Jupiter Merlin Balanced Portfolio. Full Report

Transcription

1 Jupiter Merlin Balanced Portfolio Full Report annual report for the year ended 31 May

2 Jupiter Merlin Balanced Portfolio Full Report for the year ended 31 May 2009 Investment Objective To achieve long-term capital growth with income. Investment Policy To invest predominantly in unit trusts, OEICs, Exchange Traded Funds and other collective investment schemes across several management groups. The underlying funds invest in international equities, fixed interest stocks, commodities and property. 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 in the Balanced Managed 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. Percentage change and sector ranking from launch* to 31 May year 3 years 5 years Since launch* Percentage growth Sector position 15/141 18/111 11/93 8/80 Quartile ranking 1st 1st 1st 1st Source: Financial Express, bid to bid, net income reinvested. *Launch date 1 October The increase in the annual management charge as from 1 September 2005 and the introduction of a registration fee as from the same date have had the effect of increasing the total expenses of the Fund by approximately 1% p.a. The performance would have been correspondingly reduced had the current fees and charges applied since launch. As from the same date the Fund s objective changed to aim for growth with income as opposed to growth only and this may also impact performance going forward. 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. With effect from 1 December 2005 all of the Fund s expenses have been charged to capital. This has had the effect of increasing the distributions on an annualised basis by 2.28% and constraining the Fund s capital performance to an equivalent extent. 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

3 Jupiter Merlin Balanced Portfolio Manager s Report Performance Review For the year ended 31 May 2009 the total return on your units was %* compared to %* for the Balanced Managed sector average and %* for the FTSE APCIMS Balanced Index. The Fund was ranked 15th out of 141 funds over 1 year, 11th out of 93 funds over 5 years and 8th out of 80 funds since launch in the Balanced Managed sector*. It is in the first quartile of its sector over 1 year, 3 years, 5 years and since launch*. A final distribution on income units of 0.99 per unit (accumulation ) will be paid to unitholders on 31 July 2009 bringing the total payable on income units for the year under review to 2.47 (accumulations ). This represents a decrease of 7.1% on income units compared to the same period last year reflecting falling interest rates on cash held, and cut dividends from some companies held by our underlying funds. We would expect the next year to generate a higher income level than this year. *Source: Financial Express, bid to bid, net income reinvested.. Market Review A week is said to be a long time in politics, and certainly the last twelve months have been a long time in the investment world. Make no mistake about it, we have been living through one of the worst bear markets in the history of stock exchanges. In bald numbers, from the top in mid 2007 to the recent bottom in March 2009, the S&P 500 Index of leading US companies more than halved, only beaten by the 86.2% fall seen in and the 60% fall in **. The falls have been mirrored across the world with some stock markets performing considerably worse. Investors in the UK have to some extent been shielded from these falls as a consequence of Sterling s weakness over the twelve months, which meant that overseas assets became more valuable to UK citizens, a mirror image of the way that their purchasing power abroad fell. Government Bond markets, by contrast to stock markets, have been firm as investors have sought their safe haven status, whereas corporate bond markets saw considerable weakness over the year, though those falls have been partially reversed in April and May. **Source: ISI Group. Policy Review A year ago, we reduced significantly our emerging markets exposure through the Findlay Park Latin American Fund, whilst sitting on large profits, and reduced by three quarters Jupiter Global Fund New Europe in August and September. In October we switched the holding in Thames River High Income Fund into Thames River Sterling Global Income Fund in order to increase exposure to Western Sovereign debt. More recently we have recycled some of the latter fund into an increased weighting in INVESCO Perpetual Monthly Income Plus Fund to take advantage of the extremely cheap prices we perceived to be on offer in the corporate bond market, whilst also adding to Jupiter Strategic Bond Fund for the same reasons. In January we added to ETFS Physical Gold, and in February reduced Japan and Europe as their economies exhibited weakness. In April and May we added money to both Asia and Latin America as emerging economies continued to perform better than those in the West. We have also hedged the US Dollar exposure for the time being in anticipation of continued recent Sterling strength, although this is likely to be a tactical position rather than one for the long-term. Investment Outlook We see the world situation in stark and simplistic terms. On the one side, a hole in the ground has opened up under the world s financial system and as a result, huge amounts of money have literally just disappeared as loans have been called in and asset prices have plummeted. On the other side there is a hosepipe out of which there is flowing a huge amount of money; the result of the combined actions of the world s governments and central banks. Their intention is to fill up the hole. Half full and the effect won t be enough with deflation the continuing result. Overflowing and inflation may instead be the longer-term result. A cynic (and we find we have to be cynics) would say that given the scale of personal debt in particularly the US and UK, the unspoken policy aim actually is to create inflation to reduce substantially the real value and servicing cost of that debt; a politically easier means of sharing the pain. The unpalatable truth is that through inflation the nation s savers tend to end up bailing out the reckless borrowers; and we believe that this will turn out to be the case again this time. As a result, we are increasingly finding that there is better value and more opportunities in the less developed regions of the world, and as a result the portfolio has gradually 2

