PHOENIX UNIT TRUST MANAGERS MANAGER S ANNUAL REPORT PUTM NORTH AMERICA UNIT TRUST. For the year: 1 October 2016 to 30 September 2017

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1 PHOENIX UNIT TRUST MANAGERS MANAGER S ANNUAL REPORT For the year: 1 October 2016 to 30 September 2017 PUTM NORTH AMERICA UNIT TRUST

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3 Contents Investment review* 2-3 Portfolio of investments* 4-6 Top ten purchases and sales 7 Statistical information* 8-11 Statements of total return & change in unitholders funds 12 Balance sheet 13 Notes to the financial statements Distribution tables 24 Responsibilities of the manager and the trustee 25 Trustee s report and directors statement 26 Independent auditor s report Corporate information* *These collectively comprise the Authorised Fund Manager s Report. 1

4 Investment review Dear Investor Welcome to the PUTM North America Unit Trust annual report for the 12 months to 30 September Following a review of the PUTM Fund range, PUTM have taken the decision to merge the PUTM North America Unit Trust into the PUTM Bothwell North America Fund on 8 December Approval has been received from the FCA for the merger. Following this merger the PUTM North America Unit Trust will wound up within the next 12 months and therefore this set of financial statements are prepared on a break up basis. Performance Review Over the review period the PUTM North America Unit Trust returned 12.7% compared to a return of 14.8% from its sector average. (Source: Lipper, bid to bid, net income reinvested for 12 months to 30/09/17). In the table below, you can see how the Fund performed against its sector average over the last five discrete oneyear periods. Standardised Past Performance Sep Sep15-16 Sep Sep Sep % growth % growth % growth % growth % growth PUTM North America Unit Trust Sector Average Source: Lipper, bid to bid, net income reinvested to end-september 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 The US equity market was strong over the year, boosted in large part by President Trump s promised stimulus plans. The economy gathered further strength, a trend reflected in positive corporate results, while investors continued to speculate over the likely path of interest rates and fluctuating commodity prices. The US presidential election dominated newsflow towards the start of the review period. While US equities initially registered alarm at the unexpected outcome, they subsequently rebounded as investors focused on the likely benefits of Donald Trump s business-friendly, fiscally expansive agenda. This favoured economically sensitive assets such as commodities and financial stocks. In 2017, anticipation shifted to reality as Donald Trump s policy agenda met obstacles. This led to a pause in the market s rotation into economically sensitive stocks. Nonetheless, economic data remained buoyant, with unemployment and manufacturing numbers all pointing to growth. This prompted the Federal Reserve (Fed) to increase rates in June, having already done so in December and March. Tensions between the US and North Korea escalated over the summer months, creating periodic bouts of market volatility. In August, Hurricanes Harvey and Irma caused severe disruption to homes and businesses in Texas and Florida. Some analysts estimate this could reduce 2017 US growth by as much as 1%, to around 2.8% for the year. The Fund produced positive returns over the period, albeit behind its benchmark index. First Republic Bank was among the Fund s top performers, after the lender reported continued strong loan and deposit growth, as well as stable margins. Shares in UnitedHealth Group rose after it demonstrated continued strength across all lines of its business. Semiconductor company Broadcom was positive for Fund performance. The potential for attractive free cashflow and dividend growth drove investor enthusiasm. This was supported by a robust earnings report and an assured outlook. Additional positives included Visteo, Allstate and a zero holding in General Electric. By contrast, Kraft Heinz had a challenging end to the review period due to Amazon s aggressive moves within the retail space. Nonetheless, we believe the company is better placed to overcome these hurdles and the share price does not reflect the potential upside at the group. Meanwhile, shares in US consumer products group Newell Brands fell during the month on profit-taking after it released good results. There has also been disruption to its supply chain in the wake of Hurricane Harvey. Acuity Brands declined during the period, as customers are holding off making renovation decisions until there is greater clarity on tax reforms. Holdings in Element Fleet Management, FleetCor Technologies and Devon Energy also disappointed. Turning to activity, Johnson & Johnson was a new addition to the Fund. The company sells skin/hair products and pharmaceuticals, and manufactures healthcare diagnostic devices. Our investment thesis is based on actions the company has taken on its portfolio, which will likely enhance growth in both its pharma and medical device divisions. A new position was started in leading IT and networking hardware firm Cisco Systems. We believe its current valuation overstates the disintermediation threat as the business model moves to greater subscription / recurring revenues. This should better support the dividend and reduce volatility. Further additions included NextEra Energy, Dow Chemical and DowDuPont. On the sell side, we exited Activision Blizzard after a strong run for this US games software firm. The digital distribution investment angle allowing better margins and in-game monetisation revenue is now better understood by investors, and the once-marginal esports offering is now perceived as a clear positive. We therefore banked profits ahead of a more competitive year in 2018, which will see the launch of numerous triple-a game titles. We also exited Colgate-Palmolive given competition from Procter & Gamble in the US and local firms in emerging markets. Further sales included FleetCor Technologies, Visteon and Martin Marietta Materials. Market Outlook and Fund Strategy Overall, we are generally positive on the outlook for US equities and the economy. The improving global outlook, both for developed and emerging markets, is also presenting numerous opportunities. Risks, however, remain. Higher interest rates, for example, could put pressure on earnings multiples and weigh on economic growth. Meanwhile, the Trump trade that characterised markets in the wake of his election win has run out of steam, as the administration has failed to pass any major legislation. This has cast doubt on the rest of President Trump s agenda, such as tax cuts and infrastructure spending. As such, investor focus in the remainder of 2017 should once again shift back to company fundamentals. 3

