NORTH AMERICAN UNIT UNIT TRUST

Transcription

1 NORTH AMERICAN UNIT UNIT TRUST FOR THE YEAR ENDED 31 MARCH 2013

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3 Manager St. James's Place Unit Trust Group Limited P.O. 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 Secretary of the Manager St. James's Place Administration Limited Investment Adviser Aristotle Capital Management LLC Santa Monica Boulevard, Suite 1700, Los Angeles, CA United States of America (Authorised by the Securities and Exchange Commission) 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) Auditor PricewaterhouseCoopers LLP Erskine House Queen Street Edinburgh, EH2 4NH 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 P.O. Box 9034, Chelmsford CM99 2XA. Freephone:

4 Report of the Manager During the year under review, 1 April 2012 to 31 March 2013, the St. James's Place North American Unit Trust Income unit offer price rose by 22.8% from 87.46p to 107.4p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) rose by 22.8% from 87.46p to 107.4p. On the 28 May 2013, the latest available date before the printing of this report, the Income unit offer price was 111.9p and the Accumulation unit offer price was 111.9p. The estimated yield was 0.00%. The Trust's Performance The performance of the Trust since its launch in April 1999, over the five year period since March 2008 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 Standard & Poor's 500 Index Source: Lipper for Fund returns 06/04/99 to 31/03/08 to 31/03/12 to 31/03/13 31/03/13 31/03/13 % 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. Investment Adviser's Comments US markets showed substantial optimism buoyed by better than expected corporate profits, the continuation of unlimited monetary stimulus and the end to the fiscal cliff negotiations. Concerns surfaced late in the review period as the Cypriot government raised the possibility of garnishing every citizen s bank account. The implications to the entire banking system in Europe are troubling. The largest detractors from performance were found in the most economically sensitive sectors: consumer discretionary, information technology and industrials. Relative performance was consistent with our approach of buying high-quality companies. Often, the portfolio s holdings in economically sensitive sectors will lag in strong upward markets, as our focus on quality typically leads us to make investments in lower beta, less cyclical companies. In the information technology sector specifically, EMC was the largest detractor from relative return. The company reported earnings slightly ahead of analyst estimates but warned of economic headwinds in Longer term, we continue to find considerable value in EMC due to its leading market position in higher-end storage as well as its majority stake in VMware, Inc., the leader in server, network and storage infrastructure virtualisation. On the positive side of the slate, stock selection in the energy sector was the most significant contributor to relative returns with Phillips 66 as the primary contributor. The share price climbed on continued strong execution, debt reduction and return of capital to shareholders via share repurchases and dividend increases. We remain confident in Phillips 66 s experienced, shareholder-oriented management team. Our outlook remains unchanged as the long-term fundamentals for US business activity continue to show marginal improvement. As long as productivity growth remains strong, we maintain our sanguine views of businesses, the economy and the global financial markets. We believe that over the long term, investing in high-quality businesses at a discount will offer downside protection. Aristotle Capital Management LLC 04 April

5 Performance Record Unit Price History Calendar year * Income Accumulation Highest Lowest Highest Lowest Offer Bid Offer Bid p p p p Distributions The record of net distributions paid per unit is shown below: Income Accumulation Net revenue distributed Net revenue distributed per 1,000 per 1,000 Invested Invested per unit at 02/01/08 per unit at 02/01/08 Calendar year p p * Net Asset Values Year ended March Units in Issue Units in Issue Market NAV per Unit NAV per Unit Income Accumulation NAV of Trust Income Accumulation '000 p p 1,907, ,641, , ,296, ,547, , ,493, ,530, , Ongoing Charges Figure The Ongoing Charges Figure for the year ended 31 March 2013 was 1.57%. From July 2012, following the implementation of the UCITS IV Directive, the Total Expense Ratio (TER) has been replaced by an Ongoing Charges Figure (OCF). Both figures aim to provide an indication of the annual operating expenses of the unit trust, the main difference between them is that the OCF additionally includes certain portfolio transaction based fees charged by the custodian. Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place North American Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 6. It was calculated using performance data up to 4 February The risk category is recalculated weekly and in the period from 31 May 2012 to 31 March 2013, the risk category changed to category 7 on two occasions for five weeks in total. These changes did not necessitate any amendments to the KIID during the period. * To 31 March

