,762 | |
ComfortDelGro Corp. Ltd. | | | 3,000 | | | | 5,883 | |
DSV A/S | | | 300 | | | | 16,713 | |
East Japan Railway Co. | | | 300 | | | | 26,788 | |
Hankyu Hanshin Holdings, Inc. | | | 400 | | | | 13,205 | |
Kintetsu Group Holdings Co. Ltd. | | | 3,000 | | | | 10,953 | |
MTR Corp. Ltd. | | | 3,500 | | | | 20,159 | |
Nagoya Railroad Co. Ltd. | | | 1,000 | | | | 4,593 | |
Tobu Railway Co. Ltd. | | | 3,000 | | | | 15,205 | |
Union Pacific Corp. | | | 600 | | | | 67,176 | |
West Japan Railway Co. | | | 300 | | | | 20,033 | |
| | | | | | | | |
| | | | | | | 319,532 | |
| | | | | | | | |
Trading Companies & Distributors (1.0%) | |
Ashtead Group plc | | | 600 | | | | 12,675 | |
Brenntag AG | | | 200 | | | | 11,860 | |
Bunzl plc | | | 600 | | | | 18,713 | |
Fastenal Co. | | | 200 | | | | 8,936 | |
ITOCHU Corp. | | | 1,500 | | | | 21,207 | |
Marubeni Corp. | | | 1,000 | | | | 6,158 | |
Wolseley plc | | | 500 | | | | 31,758 | |
WW Grainger, Inc. | | | 100 | | | | 19,270 | |
| | | | | | | | |
| | | | | | | 130,577 | |
| | | | | | | | |
Transportation Infrastructure (0.2%) | |
Aena SA§ | | | 90 | | | | 15,882 | |
Atlantia SpA | | | 500 | | | | 12,679 | |
| | | | | | | | |
| | | | | | | 28,561 | |
| | | | | | | | |
Total Industrials | | | | | | | 2,137,712 | |
| | | | | | | | |
Information Technology (11.4%) | |
Communications Equipment (0.5%) | |
Cisco Systems, Inc. | | | 1,100 | | | | 37,477 | |
F5 Networks, Inc.* | | | 100 | | | | 12,913 | |
Motorola Solutions, Inc. | | | 200 | | | | 17,194 | |
| | | | | | | | |
| | | | | | | 67,584 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (1.0%) | |
Amphenol Corp., Class A | | | 600 | | | | 43,386 | |
Hexagon AB, Class B | | | 400 | | | | 17,418 | |
Keyence Corp. | | | 100 | | | | 40,188 | |
Kyocera Corp. | | | 400 | | | | 22,642 | |
Murata Manufacturing Co. Ltd. | | | 100 | | | | 13,407 | |
| | | | | | | | |
| | | | | | | 137,041 | |
| | | | | | | | |
Internet Software & Services (0.4%) | |
Alphabet, Inc., Class A* | | | 50 | | | | 46,226 | |
| | | | | | | | |
IT Services (4.3%) | |
Accenture plc, Class A | | | 400 | | | | 48,520 | |
Amadeus IT Group SA, Class A | | | 400 | | | | 21,568 | |
Atos SE | | | 100 | | | | 13,105 | |
Automatic Data Processing, Inc. | | | 700 | | | | 73,143 | |
Cognizant Technology Solutions Corp., Class A* | | | 500 | | | | 30,115 | |
Fiserv, Inc.* | | | 400 | | | | 47,656 | |
International Business Machines Corp. | | | 500 | | | | 80,145 | |
Mastercard, Inc., Class A | | | 800 | | | | 93,056 | |
Paychex, Inc. | | | 600 | | | | 35,568 | |
Visa, Inc., Class A | | | 1,300 | | | | 118,586 | |
| | | | | | | | |
| | | | | | | 561,462 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (2.2%) | |
Analog Devices, Inc. | | | 400 | | | | 30,480 | |
Infineon Technologies AG | | | 1,000 | | | | 20,697 | |
KLA-Tencor Corp. | | | 200 | | | | 19,644 | |
Lam Research Corp. | | | 200 | | | | 28,970 | |
NVIDIA Corp. | | | 500 | | | | 52,150 | |
QUALCOMM, Inc. | | | 400 | | | | 21,496 | |
Skyworks Solutions, Inc. | | | 200 | | | | 19,948 | |
Texas Instruments, Inc. | | | 900 | | | | 71,262 | |
Tokyo Electron Ltd. | | | 100 | | | | 11,630 | |
Xilinx, Inc. | | | 200 | | | | 12,622 | |
| | | | | | | | |
| | | | | | | 288,899 | |
| | | | | | | | |
Software (2.0%) | |
Adobe Systems, Inc.* | | | 200 | | | | 26,748 | |
Check Point Software Technologies Ltd.* | | | 100 | | | | 10,401 | |
Electronic Arts, Inc.* | | | 300 | | | | 28,446 | |
Intuit, Inc. | | | 300 | | | | 37,563 | |
Microsoft Corp. | | | 1,200 | | | | 82,152 | |
SAP SE | | | 600 | | | | 60,175 | |
Synopsys, Inc.* | | | 200 | | | | 14,740 | |
| | | | | | | | |
| | | | | | | 260,225 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.0%) | |
Apple, Inc. | | | 700 | | | | 100,555 | |
FUJIFILM Holdings Corp. | | | 300 | | | | 11,125 | |
HP, Inc. | | | 1,000 | | | | 18,820 | |
| | | | | | | | |
| | | | | | | 130,500 | |
| | | | | | | | |
Total Information Technology | | | | | | | 1,491,937 | |
| | | | | | | | |
See Notes to Financial Statements.
133
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Materials (3.3%) | | | | | | | | |
Chemicals (3.1%) | |
BASF SE | | | 100 | | | $ | 9,745 | |
Celanese Corp. | | | 100 | | | | 8,704 | |
Dow Chemical Co. (The) | | | 300 | | | | 18,840 | |
Ecolab, Inc. | | | 400 | | | | 51,636 | |
EI du Pont de Nemours & Co. | | | 300 | | | | 23,925 | |
Givaudan SA (Registered) | | | 12 | | | | 23,120 | |
International Flavors & Fragrances, Inc. | | | 100 | | | | 13,859 | |
LyondellBasell Industries NV, Class A | | | 300 | | | | 25,428 | |
Monsanto Co. | | | 400 | | | | 46,644 | |
Novozymes A/S, Class B | | | 400 | | | | 17,281 | |
PPG Industries, Inc. | | | 200 | | | | 21,968 | |
Praxair, Inc. | | | 400 | | | | 49,992 | |
Sherwin-Williams Co. (The) | | | 100 | | | | 33,468 | |
Shin-Etsu Chemical Co. Ltd. | | | 300 | | | | 26,061 | |
Sika AG | | | 3 | | | | 19,146 | |
Symrise AG | | | 200 | | | | 14,002 | |
| | | | | | | | |
| | | | | | | 403,819 | |
| | | | | | | | |
Construction Materials (0.1%) | |
James Hardie Industries plc (CDI) | | | 400 | | | | 6,790 | |
| | | | | | | | |
Containers & Packaging (0.1%) | |
Amcor Ltd. | | | 1,500 | | | | 17,645 | |
| | | | | | | | |
Total Materials | | | | | | | 428,254 | |
| | | | | | | | |
Real Estate (2.3%) | |
Equity Real Estate Investment Trusts (REITs) (2.2%) | |
American Tower Corp. (REIT) | | | 300 | | | | 37,782 | |
AvalonBay Communities, Inc. (REIT) | | | 100 | | | | 18,984 | |
Dexus Property Group (REIT) | | | 1,200 | | | | 9,165 | |
Federal Realty Investment Trust (REIT) | | | 100 | | | | 13,089 | |
Goodman Group (REIT) | | | 3,500 | | | | 21,255 | |
GPT Group (The) (REIT) | | | 3,000 | | | | 11,794 | |
Link REIT (REIT) | | | 2,000 | | | | 14,386 | |
Mirvac Group (REIT) | | | 4,100 | | | | 6,969 | |
Public Storage (REIT) | | | 100 | | | | 20,938 | |
Scentre Group (REIT) | | | 3,400 | | | | 10,973 | |
Segro plc (REIT) | | | 2,000 | | | | 12,582 | |
Simon Property Group, Inc. (REIT) | | | 300 | | | | 49,578 | |
Stockland (REIT) | | | 4,500 | | | | 16,342 | |
Unibail-Rodamco SE (REIT) | | | 160 | | | | 39,293 | |
| | | | | | | | |
| | | | | | | 283,130 | |
| | | | | | | | |
Real Estate Management & Development (0.1%) | |
Daito Trust Construction Co. Ltd. | | | 100 | | | | 14,712 | |
| | | | | | | | |
Total Real Estate | | | | | | | 297,842 | |
| | | | | | | | |
Telecommunication Services (2.8%) | |
Diversified Telecommunication Services (2.4%) | |
AT&T, Inc. | | | 2,900 | | | | 114,927 | |
Deutsche Telekom AG (Registered) | | | 1,800 | | | | 31,568 | |
Nippon Telegraph & Telephone Corp. | | | 900 | | | | 38,503 | |
Singapore Telecommunications Ltd. | | | 10,000 | | | | 26,769 | |
Swisscom AG (Registered) | | | 60 | | | | 26,171 | |
Telenor ASA | | | 1,000 | | | | 16,166 | |
Telia Co. AB | | | 3,000 | | | | 12,227 | |
Telstra Corp. Ltd. | | | 6,300 | | | | 19,907 | |
Verizon Communications, Inc. | | | 600 | | | | 27,546 | |
| | | | | | | | |
| | | | | | | 313,784 | |
| | | | | | | | |
Wireless Telecommunication Services (0.4%) | |
KDDI Corp. | | | 1,200 | | | | 31,815 | |
NTT DOCOMO, Inc. | | | 1,200 | | | | 28,936 | |
| | | | | | | | |
| | | | | | | 60,751 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 374,535 | |
| | | | | | | | |
Utilities (6.1%) | |
Electric Utilities (3.3%) | |
American Electric Power Co., Inc. | | | 600 | | | | 40,698 | |
CLP Holdings Ltd. | | | 2,000 | | | | 21,097 | |
Duke Energy Corp. | | | 400 | | | | 33,000 | |
Enel SpA | | | 3,000 | | | | 14,261 | |
Eversource Energy | | | 300 | | | | 17,820 | |
Fortis, Inc. | | | 500 | | | | 16,271 | |
NextEra Energy, Inc. | | | 400 | | | | 53,424 | |
PG&E Corp. | | | 200 | | | | 13,410 | |
PPL Corp. | | | 1,100 | | | | 41,921 | |
Red Electrica Corp. SA | | | 400 | | | | 7,799 | |
Southern Co. (The) | | | 1,600 | | | | 79,680 | |
SSE plc | | | 2,000 | | | | 36,033 | |
Terna Rete Elettrica Nazionale SpA | | | 3,000 | | | | 15,130 | |
Xcel Energy, Inc. | | | 800 | | | | 36,040 | |
| | | | | | | | |
| | | | | | | 426,584 | |
| | | | | | | | |
Gas Utilities (0.4%) | |
Hong Kong & China Gas Co. Ltd. | | | 13,000 | | | | 25,972 | |
Osaka Gas Co. Ltd. | | | 3,000 | | | | 11,230 | |
Tokyo Gas Co. Ltd. | | | 3,000 | | | | 13,927 | |
| | | | | | | | |
| | | | | | | 51,129 | |
| | | | | | | | |
Multi-Utilities (2.2%) | |
AGL Energy Ltd. | | | 600 | | | | 12,023 | |
Ameren Corp. | | | 300 | | | | 16,407 | |
CenterPoint Energy, Inc. | | | 500 | | | | 14,265 | |
CMS Energy Corp. | | | 400 | | | | 18,160 | |
Consolidated Edison, Inc. | | | 200 | | | | 15,856 | |
Dominion Resources, Inc. | | | 900 | | | | 69,687 | |
DTE Energy Co. | | | 300 | | | | 31,377 | |
National Grid plc | | | 4,200 | | | | 54,398 | |
Sempra Energy | | | 500 | | | | 56,510 | |
| | | | | | | | |
| | | | | | | 288,683 | |
| | | | | | | | |
Water Utilities (0.2%) | |
American Water Works Co., Inc. | | | 300 | | | | 23,928 | |
Severn Trent plc | | | 300 | | | | 9,034 | |
| | | | | | | | |
| | | | | | | 32,962 | |
| | | | | | | | |
Total Utilities | | | | | | | 799,358 | |
| | | | | | | | |
Total Common Stocks (98.2%)
(Cost $11,390,847) | | | | | | | 12,880,634 | |
| | | | | | | | |
See Notes to Financial Statements.
134
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PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
SHORT-TERM INVESTMENT: | | | | | |
Investment Company (0.5%) | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 65,410 | | | $ | 65,436 | |
| | | | | | | | |
Total Short-Term Investment (0.5%)
(Cost $65,432) | | | | | | | 65,436 | |
| | | | | | | | |
Total Investments (98.7%)
(Cost $11,456,279) | | | | | | | 12,946,070 | |
Other Assets Less Liabilities (1.3%) | | | | | | | 169,268 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 13,115,338 | |
| | | | | | | | |
| § | 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, 2017, the market value of these securities amounted to $28,391 or 0.2% 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. |
| (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:
| | CDI | — Chess Depositary Interest |
| | | | |
Country Diversification As a Percentage of Total Net Assets | | | |
Australia | | | 2.1 | % |
Canada | | | 4.9 | |
Denmark | | | 0.8 | |
Finland | | | 0.4 | |
France | | | 3.7 | |
Germany | | | 4.1 | |
Hong Kong | | | 1.2 | |
Ireland | | | 0.1 | |
Israel | | | 0.2 | |
Italy | | | 0.7 | |
Japan | | | 7.1 | |
Netherlands | | | 0.6 | |
Norway | | | 0.1 | |
Singapore | | | 0.6 | |
Spain | | | 0.7 | |
Sweden | | | 1.9 | |
Switzerland | | | 2.9 | |
United Kingdom | | | 5.3 | |
United States | | | 61.3 | |
Cash and Other | | | 1.3 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
Foreign cash on the statement of assets and liabilities is maintained at JPMorgan or its affiliates and is comprised of the following (in USD): AUD 23,256, CAD 13,809, CHF 7,017, DKK 1,615, EUR 15,662, GBP 3,101, HKD 1,468, ILS 1,670, JPY 3,731, NOK 1,281, SEK 4,059 and SGD 1,825.
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, 2017:
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.) (a) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Common Stocks | | | | | | | | | | | | | | | | |
Consumer Discretionary | | $ | 884,734 | | | $ | 444,189 | | | $ | — | | | $ | 1,328,923 | |
Consumer Staples | | | 1,327,613 | | | | 895,880 | | | | — | | | | 2,223,493 | |
Energy | | | 192,371 | | | | 80,186 | | | | — | | | | 272,557 | |
Financials | | | 1,360,522 | | | | 711,516 | | | | — | | | | 2,072,038 | |
Health Care | | | 1,100,334 | | | | 353,651 | | | | — | | | | 1,453,985 | |
Industrials | | | 1,324,876 | | | | 812,762 | | | | 74 | | | | 2,137,712 | |
See Notes to Financial Statements.
135
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PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (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.) (a) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Information Technology | | $ | 1,259,982 | | | $ | 231,955 | | | $ | — | | | $ | 1,491,937 | |
Materials | | | 294,464 | | | | 133,790 | | | | — | | | | 428,254 | |
Real Estate | | | 140,371 | | | | 157,471 | | | | — | | | | 297,842 | |
Telecommunication Services | | | 142,473 | | | | 232,062 | | | | — | | | | 374,535 | |
Utilities | | | 578,454 | | | | 220,904 | | | | — | | | | 799,358 | |
Short-Term Investments | | | | | | | | | | | | | | | | |
Investment Companies | | | 65,436 | | | | — | | | | — | | | | 65,436 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 8,671,630 | | | $ | 4,274,366 | | | $ | 74 | | | $ | 12,946,070 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 8,671,630 | | | $ | 4,274,366 | | | $ | 74 | | | $ | 12,946,070 | |
| | | | | | | | | | | | | | | | |
(a) A security with a market value of $19,980 transferred from Level 1 to Level 2 at the end of the period due to inactive trading.
There were no additional transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
The Fund held no derivatives contracts during the six-months ended April 30, 2017.
Investment security transactions for the six-months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 2,520,474 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 2,049,396 | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 1,655,760 | |
Aggregate gross unrealized depreciation | | | (182,517 | ) |
| | | | |
Net unrealized appreciation | | $ | 1,473,243 | |
| | | | |
Federal income tax cost of investments | | $ | 11,472,827 | |
| | | | |
See Notes to Financial Statements.
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STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
|
ASSETS | |
Investments at value (Cost $11,456,279) | | $ | 12,946,070 | |
Cash | | | 5,000 | |
Foreign cash (Cost $78,344) | | | 78,494 | |
Receivable for Fund shares sold | | | 55,100 | |
Dividends, interest and other receivables | | | 34,013 | |
Receivable from investment adviser | | | 6,202 | |
Other assets | | | 108 | |
| | | | |
Total assets | | | 13,124,987 | |
| | | | |
LIABILITIES | |
Payable for Fund shares redeemed | | | 1,000 | |
Distribution fees payable – Class A | | | 75 | |
Distribution fees payable – Class R | | | 51 | |
Accrued expenses | | | 8,523 | |
| | | | |
Total liabilities | | | 9,649 | |
| | | | |
NET ASSETS | | $ | 13,115,338 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 11,692,934 | |
Accumulated undistributed net investment income (loss) | | | 58,497 | |
Accumulated undistributed net realized gain (loss) on investments and foreign currency transactions | | | (126,038 | ) |
Net unrealized appreciation (depreciation) on investments and foreign currency translations | | | 1,489,945 | |
| | | | |
Net assets | | $ | 13,115,338 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $367,885 / 32,765 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.23 | |
Maximum sales charge (5.50% of offering price) | | | 0.65 | |
| | | | |
Maximum offering price per share | | $ | 11.88 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $12,505,816 / 1,113,178 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.23 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $125,583 / 11,195 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.22 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $116,054 / 10,332 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 11.23 | |
Maximum sales charge (2.50% of offering price) | | | 0.29 | |
| | | | |
Maximum offering price per share | | $ | 11.52 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
|
INVESTMENT INCOME | |
Dividends (net of $8,810 foreign withholding tax) | | $ | 147,915 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 42,128 | |
Professional fees | | | 32,240 | |
Transfer agent fees | | | 20,260 | |
Registration and filing fees | | | 18,993 | |
Administrative fees | | | 9,028 | |
Custodian fees | | | 8,597 | |
Printing and mailing expenses | | | 3,877 | |
Trustees’ fees | | | 599 | |
Distribution fees – Class A | | | 407 | |
Distribution fees – Class T** | | | 404 | |
Distribution fees – Class R | | | 296 | |
Miscellaneous | | | 7,780 | |
| | | | |
Gross expenses | | | 144,609 | |
Less: Waiver from investment adviser | | | (51,156 | ) |
Waiver from distributor | | | (404 | ) |
Reimbursement from investment adviser | | | (30,335 | ) |
| | | | |
Net expenses | | | 62,714 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 85,201 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Realized gain (loss) on: | | | | |
Investments | | | (9,571 | ) |
Foreign currency transactions | | | (2,566 | ) |
| | | | |
Net realized gain (loss) | | | (12,137 | ) |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments | | | 1,178,970 | |
Foreign currency translations | | | 646 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | 1,179,616 | |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 1,167,479 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,252,680 | |
| | | | |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
See Notes to Financial Statements.
137
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STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 85,201 | | | $ | 145,786 | |
Net realized gain (loss) on investments and foreign currency transactions | | | (12,137 | ) | | | (84,951 | ) |
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations | | | 1,179,616 | | | | 118,992 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,252,680 | | | | 179,827 | |
| | | | | | | | |
DIVIDENDS : | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (3,272 | ) | | | (45,245 | ) |
Class I | | | (145,390 | ) | | | (54,271 | ) |
Class R | | | (929 | ) | | | (36,365 | ) |
Class T** | | | (1,415 | ) | | | (17,317 | ) |
| | | | | | | | |
TOTAL DIVIDENDS: | | | (151,006 | ) | | | (153,198 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 9,369 and 12,294 shares, respectively ] | | | 98,258 | | | | 124,475 | |
Capital shares issued in reinvestment of dividends [ 199 and 111 shares, respectively ] | | | 2,074 | | | | 1,104 | |
Capital shares repurchased [ (3,085) and (290,014) shares, respectively ] | | | (32,182 | ) | | | (2,947,306 | ) |
| | | | | | | | |
Total Class A transactions | | | 68,150 | | | | (2,821,727 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 60,558 and 743,273 shares, respectively ] | | | 650,648 | | | | 7,563,544 | |
Capital shares issued in reinvestment of dividends [ 1,194 and 234 shares, respectively ] | | | 12,441 | | | | 2,319 | |
Capital shares repurchased [ (4,079) and (1,720) shares, respectively ] | | | (45,118 | ) | | | (18,417 | ) |
| | | | | | | | |
Total Class I transactions | | | 617,971 | | | | 7,547,446 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 2 and 450 shares, respectively ] | | | 17 | | | | 4,614 | |
Capital shares issued in reinvestment of dividends [ 3 and 0 shares, respectively ] | | | 34 | | | | — | |
Capital shares repurchased [ (46) and (290,001) shares, respectively ] | | | (468 | ) | | | (2,945,548 | ) |
| | | | | | | | |
Total Class R transactions | | | (417 | ) | | | (2,940,934 | ) |
| | | | | | | | |
Class T** | | | | | | | | |
Capital shares repurchased [ 0 and (90,000) shares, respectively ] | | | — | | | | (915,126 | ) |
| | | | | | | | |
Total Class T transactions | | | — | | | | (915,126 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 685,704 | | | | 869,659 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,787,378 | | | | 896,288 | |
NET ASSETS: | |
Beginning of period | | | 11,327,960 | | | | 10,431,672 | |
| | | | | | | | |
End of period (a) | | $ | 13,115,338 | | | $ | 11,327,960 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | 58,497 | | | $ | 124,302 | |
| | | | | | | | |
** Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. | | | | | | | | |
See Notes to Financial Statements.
138
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FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.25 | | | $ | 10.24 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.06 | | | | 0.12 | ## | | | 0.11 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.03 | | | | 0.04 | | | | 0.16 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.09 | | | | 0.16 | | | | 0.27 | |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.11 | ) | | | (0.15 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.23 | | | $ | 10.25 | | | $ | 10.24 | |
| | | | | | | | | | | | |
Total return (b) | | | 10.72 | % | | | 1.58 | % | | | 2.70 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 368 | | | $ | 269 | | | $ | 3,111 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.28 | % | | | 1.35 | % | | | 1.35 | % |
Before waivers and reimbursements (a) | | | 2.63 | % | | | 2.76 | % | | | 4.21 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.20 | % | | | 1.23 | %(aa) | | | 1.14 | %(l) |
Before waivers and reimbursements (a) | | | (0.15 | )% | | | (0.18 | )%(aa) | | | (1.73 | )%(l) |
Portfolio turnover rate (z)^ | | | 17 | % | | | 27 | % | | | 29 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.27 | | | $ | 10.26 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.08 | | | | 0.15 | ## | | | 0.14 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.02 | | | | 0.03 | | | | 0.15 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.10 | | | | 0.18 | | | | 0.29 | |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.23 | | | $ | 10.27 | | | $ | 10.26 | |
| | | | | | | | | | | | |
Total return (b) | | | 10.79 | % | | | 1.84 | % | | | 2.94 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 12,506 | | | $ | 10,838 | | | $ | 3,218 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.03 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a) | | | 2.38 | % | | | 2.51 | % | | | 3.96 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.42 | % | | | 1.44 | %(bb) | | | 1.38 | %(l) |
Before waivers and reimbursements (a) | | | 0.07 | % | | | 0.04 | %(bb) | | | (1.48 | )%(l) |
Portfolio turnover rate (z)^ | | | 17 | % | | | 27 | % | | | 29 | % |
See Notes to Financial Statements.
