UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act FileNumber 811-22959
1290 FUNDS
(Exact name of registrant as specified in charter)
1290 Avenue of the Americas
New York, New York 10104
(Address of principal executive offices)
WILLIAM T. MACGREGOR, ESQ.
Executive Vice President and Secretary
Equitable Investment 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, 2019 - April 30, 2020
| Item 1. | Reports to Stockholders. |
The following is a copy of the report transmitted to shareholders pursuant to Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1).
Semi-Annual Report
April 30, 2020
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the shareholder reports from the Funds or from your financial intermediary, such as a broker-dealer or bank. Instead, the shareholder reports will be made available on the Funds’ website (www.1290Funds.com/literature.php), and you will be notified by mail each time a shareholder report is posted and provided with a website link to access the shareholder report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive the Funds’ shareholder reports and other communications electronically by contacting your financial intermediary or, if you invest directly with the Funds, by calling 1-888-310-0416 or by sending an e-mail request to 1290Funds@dfinsolutions.com.
You may elect to receive all future shareholder reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Funds, you can call 1-888-310-0416 or send an e-mail request to 1290Funds@dfinsolutions.com to let the Funds know that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all 1290 Funds held in your account if you invest through your financial intermediary or all 1290 Funds held with the fund complex if you invest directly with the Funds.
1290 Funds
Semi-Annual Report
April 30, 2020
Table of Contents
Market Overview for the Six Months Ended April 30, 2020
Going into the last two months of 2019, investors displayed some concern about slow economic and corporate profit-growth and elevated equity valuations, and signs that growth might be lagging in some regions. That said, global stocks advanced, as it looked increasingly likely that a trade deal between the U.S. and China was on the horizon. The capital markets were also supported by accommodative monetary policy put in place by the U.S. Federal Reserve, the European Central Bank and the Bank of Japan (among others) to counteract restrained business spending and rising tariffs, and boost manufacturing and industrial production worldwide.
Moving into 2020 — before the extent of the pandemic became clear — U.S. inflation remained in check and incomes, spending and home sales were fairly robust, while retail sales growth ebbed in February from December’s cyclical peak. That fairly mild picture quickly deteriorated as key parts of the U.S. economy became impaired and the support from better-than-expected 2019 corporate earnings reports faded. Key equity gauges fell from record highs while investors searched for ways to “price in” an event for which there was no precedent. Bear-market volatility sent investors into assets perceived as havens amid widespread fear that the disruption in global supply chains would tip the country into a deep recession. Manufacturing activity abruptly switched to contraction due as the emergency grew, while ongoing expansion in U.S. services-sector activity decelerated sharply.
In fixed-income markets, yields plunged as demand for Treasuries and other types of government-sponsored debt spiked. The 10-year U.S. Treasury note’s yield moved through record lows in February and March, including a nadir of 0.54% on March 9. The corporate credit market sustained an across-the-board selloff in March but saw widely mixed results, as fixed-income investors showed a clear preference for high-grade corporate debt while shunning riskier, below-investment-grade issuance. Among lower-rated high-yield bonds, those within the energy, industrial, aerospace, retail, leisure, gaming and airlines industries suffered the most severe price declines.
Looking into April, emergency measures — including massive direct government stimulus, a raft of programs from the Fed and similar actions from other global central banks — provoked brief recoveries in broad equity market indexes, which had finished the first quarter with steep, double-digit percentage declines as it became clear the economy would not return to normal until the virus was under control. A wide performance gap separated the 11 major sectors: information technology stocks were most resistant to the downdraft, followed closely by health care, consumer staples and utilities, while shares of energy, financials, industrials and materials firms covered the lower ranks. Small-capitalization companies felt the brunt of the selling pressure, followed by mid-caps, both of which fared substantially worse than the large-cap tier. In terms of investment style, value stocks sustained heavier losses than their growth-oriented counterparts, regardless of company size.
Across the world’s developed markets, European equities generally saw larger declines than U.S. equities. Asian emerging markets held up better than the United States, while all others generally fell further, as did most frontier markets. By April, some U.S. economic data began to reflect the government-mandated shutdown amid widespread forecasts for a recession in 2020’s first half.
Source: Equitable Investment Management Group, LLC. As of 4/30/2020.
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. Fixed income investments are subject to interest rate risk so that when interest rates rise, the prices of fixed income securities 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, if referenced, is included for illustrative purposes only. You cannot invest directly in an index.
Fund holdings and sector allocations are subject to change. Please see the Portfolio of Investments for a complete list of Fund holdings.
1
NOTES ON PERFORMANCE (Unaudited)
Total Returns
Performance of the 1290 Funds as shown on the following pages compares each Fund’s performance to that of a broad-based securities index and, with respect to certain Funds, customized composite benchmarks. Each Fund’s rates of return are net of investment advisory fees and expenses of the Fund. Each Fund has a separate investment objective it seeks to achieve by following a separate investment policy. There is no guarantee that these objectives will be attained. The objectives and policies of each Fund will affect its return and its risk. Keep in mind that past performance is not an indication of future results.
Benchmarks
60% S&P 500® Index/40% Bloomberg Barclays U.S. Aggregate Bond Index is a hypothetical combination of unmanaged indexes. The composite index combines the total return of the S&P 500® Index at a weighting of 60% and the Bloomberg Barclays U.S. Aggregate Bond Index at a weighting of 40%.
Bloomberg Barclays U.S. Aggregate Bond Index covers the U.S. dollar denominated investment-grade, fixed-rate, taxable bond market of securities. The index includes bonds from the Treasury, government-related and corporate securities, agency fixed rate and hybrid adjustable mortgage pass through securities, asset-backed securities and commercial mortgage-backed securities.
ICE BofAML U.S. 3-Month Treasury Bill Indexmeasures the returns of negotiable debt obligations issued by the U.S. government and backed by its full faith and credit, having a maturity of three months.
ICE BofAML U.S. Convertibles Indexconsists of U.S. dollar denominated investment grade and non-investment grade convertible securities sold into the U.S. market and publicly traded in the United States. The index constituents are market value weighted based on the convertible securities prices and outstanding shares, and the underlying index is rebalanced daily.
ICE BofAML U.S. High Yield Indextracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market. Qualifying securities must have at least 18 months to final maturity at the time of issuance, at least one year remaining term to final maturity as of the rebalancing date, a fixed coupon schedule and a minimum amount outstanding of $100 million. It is capitalization-weighted.
Morgan Stanley Capital International (MSCI) ACWI (Net) Index (“MSCI ACWI (Net) Index”)is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of 23 developed markets and 24 emerging markets. The index covers approximately 85% of the global investment opportunities.
Morgan Stanley Capital International (MSCI) ACWI Minimum Volatility (Net) Index (“MSCI ACWI Minimum Volatility (Net) Index”) aims to reflect the performance characteristics of a minimum variance strategy applied to large and mid cap equities across 23 developed markets and 23 emerging markets countries. The index is calculated by optimizing the MSCI ACWI Index, its parent index, in USD for the lowest absolute risk (within a given set of constraints). Historically, the index has shown lower beta and volatility characteristics relative to the MSCI ACWI Index.
Morgan Stanley Capital International (MSCI) World (Net) Index (“MSCI World (Net) Index”)is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The index consists of 23 developed market country indexes.
Russell 2500™ Value Indexmeasures the performance of those Russell 2500TM Index companies with lower price-to-book ratios and lower forecasted growth values. It is market-capitalization weighted.
Standard & Poor’s 500® Composite Stock Price Index (“S&P 500® Index”)is a weighted index of common stocks of 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities. The index is capitalization weighted, thereby giving greater weight to companies with the largest market capitalizations.
The Standard & Poor’s Target Date Index Series (each, an “S&P Target Date Index”) comprises eleven multi-asset class indices, each corresponding to a particular target retirement date. The asset allocation for each index in the series is determined once a year through survey of large fund management companies that offer target date products. Each index is fully investable, with varying levels of exposure to equities, fixed income and commodities.
The CBOE Volatility Index (known as the VIX), is measure of constant, 30-day expected volatility of the U.S. stock market, derived from prices of the S&P 500 Index call and put options.
Glossary
Derivativeis a financial instrument with a price that is dependent upon or derived from one or more underlying assets.
Diversified spreadis the sale of multiple, diversified futures contracts and the purchase of other multiple, diversified offsetting futures contracts. A spread tracks the difference between a long and short position.
2
NOTES ON PERFORMANCE (Unaudited)
Mortgage backed security (MBS)is a type of asset-backed security that is secured by a mortgage or collection of mortgages.
Quantitative easingis the introduction of new money into the money supply by a central bank.
Shiller Barclays Cyclically Adjusted Price-to-Earnings (CAPE) Total Return Index aims to identify undervalued sectors in the large-cap equity market based on a modified CAPE® ratio, which is designed to assess longer term equity valuations by using an inflation adjusted earnings horizon.
Smart betadefines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization based indices.
Swapis a derivative contract through which two parties exchange financial instruments.
3
1290 CONVERTIBLE SECURITIES FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENT SUB-ADVISER
| Ø | | Palisade Capital Management, L.L.C. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | |
| | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | 1.56 | % | | | 3.42 | % | | | 5.72 | % |
| | | with Sales Charge (a) | | | (3.02 | ) | | | (1.22 | ) | | | 4.72 | |
Fund – Class I Shares* | | | | | 1.59 | | | | 3.68 | | | | 5.98 | |
Fund – Class R Shares* | | | | | 1.37 | | | | 3.24 | | | | 5.46 | |
ICE BofAML U.S. Convertibles Index | | | | | 1.44 | | | | 4.38 | | | | 7.17 | |
| |
* Date of inception 7/6/15. (a) A 4.50% front-end sales charge was deducted. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I and R shares were 1.99%, 1.74% and 2.24%, respectively. The net expense ratios for Class A, I and R shares were 1.15%, 0.90% and 1.40%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — Palisade Capital Management, L.L.C.
Against the backdrop of COVID-19, financial market volatility, a significant decline in equity markets and a moderately higher bond market, U.S. convertibles benefited from the strength of healthcare and technology, posting modestly positive gains for thesix-month period.
Fund Highlights
The Fund’s Class I shares returned 1.59% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the ICE BofA All U.S. Convertible Bond Index, returned 1.44% over the same time period. Positioning in health care helped performance as these issuers benefited from the current economic backdrop. Offsetting this strength was weaker performance in the consumer staples sector.
What helped performance during the six-month period ended April 30, 2020:
| • | | An overweight and good security selection in the health care sector, which significantly outperformed the overall convertibles return, was the largest contributor to results for the period. Notably at the security level, positions in Inovio Pharmaceuticals, Inc. 6.5% and Teladoc Health, Inc. 3.0% posted triple digit returns. |
| • | | A significant underweight to energy, by far the worst performing sector in the benchmark for the six-month period, was also a significant contributor to results. Good security selection in the sector also added value, driven by not owning Chesapeake Energy Corporation 5.5%, which plummeted by approximately -85%. |
| • | | The Fund was well served by underweights to the hard-hit financials and utilities sectors. |
| • | | Elsewhere, the Fund benefited from outperformance in the telecommunications sector. Notably, the avoidance of Intelsat S.A. 4.5%, which fell by double-digit returns, drove results. |
What hurt performance during the six-month period ended April 30, 2020:
| • | | Partially offsetting these good results, the Fund was hampered by unfavorable security selection in the consumer discretionary sector. The lack of exposure to the three Tesla issues, which rallied significantly during the period with all three issues posting over 100% returns, detracted sharply from relative underperformance. |
| • | | Underperformance in the consumer staples sector was attributable to a disappointing return from Luckin Coffee. |
| • | | Within information technology the benefits of an overweight to the outperforming sector were more than outweighed by unfavorable security selection. Notably, not owning Atlassian, Inc. 0.625% and Ringcentral, Inc. 0.0%, both of which produced positive double-digit returns, weighed on results. |
Outlook
Looking forward, the worst of the direct effects ofCOVID-19 appear to be behind us and investors seem focused on the gradual resumption of economic activity and an eventual return to normalcy. Still, there remains a good deal of uncertainty as to what a new normal will
4
1290 CONVERTIBLE SECURITIES FUND (Unaudited)
look like, leaving the possibility of continued volatility in the months ahead. Despite the recent rebound in equity and credit markets, we believe convertibles remain attractively priced and can benefit investors willing to remain focused on the long-term, rather than on short-term, volatile, exogenous shocks. We remain focused on sectors such as health care and technology, which we believe should outperform as spending on managing COVID-19 risk as well as on technology enablement for working from home are likely to remain priorities. We will also plan to continue placing less emphasis on credit-sensitive and smaller capitalization investments as we believe these sectors could remain areas of heightened risk. Preserving capital through near-term uncertainty while positioning the Fund to benefit from an eventual economic rebound remain our primary focus.
| | | | |
| | |
Sector Weightings as of April 30, 2020 | | % of
Net Assets | |
Information Technology | | | 40.6 | % |
Health Care | | | 22.6 | |
Financials | | | 9.8 | |
Consumer Discretionary | | | 7.4 | |
Communication Services | | | 5.8 | |
Industrials | | | 4.4 | |
Utilities | | | 3.4 | |
Real Estate | | | 2.0 | |
Materials | | | 0.7 | |
Energy | | | 0.7 | |
Consumer Staples | | | 0.5 | |
Investment Company | | | 0.4 | |
Cash and Other | | | 1.7 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees (in the case of Class A 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, 2020 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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 - 4/30/20 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,015.60 | | | | $5.80 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.11 | | | | 5.81 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,015.90 | | | | 4.55 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,020.35 | | | | 4.56 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,013.70 | | | | 7.05 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,017.87 | | | | 7.06 | |
| |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.16%, 0.91% and 1.41%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect the one-half year period). | |
5
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | | | | | | | | |
Convertible Bonds (78.9%) | | | | | | | | |
Communication Services (5.8%) | | | | | | | | |
Diversified Telecommunication Services (0.5%) | |
Bandwidth, Inc. | | | | | | | | |
0.250%, 3/1/26§ | | $ | 26,000 | | | $ | 28,240 | |
Vonage Holdings Corp. | | | | | | | | |
1.750%, 6/1/24§ | | | 106,000 | | | | 95,023 | |
| | | | | | | | |
| | | | | | | 123,263 | |
| | | | | | | | |
Entertainment (3.1%) | |
Liberty Media Corp.-Liberty Formula One | | | | | | | | |
1.000%, 1/30/23 | | | 226,000 | | | | 238,732 | |
Live Nation Entertainment, Inc. | | | | | | | | |
2.500%, 3/15/23 | | | 256,000 | | | | 244,506 | |
Pandora Media LLC | | | | | | | | |
1.750%, 12/1/23 | | | 177,000 | | | | 198,342 | |
Zynga, Inc. | | | | | | | | |
0.250%, 6/1/24§ | | | 99,000 | | | | 110,199 | |
| | | | | | | | |
| | | | | | | 791,779 | |
| | | | | | | | |
Interactive Media & Services (0.9%) | |
Momo, Inc. | | | | | | | | |
1.250%, 7/1/25 | | | 122,000 | | | | 49,228 | |
Snap, Inc. | | | | | | | | |
0.250%, 5/1/25§ | | | 11,000 | | | | 11,557 | |
0.750%, 8/1/26§ | | | 101,000 | | | | 104,610 | |
Twitter, Inc. | | | | | | | | |
0.250%, 6/15/24 | | | 70,000 | | | | 65,260 | |
| | | | | | | | |
| | | | | | | 230,655 | |
| | | | | | | | |
Media (1.3%) | |
DISH Network Corp. | | | | | | | | |
3.375%, 8/15/26 | | | 395,000 | | | | 320,187 | |
| | | | | | | | |
Total Communication Services | | | | | | | 1,465,884 | |
| | | | | | | | |
Consumer Discretionary (7.4%) | | | | | | | | |
Diversified Consumer Services (1.3%) | |
Chegg, Inc. | | | | | | | | |
0.125%, 3/15/25 | | | 299,000 | | | | 313,695 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (0.8%) | |
Caesars Entertainment Corp. | | | | | | | | |
5.000%, 10/1/24 | | | 145,000 | | | | 205,757 | |
| | | | | | | | |
Internet & Direct Marketing Retail (3.7%) | |
Booking Holdings, Inc. | | | | | | | | |
0.350%, 6/15/20 | | | 240,000 | | | | 273,048 | |
0.750%, 5/1/25§ | | | 33,000 | | | | 37,234 | |
Etsy, Inc. | | | | | | | | |
(Zero Coupon), 3/1/23 | | | 167,000 | | | | 310,126 | |
IAC Financeco 3, Inc. | | | | | | | | |
2.000%, 1/15/30§ | | | 300,000 | | | | 313,320 | |
| | | | | | | | |
| | | | | | | 933,728 | |
| | | | | | | | |
Specialty Retail (1.6%) | |
Burlington Stores, Inc. | | | | | | | | |
2.250%, 4/15/25§ | | | 114,000 | | | | 120,805 | |
Guess?, Inc. | | | | | | | | |
2.000%, 4/15/24§ | | | 100,000 | | | | 64,187 | |
RH | | | | | | | | |
(Zero Coupon), 6/15/23 | | | 228,000 | | | | 222,158 | |
| | | | | | | | |
| | | | | | | 407,150 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 1,860,330 | |
| | | | | | | | |
| | | | | | | | |
Consumer Staples (0.2%) | | | | | | | | |
Personal Products (0.2%) | |
Herbalife Nutrition Ltd. | | | | | | | | |
2.625%, 3/15/24 | | $ | 66,000 | | | $ | 60,060 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 60,060 | |
| | | | | | | | |
Energy (0.7%) | | | | | | | | |
Energy Equipment & Services (0.5%) | |
SEACOR Holdings, Inc. | | | | | | | | |
3.250%, 5/15/30 | | | 148,000 | | | | 116,292 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (0.2%) | |
Cheniere Energy, Inc. | | | | | | | | |
4.250%, 3/15/45 | | | 120,000 | | | | 63,806 | |
| | | | | | | | |
Total Energy | | | | | | | 180,098 | |
| | | | | | | | |
Financials (3.6%) | | | | | | | | |
Banks (1.1%) | |
Barclays Bank plc | | | | | | | | |
Series VUN | | | | | | | | |
(Zero Coupon), 2/18/25 | | | 62,000 | | | | 60,686 | |
BofA Finance LLC | | | | | | | | |
0.125%, 9/1/22 | | | 224,000 | | | | 231,773 | |
| | | | | | | | |
| | | | | | | 292,459 | |
| | | | | | | | |
Capital Markets (0.7%) | |
New Mountain Finance Corp. | | | | | | | | |
5.750%, 8/15/23 | | | 199,000 | | | | 168,626 | |
| | | | | | | | |
Consumer Finance (1.7%) | |
Encore Capital Group, Inc. | | | | | | | | |
3.250%, 10/1/25§ | | | 72,000 | | | | 57,736 | |
LendingTree, Inc. | | | | | | | | |
0.625%, 6/1/22 | | | 211,000 | | | | 279,606 | |
PRA Group, Inc. | | | | | | | | |
3.500%, 6/1/23 | | | 99,000 | | | | 83,280 | |
| | | | | | | | |
| | | | | | | 420,622 | |
| | | | | | | | |
Mortgage Real Estate Investment Trusts (REITs) (0.1%) | |
Western Asset Mortgage Capital Corp. (REIT) | | | | | | | | |
6.750%, 10/1/22 | | | 60,000 | | | | 32,628 | |
| | | | | | | | |
Total Financials | | | | | | | 914,335 | |
| | | | | | | | |
Health Care (19.3%) | | | | | | | | |
Biotechnology (8.7%) | |
Apellis Pharmaceuticals, Inc. | | | | | | | | |
3.500%, 9/15/26§ | | | 130,000 | | | | 151,227 | |
BioMarin Pharmaceutical, Inc. | | | | | | | | |
1.500%, 10/15/20 | | | 211,000 | | | | 227,893 | |
Bridgebio Pharma, Inc. | | | | | | | | |
2.500%, 3/15/27§ | | | 22,000 | | | | 21,271 | |
Clovis Oncology, Inc. | | | | | | | | |
2.500%, 9/15/21 | | | 128,000 | | | | 113,991 | |
Coherus Biosciences, Inc. | | | | | | | | |
1.500%, 4/15/26§ | | | 11,000 | | | | 11,601 | |
Exact Sciences Corp. | | | | | | | | |
1.000%, 1/15/25 | | | 322,000 | | | | 413,479 | |
0.375%, 3/1/28 | | | 33,000 | | | | 30,055 | |
Incyte Corp. | | | | | | | | |
1.250%, 11/15/20 | | | 75,000 | | | | 139,125 | |
Insmed, Inc. | | | | | | | | |
1.750%, 1/15/25 | | | 175,000 | | | | 164,281 | |
See Notes to Financial Statements.
6
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Invitae Corp. | | | | | | | | |
2.000%, 9/1/24§ | | $ | 83,000 | | | $ | 76,190 | |
Ionis Pharmaceuticals, Inc. | | | | | | | | |
1.000%, 11/15/21 | | | 147,000 | | | | 157,382 | |
Ligand Pharmaceuticals, Inc. | | | | | | | | |
0.750%, 5/15/23 | | | 315,000 | | | | 276,715 | |
Neurocrine Biosciences, Inc. | | | | | | | | |
2.250%, 5/15/24 | | | 150,000 | | | | 210,171 | |
Retrophin, Inc. | | | | | | | | |
2.500%, 9/15/25 | | | 58,000 | | | | 43,790 | |
Sarepta Therapeutics, Inc. | | | | | | | | |
1.500%, 11/15/24 | | | 93,000 | | | | 164,005 | |
| | | | | | | | |
| | | | | | | 2,201,176 | |
| | | | | | | | |
Health Care Equipment & Supplies (4.5%) | |
CONMED Corp. | | | | | | | | |
2.625%, 2/1/24 | | | 101,000 | | | | 106,744 | |
DexCom, Inc. | | | | | | | | |
0.750%, 12/1/23 | | | 199,000 | | | | 419,178 | |
Insulet Corp. | | | | | | | | |
1.375%, 11/15/24 | | | 58,000 | | | | 125,725 | |
0.375%, 9/1/26§ | | | 200,000 | | | | 224,375 | |
Nevro Corp. | | | | | | | | |
1.750%, 6/1/21 | | | 126,000 | | | | 167,364 | |
NuVasive, Inc. | | | | | | | | |
2.250%, 3/15/21 | | | 71,000 | | | | 81,792 | |
0.375%, 3/15/25§ | | | 25,000 | | | | 23,047 | |
| | | | | | | | |
| | | | | | | 1,148,225 | |
| | | | | | | | |
Health Care Providers & Services (0.8%) | |
Anthem, Inc. | | | | | | | | |
2.750%, 10/15/42 | | | 54,000 | | | | 211,173 | |
| | | | | | | | |
Health Care Technology (2.2%) | |
Allscripts Healthcare Solutions, Inc. | | | | | | | | |
0.875%, 1/1/27§ | | | 65,000 | | | | 49,758 | |
Evolent Health, Inc. | | | | | | | | |
2.000%, 12/1/21 | | | 124,000 | | | | 107,182 | |
Tabula Rasa HealthCare, Inc. | | | | | | | | |
1.750%, 2/15/26§ | | | 67,000 | | | | 73,935 | |
Teladoc Health, Inc. | | | | | | | | |
3.000%, 12/15/22 | | | 90,000 | | | | 336,488 | |
| | | | | | | | |
| | | | | | | 567,363 | |
| | | | | | | | |
Life Sciences Tools & Services (1.9%) | |
Illumina, Inc. | | | | | | | | |
0.500%, 6/15/21 | | | 148,000 | | | | 198,374 | |
(Zero Coupon), 8/15/23 | | | 128,000 | | | | 130,796 | |
Repligen Corp. | | | | | | | | |
0.375%, 7/15/24 | | | 117,000 | | | | 138,431 | |
| | | | | | | | |
| | | | | | | 467,601 | |
| | | | | | | | |
Pharmaceuticals (1.2%) | |
Horizon Pharma Investment Ltd. | | | | | | | | |
2.500%, 3/15/22 | | | 91,000 | | | | 119,494 | |
Jazz Investments I Ltd. | | | | | | | | |
1.875%, 8/15/21 | | | 109,000 | | | | 106,065 | |
Paratek Pharmaceuticals, Inc. | | | | | | | | |
4.750%, 5/1/24 | | | 91,000 | | | | 69,677 | |
| | | | | | | | |
| | | | | | | 295,236 | |
| | | | | | | | |
Total Health Care | | | | | | | 4,890,774 | |
| | | | | | | | |
| | | | | | | | |
Industrials (3.3%) | | | | | | | | |
Aerospace & Defense (0.3%) | |
Aerojet Rocketdyne Holdings, Inc. | | | | | | | | |
2.250%, 12/15/23 | | | 46,000 | | | | 75,297 | |
| | | | | | | | |
Air Freight & Logistics (0.4%) | |
Atlas Air Worldwide Holdings, Inc. | | | | | | | | |
1.875%, 6/1/24 | | | 131,000 | | | | 108,730 | |
| | | | | | | | |
Airlines (0.3%) | |
Southwest Airlines Co. | | | | | | | | |
1.250%, 5/1/25 | | | 82,000 | | | | 90,500 | |
| | | | | | | | |
Construction & Engineering (0.7%) | |
Tutor Perini Corp. | | | | | | | | |
2.875%, 6/15/21 | | | 209,000 | | | | 170,335 | |
| | | | | | | | |
Machinery (1.6%) | |
Chart Industries, Inc. | | | | | | | | |
1.000%, 11/15/24§ | | | 88,000 | | | | 78,733 | |
Fortive Corp. | | | | | | | | |
0.875%, 2/15/22 | | | 331,000 | | | | 317,918 | |
| | | | | | | | |
| | | | | | | 396,651 | |
| | | | | | | | |
Total Industrials | | | | | | | 841,513 | |
| | | | | | | | |
Information Technology (37.7%) | | | | | | | | |
Communications Equipment (2.9%) | |
Infinera Corp. | | | | | | | | |
2.125%, 9/1/24 | | | 122,000 | | | | 108,379 | |
InterDigital, Inc. | | | | | | | | |
2.000%, 6/1/24§ | | | 199,000 | | | | 200,732 | |
Lumentum Holdings, Inc. | | | | | | | | |
0.250%, 3/15/24 | | | 288,000 | | | | 418,466 | |
| | | | | | | | |
| | | | | | | 727,577 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (1.7%) | |
II-VI, Inc. | | | | | | | | |
0.250%, 9/1/22 | | | 101,000 | | | | 99,712 | |
Insight Enterprises, Inc. | | | | | | | | |
0.750%, 2/15/25§ | | | 132,000 | | | | 132,152 | |
TTM Technologies, Inc. | | | | | | | | |
1.750%, 12/15/20 | | | 166,000 | | | | 204,906 | |
| | | | | | | | |
| | | | | | | 436,770 | |
| | | | | | | | |
IT Services (5.3%) | |
Akamai Technologies, Inc. | | | | | | | | |
0.125%, 5/1/25 | | | 215,000 | | | | 255,144 | |
GDS Holdings Ltd. | | | | | | | | |
2.000%, 6/1/25 | | | 23,000 | | | | 28,649 | |
KBR, Inc. | | | | | | | | |
2.500%, 11/1/23 | | | 62,000 | | | | 65,139 | |
MongoDB, Inc. | | | | | | | | |
0.250%, 1/15/26§ | | | 130,000 | | | | 67,872 | |
Okta, Inc. | | | | | | | | |
0.250%, 2/15/23 | | | 23,000 | | | | 71,994 | |
0.125%, 9/1/25§ | | | 67,000 | | | | 70,822 | |
Square, Inc. | | | | | | | | |
0.500%, 5/15/23 | | | 402,000 | | | | 451,245 | |
Twilio, Inc. | | | | | | | | |
0.250%, 6/1/23 | | | 195,000 | | | | 323,514 | |
| | | | | | | | |
| | | | | | | 1,334,379 | |
| | | | | | | | |
See Notes to Financial Statements.
7
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (11.8%) | |
Advanced Micro Devices, Inc. | | | | | | | | |
2.125%, 9/1/26 | | $ | 53,000 | | | $ | 347,271 | |
Inphi Corp. | | | | | | | | |
0.750%, 9/1/21 | | | 123,000 | | | | 215,481 | |
0.750%, 4/15/25§ | | | 26,000 | | | | 27,362 | |
Microchip Technology, Inc. | | | | | | | | |
1.625%, 2/15/25 | | | 259,000 | | | | 472,561 | |
1.625%, 2/15/27 | | | 485,000 | | | | 606,095 | |
Novellus Systems, Inc. | | | | | | | | |
2.625%, 5/15/41 | | | 36,000 | | | | 287,278 | |
ON Semiconductor Corp. | | | | | | | | |
1.000%, 12/1/20 | | | 199,000 | | | | 209,158 | |
1.625%, 10/15/23 | | | 111,000 | | | | 120,963 | |
Rambus, Inc. | | | | | | | | |
1.375%, 2/1/23 | | | 91,000 | | | | 88,243 | |
Silicon Laboratories, Inc. | | | | | | | | |
1.375%, 3/1/22 | | | 181,000 | | | | 217,276 | |
Synaptics, Inc. | | | | | | | | |
0.500%, 6/15/22 | | | 139,000 | | | | 152,069 | |
Teradyne, Inc. | | | | | | | | |
1.250%, 12/15/23 | | | 121,000 | | | | 246,722 | |
| | | | | | | | |
| | | | | | | 2,990,479 | |
| | | | | | | | |
Software (14.7%) | |
Blackline, Inc. | | | | | | | | |
0.125%, 8/1/24§ | | | 93,000 | | | | 98,626 | |
Coupa Software, Inc. | | | | | | | | |
0.125%, 6/15/25§ | | | 178,000 | | | | 226,780 | |
CyberArk Software Ltd. | | | | | | | | |
(Zero Coupon), 11/15/24§ | | | 59,000 | | | | 54,781 | |
DocuSign, Inc. | | | | | | | | |
0.500%, 9/15/23 | | | 122,000 | | | | 190,088 | |
FireEye, Inc. | | | | | | | | |
0.875%, 6/1/24 | | | 255,000 | | | | 219,785 | |
Guidewire Software, Inc. | | | | | | | | |
1.250%, 3/15/25 | | | 167,000 | | | | 174,619 | |
HubSpot, Inc. | | | | | | | | |
0.250%, 6/1/22 | | | 120,000 | | | | 220,087 | |
New Relic, Inc. | | | | | | | | |
0.500%, 5/1/23 | | | 222,000 | | | | 200,488 | |
Nutanix, Inc. | | | | | | | | |
(Zero Coupon), 1/15/23 | | | 181,000 | | | | 155,535 | |
Palo Alto Networks, Inc. | | | | | | | | |
0.750%, 7/1/23 | | | 288,000 | | | | 295,056 | |
Pluralsight, Inc. | | | | | | | | |
0.375%, 3/1/24 | | | 116,000 | | | | 95,874 | |
Proofpoint, Inc. | | | | | | | | |
0.250%, 8/15/24§ | | | 125,000 | | | | 129,746 | |
Q2 Holdings, Inc. | | | | | | | | |
0.750%, 6/1/26§ | | | 104,000 | | | | 111,523 | |
RealPage, Inc. | | | | | | | | |
1.500%, 11/15/22 | | | 93,000 | | | | 148,936 | |
ServiceNow, Inc. | | | | | | | | |
(Zero Coupon), 6/1/22 | | | 119,000 | | | | 312,244 | |
Slack Technologies, Inc. | | | | | | | | |
0.500%, 4/15/25§ | | | 53,000 | | | | 58,715 | |
Splunk, Inc. | | | | | | | | |
0.500%, 9/15/23 | | | 397,000 | | | | 455,556 | |
1.125%, 9/15/25 | | | 61,000 | | | | 71,383 | |
Verint Systems, Inc. | | | | | | | | |
1.500%, 6/1/21 | | | 188,000 | | | | 181,991 | |
| | | | | | | | |
Workday, Inc. | | | | | | | | |
0.250%, 10/1/22 | | | 172,000 | | | | 210,405 | |
Zendesk, Inc. | | | | | | | | |
0.250%, 3/15/23 | | | 90,000 | | | | 121,620 | |
| | | | | | | | |
| | | | | | | 3,733,838 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.3%) | |
Pure Storage, Inc. | | | | | | | | |
0.125%, 4/15/23 | | | 247,000 | | | | 226,771 | |
Western Digital Corp. | | | | | | | | |
1.500%, 2/1/24 (e) | | | 106,000 | | | | 97,308 | |
| | | | | | | | |
| | | | | | | 324,079 | |
| | | | | | | | |
Total Information Technology | | | | | | | 9,547,122 | |
| | | | | | | | |
Materials (0.3%) | | | | | | | | |
Metals & Mining (0.3%) | | | | | | | | |
Allegheny Technologies, Inc. | | | | | | | | |
4.750%, 7/1/22 | | | 42,000 | | | | 36,580 | |
Cleveland-Cliffs, Inc. | | | | | | | | |
1.500%, 1/15/25 | | | 61,000 | | | | 44,526 | |
| | | | | | | | |
Total Materials | | | | | | | 81,106 | |
| | | | | | | | |
Real Estate (0.6%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.2%) | |
IH Merger Sub LLC (REIT) | | | | | | | | |
3.500%, 1/15/22 | | | 54,000 | | | | 62,303 | |
| | | | | | | | |
Real Estate Management & Development (0.4%) | |
Redfin Corp. | | | | | | | | |
1.750%, 7/15/23 | | | 97,000 | | | | 98,528 | |
| | | | | | | | |
Total Real Estate | | | | | | | 160,831 | |
| | | | | | | | |
Total Convertible Bonds | | | | | | | 20,002,053 | |
| | | | | | | | |
Total Long-Term Debt
Securities (78.9%)
(Cost $19,060,632) | | | | | | | 20,002,053 | |
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
CONVERTIBLE PREFERRED STOCKS: | | | | | | | | |
Consumer Staples (0.3%) | | | | | | | | |
Food Products (0.3%) | |
Bunge Ltd., | | | | | | | | |
4.875% | | | 855 | | | | 79,780 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 79,780 | |
| | | | | | | | |
Financials (6.2%) | |
Banks (5.0%) | |
Bank of America Corp., | | | | | | | | |
Series L | | | | | | | | |
7.250% | | | 365 | | | | 504,576 | |
Wells Fargo & Co., | | | | | | | | |
Series L | | | | | | | | |
7.500% | | | 550 | | | | 769,362 | |
| | | | | | | | |
| | | | | | | 1,273,938 | |
| | | | | | | | |
Insurance (0.7%) | |
Assurant, Inc., | | | | | | | | |
Series D | | | | | | | | |
6.500% | | | 1,583 | | | | 169,539 | |
| | | | | | | | |
See Notes to Financial Statements.
8
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
Thrifts & Mortgage Finance (0.5%) | |
New York Community Capital Trust V, | | | | | | | | |
6.000% | | | 2,656 | | | $ | 116,864 | |
| | | | | | | | |
Total Financials | | | | | | | 1,560,341 | |
| | | | | | | | |
Health Care (3.3%) | | | | | | | | |
Health Care Equipment & Supplies (1.5%) | |
Danaher Corp., | | | | | | | | |
Series A | | | | | | | | |
4.750% | | | 328 | | | | 390,032 | |
| | | | | | | | |
Health Care Technology (0.4%) | |
Change Healthcare, Inc., | | | | | | | | |
6.000% | | | 2,328 | | | | 107,693 | |
| | | | | | | | |
Life Sciences Tools & Services (1.0%) | |
Avantor, Inc., | | | | | | | | |
Series A | | | | | | | | |
6.250% | | | 4,309 | | | | 248,112 | |
| | | | | | | | |
Pharmaceuticals (0.4%) | |
Elanco Animal Health, Inc., | | | | | | | | |
5.000% | | | 2,020 | | | | 92,920 | |
| | | | | | | | |
Total Health Care | | | | | | | 838,757 | |
| | | | | | | | |
Industrials (1.1%) | | | | | | | | |
Machinery (1.1%) | |
Fortive Corp., | | | | | | | | |
Series A | | | | | | | | |
5.000% | | | 326 | | | | 270,508 | |
| | | | | | | | |
Total Industrials | | | | | | | 270,508 | |
| | | | | | | | |
Information Technology (2.9%) | |
Semiconductors & Semiconductor Equipment (2.9%) | |
Broadcom, Inc., | | | | | | | | |
Series A | | | | | | | | |
8.000% | | | 727 | | | | 739,679 | |
| | | | | | | | |
Total Information Technology | | | | | | | 739,679 | |
| | | | | | | | |
Materials (0.4%) | | | | | | | | |
Chemicals (0.4%) | |
International Flavors & Fragrances, Inc., | | | | | | | | |
6.000% | | | 2,191 | | | | 104,182 | |
| | | | | | | | |
Total Materials | | | | | | | 104,182 | |
| | | | | | | | |
Real Estate (1.4%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (1.4%) | |
Crown Castle International Corp. (REIT), | | | | | | | | |
Series A | | | | | | | | |
6.875% | | | 250 | | | | 348,250 | |
| | | | | | | | |
Total Real Estate | | | | | | | 348,250 | |
| | | | | | | | |
| | | | | | | | |
Utilities (3.4%) | | | | | | | | |
Electric Utilities (2.5%) | |
American Electric Power Co., Inc., | | | | | | | | |
6.125% | | | 3,490 | | | | 177,292 | |
NextEra Energy, Inc., | | | | | | | | |
5.279%* | | | 10,500 | | | | 453,495 | |
| | | | | | | | |
| | | | | | | 630,787 | |
| | | | | | | | |
| | | | | | | | |
Multi-Utilities (0.9%) | |
Sempra Energy, | | | | | | | | |
Series A | | | | | | | | |
6.000% | | | 2,313 | | | | 236,643 | |
| | | | | | | | |
Total Utilities | | | | | | | 867,430 | |
| | | | | | | | |
Total Convertible Preferred
Stocks (19.0%)
(Cost $4,634,654) | | | | | | | 4,808,927 | |
| | | | | | | | |
SHORT-TERM INVESTMENT: | | | | | | | | |
Investment Company (0.4%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 103,046 | | | | 103,129 | |
| | | | | | | | |
Total Short-Term Investment (0.4%)
(Cost $103,094) | | | | | | | 103,129 | |
| | | | | | | | |
Total Investments in Securities (98.3%)
(Cost $23,798,380) | | | | | | | 24,914,109 | |
Other Assets Less Liabilities (1.7%) | | | | | | | 427,720 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 25,341,829 | |
| | | | | | | | |
| § | 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, 2020, the market value of these securities amounted to $2,832,159 or 11.2% 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. |
| (e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2020. Maturity date disclosed is the ultimate maturity date. |
See Notes to Financial Statements.
9
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable Inputs (including the
Fund’s own assumptions in determining the fair
value of investments) | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Convertible Bonds | | | | | | | | | | | | | | | | |
Communication Services | | $ | — | | | $ | 1,465,884 | | | $ | — | | | $ | 1,465,884 | |
Consumer Discretionary | | | — | | | | 1,860,330 | | | | — | | | | 1,860,330 | |
Consumer Staples | | | — | | | | 60,060 | | | | — | | | | 60,060 | |
Energy | | | — | | | | 180,098 | | | | — | | | | 180,098 | |
Financials | | | — | | | | 914,335 | | | | — | | | | 914,335 | |
Health Care | | | — | | | | 4,890,774 | | | | — | | | | 4,890,774 | |
Industrials | | | — | | | | 841,513 | | | | — | | | | 841,513 | |
Information Technology | | | — | | | | 9,547,122 | | | | — | | | | 9,547,122 | |
Materials | | | — | | | | 81,106 | | | | — | | | | 81,106 | |
Real Estate | | | — | | | | 160,831 | | | | — | | | | 160,831 | |
Convertible Preferred Stocks | | | | | | | | | | | | | | | | |
Consumer Staples | | | — | | | | 79,780 | | | | — | | | | 79,780 | |
Financials | | | 1,560,341 | | | | — | | | | — | | | | 1,560,341 | |
Health Care | | | 838,757 | | | | — | | | | — | | | | 838,757 | |
Industrials | | | 270,508 | | | | — | | | | — | | | | 270,508 | |
Information Technology | | | 739,679 | | | | — | | | | — | | | | 739,679 | |
Materials | | | 104,182 | | | | — | | | | — | | | | 104,182 | |
Real Estate | | | 348,250 | | | | — | | | | — | | | | 348,250 | |
Utilities | | | 867,430 | | | | — | | | | — | | | | 867,430 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 103,129 | | | | — | | | | — | | | | 103,129 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 4,832,276 | | | $ | 20,081,833 | | | $ | — | | | $ | 24,914,109 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 4,832,276 | | | $ | 20,081,833 | | | $ | — | | | $ | 24,914,109 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 5,214,108 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 5,133,918 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 2,562,369 | |
Aggregate gross unrealized depreciation | | | (1,617,778 | ) |
| | | | |
Net unrealized appreciation | | $ | 944,591 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 23,969,518 | |
| | | | |
See Notes to Financial Statements.
10
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | | | | |
Investments in Securities, at value (Cost $23,798,380) | | $ | 24,914,109 | |
Cash | | | 646,000 | |
Dividends, interest and other receivables | | | 77,317 | |
Prepaid registration and filing fees | | | 12,104 | |
Other assets | | | 101 | |
| | | | |
Total assets | | | 25,649,631 | |
| | | | |
LIABILITIES | | | | |
Payable for Fund shares redeemed | | | 155,003 | |
Payable for securities purchased | | | 82,000 | |
Dividends and distributions payable | | | 21,742 | |
Transfer agent fees payable | | | 1,520 | |
Administrative fees payable | | | 652 | |
Distribution fees payable – Class A | | | 125 | |
Distribution fees payable – Class R | | | 56 | |
Accrued expenses | | | 46,704 | |
| | | | |
Total liabilities | | | 307,802 | |
| | | | |
NET ASSETS | | $ | 25,341,829 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 23,562,036 | |
Total distributable earnings (loss) | | | 1,779,793 | |
| | | | |
Net assets | | $ | 25,341,829 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $643,521 / 59,362 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.84 | |
Maximum sales charge (4.50% of offering price) | | | 0.51 | |
| | | | |
Maximum offering price per share | | $ | 11.35 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $24,552,940 / 2,264,493 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.84 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $145,368 / 13,423 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.83 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Interest | | $ | 138,283 | |
Dividends | | | 130,184 | |
| | | | |
Total income | | | 268,467 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 89,810 | |
Professional fees | | | 41,010 | |
Administrative fees | | | 19,245 | |
Registration and filing fees | | | 17,094 | |
Printing and mailing expenses | | | 16,235 | |
Transfer agent fees | | | 15,159 | |
Custodian fees | | | 4,196 | |
Trustees’ fees | | | 981 | |
Distribution fees – Class A | | | 770 | |
Distribution fees – Class R | | | 368 | |
Miscellaneous | | | 9,211 | |
| | | | |
Gross expenses | | | 214,079 | |
Less: Waiver from investment adviser | | | (96,672 | ) |
| | | | |
Net expenses | | | 117,407 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 151,060 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | 854,468 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (626,055 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 228,413 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 379,473 | |
| | | | |
See Notes to Financial Statements.
11
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 151,060 | | | $ | 266,278 | |
Net realized gain (loss) | | | 854,468 | | | | 1,172,228 | |
Net change in unrealized appreciation (depreciation) | | | (626,055 | ) | | | 1,554,811 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 379,473 | | | | 2,993,317 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (30,132 | ) | | | (29,152 | ) |
Class I | | | (1,317,984 | ) | | | (1,352,512 | ) |
Class R | | | (7,510 | ) | | | (7,315 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (1,355,626 | ) | | | (1,388,979 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 9,124 and 10,409 shares, respectively ] | | | 104,837 | | | | 112,483 | |
Capital shares issued in reinvestment of dividends [ 2,184 and 2,313 shares, respectively ] | | | 24,340 | | | | 23,148 | |
Capital shares repurchased [ (2,898) and (10,505) shares, respectively ] | | | (33,720 | ) | | | (110,871 | ) |
| | | | | | | | |
Total Class A transactions | | | 95,457 | | | | 24,760 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 144,296 and 60,599 shares, respectively ] | | | 1,600,360 | | | | 662,358 | |
Capital shares issued in reinvestment of dividends [ 12,827 and 11,004 shares, respectively ] | | | 142,979 | | | | 110,649 | |
Capital shares repurchased [ (81,894) and (40,367) shares, respectively ] | | | (843,663 | ) | | | (429,627 | ) |
| | | | | | | | |
Total Class I transactions | | | 899,676 | | | | 343,380 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 151 and 396 shares, respectively ] | | | 1,695 | | | | 4,183 | |
Capital shares issued in reinvestment of dividends [ 163 and 154 shares, respectively ] | | | 1,818 | | | | 1,537 | |
Capital shares repurchased [ (8) and (9) shares, respectively ] | | | (88 | ) | | | (103 | ) |
| | | | | | | | |
Total Class R transactions | | | 3,425 | | | | 5,617 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 998,558 | | | | 373,757 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 22,405 | | | | 1,978,095 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 25,319,424 | | | | 23,341,329 | |
| | | | | | | | |
End of period | | $ | 25,341,829 | | | $ | 25,319,424 | |
| | | | | | | | |
See Notes to Financial Statements.
12
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 11.23 | | | $ | 10.52 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.05 | | | | 0.09 | | | | 0.13 | | | | 0.16 | | | | 0.14 | | | | 0.03 | |
Net realized and unrealized gain (loss) | | | 0.14 | | | | 1.22 | | | | (0.18 | ) | | | 1.43 | | | | 0.04 | | | | (0.44 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.19 | | | | 1.31 | | | | (0.05 | ) | | | 1.59 | | | | 0.18 | | | | (0.41 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.23 | ) | | | (0.23 | ) | | | (0.23 | ) | | | (0.24 | ) | | | (0.18 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.35 | ) | | | (0.37 | ) | | | (0.11 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.58 | ) | | | (0.60 | ) | | | (0.34 | ) | | | (0.24 | ) | | | (0.18 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.84 | | | $ | 11.23 | | | $ | 10.52 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 1.56 | % | | | 13.20 | % | | | (0.46 | )% | | | 16.82 | % | | | 1.97 | % | | | (4.08 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 644 | | | $ | 572 | | | $ | 512 | | | $ | 433 | | | $ | 374 | | | $ | 206 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.16 | %** | | | 1.24 | % | | | 1.30 | % | | | 1.30 | % | | | 1.30 | % | | | 1.30 | % |
Before waivers and reimbursements (a)(f) | | | 1.91 | % | | | 1.99 | % | | | 1.94 | % | | | 2.07 | % | | | 2.26 | % | | | 2.09 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.94 | % | | | 0.87 | % | | | 1.14 | % | | | 1.54 | % | | | 1.49 | % | | | 1.09 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.19 | % | | | 0.12 | % | | | 0.49 | % | | | 0.78 | % | | | 0.52 | % | | | 0.30 | %(l) |
Portfolio turnover rate^ | | | 21 | %(z) | | | 47 | % | | | 45 | % | | | 41 | % | | | 32 | % | | | 6 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | |
Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 11.24 | | | $ | 10.52 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.07 | | | | 0.12 | | | | 0.15 | | | | 0.18 | | | | 0.17 | | | | 0.04 | |
Net realized and unrealized gain (loss) | | | 0.13 | | | | 1.23 | | | | (0.17 | ) | | | 1.43 | | | | 0.04 | | | | (0.44 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.20 | | | | 1.35 | | | | (0.02 | ) | | | 1.61 | | | | 0.21 | | | | (0.40 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.25 | ) | | | (0.26 | ) | | | (0.26 | ) | | | (0.26 | ) | | | (0.21 | ) | | | (0.04 | ) |
Distributions from net realized gains | | | (0.35 | ) | | | (0.37 | ) | | | (0.11 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.60 | ) | | | (0.63 | ) | | | (0.37 | ) | | | (0.26 | ) | | | (0.21 | ) | | | (0.04 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.84 | | | $ | 11.24 | | | $ | 10.52 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 1.59 | % | | | 13.58 | % | | | (0.23 | )% | | | 17.11 | % | | | 2.23 | % | | | (4.00 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 24,553 | | | $ | 24,600 | | | $ | 22,697 | | | $ | 22,874 | | | $ | 19,584 | | | $ | 19,073 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.91 | %** | | | 0.99 | % | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % | | | 1.05 | % |
Before waivers and reimbursements (a)(f) | | | 1.66 | % | | | 1.74 | % | | | 1.69 | % | | | 1.82 | % | | | 1.99 | % | | | 1.72 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.19 | % | | | 1.12 | % | | | 1.40 | % | | | 1.80 | % | | | 1.78 | % | | | 1.37 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.43 | % | | | 0.37 | % | | | 0.75 | % | | | 1.03 | % | | | 0.84 | % | | | 0.70 | %(l) |
Portfolio turnover rate^ | | | 21 | %(z) | | | 47 | % | | | 45 | % | | | 41 | % | | | 32 | % | | | 6 | %(z) |
See Notes to Financial Statements.
13
1290 FUNDS
1290 CONVERTIBLE SECURITIES FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 11.23 | | | $ | 10.51 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.04 | | | | 0.07 | | | | 0.10 | | | | 0.13 | | | | 0.12 | | | | 0.03 | |
Net realized and unrealized gain (loss) | | | 0.13 | | | | 1.23 | | | | (0.18 | ) | | | 1.43 | | | | 0.04 | | | | (0.45 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.17 | | | | 1.30 | | | | (0.08 | ) | | | 1.56 | | | | 0.16 | | | | (0.42 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.21 | ) | | | (0.21 | ) | | | (0.21 | ) | | | (0.16 | ) | | | (0.02 | ) |
Distributions from net realized gains | | | (0.35 | ) | | | (0.37 | ) | | | (0.11 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.57 | ) | | | (0.58 | ) | | | (0.32 | ) | | | (0.21 | ) | | | (0.16 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.83 | | | $ | 11.23 | | | $ | 10.51 | | | $ | 10.91 | | | $ | 9.56 | | | $ | 9.56 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 1.37 | % | | | 13.07 | % | | | (0.78 | )% | | | 16.53 | % | | | 1.72 | % | | | (4.16 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 145 | | | $ | 147 | | | $ | 132 | | | $ | 109 | | | $ | 96 | | | $ | 96 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.41 | %** | | | 1.49 | % | | | 1.55 | % | | | 1.55 | % | | | 1.55 | % | | | 1.55 | % |
Before waivers and reimbursements (a)(f) | | | 2.16 | % | | | 2.24 | % | | | 2.19 | % | | | 2.32 | % | | | 2.49 | % | | | 2.22 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.69 | % | | | 0.62 | % | | | 0.90 | % | | | 1.30 | % | | | 1.28 | % | | | 0.87 | %(l) |
Before waivers and reimbursements (a)(f) | | | (0.07 | )% | | | (0.13 | )% | | | 0.25 | % | | | 0.53 | % | | | 0.34 | % | | | 0.20 | %(l) |
Portfolio turnover rate^ | | | 21 | %(z) | | | 47 | % | | | 45 | % | | | 41 | % | | | 32 | % | | | 6 | %(z) |
| * | Commencement of Operations. |
| ** | Includes tax expense of 0.01% |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
14
1290 DIVERSIFIED BOND FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENT SUB-ADVISER
| Ø | | Brandywine Global Investment Management, LLC (Brandywine Global) |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | |
| | |
| Total Returns as of 4/30/20 | | | | |
| | | | | |
| | | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | | without Sales Charge | | | | (1.92 | )% | | | 4.36 | % | | | 3.13 | % |
| | | | with Sales Charge (a) | | | | (6.35 | ) | | | (0.36 | ) | | | 2.15 | |
Fund – Class I Shares* | | | | | | | (1.77 | ) | | | 4.63 | | | | 3.41 | |
Fund – Class R Shares* | | | | | | | (1.96 | ) | | | 4.19 | | | | 2.89 | |
Bloomberg Barclays U.S. Aggregate Bond Index | | | | | | | 4.86 | | | | 10.84 | | | | 4.17 | |
| |
* Date of inception 7/6/15. (a) A 4.50% front-end sales charge was deducted. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I and R shares were 1.55%, 1.34% and 1.88%, respectively. The net expense ratios for Class A, I and R shares were 0.75%, 0.50% and 1.00%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — Brandywine Global Investment Management, LLC
Developed Market Bonds — Through the end of 2019, global bond yields generally rose as sentiment improved to close out the year. The U.S. and China had announced an agreement on a phase one trade deal, U.S. economic data remained favorable, and Chinese growth showed signs of recovery. Buoyed by the improved outlook, crude oil and commodities recorded a particularly strong December. Lastly, the Federal Reserve (Fed), like the Bank of Japan (BOJ), held rates unchanged but indicated monetary policy would remain accommodative. Benchmark 10-year European yields, including both core and peripheral markets, and British gilt yields also rose.
Global trends were disrupted in 2020 by the emergence of COVID19. As the novel coronavirus spread into a global pandemic, fear spread among investors, driving risk-off sentiment and demand for cash, causing dislocations in bond markets, and sending equities to their biggest quarterly declines since the Global Financial Crisis. Markets also faced a second shock in the form of a Saudi-Russian oil price war, with crude hitting an18-year low and oversupply flooding global storage capacity. Economic activity virtually shut down, prompting a barrage of fiscal and monetary stimulus. The Fed took extreme measures to curb economic fallout, lowering rates 150 basis points and implementing various measures to improve dollar liquidity, while President Trump signed a $2 trillion aid package. The European Central Bank (ECB) responded with a large, flexible, open-ended Pandemic Emergency Purchase Programme (PEPP). U.S. Treasury yields plummeted during the quarter, and the curve steepened. West Texas Intermediate (WTI) crude oil prices briefly turned negative for the first time in history before regrouping, pressured by both oversupply and the drop-off in demand. However, as the Fed expanded its bond buying program in April and continued its tremendous efforts to protect against dollar scarcity, investor confidence improved. The recovery in risk assets gained momentum after several countries began to announce plans to reopen their respective economies.
Developed Market Currencies — After showing modest strength to close out 2019, the U.S. dollar surged in the first few months of the new year as most currencies fell against the greenback as the coronavirus upended economic growth and increased uncertainty; however, the safe-haven Japanese yen was an exception. Certain trade-dependent currencies, such as the Swedish krona and the Australian and New Zealand dollars, fell during the initial shock showing their vulnerability to the decrease in Chinese growth and weakness in commodities. However, as risk sentiment improved near the end of the period with some countries announcing their plans to emerge from lockdown restrictions, many currencies improved versus the dollar. These included the British pound sterling (which recorded its first monthly gain for the year in April) and the Norwegian krone, which was supported by growing expectations for a reopening of the global economy, which would help the demand for oil.
15
1290 DIVERSIFIED BOND FUND (Unaudited)
Emerging Market Debt and Currencies — Year-end gains in emerging market assets hit formidable headwinds in 2020 due to various factors, including dramatically reduced Chinese growth and demand, the global spread of the coronavirus, the strong U.S. dollar, and the prolonged commodity rout, which in turn triggered sizable outflows in favor of haven assets and cash. Emerging market currencies were similarly impacted by panic selling. In response, China lowered its policy rate and introduced measures aimed at expanding liquidity and providing low-cost loans to companies impacted by the virus. In Latin America, Mexico, Chile, Colombia, and Brazil all cut rates during the first quarter. Concerns over Mexico’s growth outlook, the debt load of its state-owned oil company, Pemex, and falling oil prices prompted S&P to downgrade the country’s debt, causing longer-dated bonos to sell off. The Brazilian real, Chilean peso and Colombian peso saw similar declines while yields ticked higher, particularly for longer-dated government bonds, amid the deterioration in commodities and the economic environment. However, as some investors began to see a light at the end of the tunnel, risk assets like emerging markets generally rallied to close out the period. China’s moves to restart its economy offered a roadmap for other countries and ignited nascent optimism for a global recovery.
Credit and Mortgages — While corporate credit had a strong start to the year and held up relatively well until late February, March saw sizable spread widening across all segments. Structured credit was similarly impacted. However, the Fed’s all-in bond buying program revived investment grade activity. There was a surge of new issuance in March, particularly within financials, and some issues saw strong demand and significant spread compression when those deals came to market. The eventual easing of risk-off sentiment was fueled by the Fed’s announcement that its open-ended quantitative easing would be expanded beyond investment grade credit to provide a backstop for fallen angels and high yield exchange-traded funds (ETFs). Credit spreads rallied across investment grade and high yield, with U.S. credit outperforming Europe to close out the period. However, structured credit significantly lagged the recovery seen in corporates. Despite unprecedented mortgage and housing relief extended to borrowers, investors remained concerned over the potential impact of massive layoffs on income and the housing market.
Fund Highlights
During the six-month period ending April 30, 2020, the 1290 Diversified Bond Fund returned -0.74% for the period while the Fund’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, had a return of 4.86%. Both bond and currency allocations within the Fund lagged the benchmark; however, two thirds of the underperformance was attributable to the latter. Overshadowing the Fund’s overall performance was the sharp drawdown in March as the market reacted to the COVID-19 pandemic and its potential impact on global growth. The resulting rush into U.S. dollars caused a majority of global currencies to weaken against the greenback, affecting many of the Fund’s non-U.S. dollar positions.
What helped performance during the six-month period ended April 30, 2020:
| • | | The Fund’s allocation to U.S. corporates was additive to performance. During the March market decline, the Fund purchased new issue, quality corporates with good cash flow which benefited greatly as markets, started to recover. |
| • | | Select local currency emerging market bonds were positive, such as Argentina, which rallied in April off of the debt restructuring proposal. |
| • | | Italian exposure through government bonds and futures was a notable positive as well. The securities were in demand at the end of the period as the European Union stated its intentions to apply more funds to the country as a result of its impact from COVID-19. |
| • | | Futures are used in the strategy for exposure to, or to hedge against, a security without having to purchase the underlying bond. During the period, the Fund purchased bond futures of U.S. Treasuries and select European sovereigns, specifically German bunds and Italian BTPs. Interest rate swaps were also used for allocation in Hungarian government bonds, as the country does not have a bond futures market. The use of both instruments was positive to performance. |
What hurt performance during the six-month period ended April 30, 2020:
| • | | The Fund’s duration underweight (and eventual absence at the end of the period) of U.S. Treasuries detracted from performance vs. the benchmark as the bonds rallied due to its safe haven status. |
| • | | Both the Fund’s agency and non-agency mortgage-backed securities (MBS) positions lagged the benchmark. |
| • | | Select government bond positions such as Indonesia and Spain underperformed. The former sold off due to uncertainties regarding commodity prices and trade while the latter’s yields rose as the country struggled under the impact of COVID-19. |
| • | | A majority of the Fund’s developed and emerging market currencies detracted off U.S. dollar appreciation; notable were the Chilean and Mexican pesos, Brazilian real and British pound. |
| • | | The Fund utilizes currency forwards for non-U.S. dollar exposure or hedges back to U.S. dollars. As the U.S. dollar appreciated against most currencies during the period, the currency forward positions detracted from performance on average. |
| • | | In certain environments, the strategy uses credit default swaps for exposure or hedges to various issues, sectors, or indices. These instruments allow the Fund to achieve the desired exposure while remaining nimble amidst cases of extreme market volatility. During the period, the Fund occasionally had exposures to investment grade |
16
1290 DIVERSIFIED BOND FUND (Unaudited)
| | and high yield corporate indices (in addition to select issuers), which detracted from performance overall. |
Outlook
Any macro forecast is conjecture at this point, depending on the strategy for managing the pandemic once the infection rate curve has flattened and on when people are asked to return to work. An initial bounce followed by gradual recovery seems the most likely outcome once the lockdowns start to lift. The supply side of the economy should respond quickly, but the demand side could be impaired much longer, and there probably will be structural changes as a result of this experience. While the Fed and other central banks have responded quickly and confidently, there likely will be a residual deflationary output gap for some time. Central to that outlook is the U.S. dollar. In a dollar-centric world, bound by zero rates, there has been a strong negative correlation between the dollar and inflation expectations. We believe the world needs an accommodative Fed and a softer dollar. Hopefully, the Fed will progress from crisis fighting to positive forward guidance to address the need for sustained reflationary policy.
| | | | |
| | |
Sector Weightings
as of April 30, 2020 | | % of
Net Assets | |
Foreign Government Securities | | | 23.4 | % |
Financials | | | 19.6 | |
Information Technology | | | 9.8 | |
Collateralized Mortgage Obligations | | | 7.4 | |
Industrials | | | 7.0 | |
Commercial Mortgage-Backed Securities | | | 7.0 | |
Energy | | | 5.2 | |
Materials | | | 4.8 | |
Asset-Backed Securities | | | 2.3 | |
Consumer Discretionary | | | 2.2 | |
Consumer Staples | | | 2.0 | |
Utilities | | | 1.6 | |
Communication Services | | | 1.1 | |
Health Care | | | 0.4 | |
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 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, 2020 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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During
Period*
11/1/19 - 4/30/20 | |
Class A | |
Actual | | | $1,000.00 | | | | $980.80 | | | | $3.69 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,021.13 | | | | 3.77 | |
Class I | |
Actual | | | 1,000.00 | | | | 982.30 | | | | 2.46 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.38 | | | | 2.51 | |
Class R | |
Actual | | | 1,000.00 | | | | 980.40 | | | | 4.93 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.89 | | | | 5.02 | |
| |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 0.75%, 0.50% and 1.00%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect the one-half year period). | |
17
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
| | | | | | | | |
LONG-TERM DEBT SECURITIES: | | | | | | | | |
Asset-Backed Securities (2.3%) | | | | | | | | |
Aames Mortgage Investment Trust, | | | | | | | | |
Series 2006-1 A4
1.047%, 4/25/36 (l) | | $ | 1,090,283 | | | $ | 1,034,189 | |
Park Place Securities, Inc. Asset-Backed Pass-Through Certificates, | |
Series 2005-WHQ2 M2
1.177%, 5/25/35 (l) | | | 498,966 | | | | 471,201 | |
Popular ABS Mortgage Pass-Through Trust, | |
Series 2005-5 MV1
0.927%, 11/25/35 (l) | | | 602,984 | | | | 570,245 | |
Towd Point Mortgage Trust, | | | | | | | | |
Series 2018-3 A2
3.875%, 5/25/58 (l)§ | | | 345,000 | | | | 350,940 | |
| | | | | | | | |
Total Asset-Backed Securities | | | | | | | 2,426,575 | |
| | | | | | | | |
Collateralized Mortgage Obligations (7.4%) | |
Angel Oak Mortgage Trust, | | | | | | | | |
Series 2019-5 A2
2.716%, 10/25/49 (l)§ | | | 2,825,577 | | | | 2,848,925 | |
Series 2019-6 A1
2.620%, 11/25/59 (l)§ | | | 1,027,602 | | | | 1,036,968 | |
Angel Oak Mortgage Trust I LLC, | | | | | | | | |
Series 2019-2 A1
3.628%, 3/25/49 (l)§ | | | 597,176 | | | | 614,781 | |
Connecticut Avenue Securities Trust, | |
Series 2018-R07 1M2
2.887%, 4/25/31 (l)§ | | | 718,052 | | | | 670,288 | |
FNMA, | | | | | | | | |
Series 2018-C06 1M2
2.487%, 3/25/31 (l) | | | 695,494 | | | | 625,828 | |
Residential Mortgage Loan Trust, | | | | | | | | |
Series 2019-3 A1
2.633%, 9/25/59 (l)§ | | | 1,436,412 | | | | 1,429,691 | |
TDA CAM FTA, | | | | | | | | |
Series 9 B
0.208%, 4/28/50 (l)(m) | | | EUR 800,000 | | | | 566,562 | |
| | | | | | | | |
Total Collateralized Mortgage Obligations | | | | | | | 7,793,043 | |
| | | | | | | | |
Commercial Mortgage-Backed Securities (7.0%) | |
Commercial Mortgage Trust, | | | | | | | | |
Series 2014-CR14 AM
4.526%, 2/10/47 (l) | | $ | 2,716,000 | | | | 2,859,133 | |
Credit Suisse Mortgage Capital Certificates, | |
Series 2019-ICE4 A
1.794%, 5/15/36 (l)§ | | | 730,000 | | | | 710,378 | |
FHLMC Multifamily Structured Pass-Through Certificates, | |
Series K722 X1
1.439%, 3/25/23 IO (l) | | | 12,967,960 | | | | 370,111 | |
FREMF Mortgage Trust, | | | | | | | | |
Series 2017-K61 C
3.810%, 12/25/49 (l)§ | | | 1,305,000 | | | | 1,183,801 | |
| | | | | | | | |
JPMBB Commercial Mortgage Securities Trust, | |
Series 2015-C32 C
4.805%, 11/15/48 (l) | | | 2,765,280 | | | | 2,251,486 | |
| | | | | | | | |
Total Commercial Mortgage-Backed Securities | | | | | | | 7,374,909 | |
| | | | | | | | |
Corporate Bonds (53.7%) | | | | | | | | |
Communication Services (1.1%) | | | | | | | | |
Entertainment (0.9%) | | | | | | | | |
Walt Disney Co. (The) | | | | | | | | |
4.625%, 3/23/40 | | | 275,000 | | | | 344,253 | |
4.700%, 3/23/50 | | | 480,000 | | | | 642,967 | |
| | | | | | | | |
| | | | | | | 987,220 | |
| | | | | | | | |
Media (0.2%) | | | | | | | | |
Comcast Corp. | | | | | | | | |
3.400%, 4/1/30 | | | 130,000 | | | | 146,007 | |
3.750%, 4/1/40 | | | 50,000 | | | | 57,315 | |
| | | | | | | | |
| | | | | | | 203,322 | |
| | | | | | | | |
Total Communication Services | | | | | | | 1,190,542 | |
| | | | | | | | |
Consumer Discretionary (2.2%) | | | | | | | | |
Hotels, Restaurants & Leisure (0.8%) | |
McDonald’s Corp. | | | | | | | | |
3.600%, 7/1/30 | | | 80,000 | | | | 90,265 | |
3.625%, 9/1/49 | | | 105,000 | | | | 115,586 | |
4.200%, 4/1/50 | | | 145,000 | | | | 173,753 | |
Scientific Games International, Inc. | |
5.000%, 10/15/25§ | | | 535,000 | | | | 465,541 | |
| | | | | | | | |
| | | | | | | 845,145 | |
| | | | | | | | |
Specialty Retail (1.2%) | | | | | | | | |
Home Depot, Inc. (The) | | | | | | | | |
3.300%, 4/15/40 | | | 100,000 | | | | 109,393 | |
3.350%, 4/15/50 | | | 90,000 | | | | 99,854 | |
Lowe’s Cos., Inc. | | | | | | | | |
5.000%, 4/15/40 | | | 75,000 | | | | 92,028 | |
5.125%, 4/15/50 | | | 195,000 | | | | 255,500 | |
PetSmart, Inc. | | | | | | | | |
5.875%, 6/1/25§ | | | 710,000 | | | | 715,325 | |
| | | | | | | | |
| | | | | | | 1,272,100 | |
| | | | | | | | |
Textiles, Apparel & Luxury Goods (0.2%) | |
NIKE, Inc. | | | | | | | | |
3.250%, 3/27/40 | | | 90,000 | | | | 97,712 | |
3.375%, 3/27/50 | | | 90,000 | | | | 101,007 | |
| | | | | | | | |
| | | | | | | 198,719 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 2,315,964 | |
| | | | | | | | |
Consumer Staples (2.0%) | | | | | | | | |
Beverages (1.4%) | | | | | | | | |
Anheuser-Busch InBev Worldwide, Inc. | |
4.500%, 6/1/50 | | | 1,015,000 | | | | 1,136,723 | |
Coca-Cola Co. (The) | | | | | | | | |
4.125%, 3/25/40 | | | 85,000 | | | | 105,822 | |
4.200%, 3/25/50 | | | 140,000 | | | | 181,501 | |
| | | | | | | | |
| | | | | | | 1,424,046 | |
| | | | | | | | |
Food Products (0.4%) | | | | | | | | |
BRF SA | | | | | | | | |
4.875%, 1/24/30§ | | | 510,000 | | | | 441,804 | |
| | | | | | | | |
Household Products (0.2%) | | | | | | | | |
Procter & Gamble Co. (The) | | | | | | | | |
3.550%, 3/25/40 | | | 100,000 | | | | 120,093 | |
3.600%, 3/25/50 | | | 85,000 | | | | 106,110 | |
| | | | | | | | |
| | | | | | | 226,203 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 2,092,053 | |
| | | | | | | | |
See Notes to Financial Statements.
