Get documents about "CIS Corporate Bond Income Trust Manager's Report - PDF
Document Sample
CIS Corporate Bond Income Trust
Manager’s Report
Please call 08457 46 46 46 if you would like to receive this
information in an alternative format such as large print or Braille.
The Co-operative Asset Management is a brand name used by CIS Unit Managers Limited.
CIS Unit Managers Limited is authorised and regulated by the Financial Services Authority.
Registered Office: Miller Street, Manchester M60 0AL. Registered in England and Wales number 2369965.
This report is issued by The Co-operative Asset Management on behalf of CIS Unit Managers Limited. Any advice from
Co-operative Financial Advisers will relate only to a range of the products and services available from members of the
CFS Marketing Group and a limited number of other companies.
Interim Report
We like our communications to have an impact on you – but not on the environment. Which is why this is 28th February 2009
MR6i 04/09
printed using vegetable oil-based inks on 80% recycled paper (with 60% from post-consumer waste) with the remaining
20% produced from Forest Stewardship Council certified sources. This paper is made in a totally chlorine-free process.
I’m not finished! Please recycle me.
92943_CIS_MR6I.indd 1-2 17/4/09 13:25:14
The Co-operative Asset Management Investment Objective
The fund management activities of The Co-operative our members and we have a tradition of upholding The CIS Corporate Bond Income Trust aims to produce a regular income from a portfolio of fixed
Financial Services (part of The Co-operative Group) co-operative values which include fairness, honesty interest securities.
are undertaken by The Co-operative Asset and social responsibility. The Co-operative Asset
Management. We specialise in UK equities and are Management offers a distinctive responsible
one of the UK’s leading socially responsible fund investment approach which fully integrates
managers with a long and successful history of consideration of financial and ESG (environmental, Investment Review and Outlook
managing our customers’ money. social and governance) issues throughout the
investment process. We manage a range of unit
The Co-operative was voted the UK’s most ethical During the six months ended 28th February 2009, background of rising default rates and low growth
trust portfolios, including the Corporate Bond
brand in 2007 and 2008 in the GFK NOP Ethics the total return on this fund, including income and this looks set to continue for much of this year.
Income Trust, and have long-standing experience
Brands Survey. As a co-operative, we are owned by distributed, was -8.00%, compared with the peer
that few others can match. In the UK, the FTSE 100 index fell by around 32%
group median of -12.79%.
and, in the USA, the Dow Jones by around 39%.
CIS Unit Managers The period was characterised by a continuation The majority of these falls were seen in the early
of the global credit crunch, stemming originally part of the period, in the wake of the collapses
Trustee Status Directors of the Manager from weakness in the housing market in the USA, of Lehman Brothers and Bradford & Bingley.
The Trustee is State Street Trustees Limited which M.A. Summerfield (Chairman) thence into the subprime mortgage market and into Despite the efforts of the authorities to provide
holds the title to the Trust’s investments on behalf M.D. Fairbairn the structured and securitised lending markets. the financial system with liquidity, investors
of unitholders. The CIS Corporate Bond Income R.T. Goddard Central Banks were forced into aggressive rate are concerned about the immediate course for
Trust is a “wider-range” investment under the P. Sharman cuts and had to step in to provide ever-increasing global economies and are reluctant to commit
Trustee Investments Act 1961. It is an authorised substantial amounts of support to their financial their valuable cash resources to investments at
unit trust scheme under Chapter III of the Financial
Trustee
systems. At the beginning of the period, Lehman the present. Over the period, the Trust has been
Services and Markets Act 2000 and is categorised State Street Trustees Limited Brothers defaulted in the US and Bradford & maintaining its weighting in government stock
as a UCITS scheme under the Financial Services 525 Ferry Road Bingley was taken into receivership by the Bank of whilst increasing its exposure to top quality bonds
Authority New Collective Investment Schemes Edinburgh EH5 2AW England. Financial institutions in general and high at the expense of lower-rated credits.
Sourcebook. Copies of the Trust Deed may be Authorised and regulated by the Financial street banks in particular came under pressure
Services Authority. We take a long-term view in the investment
inspected at the offices of the Manager: to take huge write-downs on their investment
of your savings. As you would expect with this
CIS Building, Miller Street, Manchester. portfolios and increase their capital bases in order
Registrar style of investment, the individual holdings will
to access relief funds provided by the authorities.
