Jupiter Financial Opportunities Fund. Full Report

Transcription

1 Jupiter Financial Opportunities Fund Full Report annual report for the year ended 30 April

2

3 Jupiter Financial Opportunities Fund Full Report for the year ended 30 April 2011 Investment Objective To achieve long-term capital growth principally through investment in equities of financial sector companies on an international basis. Investment Policy To achieve long-term capital growth through investment in a concentrated international portfolio. The portfolio will principally comprise financial services companies and, to a lesser extent property related companies considered by the Manager to be undervalued and which exhibit favourable growth prospects arising from characteristics such as proven management or strong products or services. The portfolio will have an emphasis on companies based in the UK. The Manager has the power to use derivatives but it is intended that these will only be used for efficient portfolio management and not for investment purposes. Status The Fund operates under the Collective Investment Schemes Sourcebook (COLL) of the Financial Services Authority. The Fund is an authorised unit trust scheme under Section 237 of the Financial Services and Markets Act 2000 and is a UCITS scheme as defined by the COLL rules. It is in the Specialist Investment Management Association category. The Fund is a qualifying fund for inclusion within a stocks and shares Individual Savings Account (ISA). It is the Manager s intention to continue to manage the affairs of the Fund in order to meet the qualifying requirements as outlined in current legislation. Fund Manager Guy de Blonay was appointed lead manager of the Jupiter Financial Opportunities Fund from 1 January Philip Gibbs, who managed the Fund since its launch in June 1997 and co-managed the portfolio alongside Guy since 1 June 2010, became deputy manager on the same day. Philip retains oversight of all Jupiter s financials portfolios as head of the Financials Team. Percentage change from launch to 30 April year 3 years 5 years 10 years Since launch* Percentage growth FTSE Financials Index Source: Financial Express, bid to bid, net income reinvested. *Launch date 2 June Due to the diverse nature of the funds in the Specialist sector, sector rankings will not be shown. Warning: Jupiter Unit Trust Managers Limited is authorised and regulated by the Financial Services Authority and its registered address is 1 Grosvenor Place, London SW1X 7JJ. The value of an investment in a unit trust and the income from it can go down as well as up, it may be affected by exchange rate variations and you may not get back the amount invested. Initial charges are likely to have a greater proportionate effect on returns if investments are liquidated in the shorter term. Quoted yields are not guaranteed. Current tax levels and reliefs will depend on your individual circumstances and details are contained in the Key Features (incorporating the Simplified Prospectus). Past performance should not be seen as a guide to future performance. For your security we will record and randomly monitor all telephone calls. If you are unsure of the suitability of this investment please contact your Independent Financial Adviser. No material in this report should be interpreted as investment advice. 1

4 Investment Review Performance Review For the year ended 30 April 2011 the total return on your units was -6.7%* compared with a total return of 7.5%* for the UK-focused benchmark FTSE Financials Index and 5.7%** for the FTSE All World Financials Index. From the launch of the Fund on 2nd June 1997 the total return on the units was 758.1%* compared with 59.6%* for the FTSE Financials Index and 75.8%** for the FTSE All World Financials Index. This equates to annual average returns of 16.7%* for the Fund and 3.4%* for the benchmark and 4.1%** for the FTSE All World Financials Index. Over the same period the Fund was ranked 2nd out of 659 funds across all sectors*. *Source: Financial Express, bid to bid, net income reinvested. **Source: Lipper. Market Review During the year under review, global financial stocks made progress against a backdrop of divergent economic fundamentals. The first six months saw turbulent conditions. This was caused by deteriorating growth rates in the West and the eruption of a sovereign debt crisis in Greece and other peripheral European states. Markets saw a revival in late 2010 when the US Federal Reserve announced a US$600bn asset purchase programme (QE2). This alleviated fears of a double-dip recession and underpinned a modest recovery in the US economy. Credit conditions improved, as did bank profits, although loan demand remained generally subdued. The market rally that followed the announcement boosted global asset managers and insurance stocks. Less favourable, however, was the impact of QE2 on emerging market financials. These were sold off on concerns about accelerating efforts by central banks across developing economies to contain the inflation caused by the US stimulus programme. European financials appreciated despite ongoing sovereign debt problems which saw the bailout of an insolvent Ireland in November and more recently Portugal. The horrific earthquake in Japan and subsequent nuclear crisis precipitated a short sharp sell off in March which particularly impacted insurance names but markets recovered as the period came to an end. Overall, the economic backdrop proved highly unpredictable and policy intervention by western authorities oscillated between talk of exit strategies, on the one hand, to yet more aggressive steps to stabilise regional economies, on the other. This led to aggressive swings in investors tolerance for risk. For investors, such conditions made it difficult to find safety in any assets. Policy Review The portfolio s underperformance was largely a consequence of our conservative investment approach amid a highly uncertain economic backdrop. In Europe, we favoured businesses in the robust economies of Switzerland and Norway, while avoiding companies which were vulnerable to the sovereign debt crisis in peripheral states. While this proved beneficial in the months leading up to the Greek bailout, this impeded returns in 2011 when many investors moved out of emerging market financials into European stocks in January. Impressed by the rebound in the German economy, investors seemed overly willing to overlook concerns about the vulnerability of the region s undercapitalised banking system to potential debt restructuring. Our underweight in eurozone stocks was further encumbered by the strength of the euro in the first four months of During most of the period we were attracted to businesses exposed to the US recovery and companies in emerging market economies where low levels of debt, growing domestic demand and monetary stimulus in the West were driving loan growth and the expansion of financial services. This also generated mixed returns for the portfolio. Although we were quick to lock in gains to emerging market businesses that we believed had become fully valued on a short term view (in India and Brazil, for example), the sell-off was indiscriminate. Holdings retained in China and Hong Kong were also caught up in the rout, despite not being richly valued. In recent months, US dollar weakness was an impediment for the portfolio, detracting from the returns of our dollar-related assets (including those in the Far East). In terms of our current positioning, we rebuilt our exposure in emerging markets somewhat in March, with positions in Hong Kong, China and Russia. In the latter, loan growth is picking up, the high oil price is stimulating infrastructure investment and sentiment is being helped by future events such as the World Cup. We remain underweight in weaker banks in Europe given the size of the deficits in their home states. We have also reduced exposure to larger Western banks where uncertainty persists about the effect of forthcoming regulation on profitability. Instead, we have taken positions in specialist financials, for example, private equity firms Partners Group, KKR and Blackstone. These companies are benefiting from better growth prospects and the return of M&A activity. On a geographic basis, we continue to prefer businesses in robust parts of Europe such as Switzerland, Norway and Sweden where both companies and their economies are in better shape than elsewhere and have stronger growth prospects. 2