139
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FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.23 | | | $ | 10.22 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.05 | | | | 0.10 | ## | | | 0.09 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.02 | | | | 0.03 | | | | 0.16 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.07 | | | | 0.13 | | | | 0.25 | |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.08 | ) | | | (0.12 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.22 | | | $ | 10.23 | | | $ | 10.22 | |
| | | | | | | | | | | | |
Total return (b) | | | 10.55 | % | | | 1.32 | % | | | 2.47 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 126 | | | $ | 115 | | | $ | 3,073 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.53 | % | | | 1.60 | % | | | 1.60 | % |
Before waivers and reimbursements (a) | | | 2.88 | % | | | 3.01 | % | | | 4.46 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 0.92 | % | | | 0.98 | %(cc) | | | 0.89 | %(l) |
Before waivers and reimbursements (a) | | | (0.43 | )% | | | (0.43 | )%(cc) | | | (1.98 | )%(l) |
Portfolio turnover rate (z)^ | | | 17 | % | | | 27 | % | | | 29 | % |
| | | |
| Class T** | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | November 12, 2014* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 10.27 | | | $ | 10.26 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.08 | | | | 0.15 | ## | | | 0.14 | |
Net realized and unrealized gain (loss) on investments and foreign currency transactions | | | 1.02 | | | | 0.03 | | | | 0.15 | |
| | | | | | | | | | | | |
Total from investment operations | | | 1.10 | | | | 0.18 | | | | 0.29 | |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 11.23 | | | $ | 10.27 | | | $ | 10.26 | |
| | | | | | | | | | | | |
Total return (b) | | | 10.79 | % | | | 1.84 | % | | | 2.94 | % |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 116 | | | $ | 106 | | | $ | 1,029 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.03 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a) | | | 3.12 | % | | | 3.51 | % | | | 4.96 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers and reimbursements (a) | | | 1.42 | % | | | 1.48 | %(dd) | | | 1.39 | %(l) |
Before waivers and reimbursements (a) | | | (0.67 | )% | | | (0.93 | )%(dd) | | | (2.48 | )%(l) |
Portfolio turnover rate (z)^ | | | 17 | % | | | 27 | % | | | 29 | % |
See Notes to Financial Statements.
140
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. |
| ## | 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. |
| (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. |
| (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.
141
1290 UNCONSTRAINED BOND MANAGERS FUND (Unaudited)
INVESTMENT ADVISER
INVESTMENT SUB-ADVISERS
| Ø | | Pacific Investment Management Company LLC (PIMCO) |
| Ø | | TCW Investment Management Company |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| Total Returns as of 4/30/17 | |
| | | | | | 6 Months | | | 1 Year | | | Since Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | 1.94 | % | | | 4.63 | % | | | 2.05 | % |
| | | | with Sales Charge (a | ) | | | (2.69 | ) | | | (0.07 | ) | | | (0.49 | ) |
Fund – Class I Shares* | | | | | | | 2.03 | | | | 4.86 | | | | 2.27 | |
Fund – Class R Shares* | | | | | | | 1.85 | | | | 4.41 | | | | 1.79 | |
BofA Merrill Lynch USD 3-Month Deposit Offered Rate Constant Maturity Index | | | | | | | 0.45 | | | | 0.78 | | | | 0.59 | |
* 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.
Fund performance may 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. Also, 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 — Pacific Investment Management Company LLC (PIMCO)
Following Donald Trump’s election as president in November, much of the past six months was marked by surging optimism among U.S. businesses and consumers along with solid fundamentals that helped bolster risk appetites. However, the risk rally — spurred in part by expectations for growth-enhancing policies such as fiscal stimulus, tax reform and deregulation — moderated somewhat as policy setbacks raised concerns about the Trump administration’s ability to implement its pro-growth agenda.
Some post-election trends continued in the New Year: volatility remained relatively low, equities rallied, credit spreads tightened, and emerging assets rebounded despite geopolitical tensions flaring. Strong U.S. economic data, relatively easy financial conditions, and both business and consumer optimism gave the Federal Reserve an opportunity to continue on its path toward policy normalization, as it hiked rates 25 basis points (1 basis point = 1/100 of 1%) in both December 2016 and March 2017. Inflation expectations surged following the presidential election amid the incoming administration’s pro-growth rhetoric, but have since stabilized during the first quarter of 2017.
The fundamental economic backdrop remained healthy (and relatively unchanged). Supportive growth trends, including improving business activity indicators across developed and emerging regions, contributed to improved sentiment. Dutch and French election results tempered somewhat the risks related to more nationalist, anti-European Union outcomes in the eurozone. Still, an upcoming election in Germany presents a political event risk that remains on the horizon.
Fund Highlights
What helped performance during the six-month period ended April 30, 2017:
| • | | Exposure to non-agency mortgage backed securities (MBS) contributed to Fund performance. |
| • | | An allocation to corporate credit, namely investment grade and high yield financials, benefited performance. |
| • | | Long exposure to select emerging market currencies, such as the Russian ruble and Mexican peso, added to performance during the period. |
| • | | Exposure to Treasury Inflation-Protected Securities (TIPS) was additive as inflation break-evens widened. |
What helped performance during the six-month period ended April 30, 2017:
| • | | Interest rate strategies, specifically within the U.S. and the eurozone, were detrimental to performance for the period. |
Overview — TCW Investment Management Company
Despite a slight blip in March in terms of trading enthusiasm as “Trump Trade” euphoria died down, equity markets were up and spread sectors largely outperformed Treasuries during the six-month period ended April 30, 2017. Front end U.S. Treasury rates were higher, with yields shorter than 6-months up by over 30 basis points (bps). Meanwhile, longer-dated yields (7-year to 30-year maturities) fell approximately 10 bps, ultimately leading to a flatter curve. High yield bonds continued to pace domestic fixed income markets, led higher by lower quality (CCC-rated) credits. U.S. investment grade corporate credit overall had slightly positive returns, led by financials, which benefited from expectations for tax reform and rising interest rates. Within industrials, metals & mining and energy were stand out performers, outpacing the broader corporate market. Among securitized issues, agency mortgage-backed securities (MBS) was the only sector to lag Treasuries, weighed down by expectations for rate hikes and balance sheet reduction by the Federal Reserve. In contrast, non-agency MBS continued to be supported by higher home prices and faster loan amortization to post strong return and, within asset-backed securities (ABS), FFELP student loans outperformed as the uncertainty surrounding rating downgrades dissipated with Moody’s concluding its review of currently rated FFELP transactions under its updated methodology late last year and Fitch now nearing the conclusion of its review. While commercial MBS (CMBS) fell, weighed down by agency CMBS issues, the sector outperformed Treasuries.
142
1290 UNCONSTRAINED BOND MANAGERS FUND (Unaudited)
Credit ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). All Fund securities except for those labeled “No Rated” and “Other” have been rated by Moody’s, S&P or Fitch, which are each a Nationally Recognized Statistical Rating Organization (“NRSRO”). All Index securities except for those labeled “Not Rated” have been rated by Moody’s or S&P. Credit ratings are subject to change. One cannot invest directly into an index.
Fund Highlights
What helped performance during the six-month period ended April 30, 2017:
| • | | Returns were largely driven by the allocation to non-agency mortgage-backed securities (MBS), particularly bonds backed by alt-A and subprime collateral, which have benefited from continued improvement in fundamentals and solid demand. |
| • | | An additional tailwind to returns came from the Fund’s emphasis within asset-backed securities (ABS) on government guaranteed FFELP student loans, which experienced spread tightening as uncertainty about downgrades dissipated once the rating review process neared conclusion. |
| • | | The allocation to corporates was also additive, with the focus on communications and non-cyclical credits contributing most to returns. |
| • | | Meanwhile, the Fund’s small exposure to emerging market debt and high yield credit contributed as both sectors outperformed considerably. |
| • | | Finally, a small position in Japanese Government Bond T-bills, with the Yen exposure fully hedged out using a Dollar-Yen cross currency swap, added to performance over the period. |
What hurt performance during the six-month period ended April 30, 2017:
| • | | The Fund experienced a slight drag on performance from negative issue selection within wirelines, retailers, and pharmaceuticals within corporates. |
| | | | |
Sector Weightings
as of April 30, 2017 | | % of
Net Assets | |
Asset-Backed Securities | | | 24.7 | % |
Collateralized Mortgage Obligations | | | 11.7 | |
U.S. Treasury Obligations | | | 10.7 | |
Financials | | | 9.8 | |
Mortgage-Backed Securities | | | 7.8 | |
Commercial Mortgage-Backed Securities | | | 7.6 | |
Health Care | | | 2.0 | |
Telecommunication Services | | | 1.8 | |
Foreign Government Securities | | | 1.7 | |
Utilities | | | 1.3 | |
Energy | | | 1.2 | |
Consumer Discretionary | | | 1.2 | |
Real Estate | | | 1.2 | |
Consumer Staples | | | 0.9 | |
Industrials | | | 0.7 | |
Municipal Bonds | | | 0.6 | |
Information Technology | | | 0.5 | |
Materials | | | 0.5 | |
Options Purchased | | | 0.1 | |
Cash and Other | | | 14.0 | |
| | | | | |
| | | | 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 the six-month period ended April 30, 2017 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.
143
1290 UNCONSTRAINED BOND MANAGERS 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
11/1/16 | | | Ending
Account
Value
4/30/17 | | | Expenses
Paid
During
Period*
11/1/16 -
4/30/17 | |
Class A | |
Actual | | | $1,000.00 | | | | $1,019.40 | | | | $6.76 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,018.10 | | | | 6.75 | |
Class I | |
Actual | | | 1,000.00 | | | | 1,020.30 | | | | 5.51 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,019.34 | | | | 5.50 | |
Class R | |
Actual | | | 1,000.00 | | | | 1,018.50 | | | | 8.00 | |
Hypothetical (5% average return before expenses) | | | 1,000.00 | | | | 1,016.86 | | | | 8.00 | |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.35%, 1.10% and 1.60%, respectively, multiplied by the average account value over the period, and multiplied by 181/365 (to reflect the one-half year period). | |
144
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | |
Asset-Backed Securities (24.7%) | |
ABFC Trust, | | | | | | | | |
Series 2006-OPT1 A2
1.131%, 9/25/36 (l) | | $ | 177,011 | | | $ | 167,795 | |
Series 2007-NC1 A2
1.291%, 5/25/37 (l)§ | | | 250,000 | | | | 197,813 | |
ACE Securities Corp. Home Equity Loan Trust, | |
Series 2005-HE6 M1
1.461%, 10/25/35 (l) | | | 200,000 | | | | 192,217 | |
American Airlines Pass-Through Trust, | |
Series 2011-1 A
5.250%, 1/31/21 | | | 110,104 | | | | 117,404 | |
Ameriquest Mortgage Securities, Inc. Asset-Backed Pass-Through Certificates, | |
Series 2004-R9 M2
1.966%, 10/25/34 (l) | | | 120,444 | | | | 120,655 | |
AMMC CLO 17 Ltd., | | | | | | | | |
Series 2015-17A A1
2.639%, 11/15/27 (l)§ | | | 90,000 | | | | 90,493 | |
Babson CLO Ltd., | | | | | | | | |
Series 2014-3A AR
2.478%, 1/15/26 (l)§ | | | 90,000 | | | | 90,171 | |
Series 2014-IA A1R
2.306%, 7/20/25 (l)§ | | | 90,000 | | | | 90,048 | |
Ballyrock CLO LLC, | | | | | | | | |
Series 2014-1A A1R
2.306%, 10/20/26 (l)§ | | | 90,000 | | | | 90,002 | |
Bear Stearns Asset Backed Securities I Trust, | |
Series 2007-HE2 2A2
1.101%, 2/25/37 (l) | | | 209,524 | | | | 204,936 | |
BlueMountain CLO Ltd., | | | | | | | | |
Series 2015-1A A1R
2.485%, 4/13/27 (l)§ | | | 90,000 | | | | 90,082 | |
Brazos Higher Education Authority, Inc., | |
Series 2011-1 A2
1.852%, 2/25/30 (l) | | | 47,279 | | | | 47,156 | |
Cedar Funding V CLO Ltd., | | | | | | | | |
Series 2016-5A A1
2.768%, 7/17/28 (l)§ | | | 90,000 | | | | 90,845 | |
Chase Funding Trust, | | | | | | | | |
Series 2002-3 2A1
1.631%, 8/25/32 (l) | | | 4,078 | | | | 3,824 | |
Citibank Credit Card Issuance Trust, | |
Series 2008-A7 A7
2.368%, 5/20/20 (l) | | | 115,000 | | | | 116,527 | |
Citigroup Mortgage Loan Trust, | | | | | | | | |
Series 2006-HE2 A2C
1.141%, 8/25/36 (l) | | | 36,065 | | | | 35,944 | |
Series 2007-AHL1 A2B
1.131%, 12/25/36 (l) | | | 196,483 | | | | 185,789 | |
Series 2007-AMC1 A1
1.151%, 12/25/36 (l)§ | | | 196,448 | | | | 118,413 | |
Series 2007-FS1 1A1
4.584%, 10/25/37 (e)§ | | | 254,447 | | | | 250,879 | |
Citigroup Mortgage Loan Trust Asset Backed Pass-Through Certificates, | |
Series 2005-OPT3 M2
1.666%, 5/25/35 (l) | | | 74,364 | | | | 74,511 | |
Citigroup Mortgage Loan Trust, Inc., | | | | | | | | |
Series 2007-AMC3 A1
1.251%, 3/25/37 (l)§ | | | 156,527 | | | | 121,528 | |
| | | | | | | | |
Continental Airlines Pass-Through Trust, | |
Series 1998-1 A
6.648%, 9/15/17 | | | 17,456 | | | | 17,435 | |
Countrywide Asset-Backed Certificates, | |
Series 2002-3 1A1
1.731%, 5/25/32 (l) | | | 8,097 | | | | 7,622 | |
Series 2006-26 1A
1.131%, 6/25/37 (l) | | | 155,279 | | | | 129,772 | |
Series 2007-2 1A
1.131%, 8/25/37 (l) | | | 302,330 | | | | 240,758 | |
Series 2007-9 1A
1.191%, 6/25/47 (l) | | | 380,735 | | | | 287,933 | |
CWABS Asset-Backed Certificates Trust, | |
Series 2004-15 MV4
2.266%, 4/25/35 (l) | | | 180,000 | | | | 180,464 | |
Series 2005-3 MV5
1.661%, 8/25/35 (l) | | | 200,000 | | | | 194,397 | |
Series 2006-14 2A2
1.141%, 2/25/37 (l) | | | 131,774 | | | | 130,041 | |
Delta Air Lines Pass-Through Trust, | |
Series 2002-1 G-1
6.718%, 1/2/23 | | | 100,187 | | | | 112,209 | |
Dryden 41 Senior Loan Fund, | | | | | | | | |
Series 2015-41A A
2.658%, 1/15/28 (l)§ | | | 90,000 | | | | 90,749 | |
Eaton Vance CLO Ltd., | | | | | | | | |
Series 2014-1A AR
2.358%, 7/15/26 (l)§ | | | 90,000 | | | | 89,999 | |
Education Loan Asset-Backed Trust I, | |
Series 2013-1 A1
1.791%, 6/25/26 (l)§ | | | 107,162 | | | | 107,288 | |
Finn Square CLO Ltd., | | | | | | | | |
Series 2012-1A A1R
2.367%, 12/24/23 (l)§ | | | 155,584 | | | | 155,733 | |
First Franklin Mortgage Loan Trust, | | | | | | | | |
Series 2005-FF10 A5
1.351%, 11/25/35 (l) | | | 500,000 | | | | 411,682 | |
Series 2005-FF5 M2
1.726%, 5/25/35 (l) | | | 100,193 | | | | 100,009 | |
Series 2006-FF10 A4
1.141%, 7/25/36 (l) | | | 172,435 | | | | 170,945 | |
First NLC Trust, | | | | | | | | |
Series 2007-1 A3
1.171%, 8/25/37 (l)§ | | | 213,853 | | | | 122,985 | |
Flagship CLO VIII Ltd., | | | | | | | | |
Series 2014-8A AR
2.408%, 1/16/26 (l)§ | | | 90,000 | | | | 89,999 | |
Flatiron CLO Ltd., | | | | | | | | |
Series 2014-1A A1R
2.338%, 7/17/26 (l)§ | | | 250,000 | | | | 250,404 | |
Greenpoint Manufactured Housing, | |
Series 2000-1 A4
8.140%, 3/20/30 (l) | | | 146,140 | | | | 152,419 | |
GSAMP Trust, | |
Series 2006-FM3 A2C
1.191%, 11/25/36 (l) | | | 289,578 | | | | 163,293 | |
Home Equity Asset Trust, | |
Series 2005-3 M5
1.681%, 8/25/35 (l) | | | 200,000 | | | | 165,177 | |
Honda Auto Receivables Owner Trust, | |
Series 2015-4 A3
1.230%, 9/23/19 | | | 90,000 | | | | 89,794 | |
See Notes to Financial Statements.
145
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
HSI Asset Securitization Corp. Trust, | |
Series 2006-HE1 2A1
1.041%, 10/25/36 (l) | | $ | 34,246 | | | $ | 16,029 | |
J.G. Wentworth XXXVIII LLC, | |
Series 2017-1A A
3.990%, 8/16/60§ | | | 175,000 | | | | 180,257 | |
JP Morgan Mortgage Acquisition Corp., | |
Series 2006-FRE2 M1
1.331%, 2/25/36 (l) | | | 200,000 | | | | 169,707 | |
JP Morgan Mortgage Acquisition Trust, | |
Series 2006-WMC2 A1
1.126%, 7/25/36 (l) | | | 153,252 | | | | 116,915 | |
Series 2007-CH1 AV5
1.231%, 11/25/36 (l) | | | 115,664 | | | | 115,414 | |
Series 2007-CH4 A4
1.151%, 1/25/36 (l) | | | 547,795 | | | | 530,173 | |
Limerock CLO III LLC, | |
Series 2014-3A A1R
2.356%, 10/20/26 (l)§ | | | 90,000 | | | | 90,000 | |
Long Beach Mortgage Loan Trust, | |
Series 2005-1 M2
1.786%, 2/25/35 (l) | | | 71,964 | | | | 71,730 | |
Series 2005-2 M4
1.921%, 4/25/35 (l) | | | 143,067 | | | | 143,313 | |
Series 2005-3 1A
1.251%, 8/25/45 (l) | | | 202,179 | | | | 176,465 | |
Series 2006-10 2A2
1.101%, 11/25/36 (l) | | | 476,028 | | | | 216,047 | |
MASTR Asset-Backed Securities Trust, | |
Series 2006-AB1 A2
1.221%, 2/25/36 (l) | | | 7,572 | | | | 7,573 | |
Series 2006-HE1 A4
1.281%, 1/25/36 (l) | | | 257,621 | | | | 256,377 | |
Mastr Specialized Loan Trust, | |
Series 2007-1 A
1.361%, 1/25/37 (l)§ | | | 377,441 | | | | 218,301 | |
Mill Creek II CLO Ltd., | |
Series 2016-1A A
2.780%, 4/20/28 (l)§ | | | 90,000 | | | | 91,555 | |
Morgan Stanley ABS Capital I, Inc. Trust, | |
Series 2007-HE3 A2A
1.051%, 12/25/36 (l) | | | 599,334 | | | | 366,725 | |
Series 2007-NC2 A1
1.121%, 2/25/37 (l)§ | | | 183,710 | | | | 132,862 | |
Morgan Stanley Home Equity Loan Trust, | |
Series 2006-3 A4
1.251%, 4/25/36 (l) | | | 407,690 | | | | 313,299 | |
Series 2007-1 A3
1.131%, 12/25/36 (l) | | | 305,372 | | | | 170,222 | |
National Collegiate Student Loan Trust, | |
Series 2006-4 A3
1.251%, 2/26/29 (l) | | | 83,363 | | | | 82,470 | |
Navient Student Loan Trust, | |
Series 2014-1 A3
1.501%, 6/25/31 (l) | | | 170,000 | | | | 167,395 | |
Series 2014-2 A
1.631%, 3/25/83 (l) | | | 138,050 | | | | 135,993 | |
Series 2014-3 A
1.611%, 3/25/83 (l) | | | 177,875 | | | | 175,336 | |
Series 2014-4 A
1.611%, 3/25/83 (l) | | | 210,957 | | | | 207,911 | |
| | | | | | | | |
Series 2015-2 A3
1.561%, 11/26/40 (l) | | | 115,000 | | | | 114,577 | |
Series 2016-2 A3
2.491%, 6/25/65 (l)§ | | | 215,000 | | | | 221,178 | |
Series 2017-1A A3
2.141%, 7/26/66 (l)§ | | | 180,000 | | | | 180,000 | |
Series 2017-3X A3
2.111%, 7/26/66 (b)(l)§ | | | 180,000 | | | | 180,000 | |
Nelnet Student Loan Trust, | |
Series 2005-4 B
1.436%, 9/22/35 (l) | | | 121,032 | | | | 103,845 | |
Series 2006-2 B
1.356%, 1/25/38 (l) | | | 99,673 | | | | 83,188 | |
Series 2007-1 A3
1.122%, 5/27/25 (l) | | | 180,000 | | | | 176,079 | |
Series 2014-2A A3
1.841%, 7/27/37 (l)§ | | | 200,000 | | | | 190,242 | |
Series 2014-4A A2
1.941%, 11/25/48 (l)§ | | | 85,000 | | | | 83,045 | |
Nomura Home Equity Loan, Inc. Home Equity Loan Trust, | |
Series 2006-HE2 A4
1.261%, 3/25/36 (l) | | | 205,000 | | | | 184,738 | |
NovaStar Mortgage Funding Trust, | |
Series 2005-2 M1
1.636%, 10/25/35 (l) | | | 64,701 | | | | 64,901 | |
OCP CLO Ltd., | |
Series 2014-6A A1A
2.608%, 7/17/26 (l)§ | | | 200,000 | | | | 200,575 | |
Option One Mortgage Loan Trust, | |
Series 2005-1 A4
1.791%, 2/25/35 (l) | | | 90,978 | | | | 92,229 | |
OZLM IX Ltd., | |
Series 2014-9A A1R
2.376%, 1/20/27 (l)§ | | | 200,000 | | | | 199,999 | |
RAMP Trust, | |
Series 2006-RZ3 A2
1.142%, 8/25/36 (l) | | | 5,449 | | | | 5,449 | |
Series 2007-RS2 A3
1.361%, 5/25/37 (l) | | | 180,402 | | | | 131,827 | |
RASC Trust, | | | | | | | | |
Series 2005-KS10 M1 | | | | | | | | |
1.401%, 11/25/35 (l) | | | 136,502 | | | | 136,615 | |
Series 2005-KS7 M3 | | | | | | | | |
1.471%, 8/25/35 (l) | | | 129,530 | | | | 129,519 | |
Series 2006-KS9 AI3 | | | | | | | | |
1.151%, 11/25/36 (l) | | | 279,290 | | | | 255,852 | |
Saratoga Investment Corp. CLO Ltd., | |
Series 2013-1A A1R | | | | | | | | |
2.706%, 10/20/25 (l)§ | | | 250,000 | | | | 251,495 | |
SG Mortgage Securities Trust, | | | | | | | | |
Series 2007-NC1 A2 | | | | | | | | |
1.231%, 12/25/36 (l)§ | | | 248,149 | | | | 154,861 | |
SLM Student Loan Trust, | | | | | | | | |
Series 2004-10 A6B | | | | | | | | |
1.706%, 4/27/26 (l)§ | | | 123,475 | | | | 123,861 | |
Series 2004-2 B | | | | | | | | |
1.626%, 7/25/39 (l) | | | 112,026 | | | | 101,474 | |
Series 2004-8 B | | | | | | | | |
1.616%, 1/25/40 (l) | | | 33,924 | | | | 30,575 | |
Series 2005-4 A3 | | | | | | | | |
1.276%, 1/25/27 (l) | | | 161,804 | | | | 160,417 | |
See Notes to Financial Statements.