Manager CIS Unit Managers Limited change to conform with the income and maturity
As a result, the UK government acquired majority
CIS Unit Managers Limited P.O. Box 105, Manchester M4 8BB requirements of the Trust but the broad investment
stakes in both Royal Bank of Scotland and Lloyds
P.O. Box 105 criteria will change only infrequently. We invest
Auditors Banking Group. Furthermore, the global economic
solely on the basis of the long-term ability of a
Manchester M4 8BB climate deteriorated sharply, with many of the
KPMG LLP company to service its debt and any change to the
Authorised and regulated by the Financial Services major worldwide economies experiencing technical
Chartered Accountants outlook for a company’s profitability may affect that
Authority, and a member of the Investment recession. Falling equity markets impacted credit
1 The Embankment prospect. Prices of corporate bonds are influenced
Management Association. spreads which, in the UK, widened to levels
Neville Street, Leeds LS1 4DW by a number of factors. At the macro level, they
not previously experienced. Corporate earnings
change with movements in interest rates and the
and dividends came under pressure against a
2 3
92943_CIS_MR6I.indd 3-4 17/4/09 13:25:15
Investment Review and Outlook Investment Review and Outlook
absolute level of yields in the Government Bond (gilt) levels. House prices continue to weaken after a announced a sizeable fiscal stimulus package and is
market. At the micro level, they can be affected long cyclical uptrend whilst employment prospects now expanding lending to galvanise housebuilding
by changes in profitability, takeovers or mergers are not helped by the weakening of the general and property development. Economic growth for
and acquisitions, and breaches of covenants in the economy. Most commentators expect further China in 2009 is forecast to be a relatively healthy
relevant Trust Deeds. economic weakness with both the IMF and British 8% and with its stronger financial backing looks well
Chamber of Commerce anticipating domestic output positioned to support global economic activity in the
Economic review to fall 3.0% in the current year. Interest rates are difficult years that lie ahead.
The period under review has been characterised expected to remain near zero for some time.
by a sharp and synchronised deceleration in global Outlook for Sterling Corporate Bonds
The US economy fell by an annualised rate of 6.1% The collapse of equity markets and the dramatic
growth caused in the main by the growing fragility of
in the final quarter of 2008, a rate of decline not widening of credit spreads have had a substantial
the Western banking system. The fall in US housing
experienced since 1982. US consumers are overly effect on investor sentiment. It seems likely that
prices since 2006 has created an increasing level
indebted and are seeing a significant negative the credit crunch still has some way to go and that
of bad debts in the banking system, highlighting
wealth affect due to falling domestic housing prices the recession currently being experienced may
that most Western banks had raised lending levels
and equity assets. The US unemployment rate has be both deeper and longer-lasting than originally
to unsustainable levels. Fears over the health of
now reached 8.1%, with employment numbers expected. Despite the dramatic widening of credit
the financial system culminated in the demise of
currently falling an average of 600 000 per month. spreads, it seems likely that there may yet be further
Lehman Brothers, a US investment bank, and a
US authorities continue to be forceful in looking to disappointment to come. Nevertheless, good quality
realisation that many banks were insufficiently
stem the economic fall-out. Interest rates have been defensive companies in sectors such as utilities,
capitalised to continue in their present form.
slashed to 0.25% and the new administration has telecoms and healthcare are still looking to raise
Bad debts within the banking systems caused
announced a fiscal stimulus package of $790bn money and the Trust will seek to take advantage
a sharp withdrawal of credit resulting in a
equivalent to 5% of GDP. The authorities are of new issues in the sterling market as they arise.
significant contraction in global economic
contemplating the direct printing of money but In the meanwhile, the portfolio will continue to have
activity. The response of many Central Banks
are still battling to save the financial system. exposure to investments that offer solid prospects,
and governments has been immediate, with
Until the banking system is stabilised, the underlying especially those which display good cash flows and
announcements of significant monetary and
economy will remain pressured. low refinancing requirements.
fiscal stimulus programmes combined with the
possibility of unconventional policy measures, such Elsewhere, the turndown in US economic activity
as quantitative easing designed to directly reflate has led to dire economic implications for economies
economic activity through an expansion of the which had previously prospered when the US was
money supply. the driving force behind global growth. The impact
has been greatest on economies such as Germany,
In the UK, the Monetary Policy Committee
Japan and Korea which retain a sizeable
reduced rates over the period from 5% to 1%,
manufacturing base and which have been hard hit
the lowest level in the Bank’s 300-year history.
