ETHICAL UNIT TRUST FOR THE YEAR ENDING 31 MARCH 2016

Transcription

1 ETHICAL UNIT TRUST FOR THE YEAR ENDING 31 MARCH 2016

2 Manager St. James's Place Unit Trust Group Limited PO Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Conduct Authority) Directors of the Manager D. C. Bellamy A. M. Croft I. S. Gascoigne D. J. Lamb Investment Adviser Aberdeen Asset Managers Limited 10 Queen Street Aberdeen, AB10 1YG United Kingdom (Authorised and regulated by the Financial Conduct Authority) Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London, EC4V 4LA United Kingdom (Authorised and regulated by the Financial Conduct Authority) Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon, SS15 5FS United Kingdom (Authorised and regulated by the Financial Conduct Authority) Independent Auditor PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh, EH3 8EX United Kingdom Prospectus and Manager's Reports Copies of the up to date Prospectus (Scheme Particulars) and latest Manager's Report and Financial Statements for the range of St. James's Place Unit Trusts can be requested from a member of the St. James's Place Partnership or, at any time during normal business hours, from the Administration Centre at PO Box 9034, Chelmsford CM99 2XA. Freephone:

3 Report of the Manager The Report of the Manager consists of The Trust's Performance, Risk and Reward Profile, Investment Adviser's Comments and Portfolio Statement. The Trust's Performance The performance of the Trust since its launch in April 1999, over the five year period since March 2011 and over the year under review is shown below, together with figures for the most commonly quoted indices in comparable markets where the major proportion of the Trust has been invested. Income units (offer to offer) Accumulation units (offer to offer) Indices - actual MSCI AC World (Total Return) Source: Lipper for Fund returns 06/04/99 to 31/03/11 to 31/03/15 to 31/03/16 31/03/16 31/03/16 % change % change % change REMEMBER THAT THE PRICE OF UNITS AND REVENUE FROM THEM MAY GO DOWN AS WELL AS UP. PLEASE BE AWARE THAT PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place Ethical Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 5. It was calculated using performance data up to 1 February The risk category is recalculated weekly and during the year under review, the risk category did not change. Investment Adviser's Comments The fund fell over the year, significantly underperforming the MSCI AC World GDR Index. Global equities ended flat in a year marked by intense volatility, fuelled by US monetary policy uncertainty, China s policy gaffes and yuan unease, and a commodities rout. However, sentiment picked up dramatically towards the period-end, with negative interest rates imposed in Europe and Japan. As expectations were lowered for the number of rate hikes in the US this year, the resulting dollar weakness provided relief to commodity-related emerging markets. The underweight to the US, stock selection in France and overweight to the UK detracted, while the overweight to Taiwan aided performance. Daito Trust Construction benefited from recent data revealing better-than-expected orders in February amid still-robust housing occupancy levels. For another of the portfolio s winners, Taiwan Semiconductor Manufacturing, earnings were supported by robust demand in the communications and computing sectors. Top detractors were Casino Guichard Perrachon sentiment towards the French retailer remained weak due to its significant exposure to Latin America, particularly Brazil, which is undergoing a sharp economic contraction; and Standard Chartered the lender was weighed down by higher provisions, a slowing Chinese economy and global growth concerns. We introduced Kasikornbank, with a robust branch network; Fielmann, with an established European presence; Temenos, which can benefit from structural growth drivers; Amdocs, with solid client retention; Aveva, with recurring revenues despite cyclical end-markets; Essilor, which can benefit from low rates of market penetration; Samsonite, with strong brands; Shimano, with a sustainable technological advantage; MTR, with robust city-rail operations and property developments; Whitbread, with competitive positions in its key UK markets; Intercontinental Exchange, with a unique business model; Check Point Software and Mitsubishi Estate, on recent weakness; and Kerry Logistics, with strong warehousing capabilities. 2

4 Report of the Manager (continued) We sold Nordea as its growth potential seems limited; Vale, on concerns of supply and demand imbalances; Casino Guichard Perrachon, after it divested its attractive Thai business; Zurich Insurance, on concerns about management strategies and poor results; Engie, as political, environmental and regulatory pressures will likely remain; BHP Billiton, Sysmex, Verizon and Viscofan, for failing the fund s ethical screening; Ericsson and South32, to fund better opportunities. We remain mindful of slowing global growth, an acceleration in China s slowdown, and uncertainty over policy-making. Despite the unstable environment, our portfolio continues to reflect the strategy of diversification as we look for businesses that boast relatively unique attributes. Aberdeen Asset Managers Limited 14 April

