Interim Management Statement

RNS Number : 3967H

Acorn Income Fund Ld

16 May 2014

 



ACORN INCOME FUND LIMITED (the "Company")

Interim Management Statement for the period 1 January to 16 May 2014 (the "Period") as required under the Disclosure and Transparency Rule 4.3.2.

Investment Objectives and Policy Summary

The Company's investment objectives are to provide the Company's shareholders with a high income and also the opportunity for capital growth.

The Company's investments are held in two portfolios.  The Company's assets comprise investments in equities and fixed interest securities in order to achieve its investment objective. Approximately 70 percent to 80 percent of the Company's assets are invested in smaller capitalised United Kingdom companies, admitted to the Official List of the Financial Conduct Authority and traded on the London Stock Exchange or traded on the Alternative Investment Market at the time of investment.  The Company also aims to enhance income for Ordinary Shareholders by investing approximately 20 percent to 30 percent of the Company's assets in high yielding instruments which are predominantly fixed interest securities but may include up to 15 percent of the Company's overall portfolio (measured at the time of acquisition) in high yielding investment company shares.

The proportion of the overall portfolio held in the Smaller Companies Portfolio and the Income Portfolio varies from day to day as the market prices of investments move.  The Directors retain discretion to transfer funds from one portfolio to the other and generally expect between 70 percent to 80 percent of the investments to be held in the Smaller Companies Portfolio.

While the Company's investment policy is to spread risk by maintaining diversified portfolios, there are no restrictions on the proportions of either of the portfolios which may be invested in any one geographical area, asset class or industry sector. However, not more than 7.5 percent of the Company's gross assets may be invested in securities issued by any one company as at the time of investment, save that (i) in respect of the Income Portfolio only, investments may be made in other investment funds provided not more than 10 percent in aggregate of the value of the total assets of the Company at the time the investment is made will be invested in other listed closed-ended investment funds  and (ii) in respect of the Smaller Companies Portfolio only, provided that not more than 10 percent of the Company's gross assets are invested in securities issued by any one company at any time, the 7.5 percent limit may be exceeded on a short term basis, with Board approval, where a company whose securities form part of the Smaller Companies Portfolio issues new securities (for example by way of a rights issue).

The Company's capital structure is such that the underlying value of assets attributable to the Ordinary Shares is geared relative to the rising capital entitlements of the Zero Dividend Preference Shares (the "ZDP Shares"). The Company's gearing policy is not to employ any further gearing through long-term bank borrowing. Save with the prior sanction of ZDP Shareholders, the Company will incur no indebtedness other than short term borrowings in the normal course of business such as to settle share trades or borrowings to finance the redemption of the ZDP Shares.

Financial Highlights

	31 December 2013	30 April 2014	% change or return
Ordinary share NAV	359.97	369.41	2.62
Ordinary share mid price	365.00	372.50	2.05
ZDP share NAV	113.64	116.01	2.09
ZDP share mid price	121.00	123.375	1.96
Numis Smaller Companies Index Ex Investment Companies (Capital Return)	6598.70	6593.02	-0.09

Material Events and Transactions

On 6 January 2014 shareholder approval was obtained, renewing the Company's authority to buy back Ordinary Shares and ZDP Shares and to hold those shares in treasury. On 15 January 2014 the Company issued 1,725,000 Ordinary Shares and 2,315,495 ZDP Shares which were immediately bought back and held in treasury.

In addition to the above, between 1 January 2014 and 16 May 2014 the Company issued 1,165,205 Ordinary Shares and 1,564,074 ZDP Shares, raising £6.175 million through a combination of new issues sold to the market and sales out of treasury.

The Net Asset Value per Ordinary Share increased by 2.62% over the period and the total return to ordinary shareholders was 2.89%. This compared to a slight decline in the Numis Smaller Companies (ex investment companies) Index.

Issued share capital of the Company:

As at the date of this announcement, the issued share capital of the Company was 17,878,334 Ordinary Shares and 23,998,371 ZDP Shares of which the following were held in treasury:

1,335,000 Ordinary Shares

1,791,991 ZDP Shares

Dividends

The Company announced the first interim dividend in respect of the year ending 31 December 2014 on 5 February 2014 of 3.00 pence per Ordinary Share which was paid on 28 March 2014.

Largest holdings (% of Gross Assets) as at 30 April 2014:

Smaller Companies Portfolio	%
VP plc	3.38%
Cineworld Group plc	3.30%
Electrocomponents plc	3.14%
RPC Group plc	3.10%
Berensden plc	2.94%
Tyman plc	2.89%
Hill & Smith plc	2.64%
Primary Health Properties plc	2.56%
Secure Trust Bank plc	2.55%
Brewin Dolphin Holdings plc	2.53%
Income  Portfolio
Real Estate Credit Pref 8% 2017	0.69%
Ecofin Water and Power Opps 6% 2016 CULS	0.64%
GE Capital Funding 8% 2039	0.63%
Credit Suisse 7.875% 2039	0.52%
Lloyds 7.5884% 2020	0.51%
Societe General 8.25% 2018	0.46%
SVG Capital plc 8.25% 2016 CULS	0.46%
University of Cambridge  3.75% 2052	0.46%
Rabobank Nederland 6.875% 2020	0.45%
British Sky Broadcasting 3.125% 2022	0.44%
Nationwide 10.25% 2049	0.43%

For further information contact:

Premier Fund Managers Limited

Investment Adviser

Tel: [phone]

JTC Fund Managers (Guernsey) Limited

Secretary

Tel: [phone]

16 May 2014

E&OE - in transmission

 

END

 

 

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