18
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Energy (5.2%) | | | | | | | | |
Oil, Gas & Consumable Fuels (5.2%) | |
Concho Resources, Inc. | | | | | | | | |
4.875%, 10/1/47 | | $ | 900,000 | | | $ | 897,934 | |
Exxon Mobil Corp. | | | | | | | | |
4.114%, 3/1/46 | | | 900,000 | | | | 1,056,036 | |
Petroleos Mexicanos | | | | | | | | |
6.500%, 6/2/41 | | | 665,000 | | | | 444,718 | |
7.690%, 1/23/50§ | | | 1,675,000 | | | | 1,231,125 | |
Saudi Arabian Oil Co. | | | | | | | | |
4.375%, 4/16/49§ | | | 1,785,000 | | | | 1,863,094 | |
| | | | | | | | |
| | | | | | | 5,492,907 | |
| | | | | | | | |
Total Energy | | | | | | | 5,492,907 | |
| | | | | | | | |
Financials (19.6%) | | | | | | | | |
Banks (12.9%) | | | | | | | | |
Bank of America Corp. | | | | | | | | |
(ICE LIBOR USD 3 Month + 3.15%), 4.083%, 3/20/51 (k) | | | 2,275,000 | | | | 2,738,590 | |
Canadian Imperial Bank of Commerce | |
(SOFR + 0.80%),
1.060%, 3/17/23 (k) | | | 1,510,000 | | | | 1,455,746 | |
Citigroup, Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.25%), 2.683%, 7/1/26 (k) | | | 605,000 | | | | 585,988 | |
(SOFR + 4.55%),
5.316%, 3/26/41 (k) | | | 2,520,000 | | | | 3,245,349 | |
JPMorgan Chase & Co. | | | | | | | | |
(SOFR + 3.79%),
4.493%, 3/24/31 (k) | | | 2,610,000 | | | | 3,079,399 | |
(SOFR + 2.44%),
3.109%, 4/22/51 (k) | | | 425,000 | | | | 439,858 | |
Wells Fargo & Co. | | | | | | | | |
(ICE LIBOR USD 3 Month + 3.77%), 4.478%, 4/4/31 (k) | | | 1,020,000 | | | | 1,178,436 | |
(ICE LIBOR USD 3 Month + 4.24%), 5.013%, 4/4/51 (k) | | | 700,000 | | | | 917,390 | |
| | | | | | | | |
| | | | | | | 13,640,756 | |
| | | | | | | | |
Capital Markets (5.8%) | | | | | | | | |
Ares Capital Corp. | | | | | | | | |
4.250%, 3/1/25 | | | 280,000 | | | | 265,506 | |
FS KKR Capital Corp. | | | | | | | | |
4.750%, 5/15/22 | | | 287,000 | | | | 276,342 | |
4.625%, 7/15/24 | | | 150,000 | | | | 128,188 | |
Goldman Sachs BDC, Inc. | | | | | | | | |
3.750%, 2/10/25 | | | 1,045,000 | | | | 1,032,146 | |
Morgan Stanley | | | | | | | | |
(SOFR + 4.84%),
5.597%, 3/24/51 (k) | | | 1,780,000 | | | | 2,566,918 | |
Nasdaq, Inc. | | | | | | | | |
3.250%, 4/28/50 | | | 505,000 | | | | 503,093 | |
Owl Rock Capital Corp. | | | | | | | | |
5.250%, 4/15/24 | | | 645,000 | | | | 619,806 | |
4.000%, 3/30/25 | | | 335,000 | | | | 306,553 | |
UBS Group AG | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.22%), 2.903%, 5/23/23 (k)§ | | | 450,000 | | | | 443,899 | |
| | | | | | | | |
| | | | | | | 6,142,451 | |
| | | | | | | | |
Consumer Finance (0.2%) | | | | | | | | |
Toyota Motor Credit Corp. | | | | | | | | |
3.375%, 4/1/30 | | | 190,000 | | | | 205,069 | |
| | | | | | | | |
Insurance (0.7%) | | | | | | | | |
American International Group, Inc. | | | | | | | | |
4.500%, 7/16/44 | | | 435,000 | | | | 479,962 | |
Markel Corp. | | | | | | | | |
3.350%, 9/17/29 | | | 165,000 | | | | 170,219 | |
Prudential Financial, Inc. | | | | | | | | |
4.350%, 2/25/50 | | | 145,000 | | | | 167,605 | |
| | | | | | | | |
| | | | | | | 817,786 | |
| | | | | | | | |
Total Financials | | | | | | | 20,806,062 | |
| | | | | | | | |
Health Care (0.4%) | | | | | | | | |
Health Care Providers & Services (0.4%) | |
CVS Health Corp. | | | | | | | | |
4.125%, 4/1/40 | | | 145,000 | | | | 163,008 | |
4.250%, 4/1/50 | | | 185,000 | | | | 215,090 | |
| | | | | | | | |
| | | | | | | 378,098 | |
| | | | | | | | |
Total Health Care | | | | | | | 378,098 | |
| | | | | | | | |
Industrials (7.0%) | | | | | | | | |
Aerospace & Defense (2.8%) | | | | | |
Boeing Co. (The) | | | | | | | | |
3.750%, 2/1/50 | | | 2,365,000 | | | | 1,882,237 | |
3.950%, 8/1/59 | | | 305,000 | | | | 238,900 | |
General Dynamics Corp. | | | | | | | | |
4.250%, 4/1/40 | | | 155,000 | | | | 192,079 | |
4.250%, 4/1/50 | | | 60,000 | | | | 77,673 | |
Northrop Grumman Corp. | | | | | | | | |
5.150%, 5/1/40 | | | 235,000 | | | | 312,220 | |
5.250%, 5/1/50 | | | 235,000 | | | | 332,959 | |
| | | | | | | | |
| | | | | | | 3,036,068 | |
| | | | | | | | |
Air Freight & Logistics (2.0%) | |
FedEx Corp. | | | | | | | | |
5.250%, 5/15/50 | | | 755,000 | | | | 912,803 | |
United Parcel Service, Inc. | | | | | | | | |
5.200%, 4/1/40 | | | 220,000 | | | | 292,970 | |
5.300%, 4/1/50 | | | 630,000 | | | | 899,285 | |
| | | | | | | | |
| | | | | | | 2,105,058 | |
| | | | | | | | |
Airlines (0.5%) | | | | | | | | |
Delta Air Lines, Inc. | | | | | | | | |
7.000%, 5/1/25§ | | | 493,000 | | | | 505,992 | |
| | | | | | | | |
Industrial Conglomerates (1.1%) | |
3M Co. | | | | | | | | |
3.700%, 4/15/50 | | | 285,000 | | | | 337,420 | |
General Electric Co. | | | | | | | | |
4.350%, 5/1/50 | | | 810,000 | | | | 815,825 | |
| | | | | | | | |
| | | | | | | 1,153,245 | |
| | | | | | | | |
Machinery (0.5%) | | | | | | | | |
Snap-on, Inc. | | | | | | | | |
3.100%, 5/1/50 | | | 560,000 | | | | 548,053 | |
| | | | | | | | |
Road & Rail (0.1%) | | | | | | | | |
Burlington Northern Santa Fe LLC | | | | | | | | |
4.700%, 9/1/45 | | | 75,000 | | | | 95,484 | |
| | | | | | | | |
Total Industrials | | | | | | | 7,443,900 | |
| | | | | | | | |
See Notes to Financial Statements.
19
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Information Technology (9.8%) | |
IT Services (1.7%) | | | | | | | | |
International Business Machines Corp. | | | | | | | | |
4.250%, 5/15/49 | | $ | 1,315,000 | | | $ | 1,605,088 | |
Mastercard, Inc. | | | | | | | | |
3.350%, 3/26/30 | | | 75,000 | | | | 85,414 | |
3.850%, 3/26/50 | | | 80,000 | | | | 98,844 | |
| | | | | | | | |
| | | | | | | 1,789,346 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (2.9%) | |
Broadcom, Inc. | | | | | | | | |
3.125%, 10/15/22§ | | | 360,000 | | | | 372,454 | |
3.625%, 10/15/24§ | | | 340,000 | | | | 357,407 | |
Intel Corp. | | | | | | | | |
4.750%, 3/25/50 | | | 415,000 | | | | 580,657 | |
4.950%, 3/25/60 | | | 150,000 | | | | 214,250 | |
NVIDIA Corp. | | | | | | | | |
3.500%, 4/1/40 | | | 195,000 | | | | 218,862 | |
3.500%, 4/1/50 | | | 300,000 | | | | 343,523 | |
NXP BV | | | | | | | | |
3.400%, 5/1/30§ | | | 515,000 | | | | 514,833 | |
Qorvo, Inc. | | | | | | | | |
5.500%, 7/15/26 | | | 400,000 | | | | 420,000 | |
| | | | | | | | |
| | | | | | | 3,021,986 | |
| | | | | | | | |
Software (3.4%) | | | | | | | | |
Oracle Corp. | | | | | | | | |
3.600%, 4/1/50 | | | 1,010,000 | | | | 1,141,066 | |
3.850%, 4/1/60 | | | 930,000 | | | | 1,075,135 | |
VMware, Inc. | | | | | | | | |
4.700%, 5/15/30 | | | 1,270,000 | | | | 1,359,209 | |
| | | | | | | | |
| | | | | | | 3,575,410 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.8%) | |
Dell International LLC | | | | | | | | |
7.125%, 6/15/24§ | | | 485,000 | | | | 503,187 | |
6.020%, 6/15/26§ | | | 1,245,000 | | | | 1,350,357 | |
Hewlett Packard Enterprise Co. | | | | | | | | |
6.200%, 10/15/35 (e) | | | 75,000 | | | | 87,944 | |
| | | | | | | | |
| | | | | | | 1,941,488 | |
| | | | | | | | |
Total Information Technology | | | | | | | 10,328,230 | |
| | | | | | | | |
Materials (4.8%) | | | | | | | | |
Chemicals (0.3%) | | | | | | | | |
LYB International Finance III LLC | | | | | | | | |
4.200%, 5/1/50 | | | 365,000 | | | | 369,837 | |
| | | | | | | | |
Metals & Mining (4.5%) | | | | | | | | |
Anglo American Capital plc | | | | | | | | |
5.625%, 4/1/30§ | | | 990,000 | | | | 1,087,248 | |
First Quantum Minerals Ltd. | | | | | | | | |
6.500%, 3/1/24§ | | | 590,000 | | | | 513,300 | |
Freeport-McMoRan, Inc. | | | | | | | | |
5.450%, 3/15/43 | | | 2,385,000 | | | | 2,182,037 | |
Steel Dynamics, Inc. | | | | | | | | |
3.450%, 4/15/30 | | | 1,000,000 | | | | 955,259 | |
| | | | | | | | |
| | | | | | | 4,737,844 | |
| | | | | | | | |
Total Materials | | | | | | | 5,107,681 | |
| | | | | | | | |
Utilities (1.6%) | | | | | | | | |
Electric Utilities (0.6%) | | | | | | | | |
DPL, Inc. | | | | | | | | |
7.250%, 10/15/21 | | | 239,000 | | | | 242,884 | |
Exelon Corp. | | | | | | | | |
4.050%, 4/15/30 | | | 140,000 | | | | 159,906 | |
4.700%, 4/15/50 | | | 200,000 | | | | 257,819 | |
| | | | | | | | |
| | | | | | | 660,609 | |
| | | | | | | | |
Multi-Utilities (1.0%) | | | | | | | | |
Consolidated Edison Co. of New York, Inc. | |
Series 20A
3.350%, 4/1/30 | | | 750,000 | | | | 828,229 | |
Series 20B
3.950%, 4/1/50 | | | 210,000 | | | | 249,139 | |
| | | | | | | | |
| | | | | | | 1,077,368 | |
| | | | | | | | |
Total Utilities | | | | | | | 1,737,977 | |
| | | | | | | | |
Total Corporate Bonds | | | | | | | 56,893,414 | |
| | | | | | | | |
Foreign Government Securities (23.4%) | |
Boncer Government Bond | | | | | | | | |
2.500%, 7/22/21 TIPS (r) | | ARS | 180,531,898 | | | | 760,481 | |
Bonos and Obligaciones del Estado | |
2.700%, 10/31/48 (m) | | EUR | 1,660,000 | | | | 2,348,927 | |
Buoni Poliennali del Tesoro | | | | | | | | |
3.850%, 9/1/49 (m) | | | 1,050,000 | | | | 1,446,772 | |
Mex Bonos Desarr Fix Rt | | | | | | | | |
7.500%, 6/3/27 | | MXN | 9,700,000 | | | | 432,029 | |
8.500%, 5/31/29 | | | 81,200,000 | | | | 3,806,092 | |
8.000%, 11/7/47 | | | 157,100,000 | | | | 6,707,843 | |
Republic of Indonesia | | | | | | | | |
9.000%, 3/15/29 | | IDR | 26,500,000,000 | | | | 1,889,294 | |
8.250%, 5/15/29 | | | 15,200,000,000 | | | | 1,038,837 | |
7.500%, 6/15/35 | | | 31,600,000,000 | | | | 2,014,965 | |
7.500%, 4/15/40 | | | 53,300,000,000 | | | | 3,368,940 | |
Russian Federation | | | | | | | | |
7.650%, 4/10/30 | | RUB | 64,000,000 | | | | 964,318 | |
| | | | | | | | |
Total Foreign Government Securities | | | | | | | 24,778,498 | |
| | | | | | | | |
Total Long-Term Debt Securities (93.8%)
(Cost $99,738,342) | | | | | | | 99,266,439 | |
| | | | | | | | |
Total Investments in Securities (93.8%)
(Cost $99,738,342) | | | | | | | 99,266,439 | |
Other Assets Less Liabilities (6.2%) | | | | | | | 6,588,794 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 105,855,233 | |
| | | | | | | | |
| § | 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, 2020, the market value of these securities amounted to $19,211,338 or 18.1% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
| (e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2020. Maturity date disclosed is the ultimate maturity date. |
See Notes to Financial Statements.
20
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| (l) | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown was the current rate as of April 30, 2020. |
| (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, 2020, the market value of these securities amounted to $4,362,261 or 4.1% of net assets. |
| (k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2020. |
| (r) | Value determined using significant unobservable inputs. |
Glossary:
| | EUR | — European Currency Unit |
| | FHLMC | — Federal Home Loan Mortgage Corp. |
| | FNMA | — Federal National Mortgage Association |
| | ICE | — Intercontinental Exchange |
| | LIBOR | — London Interbank Offered Rate |
| | SOFR | — Secured Overnight Financing Rate |
| | TIPS | — Treasury Inflation Protected Security |
| | USD | — United States Dollar |
| | | | |
| | |
Country Diversification As a Percentage of Total Net Assets | | | |
Argentina | | | 0.7 | % |
Belgium | | | 1.1 | |
Brazil | | | 0.4 | |
Canada | | | 1.4 | |
Indonesia | | | 7.8 | |
Italy | | | 1.4 | |
Mexico | | | 11.9 | |
Netherlands | | | 0.5 | |
Russia | | | 0.9 | |
Saudi Arabia | | | 1.8 | |
South Africa | | | 1.0 | |
Spain | | | 2.8 | |
Switzerland | | | 0.4 | |
United States | | | 61.2 | |
Zambia | | | 0.5 | |
Cash and Other | | | 6.2 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
Futures contracts outstanding as of April 30, 2020 (Note 1):
| | | | | | | | | | | | | | | | | | | | |
Description | | Number of
Contracts | | | Expiration
Date | | | Trading
Currency | | | Notional
Amount ($) | | | Value and
Unrealized
Appreciation
(Depreciation) ($) | |
Long Contracts | |
Euro-BTP | | | 67 | | | | 6/2020 | | | | EUR | | | | 10,176,282 | | | | 82,058 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 82,058 | |
| | | | | | | | | | | | | | | | | | | | |
Short Contracts | | | | | | | | | | | | | | | | | | | | |
U.S. Treasury Ultra Bond | | | (37 | ) | | | 6/2020 | | | | USD | | | | (8,316,906 | ) | | | 4,582 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 4,582 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 86,640 | |
| | | | | | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
21
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
Forward Foreign Currency Contracts outstanding as of April 30, 2020 (Note 1):
| | | | | | | | | | | | | | | | | | | | |
Currency Purchased | | | Currency Sold | | | Counterparty | | Settlement
Date | | | Unrealized
Appreciation
(Depreciation) ($) | |
MXN | | | 50,000,000 | | | USD | | | 2,070,991 | | | Goldman Sachs Bank USA | | | 5/13/2020 | | | | 399 | |
USD | | | 2,285,150 | | | MXN | | | 44,700,000 | | | Barclays Bank plc | | | 5/13/2020 | | | | 433,327 | |
USD | | | 3,560,255 | | | MXN | | | 68,700,000 | | | Goldman Sachs Bank USA | | | 5/13/2020 | | | | 714,165 | |
USD | | | 4,043,113 | | | MXN | | | 80,800,000 | | | HSBC Bank plc | | | 5/13/2020 | | | | 695,747 | |
USD | | | 1,545,348 | | | MXN | | | 30,000,000 | | | JPMorgan Chase Bank | | | 5/13/2020 | | | | 302,514 | |
NOK | | | 22,000,000 | | | USD | | | 2,127,186 | | | Citibank NA | | | 5/18/2020 | | | | 20,349 | |
AUD | | | 5,030,000 | | | USD | | | 3,109,579 | | | JPMorgan Chase Bank | | | 5/29/2020 | | | | 168,507 | |
HUF | | | 1,040,000,000 | | | USD | | | 3,183,963 | | | Citibank NA | | | 6/10/2020 | | | | 47,384 | |
USD | | | 3,241,575 | | | HUF | | | 1,000,000,000 | | | Citibank NA | | | 6/10/2020 | | | | 134,511 | |
USD | | | 6,719,834 | | | CHF | | | 6,210,000 | | | Goldman Sachs Bank USA | | | 6/11/2020 | | | | 279,261 | |
USD | | | 11,791,262 | | | EUR | | | 10,430,000 | | | JPMorgan Chase Bank | | | 6/12/2020 | | | | 352,451 | |
CLP | | | 7,190,000,000 | | | USD | | | 8,584,870 | | | HSBC Bank plc** | | | 6/15/2020 | | | | 36,472 | |
GBP | | | 4,920,000 | | | USD | | | 5,781,738 | | | Citibank NA | | | 6/16/2020 | | | | 416,145 | |
GBP | | | 1,160,000 | | | USD | | | 1,361,216 | | | JPMorgan Chase Bank | | | 6/16/2020 | | | | 100,074 | |
THB | | | 101,100,000 | | | USD | | | 3,114,315 | | | JPMorgan Chase Bank | | | 6/22/2020 | | | | 10,487 | |
USD | | | 920,205 | | | BRL | | | 4,840,000 | | | HSBC Bank plc** | | | 7/10/2020 | | | | 34,335 | |
NZD | | | 3,470,000 | | | USD | | | 2,120,135 | | | HSBC Bank plc | | | 7/22/2020 | | | | 7,383 | |
CAD | | | 10,480,000 | | | USD | | | 7,529,267 | | | Citibank NA | | | 7/23/2020 | | | | 1,254 | |
KRW | | | 4,910,000,000 | | | USD | | | 3,996,093 | | | Citibank NA** | | | 7/28/2020 | | | | 41,017 | |
| | | | | | | | | | | | | | | | | | | | |
Total unrealized appreciation | | | | | | | 3,795,782 | |
| | | | | | | | | | | | | | | | | | | | |
MXN | | | 53,700,000 | | | USD | | | 2,841,796 | | | Citibank NA | | | 5/13/2020 | | | | (617,124 | ) |
MXN | | | 7,800,000 | | | USD | | | 415,219 | | | Goldman Sachs Bank USA | | | 5/13/2020 | | | | (92,082 | ) |
MXN | | | 107,900,000 | | | USD | | | 4,651,650 | | | HSBC Bank plc | | | 5/13/2020 | | | | (181,591 | ) |
MXN | | | 37,200,000 | | | USD | | | 1,945,780 | | | JPMorgan Chase Bank | | | 5/13/2020 | | | | (404,666 | ) |
USD | | | 2,021,312 | | | MXN | | | 50,500,000 | | | JPMorgan Chase Bank | | | 5/13/2020 | | | | (70,791 | ) |
NOK | | | 18,600,000 | | | USD | | | 2,017,842 | | | HSBC Bank plc | | | 5/18/2020 | | | | (202,198 | ) |
USD | | | 1,779,376 | | | NOK | | | 18,600,000 | | | Goldman Sachs Bank USA | | | 5/18/2020 | | | | (36,267 | ) |
USD | | | 3,015,133 | | | AUD | | | 5,030,000 | | | Citibank NA | | | 5/29/2020 | | | | (262,953 | ) |
HUF | | | 2,282,000,000 | | | USD | | | 7,730,769 | | | HSBC Bank plc | | | 6/10/2020 | | | | (640,449 | ) |
USD | | | 3,880,028 | | | HUF | | | 1,282,000,000 | | | Citibank NA | | | 6/10/2020 | | | | (103,228 | ) |
CHF | | | 6,210,000 | | | USD | | | 6,481,694 | | | JPMorgan Chase Bank | | | 6/11/2020 | | | | (41,121 | ) |
JPY | | | 446,000,000 | | | USD | | | 4,172,343 | | | Morgan Stanley | | | 6/11/2020 | | | | (14,036 | ) |
USD | | | 3,171,457 | | | CHF | | | 3,090,000 | | | Citibank NA | | | 6/11/2020 | | | | (33,273 | ) |
USD | | | 4,028,980 | | | JPY | | | 446,000,000 | | | Citibank NA | | | 6/11/2020 | | | | (129,327 | ) |
EUR | | | 2,890,000 | | | USD | | | 3,231,020 | | | Citibank NA | | | 6/12/2020 | | | | (61,493 | ) |
EUR | | | 5,040,000 | | | USD | | | 5,777,982 | | | HSBC Bank plc | | | 6/12/2020 | | | | (250,503 | ) |
EUR | | | 4,720,000 | | | USD | | | 5,252,697 | | | JPMorgan Chase Bank | | | 6/12/2020 | | | | (76,169 | ) |
KRW | | | 5,320,000,000 | | | USD | | | 4,435,437 | | | HSBC Bank plc** | | | 6/12/2020 | | | | (66,472 | ) |
USD | | | 9,692,420 | | | EUR | | | 8,940,000 | | | JPMorgan Chase Bank | | | 6/12/2020 | | | | (112,275 | ) |
USD | | | 2,077,860 | | | KRW | | | 2,610,000,000 | | | HSBC Bank plc** | | | 6/12/2020 | | | | (65,561 | ) |
USD | | | 2,034,694 | | | CLP | | | 1,750,000,000 | | | HSBC Bank plc** | | | 6/15/2020 | | | | (63,685 | ) |
USD | | | 7,602,205 | | | GBP | | | 6,080,000 | | | HSBC Bank plc | | | 6/16/2020 | | | | (56,968 | ) |
USD | | | 3,094,772 | | | THB | | | 101,100,000 | | | JPMorgan Chase Bank | | | 6/22/2020 | | | | (30,030 | ) |
USD | | | 1,897,483 | | | ZAR | | | 35,600,000 | | | HSBC Bank plc | | | 6/30/2020 | | | | (11,896 | ) |
ZAR | | | 35,600,000 | | | USD | | | 2,034,708 | | | Citibank NA | | | 6/30/2020 | | | | (125,329 | ) |
BRL | | | 4,840,000 | | | USD | | | 923,118 | | | HSBC Bank plc** | | | 7/10/2020 | | | | (37,249 | ) |
CZK | | | 76,400,000 | | | USD | | | 3,126,215 | | | JPMorgan Chase Bank | | | 7/20/2020 | | | | (33,937 | ) |
USD | | | 7,428,778 | | | CAD | | | 10,480,000 | | | JPMorgan Chase Bank | | | 7/23/2020 | | | | (101,743 | ) |
USD | | | 7,563,496 | | | IDR | | | 121,500,000,000 | | | JPMorgan Chase Bank** | | | 7/27/2020 | | | | (514,431 | ) |
USD | | | 876,191 | | | RUB | | | 66,000,000 | | | Citibank NA** | | | 7/29/2020 | | | | (1,780 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total unrealized depreciation | | | | | | | (4,438,627 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net unrealized depreciation | | | | | | | (642,845 | ) |
| | | | | | | | | | | | | | | | | | | | |
| ** | Non-deliverable forward. |
See Notes to Financial Statements.
22
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
Centrally Cleared Credit default swap contracts outstanding — sell protection as of April 30, 2020 (Note 1):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Reference Obligation/Index | | Financing
Rate (Paid)/
Received
by the
Fund (%) | | | Frequency of
Payments
Made/
Received | | | Maturity
Date | | | Implied
Credit
Spread (%) | | | Notional
Amount | | | Upfront
(Payments)
Receipts ($) | | | Unrealized
Appreciation
(Depreciation) ($) | | | Value ($) | |
CDX North American Investment Grade Index Series 34-V1 | | | 1.00 | | | | Quarterly | | | | 6/20/2025 | | | | 0.87 | | | USD | 20,310,000 | | | | (28,821 | ) | | | 181,524 | | | | 152,703 | |
iTraxx Europe Main Index Series 33-V1 | | | 1.00 | | | | Quarterly | | | | 6/20/2025 | | | | 0.81 | | | EUR | 9,475,000 | | | | 76,028 | | | | 38,542 | | | | 114,570 | |
Goodyear Tire & Rubber Co. (The) | | | 5.00 | | | | Quarterly | | | | 6/20/2022 | | | | 3.80 | | | USD | 1,010,000 | | | | 82,398 | | | | (51,797 | ) | | | 30,601 | |
Sprint Communications, Inc. | | | 5.00 | | | | Quarterly | | | | 6/20/2021 | | | | 0.64 | | | USD | 1,020,000 | | | | 41,942 | | | | 14,887 | | | | 56,829 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 171,547 | | | | 183,156 | | | | 354,703 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CDX North American High Yield Index Series 34-V1 | | | 5.00 | | | | Quarterly | | | | 6/20/2025 | | | | 6.28 | | | USD | 5,420,000 | | | | (234,376 | ) | | | (18,643 | ) | | | (253,019 | ) |
Dell, Inc. | | | 1.00 | | | | Quarterly | | | | 12/20/2024 | | | | 2.12 | | | USD | 2,200,000 | | | | (50,692 | ) | | | (55,226 | ) | | | (105,918 | ) |
United States Steel Corp. | | | 5.00 | | | | Quarterly | | | | 6/20/2021 | | | | 13.86 | | | USD | 520,000 | | | | 23,523 | | | | (67,740 | ) | | | (44,217 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | (261,545 | ) | | | (141,609 | ) | | | (403,154 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Centrally Cleared Credit default swap contracts outstanding | | | | (89,998 | ) | | | 41,547 | | | | (48,451 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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, 2020:
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 | | $ | — | | | $ | 2,426,575 | | | $ | — | | | $ | 2,426,575 | |
Centrally Cleared Credit Default Swaps | | | — | | | | 234,953 | | | | — | | | | 234,953 | |
Collateralized Mortgage Obligations | | | — | | | | 7,793,043 | | | | — | | | | 7,793,043 | |
Commercial Mortgage-Backed Securities | | | — | | | | 7,374,909 | | | | — | | | | 7,374,909 | |
Corporate Bonds | | | | | | | | | | | | | | | | |
Communication Services | | | — | | | | 1,190,542 | | | | — | | | | 1,190,542 | |
Consumer Discretionary | | | — | | | | 2,315,964 | | | | — | | | | 2,315,964 | |
Consumer Staples | | | — | | | | 2,092,053 | | | | — | | | | 2,092,053 | |
Energy | | | — | | | | 5,492,907 | | | | — | | | | 5,492,907 | |
Financials | | | — | | | | 20,806,062 | | | | — | | | | 20,806,062 | |
Health Care | | | — | | | | 378,098 | | | | — | | | | 378,098 | |
Industrials | | | — | | | | 7,443,900 | | | | — | | | | 7,443,900 | |
Information Technology | | | — | | | | 10,328,230 | | | | — | | | | 10,328,230 | |
Materials | | | — | | | | 5,107,681 | | | | — | | | | 5,107,681 | |
Utilities | | | — | | | | 1,737,977 | | | | — | | | | 1,737,977 | |
Foreign Government Securities | | | — | | | | 24,018,017 | | | | 760,481 | | | | 24,778,498 | |
Forward Currency Contracts | | | — | | | | 3,795,782 | | | | — | | | | 3,795,782 | |
Futures | | | 86,640 | | | | — | | | | — | | | | 86,640 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 86,640 | | | $ | 102,536,693 | | | $ | 760,481 | | | $ | 103,383,814 | |
| | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
23
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own assumptions in
determining the fair
value of investments) | | | Total | |
| | | | |
Liabilities: | | | | | | | | | | | | | | | | |
Centrally Cleared Credit Default Swaps | | $ | — | | | $ | (193,406 | ) | | $ | — | | | $ | (193,406 | ) |
Forward Currency Contracts | | | — | | | | (4,438,627 | ) | | | — | | | | (4,438,627 | ) |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | (4,632,033 | ) | | $ | — | | | $ | (4,632,033 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 86,640 | | | $ | 97,904,660 | | | $ | 760,481 | | | $ | 98,751,781 | |
| | | | | | | | | | | | | | | | |
Fair Values of Derivative Instruments as of April 30, 2020:
| | | | | | |
| | | Statement of Assets and Liabilities | |
Derivatives Contracts^ | | Asset Derivatives | | Fair Value | |
Interest rate contracts | | Receivables, Net assets – Unrealized appreciation | | $ | 86,640 | * |
Foreign exchange contracts | | Receivables | | | 3,795,782 | |
Credit contracts | | Receivables | | | 234,953 | |
| | | | | | |
Total | | | | $ | 4,117,375 | |
| | | | | | |
| | |
| | | Liability Derivatives | | | |
Foreign exchange contracts | | Payables | | $ | (4,438,627 | ) |
Credit contracts | | Payables | | | (193,406 | ) |
| | | | | | |
Total | | | | $ | (4,632,033 | ) |
| | | | | | |
| * | Includes cumulative appreciation/depreciation of futures contracts as reported in the Portfolio of Investments. Only variation margin is reported within the Statement of Assets & Liabilities. |
The Effect of Derivative Instruments on the Statement of Operations for the six months ended April 30, 2020:
| | | | | | | | | | | | | | | | |
| Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | |
Derivatives Contracts^ | | Futures | | | Forward
Foreign
Currency
Contracts | | | Swaps | | | Total | |
Interest rate contracts | | $ | 357,273 | | | $ | — | | | $ | 122,969 | | | $ | 480,242 | |
Foreign exchange contracts | | | — | | | | (670,273 | ) | | | — | | | | (670,273 | ) |
Credit contracts | | | — | | | | — | | | | (2,012,570 | ) | | | (2,012,570 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 357,273 | | | $ | (670,273 | ) | | $ | (1,889,601 | ) | | $ | (2,202,601 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |
Derivatives Contracts^ | | Futures | | | Forward
Foreign
Currency
Contracts | | | Swaps | | | Total | |
Interest rate contracts | | $ | 56,632 | | | $ | — | | | $ | — | | | $ | 56,632 | |
Foreign exchange contracts | | | — | | | | (809,817 | ) | | | — | | | | (809,817 | ) |
Credit contracts | | | — | | | | — | | | | 16,695 | | | | 16,695 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 56,632 | | | $ | (809,817 | ) | | $ | 16,695 | | | $ | (736,490 | ) |
| | | | | | | | | | | | | | | | |
^ The Fund held forward foreign currency contracts, futures and swaps contracts as a substitute for investing in conventional securities, hedging and in an attempt to enhance returns.
See Notes to Financial Statements.
24
1290 FUNDS
1290 DIVERSIFIED BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
The Fund held swap contracts with an average notional balance of approximately $19,410,000, forward foreign currency contracts with an average settlement value of approximately $119,355,000 and futures contracts with an average notional balance of approximately $26,254,000 during the six months ended April 30, 2020.
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, 2020:
| | | | | | | | | | | | | | | | |
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 | | $ | 433,327 | | | $ | — | | | $ | — | | | $ | 433,327 | |
Citibank NA | | | 660,660 | | | | (660,660 | ) | | | — | | | | — | |
Goldman Sachs Bank USA | | | 993,825 | | | | (128,349 | ) | | | — | | | | 865,476 | |
HSBC Bank plc | | | 773,937 | | | | (773,937 | ) | | | — | | | | — | |
JPMorgan Chase Bank | | | 934,033 | | | | (934,033 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 3,795,782 | | | $ | (2,496,979 | ) | | $ | — | | | $ | 1,298,803 | |
| | | | | | | | | | | | | | | | |
| | | | |
Counterparty | | Gross Amount of
Derivative Liabilities
Presented in the
Statement of Assets
and Liabilities (a) | | | Derivatives
Available
for Offset | | | Collateral
Pledged | | | Net Amount Due
to Counterparty | |
Citibank NA | | $ | 1,334,507 | | | $ | (660,660 | ) | | $ | — | | | $ | 673,847 | |
Goldman Sachs Bank USA | | | 128,349 | | | | (128,349 | ) | | | — | | | | — | |
HSBC Bank plc | | | 1,576,572 | | | | (773,937 | ) | | | (170,000 | ) | | | 632,635 | |
JPMorgan Chase Bank | | | 1,385,163 | | | | (934,033 | ) | | | (290,000 | ) | | | 161,130 | |
Morgan Stanley | | | 14,036 | | | | — | | | | — | | | | 14,036 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 4,438,627 | | | $ | (2,496,979 | ) | | $ | (460,000 | ) | | $ | 1,481,648 | |
| | | | | | | | | | | | | | | | |
| (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, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 93,887,228 | |
Long-term U.S. government debt securities | | | 72,595,402 | |
| | | | |
| | $ | 166,482,630 | |
| | | | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 67,327,373 | |
Long-term U.S. government debt securities | | | 78,116,811 | |
| | | | |
| | $ | 145,444,184 | |
| | | | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 10,373,852 | |
Aggregate gross unrealized depreciation | | | (11,588,886 | ) |
| | | | |
Net unrealized depreciation | | $ | (1,215,034 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 99,876,817 | |
| | | | |
See Notes to Financial Statements.
25
1290 FUNDS
1290 DIVERSIFIED BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | | | | |
Investments in Securities, at value (Cost $99,738,342) | | $ | 99,266,439 | |
Cash | | | 603,616 | |
Cash held as collateral for forward foreign currency contracts | | | 460,000 | |
Unrealized appreciation on forward foreign currency contracts | | | 3,795,782 | |
Variation Margin on Centrally Cleared Swaps | | | 3,435,042 | |
Due from broker for futures variation margin | | | 1,204,904 | |
Receivable for securities sold | | | 998,309 | |
Dividends, interest and other receivables | | | 916,888 | |
Receivable for Fund shares sold | | | 545,559 | |
Prepaid registration and filing fees | | | 21,826 | |
Other assets | | | 8,951 | |
| | | | |
Total assets | | | 111,257,316 | |
| | | | |
LIABILITIES | | | | |
Foreign currency overdraft payable | | | 18,945 | |
Unrealized depreciation on forward foreign currency contracts | | | 4,438,627 | |
Payable for securities purchased | | | 513,702 | |
Payable for Fund shares redeemed | | | 347,743 | |
Distribution fees payable – Class A | | | 1,273 | |
Administrative fees payable | | | 835 | |
Trustees’ fees payable | | | 230 | |
Distribution fees payable – Class R | | | 53 | |
Accrued expenses | | | 80,675 | |
| | | | |
Total liabilities | | | 5,402,083 | |
| | | | |
NET ASSETS | | $ | 105,855,233 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 109,813,637 | |
Total distributable earnings (loss) | | | (3,958,404 | ) |
| | | | |
Net assets | | $ | 105,855,233 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $6,336,929 / 654,506 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.68 | |
Maximum sales charge (4.50% of offering price) | | | 0.46 | |
| | | | |
Maximum offering price per share | | $ | 10.14 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $99,386,390 / 10,233,807 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.71 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $131,914 / 13,642 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.67 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Interest | | $ | 2,498,766 | |
Dividends | | | 25,384 | |
| | | | |
Total income | | | 2,524,150 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 301,460 | |
Professional fees | | | 76,936 | |
Administrative fees | | | 75,366 | |
Printing and mailing expenses | | | 35,819 | |
Transfer agent fees | | | 31,877 | |
Registration and filing fees | | | 23,350 | |
Custodian fees | | | 20,295 | |
Distribution fees – Class A | | | 6,928 | |
Trustees’ fees | | | 3,618 | |
Distribution fees – Class R | | | 344 | |
Miscellaneous | | | 14,552 | |
| | | | |
Gross expenses | | | 590,545 | |
Less: Waiver from investment adviser | | | (332,370 | ) |
| | | | |
Net expenses | | | 258,175 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 2,265,975 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments in securities | | | (1,498,788 | ) |
Futures contracts | | | 357,273 | |
Forward foreign currency contracts | | | (670,273 | ) |
Foreign currency transactions | | | 92,460 | |
Swaps | | | (1,889,601 | ) |
| | | | |
Net realized gain (loss) | | | (3,608,929 | ) |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments in securities | | | (349,159 | ) |
Futures contracts | | | 56,632 | |
Forward foreign currency contracts | | | (809,817 | ) |
Foreign currency translations | | | (16,676 | ) |
Swaps | | | 16,695 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (1,102,325 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (4,711,254 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (2,445,279 | ) |
| | | | |
See Notes to Financial Statements.
26
1290 FUNDS
1290 DIVERSIFIED BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 2,265,975 | | | $ | 2,144,112 | |
Net realized gain (loss) | | | (3,608,929 | ) | | | 2,739,734 | |
Net change in unrealized appreciation (depreciation) | | | (1,102,325 | ) | | | 1,170,648 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (2,445,279 | ) | | | 6,054,494 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (285,275 | ) | | | (81,362 | ) |
Class I | | | (4,265,925 | ) | | | (2,130,998 | ) |
Class R | | | (6,818 | ) | | | (4,205 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (4,558,018 | ) | | | (2,216,565 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 437,997 and 432,884 shares, respectively ] | | | 4,437,770 | | | | 4,348,727 | |
Capital shares issued in reinvestment of dividends [ 28,380 and 7,599 shares, respectively ] | | | 280,472 | | | | 77,418 | |
Capital shares repurchased [ (183,897) and (88,427) shares, respectively ] | | | (1,836,455 | ) | | | (910,471 | ) |
| | | | | | | | |
Total Class A transactions | | | 2,881,787 | | | | 3,515,674 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 3,884,151 and 5,191,046 shares, respectively ] | | | 38,882,516 | | | | 52,777,026 | |
Capital shares issued in reinvestment of dividends [ 286,240 and 87,879 shares, respectively ] | | | 2,834,997 | | | | 899,213 | |
Capital shares repurchased [ (1,774,055) and (650,622) shares, respectively ] | | | (16,979,792 | ) | | | (6,704,718 | ) |
| | | | | | | | |
Total Class I transactions | | | 24,737,721 | | | | 46,971,521 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 1,430 and 3,873 shares, respectively ] | | | 14,229 | | | | 39,837 | |
Capital shares issued in reinvestment of dividends [ 208 and 48 shares, respectively ] | | | 2,059 | | | | 490 | |
Capital shares repurchased [ (2,025) and (17) shares, respectively ] | | | (19,188 | ) | | | (166 | ) |
| | | | | | | | |
Total Class R transactions | | | (2,900 | ) | | | 40,161 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 27,616,608 | | | | 50,527,356 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 20,613,311 | | | | 54,365,285 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 85,241,922 | | | | 30,876,637 | |
| | | | | | | | |
End of period | | $ | 105,855,233 | | | $ | 85,241,922 | |
| | | | | | | | |
See Notes to Financial Statements.
27
1290 FUNDS
1290 DIVERSIFIED BOND FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.34 | | | $ | 9.52 | | | $ | 10.12 | | | $ | 9.89 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.21 | | | | 0.41 | ** | | | 0.26 | | | | 0.19 | | | | 0.16 | | | | 0.01 | |
Net realized and unrealized gain (loss) | | | (0.39 | ) | | | 0.80 | | | | (0.40 | ) | | | 0.23 | | | | 0.17 | | | | (0.16 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.18 | ) | | | 1.21 | | | | (0.14 | ) | | | 0.42 | | | | 0.33 | | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.15 | ) | | | (0.39 | ) | | | (0.43 | ) | | | (0.19 | ) | | | (0.10 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.33 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | (0.03 | ) | | | — | | | | (0.16 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.48 | ) | | | (0.39 | ) | | | (0.46 | ) | | | (0.19 | ) | | | (0.26 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.68 | | | $ | 10.34 | | | $ | 9.52 | | | $ | 10.12 | | | $ | 9.89 | | | $ | 9.82 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (1.92 | )% | | | 12.97 | % | | | (1.44 | )% | | | 4.25 | % | | | 3.39 | % | | | (1.54 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 6,337 | | | $ | 3,848 | | | $ | 190 | | | $ | 111 | | | $ | 109 | | | $ | 98 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 0.75 | % | | | 0.75 | % | | | 1.05 | % | | | 1.30 | % | | | 1.40 | % | | | 1.40 | % |
Before waivers (a)(f) | | | 1.41 | % | | | 1.55 | % | | | 1.85 | % | | | 1.76 | % | | | 1.84 | % | | | 1.62 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 4.27 | % | | | 4.00 | %** | | | 2.63 | % | | | 1.93 | % | | | 1.68 | % | | | 0.37 | %(l) |
Before waivers (a)(f) | | | 3.61 | % | | | 3.19 | %** | | | 1.83 | % | | | 1.48 | % | | | 1.24 | % | | | 0.15 | %(l) |
Portfolio turnover rate^ | | | 156 | %(z) | | | 194 | % | | | 139 | %*** | | | 117 | % | | | 152 | % | | | 77 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.37 | | | $ | 9.53 | | | $ | 10.13 | | | $ | 9.89 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.22 | | | | 0.42 | ** | | | 0.27 | | | | 0.22 | | | | 0.19 | | | | 0.02 | |
Net realized and unrealized gain (loss) | | | (0.40 | ) | | | 0.84 | | | | (0.38 | ) | | | 0.23 | | | | 0.16 | | | | (0.17 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.18 | ) | | | 1.26 | | | | (0.11 | ) | | | 0.45 | | | | 0.35 | | | | (0.15 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.15 | ) | | | (0.42 | ) | | | (0.46 | ) | | | (0.21 | ) | | | (0.11 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.33 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | (0.03 | ) | | | — | | | | (0.17 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.48 | ) | | | (0.42 | ) | | | (0.49 | ) | | | (0.21 | ) | | | (0.28 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.71 | | | $ | 10.37 | | | $ | 9.53 | | | $ | 10.13 | | | $ | 9.89 | | | $ | 9.82 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (1.77 | )% | | | 13.43 | % | | | (1.19 | )% | | | 4.58 | % | | | 3.63 | % | | | (1.49 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 99,386 | | | $ | 81,249 | | | $ | 30,590 | | | $ | 71,053 | | | $ | 69,321 | | | $ | 68,572 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 0.50 | % | | | 0.50 | % | | | 0.91 | % | | | 1.05 | % | | | 1.15 | % | | | 1.15 | % |
Before waivers (a)(f) | | | 1.16 | % | | | 1.34 | % | | | 1.54 | % | | | 1.51 | % | | | 1.58 | % | | | 1.36 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 4.53 | % | | | 4.12 | %** | | | 2.70 | % | | | 2.18 | % | | | 1.92 | % | | | 0.68 | %(l) |
Before waivers (a)(f) | | | 3.87 | % | | | 3.28 | %** | | | 2.06 | % | | | 1.73 | % | | | 1.49 | % | | | 0.47 | %(l) |
Portfolio turnover rate^ | | | 156 | %(z) | | | 194 | % | | | 139 | %*** | | | 117 | % | | | 152 | % | | | 77 | %(z) |
See Notes to Financial Statements.
28
1290 FUNDS
1290 DIVERSIFIED BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.34 | | | $ | 9.51 | | | $ | 10.11 | | | $ | 9.88 | | | $ | 9.82 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.20 | | | | 0.35 | ** | | | 0.23 | | | | 0.17 | | | | 0.14 | | | | — | # |
Net realized and unrealized gain (loss) | | | (0.40 | ) | | | 0.85 | | | | (0.39 | ) | | | 0.23 | | | | 0.15 | | | | (0.16 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.20 | ) | | | 1.20 | | | | (0.16 | ) | | | 0.40 | | | | 0.29 | | | | (0.16 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.14 | ) | | | (0.37 | ) | | | (0.41 | ) | | | (0.17 | ) | | | (0.09 | ) | | | (0.02 | ) |
Distributions from net realized gains | | | (0.33 | ) | | | — | | | | — | | | | — | | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | (0.03 | ) | | | — | | | | (0.14 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.47 | ) | | | (0.37 | ) | | | (0.44 | ) | | | (0.17 | ) | | | (0.23 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.67 | | | $ | 10.34 | | | $ | 9.51 | | | $ | 10.11 | | | $ | 9.88 | | | $ | 9.82 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (1.96 | )% | | | 12.84 | % | | | (1.69 | )% | | | 4.04 | % | | | 3.05 | % | | | (1.60 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 132 | | | $ | 145 | | | $ | 96 | | | $ | 101 | | | $ | 99 | | | $ | 98 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 1.00 | % | | | 1.00 | % | | | 1.32 | % | | | 1.55 | % | | | 1.65 | % | | | 1.65 | % |
Before waivers (a)(f) | | | 1.66 | % | | | 1.88 | % | | | 2.09 | % | | | 2.01 | % | | | 2.08 | % | | | 1.88 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 4.06 | % | | | 3.51 | %** | | | 2.34 | % | | | 1.68 | % | | | 1.42 | % | | | 0.12 | %(l) |
Before waivers (a)(f) | | | 3.40 | % | | | 2.63 | %** | | | 1.57 | % | | | 1.23 | % | | | 0.99 | % | | | (0.11 | )%(l) |
Portfolio turnover rate^ | | | 156 | %(z) | | | 194 | % | | | 139 | %*** | | | 117 | % | | | 152 | % | | | 77 | %(z) |
| * | Commencement of Operations. |
| ** | Includes accretion, interest and inflation adjustments on Argentine TIPS Bonds. Without this income, the per share income for each class would have been $0.07 lower and the ratios for each class would have been 0.65% lower. |
| *** | The portfolio turnover rate calculation includes purchases and sales made as a result of the replacement of the sub-adviser. Excluding such transactions, the portfolio turnover rate would have been 64%. |
| # | Per share amount is less than $0.005. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
29
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENT SUB-ADVISER
PERFORMANCE RESULTS
| | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | |
| | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | (0.61 | )% | | | 3.06 | % | | | 6.20 | % |
| | | with Sales Charge (a) | | | (6.05 | ) | | | (2.61 | ) | | | 4.77 | |
Fund – Class I Shares* | | | | | (0.46 | ) | | | 3.30 | | | | 6.47 | |
Fund – Class R Shares* | | | | | (0.77 | ) | | | 2.81 | | | | 5.94 | |
60% S&P 500® Index/40% Bloomberg Barclays U.S. Aggregate Bond Index | | | | | 0.45 | | | | 5.41 | | | | 8.99 | |
S&P 500® Index | | | | | (3.16 | ) | | | 0.86 | | | | 11.68 | |
Bloomberg Barclays U.S. Aggregate Bond Index | | | | | 4.86 | | | | 10.84 | | | | 4.34 | |
| |
* 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.
As of March 1, 2020, the gross expense ratios for Class A, I and R shares were 1.72%, 1.47% and 1.97%, respectively. The net expense ratios for Class A, I and R shares were 1.20%, 0.95% and 1.45%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — DoubleLine Capital LP
The six-month period ended April 30, 2020 can be divided into pre-COVID-19 and post-COVID-19 worlds. While the months before the global COVID pandemic brought the U.S. economy to a sudden halt may already feel like a distant memory, it is important to recall the state of the markets, as this will influence the trajectory and durability of the recovery in asset prices. In the first four months of the period in question, the S&P 500® Index marched higher, closing at an all-time high 33 times. At its peak on February 19, 2020, the Index had returned over 12% since October 31, 2019. Most of these gains were the result of richer valuations, as corporate earnings showed little growth. Simultaneously, the fixed income markets saw credit spreads tighten.
The strong performance of risk assets through mid-February gave little warning of the impending collapse. As developed market economies locked down, U.S. equity markets entered a bear market and prices in credit-exposed fixed income markets experienced their deepest declines since the Global Financial Crisis (GFC), both in record time. In a little over a month, the S&P 500® Index lost over 1/3 of its value. Risk markets found a bottom on March 23 only after the Federal Reserve (Fed) announced a number of programs — massive in scale even relative to their actions during the GFC — to support the Treasury market and portions of the credit markets. Within fixed income, those sectors perceived to be candidates to receive Fed support rallied sharply while those left out of the Fed programs saw much more modest recoveries (and in a few cases further declines). Equities rallied sharply, ending April 30, 2020 over 30% above the close on March 23rd and 13.7% below the all-time high.
Fund Highlights
During the six-month period ended April 30, 2020, the Fund was down slightly, losing 0.46%. Over the same period, the benchmark blend of 60% S&P 500® Index and 40% Bloomberg Barclays U.S. Aggregate Bond Index gained 0.45%. During this period, the S&P 500® Index returned -3.16% while the Bloomberg Barclays U.S. Aggregate Bond Index gained 4.86%. The Fund’s asset allocation contributed positively to relative returns over the period.
The Fund’s allocation to the Shiller Barclays CAPE U.S. Sector Index (the “CAPE Index”) underperformed the S&P 500® Index during the period. Over this time, the CAPE Index allocated to seven sectors: communication services, consumer discretionary, consumer staples, financials, industrials, materials and technology. Technology, consumer discretionary and consumer staples delivered the best returns while constituents of the CAPE Index. The most negative returns were in the materials, financials and industrial sectors.
30
1290 DOUBLELINE DYNAMIC ALLOCATION FUND (Unaudited)
The Fund’s actively managed equity portfolio outperformed the S&P 500® Index over the period. Within that portfolio, both sector allocation and security selection were positive contributors to return. The sectors contributing most positively to returns were consumer discretionary, information technology and real estate. Industrials, energy and consumer staples were the sectors detracting most from returns during the period.
The Fund’s fixed income portfolio trailed the Bloomberg Barclays U.S. Aggregate Bond Index during the period. The best returning sectors in the period were government bonds and agency mortgage-backed securities (MBS), both of which had positive returns, as well as global bonds. The weakest returns were in high-yield bonds, bank loans and non-agency MBS.
Outlook
At DoubleLine, we entered this period believing the risk-to-reward potential was unfavorable for many risk assets. Examining equities, we had concluded the combination of record high prices, historically rich valuations, lackluster earnings growth and a dependence on stock buybacks left equity investors vulnerable to negative developments. As such, we entered the COVID crisis with an underweight allocation to equities. As equity prices collapsed in March, we increased the allocation in two steps, ending March at a benchmark allocation of 60%. However, in April we twice cut our allocation to equities, believing the rapid recovery in equity prices — on the back of massive Fed intervention in the markets — left them at risk of disappointing should earnings fail to rebound sharply. We ended the period with approximately 50% of the Fund allocated to equites. At the same time, we deployed a higher proportion of our equity allocation to our active equity strategy, believing the market volatility was creating more opportunities for active stock selection.
| | | | |
| | |
Sector Weightings as of April 30, 2020 | | % of
Net Assets | |
U.S. Treasury Obligations | | | 26.2 | % |
Information Technology | | | 9.9 | |
Collateralized Mortgage Obligations | | | 9.5 | |
Investment Companies | | | 8.7 | |
Health Care | | | 6.2 | |
Financials | | | 5.6 | |
Consumer Discretionary | | | 5.2 | |
Communication Services | | | 4.7 | |
Industrials | | | 4.2 | |
Consumer Staples | | | 2.7 | |
Asset-Backed Securities | | | 2.5 | |
Energy | | | 2.1 | |
Real Estate | | | 1.8 | |
Materials | | | 0.5 | |
Utilities | | | 0.5 | |
Cash and Other | | | 9.7 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees (in the case of Class A 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, 2020 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.
31
1290 DOUBLELINE DYNAMIC ALLOCATION 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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $993.90 | | | | $5.73 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.12 | | | | 5.80 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 995.40 | | | | 4.49 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,020.36 | | | | 4.55 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 992.30 | | | | 6.96 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,017.87 | | | | 7.05 | |
| |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.16%, 0.91% and 1.41%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect the one-half year period). | |
32
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
LONG-TERM DEBT SECURITIES: | |
Asset-Backed Securities (2.5%) | |
CSMC Trust, | | | | | | | | |
Series 2019-JR1 A1 | | | | | | | | |
4.095%, 9/27/66 (l)§ | | $ | 554,724 | | | $ | 538,667 | |
GSAA Home Equity Trust, | | | | | | | | |
Series 2007-9 A2A | | | | | | | | |
6.500%, 8/25/47 | | | 406,414 | | | | 284,806 | |
Pretium Mortgage Credit Partners I LLC, | | | | | | | | |
Series 2019-NPL2 A1 | | | | | | | | |
3.844%, 12/25/58 (e)§ | | | 291,026 | | | | 279,659 | |
PRPM LLC, | | | | | | | | |
Series 2019-2A A1 | | | | | | | | |
3.967%, 4/25/24 (e)§ | | | 411,694 | | | | 387,859 | |
| | | | | | | | |
Total Asset-Backed Securities | | | | | | | 1,490,991 | |
| | | | | | | | |
Collateralized Mortgage Obligations (9.5%) | | | | | |
Banc of America Alternative Loan Trust, | | | | | |
Series 2006-5 CB14 | | | | | | | | |
6.000%, 6/25/46 (l) | | | 226,700 | | | | 206,867 | |
CHL Mortgage Pass-Through Trust, | | | | | | | | |
Series 2006-20 1A33 | | | | | | | | |
6.000%, 2/25/37 | | | 610,562 | | | | 468,944 | |
Series 2006-OA5 2A1 | | | | | | | | |
0.687%, 4/25/46 (l) | | | 721,075 | | | | 552,770 | |
FHLMC, | | | | | | | | |
Series 3998 AZ | | | | | | | | |
4.000%, 2/15/42 | | | 1,385,586 | | | | 1,539,403 | |
FNMA, | | | | | | | | |
Series 2013-5 EZ | | | | | | | | |
2.000%, 8/25/42 | | | 841,973 | | | | 863,042 | |
Series 2017-4 CH | | | | | | | | |
3.000%, 6/25/42 | | | 117,654 | | | | 121,914 | |
Series 2018-21 | | | | | | | | |
(Zero Coupon), 4/25/48 PO | | | 378,876 | | | | 348,371 | |
HarborView Mortgage Loan Trust, | | | | | | | | |
Series 2005-8 1A2A | | | | | | | | |
1.378%, 9/19/35 (l) | | | 539,248 | | | | 431,732 | |
New Residential Mortgage Loan Trust, | | | | | | | | |
Series 2016-1A A1 | | | | | | | | |
3.750%, 3/25/56 (l)§ | | | 367,322 | | | | 374,500 | |
RALI Trust, | | | | | | | | |
Series 2006-QS4 A10 | | | | | | | | |
6.000%, 4/25/36 | | | 531,698 | | | | 483,515 | |
Wells Fargo Mortgage-Backed Securities Trust, | | | | | | | | |
Series 2007-7 A1 | | | | | | | | |
6.000%, 6/25/37 | | | 283,849 | | | | 274,163 | |
| | | | | | | | |
Total Collateralized Mortgage Obligations | | | | | | | 5,665,221 | |
| | | | | | | | |
Corporate Bonds (12.8%) | | | | | | | | |
Communication Services (1.4%) | | | | | | | | |
Diversified Telecommunication Services (0.6%) | |
AT&T, Inc. | | | | | | | | |
6.375%, 3/1/41 | | | 60,000 | | | | 79,815 | |
CCO Holdings LLC | | | | | | | | |
5.750%, 2/15/26§ | | | 30,000 | | | | 31,226 | |
5.000%, 2/1/28§ | | | 30,000 | | | | 30,763 | |
CenturyLink, Inc. | | | | | | | | |
5.125%, 12/15/26§ | | | 30,000 | | | | 28,650 | |
4.000%, 2/15/27§ | | | 25,000 | | | | 24,437 | |
Frontier Communications Corp. | | | | | | | | |
8.000%, 4/1/27 (h)§ | | | 35,000 | | | | 35,690 | |
Intelsat Jackson Holdings SA | | | | | | | | |
8.500%, 10/15/24§ | | | 30,000 | | | | 17,400 | |
Telesat Canada | | | | | | | | |
6.500%, 10/15/27§ | | | 10,000 | | | | 9,450 | |
Verizon Communications, Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.10%), 2.792%, 5/15/25 (k) | | | 55,000 | | | | 54,623 | |
Zayo Group Holdings, Inc. | | | | | | | | |
4.000%, 3/1/27§ | | | 30,000 | | | | 29,057 | |
6.125%, 3/1/28§ | | | 15,000 | | | | 14,138 | |
| | | | | | | | |
| | | | | | | 355,249 | |
| | | | | | | | |
Entertainment (0.1%) | | | | | | | | |
Lions Gate Capital Holdings LLC | | | | | | | | |
6.375%, 2/1/24§ | | | 45,000 | | | | 41,866 | |
| | | | | | | | |
Media (0.6%) | | | | | | | | |
Cengage Learning, Inc. | | | | | | | | |
9.500%, 6/15/24§ | | | 25,000 | | | | 13,250 | |
Charter Communications Operating LLC | | | | | | | | |
4.908%, 7/23/25 | | | 110,000 | | | | 123,992 | |
Comcast Corp. | | | | | | | | |
3.400%, 4/1/30 | | | 40,000 | | | | 44,925 | |
Diamond Sports Group LLC | | | | | | | | |
5.375%, 8/15/26§ | | | 20,000 | | | | 15,200 | |
Gray Television, Inc. | | | | | | | | |
7.000%, 5/15/27§ | | | 45,000 | | | | 45,225 | |
iHeartCommunications, Inc. | | | | | | | | |
8.375%, 5/1/27 | | | 5,000 | | | | 4,137 | |
Interpublic Group of Cos., Inc. (The) | | | | | | | | |
4.650%, 10/1/28 | | | 50,000 | | | | 52,788 | |
5.400%, 10/1/48 | | | 45,000 | | | | 46,873 | |
Nexstar Broadcasting, Inc. | | | | | | | | |
5.625%, 7/15/27§ | | | 20,000 | | | | 19,075 | |
Scripps Escrow, Inc. | | | | | | | | |
5.875%, 7/15/27§ | | | 25,000 | | | | 21,125 | |
| | | | | | | | |
| | | | | | | 386,590 | |
| | | | | | | | |
Wireless Telecommunication Services (0.1%) | |
Gogo Intermediate Holdings LLC | | | | | | | | |
9.875%, 5/1/24§ | | | 15,000 | | | | 12,517 | |
Sprint Corp. | | | | | | | | |
7.125%, 6/15/24 | | | 45,000 | | | | 50,400 | |
T-Mobile USA, Inc. | | | | | | | | |
3.750%, 4/15/27§ | | | 15,000 | | | | 16,111 | |
| | | | | | | | |
| | | | | | | 79,028 | |
| | | | | | | | |
Total Communication Services | | | | | | | 862,733 | |
| | | | | | | | |
Consumer Discretionary (1.3%) | | | | | | | | |
Auto Components (0.1%) | | | | | | | | |
Icahn Enterprises LP | | | | | | | | |
5.250%, 5/15/27 | | | 25,000 | | | | 23,750 | |
Panther BF Aggregator 2 LP | | | | | | | | |
6.250%, 5/15/26§ | | | 15,000 | | | | 15,097 | |
| | | | | | | | |
| | | | | | | 38,847 | |
| | | | | | | | |
See Notes to Financial Statements.
33
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Automobiles (0.1%) | | | | | | | | |
Ford Motor Co. | | | | | | | | |
9.000%, 4/22/25 | | $ | 20,000 | | | $ | 19,475 | |
General Motors Co. | | | | | | | | |
(ICE LIBOR USD 3 Month + 0.80%), 2.542%, 8/7/20 (k) | | | 20,000 | | | | 19,638 | |
| | | | | | | | |
| | | | | | | 39,113 | |
| | | | | | | | |
Distributors (0.0%) | | | | | | | | |
Performance Food Group, Inc. | | | | | | | | |
5.500%, 10/15/27§ | | | 35,000 | | | | 33,251 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (0.7%) | | | | | |
Boyd Gaming Corp. | | | | | | | | |
4.750%, 12/1/27§ | | | 35,000 | | | | 29,750 | |
Caesars Resort Collection LLC | | | | | | | | |
5.250%, 10/15/25§ | | | 35,000 | | | | 27,442 | |
Carnival Corp. | | | | | | | | |
11.500%, 4/1/23§ | | | 20,000 | | | | 20,825 | |
Eldorado Resorts, Inc. | | | | | | | | |
6.000%, 4/1/25 | | | 30,000 | | | | 29,371 | |
Golden Nugget, Inc. | | | | | | | | |
6.750%, 10/15/24§ | | | 45,000 | | | | 35,575 | |
Hilton Domestic Operating Co., Inc. | | | | | | | | |
5.375%, 5/1/25§ | | | 5,000 | | | | 4,994 | |
5.750%, 5/1/28§ | | | 5,000 | | | | 5,038 | |
IRB Holding Corp. | | | | | | | | |
6.750%, 2/15/26§ | | | 35,000 | | | | 29,050 | |
McDonald’s Corp. | | | | | | | | |
3.600%, 7/1/30 | | | 40,000 | | | | 45,132 | |
MGM Resorts International | | | | | | | | |
6.750%, 5/1/25 | | | 50,000 | | | | 49,006 | |
Royal Caribbean Cruises Ltd. | | | | | | | | |
3.700%, 3/15/28 | | | 25,000 | | | | 16,365 | |
Scientific Games International, Inc. | | | | | | | | |
7.250%, 11/15/29§ | | | 20,000 | | | | 14,300 | |
Six Flags Theme Parks, Inc. | | | | | | | | |
7.000%, 7/1/25§ | | | 55,000 | | | | 57,189 | |
Twin River Worldwide Holdings, Inc. | | | | | | | | |
6.750%, 6/1/27§ | | | 30,000 | | | | 23,888 | |
Viking Cruises Ltd. | | | | | | | | |
5.875%, 9/15/27§ | | | 65,000 | | | | 42,250 | |
Yum! Brands, Inc. | | | | | | | | |
7.750%, 4/1/25§ | | | 10,000 | | | | 10,949 | |
| | | | | | | | |
| | | | | | | 441,124 | |
| | | | | | | | |
Household Durables (0.0%) | | | | | | | | |
Mattamy Group Corp. | | | | | | | | |
4.625%, 3/1/30§ | | | 35,000 | | | | 30,975 | |
| | | | | | | | |
Internet & Direct Marketing Retail (0.1%) | |
Expedia Group, Inc. | | | | | | | | |
3.250%, 2/15/30 | | | 60,000 | | | | 49,840 | |
| | | | | | | | |
Multiline Retail (0.0%) | | | | | | | | |
Nordstrom, Inc. | | | | | | | | |
8.750%, 5/15/25§ | | | 5,000 | | | | 5,340 | |
| | | | | | | | |
Specialty Retail (0.3%) | | | | | | | | |
Asbury Automotive Group, Inc. | | | | | | | | |
4.500%, 3/1/28§ | | | 5,000 | | | | 4,199 | |
4.750%, 3/1/30§ | | | 6,000 | | | | 5,027 | |
Carvana Co. | | | | | | | | |
8.875%, 10/1/23§ | | | 10,000 | | | | 9,762 | |
Home Depot, Inc. (The) | | | | | | | | |
3.900%, 6/15/47 | | | 55,000 | | | | 64,543 | |
PetSmart, Inc. | | | | | | | | |
7.125%, 3/15/23§ | | | 35,000 | | | | 33,512 | |
5.875%, 6/1/25§ | | | 12,000 | | | | 12,090 | |
Staples, Inc. | | | | | | | | |
7.500%, 4/15/26§ | | | 35,000 | | | | 27,650 | |
| | | | | | | | |
| | | | | | | 156,783 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 795,273 | |
| | | | | | | | |
Consumer Staples (0.7%) | | | | | | | | |
Food & Staples Retailing (0.1%) | | | | | | | | |
Albertsons Cos., Inc. | | | | | | | | |
4.625%, 1/15/27§ | | | 30,000 | | | | 30,188 | |
Sysco Corp. | | | | | | | | |
5.950%, 4/1/30 | | | 15,000 | | | | 17,687 | |
US Foods, Inc. | | | | | | | | |
6.250%, 4/15/25§ | | | 5,000 | | | | 5,106 | |
| | | | | | | | |
| | | | | | | 52,981 | |
| | | | | | | | |
Food Products (0.5%) | | | | | | | | |
B&G Foods, Inc. | | | | | | | | |
5.250%, 4/1/25 | | | 20,000 | | | | 20,250 | |
5.250%, 9/15/27 | | | 15,000 | | | | 15,186 | |
JBS USA Lux SA | | | | | | | | |
5.875%, 7/15/24§ | | | 10,000 | | | | 10,112 | |
5.750%, 6/15/25§ | | | 5,000 | | | | 4,994 | |
6.750%, 2/15/28§ | | | 43,000 | | | | 45,661 | |
Kraft Heinz Foods Co. | | | | | | | | |
3.950%, 7/15/25 | | | 20,000 | | | | 20,903 | |
5.000%, 7/15/35 | | | 15,000 | | | | 16,016 | |
5.200%, 7/15/45 | | | 35,000 | | | | 35,970 | |
Post Holdings, Inc. | | | | | | | | |
4.625%, 4/15/30§ | | | 30,000 | | | | 29,376 | |
Smithfield Foods, Inc. | | | | | | | | |
4.250%, 2/1/27§ | | | 115,000 | | | | 109,434 | |
| | | | | | | | |
| | | | | | | 307,902 | |
| | | | | | | | |
Household Products (0.1%) | | | | | | | | |
Kronos Acquisition Holdings, Inc. | | | | | | | | |
9.000%, 8/15/23§ | | | 30,000 | | | | 25,993 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 386,876 | |
| | | | | | | | |
Energy (1.3%) | | | | | | | | |
Energy Equipment & Services (0.2%) | | | | | |
Halliburton Co. | | | | | | | | |
2.920%, 3/1/30 | | | 25,000 | | | | 20,097 | |
Tervita Corp. | | | | | | | | |
7.625%, 12/1/21§ | | | 30,000 | | | | 19,725 | |
Transocean Poseidon Ltd. | | | | | | | | |
6.875%, 2/1/27§ | | | 30,000 | | | | 23,700 | |
Transocean, Inc. | | | | | | | | |
8.000%, 2/1/27§ | | | 25,000 | | | | 9,625 | |
USA Compression Partners LP | | | | | | | | |
6.875%, 9/1/27 | | | 50,000 | | | | 40,197 | |
| | | | | | | | |
| | | | | | | 113,344 | |
| | | | | | | | |
See Notes to Financial Statements.