146
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Series 2005-8 A5 | | | | | | | | |
1.326%, 1/25/40 (l) | | $ | 200,000 | | | $ | 186,663 | |
Series 2006-9 A5 | | | | | | | | |
1.256%, 1/26/26 (l) | | | 120,052 | | | | 119,266 | |
Series 2007-6 B | | | | | | | | |
2.006%, 4/27/43 (l) | | | 146,679 | | | | 131,934 | |
Series 2007-8 B | | | | | | | | |
2.156%, 4/27/83 (l) | | | 128,787 | | | | 121,273 | |
Series 2008-2 B | | | | | | | | |
2.356%, 1/25/83 (l) | | | 160,000 | | | | 150,597 | |
Series 2008-3 B | | | | | | | | |
2.356%, 4/26/83 (l) | | | 65,000 | | | | 60,252 | |
Series 2008-4 B | | | | | | | | |
3.006%, 4/25/29 (l) | | | 120,000 | | | | 116,431 | |
Series 2008-7 B | | | | | | | | |
3.006%, 7/26/83 (l) | | | 65,000 | | | | 63,589 | |
Series 2008-9 B | | | | | | | | |
3.406%, 10/25/83 (l) | | | 70,000 | | | | 70,830 | |
Series 2012-7 B | | | | | | | | |
2.791%, 9/25/43 (l) | | | 100,000 | | | | 94,838 | |
Series 2013-4 A | | | | | | | | |
1.541%, 6/25/43 (l) | | | 140,650 | | | | 137,770 | |
Series 2013-6 A2 | | | | | | | | |
1.491%, 2/25/21 (l) | | | 30,702 | | | | 30,712 | |
Soundview Home Loan Trust, | | | | | | | | |
Series 2007-OPT1 2A1 | | | | | | | | |
1.071%, 6/25/37 (l) | | | 236,125 | | | | 159,925 | |
SpringCastle America Funding LLC, | |
Series 2016-AA A | | | | | | | | |
3.050%, 4/25/29§ | | | 168,545 | | | | 169,449 | |
Structured Asset Investment Loan Trust, | |
Series 2006-1 A3 | | | | | | | | |
1.191%, 1/25/36 (l) | | | 152,247 | | | | 151,776 | |
Structured Asset Securities Corp. Mortgage Loan Trust, | |
Series 2005-WF4 M6 | | | | | | | | |
1.661%, 11/25/35 (l) | | | 500,000 | | | | 416,905 | |
Series 2006-GEL4 A3 | | | | | | | | |
1.291%, 10/25/36 (l)§ | | | 190,482 | | | | 183,671 | |
Telos CLO Ltd., | | | | | | | | |
Series 2016-7A A | | | | | | | | |
2.808%, 4/17/25 (l)§ | | | 162,697 | | | | 162,841 | |
THL Credit Wind River CLO Ltd., | | | | | | | | |
Series 2014-2A A2 | | | | | | | | |
2.608%, 7/15/26 (l)§ | | | 250,000 | | | | 250,726 | |
Toyota Auto Receivables, | | | | | | | | |
Series 2016-C A2A | | | | | | | | |
1.000%, 1/15/19 | | | 82,332 | | | | 82,241 | |
Toyota Auto Receivables Owner Trust, | | | | | |
Series 2014-B A3 | | | | | | | | |
0.760%, 3/15/18 | | | 3,796 | | | | 3,795 | |
Series 2016-B A2A | | | | | | | | |
1.020%, 10/15/18 | | | 57,366 | | | | 57,323 | |
USAA Auto Owner Trust, | | | | | | | | |
Series 2016-1 A2 | | | | | | | | |
1.070%, 3/15/19 | | | 87,377 | | | | 87,282 | |
Venture XVIII CLO Ltd., | | | | | | | | |
Series 2014-18A A | | | | | | | | |
2.608%, 10/15/26 (l)§ | | | 250,000 | | | | 250,061 | |
Vermont Student Assistance Corp., | | | | | | | | |
Series 2012-1 A | | | | | | | | |
1.683%, 7/28/34 (l) | | | 46,976 | | | | 46,523 | |
| | | | | | | | |
Voya CLO Ltd., | | | | | | | | |
Series 2013-3A A1R | | | | | | | | |
2.208%, 1/18/26 (b)(l)§ | | | 65,000 | | | | 65,000 | |
Wells Fargo Home Equity Asset-Backed Securities Trust, | |
Series 2007-2 A3 | | | | | | | | |
1.221%, 4/25/37 (l) | | | 165,192 | | | | 145,952 | |
WhiteHorse VI Ltd., | | | | | | | | |
Series 2012-1A A1R | | | | | | | | |
2.235%, 2/3/25 (l)§ | | | 200,000 | | | | 200,000 | |
| | | | | | | | |
Total Asset-Backed Securities | | | | | | | 17,384,374 | |
| | | | | | | | |
Collateralized Mortgage Obligations (11.7%) | |
Alternative Loan Trust, | | | | | | | | |
Series 2005-76 1A1 | | | | | | | | |
2.142%, 1/25/36 (l) | | | 138,889 | | | | 129,654 | |
Series 2006-HY12 A5 | | | | | | | | |
3.018%, 8/25/36 (l) | | | 122,091 | | | | 116,137 | |
Series 2006-OA19 A1 | | | | | | | | |
1.173%, 2/20/47 (l) | | | 351,930 | | | | 259,393 | |
Bear Stearns ALT-A Trust, | | | | | | | | |
Series 2004-9 A1 | | | | | | | | |
3.284%, 9/25/34 (l) | | | 126,226 | | | | 124,015 | |
Series 2005-10 22A1 | | | | | | | | |
3.290%, 1/25/36 (l) | | | 293,180 | | | | 272,813 | |
Series 2005-2 2A4 | | | | | | | | |
3.337%, 4/25/35 (l) | | | 119,433 | | | | 115,563 | |
CHL Mortgage Pass-Through Trust, | | | | | | | | |
Series 2005-3 1A2 | | | | | | | | |
1.571%, 4/25/35 (l) | | | 139,025 | | | | 123,011 | |
CIM Trust, | | | | | | | | |
Series 2015-4AG A1 | | | | | | | | |
2.983%, 10/25/57 (l)§ | | | 125,998 | | | | 126,024 | |
Citigroup Mortgage Loan Trust, | | | | | | | | |
Series 2015-2 1A1 | | | | | | | | |
1.182%, 6/25/47 (l)§ | | | 140,248 | | | | 131,780 | |
Deutsche Alt-A Securities Mortgage Loan Trust, | | | | | |
Series 2007-2 2A1 | | | | | | | | |
1.291%, 9/25/47 (l) | | | 157,710 | | | | 129,526 | |
DSLA Mortgage Loan Trust, | | | | | | | | |
Series 2006-AR2 2A1A | | | | | | | | |
1.194%, 10/19/36 (l) | | | 163,163 | | | | 138,439 | |
FHLMC, | | | | | | | | |
Series KF02 A2 | | | | | | | | |
1.541%, 7/25/20 (l) | | | 81,775 | | | | 81,858 | |
Series KF02 A3 | | | | | | | | |
1.621%, 7/25/20 (l) | | | 199,450 | | | | 199,914 | |
Series KF08 A | | | | | | | | |
1.291%, 1/25/22 (l) | | | 134,686 | | | | 134,479 | |
Series KJ13 A1 | | | | | | | | |
2.055%, 9/25/21 | | | 175,000 | | | | 175,431 | |
First Horizon Alternative Mortgage Securities Trust, | |
Series 2006-AA7 A1 | | | | | | | | |
3.072%, 1/25/37 (l) | | | 153,301 | | | | 130,841 | |
First Horizon Mortgage Pass-Through Trust, | | | | | |
Series 2005-AR4 2A1 | | | | | | | | |
2.889%, 10/25/35 (l) | | | 155,586 | | | | 137,009 | |
GSR Mortgage Loan Trust, | | | | | | | | |
Series 2005-AR7 6A1 | | | | | | | | |
3.030%, 11/25/35 (l) | | | 109,958 | | | | 108,848 | |
See Notes to Financial Statements.
147
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Impac CMB Trust, | | | | | | | | |
Series 2005-1 1A1 | | | | | | | | |
1.511%, 4/25/35 (l) | | $ | 88,316 | | | $ | 81,381 | |
Impac Secured Assets Trust, | | | | | | | | |
Series 2007-2 1A1A | | | | | | | | |
1.101%, 5/25/37 (l) | | | 193,192 | | | | 139,246 | |
IndyMac INDX Mortgage Loan Trust, | |
Series 2004-AR6 6A1 | | | | | | | | |
3.607%, 10/25/34 (l) | | | 88,796 | | | | 87,137 | |
Series 2006-AR4 A1A | | | | | | | | |
1.201%, 5/25/46 (l) | | | 223,883 | | | | 196,318 | |
Series 2007-AR15 2A1 | | | | | | | | |
3.886%, 8/25/37 (l) | | | 255,982 | | | | 198,416 | |
JP Morgan Mortgage Trust, | | | | | | | | |
Series 2006-A2 5A3 | | | | | | | | |
3.116%, 11/25/33 (l) | | | 58,597 | | | | 58,875 | |
Lehman XS Trust, | | | | | | | | |
Series 2005-5N 3A1A | | | | | | | | |
1.291%, 11/25/35 (l) | | | 152,139 | | | | 139,827 | |
Series 2007-4N 1A2A | | | | | | | | |
1.151%, 3/25/47 (l) | | | 305,968 | | | | 266,533 | |
Merrill Lynch Mortgage Investors Trust, | |
Series 2004-HB1 A3 | | | | | | | | |
2.967%, 4/25/29 (l) | | | 138,189 | | | | 138,630 | |
Series 2005-A9 2A1E | | | | | | | | |
3.175%, 12/25/35 (l) | | | 121,637 | | | | 114,886 | |
Series 2006-2 2A | | | | | | | | |
2.939%, 5/25/36 (l) | | | 114,947 | | | | 111,985 | |
RALI Trust, | | | | | | | | |
Series 2006-QA10 A2 | | | | | | | | |
1.171%, 12/25/36 (l) | | | 184,772 | | | | 157,493 | |
Series 2006-QA2 1A1 | | | | | | | | |
1.241%, 2/25/36 (l) | | | 229,545 | | | | 173,390 | |
Series 2006-QA5 1A1 | | | | | | | | |
1.171%, 7/25/36 (l) | | | 236,253 | | | | 160,019 | |
Residential Asset Securitization Trust, | |
Series 2005-A10 A4 | | | | | | | | |
5.500%, 9/25/35 | | | 119,654 | | | | 106,230 | |
Sequoia Mortgage Trust, | | | | | | | | |
Series 2004-12 A1 | | | | | | | | |
1.533%, 1/20/35 (l) | | | 114,325 | | | | 106,900 | |
Series 2004-6 A1 | | | | | | | | |
2.688%, 7/20/34 (l) | | | 130,938 | | | | 130,079 | |
Structured Adjustable Rate Mortgage Loan Trust, | | | | | |
Series 2004-20 1A1 | | | | | | | | |
3.285%, 1/25/35 (l) | | | 163,105 | | | | 155,500 | |
Series 2004-8 3A | | | | | | | | |
3.239%, 7/25/34 (l) | | | 146,367 | | | | 146,001 | |
Series 2005-12 3A1 | | | | | | | | |
3.221%, 6/25/35 (l) | | | 117,639 | | | | 107,479 | |
Series 2005-15 1A1 | | | | | | | | |
3.326%, 7/25/35 (l) | | | 157,283 | | | | 130,605 | |
Series 2005-16XS A1 | | | | | | | | |
1.331%, 8/25/35 (l) | | | 116,695 | | | | 112,242 | |
Series 2005-17 5A1 | | | | | | | | |
3.223%, 8/25/35 (l) | | | 144,476 | | | | 125,306 | |
Structured Asset Mortgage Investments II Trust, | | | | | |
Series 2006-AR6 1A3 | | | | | | | | |
1.181%, 7/25/46 (l) | | | 441,630 | | | | 340,964 | |
Series 2006-AR7 A10 | | | | | | | | |
1.191%, 8/25/36 (l) | | | 144,176 | | | | 142,274 | |
| | | | | | | | |
Wachovia Mortgage Loan Trust, | | | | | | | | |
Series 2006-AMN1 A3 | | | | | | | | |
1.231%, 8/25/36 (l) | | | 212,132 | | | | 131,298 | |
WaMu Mortgage Pass-Through Certificates Trust, | | | | | |
Series 2005-AR11 A1A | | | | | | | | |
1.311%, 8/25/45 (l) | | | 138,015 | | | | 131,666 | |
Series 2005-AR13 A1A1 | | | | | | | | |
1.281%, 10/25/45 (l) | | | 215,726 | | | | 204,696 | |
Series 2005-AR8 2A1A | | | | | | | | |
1.281%, 7/25/45 (l) | | | 135,879 | | | | 128,967 | |
Series 2006-AR3 A1A | | | | | | | | |
1.662%, 2/25/46 (l) | | | 168,632 | | | | 163,167 | |
Series 2007-HY3 1A1 | | | | | | | | |
2.742%, 3/25/37 (l) | | | 150,937 | | | | 133,908 | |
Washington Mutual Mortgage Pass-Through Certificates WMALT Trust, | |
Series 2007-OA1 2A | | | | | | | | |
1.382%, 12/25/46 (l) | | | 267,433 | | | | 198,203 | |
Wells Fargo Mortgage Backed Securities Trust, | | | | | |
Series 2004-DD 1A1 | | | | | | | | |
3.112%, 1/25/35 (l) | | | 143,963 | | | | 147,192 | |
Series 2004-I 1A1 | | | | | | | | |
3.178%, 7/25/34 (l) | | | 46,390 | | | | 48,141 | |
Series 2006-AR10 5A6 | | | | | | | | |
3.127%, 7/25/36 (l) | | | 216,760 | | | | 221,322 | |
Series 2006-AR12 1A1 | | | | | | | | |
3.244%, 9/25/36 (l) | | | 112,057 | | | | 106,112 | |
Series 2006-AR4 1A1 | | | | | | | | |
3.349%, 4/25/36 (l) | | | 117,441 | | | | 112,104 | |
Series 2006-AR8 2A3 | | | | | | | | |
3.109%, 4/25/36 (l) | | | 160,921 | | | | 162,558 | |
Series 2006-AR8 3A2 | | | | | | | | |
3.176%, 4/25/36 (l) | | | 115,417 | | | | 112,489 | |
| | | | | | | | |
Total Collateralized Mortgage Obligations | | | | | | | 8,264,274 | |
| | | | | | | | |
Commercial Mortgage-Backed Securities (7.6%) | |
Banc of America Commercial Mortgage Trust, | | | | | |
Series 2007-5 A4 | | | | | | | | |
5.492%, 2/10/51 | | | 47,868 | | | | 48,237 | |
Bayview Commercial Asset Trust, | | | | | | | | |
Series 2004-3 A1 | | | | | | | | |
1.361%, 1/25/35 (l)§ | | | 142,602 | | | | 136,270 | |
Bear Stearns Commercial Mortgage Securities Trust, | |
Series 2004-PWR4 X | | | | | | | | |
0.103%, 6/11/41 IO (b)(l)§ | | | 6,384,547 | | | | 18,962 | |
Citigroup Commercial Mortgage Trust, | |
Series 2007-C6 A4 | | | | | | | | |
5.922%, 12/10/49 (l) | | | 58,344 | | | | 58,320 | |
COMM Mortgage Trust, | | | | | | | | |
Series 2012-CR5 XA | | | | | | | | |
1.878%, 12/10/45 IO (l) | | | 520,606 | | | | 32,950 | |
Series 2013-LC6 A2 | | | | | | | | |
1.906%, 1/10/46 | | | 75,000 | | | | 75,184 | |
CSMC, | | | | | | | | |
Series 2010-RR1 2A | | | | | | | | |
5.695%, 9/15/40 (l)§ | | | 34,708 | | | | 34,764 | |
DBUBS Mortgage Trust, | | | | | | | | |
Series 2011-LC3A XA | | | | | | | | |
0.528%, 8/10/44 IO (l)§ | | | 2,390,291 | | | | 26,246 | |
See Notes to Financial Statements.
148
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
FHLMC, | | | | | | | | |
Series K005 AX | | | | | | | | |
1.542%, 11/25/19 IO (l) | | $ | 1,060,384 | | | $ | 32,667 | |
Series K719 X1 | | | | | | | | |
0.572%, 6/25/22 IO (l) | | | 1,574,239 | | | | 22,291 | |
Series KS01 X1 | | | | | | | | |
1.510%, 1/25/23 IO (l) | | | 496,886 | | | | 26,487 | |
Series KS07 X | | | | | | | | |
0.778%, 9/25/25 IO (l) | | | 1,500,000 | | | | 68,369 | |
FHLMC Multifamily Structured Pass-Through Certificates, | |
Series K007 X1 | | | | | | | | |
1.226%, 4/25/20 IO (l) | | | 758,370 | | | | 19,483 | |
Series KC01 X1 | | | | | | | | |
0.845%, 12/25/22 IO (l) | | | 1,548,479 | | | | 41,829 | |
FNMA, | | | | | | | | |
Series 2009-M2 X | | | | | | | | |
1.649%, 1/25/19 IO (l) | | | 837,506 | | | | 19,282 | |
Series 2010-M3 A3 | | | | | | | | |
4.332%, 3/25/20 (l) | | | 195,265 | | | | 205,986 | |
Series 2010-M4 X | | | | | | | | |
0.892%, 6/25/20 IO (l) | | | 2,778,268 | | | | 58,589 | |
Series 2010-M5 X | | | | | | | | |
1.037%, 7/25/20 IO (l) | | | 372,370 | | | | 10,195 | |
Series 2011-M5 X | | | | | | | | |
1.270%, 7/25/21 IO (l) | | | 1,170,241 | | | | 47,853 | |
Series 2012-M17 X2 | | | | | | | | |
0.528%, 11/25/22 IO (l) | | | 2,341,621 | | | | 43,393 | |
Series 2013-M14 FA | | | | | | | | |
1.341%, 8/25/18 (l) | | | 130,044 | | | | 130,143 | |
Series 2013-M4 ASQ2 | | | | | | | | |
1.451%, 2/25/18 | | | 114,621 | | | | 114,475 | |
Series 2014-M12 FA | | | | | | | | |
1.106%, 10/25/21 (l) | | | 45,668 | | | | 45,271 | |
Series 2014-M6 X2 | | | | | | | | |
0.331%, 5/25/21 IO (l) | | | 5,139,774 | | | | 40,499 | |
Series 2015-M3 FA | | | | | | | | |
1.203%, 6/25/18 (l) | | | 172,637 | | | | 172,557 | |
Series 2015-M4 FA | | | | | | | | |
1.013%, 9/25/18 (l) | | | 163,902 | | | | 163,625 | |
Series 2016-M13 FA | | | | | | | | |
1.488%, 11/25/23 (l) | | | 174,685 | | | | 174,753 | |
FREMF Mortgage Trust, | | | | | | | | |
Series 2013-K713 X2A | | | | | | | | |
0.100%, 4/25/46 IO§ | | | 14,469,544 | | | | 31,496 | |
GE Business Loan Trust, | | | | | | | | |
Series 2005-1A A3 | | | | | | | | |
1.244%, 6/15/33 (l)§ | | | 93,215 | | | | 86,288 | |
Series 2007-1A A | | | | | | | | |
1.164%, 4/16/35 (l)§ | | | 98,712 | | | | 92,794 | |
GNMA, | | | | | | | | |
Series 2012-112 IO | | | | | | | | |
0.311%, 2/16/53 IO (l) | | | 1,129,110 | | | | 29,479 | |
Series 2014-125 IO | | | | | | | | |
0.973%, 11/16/54 IO (l) | | | 717,802 | | | | 50,038 | |
GRACE Mortgage Trust, | | | | | | | | |
Series 2014-GRCE A | | | | | | | | |
3.369%, 6/10/28 (b)§ | | | 35,000 | | | | 36,382 | |
GS Mortgage Securities Trust, | | | | | | | | |
Series 2010-C1 X | | | | | | | | |
1.516%, 8/10/43 IO (b)(l)§ | | | 493,534 | | | | 18,680 | |
Series 2010-C2 A1 | | | | | | | | |
3.849%, 12/10/43§ | | | 79,528 | | | | 82,004 | |
| | | | | | | | |
Series 2012-GC6 XA | | | | | | | | |
2.150%, 1/10/45 IO (l)§ | | | 777,839 | | | | 58,589 | |
Series 2013-GC13 A2 | | | | | | | | |
2.812%, 7/10/46 | | | 200,000 | | | | 201,970 | |
Series 2013-GC13 XA | | | | | | | | |
0.239%, 7/10/46 IO (l) | | | 4,713,788 | | | | 25,990 | |
JP Morgan Chase Commercial Mortgage Securities Trust, | |
Series 2007-C1 A4
5.716%, 2/15/51 | | | 282,798 | | | | 285,488 | |
Series 2010-C1 XA
1.595%, 6/15/43 IO (b)(l)§ | | | 1,241,063 | | | | 32,261 | |
Series 2010-C2 A2
3.616%, 11/15/43§ | | | 410,789 | | | | 414,178 | |
Series 2010-CNTR A1
3.300%, 8/5/32§ | | | 71,335 | | | | 71,981 | |
Series 2011-C3 A3
4.388%, 2/15/46§ | | | 142,533 | | | | 145,805 | |
Series 2011-C3 XA
1.211%, 2/15/46 IO (b)(l)§ | | | 418,066 | | | | 9,810 | |
Series 2011-C4 A3
4.106%, 7/15/46§ | | | 235,388 | | | | 240,725 | |
Series 2012-C6 XA
1.769%, 5/15/45 IO (l) | | | 606,477 | | | | 40,728 | |
Series 2012-C8 XA
1.978%, 10/15/45 IO (l) | | | 646,046 | | | | 46,984 | |
Series 2012-CBX A3
3.139%, 6/15/45 | | | 104,062 | | | | 105,492 | |
Series 2012-CBX XA
1.828%, 6/15/45 IO (l) | | | 659,954 | | | | 36,307 | |
Series 2013-C13 XA
0.534%, 1/15/46 IO (l) | | | 3,214,930 | | | | 32,141 | |
JPMBB Commercial Mortgage Securities Trust, | | | | | |
Series 2013-C12 XA
0.812%, 7/15/45 IO (l) | | | 2,174,207 | | | | 51,845 | |
Series 2013-C14 XA
0.976%, 8/15/46 IO (l) | | | 2,323,311 | | | | 60,790 | |
Series 2013-C15 XA
1.509%, 11/15/45 IO (l) | | | 958,144 | | | | 45,473 | |
LB-UBS Commercial Mortgage Trust, | | | | | |
Series 2007-C6 A4
5.858%, 7/15/40 (l) | | | 76,798 | | | | 77,307 | |
Lehman Brothers Small Balance Commercial Mortgage Trust, | |
Series 2005-2A 1A
1.241%, 9/25/30 (l)§ | | | 59,032 | | | | 57,006 | |
Merrill Lynch Mortgage Trust, | | | | | |
Series 2007-C1 A1A
6.027%, 6/12/50 (l) | | | 115,703 | | | | 115,823 | |
Morgan Stanley Bank of America Merrill Lynch Trust, | |
Series 2013-C12 XA
1.069%, 10/15/46 IO (l) | | | 870,288 | | | | 27,818 | |
Series 2013-C7 A4
2.918%, 2/15/46 | | | 45,000 | | | | 45,418 | |
Series 2013-C7 XA
1.628%, 2/15/46 IO (l) | | | 901,297 | | | | 54,036 | |
Series 2014-C14 A2
2.916%, 2/15/47 | | | 175,000 | | | | 177,813 | |
OBP Depositor LLC Trust, | | | | | |
Series 2010-OBP A
4.646%, 7/15/45§ | | | 30,000 | | | | 32,053 | |
See Notes to Financial Statements.