5 Comparative table as at 31 March 2016 Net Asset Value and Ongoing Charges Figure 31/03/16 31/03/15 31/03/14 Income Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (12.28) Operating charges (2.18) (2.33) (2.06) Return after operating charges* (14.46) (0.64) Distributions on income units (1.44) (1.95) (1.80) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges (9.64%) 9.38% (0.45%) Other information Closing net asset value ( 000) 3,449 4,010 3,980 Closing number of units 2,572,963 2,674,206 2,865,414 Operating charges** 1.62% 1.62% 1.63% Direct transaction costs 0.07% 0.05% 0.06% Prices Highest unit price (p) Lowest unit price (p)

6 Comparative table as at 31 March 2016 (continued) 31/03/16 31/03/15 31/03/14 Accumulation Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (14.20) Operating charges (2.52) (2.66) (2.57) Return after operating charges* (16.72) (0.72) Closing net asset value per unit Retained distributions on accumulation units* *after direct transaction costs of: Performance Return after charges (9.65%) 9.41% (0.45%) Other information Closing net asset value ( 000) 199, , ,319 Closing number of units 127,143, ,168, ,002,768 Operating charges** 1.62% 1.62% 1.63% Direct transaction costs 0.07% 0.05% 0.06% Prices Highest unit price (p) Lowest unit price (p) **Operating charges are prepared using the same methodology as the ongoing charges appearing in the KIID, based on the information in this report. This figure may differ from the performance figure quoted in the Investment Report. The Investment Report performance figure is calculated using the last available published price for a given shareclass in the period compared to the equivalent for the prior period. The price per the financial statements values the fund on a bid-price basis. The financial statements shareclass valuation is based on market prices on the last day of the period, which can differ from the intraday pricing point of the Trust. 5

7 Portfolio Statement as at 31 March 2016 Security Holdings Market Value 000 % of Net Assets BERMUDA (0.00%) 4, Kerry Logistics Network 4,206,500 4, BRAZIL (4.31%) 3, Banco Bradesco ADR 623,890 3, CANADA (6.34%) 12, Canadian National Railway 111,800 4, Potash Corp of Saskatchewan 296,700 3, TELUS 0% 159,200 3, CURACAO (2.19%) 4, Schlumberger 92,800 4, FRANCE (5.56%) 5, Essilor International 22,500 1, Schneider Electric 75,200 3, GERMANY (1.68%) 5, Fielmann 40,200 2, Linde 29,300 2, GUERNSEY (0.00%) 3, Amdocs 75,500 3, HONG KONG (4.21%) 11, AIA 1,562,000 6, MTR 673,000 2, Swire Pacific 'B' Shares 2,472,500 3, ISRAEL (1.04%) 4, Check Point Software Technologies 82,200 4, JAPAN (6.59%) 14, Daito Trust Construction 50,200 4, FANUC 44,700 4, Mitsubishi Estate 218,000 2, Shimano 18,000 1, JERSEY (2.52%) 6, Experian 537,200 6, LUXEMBOURG (2.17%) 6, Samsonite International 970,200 2, Tenaris ADR 238,400 4, SINGAPORE (5.96%) 13, City Developments 476,000 2, Oversea-Chinese Banking 1,047,052 4, Singapore Telecommunications 3,558,600 6, SOUTH AFRICA (1.89%) 3, MTN 509,400 3, SPAIN (1.76%) - - SWEDEN (5.87%) 3, Atlas Copco 'A' Shares 184,100 3, SWITZERLAND (3.55%) 1, Temenos 52,769 1, TAIWAN (6.09%) 13, Taiwan Mobile 2,749,000 6, Taiwan Semiconductor Manufacturing ADR 401,300 7,

8 Portfolio Statement (continued) as at 31 March 2016 Security Holdings Market Value 000 % of Net Assets THAILAND (0.00%) 1, Kasikornbank 'A' Shares 576,800 1, UNITED KINGDOM (13.12%) 24, AVEVA 139,300 2, John Wood 577,985 3, Spirax-Sarco Engineering 112,195 4, St. James's Place Money Market Unit Trust L Acc 1,118,881 1, Standard Chartered 659,536 3, Vodafone 2,281,400 5, Weir 242,200 2, Whitbread 78,900 3, UNITED STATES (24.51%) 58, Cisco Systems 258,200 5, Cognizant Technology Solutions 101,400 4, Comcast 'A' Shares 119,800 5, EOG Resources 162,400 8, Intercontinental Exchange 16,000 2, Jones Lang LaSalle 48,400 3, M&T Bank 52,900 4, Oracle 253,100 7, PepsiCo 126,700 9, TJX 75,300 4, Visa 'A' Shares 84,500 4, Investment assets 203, Total other liabilities (net) (498) (0.25) Net assets 202, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. Stocks shown as ADRs represent American Depositary Receipts. During the year under review the Manager decided to place some of the sterling cash held on deposit into the St. James s Place Money Market Unit Trust in order to spread risk across a number of institutions. The St. James s Place Money Market Unit Trust is highly liquid and is rated AAA by Standard & Poors. This investment is a related party. 7