6 Portfolio of investments Investments held at 30 September 2017 Market Percentage of value total net assets Holding Investment % United States (30/09/16: 92.26%) Basic Materials (30/09/16: 0.00%) 1.81 Chemicals 3,322 Celanese A 259, ,639 DowDuPont 290, Consumer Goods (30/09/16: 15.90%) Automobiles & Parts 8,886 Goodyear Tire 219, ,126 Visteon 196, Beverages 7,294 PepsiCo 609, Food Producers 7,494 Blue Buffalo Pet Products 160, ,564 Kraft Heinz Co 673, ,150 Mondelez International 307, Household Goods 16,032 Newell Brands 502, Leisure Goods 5,048 Activision Blizzard 239, ,596 Electronic Arts 226, Personal Goods 1,663 Colgate-Palmolive 90, ,578 Hanesbrands 230, Tobacco 8,202 Altria Group 393, Consumer Services (30/09/16: 13.67%) General Retailers 555 Amazon.com 396, ,892 Dollar Tree Stores 569, ,815 Home Depot 462, Media 32,106 Comcast A 907, Travel & Leisure 5,574 McDonald's 656, ,454 Yum! Brands 189, Financials (30/09/16: 15.26%) Banks 13,111 Bank of America 249, ,011 First Republic Bank 930, ,069 JPMorgan Chase & Co 503, ,376 Wells Fargo & Co 501, Non-Life Insurance 9,533 AIG 434,

7 Portfolio of investments Investments held at 30 September 2017 Market Percentage of value total net assets Holding Investment % Financial Services 4,886 Blackhawk Network Holdings 159, ,716 Charles Schwab 316, ,241 Chicago Mercantile Exchange 227, ,715 Equifax 215, ,094 MasterCard 638, ,532 Morgan Stanley 306, Real Estate Investment Trusts 5,547 American Tower 564, Equinix Real Estate Investment Trust 218, Healthcare (30/09/16: 15.50%) Healthcare Equipment & Services 21,419 Boston Scientific 460, ,888 UnitedHealth Group 1,009, Pharmaceuticals & Biotechnology 5,617 Celgene 599, ,850 Eli Lilly & Co 371, ,369 Johnson & Johnson 712, ,819 Merck & Co 423, ,524 Pfizer 306, ,832 Vertex Pharmaceuticals 204, Industrials (30/09/16: 6.72%) 8.62 Construction & Materials 2,291 Acuity Brands 287, ,839 Fortune Brands Home & Security 594, Aerospace & Defence 2,512 Raytheon 345, ,647 Rockwell Collins 257, Industrial Engineering 6,787 Allison Transmission Holding 188, Industrial Transportation 14,306 CSX 573, ,091 Norfolk Southern 207, Support Services 1,394 FleetCor Technologies 161, Energy (30/09/16: 8.32%) 8.97 Oil & Gas Producers 4,801 Chevron 421, ,803 Concho Resources 177, ,368 Devon Energy 310, ,465 EOG Resources 250, ,362 Parsley Energy A 124, Oil Equipment & Services 11,441 Halliburton 391,