149
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
SFAVE Commercial Mortgage Securities Trust, | | | | | |
Series 2015-5AVE XA
0.453%, 1/5/43 IO (b)(l)§ | | $ | 525,000 | | | $ | 29,257 | |
UBS-Barclays Commercial Mortgage Trust, | | | | | |
Series 2012-C4 A5
2.850%, 12/10/45 | | | 180,000 | | | | 181,261 | |
VNDO Mortgage Trust, | | | | | |
Series 2012-6AVE A
2.996%, 11/15/30§ | |
| 62,000
|
| |
| 63,147
|
|
Series 2013-PENN A
3.808%, 12/13/29 (b)§ | | | 35,000 | | | | 36,754 | |
Wachovia Bank Commercial Mortgage Trust, | | | | | |
Series 2007-C33 A4
6.179%, 2/15/51 (l) | | | 9,115 | | | | 9,112 | |
WFRBS Commercial Mortgage Trust, | | | | | |
Series 2011-C3 A3
3.998%, 3/15/44§ | | | 167,475 | | | | 171,460 | |
Series 2013-C13 A2
1.964%, 5/15/45 | | | 50,000 | | | | 50,128 | |
Series 2014-C23 XA
0.829%, 10/15/57 IO (l) | | | 923,482 | | | | 33,290 | |
| | | | | | | | |
Total Commercial Mortgage-Backed Securities | | | | | | | 5,364,081 | |
| | | | | | | | |
Corporate Bonds (21.1%) | |
Consumer Discretionary (1.2%) | | | | | |
Automobiles (0.1%) | |
General Motors Co. | | | | | |
4.875%, 10/2/23 | | | 40,000 | | | | 42,565 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (0.2%) | |
Churchill Downs, Inc. | | | | | |
5.375%, 12/15/21 | | | 35,000 | | | | 36,445 | |
GLP Capital LP | | | | | |
5.375%, 4/15/26 | | | 35,000 | | | | 36,772 | |
KFC Holding Co. | | | | | |
5.000%, 6/1/24§ | | | 17,000 | | | | 17,553 | |
Sugarhouse HSP Gaming Prop Mezz LP | | | | | |
5.875%, 5/15/25 (b)§ | | | 35,000 | | | | 35,042 | |
| | | | | | | | |
| | | | | | | 125,812 | |
| | | | | | | | |
Media (0.9%) | |
21st Century Fox America, Inc. | | | | | |
8.875%, 4/26/23 | | | 80,000 | | | | 103,853 | |
Altice Financing SA | | | | | |
7.500%, 5/15/26§ | | | 200,000 | | | | 215,260 | |
Cable One, Inc. | | | | | | | | |
5.750%, 6/15/22§ | | | 35,000 | | | | 36,531 | |
Cequel Communications Holdings I LLC | | | | | |
6.375%, 9/15/20§ | | | 13,000 | | | | 13,398 | |
Charter Communications Operating LLC | | | | | |
3.243%, 1/15/24 | | | 99,000 | | | | 99,454 | |
6.484%, 10/23/45 | | | 90,000 | | | | 104,742 | |
DISH DBS Corp. | | | | | | | | |
5.875%, 7/15/22 | | | 17,000 | | | | 18,008 | |
Sirius XM Radio, Inc. | | | | | | | | |
5.750%, 8/1/21§ | | | 42,000 | | | | 43,575 | |
TEGNA, Inc. | | | | | | | | |
5.500%, 9/15/24 (b)§ | | | 35,000 | | | | 35,788 | |
| | | | | | | | |
| | | | | | | 670,609 | |
| | | | | | | | |
| | | | | | | | |
Multiline Retail (0.0%) | |
Cumberland Farms, Inc. | | | | | |
6.750%, 5/1/25 (b)§ | | | 18,000 | | | | 18,585 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 857,571 | |
| | | | | | | | |
Consumer Staples (0.9%) | | | | | |
Beverages (0.3%) | |
Anheuser-Busch InBev Finance, Inc. | | | | | | | | |
3.650%, 2/1/26 | | | 31,000 | | | | 31,613 | |
4.900%, 2/1/46 | | | 57,000 | | | | 62,263 | |
Constellation Brands, Inc. | | | | | | | | |
6.000%, 5/1/22 | | | 53,000 | | | | 60,385 | |
DS Services of America, Inc. | | | | | | | | |
10.000%, 9/1/21§ | | | 35,000 | | | | 37,384 | |
| | | | | | | | |
| | | | | | | 191,645 | |
| | | | | | | | |
Food & Staples Retailing (0.2%) | |
CVS Health Corp. | | | | | | | | |
4.875%, 7/20/35 | | | 30,000 | | | | 32,426 | |
Walgreens Boots Alliance, Inc. | | | | | | | | |
3.800%, 11/18/24 | | | 110,000 | | | | 113,043 | |
4.800%, 11/18/44 | | | 30,000 | | | | 30,971 | |
| | | | | | | | |
| | | | | | | 176,440 | |
| | | | | | | | |
Food Products (0.3%) | |
Chobani LLC | | | | | | | | |
7.500%, 4/15/25§ | | | 53,000 | | | | 54,723 | |
Dole Food Co., Inc. | | | | | | | | |
7.250%, 6/15/25§ | | | 18,000 | | | | 18,653 | |
Kraft Heinz Foods Co. | | | | | | | | |
3.000%, 6/1/26 | | | 70,000 | | | | 66,427 | |
Lamb Weston Holdings, Inc. | | | | | | | | |
4.875%, 11/1/26§ | | | 10,000 | | | | 10,325 | |
Post Holdings, Inc. | | | | | | | | |
5.000%, 8/15/26§ | | | 24,000 | | | | 23,880 | |
TreeHouse Foods, Inc. | | | | | | | | |
6.000%, 2/15/24§ | | | 17,000 | | | | 18,190 | |
| | | | | | | | |
| | | | | | | 192,198 | |
| | | | | | | | |
Personal Products (0.1%) | |
High Ridge Brands Co. | | | | | | | | |
8.875%, 3/15/25§ | | | 31,000 | | | | 32,395 | |
Nature’s Bounty Co. (The) | | | | | | | | |
7.625%, 5/15/21§ | | | 18,000 | | | | 19,125 | |
| | | | | | | | |
| | | | | | | 51,520 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 611,803 | |
| | | | | | | | |
Energy (1.2%) | | | | | |
Oil, Gas & Consumable Fuels (1.2%) | |
BP Capital Markets plc | | | | | | | | |
3.062%, 3/17/22 | | | 70,000 | | | | 71,349 | |
Diamondback Energy, Inc. | | | | | | | | |
5.375%, 5/31/25§ | | | 35,000 | | | | 35,963 | |
Enbridge Energy Partners LP | | | | | | | | |
5.875%, 10/15/25 | | | 40,000 | | | | 45,449 | |
Energy Transfer Partners LP | | | | | | | | |
4.187%, 11/1/66 (l) | | | 9,000 | | | | 7,729 | |
Gulfport Energy Corp. | | | | | | | | |
6.375%, 5/15/25§ | | | 10,000 | | | | 9,957 | |
Parsley Energy LLC | | | | | | | | |
6.250%, 6/1/24§ | | | 18,000 | | | | 18,821 | |
See Notes to Financial Statements.
150
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Petrobras Global Finance BV | | | | | | | | |
8.375%, 5/23/21 | | $ | 200,000 | | | $ | 225,853 | |
Regency Energy Partners LP | | | | | | | | |
5.000%, 10/1/22 | | | 150,000 | | | | 160,433 | |
Sabine Pass Liquefaction LLC | | | | | | | | |
5.000%, 3/15/27§ | | | 100,000 | | | | 105,710 | |
Texas Eastern Transmission LP | | | | | | | | |
2.800%, 10/15/22§ | | | 100,000 | | | | 98,045 | |
Williams Partners LP | | | | | | | | |
3.600%, 3/15/22 | | | 90,000 | | | | 91,997 | |
| | | | | | | | |
Total Energy | | | | | | | 871,306 | |
| | | | | | | | |
Financials (9.8%) | | | | | |
Banks (7.4%) | |
Bank of America Corp. | | | | | | | | |
6.875%, 4/25/18 | | | 105,000 | | | | 110,169 | |
5.650%, 5/1/18 | | | 275,000 | | | | 285,331 | |
3.300%, 1/11/23 | | | 400,000 | | | | 405,727 | |
3.875%, 8/1/25 | | | 300,000 | | | | 307,146 | |
3.705%, 4/24/28 (l) | | | 125,000 | | | | 125,032 | |
Barclays Bank plc | | | | | | | | |
7.625%, 11/21/22 | | | 200,000 | | | | 219,240 | |
CIT Group, Inc. | | | | | | | | |
5.250%, 3/15/18 | | | 35,000 | | | | 36,113 | |
Citigroup, Inc. | | | | | | | | |
6.125%, 11/21/17 | | | 90,000 | | | | 92,206 | |
1.800%, 2/5/18 | | | 100,000 | | | | 100,091 | |
2.500%, 9/26/18 | | | 150,000 | | | | 151,411 | |
Credit Suisse Group Funding Guernsey Ltd. | |
3.750%, 3/26/25 | | | 250,000 | | | | 248,929 | |
Discover Bank | | | | | | | | |
2.000%, 2/21/18 | | | 75,000 | | | | 75,116 | |
HBOS plc | | | | | | | | |
6.750%, 5/21/18§ | | | 100,000 | | | | 104,553 | |
HSBC Holdings plc | | | | | | | | |
6.000%, 9/29/23 (l)(m)(y) | | EUR | 200,000 | | | | 239,918 | |
JPMorgan Chase & Co. | | | | | | | | |
7.900%, 4/30/18 (l)(y) | | $ | 200,000 | | | | 208,000 | |
2.550%, 10/29/20 | | | 105,000 | | | | 105,796 | |
2.535%, 3/1/21 (l) | | | 200,000 | | | | 205,441 | |
3.900%, 7/15/25 | | | 175,000 | | | | 181,894 | |
KBC Bank NV | | | | | | | | |
8.000%, 1/25/23 (l)(m) | | | 200,000 | | | | 208,000 | |
Lloyds Banking Group plc | | | | | | | | |
7.625%, 6/27/23 (l)(m)(y) | | GBP | 200,000 | | | | 286,913 | |
Mitsubishi UFJ Financial Group, Inc. | |
2.190%, 9/13/21 | | $ | 100,000 | | | | 98,077 | |
Mizuho Financial Group, Inc. | | | | | | | | |
2.260%, 9/13/21 (l) | | | 100,000 | | | | 101,192 | |
Royal Bank of Scotland Group plc | |
7.500%, 8/10/20 (l)(y) | | | 100,000 | | | | 103,800 | |
Santander Holdings USA, Inc. | | | | | | | | |
2.504%, 11/24/17 (l) | | | 200,000 | | | | 201,243 | |
Santander UK Group Holdings plc | |
2.875%, 10/16/20 | | | 85,000 | | | | 85,352 | |
Santander UK plc | | | | | | | | |
2.500%, 3/14/19 | | | 200,000 | | | | 201,611 | |
Societe Generale SA | | | | | | | | |
7.375%, 9/13/21 (l)(y)§ | | | 200,000 | | | | 211,500 | |
Standard Chartered plc | | | | | | | | |
2.182%, 8/19/19 (l)§ | | | 200,000 | | | | 201,320 | |
| | | | | | | | |
Toronto-Dominion Bank (The) | | | | | | | | |
2.150%, 4/7/21 (l) | | | 100,000 | | | | 101,622 | |
Wells Fargo & Co. | | | | | | | | |
2.600%, 7/22/20 | | | 100,000 | | | | 101,192 | |
3.000%, 4/22/26 | | | 85,000 | | | | 82,153 | |
| | | | | | | | |
| | | | | | | 5,186,088 | |
| | | | | | | | |
Capital Markets (1.7%) | |
Blackstone CQP Holdco LP | | | | | | | | |
6.500%, 3/20/21 (b)§ | | | 50,000 | | | | 50,344 | |
Deutsche Bank AG | | | | | | | | |
4.250%, 10/14/21§ | | | 200,000 | | | | 206,882 | |
Goldman Sachs Group, Inc. (The) | | | | | | | | |
6.150%, 4/1/18 | | | 115,000 | | | | 119,560 | |
2.139%, 11/15/18 (l) | | | 100,000 | | | | 101,044 | |
3.850%, 7/8/24 | | | 245,000 | | | | 252,336 | |
3.500%, 1/23/25 | | | 100,000 | | | | 100,409 | |
Morgan Stanley | | | | | | | | |
5.625%, 9/23/19 | | | 200,000 | | | | 216,051 | |
3.875%, 4/29/24 | | | 100,000 | | | | 103,545 | |
MSCI, Inc.
4.750%, 8/1/26§ | | | 18,000 | | | | 18,439 | |
| | | | | | | | |
| | | | | | | 1,168,610 | |
| | | | | | | | |
Consumer Finance (0.6%) | |
American Express Co.
7.000%, 3/19/18 | | | 150,000 | | | | 157,014 | |
Ford Motor Credit Co. LLC | | | | | | | | |
2.145%, 1/9/18 | | | 100,000 | | | | 100,275 | |
3.157%, 8/4/20 | | | 200,000 | | | | 202,832 | |
| | | | | | | | |
| | | | | | | 460,121 | |
| | | | | | | | |
Diversified Financial Services (0.1%) | |
GSMS
0.911%, 5/10/34 | | | 1,500,000 | | | | 35,974 | |
Shell International Finance BV
3.250%, 5/11/25 | | | 50,000 | | | | 50,845 | |
| | | | | | | | |
| | | | | | | 86,819 | |
| | | | | | | | |
Total Financials | | | | | | | 6,901,638 | |
| | | | | | | | |
Health Care (2.0%) | | | | | |
Biotechnology (0.6%) | |
AbbVie, Inc. | | | | | | | | |
3.600%, 5/14/25 | | | 100,000 | | | | 100,811 | |
4.700%, 5/14/45 | | | 35,000 | | | | 35,156 | |
Amgen, Inc.
4.663%, 6/15/51 | | | 100,000 | | | | 100,623 | |
Biogen, Inc.
3.625%, 9/15/22 | | | 55,000 | | | | 56,853 | |
Celgene Corp.
5.000%, 8/15/45 | | | 50,000 | | | | 53,035 | |
Gilead Sciences, Inc.
4.500%, 2/1/45 | | | 50,000 | | | | 50,423 | |
| | | | | | | | |
| | | | | | | 396,901 | |
| | | | | | | | |
Health Care Equipment & Supplies (0.3%) | |
Boston Scientific Corp.
3.850%, 5/15/25 | | | 100,000 | | | | 102,349 | |
Hill-Rom Holdings, Inc.
5.750%, 9/1/23§ | | | 20,000 | | | | 20,900 | |
See Notes to Financial Statements.
151
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Zimmer Biomet Holdings, Inc.
3.550%, 4/1/25 | | $ | 100,000 | | | $ | 99,572 | |
| | | | | | | | |
| | | | | | | 222,821 | |
| | | | | | | | |
Health Care Providers & Services (0.8%) | |
Aetna, Inc.
1.500%, 11/15/17 | | | 150,000 | | | | 150,054 | |
Anthem, Inc.
1.875%, 1/15/18 | | | 100,000 | | | | 100,098 | |
Centene Corp.
4.750%, 1/15/25 | | | 36,000 | | | | 36,630 | |
DaVita, Inc.
5.000%, 5/1/25 | | | 15,000 | | | | 15,131 | |
HCA, Inc.
4.750%, 5/1/23 | | | 70,000 | | | | 73,500 | |
Molina Healthcare, Inc.
5.375%, 11/15/22 | | | 18,000 | | | | 18,765 | |
Tenet Healthcare Corp. | | | | | | | | |
4.750%, 6/1/20 | | | 24,000 | | | | 24,360 | |
6.000%, 10/1/20 | | | 8,000 | | | | 8,420 | |
4.500%, 4/1/21 | | | 17,000 | | | | 16,957 | |
UnitedHealth Group, Inc.
6.000%, 2/15/18 | | | 100,000 | | | | 103,472 | |
WellCare Health Plans, Inc.
5.250%, 4/1/25 | | | 17,000 | | | | 17,638 | |
| | | | | | | | |
| | | | | | | 565,025 | |
| | | | | | | | |
Health Care Technology (0.1%) | |
Quintiles IMS, Inc.
4.875%, 5/15/23§ | | | 32,000 | | | | 32,960 | |
| | | | | | | | |
Pharmaceuticals (0.2%) | |
Actavis Funding SCS
3.800%, 3/15/25 | | | 70,000 | | | | 71,165 | |
Valeant Pharmaceuticals International, Inc. | |
5.500%, 3/1/23§ | | | 50,000 | | | | 36,750 | |
7.000%, 3/15/24§ | | | 18,000 | | | | 18,383 | |
6.125%, 4/15/25§ | | | 40,000 | | | | 29,480 | |
| | | | | | | | |
| | | | | | | 155,778 | |
| | | | | | | | |
Total Health Care | | | | | | | 1,373,485 | |
| | | | | | | | |
Industrials (0.7%) | | | | | |
Aerospace & Defense (0.2%) | |
United Technologies Corp.
1.778%, 5/4/18 (e) | | | 125,000 | | | | 125,156 | |
| | | | | | | | |
Building Products (0.1%) | |
Standard Industries, Inc.
5.125%, 2/15/21§ | | | 35,000 | | | | 36,488 | |
| | | | | | | | |
Commercial Services & Supplies (0.2%) | |
Aramark Services, Inc.
4.750%, 6/1/26 | | | 25,000 | | | | 25,563 | |
Clean Harbors, Inc.
5.125%, 6/1/21 | | | 42,000 | | | | 43,016 | |
Waste Management, Inc.
6.100%, 3/15/18 | | | 75,000 | | | | 78,057 | |
| | | | | | | | |
| | | | | | | 146,636 | |
| | | | | | | | |
Professional Services (0.0%) | |
IHS Markit Ltd.
5.000%, 11/1/22§ | | | 23,000 | | | | 24,582 | |
| | | | | | | | |
| | | | | | | | |
Trading Companies & Distributors (0.2%) | |
International Lease Finance Corp.
7.125%, 9/1/18§ | | | 150,000 | | | | 160,170 | |
| | | | | | | | |
Total Industrials | | | | | | | 493,032 | |
| | | | | | | | |
Information Technology (0.5%) | | | | | |
Internet Software & Services (0.0%) | |
Zayo Group LLC
5.750%, 1/15/27§ | | | 17,000 | | | | 18,000 | |
| | | | | | | | |
IT Services (0.1%) | |
First Data Corp.
5.000%, 1/15/24§ | | | 50,000 | | | | 51,125 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (0.2%) | |
Broadcom Corp.
3.000%, 1/15/22§ | | | 100,000 | | | | 100,738 | |
| | | | | | | | |
Software (0.1%) | |
Change Healthcare Holdings LLC
5.750%, 3/1/25§ | | | 23,000 | | | | 23,661 | |
Microsoft Corp.
4.450%, 11/3/45 | | | 70,000 | | | | 74,443 | |
| | | | | | | | |
| | | | | | | 98,104 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.1%) | |
EMC Corp. | | | | | | | | |
2.650%, 6/1/20 | | | 100,000 | | | | 97,500 | |
| | | | | | | | |
Total Information Technology | | | | | | | 365,467 | |
| | | | | | | | |
Materials (0.5%) | | | | | |
Chemicals (0.1%) | |
Scotts Miracle-Gro Co. (The) | | | | | | | | |
5.250%, 12/15/26§ | | | 21,000 | | | | 21,525 | |
Valvoline, Inc. | | | | | | | | |
5.500%, 7/15/24§ | | | 30,000 | | | | 31,800 | |
| | | | | | | | |
| | | | | | | 53,325 | |
| | | | | | | | |
Containers & Packaging (0.4%) | |
Amcor Finance USA, Inc. | | | | | | | | |
3.625%, 4/28/26§ | | | 100,000 | | | | 99,946 | |
Ball Corp. | | | | | | | | |
5.250%, 7/1/25 | | | 17,000 | | | | 18,275 | |
Crown Americas LLC | | | | | | | | |
4.250%, 9/30/26§ | | | 35,000 | | | | 34,300 | |
Graphic Packaging International, Inc. | | | | | | | | |
4.125%, 8/15/24 | | | 35,000 | | | | 35,000 | |
Reynolds Group Issuer, Inc. | | | | | | | | |
5.750%, 10/15/20 | | | 52,000 | | | | 53,365 | |
Sealed Air Corp. | | | | | | | | |
5.250%, 4/1/23§ | | | 35,000 | | | | 37,321 | |
| | | | | | | | |
| | | | | | | 278,207 | |
| | | | | | | | |
Total Materials | | | | | | | 331,532 | |
| | | | | | | | |
Real Estate (1.2%) | | | | | |
Equity Real Estate Investment Trusts (REITs) (1.2%) | |
American Tower Corp. (REIT) | | | | | | | | |
4.500%, 1/15/18 | | | 75,000 | | | | 76,403 | |
Camden Property Trust (REIT) | | | | | | | | |
5.700%, 5/15/17 | | | 100,000 | | | | 100,143 | |
See Notes to Financial Statements.
152
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
DuPont Fabros Technology LP (REIT) | |
5.875%, 9/15/21 | | $ | 35,000 | | | $ | 36,487 | |
Equinix, Inc. (REIT) | | | | | | | | |
5.375%, 5/15/27 | | | 14,000 | | | | 14,569 | |
HCP, Inc. (REIT) | | | | | | | | |
3.875%, 8/15/24 | | | 75,000 | | | | 75,865 | |
SBA Communications Corp. (REIT) | |
4.875%, 9/1/24§ | | | 23,000 | | | | 23,144 | |
Ventas Realty LP (REIT) | | | | | | | | |
4.125%, 1/15/26 | | | 125,000 | | | | 128,361 | |
VEREIT Operating Partnership LP (REIT) | |
3.000%, 2/6/19 | | | 35,000 | | | | 35,270 | |
WEA Finance LLC (REIT) | | | | | | | | |
2.700%, 9/17/19§ | | | 200,000 | | | | 201,786 | |
Welltower, Inc. (REIT) | | | | | | | | |
3.750%, 3/15/23 | | | 150,000 | | | | 154,643 | |
| | | | | | | | |
Total Real Estate | | | | | | | 846,671 | |
| | | | | | | | |
Telecommunication Services (1.8%) | | | | | |
Diversified Telecommunication Services (1.7%) | |
AT&T, Inc. | | | | | | | | |
3.400%, 5/15/25 | | | 70,000 | | | | 68,029 | |
4.350%, 6/15/45 | | | 75,000 | | | | 66,627 | |
5.450%, 3/1/47 | | | 55,000 | | | | 56,331 | |
CCO Holdings LLC | | | | | | | | |
5.125%, 5/1/27§ | | | 40,000 | | | | 40,800 | |
Centurylink, Inc. | | | | | | | | |
6.000%, 2/8/18 | | | 100,000 | | | | 100,000 | |
Intelsat Jackson Holdings SA | | | | | | | | |
5.500%, 8/1/23 | | | 70,000 | | | | 59,766 | |
Level 3 Financing, Inc. | | | | | | | | |
5.625%, 2/1/23 | | | 25,000 | | | | 25,766 | |
SFR Group SA | | | | | | | | |
7.375%, 5/1/26§ | | | 200,000 | | | | 210,000 | |
Sprint Capital Corp. | | | | | | | | |
6.900%, 5/1/19 | | | 200,000 | | | | 214,500 | |
Verizon Communications, Inc. | | | | | | | | |
5.150%, 9/15/23 | | | 200,000 | | | | 220,894 | |
4.862%, 8/21/46 | | | 125,000 | | | | 121,201 | |
| | | | | | | | |
| | | | | | | 1,183,914 | |
| | | | | | | | |
Wireless Telecommunication Services (0.1%) | |
Sprint Communications, Inc. | | | | | | | | |
9.000%, 11/15/18§ | | | 49,000 | | | | 53,594 | |
T-Mobile USA, Inc. | | | | | | | | |
4.000%, 4/15/22 | | | 18,000 | | | | 18,428 | |
6.836%, 4/28/23 | | | 15,000 | | | | 16,125 | |
| | | | | | | | |
| | | | | | | 88,147 | |
| | | | | | | | |
Total Telecommunication Services | | | | | | | 1,272,061 | |
| | | | | | | | |
Utilities (1.3%) | | | | | |
Electric Utilities (0.8%) | |
Emera US Finance LP | | | | | | | | |
2.700%, 6/15/21 | | | 100,000 | | | | 100,098 | |
Jersey Central Power & Light Co. | |
6.400%, 5/15/36 | | | 100,000 | | | | 115,160 | |
Kansas City Power & Light Co. | | | | | | | | |
3.150%, 3/15/23 | | | 135,000 | | | | 137,117 | |
| | | | | | | | |
Northern States Power Co. | | | | | | | | |
4.125%, 5/15/44 | | | 100,000 | | | | 103,462 | |
Public Service Co. of New Mexico | |
3.850%, 8/1/25 | | | 100,000 | | | | 102,397 | |
| | | | | | | | |
| | | | | | | 558,234 | |
| | | | | | | | |
Gas Utilities (0.3%) | |
Perusahaan Gas Negara Persero Tbk. | | | | | |
5.125%, 5/16/24§ | | | 200,000 | | | | 213,284 | |
| | | | | | | | |
Multi-Utilities (0.2%) | |
Berkshire Hathaway Energy Co. | | | | | | | | |
5.150%, 11/15/43 | | | 100,000 | | | | 114,240 | |
| | | | | | | | |
Total Utilities | | | | | | | 885,758 | |
| | | | | | | | |
Total Corporate Bonds | | | | | | | 14,810,324 | |
| | | | | | | | |
Foreign Government Securities (1.7%) | |
Autonomous Community of Catalonia | | | | | |
4.900%, 9/15/21 | | EUR | 100,000 | | | | 113,566 | |
Federative Republic of Brazil | | | | | | | | |
2.625%, 1/5/23 | | $ | 200,000 | | | | 186,800 | |
Hellenic Republic Government Bond | | | | | |
3.375%, 7/17/17 (m) | | EUR | 200,000 | | | | 216,351 | |
3.800%, 8/8/17 | | JPY | 5,000,000 | | | | 43,844 | |
Kingdom of Saudi Arabia | | | | | | | | |
3.250%, 10/26/26§ | | $ | 200,000 | | | | 195,400 | |
Republic of Croatia | | | | | | | | |
6.625%, 7/14/20 (m) | | | 100,000 | | | | 110,000 | |
Romania Government Bond | | | | | | | | |
4.875%, 1/22/24 (m) | | | 90,000 | | | | 97,988 | |
United Mexican States | | | | | | | | |
3.500%, 1/21/21 | | | 200,000 | | | | 208,000 | |
| | | | | | | | |
Total Foreign Government Securities | | | | | | | 1,171,949 | |
| | | | | | | | |
Mortgage-Backed Securities (8.1%) | |
FNMA | | | | | | | | |
2.800%, 3/1/18 | | | 161,556 | | | | 162,296 | |
4.550%, 10/1/19 | | | 75,836 | | | | 80,241 | |
4.910%, 10/1/19 | | | 62,520 | | | | 66,661 | |
4.730%, 2/1/20 | | | 79,197 | | | | 83,712 | |
4.629%, 4/1/20 | | | 209,715 | | | | 221,751 | |
3.416%, 10/1/20 | | | 158,868 | | | | 165,135 | |
3.915%, 10/1/20 | | | 103,588 | | | | 109,410 | |
3.310%, 11/1/20 | | | 85,000 | | | | 88,381 | |
3.762%, 12/1/20 | | | 72,809 | | | | 76,644 | |
4.381%, 6/1/21 | | | 159,116 | | | | 171,559 | |
4.500%, 8/1/21 | | | 80,000 | | | | 87,155 | |
2.210%, 9/1/26 | | | 220,000 | | | | 209,279 | |
3.110%, 2/1/28 | | | 115,000 | | | | 117,098 | |
3.259%, 2/1/28 | | | 45,000 | | | | 46,345 | |
3.200%, 3/1/31 | �� | | 223,063 | | | | 226,414 | |
3.480%, 11/1/35 | | | 55,000 | | | | 56,386 | |
3.500%, 5/25/47 TBA | | | 3,600,000 | | | | 3,702,094 | |
| | | | | | | | |
Total Mortgage-Backed Securities | | | | | | | 5,670,561 | |
| | | | | | | | |
See Notes to Financial Statements.