9 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 40,351 Kerry Logistics Network 4,145 M&T Bank 4,023 Whitbread 3,461 Mitsubishi Estate 3,199 Amdocs 3,053 Intercontinental Exchange 2,765 Vodafone 2,442 MTR 2,113 AVEVA 2,076 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 44,236 Zurich Insurance 6,053 Sysmex 4,991 Casino Guichard Perrachon 4,509 Viscofan 4,136 BG 3,972 Nordea Bank 3,806 Vale ADR 3,432 Verizon Communications 3,351 Comcast 'A' Shares 3,236 Stocks shown as ADRs represent American Depositary Receipts. This investment is a related party. 8

10 Statement of the Manager's Responsibilities in relation to the Financial Statements of the Trust The rules in the Financial Conduct Authority's Collective Investment Schemes Sourcebook ("the Rules") require the Manager to prepare Financial Statements for each annual accounting period which give a true and fair view of the financial position of the Trust as at the end of the year and of the net revenue and the net capital losses on the property of the Trust for the year then ended. In preparing the Financial Statements the Manager is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; comply with the requirements of the Statement of Recommended Practice relating to Authorised Funds and the Trust Deed; follow applicable UK Accounting Standards (UK Generally Accepted Accounting Practice); and prepare Financial Statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in operation. The Manager is responsible for keeping proper accounting records and for the management of the Trust in accordance with its Trust Deed, Prospectus and the Rules. The Manager has a general responsibility for taking such steps as are reasonably open to it to prevent and detect fraud and other irregularities. Directors' Certificate This report is certified in accordance with the requirements of the rules in the Financial Conduct Authority's Collective Investment Schemes Sourcebook. A. M. Croft D. J. Lamb London 27 May

11 Report of the Trustee to the unitholders of St. James s Place Ethical Unit Trust Trustee's responsibilities The Trustee is responsible for the safekeeping of all the property of the Trust (other than tangible moveable property) which is entrusted to it and for the collection of income that arises from that property. It is the duty of the Trustee to take reasonable care to ensure that the Trust is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( COLL ), the Trust Deed and Prospectus, in relation to the pricing of, and dealings in, units in the Trust; the application of income of the Trust; and the investment and borrowing powers and restrictions applicable to the Trust. Report of the Trustee to the unitholders of St. James s Place Ethical Unit Trust for the year ended 31st March 2016 Having carried out such procedures as we considered necessary to discharge our responsibilities as Trustee of the Trust, it is our opinion, based on the information available to us and the explanations provided, that, in all material respects, the Manager: (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 Sourcebook, the Trust Deed and Prospectus, and (ii) has, observed the investment and borrowing powers and restrictions applicable to the Trust. BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London EC4V 4LA Manager Date 09 April

12 Independent Auditors' Report to the Unitholders of Our opinion In our opinion, 's financial statements, (the "financial statements"): give a true and fair view of the financial position of the Trust as at 31 March 2016 and of the net revenue and the net capital losses of the scheme property of the Trust for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of Recommended Practice for UK Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. What we have audited The financial statements, which are prepared by St. James s Place Unit Trust Group Limited (the Authorised Fund Manager ), comprise: the balance sheet of the Trust as at 31 March 2016 ; the statement of total return of the Trust for the year then ended; the statement of change in net assets attributable to unitholders of the Trust for the year then ended; the notes to the Trust s financial statements, which include a summary of significant accounting policies and other explanatory information; and the distribution tables. 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), the Statement of Recommended Practice Financial Statements of UK Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for UK Authorised Funds ), the Collective Investment Schemes sourcebook and the Trust Deed. In applying the financial reporting framework, the Authorised Fund Manager has made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Opinions on matters prescribed by the Collective Investment Schemes sourcebook we have obtained all the information and explanations we consider necessary for the purposes of the audit; and the information given in the Authorised Fund Manager s Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Other matters on which we are required to report by exception Propriety of accounting records and information and explanations received Under the Collective Investment Schemes sourcebook we are required to report to you if, in our opinion: proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. 11