8 Portfolio of investments Investments held at 30 September 2017 Market Percentage of value total net assets Holding Investment % Electricity 21,292 CMS Energy 737, ,781 NextEra Energy 305, Technology (30/09/16: 16.89%) Software & Computer Services 638 Alphabet Inc 459, ,181 Alphabet Inc C 838, ,116 Facebook 1,149, ,390 First Data 192, ,539 Microsoft 692, ,770 Salesforce.com 260, Technology Hardware & Equipment 11,295 Apple 1,293, ,062 Cavium 197, ,523 Cisco Systems 461, Telecommunications (30/09/16: 0.00%) 0.50 Fixed Line Telecommunications 10,642 CenturyLink 152, Canada (30/09/16: 1.15%) 1.62 Food & Drug Retailers 4,892 Alimentation Couche-Tard 169, Industrial Transportation 58,282 Element Fleet Management Corporation 322, Ireland (30/09/16: 3.13%) 3.30 Electronic & Electrical Equipment 7,286 Allegion 466, Healthcare Equipment & Services 5,271 Medtronic 306, Pharmaceuticals & Biotechnology 1,495 Allergan 228, Singapore (30/09/16: 2.42%) 1.74 Technology Hardware & Equipment 2,915 Broadcom 529, Portfolio of investments 29,992, Net other liabilities 354, Net assets 30,346, All investments are listed on recognised stock exchanges and are approved securities within the meaning of the FCA rules unless otherwise stated. 6

9 Top ten purchases and sales For the year ended 30 September 2017 Purchases Cost Johnson & Johnson 762,716 McDonald s 563,272 CSX 542,204 MasterCard 516,722 Cisco Systems 464,292 Philip Morris International 433,180 Bank of America 416,931 Acuity Brands 408,596 Wells Fargo & Co 350,010 NextEra Energy 324,980 Sales Proceeds Allstate 1,064,359 Equinix Real Estate Investment Trust 540,573 CVS Health 527,087 Electronic Arts 451,349 American Tower 450,957 Amgen 439,097 Philip Morris International 428,939 C.R. Bard 403,515 Martin Marietta Materials 403,276 Hartford Financial Services 399,127 Total purchases 11,184,845 Total sales 13,846,090 7

10 Statistical information Comparative Tables Income 30/09/16 30/09/15^ pence pence Change in net assets per unit Opening net asset value per unit 1, , Return before operating charges* Operating charges (9.31) (13.91) Termination price (1,118.18) Return after operating charges* Distributions on income units 0.00 (0.71) Closing net asset value per unit , *after direct transaction costs of: Performance Return after charges 0.00% 5.88% Other information Closing net asset value ( 000) 22 Closing number of units 2,000 Operating charges 1.15% 1.08% Direct transaction costs 0.06% 0.06% Prices + Highest unit price (pence) 1, , Lowest unit price (pence) 1, , High and Low price disclosures are based on quoted unit prices. Therefore the opening and closing NAV prices may fall outside the high / low price threshold. ^ The income units were launched on 24 October ~ The income units were closed on 31 October

11 Statistical information Comparative Tables Accumulation 30/09/17 30/09/16 30/09/15 pence pence pence Change in net assets per unit Opening net asset value per unit 1, , , Return before operating charges* Operating charges (20.78) (17.10) (14.98) Return after operating charges* Distributions on accumulation units (4.77) (3.54) (1.91) Retained distribution on accumulation units Closing net asset value per unit 1, , , *after direct transaction costs of: Performance Return after charges 11.62% 30.94% 3.55% Other information Closing net asset value ( 000) 30,347 29,612 25,008 Closing number of units 1,593,886 1,736,002 1,919,633 Operating charges 1.11% 1.15% 1.08% Direct transaction costs 0.04% 0.06% 0.06% Prices + Highest unit price (pence) 2, , , Lowest unit price (pence) 1, , , High and Low price disclosures are based on quoted unit prices. Therefore the opening and closing NAV prices may fall outside the high / low price threshold. 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 portfolio of securities in North America. Investment policy The Fund will mainly invest in equity shares of companies quoted in the United States and Canada. The Fund may hold cash and near cash assets where reasonably necessary to fund redemption of units, or 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 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. 10

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 5 because funds of this type have experienced medium to 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 class: 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 risks 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 it's 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 11

