# Threadneedle Monthly Extra Income Fund
### Notes to the financial statements
(continued)
Interest rate risk sensitivity
No sensitivity analysis shown as the fund has minimal exposure to interest rate
7 March 2019
Value	Commissions	Taxes
risk in relation to cash balances (2019: same).
Derivative risks
Derivatives including forward foreign exchange contracts are employed when they are the cheapest and most efficient method of gaining exposure. This increases the risk profile of the fund and may result in a higher degree of volatility. All open positions are regularly reviewed by the fund manager. The fund has
Purchases	£000	£000	%	£000	%
Bonds	23,152	–	–	–	–
Equities	8,948	4	0.05	45	0.50
Corporate actions		3,325	–	– 	–	–
Total		35,425	4	45
entered into various forward foreign exchange contracts during this accounting	
period. Such contracts commit the fund to future deliveries or receipts, typically three months forward, of assets and liabilities, at prices decided at the point of striking the contract. They therefore allow the fund manager to limit risk, or to enhance fund performance in return for the acceptance of greater risk.
At 7 March 2020, the fund had outstanding forward foreign exchange contracts with an asset value of £149,000 (2019: £203,000) and a liability value of £145,000 (2019: £57,000).
- 
###### FAIR VALUE DISCLOSURE

The fair value hierarchy is intended to prioritise the inputs that are used to measure the fair value of assets and liabilities. The fair value hierarchy has the following levels: Level 1 – Quoted prices for identical instruments in active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, pricing service etc. These include active listed equities, exchange traded derivatives etc.
Level 2 – Valuation techniques with inputs other than quoted prices within level 1 that are observable. This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data. This category will typically include debt securities and collective investments schemes. Level 3 – Prices using valuation techniques where inputs are unobservable. This category may include single or broker priced securities and suspended or unlisted securities.
2020	2019
Assets  Liabilities		 Assets Liabilities Valuation technique		£000	£000		£000	£000 Level 1	207,135		–	247,993		–
Level 2		63,400	(145)	66,198	(57)
	270,535	(145)	314,191	(57)
Included within Level 1, are debt securities of £481,000 (2019: £161,000). The valuation of some highly liquid exchange–traded debt securities (G7 sovereign debt, supranational debt or certain corporate bonds) is sufficiently close to a binding quoted price to categorise at this level.
- 
###### CONTINGENT LIABILITIES AND COMMITMENTS

There are no contingent liabilities and commitments outstanding (2019: Nil).
- 
###### PORTFOLIO TRANSACTION COSTS

7 March 2020
Value	Commissions	Taxes
| Purchases | £000 | £000 | % | £000 | % |
| --- | --- | --- | --- | --- | --- |
| Bonds | 22,913 | – | – | – | – |
| Equities | 14,235 | 8 | 0.05 | 71 | 0.50 |

Corporate actions		738	–	–    –	–
Total	  37,886	8  71
Gross purchases total:	  37,965
Value	Commissions	Taxes
Gross purchases total:		35,474
Value	Commissions	Taxes
| Sales | £000 | £000 | % | £000 | % |
| --- | --- | --- | --- | --- | --- |
| Bonds | 31,748 | – | – | – | – |

Equities	44,298	5	0.01	1	0.00
Corporate actions		1,426	–	– 	–	–
Total		77,472	5	1
Total sales net of transaction costs: 	77,466 Transaction costs as a percentage
of average Net Assets
Commissions:	0.00%
Taxes:	0.01%
Portfolio transaction costs are incurred by the fund when buying and selling underlying investments. These vary depending on the class of investment, country of exchange and method of execution.
These costs can be classified as either direct or indirect transaction costs:
Direct transaction costs: Broker commissions, fees and taxes.
Indirect transaction costs: ‘Dealing spread’ – the difference between the buying and selling prices of the fund’s underlying investments.
In order to protect existing investors from the effects of dilution, portfolio transaction costs incurred as a result of investors buying and selling shares in the fund are recovered from those investors through a ‘dilution adjustment’ to the price they pay or receive.
At the balance sheet date, the portfolio dealing spread was 0.32% (7 March 2019: 0.27%), being the difference between the respective buying and selling prices for the fund’s investments.
- 
###### POST BALANCE SHEET EVENT

Following the COVID-19 (Coronavirus) outbreak there has been an on-going period of high volatility in Global financial markets. As a result, we have witnessed significant movements in the net asset value of the Fund since the balance sheet date. During the period from the balance sheet date to 19 May 2020, the net asset value of the Fund decreased by 24.68%.
The NAV and net redemptions of shares were reviewed again on 22 May with no material movements noted since 19 May.
Subsequent to the year end, the Prudential Regulation Authority (PRA) urged caution against dividend payments and share buybacks until the end of 2020, which led to cancellation of some outstanding 2019 dividend payments. As the announcement was made after the distribution payment had been made on this fund, the income deficit caused by the cancellation of the dividends accrued on this fund were made good with a transfer of £200,000 from capital in accordance with COLL 6.7.10R(2). This caused there to be a fall in the net asset value of both income and accumulation shares.
| Share class | % Movement |
| --- | --- |
| Class 1 – Income shares | (37.94) |
| Class X – Gross accumulation shares | (90.46) |
| Class Z EUR Hedged – Accumulation shares | (23.55) |