13 Independent Auditors' Report to the Unitholders of (continued) Responsibilities for the financial statements and the audit Our responsibilities and those of the Authorised Fund Manager As explained more fully in the Statement of the Manager's Responsibilities set out on page, the Authorised Fund Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the Trust s unitholders as a body in accordance with paragraph of the Collective Investment Schemes sourcebook and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ( ISAs (UK & Ireland) ). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Trust s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Authorised Fund Manager; and the overall presentation of the financial statements. we primarily focus our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements. we test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the Annual Report (the Annual Report ) to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 27 May 2016 The maintenance and integrity of the St. James s Place website is the responsibility of the Fund Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 12

14 Statement of Total Return for the year ended 31 March 2016 Income Net capital (losses)/gains Revenue Expenses Interest payable and similar charges Net revenue before taxation Taxation Net revenue after taxation 01/04/15 to 31/03/16 01/04/14 to 31/03/15 Notes (26,128) 17, ,200 7,412 4 (3,454) (3,772) - (1) 2,746 3,639 5 (450) (490) 2,296 3,149 Total return before distributions (23,832) 20,968 Distributions 6 (2,296) (3,149) Change in net assets attributable to unitholders from investment activities (26,128) 17,819 Statement of Change in Net Assets Attributable to Unitholders for the year ended 31 March /04/15 to 31/03/16 01/04/14 to 31/03/ Opening net assets attributable to unitholders 241, ,299 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 31,777 19,208 Amounts payable on cancellation of units* (46,949) (25,740) Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Class actions Closing net assets attributable to unitholders (15,172) (6,532) - (2) (26,128) 17,819 2,107 3, , ,710 *Prior year figures in relation to Dilution Levy have been reclassified and included within creations and cancellation of units as this was income and expenses arising from creations and cancellations respectively. 13

15 Balance Sheet as at 31 March 2016 Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Creditors 31/03/ /03/2015 Notes , , , , ,704 Distribution payable (37) (52) Other creditors 9 (1,465) (942) Total liabilities (1,502) (994) Net assets attributable to unitholders 202, ,710 14

16 Notes to the Financial Statements for the year ended 31 March Accounting and Distribution policies (a) Basis of accounting The Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments, in compliance with the Financial Conduct Authority's Collective Investment Schemes Sourcebook. They have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland FRS 102) and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the Investment Management Association May 2014 (IMA SORP 2014). Both FRS 102 and SORP 2014 have been adopted in the current year. The changes in the SORP 2014 are presentational only and there have been no changes to any figures detailed with the financial statements. The financial statements are prepared on the going concern basis. (b) Revenue Dividends receivable from equity investments are credited to the revenue account when the investments are first quoted ex-dividend. Interest on deposits is accounted for on an accruals basis. Interest on capital relate to payments made by brazillian corporations as an alternative form of dividend distribution. Revenue from other authorised collective investment schemes is recognised when the investments are quoted ex-dividend. Management fee rebates from underlying funds will be taken to revenue or capital depending on the treatment adopted in the underlying funds. Management fee rebates received from St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. (c) Expenses (d) (e) (f) All expenses of the Trust are recognised on an accruals basis and are deducted from revenue with the exception of handling charges and stamp duty reserve tax which are deducted from capital. Valuation of investments Listed investments have been valued at bid market value at midday on 31/03/2016 (31/03/15: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. Authorised unit trusts are valued at cancellation price for funds managed by the manager and a bid price for all other funds. Suspended, delisted, unquoted or manually priced securities are valued by the manager taking into account, where appropriate, latest dealing prices, financial performance and other relevant factors. Foreign exchange Assets and liabilities have been translated into sterling at the exchange rates prevailing at the Balance Sheet date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Taxation Provision is made for corporation tax at the current rate on the excess of taxable revenue over allowable expenses. UK dividend revenue is disclosed net of any related tax credit. Overseas dividends continue to be disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the tax note. Deferred tax is provided for on the liability method on all timing differences. A deferred tax asset is only recognised to the extent that a timing difference will be of future benefit. 15