14 Annual financial statements For the year ended 30 September 2017 Statement of total return 30/09/17 30/09/16 Notes Income Net capital gains 4 3,325,253 7,313,758 Revenue 5 479, ,186 Expenses 6 (338,506) (303,069) Interest payable and similar charges (4) (24) Net revenue before taxation 141, ,093 Taxation 7 (62,258) (56,285) Net revenue after taxation 78,957 64,808 Total return before distributions 3,404,210 7,378,566 Distributions 8 (78,957) (64,830) Change in unitholders funds from investment activities 3,325,253 7,313,736 Statement of change in unitholders funds 30/09/17 30/09/16 Opening net assets 29,612,311 25,030,010 Amounts receivable on issue of units 754,861 73,087 Amounts payable on cancellation of units (3,423,796) (2,867,772) (2,668,935) (2,794,685) Change in unitholders funds from investment activities 3,325,253 7,313,736 Retained distributions on accumulation units 78,147 63,250 Closing net assets 30,346,776 29,612,311 12

15 Annual financial statements As at 30 September 2017 Balance sheet 30/09/17 30/09/16 Notes Assets: Fixed assets: Investments 29,992,232 29,304,778 Current assets: Debtors 9 28, ,781 Cash and bank balances , ,910 Total current assets 388, ,691 Total assets 30,381,165 29,763,469 Liabilities: Creditors: Other creditors 11 (34,389) (151,158) Total liabilities (34,389) (151,158) Net assets 30,346,776 29,612,311 Unitholders funds 30,346,776 29,612,311 13

16 Notes to the financial statements Note 1 (a) (b) (c) (d) (e) (f) (g) (h) Accounting policies Basis of preparation The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in compliance with Financial Reporting Standard (FRS102) and in accordance with the Statement of Recommended Practice (2014 SORP) for financial statements of Authorised Funds issued by The Investment Association in May 2014 (and amended in June 2017). The financial statements have been prepared on a break up basis. Under this basis, the assets are recorded at their recoverable value and liabilities are recorded at their expected settlement value. No adjustments were necessary upon application of the break-up basis. Liquidation costs will be borne by the Manager. Valuation of investments The quoted investments of the Fund have been valued at their recoverable value, which is equal to their bid dealing prices as at 12 noon, 29 September 2017, the last valuation point in the accounting year, in accordance with the Trust Deed. Foreign exchange Transactions in foreign currencies during the year are translated into Sterling at the rates of exchange ruling on the transaction date. Amounts held in foreign currencies have been translated at the rate of exchange ruling at 12 noon, 29 September 2017, the last valuation point in the accounting year. Revenue Dividends receivable from equity investments are credited to revenue when they are first quoted ex-dividend. Interest receivable on bank deposits is accounted for on an accruals basis. Special dividends Special dividends are treated either as revenue or repayments of capital depending on the facts of each particular case. It is likely that where the receipt of a special dividend results in a significant reduction in the capital value of the holding, then the special dividend should be treated as capital in nature so as to ensure the matching principle is applied to gains and losses. Otherwise, the special dividend should be treated as revenue. Stock dividends The ordinary element of stocks received in lieu of cash is recognised as revenue. Any excess in value of shares received over the amount of cash forgone would be treated as capital. Expenses Expenses are accounted for on an accruals basis. Expenses of the Fund are charged against revenue, except for costs associated with the purchase and sale of investments, which are charged to capital. Taxation The charge for taxation is based on taxable income for the year less allowable expenses. UK dividends and franked distributions from UK collective investment schemes are disclosed net of any related tax credit. Overseas dividends are disclosed gross of any tax suffered, the tax element being separately disclosed in the taxation note. 14

17 Notes to the financial statements Note 1 (i) Note 2 (a) (b) (c) Note 3 (a) (b) Accounting policies (contnued) Deferred taxation Deferred tax is provided at current rates of corporation tax on all timing differences which have originated but not reversed by the Balance sheet date. Deferred tax is not recognised on permanent differences. Deferred tax assets are recognised only to the extent that the Manager considers it is more likely than not that there will be taxable profits from which underlying timing differences can be deducted. Distribution policies Basis of distribution Revenue produced by the Fund's investments accumulates during each accounting period. If, at the end of each accounting period, revenue exceeds expenses, the net revenue of the Fund is available to be accumulated to unitholders. The Fund is not more than 60% invested in qualifying investments (as defined by SI 2006/964, Reg 20) and will pay a dividend distribution. Unclaimed distributions Distributions remaining unclaimed after six years are paid into the Fund as part of the capital property. Stock dividends It is the policy of the Fund, where applicable, to distribute the revenue element of stock dividends. Risk management policies The main risks arising from the Fund s financial instruments are market price risk, interest rate risk, foreign currency risk, liquidity risk and counterparty risk. The Manager s policies for managing these risks are summarised below and have been applied throughout the year. Market price risk Market price risk arises mainly from uncertainty about future prices of financial instruments held. It represents the potential loss the Fund might suffer through holding market positions in the face of price movements. The Fund s investment portfolio is exposed to market fluctuations which are monitored by the Manager in pursuit of the investment objectives and policies. Adherence to investment guidelines and to investment and borrowing powers set out in the Trust Deed, the Prospectus and in the Collective Investment Schemes Sourcebook ( the Sourcebook ) mitigates the risk of excessive exposure to any particular type of security or issuer. Interest rate risk The majority of the Fund s financial assets are equity shares and other investments which neither pay interest nor have a maturity date. Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. 15