153
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Municipal Bonds (0.6%) | |
City of New York Transitional Finance Authority, Future Tax Secured Bonds, Revenue Bonds, Sub
series G3 | |
5.267%, 5/1/27 | | $ | 115,000 | | | $ | 132,493 | |
City of New York, General Obligation Bonds,
Series D | |
5.985%, 12/1/36 | | | 100,000 | | | | 125,319 | |
State of California, High Speed Passenger Train, General Obligation Bonds,
Series B | |
2.193%, 4/1/47 (l) | | | 150,000 | | | | 150,279 | |
State of Illinois, General Obligation Bonds | |
5.100%, 6/1/33 | | | 10,000 | | | | 8,980 | |
Tobacco Settlement Finance Authority | |
(Zero Coupon), 6/1/47 | | | 300,000 | | | | 15,183 | |
| | | | | | | | |
Total Municipal Bonds | | | | | | | 432,254 | |
| | | | | | | | |
U.S. Treasury Obligations (10.7%) | |
U.S. Treasury Inflation Linked Note | |
0.125%, 7/15/24 TIPS | | | 1,949,267 | | | | 1,939,935 | |
U.S. Treasury Notes | | | | | | | | |
0.750%, 10/31/17 | | | 235,000 | | | | 234,688 | |
1.000%, 12/31/17 | | | 350,000 | | | | 349,863 | |
1.875%, 4/30/22 | | | 415,000 | | | | 416,101 | |
1.875%, 10/31/22 | | | 3,500,000 | | | | 3,492,344 | |
1.375%, 8/31/23 | | | 500,000 | | | | 480,332 | |
2.250%, 12/31/23 | | | 450,000 | | | | 455,119 | |
2.250%, 1/31/24 | | | 150,000 | | | | 151,646 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 7,520,028 | |
| | | | | | | | |
Total Long-Term Debt Securities (86.2%)
(Cost $59,610,894) | | | | | | | 60,617,845 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS: | |
Certificates of Deposit (1.4%) | | | | | | | | |
Barclays Bank plc | | | | | | | | |
1.80%, 11/6/17 (l) | | | 100,000 | | | | 100,272 | |
1.85%, 12/6/17 (l) | | | 200,000 | | | | 200,375 | |
Mitsubishi UFJ Trust & Banking Corp. | |
1.87%, 9/19/17 (l) | | | 100,000 | | | | 100,230 | |
Natixis SA | | | | | | | | |
1.85%, 9/25/17 (l) | | | 200,000 | | | | 200,398 | |
Norinchukin Bank | | | | | | | | |
1.87%, 10/12/17 (l) | | | 100,000 | | | | 100,326 | |
Sumitomo Mitsui Banking Corp. | | | | | | | | |
1.83%, 9/15/17 (l) | | | 100,000 | | | | 100,233 | |
Sumitomo Mitsui Trust Bank Ltd. | |
1.88%, 9/18/17 (l) | | | 200,000 | | | | 200,574 | |
| | | | | | | | |
Total Certificates of Deposit | | | | | | | 1,002,408 | |
| | | | | | | | |
Foreign Government Treasury Bills (3.4%) | |
Japanese Treasury Bills | | | | | | | | |
0.08%, 5/15/17 (p) | | JPY | 30,000,000 | | | | 269,110 | |
(0.03)%, 6/5/17 (p) | | | 40,000,000 | | | | 358,835 | |
(0.05)%, 6/19/17 (p) | | | 40,000,000 | | | | 358,850 | |
(0.06)%, 6/26/17 (p) | | | 60,000,000 | | | | 538,286 | |
(0.11)%, 7/18/17 (p) | | | 70,000,000 | | | | 628,091 | |
| | | | | | | | |
Republic of Argentina | | | | | | | | |
8.76%, 5/26/17 (p) | | $ | 100,000 | | | | 99,380 | |
6.13%, 8/25/17 (p) | | | 100,000 | | | | 98,072 | |
United Mexican States | | | | | | | | |
0.00%, 8/17/17 (p) | | MXN | 7,000,000 | | | | 36,375 | |
| | | | | | | | |
Total Foreign Government Treasury Bills | | | | | | | 2,386,999 | |
| | | | | | | | |
U.S. Government Agency Securities (11.2%) | |
FHLB | | | | | | | | |
0.67%, 5/25/17 (o)(p) | | $ | 1,200,000 | | | | 1,199,440 | |
0.68%, 6/1/17 (o)(p) | | | 5,600,000 | | | | 5,596,628 | |
0.74%, 6/20/17 (o)(p) | | | 900,000 | | | | 899,061 | |
0.74%, 6/23/17 (o)(p) | | | 200,000 | | | | 199,779 | |
| | | | | | | | |
Total U.S. Government Agency Securities | | | | | | | 7,894,908 | |
| | | | | | | | |
U.S. Treasury Obligations (1.7%) | |
U.S. Treasury Bills | | | | | | | | |
0.48%, 5/4/17 (p) | | | 700,000 | | | | 699,963 | |
0.64%, 5/18/17 (p) | | | 205,000 | | | | 204,934 | |
0.85%, 9/7/17#(p) | | | 40,000 | | | | 39,877 | |
0.91%, 10/5/17 (p) | | | 200,000 | | | | 199,202 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 1,143,976 | |
| | | | | | | | |
Total Short-Term Investments (17.7%)
(Cost $12,423,727) | | | | | | | 12,428,291 | |
| | | | | | | | |
| | | Number of
Contracts | | | Value
(Note 1) | |
OPTIONS PURCHASED: | | | | | | | | |
Interest Rate Swaptions Purchased (0.1%) | |
Call Interest Rate Swaptions Purchased Payable (0.1%) | |
Bank of America
30 years, December 2018 @ | | | | | | | | |
3.05% v. 3 Month LIBOR* | | | 1,150,000 | | | | 44,164 | |
| | | | | | | | |
Put Option Purchased (0.0%) | | | | | | | | |
10 Year U.S. Treasury Notes | | | | | | | | |
May 2017 @ $122.00* | | | 14 | | | | 219 | |
| | | | | | | | |
Total Options Purchased (0.1%)
(Cost $66,450) | | | | | | | 44,383 | |
| | | | | | | | |
Total Investments Before Options Written and Securities Sold Short (104.0%)
(Cost $72,101,071) | | | | | | | 73,090,519 | |
| | | | | | | | |
OPTIONS WRITTEN: | | | | | | | | |
Call Options Written (0.0%) | | | | | | | | |
10 Year U.S. Treasury Notes | | | | | | | | |
May 2017 @ $128.00* | | | (6 | ) | | | (469 | ) |
June 2017 @ $127.00* | | | (8 | ) | | | (2,625 | ) |
| | | | | | | | |
| | | | | | | (3,094 | ) |
| | | | | | | | |
See Notes to Financial Statements.
154
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
| | | | | | | | |
| | | Number of
Contracts | | | Value
(Note 1) | |
| | | | | | | | |
Interest Rate Swaptions Written (-0.1%) | |
Put Interest Rate Swaptions Written Receivable (-0.1%) | |
Bank of America
5 years, December 2018 @ | | | | | | | | |
2.70% v. 3 Month LIBOR* | | | (5,800,000 | ) | | $ | (56,578 | ) |
| | | | | | | | |
Put Options Written (0.0%) | | | | | | | | |
10 Year U.S. Treasury Notes | | | | | | | | |
May 2017 @ $124.00* | | | (6 | ) | | | (562 | ) |
June 2017 @ $122.00* | | | (8 | ) | | | (625 | ) |
| | | | | | | | |
| | | | | | | (1,187 | ) |
| | | | | | | | |
Total Options Written (-0.1%)
(Premiums Received $69,339) | | | | | | | (60,859 | ) |
| | | | | | | | |
Total Investments before Securities Sold Short (103.9%)
(Cost $72,031,732) | | | | | | | 73,029,660 | |
| | | | | | | | |
| | | Principal
Amount | | | Value
(Note 1) | |
SECURITIES SOLD SHORT: | | | | | | | | |
Mortgage-Backed Security (-0.3%) | | | | | | | | |
FNMA | | | | | | | | |
3.000%, 5/25/47 TBA | | $ | (200,000 | ) | | | (199,828 | ) |
| | | | | | | | |
Total Securities Sold Short (-0.3%)
(Proceeds Received $198,219) | | | | | | | (199,828 | ) |
| | | | | | | | |
Total Investments after Options Written and Securities Sold Short (103.6%)
(Cost $71,833,513) | | | | | | | 72,829,832 | |
Other Assets Less Liabilities (-3.6%) | | | | | | | (2,503,019 | ) |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 70,326,813 | |
| | | | | | | | |
| § | 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, 2017, the market value of these securities amounted to $11,510,204 or 16.4% 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. |
| # | All, or a portion of security held by broker as collateral for financial futures contracts, with a total collateral value of $39,877. |
| (b) | Rule 144A Illiquid Security. At April 30, 2017, the market value of these securities amounted to $566,865 or 0.8% of net assets. |
| (e) | Step Bond - Coupon rate increases in increments to maturity. Rate disclosed is as of April 30, 2017. Maturity date disclosed is the ultimate maturity date. |
| (l) | Floating Rate Security. Rate disclosed is as of April 30, 2017. |
| (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, 2017, the market value of these securities amounted to $1,159,170 or 1.6% of net assets. |
| (o) | Discount Note Security. Effective rate calculated as of April 30, 2017. |
| (y) | Securities are perpetual and, thus, do not have a predetermined maturity date. The coupon rate for these securities are fixed for a period of time and may be structured to adjust thereafter. The date shown, if applicable, reflects the next call date. The coupon rate shown is the rate in effect as of April 30, 2017. |
Glossary:
| | CLO | — Collateralized Loan Obligation |
| | EUR | — European Currency Unit |
| | FHLB | — Federal Home Loan Bank |
| | FHLMC | — Federal Home Loan Mortgage Corp. |
| | FNMA | — Federal National Mortgage Association |
| | GNMA | — Government National Mortgage Association |
| | LIBOR | — London Interbank offered Rate |
| | TBA | — To Be Announced; Security is subject to delayed |
| | TIPS | — Treasury Inflation Protected Security |
At April 30, 2017, the Fund had the following futures contracts open: (Note 1)
| | | | | | | | | | | | | | | | | | | | |
Purchases | | Number of
Contracts | | | Expiration
Date | | | Original
Value | | | Value at
4/30/2017 | | | Unrealized
Appreciation/
(Depreciation) | |
5 Year U.S. Treasury Notes | | | 40 | | | | June-17 | | | $ | 4,701,427 | | | $ | 4,736,250 | | | $ | 34,823 | |
| | | | | | | | | | | | | | | | | | | | |
Sales | | | | | | | | | | | | | | | |
10 Year U.S. Treasury Notes | | | 10 | | | | June-17 | | | $ | 1,240,823 | | | $ | 1,257,188 | | | $ | (16,365 | ) |
3 Month Eurodollar | | | 16 | | | | June-19 | | | | 3,923,166 | | | | 3,921,000 | | | | 2,166 | |
Euro-Bund | | | 1 | | | | June-17 | | | | 175,793 | | | | 176,227 | | | | (434 | ) |
Euro-OAT | | | 6 | | | | June-17 | | | | 960,612 | | | | 979,324 | | | | (18,712 | ) |
U.S. Ultra Bond | | | 3 | | | | June-17 | | | | 484,213 | | | | 488,813 | | | | (4,600 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | $ | (37,945 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | $ | (3,122 | ) |
| | | | | | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
155
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
At April 30, 2017, the Fund had outstanding foreign currency contracts to buy/sell foreign currencies as follows: (Note 1)
| | | | | | | | | | | | | | | | | | |
Foreign Currency Buy Contracts | | Counterparty | | Local
Contract Buy
Amount
(000’s) | | | U.S. $
Current
Value | | | U.S. $
Settlement
Value | | | Unrealized
Appreciation/
(Depreciation) | |
Brazilian Real vs. U.S. Dollar, expiring 5/3/17 | | Credit Suisse | | | 893 | | | $ | 281,132 | | | $ | 279,065 | | | $ | 2,067 | |
Brazilian Real vs. U.S. Dollar, expiring 5/3/17 | | Deutsche Bank AG | | | 893 | | | | 281,132 | | | | 279,581 | | | | 1,551 | |
Brazilian Real vs. U.S. Dollar, expiring 6/2/17 | | Credit Suisse | | | 893 | | | | 278,845 | | | | 284,786 | | | | (5,941 | ) |
Colombian Peso vs. U.S. Dollar, expiring 6/9/17 | | Bank of America | | | 247,680 | | | | 83,667 | | | | 86,000 | | | | (2,333 | ) |
Colombian Peso vs. U.S. Dollar, expiring 6/9/17 | | JPMorgan Chase Bank | | | 253,616 | | | | 85,672 | | | | 88,000 | | | | (2,328 | ) |
Mexican Peso vs. U.S. Dollar, expiring 5/17/17 | | Deutsche Bank AG | | | 10,328 | | | | 547,134 | | | | 549,254 | | | | (2,120 | ) |
Peruvian Sol vs. U.S. Dollar, expiring 6/28/17 | | Credit Suisse | | | 571 | | | | 175,126 | | | | 174,700 | | | | 426 | |
Russian Ruble vs. U.S. Dollar, expiring 6/21/17 | | Credit Suisse | | | 21,075 | | | | 365,945 | | | | 364,208 | | | | 1,737 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | $ | (6,941 | ) |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Foreign Currency Sell Contracts | | Counterparty | | Local
Contract Sell
Amount
(000’s) | | | U.S. $
Settlement
Value | | | U.S. $
Current
Value | | | Unrealized
Appreciation/
(Depreciation) | |
Brazilian Real vs. U.S. Dollar, expiring 5/3/17 | | Credit Suisse | | | 893 | | | $ | 286,997 | | | $ | 281,132 | | | $ | 5,865 | |
Brazilian Real vs. U.S. Dollar, expiring 5/3/17 | | Deutsche Bank AG | | | 893 | | | | 279,065 | | | | 281,132 | | | | (2,067 | ) |
British Pound vs. U.S. Dollar, expiring 5/2/17 | | Bank of America | | | 178 | | | | 222,926 | | | | 230,546 | | | | (7,620 | ) |
Colombian Peso vs. U.S. Dollar, expiring 6/9/17 | | Bank of America | | | 173,700 | | | | 60,000 | | | | 58,676 | | | | 1,324 | |
European Union Euro vs. U.S. Dollar, expiring 5/2/17 | | Bank of America | | | 541 | | | | 581,486 | | | | 589,311 | | | | (7,825 | ) |
European Union Euro vs. U.S. Dollar, expiring 5/2/17 | | JPMorgan Chase Bank | | | 18 | | | | 19,616 | | | | 19,607 | | | | 9 | |
European Union Euro vs. U.S. Dollar, expiring 6/2/17 | | Credit Suisse | | | 559 | | | | 610,199 | | | | 609,909 | | | | 290 | |
Japanese Yen vs. U.S. Dollar, expiring 5/2/17 | | Bank of America | | | 6,200 | | | | 55,676 | | | | 55,618 | | | | 58 | |
Japanese Yen vs. U.S. Dollar, expiring 5/15/17 | | Bank of America | | | 30,000 | | | | 268,521 | | | | 269,250 | | | | (729 | ) |
Japanese Yen vs. U.S. Dollar, expiring 6/5/17 | | Bank of America | | | 20,000 | | | | 176,134 | | | | 179,650 | | | | (3,516 | ) |
Japanese Yen vs. U.S. Dollar, expiring 6/5/17 | | Bank of America | | | 20,000 | | | | 176,061 | | | | 179,650 | | | | (3,589 | ) |
Japanese Yen vs. U.S. Dollar, expiring 6/19/17 | | Bank of America | | | 40,000 | | | | 354,359 | | | | 359,526 | | | | (5,167 | ) |
Japanese Yen vs. U.S. Dollar, expiring 6/26/17 | | Citibank NA | | | 60,000 | | | | 545,820 | | | | 539,458 | | | | 6,362 | |
Japanese Yen vs. U.S. Dollar, expiring 7/18/17 | | Goldman Sachs International | | | 70,000 | | | | 643,880 | | | | 629,978 | | | | 13,902 | |
Mexican Peso vs. U.S. Dollar, expiring 5/17/17 | | Bank of America | | | 1,509 | | | | 80,000 | | | | 79,961 | | | | 39 | |
Mexican Peso vs. U.S. Dollar, expiring 5/17/17 | | JPMorgan Chase Bank | | | 943 | | | | 50,000 | | | | 49,961 | | | | 39 | |
Mexican Peso vs. U.S. Dollar, expiring 5/17/17 | | JPMorgan Chase Bank | | | 1,513 | | | | 80,000 | | | | 80,135 | | | | (135 | ) |
Mexican Peso vs. U.S. Dollar, expiring 8/17/17 | | Bank of America | | | 200 | | | | 10,014 | | | | 10,438 | | | | (424 | ) |
Mexican Peso vs. U.S. Dollar, expiring 8/17/17 | | Credit Suisse | | | 500 | | | | 25,031 | | | | 26,096 | | | | (1,065 | ) |
Russian Ruble vs. U.S. Dollar, expiring 5/24/17 | | Bank of America | | | 10,582 | | | | 176,852 | | | | 184,917 | | | | (8,065 | ) |
Singapore Dollar vs. U.S. Dollar,
expiring 6/23/17 | | Bank of America | | | 230 | | | | 163,854 | | | | 164,821 | | | | (967 | ) |
Taiwan Dollar vs. U.S. Dollar, expiring 6/23/17 | | Credit Suisse | | | 5,357 | | | | 175,337 | | | | 177,947 | | | | (2,610 | ) |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | $ | (15,891 | ) |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | $ | (22,832 | ) |
| | | | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
156
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
Options Written:
Options written for the six months ended April 30, 2017 were as follows:
| | | | | | | | |
| | | Total
Number of
Contracts | | | Total
Premiums
Received | |
Options Outstanding – November 1, 2016 | | | 6,300,000 | | | $ | 69,696 | |
Options Written | | | 3,400,091 | | | | 51,308 | |
Options Terminated in Closing Purchase Transactions | | | (3,900,063 | ) | | | (51,665 | ) |
Options Expired | | | — | | | | — | |
Options Exercised | | | — | | | | — | |
| | | | | | | | |
Options Outstanding – April 30, 2017 | | | 5,800,028 | | | $ | 69,339 | |
| | | | | | | | |
Credit Default Swap Index Contracts-Sell Protection
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Swap Counterparty | | Reference Obligation | | Contract
Annual
Fixed
Rate | | | Notional
Amount | | | Upfront
Premium
Received
(Paid) | | | Maturity
Date | | | Implied Credit
Spread as of
4/30/2017 | | | Unrealized
Appreciation/
(Depreciation) | | | Market
Value | |
Deutsche Bank AG | | Argentine Republic | | | 5.000 | % | | $ | 100,000 | | | $ | 451 | | | | 6/20/17 | | | | 0.480 | % | | $ | 768 | | | $ | 1,219 | |
Deutsche Bank AG | | Federative Republic of Brazil | | | 1.000 | | | | 100,000 | | | | (8,755 | ) | | | 12/20/21 | | | | 1.960 | | | | 4,710 | | | | (4,045 | ) |
Bank of America | | United Mexican States | | | 1.000 | | | | 100,000 | | | | (3,571 | ) | | | 12/20/21 | | | | 1.050 | | | | 3,462 | | | | (109 | ) |
Bank of America | | Republic of Colombia | | | 1.000 | | | | 200,000 | | | | (3,129 | ) | | | 6/20/22 | | | | 1.260 | | | | 851 | | | | (2,278 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | $ | (15,004 | ) | | | | | | | | | | $ | 9,791 | | | $ | (5,213 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Centrally Cleared Credit Default Swap Index Contracts-Buy Protection
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Swap
Counterparty | | Reference Obligation | | Contract
Annual
Fixed
Rate | | | Notional
Amount | | | Upfront
Premium
Received
(Paid) | | | Maturity
Date | | | Implied Credit
Spread as of
4/30/2017 | | | Unrealized
Appreciation/
(Depreciation) | | | Market
Value | |
Morgan Stanley | | CDX North America High Yield Index | | | 5.000 | % | | $ | 250,000 | | | $ | (19,053 | ) | | | 12/20/21 | | | | 3.010 | % | | $ | (2,512 | ) | | $ | (21,565 | ) |
Morgan Stanley | | iTraxx Europe | | | 1.000 | | | EUR | 350,000 | | | | (4,974 | ) | | | 6/20/22 | | | | 0.670 | | | | (1,910 | ) | | | (6,884 | ) |
Morgan Stanley | | iTraxx Europe Senior Financials | | | 1.000 | | | | 300,000 | | | | (1,805 | ) | | | 6/20/22 | | | | 0.740 | | | | (2,802 | ) | | | (4,607 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | $ | (25,832 | ) | | | | | | | | | | $ | (7,224 | ) | | $ | (33,056 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Centrally Cleared Credit Default Swap Index Contracts-Sell Protection
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Swap Counterparty | | Reference Obligation | | Contract
Annual
Fixed
Rate | | | Notional
Amount | | | Upfront
Premium
Received
(Paid) | | | Maturity
Date | | | Implied Credit
Spread as of
4/30/2017 | | | Unrealized
Appreciation/
(Depreciation) | | | Market
Value | |
Morgan Stanley | | Airbus Group SE | | | 1.000 | % | | EUR | 50,000 | | | $ | 302 | | | | 12/20/17 | | | | 0.100 | % | | $ | 79 | | | $ | 381 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
157
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
Centrally Cleared Interest Rate Swaps
| | | | | | | | | | | | | | | | | | | | | | | | |
Swap Counterparty | | Payments Made
by the Fund | | Payments Received
by the Fund | | Notional Amount | | | Termination
Date | | | Upfront
Premium
Received
(Paid) | | | Unrealized
Appreciation/
(Depreciation) | | | Market
Value | |
| | | Rates Type | | | | | | | | | | | | | | | |
Morgan Stanley | | 4 Week TIIE monthly | | 7.730% monthly | | MXN | 1,100,000 | | | | 2/25/27 | | | $ | 1,406 | | | $ | (291 | ) | | $ | 1,115 | |
Morgan Stanley | | 4 Week TIIE monthly | | 7.278% monthly | | | 500,000 | | | | 3/22/22 | | | | 99 | | | | (78 | ) | | | 21 | |
Morgan Stanley | | 4 Week TIIE monthly | | 7.317% monthly | | | 800,000 | | | | 3/23/22 | | | | 229 | | | | (127 | ) | | | 102 | |
Morgan Stanley | | 4 Week TIIE monthly | | 6.080% monthly | | | 1,900,000 | | | | 3/10/26 | | | | (9,004 | ) | | | 36 | | | | (8,968 | ) |
Morgan Stanley | | 4 Week TIIE monthly | | 7.740% monthly | | | 2,500,000 | | | | 2/22/27 | | | | 3,307 | | | | (666 | ) | | | 2,641 | |
Morgan Stanley | | 4 Week TIIE monthly | | 7.733% monthly | | | 300,000 | | | | 2/25/27 | | | | 387 | | | | (80 | ) | | | 307 | |
Morgan Stanley | | 1.500% annually | | 6 month EURIBOR semi-annually | | EUR | 300,000 | | | | 3/21/48 | | | | (3,205 | ) | | | 1,100 | | | | (2,105 | ) |
Morgan Stanley | | 4 Week TIIE monthly | | 7.317% monthly | | MXN | 1,300,000 | | | | 3/23/22 | | | | 193 | | | | (26 | ) | | | 167 | |
Morgan Stanley | | 4 Week TIIE monthly | | 7.317% monthly | | | 1,100,000 | | | | 3/23/22 | | | | 159 | | | | (19 | ) | | | 140 | |
Morgan Stanley | | 0.300% semi-annually | | 6 month LIBOR semi-annually | | JPY | 90,000,000 | | | | 3/18/26 | | | | 43 | | | | (8,849 | ) | | | (8,806 | ) |
Morgan Stanley | | 6 month EURIBOR semi-annually | | 0.250% annually | | EUR | 1,600,000 | | | | 9/20/22 | | | | (3,529 | ) | | | 1,305 | | | | (2,224 | ) |
Morgan Stanley | | 2.000% semi-annually | | 6 month LIBOR semi-annually | | GBP | 200,000 | | | | 3/18/22 | | | | (14,056 | ) | | | (1,503 | ) | | | (15,559 | ) |
Morgan Stanley | | 1.750% semi-annually | | 3 month LIBOR quarterly | | $ | 2,300,000 | | | | 12/21/26 | | | | 121,000 | | | | (34,605 | ) | | | 86,395 | |
Morgan Stanley | | 1.750% semi-annually | | 3 month LIBOR quarterly | | | 7,000,000 | | | | 12/16/18 | | | | (52,421 | ) | | | (9,695 | ) | | | (62,116 | ) |
Morgan Stanley | | 2.250% semi-annually | | 3 month LIBOR quarterly | | | 300,000 | | | | 9/14/46 | | | | 28,295 | | | | (11,852 | ) | | | 16,443 | |
Morgan Stanley | | 1.500% semi-annually | | 3 month LIBOR quarterly | | | 1,200,000 | | | | 6/21/27 | | | | 100,207 | | | | (16,471 | ) | | | 83,736 | |
Morgan Stanley | | 3 month LIBOR quarterly | | 2.000% semi-annually | | | 1,400,000 | | | | 12/16/20 | | | | 11,440 | | | | 6,862 | | | | 18,302 | |
Morgan Stanley | | 2.300% semi-annually | | 3 month LIBOR quarterly | | | 700,000 | | | | 12/3/25 | | | | (2,133 | ) | | | (9,469 | ) | | | (11,602 | ) |
Morgan Stanley | | 4 Week TIIE monthly | | 7.380% monthly | | MXN | 1,200,000 | | | | 11/4/26 | | | | (68 | ) | | | (232 | ) | | | (300 | ) |
Morgan Stanley | | 4 Week TIIE monthly | | 5.990% monthly | | | 200,000 | | | | 1/30/26 | | | | (1,004 | ) | | | 5 | | | | (999 | ) |
Morgan Stanley | | 4 Week TIIE monthly | | 6.750% monthly | | | 400,000 | | | | 8/31/21 | | | | (349 | ) | | | (40 | ) | | | (389 | ) |
Morgan Stanley | | 2.500% semi-annually | | 3 month LIBOR quarterly | | $ | 200,000 | | | | 6/15/46 | | | | 6,821 | | | | (7,625 | ) | | | (804 | ) |
Morgan Stanley | | 1.750% semi-annually | | 3 month LIBOR quarterly | | | 2,600,000 | | | | 12/21/23 | | | | 64,158 | | | | (26,136 | ) | | | 38,022 | |
Morgan Stanley | | 1.250% semi-annually | | 3 month LIBOR quarterly | | | 5,700,000 | | | | 6/15/18 | | | | (5,056 | ) | | | (2,777 | ) | | | (7,833 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | $ | 246,919 | | | $ | (121,233 | ) | | $ | 125,686 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Glossary:
| | TIIE | — Interbank Equilibrium Interest Rate |
| | EURIBOR | — Euro Interbank Offered Rate |
See Notes to Financial Statements.