17 Notes to the Financial Statements (continued) (g) Distribution policy At the end of the accounting period all remaining revenue, less revenue expenses and taxation, will be attributable to unitholders. In the case of income unitholders this will be paid as a distribution. In the case of accumulation unitholders the distribution will be reinvested. Equalisation on distributions received is deducted from the cost of the investment. (h) Equalisation Equalisation applies only to units purchased during the distribution period. It is the accrued revenue element of the purchase price of all such units and is refunded to 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 units for capital gains tax purposes. (i) Special dividends Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. (j) Scrip dividends The ordinary element of stocks received in lieu of cash dividends is recognised as revenue and where applicable, is included in the distribution. In the case of enhanced scrip dividends, the value of the enhancement is treated as capital. 2. Net capital (losses)/gains 01/04/15 to 01/04/14 to 31/03/16 31/03/15 3. Non-derivative securities Currency losses Handling charges Net capital (losses)/gains Revenue (26,109) 17,910 (13) (87) (6) (4) (26,128) 17,819 01/04/15 to 31/03/16 01/04/14 to 31/03/ UK dividends 754 1,248 Overseas dividends 4,785 5,484 Distributions from Regulated Collective Investment Schemes Interest distributions 5 4 Bank interest 1 92 Interest on capital Management charge rebate on underlying holdings Scrip dividends Total revenue 6,200 7,412 16

18 Notes to the Financial Statements 4. (continued) Expenses 01/04/15 to 31/03/16 01/04/14 to 31/03/ Payable to the Manager Management charge 3,094 3,495 Payable to the Trustee Trustee's fee Other expenses Audit fee 5 9 Investment administration fee Registrar's fee Safe custody fee ADR Issuance fee Investment adviser's fee Total expenses 3,454 3,772 With effect from 26 October 2015 all expenses are now paid by the Manager out of the Annual Management Charge with exception of the Investment Adviser fee and AMC fee rebate. This includes current year Audit Fee of 9, Taxation 01/04/15 to 31/03/16 01/04/14 to 31/03/ (a) Analysis of charge in year: Irrecoverable overseas tax (b) Factors affecting total tax charge for the year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2015: 20%). The differences are explained below: Net revenue before taxation 2,746 3,639 (c) (d) Corporation Tax at 20% (2015: 20%) Effects of: UK dividends not subject to corporation tax (151) (250) Non taxable scrip dividends (71) (32) Non taxable foreign dividends (957) (1,097) Movement in excess management expenses Irrecoverable overseas tax Total tax charge for year (note 5a) Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. Factors that may affect future tax charges At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of 4,022,535 (31/03/15: 3,393,322) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely the Trust would generate sufficient taxable profits in the future to utilise these amounts. 17

19 Notes to the Financial Statements (continued) 6. Distributions The distribution takes account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/04/15 to 01/04/14 to 31/03/16 31/03/ Final distribution 2,144 3,096 Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (303) (214) Net distribution for the year Debtors Accrued revenue Income tax recoverable Overseas tax recoverable Total debtors Cash and bank balances Cash and bank balances: Sterling Cash and bank balances: Overseas Total cash and bank balances Other creditors Purchases awaiting settlement Amounts payable for cancellation of units Accrued expenses Total other creditors 10. Units in issue Reconciliation of the unit movement in the year: 2,296 3,149 31/03/ /03/ /03/ /03/ , ,113 31/03/ /03/ , Opening Units Closing units units in issue Creations Cancellations converted in issue Income 2,674,206 19,876,217 (19,977,460) - 2,572,963 Accumulation 137,168,469 3,564,833 (13,590,090) - 127,143, Related party transactions St. James's Place Unit Trust Group Limited and BNY Mellon Trust & Depositary (UK) Limited together with their associates are related parties and regarded as controlling parties by virtue of having the ability to act in respect of operations of the Trust. The Manager's service charge paid to St. James's Place Unit Trust Group Limited is shown in note 4 and details of the value of units created and cancelled by St. James's Place Unit Trust Group Limited are shown in the Statement of Change in Net Assets Attributable to Unitholders. The net balances due to St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 602,411 (31/03/15: 127,427). The Manager, St. James's Place Unit Trust Group Limited, is a subsidiary of St. James's Place Wealth Management Group plc ('SJPWMG'). Two fellow subsidiaries of SJPWMG, St. James's Place International plc and St. James's Place UK plc, invest some of their life and pension policyholders' funds into the. The value of these investments at the year end was 117,750,037 (31/03/15: 141,081,853). Included in the investment portfolio is a holding of 1,118,881 units (31/03/15: 4,840,959) in St. James's Place Money Market Unit Trust (a St. James's Place Unit Trust Group Limited fund) with a market value of 1,168,042 (31/03/15: 5,047,765). As at 31/03/16 total revenue earned amounts to 24,681 (31/03/15: 24,773). 18

