PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT PUTM INTERNATIONAL GROWTH UNIT TRUST. For the half year: 1 June 2018 to 30 November 2018

Transcription

1 PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT For the half year: 1 June 2018 to 30 November 2018 PUTM INTERNATIONAL GROWTH UNIT TRUST

2

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

4 Investment review Dear Investor Welcome to the PUTM International Growth Unit Trust interim report for six months to 30 November Performance Review The PUTM International Growth Unit Trust returned -2.7% over the review period (Source: Standard Life Investments for six months to 30/11/18). This is compared to its benchmark index which returned 3.5% (Source: Datastream, MSCI World ex UK - Gross Return Index for six months to 30/11/18). 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 Source: Fund performance is Standard Life Investments, benchmark index performance is Datastream, MSCI World ex UK - Gross Return Index to 30 November for each year. Past performance is not a guide to future performance. Nov Nov Nov Nov Nov % growth % growth % growth % growth % growth PUTM International Growth Unit Trust Benchmark 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 tough six months for global equites, with only the US delivering a positive return. Sentiment was hit by concerns over global growth, rising interest rates, European politics (Italy and Brexit) and the US/China trade spat. The period started well, helped by robust US economic data and better-than-expected corporate results. The former allowed the US Federal Reserve (Fed) to raise interest rates in June and September. This makes it three hikes in 2018, and eight in this cycle. However, conditions turned more challenging as the period progressed, thanks to heightened trade tensions between the US and China. The strong US dollar also had a negative impact on those emerging markets with large dollar-denominated debts. There were additional concerns about the slowing Chinese economy. That said, officials in Beijing have shown a willingness to act in order to counter any slowdown. In Europe, signs of weakening economic activity, politics and the struggling Italian banking sector all weighed on sentiment. However, a commitment by the European Central Bank to maintain its low interest rate policy provided some positive news. Meanwhile, the prospect of a no deal Brexit, once unthinkable, gained momentum as negotiations hit a number of obstacles, notably over the Irish border. The price of oil was also volatile, hitting $84 a barrel at one point, before falling back to $60 in November. Fund performance was disappointing. A number of holdings were impacted by stock-specific events, while other stocks were buffeted by changes in the macroeconomic outlook. For example, Chinese provider of travel services Ctrip.Com, which covers accommodation reservation, ticketing and package tours, was hit by renminbi weakness. This made outbound holidays from China more expensive and led to weaker sales growth. Australian-listed wine producer Treasury Wine Estates was another negative. We invested on expectations of sales growth to China, as well as the potential to drive margins higher in its US business. However, weakness in Chinese import data and trade tensions hit the share price. A position in Mitsui Mining & Smelting hurt relative performances. The Japanese company announced another profit warning on the back of weaker growth in smartphones. Falling commodity prices also hurt the firm. Holdings in Marvell Technologies, CRH, Infineon Technologies, Ryanair and Asahi also disappointed. On a more positive note, Boston Scientific, the US medical technology corporation, boosted Fund returns. The shares rose when management confirmed it now expected elevated sales growth over the next few years. US firm American Tower, a specialist owner of real estate for wireless companies, performed well. It posted good numbers that showed it continues to grow in the US. More importantly, it announced a resolution to the negotiations with its partners in India that allows it to expand its business there. Additional highlights included UnitedHealth Group, Shionogi and Nextera Energy. Turning to activity, we bought Restaurant Brands International, the owner of Tim Horton and Burger King. Remodelling of Tim Horton stores, increased advertising and improved relationships with franchisee groups should lead to improved revenues. We also remain positive on its ability to expand Burger King outside the US. Meanwhile, we purchased shares in US defence contractor Raytheon. We believe that the valuation underestimates the sustainability of its earnings growth. The backdrop is the unpredictable geopolitical environment. Given this, there is scope for an increase in US military expenditure. This should heighten the chances of Raytheon winning more military contracts. We also purchased Tryg, a Danish insurance company. The rationale for buying the stock is improving premiums, particularly in Denmark. We also see big benefits from the recent acquisition of Alka, which enables the company to drive growth higher. This should lead to a more efficient balance sheet, with the prospect that further deals will enhance the business. We sold Paddy Power Betfair, the UK-listed gambling company. It delivered disappointing results, which showed weakness in its core markets and a need to spend more on marketing to drive growth. The potential for further earnings downgrades has increased. We exited US retailer Dollar Tree Stores. We have lost confidence in the management s ability to improve revenues at its Family Dollar franchise. The strong rise in the company s share price gave us an opportunity to exit the position. Meanwhile, we exited Ryanair. The company has suffered from persistent disputes with its employees. We believed this would affect earnings for the foreseeable future and hit its prospects for growth. Market Outlook and Fund Strategy Interest rates and trade tariffs will be the key drivers of market direction in the short term. If we believe recent comments by Fed Chairman Jerome Powell s, it s possible that we have just one more interest rate hike in December remaining. This would reduce the risk of monetary policy becoming too restrictive and be a positive for the market. The outcome of trade talks between the US and China seems more uncertain. However, the recent agreement to delay tariffs indicates a willingness to negotiate. This may provide further positive surprises. In the longer term, the key determinant is corporate earnings. These still appear solid, with downgrades minor and 2019 currently looking like a growth year. As always, we seek to invest in companies delivering earnings growth and upgrades. By contrast, we avoid or sell companies seeing downgrades. This has stood us in good stead since launch. It should continue to do so as we move into 2019 and beyond. 3

