PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT PUTM FAR EASTERN UNIT TRUST. For the half year: 1 October 2015 to 31 March 2016

Transcription

1 PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT For the half year: 1 October 2015 to 31 March 2016 PUTM FAR EASTERN UNIT TRUST

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3 Contents Investment review 2-3 Portfolio of investments 4-7 Top ten purchases and sales 8 Statistical information 9-11 Statements of total return & change in net assets attributable to unitholders 12 Balance sheet 13 Distribution table 14 Corporate information 15 1

4 Investment review Dear Investor Welcome to the PUTM Far Eastern Unit Trust interim report for the six months to 31 March Performance Review Over the review period, the PUTM Far Eastern Unit Trust returned 10.3% compared to a return of 13.4% by its sector average. (Source: Lipper, bid to bid, net income reinvested for six months to 31/03/16). In the table below, you can see how the Fund performed against its sector average over the last five discrete one year periods. Standardised Past Performance Mar Mar Mar Mar Mar % growth % growth % growth % growth % growth PUTM Far Eastern Unit Trust Sector Average Source: Lipper, bid to bid, net income reinvested to end March for each year Past performance is not a guide to future performance. The value of units and the income from them can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please note that all past performance figures are calculated without taking the initial charge into account. 2

5 Investment review Portfolio and Market Review It was a volatile six months for Asia Pacific (ex-japan) markets, as sentiment ebbed and flowed with each new data release from China. The country s services sector continues to hold up well, although manufacturing activity and exports continued to contract. The country s central bank also remains active, recently cutting the bank reserve rate. Nonetheless, the economy is slowing and this is affecting other nations in the area. South Korea has been one of the main causalities, suffering pronounced outflows as investors sought safe havens. Indian stocks also sold-off after the ruling BJP party lost the Bihar state election. It is feared the loss will hinder the passing of much-needed reforms. Tumbling commodity prices (notably oil) also continued to create winners and loser as we entered More recently, Thai stocks made an excellent start to the year, thanks to a jump in government spending. As the review period came to a close, increasingly dovish statements from the US Federal Reserve lifted markets. The oil price even staged a mini recovery, helping lift exporters like Malaysia. Turning to recent activity, we switched from Oil Search and into Interoil due to growing confidence that the latter s key gas resource will prove larger than the market currently expects. We also bought Australian nickel/gold miner Independence Group. The company is set to commission a new low-cost nickel mine at the end of 2016, which should prove profitable, especially as other mining names are forced to close due to the fall of the metal s price. We also added Singaporean-based property firm City Developments to the Fund this quarter at a deep discount, with expectations that the company would sell more assets that will create value. On the other side of the ledger, we exited SK Tell after it was downgraded by analysts due to concerns about its online-to-offline investment strategy. We prefer KT Corp in this sector. DBS Group was sold on worries about profitability in the wake of slowing loan growth and rising non-performing loans. We also exited China Menga after it announced disappointing earnings numbers. The Fund s holding in Baharat Heavy Electrical, the India power equipment supplier, had a tough quarter as investors were disappointed with its earnings numbers. They were also concerned about the size of future power projects in the country. Taiwanese contact lens maker Gink underperformed as increased competition and unfavourable product mix undermined its margins. A holding in China Taiping also dragged on the Fund s returns. On a more positive note, Taiwanese tech firm Himax did well thanks to a stronger operating performance in its core business. Growing investor enthusiasm towards the possibilities of augmented/virtual reality a sector where Himax is well placed also lifted the stock. Meanwhile, Australian electronics retailer JB Hi-Fi had a good quarter after it released better-than-expected sales numbers for the Christmas period. News that a significant competitor had fallen into administration also saw investors flock to the stock Market Outlook and Strategy We continue to have a strong presence in China/Hong Kong, contrasted by a notable underweight in ASEAN. With regards to sectors, the largest overweight remains consumer discretionary, telecoms and IT, while the Fund is underweight material, utilities and consumer staples. These positions, however, are dictated by the Manager s bottom-up stock selection process, rather than any specific sector bias. In the short term, Asia Pacific markets will continue to take their lead from global events. These include the strength of economic growth in the developed world, US Federal Reserve interest-rate policy and the possibility of a deterioration of the geopolitical landscape. The fortunes of China, including any further growth-orientated policy measures, will also continue to drive sentiment. In general, from a long-term perspective, the Asia Pacific region appears to be in a strong position. Demographics remain supportive, and the ongoing reorientation of economies away from exports towards consumption should help create more stable growth. These factors should bolster Asian equities over the coming years, making the region an attractive investment prospect for those seeking both capital gains and income. 3