5 Investment Review continued Investment Outlook The economic growth outlook has moderated in recent weeks following mixed data in the US. The ongoing struggle to contain the debt crisis in peripheral Europe and inflation in emerging economies also remain concerns. Notwithstanding these challenges, the global financial sector remains lowly valued on an historical view. We continue to believe there are opportunities to make meaningful returns in specialist names and businesses operating in robust European economies and selective emerging markets. Guy de Blonay Fund Manager Philip Gibbs Deputy Fund Manager Responsible Stewardship Jupiter believes that responsible stewardship is an important issue for all shareholders who have a vital role in encouraging a higher level of corporate performance by adopting a positive approach to environmental, social and corporate governance engagement with companies. We believe companies with high standards of corporate responsibility, governance and sustainable business practices create an appropriate culture to enhance good investment performance. In addition to our Corporate Governance and Voting Policy, Jupiter publishes a biannual Voting and Engagement Report, which highlights issues we have raised with companies concerning corporate governance and sustainability. To view these go to Directors The Directors of Jupiter Unit Trust Managers Limited are: E H Bonham Carter (Chief Executive) G W Davidson (Joint Managing Director) P M Moore (Joint Managing Director) N Carter A Creedy J Crossley P Hall S Harvey S Hynes P Johnson A King R V Parker S Reynolds A Wyllie Other Information This document contains information based on the FTSE Financials Index and the FTSE All World Financials Index. FTSE is a trade mark jointly owned by the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited ( FTSE ) under licence. The FTSE Financials Index and the FTSE All World Financial Index are calculated by FTSE. FTSE does not sponsor, endorse or promote the product referred to in this document and is not in any way connected to it and does not accept any liability in relation to its issue, operation and trading. All copyright and database rights in the index values and constituent list vest in FTSE. 3

6 Comparative Tables Net Asset Values Date Net Asset Value of Fund Net Asset Value per unit Number of units in issue ,973, p 283,695, ,670, p 246,184, ,899, p 285,356, ,184,785, p 296,303, ,406, p 223,906,976 Unit Price Performance Calendar Year Highest offer Lowest bid p p p p p p p p p p to p p Income Record Calendar Year Pence per unit p p p p p to p Total Expense Ratio The annualised Total Expense Ratio of the Fund, based on the total expenses included within the accounts for the period as indicated below, is as follows: Expense Type Year to Year to Manager s periodic charge 1.50% 1.50% Other expenses 0.26% 0.24% Total expense ratio 1.76% 1.74% Portfolio Turnover Rate The Portfolio Turnover Rate (PTR) of the Fund, based on the figures included within the accounts for the period as indicated below, is as follows: Year to Year to Portfolio Turnover Rate % % The PTR provides an indication of the rate the Manager has bought and sold the underlying assets of the Fund during the period as indicated above. In general, the higher the PTR of a fund, the greater level of portfolio transaction costs will be incurred. 4