34
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Oil, Gas & Consumable Fuels (1.1%) | | | | | |
Antero Midstream Partners LP | | | | | | | | |
5.750%, 3/1/27§ | | $ | 16,000 | | | $ | 11,920 | |
Cheniere Energy Partners LP | | | | | | | | |
5.250%, 10/1/25 | | | 15,000 | | | | 14,300 | |
5.625%, 10/1/26 | | | 25,000 | | | | 24,000 | |
Energy Transfer Operating LP | | | | | | | | |
4.750%, 1/15/26 | | | 45,000 | | | | 44,240 | |
4.200%, 4/15/27 | | | 5,000 | | | | 4,812 | |
EOG Resources, Inc. | | | | | | | | |
4.375%, 4/15/30 | | | 5,000 | | | | 5,928 | |
Exxon Mobil Corp. | | | | | | | | |
2.610%, 10/15/30 | | | 15,000 | | | | 15,579 | |
4.227%, 3/19/40 | | | 10,000 | | | | 11,980 | |
Gulfport Energy Corp. | | | | | | | | |
6.375%, 5/15/25 | | | 30,000 | | | | 14,100 | |
Hess Midstream Operations LP | | | | | | | | |
5.125%, 6/15/28§ | | | 35,000 | | | | 30,713 | |
Hilcorp Energy I LP | | | | | | | | |
6.250%, 11/1/28§ | | | 30,000 | | | | 15,506 | |
Indigo Natural Resources LLC | | | | | | | | |
6.875%, 2/15/26§ | | | 15,000 | | | | 13,950 | |
Kinder Morgan Energy Partners LP | | | | | | | | |
6.950%, 1/15/38 | | | 50,000 | | | | 62,032 | |
Marathon Petroleum Corp. | | | | | | | | |
5.125%, 12/15/26 | | | 55,000 | | | | 55,759 | |
MEG Energy Corp. | | | | | | | | |
7.000%, 3/31/24§ | | | 9,000 | | | | 6,300 | |
7.125%, 2/1/27§ | | | 50,000 | | | | 33,500 | |
Oasis Petroleum, Inc. | | | | | | | | |
6.875%, 3/15/22 | | | 45,000 | | | | 6,413 | |
Occidental Petroleum Corp. | | | | | | | | |
2.900%, 8/15/24 | | | 55,000 | | | | 41,113 | |
3.500%, 8/15/29 | | | 20,000 | | | | 13,900 | |
Series 1 | | | | | | | | |
4.100%, 2/1/21 | | | 25,000 | | | | 23,812 | |
Parkland Fuel Corp. | | | | | | | | |
5.875%, 7/15/27§ | | | 55,000 | | | | 52,663 | |
Parsley Energy LLC | | | | | | | | |
5.625%, 10/15/27§ | | | 35,000 | | | | 30,275 | |
Peabody Energy Corp. | | | | | | | | |
6.000%, 3/31/22§ | | | 20,000 | | | | 14,600 | |
QEP Resources, Inc. | | | | | | | | |
5.625%, 3/1/26 | | | 35,000 | | | | 11,200 | |
Sabine Pass Liquefaction LLC | | | | | | | | |
5.000%, 3/15/27 | | | 30,000 | | | | 30,708 | |
Sunoco LP | | | | | | | | |
6.000%, 4/15/27 | | | 15,000 | | | | 14,223 | |
Targa Resources Partners LP | | | | | | | | |
5.500%, 3/1/30§ | | | 30,000 | | | | 25,575 | |
Western Midstream Operating LP | | | | | | | | |
3.100%, 2/1/25 (e) | | | 20,000 | | | | 18,250 | |
WPX Energy, Inc. | | | | | | | | |
4.500%, 1/15/30 | | | 25,000 | | | | 20,500 | |
| | | | | | | | |
| | | | | | | 667,851 | |
| | | | | | | | |
Total Energy | | | | | | | 781,195 | |
| | | | | | | | |
Financials (2.7%) | | | | | | | | |
Banks (0.9%) | | | | | | | | |
Bank of Montreal | | | | | | | | |
(USD Swap Semi 5 Year + 1.43%), 3.803%, 12/15/32 (k) | | | 50,000 | | | | 50,628 | |
Bank of Nova Scotia (The) | | | | | | | | |
1.625%, 5/1/23 | | | 80,000 | | | | 80,023 | |
Citigroup, Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.10%), 2.792%, 5/17/24 (k) | | | 120,000 | | | | 117,840 | |
Commonwealth Bank of Australia | | | | | | | | |
3.900%, 7/12/47§ | | | 45,000 | | | | 50,339 | |
JPMorgan Chase & Co. | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.10%), 2.099%, 6/7/21 (k) | | | 35,000 | | | | 35,108 | |
Mitsubishi UFJ Financial Group, Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 0.74%), 2.320%, 3/2/23 (k) | | | 120,000 | | | | 117,756 | |
Santander Holdings USA, Inc. | | | | | | | | |
3.400%, 1/18/23 | | | 80,000 | | | | 80,221 | |
Wells Fargo & Co. | | | | | | | | |
(ICE LIBOR USD 3 Month + 1.17%), 2.879%, 10/30/30 (k) | | | 30,000 | | | | 30,576 | |
| | | | | | | | |
| | | | | | | 562,491 | |
| | | | | | | | |
Consumer Finance (1.1%) | | | | | | | | |
American Express Co. | | | | | | | | |
3.400%, 2/22/24 | | | 115,000 | | | | 121,946 | |
Capital One Financial Corp. | | | | | | | | |
(ICE LIBOR USD 3 Month + 0.72%), 1.480%, 1/30/23 (k) | | | 120,000 | | | | 114,745 | |
Discover Financial Services | | | | | | | | |
4.100%, 2/9/27 | | | 85,000 | | | | 84,678 | |
General Motors Financial Co., Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 0.99%), 2.363%, 1/5/23 (k) | | | 140,000 | | | | 118,916 | |
3.950%, 4/13/24 | | | 15,000 | | | | 14,151 | |
John Deere Capital Corp. | | | | | | | | |
2.600%, 3/7/24 | | | 65,000 | | | | 68,103 | |
Navient Corp. | | | | | | | | |
5.000%, 3/15/27 | | | 15,000 | | | | 12,611 | |
Springleaf Finance Corp. | | | | | | | | |
6.625%, 1/15/28 | | | 30,000 | | | | 26,475 | |
5.375%, 11/15/29 | | | 15,000 | | | | 12,517 | |
Synchrony Financial | | | | | | | | |
3.950%, 12/1/27 | | | 60,000 | | | | 57,816 | |
| | | | | | | | |
| | | | | | | 631,958 | |
| | | | | | | | |
Diversified Financial Services (0.1%) | |
MPH Acquisition Holdings LLC | | | | | | | | |
7.125%, 6/1/24§ | | | 45,000 | | | | 40,049 | |
Verscend Escrow Corp. | | | | | | | | |
9.750%, 8/15/26§ | | | 32,000 | | | | 33,280 | |
| | | | | | | | |
| | | | | | | 73,329 | |
| | | | | | | | |
Insurance (0.5%) | | | | | | | | |
Alliant Holdings Intermediate LLC | | | | | | | | |
6.750%, 10/15/27§ | | | 20,000 | | | | 19,952 | |
Athene Global Funding | | | | | | | | |
3.000%, 7/1/22§ | | | 110,000 | | | | 110,327 | |
GTCR AP Finance, Inc. | | | | | | | | |
8.000%, 5/15/27§ | | | 30,000 | | | | 28,125 | |
NFP Corp. | | | | | | | | |
6.875%, 7/15/25§ | | | 45,000 | | | | 42,975 | |
Prudential Financial, Inc. | | | | | | | | |
3.905%, 12/7/47 | | | 55,000 | | | | 59,259 | |
See Notes to Financial Statements.
35
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Willis North America, Inc. | | | | | | | | |
4.500%, 9/15/28 | | $ | 55,000 | | | $ | 62,611 | |
| | | | | | | | |
| | | | | | | 323,249 | |
| | | | | | | | |
Thrifts & Mortgage Finance (0.1%) | |
Nationstar Mortgage Holdings, Inc. | | | | | | | | |
8.125%, 7/15/23§ | | | 35,000 | | | | 33,600 | |
| | | | | | | | |
Total Financials | | | | | | | 1,624,627 | |
| | | | | | | | |
Health Care (1.2%) | | | | | | | | |
Biotechnology (0.2%) | | | | | | | | |
AbbVie, Inc. | | | | | | | | |
4.700%, 5/14/45 | | | 70,000 | | | | 83,378 | |
| | | | | | | | |
Health Care Equipment & Supplies (0.0%) | |
Ortho-Clinical Diagnostics, Inc. | | | | | | | | |
7.250%, 2/1/28§ | | | 25,000 | | | | 22,728 | |
| | | | | | | | |
Health Care Providers & Services (0.8%) | |
Anthem, Inc. | | | | | | | | |
2.375%, 1/15/25 | | | 10,000 | | | | 10,291 | |
Centene Corp. | | | | | | | | |
4.250%, 12/15/27§ | | | 20,000 | | | | 20,925 | |
3.375%, 2/15/30§ | | | 25,000 | | | | 25,125 | |
Cigna Corp. | | | | | | | | |
(ICE LIBOR USD 3 Month + 0.89%), 2.109%, 7/15/23 (k) | | | 85,000 | | | | 80,559 | |
4.900%, 12/15/48 | | | 85,000 | | | | 109,363 | |
HCA, Inc. | | | | | | | | |
5.375%, 9/1/26 | | | 35,000 | | | | 38,170 | |
4.125%, 6/15/29 | | | 40,000 | | | | 43,254 | |
LifePoint Health, Inc. | | | | | | | | |
6.750%, 4/15/25§ | | | 10,000 | | | | 10,275 | |
4.375%, 2/15/27§ | | | 25,000 | | | | 23,500 | |
Radiology Partners, Inc. | | | | | | | | |
9.250%, 2/1/28§ | | | 25,000 | | | | 23,812 | |
Select Medical Corp. | | | | | | | | |
6.250%, 8/15/26§ | | | 25,000 | | | | 24,078 | |
West Street Merger Sub, Inc. | | | | | | | | |
6.375%, 9/1/25§ | | | 35,000 | | | | 32,813 | |
| | | | | | | | |
| | | | | | | 442,165 | |
| | | | | | | | |
Pharmaceuticals (0.2%) | |
Bausch Health Cos., Inc. | | | | | | | | |
5.250%, 1/30/30§ | | | 25,000 | | | | 24,664 | |
Eli Lilly and Co. | | | | | | | | |
3.950%, 3/15/49 | | | 70,000 | | | | 89,767 | |
Merck & Co., Inc. | | | | | | | | |
3.400%, 3/7/29 | | | 20,000 | | | | 22,988 | |
| | | | | | | | |
| | | | | | | 137,419 | |
| | | | | | | | |
Total Health Care | | | | | | | 685,690 | |
| | | | | | | | |
Industrials (1.7%) | | | | | | | | |
Aerospace & Defense (0.2%) | |
Bombardier, Inc. | | | | | | | | |
6.000%, 10/15/22§ | | | 30,000 | | | | 22,500 | |
TransDigm, Inc. | | | | | | | | |
8.000%, 12/15/25§ | | | 5,000 | | | | 5,200 | |
6.250%, 3/15/26§ | | | 55,000 | | | | 53,975 | |
6.375%, 6/15/26 | | | 15,000 | | | | 12,900 | |
5.500%, 11/15/27§ | | | 30,000 | | | | 25,256 | |
Triumph Group, Inc. | | | | | | | | |
7.750%, 8/15/25 | | | 15,000 | | | | 9,694 | |
| | | | | | | | |
| | | | | | | 129,525 | |
| | | | | | | | |
Airlines (0.2%) | |
Delta Air Lines, Inc. | | | | | | | | |
3.625%, 3/15/22 | | | 115,000 | | | | 102,566 | |
| | | | | | | | |
Building Products (0.2%) | |
Builders FirstSource, Inc. | | | | | | | | |
6.750%, 6/1/27§ | | | 30,000 | | | | 30,975 | |
5.000%, 3/1/30§ | | | 20,000 | | | | 17,250 | |
Griffon Corp. | | | | | | | | |
5.750%, 3/1/28 | | | 25,000 | | | | 23,813 | |
Owens Corning | | | | | | | | |
4.400%, 1/30/48 | | | 70,000 | | | | 66,034 | |
| | | | | | | | |
| | | | | | | 138,072 | |
| | | | | | | | |
Commercial Services & Supplies (0.4%) | |
Allied Universal Holdco LLC | | | | | | | | |
6.625%, 7/15/26§ | | | 30,000 | | | | 30,975 | |
9.750%, 7/15/27§ | | | 30,000 | | | | 30,600 | |
Aramark Services, Inc. | | | | | | | | |
6.375%, 5/1/25§ | | | 45,000 | | | | 46,800 | |
Garda World Security Corp. | | | | | | | | |
8.750%, 5/15/25§ | | | 35,000 | | | | 35,394 | |
GFL Environmental, Inc. | | | | | | | | |
4.250%, 6/1/25§ | | | 25,000 | | | | 25,125 | |
5.125%, 12/15/26§ | | | 35,000 | | | | 36,400 | |
8.500%, 5/1/27§ | | | 12,000 | | | | 12,960 | |
| | | | | | | | |
| | | | | | | 218,254 | |
| | | | | | | | |
Construction & Engineering (0.1%) | |
AECOM | | | | | | | | |
5.125%, 3/15/27 | | | 45,000 | | | | 45,703 | |
| | | | | | | | |
Industrial Conglomerates (0.0%) | |
General Electric Co. | | | | | | | | |
5.875%, 1/14/38 | | | 25,000 | | | | 28,306 | |
| | | | | | | | |
Road & Rail (0.3%) | |
Burlington Northern Santa Fe LLC | | | | | | | | |
3.050%, 2/15/51 | | | 35,000 | | | | 36,747 | |
CSX Corp. | | | | | | | | |
3.800%, 11/1/46 | | | 55,000 | | | | 61,815 | |
Kenan Advantage Group, Inc. (The) | | | | | | | | |
7.875%, 7/31/23§ | | | 5,000 | | | | 4,183 | |
Penske Truck Leasing Co. LP | | | | | | | | |
4.200%, 4/1/27§ | | | 55,000 | | | | 59,560 | |
Uber Technologies, Inc. | | | | | | | | |
7.500%, 9/15/27§ | | | 25,000 | | | | 25,502 | |
| | | | | | | | |
| | | | | | | 187,807 | |
| | | | | | | | |
Trading Companies & Distributors (0.3%) | |
Air Lease Corp. | | | | | | | | |
3.250%, 3/1/25 | | | 115,000 | | | | 103,320 | |
Beacon Roofing Supply, Inc. | | | | | | | | |
4.875%, 11/1/25§ | | | 45,000 | | | | 39,584 | |
United Rentals North America, Inc. | | | | | | | | |
6.500%, 12/15/26 | | | 20,000 | | | | 20,650 | |
5.250%, 1/15/30 | | | 25,000 | | | | 24,875 | |
| | | | | | | | |
| | | | | | | 188,429 | |
| | | | | | | | |
Total Industrials | | | | | | | 1,038,662 | |
| | | | | | | | |
See Notes to Financial Statements.
36
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Information Technology (0.6%) | | | | | | | | |
IT Services (0.2%) | |
DXC Technology Co. | | | | | | | | |
4.000%, 4/15/23 | | $ | 15,000 | | | $ | 15,037 | |
4.125%, 4/15/25 | | | 30,000 | | | | 30,238 | |
GTT Communications, Inc. | | | | | | | | |
7.875%, 12/31/24§ | | | 20,000 | | | | 11,975 | |
Tempo Acquisition LLC | | | | | | | | |
6.750%, 6/1/25§ | | | 45,000 | | | | 43,438 | |
| | | | | | | | |
| | | | | | | 100,688 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (0.1%) | |
NXP BV | | | | | | | | |
3.875%, 6/18/26§ | | | 60,000 | | | | 61,984 | |
| | | | | | | | |
Software (0.1%) | |
CDK Global, Inc. | | | | | | | | |
5.250%, 5/15/29§ | | | 10,000 | | | | 10,200 | |
Genesys Telecommunications Laboratories, Inc. | |
10.000%, 11/30/24§ | | | 40,000 | | | | 42,100 | |
Oracle Corp. | | | | | | | | |
3.600%, 4/1/50 | | | 35,000 | | | | 39,542 | |
| | | | | | | | |
| | | | | | | 91,842 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.2%) | |
Apple, Inc. | | | | | | | | |
4.650%, 2/23/46 | | | 75,000 | | | | 100,833 | |
| | | | | | | | |
Total Information Technology | | | | | | | 355,347 | |
| | | | | | | | |
Materials (0.5%) | | | | | | | | |
Chemicals (0.1%) | |
Gates Global LLC | | | | | | | | |
6.250%, 1/15/26§ | | | 15,000 | | | | 13,652 | |
Nutrien Ltd. | | | | | | | | |
4.200%, 4/1/29 | | | 60,000 | | | | 65,862 | |
| | | | | | | | |
| | | | | | | 79,514 | |
| | | | | | | | |
Containers & Packaging (0.3%) | |
Flex Acquisition Co., Inc. | | | | | | | | |
6.875%, 1/15/25§ | | | 40,000 | | | | 38,763 | |
Packaging Corp. of America | | | | | | | | |
3.000%, 12/15/29 | | | 40,000 | | | | 41,419 | |
Silgan Holdings, Inc. | | | | | | | | |
4.125%, 2/1/28§ | | | 30,000 | | | | 29,550 | |
WRKCo, Inc. | | | | | | | | |
3.750%, 3/15/25 | | | 50,000 | | | | 52,593 | |
| | | | | | | | |
| | | | | | | 162,325 | |
| | | | | | | | |
Metals & Mining (0.1%) | | | | | | | | |
Arconic Corp. | | | | | | | | |
6.125%, 2/15/28§ | | | 35,000 | | | | 33,075 | |
Novelis Corp. | | | | | | | | |
4.750%, 1/30/30§ | | | 15,000 | | | | 13,237 | |
SunCoke Energy Partners LP | | | | | | | | |
7.500%, 6/15/25§ | | | 30,000 | | | | 23,063 | |
| | | | | | | | |
| | | | | | | 69,375 | |
| | | | | | | | |
Total Materials | | | | | | | 311,214 | |
| | | | | | | | |
Real Estate (0.9%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.9%) | |
Alexandria Real Estate Equities, Inc. (REIT) | | | | | | | | |
4.000%, 1/15/24 | | | 110,000 | | | | 115,894 | |
4.850%, 4/15/49 | | | 25,000 | | | | 31,752 | |
American Tower Corp. (REIT) | | | | | | | | |
3.950%, 3/15/29 | | | 55,000 | | | | 61,614 | |
Crown Castle International Corp. (REIT) | | | | | | | | |
3.650%, 9/1/27 | | | 50,000 | | | | 54,212 | |
ESH Hospitality, Inc. (REIT) | | | | | | | | |
5.250%, 5/1/25§ | | | 35,000 | | | | 32,812 | |
MPT Operating Partnership LP (REIT) | | | | | | | | |
5.250%, 8/1/26 | | | 45,000 | | | | 45,394 | |
National Retail Properties, Inc. (REIT) | | | | | | | | |
2.500%, 4/15/30 | | | 25,000 | | | | 21,915 | |
Public Storage (REIT) | | | | | | | | |
3.385%, 5/1/29 | | | 50,000 | | | | 53,804 | |
VICI Properties LP (REIT) | | | | | | | | |
3.750%, 2/15/27§ | | | 5,000 | | | | 4,650 | |
4.125%, 8/15/30§ | | | 15,000 | | | | 13,650 | |
Welltower, Inc. (REIT) | | | | | | | | |
3.950%, 9/1/23 | | | 115,000 | | | | 117,391 | |
| | | | | | | | |
| | | | | | | 553,088 | |
| | | | | | | | |
Total Real Estate | | | | | | | 553,088 | |
| | | | | | | | |
Utilities (0.5%) | | | | | | | | |
Electric Utilities (0.3%) | | | | | | | | |
Georgia Power Co. | | | | | | | | |
Series A | | | | | | | | |
2.200%, 9/15/24 | | | 60,000 | | | | 62,066 | |
Monongahela Power Co. | | | | | | | | |
5.400%, 12/15/43§ | | | 140,000 | | | | 95,809 | |
| | | | | | | | |
| | | | | | | 157,875 | |
| | | | | | | | |
Gas Utilities (0.1%) | | | | | | | | |
Brooklyn Union Gas Co. (The) | | | | | | | | |
4.487%, 3/4/49§ | | | 50,000 | | | | 61,303 | |
| | | | | | | | |
Independent Power and Renewable Electricity Producers (0.0%) | |
Calpine Corp. | | | | | | | | |
5.125%, 3/15/28§ | | | 25,000 | | | | 24,375 | |
| | | | | | | | |
Water Utilities (0.1%) | | | | | | | | |
Essential Utilities, Inc. | | | | | | | | |
2.704%, 4/15/30 | | | 45,000 | | | | 46,238 | |
| | | | | | | | |
Total Utilities | | | | | | | 289,791 | |
| | | | | | | | |
Total Corporate Bonds | | | | | | | 7,684,496 | |
| | | | | | | | |
U.S. Treasury Obligations (8.7%) | | | | | | | | |
U.S. Treasury Bonds | | | | | | | | |
3.125%, 2/15/43 (t) | | | 220,000 | | | | 303,261 | |
3.625%, 8/15/43 (t) | | | 170,000 | | | | 252,603 | |
3.750%, 11/15/43 (t) | | | 120,000 | | | | 181,885 | |
2.000%, 2/15/50 (t) | | | 260,000 | | | | 306,892 | |
U.S. Treasury Inflation Linked Notes | | | | | | | | |
0.125%, 10/15/24 TIPS | | | 50,412 | | | | 51,550 | |
U.S. Treasury Notes | | | | | | | | |
0.125%, 4/30/22 | | | 600,000 | | | | 599,255 | |
0.250%, 4/15/23 | | | 680,000 | | | | 680,252 | |
1.625%, 5/31/23 | | | 100,000 | | | | 104,183 | |
2.125%, 9/30/24 | | | 190,000 | | | | 204,885 | |
2.250%, 10/31/24 (t) | | | 340,000 | | | | 368,941 | |
2.750%, 2/28/25 | | | 210,000 | | | | 234,091 | |
0.375%, 4/30/25 | | | 170,000 | | | | 170,251 | |
3.000%, 9/30/25 | | | 330,000 | | | | 375,746 | |
2.250%, 3/31/26 | | | 150,000 | | | | 165,713 | |
See Notes to Financial Statements.
37
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
1.625%, 10/31/26 | | $ | 330,000 | | | $ | 353,821 | |
0.500%, 4/30/27 | | | 340,000 | | | | 339,612 | |
2.250%, 11/15/27 | | | 230,000 | | | | 259,113 | |
1.500%, 2/15/30 (t) | | | 230,000 | | | | 249,084 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 5,201,138 | |
| | | | | | | | |
Total Long-Term Debt Securities (33.5%)
(Cost $20,073,028) | | | | | | | 20,041,846 | |
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
COMMON STOCKS: | | | | | | | | |
Communication Services (3.3%) | | | | | | | | |
Interactive Media & Services (3.3%) | |
Alphabet, Inc., Class A* | | | 773 | | | | 1,040,999 | |
Facebook, Inc., Class A* | | | 4,441 | | | | 909,117 | |
| | | | | | | | |
| | | | | | | 1,950,116 | |
| | | | | | | | |
Total Communication Services | | | | | | | 1,950,116 | |
| | | | | | | | |
Consumer Discretionary (3.9%) | | | | | | | | |
Internet & Direct Marketing Retail (2.8%) | |
Amazon.com, Inc.* | | | 534 | | | | 1,321,116 | |
Booking Holdings, Inc.* | | | 228 | | | | 337,570 | |
| | | | | | | | |
| | | | | | | 1,658,686 | |
| | | | | | | | |
Multiline Retail (1.1%) | | | | | | | | |
Dollar General Corp. | | | 2,305 | | | | 404,066 | |
Target Corp. | | | 2,382 | | | | 261,401 | |
| | | | | | | | |
| | | | | | | 665,467 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 2,324,153 | |
| | | | | | | | |
Consumer Staples (2.0%) | | | | | | | | |
Beverages (0.8%) | | | | | | | | |
Constellation Brands, Inc., Class A | | | 2,846 | | | | 468,708 | |
| | | | | | | | |
Food & Staples Retailing (0.6%) | | | | | | | | |
Sysco Corp. | | | 3,554 | | | | 199,984 | |
Walmart, Inc. | | | 1,544 | | | | 187,673 | |
| | | | | | | | |
| | | | | | | 387,657 | |
| | | | | | | | |
Tobacco (0.6%) | | | | | | | | |
Philip Morris International, Inc. | | | 4,690 | | | | 349,874 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 1,206,239 | |
| | | | | | | | |
Energy (0.8%) | | | | | | | | |
Oil, Gas & Consumable Fuels (0.8%) | | | | | |
Exxon Mobil Corp. | | | 7,396 | | | | 343,692 | |
Pioneer Natural Resources Co. | | | 1,689 | | | | 150,845 | |
| | | | | | | | |
| | | | | | | 494,537 | |
| | | | | | | | |
Total Energy | | | | | | | 494,537 | |
| | | | | | | | |
Financials (2.9%) | |
Banks (1.1%) | |
Citigroup, Inc. | | | 8,824 | | | | 428,493 | |
First Republic Bank | | | 2,345 | | | | 244,560 | |
| | | | | | | | |
| | | | | | | 673,053 | |
| | | | | | | | |
Capital Markets (0.9%) | |
Charles Schwab Corp. (The) | | | 5,973 | | | | 225,302 | |
Intercontinental Exchange, Inc. | | | 3,570 | | | | 319,336 | |
| | | | | | | | |
| | | | | | | 544,638 | |
| | | | | | | | |
Insurance (0.9%) | |
Aflac, Inc. | | | 6,946 | | | | 258,669 | |
Willis Towers Watson plc | | | 1,334 | | | | 237,839 | |
| | | | | | | | |
| | | | | | | 496,508 | |
| | | | | | | | |
Total Financials | | | | | | | 1,714,199 | |
| | | | | | | | |
Health Care (5.0%) | | | | | | | | |
Biotechnology (0.5%) | |
BioMarin Pharmaceutical, Inc.* | | | 1,921 | | | | 176,770 | |
Vertex Pharmaceuticals, Inc.* | | | 530 | | | | 133,136 | |
| | | | | | | | |
| | | | | | | 309,906 | |
| | | | | | | | |
Health Care Equipment & Supplies (1.2%) | |
Alcon, Inc.* | | | 4,594 | | | | 242,609 | |
Boston Scientific Corp.* | | | 12,939 | | | | 484,954 | |
| | | | | | | | |
| | | | | | | 727,563 | |
| | | | | | | | |
Health Care Providers & Services (1.7%) | |
Anthem, Inc. | | | 1,547 | | | | 434,289 | |
UnitedHealth Group, Inc. | | | 2,038 | | | | 596,054 | |
| | | | | | | | |
| | | | | | | 1,030,343 | |
| | | | | | | | |
Pharmaceuticals (1.6%) | |
AstraZeneca plc (ADR) | | | 8,557 | | | | 447,360 | |
Roche Holding AG (ADR) | | | 7,121 | | | | 309,550 | |
Zoetis, Inc. | | | 1,512 | | | | 195,517 | |
| | | | | | | | |
| | | | | | | 952,427 | |
| | | | | | | | |
Total Health Care | | | | | | | 3,020,239 | |
| | | | | | | | |
Industrials (2.5%) | | | | | | | | |
Aerospace & Defense (0.9%) | |
Boeing Co. (The) | | | 1,207 | | | | 170,211 | |
Lockheed Martin Corp. | | | 899 | | | | 349,765 | |
| | | | | | | | |
| | | | | | | 519,976 | |
| | | | | | | | |
Electrical Equipment (0.5%) | | | | | | | | |
AMETEK, Inc. | | | 3,644 | | | | 305,622 | |
| | | | | | | | |
Industrial Conglomerates (0.7%) | |
General Electric Co. | | | 16,825 | | | | 114,410 | |
Honeywell International, Inc. | | | 2,315 | | | | 328,499 | |
| | | | | | | | |
| | | | | | | 442,909 | |
| | | | | | | | |
Machinery (0.4%) | |
Parker-Hannifin Corp. | | | 1,309 | | | | 206,979 | |
| | | | | | | | |
Total Industrials | | | | | | | 1,475,486 | |
| | | | | | | | |
Information Technology (9.3%) | | | | | | | | |
Electronic Equipment, Instruments & Components (0.4%) | |
Corning, Inc. | | | 12,163 | | | | 267,708 | |
| | | | | | | | |
IT Services (1.8%) | |
PayPal Holdings, Inc.* | | | 3,881 | | | | 477,363 | |
Visa, Inc., Class A | | | 3,312 | | | | 591,921 | |
| | | | | | | | |
| | | | | | | 1,069,284 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (1.3%) | |
Analog Devices, Inc. | | | 3,459 | | | | 379,106 | |
Lam Research Corp. | | | 1,450 | | | | 370,156 | |
| | | | | | | | |
| | | | | | | 749,262 | |
| | | | | | | | |
See Notes to Financial Statements.
38
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Software (4.2%) | |
Adobe, Inc.* | | | 1,624 | | | $ | 574,311 | |
Microsoft Corp. | | | 8,917 | | | | 1,598,016 | |
Splunk, Inc.* | | | 2,611 | | | | 366,480 | |
| | | | | | | | |
| | | | | | | 2,538,807 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.6%) | |
Apple, Inc. | | | 3,259 | | | | 957,494 | |
| | | | | | | | |
Total Information Technology | | | | | | | 5,582,555 | |
| | | | | | | | |
Real Estate (0.9%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.9%) | |
American Tower Corp. (REIT) | | | 2,344 | | | | 557,872 | |
| | | | | | | | |
Total Real Estate | | | | | | | 557,872 | |
| | | | | | | | |
Total Common Stocks (30.6%)
(Cost $15,135,494) | | | | | | | 18,325,396 | |
| | | | | | | | |
INVESTMENT COMPANIES: | | | | | | | | |
Fixed Income (5.6%) | | | | | | | | |
DoubleLine Floating Rate Fund, Class I‡ | | | 157,150 | | | | 1,373,494 | |
DoubleLine Global Bond Fund, Class I‡ | | | 188,301 | | | | 1,937,612 | |
| | | | | | | | |
Total Investment Companies (5.6%)
(Cost $3,436,700) | | | | | | | 3,311,106 | |
| | | | | | | | |
SHORT-TERM INVESTMENTS: | | | | | | | | |
Investment Company (3.1%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 1,830,553 | | | | 1,832,017 | |
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
U.S. Treasury Obligations (17.5%) | | | | | | | | |
U.S. Treasury Bills | | | | | | | | |
0.09%, 5/21/20 (p) | | $ | 5,500,000 | | | | 5,499,711 | |
0.19%, 9/8/20 (p) | | | 5,000,000 | | | | 4,996,489 | |
| | | | | | | | |
Total U.S. Treasury Obligations | | | | | | | 10,496,200 | |
| | | | | | | | |
Total Short-Term Investments (20.6%)
(Cost $12,321,822) | | | | | | | 12,328,217 | |
| | | | | | | | |
Total Investments in Securities (90.3%)
(Cost $50,967,044) | | | | | | | 54,006,565 | |
Other Assets Less Liabilities (9.7%) | | | | | | | 5,823,696 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 59,830,261 | |
| | | | | | | | |
| ‡ | 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, 2020, the market value of these securities amounted to $4,635,376 or 7.7% of net assets. Securities denoted with “§” but without “b” have been determined to be liquid under the guidelines established by the Board of Trustees. To the extent any securities might provide a right to demand registration, such rights have not been relied upon when determining liquidity. |
| (e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2020. Maturity date disclosed is the ultimate maturity date. |
| (h) | Defaulted security. A security is classified as defaulted if the issuer files for bankruptcy or fails to make a scheduled interest or principal payment within the grace period set forth in the security’s governing documents. |
| (k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2020. |
| (l) | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown was the current rate as of April 30, 2020. |
| (t) | All, or a portion of security held by broker as collateral for OTC Swap contracts, with a total collateral value of $373,481. |
Glossary:
| | ADR | — American Depositary Receipt |
| | CAPE | — Cyclically Adjusted Price Earnings |
| | FHLMC | — Federal Home Loan Mortgage Corp. |
| | FNMA | — Federal National Mortgage Association |
| | ICE | — Intercontinental Exchange |
| | LIBOR | — London Interbank Offered Rate |
| | TIPS | — Treasury Inflation Protected Security |
| | USD | — United States Dollar |
See Notes to Financial Statements.
39
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
Investments in companies which were affiliates for the six months ended April 30, 2020, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Security Description | | Shares at
April 30,
2020 | | | Market Value
October 31,
2019 ($) | | | Purchases
at Cost ($) | | | Proceeds
from
Sales ($) | | | Net
Realized
Gain
(Loss) ($) | | | Change
in Unrealized
Appreciation/
(Depreciation)
($) | | | Market Value
April 30,
2020 ($) | | | Dividend/
Interest
Income
($) | | | Capital Gain
Distributions
($) | |
INVESTMENT COMPANIES: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Fixed Income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
DoubleLine Floating Rate Fund, Class I | | | 157,150 | | | | 1,682,018 | | | | 500,000 | | | | (600,000 | ) | | | (110,658 | ) | | | (97,866 | ) | | | 1,373,494 | | | | 36,827 | | | | — | |
DoubleLine Global Bond Fund, Class I | | | 188,301 | | | | 2,383,588 | | | | 400,000 | | | | (800,000 | ) | | | (20,388 | ) | | | (25,588 | ) | | | 1,937,612 | | | | 8,090 | | | | 123 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | 4,065,606 | | | | 900,000 | | | | (1,400,000 | ) | | | (131,046 | ) | | | (123,454 | ) | | | 3,311,106 | | | | 44,917 | | | | 123 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
OTC Total return swap contracts outstanding as of April 30, 2020 (Note 1):
| | | | | | | | | | | | | | | | | | | | |
| | |
Reference Entity | | Payments Made
by Fund | | Payments Received
by Fund | | Frequency of
Payments
Made/Received | | Counterparty | | Maturity
Date | | | Notional
Amount | | | Value and
Unrealized
Appreciation
(Depreciation)
($) | |
Shiller Barclays CAPE US Sector II ER USD Index | | 0.40% and decrease in total return of index | | Increase in total return of index | | At maturity | | Barclays Bank plc | | | 5/11/2020 | | | | USD 4,200,000 | | | | 222,273 | |
Shiller Barclays CAPE US Sector II ER USD Index | | 0.40% and decrease in total return of index | | Increase in total return of index | | At maturity | | Barclays Bank plc | | | 6/22/2020 | | | | USD 6,599,997 | | | | (244,326 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | (22,053 | ) |
| | | | | | | | | | | | | | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | |
Asset-Backed Securities | | $ | — | | | $ | 1,490,991 | | | $ | — | | | $ | 1,490,991 | |
Collateralized Mortgage Obligations | | | — | | | | 5,665,221 | | | | — | | | | 5,665,221 | |
Common Stocks | | | | | | | | |
Communication Services | | | 1,950,116 | | | | — | | | | — | | | | 1,950,116 | |
Consumer Discretionary | | | 2,324,153 | | | | — | | | | — | | | | 2,324,153 | |
Consumer Staples | | | 1,206,239 | | | | — | | | | — | | | | 1,206,239 | |
Energy | | | 494,537 | | | | — | | | | — | | | | 494,537 | |
Financials | | | 1,714,199 | | | | — | | | | — | | | | 1,714,199 | |
Health Care | | | 3,020,239 | | | | — | | | | — | | | | 3,020,239 | |
Industrials | | | 1,475,486 | | | | — | | | | — | | | | 1,475,486 | |
Information Technology | | | 5,582,555 | | | | — | | | | — | | | | 5,582,555 | |
Real Estate | | | 557,872 | | | | — | | | | — | | | | 557,872 | |
See Notes to Financial Statements.
40
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Corporate Bonds | | | | | | | | |
Communication Services | | $ | — | | | $ | 862,733 | | | $ | — | | | $ | 862,733 | |
Consumer Discretionary | | | — | | | | 795,273 | | | | — | | | | 795,273 | |
Consumer Staples | | | — | | | | 386,876 | | | | — | | | | 386,876 | |
Energy | | | — | | | | 781,195 | | | | — | | | | 781,195 | |
Financials | | | — | | | | 1,624,627 | | | | — | | | | 1,624,627 | |
Health Care | | | — | | | | 685,690 | | | | — | | | | 685,690 | |
Industrials | | | — | | | | 1,038,662 | | | | — | | | | 1,038,662 | |
Information Technology | | | — | | | | 355,347 | | | | — | | | | 355,347 | |
Materials | | | — | | | | 311,214 | | | | — | | | | 311,214 | |
Real Estate | | | — | | | | 553,088 | | | | — | | | | 553,088 | |
Utilities | | | — | | | | 289,791 | | | | — | | | | 289,791 | |
Investment Companies | | | 3,311,106 | | | | — | | | | — | | | | 3,311,106 | |
Short-Term Investments | | | | | | | | |
Investment Company | | | 1,832,017 | | | | — | | | | — | | | | 1,832,017 | |
U.S. Treasury Obligations | | | — | | | | 10,496,200 | | | | — | | | | 10,496,200 | |
Total Return Swaps | | | — | | | | 222,273 | | | | — | | | | 222,273 | |
U.S. Treasury Obligations | | | — | | | | 5,201,138 | | | | — | | | | 5,201,138 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 23,468,519 | | | $ | 30,760,319 | | | $ | — | | | $ | 54,228,838 | |
| | | | | | | | | | | | | | | | |
| | | | |
Liabilities: | | | | | | | | | | | | | | | | |
Total Return Swaps | | $ | — | | | $ | (244,326 | ) | | $ | — | | | $ | (244,326 | ) |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | (244,326 | ) | | $ | — | | | $ | (244,326 | ) |
| | | | | | | | | | | | | | | | |
Total | | $ | 23,468,519 | | | $ | 30,515,993 | | | $ | — | | | $ | 53,984,512 | |
| | | | | | | | | | | | | | | | |
Fair Values of Derivative Instruments as of April 30, 2020:
| | | | | | |
| | | Statement of Assets and Liabilities | |
Derivatives Contracts^ | | Asset Derivatives | | Fair Value | |
Equity contracts | | Receivables, Net assets –
Unrealized appreciation | | $ | 222,273 | |
| | | | | | |
Total | | | | $ | 222,273 | |
| | | | | | |
| | |
| | | Liability Derivatives | | | |
Equity contracts | | Payables, Net assets –
Unrealized depreciation | | $ | (244,326 | ) |
| | | | | | |
Total | | | | $ | (244,326 | ) |
| | | | | | |
The Effect of Derivative Instruments on the Statement of Operations for the six months ended April 30, 2020:
| | | | | | | | |
| Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | |
Derivatives Contracts^ | | Swaps | | | Total | |
Equity contracts | | $ | 470,065 | | | $ | 470,065 | |
| | | | | | | | |
Total | | $ | 470,065 | | | $ | 470,065 | |
| | | | | | | | |
| | | | | | | | |
See Notes to Financial Statements.
41
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| Amount of Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |
Derivatives Contracts^ | | Swaps | | | Total | |
Equity contracts | | $ | (538,448 | ) | | $ | (538,448 | ) |
| | | | | | | | |
Total | | $ | (538,448 | ) | | $ | (538,448 | ) |
| | | | | | | | |
^ The Fund held swaps contracts as a substitute for investing in conventional securities.
The Fund held swap contracts with an average notional value of approximately $11,357,000 during the six months ended April 30, 2020.
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, 2020:
| | | | | | | | | | | | | | | | |
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 | | $ | 222,273 | | | $ | (222,273 | ) | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 222,273 | | | $ | (222,273 | ) | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
| | | | |
Counterparty | | Gross Amount of
Derivative Liabilities
Presented in the
Statement of Assets
and Liabilities (a) | | | Derivatives
Available
for Offset | | | Collateral
Pledged* | | | Net Amount
Due to
Counterparty | |
Barclays Bank plc | | $ | 244,326 | | | $ | (222,273 | ) | | $ | (22,053 | ) | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 244,326 | | | $ | (222,273 | ) | | $ | (22,053 | ) | | $ | — | |
| | | | | | | | | | | | | | | | |
| * | The table above does not include the additional collateral pledged to the counterparty. Total additional collateral pledged is $351,428. |
| (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, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 13,610,720 | |
Long-term U.S. government debt securities | | | 7,170,651 | |
| | | | |
| | $ | 20,781,371 | |
| | | | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 17,673,887 | |
Long-term U.S. government debt securities | | | 9,296,258 | |
| | | | |
| | $ | 26,970,145 | |
| | | | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 4,510,342 | |
Aggregate gross unrealized depreciation | | | (1,550,457 | ) |
| | | | |
Net unrealized appreciation | | $ | 2,959,885 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 51,024,627 | |
| | | | |
See Notes to Financial Statements.
42
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | | | | |
Investments in Securities, at value: | | | | |
Affiliated Issuers (Cost $3,436,700) | | $ | 3,311,106 | |
Unaffiliated Issuers (Cost $47,530,344) | | | 50,695,459 | |
Cash | | | 2,816,369 | |
Receivable for securities sold | | | 4,253,956 | |
Market value on OTC swap contracts | | | 222,273 | |
Dividends, interest and other receivables | | | 126,797 | |
Prepaid registration and filing fees | | | 29,493 | |
Receivable for Fund shares sold | | | 45 | |
Receivable from sub-advisor | | | 33 | |
| | | | |
Total assets | | | 61,455,531 | |
| | | | |
LIABILITIES | | | | |
Payable for securities purchased | | | 1,287,441 | |
Market value on OTC swap contracts | | | 244,326 | |
Investment advisory fees payable | | | 11,421 | |
Administrative fees payable | | | 7,055 | |
Transfer agent fees payable | | | 2,044 | |
Distribution fees payable – Class A | | | 629 | |
Trustees’ fees payable | | | 106 | |
Distribution fees payable – Class R | | | 64 | |
Accrued expenses | | | 72,184 | |
| | | | |
Total liabilities | | | 1,625,270 | |
| | | | |
NET ASSETS | | $ | 59,830,261 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 56,992,675 | |
Total distributable earnings (loss) | | | 2,837,586 | |
| | | | |
Net assets | | $ | 59,830,261 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $3,201,308 / 302,205 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.59 | |
Maximum sales charge (5.50% of offering price) | | | 0.62 | |
| | | | |
Maximum offering price per share | | $ | 11.21 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $56,465,288 / 5,325,054 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.60 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $163,665 / 15,462 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.58 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Interest | | $ | 582,471 | |
Dividends ($44,917 of dividend income received from affiliates) | | | 182,785 | |
| | | | |
Total income | | | 765,256 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 227,012 | |
Professional fees | | | 57,694 | |
Administrative fees | | | 45,403 | |
Printing and mailing expenses | | | 25,369 | |
Registration and filing fees | | | 19,178 | |
Transfer agent fees | | | 19,170 | |
Custodian fees | | | 8,899 | |
Distribution fees – Class A | | | 3,622 | |
Trustees’ fees | | | 2,338 | |
Distribution fees – Class R | | | 410 | |
Miscellaneous | | | 14,979 | |
| | | | |
Gross expenses | | | 424,074 | |
Less: Voluntary waiver from investment adviser | | | (11,566 | ) |
Waiver from investment adviser | | | (134,746 | ) |
| | | | |
Net expenses | | | 277,762 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 487,494 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments in securities ($(131,046) of realized gain (loss) from affiliates) | | | (901,366 | ) |
Net distributions of realized gain received from underlying funds (All realized gains received from affiliates) | | | 123 | |
Swaps | | | 470,065 | |
| | | | |
Net realized gain (loss) | | | (431,178 | ) |
| | | | |
Change in unrealized appreciation (depreciation) on: | | | | |
Investments in securities ($(123,454) of change in unrealized appreciation (depreciation) from affiliates) | | | 191,902 | |
Swaps | | | (538,448 | ) |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (346,546 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (777,724 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (290,230 | ) |
| | | | |
See Notes to Financial Statements.
43
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 487,494 | | | $ | 1,147,151 | |
Net realized gain (loss) | | | (431,178 | ) | | | 2,234,610 | |
Net change in unrealized appreciation (depreciation) | | | (346,546 | ) | | | 2,741,136 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (290,230 | ) | | | 6,122,897 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (113,973 | ) | | | (83,828 | ) |
Class I | | | (3,268,817 | ) | | | (2,637,668 | ) |
Class R | | | (8,405 | ) | | | (6,450 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (3,391,195 | ) | | | (2,727,946 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 211,048 and 55,587 shares, respectively ] | | | 2,298,761 | | | | 596,061 | |
Capital shares issued in reinvestment of dividends [ 9,946 and 7,863 shares, respectively ] | | | 108,112 | | | | 79,177 | |
Capital shares repurchased [ (104,146) and (108,047) shares, respectively ] | | | (1,126,991 | ) | | | (1,145,133 | ) |
| | | | | | | | |
Total Class A transactions | | | 1,279,882 | | | | (469,895 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 43,989 and 54,826 shares, respectively ] | | | 467,107 | | | | 587,053 | |
Capital shares issued in reinvestment of dividends [ 19,730 and 18,482 shares, respectively ] | | | 214,461 | | | | 186,113 | |
Capital shares repurchased [ (70,365) and (113,792) shares, respectively ] | | | (701,466 | ) | | | (1,175,255 | ) |
| | | | | | | | |
Total Class I transactions | | | (19,898 | ) | | | (402,089 | ) |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 184 and 145 shares, respectively ] | | | 1,948 | | | | 1,462 | |
Capital shares issued in reinvestment of dividends [ 258 and 205 shares, respectively ] | | | 2,814 | | | | 2,068 | |
Capital shares repurchased [ (6) and (17) shares, respectively ] | | | (70 | ) | | | (181 | ) |
| | | | | | | | |
Total Class R transactions | | | 4,692 | | | | 3,349 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 1,264,676 | | | | (868,635 | ) |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (2,416,749 | ) | | | 2,526,316 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 62,247,010 | | | | 59,720,694 | |
| | | | | | | | |
End of period | | $ | 59,830,261 | | | $ | 62,247,010 | |
| | | | | | | | |
See Notes to Financial Statements.
44
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | March 7, 2016* to
October 31, 2016 | |
| Class A | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 11.23 | | | $ | 10.61 | | | $ | 11.25 | | | $ | 10.53 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.07 | | | | 0.18 | | | | 0.15 | | | | 0.11 | | | | 0.06 | |
Net realized and unrealized gain (loss) | | | (0.13 | ) | | | 0.91 | | | | (0.01 | ) | | | 0.87 | | | | 0.47 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.06 | ) | | | 1.09 | | | | 0.14 | | | | 0.98 | | | | 0.53 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.18 | ) | | | (0.17 | ) | | | (0.13 | ) | | | (0.09 | ) | | | — | |
Distributions from net realized gains | | | (0.40 | ) | | | (0.30 | ) | | | (0.65 | ) | | | (0.17 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.58 | ) | | | (0.47 | ) | | | (0.78 | ) | | | (0.26 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.59 | | | $ | 11.23 | | | $ | 10.61 | | | $ | 11.25 | | | $ | 10.53 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (0.61 | )% | | | 10.73 | % | | | 1.19 | % | | | 9.46 | % | | | 5.30 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 3,201 | | | $ | 2,081 | | | $ | 2,440 | | | $ | 1,271 | | | $ | 356 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 1.16 | %(j) | | | 1.15 | %(j) | | | 1.20 | %(k) | | | 1.21 | % | | | 1.22 | % |
Before waivers (a)(f) | | | 1.64 | % | | | 1.67 | % | | | 1.66 | % | | | 1.75 | % | | | 1.85 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f)(x) | | | 1.33 | % | | | 1.70 | % | | | 1.39 | % | | | 1.02 | % | | | 0.89 | %(l) |
Before waivers (a)(f)(x) | | | 0.85 | % | | | 1.19 | % | | | 0.93 | % | | | 0.48 | % | | | 0.26 | %(l) |
Portfolio turnover rate^ | | | 45 | %(z) | | | 63 | % | | | 79 | % | | | 86 | % | | | 56 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | March 7, 2016* to
October 31, 2016 | |
| Class I | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 11.25 | | | $ | 10.63 | | | $ | 11.27 | | | $ | 10.55 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.09 | | | | 0.21 | | | | 0.18 | | | | 0.14 | | | | 0.08 | |
Net realized and unrealized gain (loss) | | | (0.13 | ) | | | 0.91 | | | | (0.01 | ) | | | 0.86 | | | | 0.47 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.04 | ) | | | 1.12 | | | | 0.17 | | | | 1.00 | | | | 0.55 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.21 | ) | | | (0.20 | ) | | | (0.16 | ) | | | (0.11 | ) | | | — | |
Distributions from net realized gains | | | (0.40 | ) | | | (0.30 | ) | | | (0.65 | ) | | | (0.17 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.61 | ) | | | (0.50 | ) | | | (0.81 | ) | | | (0.28 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.60 | | | $ | 11.25 | | | $ | 10.63 | | | $ | 11.27 | | | $ | 10.55 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (0.46 | )% | | | 11.00 | % | | | 1.44 | % | | | 9.68 | % | | | 5.50 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 56,465 | | | $ | 59,997 | | | $ | 57,126 | | | $ | 59,101 | | | $ | 53,478 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 0.91 | %(j) | | | 0.90 | %(j) | | | 0.95 | %(k) | | | 0.96 | % | | | 0.97 | % |
Before waivers (a)(f) | | | 1.39 | % | | | 1.42 | % | | | 1.41 | % | | | 1.50 | % | | | 1.55 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f)(x) | | | 1.63 | % | | | 1.95 | % | | | 1.62 | % | | | 1.27 | % | | | 1.12 | %(l) |
Before waivers (a)(f)(x) | | | 1.14 | % | | | 1.43 | % | | | 1.16 | % | | | 0.72 | % | | | 0.55 | %(l) |
Portfolio turnover rate^ | | | 45 | %(z) | | | 63 | % | | | 79 | % | | | 86 | % | | | 56 | %(z) |
See Notes to Financial Statements.
45
1290 FUNDS
1290 DOUBLELINE DYNAMIC ALLOCATION FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | March 7, 2016* to
October 31, 2016 | |
| Class R | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 11.21 | | | $ | 10.59 | | | $ | 11.23 | | | $ | 10.52 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.06 | | | | 0.15 | | | | 0.12 | | | | 0.08 | | | | 0.04 | |
Net realized and unrealized gain (loss) | | | (0.13 | ) | | | 0.91 | | | | (0.01 | ) | | | 0.87 | | | | 0.48 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.07 | ) | | | 1.06 | | | | 0.11 | | | | 0.95 | | | | 0.52 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.16 | ) | | | (0.14 | ) | | | (0.10 | ) | | | (0.07 | ) | | | — | |
Distributions from net realized gains | | | (0.40 | ) | | | (0.30 | ) | | | (0.65 | ) | | | (0.17 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.56 | ) | | | (0.44 | ) | | | (0.75 | ) | | | (0.24 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.58 | | | $ | 11.21 | | | $ | 10.59 | | | $ | 11.23 | | | $ | 10.52 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (0.77 | )% | | | 10.46 | % | | | 0.93 | % | | | 9.15 | % | | | 5.20 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 164 | | | $ | 168 | | | $ | 156 | | | $ | 112 | | | $ | 105 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f) | | | 1.41 | %(j) | | | 1.40 | %(j) | | | 1.45 | %(k) | | | 1.46 | % | | | 1.47 | % |
Before waivers (a)(f) | | | 1.89 | % | | | 1.92 | % | | | 1.91 | % | | | 2.01 | % | | | 2.05 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers (a)(f)(x) | | | 1.13 | % | | | 1.44 | % | | | 1.13 | % | | | 0.77 | % | | | 0.62 | %(l) |
Before waivers (a)(f)(x) | | | 0.64 | % | | | 0.93 | % | | | 0.67 | % | | | 0.22 | % | | | 0.05 | %(l) |
Portfolio turnover rate^ | | | 45 | %(z) | | | 63 | % | | | 79 | % | | | 86 | % | | | 56 | %(z) |
| * | Commencement of Operations. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.20% for Class A, 0.95% for Class I and 1.45% for Class R. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.25% for Class A, 1.00% for Class I and 1.50% for Class R. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
46
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENT SUB-ADVISER
| Ø | | GAMCO Asset Management, Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | | |
| | | | | | 6
Months | | | 1
Year | | | 5
Year | | | Since
Incept. | |
Fund – Class A Shares* | |
| without Sales
Charge |
| | | (22.03 | )% | | | (26.01 | )% | | | 0.04 | % | | | 0.99 | % |
| | |
| with Sales
Charge (a) |
| | | (26.34 | ) | | | (30.06 | ) | | | (1.09 | ) | | | (0.05 | ) |
Fund – Class I Shares* | | | | | | | (22.03 | ) | | | (25.89 | ) | | | 0.28 | | | | 1.23 | |
Fund – Class R Shares* | | | | | | | (22.12 | ) | | | (26.23 | ) | | | (0.20 | ) | | | 0.75 | |
Fund – Class T Shares*† | |
| without Sales
Charge |
| | | (21.95 | ) | | | (25.87 | ) | | | 0.29 | | | | 1.25 | |
| | |
| with Sales
Charge (b) |
| | | (23.90 | ) | | | (27.73 | ) | | | (0.22 | ) | | | 0.77 | |
Russell 2500TMValue Index | | | | | | | (21.89 | ) | | | (21.90 | ) | | | 0.61 | | | | 0.96 | |
| | |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. (a)A 5.50% front-end sales charge was deducted. (b)A 2.50% front-end sales charge was deducted. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | | | | | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most current month-end performance data please call 1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I, R and T shares were 1.66%, 1.41%, 1.91% and 1.66%, respectively. The net expense ratios for Class A, I, R and T shares were 1.25%, 1.00%, 1.50% and 1.25%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — GAMCO Asset Management, Inc.
Having spent most of 2019 seemingly immune to bad news, global markets have been sickened by the novel Coronavirus (COVID-19). Few historical analogs exist to gauge the impact of a pandemic. Unlike an actor in a trade war, the virus does not negotiate. Other outbreaks such as SARS and MERS have been more limited in scope while economic shocks such as 9/11 and Hurricane Katrina have been more discrete in timing.
Ultimately, our framework for understanding how macroeconomic events impact individual securities remains the same: how does this series of events impact earnings near term and how will it impact the trajectory of earnings long term? The latter is commonly encompassed by an earnings multiple. While earnings this year will surely be lower, we don’t see anything to suggest that they should be capitalized at a lower rate.
Earnings estimates are in flux and the path of future growth is more fragile. If the disease is contained in the spring, companies may be able to provide broad guidance regarding their outlooks on first quarter earnings calls. An expanding crisis would obviously leave more of 2020 and even 2021 in doubt. In any case, we doubt many companies or analysts will possess great conviction in their forecasts, especially given the uncertainties of a COVID-19 re-emergence prior to a vaccine, the recent price war in oil and the U.S. election. All else being equal, that should weigh on multiples. However, all else is never equal and a sub 1.0% 10-year Treasury yield may support multiples and burnish the appeal of U.S. equities.
Like the virus, volatility is likely to remain with us. Volatility can lead to opportunity in areas where we can utilize our accumulated compounded knowledge of industries to buy/harvest companies where Mr. Market has become too pessimistic/optimistic relative to long-term fundamentals. Some companies will be disproportionately hurt by recent developments (travel, live entertainment) while some will be helped (select staples and health care companies), but both need to be viewed through the lens of valuation.
It is too early to tell whether current events lead to a shift in market leadership from growth/momentum to value. We began to see a deterioration in venture funding in late 2019, but that has been belied by the continued strong performance of certain technology darlings. Ultimately, we think a retrenchment of the markets will chasten some momentum investors while an economic downturn will underscore the importance of investing in companies with sustainable cash generation and adaptable managements.
U.S. stocks looked through coronavirus and economic driven gloom during April as unprecedented central bank easing and government fiscal policy stimulus
47
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
spurred the best monthly gain since January 1987 and the best April return since 1938. Despite the market’s recent momentum, we believe the earlier market decline and volatility due to the economic fallout from COVID-19 has laid the groundwork for investors to again focus on fundamental stock picking. Capital preservation is especially important in bear markets and we believe the market has offered bargains unseen since 2008.
Fund Highlights
We buy businesses we believe are selling at a discount to their Private Market Value (the price an informed industrialist would pay for the entire company), with a catalyst in place that could potentially surface values. Our philosophy and process focus on fundamental company research and individual stock selection. The Fund is significantly different than its benchmark index, and performance will often not closely track it.
The Fund was slightly ahead of its benchmark, the Russell 2500TM Value Index, for the six-month period ended April 30, 2020, as it returned -21.4% on a gross basis compared to -21.8% for the benchmark. The Fund’s lower weighting in financial and energy companies was among the strongest contributors to relative performance for the period, while its higher exposure to industrial and communication services companies was the primary relative detractor during the period.
Our holdings tend to be domestically focused with strong franchises and often pricing power. We have never been top-down allocators, trying to chase every trend. Rather, we rely on fundamental bottom-up research informed by our view of the shifting political and economic tides.
What helped performance during the six-month period ended April 30, 2020:
| • | | Virtual health care company Teladoc Health, Inc. was up more than 100% over this period as it has benefited from a sharp increase in visits in the context of the COVID-19 pandemic. |
| • | | We remain focused on companies trading at a discount to their intrinsic value with a catalyst in place to surface that value regardless of the broader market environment. Over the last six months, Legg Mason, Inc. (sold during the first quarter) was up more than 30% as Franklin Resources agreed to buy the company for $4.5 billion in cash. |
| • | | Several consumer staples companies, which often have consistent recurring cash flow and strong brands that can command premium pricing, have had strong performance over this period, helped in the current environment as consumers stock their pantries and continue to eat more at home. This includes companies with exposure to pet products and services like JM Smucker Co., which has a #1 market position in dog snacks and #2 in cat food and premium dog food as well as The Hain Celestial Group, Inc., one of the leading companies in the natural/organic space. |
| • | | The Fund’s underweighting in financial companies has been the largest relative contributor to performance so far this year as interest rates have plunged in the recent period. The Fund’s much lower weighting in energy also boosted performance during this period. Our investment philosophy leads us away from commodity-driven businesses, which results in a low absolute and relative exposure to energy as well as financial holdings to an extent, given their reliance on interest rates. |
What hurt performance during the six-month period ended April 30, 2020:
| • | | The Fund’s higher weighting in industrial companies was its largest detractor to relative performance over the period as the market weighed the impact of coronavirus on global supply chain disruptions and on cyclical businesses more heavily. Aerospace suppliers including Kaman Corp. and economically sensitive pump/valve companies including EnPro Industries, Inc. were especially hard hit. We believe the market has more than discounted the negatives ahead without regard for what an eventual recovery may look like, particularly for the high-quality companies we own in this portfolio. |
| • | | The Fund’s larger allocation to the communication services sector, which includes several companies focused on live entertainment, also hurt performance during the period. Madison Square Garden Sports is an example of a company focused on live entertainment and impacted by recent circumstances. The company has a strong balance sheet with more than $1 billion in net cash to weather the storm and a very compelling long-term valuation of its sports teams regardless of short-term disruptions in live events. The company reached a deal to sell its LA forum venue to Steve Ballmer for $400 million cash in March, at the higher end of our valuation range for the asset. The company also spun off of its entertainment business from its sports business as another catalyst which will help to surface value going forward. |
| • | | The Fund’s higher allocation to smaller capitalization companies (roughly twice the index weighting) hurt performance during this period as the broader market uncertainty had an outsized impact on smaller companies. The market volatility spurred by the coronavirus pandemic widened the valuation gap between small cap and large cap companies, which was already at a 15-year high prior to the beginning of 2020. A low interest rate environment has typically been a positive one for smaller companies. Federal |
48
1290 GAMCO SMALL/MID CAP VALUE FUND (Unaudited)
| | Reserve interest rate cuts have been more beneficial to small-caps than to mid and large-caps. Over the previous 12 Fed rate cuts, smaller cap companies have averaged stronger returns as compared to mid and large cap companies, during the first 3, 6 and 12 months following the first cut. |
| | | | |
| | |
Sector Weightings
as of April 30, 2020 | | % of
Net Assets | |
Industrials | | | 35.7 | % |
Consumer Staples | | | 13.4 | |
Communication Services | | | 11.7 | |
Materials | | | 10.8 | |
Consumer Discretionary | | | 8.9 | |
Health Care | | | 6.7 | |
Financials | | | 2.8 | |
Utilities | | | 2.5 | |
Information Technology | | | 2.3 | |
Investment Company | | | 2.2 | |
Real Estate | | | 1.2 | |
Energy | | | 1.1 | |
Cash and Other | | | 0.7 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
Holdings are subject to change without notice. | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service (12b-1) fees (in the case of Class A, Class R and Class T shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the six-month period ended April 30, 2020 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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period* 11/1/19 -
4/30/20 | |
Class A | |
Actual | | | $1,000.00 | | | | $779.70 | | | | $5.51 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,018.67 | | | | 6.25 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 779.70 | | | | 4.40 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.92 | | | | 5.00 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 778.80 | | | | 6.61 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,017.43 | | | | 7.50 | |
Class T** | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 780.50 | | | | 4.40 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.92 | | | | 5.00 | |
| |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.24%, 0.99%, 1.49% and 0.99%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect the one-half year period). ** Class T shares currently are not offered for sale. | |
49
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
COMMON STOCKS: | | | | | | | | |
Communication Services (11.7%) | |
Diversified Telecommunication Services (0.0%) | |
Intelsat SA* | | | 22,000 | | | $ | 27,500 | |
| | | | | | | | |
Entertainment (1.5%) | | | | | | | | |
Liberty Media Corp.-Liberty Braves, Class A* | | | 6,000 | | | | 123,840 | |
Liberty Media Corp.-Liberty Braves, Class C* | | | 20,000 | | | | 401,800 | |
Madison Square Garden Entertainment Corp.* | | | 2,200 | | | | 181,940 | |
Madison Square Garden Sports C, Class A* | | | 2,200 | | | | 376,904 | |
| | | | | | | | |
| | | | | | | 1,084,484 | |
| | | | | | | | |
Media (9.1%) | | | | | | | | |
AMC Networks, Inc., Class A* | | | 20,000 | | | | 477,000 | |
Clear Channel Outdoor Holdings, Inc.* | | | 450,063 | | | | 434,221 | |
Corus Entertainment, Inc., Class B | | | 190,000 | | | | 432,702 | |
DISH Network Corp., Class A* | | | 5,000 | | | | 125,075 | |
EW Scripps Co. (The), Class A | | | 45,000 | | | | 363,150 | |
Grupo Televisa SAB (ADR) | | | 70,000 | | | | 374,500 | |
JCDecaux SA | | | 27,000 | | | | 560,294 | |
Loral Space & Communications, Inc.* | | | 14,000 | | | | 308,000 | |
Meredith Corp. | | | 64,000 | | | | 949,120 | |
MSG Networks, Inc., Class A* | | | 48,000 | | | | 570,240 | |
Sinclair Broadcast Group, Inc., Class A | | | 30,000 | | | | 529,500 | |
Sirius XM Holdings, Inc. | | | 34,560 | | | | 204,250 | |
TEGNA, Inc. | | | 30,000 | | | | 321,600 | |
ViacomCBS, Inc. | | | 40,000 | | | | 690,400 | |
ViacomCBS, Inc., Class A | | | 13,000 | | | | 255,190 | |
WideOpenWest, Inc.* | | | 36,000 | | | | 213,120 | |
| | | | | | | | |
| | | | | | | 6,808,362 | |
| | | | | | | | |
Wireless Telecommunication Services (1.1%) | |
Gogo, Inc.* | | | 30,000 | | | | 48,900 | |
Millicom International Cellular SA | | | 4,000 | | | | 106,040 | |
United States Cellular Corp.* | | | 20,000 | | | | 636,600 | |
| | | | | | | | |
| | | | | | | 791,540 | |
| | | | | | | | |
Total Communication Services | | | | | | | 8,711,886 | |
| | | | | | | | |
Consumer Discretionary (8.9%) | | | | | | | | |
Auto Components (0.7%) | | | | | | | | |
Dana, Inc. | | | 40,000 | | | | 460,000 | |
Lear Corp. | | | 600 | | | | 58,590 | |
| | | | | | | | |
| | | | | | | 518,590 | |
| | | | | | | | |
Diversified Consumer Services (0.9%) | |
H&R Block, Inc. | | | 14,000 | | | | 233,100 | |
ServiceMaster Global Holdings, Inc.* | | | 13,000 | | | | 442,650 | |
| | | | | | | | |
| | | | | | | 675,750 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (2.3%) | |
Cheesecake Factory, Inc. (The) | | | 7,500 | | | | 167,175 | |
Churchill Downs, Inc. | | | 3,500 | | | | 350,770 | |
Dover Motorsports, Inc. | | | 15,000 | | | | 19,902 | |
Eldorado Resorts, Inc.* | | | 5,000 | | | | 107,200 | |
Golden Entertainment, Inc.* | | | 40,000 | | | | 377,600 | |
| | | | | | | | |
Nathan’s Famous, Inc. | | | 7,800 | | | | 438,906 | |
Wynn Resorts Ltd. | | | 3,000 | | | | 256,590 | |
| | | | | | | | |
| | | | | | | 1,718,143 | |
| | | | | | | | |
Household Durables (1.2%) | | | | | | | | |
Bassett Furniture Industries, Inc. | | | 40,000 | | | | 273,600 | |
Hunter Douglas NV | | | 4,000 | | | | 186,811 | |
Lennar Corp., Class B | | | 11,000 | | | | 419,650 | |
| | | | | | | | |
| | | | | | | 880,061 | |
| | | | | | | | |
Internet & Direct Marketing Retail (0.5%) | |
Lands’ End, Inc.* | | | 13,000 | | | | 110,630 | |
Stamps.com, Inc.* | | | 1,800 | | | | 284,886 | |
| | | | | | | | |
| | | | | | | 395,516 | |
| | | | | | | | |
Leisure Products (3.0%) | | | | | | | | |
Brunswick Corp. | | | 36,000 | | | | 1,717,920 | |
Mattel, Inc.* | | | 64,000 | | | | 558,080 | |
| | | | | | | | |
| | | | | | | 2,276,000 | |
| | | | | | | | |
Specialty Retail (0.3%) | | | | | | | | |
Carvana Co.* | | | 2,400 | | | | 192,264 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 6,656,324 | |
| | | | | | | | |
Consumer Staples (13.4%) | | | | | | | | |
Beverages (3.4%) | | | | | | | | |
Davide Campari-Milano SpA | | | 33,000 | | | | 256,127 | |
National Beverage Corp.* | | | 12,500 | | | | 627,875 | |
Primo Water Corp. | | | 12,000 | | | | 123,120 | |
Remy Cointreau SA | | | 13,500 | | | | 1,507,075 | |
| | | | | | | | |
| | | | | | | 2,514,197 | |
| | | | | | | | |
Food & Staples Retailing (1.0%) | | | | | | | | |
Casey’s General Stores, Inc. | | | 2,500 | | | | 378,525 | |
Ingles Markets, Inc., Class A | | | 10,000 | | | | 408,300 | |
| | | | | | | | |
| | | | | | | 786,825 | |
| | | | | | | | |
Food Products (6.4%) | | | | | | | | |
Bunge Ltd. | | | 26,500 | | | | 1,051,255 | |
Farmer Bros Co.* | | | 33,000 | | | | 304,920 | |
Hain Celestial Group, Inc. (The)* | | | 40,000 | | | | 1,033,600 | |
JM Smucker Co. (The) | | | 12,000 | | | | 1,378,920 | |
Maple Leaf Foods, Inc. | | | 38,000 | | | | 702,424 | |
McCormick & Co., Inc. | | | 1,800 | | | | 281,826 | |
| | | | | | | | |
| | | | | | | 4,752,945 | |
| | | | | | | | |
Household Products (1.7%) | | | | | | | | |
Energizer Holdings, Inc. | | | 32,000 | | | | 1,246,720 | |
| | | | | | | | |
Personal Products (0.9%) | | | | | | | | |
Edgewell Personal Care Co.* | | | 25,000 | | | | 690,250 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 9,990,937 | |
| | | | | | | | |
Energy (1.1%) | | | | | | | | |
Energy Equipment & Services (1.1%) | | | | | |
Dril-Quip, Inc.* | | | 11,500 | | | | 380,995 | |
RPC, Inc. | | | 130,000 | | | | 443,300 | |
| | | | | | | | |
Total Energy | | | | | | | 824,295 | |
| | | | | | | | |
Financials (2.8%) | | | | | | | | |
Banks (1.5%) | | | | | | | | |
Atlantic Capital Bancshares, Inc.* | | | 15,000 | | | | 188,250 | |
Cadence Bancorp | | | 10,997 | | | | 72,800 | |
See Notes to Financial Statements.