6 Portfolio of investments Investments held at 31 March 2016 Market Percentage of value total net assets Holding Investment % Australia (30/09/15: 21.07%) Basic Materials 32,051 BHP Billiton 251, ,162 Independence Group 104, ,924 Syrah Resources 119, Consumer Goods 36,726 Treasury Wine Estates 187, Consumer Services 21,785 JB Hi-Fi 270, ,780 Qantas Airways 178, ,344 Wesfarmers 73, ,278 Woolworths 109, Financials 10,385 Australia and New Zealand Banking Group 129, ,097 Challenger 241, ,569 Investa Office Fund 257, ,462 National Australia Bank 579, ,365 QBE Insurance Group 192, ,778 Westpac Banking Group 659, Healthcare 2,502 CSL 134, Industrials 289,089 Spotless Group Holdings 191, Oil & Gas 5,719 Woodside Petroleum 79, Telecommunications 122,185 Telstra 346, Bermuda (30/09/15: 0.26%) 0.76 Consumer Services 2,650,000 Rexlot Holdings** 52, Utilities 96,920 China Gas Holdings 98, Canada (30/09/15: 0.00%) 0.72 Oil & Gas 6,342 Interoil 144, Cayman Islands (30/09/15: 12.19%) Consumer Goods 512,170 Geely Automobile Holdings 175, Consumer Services 1,712 Alibaba Group Holding ADR* 93, ,500 CK Hutchison Holdings 202, ,907 China Lodging Group ADR* 128, ,600 Sands China 165, ,618 Vipshop Holdings ADR* 92,

7 Portfolio of investments Investments held at 31 March 2016 Market Percentage of value total net assets Holding Investment % Financials 58,727 Cheung Kong Property Holdings 262, ,771 China Resources Land 214, Healthcare 23,000 Ginko International 159, Other Investments Technology 2,861 Baidu ADR* 377, ,712 Himax Technologies 272, ,900 JD Com ADR* 225, ,703 Tencent Holdings 590, China (30/09/15: 8.24%) 6.39 Industrials 244,200 Changsha Zoomlion 65, ,000 Shanghai Electric 161, Financials 875,504 China Construction Bank 387, ,533 China Merchants Bank H 265, ,000 Ping An Insurance H 242, Oil & Gas 341,342 China Petroleum & Chemical H 155, Hong Kong (30/09/15: 14.18%) Consumer Services 40,000 Galaxy Entertainment G 104, Financial 79,313 AIA Group 311, ,576 China Taiping Insurance Holdings 160, ,722 Hang Seng Bank 193, ,000 Wharf Holdings 159, Healthcare 197,365 CSPC Pharmaceutical 124, Industrials 120,767 China Resources Beer Holdings 154, ,183 China State Construction International Holdings 265, Technology 311,518 Lenovo Group 168, Telecommunications 59,713 China Mobile (HK) 462, ,000 China Unicom 170, India (30/09/15: 7.91%) 6.84 Basic Materials 66,469 Coal India 203, Consumer Goods 34,458 ITC 118,