7 Portfolio Statement as at 30 April 2011 Holding Portfolio of investments# Market value % of Total net assets Bermuda 1.57% (0.00%) 200,000 Catlin 791, ,200 Jardine Matheson 12,391, Brazil 3.10% (0.00%) 703,790 Banco Bradesco ADR 8,531, ,899 Banco do Brasil 7,060, ,608 Banco Itau ADR 4,050, ,298 Banco Santander Brasil 6,184, Cayman Islands 0.05% (0.06%) 2,298,304 Orchid Developments 379, Channel Islands 0.11% (0.10%) 3,039,438 Equity Partnership 881, China 9.10% (4.03%) 42,760,000 Agricultural Bank of China 15,148, ,378,000 Bank of China 9,750, ,610,000 China Construction Bank 13,942, ,122,000 China Merchants Bank 7,906, ,371,000 Chongqing Rural Commercial Bank 12,611, ,694,000 Industrial & Commercial Bank of China 16,554, Egypt 0.30% (0.00%) 20,000 Commercial International Bank Egypt ADR 57, ,559 Commercial International Bank GDR 2,441, Finland 1.89% (0.00%) 779,892 Sampo Oyj 15,732, France 2.48% (3.25%) 121,631 AXA 1,638, ,345 BNP Paribas 8,903, ,460 Scor Regroupe 10,061, Germany 4.86% (0.00%) 544,055 Aareal Bank 9,934, Aareal Bank Nil Paid 6 147,881 Allianz 14,002, ,966,569 Commerzbank 7,523, ,854 Wirecard 9,055, Hong Kong 2.27% (7.20%) 2,201,800 AIA 4,461, ,144,000 Hong Kong Land Holdings 5,075, ,736,000 Sun Hung Kai 1,383, ,000 Sun Hung Kai Properties 8,033, Norway 5.44% (7.85%) 4,498,606 DnB NOR 43,912, ,628 Sparebank 1,510,

8 Portfolio Statement continued Holding Portfolio of investments# Market value % of Total net assets Russia 6.13% (2.09%) 25,488 Bank Vozrozhdenie 563, ,962,716 Sberbank of Russia 23,703, ,937,126 VTB Bank OJSC GDR 26,888, Sweden 0.50% (0.00%) 603,081 Nordea Bank 4,136, Switzerland 20.65% (3.87%) 97,719 BCV 35,855, ,382 EFG International 3,904, ,809 Gottex Fund Management 432, ,268 Helvetia Patria 5,953, ,350,263 GAM Holding 15,800, ,606 Julius Baer 26,051, ,005 Partners 30,437, ,594 Swiss Life Holdings 6,927, ,409 Swissquote 9,415, ,287 Temenos 14,310, ,301,458 UBS (registered) 15,534, ,339 VZ Holding 7,761, Turkey 2.44% (1.63%) 5,983,369 Garanti Bankasi 18,607, ,509,463 Turkiye Sinai Kalkinma Bankasi 1,727, United Kingdom 9.58% (5.83%) 3,307,623 Argo 446, ,347 Aurora Investment Trust 2,293, ,746,494 Aviva 7,803, ,680,723 ICAP 13,886, ,292,148 Jupiter Second Split Trust 11,487, ,732,789 Legal & General 19,304, ,357,633 Standard Chartered 22,523, ,636 Tullett Prebon 2,262, United States 9.27% (19.67%) 145,552 American Express 4,282, ,049 Aon 2,472, ,152 Blackstone 8,345, ,331,433 Citigroup 14,607, ,022 Franklin Resources 1,704, ,578 Goldman Sachs 2,860, ,345 JP Morgan Chase 25,287, ,785 KKR 9,258, ,222 Lazard 8,631,

9 Portfolio Statement continued Holding Portfolio of investments# Contracts for Difference 0.00% (0.10%) Market value % of Total net assets 838,275 AXA Contract for difference (3,728) Notional value 10,915,498 1,067,411 Jardine Lloyd Thompson Contract for difference (32,022) Notional value 7,509,236 4,655,433 Old Mutual Contract for difference Notional value 6,471,052 5,895,107 Prudential Contract for difference Notional value 45,569,177 1,485,461 Schroders Contract for difference Notional value 28,194, ,052 Standard Chartered Contract for difference Notional value 10,153,943 4,135,913 Standard Life Contract for difference Notional value 9,351,299 Forward Foreign Currency Contracts 0.00% (-0.10%) Portfolio of investments 665,346, Net other assets 169,060, Net assets 834,406, All holdings are ordinary shares or stock units unless otherwise stated. Notional value illustrates the face value of the exposure to the underlying instruments on which the derivative contracts are traded and indicates the exposure the Fund has to the underlying stock or index it relates to. #The figures in brackets show allocations as at 30 April Represents an investment in a Jupiter Investment Management Group Limited product. 7

10 Top 20 Purchases and Sales The top 20 purchases and sales for the year ended 30 April 2011 Purchases Cost Citigroup 169,806,186 Standard Chartered 115,514,112 HSBC Holdings (London listed) 109,008,157 JP Morgan Chase 98,726,577 Bank of America 87,423,511 Wells Fargo 84,230,756 UBS (registered) 82,340,482 Prudential 76,952,540 Lloyds Banking Group 69,759,529 Industrial & Commercial Bank of China 66,267,714 China Construction Bank 61,769,633 Banco Bradesco ADR 53,752,769 Goldman Sachs 49,927,094 Bank of China 49,320,173 Sberbank of Russia 48,720,514 Garanti Bankasi 45,982,854 Credit Suisse 41,947,158 DnB NOR 38,227,172 Julius Baer 38,132,852 Agricultural Bank of China 35,572,833 Total top 20 purchases 1,423,382,616 Remaining purchases 1,382,956,918 Total purchases 2,806,339,534 Sales Proceeds Citigroup 157,382,254 JP Morgan Chase 142,987,347 Bank of America 131,713,602 HSBC Holdings (London listed) 120,459,133 DnB NOR 102,100,205 Sun Hung Kai Properties 97,654,636 Standard Chartered 97,478,238 Goldman Sachs 79,487,665 Lloyds Banking Group 76,602,019 Prudential 76,087,738 Wells Fargo 73,970,837 Bank of China 73,838,061 Credit Suisse 65,009,689 UBS (registered) 64,232,674 China Construction Bank 62,715,591 Barclays 60,644,367 BNP Paribas 53,680,998 Zurich Financial 49,367,268 Morgan Stanley 49,086,281 Industrial & Commercial Bank of China 48,711,992 Total top 20 sales 1,683,210,595 Remaining sales 1,065,303,435 Total sales 2,748,514,030 8