4 Jupiter Merlin Balanced Portfolio Manager s Report continued been shifting in favour of the former. As ever, we are focussed on trying to make sure that investors in the Jupiter Merlin Balanced Portfolio turn out to be winners, whatever markets and governments throw at us. John Chatfeild-Roberts Jupiter Asset Management Limited Investment Adviser Directors Other Information This document contains information based on the FTSE APCIMS 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 APCIMS Index is 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. 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) A Creedy P Hall S Harvey S Hynes A King R V Parker T Pearson (resigned 7 October 2008) J Petkovic (resigned 3 March 2009) S Reynolds J C Stevenson A Wyllie 3

5 Comparative Tables Net Asset Values Date Net Asset Value of Fund Net Asset Value Income Accumulation Number of units in issue Income Accumulation* ,458, p 69.84p 47,602,955 10,539, ,843, p 84.51p 51,813,003 58,259, ,095, p 97.93p 62,792, ,612, ,588, p 93.42p 87,352, ,112, ,989, p 81.58p 109,836, ,874,605 Unit Price Performance Calendar Year Highest offer Income Accumulation Lowest bid Income Accumulation p 70.73p 56.24p 57.73p p 88.45p 64.53p 66.66p p 97.18p 74.25p 80.11p p p 80.35p 89.28p p p 62.46p 71.67p to p 87.37p 62.33p 73.15p Income/Accumulation Record Calendar Year Pence Income Accumulation p p p p p p p p p p to p p *Accumulation units in issue expressed as notional income units. The net Historic Yield as at 1 June 2009 was 3.6%. The Historic Yield reflects distributions declared over the past twelve months as a percentage of the mid-market unit price at the date shown. It does not include any initial charge and investors may be subject to tax on their distributions. Total Expense Ratio The 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 0.78% 0.85% Total expense ratio 2.28% 2.35% 4

6 Statement of Total Return for the year ended 31 May 2009 Notes Year to Year to Net losses on investments during the year 2 (39,863,765) (13,534,782) Currency losses (649,098) (49,816) Income 3 12,438,031 8,183,452 Expenses 4 (5,068,817) (3,733,475) Finance costs: Interest 6 (3,077) (7) Net income before taxation 7,366,137 4,449,970 Taxation 5 (1,070,033) (441,403) Net income after taxation 6,296,104 4,008,567 Total return before distributions/accumulations (34,216,759) (9,576,031) Finance costs: Distributions/Accumulations 6 (10,296,640) (7,042,890) Change in net assets attributable to unitholders (44,513,399) (16,618,921) Statement of Change in Unitholders Net Assets for the year ended 31 May 2009 Year to Year to Net assets at the start of the year 288,588, ,095,559 Movement due to sales and repurchases of units: Amounts received on creation of units 127,658, ,015,815 Less: Amounts paid on cancellation of units (6,511,972) (2,801,889) 121,146, ,213,926 Stamp Duty Reserve Tax (150,240) (87,272) Retained distribution on accumulation units 8,918,232 5,984,766 Change in net assets attributable to unitholders (see statement of total return above) (44,513,399) (16,618,921) Net assets at the end of the year 373,989, ,588,058 5