18 Notes to the financial statements Note 3 (c) (d) (e) (f) Risk management policies (continued) Foreign currency risk All of the Fund s investment portfolio is invested in overseas securities and the Balance sheet can be significantly affected by movements in foreign exchange rates. The Fund may be subject to short term exposure to exchange rate movements between placing the purchase or sale of securities and agreeing a related currency transaction albeit usually the two transactions are agreed at the same time. Any such currency transactions must be used in accordance with the investment objective of the Fund and must be deemed by the Investment Manager to be economically appropriate. Regular production of portfolio risk reports highlight concentrations of risk, including currency risk, for the Fund. Liquidity risk The Fund s assets are comprised of mainly readily realisable securities. If insufficient cash is available to finance unitholder redemptions then securities held by the Fund may need to be sold. The risk of low market liquidity, through reduced trading volumes, may affect the ability of the Fund to trade financial instruments at values previously indicated by financial brokers. From time to time, liquidity may also be affected by stock specific or economic events. To manage these risks the Manager performs market research in order to achieve the best price for any transactions entered into on behalf of the Fund. All stocks are valued daily but those stocks identified as being less liquid are reviewed on a regular basis for pricing accuracy. Counterparty risk Certain transactions in securities that the Fund enters into expose it to the risk that the counterparty will not deliver the investment (purchase) or cash (sale) after the Fund has fulfilled its responsibilities. The Fund only buys and sells investments through brokers which have been approved by the Manager as an acceptable counterparty. This list is reviewed annually. Derivatives Derivative transactions may be used by the Fund for the purposes of meeting its investment objectives and also for hedging. In doing so the Manager may make use of a variety of derivative instruments in accordance with the Sourcebook. The use of derivatives for investment purposes means that the net asset value of the Fund may at times have high volatility, although derivatives will not be used with the intention of raising the risk profile of the Fund. Where derivatives are used for hedging this will not compromise the risk profile of the Fund. Use of derivatives will not knowingly contravene any relevant investment objective or limits. There are no derivatives held at the year end. 16

19 Notes to the financial statements Note 4 Net capital gains The net capital gains during the year comprise: 30/09/17 30/09/16 Gains on non-derivative securities 3,350,918 7,192,110 Losses on derivative contracts (5,391) (10,425) Currency gains 5,264 4,656 Capital special dividend (17,832) 136,826 Handling charges (7,706) (9,409) Net capital gains 3,325,253 7,313,758 Note 5 Revenue 30/09/17 30/09/16 Overseas dividends 479, ,457 Bank interest Total revenue 479, ,186 Note 6 Expenses 30/09/17 30/09/16 (a) Payable to the Manager or associates of the Manager and agents of either of them: Manager's periodic charge 317, ,574 Registration fees* , ,710 (b) (c) Payable to the Trustee or associates of the Trustee and agents of either of them: Trustee s fees 8,777 16,732 8,777 16,732 Other expenses: Audit fee 6,618 7,048 Safe custody charges 1,615 2,329 FCA fee Legal fee 1,560 Printing & stationery 2,347 Professional fees ,521 9,627 Total expenses 338, ,069 * Registration fees are no longer charged with effect from 2 November

20 Notes to the financial statements Note 7 Taxation 30/09/17 30/09/16 (a) Analysis of tax charge for the year Overseas withholding tax 62,258 56,285 Total taxation (Note 7 (b)) 62,258 56,285 (b) (c) Factors affecting the tax charge for the year The tax assessed for the year is higher than that calculated when the standard rate of corporation tax for Authorised Unit Trusts is applied to total revenue return. The differences are explained below: Net revenue before taxation 141, ,093 Corporation tax at 20% (30/09/16: 20%) 28,243 24,219 Effects of: Overseas divdends not taxable* (91,133) (78,551) Overseas withholding tax 62,258 56,285 Excess management expenses unutilised 63,910 55,251 Tax relief on overseas tax suffered (1,020) (919) Total tax charge for the year (Note 7(a)) 62,258 56,285 * As an Authorised Unit Trusts these items are not subject to corporation tax. Authorised Unit Trusts are exempt from tax on capital gains in the UK. Provision for deferred taxation At 30 September 2017 the Fund had a potential deferred tax asset of 444,715 (30/09/16: 380,805) in relation to surplus management expenses of 2,223,576 (30/09/16: 1,903,964). It is unlikely that the Fund will generate sufficient taxable profits in the future to utilise these expenses and, therefore, no deferred tax asset has been recognised in the year or the prior year. 18