11 Statement of Total Return for the year ended 30 April 2011 Notes Year to Year to Income Net capital (losses)/gains 3 (78,294,593) 207,284,738 Revenue 4 18,384,093 17,896,329 Expenses 5 (17,852,661) (21,101,520) Finance costs: Interest 7 (782,714) (612,965) Net expense before taxation (251,282) (3,818,156) Taxation 6 503,734 (1,450,634) Net revenue/(expense) after taxation 252,452 (5,268,790) Total return before distributions (78,042,141) 202,015,948 Finance costs: Distributions 7 (12,851) 55,637 Change in net assets attributable to unitholders funds from investment activities (78,054,992) 202,071,585 Statement of Change in Net Assets Attributable to Unitholders for the year ended 30 April 2011 Year to Year to Opening net assets attributable to unitholders 1,184,785, ,899,556 Amounts received on issue of units 23,314, ,542,135 Amounts paid on cancellation of units (295,543,278) (151,281,016) Assets transferred under a Scheme of Arrangement to the Jupiter Absolute Return Fund and the Jupiter International Financials Fund (153,216,376) (272,229,145) 39,044,743 Stamp Duty Reserve Tax (96,055) (232,727) Unclaimed distributions over six years old 1,237 2,730 Change in net assets attributable to unitholders from investment activities (see statement of total return above) (78,054,992) 202,071,585 Closing net assets attributable to unitholders 834,406,932 1,184,785,887 9

12 Balance Sheet as at 30 April 2011 Notes Assets Investment assets 665,382, ,596,321 Debtors 8 49,462,117 22,960,464 Short term deposits 116,500, ,021,409 Cash and bank balances 54,291, ,034,057 Total other assets 220,253, ,015,930 Total assets 885,635,910 1,294,612,251 Liabilities Investment liabilities (35,750) (1,094,371) Creditors 9 (39,327,500) (95,411,098) Bank overdrafts (11,865,728) (13,320,895) Total other liabilities (51,193,228) (108,731,993) Total liabilities (51,228,978) (109,826,364) Net assets attributable to unitholders 834,406,932 1,184,785,887 Directors Statement Jupiter Financial Opportunities Fund This report has been prepared in accordance with the requirements of the Financial Services Authority s Collective Investment Schemes Sourcebook and the Statement of Recommended Practice issued by the Investment Management Association. Directors: Paula Moore, Spencer Reynolds Jupiter Unit Trust Managers Limited London 14 June

13 Notes to the Financial Statements for the year ended 30 April Accounting Policies (a) Basis of Accounting The financial statements have been prepared on the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for Authorised Funds (SORP) issued by the Investment Management Association (IMA) in October Previously the requirements of the SORP issued by the IMA in November 2008 had been applied. No restatement was necessary following this change. To remain consistent with current accounting practices and the requirements of the SORP, the term Income is now generally used to include both revenue and capital gains/(losses). Dividends, interest, fees and equivalent items previously referred to as Income in the Statement of Total Return are now referred to as Revenue. Note however, that any reference to distribution or dividend income allocated to unitholders, or references to income units are unaffected by this change and will still be referred to as income in the report and financial statements and in all other literature. (b) Revenue All dividends from companies declared ex-dividend during the year ended 30 April 2011 are included in revenue, net of any attributable tax. Dividend equivalent values on Contracts for Difference are recognised when the securities are quoted ex-dividend. Interest on any debt securities is recognised on an effective interest rate basis. Bank interest and interest on short-term deposits are accrued up to the year end date. Underwriting commission is taken to revenue and recognised when the issue takes place, except where the Fund is required to take up all or some of the shares underwritten, in which case an appropriate proportion of the commission received is deducted from the cost of the shares. Special dividends are reviewed on a case by case basis when determining if the dividend is to be treated as revenue or capital. The tax accounting treatment follows the treatment of the principal amount. (c) Expenses All expenses, including overdraft interest, but excluding those relating to the purchase and sale of investments and any Stamp Duty Reserve Tax, are charged against the revenue of the Fund. All of the Fund s expenses are recognised on an accruals basis. (d) Valuation of Investments The investments of the Fund have been valued using bid market values ruling on international stock exchanges at close of business on 29 April Market value is defined by the SORP as fair value which is generally the bid value of each security. The values of the Contracts for Difference held in the portfolio are based on the price of the underlying security or index which they are purchased to reflect. Where a stock is unlisted or where there is a non liquid market, a valuation for this stock has been obtained from market makers where possible, and suspended stocks are normally valued at their suspension price. However, where the Manager believes that these prices do not reflect a fair value, or where no reliable price exists for a security, it is valued at a price which in the opinion of the Manager reflects a fair and reasonable price for that investment. (e) Foreign Exchange Transactions in foreign currencies are translated into Sterling at the rates ruling at the dates of the transactions. Assets and liabilities expressed in foreign currencies are translated at the rates ruling at close of business on 29 April

