Global Equity Income Fund

Transcription

1 Schroder Global Equity Income Fund Interim Report and Accounts January 2018

2 Contents Schroder Global Equity Income Fund Fund Information Investment objective and policy Financial highlights Fund information Ongoing charges figure Total purchases and sales Review of Investment Activities Risk Profile Risk and reward indicator Specific risks Net Asset Value and Comparative Tables Unit price range Net revenue Net asset value Fund performance Portfolio Statement Summary of Portfolio Transactions Largest purchases Largest sales Statement of the Manager s Responsibilities Statement of Total Return (unaudited) Statement of Change in Net Assets Attributable to Unitholders (unaudited) Balance Sheet (unaudited) Notes to the Accounts (unaudited) Basis of preparation Accounting policies Distribution Table (unaudited) Interim distribution for the six months ended 15 January Corporate unitholders Equalisation General Information Authorisation Other information Collectively these comprise the Manager s report.

3 Fund Information Investment objective and policy The Schroder Global Equity Income Fund (the fund ) aims to provide income and capital growth by investing in equity and equity related securities of companies worldwide. The fund invests at least 80% of its assets in equity and equity related securities of companies worldwide which offer sustainable dividend payments. The fund seeks to invest in a diversified portfolio of equity and equity related securities whose dividend yield in aggregate is greater than the average market yield. Equities with below average dividend yield may be included in the portfolio when the Manager considers that they have the potential to pay above average income in future. The fund may also invest in collective investment schemes, warrants and money market instruments, and hold cash. The fund may use derivatives with the aim of reducing risk or managing the fund more efficiently. Financial highlights Dealing price % change A Income units 73.43p 68.20p 7.67 A Accumulation units p 97.51p L Income units 82.46p 76.26p 8.13 L Accumulation units 92.90p 84.03p Z Income units p 93.85p 8.04 Z Accumulation units p p Interim distribution per Z Income unit p p 3

4 Fund Information (continued) Fund information Launch date 18 May 2007 Launch price 50.00p per A Income unit 50.00p per A Accumulation unit Launch date 8 November 2011 Launch price 50.00p per Z Income unit 50.00p per Z Accumulation unit Launch date 1 October 2013 Launch price 50.00p per L Income unit 50.00p per L Accumulation unit Interim Final Accounting dates 15 January 15 July Revenue allocation dates 15 March 15 September Ongoing charges figure For the period For the year to to A Income units 1.69% % A Accumulation units 1.69% % L Income units 0.87% % L Accumulation units 0.87% % Z Income units 0.94% % Z Accumulation units 0.94% % 1 The Ongoing charges figure is annualised based on the fees incurred during the accounting period. Total purchases and sales For the period For the year to to s 000 s Total purchases 53,037 84,716 Total sales 37,867 86,665 4

5 Review of Investment Activities From 14 July 2017 to 15 January 2018, the price of Z Accumulation units on a dealing price to dealing price basis rose 10.52%. In comparison, the MSCI World Index generated a net total return of 7.82% 1 in sterling terms. 1 Source: Thomson Reuters Datastream. Our complete income strategy delivers returns from two sources: firstly, the income the companies generate through paying dividends; and secondly, the capital returns generated by lowly valued underperforming companies improving. The fund outperformed the Index over the period. The leading individual contributor to relative returns was US oil refiner HollyFrontier. It has a solid balance sheet and an attractive dividend yield. Other oil sector holdings including CNOOC and Eni also supported fund performance. Retailer Gap was another top contributor. There have been sector wide concerns over soft sales at US shopping malls but we felt Gap was well positioned to weather any period of weakness. In September, the group announced its new growth strategy. Fellow retailer Kohl s also made a positive contribution to performance. On the negative side, UK power provider Centrica performed poorly on the back of a profit warning. In our opinion, the valuation discounts a whole host of negative outcomes, including a dividend cut and a cap on standard variable tariffs in the UK. New positions in the period included Saudi Basic Industries (Deutsche Bank) Warrant 06/08/2020, Ferrexpo, WPP and Omnicom Group. Sales included Staples following a takeover bid; First Solar, Apple and Japan Airlines were also sold in the wake of strong performance, meaning these reached our estimate of fair value. Fund Manager: Ian Kelly Fund manager of Schroder Global Equity Income Fund, Schroder ISF Global Equity Yield and Schroder ISF Global Dividend Maximiser Joined Schroders in May 2007 as an analyst specialising in European insurance and automobiles Ian completed a PhD in Biophysics at Newcastle University and a Masters Degree in Investment Management at Cass Business School, London Chartered Financial Analyst (CFA) charterholder Market volatility has been at low levels for an extended period. This poses a risk in that investors may take riskier decisions in the belief that the future will be as benign as the recent past. Low volatility also limits the number of new investment opportunities; as stockpickers, we thrive on volatility. However, this situation will not persist forever. Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. 5

6 Risk Profile Risk and reward indicator The risk category was calculated using historical performance data and may not be a reliable indicator of the fund s future risk profile. The fund is in this category because it can take higher risks in search of higher rewards and its price may rise and fall accordingly. The fund s risk category is not guaranteed to remain fixed and may change over time. A fund in the lowest category does not mean a risk free investment. Specific risks The fund invests in assets which are exposed to currencies other than sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall. The fund invests in emerging markets and the Far East. This involves a high degree of risk and should be seen as long term in nature. The fund invests in a smaller number of stocks. This carries more risk than funds spread across a larger number of companies. As a result of the expenses being charged wholly to capital, the distributable revenue of the fund may be higher, but the capital value of the fund may be eroded which may affect future performance. For these reasons, the purchase of units should not normally be regarded as a short term investment. 6