8 Portfolio of investments 6 Investments held at 31 March 2016 Market Percentage of value total net assets Holding Investment % Financials 18,264 Yes Bank 165, Industrials 57,071 Bharat Heavy Industrials 68, ,798 Tata Motors 'A' 5, Oil & Gas 32,213 Bharat Petroleum 305, Technology 30,462 Infosys 389, Telecommunications 27,012 Bharti Infratel 108, Indonesia (30/09/15: 0.98%) 1.26 Consumer Goods 245,600 Astra International 92, Financials 292,929 Bank Mandiri 157, Malaysia (30/09/15: 1.05%) 1.34 Consumer Services 344,300 AirAsia 111, Telecommunications 132,900 Telekom Malaysia 155, New Zealand (30/09/15: 0.70%) 1.54 Consumer Services 84,871 SKYCITY Entertainment Group 204, Utilities 73,624 Mighty River Power 101, Papua New Guinea (30/09/15: 0.97%) 0.00 Philippines (30/09/15: 1.55%) 1.67 Financials 629,500 Ayala Land 332, Singapore (30/09/15: 2.94%) 3.80 Consumer Services 30,373 City Developments 127, Financials 158,000 CapitaLand 249, ,386 United Overseas Bank 227, Telecommunications 78,000 Singapore Telecommunications 153, South Korea (30/09/15: 14.28%) Basic Materials 1,138 LG Chemicals 226, ,146 Pohang Iron Steel (Posco) 152, Consumer Goods 2,005 Hyundai Mobis 303,

9 Portfolio of investments Investments held at 31 March 2016 Market Percentage of value total net assets Holding Investment % Consumer Services 2,508 Hyundai Department Store 210, Financials 3,161 Samsung Securities 76, ,225 Shinhan Financial Group 374, Industrials 6,759 Hyundai Development 189, Technology 1,019 Samsung Electronics 813, Samsung Electronics Preference Share 253, Telecommunications 11,542 Korea Telecom 209, Utilities 3,781 Korea Electric Power 137, Taiwan (30/09/15: 11.22%) 9.01 Basic Materials 81,246 Formosa Plastics 139, Consumer Goods 28,434 Makalot Industrial 118, Industrials 105,539 Hon Hai Precision Industries 192, Technology 4,000 Hermes Microvision 79, ,876 PChome Online 175, ,291 Pegatron 202, ,320 Taiwan Semiconductor Manufacturing 887, Thailand (30/09/15: 1.05%) 1.48 Financials 55,831 Bangkok Bank 197, Telecommunications 120,260 Total Access Communications 97, Portfolio of investments 19,231, Net other assets 704, Net assets 19,935, All investments are listed on recognised stock exchanges and are "approved securities" within the meaning of FCA rules unless otherwise stated. * ADR - American Depositary Receipt. ** This stock is currently suspended from trading. It was valued by the Manager based on information available as at 31 March

10 Top ten purchases and sales For the half year ended 31 March 2016 Purchases Cost China Merchants Bank H 257,206 Bangkok Bank 232,976 BHP Billiton 227,924 Lenovo Group 227,722 Investa Office 217,047 Pegatron 212,859 Baidu ADR 211,701 United Overseas Bank 204,711 Treasury Wine Estates 179,343 Total Access Communications 176,084 Sales Proceeds Industrial & Commercial Bank of China 417,542 Hon Hai Precision Industries 259,614 BHP Billiton 242,966 DBS Group 213,851 DEXUS Property Group 212,375 Vipshop Holdings ADR 211,688 China Mobile (HK) 202,239 Bangkok Bank 201,428 Hengan International Group 197,636 Zhuzhou CSR Times Electric 187,828 Total purchases 4,978,303 Total sales 6,231,142 8

11 Statistical information Performance record Income Accumulation Lowest Highest Lowest Highest redemption issue redemption issue price price price price Year to 31 December pence pence pence pence January to 31 March Distribution record Net distribution pence per unit* Year to 31 December Income Accumulation January to 31 March 2016 *paid during the period Accounting period statistics Total Net asset net asset Units in value per As at 30 September value ( ) issue unit in pence 2013 Income 3,772 1, Accumulation 24,973,229 4,848, Income 3,976 1, Accumulation 24,202,299 4,385, Income 8,857 2, Accumulation 19,074,881 3,787, * Income 2, Accumulation 19,933,373 3,613, ** As at 31 March 9