50
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
Flushing Financial Corp. | | | 21,054 | | | $ | 262,965 | |
Synovus Financial Corp. | | | 27,500 | | | | 577,775 | |
| | | | | | | | |
| | | | | | | 1,101,790 | |
| | | | | | | | |
Capital Markets (1.3%) | | | | | | | | |
Federated Hermes, Inc., Class B | | | 36,000 | | | | 819,720 | |
Waddell & Reed Financial, Inc., Class A | | | 12,000 | | | | 174,600 | |
| | | | | | | | |
| | | | | | | 994,320 | |
| | | | | | | | |
Total Financials | | | | | | | 2,096,110 | |
| | | | | | | | |
Health Care (6.7%) | | | | | | | | |
Biotechnology (0.2%) | | | | | | | | |
Clovis Oncology, Inc.* | | | 14,000 | | | | 106,540 | |
| | | | | | | | |
Health Care Equipment & Supplies (0.3%) | |
Cutera, Inc.* | | | 17,500 | | | | 235,375 | |
| | | | | | | | |
Health Care Providers & Services (1.5%) | |
Option Care Health, Inc.* | | | 22,527 | | | | 322,136 | |
Patterson Cos., Inc. | | | 44,000 | | | | 804,320 | |
| | | | | | | | |
| | | | | | | 1,126,456 | |
| | | | | | | | |
Health Care Technology (4.5%) | | | | | | | | |
Evolent Health, Inc., Class A* | | | 56,000 | | | | 403,760 | |
Teladoc Health, Inc.* | | | 18,000 | | | | 2,962,620 | |
| | | | | | | | |
| | | | | | | 3,366,380 | |
| | | | | | | | |
Life Sciences Tools & Services (0.2%) | | | | | |
Bio-Rad Laboratories, Inc., Class A* | | | 300 | | | | 132,030 | |
| | | | | | | | |
Total Health Care | | | | | | | 4,966,781 | |
| | | | | | | | |
Industrials (35.7%) | | | | | | | | |
Aerospace & Defense (3.9%) | | | | | | | | |
AAR Corp. | | | 19,000 | | | | 372,020 | |
Aerojet Rocketdyne Holdings, Inc.* | | | 26,200 | | | | 1,077,868 | |
Moog, Inc., Class A | | | 24,000 | | | | 593,760 | |
Moog, Inc., Class B | | | 3,600 | | | | 101,700 | |
Textron, Inc. | | | 30,000 | | | | 790,800 | |
| | | | | | | | |
| | | | | | | 2,936,148 | |
| | | | | | | | |
Building Products (2.8%) | | | | | | | | |
Armstrong Flooring, Inc.* | | | 80,000 | | | | 168,000 | |
Griffon Corp. | | | 116,000 | | | | 1,903,560 | |
| | | | | | | | |
| | | | | | | 2,071,560 | |
| | | | | | | | |
Commercial Services & Supplies (2.3%) | |
IAA, Inc.* | | | 8,688 | | | | 335,357 | |
KAR Auction Services, Inc. | | | 8,688 | | | | 130,146 | |
Matthews International Corp., Class A | | | 46,000 | | | | 1,101,240 | |
Team, Inc.* | | | 30,000 | | | | 185,100 | |
| | | | | | | | |
| | | | | | | 1,751,843 | |
| | | | | | | | |
Construction & Engineering (0.7%) | |
Arcosa, Inc. | | | 14,000 | | | | 521,780 | |
| | | | | | | | |
Electrical Equipment (0.9%) | | | | | | | | |
AZZ, Inc. | | | 22,000 | | | | 690,580 | |
| | | | | | | | |
Machinery (20.0%) | | | | | | | | |
Astec Industries, Inc. | | | 63,000 | | | | 2,526,930 | |
CIRCOR International, Inc.* | | | 66,000 | | | | 985,380 | |
CNH Industrial NV* | | | 35,000 | | | | 218,400 | |
| | | | | | | | |
Donaldson Co., Inc. | | | 1,000 | | | | 43,830 | |
Eastern Co. (The) | | | 15,000 | | | | 270,000 | |
EnPro Industries, Inc. | | | 40,000 | | | | 1,814,000 | |
Flowserve Corp. | | | 40,000 | | | | 1,126,800 | |
Graco, Inc. | | | 4,500 | | | | 200,970 | |
Hyster-Yale Materials Handling, Inc. | | | 8,383 | | | | 327,272 | |
Ingersoll Rand, Inc.* | | | 24,000 | | | | 697,920 | |
ITT, Inc. | | | 3,500 | | | | 184,520 | |
Kennametal, Inc. | | | 30,000 | | | | 768,300 | |
Mueller Industries, Inc. | | | 40,000 | | | | 1,036,000 | |
Mueller Water Products, Inc., Class A | | | 34,000 | | | | 322,660 | |
Navistar International Corp.* | | | 22,470 | | | | 534,112 | |
Park-Ohio Holdings Corp. | | | 17,000 | | | | 311,610 | |
Toro Co. (The) | | | 6,500 | | | | 414,765 | |
Trinity Industries, Inc. | | | 95,000 | | | | 1,832,550 | |
Twin Disc, Inc.* | | | 74,509 | | | | 447,799 | |
Watts Water Technologies, Inc., Class A | | | 10,000 | | | | 824,000 | |
Welbilt, Inc.* | | | 12,500 | | | | 61,625 | |
| | | | | | | | |
| | | | | | | 14,949,443 | |
| | | | | | | | |
Road & Rail (0.2%) | | | | | | | | |
Hertz Global Holdings, Inc.* | | | 45,000 | | | | 181,800 | |
| | | | | | | | |
Trading Companies & Distributors (3.7%) | |
Ashtead Group plc | | | 3,000 | | | | 82,322 | |
GATX Corp. | | | 8,000 | | | | 474,400 | |
Herc Holdings, Inc.* | | | 55,000 | | | | 1,552,650 | |
Kaman Corp. | | | 16,000 | | | | 620,160 | |
| | | | | | | | |
| | | | | | | 2,729,532 | |
| | | | | | | | |
Transportation Infrastructure (1.2%) | |
Macquarie Infrastructure Corp. | | | 31,000 | | | | 855,290 | |
| | | | | | | | |
Total Industrials | | | | | | | 26,687,976 | |
| | | | | | | | |
Information Technology (2.3%) | | | | | | | | |
Communications Equipment (0.2%) | |
Communications Systems, Inc. | | | 20,000 | | | | 113,800 | |
EchoStar Corp., Class A* | | | 1,600 | | | | 50,480 | |
| | | | | | | | |
| | | | | | | 164,280 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (0.5%) | |
Landis+Gyr Group AG* | | | 6,000 | | | | 405,664 | |
| | | | | | | | |
IT Services (0.1%) | | | | | | | | |
MoneyGram International, Inc.* | | | 60,000 | | | | 49,800 | |
| | | | | | | | |
Software (0.6%) | | | | | | | | |
A10 Networks, Inc.* | | | 25,000 | | | | 170,750 | |
Cloudflare, Inc., Class A* | | | 500 | | | | 11,780 | |
FireEye, Inc.* | | | 12,000 | | | | 138,120 | |
Zuora, Inc., Class A* | | | 10,000 | | | | 105,700 | |
| | | | | | | | |
| | | | | | | 426,350 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (0.9%) | |
Diebold Nixdorf, Inc.* | | | 137,000 | | | | 675,410 | |
| | | | | | | | |
Total Information Technology | | | | | | | 1,721,504 | |
| | | | | | | | |
Materials (10.8%) | | | | | | | | |
Chemicals (8.3%) | | | | | | | | |
Axalta Coating Systems Ltd.* | | | 11,000 | | | | 217,140 | |
Chr Hansen Holding A/S | | | 1,200 | | | | 103,526 | |
Core Molding Technologies, Inc.* | | | 104,000 | | | | 262,080 | |
See Notes to Financial Statements.
51
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
Element Solutions, Inc.* | | | 130,000 | | | $ | 1,332,500 | |
Ferro Corp.* | | | 95,000 | | | | 947,150 | |
GCP Applied Technologies, Inc.* | | | 93,300 | | | | 1,597,296 | |
HB Fuller Co. | | | 8,500 | | | | 312,715 | |
Scotts Miracle-Gro Co. (The) | | | 6,200 | | | | 768,986 | |
Tredegar Corp. | | | 15,000 | | | | 247,200 | |
Valvoline, Inc. | | | 26,000 | | | | 446,940 | |
| | | | | | | | |
| | | | | | | 6,235,533 | |
| | | | | | | | |
Containers & Packaging (2.0%) | | | | | | | | |
Greif, Inc., Class A | | | 30,000 | | | | 1,016,700 | |
Myers Industries, Inc. | | | 36,000 | | | | 444,960 | |
| | | | | | | | |
| | | | | | | 1,461,660 | |
| | | | | | | | |
Metals & Mining (0.5%) | | | | | | | | |
Ampco-Pittsburgh Corp.* | | | 30,000 | | | | 112,200 | |
Freeport-McMoRan, Inc. | | | 20,000 | | | | 176,600 | |
TimkenSteel Corp.* | | | 37,000 | | | | 96,200 | |
| | | | | | | | |
| | | | | | | 385,000 | |
| | | | | | | | |
Total Materials | | | | | | | 8,082,193 | |
| | | | | | | | |
Real Estate (1.2%) | | | | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.5%) | |
Ryman Hospitality Properties, Inc. (REIT) | | | 5,000 | | | | 176,700 | |
Seritage Growth Properties (REIT), Class A* | | | 21,000 | | | | 222,180 | |
| | | | | | | | |
| | | | | | | 398,880 | |
| | | | | | | | |
Real Estate Management & Development (0.7%) | |
St Joe Co. (The)* | | | 28,000 | | | | 512,400 | |
| | | | | | | | |
Total Real Estate | | | | | | | 911,280 | |
| | | | | | | | |
Utilities (2.5%) | | | | | | | | |
Gas Utilities (1.4%) | | | | | | | | |
National Fuel Gas Co. | | | 25,000 | | | | 1,025,000 | |
| | | | | | | | |
Independent Power and Renewable Electricity Producers (1.1%) | |
AES Corp. (The) | | | 64,000 | | | | 848,000 | |
| | | | | | | | |
Total Utilities | | | | | | | 1,873,000 | |
| | | | | | | | |
Total Common Stocks (97.1%)
(Cost $94,467,861) | | | | | | | 72,522,286 | |
| | | | | | | | |
| | | |
| | | Number of
Warrants | | | Value
(Note 1) | |
WARRANTS: | | | | | | | | |
Energy (0.0%) | | | | | | | | |
Energy Equipment & Services (0.0%) | |
Weatherford International plc, expiring 12/13/23* | | | 1,117 | | | | 234 | |
| | | | | | | | |
Total Energy | | | | | | | 234 | |
| | | | | | | | |
Health Care (0.0%) | | | | | | | | |
Health Care Providers & Services (0.0%) | | | | | |
Option Care Health, Inc., expiring 6/30/25* | | | 22 | | | | 8 | |
| | | | | | | | |
Total Health Care | | | | | | | 8 | |
| | | | | | | | |
Total Warrants (0.0%)
(Cost $—) | | | | | | | 242 | |
| | | | | | | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
SHORT-TERM INVESTMENT: | | | | | | | | |
Investment Company (2.2%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 1,678,764 | | | | 1,680,107 | |
| | | | | | | | |
Total Short-Term Investment (2.2%)
(Cost $1,679,181) | | | | | | | 1,680,107 | |
| | | | | | | | |
Total Investments in Securities (99.3%)
(Cost $96,147,042) | | | | | | | 74,202,635 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 517,303 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 74,719,938 | |
| | | | | | | | |
Glossary:
| | ADR | — American Depositary Receipt |
See Notes to Financial Statements.
52
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
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 | | | | | | | | | | | | | | | | |
Communication Services | | $ | 8,151,592 | | | $ | 560,294 | | | $ | — | | | $ | 8,711,886 | |
Consumer Discretionary | | | 6,010,705 | | | | 645,619 | | | | — | | | | 6,656,324 | |
Consumer Staples | | | 7,945,909 | | | | 2,045,028 | | | | — | | | | 9,990,937 | |
Energy | | | 824,295 | | | | — | | | | — | | | | 824,295 | |
Financials | | | 2,096,110 | | | | — | | | | — | | | | 2,096,110 | |
Health Care | | | 4,966,781 | | | | — | | | | — | | | | 4,966,781 | |
Industrials | | | 26,503,954 | | | | 184,022 | | | | — | | | | 26,687,976 | |
Information Technology | | | 1,315,840 | | | | 405,664 | | | | — | | | | 1,721,504 | |
Materials | | | 7,604,387 | | | | 477,806 | | | | — | | | | 8,082,193 | |
Real Estate | | | 911,280 | | | | — | | | | — | | | | 911,280 | |
Utilities | | | 1,873,000 | | | | — | | | | — | | | | 1,873,000 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 1,680,107 | | | | — | | | | — | | | | 1,680,107 | |
Warrants | | | | | | | | | | | | | | | | |
Energy | | | 234 | | | | — | | | | — | | | | 234 | |
Health Care | | | — | | | | 8 | | | | — | | | | 8 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 69,884,194 | | | $ | 4,318,441 | | | $ | — | | | $ | 74,202,635 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 69,884,194 | | | $ | 4,318,441 | | | $ | — | | | $ | 74,202,635 | |
| | | | | | | | | | | | | | | | |
(a) Securities with a market value of $8 transferred from Level 3 to Level 2 at the end of the period due to active trading.
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 10,632,260 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 11,780,735 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 4,947,174 | |
Aggregate gross unrealized depreciation | | | (27,904,716 | ) |
| | | | |
Net unrealized depreciation | | $ | (22,957,542 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 97,160,177 | |
| | | | |
For the six months ended April 30, 2020, the Fund incurred approximately $8,026 as brokerage commissions with G. Research, an affiliated broker/dealer.
See Notes to Financial Statements.
53
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value
(Cost $96,147,042) | | $ | 74,202,635 | |
Cash | | | 331,000 | |
Foreign cash (Cost $7,042) | | | 7,153 | |
Receivable for Fund shares sold | | | 283,038 | |
Receivable for securities sold | | | 178,564 | |
Due from Custodian | | | 70,466 | |
Prepaid registration and filing fees | | | 24,698 | |
Dividends, interest and other receivables | | | 19,042 | |
| | | | |
Total assets | | | 75,116,596 | |
| | | | |
LIABILITIES | |
Payable for securities purchased | | | 195,247 | |
Payable for Fund shares redeemed | | | 71,915 | |
Transfer agent fees payable | | | 16,595 | |
Investment advisory fees payable | | | 16,352 | |
Administrative fees payable | | | 8,427 | |
Distribution fees payable – Class A | | | 584 | |
Distribution fees payable – Class R | | | 249 | |
Accrued expenses | | | 87,289 | |
| | | | |
Total liabilities | | | 396,658 | |
| | | | |
NET ASSETS | | $ | 74,719,938 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 101,098,380 | |
Total distributable earnings (loss) | | | (26,378,442 | ) |
| | | | |
Net assets | | $ | 74,719,938 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $3,124,038 / 326,595 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.57 | |
Maximum sales charge (5.50% of offering price) | | | 0.56 | |
| | | | |
Maximum offering price per share | | $ | 10.13 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $70,833,237 / 7,398,614 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.57 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $665,193 / 69,901 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.52 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $97,470 / 10,179 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.58 | |
Maximum sales charge (2.50% of offering price) | | | 0.25 | |
| | | | |
Maximum offering price per share | | $ | 9.83 | |
| | | | |
| ** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends (net of $7,902 foreign withholding tax) | | $ | 761,393 | |
Interest | | | 2,184 | |
| | | | |
Total income | | | 763,577 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 349,043 | |
Administrative fees | | | 69,809 | |
Professional fees | | | 67,636 | |
Transfer agent fees | | | 65,738 | |
Printing and mailing expenses | | | 34,839 | |
Registration and filing fees | | | 19,996 | |
Custodian fees | | | 6,599 | |
Distribution fees – Class A | | | 4,568 | |
Trustees’ fees | | | 3,713 | |
Distribution fees – Class R | | | 2,066 | |
Distribution fees – Class T** | | | 147 | |
Miscellaneous | | | 23,320 | |
| | | | |
Gross expenses | | | 647,474 | |
Less: Waiver from investment adviser | | | (178,883 | ) |
Waiver from distributor | | | (147 | ) |
| | | | |
Net expenses | | | 468,444 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 295,133 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Realized gain (loss) on: | | | | |
Investments in securities | | | (3,550,947 | ) |
Foreign currency transactions | | | 6,324 | |
| | | | |
Net realized gain (loss) | | | (3,544,623 | ) |
| | | | |
Change in unrealized appreciation (depreciation) on: | |
Investments in securities | | | (18,868,595 | ) |
Foreign currency translations | | | 114 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (18,868,481 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (22,413,104 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (22,117,971 | ) |
| | | | |
| ** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
54
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 295,133 | | | $ | 609,998 | |
Net realized gain (loss) | | | (3,544,623 | ) | | | 340,659 | |
Net change in unrealized appreciation (depreciation) | | | (18,868,481 | ) | | | 1,060,409 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (22,117,971 | ) | | | 2,011,066 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (60,182 | ) | | | (42,434 | ) |
Class I | | | (1,732,560 | ) | | | (1,255,738 | ) |
Class R | | | (12,206 | ) | | | (7,956 | ) |
Class T** | | | (2,304 | ) | | | (1,787 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (1,807,252 | ) | | | (1,307,915 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 46,185 and 70,453 shares, respectively ] | | | 548,145 | | | | 886,229 | |
Capital shares issued in reinvestment of dividends [ 4,524 and 3,493 shares, respectively ] | | | 58,133 | | | | 40,904 | |
Capital shares repurchased [ (36,747) and (53,218) shares, respectively ] | | | (441,381 | ) | | | (654,905 | ) |
| | | | | | | | |
Total Class A transactions | | | 164,897 | | | | 272,228 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 804,157 and 1,868,998 shares, respectively ] | | | 9,231,783 | | | | 23,316,263 | |
Capital shares issued in reinvestment of dividends [ 78,814 and 59,543 shares, respectively ] | | | 1,012,764 | | | | 697,247 | |
Capital shares repurchased [ (1,140,254) and (1,297,404) shares, respectively ] | | | (12,241,076 | ) | | | (15,901,713 | ) |
| | | | | | | | |
Total Class I transactions | | | (1,996,529 | ) | | | 8,111,797 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 7,985 and 21,731 shares, respectively ] | | | 87,839 | | | | 268,538 | |
Capital shares issued in reinvestment of dividends [ 820 and 575 shares, respectively ] | | | 10,489 | | | | 6,698 | |
Capital shares repurchased [ (12,570) and (13,939) shares, respectively ] | | | (157,604 | ) | | | (167,220 | ) |
| | | | | | | | |
Total Class R transactions | | | (59,276 | ) | | | 108,016 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | (1,890,908 | ) | | | 8,492,041 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (25,816,131 | ) | | | 9,195,192 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 100,536,069 | | | | 91,340,877 | |
| | | | | | | | |
End of period | | $ | 74,719,938 | | | $ | 100,536,069 | |
| | | | | | | | |
| ** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
55
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 12.46 | | | $ | 12.33 | | | $ | 12.83 | | | $ | 10.28 | | | $ | 10.25 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.02 | | | | 0.05 | | | | 0.03 | | | | 0.06 | ## | | | 0.05 | | | | (0.01 | ) |
Net realized and unrealized gain (loss) | | | (2.72 | ) | | | 0.22 | | | | (0.25 | ) | | | 2.67 | | | | 0.25 | | | | 0.33 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (2.70 | ) | | | 0.27 | | | | (0.22 | ) | | | 2.73 | | | | 0.30 | | | | 0.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.04 | ) | | | (0.02 | ) | | | (0.03 | ) | | | (0.02 | ) | | | — | # | | | (0.07 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.19 | ) | | | (0.14 | ) | | | (0.28 | ) | | | (0.18 | ) | | | (0.27 | ) | | | (0.07 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.57 | | | $ | 12.46 | | | $ | 12.33 | | | $ | 12.83 | | | $ | 10.28 | | | $ | 10.25 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (22.03 | )% | | | 2.29 | % | | | (1.84 | )% | | | 26.72 | % | | | 3.08 | % | | | 3.20 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 3,124 | | | $ | 3,896 | | | $ | 3,599 | | | $ | 2,063 | | | $ | 591 | | | $ | 997 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.24 | %(j) | | | 1.24 | %(j) | | | 1.24 | %(j) | | | 1.27 | % | | | 1.35 | % | | | 1.35 | % |
Before waivers and reimbursements (a)(f) | | | 1.63 | % | | | 1.66 | % | | | 1.79 | % | | | 2.72 | % | | | 4.38 | % | | | 9.28 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.41 | % | | | 0.39 | % | | | 0.26 | % | | | 0.48 | %(aa) | | | 0.49 | % | | | (0.10 | )%(l) |
Before waivers and reimbursements (a)(f) | | | 0.02 | % | | | (0.03 | )% | | | (0.28 | )% | | | (0.97 | )%(aa) | | | (2.53 | )% | | | (8.03 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 37 | % | | | 49 | % | | | 88 | % | | | 76 | % | | | 95 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 12.49 | | | $ | 12.36 | | | $ | 12.86 | | | $ | 10.30 | | | $ | 10.27 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.04 | | | | 0.08 | | | | 0.07 | | | | 0.08 | ## | | | 0.05 | | | | 0.02 | |
Net realized and unrealized gain (loss) | | | (2.74 | ) | | | 0.23 | | | | (0.26 | ) | | | 2.68 | | | | 0.28 | | | | 0.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (2.70 | ) | | | 0.31 | | | | (0.19 | ) | | | 2.76 | | | | 0.33 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.07 | ) | | | (0.06 | ) | | | (0.06 | ) | | | (0.04 | ) | | | (0.03 | ) | | | (0.07 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.18 | ) | | | (0.31 | ) | | | (0.20 | ) | | | (0.30 | ) | | | (0.07 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.57 | | | $ | 12.49 | | | $ | 12.36 | | | $ | 12.86 | | | $ | 10.30 | | | $ | 10.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (22.03 | )% | | | 2.57 | % | | | (1.60 | )% | | | 27.09 | % | | | 3.34 | % | | | 3.43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 70,833 | | | $ | 95,601 | | | $ | 86,815 | | | $ | 21,317 | | | $ | 6,041 | | | $ | 2,416 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.99 | %(j) | | | 0.99 | %(j) | | | 0.99 | %(j) | | | 1.02 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a)(f) | | | 1.38 | % | | | 1.41 | % | | | 1.51 | % | | | 2.47 | % | | | 4.09 | % | | | 8.56 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.65 | % | | | 0.64 | % | | | 0.54 | % | | | 0.69 | %(aa) | | | 0.49 | % | | | 0.16 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.26 | % | | | 0.22 | % | | | 0.03 | % | | | (0.76 | )%(aa) | | | (2.51 | )% | | | (7.30 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 37 | % | | | 49 | % | | | 88 | % | | | 76 | % | | | 95 | %(z) |
See Notes to Financial Statements.
56
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 12.38 | | | $ | 12.26 | | | $ | 12.76 | | | $ | 10.23 | | | $ | 10.23 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.01 | | | | 0.02 | | | | — | # | | | 0.03 | ## | | | 0.04 | | | | (0.04 | ) |
Net realized and unrealized gain (loss) | | | (2.71 | ) | | | 0.22 | | | | (0.25 | ) | | | 2.66 | | | | 0.23 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (2.70 | ) | | | 0.24 | | | | (0.25 | ) | | | 2.69 | | | | 0.27 | | | | 0.30 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.01 | ) | | | — | | | | — | | | | — | | | | — | | | | (0.07 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.16 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.16 | ) | | | (0.27 | ) | | | (0.07 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.52 | | | $ | 12.38 | | | $ | 12.26 | | | $ | 12.76 | | | $ | 10.23 | | | $ | 10.23 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (22.12 | )% | | | 2.02 | % | | | (2.07 | )% | | | 26.49 | % | | | 2.77 | % | | | 2.96 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 665 | | | $ | 912 | | | $ | 801 | | | $ | 332 | | | $ | 168 | | | $ | 777 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.49 | %(j) | | | 1.49 | %(j) | | | 1.49 | %(j) | | | 1.53 | % | | | 1.60 | % | | | 1.60 | % |
Before waivers and reimbursements (a)(f) | | | 1.88 | % | | | 1.91 | % | | | 2.05 | % | | | 3.00 | % | | | 4.65 | % | | | 9.73 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.14 | % | | | 0.14 | % | | | 0.02 | % | | | 0.27 | %(aa) | | | 0.42 | % | | | (0.35 | )%(l) |
Before waivers and reimbursements (a)(f) | | | (0.25 | )% | | | (0.28 | )% | | | (0.54 | )% | | | (1.21 | )%(aa) | | | (2.64 | )% | | | (8.49 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 37 | % | | | 49 | % | | | 88 | % | | | 76 | % | | | 95 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class T** | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 12.49 | | | $ | 12.36 | | | $ | 12.86 | | | $ | 10.30 | | | $ | 10.27 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.04 | | | | 0.08 | | | | 0.07 | | | | 0.11 | ## | | | 0.08 | | | | 0.01 | |
Net realized and unrealized gain (loss) | | | (2.73 | ) | | | 0.23 | | | | (0.26 | ) | | | 2.65 | | | | 0.25 | | | | 0.33 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (2.69 | ) | | | 0.31 | | | | (0.19 | ) | | | 2.76 | | | | 0.33 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.07 | ) | | | (0.06 | ) | | | (0.06 | ) | | | (0.04 | ) | | | (0.03 | ) | | | (0.07 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.12 | ) | | | (0.25 | ) | | | (0.16 | ) | | | (0.27 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.18 | ) | | | (0.31 | ) | | | (0.20 | ) | | | (0.30 | ) | | | (0.07 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.58 | | | $ | 12.49 | | | $ | 12.36 | | | $ | 12.86 | | | $ | 10.30 | | | $ | 10.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (21.95 | )% | | | 2.57 | % | | | (1.60 | )% | | | 27.09 | % | | | 3.34 | % | | | 3.43 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 97 | | | $ | 127 | | | $ | 126 | | | $ | 131 | | | $ | 105 | | | $ | 259 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.99 | %(j) | | | 0.99 | %(j) | | | 0.99 | %(j) | | | 1.03 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a)(f) | | | 1.63 | % | | | 1.66 | % | | | 1.80 | % | | | 3.02 | % | | | 5.11 | % | | | 10.23 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.65 | % | | | 0.64 | % | | | 0.50 | % | | | 0.89 | %(aa) | | | 0.77 | % | | | 0.15 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.02 | % | | | (0.02 | )% | | | (0.31 | )% | | | (1.10 | )%(aa) | | | (3.23 | )% | | | (8.98 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 37 | % | | | 49 | % | | | 88 | % | | | 76 | % | | | 95 | %(z) |
See Notes to Financial Statements.
57
1290 FUNDS
1290 GAMCO SMALL/MID CAP VALUE FUND
FINANCIAL HIGHLIGHTS (Continued)
| * | Commencement of Operations. |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
| # | Per share amount is less than $0.005. |
| ## | Includes income resulting from a special dividend. Without this dividend, the per share income amounts would be $0.02, $0.04, $(0.01) and $0.07 for Class A, Class I, Class R and Class T, respectively. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certain non-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.25% for Class A, 1.00% for Class I, 1.50% for Class R and 1.00% for Class T. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
| (aa) | Includes income resulting from a special dividend. Without this dividend, the ratios for each class would have been 0.34% lower. |
See Notes to Financial Statements.
58
1290 GLOBAL TALENTS FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENTSUB-ADVISER
| Ø | | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | |
| | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | 0.58 | % | | | (2.35 | )% | | | 6.84 | % |
| | | with Sales Charge (a) | | | (4.97 | ) | | | (7.73 | ) | | | 5.36 | |
Fund – Class I Shares* | | | | | 0.77 | | | | (2.07 | ) | | | 7.12 | |
Fund – Class R Shares* | | | | | 0.50 | | | | (2.53 | ) | | | 6.59 | |
MSCI ACWI (Net) Index | | | | | (7.68 | ) | | | (4.96 | ) | | | 7.58 | |
| |
* Date of inception 4/11/16. (a) A 5.50%front-end sales charge was deducted. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I and R shares were 2.04%, 1.79% and 2.29%, respectively. The net expense ratios for Class A, I and R shares were 1.25%, 1.00% and 1.50%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — AXA Investment Managers, Inc.
Global equities proved quite volatile over the period and ended lower. Stock price performance was positive initially but started to fall abruptly from mid-February as it became clear that the new coronavirus emanating from China was becoming a global pandemic. Social distancing measures implemented across the globe have had severe negative economic effects, generated great uncertainty for businesses small and large and led to a spike in unemployment. Markets rebounded off their lows from the end of March till the end of the period as we saw unprecedented monetary and fiscal responses to support businesses and individuals at risk. Other positive news included most countries successfully flattening their infection curve, some economies gradually emerging from lockdowns and hopes were raised about a potential vaccine. It remains, however, unclear when or if a full return to normality will be possible as businesses continue to operate under constraints, consumers remain cautious, travel and physical services remain heavily curtailed, risks of renewed virus outbreaks are real, and central banks and governments alike are running out of ammunitions in view of the level of support already offered and the economic damage already sustained over the last couple of months. To add to concerns, geopolitical tensions are once again on the rise.
Over the period, technology and health care emerged as the two strongest sectors, finishing the period in the green. Both sectors, while benefiting from long term structural tailwinds around digitalization and aging demographics, are also well positioned in the context of the novel coronavirus given their importance in providing solutions during the crisis. Communication services were also understandably a relative outperformer. Within the consumer space, certain segments performed strongly — such as e-commerce or grocery staples benefiting from pantry loading. Unsurprisingly, cyclical sectors fared poorly over the period. In particular, energy was the worst performer as oil prices dropped sharply.
Fund Highlights
The Fund’s Class I shares returned 0.77% for the six-month period ended April 30, 2020. The Fund’s benchmark, the MSCI All Country World Index, returned -7.68% over the same time period. The Fund’s performance was driven by positive stock selection and positive sector allocation.
We made limited changes to Fund holdings over the period. In technology, we sold Check Point Software Technologies Ltd. in information technology security and initiated two new positions, in CRM software leader salesforce.com, which has at its helm co-founder/CEO/chairman Marc Benioff and in ServiceNow, Inc., a fast-growing information technology management software
59
1290 GLOBAL TALENTS FUND (Unaudited)
provider led by chairman/founder/advisor Frederic Luddy. We also added to our health care exposure by initiating a position in UCB SA, a Belgian biopharmaceuticals company targeting central nervous system disorders and inflammatory diseases, where the family holding Financiere de Tubize holds a 35% stake. We sold U.S. shale firm Concho Resources, Inc. given the negative outlook on oil prices in the short term and the long term.
What helped performance during thesix-month period ended April 30, 2020:
| • | | DexCom, Inc. continued to be a strong performer and reported record sales. Diagnostics firm Roche Holding AG is at the forefront of developing a highly reliable test for the novel disease COVID-19. |
| • | | E-commerce players Amazon.com, Inc. and Alibaba Group Holding Ltd. both saw a surge in demand following social distancing measures. |
| • | | Online gaming platform Tencent Holdings Ltd. benefited from more time spent at home. Softbank Group Corp. closed some of the discount to the net asset value of its underlying assets by announcing a large buyback program, benefited from the consolidation of its U.S. telecommunications arm and decided to walk away from its pending WeWork deal. |
| • | | Apple, Inc. proved resilient given a loyal base and strong demand for its consumer services. |
| • | | Personal care and hygiene manufacturer Unicharm Corp. benefited from pantry loading. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | Anheuser-Busch InBev SA/NV was a poor performer as investors worried about its leverage levels and exposure to emerging markets, particularly in Latin America, where the virus outbreak could wreak havoc on local economies. |
| • | | Kose Corp. also suffered as cosmetics sales in Japan are largely made either in department stores or in travel retail locations. |
| • | | Credicorp Ltd. was also hard hit. Investors anticipate a lasting negative impact on the Peruvian economy from the virus outbreak as well as more generally for banks due to lower interest rates for longer and higher future credit losses. |
| • | | Assa Abloy AB warned about risks of a significant drop in sales and margins as a result of the virus outbreak. |
| • | | Financiere de L’Odet SA, heavily exposed to logistics and the African continent, will likely be impacted near-term due to restrictions. Investors rightly worry that emerging markets are likely less well equipped to deal with the coronavirus crisis. |
| • | | EOG Resources, Inc. came under pressure due to falling oil prices and oil demand as economies around the world have come to a standstill. |
| | | | | | | | |
| | | |
Sector Weightings as of April 30, 2020 | | Market
Value | | | % of Net Assets | |
Information Technology | | | $6,562,686 | | | | 24.2 | % |
Health Care | | | 4,451,746 | | | | 16.4 | |
Communication Services | | | 3,734,470 | | | | 13.8 | |
Financials | | | 3,306,337 | | | | 12.2 | |
Consumer Discretionary | | | 2,668,544 | | | | 9.9 | |
Consumer Staples | | | 2,026,373 | | | | 7.5 | |
Industrials | | | 1,795,568 | | | | 6.6 | |
Materials | | | 898,614 | | | | 3.3 | |
Real Estate | | | 730,437 | | | | 2.7 | |
Energy | | | 228,428 | | | | 0.8 | |
Cash and Other | | | 709,027 | | | | 2.6 | |
| | | | | | | | | |
| | | | | | | | 100.0 | % |
| | | | | | | | | |
Holdings are subject to change without notice. | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled ‘‘Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
60
1290 GLOBAL TALENTS 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 11/1/19 | | | Ending
Account
Value 4/30/20 | | | Expenses
Paid
During
Period* 11/1/19 - 4/30/20 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $1,005.80 | | | | $6.23 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,018.65 | | | | 6.27 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,007.70 | | | | 4.99 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.89 | | | | 5.02 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 1,005.00 | | | | 7.48 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,017.40 | | | | 7.52 | |
| |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.25%, 1.00% and 1.50%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
61
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
COMMON STOCKS: | |
Belgium (2.8%) | |
Anheuser-Busch InBev SA/NV | | | 5,590 | | | $ | 259,472 | |
UCB SA* | | | 5,577 | | | | 510,980 | |
| | | | | | | | |
| | | | | | | 770,452 | |
| | | | | | | | |
China (7.0%) | |
Alibaba Group Holding Ltd. (ADR)* | | | 4,441 | | | | 900,057 | |
Tencent Holdings Ltd. | | | 18,600 | | | | 986,788 | |
| | | | | | | | |
| | | | | | | 1,886,845 | |
| | | | | | | | |
Finland (1.8%) | |
Sampo OYJ, Class A | | | 14,933 | | | | 495,366 | |
| | | | | | | | |
France (4.0%) | |
Dassault Systemes SE | | | 4,740 | | | | 694,432 | |
Financiere de L’Odet SA | | | 594 | | | | 381,884 | |
| | | | | | | | |
| | | | | | | 1,076,316 | |
| | | | | | | | |
Japan (8.3%) | |
Kose Corp. | | | 5,000 | | | | 622,182 | |
SoftBank Group Corp. | | | 19,200 | | | | 821,188 | |
Unicharm Corp. | | | 22,000 | | | | 805,966 | |
| | | | | | | | |
| | | | | | | 2,249,336 | |
| | | | | | | | |
Mexico (1.3%) | |
Fomento Economico Mexicano SAB de CV | | | 52,500 | | | | 338,753 | |
| | | | | | | | |
Peru (1.8%) | |
Credicorp Ltd. | | | 3,337 | | | | 497,280 | |
| | | | | | | | |
Spain (1.6%) | |
Industria de Diseno Textil SA | | | 17,149 | | | | 437,475 | |
| | | | | | | | |
Sweden (1.8%) | |
Assa Abloy AB, Class B | | | 26,870 | | | | 483,809 | |
| | | | | | | | |
Switzerland (4.2%) | |
Roche Holding AG | | | 3,251 | | | | 1,130,791 | |
| | | | | | | | |
United States (62.8%) | |
Alphabet, Inc., Class A* | | | 698 | | | | 939,997 | |
Amazon.com, Inc.* | | | 538 | | | | 1,331,012 | |
Apple, Inc. | | | 4,321 | | | | 1,269,510 | |
Bank OZK | | | 18,113 | | | | 409,716 | |
Berkshire Hathaway, Inc., Class B* | | | 4,265 | | | | 799,090 | |
BlackRock, Inc. | | | 1,262 | | | | 633,574 | |
Booz Allen Hamilton Holding Corp. | | | 8,607 | | | | 632,098 | |
Charles Schwab Corp. (The) | | | 12,495 | | | | 471,311 | |
Cognex Corp. | | | 10,284 | | | | 568,088 | |
DexCom, Inc.* | | | 2,879 | | | | 965,041 | |
Ecolab, Inc. | | | 4,644 | | | | 898,614 | |
EOG Resources, Inc. | | | 4,808 | | | | 228,428 | |
Facebook, Inc., Class A* | | | 4,819 | | | | 986,497 | |
FedEx Corp. | | | 4,147 | | | | 525,715 | |
Fidelity National Information Services, Inc. | | | 5,680 | | | | 749,135 | |
Fortive Corp. | | | 6,315 | | | | 404,160 | |
IPG Photonics Corp.* | | | 3,335 | | | | 431,316 | |
Jazz Pharmaceuticals plc* | | | 4,198 | | | | 462,830 | |
Prologis, Inc. (REIT) | | | 8,186 | | | | 730,437 | |
Proofpoint, Inc.* | | | 5,229 | | | | 636,526 | |
QUALCOMM, Inc. | | | 6,137 | | | | 482,798 | |
salesforce.com, Inc.* | | | 3,240 | | | | 524,718 | |
| | | | | | | | |
ServiceNow, Inc.* | | | 1,633 | | | | 574,065 | |
Stryker Corp. | | | 3,137 | | | | 584,831 | |
UnitedHealth Group, Inc. | | | 2,726 | | | | 797,273 | |
| | | | | | | | |
| | | | | | | 17,036,780 | |
| | | | | | | | |
Total Common Stocks (97.4%)
(Cost $22,365,707) | | | | | | | 26,403,203 | |
| | | | | | | | |
Total Investments in Securities (97.4%)
(Cost $22,365,707) | | | | | | | 26,403,203 | |
Other Assets Less Liabilities (2.6%) | | | | | | | 709,027 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 27,112,230 | |
| | | | | | | | |
Glossary:
| | ADR | — American Depositary Receipt |
| | REIT | — Real Estate Investment Trust |
See Notes to Financial Statements.
62
1290 FUNDS
1290 GLOBAL TALENTS FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | |
Common Stocks | | | | | | | | | | | | | | | | |
Belgium | | $ | — | | | $ | 770,452 | | | $ | — | | | $ | 770,452 | |
China | | | 900,057 | | | | 986,788 | | | | — | | | | 1,886,845 | |
Finland | | | — | | | | 495,366 | | | | — | | | | 495,366 | |
France | | | — | | | | 1,076,316 | | | | — | | | | 1,076,316 | |
Japan | | | — | | | | 2,249,336 | | | | — | | | | 2,249,336 | |
Mexico | | | 338,753 | | | | — | | | | — | | | | 338,753 | |
Peru | | | 497,280 | | | | — | | | | — | | | | 497,280 | |
Spain | | | — | | | | 437,475 | | | | — | | | | 437,475 | |
Sweden | | | — | | | | 483,809 | | | | — | | | | 483,809 | |
Switzerland | | | — | | | | 1,130,791 | | | | — | | | | 1,130,791 | |
United States | | | 17,036,780 | | | | — | | | | — | | | | 17,036,780 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 18,772,870 | | | $ | 7,630,333 | | | $ | — | | | $ | 26,403,203 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 18,772,870 | | | $ | 7,630,333 | | | $ | — | | | $ | 26,403,203 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,041,989 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,140,751 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 6,195,974 | |
Aggregate gross unrealized depreciation | | | (2,165,502 | ) |
| | | | |
Net unrealized appreciation | | $ | 4,030,472 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 22,372,731 | |
| | | | |
See Notes to Financial Statements.
63
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value
(Cost $22,365,707) | | $ | 26,403,203 | |
Cash | | | 665,888 | |
Dividends, interest and other receivables | | | 77,366 | |
Prepaid registration and filing fees | | | 25,705 | |
Receivable for Fund shares sold | | | 80 | |
Other assets | | | 98 | |
| | | | |
Total assets | | | 27,172,340 | |
| | | | |
LIABILITIES | | | | |
Payable for Fund shares redeemed | | | 5,205 | |
Administrative fees payable | | | 3,128 | |
Transfer agent fees payable | | | 1,223 | |
Investment advisory fees payable | | | 982 | |
Distribution fees payable – Class A | | | 270 | |
Distribution fees payable – Class R | | | 47 | |
Accrued expenses | | | 49,255 | |
| | | | |
Total liabilities | | | 60,110 | |
| | | | |
NET ASSETS | | $ | 27,112,230 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 22,330,505 | |
Total distributable earnings (loss) | | | 4,781,725 | |
| | | | |
Net assets | | $ | 27,112,230 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $1,412,715 / 114,449 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.34 | |
Maximum sales charge (5.50% of offering price) | | | 0.72 | |
| | | | |
Maximum offering price per share | | $ | 13.06 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $25,576,712 / 2,059,512 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.42 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $122,803 / 10,050 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.22 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends (net of $7,804 foreign withholding tax) | | $ | 165,118 | |
Interest | | | 4,452 | |
| | | | |
Total income | | | 169,570 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 110,122 | |
Professional fees | | | 37,178 | |
Administrative fees | | | 20,648 | |
Registration and filing fees | | | 18,112 | |
Printing and mailing expenses | | | 16,639 | |
Transfer agent fees | | | 15,208 | |
Custodian fees | | | 5,006 | |
Distribution fees – Class A | | | 1,806 | |
Trustees’ fees | | | 1,064 | |
Distribution fees – Class R | | | 310 | |
Miscellaneous | | | 11,152 | |
| | | | |
Gross expenses | | | 237,245 | |
Less: Waiver from investment adviser | | | (97,599 | ) |
| | | | |
Net expenses | | | 139,646 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 29,924 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Realized gain (loss) on: | | | | |
Investments in securities | | | 726,175 | |
Foreign currency transactions | | | 688 | |
| | | | |
Net realized gain (loss) | | | 726,863 | |
| | | | |
Change in unrealized appreciation (depreciation) on: | |
Investments in securities | | | (552,995 | ) |
Foreign currency translations | | | 225 | |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (552,770 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | 174,093 | |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 204,017 | |
| | | | |
See Notes to Financial Statements.
64
1290 FUNDS
1290 GLOBAL TALENTS FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 29,924 | | | $ | 53,044 | |
Net realized gain (loss) | | | 726,863 | | | | 97,187 | |
Net change in unrealized appreciation (depreciation) | | | (552,770 | ) | | | 1,534,547 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | 204,017 | | | | 1,684,778 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (6,344 | ) | | | (59,488 | ) |
Class I | | | (163,350 | ) | | | (1,215,312 | ) |
Class R | | | (538 | ) | | | (5,857 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (170,232 | ) | | | (1,280,657 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 4,645 and 28,983 shares, respectively ] | | | 55,862 | | | | 348,443 | |
Capital shares issued in reinvestment of dividends [ 452 and 4,796 shares, respectively ] | | | 5,808 | | | | 53,769 | |
Capital shares repurchased [ (8,185) and (20,615) shares, respectively ] | | | (105,116 | ) | | | (249,226 | ) |
| | | | | | | | |
Total Class A transactions | | | (43,446 | ) | | | 152,986 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 4,216 and 20,818 shares, respectively ] | | | 54,361 | | | | 242,976 | |
Capital shares issued in reinvestment of dividends [ 583 and 5,591 shares, respectively ] | | | 7,524 | | | | 62,951 | |
Capital shares repurchased [ (25,327) and (33,603) shares, respectively ] | | | (309,675 | ) | | | (394,874 | ) |
| | | | | | | | |
Total Class I transactions | | | (247,790 | ) | | | (88,947 | ) |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 16 and 628 shares, respectively ] | | | 196 | | | | 7,467 | |
Capital shares issued in reinvestment of dividends [ 0 and 12 shares, respectively ] | | | — | | | | 137 | |
Capital shares repurchased [ (1) and (734) shares, respectively ] | | | (8 | ) | | | (8,933 | ) |
| | | | | | | | |
Total Class R transactions | | | 188 | | | | (1,329 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | (291,048 | ) | | | 62,710 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (257,263 | ) | | | 466,831 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 27,369,493 | | | | 26,902,662 | |
| | | | | | | | |
End of period | | $ | 27,112,230 | | | $ | 27,369,493 | |
| | | | | | | | |
See Notes to Financial Statements.
65
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | April 11, 2016*
to October 31,
2016 | |
| Class A | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 12.32 | | | $ | 12.16 | | | $ | 12.44 | | | $ | 10.33 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | — | # | | | — | # | | | (0.02 | ) | | | (0.03 | ) | | | (0.01 | ) |
Net realized and unrealized gain (loss) | | | 0.07 | | | | 0.73 | | | | (0.26 | ) | | | 2.18 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.07 | | | | 0.73 | | | | (0.28 | ) | | | 2.15 | | | | 0.33 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gains | | | (0.05 | ) | | | (0.57 | ) | | | — | | | | (0.04 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.34 | | | $ | 12.32 | | | $ | 12.16 | | | $ | 12.44 | | | $ | 10.33 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 0.58 | % | | | 6.49 | % | | | (2.25 | )% | | | 20.89 | % | | | 3.30 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 1,413 | | | $ | 1,448 | | | $ | 1,270 | | | $ | 803 | | | $ | 103 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.25 | % | | | 1.25 | % | | | 1.25 | % | | | 1.27 | % | | | 1.40 | % |
Before waivers and reimbursements (a)(f) | | | 1.96 | % | | | 2.04 | % | | | 1.94 | % | | | 2.13 | % | | | 2.31 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | (0.02 | )% | | | (0.02 | )% | | | (0.13 | )% | | | (0.25 | )% | | | (0.19 | )%(l) |
Before waivers and reimbursements (a)(f) | | | (0.73 | )% | | | (0.81 | )% | | | (0.82 | )% | | | (1.11 | )% | | | (1.10 | )%(l) |
Portfolio turnover rate^ | | | 11 | %(z) | | | 20 | % | | | 26 | % | | | 18 | % | | | 11 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | April 11, 2016*
to October 31,
2016 | |
| Class I | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 12.40 | | | $ | 12.22 | | | $ | 12.48 | | | $ | 10.34 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.01 | | | | 0.03 | | | | 0.02 | | | | 0.01 | | | | — | # |
Net realized and unrealized gain (loss) | | | 0.09 | | | | 0.73 | | | | (0.26 | ) | | | 2.18 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.10 | | | | 0.76 | | | | (0.24 | ) | | | 2.19 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.03 | ) | | | (0.01 | ) | | | (0.02 | ) | | | (0.01 | ) | | | — | |
Distributions from net realized gains | | | (0.05 | ) | | | (0.57 | ) | | | — | | | | (0.04 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.08 | ) | | | (0.58 | ) | | | (0.02 | ) | | | (0.05 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.42 | | | $ | 12.40 | | | $ | 12.22 | | | $ | 12.48 | | | $ | 10.34 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 0.77 | % | | | 6.72 | % | | | (1.95 | )% | | | 21.23 | % | | | 3.40 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 25,577 | | | $ | 25,799 | | | $ | 25,511 | | | $ | 25,009 | | | $ | 20,479 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.00 | % | | | 1.00 | % | | | 1.00 | % | | | 1.05 | % | | | 1.15 | % |
Before waivers and reimbursements (a)(f) | | | 1.71 | % | | | 1.79 | % | | | 1.69 | % | | | 1.92 | % | | | 2.06 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.23 | % | | | 0.21 | % | | | 0.13 | % | | | 0.09 | % | | | 0.06 | %(l) |
Before waivers and reimbursements (a)(f) | | | (0.48 | )% | | | (0.57 | )% | | | (0.56 | )% | | | (0.79 | )% | | | (0.85 | )%(l) |
Portfolio turnover rate^ | | | 11 | %(z) | | | 20 | % | | | 26 | % | | | 18 | % | | | 11 | %(z) |
See Notes to Financial Statements.
66
1290 FUNDS
1290 GLOBAL TALENTS FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | April 11, 2016*
to October 31,
2016 | |
| Class R | | 2019 | | | 2018 | | | 2017 | |
Net asset value, beginning of period | | $ | 12.21 | | | $ | 12.09 | | | $ | 12.39 | | | $ | 10.31 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | (0.02 | ) | | | (0.03 | ) | | | (0.05 | ) | | | (0.05 | ) | | | (0.03 | ) |
Net realized and unrealized gain (loss) | | | 0.08 | | | | 0.72 | | | | (0.25 | ) | | | 2.17 | | | | 0.34 | |
| | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | 0.06 | | | | 0.69 | | | | (0.30 | ) | | | 2.12 | | | | 0.31 | |
| | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | |
Distributions from net realized gains | | | (0.05 | ) | | | (0.57 | ) | | | — | | | | (0.04 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.22 | | | $ | 12.21 | | | $ | 12.09 | | | $ | 12.39 | | | $ | 10.31 | |
| | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | 0.50 | % | | | 6.18 | % | | | (2.42 | )% | | | 20.64 | % | | | 3.10 | % |
| | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 123 | | | $ | 123 | | | $ | 122 | | | $ | 124 | | | $ | 103 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.50 | % | | | 1.50 | % | | | 1.50 | % | | | 1.55 | % | | | 1.65 | % |
Before waivers and reimbursements (a)(f) | | | 2.21 | % | | | 2.29 | % | | | 2.19 | % | | | 2.42 | % | | | 2.56 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | (0.27 | )% | | | (0.29 | )% | | | (0.37 | )% | | | (0.41 | )% | | | (0.44 | )%(l) |
Before waivers and reimbursements (a)(f) | | | (0.98 | )% | | | (1.08 | )% | | | (1.06 | )% | | | (1.29 | )% | | | (1.35 | )%(l) |
Portfolio turnover rate^ | | | 11 | %(z) | | | 20 | % | | | 26 | % | | | 18 | % | | | 11 | %(z) |
| * | Commencement of Operations. |
| # | Per share amount is less than $0.005. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
67
1290 HIGH YIELD BOND FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENTSUB-ADVISER
| Ø | | AXA Investment Managers, Inc. |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | | |
| | | | | | 6 Months | | | 1 Year | | | 5 Year | | | Since Incept. | |
Fund – Class A Shares* | |
| without Sales
Charge |
| | | (4.93 | )% | | | (3.17 | )% | | | 2.75 | % | | | 2.72 | % |
| | |
| with Sales
Charge (a) |
| | | (9.23 | ) | | | (7.52 | ) | | | 1.82 | | | | 1.86 | |
Fund – Class I Shares* | | | | | | | (4.81 | ) | | | (3.03 | ) | | | 3.00 | | | | 2.97 | |
Fund – Class R Shares* | | | | | | | (4.94 | ) | | | (3.40 | ) | | | 2.51 | | | | 2.47 | |
Fund – Class T Shares*† | |
| without Sales
Charge |
| | | (4.81 | ) | | | (3.03 | ) | | | 3.01 | | | | 2.98 | |
| | |
| with Sales
Charge (b) |
| | | (7.16 | ) | | | (5.41 | ) | | | 2.49 | | | | 2.49 | |
ICE BofAML U.S. High Yield Index | | | | | | | (7.68 | ) | | | (5.26 | ) | | | 3.19 | | | | 3.22 | |
| |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. (a) A 4.50%front-end sales charge was deducted. (b) A 2.50%front-end sales charge was deducted. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I, R and T shares were 1.79%, 1.53%, 2.03% and 1.78%, respectively. The net expense ratios for Class A, I, R and T shares were 1.00%, 0.75%, 1.25% and 1.00%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — AXA Investment Managers, Inc.
Returns were strong through year-end, then began to flatten and then rapidly decline in the first quarter, before a modest rebound in April. The negative six-month return was driven primarily by growing uncertainty surrounding the global health care crisis due to COVID-19, and to a lesser extent, a crude oil price war between two of the largest petroleum producing nations: Russia and Saudi Arabia. High yield credit began its recovery following a difficult March as fiscal and monetary authorities introduced drastic action to stave off any near-term consequences of the health care crisis. High yield market flows were up at year-end 2019 before turning significantly negative in the first quarter of 2020 – the six-month period had positive net flows of $0.62 billion.
For the six-month period ended April 30, 2020, U.S. high-yield bonds underperformed U.S. Equities, U.S. Investment Grade Corporates and U.S. Treasuries. Within U.S. high-yield bonds, higher quality BB-rated credits outperformed both single B-rated credits and CCC-and-lower rated credits.
Fund Highlights
The Fund’s Class I shares returned -4.81% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the ICE BofA U.S. High Yield Index, returned -7.68%. The Fund outperformed its benchmark during the period.
During the six-month period ended April 30, 2020, the Fund’s relative performance benefited from positive security selection, particularly within the highest yielding portion of the market. The Fund’s macro positioning had a positive impact on relative performance during the period. The Fund’s relative performance benefited from an overweight to short duration securities as this segment of the market outperformed the broad U.S. high yield market during the period. From a sector perspective the Fund significantly outperformed within the energy sector and had positive security selection within the telecommunications sector. These positive effects were partially offset by negative security selection within the media and health care sectors. The Fund’s relative performance benefited from an overweight to the technology sector, which outperformed. The Fund’s underweight to the utility sector detracted from relative performance during the period.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The top contributors to return for the period were debt positions in Sprint Corp., Cincinnati Bell, Inc. and Rackspace Hosting, Inc. |
68
1290 HIGH YIELD BOND FUND (Unaudited)
| • | | Sprint was the fourth largest national wireless telecommunication service provider. Sprint’s 8.75% bond due 2032 was a top contributor to return due to the credit accretive merger of Sprint with the third largest national wireless telecommunications company, T-Mobile U.S.A. Inc. The merger positions the combined credit to eventually attain investment grade ratings, which this bond will particularly benefit from. |
| • | | Cincinnati Bell is a local incumbent wireline telecommunications service provider, with operations in Hawaii and the greater Cincinnati area. The company’s 7.00% bond due 2024 was a top contributor to return as funds associated with Macquarie Infrastructure announced the take-private of Cincinnati Bell. The issuer’s capital structure is expected to be refinanced in the process, with this bond getting at least a 101 Change of Control put option, or a full call at 103.5 when the transaction closes. |
| • | | Rackspace is a provider of managed information technology solutions, including managed dedicated server/private cloud hosting, public cloud, managed public cloud services and managed information technology applications. Rackspace was a top performer due to management’s execution on its turnaround strategy, returning the company to organic growth in the fourth quarter of 2019. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The bottom contributors to return for the period were debt positions in Summit Midstream Holdings LLC, Surgery Center Holdings, Inc. and Diamond Sports Group LLC. |
| • | | Summit Midstream is a provider of natural gas gathering and processing services in several oil & gas producing basins in the U.S. Their bonds have underperformed the market due to the collapse in oil & gas prices following a warm winter combined with the OPEC price war initiated in March 2020. |
| • | | Surgery Partners (Surgery Center Holdings) is an operator of ambulatory surgical facilities (ASC’s) and surgical hospitals. Surgery Partners was a bottom contributor due to the COVID-19 crisis, which delayed elective surgeries and caused case volume to decline by 80-90% at most of their facilities in April. |
| • | | Diamond Sports is the owner of a number of regional sports networks which televise professional baseball, basketball and hockey in various local markets. The 6.625% bond due 2027 was a bottom contributor to return on a combination of a loss of carriage on Dish Network, which was driving leverage higher and free cash flow lower, combined with the impact of the Covid-19 pandemic, which has led to the temporary shutdown of professional sports. With sports shut down, the company has lost all of its advertising revenues (less than 20% of total top line) and may contractually lose some of the revenues from cable and satellite operators depending on when professional sports return. |
| | | | |
| | |
Sector Weightings as of April 30, 2020 | | % of Net Assets | |
Communication Services | | | 16.6 | % |
Industrials | | | 14.8 | |
Materials | | | 12.7 | |
Information Technology | | | 12.5 | |
Consumer Discretionary | | | 9.7 | |
Energy | | | 8.6 | |
Consumer Staples | | | 7.7 | |
Health Care | | | 6.2 | |
Financials | | | 5.0 | |
Real Estate | | | 2.4 | |
Investment Company | | | 0.3 | |
Utilities | | | 0.2 | |
Cash and Other | | | 3.3 | |
| | | | | |
| | | | 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 thesix-month period ended April 30, 2020 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled ‘‘Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
69
1290 HIGH YIELD BOND 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 11/1/19 | | | Ending
Account
Value 4/30/20 | | | Expenses
Paid
During
Period* 11/1/19 -
4/30/20 | |
Class A | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $950.70 | | | | $4.85 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.89 | | | | 5.02 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 951.90 | | | | 3.64 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,021.13 | | | | 3.77 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 950.60 | | | | 6.06 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,018.65 | | | | 6.27 | |
Class T** | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 951.90 | | | | 3.64 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,021.13 | | | | 3.77 | |
| |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.00%, 0.75%, 1.25% and 0.75%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). ** Class T shares currently are not offered for sale. | |
70
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
LONG-TERM DEBT SECURITIES: | |
Corporate Bonds (96.4%) | |
Communication Services (16.6%) | | | | | |
Diversified Telecommunication Services (6.6%) | |
CCO Holdings LLC | | | | | | | | |
5.375%, 5/1/25§ | | $ | 165,000 | | | $ | 169,094 | |
5.750%, 2/15/26§ | | | 162,000 | | | | 168,618 | |
5.875%, 5/1/27§ | | | 140,000 | | | | 145,626 | |
4.750%, 3/1/30§ | | | 110,000 | | | | 111,891 | |
4.500%, 5/1/32§ | | | 159,000 | | | | 157,857 | |
CenturyLink, Inc. | | | | | | | | |
5.125%, 12/15/26§ | | | 230,000 | | | | 219,650 | |
4.000%, 2/15/27§ | | | 135,000 | | | | 131,962 | |
Series G 6.875%, 1/15/28 | | | 128,000 | | | | 130,240 | |
Series W 6.750%, 12/1/23 | | | 70,000 | | | | 73,500 | |
Cincinnati Bell, Inc. | | | | | | | | |
7.000%, 7/15/24§ | | | 285,000 | | | | 287,582 | |
Level 3 Financing, Inc. | | | | | | | | |
5.375%, 8/15/22 | | | 237,000 | | | | 237,000 | |
Sprint Capital Corp. | | | | | | | | |
8.750%, 3/15/32 | | | 156,000 | | | | 219,180 | |
Zayo Group Holdings, Inc. | | | | | | | | |
4.000%, 3/1/27§ | | | 245,000 | | | | 237,302 | |
6.125%, 3/1/28§ | | | 109,000 | | | | 102,735 | |
| | | | | | | | |
| | | | | | | 2,392,237 | |
| | | | | | | | |
Entertainment (1.3%) | |
Lions Gate Capital Holdings LLC | | | | | | | | |
6.375%, 2/1/24§ | | | 38,000 | | | | 35,353 | |
Live Nation Entertainment, Inc. | | | | | | | | |
4.875%, 11/1/24§ | | | 306,000 | | | | 271,193 | |
4.750%, 10/15/27§ | | | 78,000 | | | | 65,715 | |
Netflix, Inc. | | | | | | | | |
4.875%, 6/15/30§ | | | 83,000 | | | | 88,412 | |
| | | | | | | | |
| | | | | | | 460,673 | |
| | | | | | | | |
Interactive Media & Services (1.3%) | |
Match Group, Inc. | | | | | | | | |
6.375%, 6/1/24 | | | 149,000 | | | | 153,470 | |
Rackspace Hosting, Inc. | | | | | | | | |
8.625%, 11/15/24§ | | | 329,000 | | | | 324,680 | |
| | | | | | | | |
| | | | | | | 478,150 | |
| | | | | | | | |
Media (6.0%) | |
Charter Communications Operating LLC | | | | | | | | |
4.908%, 7/23/25 | | | 100,000 | | | | 112,720 | |
Cinemark USA, Inc. | | | | | | | | |
8.750%, 5/1/25§ | | | 50,000 | | | | 50,750 | |
Diamond Sports Group LLC | | | | | | | | |
5.375%, 8/15/26§ | | | 198,000 | | | | 150,480 | |
6.625%, 8/15/27§ | | | 198,000 | | | | 107,910 | |
DISH DBS Corp. | | | | | | | | |
5.875%, 7/15/22 | | | 112,000 | | | | 112,420 | |
Getty Images, Inc. | | | | | | | | |
9.750%, 3/1/27§ | | | 236,000 | | | | 174,640 | |
McGraw-Hill Global Education Holdings LLC | | | | | | | | |
7.875%, 5/15/24§ | | | 89,000 | | | | 56,960 | |
Meredith Corp. | | | | | | | | |
6.875%, 2/1/26 | | | 192,000 | | | | 164,544 | |
National CineMedia LLC | | | | | | | | |
5.875%, 4/15/28§ | | | 61,000 | | | | 43,767 | |
Nexstar Broadcasting, Inc. | | | | | | | | |
5.625%, 8/1/24§ | | | 46,000 | | | | 44,907 | |
5.625%, 7/15/27§ | | | 86,000 | | | | 82,023 | |
Sinclair Television Group, Inc. | | | | | | | | |
5.625%, 8/1/24§ | | | 96,000 | | | | 88,092 | |
5.500%, 3/1/30§ | | | 258,000 | | | | 214,140 | |
Sirius XM Radio, Inc. | | | | | | | | |
4.625%, 7/15/24§ | | | 130,000 | | | | 132,386 | |
5.375%, 4/15/25§ | | | 92,000 | | | | 94,875 | |
TEGNA, Inc. | | | | | | | | |
5.500%, 9/15/24§ | | | 150,000 | | | | 151,500 | |
Univision Communications, Inc. | | | | | | | | |
6.750%, 9/15/22§ | | | 186,000 | | | | 187,395 | |
Ziggo BV | | | | | | | | |
5.500%, 1/15/27§ | | | 180,000 | | | | 181,350 | |
| | | | | | | | |
| | | | | | | 2,150,859 | |
| | | | | | | | |
Wireless Telecommunication Services (1.4%) | |
Sprint Corp. | | | | | | | | |
7.875%, 9/15/23 | | | 128,000 | | | | 143,853 | |
7.125%, 6/15/24 | | | 66,000 | | | | 73,920 | |
7.625%, 3/1/26 | | | 114,000 | | | | 134,687 | |
T-Mobile USA, Inc. | | | | | | | | |
6.000%, 3/1/23 | | | 101,000 | | | | 101,849 | |
6.000%, 4/15/24 | | | 64,000 | | | | 65,174 | |
| | | | | | | | |
| | | | | | | 519,483 | |
| | | | | | | | |
Total Communication Services | | | | | | | 6,001,402 | |
| | | | | | | | |
Consumer Discretionary (9.7%) | | | | | |
Auto Components (0.9%) | |
Icahn Enterprises LP | | | | | | | | |
4.750%, 9/15/24 | | | 74,000 | | | | 69,598 | |
5.250%, 5/15/27 | | | 164,000 | | | | 155,800 | |
Panther BF Aggregator 2 LP | | | | | | | | |
8.500%, 5/15/27§ | | | 134,000 | | | | 113,565 | |
| | | | | | | | |
| | | | | | | 338,963 | |
| | | | | | | | |
Automobiles (0.9%) | |
Ford Motor Co. | | | | | | | | |
9.000%, 4/22/25 | | | 221,000 | | | | 215,199 | |
9.625%, 4/22/30 | | | 105,000 | | | | 104,542 | |
| | | | | | | | |
| | | | | | | 319,741 | |
| | | | | | | | |
Distributors (0.9%) | |
Performance Food Group, Inc. | | | | | | | | |
5.500%, 6/1/24§ | | | 76,000 | | | | 74,100 | |
6.875%, 5/1/25§ | | | 73,000 | | | | 74,232 | |
5.500%, 10/15/27§ | | | 50,000 | | | | 47,501 | |
Univar Solutions USA, Inc. | | | | | | | | |
5.125%, 12/1/27§ | | | 135,000 | | | | 133,902 | |
| | | | | | | | |
| | | | | | | 329,735 | |
| | | | | | | | |
Diversified Consumer Services (0.6%) | |
GEMS MENASA Cayman Ltd. | | | | | | | | |
7.125%, 7/31/26§ | | | 200,000 | | | | 183,563 | |
Service Corp. International | | | | | | | | |
5.375%, 5/15/24 | | | 36,000 | | | | 36,607 | |
| | | | | | | | |
| | | | | | | 220,170 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (4.4%) | |
1011778 BC ULC 4.250%, 5/15/24§ | | | 36,000 | | | | 35,966 | |
5.750%, 4/15/25§ | | | 36,000 | | | | 37,890 | |
5.000%, 10/15/25§ | | | 174,000 | | | | 174,325 | |
See Notes to Financial Statements.