by a slowdown in international trade. China remains
Nevertheless, Q4 GDP fell at an alarming rate of
the most resilient sizeable international economy
1.5% leaving GDP for the year up just 0.7%.
although, even here, growth is likely to fall from
The UK remains mired in debt, particularly in the
levels of 2008. The Chinese government has recently
banking system where it remains at unsustainable
4 5
92943_CIS_MR6I.indd 5-6 17/4/09 13:25:15
Performance Record Statement of Total Return
for the period ended 28th February 2009
2009 2008
Unit prices
Notes £ £ £ £
Units, which are exclusively income units, were initially offered to the public at £1. The highest buying and
selling prices during each calendar year from launch date to the end of this accounting period were as follows: Net (losses) on investments 2 (37,659,273) (13,142,460)
Highest buying Lowest selling Distribution Income 3 9,181,768 10,640,877
(pence per unit)
Expenses 4 (1,600,097) (1,938,867)
1st Jan 2004 to 31st Dec 2004 104.1p 93.43p 4.8120
Finance costs: Interest 6 – –
1st Jan 2005 to 31st Dec 2005 105.3p 96.34p 4.5998 Net income before taxation 7,581,671 8,702,010
1st Jan 2006 to 31st Dec 2006 106.1p 94.33p 4.3840 Taxation 5 – –
1st Jan 2007 to 31st Dec 2007 99.26p 88.17p 4.1486 Net income after
1st Jan 2008 to 31st Dec 2008 95.41p 81.33p 3.9996 taxation for the period 7,581,671 8,702,010
1st Jan 2009 to 28th Feb 2009 81.78p 73.92p 1.0200 Total return for the period (30,077,602) (4,440,450)
Finance costs:
Distributions 6 (10,009,838) (10,701,135)
Price information Selling price Buying price Estimated gross Estimated gross
(pence per unit) (pence per unit) distribution yield underlying yield Net (decrease) in
unitholders’ funds from
31st August 2006 95.97 101.0 5.52% 3.80% investment activities (40,087,440) (15,141,585)
31st August 2007 89.58 94.29 5.68% 4.47%
29th August 2008 83.98 88.40 5.90% 5.40%
27th February 2009 75.30 79.26 5.80% 5.70% Statement of Change in Unitholders’ Net Assets
for the period ended 28th February 2009
Trust details Total net
Total units in issue Net asset value per unit
asset value
2009 2008
31st August 2006 £368,563,417 386,089,000 95.46p
£ £ £ £
31st August 2007 £381,959,761 427,307,000 89.39p
Net assets at the start of the period 335,833,833 381,959,761
31st August 2008 £335,833,833 401,457,000 83.65p
Movement due to sales and
28th February 2009 £288,175,730 391,509,000 73.61p repurchase of units
Amounts received on creation of units 6,692,109 446,591
It should be remembered that past performance is not a reliable indicator of future performance and that the
Amounts paid on cancellation of units (14,262,915) (11,278,954)
value of units, and the income derived from them, can vary. The net asset value per unit does not include the
(7,570,806) (10,832,363)
income which has been distributed at the end of the financial year and therefore will not match the unit price
at the end of the year. Net (decrease) in unitholders’ funds from
investment activities (see above) (40,087,440) (15,141,585)
Total Expense Ratio (TER) Unclaimed distributions 143 75
31st August 2008 1.03%
28th February 2009 1.05% Net assets at the end of the period 288,175,730 355,985,888
The TER is the ratio of the scheme’s total operating costs to its average net assets, during the period.