7 Portfolio Statement as at 31 May 2009 Holding Portfolio of investments# Market value % of Total net assets UK Equity Funds 31.76% (21.40%) 20,098,000 Artemis Income Fund 26,448, ,200,000 INVESCO Perpetual Income Fund 32,185, ,500,000 ishares FTSE100 19,975, ,000,000 Jupiter UK Special Situations Fund 32,869, ,000 Fidelity Special Situations Fund 7,260, European Equity Funds 0.00% (4.18%) Asian Equity Funds 13.64% (7.66%) 6,600,000 First State Asia Pacific Leaders B Fund 16,116, ,400,000 First State Global Umbrella Asian Equity Plus Fund 34,901, Japanese Equity Funds 2.38% (7.14%) 20,000,000 Jupiter Japan Income Fund 8,912, US Equity Funds 15.90% (5.23%) 1,623,000 Findlay Park US Smaller Companies Fund 31,039, ,000,000 Jupiter North American Income Fund 28,437, Fixed Interest Funds 17.15% (13.36%) 60,600,000 INVESCO Perpetual Monthly Income Plus Fund 47,867, ,000,000 Jupiter Strategic Bond Fund 16,283, Specialist 12.97% (17.32%) 440,000 ETFS Physical Gold 26,489, ,000,000 Findlay Park Latin American Fund 11,807, ,000,000 Jupiter Financial Opportunities Fund 10,205, Forward Foreign Currency Contracts 0.82% (0.00%) Bought Sterling 78,000,000: Sold US$120,767,400 3,084, Portfolio of investments 353,885, Net other assets 20,104, Net assets 373,989, #The figures in brackets show allocations as at 31 May Represents an investment in a Jupiter Investment Management Group Limited product. 6

8 Balance Sheet as at 31 May 2009 Notes Assets Portfolio of investments 353,885, ,162,356 Debtors 7 5,872,531 19,317,682 Short term deposits 3,500,000 50,000,000 Cash and bank balances 11,892,644 3,265,731 Total other assets 21,265,175 72,583,413 Total assets 375,150, ,745,769 Liabilities Creditors 8 (73,244) (167,525) Bank overdrafts (2,985,634) Distribution payable on income units (1,087,386) (1,004,552) Total liabilities (1,160,630) (4,157,711) Net assets attributable to unitholders 373,989, ,588,058 Directors Statement Jupiter Merlin Balanced Portfolio 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, John Stevenson Jupiter Unit Trust Managers Limited London 10 July

9 Summary of Material Portfolio Changes for the year ended 31 May 2009 Material portfolio changes are all the purchases and sales for the year. Purchases Cost ishares FTSE100 49,046,187 Jupiter North American Income Fund 31,160,200 INVESCO Perpetual Monthly Income Plus Fund 26,423,840 Findlay Park US Smaller Companies Fund 18,850,755 Jupiter Strategic Bond Fund 17,362,400 INVESCO Perpetual Income Fund 16,453,666 First State Asia Pacific Leaders B Fund 14,777,400 ETFS Physical Gold 14,700,834 Jupiter UK Special Situations Fund 14,545,600 Artemis Income Fund 14,358,270 First State Global Umbrella Asian Equity Plus Fund 13,621,866 Findlay Park Latin American Fund 11,592,468 Thames River Sterling Global Income Fund 10,545,681 Jupiter Financial Opportunities Fund 8,897,100 Fidelity Special Situations Fund 7,325,000 Total purchases 269,661,267 Note 12 Sales Proceeds ishares FTSE100 24,169,708 Findlay Park Latin American Fund 14,586,182 Thames River Sterling Global Income Fund 11,784,651 Jupiter Global Fund New Europe 9,824,590 Jupiter Japan Income Fund 8,321,928 Ignis Argonaut European Income Fund 7,718,400 Thames River High Income Fund 6,258,000 ETFS Physical Gold 3,636,645 Thames River High Income Fund 3,227,100 Jupiter Global Fund Global Financials 3,163,875 Algebra Capital Alpha Mena Fund 2,397,403 Total sales 95,088,482 8

10 Notes to the Financial Statements as at 31 May Accounting Policies (a) 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 December (b) All dividends and interest from regulated Collective Investment Schemes and Funds declared ex-dividend during the year ended 31 May 2009, are included in income, net of any attributable tax. Interest on any debt securities is recognised on an effective interest rate basis. Bank interest and other interest receivable is accrued up to the year end date. Any VAT refunds relating to registration fees have been accounted for on a receipts basis. (c) Managers periodic charge rebates are recognised on an accruals basis within the income of the Fund and form part of any distribution/accumulation. As from 1 June 2009 the Fund will be adopting the SORP issued by the IMA in November 2008 with the result that in future where it is the policy of the underlying fund to charge its fees to capital in determining its distribution, the Fund will recognise any rebates received from such funds as capital. (d) All expenses, other than those relating to the purchase and sale of investments and any Stamp Duty Reserve Tax, are charged against the income of the Fund. The Manager s periodic charge and all other expenses have been deducted from the capital of the Fund for the purpose of calculating any distribution/accumulation. (e) Income, if any, will be distributed/accumulated, as a dividend distribution, semi-annually on 31 July and 31 January. (f) The investments of the Fund have been valued at bid price for authorised unit trusts, and quoted price for open ended investment companies and offshore funds which have been defined by the SORP as being the fair value. The investments have been valued at 12 noon on 29 May 2009, being the last valuation point of the year. (g) 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 12 noon on 29 May 2009, being the last valuation point of the year. (h) Corporation Tax is provided at 20% on income, other than franked UK dividends, 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. (i) Equalisation on distributions received from the underlying funds is treated as capital of the Fund. 9