The table below provides the net subscriptions and redemptions of shares between the year-ended 7 March 2020 and 19 May 2020 as a percentage of that share class NAV. This change is reflective of conditions that arose after the year-end and hence is considered a non-adjusting event.
| Sales | £000 | £000 | %	£000 | % |
| --- | --- | --- | --- | --- |
| Bonds | 30,441 | – | –	– | – |
| Equities | 52,491 | 9 | 0.02	1 | – |

| Corporate actions | 	171	– | – 	–	– |
| --- | --- | --- |
| Total | 	83,103	9 | 	1 |
| Total sales net of transaction costs: | 	83,093 |  |
| Transaction costs as a percentage of average Net Assets |  |  |
| Commissions: | 0.01% |  |
| Taxes: | 0.02% |  |

Translation (ENDE, 2020-03-31):
# Threadneedle Monthly Extra Income Fund
### Portfolioaufstellung
(Fortsetzung)
Portfoliotransaktionskosten entstehen dem Fonds beim Kauf und Verkauf zugrunde liegender Anlagen. Sie variieren je nach Anlagenklasse, Börsenland und Ausführungsmethode.
Diese Kosten können entweder als direkte oder als indirekte Transaktionskosten klassifiziert werden:
Direkte Transaktionskosten: Maklerprovisionen, Gebühren und Steuern. Indirekte Transaktionskosten: „Handelsspread“ – die Differenz zwischen den Kauf- und Verkaufspreisen der zugrunde liegenden Anlagen des Fonds.
Um bestehende Anleger vor den Auswirkungen der Verwässerung zu schützen, werden Portfoliotransaktionskosten, die infolge des Kaufs und Verkaufs von Anteilen des Fonds durch Anleger entstehen, von diesen Anlegern über eine
„Verwässerungsanpassung“ auf den Preis, den sie zahlen oder erhalten, wiedererlangt.
Am Bilanzstichtag betrug der Portfolio-Handelsspread 0,32 % (7. März 2019: 0,27 %), wobei es sich um die Differenz zwischen den jeweiligen Kauf- und Verkaufspreisen für die Anlagen des Fonds handelt.
- 
###### EREIGNIS NACH DEM BILANZSTICHTAG

Nach dem Ausbruch von COVID-19 (Coronavirus) gab es eine anhaltende Phase hoher Volatilität auf den globalen Finanzmärkten. Infolgedessen kam es seit dem Bilanzstichtag zu erheblichen Bewegungen beim Nettoinventarwert des Fonds. Während des Berichtszeitraums vom Bilanzstichtag bis zum 19. Mai 2020 sank der Nettoinventarwert des Fonds um 24,68 %.
Der NIW und die Nettorücknahmen von Anteilen wurden am 22. Mai erneut überprüft, wobei seit dem 19. Mai keine wesentlichen Bewegungen festgestellt wurden.
Im Anschluss an das Jahresende rief die Prudential Regulation Authority (PRA) zur Vorsicht bezüglich Dividendenzahlungen und Aktienrückkäufen bis Ende 2020 auf, was zur Streichung einiger ausstehender Dividendenzahlungen für 2019 führte. Da die Ankündigung erfolgte, nachdem die Ausschüttungszahlung für diesen Fonds erfolgt war, wurde das durch die Annullierung der für diesen Fonds aufgelaufenen Dividenden verursachte Einkommensdefizit gemäß COLL 6.7.10R(2) durch eine Überweisung von £200.000 aus dem Kapital ausgeglichen. Dies führte zu einem Rückgang des Nettovermögenswerts sowohl der Ertrags- als auch der Thesaurierungsanteile.
Die nachfolgende Tabelle zeigt die Nettozeichnungen und -rücknahmen von Anteilen zwischen dem Geschäftsjahresende am 7. März 2020 und dem 19. Mai 2020 als Prozentsatz des NIW dieser Anteilklasse. Diese Änderung spiegelt Bedingungen wider, die nach dem Geschäftsjahresende eingetreten sind, und wird daher als ein sich nicht anpassendes Ereignis betrachtet.
| Anteilklasse | % Änderung |
| --- | --- |
| Klasse 1 – Ertragsanteile | (37,94) |
| Klasse X – Bruttothesaurierungsanteile | (90,46) |
| Klasse Z in EUR abgesichert – Thesaurierungsanteile | (23,55) |