6 7
92943_CIS_MR6I.indd 7-8 17/4/09 13:25:15
Portfolio Statement Portfolio Statement
as at 28th February 2009 as at 28th February 2009
Holding or Market Value Percentage of Holding or Market Value Percentage of
nominal value of total net nominal value of total net
positions at assets positions at assets
28th Feb 2009 £ % 28th Feb 2009 £ %
Bonds dated up to 10 years Royal Bank of Scotland PLC 10 1/2% 01/03/13 3,400,000 3,689,987 1.28
– (52.92%, August 2008: 58.13%)
Scottish & Southern Energy 5.75% 05/02/2014 5,000,000 5,175,500 1.80
Abbey National 10.125% 04/01/2018 7,710,000 8,491,353 2.95
Scottish Power 8.375% 20/02/2017 5,500,000 6,448,524 2.24
Abbey National 11.5% 04/01/2017 4,180,000 5,081,208 1.76
Southern Water Services 7.869% 31/03/2014 5,817,000 6,377,619 2.21
Anglian Water 12.375% 07/01/2014 4,150,000 5,378,977 1.87
Standard Chartered Bank 7.75 03/04/2018 3,000,000 2,962,516 1.03
Anglo American Capital 6.875% 01/05/2018 3,500,000 3,121,016 1.08
Vodafone 4.625% 08/09/2014 5,000,000 4,998,000 1.73
Aviva PLC 9.5% 20/06/2016 5,100,000 5,657,430 1.96
Vodafone 8.125% 26/11/2018 5,000,000 5,897,790 2.05
Bank of Ireland 10.75% Sub 22/06//18 3,469,000 3,395,423 1.18
West Bromwich Building Society 6.1 05/04/2021 1,500,000 825,000 0.29
Cadbury Schweppes 7.25% 18/07/2018 3,900,000 4,255,290 1.48
152,478,661 52.92
Credit Suisse Financial Products 17/08/2015 4,050,000 2,430,013 0.84
Deutsche Telekom Intl Finance 5.62 2013 5,000,000 5,136,375 1.78
Bonds dated between 10 to 20 years
European Investment Bank 5.375% 07/06/2021 4,200,000 4,571,599 1.59
– (21.70%, August 2008: 19.34%)
European Investment Bank 6.25% 15/04/2014 5,000,000 5,665,960 1.97
Anglian Water 6.875% 21/08/2023 6,000,000 5,954,682 2.07
European Investment Bank 8.75% 25/8/2017 6,600,000 8,847,602 3.07
AT&T Inc 5.5% 2027 10,000,000 8,654,500 3.00
Friends Provident PLC 6.292% 01/07/2015 9,000,000 3,757,478 1.30
Egg Banking 6.875% 29/12/2021 5,000,000 3,503,285 1.22
General Electric Capital Corp 5.5% 2016 2,000,000 1,067,370 0.37
ENEL Societa 6.25% 20/06/2019 3,000,000 2,790,861 0.97
General Electric Capital Corp 5.5% 2021 4,000,000 3,255,256 1.13
France Telecom 8.125% 20/11/2028 4,140,000 4,952,628 1.72
Generali Finance BV 6.214% Frn Per 16/6/16 6,100,000 2,768,259 0.96
Housing Finance Corp 8.625% 2023 2,910,000 3,697,180 1.28
GHQB Ltd 12 5/8% GTD 13/3/15 1,682,000 2,381,611 0.83
HSBC 6.75% 11/09/2028 4,000,000 3,864,048 1.34
HSBC 9.875% 08/04/2018 5,650,000 6,472,324 2.25
Iberdrola 7.375% 29/01/2024 5,000,000 5,137,235 1.78
Hydro Quebec 12.625% 08/03/2015 4,600,000 6,690,887 2.32
Imperial Tobacco 8.125% 15/03/2024 2,300,000 2,275,197 0.79
Hydro Quebec 12 3/4% LN 2015 1,738,000 2,564,393 0.89
Imperial Tobacco 9% 17/02/2022 5,000,000 5,199,000 1.79
ING Bank 6.875% 29/5/2018 5,000,000 4,514,448 1.57
Nova Scotia (Province of) Canada 11.75% 2019 926,200 1,480,540 0.50
Kent Reliance BS 6.591% 07/03/2014 900,000 522,165 0.18
Quebec (Province of) Canada 12.25% 2020 1,660,000 2,793,531 0.97
Kent Reliance BS 7.875% 27/08/2016 650,000 452,958 0.16
Severn Trent Water Ltd 6% 22/01/20 2,320,000 2,409,849 0.84
Lloyds TSB 6.9625% 29/05/2015 5,000,000 4,734,530 1.64
Tesco 6.125% 24/02/2022 5,000,000 4,957,500 1.72
RBS 9.625% 22/06/15 4,600,000 4,982,232 1.73
Yorkshire Power Finance 7.25% 4/8/2028 5,000,000 4,941,800 1.71
Republic of Italy 10.5% 28/04/2014 3,750,000 4,940,903 1.71
62,611,836 21.70
Roche Holdgs 5.5% 04/03/2015 5,000,000 4,966,665 1.72