158
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (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, 2017:
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.) (a) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | |
Asset-Backed Securities | | $ | — | | | $ | 17,384,374 | | | $ | — | | | $ | 17,384,374 | |
Centrally Cleared Credit Default Swaps | | | — | | | | 79 | | | | — | | | | 79 | |
Centrally Cleared Interest Rate Swaps | | | — | | | | 9,308 | | | | — | | | | 9,308 | |
Collateralized Mortgage Obligations | | | — | | | | 8,264,274 | | | | — | | | | 8,264,274 | |
Commercial Mortgage-Backed Securities | | | — | | | | 5,364,081 | | | | — | | | | 5,364,081 | |
Corporate Bonds | | | | | | | | | | | | | | | | |
Consumer Discretionary | | | — | | | | 857,571 | | | | — | | | | 857,571 | |
Consumer Staples | | | — | | | | 611,803 | | | | — | | | | 611,803 | |
Energy | | | — | | | | 871,306 | | | | — | | | | 871,306 | |
Financials | | | — | | | | 6,901,638 | | | | — | | | | 6,901,638 | |
Health Care | | | — | | | | 1,373,485 | | | | — | | | | 1,373,485 | |
Industrials | | | — | | | | 493,032 | | | | — | | | | 493,032 | |
Information Technology | | | — | | | | 365,467 | | | | — | | | | 365,467 | |
Materials | | | — | | | | 331,532 | | | | — | | | | 331,532 | |
Real Estate | | | — | | | | 846,671 | | | | — | | | | 846,671 | |
Telecommunication Services | | | — | | | | 1,272,061 | | | | — | | | | 1,272,061 | |
Utilities | | | — | | | | 885,758 | | | | — | | | | 885,758 | |
Credit Default Swaps | | | — | | | | 9,791 | | | | — | | | | 9,791 | |
Foreign Government Securities | | | — | | | | 1,171,949 | | | | — | | | | 1,171,949 | |
Forward Currency Contracts | | | — | | | | 33,669 | | | | — | | | | 33,669 | |
Futures | | | 36,989 | | | | — | | | | — | | | | 36,989 | |
Mortgage-Backed Securities | | | — | | | | 5,670,561 | | | | — | | | | 5,670,561 | |
Municipal Bonds | | | — | | | | 432,254 | | | | — | | | | 432,254 | |
Options Purchased | | | | | | | | | | | | | | | | |
Interest Rate Swaptions Purchased | | | — | | | | 44,164 | | | | — | | | | 44,164 | |
Put Option Purchased | | | 219 | | | | — | | | | — | | | | 219 | |
Short-Term Investments | | | | | | | | | | | | | | | | |
Certificates of Deposit | | | — | | | | 1,002,408 | | | | — | | | | 1,002,408 | |
Foreign Government Treasury Bills | | | — | | | | 2,386,999 | | | | — | | | | 2,386,999 | |
U.S. Government Agency Securities | | | — | | | | 7,894,908 | | | | — | | | | 7,894,908 | |
U.S. Treasury Obligations | | | — | | | | 1,143,976 | | | | — | | | | 1,143,976 | |
U.S. Treasury Obligations | | | — | | | | 7,520,028 | | | | — | | | | 7,520,028 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 37,208 | | | $ | 73,143,147 | | | $ | — | | | $ | 73,180,355 | |
| | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
159
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (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.) (a) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Liabilities: | |
Centrally Cleared Credit Default Swaps | | $ | — | | | $ | (7,224 | ) | | $ | — | | | $ | (7,224 | ) |
Centrally Cleared Interest Rate Swaps | | | — | | | | (130,541 | ) | | | — | | | | (130,541 | ) |
Forward Currency Contracts | | | — | | | | (56,501 | ) | | | — | | | | (56,501 | ) |
Futures | | | (40,111 | ) | | | — | | | | — | | | | (40,111 | ) |
Mortgage-Backed Securities | | | — | | | | (199,828 | ) | | | — | | | | (199,828 | ) |
Options Written | | | | | | | | | | | | | | | | |
Call Options Written | | | (3,094 | ) | | | — | | | | — | | | | (3,094 | ) |
Interest Rate Swaptions Written | | | — | | | | (56,578 | ) | | | — | | | | (56,578 | ) |
Put Options Written | | | (1,187 | ) | | | — | | | | — | | | | (1,187 | ) |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | (44,392 | ) | | $ | (450,672 | ) | | $ | — | | | $ | (495,064 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | (7,184 | ) | | $ | 72,692,475 | | | $ | — | | | $ | 72,685,291 | |
| | | | | | | | | | | | | | | | |
(a) A security with a market value of $200,000 transferred from Level 3 to Level 2 at the end of the period due to active trading.
There were no additional transfers between Levels 1, 2 or 3 during the six-months ended April 30, 2017.
Fair Values of Derivative Instruments as of April 30, 2017:
| | | | | | |
| | | Statement of Assets and Liabilities | |
Derivatives Not Accounted for as
Hedging Instrument*^ | | Asset Derivatives | | Fair Value | |
Interest rate contracts | | Receivables, Net assets –
Unrealized appreciation | | $ | 90,680 | |
Foreign exchange contracts | | Receivables | | | 33,669 | |
Credit contracts | | Receivables | | | 9,870 | |
| | | | | | |
Total | | | | $ | 134,219 | |
| | | | | | |
| | | Liability Derivatives | | | |
Interest rate contracts | | Payables, Net assets –
Unrealized depreciation | | $ | (231,511 | ) |
Foreign exchange contracts | | Payables | | | (56,501 | ) |
Credit contracts | | Payables | | | (7,224 | ) |
| | | | | | |
Total | | | | $ | (295,236 | ) |
| | | | | | |
See Notes to Financial Statements.
160
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
The Effect of Derivative Instruments on the Statement of Operations for the six-months ended April 30, 2017:
| | | | | | | | | | | | | | | | | | | | |
| Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | |
Derivatives Not Accounted for as Hedging Instruments^ | | Options | | | Futures | | | Forward
Foreign
Currency
Contracts | | | Swaps | | | Total | |
Interest rate contracts | | $ | 37,632 | | | $ | 17,783 | | | $ | — | | | $ | 733,482 | | | $ | 788,897 | |
Foreign exchange contracts | | | 1,622 | | | | — | | | | 412,423 | | | | — | | | | 414,045 | |
Credit contracts | | | — | | | | — | | | | — | | | | 8,488 | | | | 8,488 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 39,254 | �� | | $ | 17,783 | | | $ | 412,423 | | | $ | 741,970 | | | $ | 1,211,430 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |
Derivatives Not Accounted for as Hedging Instruments^ | | Options | | | Futures | | | Forward
Foreign
Currency
Contracts | | | Swaps | | | Total | |
Interest rate contracts | | $ | (17,100 | ) | | $ | (39,805 | ) | | $ | — | | | $ | (167,679 | ) | | $ | (224,584 | ) |
Foreign exchange contracts | | | — | | | | — | | | | (148,664 | ) | | | — | | | | (148,664 | ) |
Credit contracts | | | — | | | | — | | | | — | | | | (132 | ) | | | (132 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | (17,100 | ) | | $ | (39,805 | ) | | $ | (148,664 | ) | | $ | (167,811 | ) | | $ | (373,380 | ) |
| | | | | | | | | | | | | | | | | | | | |
* Includes cumulative appreciation / depreciation of futures contracts and centrally cleared swaps as reported in the Portfolio of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.
^ The Fund held options, forward foreign currency, futures and swap 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 $8,489,000, options with an average notional balance of approximately $144,000, swaps with an average notional balance of approximately $989,000 and futures contracts with an average notional balance of approximately $18,610,000 during the six-months ended April 30, 2017.
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, 2017:
| | | | | | | | | | | | | | | | |
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 | |
Bank of America | | $ | 49,898 | | | $ | (49,898 | ) | | $ | — | | | $ | — | |
Citibank N.A. | | | 6,362 | | | | — | | | | — | | | | 6,362 | |
Credit Suisse | | | 10,385 | | | | (9,616 | ) | | | — | | | | 769 | |
Deutsche Bank AG | | | 7,029 | | | | (4,187 | ) | | | — | | | | 2,842 | |
Goldman Sachs International | | | 13,902 | | | | — | | | | — | | | | 13,902 | |
JPMorgan Chase Bank | | | 48 | | | | (48 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 87,624 | | | $ | (63,749 | ) | | $ | — | | | $ | 23,875 | |
| | | | | | | | | | | | | | | | |
| | | | |
Counterparty | | Gross Amount of
Derivative Liabilities
Presented in the
Statement of Assets
and Liabilities (a) | | | Derivatives
Available
for Offset | | | Collateral
Received | | | Net Amount Due
from Counterparty | |
Bank of America | | $ | 96,813 | | | $ | (49,898 | ) | | $ | — | | | $ | 46,915 | |
Credit Suisse | | | 9,616 | | | | (9,616 | ) | | | — | | | | — | |
Deutsche Bank AG | | | 4,187 | | | | (4,187 | ) | | | — | | | | — | |
JPMorgan Chase Bank | | | 2,463 | | | | (48 | ) | | | — | | | | 2,415 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 113,079 | | | $ | (63,749 | ) | | $ | — | | | $ | 49,330 | |
| | | | | | | | | | | | | | | | |
| (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.
161
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2017 (Unaudited)
Investment security transactions for the six months ended April 30, 2017 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 32,922,727 | |
Long-term U.S. government debt securities | | | 3,027,296 | |
| | | | |
| | $ | 35,950,023 | |
| | | | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 32,610,160 | |
Long-term U.S. government debt securities | | | 6,082,683 | |
| | | | |
| | $ | 38,692,843 | |
| | | | |
As of April 30, 2017, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 1,369,253 | |
Aggregate gross unrealized depreciation | | | (385,234 | ) |
| | | | |
Net unrealized appreciation | | $ | 984,019 | |
| | | | |
Federal income tax cost of investments | | $ | 72,106,500 | |
| | | | |
See Notes to Financial Statements.
162
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2017 (Unaudited)
| | | | |
|
ASSETS | |
Investments at value (Cost $72,101,071) | | $ | 73,090,519 | |
Cash | | | 1,013,108 | |
Foreign cash (Cost $35,962) | | | 36,071 | |
Cash held as collateral at broker for futures | | | 4,510,000 | |
Cash held as collateral at broker for swaps | | | 279,000 | |
Receivable for forward commitments | | | 495,234 | |
Dividends, interest and other receivables | | | 269,325 | |
Market value on OTC swap contracts (Premiums received $221,840) | | | 222,607 | |
Due from broker for futures variation margin | | | 79,060 | |
Receivable for securities sold | | | 73,893 | |
Unrealized appreciation on forward foreign currency contracts | | | 33,669 | |
Receivable for Fund shares sold | | | 100 | |
| | | | |
Total assets | | | 80,102,586 | |
| | | | |
LIABILITIES | |
Variation Margin on Centrally Cleared Swaps | | | 4,465,265 | |
Payable for forward commitments | | | 3,972,891 | |
Payable for securities purchased | | | 702,411 | |
Market value on OTC swap contracts (Premiums received $236,844) | | | 227,820 | |
Securities sold short (Proceeds received $198,219) | | | 199,828 | |
Options written, at value (Premiums received $69,339) | | | 60,859 | |
Unrealized depreciation on forward foreign currency contracts | | | 56,501 | |
Investment management fees payable | | | 19,697 | |
Dividends and distributions payable | | | 9,074 | |
Administrative fees payable | | | 8,659 | |
Distribution fees payable - Class R | | | 41 | |
Transfer agent fees payable | | | 23 | |
Distribution fees payable - Class A | | | 23 | |
Payable for Fund shares redeemed | | | 1 | |
Accrued expenses | | | 52,680 | |
| | | | |
Total liabilities | | | 9,775,773 | |
| | | | |
NET ASSETS | | $ | 70,326,813 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 69,131,366 | |
Accumulated undistributed net investment income (loss) | | | (75,789 | ) |
Accumulated undistributed net realized gain (loss) on investments, securities sold short, options written, futures, swaps and foreign currency transactions | | | 418,728 | |
Net unrealized appreciation (depreciation) on investments, securities sold short, options written, futures, swaps and foreign currency translations | | | 852,508 | |
| | | | |
Net assets | | $ | 70,326,813 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $109,899 / 10,994 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.00 | |
Maximum sales charge (4.50% of offering price) | | | 0.47 | |
| | | | |
Maximum offering price per share | | $ | 10.47 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $70,116,931 / 7,008,100 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.01 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $99,983 / 10,010 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.99 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2017 (Unaudited)
| | | | |
| |
INVESTMENT INCOME | | | | |
Interest | | $ | 1,123,512 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 276,148 | |
Professional fees | | | 85,026 | |
Administrative fees | | | 51,778 | |
Registration and filing fees | | | 22,603 | |
Printing and mailing expenses | | | 22,549 | |
Custodian fees | | | 14,117 | |
Transfer agent fees | | | 12,998 | |
Trustees’ fees | | | 3,499 | |
Distribution fees - Class R | | | 246 | |
Distribution fees - Class A | | | 135 | |
Miscellaneous | | | 23,568 | |
| | | | |
Gross expenses | | | 512,667 | |
Less: Waiver from investment adviser | | | (132,486 | ) |
| | | | |
Net expenses | | | 380,181 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 743,331 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments | | | (259,951 | ) |
Futures | | | 17,783 | |
Foreign currency transactions | | | 427,742 | |
Swaps | | | 741,970 | |
Options written | | | 47,517 | |
Securities sold short | | | 10,191 | |
| | | | |
Net realized gain (loss) | | | 985,252 | |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments | | | 77,939 | |
Futures | | | (39,805 | ) |
Foreign currency translations | | | (156,328 | ) |
Swaps | | | (167,811 | ) |
Options written | | | (23,386 | ) |
Securities sold short | | | (3,882 | ) |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (313,273 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 671,979 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 1,415,310 | |
| | | | |
See Notes to Financial Statements.
163
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 743,331 | | | $ | 1,318,044 | |
Net realized gain (loss) on investments, securities sold short, options written, futures, foreign currency transactions and swaps | | | 985,252 | | | | (781,949 | ) |
Net change in unrealized appreciation (depreciation) on investments, securities sold short, options written, futures, foreign currency translations and swaps | | | (313,273 | ) | | | 1,920,814 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 1,415,310 | | | | 2,456,909 | |
| | | | | | | | |
DIVIDENDS AND DISTRIBUTIONS: | | | | | | | | |
Dividends from net investment income | | | | | | | | |
Class A | | | (882 | ) | | | (1,093 | ) |
Class I | | | (628,116 | ) | | | (774,527 | ) |
Class R | | | (722 | ) | | | (929 | ) |
| | | | | | | | |
| | | (629,720 | ) | | | (776,549 | ) |
| | | | | | | | |
Return of capital | | | | | | | | |
Class A | | | — | | | | (1,669 | ) |
Class I | | | — | | | | (1,182,210 | ) |
Class R | | | — | | | | (1,417 | ) |
| | | | | | | | |
| | | — | | | | (1,185,296 | ) |
| | | | | | | | |
TOTAL DIVIDENDS AND DISTRIBUTIONS: | | | (629,720 | ) | | | (1,961,845 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 0 and 966 shares, respectively ] | | | — | | | | 9,460 | |
Capital shares issued in reinvestment of dividends [ 8 and 20 shares, respectively ] | | | 79 | | | | 194 | |
| | | | | | | | |
Total Class A transactions | | | 79 | | | | 9,654 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 16,342 and 25,890 shares, respectively ] | | | 162,000 | | | | 253,672 | |
Capital shares issued in reinvestment of dividends [ 203 and 453 shares, respectively ] | | | 2,010 | | | | 4,449 | |
Capital shares repurchased [ (15,356) and (280) shares, respectively ] | | | (151,722 | ) | | | (2,750 | ) |
| | | | | | | | |
Total Class I transactions | | | 12,288 | | | | 255,371 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 0 and 10 shares, respectively ] | | | — | | | | 100 | |
Capital shares issued in reinvestment of dividends [ 0# and 0 shares, respectively ] | | | 1 | | | | — | |
| | | | | | | | |
Total Class R transactions | | | 1 | | | | 100 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 12,368 | | | | 265,125 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 797,958 | | | | 760,189 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 69,528,855 | | | | 68,768,666 | |
| | | | | | | | |
End of period (a) | | $ | 70,326,813 | | | $ | 69,528,855 | |
| | | | | | | | |
(a) Includes accumulated undistributed (overdistributed) net investment income (loss) of | | $ | (75,789 | ) | | $ | (189,400 | ) |
| | | | | | | | |
# Number of shares is less than 0.5. | | | | | | | | |
See Notes to Financial Statements.
164
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | |
| Class A | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.89 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.16 | | | | 0.01 | |
Net realized and unrealized gain (loss) on investments, securities sold short, options written, futures, foreign currency transactions and swaps | | | 0.10 | | | | 0.17 | | | | (0.16 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.19 | | | | 0.33 | | | | (0.15 | ) |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | (0.08 | ) | | | (0.10 | ) | | | (0.03 | ) |
Return of capital | | | — | | | | (0.16 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.08 | ) | | | (0.26 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | | $ 10.00 | | | $ | 9.89 | | | $ | 9.82 | |
| | | | | | | | | | | | |
Total return (b) | | | 1.94 | % | | | 3.39 | % | | | (1.54 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 110 | | | $ | 109 | | | $ | 98 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 1.35 | % | | | 1.40 | % | | | 1.40 | % |
Before waivers (a) | | | 1.73 | % | | | 1.84 | % | | | 1.62 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 1.90 | % | | | 1.68 | % | | | 0.37 | %(l) |
Before waivers (a) | | | 1.52 | % | | | 1.24 | % | | | 0.15 | %(l) |
Portfolio turnover rate (z)^ | | | 56 | % | | | 152 | % | | | 77 | % |
| | | |
| Class I | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.89 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.11 | | | | 0.19 | | | | 0.02 | |
Net realized and unrealized gain (loss) on investments, securities sold short, options written, futures, foreign currency transactions and swaps | | | 0.10 | | | | 0.16 | | | | (0.17 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.21 | | | | 0.35 | | | | (0.15 | ) |
| | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | |
Dividends from net investment income | | | (0.09 | ) | | | (0.11 | ) | | | (0.03 | ) |
Return of capital | | | — | | | | (0.17 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.09 | ) | | | (0.28 | ) | | | (0.03 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.01 | | | $ | 9.89 | | | $ | 9.82 | |
| | | | | | | | | | | | |
Total return (b) | | | 2.03 | % | | | 3.63 | % | | | (1.49 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 70,117 | | | $ | 69,321 | | | $ | 68,572 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 1.10 | % | | | 1.15 | % | | | 1.15 | % |
Before waivers (a) | | | 1.48 | % | | | 1.58 | % | | | 1.36 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 2.15 | % | | | 1.92 | % | | | 0.68 | %(l) |
Before waivers (a) | | | 1.77 | % | | | 1.49 | % | | | 0.47 | %(l) |
Portfolio turnover rate (z)^ | | | 56 | % | | | 152 | % | | | 77 | % |
See Notes to Financial Statements.