12 Statistical information Investment objective The objective of the Fund is to maximise the long term return, mainly through capital growth, by investment in a broadly based portfolio of securities in Far Eastern markets, including Australasia. Investment policy The Fund will primarily invest in equity shares quoted in Far Eastern Markets, excluding Japan. The Fund may hold cash and near cash assets where reasonably necessary to fund redemptions of units, for the efficient management of the Fund, or for purposes ancillary to the objectives of the Fund. It may borrow, providing such borrowing is on a temporary basis, and does not exceed the limits applicable to the Fund. Revenue distribution and pricing Units of the Fund are available as either Income units (where revenue is distributed to unitholders) or Accumulation units (where revenue is reinvested to enhance the unit price). There will be two potential distributions in each accounting year: an interim distribution as at 31 March and a final distribution as at 30 September. At each distribution the net revenue after deduction of expenses, arising in the preceding six months from the investments of the Fund is apportioned amongst the unitholders. Unitholders receive a tax voucher giving details of the distribution and the Manager s Report no later than two months after these dates. Ongoing charges figure The Ongoing Charges Figure (OCF) shows the operating expenses, annualised, of each unit class as a percentage of average net assets of that class for the preceding period. Income Accumulation % % As at 31 March As at 31 March

13 Statistical information Risk and reward profile The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund s ranking on the Risk and Reward Indicator. fi Typically lower rewards, Typically higher rewards, lower risk higher risk fi This Fund is ranked at 6 because funds of this type have experienced high rises and falls in value in the past. Although this is a high risk ranking it is not the highest. The above figure applies to the following unit classes: Income Accumulation Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. Please note the Fund s risk category may change in the future. The indicator does not take into account the following risk of investing in this Fund: Investing overseas can bring additional returns and spread risk to different markets. There are risks, however, that changes in currency rates will reduce the value of your investment. The Fund may use derivatives to reduce risk or cost or to generate additional capital or income at low risk, or to meet its investment objective. For more information on the Risk and Reward profiles of our funds, please refer to the most up to date relevant Fund and Unit Class Key Investor Information Documents (KIIDs). These are available online at Directors statement This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority. Director 18 May 2016 Director 11

14 Interim financial statements (unaudited) For the half year ended 31 March 2016 Statement of total return 31/03/16 31/03/15 Income Net capital gains 1,683,883 2,838,858 Revenue 215, ,031 Expenses (116,319) (134,199) Interest payable and similar charges (104) (284) Net revenue before taxation 99,029 95,548 Taxation (16,065) (18,069) Net revenue after taxation 82,964 77,479 Total return before distributions 1,766,847 2,916,337 Distributions (86,688) (77,478) Change in net assets attributable to unitholders from investment activities 1,680,159 2,838,859 Statement of change in net assets attributable to unitholders 31/03/16 31/03/15* Opening net assets attributable to unitholders 19,083,738 24,206,275 Amounts payable on cancellation of units (913,605) (1,381,831) (913,605) (1,381,831) Change in net assets attributable to unitholders from investment activities 1,680,159 2,838,859 Retained distributions on accumulation units 85,445 76,545 Closing net assets attributable to unitholders 19,935,737 25,739,848 *Please note that the comparative figures are for the comparative interim period. The brought forward net assets for the current period do not, therefore equal the carried forward figure in the comparative. 12

15 Interim financial statements (unaudited) As at 31 March 2016 Balance sheet 31/03/ /09/2015 Assets: Fixed assets: Investments 19,231,012 18,815,420 Current assets: Debtors 72, ,456 Cash and bank balances 686, ,470 Total current assets 759, ,926 Total assets 19,990,099 19,684,346 Creditors: Distributions payable (7) (123) Other creditors (54,355) (600,485) Total liabilities (54,362) (600,608) Net assets attributable to unitholders 19,935,737 19,083,738 Notes to the interim financial statements Accounting Policies The interim financial statements have been prepared in accordance with the Statement of Recommended Practice for Authorised Funds issued by the Investment Association in May Previously the requirements for the Statement of Recommended Practice (SORP) issued by The Investment Management Association in October 2010 had been applied. The impact is minimal for an interim reporting period and limited to some presentational amendments to the Statement of Total Return, Statement of Change in Net Assets Attributable to Unitholders and the Balance Sheet. The presentational amendments had no impact on the total return or net assets in either the current or preceding year. The full disclosures under the new SORP will first be presented for the annual financial statements prepared for the year to 30 September Unless otherwise stated all other accounting policies applied are consistent with those of the Annual Report for the year ended 30 September 2015 and are described in those financial statements. Please note the Manager of the Scottish Mutual Funds has changed from Scottish Mutual Investment Managers Limited to Phoenix Unit Trust Managers Limited (PUTM) with effect from 2 November As a result the Fund was re-named PUTM Far Eastern Unit Trust. 13