14 Notes to the Financial Statements continued (f) Taxation Corporation Tax is provided at 20% on revenue, other than UK dividends and overseas dividends received after 1 July 2009, after deduction of expenses. Where overseas tax has been deducted from overseas income that tax can, in some instances, be set off against Corporation Tax payable, by way of double taxation relief. The charge for Tax is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred Tax is provided using the liability method on all timing differences, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred Tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in the future against which the Deferred Tax can be offset. Stamp Duty Reserve Tax, if any, suffered on surrender of units is deducted from capital. 2. Distribution Policies (a) Basis of Distribution All of the net revenue available for distribution at the end of the final accounting period will be distributed to unitholders as a dividend distribution. In order to achieve a controlled dividend flow to unitholders, interim distributions may be made at the Manager s discretion, up to a maximum of the distributable revenue available for the period. The distribution dates in respect of this Fund are summarised in Note 2(b). Should expenses and taxation together exceed revenue, there will be no distribution and the shortfall will be met from capital. If, in respect of a particular accounting period, the average income allocation to unitholders (disregarding, for this purpose, any units held by the Manager or Trustee or their associates) would be less than 25, the Manager reserves the right (with the agreement of the Trustee) not to make any income allocation and, in such an event, the amount of net revenue remaining for that period will be credited to capital and reflected in the value of units. (b) Distribution dates Net revenue, if any, will be distributed to unitholders as a dividend distribution, semi-annually on 31 December (interim) and 30 June (final) in respect of the accounting periods ending 31 October (interim) and 30 April (final). (c) Stock Dividends The ordinary element of stock dividends is treated as revenue and forms part of any distribution. In the case of an enhanced stock dividend, the value of the enhancement is treated as capital and does not form part of any distribution. 12

15 Notes to the Financial Statements continued 3. Net capital (losses)/gains The net (losses)/gains on investments during the year comprise: Currency (losses)/gains (10,206,673) 36,696,956 Transaction charges (76,765) (22,216) (Losses)/gains on non-derivative securities (50,444,684) 232,274,848 Gains/(losses) forward foreign currency contracts (Note 13) 2,143,001 (13,377,832) Losses on contracts for difference (Note 13) (16,876,301) (21,284,626) Losses on swap contracts (Note 13) (2,833,171) (27,002,392) Net capital (losses)/gains (78,294,593) 207,284, Revenue UK dividends 3,711,043 5,461,203 Overseas dividends 10,516,516 11,278,871 Bank interest 12,341 22,102 Underwriting commission 108,097 Interest earned from the Norwegian Government on tax reclaims 28,715 Revenue on contracts for difference (Note 13) 3,489, ,113 Deposit interest 517, ,040 Total revenue 18,384,093 17,896,329 13

16 Notes to the Financial Statements continued 5. Expenses Payable to the Manager, associates of the Manager and agents of either of them: Manager s periodic charge 15,125,224 18,172,784 Registration fees 2,016,696 2,423,038 17,141,920 20,595,822 Payable to the Trustee, associates of the Trustee and agents of either of them: Trustee s fee 249, ,491 Safe custody fees 424, , , ,903 Other expenses: Audit fee 10,800 10,575 Charges on ADR dividend receipts 25,413 Financial Services Authority fee Legal fees 1,141 Professional fees on withholding tax reclaims 35,026 37,534 45,795 Total expenses 17,852,661 21,101,520 14

17 Notes to the Financial Statements continued 6. Taxation (a) Analysis of charge in the year: Overseas tax 335,467 1,461,982 Repayment of Norwegian withholding tax (839,201) Overseas tax credits (11,348) Total current tax (Note 6.(b)) (503,734) 1,450,634 (b) Factors affecting current 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. The differences are explained below: Net expense before taxation (251,282) (3,818,156) Corporation Tax at 20% (50,256) (763,631) Effects of: Revenue not subject to taxation (2,778,170) (2,693,552) Taxable revenue adjusted for recoverable overseas tax 2,270 Current year expenses not utilised 2,836,762 3,553,423 Overseas tax 335,467 1,461,982 Tax relief on overseas tax suffered (8,336) (98,510) Repayment of Norwegian withholding tax (839,201) Overseas tax credits (11,348) Current tax charge for the year (Note 6.(a)) (503,734) 1,450,634 Authorised unit trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. (c) Provision for Deferred Tax At 30 April 2011 there is a potential Deferred Tax asset of 6,390,185 ( : 3,553,423) in relation to surplus management expenses. It is unlikely the Fund will generate sufficient taxable profits in the future to utilise this amount and therefore no Deferred Tax asset has been recognised in the year. 15