71
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Churchill Downs, Inc. | | | | | | | | |
5.500%, 4/1/27§ | | $ | 170,000 | | | $ | 163,358 | |
Eldorado Resorts, Inc. | | | | | | | | |
7.000%, 8/1/23 | | | 186,000 | | | | 178,560 | |
6.000%, 9/15/26 | | | 124,000 | | | | 124,583 | |
Golden Entertainment, Inc. | | | | | | | | |
7.625%, 4/15/26§ | | | 134,000 | | | | 100,165 | |
Hilton Domestic Operating Co., Inc. | | | | | | | | |
5.750%, 5/1/28§ | | | 80,000 | | | | 80,608 | |
Hyatt Hotels Corp. | | | | | | | | |
5.750%, 4/23/30 | | | 58,000 | | | | 59,402 | |
LTF Merger Sub, Inc. | | | | | | | | |
8.500%, 6/15/23§ | | | 332,000 | | | | 268,090 | |
Scientific Games International, Inc. | | | | | | | | |
5.000%, 10/15/25§ | | | 98,000 | | | | 85,277 | |
7.000%, 5/15/28§ | | | 80,000 | | | | 57,600 | |
7.250%, 11/15/29§ | | | 71,000 | | | | 50,765 | |
Station Casinos LLC | | | | | | | | |
5.000%, 10/1/25§ | | | 31,000 | | | | 25,845 | |
4.500%, 2/15/28§ | | | 94,000 | | | | 75,200 | |
Vail Resorts, Inc. | | | | | | | | |
6.250%, 5/15/25§ | | | 58,000 | | | | 59,450 | |
| | | | | | | | |
| | | | | | | 1,577,084 | |
| | | | | | | | |
Internet & Direct Marketing Retail (0.7%) | |
Expedia Group, Inc. | | | | | | | | |
6.250%, 5/1/25§ | | | 59,000 | | | | 60,315 | |
Photo Holdings Merger Sub, Inc. | | | | | | | | |
8.500%, 10/1/26§ | | | 212,000 | | | | 184,493 | |
| | | | | | | | |
| | | | | | | 244,808 | |
| | | | | | | | |
Specialty Retail (1.3%) | |
Asbury Automotive Group, Inc. | | | | | | | | |
4.750%, 3/1/30§ | | | 22,000 | | | | 18,433 | |
eG Global Finance plc | | | | | | | | |
8.500%, 10/30/25§ | | | 200,000 | | | | 190,250 | |
KGA Escrow LLC | | | | | | | | |
7.500%, 8/15/23§ | | | 148,000 | | | | 134,680 | |
Penske Automotive Group, Inc. | | | | | | | | |
5.750%, 10/1/22 | | | 78,000 | | | | 74,295 | |
SRS Distribution, Inc. | | | | | | | | |
8.250%, 7/1/26§ | | | 48,000 | | | | 44,520 | |
| | | | | | | | |
| | | | | | | 462,178 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 3,492,679 | |
| | | | | | | | |
Consumer Staples (7.7%) | | | | | |
Food & Staples Retailing (0.4%) | |
US Foods, Inc. | | | | | | | | |
6.250%, 4/15/25§ | | | 148,000 | | | | 151,145 | |
| | | | | | | | |
Food Products (4.7%) | |
B&G Foods, Inc. | | | | | | | | |
5.250%, 4/1/25 | | | 101,000 | | | | 102,263 | |
5.250%, 9/15/27 | | | 74,000 | | | | 74,916 | |
Clearwater Seafoods, Inc. | | | | | | | | |
6.875%, 5/1/25§ | | | 149,000 | | | | 136,335 | |
JBS USA Lux SA | | | | | | | | |
6.750%, 2/15/28§ | | | 152,000 | | | | 161,405 | |
Kraft Heinz Foods Co. | | | | | | | | |
4.875%, 2/15/25§ | | | 180,000 | | | | 184,214 | |
6.750%, 3/15/32 (e) | | | 13,000 | | | | 15,957 | |
6.875%, 1/26/39 | | | 116,000 | | | | 138,285 | |
4.375%, 6/1/46 | | | 139,000 | | | | 132,490 | |
Lamb Weston Holdings, Inc. | | | | | | | | |
4.625%, 11/1/24§ | | | 22,000 | | | | 22,415 | |
4.875%, 11/1/26§ | | | 137,000 | | | | 137,343 | |
Pilgrim’s Pride Corp. | | | | | | | | |
5.875%, 9/30/27§ | | | 136,000 | | | | 138,210 | |
Post Holdings, Inc. | | | | | | | | |
5.750%, 3/1/27§ | | | 156,000 | | | | 159,802 | |
4.625%, 4/15/30§ | | | 100,000 | | | | 97,919 | |
Sigma Holdco BV | | | | | | | | |
7.875%, 5/15/26§ | | | 200,000 | | | | 188,000 | |
| | | | | | | | |
| | | | | | | 1,689,554 | |
| | | | | | | | |
Household Products (1.8%) | |
Central Garden & Pet Co. | | | | | | | | |
6.125%, 11/15/23 | | | 121,000 | | | | 121,000 | |
Energizer Holdings, Inc. | | | | | | | | |
5.500%, 6/15/25§ | | | 168,000 | | | | 170,856 | |
7.750%, 1/15/27§ | | | 99,000 | | | | 104,994 | |
Kronos Acquisition Holdings, Inc. | | | | | | | | |
9.000%, 8/15/23§ | | | 311,000 | | | | 269,466 | |
| | | | | | | | |
| | | | | | | 666,316 | |
| | | | | | | | |
Personal Products (0.8%) | |
Prestige Brands, Inc. | | | | | | | | |
6.375%, 3/1/24§ | | | 221,000 | | | | 227,122 | |
5.125%, 1/15/28§ | | | 50,000 | | | | 50,950 | |
| | | | | | | | |
| | | | | | | 278,072 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 2,785,087 | |
| | | | | | | | |
Energy (8.6%) | | | | | |
Energy Equipment & Services (0.2%) | |
Precision Drilling Corp. | | | | | | | | |
7.750%, 12/15/23 | | | 93,000 | | | | 40,688 | |
7.125%, 1/15/26§ | | | 105,000 | | | | 42,000 | |
| | | | | | | | |
| | | | | | | 82,688 | |
| | | | | | | | |
Oil, Gas & Consumable Fuels (8.4%) | |
American Midstream Partners LP | | | | | | | | |
9.500%, 12/15/21 (e)§ | | | 315,000 | | | | 288,619 | |
Antero Resources Corp. | | | | | | | | |
5.625%, 6/1/23 | | | 117,000 | | | | 67,860 | |
Ascent Resources Utica Holdings LLC | | | | | | | | |
10.000%, 4/1/22§ | | | 118,000 | | | | 96,760 | |
7.000%, 11/1/26§ | | | 176,000 | | | | 98,560 | |
Blue Racer Midstream LLC | | | | | | | | |
6.125%, 11/15/22§ | | | 246,000 | | | | 204,488 | |
6.625%, 7/15/26§ | | | 150,000 | | | | 100,125 | |
Calumet Specialty Products Partners LP | | | | | | | | |
11.000%, 4/15/25§ | | | 119,000 | | | | 94,605 | |
Crestwood Midstream Partners LP | | | | | | | | |
6.250%, 4/1/23 (e) | | | 222,000 | | | | 160,950 | |
5.625%, 5/1/27§ | | | 54,000 | | | | 34,830 | |
CrownRock LP | | | | | | | | |
5.625%, 10/15/25§ | | | 268,000 | | | | 215,936 | |
Delek Logistics Partners LP | | | | | | | | |
6.750%, 5/15/25 | | | 195,000 | | | | 185,006 | |
Genesis Energy LP | | | | | | | | |
5.625%, 6/15/24 | | | 82,000 | | | | 68,188 | |
7.750%, 2/1/28 | | | 212,000 | | | | 180,963 | |
Hilcorp Energy I LP | | | | | | | | |
6.250%, 11/1/28§ | | | 136,000 | | | | 70,294 | |
See Notes to Financial Statements.
72
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Holly Energy Partners LP | | | | | | | | |
5.000%, 2/1/28§ | | $ | 111,000 | | | $ | 100,455 | |
Indigo Natural Resources LLC | | | | | | | | |
6.875%, 2/15/26§ | | | 82,000 | | | | 76,260 | |
PBF Logistics LP | | | | | | | | |
6.875%, 5/15/23 | | | 220,000 | | | | 165,275 | |
Southern Star Central Corp. | | | | | | | | |
5.125%, 7/15/22§ | | | 330,000 | | | | 313,043 | |
Southwestern Energy Co. | | | | | | | | |
7.750%, 10/1/27 | | | 97,000 | | | | 84,409 | |
Summit Midstream Holdings LLC | | | | | | | | |
5.500%, 8/15/22 | | | 202,000 | | | | 46,713 | |
Targa Resources Partners LP | | | | | | | | |
6.750%, 3/15/24 | | | 207,000 | | | | 196,306 | |
5.875%, 4/15/26 | | | 92,000 | | | | 82,363 | |
WPX Energy, Inc. | | | | | | | | |
4.500%, 1/15/30 | | | 124,000 | | | | 101,680 | |
| | | | | | | | |
| | | | | | | 3,033,688 | |
| | | | | | | | |
Total Energy | | | | | | | 3,116,376 | |
| | | | | | | | |
Financials (5.0%) | | | | | |
Capital Markets (0.3%) | |
MSCI, Inc. | | | | | | | | |
4.750%, 8/1/26§ | | | 94,000 | | | | 98,256 | |
| | | | | | | | |
Consumer Finance (1.0%) | |
Avolon Holdings Funding Ltd. | | | | | | | | |
5.250%, 5/15/24§ | | | 67,000 | | | | 58,980 | |
Curo Group Holdings Corp. | | | | | | | | |
8.250%, 9/1/25§ | | | 144,000 | | | | 116,064 | |
Enova International, Inc. | | | | | | | | |
8.500%, 9/1/24§ | | | 154,000 | | | | 133,980 | |
Park Aerospace Holdings Ltd. | | | | | | | | |
5.500%, 2/15/24§ | | | 62,000 | | | | 54,656 | |
| | | | | | | | |
| | | | | | | 363,680 | |
| | | | | | | | |
Diversified Financial Services (1.7%) | |
Cardtronics, Inc. | | | | | | | | |
5.500%, 5/1/25§ | | | 130,000 | | | | 122,967 | |
Refinitiv US Holdings, Inc. | | | | | | | | |
6.250%, 5/15/26§ | | | 238,000 | | | | 253,522 | |
8.250%, 11/15/26§ | | | 110,000 | | | | 122,100 | |
Verscend Escrow Corp. | | | | | | | | |
9.750%, 8/15/26§ | | | 120,000 | | | | 124,800 | |
| | | | | | | | |
| | | | | | | 623,389 | |
| | | | | | | | |
Insurance (1.4%) | |
Acrisure LLC | | | | | | | | |
8.125%, 2/15/24§ | | | 400,000 | | | | 412,000 | |
7.000%, 11/15/25§ | | | 52,000 | | | | 46,540 | |
HUB International Ltd. | | | | | | | | |
7.000%, 5/1/26§ | | | 36,000 | | | | 35,786 | |
| | | | | | | | |
| | | | | | | 494,326 | |
| | | | | | | | |
Thrifts & Mortgage Finance (0.6%) | |
Freedom Mortgage Corp. | | | | | | | | |
8.250%, 4/15/25§ | | | 276,000 | | | | 234,600 | |
| | | | | | | | |
Total Financials | | | | | | | 1,814,251 | |
| | | | | | | | |
Health Care (6.2%) | | | | | |
Health Care Equipment & Supplies (0.4%) | |
Hill-Rom Holdings, Inc. | | | | | | | | |
5.000%, 2/15/25§ | | | 118,000 | | | | 120,655 | |
| | | | | | | | |
Health Care Providers & Services (2.6%) | |
Centene Corp. | | | | | | | | |
5.375%, 6/1/26§ | | | 147,000 | | | | 155,460 | |
5.375%, 8/15/26§ | | | 118,000 | | | | 125,682 | |
Hadrian Merger Sub, Inc. | | | | | | | | |
8.500%, 5/1/26§ | | | 31,000 | | | | 26,931 | |
HCA, Inc. | | | | | | | | |
7.690%, 6/15/25 | | | 91,000 | | | | 101,824 | |
Polaris Intermediate Corp. | | | | | | | | |
8.500%, 12/1/22 PIK§ | | | 234,000 | | | | 195,683 | |
Tenet Healthcare Corp. | | | | | | | | |
4.875%, 1/1/26§ | | | 190,000 | | | | 187,150 | |
Vizient, Inc. | | | | | | | | |
6.250%, 5/15/27§ | | | 33,000 | | | | 34,673 | |
West Street Merger Sub, Inc. | | | | | | | | |
6.375%, 9/1/25§ | | | 118,000 | | | | 110,625 | |
| | | | | | | | |
| | | | | | | 938,028 | |
| | | | | | | | |
Life Sciences Tools & Services (0.5%) | |
Avantor, Inc. | | | | | | | | |
6.000%, 10/1/24§ | | | 75,000 | | | | 79,040 | |
Charles River Laboratories International, Inc. | | | | | | | | |
5.500%, 4/1/26§ | | | 100,000 | | | | 104,115 | |
| | | | | | | | |
| | | | | | | 183,155 | |
| | | | | | | | |
Pharmaceuticals (2.7%) | |
Bausch Health Americas, Inc. | | | | | | | | |
9.250%, 4/1/26§ | | | 217,000 | | | | 239,299 | |
Bausch Health Cos., Inc. | | | | | | | | |
7.000%, 3/15/24§ | | | 340,000 | | | | 353,658 | |
5.500%, 11/1/25§ | | | 126,000 | | | | 130,977 | |
5.750%, 8/15/27§ | | | 54,000 | | | | 56,881 | |
Catalent Pharma Solutions, Inc. | | | | | | | | |
4.875%, 1/15/26§ | | | 115,000 | | | | 116,725 | |
5.000%, 7/15/27§ | | | 79,000 | | | | 80,580 | |
| | | | | | | | |
| | | | | | | 978,120 | |
| | | | | | | | |
Total Health Care | | | | | | | 2,219,958 | |
| | | | | | | | |
Industrials (14.8%) | | | | | |
Aerospace & Defense (1.2%) | |
Bombardier, Inc. | | | | | | | | |
8.750%, 12/1/21§ | | | 185,000 | | | | 153,804 | |
5.750%, 3/15/22§ | | | 17,000 | | | | 12,835 | |
Howmet Aerospace, Inc. | | | | | | | | |
6.875%, 5/1/25 | | | 107,000 | | | | 109,140 | |
Spirit AeroSystems, Inc. | | | | | | | | |
7.500%, 4/15/25§ | | | 152,000 | | | | 149,340 | |
| | | | | | | | |
| | | | | | | 425,119 | |
| | | | | | | | |
Air Freight & Logistics (0.3%) | |
XPO Logistics, Inc. | | | | | | | | |
6.250%, 5/1/25§ | | | 106,000 | | | | 107,325 | |
| | | | | | | | |
Building Products (1.9%) | |
JELD-WEN, Inc. | | | | | | | | |
6.250%, 5/15/25§ | | | 89,000 | | | | 90,001 | |
Standard Industries, Inc. | | | | | | | | |
5.500%, 2/15/23§ | | | 103,000 | | | | 103,000 | |
6.000%, 10/15/25§ | | | 222,000 | | | | 228,383 | |
Summit Materials LLC | | | | | | | | |
6.125%, 7/15/23 | | | 272,000 | | | | 272,258 | |
| | | | | | | | |
| | | | | | | 693,642 | |
| | | | | | | | |
See Notes to Financial Statements.
73
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Commercial Services & Supplies (4.5%) | |
ACCO Brands Corp. | | | | | | | | |
5.250%, 12/15/24§ | | $ | 138,000 | | | $ | 136,792 | |
ADT Security Corp. (The) | | | | | | | | |
4.125%, 6/15/23 | | | 110,000 | | | | 107,800 | |
4.875%, 7/15/32§ | | | 72,000 | | | | 64,080 | |
Allied Universal Holdco LLC | | | | | | | | |
6.625%, 7/15/26§ | | | 130,000 | | | | 134,225 | |
9.750%, 7/15/27§ | | | 142,000 | | | | 144,840 | |
Aramark Services, Inc. | | | | | | | | |
5.000%, 4/1/25§ | | | 158,000 | | | | 154,050 | |
6.375%, 5/1/25§ | | | 92,000 | | | | 95,680 | |
Cimpress plc | | | | | | | | |
7.000%, 6/15/26§ | | | 150,000 | | | | 110,295 | |
Garda World Security Corp. | | | | | | | | |
9.500%, 11/1/27§ | | | 127,000 | | | | 126,591 | |
GFL Environmental, Inc. | | | | | | | | |
7.000%, 6/1/26§ | | | 86,000 | | | | 90,326 | |
5.125%, 12/15/26§ | | | 88,000 | | | | 91,520 | |
Matthews International Corp. | | | | | | | | |
5.250%, 12/1/25§ | | | 241,000 | | | | 217,804 | |
Nielsen Co. Luxembourg Sarl (The) | | | | | | | | |
5.500%, 10/1/21§ | | | 58,000 | | | | 57,420 | |
Nielsen Finance LLC | | | | | | | | |
5.000%, 4/15/22§ | | | 90,000 | | | | 88,660 | |
| | | | | | | | |
| | | | | | | 1,620,083 | |
| | | | | | | | |
Construction & Engineering (1.2%) | |
AECOM | | | | | | | | |
5.125%, 3/15/27 | | | 98,000 | | | | 99,531 | |
AECOM Global II LLC | | | | | | | | |
5.000%, 4/1/22 (e) | | | 95,000 | | | | 94,881 | |
New Enterprise Stone & Lime Co., Inc. | | | | | | | | |
6.250%, 3/15/26§ | | | 241,000 | | | | 226,540 | |
| | | | | | | | |
| | | | | | | 420,952 | |
| | | | | | | | |
Machinery (0.8%) | |
Mueller Water Products, Inc. | | | | | | | | |
5.500%, 6/15/26§ | | | 52,000 | | | | 53,820 | |
Welbilt, Inc. | | | | | | | | |
9.500%, 2/15/24 | | | 272,000 | | | | 225,080 | |
| | | | | | | | |
| | | | | | | 278,900 | |
| | | | | | | | |
Professional Services (2.3%) | |
Dun & Bradstreet Corp. (The) | | | | | | | | |
6.875%, 8/15/26§ | | | 156,000 | | | | 164,419 | |
10.250%, 2/15/27§ | | | 291,000 | | | | 318,645 | |
Jaguar Holding Co. II | | | | | | | | |
6.375%, 8/1/23§ | | | 358,000 | | | | 365,160 | |
| | | | | | | | |
| | | | | | | 848,224 | |
| | | | | | | | |
Road & Rail (2.6%) | |
Capitol Investment Merger Sub 2 LLC | | | | | | | | |
10.000%, 8/1/24§ | | | 115,000 | | | | 106,950 | |
DAE Funding LLC | | | | | | | | |
5.250%, 11/15/21§ | | | 100,000 | | | | 90,844 | |
5.000%, 8/1/24§ | | | 40,000 | | | | 35,750 | |
Kenan Advantage Group, Inc. (The) | | | | | | | | |
7.875%, 7/31/23§ | | | 395,000 | | | | 330,441 | |
Watco Cos. LLC | | | | | | | | |
6.375%, 4/1/23§ | | | 406,000 | | | | 392,805 | |
| | | | | | | | |
| | | | | | | 956,790 | |
| | | | | | | | |
Total Industrials | | | | | | | 5,351,035 | |
| | | | | | | | |
Information Technology (12.5%) | | | | | |
Communications Equipment (1.4%) | |
CommScope, Inc. | | | | | | | | |
5.000%, 6/15/21§ | | | 3,000 | | | | 2,948 | |
5.500%, 3/1/24§ | | | 128,000 | | | | 128,000 | |
6.000%, 3/1/26§ | | | 214,000 | | | | 214,535 | |
8.250%, 3/1/27§ | | | 174,000 | | | | 166,561 | |
| | | | | | | | |
| | | | | | | 512,044 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (0.4%) | |
Itron, Inc. 5.000%, 1/15/26§ | | | 122,000 | | | | 122,610 | |
| | | | | | | | |
IT Services (1.2%) | |
Alliance Data Systems Corp. | | | | | | | | |
4.750%, 12/15/24§ | | | 229,000 | | | | 170,033 | |
Gartner, Inc. | | | | | | | | |
5.125%, 4/1/25§ | | | 152,000 | | | | 156,750 | |
Presidio Holdings, Inc. | | | | | | | | |
4.875%, 2/1/27§ | | | 45,000 | | | | 44,325 | |
8.250%, 2/1/28§ | | | 36,000 | | | | 35,100 | |
Science Applications International Corp. | | | | | | | | |
4.875%, 4/1/28§ | | | 40,000 | | | | 38,950 | |
| | | | | | | | |
| | | | | | | 445,158 | |
| | | | | | | | |
Software (7.2%) | |
ACI Worldwide, Inc. | | | | | | | | |
5.750%, 8/15/26§ | | | 145,000 | | | | 145,000 | |
Ascend Learning LLC | | | | | | | | |
6.875%, 8/1/25§ | | | 190,000 | | | | 188,100 | |
6.875%, 8/1/25§ | | | 114,000 | | | | 113,179 | |
Camelot Finance SA | | | | | | | | |
4.500%, 11/1/26§ | | | 316,000 | | | | 315,210 | |
CDK Global, Inc. | | | | | | | | |
5.875%, 6/15/26 | | | 66,000 | | | | 69,135 | |
Change Healthcare Holdings LLC | | | | | | | | |
5.750%, 3/1/25§ | | | 409,000 | | | | 403,454 | |
Granite Merger Sub 2, Inc. | | | | | | | | |
11.000%, 7/15/27§ | | | 191,000 | | | | 183,360 | |
NortonLifeLock, Inc. | | | | | | | | |
5.000%, 4/15/25§ | | | 76,000 | | | | 76,475 | |
PTC, Inc. | | | | | | | | |
4.000%, 2/15/28§ | | | 31,000 | | | | 30,380 | |
Solera LLC | | | | | | | | |
10.500%, 3/1/24§ | | | 430,000 | | | | 427,850 | |
Sophia LP | | | | | | | | |
9.000%, 9/30/23§ | | | 409,000 | | | | 412,068 | |
SS&C Technologies, Inc. | | | | | | | | |
5.500%, 9/30/27§ | | | 229,000 | | | | 234,782 | |
| | | | | | | | |
| | | | | | | 2,598,993 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (2.3%) | |
Dell International LLC | | | | | | | | |
5.875%, 6/15/21§ | | | 211,000 | | | | 211,000 | |
7.125%, 6/15/24§ | | | 171,000 | | | | 177,412 | |
6.100%, 7/15/27§ | | | 84,000 | | | | 91,849 | |
5.300%, 10/1/29§ | | | 124,000 | | | | 129,203 | |
Everi Payments, Inc. | | | | | | | | |
7.500%, 12/15/25§ | | | 92,000 | | | | 74,520 | |
NCR Corp. | | | | | | | | |
6.375%, 12/15/23 | | | 98,000 | | | | 99,347 | |
8.125%, 4/15/25§ | | | 51,000 | | | | 54,060 | |
| | | | | | | | |
| | | | | | | 837,391 | |
| | | | | | | | |
Total Information Technology | | | | | | | 4,516,196 | |
| | | | | | | | |
See Notes to Financial Statements.
74
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Principal
Amount | | | Value
(Note 1) | |
Materials (12.7%) | | | | | |
Chemicals (4.2%) | |
Axalta Coating Systems LLC | | | | | | | | |
4.875%, 8/15/24§ | | $ | 150,000 | | | $ | 152,250 | |
Blue Cube Spinco LLC | | | | | | | | |
10.000%, 10/15/25 | | | 226,000 | | | | 238,712 | |
INEOS Group Holdings SA | | | | | | | | |
5.625%, 8/1/24§ | | | 200,000 | | | | 194,000 | |
NOVA Chemicals Corp. | | | | | | | | |
4.875%, 6/1/24§ | | | 104,000 | | | | 93,340 | |
Nufarm Australia Ltd. | | | | | | | | |
5.750%, 4/30/26§ | | | 123,000 | | | | 115,312 | |
Olin Corp. | | | | | | | | |
5.000%, 2/1/30 | | | 86,000 | | | | 75,465 | |
PolyOne Corp. | | | | | | | | |
5.750%, 5/15/25§ | | | 73,000 | | | | 73,821 | |
PQ Corp. | | | | | | | | |
6.750%, 11/15/22§ | | | 191,000 | | | | 191,836 | |
5.750%, 12/15/25§ | | | 136,000 | | | | 134,640 | |
Starfruit Finco BV | | | | | | | | |
8.000%, 10/1/26§ | | | 150,000 | | | | 140,381 | |
WR Grace & Co.-Conn | | | | | | | | |
5.125%, 10/1/21§ | | | 110,000 | | | | 110,000 | |
| | | | | | | | |
| | | | | | | 1,519,757 | |
| | | | | | | | |
Containers & Packaging (8.0%) | |
ARD Finance SA 6.500%, | | | | | | | | |
6/30/27 PIK§ | | | 200,000 | | | | 186,500 | |
Ardagh Packaging Finance plc | | | | | | | | |
6.000%, 2/15/25§ | | | 200,000 | | | | 199,924 | |
Berry Global, Inc. | | | | | | | | |
5.500%, 5/15/22 | | | 136,000 | | | | 135,490 | |
5.125%, 7/15/23 | | | 174,000 | | | | 175,088 | |
Flex Acquisition Co., Inc. | | | | | | | | |
7.875%, 7/15/26§ | | | 241,000 | | | | 233,168 | |
LABL Escrow Issuer LLC | | | | | | | | |
6.750%, 7/15/26§ | | | 225,000 | | | | 232,492 | |
10.500%, 7/15/27§ | | | 162,000 | | | | 160,521 | |
Mauser Packaging Solutions Holding Co. | | | | | | | | |
5.500%, 4/15/24§ | | | 186,000 | | | | 171,412 | |
7.250%, 4/15/25§ | | | 470,000 | | | | 367,775 | |
OI European Group BV | | | | | | | | |
4.000%, 3/15/23§ | | | 150,000 | | | | 147,000 | |
Owens-Brockway Glass Container, Inc. | | | | | | | | |
5.000%, 1/15/22§ | | | 110,000 | | | | 110,825 | |
5.875%, 8/15/23§ | | | 130,000 | | | | 135,106 | |
Reynolds Group Issuer, Inc. | | | | | | | | |
(ICE LIBOR USD 3 Month + 3.50%),
4.719%, 7/15/21(k)§ | | | 326,000 | | | | 323,555 | |
Sealed Air Corp. | | | | | | | | |
4.875%, 12/1/22§ | | | 102,000 | | | | 104,805 | |
Trivium Packaging Finance BV | | | | | | | | |
5.500%, 8/15/26 (e)§ | | | 200,000 | | | | 205,000 | |
| | | | | | | | |
| | | | | | | 2,888,661 | |
| | | | | | | | |
Metals & Mining (0.5%) | |
Novelis Corp. | | | | | | | | |
4.750%, 1/30/30§ | | | 190,000 | | | | 167,675 | |
| | | | | | | | |
Total Materials | | | | | | | 4,576,093 | |
| | | | | | | | |
Real Estate (2.4%) | | | | | |
Equity Real Estate Investment Trusts (REITs) (0.9%) | |
Equinix, Inc. (REIT) | | | | | | | | |
5.875%, 1/15/26 | | | 90,000 | | | | 93,852 | |
Iron Mountain, Inc. (REIT) | | | | | | | | |
6.000%, 8/15/23 | | | 106,000 | | | | 107,060 | |
SBA Communications Corp. (REIT) | | | | | | | | |
4.875%, 9/1/24 | | | 120,000 | | | | 123,390 | |
| | | | | | | | |
| | | | | | | 324,302 | |
| | | | | | | | |
Real Estate Management & Development (1.5%) | |
Greystar Real Estate Partners LLC | | | | | | | | |
5.750%, 12/1/25§ | | | 227,000 | | | | 206,002 | |
Howard Hughes Corp. (The) | | | | | | | | |
5.375%, 3/15/25§ | | | 166,000 | | | | 160,288 | |
Realogy Group LLC | | | | | | | | |
9.375%, 4/1/27§ | | | 244,000 | | | | 170,800 | |
| | | | | | | | |
| | | | | | | 537,090 | |
| | | | | | | | |
Total Real Estate | | | | | | | 861,392 | |
| | | | | | | | |
Utilities (0.2%) | | | | | |
Independent Power and Renewable Electricity Producers (0.2%) | |
AES Corp. (The) | | | | | | | | |
4.875%, 5/15/23 | | | 86,000 | | | | 86,520 | |
| | | | | | | | |
Total Utilities | | | | | | | 86,520 | |
| | | | | | | | |
Total Corporate Bonds | | | | | | | 34,820,989 | |
| | | | | | | | |
Total Long-Term Debt Securities (96.4%)
(Cost $36,925,914) | | | | | | | 34,820,989 | |
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
SHORT-TERM INVESTMENT: | | | | | | | | |
Investment Company (0.3%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 114,878 | | | | 114,970 | |
| | | | | | | | |
Total Short-Term Investment (0.3%)
(Cost $114,969) | | | | | | | 114,970 | |
| | | | | | | | |
Total Investments in Securities (96.7%)
(Cost $37,040,883) | | | | | | | 34,935,959 | |
Other Assets Less Liabilities (3.3%) | | | | | | | 1,205,532 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 36,141,491 | |
| | | | | | | | |
| § | 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, 2020, the market value of these securities amounted to $27,899,961 or 77.2% 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. |
| (e) | Step Bond - Coupon rate increases or decreases in increments to maturity. Rate disclosed is as of April 30, 2020. Maturity date disclosed is the ultimate maturity date. |
| (k) | Variable or floating rate security, linked to the referenced benchmark. The interest rate shown was the current rate as of April 30, 2020. |
Glossary:
| | ICE | — Intercontinental Exchange |
| | LIBOR | — London Interbank Offered Rate |
| | PIK | —Payment-in Kind Security |
| | USD | — United States Dollar |
See Notes to Financial Statements.
75
1290 FUNDS
1290 HIGH YIELD BOND FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
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 | | | | | | | | | | | | | | | | |
Communication Services | | $ | — | | | $ | 6,001,402 | | | $ | — | | | $ | 6,001,402 | |
Consumer Discretionary | | | — | | | | 3,492,679 | | | | — | | | | 3,492,679 | |
Consumer Staples | | | — | | | | 2,785,087 | | | | — | | | | 2,785,087 | |
Energy | | | — | | | | 3,116,376 | | | | — | | | | 3,116,376 | |
Financials | | | — | | | | 1,814,251 | | | | — | | | | 1,814,251 | |
Health Care | | | — | | | | 2,219,958 | | | | — | | | | 2,219,958 | |
Industrials | | | — | | | | 5,351,035 | | | | — | | | | 5,351,035 | |
Information Technology | | | — | | | | 4,516,196 | | | | — | | | | 4,516,196 | |
Materials | | | — | | | | 4,576,093 | | | | — | | | | 4,576,093 | |
Real Estate | | | — | | | | 861,392 | | | | — | | | | 861,392 | |
Utilities | | | — | | | | 86,520 | | | | — | | | | 86,520 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 114,970 | | | | — | | | | — | | | | 114,970 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 114,970 | | | $ | 34,820,989 | | | $ | — | | | $ | 34,935,959 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 114,970 | | | $ | 34,820,989 | | | $ | — | | | $ | 34,935,959 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 13,142,337 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 10,785,797 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 501,283 | |
Aggregate gross unrealized depreciation | | | (2,607,539 | ) |
| | | | |
Net unrealized depreciation | | $ | (2,106,256 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 37,042,215 | |
| | | | |
See Notes to Financial Statements.
76
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | | | | |
Investments in Securities, at value
(Cost $37,040,883) | | $ | 34,935,959 | |
Cash | | | 894,998 | |
Dividends, interest and other receivables | | | 586,119 | |
Receivable for securities sold | | | 185,683 | |
Receivable for Fund shares sold | | | 38,927 | |
Prepaid registration and filing fees | | | 24,241 | |
Receivable from investment adviser | | | 16 | |
Other assets | | | 4 | |
| | | | |
Total assets | | | 36,665,947 | |
| | | | |
LIABILITIES | | | | |
Payable for securities purchased | | | 320,720 | |
Dividends and distributions payable | | | 117,250 | |
Payable for Fund shares redeemed | | | 25,419 | |
Transfer agent fees payable | | | 1,406 | |
Distribution fees payable – Class A | | | 366 | |
Distribution fees payable – Class R | | | 124 | |
Accrued expenses | | | 59,171 | |
| | | | |
Total liabilities | | | 524,456 | |
| | | | |
NET ASSETS | | $ | 36,141,491 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 41,824,628 | |
Total distributable earnings (loss) | | | (5,683,137 | ) |
| | | | |
Net assets | | $ | 36,141,491 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $1,844,498 / 219,916 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 8.39 | |
Maximum sales charge (4.50% of offering price) | | | 0.40 | |
| | | | |
Maximum offering price per share | | $ | 8.79 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $33,868,864 / 4,035,239 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 8.39 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $309,036 / 36,855 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 8.39 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $119,093 / 14,192 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 8.39 | |
Maximum sales charge (2.50% of offering price) | | | 0.22 | |
| | | | |
Maximum offering price per share | | $ | 8.61 | |
| | | | |
| ** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Interest | | $ | 1,120,557 | |
Dividends | | | 6,208 | |
| | | | |
Total income | | | 1,126,765 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 112,396 | |
Professional fees | | | 49,417 | |
Administrative fees | | | 28,099 | |
Transfer agent fees | | | 22,501 | |
Printing and mailing expenses | | | 19,406 | |
Registration and filing fees | | | 17,970 | |
Custodian fees | | | 5,124 | |
Distribution fees – Class A | | | 2,174 | |
Trustees’ fees | | | 1,440 | |
Distribution fees – Class R | | | 781 | |
Distribution fees – Class T** | | | 157 | |
Miscellaneous | | | 12,244 | |
| | | | |
Gross expenses | | | 271,709 | |
Less: Waiver from investment adviser | | | (128,295 | ) |
Waiver from distributor | | | (157 | ) |
| | | | |
Net expenses | | | 143,257 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 983,508 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | (871,673 | ) |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (1,970,787 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (2,842,460 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (1,858,952 | ) |
| | | | |
| ** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
77
1290 FUNDS
1290 HIGH YIELD BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 983,508 | | | $ | 1,904,693 | |
Net realized gain (loss) | | | (871,673 | ) | | | (25,701 | ) |
Net change in unrealized appreciation (depreciation) | | | (1,970,787 | ) | | | 503,655 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (1,858,952 | ) | | | 2,382,647 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (45,140 | ) | | | (108,338 | ) |
Class I | | | (971,630 | ) | | | (1,764,611 | ) |
Class R | | | (7,880 | ) | | | (15,046 | ) |
Class T** | | | (3,449 | ) | | | (6,981 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (1,028,099 | ) | | | (1,894,976 | ) |
| | | | | | | | |
Tax return of capital: | | | | | | | | |
Class A | | | — | | | | (2,118 | ) |
Class I | | | — | | | | (34,497 | ) |
Class R | | | — | | | | (294 | ) |
Class T** | | | — | | | | (136 | ) |
| | | | | | | | |
Total tax return of capital | | | — | | | | (37,045 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 64,397 and 31,260 shares, respectively ] | | | 542,040 | | | | 285,024 | |
Capital shares issued in reinvestment of dividends [ 4,553 and 11,087 shares, respectively ] | | | 40,019 | | | | 99,880 | |
Capital shares repurchased [ (28,204) and (143,061) shares, respectively ] | | | (230,654 | ) | | | (1,297,523 | ) |
| | | | | | | | |
Total Class A transactions | | | 351,405 | | | | (912,619 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 295,146 and 569,065 shares, respectively ] | | | 2,620,436 | | | | 5,164,420 | |
Capital shares issued in reinvestment of dividends [ 28,083 and 33,563 shares, respectively ] | | | 246,864 | | | | 303,346 | |
Capital shares repurchased [ (200,968) and (90,055) shares, respectively ] | | | (1,727,672 | ) | | | (809,784 | ) |
| | | | | | | | |
Total Class I transactions | | | 1,139,628 | | | | 4,657,982 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 2,851 and 2,702 shares, respectively ] | | | 25,339 | | | | 24,313 | |
Capital shares issued in reinvestment of dividends [ 356 and 609 shares, respectively ] | | | 3,117 | | | | 5,496 | |
Capital shares repurchased [ (280) and (1,517) shares, respectively ] | | | (2,501 | ) | | | (13,763 | ) |
| | | | | | | | |
Total Class R transactions | | | 25,955 | | | | 16,046 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 1,516,988 | | | | 3,761,409 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (1,370,063 | ) | | | 4,212,035 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 37,511,554 | | | | 33,299,519 | |
| | | | | | | | |
End of period | | $ | 36,141,491 | | | $ | 37,511,554 | |
| | | | | | | | |
** Class T shares currently are not offered for sale. | | | | | | | | |
See Notes to Financial Statements.
78
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014* to
October 31, 2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 9.06 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.22 | | | | 0.47 | | | | 0.48 | | | | 0.49 | | | | 0.61 | | | | 0.59 | |
Net realized and unrealized gain (loss) | | | (0.66 | ) | | | 0.14 | | | | (0.40 | ) | | | 0.32 | | | | (0.09 | ) | | | (0.84 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.44 | ) | | | 0.61 | | | | 0.08 | | | | 0.81 | | | | 0.52 | | | | (0.25 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.23 | ) | | | (0.47 | ) | | | (0.48 | ) | | | (0.48 | ) | | | (0.65 | ) | | | (0.60 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.23 | ) | | | (0.48 | ) | | | (0.48 | ) | | | (0.49 | ) | | | (0.66 | ) | | | (0.60 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 8.39 | | | $ | 9.06 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (4.93 | )% | | | 6.97 | % | | | 0.86 | % | | | 9.20 | % | | | 6.17 | % | | | (2.62 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 1,844 | | | $ | 1,623 | | | $ | 2,500 | | | $ | 709 | | | $ | 355 | | | $ | 8,372 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.00 | % | | | 1.00 | % | | | 1.04 | % | | | 1.06 | % | | | 1.06 | % | | | 1.05 | % |
Before waivers and reimbursements (a)(f) | | | 1.69 | % | | | 1.79 | % | | | 1.77 | % | | | 1.84 | % | | | 1.81 | % | | | 2.45 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 5.03 | % | | | 5.27 | % | | | 5.20 | % | | | 5.26 | % | | | 7.06 | % | | | 6.39 | %(l) |
Before waivers and reimbursements (a)(f) | | | 4.34 | % | | | 4.48 | % | | | 4.47 | % | | | 4.48 | % | | | 6.31 | % | | | 4.99 | %(l) |
Portfolio turnover rate^ | | | 30 | %(z) | | | 54 | % | | | 45 | % | | | 54 | % | | | 79 | % | | | 57 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014* to
October 31, 2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 9.06 | | | $ | 8.94 | | | $ | 9.34 | | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.23 | | | | 0.50 | | | | 0.50 | | | | 0.52 | | | | 0.58 | | | | 0.62 | |
Net realized and unrealized gain (loss) | | | (0.66 | ) | | | 0.12 | | | | (0.40 | ) | | | 0.33 | | | | (0.04 | ) | | | (0.85 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.43 | ) | | | 0.62 | | | | 0.10 | | | | 0.85 | | | | 0.54 | | | | (0.23 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.24 | ) | | | (0.49 | ) | | | (0.50 | ) | | | (0.51 | ) | | | (0.67 | ) | | | (0.62 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.50 | ) | | | (0.50 | ) | | | (0.52 | ) | | | (0.68 | ) | | | (0.62 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 8.39 | | | $ | 9.06 | | | $ | 8.94 | | | $ | 9.34 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (4.81 | )% | | | 7.12 | % | | | 1.09 | % | | | 9.58 | % | | | 6.44 | % | | | (2.39 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 33,869 | | | $ | 35,453 | | | $ | 30,386 | | | $ | 30,185 | | | $ | 27,710 | | | $ | 8,395 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.75 | % | | | 0.75 | % | | | 0.80 | % | | | 0.82 | % | | | 0.84 | % | | | 0.80 | % |
Before waivers and reimbursements (a)(f) | | | 1.44 | % | | | 1.53 | % | | | 1.52 | % | | | 1.58 | % | | | 1.53 | % | | | 2.20 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 5.27 | % | | | 5.50 | % | | | 5.47 | % | | | 5.55 | % | | | 6.62 | % | | | 6.64 | %(l) |
Before waivers and reimbursements (a)(f) | | | 4.59 | % | | | 4.71 | % | | | 4.74 | % | | | 4.79 | % | | | 5.94 | % | | | 5.24 | %(l) |
Portfolio turnover rate^ | | | 30 | %(z) | | | 54 | % | | | 45 | % | | | 54 | % | | | 79 | % | | | 57 | %(z) |
See Notes to Financial Statements.
79
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014* to
October 31, 2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 9.05 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.21 | | | | 0.45 | | | | 0.45 | | | | 0.47 | | | | 0.59 | | | | 0.57 | |
Net realized and unrealized gain (loss) | | | (0.65 | ) | | | 0.13 | | | | (0.39 | ) | | | 0.32 | | | | (0.10 | ) | | | (0.85 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.44 | ) | | | 0.58 | | | | 0.06 | | | | 0.79 | | | | 0.49 | | | | (0.28 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.45 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.62 | ) | | | (0.57 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.46 | ) | | | (0.46 | ) | | | (0.47 | ) | | | (0.63 | ) | | | (0.57 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 8.39 | | | $ | 9.05 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (4.94 | )% | | | 6.59 | % | | | 0.63 | % | | | 8.95 | % | | | 5.91 | % | | | (2.86 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 309 | | | $ | 307 | | | $ | 287 | | | $ | 218 | | | $ | 195 | | | $ | 8,339 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.25 | % | | | 1.25 | % | | | 1.30 | % | | | 1.32 | % | | | 1.31 | % | | | 1.30 | % |
Before waivers and reimbursements (a)(f) | | | 1.94 | % | | | 2.03 | % | | | 2.02 | % | | | 2.08 | % | | | 2.06 | % | | | 2.70 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 4.78 | % | | | 5.00 | % | | | 4.96 | % | | | 5.05 | % | | | 6.83 | % | | | 6.14 | %(l) |
Before waivers and reimbursements (a)(f) | | | 4.09 | % | | | 4.22 | % | | | 4.23 | % | | | 4.28 | % | | | 6.08 | % | | | 4.74 | %(l) |
Portfolio turnover rate^ | | | 30 | %(z) | | | 54 | % | | | 45 | % | | | 54 | % | | | 79 | % | | | 57 | %(z) |
| | | |
Class T** | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014* to
October 31, 2015 | |
| | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 9.06 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.23 | | | | 0.50 | | | | 0.50 | | | | 0.52 | | | | 0.63 | | | | 0.62 | |
Net realized and unrealized gain (loss) | | | (0.66 | ) | | | 0.13 | | | | (0.40 | ) | | | 0.32 | | | | (0.09 | ) | | | (0.85 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.43 | ) | | | 0.63 | | | | 0.10 | | | | 0.84 | | | | 0.54 | | | | (0.23 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.24 | ) | | | (0.49 | ) | | | (0.50 | ) | | | (0.51 | ) | | | (0.67 | ) | | | (0.62 | ) |
Return of capital | | | — | | | | (0.01 | ) | | | — | | | | (0.01 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.50 | ) | | | (0.50 | ) | | | (0.52 | ) | | | (0.68 | ) | | | (0.62 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 8.39 | | | $ | 9.06 | | | $ | 8.93 | | | $ | 9.33 | | | $ | 9.01 | | | $ | 9.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (4.81 | )% | | | 7.24 | % | | | 1.09 | % | | | 9.46 | % | | | 6.44 | % | | | (2.39 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 119 | | | $ | 129 | | | $ | 127 | | | $ | 132 | | | $ | 128 | | | $ | 2,783 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.75 | % | | | 0.75 | % | | | 0.80 | % | | | 0.82 | % | | | 0.81 | % | | | 0.80 | % |
Before waivers and reimbursements (a)(f) | | | 1.69 | % | | | 1.78 | % | | | 1.77 | % | | | 2.08 | % | | | 2.56 | % | | | 3.20 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 5.27 | % | | | 5.50 | % | | | 5.46 | % | | | 5.56 | % | | | 7.30 | % | | | 6.64 | %(l) |
Before waivers and reimbursements (a)(f) | | | 4.34 | % | | | 4.47 | % | | | 4.49 | % | | | 4.30 | % | | | 5.55 | % | | | 4.24 | %(l) |
Portfolio turnover rate^ | | | 30 | %(z) | | | 54 | % | | | 45 | % | | | 54 | % | | | 79 | % | | | 57 | %(z) |
See Notes to Financial Statements.
80
1290 FUNDS
1290 HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS (Continued)
| * | Commencement of Operations. |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
81
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (14.07 | )% | | | (9.56 | )% | | | 2.70 | % |
MSCI ACWI Minimum Volatility (Net) Index | | | (8.04 | ) | | | (1.49 | ) | | | 6.09 | |
MSCI ACWI (Net) Index | | | (7.68 | ) | | | (4.96 | ) | | | 5.07 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 4.80%. The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of COVID-19, extreme market volatility, and a significant decline in equity markets, the Fund provided returns lower than those of its broad market benchmark.
Fund Highlights
The Fund’s Class I shares returned -14.07% for the six-month period ended April 30, 2020. The Fund’s benchmark, the MSCI ACWI Minimum Volatility (Net) Index, returned -8.04%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | Relative to the MSCI ACWI Index, stock selection within developed markets was the top contributor to performance. On a sector basis, an underweight to the energy sector and stock selection within the materials sector were the top contributors to performance. |
| • | | Relative to the MSCI ACWI Minimum Volatility (Net) Index, stock selection within information technology helped performance. On a regional basis, stock selection within emerging markets was the top contributor to performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | Relative to both the MSCI ACWI Index and the MSCI ACWI Minimum Volatility (Net) Index, stock selection within domestic equities was a significant detractor, largely driven by exposure to mid and small-cap companies. In specific sectors, the Fund’s overweighting and stock selection within real estate was the top detractor to performance. |
| • | | Relative to the MSCI ACWI Index, an underweighting and stock selection within information technology detracted from performance. On a regional basis, stock selection within emerging markets detracted the most, specifically holdings in China. |
Outlook
The Fund maintains a neutral outlook on the markets. It is designed to offer lower-volatility returns than traditional equity benchmarks, with the potential to smooth investment returns over full market cycles.
82
1290 LOW VOLATILITY GLOBAL EQUITY FUND (Unaudited)
| | | | |
| |
Table by Asset Class(as a percentage of Total Investments
in Securities)
As of April 30, 2020 | |
Equity | | | 100.0 | % |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) | |
| |
| As of April 30, 2020 | |
iShares Edge MSCI Min Vol Global ETF | | | 28.5 | % |
iShares Edge MSCI Min Vol EAFE ETF | | | 13.5 | |
Invesco S&P International Developed Low Volatility ETF | | | 12.3 | |
Invesco S&P MidCap Low Volatility ETF | | | 6.5 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 6.4 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 6.0 | |
iShares Edge MSCI Min Vol USA ETF | | | 6.0 | |
Invesco S&P 500 Low Volatility ETF | | | 5.3 | |
Invesco S&P 500 High Dividend Low Volatility ETF | | | 5.0 | |
SPDR SSGA US Large Cap Low Volatility Index ETF | | | 4.7 | |
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 thesix-month period ended April 30, 2020 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled ‘‘Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
| | | | | | | | | | | | |
| | | | |
| | | Beginning
Account
Value
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class I | | | | | | | | | | | | |
Actual | | $ | 1,000.00 | | | $ | 859.30 | | | $ | 2.08 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.62 | | | | 2.26 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.45%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
83
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (99.1%) | |
Invesco S&P 500 High Dividend Low Volatility ETF | | | 4,460 | | | $ | 147,135 | |
Invesco S&P 500 Low Volatility ETF | | | 3,090 | | | | 154,315 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 9,360 | | | | 175,406 | |
Invesco S&P International Developed Low Volatility ETF | | | 13,370 | | | | 358,316 | |
Invesco S&P MidCap Low Volatility ETF | | | 4,500 | | | | 190,530 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2,420 | | | | 85,039 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 6,090 | | | | 392,379 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 3,690 | | | | 186,640 | |
iShares Edge MSCI Min Vol Global ETF | | | 9,650 | | | | 832,312 | |
iShares Edge MSCI Min Vol USA ETF | | | 2,940 | | | | 173,666 | |
SPDR SSGA US Large Cap Low Volatility Index ETF | | | 1,400 | | | | 137,732 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,140 | | | | 84,075 | |
| | | | | | | | |
Total Investments in Securities (99.1%)
(Cost $2,993,787) | | | | | | | 2,917,545 | |
Other Assets Less Liabilities (0.9%) | | | | | | | 26,534 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 2,944,079 | |
| | | | | | | | |
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, 2020:
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 | | $ | 2,917,545 | | | $ | — | | | $ | — | | | $ | 2,917,545 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 2,917,545 | | | $ | — | | | $ | — | | | $ | 2,917,545 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 2,917,545 | | | $ | — | | | $ | — | | | $ | 2,917,545 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 21,778 | |
Net Proceeds of Sales and Redemptions: | | | | |
six months Long-term investments other than U.S. government debt securities | | $ | 151,356 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 124,770 | |
Aggregate gross unrealized depreciation | | | (201,012 | ) |
| | | | |
Net unrealized depreciation | | $ | (76,242 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 2,993,787 | |
| | | | |
See Notes to Financial Statements.
84
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $2,993,787) | | $ | 2,917,545 | |
Cash | | | 28,911 | |
Prepaid registration and filing fees | | | 14,425 | |
Receivable from investment adviser | | | 7,372 | |
Other assets | | | 1 | |
| | | | |
Total assets | | | 2,968,254 | |
| | | | |
LIABILITIES | |
Accrued professional fees | | | 23,478 | |
Transfer agent fees payable | | | 554 | |
Trustees’ fees payable | | | 7 | |
Accrued expenses | | | 136 | |
| | | | |
Total liabilities | | | 24,175 | |
| | | | |
NET ASSETS | | $ | 2,944,079 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 2,978,147 | |
Total distributable earnings (loss) | | | (34,068 | ) |
| | | | |
Net assets | | $ | 2,944,079 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $2,944,079 / 292,543 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.06 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 66,267 | |
Interest | | | 114 | |
| | | | |
Total income | | | 66,381 | |
| | | | |
EXPENSES | |
Professional fees | | | 20,477 | |
Printing and mailing expenses | | | 10,191 | |
Registration and filing fees | | | 9,683 | |
Investment advisory fees | | | 8,328 | |
Transfer agent fees | | | 4,701 | |
Administrative fees | | | 2,499 | |
Custodian fees | | | 1,689 | |
Trustees’ fees | | | 131 | |
Miscellaneous | | | 3,106 | |
| | | | |
Gross expenses | | | 60,805 | |
Less: Waiver from investment adviser | | | (10,827 | ) |
Reimbursement from investment adviser | | | (42,494 | ) |
| | | | |
Net expenses | | | 7,484 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 58,897 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 22,100 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (568,598 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (546,498 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (487,601 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 58,897 | | | $ | 75,703 | |
Net realized gain (loss) | | | 22,100 | | | | 16,504 | |
Net change in unrealized appreciation (depreciation) | | | (568,598 | ) | | | 342,520 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (487,601 | ) | | | 434,727 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (96,518 | ) | | | (88,452 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 2,472 and 30,470 shares, respectively ] | | | 25,522 | | | | 346,770 | |
Capital shares issued in reinvestment of dividends [ 1,304 and 560 shares, respectively ] | | | 15,368 | | | | 5,952 | |
Capital shares repurchased [ (9,271) and (975) shares, respectively ] | | | (98,057 | ) | | | (11,138 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | (57,167 | ) | | | 341,584 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (641,286 | ) | | | 687,859 | |
NET ASSETS: | |
Beginning of period | | | 3,585,365 | | | | 2,897,506 | |
| | | | | | | | |
End of period | | $ | 2,944,079 | | | $ | 3,585,365 | |
| | | | | | | | |
See Notes to Financial Statements.
85
1290 FUNDS
1290 LOW VOLATILITY GLOBAL EQUITY FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.03 | | | $ | 10.81 | | | $ | 10.94 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.20 | | | | 0.27 | | | | 0.25 | | | | 0.12 | |
Net realized and unrealized gain (loss) | | | (1.85 | ) | | | 1.28 | | | | (0.16 | ) | | | 0.82 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.65 | ) | | | 1.55 | | | | 0.09 | | | | 0.94 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.27 | ) | | | (0.27 | ) | | | (0.22 | ) | | | — | |
Distributions from net realized gains | | | (0.05 | ) | | | (0.06 | ) | | | — | # | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.32 | ) | | | (0.33 | ) | | | (0.22 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.06 | | | $ | 12.03 | | | $ | 10.81 | | | $ | 10.94 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (14.07 | )% | | | 14.74 | % | | | 0.88 | % | | | 9.40 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 2,944 | | | $ | 3,585 | | | $ | 2,898 | | | $ | 2,836 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.45 | %**(j) | | | 0.43 | %(k) | | | 0.43 | %(k) | | | 0.43 | %(k) |
Before waivers and reimbursements (a)(f) | | | 3.66 | % | | | 4.58 | % | | | 5.15 | % | | | 4.87 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 3.54 | % | | | 2.36 | % | | | 2.24 | % | | | 1.66 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 0.34 | % | | | (1.79 | )% | | | (2.49 | )% | | | (2.78 | )%(l) |
Portfolio turnover rate^ | | | 1 | %(z) | | | 4 | % | | | 4 | % | | | 0 | %(z)‡ |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.02%. |
| # | Per share amount is less than $0.005. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.67%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
86
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | | |
| | | | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | (7.94 | )% | | | (6.85 | )% | | | (0.56 | )% |
| | | with Sales Charge (a) | | | (13.00 | ) | | | (11.95 | ) | | | (1.72 | ) |
Fund – Class I Shares* | | | | | (7.89 | ) | | | (6.62 | ) | | | (0.33 | ) |
Fund – Class R Shares* | | | | | (8.11 | ) | | | (7.11 | ) | | | (0.82 | ) |
ICE BofAML3-Month U.S. Treasury Bill Index | | | | | 0.85 | | | | 2.07 | | | | 1.24 | |
| |
* 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 currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I and R shares were 2.52%, 2.26% and 2.76%, respectively. The net expense ratios for Class A, I and R shares were 1.69%, 1.44% and 1.94%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of COVID-19, financial market volatility, a significant decline in equity markets and a moderately higher bond market, the 1290 Multi-Alternative Strategies Fund provided returns lower than those of its cash benchmark.
Fund Highlights
The Fund’s Class I shares returned -7.89% for the six-month period ended April 30, 2020. The Fund’s benchmark, the ICE BofA U.S. 3-Month Treasury Bill Index, rose 0.85%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | Precious metals were the top contributors to performance, up more than 10% for the period. |
| • | | Treasury Inflation-Protected Securities (TIPS) added to performance as the U.S. Federal Reserve cut interest rates in an effort to stabilize the U.S. economy during the pandemic. |
| • | | Convertible securities added to performance as fixed-income characteristics buffered some of the downside during the market downturn, while equity sensitivity helped as the market recovered. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | Commodities were the top detractor to performance, driven largely by a steep decline in energy. Oil prices went negative for the first time in history, with the global lockdown curbing demand. |
| • | | Global real estate holdings detracted from performance, as cash flows within real estate investment trusts (REITs) were negatively impacted by the global shutdown. |
| • | | Multi-strategy exposure hurt performance as the long-equity bias did not help during the recent shock to markets. |
Outlook
The Fund maintains a neutral outlook on the markets. We select complementary alternative strategies from a broad universe of non-traditional investments to help reduce the role of overall market direction in determining return.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities) | |
| |
| As of April 30, 2020 | |
Alternatives | | | 45.8 | % |
Fixed Income | | | 17.9 | |
Commodity | | | 15.5 | |
Specialty | | | 10.6 | |
Equity | | | 10.2 | |
87
1290 MULTI-ALTERNATIVE STRATEGIES FUND (Unaudited)
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) | |
| |
| As of April 30, 2020 | |
Invesco DB G10 Currency Harvest Fund | | | 10.6 | % |
IQ Merger Arbitrage ETF | | | 9.6 | |
ProShares Hedge Replication ETF | | | 9.2 | |
SPDR Bloomberg Barclays Convertible Securities ETF | | | 9.2 | |
JPMorgan Diversified Alternatives ETF | | | 9.1 | |
WisdomTree Managed Futures Strategy Fund | | | 8.9 | |
Invesco DB Gold Fund | | | 6.3 | |
ProShares RAFI Long/Short | | | 4.8 | |
iShares Core US REIT ETF | | | 4.7 | |
iShares TIPS Bond ETF | | | 4.4 | |
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 (in the case of Class A and Class R shares of the Fund), and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled ‘‘Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
| | | | | | | | | | | | |
| | | | |
| | | Beginning
Account
Value
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class A | |
Actual | | | $1,000.00 | | | | $920.60 | | | | $5.03 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.62 | | | | 5.29 | |
Class I | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 921.10 | | | | 3.84 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,020.87 | | | | 4.04 | |
Class R | | | | | | | | | | | | |
Actual | | | 1,000.00 | | | | 918.90 | | | | 6.21 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,018.39 | | | | 6.54 | |
| |
* Expenses are equal to the Fund’s Class A, I and R shares annualized expense ratios of 1.05%, 0.80% and 1.30%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
88
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value (Note 1) | |
EXCHANGE TRADED FUNDS (ETF): | |
Alternatives (45.8%) | |
IQ Merger Arbitrage ETF* | | | 46,840 | | | $ | 1,470,308 | |
JPMorgan Diversified Alternatives ETF* | | | 71,910 | | | | 1,402,245 | |
JPMorgan Long/Short ETF* | | | 36,340 | | | | 645,406 | |
ProShares Hedge Replication ETF | | | 32,040 | | | | 1,420,333 | |
ProShares RAFI Long/Short‡ | | | 23,000 | | | | 739,910 | |
WisdomTree Managed Futures Strategy Fund | | | 38,050 | | | | 1,359,138 | |
| | | | | | | | |
Total Alternatives | | | | | | | 7,037,340 | |
| | | | | | | | |
Commodity (15.5%) | |
Invesco DB Base Metals Fund | | | 17,600 | | | | 219,648 | |
Invesco DB Commodity Index Tracking Fund | | | 54,380 | | | | 592,742 | |
Invesco DB Gold Fund | | | 19,500 | | | | 969,735 | |
Invesco DB Precious Metals Fund | | | 2,860 | | | | 125,468 | |
Invesco DB Silver Fund | | | 4,020 | | | | 87,304 | |
iShares Commodities Select Strategy ETF | | | 17,470 | | | | 385,213 | |
| | | | | | | | |
Total Commodity | | | | | | | 2,380,110 | |
| | | | | | | | |
Equity (10.2%) | | | | | | | | |
iShares Core US REIT ETF | | | 17,020 | | | | 722,499 | |
iShares MSCI Global Agriculture Producers ETF | | | 9,870 | | | | 231,518 | |
Vanguard Globalex-U.S. Real Estate ETF | | | 13,660 | | | | 609,919 | |
| | | | | | | | |
Total Equity | | | | | | | 1,563,936 | |
| | | | | | | | |
Fixed Income (17.9%) | | | | | | | | |
iShares TIPS Bond ETF | | | 5,660 | | | | 686,615 | |
SPDR Bloomberg Barclays Convertible Securities ETF | | | 26,540 | | | | 1,412,724 | |
Vanguard Short-Term Inflation-Protected Securities ETF | | | 13,420 | | | | 663,082 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 2,762,421 | |
| | | | | | | | |
Specialty (10.6%) | |
Invesco DB G10 Currency Harvest Fund‡ | | | 70,890 | | | | 1,631,888 | |
| | | | | | | | |
Total Investments in Securities (100.0%)
(Cost $16,504,605) | | | | | | | 15,375,695 | |
Other Assets Less Liabilities (0.0%) | | | | | | | (6,002 | ) |
| | | | | |
Net Assets (100%) | | | | | | $ | 15,369,693 | |
| | | | | | | | |
| ‡ | 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, 2020, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Security Description | | Shares at
April 30,
2020 | | | Market Value
October 31,
2019 ($) | | | Purchases
at Cost ($) | | | Proceeds
from
Sales ($) | | | Net
Realized
Gain
(Loss) ($) | | | Change
in Unrealized
Appreciation/
(Depreciation)
($) | | | Market
Value
April 30,
2020 ($) | | | Dividend/
Interest
Income
($) | | | Capital Gain
Distributions
($) | |
EXCHANGE TRADED FUNDS (ETF): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Specialty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Invesco DB G10 Currency Harvest Fund | | | 70,890 | | | | 1,714,829 | | | | — | | | | — | | | | — | | | | (82,941 | ) | | | 1,631,888 | | | | 24,421 | | | | — | |
Alternatives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
ProShares RAFI Long/Short | �� | | 23,000 | | | | 798,675 | | | | — | | | | — | | | | — | | | | (58,765 | ) | | | 739,910 | | | | 7,107 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | 2,513,504 | | | | — | | | | — | | | | — | | | | (141,706 | ) | | | 2,371,798 | | | | 31,528 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
See Notes to Financial Statements.
89
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
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 | | $ | 15,375,695 | | | $ | — | | | $ | — | | | $ | 15,375,695 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 15,375,695 | | | $ | — | | | $ | — | | | $ | 15,375,695 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 15,375,695 | | | $ | — | | | $ | — | | | $ | 15,375,695 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 445,895 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,845,439 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 613,641 | |
Aggregate gross unrealized depreciation | | | (1,683,982 | ) |
| | | | |
Net unrealized depreciation | | $ | (1,070,341 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 16,446,036 | |
| | | | |
See Notes to Financial Statements.
90
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value: | | | | |
Affiliated Issuers (Cost $2,573,144) | | $ | 2,371,798 | |
Unaffiliated Issuers (Cost $13,931,461) | | | 13,003,897 | |
Receivable for securities sold | | | 61,384 | |
Prepaid registration and filing fees | | | 13,803 | |
Receivable from investment adviser | | | 4,062 | |
Receivable for Fund shares sold | | | 50 | |
Other assets | | | 56 | |
| | | | |
Total assets | | | 15,455,050 | |
| | | | |
LIABILITIES | | | | |
Overdraft payable | | | 36,681 | |
Payable for Fund shares redeemed | | | 13,276 | |
Transfer agent fees payable | | | 2,787 | |
Distribution fees payable – Class A | | | 118 | |
Distribution fees payable – Class R | | | 44 | |
Accrued expenses | | | 32,451 | |
| | | | |
Total liabilities | | | 85,357 | |
| | | | |
NET ASSETS | | $ | 15,369,693 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 16,559,638 | |
Total distributable earnings (loss) | | | (1,189,945 | ) |
| | | | |
Net assets | | $ | 15,369,693 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $544,166 / 58,406 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
Maximum sales charge (5.50% of offering price) | | | 0.54 | |
| | | | |
Maximum offering price per share | | $ | 9.86 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $14,716,601 / 1,578,776 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.32 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $108,926 / 11,737 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 9.28 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends ($31,528 of dividend income received from affiliates) | | $ | 305,677 | |
Interest | | | 635 | |
| | | | |
Total income | | | 306,312 | |
| | | | |
EXPENSES | | | | |
Investment advisory fees | | | 43,658 | |
Professional fees | | | 26,916 | |
Transfer agent fees | | | 18,242 | |
Registration and filing fees | | | 16,758 | |
Printing and mailing expenses | | | 14,001 | |
Administrative fees | | | 13,097 | |
Custodian fees | | | 2,437 | |
Distribution fees – Class A | | | 765 | |
Trustees’ fees | | | 684 | |
Distribution fees – Class R | | | 280 | |
Miscellaneous | | | 7,760 | |
| | | | |
Gross expenses | | | 144,598 | |
Less: Waiver from investment adviser | | | (56,755 | ) |
Reimbursement from investment adviser | | | (16,715 | ) |
| | | | |
Net expenses | | | 71,128 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 235,184 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | 76,739 | |
Net change in unrealized appreciation (depreciation) on investments in securities ($(141,706) of change in unrealized appreciation (depreciation) from affiliates) | | | (1,755,489 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (1,678,750 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (1,443,566 | ) |
| | | | |
See Notes to Financial Statements.
91
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 235,184 | | | $ | 244,037 | |
Net realized gain (loss) | | | 76,739 | | | | (50,597 | ) |
Net change in unrealized appreciation (depreciation) | | | (1,755,489 | ) | | | 583,673 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (1,443,566 | ) | | | 777,113 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (11,965 | ) | | | (7,113 | ) |
Class I | | | (380,272 | ) | | | (217,148 | ) |
Class R | | | (1,934 | ) | | | (740 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (394,171 | ) | | | (225,001 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 2,454 and 5,825 shares, respectively ] | | | 25,000 | | | | 59,103 | |
Capital shares issued in reinvestment of dividends [ 983 and 623 shares, respectively ] | | | 9,992 | | | | 6,163 | |
Capital shares repurchased [ (5,788) and (28,247) shares, respectively ] | | | (54,302 | ) | | | (286,221 | ) |
| | | | | | | | |
Total Class A transactions | | | (19,310 | ) | | | (220,955 | ) |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 37,636 and 178,038 shares, respectively ] | | | 377,082 | | | | 1,799,614 | |
Capital shares issued in reinvestment of dividends [ 15,947 and 9,966 shares, respectively ] | | | 162,026 | | | | 98,568 | |
Capital shares repurchased [ (194,576) and (276,662) shares, respectively ] | | | (1,842,935 | ) | | | (2,793,490 | ) |
| | | | | | | | |
Total Class I transactions | | | (1,303,827 | ) | | | (895,308 | ) |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 473 and 703 shares, respectively ] | | | 4,241 | | | | 7,121 | |
Capital shares issued in reinvestment of dividends [ 21 and 4 shares, respectively ] | | | 215 | | | | 40 | |
Capital shares repurchased [ (5) and (22) shares, respectively ] | | | (51 | ) | | | (223 | ) |
| | | | | | | | |
Total Class R transactions | | | 4,405 | | | | 6,938 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | (1,318,732 | ) | | | (1,109,325 | ) |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (3,156,469 | ) | | | (557,213 | ) |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 18,526,162 | | | | 19,083,375 | |
| | | | | | | | |
End of period | | $ | 15,369,693 | | | $ | 18,526,162 | |
| | | | | | | | |
See Notes to Financial Statements.