20 Notes to the Financial Statements (continued) 12. Capital commitments and contingent liabilities On 31 March 2016, the Trust had no capital commitments (31/03/15: nil) and no contingent liabilities (31/03/15: nil). 13. Financial instruments In accordance with the investment objectives, as stated on page 25, the Trust held certain financial instruments. These comprise: Equity shares and units in collective investment schemes; and. Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations. The rules in the Scheme Documents set out the financial instruments in which the Trust may invest. The Trust's use of financial instruments during the year satisfies these requirements. 14. Risk management The Manager s objectives in managing investment risk are to ensure that the investment profile of the Trust is consistent with its stated investment objectives and risk profile, and to ensure appropriate liquidity. Day to day responsibility for managing investment risk is delegated to the Investment Adviser, who is required to manage the Trust in accordance with FCA regulations, the Prospectus and the terms of their Investment Management Agreement with the Manager. The Manager monitors the activities of the Investment Adviser, through a variety of mechanisms including the following: Initial and ongoing due diligence of Investment Adviser investment and risk management procedures including on site reviews; Periodic reviews of the investments held by the Trust and their compliance with investment objectives and liquidity requirements; and Ongoing review of the investment performance of the Trust against appropriate benchmarks. The main risks arising from the Trust's financial instruments are market price risk, foreign currency risk, interest rate risk, credit risk and liquidity risk. The Manager's policies for managing these risks are summarised below. These policies have remained unchanged since the beginning of the year to which these financial statements relate (same for 2014). (a) Market price risk Market price risk represents the potential loss the Trust might suffer through holding market positions in the face of price movements. The Manager has delegated the investment management of the portfolio to an external Investment Adviser who determines the asset allocation and minimises the risk associated with particular countries or industry sectors, whilst continuing to follow the Trust s investment objectives. The Manager has the responsibility for monitoring the portfolio to ensure compliance with the investment objectives and that an acceptable risk and reward profile is maintained. The sensitivity of the fund to market risk is calculated using the Value-at-Risk (VaR) approach. VaR is a mathematical-statistical concept and is commonly used as a standard measure of risk in the financial sector. The maximum potential loss that a fund could suffer under normal market conditions within a given time horizon and a certain degree of confidence is estimated. An absolute VaR is calculated using the historic return series of each fund. Using the Historical VaR approach, a 1% 20-day VaR using 10 years of historical daily data is calculated. An annualised VaR limit of 20% is considered for the fund. The actual VaR is summarised in the table below: Lowest monthly VaR Highest monthly VaR Average monthly VaR 01/04/15 to 31/03/16 01/04/14 to 31/03/15 % %

21 Notes to the Financial Statements (continued) (b) Foreign currency risk The revenue and capital value of the Trust s investments can be significantly affected by currency translation movements as a proportion of the Trust s assets and revenue are denominated in currencies other than sterling, which is the Trust s functional currency. The Manager has identified three principal areas where foreign currency risk could impact the Trust: Movements in exchange rates affect the value of investments; Movements in exchange rates affect short term timing differences; and Movements in exchange rates affect revenue received. The Trust may be subject to short term exposure to exchange rate movements, for instance where there is a difference between the date an investment purchase or sale is entered into and the date when settlement of the proceeds occurs. When the Trust enters into such a transaction which will involve the buying or selling of foreign currency in order to complete, a foreign exchange contract is entered into as soon as possible after the initial transaction in order to minimise the exchange rate risk. The Trust receives revenue in currencies other than sterling and movements in exchange rates can affect the sterling values of this revenue. The Trust converts all receipts of revenue into sterling on or near the date of receipt, it does not however hedge or otherwise seek to avoid exchange rate risk on revenue accrued but not received. An analysis for all currencies at the year end is shown below: Net foreign currency assets 31/03/ /03/2015 Currency Total Total GBP 30,917 39,117 AUD 1 1 CAD 7,262 8,994 CHF 1,359 8,574 EUR 10,430 22,084 HKD 18,212 10,155 JPY 14,681 16,048 SEK 3,220 14,173 SGD 13,757 14,403 THB 1,981 - TWD 6,173 6,528 USD 91,187 97,054 ZAR 3,337 4,579 Total 202, ,710 (c) Interest rate risk Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. 20