8 9
92943_CIS_MR6I.indd 9-10 17/4/09 13:25:16
Portfolio Statement Balance Sheet
as at 28th February 2009 as at 28th February 2009
Holding or Market Value Percentage of February 2009 August 2008
nominal value of total net
Notes £ £ £ £
positions at assets
28th Feb 2009 £ % Assets
Bonds dated more than 20 years and undated
Portfolio of investments 273,272,313 325,657,258
– (4.62%, August 2008: 4.85%)
Aviva 6.875% 20/5/38 2,780,000 1,964,673 0.68 Debtors 7 9,766,100 17,798,661
E.on International Finance 5.875% 2037 5,500,000 5,013,047 1.74 Cash and bank balances 8 12,662,665 3,601,444
Enel Societa 5.75% 22/06/2037 3,000,000 2,269,665 0.79 Total current assets 22,428,765 21,400,105
HSBC 7% 7/4/2038 3,950,000 4,061,828 1.41 Total assets 295,701,078 347,057,363
13,309,213 4.62 Liabilities
Government Securities – (15.56%, August 2008:
Creditors 9 (6,194,217) (10,181,348)
14.65%)
Treasury 4% 07/09/2016 1,110,000 1,175,575 0.41 Distribution payable 6 (1,331,131) (1,042,182)
Treasury 4.25% 07/06/2032 1,500,000 1,470,378 0.51 Total current liabilities (7,525,348) (11,223,530)
Treasury 4.75% 7/9/2015 19,590,000 21,677,197 7.52 Net assets
attributable to unitholders 288,175,730 335,833,833
Treasury 5% 07/03/2018 8,900,000 10,058,299 3.49
Treasury 5.75% 7/12/2009 6,000,000 6,232,350 2.15
Treasury 6% 07/12/2028 3,500,000 4,258,804 1.48
44,872,603 15.56
Portfolio of investments 273,272,313 94.80
M.A. Summerfield (Chairman) P. Sharman (Director)
Net current assets 14,903,417 5.20
16th April 2009
Net assets 288,175,730 100.00
The Manager does not have a licence to permit publication of credit ratings.
10 11
92943_CIS_MR6I.indd 11-12 17/4/09 13:25:16
Summary of Material Portfolio Changes Notes to the Financial Statements
as at 28th February 2009 as at 28th February 2009
Cost Proceeds 1 Accounting Policies
Significant Purchases Significant Sales
£000 £000 (a) The financial statements have been prepared (d) The Trust is more than 60% invested in qualifying
Treasury 6% 07/12/2018 53,483 Treasury 4% 7/3/2009 53,422 under the historical cost basis, as modified by the investments (as defined by Section 468L I.C.T.A
Treasury 4% 7/3/2009 28,440 Treasury 6% 07/12/2008 50,683 revaluation of investments, and in accordance 1988) and where applicable will pay an interest
with the Statement of Recommended Practice distribution to unitholders monthly.
Treasury 5.75% 7/12/2009 28,042 Treasury 5.75% 7/12/2009 21,819
for Authorised Funds issued by the Investment (e) The investments of the Trust have been valued at
Treasury 5% 07/03/2018 26,804 Treasury 5% 07/03/2018 16,878
Managers Association in December 2005. bid price at noon on 27th February 2009, the last
Treasury 4.75% 7/9/2015 10,131 Daily Mail & General Trust 6.375% 6,582
(b) Dividends on equities are recognised when valuation point in the accounting period.
European Investment Bank 5.375% 8,953 GEC UK Funding 5.125% 03/03/2015 6,096
the security is quoted ex-dividend. Interest on (f) In accordance with FRS 16 “Current Tax”,
European Investment Bank 8.75% 8,869 BAA 12.45% 31/3/2018 5,934
debt securities is recognised on an effective dividend income and taxation are stated
Anglian Water 6.875% 21/08/2023 5,906 E.on International Finance 6% 5,749 interest rate basis. Previous years were based on net of any associated tax credits.
European Investment Bank 6.25% 5,672 Standard Life 6.14% 29/06/2015 5,648 accruals basis and have not been recalculated.