92
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.32 | | | $ | 10.02 | | | $ | 10.21 | | | $ | 9.97 | | | $ | 9.70 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.12 | | | | 0.11 | | | | 0.04 | | | | 0.02 | | | | 0.01 | | | | (0.01 | ) |
Net realized and unrealized gain (loss) | | | (0.92 | ) | | | 0.28 | | | | (0.19 | ) | | | 0.26 | | | | 0.33 | | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.80 | ) | | | 0.39 | | | | (0.15 | ) | | | 0.28 | | | | 0.34 | | | | (0.30 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.20 | ) | | | (0.04 | ) | | | — | | | | (0.01 | ) | | | (0.05 | ) | | | — | |
Distributions from net realized gains | | | — | | | | (0.05 | ) | | | (0.04 | ) | | | (0.03 | ) | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | — | | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.20 | ) | | | (0.09 | ) | | | (0.04 | ) | | | (0.04 | ) | | | (0.07 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 10.32 | | | $ | 10.02 | | | $ | 10.21 | | | $ | 9.97 | | | $ | 9.70 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.94 | )% | | | 3.98 | % | | | (1.49 | )% | | | 2.78 | % | | | 3.53 | % | | | (3.00 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 544 | | | $ | 627 | | | $ | 827 | | | $ | 659 | | | $ | 410 | | | $ | 112 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.05 | %***(j) | | | 1.07 | %**(k) | | | 1.03 | %(m) | | | 1.00 | %(m) | | | 0.98 | %(m) | | | 0.96 | %(m) |
Before waivers and reimbursements (a)(f) | | | 1.90 | % | | | 1.89 | % | | | 1.79 | % | | | 2.08 | % | | | 2.62 | % | | | 2.26 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.39 | % | | | 1.12 | % | | | 0.39 | % | | | 0.20 | % | | | 0.10 | % | | | (0.25 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | 1.55 | % | | | 0.30 | % | | | (0.37 | )% | | | (0.88 | )% | | | (1.55 | )% | | | (1.55 | )%(l) |
Portfolio turnover rate^ | | | 3 | %(z) | | | 8 | % | | | 5 | % | | | 13 | % | | | 2 | % | | | 0 | %(z) |
| | | |
| | | Six Months
Ended April 30,
2020 (Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.34 | | | $ | 10.04 | | | $ | 10.23 | | | $ | 9.99 | | | $ | 9.71 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.13 | | | | 0.13 | | | | 0.07 | | | | 0.05 | | | | 0.05 | | | | — | # |
Net realized and unrealized gain (loss) | | | (0.93 | ) | | | 0.29 | | | | (0.20 | ) | | | 0.25 | | | | 0.31 | | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.80 | ) | | | 0.42 | | | | (0.13 | ) | | | 0.30 | | | | 0.36 | | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.07 | ) | | | (0.02 | ) | | | (0.03 | ) | | | (0.05 | ) | | | — | |
Distributions from net realized gains | | | — | | | | (0.05 | ) | | | (0.04 | ) | | | (0.03 | ) | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | — | | | | — | | | | (0.03 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.12 | ) | | | (0.06 | ) | | | (0.06 | ) | | | (0.08 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.32 | | | $ | 10.34 | | | $ | 10.04 | | | $ | 10.23 | | | $ | 9.99 | | | $ | 9.71 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.89 | )% | | | 4.25 | % | | | (1.25 | )% | | | 3.04 | % | | | 3.76 | % | | | (2.90 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 14,717 | | | $ | 17,783 | | | $ | 18,151 | | | $ | 16,358 | | | $ | 12,233 | | | $ | 9,591 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.80 | %***(j) | | | 0.82 | %**(k) | | | 0.78 | %(m) | | | 0.75 | %(m) | | | 0.73 | %(m) | | | 0.72 | %(m) |
Before waivers and reimbursements (a)(f) | | | 1.65 | % | | | 1.63 | % | | | 1.54 | % | | | 1.82 | % | | | 2.24 | % | | | 1.97 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.71 | % | | | 1.32 | % | | | 0.66 | % | | | 0.45 | % | | | 0.50 | % | | | (0.03 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | 1.87 | % | | | 0.50 | % | | | (0.11 | )% | | | (0.62 | )% | | | (1.02 | )% | | | (1.29 | )%(l) |
Portfolio turnover rate^ | | | 3 | %(z) | | | 8 | % | | | 5 | % | | | 13 | % | | | 2 | % | | | 0 | %(z) |
See Notes to Financial Statements.
93
1290 FUNDS
1290 MULTI-ALTERNATIVE STRATEGIES FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months
Ended April 30,
2020 (Unaudited) | | | Year Ended October 31, | | | July 6, 2015*
to October 31,
2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 10.27 | | | $ | 9.97 | | | $ | 10.19 | | | $ | 9.95 | | | $ | 9.69 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.10 | | | | 0.08 | | | | 0.03 | | | | — | # | | | — | # | | | (0.02 | ) |
Net realized and unrealized gain (loss) | | | (0.92 | ) | | | 0.29 | | | | (0.21 | ) | | | 0.27 | | | | 0.32 | | | | (0.29 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.82 | ) | | | 0.37 | | | | (0.18 | ) | | | 0.27 | | | | 0.32 | | | | (0.31 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.17 | ) | | | (0.02 | ) | | | — | | | | — | | | | (0.04 | ) | | | — | |
Distributions from net realized gains | | | — | | | | (0.05 | ) | | | (0.04 | ) | | | (0.03 | ) | | | — | | | | — | |
Return of capital | | | — | | | | — | | | | — | | | | — | | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.17 | ) | | | (0.07 | ) | | | (0.04 | ) | | | (0.03 | ) | | | (0.06 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 9.28 | | | $ | 10.27 | | | $ | 9.97 | | | $ | 10.19 | | | $ | 9.95 | | | $ | 9.69 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (8.11 | )% | | | 3.74 | % | | | (1.79 | )% | | | 2.53 | % | | | 3.30 | % | | | (3.10 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 109 | | | $ | 116 | | | $ | 105 | | | $ | 105 | | | $ | 101 | | | $ | 97 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.30 | %***(j) | | | 1.32 | %**(k) | | | 1.26 | %(m) | | | 1.25 | %(m) | | | 1.22 | %(m) | | | 1.21 | %(m) |
Before waivers and reimbursements (a)(f) | | | 2.15 | % | | | 2.13 | % | | | 2.02 | % | | | 2.32 | % | | | 2.73 | % | | | 2.47 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.14 | % | | | 0.78 | % | | | 0.27 | % | | | (0.02 | )% | | | 0.02 | % | | | (0.53 | )%(l) |
Before waivers and reimbursements (a)(f)(x) | | | 1.29 | % | | | (0.04 | )% | | | (0.49 | )% | | | (1.08 | )% | | | (1.50 | )% | | | (1.78 | )%(l) |
Portfolio turnover rate^ | | | 3 | %(z) | | | 8 | % | | | 5 | % | | | 13 | % | | | 2 | % | | | 0 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.04%. |
| *** | Includes excise tax expense of 0.02%. |
| # | Per share amount is less than $0.005. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.67% for Class A, 1.42% for Class I and 1.92% for Class R. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 1.69% for Class A, 1.44% for Class I and 1.94% 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. |
| (m) | 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. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
94
1290 RETIREMENT 2020 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (4.25 | )% | | | 0.08 | % | | | 4.50 | % |
S&P Target Date 2020 Index | | | (2.26 | ) | | | 1.26 | | | | 4.73 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 2.21% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -4.25% for the six-month period ended April 30, 2019. The Fund’s benchmark, the S&P Target Date 2020 Index, returned -2.26%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from a lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total Investments
in Securities) As of April 30, 2020 | |
Equity | | | 53.3 | % |
Fixed Income | | | 46.7 | |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) As of April 30, 2020 | |
iShares Core U.S. Aggregate Bond ETF | | | 28.3 | % |
iShares Core S&P Total US Stock Market ETF | | | 17.4 | |
iShares TIPS Bond ETF | | | 7.0 | |
iShares Core MSCI EAFE ETF | | | 5.9 | |
Invesco S&P 500 Low Volatility ETF | | | 5.7 | |
iShares Edge MSCI Min Vol USA ETF | | | 5.7 | |
Vanguard Short-Term Bond ETF | | | 4.4 | |
JPMorgan Prime Money Market Fund, IM Shares | | | 3.7 | |
Vanguard Total International Bond ETF | | | 3.6 | |
SPDR Bloomberg Barclays High Yield Bond ETF | | | 3.4 | |
| |
Holdings are subject to change without notice. | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
95
1290 RETIREMENT 2020 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | $ | 1,000.00 | | | $ | 957.50 | | | $ | 2.61 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.19 | | | | 2.70 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
96
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (51.0%) | |
Invesco S&P 500 Low Volatility ETF | | | 12,050 | | | $ | 601,777 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 3,540 | | | | 66,340 | |
Invesco S&P International Developed Low Volatility ETF | | | 11,780 | | | | 315,704 | |
Invesco S&P MidCap Low Volatility ETF | | | 7,760 | | | | 328,558 | |
Invesco S&P SmallCap Low Volatility ETF | | | 4,490 | | | | 157,779 | |
iShares Core MSCI EAFE ETF | | | 11,820 | | | | 626,814 | |
iShares Core MSCI Emerging Markets ETF | | | 3,760 | | | | 164,162 | |
iShares Core S&P Total US Stock Market ETF | | | 28,410 | | | | 1,839,831 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 4,840 | | | | 311,841 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 1,800 | | | | 91,044 | |
iShares Edge MSCI Min Vol USA ETF | | | 10,170 | | | | 600,742 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,780 | | | | 131,275 | |
| | | | | | | | |
Total Equity | | | | | | | 5,235,867 | |
| | | | | | | | |
| | | | | | | | |
Fixed Income (48.2%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 25,540 | | | | 2,990,734 | |
iShares TIPS Bond ETF | | | 6,120 | | | | 742,417 | |
SPDR Bloomberg Barclays High Yield Bond ETF | | | 3,626 | | | | 359,083 | |
Vanguard Short-Term Bond ETF | | | 5,680 | | | | 469,622 | |
Vanguard Total International Bond ETF | | | 6,600 | | | | 378,048 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 4,939,904 | |
| | | | | | | | |
Total Exchange Traded Funds (99.2%)
(Cost $10,208,662) | | | | | | | 10,175,771 | |
| | | | | | | | |
SHORT-TERM INVESTMENT: | | | | | |
Investment Company (3.8%) | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 391,327 | | | | 391,641 | |
| | | | | | | | |
Total Short-Term Investment (3.8%)
(Cost $391,641) | | | | | | | 391,641 | |
| | | | | | | | |
Total Investments in Securities (103.0%)
(Cost $10,600,303) | | | | | | | 10,567,412 | |
Other Assets LessLiabilities (-3.0%) | | | | | | | (313,084 | ) |
| | | | | |
Net Assets (100%) | | | | | | $ | 10,254,328 | |
| | | | | | | | |
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, 2020:
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 | | $ | 10,175,771 | | | $ | — | | | $ | — | | | $ | 10,175,771 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 391,641 | | | | — | | | | — | | | | 391,641 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 10,567,412 | | | $ | — | | | $ | — | | | $ | 10,567,412 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 10,567,412 | | | $ | — | | | $ | — | | | $ | 10,567,412 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
See Notes to Financial Statements.
97
1290 FUNDS
1290 RETIREMENT 2020 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,597,995 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,594,683 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 335,752 | |
Aggregate gross unrealized depreciation | | | (376,511 | ) |
| | | | |
Net unrealized depreciation | | $ | (40,759 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 10,608,171 | |
| | | | |
See Notes to Financial Statements.
98
1290 FUNDS
1290 RETIREMENT 2020 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $10,600,303) | | $ | 10,567,412 | |
Cash | | | 75,000 | |
Prepaid registration and filing fees | | | 14,888 | |
Receivable from investment adviser | | | 5,346 | |
Receivable for Fund shares sold | | | 382 | |
Dividends, interest and other receivables | | | 46 | |
Other assets | | | 61 | |
| | | | |
Total assets | | | 10,663,135 | |
| | | | |
LIABILITIES | |
Payable for securities purchased | | | 379,786 | |
Transfer agent fees payable | | | 705 | |
Accrued expenses | | | 28,316 | |
| | | | |
Total liabilities | | | 408,807 | |
| | | | |
NET ASSETS | | $ | 10,254,328 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 10,117,098 | |
Total distributable earnings (loss) | | | 137,230 | |
| | | | |
Net assets | | $ | 10,254,328 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $10,254,328 / 957,299 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.71 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 155,096 | |
Interest | | | 276 | |
| | | | |
Total income | | | 155,372 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 26,989 | |
Professional fees | | | 23,862 | |
Printing and mailing expenses | | | 12,116 | |
Registration and filing fees | | | 10,094 | |
Administrative fees | | | 8,097 | |
Transfer agent fees | | | 4,923 | |
Custodian fees | | | 2,485 | |
Trustees’ fees | | | 419 | |
Miscellaneous | | | 4,299 | |
| | | | |
Gross expenses | | | 93,284 | |
Less: Waiver from investment adviser | | | (35,086 | ) |
Reimbursement from investment adviser | | | (29,243 | ) |
| | | | |
Net expenses | | | 28,955 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 126,417 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 128,564 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (737,365 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (608,801 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (482,384 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 126,417 | | | $ | 200,268 | |
Net realized gain (loss) | | | 128,564 | | | | 144,361 | |
Net change in unrealized appreciation (depreciation) | | | (737,365 | ) | | | 762,470 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (482,384 | ) | | | 1,107,099 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (377,438 | ) | | | (142,418 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 153,228 and 364,955 shares, respectively ] | | | 1,709,969 | | | | 3,974,381 | |
Capital shares issued in reinvestment of dividends [ 24,677 and 9,100 shares, respectively ] | | | 279,838 | | | | 93,918 | |
Capital shares repurchased [ (153,620) and (170,980) shares, respectively ] | | | (1,666,257 | ) | | | (1,901,097 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 323,550 | | | | 2,167,202 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (536,272 | ) | | | 3,131,883 | |
NET ASSETS: | |
Beginning of period | | | 10,790,600 | | | | 7,658,717 | |
| | | | | | | | |
End of period | | $ | 10,254,328 | | | $ | 10,790,600 | |
| | | | | | | | |
See Notes to Financial Statements.
99
1290 FUNDS
1290 RETIREMENT 2020 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 11.57 | | | $ | 10.49 | | | $ | 10.66 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.13 | | | | 0.23 | | | | 0.20 | | | | 0.12 | |
Net realized and unrealized gain (loss) | | | (0.60 | ) | | | 1.05 | | | | (0.17 | ) | | | 0.54 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.47 | ) | | | 1.28 | | | | 0.03 | | | | 0.66 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.24 | ) | | | (0.15 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.15 | ) | | | (0.05 | ) | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.39 | ) | | | (0.20 | ) | | | (0.20 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.71 | | | $ | 11.57 | | | $ | 10.49 | | | $ | 10.66 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (4.25 | )% | | | 12.37 | % | | | 0.24 | % | | | 6.60 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 10,254 | | | $ | 10,791 | | | $ | 7,659 | | | $ | 2,665 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.54 | %(k) | | | 0.53 | %(k) | | | 0.53 | %(k) |
Before waivers and reimbursements (a)(f) | | | 1.73 | % | | | 2.09 | % | | | 3.93 | % | | | 5.32 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.35 | % | | | 2.10 | % | | | 1.88 | % | | | 1.66 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 1.15 | % | | | 0.55 | % | | | (1.52 | )% | | | (3.13 | )%(l) |
Portfolio turnover rate^ | | | 15 | %(z) | | | 18 | % | | | 8 | % | | | 2 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
100
1290 RETIREMENT 2025 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (5.52 | )% | | | (1.16 | )% | | | 4.64 | % |
S&P Target Date 2025 Index | | | (3.55 | ) | | | (0.18 | ) | | | 4.73 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 1.71% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -5.52% for the six-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2025 Index, returned -3.55%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total Investments
in Securities) As of April 30, 2020 | |
Equity | | | 61.9 | % |
Fixed Income | | | 38.1 | |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) As of April 30, 2020 | |
iShares Core U.S. Aggregate Bond ETF | | | 27.0 | % |
iShares Core S&P Total US Stock Market ETF | | | 21.4 | |
iShares Core MSCI EAFE ETF | | | 8.0 | |
iShares Edge MSCI Min Vol USA ETF | | | 6.8 | |
Invesco S&P 500 Low Volatility ETF | | | 6.8 | |
iShares TIPS Bond ETF | | | 5.7 | |
Invesco S&P MidCap Low Volatility ETF | | | 3.9 | |
Invesco S&P International Developed Low Volatility ETF | | | 3.9 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 3.8 | |
Vanguard Short-Term Bond ETF | | | 2.1 | |
Holdings are subject to change without notice. | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
101
1290 RETIREMENT 2025 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | $ | 1,000.00 | | | $ | 944.80 | | | $ | 2.61 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.18 | | | | 2.71 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
102
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (61.9%) | |
Invesco S&P 500 Low Volatility ETF | | | 24,780 | | | $ | 1,237,513 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 8,180 | | | | 153,293 | |
Invesco S&P International Developed Low Volatility ETF | | | 26,360 | | | | 706,448 | |
Invesco S&P MidCap Low Volatility ETF | | | 16,920 | | | | 716,393 | |
Invesco S&P SmallCap Low Volatility ETF | | | 9,430 | | | | 331,370 | |
iShares Core MSCI EAFE ETF | | | 27,420 | | | | 1,454,083 | |
iShares Core MSCI Emerging Markets ETF | | | 7,640 | | | | 333,562 | |
iShares Core S&P Total US Stock Market ETF | | | 60,410 | | | | 3,912,152 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 10,790 | | | | 695,200 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 3,040 | | | | 153,763 | |
iShares Edge MSCI Min Vol USA ETF | | | 21,170 | | | | 1,250,512 | |
| | | | | | | | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 5,060 | | | | 373,175 | |
| | | | | | | | |
Total Equity | | | | | | | 11,317,464 | |
| | | | | | | | |
Fixed Income (38.1%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 42,130 | | | | 4,933,423 | |
iShares TIPS Bond ETF | | | 8,560 | | | | 1,038,413 | |
SPDR Bloomberg Barclays High Yield Bond ETF | | | 2,996 | | | | 296,694 | |
Vanguard Short-Term Bond ETF | | | 4,730 | | | | 391,076 | |
Vanguard Total International Bond ETF | | | 5,520 | | | | 316,186 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 6,975,792 | |
| | | | | | | | |
Total Investments in Securities (100.0%)
(Cost $18,671,840) | | | | | | | 18,293,256 | |
Other Assets Less Liabilities (0.0%) | | | | | | | 1,745 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 18,295,001 | |
| | | | | | | | |
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, 2020:
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 | | $ | 18,293,256 | | | $ | — | | | $ | — | | | $ | 18,293,256 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 18,293,256 | | | $ | — | | | $ | — | | | $ | 18,293,256 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 18,293,256 | | | $ | — | | | $ | — | | | $ | 18,293,256 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 4,946,846 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 4,516,062 | |
See Notes to Financial Statements.
103
1290 FUNDS
1290 RETIREMENT 2025 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 353,446 | |
Aggregate gross unrealized depreciation | | | (754,652 | ) |
| | | | |
Net unrealized depreciation | | $ | (401,206 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 18,694,462 | |
| | | | |
See Notes to Financial Statements.
104
1290 FUNDS
1290 RETIREMENT 2025 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $18,671,840) | | $ | 18,293,256 | |
Cash | | | 14,242 | |
Prepaid registration and filing fees | | | 15,294 | |
Receivable from investment adviser | | | 3,304 | |
Receivable for Fund shares sold | | | 1,407 | |
Dividends, interest and other receivables | | | 223 | |
Other assets | | | 156 | |
| | | | |
Total assets | | | 18,327,882 | |
| | | | |
LIABILITIES | |
Transfer agent fees payable | | | 1,024 | |
Accrued expenses | | | 31,857 | |
| | | | |
Total liabilities | | | 32,881 | |
| | | | |
NET ASSETS | | $ | 18,295,001 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 18,383,393 | |
Total distributable earnings (loss) | | | (88,392 | ) |
| | | | |
Net assets | | $ | 18,295,001 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $18,295,001 / 1,704,014 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.74 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 263,314 | |
Interest | | | 376 | |
| | | | |
Total income | | | 263,690 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 46,738 | |
Professional fees | | | 27,457 | |
Printing and mailing expenses | | | 14,174 | |
Administrative fees | | | 14,021 | |
Registration and filing fees | | | 10,441 | |
Transfer agent fees | | | 4,979 | |
Custodian fees | | | 2,789 | |
Trustees’ fees | | | 721 | |
Miscellaneous | | | 5,861 | |
| | | | |
Gross expenses | | | 127,181 | |
Less: Waiver from investment adviser | | | (60,759 | ) |
Reimbursement from investment adviser | | | (16,125 | ) |
| | | | |
Net expenses | | | 50,297 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 213,393 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 227,858 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (1,581,408 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (1,353,550 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (1,140,157 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 213,393 | | | $ | 314,181 | |
Net realized gain (loss) | | | 227,858 | | | | 326,657 | |
Net change in unrealized appreciation (depreciation) | | | (1,581,408 | ) | | | 1,336,178 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (1,140,157 | ) | | | 1,977,016 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (724,697 | ) | | | (176,541 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 471,830 and 1,042,196 shares, respectively ] | | | 5,307,048 | | | | 11,528,327 | |
Capital shares issued in reinvestment of dividends [ 62,744 and 12,850 shares, respectively ] | | | 724,697 | | | | 134,540 | |
Capital shares repurchased [ (456,247) and (397,479) shares, respectively ] | | | (5,074,275 | ) | | | (4,546,482 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 957,470 | | | | 7,116,385 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (907,384 | ) | | | 8,916,860 | |
NET ASSETS: | |
Beginning of period | | | 19,202,385 | | | | 10,285,525 | |
| | | | | | | | |
End of period | | $ | 18,295,001 | | | $ | 19,202,385 | |
| | | | | | | | |
See Notes to Financial Statements.
105
1290 FUNDS
1290 RETIREMENT 2025 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 11.81 | | | $ | 10.62 | | | $ | 10.75 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.13 | | | | 0.22 | | | | 0.21 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (0.75 | ) | | | 1.14 | | | | (0.14 | ) | | | 0.64 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.62 | ) | | | 1.36 | | | | 0.07 | | | | 0.75 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.23 | ) | | | (0.14 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.22 | ) | | | (0.03 | ) | | | (0.02 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.45 | ) | | | (0.17 | ) | | | (0.20 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.74 | | | $ | 11.81 | | | $ | 10.62 | | | $ | 10.75 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (5.52 | )% | | | 12.99 | % | | | 0.60 | % | | | 7.50 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 18,295 | | | $ | 19,202 | | | $ | 10,286 | | | $ | 2,688 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.54 | %(k) | | | 0.54 | %(k) | | | 0.53 | %(k) |
Before waivers and reimbursements (a)(f) | | | 1.36 | % | | | 1.58 | % | | | 3.23 | % | | | 5.30 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.29 | % | | | 1.99 | % | | | 1.91 | % | | | 1.62 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 1.46 | % | | | 0.95 | % | | | (0.79 | )% | | | (3.15 | )%(l) |
Portfolio turnover rate^ | | | 24 | %(z) | | | 23 | % | | | 4 | % | | | 2 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
106
1290 RETIREMENT 2030 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (6.86 | )% | | | (2.43 | )% | | | 4.51 | % |
S&P Target Date 2030 Index | | | (4.89 | ) | | | (1.73 | ) | | | 4.67 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 3.26% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -6.86% for the six-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2030 Index, returned -4.89%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total Investments
in Securities) As of April 30, 2020 | |
Equity | | | 72.8 | % |
Fixed Income | | | 27.2 | |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) As of April 30, 2020 | |
iShares Core S&P Total US Stock Market ETF | | | 25.5 | % |
iShares Core U.S. Aggregate Bond ETF | | | 23.9 | |
iShares Core MSCI EAFE ETF | | | 10.3 | |
iShares Edge MSCI Min Vol USA ETF | | | 8.1 | |
Invesco S&P 500 Low Volatility ETF | | | 7.4 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.1 | |
Invesco S&P MidCap Low Volatility ETF | | | 4.6 | |
Invesco S&P International Developed Low Volatility ETF | | | 4.4 | |
iShares TIPS Bond ETF | | | 3.3 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2.1 | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
107
1290 RETIREMENT 2030 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | $ | 1,000.00 | | | $ | 931.40 | | | $ | 2.61 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.16 | | | | 2.73 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
108
1290 FUNDS
1290 RETIREMENT 2030 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (72.7%) | |
Invesco S&P 500 Low Volatility ETF | | | 8,070 | | | $ | 403,016 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 3,110 | | | | 58,281 | |
Invesco S&P International Developed Low Volatility ETF | | | 8,910 | | | | 238,788 | |
Invesco S&P MidCap Low Volatility ETF | | | 5,920 | | | | 250,653 | |
Invesco S&P SmallCap Low Volatility ETF | | | 3,210 | | | | 112,799 | |
iShares Core MSCI EAFE ETF | | | 10,650 | | | | 564,770 | |
iShares Core MSCI Emerging Markets ETF | | | 1,670 | | | | 72,912 | |
iShares Core S&P Total US Stock Market ETF | | | 21,530 | | | | 1,394,283 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 4,300 | | | | 277,049 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 1,070 | | | | 54,121 | |
iShares Edge MSCI Min Vol USA ETF | | | 7,520 | | | | 444,206 | |
| | | | | | | | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,420 | | | | 104,725 | |
| | | | | | | | |
Total Equity | | | | | | | 3,975,603 | |
| | | | | | | | |
Fixed Income (27.2%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 11,180 | | | | 1,309,178 | |
iShares TIPS Bond ETF | | | 1,480 | | | | 179,539 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 1,488,717 | |
| | | | | | | | |
Total Investments in Securities (99.9%)
(Cost $5,522,719) | | | | | | | 5,464,320 | |
Other Assets Less Liabilities (0.1%) | | | | | | | 3,981 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 5,468,301 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 5,464,320 | | | $ | — | | | $ | — | | | $ | 5,464,320 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 5,464,320 | | | $ | — | | | $ | — | | | $ | 5,464,320 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 5,464,320 | | | $ | — | | | $ | — | | | $ | 5,464,320 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 781,787 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,436,774 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 187,756 | |
Aggregate gross unrealized depreciation | | | (246,807 | ) |
| | | | |
Net unrealized depreciation | | $ | (59,051 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 5,523,371 | |
| | | | |
See Notes to Financial Statements.
109
1290 FUNDS
1290 RETIREMENT 2030 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $5,522,719) | | $ | 5,464,320 | |
Cash | | | 8,281 | |
Prepaid registration and filing fees | | | 14,647 | |
Receivable from investment adviser | | | 6,580 | |
Receivable for Fund shares sold | | | 1,272 | |
Dividends, interest and other receivables | | | 2 | |
Other assets | | | 32 | |
| | | | |
Total assets | | | 5,495,134 | |
| | | | |
LIABILITIES | |
Transfer agent fees payable | | | 745 | |
Accrued expenses | | | 26,088 | |
| | | | |
Total liabilities | | | 26,833 | |
| | | | |
NET ASSETS | | $ | 5,468,301 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 5,392,570 | |
Total distributable earnings (loss) | | | 75,731 | |
| | | | |
Net assets | | $ | 5,468,301 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $5,468,301 / 503,827 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.85 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 89,753 | |
Interest | | | 345 | |
| | | | |
Total income | | | 90,098 | |
| | | | |
EXPENSES | |
Professional fees | | | 21,861 | |
Investment advisory fees | | | 15,842 | |
Printing and mailing expenses | | | 10,967 | |
Registration and filing fees | | | 9,858 | |
Transfer agent fees | | | 4,923 | |
Administrative fees | | | 4,753 | |
Custodian fees | | | 2,262 | |
Trustees’ fees | | | 248 | |
Miscellaneous | | | 3,473 | |
| | | | |
Gross expenses | | | 74,187 | |
Less: Waiver from investment adviser | | | (20,595 | ) |
Reimbursement from investment adviser | | | (36,423 | ) |
| | | | |
Net expenses | | | 17,169 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 72,929 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 106,348 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (671,246 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (564,898 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (491,969 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 72,929 | | | $ | 104,968 | |
Net realized gain (loss) | | | 106,348 | | | | 19,025 | |
Net change in unrealized appreciation (depreciation) | | | (671,246 | ) | | | 544,946 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (491,969 | ) | | | 668,939 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (136,178 | ) | | | (88,204 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 56,005 and 189,006 shares, respectively ] | | | 641,746 | | | | 2,128,791 | |
Capital shares issued in reinvestment of dividends [ 6,336 and 3,168 shares, respectively ] | | | 75,078 | | | | 33,204 | |
Capital shares repurchased [ (124,194) and (26,204) shares, respectively ] | | | (1,344,611 | ) | | | (291,050 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | (627,787 | ) | | | 1,870,945 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (1,255,934 | ) | | | 2,451,680 | |
NET ASSETS: | |
Beginning of period | | | 6,724,235 | | | | 4,272,555 | |
| | | | | | | | |
End of period | | $ | 5,468,301 | | | $ | 6,724,235 | |
| | | | | | | | |
See Notes to Financial Statements.
110
1290 FUNDS
1290 RETIREMENT 2030 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 11.89 | | | $ | 10.69 | | | $ | 10.80 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.13 | | | | 0.22 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (0.93 | ) | | | 1.20 | | | | (0.12 | ) | | | 0.69 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.80 | ) | | | 1.42 | | | | 0.08 | | | | 0.80 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.21 | ) | | | (0.18 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.03 | ) | | | (0.04 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.22 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.85 | | | $ | 11.89 | | | $ | 10.69 | | | $ | 10.80 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (6.86 | )% | | | 13.56 | % | | | 0.70 | % | | | 8.00 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 5,468 | | | $ | 6,724 | | | $ | 4,273 | | | $ | 2,701 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.54 | %(k) | | | 0.54 | %(k) | | | 0.53 | %(k) |
Before waivers and reimbursements (a)(f) | | | 2.34 | % | | | 3.14 | % | | | 4.74 | % | | | 5.27 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.31 | % | | | 1.98 | % | | | 1.78 | % | | | 1.59 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 0.50 | % | | | (0.62 | )% | | | (2.41 | )% | | | (3.15 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 5 | % | | | 3 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
111
1290 RETIREMENT 2035 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (7.78 | )% | | | (3.44 | )% | | | 4.42 | % |
S&P Target Date 2035 Index | | | (6.25 | ) | | | (3.25 | ) | | | 4.54 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 2.62% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -7.78% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2035 Index, returned -6.25%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities) | |
| |
| As of April 30, 2020 | |
Equity | | | 76.6 | % |
Fixed Income | | | 23.4 | |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) | |
| | |
| As of April 30, 2020 | | | |
iShares Core S&P Total US Stock Market ETF | | | 26.9 | % |
iShares Core U.S. Aggregate Bond ETF | | | 19.9 | |
iShares Core MSCI EAFE ETF | | | 9.8 | |
iShares Edge MSCI Min Vol USA ETF | | | 8.3 | |
Invesco S&P 500 Low Volatility ETF | | | 8.3 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.2 | |
Invesco S&P MidCap Low Volatility ETF | | | 4.8 | |
Invesco S&P International Developed Low Volatility ETF | | | 4.7 | |
iShares TIPS Bond ETF | | | 3.5 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2.6 | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
112
1290 RETIREMENT 2035 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | | $1,000.00 | | | | $922.20 | | | | $2.58 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.18 | | | | 2.71 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
113
1290 FUNDS
1290 RETIREMENT 2035 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | | | | | | | | |
Equity (75.1%) | | | | | |
Invesco S&P 500 Low Volatility ETF | | | 15,530 | | | $ | 775,568 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 4,340 | | | | 81,332 | |
Invesco S&P International Developed Low Volatility ETF | | | 16,450 | | | | 440,860 | |
Invesco S&P MidCap Low Volatility ETF | | | 10,550 | | | | 446,687 | |
Invesco S&P SmallCap Low Volatility ETF | | | 6,990 | | | | 245,629 | |
iShares Core MSCI EAFE ETF | | | 17,270 | | | | 915,828 | |
iShares Core MSCI Emerging Markets ETF | | | 4,450 | | | | 194,287 | |
iShares Core S&P Total US Stock Market ETF | | | 38,850 | | | | 2,515,926 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 7,520 | | | | 484,514 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 2,170 | | | | 109,758 | |
iShares Edge MSCI Min Vol USA ETF | | | 13,230 | | | | 781,496 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 2,130 | | | | 157,087 | |
| | | | | | | | |
Total Equity | | | | | | | 7,148,972 | |
| | | | | | | | |
| | | | | | | | |
Fixed Income (23.0%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 15,940 | | | | 1,866,574 | |
iShares TIPS Bond ETF | | | 2,670 | | | | 323,898 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 2,190,472 | |
| | | | | | | | |
Total Exchange Traded Funds (98.1%)
(Cost $9,496,741) | | | | | | | 9,339,444 | |
| | | | | | | | |
| |
SHORT-TERM INVESTMENT: | | | | | |
Investment Company (0.1%) | | | | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 11,969 | | | | 11,979 | |
| | | | | | | | |
Total Short-Term Investment (0.1%)
(Cost $11,978) | | | | | | | 11,979 | |
| | | | | | | | |
Total Investments in Securities (98.2%)
(Cost $9,508,719) | | | | | | | 9,351,423 | |
Other Assets Less Liabilities (1.8%) | | | | | | | 166,036 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 9,517,459 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 9,339,444 | | | $ | — | | | $ | — | | | $ | 9,339,444 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 11,979 | | | | — | | | | — | | | | 11,979 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 9,351,423 | | | $ | — | | | $ | — | | | $ | 9,351,423 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 9,351,423 | | | $ | — | | | $ | — | | | $ | 9,351,423 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
See Notes to Financial Statements.
114
1290 FUNDS
1290 RETIREMENT 2035 FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,631,388 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,911,960 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 237,586 | |
Aggregate gross unrealized depreciation | | | (396,412 | ) |
| | | | |
Net unrealized depreciation | | $ | (158,826 | ) |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 9,510,249 | |
| | | | |
See Notes to Financial Statements.
115
1290 FUNDS
1290 RETIREMENT 2035 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $9,508,719) | | $ | 9,351,423 | |
Cash | | | 75,000 | |
Receivable for Fund shares sold | | | 98,622 | |
Prepaid registration and filing fees | | | 14,748 | |
Receivable from investment adviser | | | 5,514 | |
Dividends, interest and other receivables | | | 18 | |
Other assets | | | 32 | |
| | | | |
Total assets | | | 9,545,357 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 672 | |
Accrued expenses | | | 27,226 | |
| | | | |
Total liabilities | | | 27,898 | |
| | | | |
NET ASSETS | | $ | 9,517,459 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 9,464,446 | |
Total distributable earnings (loss) | | | 53,013 | |
| | | | |
Net assets | | $ | 9,517,459 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $9,517,459 / 880,096 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.81 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 123,776 | |
Interest | | | 382 | |
| | | | |
Total income | | | 124,158 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 22,881 | |
Investment advisory fees | | | 21,922 | |
Printing and mailing expenses | | | 11,561 | |
Registration and filing fees | | | 9,983 | |
Administrative fees | | | 6,577 | |
Transfer agent fees | | | 4,923 | |
Custodian fees | | | 2,324 | |
Trustees’ fees | | | 329 | |
Miscellaneous | | | 3,984 | |
| | | | |
Gross expenses | | | 84,484 | |
Less: Waiver from investment adviser | | | (28,499 | ) |
Reimbursement from investment adviser | | | (32,358 | ) |
| | | | |
Net expenses | | | 23,627 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 100,531 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | 170,070 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (866,974 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (696,904 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (596,373 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 100,531 | | | $ | 144,226 | |
Net realized gain (loss) | | | 170,070 | | | | 63,099 | |
Net change in unrealized appreciation (depreciation) | | | (866,974 | ) | | | 696,566 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (596,373 | ) | | | 903,891 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (225,614 | ) | | | (107,092 | ) |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 378,332 and 166,637 shares, respectively ] | | | 4,093,502 | | | | 1,919,697 | |
Capital shares issued in reinvestment of dividends [ 12,315 and 6,075 shares, respectively ] | | | 147,040 | | | | 64,342 | |
Capital shares repurchased [ (206,457) and (98,499) shares, respectively ] | | | (2,270,569 | ) | | | (1,103,345 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 1,969,973 | | | | 880,694 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,147,986 | | | | 1,677,493 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 8,369,473 | | | | 6,691,980 | |
| | | | | | | | |
End of period | | $ | 9,517,459 | | | $ | 8,369,473 | |
| | | | | | | | |
See Notes to Financial Statements.
116
1290 FUNDS
1290 RETIREMENT 2035 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017*
to October 31,
2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.03 | | | $ | 10.76 | | | $ | 10.85 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.13 | | | | 0.22 | | | | 0.19 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.04 | ) | | | 1.23 | | | | (0.09 | ) | | | 0.74 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.91 | ) | | | 1.45 | | | | 0.10 | | | | 0.85 | |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.16 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.09 | ) | | | (0.02 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.31 | ) | | | (0.18 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.81 | | | $ | 12.03 | | | $ | 10.76 | | | $ | 10.85 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (7.78 | )% | | | 13.61 | % | | | 0.88 | % | | | 8.50 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 9,517 | | | $ | 8,369 | | | $ | 6,692 | | | $ | 2,712 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.54 | %(j) | | | 0.53 | %(k) | | | 0.53 | %(k) |
Before waivers and reimbursements (a)(f) | | | 1.93 | % | | | 2.50 | % | | | 3.95 | % | | | 5.28 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.30 | % | | | 1.98 | % | | | 1.73 | % | | | 1.58 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 0.91 | % | | | 0.01 | % | | | (1.68 | )% | | | (3.17 | )%(l) |
Portfolio turnover rate^ | | | 22 | %(z) | | | 13 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
117
1290 RETIREMENT 2040 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (7.34 | )% | | | (3.08 | )% | | | 4.87 | % |
S&P Target Date 2040 Index | | | (7.15 | ) | | | (4.26 | ) | | | 4.47 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 4.69% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund’s holdings performed in line with the relevant asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned -7.34% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2040 Index, returned -7.15%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities) | |
| |
| As of April 30, 2020 | |
Equity | | | 82.4 | % |
Fixed Income | | | 17.6 | |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) | |
| |
| As of April 30, 2020 | |
iShares Core S&P Total US Stock Market ETF | | | 28.9 | % |
iShares Core U.S. Aggregate Bond ETF | | | 15.7 | |
iShares Edge MSCI Min Vol USA ETF | | | 10.2 | |
iShares Core MSCI EAFE ETF | | | 9.8 | |
Invesco S&P 500 Low Volatility ETF | | | 9.8 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.1 | |
Invesco S&P MidCap Low Volatility ETF | | | 5.0 | |
Invesco S&P International Developed Low Volatility ETF | | | 4.6 | |
iShares Core MSCI Emerging Markets ETF | | | 2.5 | |
Invesco S&P SmallCap Low Volatility ETF | | | 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 thesix-month period ended April 30, 2020 and held for the entiresix-month period.
118
1290 RETIREMENT 2040 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | | $1,000.00 | | | | $ 926.60 | | | | $2.58 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.18 | | | | 2.71 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
119
1290 FUNDS
1290 RETIREMENT 2040 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (81.8%) | |
Invesco S&P 500 Low Volatility ETF | | | 7,850 | | | $ | 392,029 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 2,450 | | | | 45,913 | |
Invesco S&P International Developed Low Volatility ETF | | | 6,900 | | | | 184,920 | |
Invesco S&P MidCap Low Volatility ETF | | | 4,760 | | | | 201,538 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2,470 | | | | 86,796 | |
iShares Core MSCI EAFE ETF | | | 7,410 | | | | 392,952 | |
iShares Core MSCI Emerging Markets ETF | | | 2,310 | | | | 100,855 | |
iShares Core S&P Total US Stock Market ETF | | | 17,820 | | | | 1,154,023 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 3,190 | | | | 205,532 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 890 | | | | 45,016 | |
iShares Edge MSCI Min Vol USA ETF | | | 6,900 | | | | 407,583 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,030 | | | | 75,963 | |
| | | | | | | | |
Total Equity | | | | | | | 3,293,120 | |
| | | | | | | | |
Fixed Income (17.5%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 5,350 | | | | 626,485 | |
iShares TIPS Bond ETF | | | 650 | | | | 78,851 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 705,336 | |
| | | | | | | | |
Total Investments in Securities (99.3%)
(Cost $3,979,842) | | | | | | | 3,998,456 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 29,588 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 4,028,044 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 3,998,456 | | | $ | — | | | $ | — | | | $ | 3,998,456 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 3,998,456 | | | $ | — | | | $ | — | | | $ | 3,998,456 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 3,998,456 | | | $ | — | | | $ | — | | | $ | 3,998,456 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 965,311 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 511,681 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 190,008 | |
Aggregate gross unrealized depreciation | | | (171,559 | ) |
| | | | |
Net unrealized appreciation | | $ | 18,449 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 3,980,007 | |
| | | | |
See Notes to Financial Statements.
120
1290 FUNDS
1290 RETIREMENT 2040 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $3,979,842) | | $ | 3,998,456 | |
Cash | | | 33,089 | |
Prepaid registration and filing fees | | | 14,514 | |
Receivable from investment adviser | | | 6,943 | |
Receivable for Fund shares sold | | | 1 | |
| | | | |
Total assets | | | 4,053,003 | |
| | | | |
LIABILITIES | |
Accrued professional fees | | | 23,738 | |
Transfer agent fees payable | | | 631 | |
Trustees’ fees payable | | | 11 | |
Accrued expenses | | | 579 | |
| | | | |
Total liabilities | | | 24,959 | |
| | | | |
NET ASSETS | | $ | 4,028,044 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 3,975,600 | |
Total distributable earnings (loss) | | | 52,444 | |
| | | | |
Net assets | | $ | 4,028,044 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $4,028,044 / 367,487 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.96 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 59,968 | |
Interest | | | 245 | |
| | | | |
Total income | | | 60,213 | |
| | | | |
EXPENSES | |
Professional fees | | | 20,863 | |
Investment advisory fees | | | 10,489 | |
Printing and mailing expenses | | | 10,403 | |
Registration and filing fees | | | 9,750 | |
Transfer agent fees | | | 4,923 | |
Administrative fees | | | 3,147 | |
Custodian fees | | | 2,175 | |
Trustees’ fees | | | 159 | |
Miscellaneous | | | 2,977 | |
| | | | |
Gross expenses | | | 64,886 | |
Less: Waiver from investment adviser | | | (13,636 | ) |
Reimbursement from investment adviser | | | (39,965 | ) |
| | | | |
Net expenses | | | 11,285 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 48,928 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 14,408 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (491,385 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (476,977 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (428,049 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 48,928 | | | $ | 64,588 | |
Net realized gain (loss) | | | 14,408 | | | | 6,331 | |
Net change in unrealized appreciation (depreciation) | | | (491,385 | ) | | | 351,616 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (428,049 | ) | | | 422,535 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (78,113 | ) | | | (68,399 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 72,693 and 71,724 shares, respectively ] | | | 877,225 | | | | 832,237 | |
Capital shares issued in reinvestment of dividends [ 1,789 and 557 shares, respectively ] | | | 21,589 | | | | 5,899 | |
Capital shares repurchased [ (39,362) and (8,837) shares, respectively ] | | | (370,043 | ) | | | (102,332 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 528,771 | | | | 735,804 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 22,609 | | | | 1,089,940 | |
NET ASSETS: | |
Beginning of period | | | 4,005,435 | | | | 2,915,495 | |
| | | | | | | | |
End of period | | $ | 4,028,044 | | | $ | 4,005,435 | |
| | | | | | | | |
See Notes to Financial Statements.
121
1290 FUNDS
1290 RETIREMENT 2040 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months
Ended
April 30,
2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.05 | | | $ | 10.84 | | | $ | 10.89 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.14 | | | | 0.22 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.01 | ) | | | 1.24 | | | | (0.06 | ) | | | 0.78 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.87 | ) | | | 1.46 | | | | 0.14 | | | | 0.89 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.21 | ) | | | (0.20 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.01 | ) | | | (0.05 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.25 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.96 | | | $ | 12.05 | | | $ | 10.84 | | | $ | 10.89 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (7.34 | )% | | | 13.79 | % | | | 1.26 | % | | | 8.90 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 4,028 | | | $ | 4,005 | | | $ | 2,915 | | | $ | 2,722 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.53 | %(k) | | | 0.53 | %(k) | | | 0.53 | %(k) |
Before waivers and reimbursements (a)(f) | | | 3.10 | % | | | 4.57 | % | | | 5.31 | % | | | 5.28 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.34 | % | | | 1.96 | % | | | 1.80 | % | | | 1.57 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.22 | )% | | | (2.08 | )% | | | (2.99 | )% | | | (3.18 | )%(l) |
Portfolio turnover rate^ | | | 12 | %(z) | | | 3 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
122
1290 RETIREMENT 2045 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| |
| Total Returns as of 4/30/20 | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (8.19 | )% | | | (4.01 | )% | | | 4.79 | % |
S&P Target Date 2045 Index | | | (7.73 | ) | | | (4.87 | ) | | | 4.38 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 3.64% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund’s holdings performed in line with the relevant asset classes and market sectors.
Fund Highlights
The Fund’s Class I shares returned -8.19% for the six-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2045 Index, returned -7.73%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities) As of April 30, 2020 | |
Equity | | | 86.1 | % |
Fixed Income | | | 13.9 | |
| | | | |
| |
Top 10 Holdings (as a percentage of Total Investments in
Securities) As of April 30, 2020 | |
iShares Core S&P Total US Stock Market ETF | | | 31.0 | % |
iShares Core U.S. Aggregate Bond ETF | | | 11.8 | |
iShares Core MSCI EAFE ETF | | | 10.6 | |
iShares Edge MSCI Min Vol USA ETF | | | 9.9 | |
Invesco S&P 500 Low Volatility ETF | | | 9.6 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.4 | |
Invesco S&P International Developed Low Volatility ETF | | | 5.2 | |
Invesco S&P MidCap Low Volatility ETF | | | 5.1 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2.6 | |
iShares Core MSCI Emerging Markets ETF | | | 2.4 | |
| | |
| Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
123
1290 RETIREMENT 2045 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class I | | | | | | | | | | | | |
Actual | | | $1,000.00 | | | | $918.10 | | | | $2.56 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.19 | | | | 2.70 | |
| |
* Expenses are equal to the Fund’s Class I shares annualized expense ratio of 0.54%, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). | |
124
1290 FUNDS
1290 RETIREMENT 2045 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | | | | | | | | |
Equity (85.5%) | | | | | |
Invesco S&P 500 Low Volatility ETF | | | 13,000 | | | $ | 649,220 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 3,470 | | | | 65,028 | |
Invesco S&P International Developed Low Volatility ETF | | | 12,970 | | | | 347,596 | |
Invesco S&P MidCap Low Volatility ETF | | | 8,190 | | | | 346,765 | |
Invesco S&P SmallCap Low Volatility ETF | | | 4,920 | | | | 172,889 | |
iShares Core MSCI EAFE ETF | | | 13,460 | | | | 713,784 | |
iShares Core MSCI Emerging Markets ETF | | | 3,700 | | | | 161,542 | |
iShares Core S&P Total US Stock Market ETF | | | 32,270 | | | | 2,089,805 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5,610 | | | | 361,452 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 1,780 | | | | 90,032 | |
iShares Edge MSCI Min Vol USA ETF | | | 11,260 | | | | 665,128 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,870 | | | | 137,913 | |
| | | | | | | | |
Total Equity | | | | | | | 5,801,154 | |
| | | | | | | | |
Fixed Income (13.8%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 6,780 | | | | 793,938 | |
iShares TIPS Bond ETF | | | 1,150 | | | | 139,506 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 933,444 | |
| | | | | | | | |
Total Investments in Securities (99.3%)
(Cost $6,603,418) | | | | | | | 6,734,598 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 48,022 | |
| | | | | | | | |
Net Assets (100%) | | | | | | $ | 6,782,620 | |
| | | | | | | | |
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, 2020:
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 | | $ | 6,734,598 | | | $ | — | | | $ | — | | | $ | 6,734,598 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 6,734,598 | | | $ | — | | | $ | — | | | $ | 6,734,598 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 6,734,598 | | | $ | — | | | $ | — | | | $ | 6,734,598 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,880,297 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 229,882 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 350,661 | |
Aggregate gross unrealized depreciation | | | (219,927 | ) |
| | | | |
Net unrealized appreciation | | $ | 130,734 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 6,603,864 | |
| | | | |
See Notes to Financial Statements.
125
1290 FUNDS
1290 RETIREMENT 2045 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | | | | |
Investments in Securities, at value (Cost $6,603,418) | | $ | 6,734,598 | |
Cash | | | 52,162 | |
Prepaid registration and filing fees | | | 14,588 | |
Receivable from investment adviser | | | 6,236 | |
Receivable for Fund shares sold | | | 645 | |
Dividends, interest and other receivables | | | 28 | |
| | | | |
Total assets | | | 6,808,257 | |
| | | | |
LIABILITIES | | | | |
Transfer agent fees payable | | | 246 | |
Trustees’ fees payable | | | 4 | |
Accrued expenses | | | 25,387 | |
| | | | |
Total liabilities | | | 25,637 | |
| | | | |
NET ASSETS | | $ | 6,782,620 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 6,582,812 | |
Total distributable earnings (loss) | | | 199,808 | |
| | | | |
Net assets | | $ | 6,782,620 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $6,782,620 / 617,709 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.98 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | | | | |
Dividends | | $ | 84,642 | |
Interest | | | 337 | |
| | | | |
Total income | | | 84,979 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 21,599 | |
Investment advisory fees | | | 14,810 | |
Printing and mailing expenses | | | 10,829 | |
Registration and filing fees | | | 9,828 | |
Transfer agent fees | | | 4,987 | |
Administrative fees | | | 4,443 | |
Custodian fees | | | 2,262 | |
Trustees’ fees | | | 223 | |
Miscellaneous | | | 3,357 | |
| | | | |
Gross expenses | | | 72,338 | |
Less: Waiver from investment adviser | | | (19,253 | ) |
Reimbursement from investment adviser | | | (37,204 | ) |
| | | | |
Net expenses | | | 15,881 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 69,098 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | 40,853 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (518,466 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (477,613 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (408,515 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | | | | | | | | |
Net investment income (loss) | | $ | 69,098 | | | $ | 90,582 | |
Net realized gain (loss) | | | 40,853 | | | | 422 | |
Net change in unrealized appreciation (depreciation) | | | (518,466 | ) | | | 506,810 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (408,515 | ) | | | 597,814 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (106,681 | ) | | | (75,322 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 179,424 and 117,575 shares, respectively ] | | | 1,957,764 | | | | 1,356,581 | |
Capital shares issued in reinvestment of dividends [ 4,128 and 2,113 shares, respectively ] | | | 50,406 | | | | 22,572 | |
Capital shares repurchased [ (28,428) and (8,569) shares, respectively ] | | | (345,218 | ) | | | (100,710 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 1,662,952 | | | | 1,278,443 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 1,147,756 | | | | 1,800,935 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 5,634,864 | | | | 3,833,929 | |
| | | | | | | | |
End of period | | $ | 6,782,620 | | | $ | 5,634,864 | |
| | | | | | | | |
See Notes to Financial Statements.
126
1290 FUNDS
1290 RETIREMENT 2045 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
Class I | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.18 | | | $ | 10.91 | | | $ | 10.93 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.14 | | | | 0.23 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.12 | ) | | | 1.25 | | | | (0.03 | ) | | | 0.82 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.98 | ) | | | 1.48 | | | | 0.17 | | | | 0.93 | |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.18 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | — | # | | | (0.03 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.22 | ) | | | (0.21 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.98 | | | $ | 12.18 | | | $ | 10.91 | | | $ | 10.93 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (8.19 | )% | | | 13.85 | % | | | 1.53 | % | | | 9.30 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 6,783 | | | $ | 5,635 | | | $ | 3,834 | | | $ | 2,741 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.54 | %**(j) | | | 0.53 | %(k) | | | 0.53 | %(k) | | | 0.52 | %(k) |
Before waivers and reimbursements (a)(f) | | | 2.45 | % | | | 3.51 | % | | | 4.91 | % | | | 5.29 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.34 | % | | | 1.97 | % | | | 1.76 | % | | | 1.55 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | 0.43 | % | | | (1.01 | )% | | | (2.62 | )% | | | (3.22 | )%(l) |
Portfolio turnover rate^ | | | 4 | %(z) | | | 1 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| # | Per share amount is less than $0.005. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
127
1290 RETIREMENT 2050 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (9.38 | )% | | | (5.28 | )% | | | 4.64 | % |
S&P Target Date 2050 Index | | | (7.95 | ) | | | (5.19 | ) | | | 4.39 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
| | | | | | | | | | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 4.65% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -9.38% for the six-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2050 Index, returned -7.95%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities)
As of April 30, 2020 | |
Equity | | | 91.0 | % |
Fixed Income | | | 9.0 | |
| | | | |
| |
Top 10 Holdings (as a percentage of Total Investments in
Securities) | |
| |
| As of April 30, 2020 | |
iShares Core S&P Total US Stock Market ETF | | | 32.6 | % |
iShares Core MSCI EAFE ETF | | | 11.2 | |
iShares Edge MSCI Min Vol USA ETF | | | 10.5 | |
Invesco S&P 500 Low Volatility ETF | | | 10.3 | |
iShares Core U.S. Aggregate Bond ETF | | | 7.7 | |
Invesco S&P MidCap Low Volatility ETF | | | 5.6 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.4 | |
Invesco S&P International Developed Low Volatility ETF | | | 5.3 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2.9 | |
iShares Core MSCI Emerging Markets ETF | | | 2.6 | |
| | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
128
1290 RETIREMENT 2050 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | $ | 1,000.00 | | | $ | 906.20 | | | $ | 2.53 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.21 | | | | 2.68 | |
| |
* 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 182/366 (to reflect theone-half year period). | |
129
1290 FUNDS
1290 RETIREMENT 2050 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (90.5%) | |
Invesco S&P 500 Low Volatility ETF | | | 8,260 | | | $ | 412,504 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 2,380 | | | | 44,601 | |
Invesco S&P International Developed Low Volatility ETF | | | 7,940 | | | | 212,792 | |
Invesco S&P MidCap Low Volatility ETF | | | 5,250 | | | | 222,285 | |
Invesco S&P SmallCap Low Volatility ETF | | | 3,290 | | | | 115,611 | |
iShares Core MSCI EAFE ETF | | | 8,460 | | | | 448,634 | |
iShares Core MSCI Emerging Markets ETF | | | 2,380 | | | | 103,911 | |
iShares Core S&P Total US Stock Market ETF | | | 20,170 | | | | 1,306,209 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 3,380 | | | | 217,773 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 1,030 | | | | 52,098 | |
iShares Edge MSCI Min Vol USA ETF | | | 7,150 | | | | 422,351 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,180 | | | | 87,025 | |
| | | | | | | | |
Total Equity | | | | | | | 3,645,794 | |
| | | | | | | | |
Fixed Income (8.9%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 2,640 | | | | 309,144 | |
iShares TIPS Bond ETF | | | 420 | | | | 50,950 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 360,094 | |
| | | | | | | | |
Total Investments in Securities (99.4%)
(Cost $3,983,934) | | | | | | | 4,005,888 | |
Other Assets Less Liabilities (0.6%) | | | | | | | 23,842 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 4,029,730 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 4,005,888 | | | $ | — | | | $ | — | | | $ | 4,005,888 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 4,005,888 | | | $ | — | | | $ | — | | | $ | 4,005,888 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 4,005,888 | | | $ | — | | | $ | — | | | $ | 4,005,888 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 1,578,020 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 765,788 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 183,408 | |
Aggregate gross unrealized depreciation | | | (161,454 | ) |
| | | | |
Net unrealized appreciation | | $ | 21,954 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 3,983,934 | |
| | | | |
See Notes to Financial Statements.
130
1290 FUNDS
1290 RETIREMENT 2050 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $3,983,934) | | $ | 4,005,888 | |
Cash | | | 26,070 | |
Prepaid registration and filing fees | | | 14,495 | |
Receivable from investment adviser | | | 6,942 | |
Receivable for Fund shares sold | | | 1,376 | |
Dividends, interest and other receivables | | | 13 | |
| | | | |
Total assets | | | 4,054,784 | |
| | | | |
LIABILITIES | |
Accrued professional fees | | | 23,629 | |
Transfer agent fees payable | | | 747 | |
Trustees’ fees payable | | | 12 | |
Accrued expenses | | | 666 | |
| | | | |
Total liabilities | | | 25,054 | |
| | | | |
NET ASSETS | | $ | 4,029,730 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 3,998,638 | |
Total distributable earnings (loss) | | | 31,092 | |
| | | | |
Net assets | | $ | 4,029,730 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $4,029,730 / 370,506 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.88 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 56,697 | |
Interest | | | 258 | |
| | | | |
Total income | | | 56,955 | |
| | | | |
EXPENSES | |
Professional fees | | | 20,751 | |
Printing and mailing expenses | | | 10,337 | |
Investment advisory fees | | | 9,901 | |
Registration and filing fees | | | 9,749 | |
Transfer agent fees | | | 4,923 | |
Administrative fees | | | 2,971 | |
Custodian fees | | | 2,113 | |
Trustees’ fees | | | 150 | |
Miscellaneous | | | 3,006 | |
| | | | |
Gross expenses | | | 63,901 | |
Less: Waiver from investment adviser | | | (12,872 | ) |
Reimbursement from investment adviser | | | (40,483 | ) |
| | | | |
Net expenses | | | 10,546 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 46,409 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | (8,888 | ) |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (537,263 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (546,151 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (499,742 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 46,409 | | | $ | 65,387 | |
Net realized gain (loss) | | | (8,888 | ) | | | 6,188 | |
Net change in unrealized appreciation (depreciation) | | | (537,263 | ) | | | 370,029 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (499,742 | ) | | | 441,604 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (76,047 | ) | | | (70,591 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 143,141 and 29,945 shares, respectively ] | | | 1,619,804 | | | | 343,550 | |
Capital shares issued in reinvestment of dividends [ 1,323 and 756 shares, respectively ] | | | 16,247 | | | | 8,091 | |
Capital shares repurchased [ (80,111) and (4,097) shares, respectively ] | | | (777,181 | ) | | | (44,001 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 858,870 | | | | 307,640 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 283,081 | | | | 678,653 | |
NET ASSETS: | |
Beginning of period | | | 3,746,649 | | | | 3,067,996 | |
| | | | | | | | |
End of period | | $ | 4,029,730 | | | $ | 3,746,649 | |
| | | | | | | | |
See Notes to Financial Statements.
131
1290 FUNDS
1290 RETIREMENT 2050 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months
Ended
April 30,
2020
(Unaudited) | | | Year Ended October
31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.24 | | | $ | 10.97 | | | $ | 10.98 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.14 | | | | 0.22 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.26 | ) | | | 1.30 | | | | (0.02 | ) | | | 0.87 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.12 | ) | | | 1.52 | | | | 0.18 | | | | 0.98 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.22 | ) | | | (0.20 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.02 | ) | | | (0.05 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.25 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.88 | | | $ | 12.24 | | | $ | 10.97 | | | $ | 10.98 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (9.38 | )% | | | 14.18 | % | | | 1.63 | % | | | 9.80 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 4,030 | | | $ | 3,747 | | | $ | 3,068 | | | $ | 2,744 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %**(j) | | | 0.52 | %(k) | | | 0.52 | %(k) | | | 0.52 | %(k) |
Before waivers and reimbursements (a)(f) | | | 3.23 | % | | | 4.52 | % | | | 5.20 | % | | | 5.26 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.35 | % | | | 1.96 | % | | | 1.77 | % | | | 1.54 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.35 | )% | | | (2.03 | )% | | | (2.90 | )% | | | (3.20 | )%(l) |
Portfolio turnover rate^ | | | 19 | %(z) | | | 2 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
132
1290 RETIREMENT 2055 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (10.66 | )% | | | (6.64 | )% | | | 4.41 | % |
S&P Target Date 2055 Index | | | (8.17 | ) | | | (5.38 | ) | | | 4.36 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 4.87% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -10.66% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2055 Index, returned-8.17%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
| • | | The Fund’s fixed-income holdings outperformed compared to those of the benchmark, adding positively to relative performance. |
What hurt performance during the six-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total Investments
in Securities) As of April 30, 2020 | |
Equity | | | 96.0 | % |
Fixed Income | | | 4.0 | |
| | | | |
| |
Top 10 Holdings (as a percentage of Total Investments in
Securities) As of April 30, 2020 | |
iShares Core S&P Total US Stock Market ETF | | | 33.9 | % |
iShares Core MSCI EAFE ETF | | | 11.6 | |
iShares Edge MSCI Min Vol USA ETF | | | 11.6 | |
Invesco S&P 500 Low Volatility ETF | | | 11.6 | |
Invesco S&P MidCap Low Volatility ETF | | | 5.7 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 5.7 | |
Invesco S&P International Developed Low Volatility ETF | | | 5.6 | |
iShares Core U.S. Aggregate Bond ETF | | | 3.4 | |
Invesco S&P SmallCap Low Volatility ETF | | | 3.0 | |
iShares Core MSCI Emerging Markets ETF | | | 2.5 | |
| | |
Holdings are subject to change without notice. | | | | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
133
1290 RETIREMENT 2055 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses
Paid
During
Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | | $1,000.00 | | | | $893.40 | | | | $2.50 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.22 | | | | 2.68 | |
| |
* 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 182/366 (to reflect theone-half year period). | |
134
1290 FUNDS
1290 RETIREMENT 2055 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | |
Equity (95.2%) | |
Invesco S&P 500 Low Volatility ETF | | | 8,060 | | | $ | 402,516 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 2,130 | | | | 39,916 | |
Invesco S&P International Developed Low Volatility ETF | | | 7,230 | | | | 193,764 | |
Invesco S&P MidCap Low Volatility ETF | | | 4,730 | | | | 200,268 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2,960 | | | | 104,014 | |
iShares Core MSCI EAFE ETF | | | 7,610 | | | | 403,558 | |
iShares Core MSCI Emerging Markets ETF | | | 1,990 | | | | 86,884 | |
iShares Core S&P Total US Stock Market ETF | | | 18,220 | | | | 1,179,927 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 3,100 | | | | 199,733 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 950 | | | | 48,051 | |
iShares Edge MSCI Min Vol USA ETF | | | 6,820 | | | | 402,858 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,070 | | | | 78,913 | |
| | | | | | | | |
Total Equity | | | | | | | 3,340,402 | |
| | | | | | | | |
Fixed Income (4.0%) | | | | | | | | |
iShares Core U.S. Aggregate Bond ETF | | | 1,010 | | | | 118,271 | |
iShares TIPS Bond ETF | | | 180 | | | | 21,836 | |
| | | | | | | | |
Total Fixed Income | | | | | | | 140,107 | |
| | | | | | | | |
Total Investments in Securities (99.2%)
(Cost $3,317,193) | | | | | | | 3,480,509 | |
Other Assets Less Liabilities (0.8%) | | | | | | | 26,803 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 3,507,312 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 3,480,509 | | | $ | — | | | $ | — | | | $ | 3,480,509 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 3,480,509 | | | $ | — | | | $ | — | | | $ | 3,480,509 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 3,480,509 | | | $ | — | | | $ | — | | | $ | 3,480,509 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 427,407 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 112,117 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 283,783 | |
Aggregate gross unrealized depreciation | | | (120,753 | ) |
| | | | |
Net unrealized appreciation | | $ | 163,030 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 3,317,479 | |
| | | | |
See Notes to Financial Statements.
135
1290 FUNDS
1290 RETIREMENT 2055 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $3,317,193) | | $ | 3,480,509 | |
Cash | | | 28,448 | |
Prepaid registration and filing fees | | | 14,486 | |
Receivable from investment adviser | | | 7,049 | |
Receivable for Fund shares sold | | | 1,692 | |
Dividends, interest and other receivables | | | 2 | |
| | | | |
Total assets | | | 3,532,186 | |
| | | | |
LIABILITIES | |
Accrued professional fees | | | 23,526 | |
Transfer agent fees payable | | | 745 | |
Trustees’ fees payable | | | 13 | |
Accrued expenses | | | 590 | |
| | | | |
Total liabilities | | | 24,874 | |
| | | | |
NET ASSETS | | $ | 3,507,312 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 3,304,789 | |
Total distributable earnings (loss) | | | 202,523 | |
| | | | |
Net assets | | $ | 3,507,312 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $3,507,312 / 324,849 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.80 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 51,829 | |
Interest | | | 185 | |
| | | | |
Total income | | | 52,014 | |
| | | | |
EXPENSES | |
Professional fees | | | 20,538 | |
Printing and mailing expenses | | | 10,220 | |
Registration and filing fees | | | 9,735 | |
Investment advisory fees | | | 8,721 | |
Transfer agent fees | | | 4,923 | |
Administrative fees | | | 2,617 | |
Custodian fees | | | 2,117 | |
Trustees’ fees | | | 135 | |
Miscellaneous | | | 2,955 | |
| | | | |
Gross expenses | | | 61,961 | |
Less: Waiver from investment adviser | | | (11,338 | ) |
Reimbursement from investment adviser | | | (41,356 | ) |
| | | | |
Net expenses | | | 9,267 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 42,747 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Net realized gain (loss) on investments in securities | | | 23,347 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (402,950 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (379,603 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (336,856 | ) |
| | | | |
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 42,747 | | | $ | 61,461 | |
Net realized gain (loss) | | | 23,347 | | | | 3,941 | |
Net change in unrealized appreciation (depreciation) | | | (402,950 | ) | | | 355,603 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (336,856 | ) | | | 421,005 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (68,507 | ) | | | (69,041 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 46,888 and 23,882 shares, respectively ] | | | 477,438 | | | | 280,169 | |
Capital shares issued in reinvestment of dividends [ 752 and 376 shares, respectively ] | | | 9,307 | | | | 4,042 | |
Capital shares repurchased [ (10,576) and (777) shares, respectively ] | | | (119,356 | ) | | | (9,079 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 367,389 | | | | 275,132 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (37,974 | ) | | | 627,096 | |
NET ASSETS: | |
Beginning of period | | | 3,545,286 | | | | 2,918,190 | |
| | | | | | | | |
End of period | | $ | 3,507,312 | | | $ | 3,545,286 | |
| | | | | | | | |
See Notes to Financial Statements.
136
1290 FUNDS
1290 RETIREMENT 2055 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017* to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.32 | | | $ | 11.04 | | | $ | 11.02 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.14 | | | | 0.22 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.42 | ) | | | 1.32 | | | | 0.01 | † | | | 0.91 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.28 | ) | | | 1.54 | | | | 0.21 | | | | 1.02 | |
| | | | | | | | | | | | | | | | |
Less distributions: | |
Dividends from net investment income | | | (0.23 | ) | | | (0.21 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.01 | ) | | | (0.05 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.26 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.80 | | | $ | 12.32 | | | $ | 11.04 | | | $ | 11.02 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (10.66 | )% | | | 14.29 | % | | | 1.90 | % | | | 10.20 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | |
Net assets, end of period (000’s) | | $ | 3,507 | | | $ | 3,545 | | | $ | 2,918 | | | $ | 2,755 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %**(j) | | | 0.52 | %(k) | | | 0.52 | %(k) | | | 0.52 | %(k) |
Before waivers and reimbursements (a)(f) | | | 3.56 | % | | | 4.74 | % | | | 5.27 | % | | | 5.25 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.45 | % | | | 1.95 | % | | | 1.73 | % | | | 1.53 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.57 | )% | | | (2.27 | )% | | | (3.02 | )% | | | (3.21 | )%(l) |
Portfolio turnover rate^ | | | 3 | %(z) | | | 2 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| † | The amount shown for a share outstanding throughout the period does not accord with the aggregate net income and/or gain on investments for that period because of the timing of sales and repurchases of the Fund shares in relation to fluctuating market value of the investments in the Fund. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
137
1290 RETIREMENT 2060 FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
PERFORMANCE RESULTS
| | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | |
| | | | |
| | | 6
Months | | | 1
Year | | | Since
Incept. | |
Fund – Class I Shares* | | | (10.93 | )% | | | (6.95 | )% | | | 4.44 | % |
S&P Target Date 2060+ Index | | | (8.05 | ) | | | (5.26 | ) | | | 4.51 | |
| |
* Date of inception 2/27/17. Returns for periods less than one year are not annualized. Returns for periods greater than one year are annualized. | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratio for Class I share was 4.96% The net expense ratio for Class I share was 0.65%. The net expense ratio reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview
Against the backdrop of an extreme shock to the financial markets, resulting in a substantial first-quarter drop in equity prices and a rally in safe-haven bond markets, the Fund underperformed its benchmark.