11 Notes to the Financial Statements continued 2. Net Losses on Investments The net losses on investments during the year comprise: Forward Foreign Currency Contracts (see Note 11) 3,084,146 Non-derivative securities (42,947,911) (13,534,782) Net losses on investments (39,863,765) (13,534,782) 3. Income UK dividends (franked) 1,849,633 2,406,637 UK dividends (unfranked) 5,024, ,180 Overseas dividends 1,444, ,175 Bank interest 30,561 55,399 Deposit interest 1,424,766 2,072,619 Interest distributions 566,169 1,102,584 HM Revenue & Customs interest received 445 Interest on VAT reclaim 6,332 Managers periodic charge rebates 2,097,813 1,307,081 Total income 12,438,031 8,183, Expenses Payable to the Manager, associates of the Manager and agents of either of them: Manager s periodic charge 4,401,312 3,292,646 Registration fees 616, ,970 VAT reclaim on registration fees, net of associated recovery costs (61,920) 5,017,496 3,691,696 Payable to the Trustee, associates of the Trustee and agents of either of them: Trustee s fee 34,095 25,792 Safe custody fees 6,430 4,894 Transaction charges ,748 31,018 Other expenses: Audit fee 10,350 10,223 Financial Services Authority fee HM Revenue & Customs interest paid ,573 10,761 Total expenses 5,068,817 3,733,475 10

12 Notes to the Financial Statements continued 5. Taxation (a) Analysis of charge in the year: Corporation Tax 1,046, ,732 Adjustment in respect of prior years (641) Total current tax (Note 5.(b)) 1,046, ,091 Deferred Tax (Note 5.(c)) 23,313 33,312 Total taxation for the year 1,070, ,403 (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 income before taxation 7,366,137 4,449,970 Corporation Tax at 20% 1,473, ,994 Effects of: Income not subject to taxation (369,927) (481,328) Income taxable in different years (56,625) Expenses not deductible for tax purposes Adjustment in respect of prior years (641) Current tax charge for the year (Note 5.(a)) 1,046, ,091 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 Provision at the start of year 33,312 Deferred Tax charge in profit and loss account for the year (Note 5.(a)) 23,313 33,312 Movement in accrued Income Tax (6,675) Provision at the end of year 49,950 33,312 11

13 Notes to the Financial Statements continued 6. Finance Costs Distributions/Accumulations and Interest The distributions/accumulations take account of income received on the creation of units and income deducted on the cancellation of units and comprise: Interim distribution/accumulation 6,089,775 4,114,952 Final distribution/accumulation 5,341,185 4,033,478 11,430,960 8,148,430 Deduct: Income received on creation of units (1,171,620) (1,133,092) Add: Income paid on cancellation of units 37,300 27,552 Net distribution/accumulation for the year 10,296,640 7,042,890 Interest 3,077 7 Total finance costs 10,299,717 7,042,897 Reconciliation of net income after taxation to Distributions/Accumulations: Net income after taxation for the year 6,296,104 4,008,567 Charges borne by capital 5,068,817 3,795,086 Tax relief on capitalised expenses (1,047,031) (713,255) VAT reclaim on registeration fees (61,920) Net movement in income account (21,250) 14,412 Net distribution/accumulation for the year 10,296,640 7,042,890 Details of the distributions/accumulations are shown in the Distribution Tables on pages 16 and Debtors Accrued income 1,990,749 1,185,659 Amounts receivable for creation of units 3,617,860 17,941,877 Corporation Tax recoverable 43,569 Managers periodic charge rebates receivable 220, ,146 Total debtors 5,872,531 19,317, Creditors Corporation Tax payable 113,852 Deferred Tax payable 49,950 33,312 Other accrued expenses 11,422 11,037 Stamp Duty Reserve Tax accrued 11,872 9,324 Total creditors 73, ,525 12