Other income is accounted for on a receipt basis. (g) In accordance with FRS 19 “Deferred Tax”,
Imperial Tobacco 9% 17/02/2022 4,995 Treasury 5% 07/09/2014 5,568
deferred tax is fully provided for on all timing
Scottish & Southern Energy 5.75% 4,983 Standard Chartered Bank 8.103% Perp 5,276 (c) In addition to the initial charge of 5% contained in differences. Deferred tax assets are recognised to
Tesco 6.125% 24/02/2022 4,981 Daily Mail & General Trust 10% 09/04/2021 5,124 the spread, CIS Unit Managers Limited makes an the extent that they are regarded as recoverable.
Vodafone 8.125% 26/11/2018 4,969 Glencore Finance 6.5% 27/02/2019 4,800 annual management charge of 1% of the value
of the Trust, which is deducted before income
Roche Holdings 5.5% 04/03/2015 4,966 European Investment Bank 5.375% 4,773
is distributed.
Iberdrola 7.375% 29/01/2024 4,953 British Telecom 6.625% 23/06/2017 4,638
Vodafone 4.625% 08/09/2014 4,941 British Sugar 10.75% Stk 2013 4,336
Deutsche Telekom Intl Finance 5.625% 4,932 GEC UK Funding 6.75% 06/08/2018 4,141
France Telecom 8.125% 20/11/2028 4,076 Tomkins Finance 6.125% 16/09/15 3,270
HSBC 6.75% 11/09/2028 3,979 Aggregate Industries 7.25% 31/05/2016 3,178
Severn Trent Water Ltd 6% 22/01/2018 2,303 Treasury 4.25% 07/06/2032 2,925
Total cost of purchases, Total proceeds from sales,
including the above, for the period 230,520 including the above, for the period 243,652
12 13
92943_CIS_MR6I.indd 13-14 17/4/09 13:25:16
Notes to the Financial Statements Notes to the Financial Statements
for the period ended 28th February 2009 for the period ended 28th February 2009
2 Net (losses) on investments 5 Taxation
The net (losses) on investments during the period comprise: a) Analysis of charge for the period
2009 2008 No tax charge recognised in the year (2008: Nil)
£ £
Corporation tax has been provided at a rate of 20% (2008: 20%)
Non-derivative securities (37,659,273) (13,142,460)
Net (losses) on investments (37,659,273) (13,142,460)
b) Factors affecting the current tax charge for the period
The tax assessed for the period is lower than the standard rate of corporation tax in the UK for a unit trust
3 Income company (20%).
2009 2008
The differences are explained below:
£ £
2009 2008
Dividends from UK companies – 97,489
£ £
Bond income 9,110,664 10,437,409
Net income before tax 7,736,175 8,702,010
Bank interest 71,104 105,979
Corporation tax @ 20% 1,547,235 1,740,402
9,181,768 10,640,877
4 Expenses Tax deductible interest payments (1,982,614) (2,122,499)
2009 2008 Non-taxable franked investment income – (19,498)
£ £
Unrelieved management expenses 435,379 401,595
Payable to the Manager, associates of the Manager
and their agents: Current tax charge for the period (note 5a) – –
Manager’s annual charge 1,512,174 1,869,077
At the period end, there is a potential deferred tax asset of £1,150,773 (2008: £428,557) in relation to
Payable to the Trustee, associates of the Trustee
excess interest distributions. It is unlikely the fund will generate sufficient taxable profits in the future to utilise
and their agents:
these amounts and therefore no deferred tax asset has been recognised in the period or the prior period.