Fund Highlights
The Fund’s Class I shares returned -10.93% for thesix-month period ended April 30, 2020. The Fund’s benchmark, the S&P Target Date 2060+ Index, returned -8.05%.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund benefited from its lack of holdings in the real estate sector, which was down about 25% for the six-month period. |
| • | | Among equity holdings, an overweighting in large-cap growth stocks helped performance compared to the broader market, as these securities held up better during the downdraft. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s overweighted position relative to the benchmark in equities detracted from performance, as the asset class underperformed relative to bonds. |
| • | | Within equity holdings, stock selection hurt performance, especially within the U.S. large-cap sector. |
Outlook
The Fund maintains a neutral outlook on the markets. The Fund’s investments are aimed at a specific retirement target date and are guided by a strategic risk-management discipline that automatically shifts the allocation to anticipate an investor’s risk tolerance at different stages of life.
| | | | |
| |
Table by Asset Class(as a percentage of Total
Investments in Securities) | |
| |
| As of April 30, 2020 | |
Equity | | | 100.0 | % |
| | | | |
| |
Top 10 Holdings(as a percentage of Total Investments in
Securities) | |
As of April 30, 2020 | | | | |
iShares Core S&P Total US Stock Market ETF | | | 36.1 | % |
iShares Core MSCI EAFE ETF | | | 12.4 | |
iShares Edge MSCI Min Vol USA ETF | | | 11.7 | |
Invesco S&P 500 Low Volatility ETF | | | 11.1 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 6.5 | |
Invesco S&P MidCap Low Volatility ETF | | | 5.8 | |
Invesco S&P International Developed Low Volatility ETF | | | 5.6 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2.8 | |
iShares Core MSCI Emerging Markets ETF | | | 2.7 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 2.6 | |
Holdings are subject to change without notice. | |
UNDERSTANDING YOUR EXPENSES:
As a shareholder of the Fund, you incur two types of costs:
(1) transaction costs, including applicable sales charges and redemption fees; and (2) ongoing costs, including investment advisory fees, distribution and/or service(12b-1) fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of thesix-month period ended April 30, 2020 and held for the entiresix-month period.
138
1290 RETIREMENT 2060 FUND (Unaudited)
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
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 -
4/30/20 | |
Class I | |
Actual | | | $1,000.00 | | | | $ 890.70 | | | | $2.50 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,022.22 | | | | 2.68 | |
| |
* 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 182/366 (to reflect theone-half year period). | |
139
1290 FUNDS
1290 RETIREMENT 2060 FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
| | | | | | | | |
EXCHANGE TRADED FUNDS (ETF): | | | | | | | | |
Equity (99.3%) | | | | | |
Invesco S&P 500 Low Volatility ETF | | | 7,300 | | | $ | 364,562 | |
Invesco S&P Emerging Markets Low Volatility ETF | | | 2,200 | | | | 41,228 | |
Invesco S&P International Developed Low Volatility ETF | | | 6,820 | | | | 182,776 | |
Invesco S&P MidCap Low Volatility ETF | | | 4,530 | | | | 191,800 | |
Invesco S&P SmallCap Low Volatility ETF | | | 2,620 | | | | 92,067 | |
iShares Core MSCI EAFE ETF | | | 7,660 | | | | 406,210 | |
iShares Core MSCI Emerging Markets ETF | | | 2,070 | | | | 90,376 | |
iShares Core S&P Total US Stock Market ETF | | | 18,320 | | | | 1,186,403 | |
iShares Edge MSCI Min Vol EAFE ETF | | | 3,310 | | | | 213,263 | |
iShares Edge MSCI Min Vol Emerging Markets ETF | | | 900 | | | | 45,522 | |
iShares Edge MSCI Min Vol USA ETF | | | 6,520 | | | | 385,137 | |
SPDR SSGA US Small Cap Low Volatility Index ETF | | | 1,160 | | | | 85,550 | |
| | | | | | | | |
Total Investments in Securities (99.3%)
(Cost $3,156,746) | | | | | | | 3,284,894 | |
Other Assets Less Liabilities (0.7%) | | | | | | | 24,757 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 3,309,651 | |
| | | | | | | | |
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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1
Quoted Prices in
Active Markets for
Identical
Securities | | | Level 2
Significant Other
Observable Inputs
(including quoted prices
for similar securities,
interest rates,
prepayment speeds,
credit risk, etc.) | | | Level 3
Significant Unobservable
Inputs (including the
Fund’s own
assumptions in
determining the fair
value of investments) | | | Total | |
Assets: | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | | | | | | | | | | | | | | | |
Exchange Traded Funds | | $ | 3,284,894 | | | $ | — | | | $ | — | | | $ | 3,284,894 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 3,284,894 | | | $ | — | | | $ | — | | | $ | 3,284,894 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 3,284,894 | | | $ | — | | | $ | — | | | $ | 3,284,894 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 351,663 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 119,354 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 256,094 | |
Aggregate gross unrealized depreciation | | | (127,946 | ) |
| | | | |
Net unrealized appreciation | | $ | 128,148 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 3,156,746 | |
| | | | |
See Notes to Financial Statements.
140
1290 FUNDS
1290 RETIREMENT 2060 FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value
(Cost $3,156,746) | | $ | 3,284,894 | |
Cash | | | 27,371 | |
Prepaid registration and filing fees | | | 14,483 | |
Receivable from investment adviser | | | 7,104 | |
Receivable for Fund shares sold | | | 312 | |
Other assets | | | 1 | |
| | | | |
Total assets | | | 3,334,165 | |
| | | | |
LIABILITIES | | | | |
Accrued professional fees | | | 23,522 | |
Transfer agent fees payable | | | 515 | |
Trustees’ fees payable | | | 11 | |
Accrued expenses | | | 466 | |
| | | | |
Total liabilities | | | 24,514 | |
| | | | |
NET ASSETS | | $ | 3,309,651 | |
| | | | |
Net assets were comprised of: | | | | |
Paid in capital | | $ | 3,153,587 | |
Total distributable earnings (loss) | | | 156,064 | |
| | | | |
Net assets | | $ | 3,309,651 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $3,309,651 / 305,757 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 10.82 | |
| | | | |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends | | $ | 52,777 | |
Interest | | | 200 | |
| | | | |
Total income | | | 52,977 | |
| | | | |
EXPENSES | | | | |
Professional fees | | | 20,539 | |
Printing and mailing expenses | | | 10,218 | |
Registration and filing fees | | | 9,735 | |
Investment advisory fees | | | 8,710 | |
Transfer agent fees | | | 4,923 | |
Administrative fees | | | 2,613 | |
Custodian fees | | | 2,074 | |
Trustees’ fees | | | 135 | |
Miscellaneous | | | 3,002 | |
| | | | |
Gross expenses | | | 61,949 | |
Less: Waiver from investment adviser | | | (11,323 | ) |
Reimbursement from investment adviser | | | (41,373 | ) |
| | | | |
Net expenses | | | 9,253 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 43,724 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | | | | |
Net realized gain (loss) on investments in securities | | | 10,872 | |
Net change in unrealized appreciation (depreciation) on investments in securities | | | (445,470 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (434,598 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (390,874 | ) |
| | | | |
| | | | | | | | |
| STATEMENT OF CHANGES IN NET ASSETS | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 43,724 | | | $ | 59,624 | |
Net realized gain (loss) | | | 10,872 | | | | 5,740 | |
Net change in unrealized appreciation (depreciation) | | | (445,470 | ) | | | 352,798 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (390,874 | ) | | | 418,162 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class I | | | (69,322 | ) | | | (65,105 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 36,864 and 24,271 shares, respectively ] | | | 421,033 | | | | 286,685 | |
Capital shares issued in reinvestment of dividends [ 796 and 242 shares, respectively ] | | | 9,897 | | | | 2,604 | |
Capital shares repurchased [ (13,854) and (1,648) shares, respectively ] | | | (151,239 | ) | | | (19,043 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 279,691 | | | | 270,246 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | (180,505 | ) | | | 623,303 | |
NET ASSETS: | | | | | | | | |
Beginning of period | | | 3,490,156 | | | | 2,866,853 | |
| | | | | | | | |
End of period | | $ | 3,309,651 | | | $ | 3,490,156 | |
| | | | | | | | |
See Notes to Financial Statements.
141
1290 FUNDS
1290 RETIREMENT 2060 FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | February 27, 2017*
to
October 31, 2017 | |
| Class I | | 2019 | | | 2018 | |
Net asset value, beginning of period | | $ | 12.38 | | | $ | 11.07 | | | $ | 11.03 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | |
Net investment income (loss) (e)(x) | | | 0.15 | | | | 0.22 | | | | 0.20 | | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.47 | ) | | | 1.34 | | | | 0.03 | | | | 0.92 | |
| | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.32 | ) | | | 1.56 | | | | 0.23 | | | | 1.03 | |
| | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.22 | ) | | | (0.21 | ) | | | (0.18 | ) | | | — | |
Distributions from net realized gains | | | (0.02 | ) | | | (0.04 | ) | | | (0.01 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.24 | ) | | | (0.25 | ) | | | (0.19 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 10.82 | | | $ | 12.38 | | | $ | 11.07 | | | $ | 11.03 | |
| | | | | | | | | | | | | | | | |
Total return (b) | | | (10.93 | )% | | | 14.43 | % | | | 2.09 | % | | | 10.30 | % |
| | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 3,310 | | | $ | 3,490 | | | $ | 2,867 | | | $ | 2,758 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.53 | %**(j) | | | 0.52 | %(k) | | | 0.52 | %(k) | | | 0.52 | %(k) |
Before waivers and reimbursements (a)(f) | | | 3.56 | % | | | 4.83 | % | | | 5.27 | % | | | 5.25 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f)(x) | | | 2.51 | % | | | 1.93 | % | | | 1.73 | % | | | 1.52 | %(l) |
Before waivers and reimbursements (a)(f)(x) | | | (0.52 | )% | | | (2.39 | )% | | | (3.02 | )% | | | (3.21 | )%(l) |
Portfolio turnover rate^ | | | 3 | %(z) | | | 2 | % | | | 2 | % | | | 1 | %(z) |
| * | Commencement of Operations. |
| ** | Includes excise tax expense of 0.01%. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (j) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.66%. |
| (k) | Including direct and indirect expenses, the net expense ratio after waivers and reimbursements would be 0.65%. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (x) | Recognition of net investment income is affected by the timing of dividend declarations by the underlying funds in which the Fund invests. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
See Notes to Financial Statements.
142
1290 SMARTBETA EQUITY FUND (Unaudited)
INVESTMENT ADVISER
| Ø | | Equitable Investment Management |
INVESTMENTSUB-ADVISER
| Ø | | AXA Rosenberg Investment Management LLC |
PERFORMANCE RESULTS
| | | | | | | | | | | | | | | | | | |
| | | | |
| Total Returns as of 4/30/20 | | | | | | | | | | |
| | | | | | |
| | | | | 6
Months | | | 1
Year | | | 5
Year | | | Since
Incept. | |
Fund – Class A Shares* | | without Sales Charge | | | (7.80 | )% | | | (2.78 | )% | | | 5.79 | % | | | 5.86 | % |
| | | with Sales Charge (a) | | | (12.90 | ) | | | (8.15 | ) | | | 4.60 | | | | 4.77 | |
Fund – Class I Shares* | | | | | (7.65 | ) | | | (2.47 | ) | | | 6.06 | | | | 6.13 | |
Fund – Class R Shares* | | | | | (7.89 | ) | | | (3.00 | ) | | | 5.54 | | | | 5.60 | |
Fund – Class T Shares*† | | without Sales Charge | | | (7.65 | ) | | | (2.47 | ) | | | 6.06 | | | | 6.13 | |
| | | with Sales Charge (b) | | | (9.94 | ) | | | (4.87 | ) | | | 5.53 | | | | 5.64 | |
MSCI World (Net) Index | | | | | (7.29 | ) | | | (4.00 | ) | | | 4.92 | | | | 5.35 | |
| |
* Date of inception 11/12/14. † Class T Shares currently are not offered for sale. (a) A 5.50%front-end sales charge was deducted. (b) A 2.50%front-end sales charge was deducted. Returns for periods less than one year are not annualized Returns for periods greater than one year are annualized. | |
| | | | | | | | | | | | | | | | | |
The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance data shown. For the most currentmonth-end performance data please call1-888-310-0416 or visit www.1290Funds.com.
As of March 1, 2020, the gross expense ratios for Class A, I, R and T shares were 2.26%, 2.02%, 2.52% and 2.27%, respectively. The net expense ratios for Class A, I, R and T shares were 1.15%, 0.90%, 1.40% and 1.15%, respectively. The net expense ratios reflect the Adviser’s decision to contractually limit expenses through April 30, 2021. Fund Performance may also reflect the waiver of the Fund’s fees and reimbursement of expenses for certain periods since the inception date. Without these waivers and reimbursements, performance would have been lower.
In addition, performance shown in this section does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemption of Fund shares.
Overview — AXA Rosenberg Investment Management LLC
Equity markets began the period strongly amid optimism that a ‘Phase One’ deal between the U.S. and China could be a step towards the resolution of their protracted trade war. As the period progressed, however, growing concerns about the spread of a deadly coronavirus in and beyond mainland China – declared a ‘global emergency’ and later a ‘pandemic’ by the World Health Organization – caused a sharp shift in investor sentiment. In a bid to contain the virus, governments around the world enacted extraordinary measures to lock-down their citizens, halting economic activity across many sectors. With fears about the financial impact of the virus mounting, equity markets suffered steep losses and volatility spiked to record highs. Investor sentiment was further weakened by an oil price war between Russia and Saudi Arabia, causing crude prices to fall to multi-year lows. Central bank and government measures to support, stimulate and safeguard their economies and financial markets fueled a rally late in the period, yet stock markets still ended sharply lower.
Fund Highlights
The Fund’s Class I shares returned -7.65% for the six-month period ended April 30, 2020. The Fund’s benchmark, the MSCI All Country World Index, returned -12.43%. Although the strong rallies in equity markets at the beginning and end of the reporting period were challenging for the Fund, it provided protection during the market volatility in between. This performance profile is in line with our expectations given the Fund’s defensive approach.
What helped performance during thesix-month period ended April 30, 2020:
| • | | The Fund’s emphasis on companies with less volatile share prices helped relative performance, especially during the sharp sell-off in the market. |
| • | | In addition to its emphasis on lower volatility stocks, the Fund’s focus on higher quality companies – those with more stable fundamentals – also proved beneficial. Firms with these attributes performed relatively well during the whole period. |
| • | | Having a lower-than-benchmark allocation to the embattled energy sector also helped performance as oil prices slumped to multi-year lows. |
What hurt performance during thesix-month period ended April 30, 2020:
| • | | As in recent periods, the Fund’s diversification away from the largest stocks in the benchmark detracted from relative returns, given mega caps’ ongoing outperformance. |
143
1290 SMARTBETA EQUITY FUND (Unaudited)
| • | | The above was especially evident in technology and consumer-technology related areas of the market, where stock selection proved particularly challenged. |
| • | | Stock selection in the real estate sector also hurt returns. |
| | | | |
| | |
Sector Weightings
as of April 30, 2020 | | % of
Net Assets | |
Financials | | | 18.9 | % |
Health Care | | | 14.4 | |
Information Technology | | | 14.1 | |
Industrials | | | 13.1 | |
Consumer Staples | | | 12.1 | |
Consumer Discretionary | | | 6.7 | |
Communication Services | | | 5.3 | |
Utilities | | | 5.2 | |
Real Estate | | | 4.0 | |
Materials | | | 3.7 | |
Energy | | | 0.8 | |
Investment Company | | | 0.4 | |
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 thesix-month period ended April 30, 2020 and held for the entiresix-month period.
Actual Expenses
The first line of the following table provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled ‘‘Expenses Paid During Period’’ to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the following table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees, or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
EXAMPLE
| | | | | | | | | | | | |
| | | | |
| | | Beginning
Account
Value
11/1/19 | | | Ending
Account
Value
4/30/20 | | | Expenses Paid During Period*
11/1/19 - 4/30/20 | |
Class A | |
Actual | | | $1,000.00 | | | | $ 922.00 | | | | $5.50 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,019.14 | | | | 5.77 | |
Class I | |
Actual | | | 1,000.00 | | | | 923.50 | | | | 4.30 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,020.39 | | | | 4.52 | |
Class R | |
Actual | | | 1,000.00 | | | | 921.10 | | | | 6.69 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,017.90 | | | | 7.02 | |
Class T** | |
Actual | | | 1,000.00 | | | | 923.50 | | | | 4.30 | |
Hypothetical (5% average annual return before expenses) | | | 1,000.00 | | | | 1,020.39 | | | | 4.52 | |
| |
* Expenses are equal to the Fund’s Class A, I, R and T shares annualized expense ratios of 1.15%, 0.90%, 1.40% and 0.90%, respectively, multiplied by the average account value over the period, and multiplied by 182/366 (to reflect theone-half year period). ** Class T shares currently are not offered for sale. | |
144
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
COMMON STOCKS: | |
Communication Services (5.3%) | |
Diversified Telecommunication Services (3.0%) | |
AT&T, Inc. | | | 7,137 | | | $ | 217,464 | |
BCE, Inc. | | | 1,200 | | | | 48,528 | |
Deutsche Telekom AG (Registered) | | | 9,767 | | | | 142,688 | |
Elisa OYJ | | | 600 | | | | 36,474 | |
Nippon Telegraph & Telephone Corp. | | | 3,300 | | | | 75,181 | |
Swisscom AG (Registered) | | | 201 | | | | 104,557 | |
Telenor ASA | | | 1,900 | | | | 29,197 | |
Telia Co. AB | | | 11,826 | | | | 40,842 | |
Verizon Communications, Inc. | | | 4,000 | | | | 229,800 | |
| | | | | | | | |
| | | | | | | 924,731 | |
| | | | | | | | |
Entertainment (0.1%) | |
Vivendi SA | | | 1,431 | | | | 30,930 | |
| | | | | | | | |
Interactive Media & Services (0.6%) | |
Alphabet, Inc., Class A* | | | 141 | | | | 189,885 | |
| | | | | | | | |
Media (0.6%) | |
Comcast Corp., Class A | | | 2,790 | | | | 104,988 | |
Omnicom Group, Inc. | | | 800 | | | | 45,624 | |
Quebecor, Inc., Class B | | | 2,000 | | | | 43,550 | |
| | | | | | | | |
| | | | | | | 194,162 | |
| | | | | | | | |
Wireless Telecommunication Services (1.0%) | |
KDDI Corp. | | | 3,300 | | | | 95,091 | |
NTT DOCOMO, Inc. | | | 2,700 | | | | 79,251 | |
Rogers Communications, Inc., Class B | | | 2,700 | | | | 113,086 | |
| | | | | | | | |
| | | | | | | 287,428 | |
| | | | | | | | |
Total Communication Services | | | | | | | 1,627,136 | |
| | | | | | | | |
Consumer Discretionary (6.7%) | |
Auto Components (0.2%) | |
Bridgestone Corp. | | | 600 | | | | 18,765 | |
Magna International, Inc. | | | 900 | | | | 35,070 | |
| | | | | | | | |
| | | | | | | 53,835 | |
| | | | | | | | |
Automobiles (0.1%) | |
Toyota Motor Corp. | | | 700 | | | | 43,203 | |
| | | | | | | | |
Hotels, Restaurants & Leisure (0.9%) | |
Compass Group plc | | | 1,923 | | | | 32,399 | |
Marriott International, Inc., Class A | | | 600 | | | | 54,564 | |
Restaurant Brands International, Inc. | | | 500 | | | | 24,391 | |
Starbucks Corp. | | | 800 | | | | 61,384 | |
Yum! Brands, Inc. | | | 1,100 | | | | 95,073 | |
| | | | | | | | |
| | | | | | | 267,811 | |
| | | | | | | | |
Household Durables (0.8%) | |
Barratt Developments plc | | | 5,408 | | | | 35,400 | |
DR Horton, Inc. | | | 700 | | | | 33,054 | |
NVR, Inc.* | | | 10 | | | | 31,000 | |
Panasonic Corp. | | | 3,900 | | | | 29,814 | |
Sekisui Chemical Co. Ltd. | | | 2,000 | | | | 25,346 | |
Sekisui House Ltd. | | | 3,000 | | | | 51,633 | |
Sony Corp. | | | 700 | | | | 44,909 | |
| | | | | | | | |
| | | | | | | 251,156 | |
| | | | | | | | |
Internet & Direct Marketing Retail (0.3%) | |
eBay, Inc. | | | 1,899 | | | | 75,637 | |
| | | | | | | | |
Multiline Retail (0.4%) | |
Dollar General Corp. | | | 300 | | | | 52,590 | |
Wesfarmers Ltd. | | | 3,223 | | | | 77,802 | |
| | | | | | | | |
| | | | | | | 130,392 | |
| | | | | | | | |
Specialty Retail (2.8%) | |
AutoZone, Inc.* | | | 100 | | | | 102,032 | |
Home Depot, Inc. (The) | | | 1,300 | | | | 285,779 | |
Industria de Diseno Textil SA | | | 2,000 | | | | 51,020 | |
Lowe’s Cos., Inc. | | | 1,200 | | | | 125,700 | |
Nitori Holdings Co. Ltd. | | | 100 | | | | 15,318 | |
O’Reilly Automotive, Inc.* | | | 200 | | | | 77,268 | |
Ross Stores, Inc. | | | 700 | | | | 63,952 | |
TJX Cos., Inc. (The) | | | 3,000 | | | | 147,150 | |
| | | | | | | | |
| | | | | | | 868,219 | |
| | | | | | | | |
Textiles, Apparel & Luxury Goods (1.2%) | |
adidas AG | | | 350 | | | | 80,115 | |
Gildan Activewear, Inc. | | | 800 | | | | 11,161 | |
LVMH Moet Hennessy Louis Vuitton SE | | | 200 | | | | 77,358 | |
NIKE, Inc., Class B | | | 2,300 | | | | 200,514 | |
| | | | | | | | |
| | | | | | | 369,148 | |
| | | | | | | | |
Total Consumer Discretionary | | | | | | | 2,059,401 | |
| | | | | | | | |
Consumer Staples (12.1%) | |
Beverages (3.3%) | |
Asahi Group Holdings Ltd. | | | 700 | | | | 24,202 | |
Brown-Forman Corp., Class B | | | 1,100 | | | | 68,420 | |
Carlsberg A/S, Class B | | | 200 | | | | 25,247 | |
Coca-Cola Co. (The) | | | 6,600 | | | | 302,874 | |
Diageo plc | | | 3,850 | | | | 133,458 | |
Heineken NV | | | 800 | | | | 68,111 | |
Kirin Holdings Co. Ltd. | | | 1,000 | | | | 19,267 | |
PepsiCo, Inc. | | | 2,589 | | | | 342,499 | |
Pernod Ricard SA | | | 200 | | | | 30,517 | |
| | | | | | | | |
| | | | | | | 1,014,595 | |
| | | | | | | | |
Food & Staples Retailing (2.1%) | |
Alimentation Couche-Tard, Inc., Class B | | | 1,400 | | | | 39,064 | |
Costco Wholesale Corp. | | | 827 | | | | 250,581 | |
Koninklijke Ahold Delhaize NV | | | 800 | | | | 19,442 | |
Loblaw Cos. Ltd. | | | 800 | | | | 39,369 | |
Metro, Inc. | | | 1,800 | | | | 74,059 | |
Seven & i Holdings Co. Ltd. | | | 900 | | | | 29,653 | |
Sysco Corp. | | | 1,600 | | | | 90,032 | |
Walmart, Inc. | | | 500 | | | | 60,775 | |
Woolworths Group Ltd. | | | 2,200 | | | | 50,705 | |
| | | | | | | | |
| | | | | | | 653,680 | |
| | | | | | | | |
Food Products (2.6%) | |
Chocoladefabriken Lindt & Spruengli AG (Registered) | | | 1 | | | | 83,762 | |
Danone SA | | | 651 | | | | 45,162 | |
General Mills, Inc. | | | 1,600 | | | | 95,824 | |
Hershey Co. (The) | | | 600 | | | | 79,458 | |
Hormel Foods Corp. | | | 600 | | | | 28,110 | |
Kellogg Co. | | | 900 | | | | 58,950 | |
See Notes to Financial Statements.
145
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
McCormick & Co., Inc.(Non-Voting) | | | 300 | | | $ | 47,052 | |
Mondelez International, Inc., Class A | | | 3,300 | | | | 169,752 | |
Mowi ASA | | | 700 | | | | 12,015 | |
Nestle SA (Registered) | | | 1,700 | | | | 179,581 | |
| | | | | | | | |
| | | | | | | 799,666 | |
| | | | | | | | |
Household Products (2.4%) | |
Church & Dwight Co., Inc. | | | 1,000 | | | | 69,990 | |
Clorox Co. (The) | | | 300 | | | | 55,932 | |
Essity AB, Class B* | | | 1,257 | | | | 40,841 | |
Henkel AG & Co. KGaA (Preference) (q) | | | 511 | | | | 45,548 | |
Kimberly-Clark Corp. | | | 1,300 | | | | 180,024 | |
Procter & Gamble Co. (The) | | | 3,100 | | | | 365,397 | |
| | | | | | | | |
| | | | | | | 757,732 | |
| | | | | | | | |
Personal Products (1.7%) | |
Beiersdorf AG | | | 180 | | | | 18,894 | |
Estee Lauder Cos., Inc. (The), Class A | | | 600 | | | | 105,840 | |
Kao Corp. | | | 500 | | | | 38,567 | |
L’Oreal SA | | | 407 | | | | 118,447 | |
Unilever NV | | | 3,274 | | | | 163,661 | |
Unilever plc | | | 1,300 | | | | 67,213 | |
| | | | | | | | |
| | | | | | | 512,622 | |
| | | | | | | | |
Total Consumer Staples | | | | | | | 3,738,295 | |
| | | | | | | | |
Energy (0.8%) | |
Oil, Gas & Consumable Fuels (0.8%) | |
Chevron Corp. | | | 700 | | | | 64,400 | |
Enbridge, Inc. | | | 1,700 | | | | 52,089 | |
Neste OYJ | | | 1,200 | | | | 42,565 | |
TC Energy Corp. | | | 700 | | | | 32,215 | |
TOTAL SA | | | 1,400 | | | | 50,480 | |
| | | | | | | | |
Total Energy | | | | | | | 241,749 | |
| | | | | | | | |
Financials (18.9%) | |
Banks (5.1%) | |
Bank Hapoalim BM | | | 4,000 | | | | 25,701 | |
Bank LeumiLe-Israel BM | | | 3,000 | | | | 16,289 | |
Bank of America Corp. | | | 5,200 | | | | 125,060 | |
Bank of Montreal | | | 1,800 | | | | 91,516 | |
Bank of Nova Scotia (The) | | | 3,000 | | | | 120,263 | |
Canadian Imperial Bank of Commerce | | | 500 | | | | 29,627 | |
Citigroup, Inc. | | | 1,700 | | | | 82,552 | |
Citizens Financial Group, Inc. | | | 600 | | | | 13,434 | |
Commonwealth Bank of Australia | | | 1,286 | | | | 51,422 | |
DBS Group Holdings Ltd. | | | 3,700 | | | | 51,863 | |
Hang Seng Bank Ltd. | | | 1,400 | | | | 24,563 | |
HSBC Holdings plc | | | 5,815 | | | | 30,029 | |
JPMorgan Chase & Co. | | | 300 | | | | 28,728 | |
M&T Bank Corp. | | | 200 | | | | 22,416 | |
Mizrahi Tefahot Bank Ltd. | | | 1,800 | | | | 37,119 | |
National Australia Bank Ltd. | | | 4,093 | | | | 44,258 | |
National Bank of Canada | | | 1,400 | | | | 56,465 | |
Oversea-Chinese Banking Corp. Ltd. | | | 3,000 | | | | 19,179 | |
PNC Financial Services Group, Inc. (The) | | | 1,200 | | | | 128,004 | |
Royal Bank of Canada | | | 2,000 | | | | 123,036 | |
Skandinaviska Enskilda Banken AB, Class A | | | 6,000 | | | | 49,302 | |
Svenska Handelsbanken AB, Class A* | | | 4,000 | | | | 36,950 | |
Swedbank AB, Class A | | | 2,600 | | | | 30,686 | |
Toronto-Dominion Bank (The) | | | 5,000 | | | | 208,916 | |
United Overseas Bank Ltd. | | | 1,000 | | | | 14,287 | |
US Bancorp | | | 1,800 | | | | 65,700 | |
Westpac Banking Corp. | | | 3,754 | | | | 38,973 | |
| | | | | | | | |
| | | | | | | 1,566,338 | |
| | | | | | | | |
Capital Markets (4.8%) | |
Ameriprise Financial, Inc. | | | 300 | | | | 34,482 | |
ASX Ltd. | | | 400 | | | | 20,983 | |
Bank of New York Mellon Corp. (The) | | | 1,500 | | | | 56,310 | |
BlackRock, Inc. | | | 300 | | | | 150,612 | |
CME Group, Inc. | | | 700 | | | | 124,747 | |
Deutsche Boerse AG | | | 880 | | | | 136,882 | |
FactSet Research Systems, Inc. | | | 100 | | | | 27,500 | |
Hong Kong Exchanges & Clearing Ltd. | | | 700 | | | | 22,440 | |
Intercontinental Exchange, Inc. | | | 2,200 | | | | 196,790 | |
London Stock Exchange Group plc | | | 364 | | | | 34,215 | |
Moody’s Corp. | | | 500 | | | | 121,950 | |
Morgan Stanley | | | 1,900 | | | | 74,917 | |
MSCI, Inc. | | | 300 | | | | 98,100 | |
Nasdaq, Inc. | | | 300 | | | | 32,901 | |
Northern Trust Corp. | | | 400 | | | | 31,664 | |
S&P Global, Inc. | | | 700 | | | | 205,016 | |
T. Rowe Price Group, Inc. | | | 900 | | | | 104,067 | |
| | | | | | | | |
| | | | | | | 1,473,576 | |
| | | | | | | | |
Consumer Finance (0.7%) | |
American Express Co. | | | 1,600 | | | | 146,000 | |
Capital One Financial Corp. | | | 1,400 | | | | 90,664 | |
Isracard Ltd. | | | 1 | | | | 2 | |
| | | | | | | | |
| | | | | | | 236,666 | |
| | | | | | | | |
Diversified Financial Services (0.9%) | |
Berkshire Hathaway, Inc., Class B* | | | 1,500 | | | | 281,040 | |
| | | | | | | | |
Insurance (7.4%) | |
Aflac, Inc. | | | 2,900 | | | | 107,996 | |
Allianz SE (Registered) | | | 791 | | | | 146,536 | |
Allstate Corp. (The) | | | 1,100 | | | | 111,892 | |
American Financial Group, Inc. | | | 400 | | | | 26,496 | |
Aon plc | | | 1,000 | | | | 172,670 | |
Arch Capital Group Ltd.* | | | 600 | | | | 14,418 | |
Arthur J Gallagher & Co. | | | 500 | | | | 39,250 | |
Assicurazioni Generali SpA | | | 3,544 | | | | 50,644 | |
Baloise Holding AG (Registered) | | | 210 | | | | 31,474 | |
Brown & Brown, Inc. | | | 900 | | | | 32,319 | |
Chubb Ltd. | | | 1,500 | | | | 162,015 | |
Cincinnati Financial Corp. | | | 300 | | | | 19,740 | |
Hartford Financial Services Group, Inc. (The) | | | 1,300 | | | | 49,387 | |
Insurance Australia Group Ltd. | | | 7,676 | | | | 28,446 | |
Intact Financial Corp. | | | 800 | | | | 76,135 | |
See Notes to Financial Statements.
146
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Legal & General Group plc | | | 8,000 | | | $ | 20,653 | |
Loews Corp. | | | 1,100 | | | | 38,126 | |
Manulife Financial Corp. | | | 3,400 | | | | 42,819 | |
Markel Corp.* | | | 30 | | | | 25,975 | |
Marsh & McLennan Cos., Inc. | | | 2,300 | | | | 223,859 | |
Medibank Pvt Ltd. | | | 8,700 | | | | 15,272 | |
MetLife, Inc. | | | 1,100 | | | | 39,688 | |
MS&AD Insurance Group Holdings, Inc. | | | 1,200 | | | | 34,682 | |
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen (Registered) | | | 660 | | | | 145,441 | |
Power Corp. of Canada | | | 1,400 | | | | 22,389 | |
Progressive Corp. (The) | | | 1,600 | | | | 123,680 | |
Sampo OYJ, Class A | | | 1,600 | | | | 53,076 | |
Sompo Holdings, Inc. | | | 900 | | | | 29,134 | |
Sun Life Financial, Inc. | | | 3,400 | | | | 116,537 | |
Swiss Re AG | | | 411 | | | | 29,698 | |
Tokio Marine Holdings, Inc. | | | 1,600 | | | | 75,414 | |
Willis Towers Watson plc | | | 600 | | | | 106,974 | |
Zurich Insurance Group AG | | | 280 | | | | 89,258 | |
| | | | | | | | |
| | | | | | | 2,302,093 | |
| | | | | | | | |
Total Financials | | | | | | | 5,859,713 | |
| | | | | | | | |
Health Care (14.4%) | |
Biotechnology (1.0%) | |
AbbVie, Inc. | | | 400 | | | | 32,880 | |
Amgen, Inc. | | | 756 | | | | 180,850 | |
CSL Ltd. | | | 200 | | | | 39,643 | |
Vertex Pharmaceuticals, Inc.* | | | 200 | | | | 50,240 | |
| | | | | | | | |
| | | | | | | 303,613 | |
| | | | | | | | |
Health Care Equipment & Supplies (4.1%) | |
Abbott Laboratories | | | 1,200 | | | | 110,508 | |
Baxter International, Inc. | | | 1,100 | | | | 97,658 | |
Boston Scientific Corp.* | | | 1,000 | | | | 37,480 | |
Cochlear Ltd. | | | 200 | | | | 23,966 | |
Coloplast A/S, Class B | | | 400 | | | | 63,168 | |
Edwards Lifesciences Corp.* | | | 500 | | | | 108,750 | |
Hoya Corp. | | | 400 | | | | 36,555 | |
IDEXX Laboratories, Inc.* | | | 200 | | | | 55,520 | |
Koninklijke Philips NV | | | 1,365 | | | | 59,494 | |
Medtronic plc | | | 3,000 | | | | 292,890 | |
ResMed, Inc. | | | 200 | | | | 31,064 | |
STERIS plc | | | 500 | | | | 71,250 | |
Stryker Corp. | | | 1,100 | | | | 205,073 | |
Terumo Corp. | | | 900 | | | | 29,702 | |
West Pharmaceutical Services, Inc. | | | 200 | | | | 37,852 | |
| | | | | | | | |
| | | | | | | 1,260,930 | |
| | | | | | | | |
Health Care Providers & Services (1.8%) | |
AmerisourceBergen Corp. | | | 200 | | | | 17,932 | |
Anthem, Inc. | | | 400 | | | | 112,292 | |
HCA Healthcare, Inc. | | | 700 | | | | 76,916 | |
Henry Schein, Inc.* | | | 400 | | | | 21,824 | |
Humana, Inc. | | | 100 | | | | 38,182 | |
Laboratory Corp. of America Holdings* | | | 300 | | | | 49,335 | |
Quest Diagnostics, Inc. | | | 300 | | | | 33,033 | |
UnitedHealth Group, Inc. | | | 700 | | | | 204,729 | |
| | | | | | | | |
| | | | | | | 554,243 | |
| | | | | | | | |
Health Care Technology (0.1%) | |
Cerner Corp. | | | 500 | | | | 34,695 | |
| | | | | | | | |
Life Sciences Tools & Services (0.8%) | |
Agilent Technologies, Inc. | | | 500 | | | | 38,330 | |
Mettler-Toledo International, Inc.* | | | 100 | | | | 71,994 | |
Thermo Fisher Scientific, Inc. | | | 400 | | | | 133,872 | |
Waters Corp.* | | | 100 | | | | 18,700 | |
| | | | | | | | |
| | | | | | | 262,896 | |
| | | | | | | | |
Pharmaceuticals (6.6%) | |
Astellas Pharma, Inc. | | | 3,000 | | | | 49,658 | |
Chugai Pharmaceutical Co. Ltd. | | | 400 | | | | 47,450 | |
Eli Lilly and Co. | | | 1,400 | | | | 216,496 | |
GlaxoSmithKline plc | | | 4,137 | | | | 86,613 | |
Johnson & Johnson | | | 2,400 | | | | 360,096 | |
Merck & Co., Inc. | | | 3,300 | | | | 261,822 | |
Merck KGaA | | | 200 | | | | 23,311 | |
Novartis AG (Registered) | | | 1,251 | | | | 106,718 | |
Novo Nordisk A/S, Class B | | | 1,776 | | | | 113,405 | |
Otsuka Holdings Co. Ltd. | | | 400 | | | | 15,742 | |
Pfizer, Inc. | | | 7,600 | | | | 291,536 | |
Roche Holding AG | | | 594 | | | | 206,610 | |
Sanofi | | | 415 | | | | 40,601 | |
Shionogi & Co. Ltd. | | | 300 | | | | 16,462 | |
Zoetis, Inc. | | | 1,500 | | | | 193,965 | |
| | | | | | | | |
| | | | | | | 2,030,485 | |
| | | | | | | | |
Total Health Care | | | | | | | 4,446,862 | |
| | | | | | | | |
Industrials (13.1%) | |
Aerospace & Defense (1.4%) | |
CAE, Inc. | | | 2,300 | | | | 38,004 | |
General Dynamics Corp. | | | 500 | | | | 65,310 | |
HEICO Corp. | | | 200 | | | | 17,520 | |
Lockheed Martin Corp. | | | 500 | | | | 194,530 | |
MTU Aero Engines AG* | | | 100 | | | | 13,636 | |
Northrop Grumman Corp. | | | 200 | | | | 66,134 | |
Teledyne Technologies, Inc.* | | | 100 | | | | 32,567 | |
Thales SA | | | 200 | | | | 15,167 | |
| | | | | | | | |
| | | | | | | 442,868 | |
| | | | | | | | |
Air Freight & Logistics (0.6%) | |
Deutsche Post AG (Registered) | | | 1,754 | | | | 52,252 | |
Expeditors International of Washington, Inc. | | | 800 | | | | 57,284 | |
United Parcel Service, Inc., Class B | | | 900 | | | | 85,194 | |
| | | | | | | | |
| | | | | | | 194,730 | |
| | | | | | | | |
Building Products (1.0%) | |
Allegion plc | | | 200 | | | | 20,108 | |
Assa Abloy AB, Class B | | | 1,200 | | | | 21,607 | |
Daikin Industries Ltd. | | | 600 | | | | 77,770 | |
Geberit AG (Registered) | | | 140 | | | | 62,872 | |
Johnson Controls International plc | | | 2,100 | | | | 61,131 | |
Lennox International, Inc. | | | 100 | | | | 18,668 | |
Masco Corp. | | | 800 | | | | 32,832 | |
| | | | | | | | |
| | | | | | | 294,988 | |
| | | | | | | | |
Commercial Services & Supplies (0.9%) | |
Cintas Corp. | | | 200 | | | | 44,366 | |
Copart, Inc.* | | | 300 | | | | 24,033 | |
Republic Services, Inc. | | | 400 | | | | 31,336 | |
See Notes to Financial Statements.
147
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Secom Co. Ltd. | | | 700 | | | $ | 58,402 | |
Waste Management, Inc. | | | 1,100 | | | | 110,022 | |
| | | | | | | | |
| | | | | | | 268,159 | |
| | | | | | | | |
Construction & Engineering (0.6%) | |
Kajima Corp. | | | 2,000 | | | | 20,908 | |
Obayashi Corp. | | | 5,300 | | | | 46,642 | |
Shimizu Corp. | | | 3,000 | | | | 23,206 | |
Taisei Corp. | | | 800 | | | | 25,037 | |
Vinci SA | | | 500 | | | | 40,984 | |
WSP Global, Inc. | | | 400 | | | | 26,843 | |
| | | | | | | | |
| | | | | | | 183,620 | |
| | | | | | | | |
Electrical Equipment (0.9%) | |
Eaton Corp. plc | | | 800 | | | | 66,800 | |
Emerson Electric Co. | | | 700 | | | | 39,921 | |
Legrand SA | | | 300 | | | | 20,244 | |
Mitsubishi Electric Corp. | | | 4,500 | | | | 55,711 | |
Rockwell Automation, Inc. | | | 400 | | | | 75,792 | |
Schneider Electric SE* | | | 300 | | | | 27,484 | |
| | | | | | | | |
| | | | | | | 285,952 | |
| | | | | | | | |
Industrial Conglomerates (1.5%) | |
3M Co. | | | 900 | | | | 136,728 | |
Honeywell International, Inc. | | | 1,200 | | | | 170,280 | |
Roper Technologies, Inc. | | | 200 | | | | 68,206 | |
Siemens AG (Registered) | | | 822 | | | | 76,355 | |
| | | | | | | | |
| | | | | | | 451,569 | |
| | | | | | | | |
Machinery (2.0%) | |
Atlas Copco AB, Class A | | | 1,500 | | | | 52,042 | |
Caterpillar, Inc. | | | 700 | | | | 81,466 | |
Cummins, Inc. | | | 500 | | | | 81,750 | |
Deere & Co. | | | 500 | | | | 72,530 | |
IDEX Corp. | | | 200 | | | | 30,726 | |
Illinois Tool Works, Inc. | | | 700 | | | | 113,750 | |
Kone OYJ, Class B | | | 1,194 | | | | 72,439 | |
PACCAR, Inc. | | | 400 | | | | 27,692 | |
Parker-Hannifin Corp. | | | 200 | | | | 31,624 | |
Sandvik AB* | | | 2,000 | | | | 30,927 | |
Volvo AB, Class B | | | 2,258 | | | | 29,120 | |
| | | | | | | | |
| | | | | | | 624,066 | |
| | | | | | | | |
Marine (0.1%) | |
Kuehne + Nagel International AG (Registered) | | | 180 | | | | 25,771 | |
| | | | | | | | |
Professional Services (1.4%) | |
CoStar Group, Inc.* | | | 100 | | | | 64,826 | |
Experian plc | | | 990 | | | | 29,661 | |
IHS Markit Ltd. | | | 1,300 | | | | 87,490 | |
Recruit Holdings Co. Ltd. | | | 800 | | | | 23,469 | |
TransUnion | | | 300 | | | | 23,637 | |
Verisk Analytics, Inc. | | | 600 | | | | 91,698 | |
Wolters Kluwer NV | | | 1,635 | | | | 120,381 | |
| | | | | | | | |
| | | | | | | 441,162 | |
| | | | | | | | |
Road & Rail (1.7%) | |
Canadian National Railway Co. | | | 1,400 | | | | 115,776 | |
Canadian Pacific Railway Ltd. | | | 200 | | | | 45,456 | |
Central Japan Railway Co. | | | 200 | | | | 31,462 | |
CSX Corp. | | | 600 | | | | 39,738 | |
East Japan Railway Co. | | | 1,000 | | | | 72,962 | |
Hankyu Hanshin Holdings, Inc. | | | 1,000 | | | | 34,273 | |
Kintetsu Group Holdings Co. Ltd. | | | 1,000 | | | | 47,854 | |
MTR Corp. Ltd. | | | 4,000 | | | | 21,951 | |
Nagoya Railroad Co. Ltd. | | | 1,200 | | | | 34,445 | |
Odakyu Electric Railway Co. Ltd. | | | 2,000 | | | | 43,987 | |
Union Pacific Corp. | | | 300 | | | | 47,937 | |
| | | | | | | | |
| | | | | | | 535,841 | |
| | | | | | | | |
Trading Companies & Distributors (0.8%) | |
Brenntag AG | | | 400 | | | | 18,084 | |
Bunzl plc | | | 600 | | | | 13,067 | |
Fastenal Co. | | | 1,000 | | | | 36,220 | |
Ferguson plc | | | 473 | | | | 34,211 | |
ITOCHU Corp. | | | 1,500 | | | | 29,476 | |
Mitsui & Co. Ltd. | | | 1,900 | | | | 26,650 | |
Toyota Tsusho Corp. | | | 2,200 | | | | 52,599 | |
WW Grainger, Inc. | | | 100 | | | | 27,558 | |
| | | | | | | | |
| | | | | | | 237,865 | |
| | | | | | | | |
Transportation Infrastructure (0.2%) | |
Aena SME SA (m)* | | | 270 | | | | 34,176 | |
Kamigumi Co. Ltd. | | | 1,400 | | | | 24,647 | |
| | | | | | | | |
| | | | | | | 58,823 | |
| | | | | | | | |
Total Industrials | | | | | | | 4,045,414 | |
| | | | | | | | |
Information Technology (14.1%) | |
Communications Equipment (0.6%) | |
Cisco Systems, Inc. | | | 4,035 | | | | 171,003 | |
Motorola Solutions, Inc. | | | 200 | | | | 28,762 | |
| | | | | | | | |
| | | | | | | 199,765 | |
| | | | | | | | |
Electronic Equipment, Instruments & Components (0.8%) | |
Amphenol Corp., Class A | | | 600 | | | | 52,956 | |
CDW Corp. | | | 200 | | | | 22,160 | |
Hexagon AB, Class B* | | | 300 | | | | 14,937 | |
Keyence Corp. | | | 200 | | | | 71,853 | |
Kyocera Corp. | | | 400 | | | | 21,380 | |
Omron Corp. | | | 900 | | | | 52,844 | |
| | | | | | | | |
| | | | | | | 236,130 | |
| | | | | | | | |
IT Services (5.4%) | |
Accenture plc, Class A | | | 1,200 | | | | 222,228 | |
Amadeus IT Group SA | | | 700 | | | | 33,730 | |
Automatic Data Processing, Inc. | | | 1,600 | | | | 234,704 | |
Booz Allen Hamilton Holding Corp. | | | 500 | | | | 36,720 | |
Broadridge Financial Solutions, Inc. | | | 200 | | | | 23,200 | |
CGI, Inc.* | | | 1,000 | | | | 63,774 | |
Cognizant Technology Solutions Corp., Class A | | | 1,400 | | | | 81,228 | |
FleetCor Technologies, Inc.* | | | 100 | | | | 24,125 | |
Jack Henry & Associates, Inc. | | | 300 | | | | 49,065 | |
Mastercard, Inc., Class A | | | 900 | | | | 247,473 | |
Nomura Research Institute Ltd. | | | 1,700 | | | | 41,361 | |
Paychex, Inc. | | | 1,100 | | | | 75,372 | |
PayPal Holdings, Inc.* | | | 1,286 | | | | 158,178 | |
VeriSign, Inc.* | | | 200 | | | | 41,898 | |
Visa, Inc., Class A | | | 1,900 | | | | 339,568 | |
| | | | | | | | |
| | | | | | | 1,672,624 | |
| | | | | | | | |
Semiconductors & Semiconductor Equipment (2.0%) | |
ASML Holding NV | | | 390 | | | | 115,849 | |
Intel Corp. | | | 4,600 | | | | 275,908 | |
See Notes to Financial Statements.
148
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
Maxim Integrated Products, Inc. | | | 900 | | | $ | 49,482 | |
Texas Instruments, Inc. | | | 1,470 | | | | 170,623 | |
| | | | | | | | |
| | | | | | | 611,862 | |
| | | | | | | | |
Software (4.1%) | |
Adobe, Inc.* | | | 600 | | | | 212,184 | |
ANSYS, Inc.* | | | 100 | | | | 26,183 | |
Cadence Design Systems, Inc.* | | | 400 | | | | 32,452 | |
Citrix Systems, Inc. | | | 200 | | | | 29,002 | |
Intuit, Inc. | | | 600 | | | | 161,886 | |
Microsoft Corp. | | | 2,515 | | | | 450,713 | |
Oracle Corp. | | | 3,700 | | | | 195,989 | |
SAP SE | | | 1,100 | | | | 131,195 | |
Synopsys, Inc.* | | | 200 | | | | 31,424 | |
| | | | | | | | |
| | | | | | | 1,271,028 | |
| | | | | | | | |
Technology Hardware, Storage & Peripherals (1.2%) | |
Apple, Inc. | | | 1,091 | | | | 320,536 | |
Canon, Inc. | | | 1,300 | | | | 27,466 | |
FUJIFILM Holdings Corp. | | | 700 | | | | 33,459 | |
| | | | | | | | |
| | | | | | | 381,461 | |
| | | | | | | | |
Total Information Technology | | | | | | | 4,372,870 | |
| | | | | | | | |
Materials (3.7%) | |
Chemicals (3.1%) | |
Air Products and Chemicals, Inc. | | | 500 | | | | 112,790 | |
Akzo Nobel NV | | | 670 | | | | 50,863 | |
Asahi Kasei Corp. | | | 3,200 | | | | 22,615 | |
Celanese Corp. | | | 400 | | | | 33,228 | |
Chr Hansen Holding A/S | | | 200 | | | | 17,254 | |
Ecolab, Inc. | | | 1,300 | | | | 251,550 | |
Givaudan SA (Registered) | | | 22 | | | | 73,755 | |
Koninklijke DSM NV | | | 312 | | | | 38,253 | |
Linde plc | | | 500 | | | | 91,995 | |
Novozymes A/S, Class B | | | 400 | | | | 19,622 | |
PPG Industries, Inc. | | | 500 | | | | 45,415 | |
Sherwin-Williams Co. (The) | | | 200 | | | | 107,274 | |
Shin-Etsu Chemical Co. Ltd. | | | 300 | | | | 33,238 | |
Symrise AG | | | 300 | | | | 30,454 | |
Toray Industries, Inc. | | | 5,400 | | | | 24,887 | |
| | | | | | | | |
| | | | | | | 953,193 | |
| | | | | | | | |
Construction Materials (0.1%) | |
Vulcan Materials Co. | | | 300 | | | | 33,891 | |
| | | | | | | | |
Containers & Packaging (0.2%) | |
Ball Corp. | | | 800 | | | | 52,472 | |
| | | | | | | | |
Metals & Mining (0.3%) | |
BHP Group Ltd. | | | 2,538 | | | | 51,983 | |
BHP Group plc | | | 1,834 | | | | 30,801 | |
Rio Tinto Ltd. | | | 411 | | | | 23,151 | |
| | | | | | | | |
| | | | | | | 105,935 | |
| | | | | | | | |
Total Materials | | | | | | | 1,145,491 | |
| | | | | | | | |
Real Estate (4.0%) | |
Equity Real Estate Investment Trusts (REITs) (3.4%) | |
Alexandria Real Estate Equities, Inc. (REIT) | | | 300 | | | | 47,127 | |
American Tower Corp. (REIT) | | | 200 | | | | 47,600 | |
Ascendas REIT (REIT) | | | 12,000 | | | | 25,002 | |
AvalonBay Communities, Inc. (REIT) | | | 600 | | | | 97,770 | |
CapitaLand Commercial Trust (REIT) | | | 24,900 | | | | 28,123 | |
CapitaLand Mall Trust (REIT) | | | 19,000 | | | | 25,179 | |
Dexus (REIT) | | | 8,671 | | | | 50,977 | |
Equity LifeStyle Properties, Inc. (REIT) | | | 1,000 | | | | 60,310 | |
Equity Residential (REIT) | | | 1,400 | | | | 91,084 | |
Essex Property Trust, Inc. (REIT) | | | 100 | | | | 24,410 | |
First Capital REIT (REIT) | | | 2,200 | | | | 22,680 | |
Goodman Group (REIT) | | | 7,429 | | | | 62,436 | |
GPT Group (The) (REIT) | | | 19,392 | | | | 52,570 | |
H&R REIT (REIT) | | | 1,400 | | | | 9,917 | |
Japan Prime Realty Investment Corp. (REIT) | | | 8 | | | | 22,116 | |
Japan Retail Fund Investment Corp. (REIT) | | | 9 | | | | 9,830 | |
Mirvac Group (REIT) | | | 30,152 | | | | 43,127 | |
Nomura Real Estate Master Fund, Inc. (REIT) | | | 28 | | | | 31,924 | |
Prologis, Inc. (REIT) | | | 1,200 | | | | 107,076 | |
Public Storage (REIT) | | | 300 | | | | 55,635 | |
Regency Centers Corp. (REIT) | | | 300 | | | | 13,173 | |
Simon Property Group, Inc. (REIT) | | | 600 | | | | 40,062 | |
United Urban Investment Corp. (REIT) | | | 30 | | | | 30,072 | |
Welltower, Inc. (REIT) | | | 700 | | | | 35,861 | |
| | | | | | | | |
| | | | | | | 1,034,061 | |
| | | | | | | | |
Real Estate Management & Development (0.6%) | |
CBRE Group, Inc., Class A* | | | 600 | | | | 25,758 | |
Daiwa House Industry Co. Ltd. | | | 1,000 | | | | 25,486 | |
Mitsubishi Estate Co. Ltd. | | | 4,400 | | | | 71,608 | |
Mitsui Fudosan Co. Ltd. | | | 1,000 | | | | 18,464 | |
Swiss Prime Site AG (Registered) | | | 583 | | | | 55,427 | |
| | | | | | | | |
| | | | | | | 196,743 | |
| | | | | | | | |
Total Real Estate | | | | | | | 1,230,804 | |
| | | | | | | | |
Utilities (5.2%) | |
Electric Utilities (2.0%) | |
Chubu Electric Power Co., Inc. | | | 3,100 | | | | 41,869 | |
Enel SpA | | | 12,000 | | | | 82,154 | |
Eversource Energy | | | 1,800 | | | | 145,260 | |
Iberdrola SA | | | 17,369 | | | | 174,117 | |
Red Electrica Corp. SA | | | 5,446 | | | | 95,880 | |
Terna Rete Elettrica Nazionale SpA | | | 13,465 | | | | 84,550 | |
| | | | | | | | |
| | | | | | | 623,830 | |
| | | | | | | | |
Gas Utilities (0.9%) | |
Atmos Energy Corp. | | | 1,100 | | | | 112,167 | |
Hong Kong & China Gas Co. Ltd. | | | 17,303 | | | | 30,620 | |
Naturgy Energy Group SA | | | 800 | | | | 14,137 | |
Osaka Gas Co. Ltd. | | | 1,900 | | | | 35,230 | |
Snam SpA | | | 6,000 | | | | 26,924 | |
Tokyo Gas Co. Ltd. | | | 2,000 | | | | 43,726 | |
| | | | | | | | |
| | | | | | | 262,804 | |
| | | | | | | | |
Multi-Utilities (1.7%) | |
Algonquin Power & Utilities Corp. | | | 2,100 | | | | 29,118 | |
CenterPoint Energy, Inc. | | | 2,200 | | | | 37,466 | |
CMS Energy Corp. | | | 1,200 | | | | 68,508 | |
Consolidated Edison, Inc. | | | 1,300 | | | | 102,440 | |
See Notes to Financial Statements.
149
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | |
| | | |
| | | Number of
Shares | | | Value
(Note 1) | |
National Grid plc | | | 1,400 | | | $ | 16,479 | |
Public Service Enterprise Group, Inc. | | | 1,300 | | | | 65,923 | |
Sempra Energy | | | 1,500 | | | | 185,775 | |
WEC Energy Group, Inc. | | | 300 | | | | 27,165 | |
| | | | | | | | |
| | | | | | | 532,874 | |
| | | | | | | | |
Water Utilities (0.6%) | |
American Water Works Co., Inc. | | | 1,000 | | | | 121,690 | |
Essential Utilities, Inc. | | | 800 | | | | 33,432 | |
Severn Trent plc | | | 1,200 | | | | 36,158 | |
| | | | | | | | |
| | | | | | | 191,280 | |
| | | | | | | | |
Total Utilities | | | | | | | 1,610,788 | |
| | | | | | | | |
Total Common Stocks (98.3%)
(Cost $29,257,575) | | | | | | | 30,378,523 | |
| | | | | | | | |
SHORT-TERM INVESTMENT: | | | | | |
Investment Company (0.4%) | | | | | |
JPMorgan Prime Money Market Fund, IM Shares | | | 115,581 | | | | 115,673 | |
| | | | | | | | |
Total Short-Term Investment (0.4%)
(Cost $115,673) | | | | | | | 115,673 | |
| | | | | | | | |
Total Investments in Securities (98.7%)
(Cost $29,373,248) | | | | | | | 30,494,196 | |
Other Assets Less Liabilities (1.3%) | | | | | | | 415,683 | |
| | | | | |
Net Assets (100%) | | | | | | $ | 30,909,879 | |
| | | | | | | | |
| (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, 2020, the market value of these securities amounted to $34,176 or 0.1% of net assets. |
| (q) | Preference Shares are a special type of equity investment that shares in the earnings of the company, has limited voting rights, and receives a greater dividend than applicable Common Shares. |
| | | | |
| | |
Country Diversification As a Percentage of Total Net Assets | | | |
Australia | | | 2.3 | % |
Canada | | | 5.7 | |
Denmark | | | 0.8 | |
Finland | | | 0.7 | |
France | | | 1.6 | |
Germany | | | 3.4 | |
Hong Kong | | | 0.3 | |
Israel | | | 0.3 | |
Italy | | | 0.8 | |
Japan | | | 7.5 | |
Netherlands | | | 1.5 | |
Norway | | | 0.1 | |
Singapore | | | 0.5 | |
Spain | | | 1.3 | |
Sweden | | | 1.1 | |
Switzerland | | | 3.4 | |
United Kingdom | | | 2.6 | |
United States | | | 64.8 | |
Cash and Other | | | 1.3 | |
| | | | | |
| | | | 100.0 | % |
| | | | | |
See Notes to Financial Statements.
150
1290 FUNDS
1290 SMARTBETA EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
April 30, 2020 (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, 2020:
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below:
| | | | | | | | | | | | | | | | |
| | | | | |
| Investment Type | | Level 1 Quoted Prices in Active Markets for Identical Securities | | | Level 2 Significant Other Observable Inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) | | | Level 3 Significant Unobservable Inputs (including the Fund’s own assumptions in determining the fair value of investments) | | | Total | |
Assets: | |
Common Stocks | | | | | | | | | | | | | | | | |
Communication Services | | $ | 992,925 | | | $ | 634,211 | | | $ | — | | | $ | 1,627,136 | |
Consumer Discretionary | | | 1,476,319 | | | | 583,082 | | | | — | | | | 2,059,401 | |
Consumer Staples | | | 2,524,002 | | | | 1,214,293 | | | | — | | | | 3,738,295 | |
Energy | | | 148,704 | | | | 93,045 | | | | — | | | | 241,749 | |
Financials | | | 4,424,842 | | | | 1,434,871 | | | | — | | | | 5,859,713 | |
Health Care | | | 3,487,764 | | | | 959,098 | | | | — | | | | 4,446,862 | |
Industrials | | | 2,503,483 | | | | 1,541,931 | | | | — | | | | 4,045,414 | |
Information Technology | | | 3,828,796 | | | | 544,074 | | | | — | | | | 4,372,870 | |
Materials | | | 728,615 | | | | 416,876 | | | | — | | | | 1,145,491 | |
Real Estate | | | 678,463 | | | | 552,341 | | | | — | | | | 1,230,804 | |
Utilities | | | 928,944 | | | | 681,844 | | | | — | | | | 1,610,788 | |
Short-Term Investment | | | | | | | | | | | | | | | | |
Investment Company | | | 115,673 | | | | — | | | | — | | | | 115,673 | |
| | | | | | | | | | | | | | | | |
Total Assets | | $ | 21,838,530 | | | $ | 8,655,666 | | | $ | — | | | $ | 30,494,196 | |
| | | | | | | | | | | | | | | | |
Total Liabilities | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | |
Total | | $ | 21,838,530 | | | $ | 8,655,666 | | | $ | — | | | $ | 30,494,196 | |
| | | | | | | | | | | | | | | | |
The Fund held no derivatives contracts during the six months ended April 30, 2020.
Investment security transactions for the six months ended April 30, 2020 were as follows:
| | | | |
Cost of Purchases: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 11,203,291 | |
Net Proceeds of Sales and Redemptions: | | | | |
Long-term investments other than U.S. government debt securities | | $ | 3,905,921 | |
As of April 30, 2020, the gross unrealized appreciation (depreciation) of investments based on the aggregate cost of investments in securities and derivative instruments, if applicable, for Federal income tax purposes was as follows:
| | | | |
Aggregate gross unrealized appreciation | | $ | 3,303,872 | |
Aggregate gross unrealized depreciation | | | (2,218,506 | ) |
| | | | |
Net unrealized appreciation | | $ | 1,085,366 | |
| | | | |
Federal income tax cost of investments in securities and derivative instruments, if applicable | | $ | 29,408,830 | |
| | | | |
See Notes to Financial Statements.
151
1290 FUNDS
1290 SMARTBETA EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2020 (Unaudited)
| | | | |
ASSETS | |
Investments in Securities, at value (Cost $29,373,248) | | $ | 30,494,196 | |
Cash | | | 382,999 | |
Foreign cash (Cost $91,679) | | | 91,880 | |
Receivable for Fund shares sold | | | 346,393 | |
Receivable for securities sold | | | 237,461 | |
Dividends, interest and other receivables | | | 82,509 | |
Prepaid registration and filing fees | | | 21,649 | |
Other assets | | | 955 | |
| | | | |
Total assets | | | 31,658,042 | |
| | | | |
LIABILITIES | |
Payable for securities purchased | | | 685,393 | |
Payable for Fund shares redeemed | | | 15,388 | |
Administrative fees payable | | | 772 | |
Distribution fees payable – Class A | | | 506 | |
Distribution fees payable – Class R | | | 54 | |
Accrued expenses | | | 46,050 | |
| | | | |
Total liabilities | | | 748,163 | |
| | | | |
NET ASSETS | | $ | 30,909,879 | |
| | | | |
Net assets were comprised of: | |
Paid in capital | | $ | 29,666,968 | |
Total distributable earnings (loss) | | | 1,242,911 | |
| | | | |
Net assets | | $ | 30,909,879 | |
| | | | |
Class A | | | | |
Net asset value and redemption price per share, $2,643,166 / 219,277 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.05 | |
Maximum sales charge (5.50% of offering price) | | | 0.70 | |
| | | | |
Maximum offering price per share | | $ | 12.75 | |
| | | | |
Class I | | | | |
Net asset value and redemption price per share, $28,004,958 / 2,320,153 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.07 | |
| | | | |
Class R | | | | |
Net asset value and redemption price per share, $137,085 / 11,386 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.04 | |
| | | | |
Class T** | | | | |
Net asset value and redemption price per share, $124,670 / 10,332 shares outstanding (unlimited amount authorized: $0.001 par value) | | $ | 12.07 | |
Maximum sales charge (2.50% of offering price) | | | 0.31 | |
| | | | |
Maximum offering price per share | | $ | 12.38 | |
| | | | |
| ** | Class T shares currently are not offered for sale. |
STATEMENT OF OPERATIONS
For the Six Months Ended April 30, 2020 (Unaudited)
| | | | |
INVESTMENT INCOME | |
Dividends (net of $19,536 foreign withholding tax) | | $ | 332,880 | |
Interest | | | 1,443 | |
| | | | |
Total income | | | 334,323 | |
| | | | |
EXPENSES | |
Investment advisory fees | | | 102,455 | |
Professional fees | | | 37,916 | |
Transfer agent fees | | | 25,378 | |
Administrative fees | | | 21,955 | |
Printing and mailing expenses | | | 17,127 | |
Registration and filing fees | | | 15,832 | |
Custodian fees | | | 9,525 | |
Distribution fees – Class A | | | 2,895 | |
Trustees’ fees | | | 1,100 | |
Distribution fees – Class R | | | 365 | |
Distribution fees – Class T** | | | 167 | |
Miscellaneous | | | 10,667 | |
| | | | |
Gross expenses | | | 245,382 | |
Less: Waiver from investment adviser | | | (110,416 | ) |
Waiver from distributor | | | (167 | ) |
| | | | |
Net expenses | | | 134,799 | |
| | | | |
NET INVESTMENT INCOME (LOSS) | | | 199,524 | |
| | | | |
REALIZED AND UNREALIZED GAIN (LOSS) | |
Realized gain (loss) on: | | | | |
Investments in securities | | | 11,724 | |
Foreign currency transactions | | | (3,995 | ) |
| | | | |
Net realized gain (loss) | | | 7,729 | |
| | | | |
Change in unrealized appreciation (depreciation) on: | |
Investments in securities | | | (2,982,272 | ) |
Foreign currency translations | | | (546 | ) |
| | | | |
Net change in unrealized appreciation (depreciation) | | | (2,982,818 | ) |
| | | | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | | | (2,975,089 | ) |
| | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (2,775,565 | ) |
| | | | |
| ** | Class T shares currently are not offered for sale. |
See Notes to Financial Statements.
152
1290 FUNDS
1290 SMARTBETA EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
| | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended
October 31, 2019 | |
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS: | |
Net investment income (loss) | | $ | 199,524 | | | $ | 309,845 | |
Net realized gain (loss) | | | 7,729 | | | | 297,173 | |
Net change in unrealized appreciation (depreciation) | | | (2,982,818 | ) | | | 2,511,264 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | | | (2,775,565 | ) | | | 3,118,282 | |
| | | | | | | | |
Distributions to shareholders: | | | | | | | | |
Class A | | | (44,168 | ) | | | (49,479 | ) |
Class I | | | (572,775 | ) | | | (823,783 | ) |
Class R | | | (2,785 | ) | | | (6,108 | ) |
Class T** | | | (3,196 | ) | | | (6,200 | ) |
| | | | | | | | |
Total distributions to shareholders | | | (622,924 | ) | | | (885,570 | ) |
| | | | | | | | |
CAPITAL SHARES TRANSACTIONS: | | | | | | | | |
Class A | | | | | | | | |
Capital shares sold [ 75,581 and 94,431 shares, respectively ] | | | 997,219 | | | | 1,199,186 | |
Capital shares issued in reinvestment of dividends [ 3,024 and 3,763 shares, respectively ] | | | 40,643 | | | | 43,270 | |
Capital shares repurchased [ (10,307) and (40,087) shares, respectively ] | | | (127,121 | ) | | | (494,261 | ) |
| | | | | | | | |
Total Class A transactions | | | 910,741 | | | | 748,195 | |
| | | | | | | | |
Class I | | | | | | | | |
Capital shares sold [ 662,547 and 503,495 shares, respectively ] | | | 8,686,500 | | | | 6,334,750 | |
Capital shares issued in reinvestment of dividends [ 20,252 and 21,002 shares, respectively ] | | | 272,391 | | | | 241,529 | |
Capital shares repurchased [ (154,445) and (81,503) shares, respectively ] | | | (1,823,728 | ) | | | (1,019,728 | ) |
| | | | | | | | |
Total Class I transactions | | | 7,135,163 | | | | 5,556,551 | |
| | | | | | | | |
Class R | | | | | | | | |
Capital shares sold [ 72 and 127 shares, respectively ] | | | 957 | | | | 1,616 | |
Capital shares issued in reinvestment of dividends [ 10 and 25 shares, respectively ] | | | 132 | | | | 283 | |
Capital shares repurchased [ (9) and (143) shares, respectively ] | | | (123 | ) | | | (1,887 | ) |
| | | | | | | | |
Total Class R transactions | | | 966 | | | | 12 | |
| | | | | | | | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL SHARE TRANSACTIONS | | | 8,046,870 | | | | 6,304,758 | |
| | | | | | | | |
TOTAL INCREASE (DECREASE) IN NET ASSETS | | | 4,648,381 | | | | 8,537,470 | |
NET ASSETS: | |
Beginning of period | | | 26,261,498 | | | | 17,724,028 | |
| | | | | | | | |
End of period | | $ | 30,909,879 | | | $ | 26,261,498 | |
| | | | | | | | |
** Class T shares currently are not offered for sale. | |
See Notes to Financial Statements.