16 Distribution table For the half year ended 31 March 2016 Interim distribution in pence per unit Group 1: units purchased prior to 1 October 2015 Group 2: units purchased 1 October 2015 to 31 March pence pence per unit per unit Net payable paid income Equalisation 31 May 31 May Income Group Group Accumulation Group Group Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital. Being capital it is not liable to income tax but must be deducted from the cost of the units for capital gains tax purposes. 14

17 Corporate information The information in this report is designed to enable unitholders to make an informed judgement on the activities of the Fund during the period it covers and the results of those activities at the end of the period. Phoenix Unit Trust Mangers Limted is part of the Phoenix Group. Ignis Investment Services Limited is part of the Standard Life Investments group (Standard Life Investments (Holdings) Limited) and its subsidiaries. Unit prices appear daily on our website Manager (resigned 2 November 2015) Scottish Mutual Investments Managers Limited 50 Bothwell Street Glasgow G2 6HR Tel: Registered in Scotland No.SC Member of The Investment Association Authorised and regulated by the Financial Conduct Authority Manager (appointed 2 November 2015) Phoenix Unit Trust Managers Limited (PUTM) 1 Wythall Green Way, Wythall, Birmingham, B47 6WG Tel: Registered in England No Authorised and regulated by the Financial Conduct Authority Directors *Appointed with effect 2 November 2015 Andrew Moss* PUTM Director, Chief Executive Phoenix Life; Shamira Mohammed* PUTM Director, Finance Director Phoenix Life; Craig Baker* PUTM Director, Head of Investment Management Phoenix Life; Mike Urmston* Non Executive Director of PUTM. Resigned with effect 2 November 2015 J Aird C Clark C Walklin Registrar and correspondence address Phoenix Unit Trust Managers Limited PO Box 12997, Chelmsford CM99 2EN Authorised and regulated by the Financial Conduct Authority Investment Adviser Ignis Investment Services Limited 50 Bothwell Street Glasgow G2 6HR Registered in Scotland No.SC Authorised and regulated by the Financial Conduct Authority Trustee National Westminster Bank Younger Building, 1st Floor 3 Redheughs Avenue Edinburgh EH12 9RH Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority Independent Auditor to the Fund Ernst & Young LLP Ten George Street Edinburgh EH2 2DZ Authorised status This Fund is an Authorised Unit Trust Scheme under section 243 of the Financial Services & Markets Act 2000 and is categorised under the Collective Investment Schemes Sourcebook as a UCITS fund. Risk The price of units and the revenue from them can go down as well as up and investors may not get back the amount they invested, particularly in the case of early withdrawal. Tax levels and reliefs are those currently applicable and may change. The value of any tax relief depends on personal circumstances. Depending on the fund, the value of your investment may change with currency movements. 15

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20 Contact: Client Services Call: Correspondence Address: PO Box Chelmsford CM99 2EN Visit: phoenixunittrust.co.uk Telephone calls may be monitored and/or recorded for the purposes of security, internal training, accurate account operation, internal customer monitoring and to improve the quality of service. Please note the Key Investor Information Document (KIID), the supplementary Information Document (SID) and the full prospectus are available free of charge. These are available by contacting Client Services on Phoenix Unit Trust Managers Limited does not accept liability for any claims or losses of any nature arising directly or indirectly from use of the data or material in this report. The information supplied is not intended to constitute investment, tax, legal or other advice. Phoenix Unit Trust Managers Limited* is a Phoenix Group Company. Registered in England No Registered office: 1 Wythall Green Way, Wythall, Birmingham B47 6WG. Authorised and regulated by the Financial Conduct Authority. Phoenix Unit Trust Managers Limited and its subsidiaries are part of the Phoenix Group (Phoenix Group plc and its subsidiaries). B