165
1290 FUNDS
1290 UNCONSTRAINED BOND MANAGERS FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | |
| Class R | | Six Months Ended
April 30, 2017
(Unaudited) | | | Year Ended
October 31, 2016 | | | July 6, 2015* to
October 31, 2015 | |
Net asset value, beginning of period | | $ | 9.88 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.08 | | | | 0.14 | | | | — | # |
Net realized and unrealized gain (loss) on investments, securities sold short, options written, futures, foreign currency transactions and swaps | | | 0.10 | | | | 0.15 | | | | (0.16 | ) |
| | | | | | | | | | | | |
Total from investment operations | | | 0.18 | | | | 0.29 | | | | (0.16 | ) |
| | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.07 | ) | | | (0.09 | ) | | | (0.02 | ) |
Return of capital | | | — | | | | (0.14 | ) | | | — | |
| | | | | | | | | | | | |
Total dividends and distributions | | | (0.07 | ) | | | (0.23 | ) | | | (0.02 | ) |
| | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.99 | | | $ | 9.88 | | | $ | 9.82 | |
| | | | | | | | | | | | |
Total return (b) | | | 1.85 | % | | | 3.05 | % | | | (1.60 | )% |
| | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 100 | | | $ | 99 | | | $ | 98 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 1.60 | % | | | 1.65 | % | | | 1.65 | % |
Before waivers (a) | | | 1.98 | % | | | 2.08 | % | | | 1.88 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | |
After waivers (a) | | | 1.65 | % | | | 1.42 | % | | | 0.12 | %(l) |
Before waivers (a) | | | 1.27 | % | | | 0.99 | % | | | (0.11 | )%(l) |
Portfolio turnover rate (z)^ | | | 56 | % | | | 152 | % | | | 77 | % |
| * | 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. |
| (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. |
| (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.
166
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 2017 (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 an open-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”).
The total amount of seed capital at the Funds’ commencement of operations is listed below:
| | | | | | | | | | | | |
Funds: | | Commencement
Date | | | Class | | | Seed Capital | |
1290 Low Volatility Global Equity | | | 2/27/17 | | | | Class I | | | $ | 2,500,000 | |
1290 Retirement 2020 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2025 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2030 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2035 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2040 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2045 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2050 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2055 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
1290 Retirement 2060 | | | 2/27/17 | | | | Class I | | | | 2,500,000 | |
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. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust. However, based on experience, the Trust and management expect the risk of loss to be remote.
Each of the investment sub-advisers (each a “Sub-Adviser”) independently chooses and maintains a portfolio of securities for their respective Fund.
The 1290 Multi-Alternative Strategies Fund, 1290 Low Volatility Global Equity Fund, 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 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 Trust has authorized four classes of shares, Class A, Class I, Class R and Class T on behalf of the following eighteen Funds: 1290 Convertible Securities Fund, 1290 DoubleLine Dynamic Allocation Fund, 1290 GAMCO Small/Mid Cap Value Fund, 1290 Global Talents Fund, 1290 High Yield Bond Fund, 1290 Low Volatility Global Equity Fund, 1290 Multi-Alternative Strategies Fund, 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, 1290 Retirement 2060 Fund, 1290 SmartBeta Equity Fund and 1290 Unconstrained Bond Managers Fund. Class C shares of each Fund (except 1290 Low Volatility Global Equity Fund and each Retirement Fund) were redesignated as Class T shares on March 1, 2017. Class T shares currently are not offered for sale. Additionally, 1290 Low Volatility Global Equity Fund, 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 1290 Retirement 2060 Fund currently only offer Class I shares.
167
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
The Class A, Class R and Class T shares are subject to distribution fees imposed under distribution plans (“Distribution Plans”) adopted pursuant to Rule 12b-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 High Yield Bond Fund and 1290 Unconstrained Bond Managers 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, 1290 Multi-Alternative Strategies Fund, 1290 SmartBeta Equity Fund, 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 1290 Retirement 2060 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 net asset value (“NAV”) of the redeemed shares at the time of purchase or the 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%.
1290 High Yield Bond Fund shares that are held for one month or less are subject to a 2.00% redemption fee based on the current NAV on all classes subject to certain exceptions as described in the Fund’s prospectus. No such redemption fees were assessed during the six months ended April 30, 2017.
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 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 (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2025 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2030 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2035 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2040 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
168
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
1290 Retirement 2045 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2050 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2055 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
1290 Retirement 2060 Fund — Seeks the highest total return (including capital growth and income) over time consistent with its asset mix while managing portfolio volatility.
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.
1290 Unconstrained Bond Managers Fund (sub-advised by Pacific Investment Management Company LLC and TCW Investment Management Company) — Seeks to achieve maximum current income and total return over a full market cycle through opportunistic sector allocation.
The following is a summary of the significant accounting policies of the Trust:
In October 2016, the Securities and Exchange Commission (SEC) issued a new rule, Investment Company Reporting Modernization, which, among other provisions, amends Regulation S-X to require standardized, enhanced disclosures, particularly related to derivatives, in investment company financial statements. Compliance with the guidance is required for financial statements filed with the SEC on or after August 1, 2017; adoption will have no effect on the Funds’ net assets or results of operations.
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 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.
Valuation:
Equity securities (including securities issued by ETFs) listed on national securities exchanges are 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 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.
Corporate bonds and notes are generally valued on the basis of prices provided by a pricing service. The pricing service may utilize many factors in making evaluations, trading in similar groups of securities and any developments related to specific securities. However, when such prices are not available, such bonds and notes are valued at a bid price estimated by a broker.
Convertible preferred stocks listed on national securities exchanges are 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 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.
169
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Mortgage-backed and asset-backed securities are 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 will 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 service may utilize many factors in making evaluations, trading in similar groups of securities and any developments related to specific securities. However, when such prices are not available, such bonds and notes are 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 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 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 of open-end investment companies (other than ETFs) held by a Fund will be valued at the NAV of the shares of such funds as described in the underlying funds’ prospectuses.
Futures contracts are 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 are marked-to-market daily based upon values from third party vendors.
Forward foreign exchange contracts are 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 exchange rates gathered from leading market makers and foreign currency exchange trading centers throughout the world in making evaluations. Forward foreign exchange contracts may be settled with the counterparty in U.S. Dollars without the delivery of foreign currency.
During the six months ended April 30, 2017, the 1290 GAMCO Small/Mid Cap Value Fund, and the 1290 Unconstrained Bond Managers Fund 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 unrealized gains or losses in forward currency exchange transactions. Further information on the impact of these positions on the Funds’ financial statements can be found in the Statement of Operations and Portfolio of Investments for each Fund.
170
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
If market quotations are not readily available for a security or other financial instruments, such securities and instruments shall be referred to the Trust’s Valuation Committee (“Committee”), who will value the assets 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 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 a subadministration agreement with JPMorgan Chase Bank, N.A. (the “Sub-Administrator”) to assist 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, 2017 is included in the Portfolios of Investments. Changes in valuation techniques may result in transfers in or out of an investment’s assigned level. The Funds’ policy is to recognize transfers into and transfers out of the valuation levels as of the end of the reporting period.
Transfers between levels are included after the Summary of Level 1, Level 2 and Level 3 inputs, following the Portfolio of Investments for each Fund. 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 and Sub-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 a Sub-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
171
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
information, corporate actions, related securities, any available company news and announcements and 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 NAV for each applicable Fund when the Adviser deems that the particular event or circumstance would materially affect such Fund’s NAV. None of the Funds applied these procedures on April 30, 2017.
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 the ex-dividend date, except that certain dividends from foreign securities, if any, are recognized as soon as the Fund is informed of the ex-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.
Offering costs incurred in connection with the offering of shares of the Funds will be amortized and recorded as an expense on a straight line basis over 12 months from the date of the Funds commencement of public offering of shares.
All income earned and expenses incurred by each Fund are borne on a pro-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.
Offering costs incurred during the year ended October 31, 2016 by the Funds shown below were:
| | | | |
Funds: | | Offering Costs | |
1290 Global Talents | | $ | 34,321 | |
1290 DoubleLine Dynamic Allocation | | | 66,986 | |
172
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Additionally, offering costs incurred during the six months ended April 30, 2017 by the Funds shown below were:
| | | | |
Funds: | | Offering Costs | |
1290 Low Volatility Global Equity | | $ | 4,678 | |
1290 Retirement 2020 | | | 3,607 | |
1290 Retirement 2025 | | | 3,607 | |
1290 Retirement 2030 | | | 3,606 | |
1290 Retirement 2035 | | | 3,606 | |
1290 Retirement 2040 | | | 3,606 | |
1290 Retirement 2045 | | | 3,606 | |
1290 Retirement 2050 | | | 3,605 | |
1290 Retirement 2055 | | | 3,605 | |
1290 Retirement 2060 | | | 3,605 | |
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.
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.
Net currency gains or losses realized and unrealized as a result of differences between interest or dividends, withholding taxes, security payables/receivables, forward foreign currency exchange contracts and foreign cash recorded on a Fund’s books and the U.S. dollar equivalent amount actually received or paid are presented under foreign currency transactions and foreign currency translations in the realized and unrealized gains and losses section, respectively, of the Statements of Operations of the Funds. Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from forward foreign currency contracts, disposition of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on a Fund’s books and the U.S. dollar equivalent of amounts actually received or paid.
Taxes:
The Funds intend 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 provision 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, 2016, the Funds did not incur any interest or penalties. Each of the tax years in the two year period ended October 31, 2016 remains subject to examination by the Internal Revenue Service, state and local taxing authorities.
173
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Dividends from net investment income, if any, are declared and distributed at least annually for all Funds (1290 Convertible Securities Fund, 1290 High Yield Bond Fund and 1290 Unconstrained Bond Managers Fund declare and distribute monthly). Dividends to shareholders of the 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 the Fund’s next taxable year. The tax character of distributions for the years ended October 31, 2016 and October 31, 2015 and the tax composition of undistributed ordinary income and undistributed long term gains for the years ended October 31, 2016 and October 31, 2015 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 Distributions Payable (1290 High Yield Bond), Capital Losses Carried Forward (1290 High Yield Bond, 1290 Multi-Alternative Strategies, 1290 SmartBeta Equity and 1290 Unconstrained Bond Managers), Wash Sale Loss Deferrals (1290 GAMCO Small/Mid Cap Value) and Partnership Basis Adjustments (1290 Multi-Alternative Strategies).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended October 31, 2016 | | | Year Ended October 31, 2015 | |
Funds: | | Distributed
Ordinary
Income | | | Distributed
Long Term
Gains | | | Accumulated
Undistributed
Ordinary
Income | | | Accumulated
Undistributed
Long-Term
Gains | | | Distributed
Ordinary
Income | | | Accumulated
Undistributed
Ordinary
Income | | | Accumulated
Undistributed
Long-Term
Gains | |
1290 Convertible Securities | | $ | 423,202 | | | $ | — | | | $ | 172,604 | | | $ | — | | | $ | 79,871 | | | $ | 64,906 | | | $ | — | |
1290 DoubleLine Dynamic Allocation | | | — | | | | — | | | | 1,295,094 | | | | — | | | | — | | | | — | | | | — | |
1290 GAMCO Small/Mid Cap Value | | | 125,312 | | | | 448 | | | | 77,724 | | | | 59,158 | | | | 18,854 | | | | 118,272 | | | | 203 | |
1290 Global Talents | | | — | | | | — | | | | 89,224 | | | | — | | | | — | | | | — | | | | — | |
1290 High Yield Bond | | | 2,047,010 | | | | — | | | | — | | | | — | | | | 1,820,139 | | | | 239,013 | | | | — | |
1290 Low Volatility Global Equity | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Multi-Alternative Strategies | | | 57,243 | | | | — | | | | — | | | | — | | | | — | | | | 2,002 | | | | — | |
1290 Retirement 2020 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2025 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2030 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2035 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2040 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2045 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2050 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2055 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 Retirement 2060 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
1290 SmartBeta Equity | | | 153,198 | | | | — | | | | 127,473 | | | | — | | | | 30,060 | | | | 127,923 | | | | — | |
1290 Unconstrained Bond Managers | | | 776,549 | | | | — | | | | — | | | | — | | | | 220,349 | | | | 28,490 | | | | — | |
The following Funds had a Return of Capital during the year ended October 31, 2016:
| | | | |
Funds: | | Return of Capital | |
1290 High Yield Bond | | $ | 17,144 | |
1290 Multi-Alternative Strategies. | | | 28,089 | |
1290 Unconstrained Bond Managers | | | 1,185,296 | |
174
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Under the Regulated Investment Company Modernization Act of 2010 (the “RIC Mod Act”), 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 losses incurred that will be carried forward under the provisions of the RIC Mod Act as follows:
| | | | | | | | |
| | | Losses Carried Forward | |
Funds: | | Short-Term | | | Long-Term | |
1290 Convertible Securities | | $ | 351,805 | | | $ | — | |
1290 High Yield Bond | | | 734,211 | | | | 1,152,233 | |
1290 Multi-Alternative Strategies | | | 75,781 | | | | 76,546 | |
1290 SmartBeta Equity | | | 64,620 | | | | 35,904 | |
1290 Unconstrained Bond Managers | | | 329,452 | | | | — | |
Sale-Buybacks:
The Funds may enter into financing transactions referred to as “sale-buybacks”. A sale-buyback transaction consists of a sale of a security by a Fund to a financial institution, the counterparty, with a simultaneous agreement to repurchase the same or substantially the same security at an agreed-upon price and date. The Fund is not entitled to receive principal and interest payments, if any, made on the security sold to the counterparty during the term of the agreement. The agreed-upon proceeds for securities to be repurchased by the Fund are reflected as a liability on the Fund’s Statement of Assets and Liabilities. The Fund will recognize net income represented by the price differential between the price received for the transferred security and the agreed-upon repurchase price. This is commonly referred to as the “price drop.” A price drop consists of: (i) the foregone interest and inflationary income adjustments, if any, the Fund would have otherwise received had the security not been sold; and (ii) the negotiated financing terms between the Fund and counterparty. Foregone interest and inflationary income adjustments, if any, are recorded as components of interest income on the Fund’s Statement of Operations. Interest payments based upon negotiated financing terms made by the Fund to counterparties are recorded as a component of interest expense on the Fund’s Statement of Operations. In periods of increased demand for the security, the Fund may receive a fee for use of the security by the counterparty, which may result in interest income to the Fund. The Fund will segregate assets determined to be liquid to cover its obligations under sale-buyback transactions. In the event the net exposure for sale-buybacks and certain derivatives trades exceeds $250,000 (on a per counterparty basis) the Fund will post additional collateral. As of April 30, 2017, the 1290 Unconstrained Bond Managers Fund did not need to post additional collateral. The 1290 Unconstrained Bond Managers Fund had open sale-buybacks at April 30, 2017.
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 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.
175
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Options:
Certain Funds 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, Forward Commitments and Foreign Currency Exchange 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 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.
176
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
A Fund may make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time (“forward commitments”). Funds may designate the segregation, either on their records or with the Trust’s custodian, of cash or other liquid securities in an amount sufficient to meet the purchase price, or may enter into offsetting contracts for the forward sale of other securities they own. These commitments are reported at market value in the financial statements. Forward commitments may be considered securities in themselves and involve a risk of loss if the value of the security to be purchased declines or if the value of the security to be sold increases prior to the settlement date, which is a risk in addition to the risk of decline in value of the Fund’s other assets. Where such purchases or sales are made through dealers, a Fund relies on the dealer to consummate the sale. The dealer’s failure to do so may result in the loss to a Fund of an advantageous yield or price. Market risk exists on these commitments to the same extent as if the securities were owned on a settled basis and gains and losses are recorded and reported in the same manner. However, during the commitment period, these investments earn no interest or dividends. The use of forward commitments may result in market risk to the Funds that is greater than if the Funds had engaged solely in transactions that settle in the customary time.
The Funds may be exposed to foreign currency risks associated with Fund investments. During the reporting period, the Funds entered into certain forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date to hedge or otherwise manage these exposures. Unrealized gains or losses on forward foreign currency exchange contracts are recorded by the Funds on a daily basis and realized gains or losses are recorded on the settlement date of a contract.
A Fund may purchase foreign currency on a spot (or cash) basis. In addition, a Fund may enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”). A forward foreign currency exchange 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 Sub-Advisers may engage in these forward contracts to protect against uncertainty in the level of future exchange 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 exchange 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
177
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
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.
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 a marked-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 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.
178
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
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.
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, 2017, 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 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 exchange 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
179
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
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 (“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. These securities are subject to risks specific to their structure, sector with their individual investment strategies including futures, forward currency exchange contracts, options, swaps, and other derivatives, which are also subject to specific risks related to their structure, sector or market and may be riskier than investments in other types of securities.
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 a 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.
180
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
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) | |
Fund: | | First
$4 Billion | | | Next
$4 Billion | | | Next
$2 Billion | | | Thereafter | |
1290 Multi-Alternative Strategies | | | 0.500 | % | | | 0.490 | % | | | 0.480 | % | | | 0.470 | % |
1290 Low Volatility Global Equity | | | 0.500 | % | | | 0.490 | % | | | 0.480 | % | | | 0.470 | % |
| | | | | | | | | | | | |
| | | (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 High Yield Bond | | | 0.600 | | | | 0.580 | | | | 0.560 | |
1290 Unconstrained Bond Managers | | | 0.800 | | | | 0.780 | | | | 0.760 | |
On behalf of the Trust, the Adviser has entered into an investment sub-advisory agreement (“Sub-Advisory Agreements”) with each of the Sub-Advisers. Each of the Sub-Advisory Agreements obligates the Sub-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 respective Sub-Advisers; and (iii) perform certain limited related administrative functions in connection therewith. The Adviser pays the expenses of providing investment sub-advisory services to the Funds, including the fees of the Sub-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
181
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
Sub-Administrator to provide, pursuant to a sub-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 Rule 12b-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. Prior to March 1, 2017, the rate for Class T shares (when they were known as Class C shares) was 1.00%. |
The Trust, on behalf of the Funds, has entered into a Transfer Agency and Service Agreement (the “Transfer Agency Agreement”) with Boston Financial Data Services (“BFDS”). Pursuant to the Transfer Agency Agreement, BFDS 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, BFDS 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 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 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 April 30, 2017, certain of the Funds maintained a significant cash balance 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 offering costs and investment advisory fees of the Adviser (but excluding interest, taxes, brokerage commissions, fees and expenses of other investment companies in which a Fund invests, 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
182
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
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:
| | | | | | | | | | | | | | | | |
| | | Total Expense Limited to (% of daily net assets) | |
Funds: | | Class A | | | Class I | | | Class R | | | Class T** | |
1290 Convertible Securities | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % |
1290 DoubleLine Dynamic Allocation | | | 1.00 | | | | 1.00 | | | | 1.00 | | | | 1.00 | |
1290 GAMCO Small/Mid Cap Value | | | 1.00 | | | | 1.00 | | | | 1.00 | | | | 1.00 | |
1290 Global Talents | | | 1.00 | | | | 1.00 | | | | 1.00 | | | | 1.00 | |
1290 High Yield Bond | | | 0.80 | | | | 0.80 | | | | 0.80 | | | | 0.80 | |
1290 Low Volatility Global Equity* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Multi-Alternative Strategies* | | | 1.40 | | | | 1.40 | | | | 1.40 | | | | 1.40 | |
1290 Retirement 2020* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2025* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2030* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2035* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2040* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2045* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2050* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2055* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 Retirement 2060* | | | 0.65 | | | | 0.65 | | | | 0.65 | | | | 0.65 | |
1290 SmartBeta Equity | | | 0.90 | | | | 0.90 | | | | 0.90 | | | | 0.90 | |
1290 Unconstrained Bond Managers | | | 1.00 | | | | 1.00 | | | | 1.00 | | | | 1.00 | |
| * | Includes fees and expenses of other investment companies in which the Fund invests. |
| ** | Class T shares were known as Class C shares prior to March 1, 2017. |
Prior to March 1, 2017, 1290 Asset Managers had contractually agreed to the following expense limitations:
| | | | | | | | | | | | | | | | |
| | | Total Expense Limited to (% of daily net assets) | |
Funds: | | Class A | | | Class T* | | | Class I | | | Class R | |
1290 GAMCO Small/Mid Cap Value | | | 1.10 | % | | | 1.10 | % | | | 1.10 | % | | | 1.10 | % |
1290 Global Talents | | | 1.15 | | | | 1.15 | | | | 1.15 | | | | 1.15 | |
1290 High Yield Bond | | | 0.85 | | | | 0.85 | | | | 0.85 | | | | 0.85 | |
1290 SmartBeta Equity | | | 1.10 | | | | 1.10 | | | | 1.10 | | | | 1.10 | |
1290 Unconstrained Bond Managers | | | 1.15 | | | | 1.15 | | | | 1.15 | | | | 1.15 | |
| * | Class T shares were known as Class C prior to March 1, 2017. |
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 the prior three fiscal years, 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: (i) the Fund’s total annual expense ratio is less than the respective percentages stated above for the respective period; and (ii) the payment of such reimbursement has been approved by the Board. 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, 2017, 1290 Asset Managers did not receive recoupment for any of the Funds within the Trust. At April 30, 2017,
183
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
under the Expense Limitation Agreement, the amount that would be recoverable from each Fund is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Amount Eligible Through | | | Total Eligible
For
Recoupment | |
Funds: | | 2017 | | | 2018 | | | 2019 | | | 2020 | | |
1290 Convertible Securities | | $ | — | | | $ | 79,383 | | | $ | 181,764 | | | $ | 78,489 | | | $ | 339,636 | |
1290 DoubleLine Dynamic Allocation | | | — | | | | — | | | | 206,816 | | | | 143,467 | | | | 350,283 | |
1290 GAMCO Small/Mid Cap Value | | | — | | | | 256,568 | | | | 170,475 | | | | 79,209 | | | | 506,252 | |
1290 Global Talents | | | — | | | | — | | | | 124,531 | | | | 95,307 | | | | 219,838 | |
1290 High Yield Bond | | | — | | | | 398,213 | | | | 190,254 | | | | 104,494 | | | | 692,961 | |
1290 Low Volatility Global Equity | | | — | | | | — | | | | — | | | | 17,826 | | | | 17,826 | |
1290 Multi-Alternative Strategies | | | — | | | | 67,806 | | | | 167,229 | | | | 68,467 | | | | 303,502 | |
1290 Retirement 2020 | | | — | | | | — | | | | — | | | | 17,213 | | | | 17,213 | |
1290 Retirement 2025 | | | — | | | | — | | | | — | | | | 17,203 | | | | 17,203 | |
1290 Retirement 2030 | | | — | | | | — | | | | — | | | | 17,209 | | | | 17,209 | |
1290 Retirement 2035 | | | — | | | | — | | | | — | | | | 17,218 | | | | 17,218 | |
1290 Retirement 2040 | | | — | | | | — | | | | — | | | | 17,228 | | | | 17,228 | |
1290 Retirement 2045 | | | — | | | | — | | | | — | | | | 17,237 | | | | 17,237 | |
1290 Retirement 2050 | | | — | | | | — | | | | — | | | | 17,247 | | | | 17,247 | |
1290 Retirement 2055 | | | — | | | | — | | | | — | | | | 17,257 | | | | 17,257 | |
1290 Retirement 2060 | | | — | | | | — | | | | — | | | | 17,259 | | | | 17,259 | |
1290 SmartBeta Equity | | | — | | | | 283,924 | | | | 150,945 | | | | 81,333 | | | | 516,202 | |
1290 Unconstrained Bond Managers | | | — | | | | 80,587 | | | | 294,316 | | | | 131,641 | | | | 506,544 | |
During the six months ended April 30, 2017, 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 | | $ | 428 | |
1290 High Yield Bond | | | 481 | |
1290 SmartBeta Equity | | | 404 | |
During the six months ended April 30, 2017, 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 | | $ | 265 | |
1290 DoubleLine Dynamic Allocation | | | 670 | |
1290 GAMCO Small/Mid Cap Value | | | 420 | |
1290 Global Talents | | | 253 | |
1290 High Yield Bond | | | 364 | |
1290 Multi-Alternative Strategies | | | 200 | |
1290 SmartBeta Equity | | | 158 | |
1290 Unconstrained Bond Managers | | | 845 | |
If during a Fund’s fiscal year, Fund Operating Expenses that at any time during the prior three fiscal years received a fee waiver or reduction from 1290 Asset Managers less than the percentage limits mentioned above, 1290 Asset Managers is entitled to be reimbursed by such share class up to the lesser of (a) the amount of fees waived or reduced and (b) the amount by which the expense limit for that share class exceeds the Fund Operating Expenses of the share class for the current fiscal year.
During the six months ended April 30, 2017, DoubleLine Capital LP reimbursed 1290 DoubleLine Dynamic Allocation Fund $9,950 of Investment Management fees from the
184
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2017 (Unaudited)
DoubleLine Floating Rate Fund and the DoubleLine Global Bond Fund, which are underlying investments in this Fund. This reimbursement is not eligible for recoupment.