14 Notes to the Financial Statements continued 9. Contingent Liabilities and Commitments The Fund has no capital commitments or contingent liabilities at the balance sheet date ( : nil). 10. Related Party Transactions Jupiter Unit Trust Managers Limited (JUTM), as Manager, is a related party, and acts as principal in respect of all transactions of units in the Fund. The aggregate monies received through creation and paid on cancellation are disclosed in the Statement of Change in Unitholders Net Assets. Any amounts due to or from JUTM at the end of the accounting year are disclosed in Notes 7 (debtors) and 8 (creditors). Amounts payable to JUTM in respect of fund administration and The Royal Bank of Scotland plc in respect of trusteeship are disclosed in Note 4 (expenses); there were no amounts outstanding at the year end. 11. Financial Instruments and Derivatives In pursuing its investment objectives the Fund invests in other funds, which in turn, will invest in 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 for creations and payable for liquidations, debtors for accrued income 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 cash flow risk. There are no borrowings or unlisted securities of a material nature and so there is little exposure to liquidity risk. The risks it faces from its financial instruments are market price, credit, foreign currency and interest rate 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. It represents the potential loss the Fund might suffer through holding market positions in the face of 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). Credit Risk Credit risk arises as the investment returns produced by the Fund s holdings in fixed interest funds are dependant on the issuers of these instruments maintaining due payment of interest and capital. The Manager aims to reduce this credit risk by holding a well diversified range of securities. 13

15 Notes to the Financial Statements continued Foreign Currency Risk The income and capital value of the Fund s investments can be significantly affected by currency translation movements, as a substantial proportion fo the underlying funds assets and income are denominated in currencies other than Sterling which is the Fund s functional currency. Currency Net foreign currency assets Net foreign currency assets Monetary exposures Non-monetary exposures Total Monetary exposures Non-monetary exposures US Dollar 29,321,857 29,321,857 69,429,806 69,429,806 Interest Rate Risk The Fund holds various cash positions, any change to the interest rates relevant for particular positions may result in either income 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 31 May 2009 was: Total Currency Floating Rate financial assets Financial assets not carrying interest Total US Dollar Sterling Total 15,392,644 15,392,644 29,321, ,435, ,757,556 29,321, ,828, ,150, US Dollar Sterling Total 53,265,731 53,265,731 69,429, ,050, ,480,038 69,429, ,315, ,745,769 Currency Floating Rate financial liabilities Financial liabilities not carrying interest Total Sterling Total 0 1,160,630 1,160,630 1,160,630 1,160, Sterling Total 2,985,634 2,985,634 1,172,077 1,172,077 4,157,711 4,157,711 There are no material amounts of non interest-bearing financial assets, other than underlying funds investing in equities, which do not have maturity dates. The floating rate financial assets and liabilities include: Bank balances and overdrafts that bear interest. Interest on Sterling bank balances is calculated at the current Bank of England base rate minus 0.75% (0.50% prior to 8 December 2008), limited to 0.00%. Overdraft interest is calculated at the current Bank of England base rate plus 1.00%. Interest on any overseas bank balances is determined by reference to rates supplied by the custodian. 14

16 Notes to the Financial Statements continued Use of Derivatives Forward Foreign Currency Contracts The Fund Manager has made use of forward foreign currency contracts over the period in order to hedge out the base currency of underlying funds or investments held within the underlying funds denominated in US Dollars, resulting in gains to the Fund of 3,084,146 as indicated in Note 2. The contracts outstanding at the year end are detailed on page 6. 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. 12. Portfolio Transaction Costs Analysis of total purchase costs Purchases in year before transaction costs 269,480, ,117,607 Commissions 28,920 9,493 Taxes and other charges 151,460 54,682 Total purchase costs 180,380 64,175 Gross purchases total 269,661, ,181,782 Analysis of total sale costs Gross sales in year before transaction costs 95,201, ,941,580 Commissions (13,182) (6,518) Taxes and other charges (100,259) (16,049) Total sale costs (113,441) (22,567) Total sales net of transaction costs 95,088, ,919, Unit Price Movement since the Balance Sheet date As indicated in the Accounting Policies in Note 1, the investments have been valued at 12 noon on 29 May Since that date the Fund s quoted bid price has fallen on income units from 69.54p to 67.37p as at 8 July 2009, a fall of 3.12% and has fallen on accumulation units from 81.61p to 80.24p as at 8 July 2009, a fall of 1.68%. 15