22 Notes to the Financial Statements (continued) (d) Credit risk Credit risk occurs where there is a risk associated with the uncertainty of a counterparty s ability to meet its obligations. This risk is managed by reviewing the counterparty s credit rating, at the time of purchase and on an ongoing basis, and ensuring that the portfolio is sufficiently diversified. The impact of movements in credit rating and spread, and their effect on market prices, is considered to be part of market price risk, which is discussed above. The Trust s investments and cash are held on its behalf by State Street Bank and Trust Company (acting as agent), the custodian to the Trust, and its appointed sub custodians. Bankruptcy or insolvency of the custodian or its sub custodians may cause the Trust s rights with respect to securities to be delayed. This risk is managed through ongoing monitoring of the custodian and periodic reviews of its procedures for selecting and monitoring sub custodians, together with ad hoc reviews of custodian and sub custodian credit ratings. Certain transactions in securities that the Trust 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 external Investment Adviser selects acceptable counterparties through which investments are bought and sold. The Manager has responsibility for monitoring the process by which these counterparties are selected to minimise risk. (e) Liquidity risk Liquidity risk arises where liabilities cannot be met when they fall due or can only be met at an uneconomic price. For instance, this could arise if the Trust faces significant redemptions in a short period of time. In order to manage this risk the manager monitors the Trust with the aim of ensuring that it contains diversified liquid assets, that the Trust possesses sufficient liquidity for the purpose of meeting the redemption of units, and that the Trust has sources of borrowing available to it. (f) Derivative risk The Manager may use derivative instruments to hedge the value of the investment portfolio against market and stock specific risk through investment in warrants, options and futures. The purpose of the financial instruments is efficient portfolio management. In particular futures may be used to implement the investment policy in a timely manner and to manage market risk arising from the time lag between funds being receivable or payable by the Trust and investment and disinvestment in underlying securities. No such derivatives were held by the Trust in the year to 31 March (g) Maturity profile of financial liabilities All financial liabilities of the Trust at the year end are due to settle in one year or less, or on demand. (h) Fair value of financial assets and liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the Balance Sheet, and their fair values. 21

23 Notes to the Financial Statements 15. Portfolio transaction costs Analysis of total trade costs. Collective Investment Schemes Equities Trades in the year before transaction costs Commissions Collective Investment Schemes Equities Total commissions Taxes Collective Investment Schemes Equities (continued) Purchases Sales 01/04/15 to 31/03/16 01/04/14 to 31/03/15 01/04/15 to 31/03/16 01/04/14 to 31/03/ ,351 48,886 44,236 46,160 52,186 38,210 59,421 42,580 92,537 87, ,657 88, (43) (41) (43) (41) (43) (41) Total taxes Total costs Trades in the year after transaction costs 92,645 87, ,614 88,699 Total transaction cost expressed as a percentage of asset type cost. Purchases Sales 01/04/15 to 31/03/16 01/04/14 to 31/03/15 01/04/15 to 31/03/16 01/04/14 to 31/03/15 % % % % Commissions Collective Investment Schemes Equities Taxes Collective Investment Schemes Equities Total transaction costs expressed as a percentage of net asset value. 01/04/15 to 31/03/16 01/04/14 to 31/03/15 % % Commissions Taxes Total costs Average portfolio dealing spread The average portfolio dealing spread at the balance sheet date was 0.13% (31/03/15: 0.06%). 22

24 Notes to the Financial Statements (continued) 16. Fair value The intention of a fair value measurement is to estimate the price at which an asset or a liability could be exchanged in the market conditions prevailing at the measurement date. The measurement assumes the exchange is an orderly transaction (that is, it is not a forced transaction, involuntary liquidation or distress sale) between knowledgeable, willing participants on an independent basis. The purpose of the fair value hierarchy is to prioritise the inputs that should be used to measure the fair value of assets and liabilities. The highest priority is given to quoted prices at which a transaction can be entered into and the lowest priority to unobservable inputs. The fund has early adopted the March 2016 amendment to section 34 of FRS102 (Fair Value Hierarchy disclosures that simplify preparation of financial instrument disclosure), which is applicable to accounting periods beginning on or after 1 January 2017 with earlier application permitted. In accordance with FRS102 the fund classifies fair value measurement under the following levels: 31/03/ /03/2015 Assets Liabilities Assets Liabilities Valuation technique Level 1 201, ,109 - Level 2 1,168-5,048 - Level Total fair value 203, ,157 - 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. 23