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, 2017, 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 | | $ | 86 | | | $ | — | | | $ | — | |
1290 DoubleLine Dynamic Allocation | | | 10,800 | | | | — | | | | — | |
1290 GAMCO Small/Mid Cap Value | | | 16,839 | | | | — | | | | — | |
1290 High Yield Bond | | | 6,544 | | | | — | | | | — | |
1290 Multi-Alternative Strategies | | | 13,265 | | | | — | | | | — | |
1290 SmartBeta Equity | | | 4,967 | | | | — | | | | — | |
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, 2017, 1290 Asset Managers held investments in each of the Funds as follows:
| | | | |
Funds: | | Percentage of
Ownership | |
1290 Convertible Securities | | | 94.49 | % |
1290 Doubleline Dynamic Allocation | | | 95.19 | |
1290 GAMCO Small/ Mid Cap Value | | | 21.88 | |
1290 Global Talents | | | 99.42 | |
1290 High Yield Bond | | | 94.21 | |
1290 Low Volatility Global Equity | | | 98.92 | |
1290 Multi-Alternative Strategies | | | 62.72 | |
1290 Retirement 2020 Fund | | | 100.00 | |
1290 Retirement 2025 Fund | | | 100.00 | |
1290 Retirement 2030 Fund | | | 100.00 | |
1290 Retirement 2035 Fund | | | 100.00 | |
1290 Retirement 2040 Fund | | | 100.00 | |
1290 Retirement 2045 Fund | | | 99.70 | |
1290 Retirement 2050 Fund | | | 100.00 | |
1290 Retirement 2055 Fund | | | 100.00 | |
1290 Retirement 2060 Fund | | | 100.00 | |
1290 SmartBeta Equity | | | 86.23 | |
1290 Unconstrained Bond Managers | | | 99.59 | |
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1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Concluded)
April 30, 2017 (Unaudited)
The Adviser evaluated subsequent events from April 30, 2017, the date of these financial statements, through the date these financial statements were issued and available. There were no subsequent events to disclose.
In July 2011, a lawsuit was filed in the United States District Court of the District of New Jersey, entitled Mary Ann Sivolella v. AXA Equitable Life Insurance Company and AXA Equitable Funds Management Group, LLC (“Sivolella Litigation’’). The lawsuit was filed derivatively on behalf of eight Portfolios of EQ Advisors Trust (a separate Trust) advised by the Adviser. The lawsuit seeks recovery under Section 36(b) of the 1940 Act, for alleged excessive fees paid to the Adviser and AXA Equitable (the “Defendants”) for investment management services. The Plaintiff seeks recovery of the alleged overpayments, or alternatively, rescission of the contracts and restitution of all fees paid, interest, costs and fees. In October 2011, the Adviser and AXA Equitable filed a motion to dismiss the complaint. In November 2011, the Plaintiff filed an Amended Complaint seeking the same relief and in December 2011, the Defendants filed a motion to dismiss the Amended Complaint. In September 2012, the United States District Court for the District of New Jersey denied the motion to dismiss the Amended Complaint.
In January 2013, a second lawsuit against the Adviser was filed in the United States District Court for the District of New Jersey by a group of Plaintiffs asserting substantially similar claims under Section 36(b) and seeking substantially similar damages as in the Sivolella Litigation. The lawsuit, entitled Glenn D. Sanford, et al. v. AXA Equitable Funds Management Group, LLC (“Sanford Litigation”), was filed derivatively on behalf of certain Portfolios of EQ Advisors Trust advised by the Adviser. The Sanford Litigation does not involve any of the Funds. In light of the similarities of the allegations in the Sivolella and Sanford Litigations, the parties agreed to consolidate the two lawsuits.
In April 2013, the Plaintiffs in the Sivolella and Sanford Litigations amended the complaints to add additional claims under Section 36(b) of the 1940 Act for recovery of alleged excessive fees paid to the Adviser in its capacity as the Administrator of EQ Advisors Trust (a separate Trust). The Plaintiffs seek recovery of the alleged overpayments, or alternatively, rescission of the contract and restitution of the excessive fees paid, interest, costs, and fees. In January 2015, Plaintiffs and Defendants filed motions for summary judgment and other pre-trial motions, which were denied by the Court in August 2015.
The non-jury trial commenced in January 2016 and testimony concluded in February 2016. Closing arguments occurred in June 2016 following post-trial briefing. On August 25, 2016, the Court issued its decision in favor of the Adviser and AXA Equitable, finding that the Plaintiffs had failed to meet their burden to demonstrate that the Adviser and AXA Equitable breached their fiduciary duty in violation of Section 36(b) or show any actual damages. In September 2016, the Plaintiffs filed a motion to amend the trial opinion and to amend or make new findings of fact and/or conclusions of law, which was denied by the Court in December 2016. In December 2016, Plaintiffs filed a notice to appeal the Court’s decision to the United States Court of Appeals for the Third Circuit.
None of the Funds within the Trust are a party to the Sivolella or Sanford Litigations and any potential damages would be the responsibility of the Defendants. Therefore, no liability for litigation relating to these matters has been accrued in the financial statements of the Funds.
186
1290 FUNDS
DISCLOSURE REGARDING ADVISORY CONTRACT APPROVAL
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS (UNAUDITED)
At a meeting held on September 27-28, 2016, the Board of Trustees (the “Board”) of 1290 Funds (the “Trust”), including those Trustees who are not parties to the Agreement (as defined below) or “interested persons” (as that term is defined in the Investment Company Act of 1940, as amended) of such parties or the Trust (the “Independent Trustees”), considered and unanimously approved an Investment Advisory Agreement (an “Agreement”) with AXA Equitable Funds Management Group, LLC (d/b/a 1290 Asset Managers®) (“1290 Asset Managers” or the “Adviser”) with respect to the 1290 Low Volatility Global Equity Fund (a “Fund”).
In addition, the Board of the Trust, including the Independent Trustees, previously considered and unanimously approved an Investment Advisory Agreement (an “Agreement”) with the Adviser with respect to the 1290 Retirement 2020 Fund, the 1290 Retirement 2025 Fund, the 1290 Retirement 2030 Fund, the 1290 Retirement 2035 Fund, the 1290 Retirement 2040 Fund, the 1290 Retirement 2045 Fund, the 1290 Retirement 2050 Fund, the 1290 Retirement 2055 Fund, and the 1290 Retirement 2060 Fund (each, a “Fund” or a “1290 Retirement Fund” and, together with the 1290 Low Volatility Global Equity Fund, the “Funds”).
Each Fund is a newly-created fund of the Trust that commenced operations on March 1, 2017. The Board noted that each Fund would operate as a fund-of-funds that would seek to achieve its investment objective by investing in exchange traded securities of other investment companies or investment vehicles (referred to as underlying ETFs).
In reaching its decision to approve the Agreement with respect to each Fund, the Board considered the overall fairness of the Agreement and whether the Agreement was in the best interests of the Fund and its shareholders. The Board further considered all factors it deemed relevant with respect to each Fund and the Agreement, including: (1) the nature, quality and extent of the overall services to be provided to the Fund by the Adviser and its affiliates; (2) the level of the Fund’s proposed advisory fee and the Fund’s expense ratios relative to those of peer funds; (3) the anticipated costs of the services to be provided by, and the estimated profits to be realized by, the Adviser and its affiliates from their relationships with the Fund; (4) the anticipated effect of growth and size on the Fund’s performance and expenses, including any potential economies of scale; and (5) “fall out” benefits that may accrue to the Adviser and its affiliates (i.e., indirect benefits that the Adviser or its affiliates would be unable to generate but for the existence of the Funds). In considering the Agreement, the Board did not identify any single factor or information as all-important or controlling, and each Trustee may have attributed different weight to each factor.
In connection with its deliberations at each meeting, the Board took into account information prepared by the Adviser, including memoranda and other materials addressing the factors set out above, and provided to the Trustees in connection with the meeting. The Board also took into account information provided to the Trustees at prior Board meetings. The information provided to the Trustees described, among other things, each Fund’s investment strategies and risks, the services to be provided by the Adviser, as well as the Adviser’s investment personnel, proposed advisory fee, expense ratios, expense limitation arrangements, and other matters. During each meeting, the Trustees met with senior representatives of the Adviser to discuss the relevant Agreement and the information provided. The Independent Trustees met in advance of, and in executive session during, each meeting at which the Board approved an Agreement to review the information provided. At each meeting, the Independent Trustees and management engaged in extensive discussions regarding the relevant Agreement. The Independent Trustees were assisted by independent legal counsel prior to and during each meeting and during their deliberations regarding each Agreement and also received materials discussing the legal standards applicable to their consideration of each Agreement.
The Board also noted that the Trust is an affiliated investment company of EQ Advisors Trust, which is also managed by the Adviser, and that all of the Board members also currently serve on the Board of Trustees of EQ Advisors Trust. The Board took into account information relating to the Adviser provided to the Trustees, in their capacities as Trustees of EQ Advisors Trust, at prior meetings of the Board of Trustees of EQ Advisors Trust, and the Trustees noted their experience and familiarity with the Adviser and the portfolios of EQ Advisors Trust derived from their years of service on the Boards of EQ Advisors Trust and the Trust.
187
Although the Board approved the Agreement for all of the 1290 Retirement Funds at the same Board meeting, the Board considered each 1290 Retirement Fund separately. In approving the Agreement with respect to each Fund, each Trustee, including the Independent Trustees, on the basis of their business judgment after review of all information, determined that the proposed advisory fee was fair and reasonable and that the approval of the Agreement was in the best interests of the applicable Fund and its shareholders. Although the Board gave attention to all information provided, the following discusses some of the primary factors that the Board deemed relevant to its decision to approve each Agreement.
Nature, Quality and Extent of Services. The Board evaluated the nature, quality and extent of the overall services to be provided to each Fund and its shareholders by the Adviser and its affiliates. The Board also considered the Adviser’s responsibilities with respect to each Fund. The Board also considered the Adviser’s experience in serving as the investment adviser for the other funds of the Trust and, based on the Board members’ service as Trustees of EQ Advisors Trust, the Adviser’s experience in serving as the investment manager for portfolios of EQ Advisors Trust, including portfolios that, like the Funds, are structured as funds-of-funds. The Board considered that the Adviser would be responsible for, among other things, developing investment strategies for the Funds; making investment decisions for the Funds; monitoring and evaluating the performance of the Funds; monitoring the investment operations and composition of the Funds and, in connection therewith, monitoring compliance with the Funds’ investment objectives, policies and restrictions, as well as the Funds’ compliance with applicable law and the Trust’s compliance policies and procedures; placing orders for the purchase or sale of investments for the Funds; coordinating and managing the flow of information and communications relating to the Funds among the applicable parties; coordinating responses to regulatory agency inquiries relating to the operations of the Trust and coordinating litigation matters involving the Adviser and the Trust; and implementing Board directives as they relate to the Funds. The Board also considered information regarding the Adviser’s process for making investment decisions for the Funds, as well as information regarding the qualifications and experience of, and resources available to, the personnel who would manage the Funds. The Board further considered that the Adviser has provided the Trust with personnel, including Trust officers, in connection with carrying out its responsibilities. The Board also considered that the Adviser has assumed significant entrepreneurial risk in sponsoring the Funds and that the Adviser also would bear and assume significant ongoing risks, including investment, operational, enterprise, litigation, regulatory and compliance risks, with respect to the Funds. The Board considered that the Adviser’s responsibilities would include daily monitoring of investment, operational, enterprise, litigation, regulatory and compliance risks as they relate to the Funds. The Board also considered information regarding the Adviser’s ongoing risk management activities. The Board’s conclusion regarding the nature, quality and extent of the overall services to be provided by the Adviser also was based, in part, on (i) the Board’s experience and familiarity with the Adviser serving as the investment adviser for the other funds of the Trust, and on periodic reports provided to the Board regarding the services provided by the Adviser to those other funds, and (ii) the Trustees’ experience and familiarity, in their capacities as Trustees of EQ Advisors Trust, with the Adviser serving as the investment manager for portfolios of EQ Advisors Trust, including portfolios that, like the Funds, are structured as funds-of-funds, and on periodic reports provided to the Trustees, in their capacities as Trustees of EQ Advisors Trust, regarding the services provided by the Adviser to those other portfolios.
The Board members also factored into their review their experience and familiarity with the Adviser’s compliance program, policies, and procedures with respect to the Trust and their experience and familiarity, in their capacities as Trustees of EQ Advisors Trust, with the Adviser’s compliance program, policies, and procedures with respect to EQ Advisors Trust. The Board also considered whether there were any pending lawsuits, enforcement proceedings or regulatory investigations involving the Adviser and reviewed information regarding the Adviser’s financial condition and history of operations and potential conflicts of interest in managing the Funds.
The Board also considered the benefits that would be provided to shareholders from participation in a Fund advised by the Adviser, including the Adviser’s experience operating a large fund complex that offers a wide range of portfolios, sub-advisers and investment styles. In addition, the Board considered the nature, quality and extent of the administrative, shareholder servicing and distribution support services that the Adviser and its affiliates would provide to the Funds and their shareholders.
188
The Board noted that the Funds did not have any performance history as they were newly organized and had not commenced operations as of the dates of the relevant meetings. However, the Board received and reviewed information regarding each Fund’s investment objectives and policies and its anticipated investments and asset allocations. The Board also considered the Adviser’s expertise, resources, proposed methodology and personnel for managing the Funds and its experience managing the other funds of the Trust, as well as portfolios of EQ Advisors Trust, including portfolios that, like the Funds, are structured as funds-of-funds.
Based on its review, the Board determined, with respect to each Fund, that the nature, quality and extent of the overall services to be provided by the Adviser were appropriate for the Fund in light of its investment objectives and, thus, supported a decision to approve the Agreement.
Expenses. The Board considered each Fund’s proposed advisory fee in light of the nature, quality and extent of the overall services to be provided by the Adviser. The Board also considered each Fund’s proposed advisory fee rate relative to the advisory fee rates of other portfolios managed by the Adviser, including portfolios that, like the Funds, are structured as funds-of-funds, and noted that differences in the level of the fees reflected differences between the Funds and the other funds-of-funds managed by the Adviser. The Board also considered information provided by the Adviser comparing the proposed advisory fee rate and expense ratios for each Fund to the advisory fee rates and expense ratios for comparable funds, including information compiled by Lipper, Inc., an independent organization. The Board further considered that the proposed advisory fee schedule for the 1290 Low Volatility Global Equity Fund includes breakpoints that would reduce the advisory fee rate as Fund assets increase above certain levels. The Board noted that any such reduction in the 1290 Low Volatility Global Equity Fund’s advisory fee would result in corresponding reductions in the Fund’s total expense ratios. In addition, the Board noted that the Adviser had contractually agreed to make payments or waive all or a portion of its management, administrative and other fees so that each Fund’s total expense ratios do not exceed certain levels as set forth in its prospectus. The Board also noted that, to the extent that the Adviser waives fees pursuant to these expense limitation arrangements, each Fund’s actual advisory fee may be lower than that Fund’s contractual advisory fee. The Board considered that all fees and expenses of each Fund are explicitly disclosed in the Fund’s offering documents. Based on its review, the Board determined that the Adviser’s proposed fee for each Fund is fair and reasonable.
Profitability and Costs. The Board also considered the anticipated level of profits to be realized by the Adviser in connection with the operation of each Fund. The Adviser represented that, as new funds with no prior operations, the Funds were not expected to be profitable to the Adviser initially because of their anticipated small initial asset bases. As a result, the Board noted that it periodically would evaluate profitability as the assets of the Funds increase over time.
Economies of Scale. The Board also considered whether economies of scale or efficiencies would be realized as a Fund grows larger and the extent to which this is reflected in the proposed advisory fee schedule for the Fund. While recognizing that any precise determination is inherently subject to assumptions and subjective assessments, the Board considered that any realized economies of scale or efficiencies may be shared with funds and their shareholders in a variety of ways, including: (i) breakpoints in the advisory fee or other fees so that a fund’s effective fee rate declines as the fund grows in size, (ii) subsidizing a fund’s expenses by making payments or waiving all or a portion of the advisory fee or other fees so that the fund’s total expense ratio does not exceed certain levels, (iii) setting the advisory fee or other fees so that a fund is priced to scale, which assumes that the fund has sufficient assets from inception to operate at a competitive fee rate without any fee waiver or expense reimbursement from the adviser, and (iv) reinvestment in, and enhancements to, the services that an adviser and its affiliates provide to a fund and its shareholders. The Board noted that the proposed advisory fee schedule for the 1290 Low Volatility Global Equity Fund includes breakpoints that would reduce the advisory fee rate as Fund assets increase above certain levels. In addition, the Board noted that, although the advisory fee for the 1290 Retirement Funds does not include breakpoints, the Adviser had agreed to assume certain expenses of each Fund by making payments or waiving all or a portion of its management, administrative and other fees so that each Fund’s total expense ratios do not exceed certain levels as set forth in its prospectus in light of the fact that each Fund is a new fund and initially would not have sufficient assets to maintain its expense ratios at competitive levels. The Board also considered that the Adviser could potentially share economies of scale or efficiencies with the Funds through reinvestment in, and enhancements to, the services that the Adviser and its affiliates provide over time, such as hiring additional personnel and providing additional resources in areas that would be relevant to the management and administration of the Funds. The Board considered these factors, and the relationship they
189
bear to the fee structure charged to each Fund by the Adviser, and concluded that there would be a reasonable sharing of benefits from any realized economies of scale or efficiencies with the Funds once they commence operations and at reasonably anticipated asset levels. The Board noted, however, that it would monitor future growth in Fund assets to determine whether any realized economies of scale or efficiencies continued to be reflected in the Funds’ fee arrangements.
Fall-Out Benefits. The Board also considered the extent to which fall-out benefits may accrue to the Adviser and its affiliates. In this connection, the Board considered several possible fall-out benefits and other types of benefits, including the following. The Board noted that the Adviser also would serve as the administrator for the Funds and would receive compensation for acting in this capacity. The Board also noted that AXA Distributors, LLC, an affiliate of the Adviser, provides distribution support services for the Trust pursuant to an agreement with the Trust’s distributor, ALPS Distributors, Inc. AXA Distributors, LLC may receive from the Funds compensation (which may include payments pursuant to Rule 12b-1 plans with respect to their Class A, Class R, and Class T shares, when offered for sale) for providing shareholder services and selling activities, which could lead to growth in the Trust’s assets and corresponding benefits from such growth, including economies of scale. The Board also recognized that other broker-dealers that are affiliated with the Adviser may sell, and earn sales commissions and/or other compensation with respect to, shares of the Funds. Further, the Board considered that Sanford C. Bernstein & Co., LLC, a registered broker-dealer, is an affiliate of the Adviser and may, from time to time, receive brokerage commissions from the Funds in connection with the purchase and sale of portfolio securities; provided, however, that those transactions, among other things, are consistent with seeking best execution. Based on its review, the Board determined that any “fall-out” benefits and other types of benefits that may accrue to the Adviser are fair and reasonable.
190
PROXY VOTING RESULTS (UNAUDITED)
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of the 1290 Convertible Securities Fund, 1290 DoubleLine Dynamic Allocation Fund, 1290 GAMCO Small/Mid Cap Value Fund, 1290 Global Talents Fund, 1290 High Yield Bond Fund, 1290 Multi-Alternative Strategies Fund, 1290 SmartBeta Equity Fund and 1290 Unconstrained Bond Managers Fund approved the election of Steven M. Joenk, Mark A. Barnard, Thomas W. Brock, Donald E. Foley, Christopher P.A. Komisarjevsky, H. Thomas McMeekin, Gloria D. Reeg, Gary S. Schpero, Kenneth L. Walker and Caroline L. Williams to serve as the Board of Trustees of 1290 Funds. The results of the shareholder vote are as follows:
| | | | | | | | | | |
Shareholders of All Funds Vote Collectively | | For | | | Against | | | Abstain |
Mark A. Barnard | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Thomas W. Brock | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Donald E. Foley | | | 21,543,397.436 | | | | 5,947.692 | | | N/A |
Steven M. Joenk | | | 21,543,397.436 | | | | 5,947.692 | | | N/A |
Christopher P.A. Komisarjevsky | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
H. Thomas McMeekin | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Gloria D. Reeg | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Gary S. Schpero | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Kenneth L. Walker | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
Caroline L. Williams | | | 21,543,397.451 | | | | 5,947.677 | | | N/A |
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to diversification. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 357,159.478 | | | | 1,657.820 | | | | 5,611.942 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 889,224.811 | | | | 20,942.599 | | | | 146,001.918 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to issuing senior securities and borrowing money. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 338,939.173 | | | | 19,878.126 | | | | 5,611.941 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 889,224.811 | | | | 20,942.599 | | | | 146,001.918 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
191
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to underwriting. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 349,492.221 | | | | 1,657.820 | | | | 13,279.199 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 889,224.811 | | | | 20,942.599 | | | | 146,001.918 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to concentrating. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 333,930.261 | | | | 17,219.780 | | | | 13,279.199 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 889,224.811 | | | | 20,942.599 | | | | 146,001.918 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to investing in real estate. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 339,684.989 | | | | 19,132.310 | | | | 5,611.941 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 875,608.377 | | | | 34,559.036 | | | | 146,001.915 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to investing in commodities. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 344,774.694 | | | | 14,042.605 | | | | 5,611.941 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 875,608.377 | | | | 34,559.036 | | | | 146,001.915 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
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At a Special Meeting of Shareholders held on February 22, 2017, shareholders of each Fund approved changes to each Fund’s fundamental investment restriction with respect to making loans. The results of the shareholder vote are as follows:
| | | | | | | | | | | | |
Funds | | For | | | Against | | | Abstain | |
1290 Convertible Securities Fund | | | 2,025,798.011 | | | | 0 | | | | 0 | |
1290 DoubleLine Dynamic Allocation Fund | | | 4,835,354.404 | | | | 188,391.397 | | | | 0 | |
1290 GAMCO Small/Mid Cap Value Fund | | | 327,707.603 | | | | 31,109.696 | | | | 5,611.941 | |
1290 Global Talents Fund | | | 2,000,643.513 | | | | 0 | | | | 0 | |
1290 High Yield Bond Fund | | | 3,061,228.972 | | | | 0 | | | | 0 | |
1290 Multi-Alternative Strategies Fund | | | 889,224.811 | | | | 20,942.599 | | | | 146,001.918 | |
1290 SmartBeta Equity Fund | | | 1,015,927.832 | | | | 0 | | | | 0 | |
1290 Unconstrained Bond Managers Fund | | | 7,001,402.431 | | | | 0 | | | | 0 | |
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.
NOTIFICATION OF SOURCE OF DISTRIBUTIONS (UNAUDITED)
Pursuant to Rule 19a-1 under the Investment Company Act of 1940
As noted in the table provided below, 1290 High Yield Bond Fund and 1290 Unconstrained Bond Fund made distributions for the calendar year ending 2016 for which a portion was in excess of the Funds net income as calculated in accordance with good accounting practice. As of December 31, 2016, the sources of these distributions were approximately as follows:
| | | | | | | | | | | | |
Fund | | Net Income | | | Realized Gain | | | Capital Sources | |
1290 High Yield Bond Fund | | | 99.04 | % | | | — | | | | 0.96 | % |
1290 Unconstrained Bond Fund | | | 38.78 | % | | | — | | | | 61.22 | % |
Please note that this information is being provided to satisfy certain notice requirements under the Investment Company Act of 1940. As a result, shareholders should not use the information provided in this notice for tax reporting purposes.
QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
The Funds file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Forms N-Q are available on the Securities and Exchange Commission’s website at http://www.sec.gov. You may also review and obtain copies at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information about the Public Reference Room may be obtained by calling 1-800-SEC-0330.
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Visit the Funds’ Website: 1290Funds.com | |  |
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| Must be accompanied or preceded by a Prospectus. 1290 Funds are distributed by ALPS Distributors, Inc. | | DFS#400606 |
© 2017 AXA Equitable Life Insurance Company. All rights reserved.
1290 Avenue of the Americas, New York, NY 10104.
AXA Equitable Life Insurance Company
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 this Form N-CSR.
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
| Item 9. | Purchases of Equity Securities by 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 in Rule 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 by Rule 30a-3(b) under the 1940 Act and Rule 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. |
| | |
| |
| (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 29, 2017 |
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 29, 2017 |
| | |
| By: | | /s/ Brian E. Walsh |
| | Brian E. Walsh |
| | Chief Financial Officer |
| | June 29, 2017 |