Trustee’s fee 34,929 40,192
Safe custody charges 47,497 25,564
Activity charges 2,395 950
84,821 66,706
Other expenses
Audit fee 3,102 3,084
3,102 3,084
1,600,097 1,938,867
14 15
92943_CIS_MR6I.indd 15-16 17/4/09 13:25:17
Notes to the Financial Statements Notes to the Financial Statements
for the period ended 28th February 2009 as at 28th February 2009
6 Finance costs 7 Debtors
Distributions February 2009 August 2008
The distributions take account of income received on the creation of units and income deducted on the £ £
cancellation of units and comprise: Outstanding sales 57,517 9,318,484
2009 2008 Accrued bond income 9,698,142 8,463,257
£ £ Bank interest 10,441 16,920
Monthly distributions 6,650,251 7,133,560 9,766,100 17,798,661
Interim distribution 1,331,131 1,411,306
8 Cash and bank balances
February 2009 August 2008
Income tax withheld at source 1,982,298 2,122,012
£ £
9,963,680 10,666,878 Cash and bank balances 12,662,665 3,601,444
Add: Income paid on liquidation of units 52,249 34,750
9 Creditors
February 2009 August 2008
Deduct: Income received on creations of units (6,091) (493)
£ £
10,009,838 10,701,135
Outstanding purchases 4,966,100 8,955,430
Interest – –
Manager's annual charge 224,620 267,349
Total finance costs 10,009,838 10,701,135
Other accrued expenses 14,660 12,776
Details of the distribution per unit are set out in the table on pages 20 to 21 Tax payments on Distributions 988,837 945,793
6,194,217 10,181,348
10 Capital Commitments disclosed in Note 4 of the accounts. By virtue of
At 28th February 2009 there were no outstanding the regulations governing authorised unit trusts,
capital commitments in respect of nil or partly paid the Manager is party to all the transactions in
securities held by the Trust. respect of units of the fund, which are
summarised in the Statement of Movement in
11 Related Parties Unitholders’ Funds.
The Manager and Trustee are related to the fund as
Any amounts due to or from the Manager and
defined by Financial Reporting Standard 8 ‘Related
Trustee at the end of the accounting period are
Party Disclosures’ and are named on page 2.
disclosed in notes 7 (Debtors) and 9 (Creditors).
Fees received by the Manager and the Trustee are
16 17
92943_CIS_MR6I.indd 17-18 17/4/09 13:25:17
Notes to the Financial Statements Notes to the Financial Statements
as at 28th February 2009 as at 28th February 2009
12 Financial Instruments Liquidity Risk Interest Rate Risk Profile of Financial Assets and Financial Liabilities
In pursuing the Fund’s aims set out on page 3, The Fund’s assets comprise mainly readily available The interest rate risk profile of the Fund’s financial assets and liabilities at 28th February 2009 compared
the Fund holds a number of financial instruments realisable securities, which can be sold to meet to the previous year end was:
which include: funding requirements if and when necessary.
Currency Floating Rate Fixed Rate Financial assets not Total
The main liability of the Fund is the redemption
• nvestment-grade corporate bonds held
I financial assets financial assets carrying interest
of any units that investors wish to sell. £ £ £ £
in accordance with the Fund’s investment
objectives and policies February 2009
Interest Rate Risk
Sterling 12,662,665 273,272,313 9,766,100 295,701,078
• ash, liquid resources and short-term
C The Fund invests in fixed and variable rate securities,
Total 12,662,665 273,272,313 9,766,100 295,701,078
debtors and creditors that arise directly any change to the interest rates relevant for particular
securities may result in either income increasing or August 2008
from its operations.
decreasing, or the Manager being unable to secure Sterling 3,601,444 325,657,258 17,798,661 347,057,363
The main risks arising from the Fund’s financial
similar returns on the expiry of contracts or the Total 3,601,444 325,657,258 17,798,661 347,057,363
instruments are market price and credit liquidity
sale of securities. In addition, changes to prevailing
risks. The manager reviews each of these risks and
rates or changes in expectations of future rates may Currency Floating Rate Financial liabilities Total
they are summarised below. These policies have financial liabilities not carrying interest
result in an increase or decrease in the value of the £ £ £
remained unchanged since the beginning of the year
securities held.
to which these financial statements relate. February 2009
In general, if interest rates rise the income potential Sterling – (7,525,348) (7,525,348)
Market Price Risk of the Fund also rises, but the value of fixed-rate Total – (7,525,348) (7,525,348)
Market risk arises mainly from uncertainty about securities will decline. A fall in interest rates will in
August 2008
future prices of financial instruments held. general have the opposite effect.