21 Notes to the financial statements Note 8 Distributions The distributions take account of amounts added on the issue of units and amounts deducted on the cancellation of units and comprise: 30/09/17 30/09/16 Interim 46,500 38,728 Final 31,647 24,523 78,147 63,251 Amounts deducted on cancellation of units 947 1,606 Amounts added on issue of units (137) (27) Net distribution for the year 78,957 64,830 Net revenue after taxation 78,957 64,808 Equalisation on conversion 22 Net distribution for the year 78,957 64,830 Details of the distribution per unit are set out in the tables on page 24. Note 9 Debtors 30/09/17 30/09/16 Sales awaiting settlement 194,458 Accrued income 26,990 33,311 Overseas tax recoverable 974 1,005 FCA fee prepaid 64 Trustee s fee prepaid 7 Total debtors 28, ,781 Note 10 Cash and bank balances 30/09/17 30/09/16 Cash and bank balances 360, ,910 Note 11 Other creditors 30/09/17 30/09/16 Purchase awaiting settlement 118,586 Manager s periodic charge payable 25,435 24,079 Trustee s fees payable 569 Safe custody charges payable Audit fee payable 6,780 6,942 FCA fee payable 116 Handling charges payable 1, Total other creditors 34, ,158 19

22 Notes to the financial statements Note 12 Reconciliation of units Accumulation Opening units issued at 01/10/16 1,736,002 Unit movements in year: Units issued 40,368 Units cancelled (182,484) Closing units at 30/09/17 1,593,886 Note 13 Contingencies and commitments At 30 September 2017 the Fund had no outstanding calls on partly paid shares, no potential underwriting commitments or any other contingent liabilities (30/09/16: nil). Note 14 Related party transactions The Manager is a related party to the Fund by virtue of its controlling influence. The Manager is part of the Phoenix Group. Phoenix Life Limited which is also part of the Phoenix Group, is a material unitholder in the Fund and therefore a related party, holding 99.55% of the units at the year end (30/09/16: 99.28%). Manager's periodic charge paid to the Manager, Phoenix Unit Trust Managers Limited or its associates are shown in Note 6(a) and details of the units issued and cancelled by the Manager are shown in the Statement of change in unitholder's fund and Note 8. Any balances due to/from the Manager or its associates at 30 September 2017 in respect of these transactions are shown in Notes 9 and

23 Notes to the financial statements Note 15 Financial instruments In accordance with the investment objective, the Fund held certain financial instruments. These comprise : securities held in accordance with the investment objective and policies; derivative transactions which the Fund may also enter into, the purpose of which is to manage the currency and market risks arising from the Fund s investment activities; and cash and short term debtors and creditors arising directly from operations. Currency exposures An analysis of the monetary assets and liabilities at the year end is shown below: Net currency assets Net currency assets 30/09/17 30/09/16 Currency Monetary Non- Total Monetary Non- Total exposure monetary exposure exposure monetary exposure exposure exposure Sterling 318, , , ,001 Canadian Dollar 2, , , , ,763 Euro US Dollar 33,444 29,500,183 29,533, ,376 28,965,661 29,093, ,544 29,992,232 30,346, ,533 29,304,778 29,612,311 Income received in other currencies is converted to Sterling on or near the date of receipt. The Fund does not hedge or otherwise seek to avoid, movement risk on accrued income. Interest profile At the year end date, 1.19% (30/09/16: 0.78%) of the Fund s net assets by value were interest bearing. Interest rates earned/paid on deposits are earned/paid at a rate linked to LIBOR (London Interbank Offered Rate) or international equivalent. Sensitivity analysis Interest rate risk sensitivity As the majority of the Fund s financial assets are non-interest bearing, the Fund is only subject to limited exposure to fair value interest rate risk due to fluctuations in levels of market interest rates. Foreign currency risk sensitivity A five percent increase in the value of the Funds foreign currency exposure would have the effect of increasing the return and net assets by 1,447,541 (30/09/16: 1,471,732). A five percent decrease would have an equal and opposite effect. Price risk sensitivity A five percent increase in the value of the Fund s portfolio would have the effect of increasing the return and net assets by 1,517,338 (30/09/16: 1,480,616). A five percent decrease would have an equal and opposite effect. 21