6 Investment Assets as at 31 March 2013 Security Holdings Market Value 000 % of Net Assets UNITED STATES (87.02%) 293, Aerospace & Defence (2.44%) 6, General Dynamics 149,400 6, Banks (10.66%) 35, Bank of America 928,100 7, First Republic Bank 239,600 6, JPMorgan Chase 268,000 8, M&T Bank 100,000 6, SunTrust Banks 350,000 6, Chemicals (2.55%) 13, Dow Chemical 301,900 6, Ecolab 144,800 7, Electricity (3.47%) 6, AES 806,060 6, Electronic & Electrical Equipment (3.15%) 8, TE Connectivity 307,925 8, Financial Services (3.82%) 14, Charles Schwab 671,700 7, Morgan Stanley 444,900 6, Fixed Line Telecommunications (1.97%) 4, CenturyLink 204,700 4, Food & Drug Retailers (0.00%) 4, Walgreen 150,600 4, Food Producers (7.81%) 31, Bunge 129,000 6, General Mills 217,700 7, Hershey 163,000 9, Kraft Foods 88,166 2, Mondelez International 309,000 6, Gas, Water & Multiutilities (2.37%) 6, Questar 437,600 6, General Industrials (2.44%) 7, General Electric 500,000 7, General Retailers (10.50%) 31, ebay 290,000 9, Home Depot 69,500 3, JC Penney 308,800 3, Lowe's 228,000 5, Wal-Mart Stores 184,000 9, Health Care Equipment & Services (7.56%) 21, Baxter International 155,000 7, Covidien 164,000 7, Medtronic 210,000 6, Household Goods & Home Construction (2.63%) 10, Lennar 365,000 10, Industrial Engineering (4.62%) 12, Deere 118,000 6, SPX 115,000 5, Media (2.47%) 9, Time Warner 247,000 9,

7 Investment Assets (continued) as at 31 March 2013 Security Holdings Market Value 000 % of Net Assets Non Life Insurance (0.00%) 4, Progressive 245,000 4, Oil & Gas Producers (5.48%) 22, Hess 139,000 6, Phillips ,500 10, Pioneer Natural Resources 65,400 5, Oil Equipment, Services & Distribution (2.10%) 8, Halliburton 299,235 8, Pharmaceuticals & Biotechnology (1.54%) 5, AbbVie 220,300 5, Software & Computer Services (4.05%) 13, International Business Machines 43,000 5, Oracle 350,000 7, Technology Hardware & Equipment (5.39%) 14, EMC 482,600 7, Texas Instruments 276,700 6, UNITED KINGDOM (5.78%) 2, St. James's Place Money Market Unit Trust (Acc) 2,464,598 2, Investment assets 296, Total other assets (net) 5, Net assets 301, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. 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. 5

8 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust (Acc) 78,953 Mondelez International 7,106 Medtronic 6,339 Ecolab 5,776 Bunge 5,568 General Mills 5,527 Phillips 66 5,312 International Business Machines 4,824 Walgreen 3,693 Progressive 3,243 Proceeds Sales 000 St. James's Place Money Market Unit Trust (Acc) 87,300 HJ Heinz 5,658 Abbott Laboratories 4,728 ConAgra Foods 4,499 Hospira 3,141 International Business Machines 2,768 QEP Resources 2,746 Pioneer Natural Resources 2,417 Lowe's 1,255 This investment is a related party. 6

9 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 gains 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. Directors A. M. Croft London D. J. Lamb 29 May

10 Statement of Trustee's Responsibilities The Trustee is under a duty to take into custody and to hold the property of the Scheme in trust for the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Scheme and to ensure that the Scheme is managed in accordance with all applicable rules and restrictions in each annual accounting period, and to report thereon to unitholders. Report of the Trustee In our opinion, the Manager has managed the scheme, in all material aspects, during the period covered by this Report in accordance with the investment and borrowing powers and the restrictions applicable to the scheme, and otherwise in accordance with the Trust Deed and the rules in the Financial Conduct Authority's Collective Investment Scheme provisions of the Sourcebook. For and on behalf of: BNY Mellon Trust & Depositary (UK) Limited London 29 May

11 (the "Trust") Independent Auditors' Report to the Unitholders We have audited the financial statements of the Trust for the year ended 31 March 2013 which comprise the statement of total return, the statement of change in net assets attributable to unitholders, the balance sheet and the related notes. 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) and the Statement of Recommended Practice Financial Statements of Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for Authorised Funds ). Respective responsibilities of Authorised Fund Manager and Auditors As explained more fully in the Authorised Fund Manager s Responsibilities Statement 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 International Standards on Auditing (UK and 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. Scope of the audit of the financial statements 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. In addition, we read all the financial and non-financial information in the Annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on the financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Trust at 31 March 2013 and of the net revenue and the net capital gains of the scheme property of the Trust for the year then ended; and have been properly prepared in accordance with the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. Opinion on other matters prescribed by the Collective Investment Schemes sourcebook In our opinion: 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. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Collective Investment Schemes sourcebook requires us to report to you if, in our opinion: proper accounting records for the Trust have not been kept; or the financial statements are not in agreement with the accounting records and returns. PricewaterhouseCoopers LLP Chartered Accountants & Statutory Auditors Edinburgh 29 May 2013 The Financial Statements are published on www sjp.co.uk which is a website maintained by St. James s Unit Trust Group Limited. The maintenance and integrity of the website is the responsibility of the Authorised 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. Visitors to the website need to be aware that legislation in the United Kingdom governing the presentation and dissemination of the Financial Statements may differ from legislation in their jurisdictions. 9