Sterling – 11,223,530 11,223,530
It represents the potential loss the Fund might suffer
through holding market positions in the face of price Total – 11,223,530 11,223,530
movements. The asset allocation of the portfolio is
reviewed in order to manage the risk associated Currency Fixed rate financial assets
with particular industry sectors whilst continuing to Weighted average interest rate Weighted average period for
which rate is fixed
follow the investment objective. An individual fund
February 2009 August 2008 February 2009 August 2008
manager has responsibility for monitoring the existing
portfolio selected in accordance with an overall asset Sterling 7.57% 7.65% 10.8 years 13.1 years
allocation parameter and seeks to ensure that the
Fund invests in a diversified fashion, to reduce the
risk of exposure to a significant event affecting a
single security, or industry, subject to the obligation
under the Fund’s objective to invest in securities
which share certain characteristics.
18 19
92943_CIS_MR6I.indd 19-20 17/4/09 13:25:17
Distribution Table
for the month ended 30th September 2008 for the month ended 31st December 2008
Group 1 – Units purchased prior to 1st September 2008 Group 1 – Units purchased prior to 1st December 2008
Group 2 – Units purchased on or after 1st September 2008 Group 2 – Units purchased on or after 1st December 2008
Gross Income Income tax Net Income Equalisation Distribution Distribution Gross Income Income tax Net Income Equalisation Distribution Distribution
pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007 pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007
pence per unit pence per unit pence per unit pence per unit
Income units Income units
Group 1 0.3245 0.0649 0.2596 – 0.2596 0.3400 Group 1 0.4250 0.0850 0.3400 – 0.3400 0.3400
Group 2 0.2824 0.0565 0.2259 0.0337 0.2596 0.3400 Group 2 0.1654 0.0331 0.1323 0.2077 0.3400 0.3400
for the month ended 31st October 2008 for the month ended 31st January 2009
Group 1 – Units purchased prior to 1st October 2008 Group 1 – Units purchased prior to 1st January 2009
Group 2 – Units purchased on or after 1st October 2008 Group 2 – Units purchased on or after 1st January 2009
Gross Income Income tax Net Income Equalisation Distribution Distribution Gross Income Income tax Net Income Equalisation Distribution Distribution
pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007 pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007
pence per unit pence per unit pence per unit pence per unit
Income units Income units
Group 1 0.4250 0.0850 0.3400 – 0.3400 0.3400 Group 1 0.4250 0.0850 0.3400 – 0.3400 0.3690
Group 2 0.2423 0.0485 0.1938 0.1462 0.3400 0.3400 Group 2 0.2690 0.0538 0.2152 0.1248 0.3400 0.3690
for the month ended 30th November 2008 for the month ended 28th February 2009
Group 1 – Units purchased prior to 1st November 2008 Group 1 – Units purchased prior to 1st February 2009
Group 2 – Units purchased on or after 1st November 2008 Group 2 – Units purchased on or after 1st February 2009
Gross Income Income tax Net Income Equalisation Distribution Distribution Gross Income Income tax Net Income Equalisation Distribution Distribution
pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007 pence per unit pence per unit pence per unit pence per unit payable 2008 paid 2007
pence per unit pence per unit pence per unit pence per unit
Income units Income units
Group 1 0.4250 0.0850 0.3400 – 0.3400 0.3400 Group 1 0.4250 0.0850 0.3400 – 0.3400 0.3400
Group 2 0.2925 0.0585 0.2340 0.1060 0.3400 0.3400 Group 2 0.3518 0.0704 0.2814 0.0586 0.3400 0.3400
20 21
92943_CIS_MR6I.indd 21-22 17/4/09 13:25:18
Prices Prospectus
The price of the CIS Corporate Bond Income Trust is Copies of the most recent Prospectus may be
calculated using the dual pricing method, which means obtained, free of charge, from
that two dealing prices are quoted. the buying price CIS Unit Managers Limits,
is the price at which you can buy units, and the selling PO Box 105,
price is the price at which you can sell units back to Manchester M4 8BB.
the Manager.
The difference between the buying and selling prices,
currently 5%, is known as the spread. This includes
the initial management charge to cover the expense of
selling units and administration.
Full details of how the Trust is priced are contained in
the Prospectus.
It should be noted that legislation governing taxation
is liable to change. the information contained
in this report is based upon CIS Unit Managers’
understanding of the current position.
You should bear in mind that a unit trust is
a different sort of investment from a bank or
building society account. Whilst the capital in
such an account is secure, a unit is an equity
investment and its value may fluctuate.
Neither the value of the investment nor the income
from it is guaranteed.
22
92943_CIS_MR6I.indd 23-24 17/4/09 13:25:18