6 Portfolio of investments (unaudited) Investments held at 30 November 2018 Market Percentage of value total net assets Holding Investment % United States (31/05/ %) Aerospace & Defence 7,674 Raytheon 1,044, Banks 54,301 Bank of America 1,193, ,966 Citigroup 812, ,345 First Republic Bank 780, Beverages 4,869 Constellation Brands 749, Chemicals 8,788 Celanese A 692, ,092 Dow-Dupont 452, Construction & Materials 3,211 Fortune Brands Home & Security 109, ,833 Martin Marietta Materials 745, Electricity 24,390 CMS Energy 981, ,265 NextEra Energy 1,425, Financial Services 9,240 Intercontinental Exchange 587, ,480 Mastercard 1,153, ,373 Schwab (Charles) 601, Fixed Line Telecommunications 23,897 Verizon Communications 1,113, Food Producers 14,288 Mondelez International 498, General Retailers 15,314 Service Corporation International 550, Healthcare Equipment & Services 20,739 Baxter International 1,106, ,821 Boston Scientific 894, ,187 UnitedHealth Group 1,370, Industrial Transportation 11,945 CSX 672, Leisure Goods 4,626 Electronic Arts 313, Non-Life Insurance 9,506 AIG 323, Oil & Gas Producers 11,469 Hess 489, ,147 Occidental Petroleum 953, Pharmaceuticals & Biotechnology 2,929 Neurocrine Biosciences 199, ,867 Vertex Pharmaceuticals 544,

7 Portfolio of investments (unaudited) Investments held at 30 November 2018 Market Percentage of value total net assets Holding Investment % Real Estate Investment Trusts 12,669 American Tower 1,616, ,562 Equinix Real Estate Investment Trust 1,072, Software & Computer Services 950 Adobe 185, ,312 Alphabet A 1,125, ,364 Alphabet C 1,163, ,321 GrubHub 523, ,881 Worldpay A 730, Technology Hardware & Equipment 4,072 Apple 573, ,142 Broadcom 1,135, ,742 Nvidia 338, Travel & Leisure 23,007 Ctrip.Com 505, ,338 Huazhu Group 316, ,656 McDonald s 691, Australia (31/05/ %) 2.32 Beverages 104,045 Treasury Wine Estates 839, Travel & Leisure 28,172 Aristocrat Leisure 381, Belgium (31/05/ %) 0.66 Chemicals 10,158 Umicore 348, Bermuda (31/05/ %) 2.29 Financial Services 10,403 IHS Markit 430, Technology Hardware & Equipment 61,354 Marvell Technologies 773, Canada (31/05/ %) 2.29 Travel & Leisure 26,119 Restaurant Brands 1,203, China (31/05/ %) 3.65 Personal Goods 81,443 ANTA Sports Products 290, ,129 Shenzhou International 1,238, Software & Computer Services 12,594 Tencent 393, Denmark (31/05/ %) 0.84 Non-Life Insurance 23,211 Tryg 444,