25 Distribution Tables Distribution in pence per unit Group 1 Final Units purchased prior to 1 April 2015 Group 2 Final Units purchased on or after 1 April 2015 to 31 March 2016 Income Net revenue Equalisation Distribution payable 31/05/16 Distribution paid 31/05/15 Group 1 (p) (p) (p) (p) Final Group 2 (p) (p) (p) (p) Final Accumulation Net revenue Equalisation Distribution payable 31/05/16 Distribution paid 31/05/15 Group 1 (p) (p) (p) (p) Final Group 2 (p) (p) (p) (p) Final

26 General Information The Trust is an authorised Unit Trust scheme under section 243 of the Financial Services and Markets Act (2000) and is constituted by a Trust Deed dated 12 February The Unit Trust is subject to the rules of the Financial Conduct Authority's Collective Investment Scheme Sourcebook and is classified as a UCITS Scheme. The Trust Manager The Manager of the Trust is St. James's Place Unit Trust Group Limited which is authorised and regulated by the Financial Conduct Authority. Investment Objectives The investment objective of the Scheme is to achieve capital appreciation over the medium to long term, by investing worldwide in companies that meet generally accepted ethical criteria (a statement of the ethical investment principles is available on request). The Scheme will invest principally in equities and convertible stock and may hold fixed interest securities. In selecting assets, the Manager will not knowingly invest in any company, industry or country whose business or behaviour offends against generally accepted ethical criteria. The Scheme is permitted to invest in derivative and forward transactions for the purposes of efficient portfolio management (including hedging). It is the Manager's intention that the assets of the Unit Trust will be invested so that the Unit Trust will be eligible for inclusion in an ISA. Unit Dealings Dealings on the Trust take place on a daily basis. Purchase or sale instructions can be made by telephone or in writing to St. James's Place Unit Trust Group Limited, PO Box 9034, Chelmsford, CM99 2XA, United Kingdom, freephone: The Manager adopts a policy of forward pricing, i.e. the order will be transacted on the dealing day following receipt of the client's instructions, or if received before noon, on that dealing day. In the case of telephone purchases of units from the Manager, settlement must be by return of post after receipt of the contract note. In the case of telephone redemptions, the proceeds will not become payable until the receipt at the Administration Centre of a written request. A contract note confirming the subscription or redemption price and the number of units involved will be forwarded, together with a cancellation notice, where appropriate, on the next business day. The most recent issue and redemption prices will be published on the Manager's website: and are available by calling the Administration Centre on Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment is 150 and the minimum monthly increment is 50. The minimum annual investment is 1,500 and the minimum annual increment is 500. Management Charges With effect from 26 October 2015 the Manager changed the charging structure of the Scheme. The annual management charge has been adjusted to include many of the predictable costs, such as trustee fees and administration fees, which were previously charged directly to the Scheme, and to exclude the fees for Investment Advisers, which are now charged directly to the Scheme. These changes were presentational only and there has been no overall increase in the total charges met by the Scheme. In addition, the way the annual management charge is calculated has been changed. The charge was previously calculated monthly, based on the Scheme value on the first business day of the month; with effect from 26 October 2015 it is calculated daily, based on the Scheme value every day. The Trust Deed permits the following management charges which are receivable by the Manager: (a) A Preliminary Charge of 5 per cent which is included in the offer price of the Units. (b) An Annual Management Charge at a rate of 1.37 per cent (1.5 per cent prior to 26 October 2015) of the value of the Trust. 25

27 General Information (continued) Income Distributions Income distributions are made annually on or before the 31 May. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. Tax Vouchers Income unitholders that receive income distributions by direct credit and accumulation unitholders (where the distribution income is reinvested) receive an annual consolidated tax voucher in May with all the relevant payment and tax information required to complete a tax return. Tax vouchers will be enclosed if income unitholders receive payment by cheque. Report A report is sent semi-annually to all unitholders on or before 31 May and 30 November. Capital Gains Tax The Trust is not liable to tax on capital gains and any individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2016/2017 exceed 11,100 (2015/ ,100). To calculate capital gains on accumulation units, the total amount of reinvested net revenue (shown on the annual tax credit vouchers) should be added to the base cost of the units purchased. Unitholders should consult their professional advisers for any advice regarding their tax position. Remuneration St. James s Place PLC ( SJP PLC ) personnel providing services to St. James s Place Unit Trust Group Limited ( the Manager ) are subject to the SJP PLC Remuneration Policy (the Remuneration Policy ). The Remuneration Policy reflects the remuneration requirements of the UCITS V Directive (2014/91/EU). Details of the Remuneration Policy are available through www1.sjp.co.uk/about-st-james-place/our-responsibilities/corporate-governance which is updated periodically to reflect changes to the policy. 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. 26