24 Notes to the financial statements Note 16 Fair value of investments The fair value of the Fund s investments has been determined using the hierarchy below. This complies with the Amendments to FRS102 Fair value hierarchy disclosures issued by the Financial Reporting Council in March Level 1 The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. Level 3 Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. For the year ended 30/09/17 Level Total Investment assets Equities 29,992,232 29,992,232 29,992,232 29,992,232 For the year ended 30/09/16 Level Total Investment assets Equities 29,304,778 29,304,778 29,304,778 29,304,778 Note 17 Portfolio transaction costs For the year ended 30/09/17 Value Commission Taxes Analysis of total purchases costs % % Equity transactions 11,178,599 6, Total 11,178,599 6,246 Value Commission Taxes Analysis of total sales costs % % Equity transactions 13,853,164 (7,074) (0.05) Total 13,853,164 (7,074) Commission and taxes as % of average net assets: Commission 0.04% Taxes 0.00% 22

25 Notes to the financial statements Note 17 Portfolio transaction costs (continued) For the year ended 30/09/16 Value Commission Taxes Analysis of total purchases costs % % Equity Transactions 11,161,355 7, Total 11,161,355 7,192 Value Commission Taxes Analysis of total sales costs % % Equity Transactions 13,408,185 (9,415) (0.07) Corporate actions 206,604 Total 13,614,789 (9,415) Commission and taxes as % of average net assets: Commission 0.06% Taxes 0.00% Portfolio transaction costs are incurred by the Fund when buying and selling underlying investments. These costs 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 buying and selling prices of the underlying investments. At the Balance sheet date the portfolio dealing spread was 0.03% (30/09/16: 0.02%) being the difference between the respective bid and offer prices for the Fund's investments. 23

26 Distribution tables For the year ended 30 September 2017 Interim distribution in pence per unit Group 1: units purchased prior to 1 October 2016 Group 2: units purchased 1 October 2016 to 31 March pence pence per unit per unit Net paid paid income Equalisation 31 May 31 May Accumulation Group Group Final distribution in pence per unit Group 1: units purchased prior to 1 April 2017 Group 2: units purchased 1 April 2017 to 30 September pence pence per unit per unit Net payable paid income Equalisation 30 Nov 30 Nov 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. 24

27 Responsibilities of the manager and the trustee a) The Manager of the Fund is required by the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( the Sourcebook ) to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the Fund at the end of that period and the net revenue or expense and the net gains or losses on the property of the Fund for the year then ended. In preparing these financial statements, the Manager is required to: select suitable accounting policies and then apply them consistently make judgements and estimates that are prudent and reasonable state whether applicable accounting standards have been followed subject to any material departure disclosed and explained in the financial statements; and for reasons stated in note 1 (a), and note 18 to the financial statements, and the Managers Report, the financial statements of the Fund have not been prepared on a going concern basis. The Manager is also required to manage the Fund in accordance with the Trust Deed, the Prospectus and the Sourcebook, maintain proper financial records to enable them to ensure that the financial statements comply with the Statement of Recommended Practice for Authorised Funds as issued by the IA in May 2014 and the Sourcebook and take reasonable steps for the prevention and detection of fraud and other irregularities. b) The Depositary in its capacity as Trustee of the PUTM North America Unit Trust must ensure that the Trust is managed in accordance with the Financial Conduct Authority's Collective Investment Schemes Sourcebook, the Financial Services and Markets Act 2000, as amended, (together the Regulations ), the Trust Deed and Prospectus (together 'the Scheme documents') as detailed below. The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Trust and its investors. The Depositary is responsible for the safekeeping of all custodial assets and maintaining a record of all other assets of the Trust in accordance with the Regulations. The Depositary must ensure that: the Trust s cash flows are properly monitored and that cash of the Trust is booked in cash accounts in accordance with the Regulations; the sale, issue, repurchase, redemption and cancellation of units are carried out in accordance with the Regulations; the value of units of the Trust are calculated in accordance with the Regulations; any consideration relating to transactions in the Trust s assets is remitted to the Trust within the usual time limits; the Trust s income is applied in accordance with the Regulations; and the instructions of the Authorised Fund Manager ( the AFM ), which is the UCITS Management Company, are carried out (unless they conflict with the Regulations. The Depositary also has a duty to take reasonable care to ensure that the Trust is managed in accordance with the Regulations and the Scheme documents of the Trust in relation to the investment and borrowing powers applicable to the Trust. 25