18 Notes to the Financial Statements continued 7. Finance Costs Distributions and Interest The distributions take account of amounts received on the issue of units and paid on the cancellation of units and comprise: Interim distribution Final distribution 0 0 Deduct: Amounts received on issue of units (4,584) (56,125) Add: Amounts paid on cancellation of units 17, Net distribution for the year 12,851 (55,637) Interest 782, ,965 Total finance costs 795, ,328 Reconciliation of net revenue/(expense) after taxation to Distributions: Net revenue/(expense) after taxation for the year 252,452 (5,268,790) Net movement in revenue account 19,070 Transfer from capital to cover revenue deficit 5,194,083 Surplus net revenue transferred to capital* (239,601) Net distribution for the year 12,851 (55,637) *No distributions have been made in respect of the year to 30 April 2011 on the grounds of immateriality of net revenue available. 8. Debtors Accrued revenue 4,990,697 3,984,794 Amounts receivable for issue of units 515,994 Amounts receivable on derivative contracts 7,249, ,135 Currency sales awaiting settlement 14,363,975 4,557,670 Overseas tax recoverable 2,583,763 1,322,917 Sales awaiting settlement 20,274,017 12,284,954 Total debtors 49,462,117 22,960,464 16

19 Notes to the Financial Statements continued 9. Creditors Accrued expenses 602, ,664 Amounts payable for cancellation of units 3,722,913 6,236,089 Amounts payable on derivative contracts 23,924,789 Currency purchases awaiting settlement 14,357,932 4,550,486 Purchases awaiting settlement 20,643,739 60,066,311 Stamp Duty Reserve Tax accrued 11,759 Total creditors 39,327,500 95,411, Contingent Liabilities and Capital Commitments The Fund had no contingent liabilities or capital commitments at the balance sheet date ( : nil). 11. Contingent Asset Following the ruling on Denkavit s case with the European Court of Justice regarding taxation withheld on overseas dividends, the Manager has taken steps to make claims with certain European Tax Authorities for repayment of taxation suffered by the Fund on dividend income. In the annual accounts to 30 April 2010 there was included in the Contingent Asset note a statement that, although the Fund had previously received and recognised a repayment of 587,332 in respect of taxation withheld by the Norwegian Tax Authority for the calendar years 2004 to 2007, no further accruals could be made as there was no guarantee that any tax withheld after 1 January 2008 could be recovered. However, following a statement from the Norwegian Ministry of Finance the recovery of withholding tax could be viewed as reasonably certain. As a result of this the Fund has recognised a repayment of 839,201 in the year to 30 April 2011 in relation to Norwegian withholding tax previously incurred and a debtor of 1,163,882 at year end. This balance is included within the overseas tax recoverable balance within Note 8. In addition to the claims with the Norwegian Tax Authority, the Manager has outstanding claims with other European Tax Authorities. Due to uncertainty regarding the likely success of these claims, it is not possible to estimate the potential amount of overseas taxation that may be received by the Fund, if any. Therefore, the financial statements presented for the year ended 30 April 2011 do not reflect any further amounts that may be received. 12. Related Party Transactions Jupiter Unit Trust Managers Limited (JUTM), as Manager, and The Royal Bank of Scotland plc (RBS), as Trustee, are related parties in respect of their dealings with the Fund. JUTM acts as principal in respect of all transactions of units in the Fund. The aggregate monies received through issue and paid on cancellation are disclosed in the Statement of Change in Net Assets Attributable to Unitholders and, if applicable, in Note 7. Any amounts due to or from JUTM at the end of the accounting year are disclosed in Notes 8 (debtors) and 9 (creditors). Amounts payable to JUTM in respect of fund management and RBS in respect of trusteeship are disclosed in Note 5 (expenses). At the year end 378,185 was due to JUTM and 7,299 due to RBS. These amounts are included in accrued expenses in Note 9. 17

20 Notes to the Financial Statements continued 13. Financial Instruments In pursuing its investment objectives the Fund holds a number of financial instruments. These comprise securities and other investments, cash balances, short term fixed deposits, bank overdrafts and debtors and creditors that arise directly from its operations, for example, in respect of sales and purchases awaiting settlement, amounts receivable from issues and payable for cancellations, debtors for accrued revenue and any derivative transactions. The Fund may enter into derivative transactions, the purpose of which will only be for efficient management of the Fund and not for investment purposes. The Fund has little exposure to liquidity, credit or cash flow risk. The risks it faces from its financial instruments are market price, foreign currency, interest rate and counterparty risk. The Manager reviews policies for managing these risks in pursuance of the Investment Objective and Policy as set out on page 1 and they are summarised later. Adherence to investment guidelines and to investment and borrowing powers set out in the Trust Deed, Scheme Particulars and in the rules of the Collective Investment Schemes Sourcebook mitigates the risk of excessive exposure to any particular type of security or issuer. Further information on the investment portfolio is set out in the Manager s Report and Portfolio Statement. Market Price Risk Market price risk arises mainly from uncertainty about future prices of financial instruments held by the Fund. It represents the potential loss the Fund might suffer through holding market positions which are affected by adverse price movements. The Manager regularly considers the asset allocation of the portfolio in order to minimise the risk associated with particular markets or industry sectors whilst continuing to follow the Investment Objective and Policy (as set out on page 1). Foreign Currency Risk A substantial proportion of the net assets of the Fund is denominated in currencies other than Sterling, with the effect that the balance sheet and total return can be significantly affected by currency movements. Currency Net foreign currency assets Net foreign currency assets Monetary exposures Non-monetary exposures Total Monetary exposures Non-monetary exposures Euro (1,096,523) 76,848,360 75,751,837 (11,207,763) 38,776,934 27,569,171 Brazilian Real 38,333 7,060,000 7,098,333 0 Candian Dollar 0 122,787, ,787,815 Chinese Yuan Renmindi 123, ,477 0 Danish Krone (11) (11) 186,886 (3,077) 183,809 Hong Kong Dollar (833,507) 89,791,566 88,958, , ,070, ,743,758 Norwegian Kroner 25,283,311 45,423,263 70,706,574 1,964,502 92,984,023 94,948,525 Russian Ruble 215, ,955 21,285 21,285 Singapore Dollar 19,598,264 19,598,264 0 Swedish Krona 4,136,169 4,136,169 0 Swiss Franc 1,305, ,384, ,689,191 (1,879,865) 45,848,221 43,968,356 Turkish Lira 1,679,710 20,335,137 22,014,847 3,195,991 19,264,518 22,460,509 US Dollar 6,016, ,340, ,357, ,270, ,200, ,471,101 Total 18