8 Portfolio of investments (unaudited) Investments held at 30 November 2018 Market Percentage of value total net assets Holding Investment % Finland (31/05/ %) 1.23 Industrial Engineering 16,583 Kone B 648, France (31/05/ %) 4.33 Aerospace & Defence 5,364 Thales 515, Fixed Line Telecommunications 26,966 Orange 362, General Retailers 1,394 Kering 476, Healthcare Equipment & Services 5,138 Orpea 429, Software & Computer Services 7,697 Ubisoft 488, Germany (31/05/ %) 2.84 Mobile Telecommunications 43,392 Deutsche Telekom 596, Software & Computer Services 9,812 Scout24 317, Support Services 3,575 Wirecard 428, Technology Hardware & Equipment 9,209 Infineon Technologies 149, Hong Kong (31/05/ %) Chemicals 3,840,000 Tianhe Chemicals Group* Ireland (31/05/ %) 1.43 Construction & Materials 12,716 CRH 275, Electronic & Electrical Equipment 6,673 Allegion 480, Italy (31/05/ %) 2.60 Electricity 161,886 Enel 691, Electronic & Electrical Equipment 47,151 Prysmian 674, Japan (31/05/ %) 6.39 Beverages 27,186 Asahi 892, Industrial Metals 11,185 Mitsui Mining & Smelting 200, Oil & Gas Producers 113,833 JX Holdings 537,

9 Portfolio of investments (unaudited) Investments held at 30 November 2018 Market Percentage of value total net assets Holding Investment % Pharmaceuticals & Biotechnology 18,549 Shionogi 959, Real Estate & Investment Services 41,096 Mitsui Fudosan 770, Netherlands (31/05/ %) 4.71 Aerospace & Defence 7,297 Airbus Group 618, Chemicals 5,733 Koninklijke DSM 398, Non-Life Insurance 27,598 ASR Nederland 942, Technology Hardware & Equipment 3,917 ASML Holdings 519, Portugal (31/05/ %) 0.97 Oil & Gas Producers 39,396 Galp Energia 512, South Korea (31/05/ %) Spain (31/05/ %) 0.42 Banks 60,138 Banco Santander 223, Sweden (31/05/ %) 1.68 Banks 27,088 Swedbank A 493, Oil & Gas Producers 18,915 Lundin Petroleum 390, Switzerland (31/05/ %) 1.86 Banks 53,941 Credit Suisse Group 495, Non-Life Insurance 1,982 Zurich Insurance Group 486, United Kingdom (31/05/ %) Portfolio of investments 51,661, Net other assets 965, Net assets 52,627, * suspended security All investments are listed on recognised stock exchanges and are approved securities within the meaning of the FCA rules unless otherwise stated. 7

10 Top ten purchases and sales For the half year ended 30 November 2018 Purchases Cost Raytheon 1,184,127 Verizon Communications 1,001,859 Restaurant Brands 873,972 Worldpay A 794,001 Intercontinental Exchange 718,992 Baxter International 676,407 TDK 665,067 Airbus Group 614,651 Ubisoft 606,247 GrubHub 571,391 Subtotal 7,706,714 Other purchases 13,413,268 Total purchases for the half year 21,119,982 Sales Proceeds JP Morgan Chase & Co 1,239,571 Dollar Tree Stores 1,123,524 Apple 981,060 Ryanair 799,895 Alimentation Couche-Tard 781,447 Samsung Electronics 768,691 Paddy Power Betfair 761,844 Facebook 716,978 Mohawk Industries 697,078 Infineon Technologies 695,077 Subtotal 8,565,165 Other sales 14,861,381 Total sales for the half year 23,426,546 8

11 Statistical information Comparative tables Income 30/11/18 31/05/18 31/05/17 31/05/16 Change in net assets per unit pence pence pence pence Opening net asset value per unit Return before operating charges* (21.74) Operating charges (3.21) (6.36) (5.83) (4.80) Return after operating charges* (24.95) (1.25) Distributions on income units (1.54) (2.53) (0.75) (2.84) Closing net asset value per unit * after direct transaction costs of: Performance Return after charges (4.22%) 3.05% 28.20% (0.28%) Other information Closing net asset value ( 000) 1,671 1,858 1,942 1,908 Closing number of units 295, , , ,605 Operating charges 1.08% 1.09% 1.12% 1.11% Direct transaction costs 0.06% 0.11% 0.14% 0.10% Prices + Highest unit price (pence) Lowest unit price (pence) 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 Comparative tables Accumulation 30/11/18 31/05/18 31/05/17 31/05/16 Change in net assets per unit pence pence pence pence Opening net asset value per unit Return before operating charges* (30.35) Operating charges (4.47) (8.83) (8.10) (6.62) Return after operating charges* (34.82) (1.72) Distributions on accumulation units (2.14) (3.52) (1.10) (3.95) Retained distributions on accumulation units Closing net asset value per unit * after direct transaction costs of: Performance Return after charges (4.22%) 3.05% 28.18% (0.27%) Other information Closing net asset value ( 000) 50,956 55,124 58,794 51,096 Closing number of units 6,445,314 6,678,304 7,339,891 8,176,458 Operating charges 1.08% 1.09% 1.12% 1.11% Direct transaction costs 0.06% 0.11% 0.14% 0.10% Prices + Highest unit price (pence) Lowest unit price (pence) 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. 10