12 Statement of Total Return for the year ended 31 March 2013 Income Net capital gains Revenue Expenses Finance costs: Interest Net revenue/(expenses) before taxation Taxation Net revenue/(expenses) after taxation 01/04/12 to 31/03/13 01/04/11 to 31/03/12 Notes ,402 8, ,321 2,022 4 (3,464) (2,200) 6 (5) (3) 852 (181) 5 (595) (264) 257 (445) Total return before equalisation 53,659 7,758 Finance costs: Equalisation Change in net assets attributable to unitholders from investment activities 53,681 7,758 Statement of Change in Net Assets Attributable to Unitholders for the year ended 31 March /04/12 to 31/03/13 01/04/11 to 31/03/ Opening net assets attributable to unitholders 188, ,404 Movement due to creation and cancellation of units: Amounts receivable on creation of units 65,754 68,316 Amounts payable on cancellation of units (6,758) (5,711) Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Closing net assets attributable to unitholders 58,996 62,605 - (1) 53,681 7, , ,766 The prices per unit as at 28 March 2013 (unaudited) were: Income units Accumulation units Bid Offer p p

13 Balance Sheet as at 31 March 2013 Assets Investment assets Debtors Cash and bank balances Total other assets Total assets 31/03/13 31/03/12 Notes , , ,293 14, ,412 2,393 5,705 16, , ,065 Liabilities Creditors 10 (375) (3,299) Total liabilities (375) (3,299) Net assets attributable to unitholders 301, ,766 11

14 7 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 applicable UK accounting standards and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the IMA in October 2010 (IMA SORP 2010). (b) Revenue Dividends receivable from equity investments are credited to the revenue account when the investments are first quoted ex-dividend. Interest on deposits and on interest bearing assets is accounted for on an accruals basis. Revenue on interest bearing assets is recognised on an effective interest basis. 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 the St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. (c) Expenses All expenses of the Trust are deducted from revenue with the exception of handling charges and stamp duty reserve tax which are deducted from capital. (d) Valuation of investments Listed investments have been valued at bid market value at midday on 28 March 2013 (30/03/12: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. (e) 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. (f) 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. (g) (h) Distribution policy There is no distribution for the current period. Where there is distributable income, the Manager may choose to pay all remaining revenue, less revenue expenses and taxation as a distribution at the end of the accounting period subject to the amount being de-minimus; however, the manager will choose, with the agreement of the Trustee, to retain the surplus revenue which is below de-minimus and carry it forward to the following accounting period. 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. 12

15 Notes to the Financial Statements (i) Special dividends 01/04/12 to 31/03/13 (continued) Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. Net capital gains Non-derivative securities Currency gains/(losses) Handling charges Net capital gains 01/04/11 to 31/03/ ,391 8, (62) (3) (3) 53,402 8,203 Revenue 01/04/12 to 31/03/13 01/04/11 to 31/03/ Overseas dividends 4,290 1,984 Distributions from Regulated Collective Investment Schemes Interest distributions 6 14 Bank interest 6 5 Management charge rebate on underlying holdings Total revenue 4,321 2,022 Expenses 01/04/12 to 01/04/11 to 31/03/13 31/03/ Payable to the Manager Management charge 3,267 2,029 Payable to the Trustee Trustee's fees Other expenses Audit fee 8 6 Registrar's fees* Safe custody fees Total expenses ,464 2,200 *From 1 August 2012 the basis on which registration fees are charged to the schemes was changed by the Manager, with the agreement of the Trustee. As detailed in the Prospectuses, registration fees are now based on a combination of the total number of St. James s Place Unit Trust Group clients (unitholders) as well as the total number of investments held (unitholdings); and are allocated to the individual unit trusts based on the relative overall values of clients investments. Copies of the Prospectuses are available free of charge on request to the Manager. 13

16 Notes to the Financial Statements 5. (a) (b) Taxation Analysis of charge in year: Irrecoverable overseas tax Factors affecting current tax charge for the year: (continued) 01/04/12 to 01/04/11 to 31/03/13 31/03/ The tax assessed for the year is higher than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2012: 20%). The differences are explained below: Net revenue/(expenses) before taxation 852 (181) (c) (d) Corporation Tax at 20% (2012: 20%) Effects of: Non taxable foreign dividends Movement in excess management expenses Irrecoverable overseas tax Current tax charge for year (note 5a) 170 (36) (858) (397) 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 1,769,296 (31/03/13: 1,081,747) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely the Fund would generate sufficient taxable profits in the future to utilise these amounts. Finance costs Distribution and interest The distribution takes account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/04/12 to 31/03/13 01/04/11 to 31/03/ Add: Revenue deducted on cancellation of units 1 - Deduct: Revenue received on creation of units (23) - Net distribution for the year (22) - Interest 5 3 Total finance costs (17) 3 Movement between net revenue/(expenses) and net distribution 01/04/12 to 01/04/11 to 31/03/13 31/03/ Net revenue / (expenses) after taxation 257 (445) Deficit transferred to capital Less: carried forward to next year (279) - Net distribution for the year (22) - 14