21 Notes to the Financial Statements continued Interest Rate Risk The Fund holds various cash positions and any change to the interest rates may result in either revenue increasing or decreasing. Interest Rate Risk Profile of Financial Assets and Financial Liabilities The interest rate risk profile of the Fund s financial assets and liabilities at 30 April 2011 was: Currency Euro Brazilian Real Chinese Yuan Renmindi Hong Kong Dollar Norwegian Kroner Russian Ruble Singapore Dollar Swedish Krona Swiss Franc Turkish Lira US Dollar Sterling Total Floating Rate financial assets 20,396,565 19,598, , ,956 12,824,492 54,291,545 Fixed Rate financial assets 116,500, ,500,000 Financial assets not carrying interest 82,087,680 7,098, ,477 92,271,325 50,310, ,955 4,136, ,445,352 24,776, ,495,716 95,884, ,844,365 Total 82,087,680 7,098, ,477 92,271,325 70,706, ,955 19,598,264 4,136, ,128,620 24,776, ,284, ,208, ,635, Euro Candian Dollar Danish Krone Hong Kong Dollar Norwegian Kroner Russian Ruble Swiss Franc Turkish Lira US Dollar Sterling Total 46,442,090 15,766, ,958,853 40,866, ,034, ,021, ,000, ,021,409 48,111, , ,743,758 94,948,525 21,285 47,034,703 22,460, ,149,615 76,900, ,556,785 94,553, ,787, , ,743,758 94,948,525 21,285 47,034,703 22,460, ,108, ,766,934 1,294,612,251 Currency Floating Rate financial liabilities Financial liabilities not carrying interest Total Euro Danish Krone Hong Kong Dollar Swiss Franc Turkish Lira US Dollar Sterling Total ,865,612 11,865,728 6,335,738 3,313,266 2,439,429 2,761,185 9,927,033 14,586,599 39,363,250 6,335, ,313,266 2,439,429 2,761,185 9,927,033 26,452,211 51,228, Euro Danish Krone Swiss Franc US Dollar Sterling Total 13,320,895 13,320,895 66,984,197 3,077 3,066,347 (149,362,633) 175,814,481 96,505,469 66,984,197 3,077 3,066,347 (149,362,633) 189,135, ,826,364 19

22 Notes to the Financial Statements continued There are no material amounts of non interest-bearing financial assets, which do not have maturity dates, other than equities. The floating rate financial assets and liabilities include bank balances and overdrafts that bear interest. Interest rates on Sterling and overseas bank balances as supplied by the custodian may vary in line with market conditions and the size of deposit. Overdraft interest is calculated at the current Bank of England base rate plus 1.00%. Counterparty Risk Counterparty risk, is the risk that a third party organisation (counterparty) does not pay out on a contract, or other trade or transaction when this is due to the Fund. The derivatives entered into by the Fund fall into either of two categories: i) have been traded on recognised exchanges on a delivery versus payment basis, thus eliminating exposure to counterparty risk, or ii) have been traded on Over the Counter markets which may expose the Fund to the risk that the counterparty may default on its obligations to perform under the relevant contract. In respect of trades made on Over the Counter markets the Manager will seek to reduce such risk by only entering into transactions with counterparties that it believes to have a high credit rating at the time the transaction is entered into, and by ensuring that formal legal agreements covering the terms of the contract are entered into in advance. In certain circumstances however, the Manager may be unable to enforce or rely on rights and obligations arising under such agreements. In the event of bankruptcy or insolvency of the counterparty, the Fund may only have the rights of a general creditor and could therefore experience delays in liquidating the position and may incur significant losses compared to the value of the transaction in the portfolio. Use of Derivatives The Manager made use of the following derivatives during the period under review: Contracts for Difference The Manager entered into Contracts for Difference during the year with the aim of gaining short term exposure to a company s stock at a lower cost than directly holding the shares. This allows the Manager to gain exposure to share price movements (whether up or down) without the need for ownership of the underlying shares. This has resulted in realised and unrealised capital losses of 16,876,301 to the Fund during the year. An amount of 3,489,936, equivalent to the dividends paid by the underlying holdings, has been received in the year and recognised as revenue. Forward Foreign Currency Contracts The Manager made use of forward foreign currency contracts during the year in order to hedge out some of the currency exposure in the Fund. This resulted in realised gains of 2,143,001 to the Fund during the year. Swaps The Manager bought swap contracts during the year with the aim of protecting the Fund from the risk of index volatility. This has resulted in realised losses of 2,833,171 to the Fund during the year. The derivative contracts outstanding at the year end are itemised on page 7. Fair Value of Financial Assets and Financial Liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet, and their fair value. 20