13 Statistical information Investment objective The objective of the Fund is to maximise the long term return, mainly through capital growth, by investment in a diversified portfolio of international securities in North America, the Far East (including Australasia) and Europe, which could occasionally include securities in the United Kingdom. Investment policy Although the investment powers of the Fund are widely drawn, the portfolio comprises mainly Worldwide equity shares. This is an authorised unit trust scheme, as defined by the Financial Services and Markets Act The Fund is an authorised securities scheme, under the terms of the Financial Conduct Authority s Collective Investment Schemes Sourcebook. The use of financial instruments by a securities scheme is set out in the Financial Conduct Authority s Collective Investment Schemes Sourcebook. A securities scheme is required to be invested in transferable securities in accordance with any restrictions set out in those regulations and the prospectus. 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 income is reinvested to enhance the unit price). There will be two potential distributions in each accounting year: an interim distribution as at 30 November and a final distribution as at 31 May. 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. 11

14 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 (31/05/18: 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 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(s) 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. 5 February 2019 Craig Baker, Director Andrew Moss, Director 12

15 Interim financial statements (unaudited) For the half year ended 30 November 2018 Statement of total return Income 30/11/18 30/11/17 Net capital (losses)/gains (2,446,181) 1,631,491 Revenue 493, ,067 Expenses (291,920) (319,681) Interest payable and similar charges (288) (153) Net revenue before taxation 201,086 62,233 Taxation (54,957) (44,861) Net revenue after taxation 146,129 17,372 Total (deficit)/return before distribution (2,300,052) 1,648,863 Distributions (146,131) (17,373) Change in net assets attributable to unitholders from investment activities (2,446,183) 1,631,490 Statement of change in net assets attributable to unitholders 30/11/18 30/11/17* Opening net assets attributable to unitholders 56,982,394 60,735,949 Amounts receivable on issue of units 226,185 17,591 Amounts payable on cancellation of units (2,273,158) (3,347,806) (2,046,973) (3,330,215) Change in net assets attributable to unitholders from investment activities (2,446,183) 1,631,490 Retained distributions on accumulation units 138,162 15,541 Closing net assets attributable to unitholders 52,627,400 59,052,765 *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. 13

16 Interim financial statements (unaudited) As at 30 November 2018 Balance sheet 30/11/18 31/05/18 Assets: Fixed assets: Investments 51,661,676 56,403,721 Current assets: Debtors 651, ,512 Cash and bank balances 459,471 1,136,994 Total current assets 1,111,104 1,545,506 Total assets 52,772,780 57,949,227 Liabilities: Creditors: Other creditors (140,838) (959,391) Distribution payable (4,542) (7,442) Total liabilities (145,380) (966,833) Net assets attributable to unitholders 52,627,400 56,982,394 Notes to the interim financial statements Accounting policies The interim financial statements have been prepared under the historical cost basis, as modified by the valuation of investments and in compliance with 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). Unless otherwise stated all accounting policies applied are consistent with those of the Annual Report for the year ended 31 May 2018 and are described in those financial statements. 14

17 Distribution table For the half year ended 30 November 2018 Interim distribution in pence per unit Group 1: units purchased prior to 1 June 2018 Group 2: units purchased 1 June 2018 to 30 November 2018 Income pence pence per unit per unit Net payable paid income Equalisation 31 Jan 31 Jan 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. 15

18 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 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. Risks 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. 16

19 Corporate information Manager 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 Andrew Moss Craig Baker Mike Urmston Nick Poyntz-Wright PUTM Director, Chief Executive Phoenix Life; PUTM Director, Head of Investment Management Phoenix Life; Non Executive Director of PUTM Non Executive Director of PUTM (appointed 6 July 2018). Registrar and correspondence address Phoenix Unit Trust Managers Limited PO Box Chelmsford CM99 2EN Authorised and regulated by the Financial Conduct Authority. Investment Adviser Ignis Investment Services Limited 1 George Street Edinburgh EH2 2LL Registered in Scotland No.SC Authorised and regulated by the Financial Conduct Authority. Trustee HSBC Bank plc 1-2 Lochside Way Edinburgh Park Edinburgh EH12 9DT Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Independent Auditor Ernst & Young LLP Atria One 144 Morrison Street Edinburgh EH3 8EX 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. 17

20 18 Notes

21 Notes 19

22 20 Notes

23

24 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. B