153
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class A | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 13.34 | | | $ | 12.09 | | | $ | 12.23 | | | $ | 10.25 | | | $ | 10.24 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.07 | | | | 0.15 | | | | 0.15 | | | | 0.13 | | | | 0.12 | ## | | | 0.11 | |
Net realized and unrealized gain (loss) | | | (1.08 | ) | | | 1.67 | | | | 0.06 | † | | | 1.96 | | | | 0.04 | | | | 0.16 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.01 | ) | | | 1.82 | | | | 0.21 | | | | 2.09 | | | | 0.16 | | | | 0.27 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.13 | ) | | | (0.14 | ) | | | (0.15 | ) | | | (0.11 | ) | | | (0.15 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.43 | ) | | | (0.20 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.28 | ) | | | (0.57 | ) | | | (0.35 | ) | | | (0.11 | ) | | | (0.15 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.05 | | | $ | 13.34 | | | $ | 12.09 | | | $ | 12.23 | | | $ | 10.25 | | | $ | 10.24 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.80 | )% | | | 15.81 | % | | | 1.64 | % | | | 20.58 | % | | | 1.58 | % | | | 2.70 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 2,643 | | | $ | 2,014 | | | $ | 1,123 | | | $ | 685 | | | $ | 269 | | | $ | 3,111 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.15 | % | | | 1.15 | % | | | 1.15 | % | | | 1.20 | % | | | 1.35 | % | | | 1.35 | % |
Before waivers and reimbursements (a)(f) | | | 1.91 | % | | | 2.26 | % | | | 2.42 | % | | | 2.77 | % | | | 2.76 | % | | | 4.21 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.17 | % | | | 1.19 | % | | | 1.21 | % | | | 1.17 | % | | | 1.23 | %(aa) | | | 1.14 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.41 | % | | | 0.08 | % | | | (0.06 | )% | | | (0.41 | )% | | | (0.18 | )%(aa) | | | (1.73 | )%(l) |
Portfolio turnover rate^ | | | 14 | %(z) | | | 31 | % | | | 49 | % | | | 41 | % | | | 27 | % | | | 29 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class I | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 13.37 | | | $ | 12.11 | | | $ | 12.25 | | | $ | 10.27 | | | $ | 10.26 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.19 | | | | 0.18 | | | | 0.17 | | | | 0.15 | ## | | | 0.14 | |
Net realized and unrealized gain (loss) | | | (1.08 | ) | | | 1.67 | | | | 0.06 | † | | | 1.95 | | | | 0.03 | | | | 0.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.99 | ) | | | 1.86 | | | | 0.24 | | | | 2.12 | | | | 0.18 | | | | 0.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.16 | ) | | | (0.17 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.43 | ) | | | (0.20 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.31 | ) | | | (0.60 | ) | | | (0.38 | ) | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.07 | | | $ | 13.37 | | | $ | 12.11 | | | $ | 12.25 | | | $ | 10.27 | | | $ | 10.26 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.65 | )% | | | 16.16 | % | | | 1.86 | % | | | 20.85 | % | | | 1.84 | % | | | 2.94 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 28,005 | | | $ | 23,959 | | | $ | 16,340 | | | $ | 14,158 | | | $ | 10,838 | | | $ | 3,218 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.90 | % | | | 0.90 | % | | | 0.90 | % | | | 0.96 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a)(f) | | | 1.66 | % | | | 2.02 | % | | | 2.16 | % | | | 2.49 | % | | | 2.51 | % | | | 3.96 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.39 | % | | | 1.49 | % | | | 1.47 | % | | | 1.48 | % | | | 1.44 | %(aa) | | | 1.38 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.63 | % | | | 0.37 | % | | | 0.21 | % | | | (0.05 | )% | | | 0.04 | %(aa) | | | (1.48 | )%(l) |
Portfolio turnover rate^ | | | 14 | %(z) | | | 31 | % | | | 49 | % | | | 41 | % | | | 27 | % | | | 29 | %(z) |
See Notes to Financial Statements.
154
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class R | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 13.31 | | | $ | 12.06 | | | $ | 12.20 | | | $ | 10.23 | | | $ | 10.22 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.05 | | | | 0.12 | | | | 0.12 | | | | 0.11 | | | | 0.10 | ## | | | 0.09 | |
Net realized and unrealized gain (loss) | | | (1.07 | ) | | | 1.67 | | | | 0.06 | † | | | 1.94 | | | | 0.03 | | | | 0.16 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (1.02 | ) | | | 1.79 | | | | 0.18 | | | | 2.05 | | | | 0.13 | | | | 0.25 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.10 | ) | | | (0.11 | ) | | | (0.12 | ) | | | (0.08 | ) | | | (0.12 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.43 | ) | | | (0.20 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.25 | ) | | | (0.54 | ) | | | (0.32 | ) | | | (0.08 | ) | | | (0.12 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.04 | | | $ | 13.31 | | | $ | 12.06 | | | $ | 12.20 | | | $ | 10.23 | | | $ | 10.22 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.89 | )% | | | 15.55 | % | | | 1.39 | % | | | 20.21 | % | | | 1.32 | % | | | 2.47 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 137 | | | $ | 151 | | | $ | 136 | | | $ | 137 | | | $ | 115 | | | $ | 3,073 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.40 | % | | | 1.40 | % | | | 1.40 | % | | | 1.46 | % | | | 1.60 | % | | | 1.60 | % |
Before waivers and reimbursements (a)(f) | | | 2.16 | % | | | 2.52 | % | | | 2.66 | % | | | 2.98 | % | | | 3.01 | % | | | 4.46 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.85 | % | | | 1.00 | % | | | 0.98 | % | | | 0.98 | % | | | 0.98 | %(aa) | | | 0.89 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.10 | % | | | (0.12 | )% | | | (0.29 | )% | | | (0.54 | )% | | | (0.43 | )%(aa) | | | (1.98 | )%(l) |
Portfolio turnover rate^ | | | 14 | %(z) | | | 31 | % | | | 49 | % | | | 41 | % | | | 27 | % | | | 29 | %(z) |
| | | |
| | | Six Months Ended
April 30, 2020
(Unaudited) | | | Year Ended October 31, | | | November 12, 2014*
to October 31,
2015 | |
| Class T** | | 2019 | | | 2018 | | | 2017 | | | 2016 | |
Net asset value, beginning of period | | $ | 13.37 | | | $ | 12.11 | | | $ | 12.25 | | | $ | 10.27 | | | $ | 10.26 | | | $ | 10.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | | | |
Net investment income (loss) (e) | | | 0.09 | | | | 0.19 | | | | 0.18 | | | | 0.17 | | | | 0.15 | ## | | | 0.14 | |
Net realized and unrealized gain (loss) | | | (1.08 | ) | | | 1.67 | | | | 0.06 | † | | | 1.95 | | | | 0.03 | | | | 0.15 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total from investment operations | | | (0.99 | ) | | | 1.86 | | | | 0.24 | | | | 2.12 | | | | 0.18 | | | | 0.29 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Less distributions: | | | | | | | | | | | | | | | | | | | | | | | | |
Dividends from net investment income | | | (0.16 | ) | | | (0.17 | ) | | | (0.18 | ) | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
Distributions from net realized gains | | | (0.15 | ) | | | (0.43 | ) | | | (0.20 | ) | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total dividends and distributions | | | (0.31 | ) | | | (0.60 | ) | | | (0.38 | ) | | | (0.14 | ) | | | (0.17 | ) | | | (0.03 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net asset value, end of period | | $ | 12.07 | | | $ | 13.37 | | | $ | 12.11 | | | $ | 12.25 | | | $ | 10.27 | | | $ | 10.26 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total return (b) | | | (7.65 | )% | | | 16.16 | % | | | 1.86 | % | | | 20.85 | % | | | 1.84 | % | | | 2.94 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
Net assets, end of period (000’s) | | $ | 125 | | | $ | 138 | | | $ | 125 | | | $ | 127 | | | $ | 106 | | | $ | 1,029 | |
Ratio of expenses to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 0.90 | % | | | 0.90 | % | | | 0.90 | % | | | 0.96 | % | | | 1.10 | % | | | 1.10 | % |
Before waivers and reimbursements (a)(f) | | | 1.91 | % | | | 2.27 | % | | | 2.41 | % | | | 2.96 | % | | | 3.51 | % | | | 4.96 | % |
Ratio of net investment income (loss) to average net assets: | | | | | | | | | | | | | | | | | | | | | | | | |
After waivers and reimbursements (a)(f) | | | 1.35 | % | | | 1.50 | % | | | 1.47 | % | | | 1.48 | % | | | 1.48 | %(aa) | | | 1.39 | %(l) |
Before waivers and reimbursements (a)(f) | | | 0.35 | % | | | 0.13 | % | | | (0.04 | )% | | | (0.52 | )% | | | (0.93 | )%(aa) | | | (2.48 | )%(l) |
Portfolio turnover rate^ | | | 14 | %(z) | | | 31 | % | | | 49 | % | | | 41 | % | | | 27 | % | | | 29 | %(z) |
See Notes to Financial Statements.
155
1290 FUNDS
1290 SMARTBETA EQUITY FUND
FINANCIAL HIGHLIGHTS (Continued)
| * | Commencement of Operations. |
| ** | Class T shares currently are not offered for sale. Class T shares were formerly known as Class C shares. |
| † | The amount shown for a share outstanding throughout the period does not accord with the aggregate net income and/or gain on investments for that period because of the timing of sales and repurchases of the Fund shares in relation to fluctuating market value of the investments in the Fund. |
| ## | Includes income resulting from a special dividend. Without this dividend, the per share income amounts would be $0.08, $0.11, $0.06 and $0.11 for Class A, Class I, Class R and Class T, respectively. |
| ^ | Portfolio turnover rate excludes derivatives, if any. |
| (a) | Ratios for periods less than one year are annualized. Certainnon-recurring expenses incurred by the Fund are not annualized for periods less than one year. |
| (b) | Total returns for periods less than one year are not annualized. |
| (e) | Net investment income (loss) per share is based on average shares outstanding. |
| (f) | Expenses do not include the expenses of the underlying funds (“indirect expenses”), if applicable. |
| (l) | The annualized ratio of net investment income to average net assets may not be indicative of operating results for a full year. |
| (z) | Portfolio turnover rate for periods less than one year is not annualized. |
| (aa) | Includes income resulting from a special dividend. Without this dividend, the ratios for each class would have been 0.37% lower. |
See Notes to Financial Statements.
156
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 2020 (Unaudited)
| Note 1 | Organization and Significant Accounting Policies |
1290 Funds (the “Trust”) was organized as a Delaware statutory trust on March 1, 2013 and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end management investment company with eighteen diversified funds in operation (each, a “Fund” and collectively, the “Funds”). The investment adviser to each Fund is Equitable Investment Management Group, LLC, formerly, AXA Equitable Funds Management Group, LLC (“EIM” or the “Adviser”), a wholly-owned subsidiary of Equitable Financial Life Insurance Company, formerly, AXA Equitable Financial Life Insurance Company (“Equitable Financial”).
On September 10, 2019, EIM redeemed capital out of the 1290 Retirement 2025 Fund in the amount of $2,905,000 for Class I shares.
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the Trust enters into contracts with vendors and others that provide for general indemnifications. A Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund. However, based on experience, the Trust and management expect the risk of loss to be remote.
Each of the investmentsub-advisers (each a“Sub-Adviser”) independently chooses and maintains a portfolio of securities for their respective Fund.
The 1290 Retirement 2020 Fund, 1290 Retirement 2025 Fund, 1290 Retirement 2030 Fund, 1290 Retirement 2035 Fund, 1290 Retirement 2040 Fund, 1290 Retirement 2045 Fund, 1290 Retirement 2050 Fund, 1290 Retirement 2055 Fund and the 1290 Retirement 2060 Fund (each, a “1290 Retirement Fund” and together, the “1290 Retirement Funds”) as well as 1290 Multi-Alternative Strategies Fund and 1290 Low Volatility Global Equity Fund are types of mutual funds often described as“fund-of-funds.” These Funds pursue their investment objectives by investing exclusively in other unaffiliated investment companies or exchange-traded funds (“ETFs”). The underlying funds’ financial statements are publicly available through the SEC’s EDGAR database (https://www.sec.gov/edgar/searchedgar/companysearch.html).
The Trust has authorized four classes of shares, Class A, Class I, Class R and Class T on behalf of each of the eighteen Funds. Class T shares are currently not offered for sale. Additionally, 1290 Low Volatility Global Equity Fund and each 1290 Retirement Fund currently only offer Class I shares for sale.
The Class A, Class R and Class T shares are subject to distribution fees imposed under distribution plans (“Distribution Plans”) adopted pursuant to Rule12b-1 under the 1940 Act. Under the Trust’s multiple-class distribution system, all four classes of shares have identical voting, dividend, liquidation and other rights, other than the payment of distribution fees under the applicable Distribution Plan.
Additionally, Class A shares are sold at a maximumfront-end sales charge of up to 4.50% for 1290 Convertible Securities Fund, 1290 Diversified Bond Fund and 1290 High Yield Bond Fund, and up to 5.50% for 1290 DoubleLine Dynamic Allocation Fund, 1290 GAMCO Small/ Mid Cap Value Fund, 1290 Global Talents Fund, 1290 Low Volatility Global Equity Fund, 1290 Multi-Alternative Strategies Fund, 1290 SmartBeta Equity Fund and each 1290 Retirement Fund. Class A shares sold without afront-end sales charge are subject to a contingent deferred sales charge (“CDSC”) of 1% of the lesser of the original net asset value (“NAV”) of the redeemed shares at the time of purchase or the aggregate NAV of the redeemed shares at the time of redemption, if redeemed within 12 months of purchase. Class T shares are subject to a maximumfront-end sales charge of up to 2.50%.
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.
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April 30, 2020 (Unaudited)
1290 Diversified Bond Fund(sub-advised by Brandywine Global Investment Management, LLC (“Brandywine Global”)) — Seeks to maximize total return consisting of income and capital appreciation.
1290 DoubleLine Dynamic Allocation Fund(sub-advised by DoubleLine Capital LP) — Seeks to achieve total return from long-term capital appreciation and income.
1290 GAMCO Small/Mid Cap Value Fund(sub-advised by GAMCO Asset Management Inc.) — Seeks to maximize capital appreciation.
1290 Global Talents Fund(sub-advised by AXA Investment Managers, Inc. (“AXA IM”)) — Seeks to provide long-term capital growth.
1290 High Yield Bond Fund(sub-advised by AXA IM) — Seeks to maximize current income.
1290 Low Volatility Global Equity Fund — Seeks long-term capital appreciation while managing portfolio volatility.
1290 Multi-Alternative Strategies Fund — Seeks long-term growth of capital.
1290 Retirement 2020 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2025 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2030 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2035 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2040 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2045 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2050 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2055 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 Retirement 2060 Fund — Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Total return includes capital growth and income.
1290 SmartBeta Equity Fund(sub-advised by AXA Rosenberg Investment Management LLC) — Seeks to achieve long-term capital appreciation.
The following is a summary of the significant accounting policies of the Trust:
The preparation of financial statements in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The Funds are investment companies and, accordingly, follow the Investment Company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standards Codification Topic 946 —Investment Companies,which is part of U.S. GAAP.
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. (“ASU”)2017-08, “Receivables — Nonrefundable Fees and Other Costs (Subtopic310-20): Premium Amortization on Purchased Callable Debt Securities.” ASU2017-08 shortens the amortization period for certain callable debt securities, held at a premium, to be amortized to the earliest call date rather than the contractual maturity date. The Funds adopted and applied ASU2017-08 on a modified retrospective basis through a cumulative-effect adjustment as of November 1, 2019.
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NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
As a result of the adoption of ASU2017-08, as of November 1, 2019, for each Fund within-scope securities, the amortized cost basis of investments was reduced and unrealized appreciation of investments was increased as listed below. There is no impact on net assets or overall results from operations.
| | | | |
Funds: | | Amounts | |
1290 Convertible Securities | | $ | 56 | |
1290 Diversified Bond | | | 10,545 | |
1290 DoubleLine Dynamic Allocation | | | 3,579 | |
1290 High Yield Bond | | | 101,580 | |
Valuation:
Equity securities (including securities issued by ETFs) listed on national securities exchanges are generally valued at the last sale price or official closing price on the date of valuation or, if there is no sale or official closing price, at the latest available bid price. Securities listed on the NASDAQ stock market will be valued using the NASDAQ Official Closing Price (“NOCP”). Generally, the NOCP will be the last sale price unless the reported trade for the security is outside the range of the bid/ask price. In such cases, the NOCP will be normalized to the nearer of the bid or ask price. Other unlisted stocks are generally valued at their last sale price or official closing price, or if there is no such price, at a bid price estimated by a broker.
Corporate and municipal bonds and notes are generally valued on the basis of prices provided by a pricing service. The pricing services may utilize many inputs that are observable in making evaluations which may include, but are not limited to, trading activity for similar securities, issuer details, yields, default rates, credit spreads, quoted prices and any developments related to the specific securities. However, when such prices are not available, such bonds and notes are generally valued at a bid price estimated by a broker.
Convertible preferred stocks listed on national securities exchanges are generally valued as of their last sale price or, if there is no sale, at the latest available bid price. Convertible bonds and unlisted convertible preferred stocks are generally valued using prices obtained from a pricing service for such investments or, if a pricing service price is not available, at bid prices obtained from one or more of the major dealers in such bonds or stocks. Where there is a discrepancy between dealers, values may be adjusted based on recent premium spreads to the underlying common stocks. Convertible bonds may be matrix-priced based upon the conversion value to the underlying common stocks and market premiums.
Mortgage-backed and asset-backed securities are generally valued at evaluated prices obtained from a pricing service where available, or at a bid price obtained from one or more of the major dealers in such securities. The pricing service may utilize data such as issuer type, coupon, cash flows, collateral performance, mortgage prepayment projection tables and Adjustable Rate Mortgage evaluations that incorporate index data, periodic and life caps, the next coupon reset date and the convertibility of the bond in making evaluations. If a quoted price is unavailable, an equivalent yield or yield spread quotes may be obtained from a broker and converted to a price.
Options that are traded on an exchange are generally valued at their last sale price or official closing price on the date of valuation. Options not traded on an exchange or actively traded are valued according to fair value methods. The market value of a put or call option will usually reflect, among other factors, the market price of the underlying security.
U.S. Treasury securities and other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities, are generally valued at prices obtained from a bond pricing service where available. The pricing service may utilize data received from active market makers and broker-dealers, yield curves and the spread over comparable U.S. Treasury issues in making evaluations.
159
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
Foreign securities, including foreign government securities, not traded directly in the U.S., or traded in American Depositary Receipts (“ADR”) or similar form, are generally valued at representative quoted prices from the primary exchange in the currency of the country of origin. Foreign currency is converted into U.S. dollar equivalent at current exchange rates.
Investments in shares ofopen-end investment companies (other than ETFs) held by a Fund are generally valued at the NAV of the shares of such funds as described in the underlying funds’ prospectuses.
Futures contracts are generally valued at their last settlement price or, if there is no sale, at the latest available bid price.
Forward foreign currency contracts are generally valued by interpolating between the forward and spot currency rates as quoted by a pricing service as of a designated hour on the valuation date. The pricing service may utilize data such as actual trading information and foreign currency rates gathered from leading market makers and foreign currency trading centers throughout the world in making evaluations. Forward foreign currency contracts may be settled with the counterparty in U.S. dollars without the delivery of foreign currency.
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 aremarked-to-market daily based upon values from third party vendors, which may include a clearing counterparty, registered exchange, or quotations from market makers to the extent available. In the event that market quotes are not readily available and the swap cannot be valued pursuant to one of the valuation methods, the value of the swap will be determined in good faith by the Committee. Changes in market value, if any, are reflected as a component of net changes in unrealized appreciation (depreciation) on the Statements of Operations. Daily changes in valuation of centrally cleared swaps, if any, are recorded as a receivable or payable for the change in value as appropriate (“variation margin”) on the Statements of Assets and Liabilities. There is potential for swaps to be illiquid.Over-the-counter (“OTC”) swap payments received or made at the beginning of the measurement period are reflected as such on the Statements of Assets and Liabilities and represent premiums paid or received upon entering into the swap agreement to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront premiums are recorded as realized gains or losses on the Statement of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss on the Statement of Operations. Net periodic payments received or paid by a Fund are included as part of realized gains or losses on the Statement of Operations.
Total return swap agreements involve commitments where cash flows are exchanged based on the price of an underlying reference and based on a fixed or variable rate. Total return swap agreements may involve commitments to pay interest in exchange for a market-linked return. One counterparty pays out the total return of a specific reference asset, which may include an underlying equity, index, or bond, and in return receives a fixed or variable rate. At the maturity date, a net cash flow is exchanged where the total return is equivalent to the return of the underlying reference less a financing rate, if any. As a receiver, the Fund would receive payments based on any positive total return and would owe payments in the event of a negative total return. As the payer, the Fund would owe payments on any net positive total return, and would receive payment in the event of a negative total return. In connection with total return swap agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency.
Currency swaps involve the exchange by one party with another party of a series of payments in specified currencies. Currency swaps usually involve the delivery of the entire principal value of one designated currency in exchange for the other designated currency. Therefore, the entire principal value of a currency swap is subject to the risk that the other party to the swap will default
160
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
on its contractual delivery obligations. In addition, a Fund may enter into currency swaps that involve an agreement to pay interest streams in one currency based on a specified index in exchange for receiving interest streams denominated in another currency. Currency swaps may involve initial and final exchanges that correspond to the agreed upon notional amount.
Interest rate swaps involve the exchange between two parties of payments calculated by reference to specified interest rates (e.g., an exchange of floating rate payments for fixed rate payments). The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a notional principal amount from the party selling such interest rate floor. Caps and floors may be less liquid than swaps. In addition, the value of interest rate transactions will fluctuate based on changes in interest rates.
Credit default swap agreements involve greater risks than if a Fund had invested in the reference obligation directly since, in addition to general market risks, credit default swaps are subject to illiquidity risk, counterparty risk and credit risk. A Fund will enter into credit default swap agreements only with counterparties that meet certain standards of creditworthiness. A buyer generally also will lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. If a credit event were to occur, the value of any deliverable obligation received by the seller, coupled with the upfront or periodic payments previously received, may be less than the full notional value it pays to the buyer, resulting in a loss of value to the seller. A Fund’s obligations under a credit default swap agreement will be accrued daily (offset against any amounts owing to the Fund). In connection with credit default swaps in which a Fund is the buyer, the Fund will segregate or “earmark” cash or assets determined to be liquid, or enter into certain offsetting positions, with a value at least equal to the Fund’s exposure (any accrued but unpaid net amounts owed by the Fund to any counterparty), on amarked-to-market basis. In connection with credit default swaps in which a Fund is the seller, the Fund will segregate or “earmark” cash or assets determined to be liquid, or enter into offsetting positions, with a value at least equal to the full notional amount of the swap (minus any amounts owed to the Fund). Such segregation or “earmarking” is intended to ensure that the Fund has assets available to satisfy its obligations with respect to the transaction and limit any potential leveraging of the Fund. Such segregation or “earmarking” will not limit the Fund’s exposure to loss. To the extent that credit default swaps are entered into for hedging purposes or are covered as described above, the Adviser believes such obligations do not constitute “senior securities” under the 1940 Act and, accordingly, will not treat them as being subject to the Fund’s senior security and borrowing restrictions.
In the case of a credit default swap sold by a Fund (i.e., where the Fund is selling credit default protection), the Fund may value the credit default swap at its notional amount in applying certain of the Fund’s investment policies and restrictions, but may value the credit default swap at market value for purposes of applying certain of the Fund’s other investment policies and restrictions.
An option on a swap agreement, also called a “swaption,” is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based “premium.” A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate, or index. A payer swaption gives the owner the right to pay the total return of a specified asset, reference rate, or index. A purchaser of a swaption risks losing only the amount of the premium they have paid should they decide to let the option expire, whereas the seller of a swaption is subject to the risk that they will become obligated if the option is exercised. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.
During the six months ended April 30, 2020, certain Funds held forward foreign currency contracts to either gain exposure to certain currencies, or enter into an economic hedge against changes in the values of securities held in the Fund, that do not qualify for hedge accounting under Accounting Standards Codification (“ASC”) 815. The Statement of Operations for each Fund reflects realized gains or
161
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NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
losses, if any, in forward currency transactions and change in unrealized gains or losses in forward foreign currency 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.
If market quotations are not readily available for a security or other financial instrument, such security and instrument shall be referred to the Trust’s Valuation Committee (“Committee”), which will value the asset in good faith pursuant to procedures (“Pricing Procedures”) adopted by the Board of Trustees of the Trust (the “Board”).
The Board is responsible for ensuring that appropriate valuation methods are used to price securities for the Funds. The Board has delegated the responsibility of calculating the NAVs of each of the Funds and classes pursuant to these Pricing Procedures to the Trust’s administrator, EIM (in its capacity as administrator, the “Administrator”). The Administrator has entered into asub-administration agreement with JPMorgan Chase Bank, N.A. (the“Sub-Administrator”), which assists in performing certain of the duties described herein. The Committee, established by the Board, determines the value of the Trust’s securities and assets for which market quotations are not readily available or for which valuation cannot otherwise be provided in accordance with procedures adopted by the Board. The Committee is comprised of senior employees from EIM.
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, 2020, is included in the Portfolio of Investments for each Fund. Changes in valuation techniques may result in transfers in or out of an investment’s assigned level.
Transfers into and transfers out of Level 3 are included in the Level 3 reconciliation following the Portfolio of Investments for each Fund, if any. Transfers between levels may be due to a decline, or an increase, in market activity (e.g., frequency of trades), which may result in a lack of, or increase in, available observable market inputs to determine price.
The inputs or methodology used to value securities are not necessarily an indication of the risk associated with investing in those securities. An investment’s level within the fair value hierarchy is based on the lowest level of any input, both individually and in the aggregate, that is significant to the fair value measurement.
The Committee has the ability to meet and review reports based on the valuation techniques used to value Level 3 securities. As part of a review, the Committee would consider obtaining updates from its pricing vendors andSub-Advisers for fair valued securities. For example, with respect to model driven prices, the Committee could receive reports regarding a review and recalculation of pricing models and related discounts. For those securities which are valued based on broker quotes, the Committee may evaluate variances between existing broker quotes and any alternative broker quotes provided by aSub-Adviser or other pricing source.
To substantiate unobservable inputs used in a fair valuation, the Secretary of the Committee can perform an independent verification as well as additional research for fair value notifications received from the pricing agents. Among other factors, particular areas of focus may include: description of security, historical pricing, intra-day price movement, last trade information, corporate actions, related securities, any available company news and announcements, any available trade data or other information. The Committee also notes the materiality of holdings and price changes on a Fund’s NAV.
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NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
The Committee reviews and considers changes in value for all fair valued securities that have occurred since the last review.
Pursuant to procedures approved by the Board, events or circumstances affecting the values of Fund securities that occur between the closing of their principal markets and the time the NAV is determined may be reflected in the Trust’s calculation of a NAV for each applicable Fund when the Adviser deems that the particular event or circumstance would materially affect such Fund’s NAV. The value and percentage, based on Total Investments in Securities, of the investments that applied these procedures on April 30, 2020 are as follows:
| | | | | | | | |
Funds: | | Market Value | | | Percentage of Total Investments | |
1290 GAMCO Small/Mid Cap Value | | $ | 3,101,818 | | | | 4.2 | % |
1290 Global Talents | | | 7,630,333 | | | | 28.9 | |
1290 SmartBeta Equity | | | 8,536,453 | | | | 28.0 | |
Security Transactions and Investment Income:
Securities transactions are recorded on the trade date net of brokerage fees, commissions, and transfer fees. Dividend income (net of withholding taxes) and distributions to shareholders are recorded on theex-dividend date, except that certain dividends from foreign securities, if any, are recognized as soon as the Fund is informed of theex-dividend date.Non-cash dividends, if any, are recorded at the fair market value of the asset received. Interest income (including amortization of premium and accretion of discount on long-term securities using the effective yield method) and interest expense are accrued daily. The Trust records paydown gains and losses realized on prepayments received on mortgage-backed securities as an adjustment to interest income.
The Funds record distributions received in excess of income from underlying investments as a reduction of cost of investments and/or realized gain. Such amounts are based on estimates if actual amounts are not available and actual amounts of income, realized gain and return of capital may differ from the estimated amounts. The Funds adjust the estimated amounts of components of distributions (and consequently its net investment income) as necessary once the issuers provide information about the actual composition of the distributions.
Realized gains and losses on the sale of investments are computed on the basis of the specific identified cost of the investments sold. Unrealized appreciation (depreciation) on investments and foreign currency denominated assets and liabilities, if any, is presented net of deferred taxes on unrealized appreciation in the Statements of Assets and Liabilities.
Allocation of Expenses and Income:
Expenses attributable to a single Fund or class are charged to that Fund or class. Expenses of the Trust not attributable to a single Fund or class are charged to each Fund or class in proportion to the average net assets of each Fund or other appropriate allocation methods.
All income earned and expenses incurred by each Fund are borne on apro-rata basis by each outstanding class of shares, based on the proportionate interest in the Fund represented by the daily net assets of such class, except for distribution fees which are charged on a class-specific basis.
Foreign Currency Valuation:
The books and records of the Trust are kept in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at current exchange rates at the following dates:
(i) Market value of investment securities, other assets and liabilities — at the valuation date.
(ii) Purchases and sales of investment securities, income and expenses — at the date of such transactions.
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NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.
Reported realized foreign currency gains and losses arise from the disposition of foreign currency, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on each Fund’s books on the transaction date and the U.S. dollar equivalent of the amounts actually received or paid. These reported realized foreign currency gains and losses are included in Net realized gain (loss) on foreign currency transactions on the Statements of Operations. Unrealized foreign currency gains and losses arise from changes (due to changes in exchange rates) in the value of foreign currency and other assets and liabilities denominated in foreign currencies, which are held at period end and are included in Change in net unrealized appreciation/depreciation on foreign currency translations on the Statements of Operations.
Taxes:
Each Fund intends to comply with the requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies (���RICs”) and to distribute substantially all of its net investment income and net realized capital gains to shareholders of each Fund. Therefore, no Federal, State and local income tax provisions are required.
The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. However, the Funds’ conclusions may be subject to future review based on changes in, or the interpretation of, the accounting standards or tax laws and regulations. The Funds recognize interest and penalties, if any, related to uncertain tax positions as income tax expense in the Statements of Operations. During the year ended October 31, 2019, the Funds did not incur any interest or penalties. Each of the tax years in the four year period ended October 31, 2019 remains subject to examination by the Internal Revenue Service, state and local taxing authorities.
Dividends from net investment income, if any, are declared and distributed at least annually for all Funds (1290 Convertible Securities Fund, 1290 Diversified Bond Fund and 1290 High Yield Bond Fund declare and distribute monthly). Dividends to shareholders of a Fund to which such gains are attributable from net realized short-term and long-term capital gains are declared and distributed at least annually. All distributions are calculated on a tax basis and, as such, the amounts may differ from financial statement investment income and realized gains. Short-term capital gains and foreign currency gains are treated as capital gains for U.S. GAAP purposes but are considered ordinary income for tax purposes. The tax character of distributions for the years ended October 31, 2019 and October 31, 2018 and the tax composition of undistributed ordinary income and undistributed long term gains at October 31, 2019 are presented in the following table. For the Funds, the cumulative timing differences related to the tax composition of undistributed ordinary income and long term gains are primarily due to wash sale loss deferrals (1290 GAMCO Small/Mid Cap Value Fund) and capital loss carryover (1290 High Yield Bond Fund and 1290 Multi-Alternative Strategies Fund).
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended October 31, 2019 | | | As of October 31, 2019 | | | Year Ended October 31, 2018 | |
Funds: | | Distributed
Ordinary
Income | | | Distributed
Long Term
Gains | | | Accumulated
Undistributed
Ordinary
Income | | | Accumulated
Undistributed
Long Term
Gains | | | Distributed
Ordinary
Income | | | Distributed
Long Term
Gains | |
1290 Convertible Securities | | $ | 568,167 | | | $ | 820,812 | | | $ | 471,472 | | | $ | 741,420 | | | $ | 550,306 | | | $ | 245,075 | |
1290 Diversified Bond | | | 2,216,565 | | | | — | | | | 2,516,863 | | | | 1,134,557 | | | | 2,638,391 | | | | — | |
1290 DoubleLine Dynamic Allocation | | | 1,100,643 | | | | 1,627,303 | | | | 2,285,165 | | | | 930,995 | | | | 1,554,308 | | | | 2,764,419 | |
1290 GAMCO Small/Mid Cap Value | | | 1,094,928 | | | | 212,987 | | | | 951,714 | | | | 684,088 | | | | 369,101 | | | | 242,379 | |
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1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year Ended October 31, 2019 | | | As of October 31, 2019 | | | Year Ended October 31, 2018 | |
Funds: | | Distributed
Ordinary
Income | | | Distributed
Long Term
Gains | | | Accumulated
Undistributed
Ordinary
Income | | | Accumulated
Undistributed
Long Term
Gains | | | Distributed
Ordinary
Income | | | Distributed
Long Term
Gains | |
1290 Global Talents | | $ | 20,882 | | | $ | 1,259,775 | | | $ | 47,352 | | | $ | 117,541 | | | $ | 33,488 | | | $ | — | |
1290 High Yield Bond | | | 1,894,976 | | | | — | | | | — | | | | — | | | | 1,818,704 | | | | — | |
1290 Low Volatility Global Equity | | | 83,091 | | | | 5,361 | | | | 42,885 | | | | 14,810 | | | | 59,429 | | | | — | |
1290 Multi-Alternative Strategies | | | 203,361 | | | | 21,640 | | | | 194,450 | | | | — | | | | 38,183 | | | | 69,201 | |
1290 Retirement 2020 | | | 120,395 | | | | 22,023 | | | | 153,589 | | | | 146,857 | | | | 49,252 | | | | 250 | |
1290 Retirement 2025 | | | 161,829 | | | | 14,712 | | | | 249,117 | | | | 347,143 | | | | 49,002 | | | | — | |
1290 Retirement 2030 | | | 84,195 | | | | 4,009 | | | | 73,287 | | | | 18,396 | | | | 46,752 | | | | — | |
1290 Retirement 2035 | | | 105,840 | | | | 1,252 | | | | 102,650 | | | | 64,202 | | | | 46,752 | | | | — | |
1290 Retirement 2040 | | | 65,663 | | | | 2,736 | | | | 44,182 | | | | 4,590 | | | | 47,002 | | | | — | |
1290 Retirement 2045 | | | 73,894 | | | | 1,428 | | | | 65,471 | | | | 333 | | | | 47,142 | | | | — | |
1290 Retirement 2050 | | | 67,767 | | | | 2,824 | | | | 43,378 | | | | 4,286 | | | | 47,252 | | | | — | |
1290 Retirement 2055 | | | 66,386 | | | | 2,655 | | | | 39,356 | | | | 2,550 | | | | 47,252 | | | | — | |
1290 Retirement 2060 | | | 62,501 | | | | 2,604 | | | | 38,412 | | | | 4,230 | | | | 47,502 | | | | — | |
1290 SmartBeta Equity | | | 248,559 | | | | 637,011 | | | | 276,406 | | | | 297,433 | | | | 290,538 | | | | 160,318 | |
Ordinary losses incurred after December 31st and within the taxable year are deemed to arise on the first business day of a Fund’s next taxable year. For the year ended October 31, 2019, the Fund elected to defer late year losses, in the amount listed below:
| | | | |
Fund: | | Deferred Late Year Losses | |
1290 Multi-Alternative Strategies | | $ | 1,381 | |
The following Fund had a Return of Capital during the year ended October 31, 2019:
| | | | |
Fund: | | Return of Capital | |
1290 High Yield Bond | | $ | 37,045 | |
The following Fund had a Return of Capital during the year ended October 31, 2018:
| | | | |
Fund: | | Return of Capital | |
1290 Diversified Bond | | $ | 174,948 | |
Net capital losses recognized by the Funds may get carried forward indefinitely, and retain their character as short-term and/or long-term losses. A portion of 1290 High Yield Bond Fund’s capital loss carryforward is subject to an annual limitation under the Internal Revenue Code and related regulations. The following Funds have capital losses incurred that will be carried forward as follows:
| | | | | | | | | | | | | | | | |
| | | Utilized | | | Losses Carried Forward | |
Funds: | | Short Term | | | Long Term | | | Short Term | | | Long Term | |
1290 Diversified Bond | | $ | 29,675 | | | $ | — | | | $ | — | | | | — | |
1290 High Yield Bond | | | 89,979 | | | | — | | | | 661,104 | | | | 1,769,147 | |
1290 Multi-Alternative Strategies | | | — | | | | — | | | | 81,786 | | | | 148,639 | |
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
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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 onmonth-end notional amounts during the period is also noted in each respective Fund’s Portfolio of Investments. Portfolio securities are reserved and/or pledged with the custodian for current or potential derivative holdings as necessary throughout the year.
Options:
Certain Funds may write (sell) covered options as a hedge to provide protection against adverse movements in the price of securities in the Fund or to enhance investment performance. Certain Funds purchase and sell exchange traded options on foreign currencies. When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted on a daily basis to the current market price of the option written. Premiums received from writing options that expire unexercised are recognized as gains on the expiration date. Premiums received from writing options that are exercised or are cancelled in closing purchase transactions are offset against the cost of any securities purchased or added to the proceeds or netted against the amount paid on the transaction to determine the realized gain or loss. In writing options, a Fund must assume that the option may be exercised at any time prior to the expiration of its obligation as a writer, and that in such circumstances the net proceeds of the sale (or cost of) purchase of the underlying securities and currencies pursuant to the call or put option may be substantially below or above the prevailing market price. A Fund also has the additional risk of not being able to enter into a closing purchase transaction if a liquid secondary market does not exist and bears the risk of unfavorable changes in the price of the financial instruments underlying the options.
Certain Funds may purchase put options on securities to increase the Fund’s total investment return or to protect its holdings against a substantial decline in market value. The purchase of put options on securities will enable a Fund to preserve, at least partially, unrealized gains in an appreciated security in its Fund without actually selling the security. In addition, the Funds will continue to receive interest or dividend income on the security. The Funds may also purchase call options on securities to protect against substantial increases in prices of securities that Funds intend to purchase pending their ability to invest in an orderly manner in those securities. The Funds may sell put or call options they have previously purchased, which could result in a net gain or loss depending on whether the amount received on the sale is more or less than the premium and other transaction costs paid on the put or call option which was bought.
Futures Contracts, Options on Futures Contracts and Foreign Currency Contracts:
The futures contracts used by the Funds are agreements to buy or sell a financial instrument for a set price in the future. Options on futures contracts used by the Funds are rights to buy, or sell a futures contract for a set price in the future. Certain Funds buy or sell futures contracts for the purpose of protecting their Fund securities against future changes in interest rates and indices which might adversely affect the value of the Funds’ securities or the price of securities that they intend to purchase at a later date. Initial margin deposits are made upon entering into futures contracts and can be in cash, certain money market instruments, treasury securities or other liquid, high grade debt securities. During the period the futures contracts are open, changes in the market price of the contracts are recognized as unrealized gains or losses by“marking-to-market” at the end of each trading day. Variation margin payments on futures contracts are received or made, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from or cost of the closing transactions and the Fund’s basis in the contract. Should interest rates or indices move unexpectedly, the Fund may not achieve the anticipated benefits of the futures contracts and may incur a loss. The
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April 30, 2020 (Unaudited)
use of futures contracts transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Use of long futures contracts subjects the Funds to risk of loss in excess of the amounts shown on the Statements of Assets and Liabilities, up to the notional value of the futures contracts. Use of short futures contracts subjects the Funds to unlimited risk of loss. The Funds enter into futures contracts only on exchanges or boards of trade. The exchange or board of trade acts as the counterparty to each futures transaction; therefore, a Fund’s credit risk is limited to failure of the exchange or board of trade.
The Funds may be exposed to foreign currency risks associated with Fund investments. Certain Funds may purchase foreign currency on a spot (or cash) basis. In addition, certain Funds enter into contracts to purchase or sell foreign currencies at a future date (“forward contracts”). A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. Daily fluctuations in the value of such contracts are recognized as unrealized appreciation or depreciation by“marking-to-market”. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions in the Statements of Operations of the Funds. The Funds may engage in these forward contracts to protect against uncertainty in the level of future rates in connection with the purchase and sale of Fund securities (“transaction hedging”) and to protect the value of specific Fund positions (“position hedging”). The Funds also buy forward foreign currency contracts to gain exposure to currencies. The Funds are subject tooff-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.
Forward Settling Transactions:
Certain Funds make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time (“forward settling transactions”). 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 settling transactions 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 Funds’ 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 settling transaction 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.
Certain Funds may enter intoto-be-announced purchase or sale commitments (“TBA transactions”), pursuant to which it agrees to purchase or sell, respectively, mortgage backed securities for a fixed unit price, with payment and delivery at a scheduled future date beyond the customary settlement period for such securities. With TBA transactions, the particular securities to be received or delivered by a Fund are not identified at the trade date; however, the securities must meet specified terms, including issuer, rate, and mortgage term, and be within industry accepted “good delivery” standards. Funds may enter into TBA transactions with the intention of taking possession of or relinquishing the underlying securities, may elect to extend the settlement by “rolling” the transaction, and/or may use TBA transactions to gain or reduce interim exposure to underlying securities. Until settlement, a Fund maintains liquid assets sufficient to settle its commitment to purchase a TBA or, in the case of a sale commitment, a Fund maintains an entitlement to the security to be sold.
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Master netting arrangements and collateral:
International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) govern bilateral OTC derivative transactions entered into by theSub-Advisors on behalf of the Funds with select counterparties. ISDA Master Agreements maintain provisions for general obligations, representations, agreements, collateral posting and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. In limited circumstances, the ISDA Master Agreement may contain additional provisions that add counterparty protection beyond coverage of existing daily exposure if the counterparty has a decline in credit quality below a predefined level. These amounts, if any, may be segregated with a third-party custodian. The market value of OTC financial derivative instruments, collateral received or pledged, and net exposure by counterparty as of period end are disclosed in the Portfolio of Investments.
Master Securities Forward Transaction Agreements (“Master Forward Agreements”) govern certain forward settling transactions, such as TBA transactions, delayed-delivery or sale buybacks by and between theSub-Advisors on behalf of the Funds and select counterparties. The Master Forward Agreements maintain provisions for, among other things, transaction initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral. The market value of forward settling transactions, collateral pledged and/or received, and the net exposure by counterparty as of period end is disclosed in the Portfolio of Investments.
ISDA Master Agreements and Master Forward Agreements 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. Under most ISDA Master Agreements and Master Forward Agreements, collateral is routinely pledged if the total net exposure to certain transactions (net of existing collateral already in place) governed under the relevant master agreement with a counterparty in a given account exceeds a specified threshold, which typically ranges from zero to $250,000 (on a per counterparty basis) depending on the counterparty and the type of master agreement.
Collateral on OTC derivatives and centrally cleared derivatives may be in the form of cash or debt securities issued by the U.S. government or related agencies or foreign governments. Cash pledged as collateral by a Fund is reflected as cash held as collateral at the broker in the accompanying financial statements and generally is restricted from withdrawal by the Fund; securities pledged by a Fund are so noted in the accompanying Portfolio of Investments; both remain in the Fund’s assets. Securities received as collateral by counterparties are not included in the Fund’s assets because the Fund does not obtain effective control over those securities. The obligation to return cash collateral received from counterparties is included as a liability in the accompanying financial statements. Collateral posted or received by the Fund may be held in a segregated account at the respective counterparty or Fund’s custodian. For OTC derivatives, collateral posted or received by the Fund is held in a segregated account at the respective counterparty or Fund’s custodian.
Market and Credit Risk:
A Fund’s investments in financial instruments expose the Fund to various risks such as, but not limited to, interest rate, foreign currency, foreign securities, forward settling transactions 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.
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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, 2020, 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.
Many debt securities, derivatives and other financial instruments utilize the London Interbank Offered Rate (“LIBOR”) as the reference or benchmark rate for variable interest rate calculations. In July 2017, the UK Financial Conduct Authority announced that after 2021 it will cease its active encouragement of UK banks to provide quotations needed to sustain LIBOR, suggesting that LIBOR may cease to be published after that time. Financial industry groups have begun planning for a transition to the use of a different benchmark, but there are obstacles to converting certain longer term securities and transactions to a new benchmark. The transition process might lead to increased volatility and illiquidity in markets that currently rely on the LIBOR to determine interest rates, a reduction in the values of some LIBOR-based investments, and reduced effectiveness of certain hedging strategies, which may adversely affect a Portfolio’s performance or net asset value. Since the usefulness of LIBOR as a benchmark could deteriorate during the transition period, these effects could occur prior to the end of 2021. In addition, the alternative reference or benchmark rate may be an ineffective substitute resulting in prolonged adverse market conditions for a Portfolio.
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.
Foreign(non-U.S.) securities in this report are classified by the country of risk of a holding. Investments in foreign securities, including depositary receipts, involve risks not associated with investment in U.S. securities. Foreign markets may be less liquid, more volatile and subject to less government supervision and regulation than U.S. markets. Differences between U.S. and foreign legal, political and economic systems, regulatory regimes and market practices also may impact security values, and it may take more time to clear and settle trades involving foreign securities. In addition, foreign operations or holding can involve risks relating to conditions in foreign countries.
Forward settling transactions and forward foreign currency contracts involve elements of both market and credit risk in excess of the amounts reflected in the Statements of Assets and Liabilities. They are executed directly with the counterparty and not through an exchange and can be terminated only by agreement of both parties to such contracts. With respect to such transactions there is no daily margin settlement. There is also the risk that the security will not be issued or that the other party to the transaction will not meet its obligations. If this occurs, the Fund may lose both the investment opportunity for its assets if set aside to pay for the security and any gain in the security.
The market values of the Fund’s investments may decline due to general market conditions which are not specifically related to a particular company or issuer, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and
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April 30, 2020 (Unaudited)
competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities, although under certain market conditions fixed income securities may have comparable or greater price volatility. Credit ratings downgrades may also negatively affect securities held by a Fund. Even when markets perform well, there is no assurance that the investments held by a Fund will increase in value along with the broader market. In addition, market risk includes the risk that geopolitical events will disrupt the economy on a national or global level.
A Fund will be exposed to credit risk to parties with whom it trades and will also bear the risk of settlement default. A Fund seeks to minimize concentrations of credit risk by undertaking transactions with a large number of counterparties on recognized and reputable exchanges, where applicable. A Fund could lose money if the issuer or guarantor of a fixed income security, or the counterparty of a financial derivatives contract, repurchase agreement or a loan of portfolio securities or other transactions, is unable or unwilling, or is perceived (whether by market participants, rating agencies, pricing services or otherwise) as unable or unwilling to make timely principal and/or interest payments, or otherwise honor its obligations. Securities are subject to varying degrees of credit risk, which are often reflected in credit ratings.
Certain Funds may invest in below investment grade high-yield securities (commonly known as “junk bonds”). These securities are considered to be high risk investments. Securities rated below investment grade are speculative in nature, involve greater risk of default by the issuing entity and may be subject to greater market fluctuations than higher rated fixed income securities because such securities are generally unsecured and subordinated to other creditors’ claims. The retail secondary market for these “junk bonds” may be less liquid than that of higher rated securities and adverse economic conditions could make it difficult to sell certain securities or could result in lower prices than those used in calculating the Fund’s NAV.
Because certain Funds invest in affiliated mutual funds, unaffiliated investment companies or ETFs, the Funds indirectly bear a portion of the fees and 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 exclusively invests directly in individual stocks and bonds. The Fund’s net asset value is subject to fluctuations in the net asset values of the underlying funds and the market values of the ETFs. The Funds are also subject to certain risks related to the underlying funds’ and ETFs’ investments in securities and financial instruments (such as fixed income securities, including high yield, asset-backed and mortgage-related securities, equity securities, foreign and emerging markets securities, commodities and real estate securities) and the ability of the Fund to meet its investment objective will directly depend on the ability of the underlying fund or ETF to meet its investment objective. With respect to the Fund’s investments in ETFs, there is also the risk that an ETF’s performance may not match that of the relevant index. It is also possible that an active trading market for an ETF may not develop or be maintained, in which case the liquidity and value of the Fund’s investments in the ETF could be substantially and adversely affected. The extent to which the investment performance and risks associated with the Fund correlate to those of a particular underlying fund or ETF will depend upon the extent to which the Fund’s assets are allocated from time to time for investment in the underlying fund or ETF, which will vary.
Offsetting Assets and Liabilities:
The Funds may be subject to various netting arrangements with select counterparties (“Master Agreements”). Master Agreements govern the terms of certain transactions, and are intended to reduce the counterparty risk associated with relevant transactions by specifying credit protection mechanisms and providing standardization that is intended to improve legal certainty. As the Master Agreements are specific to unique operations of different asset types, they allow a Fund to close out and net its total exposure to counterparty in the event of a default with respect to all the transactions governed under a single Master Agreement with a counterparty. For financial reporting purposes the Statement of Assets and Liabilities generally show derivative assets and liabilities on a gross basis, which reflects the full risks and exposures prior to netting.
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April 30, 2020 (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: | | Investment Advisory Fees |
1290 Retirement 2020 | | 0.500% of average daily net assets |
1290 Retirement 2025 | | 0.500% of average daily net assets |
1290 Retirement 2030 | | 0.500% of average daily net assets |
1290 Retirement 2035 | | 0.500% of average daily net assets |
1290 Retirement 2040 | | 0.500% of average daily net assets |
1290 Retirement 2045 | | 0.500% of average daily net assets |
1290 Retirement 2050 | | 0.500% of average daily net assets |
1290 Retirement 2055 | | 0.500% of average daily net assets |
1290 Retirement 2060 | | 0.500% of average daily net assets |
| | | | | | | | | | | | | | | | | | | | |
| | | (as a percentage of average daily net assets) | |
Funds: | | First
$1 Billion | | | Next
$1 Billion | | | Next
$3 Billion | | | Next
$5 Billion | | | Thereafter | |
1290 DoubleLine Dynamic Allocation | | | 0.750 | % | | | 0.700 | % | | | 0.675 | % | | | 0.650 | % | | | 0.625 | % |
1290 GAMCO Small/Mid Cap Value | | | 0.750 | | | | 0.700 | | | | 0.675 | | | | 0.650 | | | | 0.625 | |
1290 Global Talents | | | 0.800 | | | | 0.750 | | | | 0.725 | | | | 0.700 | | | | 0.675 | |
1290 SmartBeta Equity | | | 0.700 | | | | 0.650 | | | | 0.625 | | | | 0.600 | | | | 0.575 | |
| | | | | | | | | | | | | | | | |
| | | (as a percentage of average daily net assets) | |
Funds: | | First
$4 Billion | | | Next
$4 Billion | | | Next
$2 Billion | | | Thereafter | |
1290 Low Volatility Global Equity | | | 0.500 | % | | | 0.490 | % | | | 0.480 | % | | | 0.470 | % |
1290 Multi-Alternative Strategies | | | 0.500 | | | | 0.490 | | | | 0.480 | | | | 0.470 | |
| | | | | | | | | | | | |
| | | (as a percentage of average daily net assets) | |
Funds: | | First
$4 Billion | | | Next
$4 Billion | | | Thereafter | |
1290 Convertible Securities | | | 0.700 | % | | | 0.680 | % | | | 0.660 | % |
1290 Diversified Bond | | | 0.600 | | | | 0.580 | | | | 0.560 | |
1290 High Yield Bond | | | 0.600 | | | | 0.580 | | | | 0.560 | |
On behalf of the Trust, the Adviser has entered into an investmentsub-advisory agreement(“Sub-Advisory Agreements”) with each of theSub-Advisers. Each of theSub-Advisory Agreements obligates theSub-Advisers for the respective Funds to: (i) continuously furnish investment programs for the Funds; (ii) place all orders for the purchase and sale of investments for the Funds with brokers or dealers selected by the Adviser or the respectiveSub-Advisers; and (iii) perform certain limited related administrative functions in connection therewith. The Adviser pays the expenses of providing investmentsub-advisory services to the Funds, including the fees of theSub-Advisers of each Fund.
In addition to the advisory fee, each Fund pays the Administrator its proportionate share of an asset-based administration fee, which is equal to an annual rate of the greater of 0.15% of each Fund’s average daily net assets, or $30,000 per Fund (or $30,000 for each allocated portion (or sleeve) of a Fund, as applicable). The Administrator has contracted with theSub-Administrator to provide, pursuant to asub-administration agreement, the Funds with certain administrative services, including monitoring of Fund compliance and Fund accounting services.
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April 30, 2020 (Unaudited)
The Trust, on behalf of the Funds, has entered into a distribution agreement (the “Distribution Agreement”) with ALPS Distributors, Inc. (“ALPS” or the “Distributor”), under which ALPS serves as Distributor for each Fund’s Class A, Class I, Class R and Class T shares. The Board has approved Distribution Plans pursuant to Rule12b-1 under the 1940 Act for Class A, Class R and Class T shares for each Fund. Pursuant to the Distribution Plans, the Funds will pay the Distributor annual fees at the following rates:
| | | | |
Share Class: | | Distribution Fee and/or Service Fee
(as a % of average daily net
assets attributable to the class) | |
Class A | | | 0.25 | % |
Class R | | | 0.50 | |
Class T* | | | 0.25 | |
| * | The Distribution Fees for Class T shares are currently being waived. This waiver is voluntary and could be eliminated at any time at the discretion of the Distributor. The amounts waived for the six months ended April 30, 2020 are included in Waiver from distributor on the Statement of Operations for each Fund and are not eligible for recoupment. |
The Trust, on behalf of the Funds, has entered into a transfer agency and service agreement (the “Transfer Agency Agreement”) with DST Asset Manager Solutions, Inc. (“DST”). Pursuant to the Transfer Agency Agreement, DST is responsible for, among other things, the issuance, transfer and redemption of shares, the opening and maintenance of shareholder accounts, the handling of certain communications between shareholders and the Trust, and the payment of dividends and distributions payable by the Funds. Under the Transfer Agency Agreement, DST receives a monthly fee comprised of a fixed base fee plus a fee computed on the basis of the number of shareholder accounts it maintains for the Trust during the month.
The Trust, on behalf of the Funds, has entered into a custody agreement (the “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 intosub-custodian agreements with a number of foreign banks and clearing agencies, pursuant to which Fund securities purchased outside the United States are maintained in the custody of these entities. At period end, certain of the Funds maintain significant cash balances with the Custodian or its affiliates. These balances are presented as cash on each Fund’s Statement of Assets and Liabilities.
The Adviser has contractually agreed to limit the expenses of certain Funds (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses (other than offering costs), fees and expenses of other investment companies in which a Fund may invest (except as noted in the table below),12b-1 fees and extraordinary expenses not incurred in the ordinary course of such Fund’s business) through April 30, 2021 (unless the Board consents to an earlier revision or termination of this arrangement) (“Expense Limitation Agreement”), pursuant to which the Adviser has agreed to make payments or waive or limit its fees so that the total annual operating expenses do not exceed the following annual rates:
| | | | |
Funds: | | Total Expense Limited
For All Share Classes to
(% of daily net assets) | |
1290 Convertible Securities | | | 0.90 | % |
1290 Diversified Bond | | | 0.50 | |
1290 DoubleLine Dynamic Allocation* | | | 0.95 | |
1290 GAMCO Small/Mid Cap Value* | | | 1.00 | |
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| | | | |
Funds: | | Total Expense Limited
For All Share Classes to
(% of daily net assets) | |
1290 Global Talents | | | 1.00 | % |
1290 High Yield Bond | | | 0.75 | |
1290 Low Volatility Global Equity* | | | 0.65 | |
1290 Multi-Alternative Strategies* | | | 1.40 | |
1290 Retirement 2020* | | | 0.65 | |
1290 Retirement 2025* | | | 0.65 | |
1290 Retirement 2030* | | | 0.65 | |
1290 Retirement 2035* | | | 0.65 | |
1290 Retirement 2040* | | | 0.65 | |
1290 Retirement 2045* | | | 0.65 | |
1290 Retirement 2050* | | | 0.65 | |
1290 Retirement 2055* | | | 0.65 | |
1290 Retirement 2060* | | | 0.65 | |
1290 SmartBeta Equity | | | 0.90 | |
| * | Includes fees and expenses of other investment companies in which the Fund invests. |
The Adviser 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 the Adviser the advisory fees waived or other expenses assumed and paid for by the Adviser pursuant to the Expense Limitation Agreement within three years of payments or waivers being recorded, provided such Fund has reached a sufficient asset size to permit such reimbursement to be made without causing the total annual expense ratio of each Fund to exceed the percentage limits mentioned above for the respective period. Consequently, no reimbursement by a Fund will be made unless the Fund’s total annual expense ratio is less than the respective percentages stated above for the respective period. Any reimbursement, called recoupment fees on the Statement of Operations of the Fund, will be based on the earliest fees waived or assumed by the Adviser. During the six months ended April 30, 2020, the Funds did not incur recoupment fees. At April 30, 2020, under the Expense Limitation Agreement, the amount that would be recoverable from each Fund is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | Amount Eligible Through | | | Total Eligible
ForReimbursement | |
Funds: | | 2020 | | | 2021 | | | 2022 | | | 2023 | |
1290 Convertible Securities | | $ | — | | | $ | — | | | $ | 149,972 | | | $ | 96,672 | | | $ | 246,644 | |
1290 Diversified Bond | | | 180,112 | | | | 350,461 | | | | 436,563 | | | | 332,370 | | | | 1,299,506 | |
1290 DoubleLine Dynamic Allocation | | | — | | | | — | | | | 229,925 | | | | 134,746 | | | | 364,671 | |
1290 GAMCO Small/Mid Cap Value | | | 118,865 | | | | 292,540 | | | | 407,167 | | | | 178,883 | | | | 997,455 | |
1290 Global Talents | | | 102,910 | | | | 196,463 | | | | 210,795 | | | | 97,599 | | | | 607,767 | |
1290 High Yield Bond | | | — | | | | — | | | | 227,837 | | | | 128,295 | | | | 356,132 | |
1290 Low Volatility Global Equity | | | 75,273 | | | | 138,255 | | | | 133,039 | | | | 53,321 | | | | 399,888 | |
1290 Multi-Alternative Strategies | | | 94,583 | | | | 141,540 | | | | 152,126 | | | | 73,470 | | | | 461,719 | |
1290 Retirement 2020 | | | 79,086 | | | | 139,205 | | | | 148,122 | | | | 64,329 | | | | 430,742 | |
1290 Retirement 2025 | | | 79,114 | | | | 140,647 | | | | 164,119 | | | | 76,884 | | | | 460,764 | |
1290 Retirement 2030 | | | 78,760 | | | | 136,903 | | | | 137,980 | | | | 57,018 | | | | 410,661 | |
1290 Retirement 2035 | | | 79,121 | | | | 139,321 | | | | 143,164 | | | | 60,857 | | | | 422,463 | |
1290 Retirement 2040 | | | 79,194 | | | | 136,054 | | | | 133,015 | | | | 53,601 | | | | 401,864 | |
1290 Retirement 2045 | | | 79,786 | | | | 138,025 | | | | 137,163 | | | | 56,457 | | | | 411,431 | |
1290 Retirement 2050 | | | 79,225 | | | | 136,781 | | | | 133,264 | | | | 53,355 | | | | 402,625 | |
1290 Retirement 2055 | | | 79,272 | | | | 136,944 | | | | 132,927 | | | | 52,694 | | | | 401,837 | |
1290 Retirement 2060 | | | 79,304 | | | | 136,329 | | | | 133,636 | | | | 52,696 | | | | 401,965 | |
1290 SmartBeta Equity | | | 116,779 | | | | 208,207 | | | | 236,252 | | | | 110,416 | | | | 671,654 | |
173
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Continued)
April 30, 2020 (Unaudited)
During the six months ended April 30, 2020, EIM voluntarily waived fees for certain Funds. These amounts are included in Voluntary waiver from investment adviser on the Statement of Operations for each Fund and are 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, 2020, 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 | | $ | 3,653 | | | $ | — | | | $ | — | |
1290 Diversified Bond | | | 75,030 | | | | — | | | | — | |
1290 DoubleLine Dynamic Allocation | | | 19,196 | | | | — | | | | — | |
1290 GAMCO Small/Mid Cap Value | | | 5,752 | | | | — | | | | — | |
1290 Global Talents | | | 2,283 | | | | — | | | | — | |
1290 High Yield Bond | | | 6,595 | | | | — | | | | — | |
1290 Multi-Alternative Strategies | | | 1,220 | | | | — | | | | — | |
1290 SmartBeta Equity | | | 22,401 | | | | — | | | | — | |
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 | Compensation of Officers |
Certain trustees and officers of the Trust are also trustees, officers and/or employees of the Adviser. The Trust does not pay compensation to trustees and officers affiliated with the Adviser except for the Chief Compliance Officer, who received compensation from the Adviser, of which a portion was reimbursed by the Trust, in the amount of $753.06 for the six months ended April 30, 2020.
| Note 5 | Percentage of Ownership by Affiliates |
At April 30, 2020, the Adviser and Equitable Financial held investments in each of the Funds as follows
| | | | |
Funds: | | Percentage of
Ownership | |
1290 Convertible Securities | | | 86 | % |
1290 Diversified Bond | | | 27 | |
1290 DoubleLine Dynamic Allocation | | | 89 | |
1290 GAMCO Small/Mid Cap Value | | | 41 | |
1290 Global Talents | | | 92 | |
1290 High Yield Bond | | | 71 | |
1290 Low Volatility Global Equity | | | 85 | |
1290 Multi-Alternative Strategies | | | 61 | |
1290 Retirement 2020 | | | 99 | |
1290 Retirement 2025 | | | 97 | |
1290 Retirement 2030 | | | 99 | |
174
1290 FUNDS
NOTES TO FINANCIAL STATEMENTS (Concluded)
April 30, 2020 (Unaudited)
| | | | |
Funds: | | Percentage of
Ownership | |
1290 Retirement 2035 | | | 99 | % |
1290 Retirement 2040 | | | 99 | |
1290 Retirement 2045 | | | 99 | |
1290 Retirement 2050 | | | 100 | |
1290 Retirement 2055 | | | 100 | |
1290 Retirement 2060 | | | 100 | |
1290 SmartBeta Equity | | | 39 | |
| Note 6 | – COVID – 19 Impact |
The extent of the impact of the coronavirus(“COVID-19”) outbreak on the financial performance of the Trust’s investments will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions and the impact ofCOVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Trust’s investment results may be materially adversely affected.
| Note 7 | - Subsequent Events |
The Adviser evaluated subsequent events from April 30, 2020, the date of these financial statements, through the date these financial statements were issued. At a meeting held on April21-22, 2020, the Trust’s Board, upon the recommendation of the Adviser, approved a Plan of Liquidation and Termination under which 1290 Convertible Securities Fund, 1290 Global Talents Fund and 1290 Low Volatility Global Equity Fund will liquidate and terminate. It is expected that the liquidations will take place on or about July 31, 2020. In anticipation of the liquidation, each liquidating Fund will close to new investors, effective on May 1, 2020. In addition, each liquidating Fund will sell its portfolio holdings in an orderly manner to convert its assets to cash.
175
LIQUIDITY RISK PROGRAM (UNAUDITED)
Consistent with Rule22e-4 under the 1940 Act, the Funds have established a liquidity risk management program to govern their approach to managing liquidity risk (the “Program”). The Board has approved the designation of the Funds’ Adviser as the program administrator (the “Program Administrator”). The Program Administrator is responsible for implementing and monitoring the Program and has formed a Liquidity Risk Management Committee (the “Committee”) to assess and review, on an ongoing basis, each Fund’s liquidity risk. The Program includes a number of elements that support the management and assessment of liquidity risk, including an annual assessment of liquidity risk factors and the periodic classification (orre-classification, as necessary) of a Fund’s investments into categories (highly liquid, moderately liquid, less liquid and illiquid) that reflect the Committee’s assessment of the investments’ liquidity under current market conditions. The Committee also utilizes Fund-specific data including information about a Fund’s investment strategy, the characteristics of its investments, and historical redemptions to determine whether a Fund will be able to meet its redemption obligations in a timely manner.
At a meeting of the Board held on April21-22, 2020, the Trustees received a report from the Committee addressing the operations of the Program and assessing its adequacy and effectiveness of implementation. The report concluded that based on its experience administering the Program, the Program Administrator considers the Program to be operating effectively to assess and manage each Fund’s liquidity risk, including during any periods of market volatility and net redemptions, and believes that the Program has been and continues to be adequately and effectively implemented to monitor and respond to the Funds’ liquidity developments.
During the period covered by this report, the Program supported the Funds’ ability to honor redemption requests in accordance with their obligations and the Program Administrator’s management of each Fund’s liquidity risk, including during any periods of market volatility and net redemptions. There can be no assurance that the Program will achieve its objectives under all circumstances in the future. Please refer to your Fund’s prospectus for more information about the Fund’s exposure to liquidity risk and other risks.
176
QUARTERLY PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Previously, this information was filed on Form N-Q. These filings are available on the Securities and Exchange Commission’s website at http://www.sec.gov.
177
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Visit the Funds’ Website: 1290Funds.com | |  |
| | |
| Must be accompanied or preceded by a Prospectus. 1290 Funds are distributed by ALPS Distributors, Inc. | | DFIN#146764 |
© 2020 Equitable Holdings, Inc. All rights reserved.
1290 Avenue of the Americas, New York, NY 10104.
Equitable Financial 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 thisForm N-CSR.
| Item 7. | Disclosure of Proxy Voting Policies and Proceduresfor Closed-End Management Investment Companies. |
Not applicable.
| Item 8. | Portfolio Managersof Closed-End Management Investment Companies. |
Not applicable.
| Item 9. | Purchases of Equity Securitiesby Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
| Item 10 | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
| Item 11 | Controls and Procedures. |
| (a) | The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined inRule 30a-3(c) under the Investment Company Act of 1940, as amended (“1940 Act”)) are effective as of a date within 90 days prior to the filing date of this report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required byRule 30a-3(b) under the 1940 Act andRule 15d-15(b) under the Securities Exchange Act of 1934, as amended. |
| (b) | The registrant’s certifying officers are not aware of any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| Item 12. | Disclosure of Securities Lending Activitiesfor Closed-End Management Investment Companies. |
Not Applicable.
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 |
| | Chief Executive Officer |
| | June 29, 2020 |
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 |
| | Chief Executive Officer |
| | June 29, 2020 |
| |
| By: | | /s/ Brian E. Walsh |
| | Brian E. Walsh |
| | Chief Financial Officer |
| | June 29, 2020 |