17 Notes to the Financial Statements 8. Debtors Amounts receivable for creation of units Accrued revenue Rebate receivable on underlying holdings Income tax recoverable Total debtors Cash and bank balances Cash and bank balances: Sterling Cash and bank balances: Overseas Total cash and bank balances Creditors Purchases awaiting settlement Accrued expenses Total creditors Units in issue (continued) 31/03/13 31/03/ ,940 14, ,293 14,494 31/03/13 31/03/ ,973 1, ,412 2,393 31/03/13 31/03/ , ,299 At the year end there were Income units of 2,493,537 (31/03/13: 2,296,935) and Accumulation units of 292,530,670 (31/03/13: 224,547,477) resulting in equivalent Income units of 295,024,207 (31/03/13: 226,844,412). 12. 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 from St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 1,599,773 (31/03/13: 14,313,253). Trustee's fees and interest payable to the BNY Mellon Trust & Depositary (UK) Limited and their associates are shown in notes 4 and 6 respectively. The net balances due from BNY Mellon Trust & Depositary (UK) Limited and their associates at the year end in respect of these transactions was 2,308 (31/03/13: nil). 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 221,599,959 (31/03/13: 125,402,568). Included in the investment portfolio is a holding of 2,464,598 units (31/03/13: 10,492,562) in St. James's Place Money Market Unit Trust (a St. James's Place Unit Trust Group Limited fund) with a market value of 2,566,406 (31/03/13: 10,907,899). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. Capital commitments and contingent liabilities On 28 March 2013, the Trust had no capital commitments (31/03/13: nil) and no contingent liabilities (31/03/13: nil). 15

18 Notes to the Financial Statements (continued) 14. Financial instruments In accordance with the investment objectives, as stated on page 19, the Trust holds 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. 15. 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, 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. (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 reward profile is maintained. (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 that 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 open currency contracts at a forward exchange rate in order to reduce or eliminate the impact of exchange rate fluctuations on the value of investments and revenue receivable. 16

19 Notes to the Financial Statements Currency GBP USD Monetary exposures 31/03/13 Nonmonetary exposures 31/03/12 Nonmonetary exposures (continued) 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 of monetary assets and liabilities for all currencies at the year end is shown below: Net foreign currency assets Net foreign currency assets Total Monetary exposures Total ,544 2,566 7,110 16,548 10,908 27, , ,333 (2,960) 164, ,310 5, , ,443 13, , ,766 (c) Interest rate risk Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. (d) Credit risk 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, currency and stock specific risk through investment in warrants, options forwards 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. Forwards have been used to manage currency risk. As the trust is not considered a sophisticated fund, the manager uses the commitment approach to measure the global exposure to derivatives. 17

20 Notes to the Financial Statements (g) Maturity profile of financial liabilities (continued) 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. 16. Portfolio transaction costs Analysis of total trade costs. Purchases Sales 01/04/12 to 31/03/13 01/04/11 to 31/03/12 01/04/12 to 31/03/13 01/04/11 to 31/03/ Non-derivative securities 181, , , ,928 Commissions (28) (147) Taxes - - (1) (2) Total costs Total trades in the year after transaction costs (29) (149) 182, , , ,779 18

21 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 March 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 a member of the IMA and is authorised and regulated by the Financial Conduct Authority. Investment Objectives The Scheme aims to maximise total return, comprising both capital appreciation and income, through investments principally but not exclusively in North American (United States of America, Canada and Mexico) stock markets. The Scheme will invest in a wide range of North American securities which may include investments that are listed, registered or trading within this area. 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. European Savings Directive It is the Manager's intention that the Trust will not normally hold 15% or more of its value in money debt instruments. 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, P.O. 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 the dealing day, 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 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 1.5 per cent of the value of the Trust. Income Distributions Income distributions are made semi-annually on or before the 31 May and 30 November. 19

22 General Information (continued) 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 each year. Capital Gains Tax The Trust is not liable to tax on capital gains and an individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2013/2014 exceed 10,900 (2012/ ,600). 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. 20

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24 St. James s Place Unit Trust Group Ltd is authorised and regulated by the Financial Conduct Authority. St. James s Place Unit Trust Group Ltd Registered Office: St. James s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP, United Kingdom. Registered in England Number Perivan Financial Print North American (05/13)