28 Trustee s report and directors statement Report of the Trustee to the Unitholders of the PUTM North American Unit Trust for the period from 1 October 2016 to 30 September 2017 Having carried out such procedures as we considered necessary to discharge our responsibilities as Depositary of the Trust, it is our opinion, based on the information available to us and the explanations provided, that, in all material respects the Trust, acting through the AFM: (i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Trust's units and the application of the Trust's income in accordance with the Regulations and the Scheme documents of the Trust; and (ii) has observed the investment and borrowing powers and restrictions applicable to the Trust in accordance with the Regulations and the Scheme documents of the Trust. London 31 January 2018 HSBC Bank plc Directors statement In accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority, we hereby certify the report on behalf of the Directors of Phoenix Unit Trust Managers Limited. Birmingham Craig Baker, Director 31 January 2018 Andrew Moss, Director 26

29 Independent auditor s report to the unitholders of the PUTM North American Unit Trust Opinion We have audited the financial statements of the PUTM North America Unit Trust ( the Fund ) for the year ended 30 September 2017 which comprise the Statement of Total Return, the Statement of Change in Net Assets attributable to Unitholders, Balance Sheet, Distribution Tables and the related notes 1 to 17, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) including FRS 102 The Financial Reporting Standard applicable to the UK and Republic of Ireland. The financial statements have been prepared on a break-up basis as disclosed in note 1 (a) to the financial statements. In our opinion, the financial statements: give a true and fair view of the financial position of the Fund as at 30 September 2017 and of the net revenue and the net capital gains on the scheme property of the Fund for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice including FRS 102 The Financial Reporting Standard applicable to the UK and Republic of Ireland. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor s responsibilities for the audit of the financial statements section of our report below. We are independent of the Fund in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor s report thereon. The manager is responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. 27

30 Independent auditor s report to the unitholders of the PUTM North American Unit Trust Opinions on other matters prescribed by the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority In our opinion: the financial statements have been properly prepared in accordance with the Statement of Recommended Practice relating to Authorised Funds, the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority and the Trust Deed; the information given in the manager s report for the financial year for which the financial statements are prepared is consistent with the financial statements; and there is nothing to indicate that proper accounting records have not been kept or that the financial statements are not in agreement with those records statements are not in agreement with those records. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Collective Investment Schemes Sourcebook of the Financial Conduct Authority rules requires us to report to you if, in our opinion: we have not received all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit. Responsibilities of the Manager As explained more fully in the manager s responsibilities statement set out on page 25, the manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the manager is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the manager either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. 28

31 Independent auditor s report to the unitholders of the PUTM North American Unit Trust Auditor s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. This report is made solely to the unitholders of the Fund, as a body, pursuant to Paragraph of the rules of the Collective Investment Schemes Sourcebook of the Financial Conduct Authority. Our audit work has been undertaken so that we might state to the unitholders of the Fund those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the unitholders of the Fund as a body, for our audit work, for this report, or for the opinions we have formed. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council s website at This description forms part of our auditor s report. Ernst & Young LLP Statutory Auditor Edinburgh 31 January

32 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 year. Phoenix Unit Trust Managers Limited is part of the Phoenix Group. Ignis Investment Services Limited is part of the Standard Life Aberdeen plc group and its subsidiaries. Unit prices appear daily on our website Dealing: Administration: Remuneration The Manager has adopted a remuneration policy, up-to-date details of which can be found on These details describe how remuneration and benefits are calculated and identify the committee which oversees and controls the policy. A paper copy of these details can be requested free of charge from the Manager. Following the implementation of UCITS V in the UK on 18 March 2016, all authorised UCITS Managers are required to comply with the UCITS V Remuneration Code from the start of their next accounting year. Under the UCITS V Directive, the Manager is required to disclose information relating to the remuneration paid to its staff for the financial year, split into fixed and variable remuneration. The Manager s Financial Year end is 31 December, it is therefore anticipated that the Manager's Remuneration Policy and associated financial disclosures will be made within the Annual Reports starting from 31 December 2017, following its first full performance period. Prior to this date, and in line with the FCA s guidance on the UCITS V remuneration disclosures, the Manager would be part way through its first performance period and the information available would not be relevant or provide a proper basis for comparison. 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. 30