17 Distribution Table for the period ended 30 November 2008 Group 1: units purchased prior to 1 June 2008 Group 2: units purchased on or after 1 June 2008 to 30 November 2008 Gross Income Tax Credit at 10% Net Income Equalisation Distribution paid Distribution paid Income Units Group Group Gross Income Tax Credit at 10% Net Income Equalisation Distribution accumulated Distribution accumulated Accumulation Units Group Group Equalisation applies only to units purchased during the distribution period (Group 2 units). It is the average amount of income included in the purchase price of all Group 2 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. Corporate Unitholders should read the important information on the reverse of the tax voucher in respect of this distribution. The relevant information required by a corporate unitholder is as follows: Franked investment income 19.42% Annual payment 80.58% Trustee net liability to Corporation Tax: Income Units Accumulation Units

18 Distribution Table for the period ended 31 May 2009 Group 1: units purchased prior to 1 December 2008 Group 2: units purchased on or after 1 December 2008 to 31 May 2009 Gross Income Tax Credit at 10% Net Income Equalisation Distribution payable Distribution paid Income Units Group Group Gross Income Tax Credit at 10% Net Income Equalisation Distribution to be accumulated Distribution accumulated Accumulation Units Group Group Equalisation applies only to units purchased during the distribution period (Group 2 units). It is the average amount of income included in the purchase price of all Group 2 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. Corporate Unitholders should read the important information on the reverse of the tax voucher in respect of this distribution. The relevant information required by a corporate unitholder is as follows: Franked investment income 12.55% Annual payment 87.45% Trustee net liability to Corporation Tax: Income Units Accumulation Units

19 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 income 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 income 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 income 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 Merlin Balanced Portfolio 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 income 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 10 July

20 Independent Auditors Report to the Unitholders of the Jupiter Merlin Balanced Portfolio We have audited the Fund s financial statements for the year ended 31 May 2009 which comprise the Statement of Total Return, Statement of Change in Unitholders Net Assets, Portfolio Statement, Balance Sheet, Summary of Material Portfolio Changes, related notes 1 to 13 and the Distribution Tables. These financial statements have been prepared under the accounting policies set out therein. 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 auditors 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 Manager, Trustee and Auditors The Manager s responsibilities for preparing the Annual Report and the financial statements in accordance with the rules of the Collective Investment Schemes Sourcebook of the Financial Services Authority, the Trust Deed and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the Statement of Manager s Responsibilities in relation to the financial statements. The Trustee is required to take reasonable care to ensure compliance by the Manager with all relevant requirements. Our responsibility is to audit the financial statements in accordance with UK legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements give a true and fair view, and are 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. We also report to you whether, in our opinion, the Report of the Manager is consistent with the financial statements, whether the Manager has not kept proper accounting records for the Fund or whether the financial statements are not in agreement with those records, and whether we have received all the information and explanations which, to the best of our knowledge and belief, we require for our audit. We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only the Investment Objective, Investment Policy, Status, Manager s Report, Directors, Other Information, Comparative Tables, Statement of Manager s and Trustee s Responsibilities and the Report of the Trustee. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Manager in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Fund s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we consider necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements. 19

21 Independent Auditors Report to the Unitholders of the Jupiter Merlin Balanced Portfolio continued Opinion In our opinion: the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial position of the Fund as at 31 May 2009 and of the net income and net losses on the scheme property of the Fund for the year then ended; 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 Report of the Manager 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, we require for our audit. Ernst & Young LLP Registered Auditor Edinburgh 10 July

22 Manager, Registrar and Administrator Jupiter Unit Trust Managers Limited 32 Tower View Kings Hill West Malling Kent ME19 4JA 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 Waterhouse Square Holborn London EC1N 2TH 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. Auditors 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 auditors of the Jupiter Merlin Balanced Portfolio 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. 21

23 LF1220a (54090) Jupiter Unit Trust Managers Limited, PO Box 300, West Malling, Kent ME19 4YY Tel: Fax: Authorised and regulated by the Financial Services Authority whose address is 25 The North Colonnade, Canary Wharf, London E14 5HS