23 Notes to the Financial Statements continued 14. Portfolio Transaction Costs Analysis of total purchase costs Purchases in year before transaction costs 2,799,044,453 2,986,285,790 Commissions 4,559,956 4,082,267 Taxes and other charges 2,735,125 2,621,231 Total purchase costs 7,295,081 6,703,498 Gross purchases total 2,806,339,534 2,992,989,288 Analysis of total sale costs Gross sales in year before transaction costs 2,753,557,111 3,025,975,576 Commissions (4,486,918) (3,879,018) Taxes and other charges (556,163) (257,093) Total sale costs (5,043,081) (4,136,111) Total sales net of transaction costs 2,748,514,030 3,021,839, Unit Price Movement since the Balance Sheet date Since the last dealing day of the year on 28 April 2011 the Fund s quoted bid price has fallen from p to p as at 10 June 2011, a fall of 4.26%. 21

24 Statement of Manager s and Trustee s responsibilities in relation to the financial statements of the Scheme The Financial Services Authority s Collective Investment Schemes Sourcebook, as amended (the Sourcebook) requires the Manager to prepare financial statements for each annual accounting period which give a true and fair view of the financial affairs of the Scheme and of its revenue and expenditure for the period. 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 disclosure requirements of the Statement of Recommended Practice for Authorised Funds; follow applicable accounting standards; and keep proper accounting records which enable it to demonstrate that the financial statements as prepared comply with the above requirements. The Manager is responsible for the management of the Scheme in accordance with the Sourcebook and the Scheme s Trust Deed and Prospectus. The Manager is also responsible for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Trustee is responsible for the safekeeping of all the property of the Scheme (other than tangible moveable property) which is entrusted to it and for the collection of revenue that arises from that property. It is the duty of the Trustee to take reasonable care to ensure that the Scheme is managed in accordance with the Sourcebook and the Scheme s Trust Deed and Prospectus, in relation to the pricing of, and dealings in, units in the Scheme; the application of revenue of the Scheme; and the investment and borrowing powers of the Scheme. A copy of the Report of the Trustee is set out below. Report of the Trustee Jupiter Financial Opportunities Fund Having carried out such procedures as we considered necessary to discharge our responsibilities as Trustee of the Scheme, it is our opinion, based on information available to us and explanations provided, that, in all material respects, the Manager: has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Scheme s units and the application of the Scheme s revenue in accordance with the Sourcebook and the Scheme s Trust Deed and Prospectus; and has observed the investment and borrowing powers and restrictions applicable to the Scheme. The Royal Bank of Scotland plc Trustee & Depositary Services London 14 June

25 Independent Auditor s Report to the Unitholders of the Jupiter Financial Opportunities Fund We have audited the financial statements of the Jupiter Financial Opportunities Fund ( the Fund ) for the year ended 30 April 2011 which comprise the Statement of Total Return, the Statement of Change in Net Assets Attributable to Unitholders, the Balance Sheet and the related notes 1 to 15. 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). This report is made solely to the unitholders of the Fund, as a body, pursuant to Paragraph of the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority. Our audit work has been undertaken so that we might state to the unitholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the unitholders as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Manager and Auditor As explained more fully in the Manager s responsibilities statement set out on page 22, the 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. 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 Fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the 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 financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Fund as at 30 April 2011 and of the net revenue and the net losses on the scheme property of the Fund for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice. Opinion on other matters prescribed by the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority In our opinion: the financial statements have been properly prepared in accordance with the Statement of Recommended Practice relating to Authorised Funds, the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority and the Trust Deed; the information given in the Manager s report for the financial year for which the financial statements are prepared is consistent with the financial statements; there is nothing to indicate that proper accounting records have not been kept or that the financial statements are not in agreement with those records; and we have received all the information and explanations which, to the best of our knowledge and belief, are necessary for the purposes of our audit. Ernst & Young LLP Statutory Auditor Edinburgh 14 June

26 Manager, Registrar and Administrator Jupiter Unit Trust Managers Limited PO Box Chelmsford CM99 2BG Tel: Fax: Registered Address: 1 Grosvenor Place, London SW1X 7JJ. Authorised and regulated by the Financial Services Authority. Trustee The Royal Bank of Scotland plc Trustee and Depositary Services Ground Floor 15 Bishopsgate London EC2P 2AP Authorised and regulated by the Financial Services Authority. Investment Adviser Jupiter Asset Management Limited 1 Grosvenor Place London SW1X 7JJ Authorised and regulated by the Financial Services Authority. Auditor Ernst & Young LLP Ten George Street Edinburgh EH2 2DZ It is the intention of Jupiter Unit Trust Managers Limited to make this Report & Accounts available on their website. The maintenance and integrity of the Jupiter Unit Trust Managers Limited website is the responsibility of the Directors; the work carried out by the auditor of the Jupiter Financial Opportunities Fund does not involve consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. 24