7 Net Asset Value and Comparative Tables Financial year to 15 July A Income units A Accumulation units Unit price range Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 15 January Financial year to 15 July L Income units L Accumulation units Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 15 January Financial year to 15 July Z Income units Z Accumulation units Highest Lowest Highest Lowest dealing dealing dealing dealing p p p p Financial period to 15 January Net revenue A Income units A Accumulation units Financial year to 15 July pence per unit pence per unit Financial period to 15 January L Income units L Accumulation units Financial year to 15 July pence per unit pence per unit Financial period to 15 January

8 Net Asset Value and Comparative Tables (continued) Z Income units Z Accumulation units Financial year to 15 July pence per unit pence per unit Financial period to 15 January Net asset value Net asset Net asset value value per unit Number of As at 15 July 000 s p units in issue 2015 A Income units 13, ,793,354 A Accumulation units 40, ,925,802 L Income units 2, ,158,360 L Accumulation units 10, ,153,945 Z Income units 32, ,376,381 Z Accumulation units 25, ,876, A Income units 6, ,270,365 A Accumulation units 25, ,093,323 L Income units 16, ,949,097 L Accumulation units 20, ,991,556 Z Income units 45, ,817,065 Z Accumulation units 34, ,664, A Income units 6, ,240,159 A Accumulation units 27, ,115,734 L Income units 16, ,269,197 L Accumulation units 24, ,894,058 Z Income units 53, ,104,165 Z Accumulation units 42, ,325, at 15 January A Income units 6, ,282,381 A Accumulation units 28, ,032,564 L Income units 20, ,617,908 L Accumulation units 34, ,069,828 Z Income units 68, ,312,168 Z Accumulation units 50, ,762,042 8

9 Net Asset Value and Comparative Tables (continued) Fund performance Net asset Net asset value per unit value per unit p p as at as at % change A Income units A Accumulation units L Income units L Accumulation units Z Income units Z Accumulation units Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money. 9

10 Portfolio Statement Holding at Market Value % of net s assets Equities 95.98% (98.45%) Belgium 3.82% (3.94%) Ageas 211,452 8, , Brazil 1.35% (1.60%) AES Tiete Energia 953,344 2, , Canada 0.00% (1.51%) China 2.43% (0.00%) CNOOC 4,490,000 5, , Finland 1.77% (2.99%) Fortum 238,439 3, , France 8.73% (9.11%) Alstom 156,195 4, BNP Paribas 127,875 7, Coface 402,944 3, Sanofi 35,765 2, , Hong Kong 2.01% (5.72%) NWS Holdings 3,113,000 4, , India 0.69% (0.00%) Fairfax India Holdings 112,512 1, , Italy 4.49% (4.10%) Eni 711,482 9, , Japan 3.35% (4.00%) Fuji Media Holdings 284,900 3,

11 Portfolio Statement (continued) Holding at Market Value % of net s assets Japan (continued) NHK Spring 199,200 1, Toagosei 208,200 1, , Norway 0.24% (0.58%) DNB 34, Russia 2.60% (2.27%) Gazprom ADR 514,747 1, Gazprom Neft ADR 86,936 1, Tatneft Preference 430,912 2, , Saudi Arabia 1.59% (0.00%) Saudi Basic Industries (Deutsche Bank) Warrant 06/08/ ,802 3, , South Korea 4.54% (5.40%) Hyundai Mobis 24,608 4, Kia Motors 246,351 5, , Switzerland 1.44% (0.00%) Ferrexpo 987,776 3, , Taiwan 0.95% (0.00%) Asustek Computer 305,000 2, , United Arab Emirates 2.58% (2.35%) Aldar Properties 12,146,960 5, , United Kingdom 19.31% (17.54%) Centrica 4,931,742 7, HSBC Holdings 1,081,739 8, Legal & General Group 2,057,420 5,

12 Portfolio Statement (continued) Holding at Market Value % of net s assets United Kingdom (continued) Pearson 1,032,033 7, Tesco 3,903,620 8, WPP 265,970 3, , United States of America 34.09% (37.34%) American International Group 172,131 7, Cisco Systems 328,406 9, Gap 245,928 6, Graham Holdings B 3,710 1, HollyFrontier 215,675 8, Intel 160,978 5, International Business Machines 54,684 6, JPMorgan Chase 36,120 2, Kohl s 69,035 3, Leucadia National 195,211 3, Michael Kors Holdings 22,667 1, Omnicom Group 62,817 3, Time 229,278 3, Vishay Intertechnology 262,710 4, Wells Fargo 113,155 5, , Equities total 201, Portfolio of investments 201, Net other assets 8, Net assets attributable to unitholders 210, The comparative percentage figures in brackets are as at 15 July

13 Summary of Portfolio Transactions Largest purchases Largest sales Cost For the six months ended 15 January s WPP 3,575 Omnicom Group 3,519 Saudi Basic Industries (Deutsche Bank) Warrant 06/08/2020 3,273 Centrica 3,173 Ferrexpo 2,903 International Business Machines 2,827 Hyundai Mobis 2,197 BNP Paribas 2,175 Toagosei 2,086 Asustek Computer 2,085 Proceeds For the six months ended 15 January s Staples 6,061 Japan Airlines 5,609 Samsung Electronics Preference 2,946 Fortum 2,918 Apple 2,725 First Solar 2,415 JPMorgan Chase 2,348 BGC Partners 2,269 Graham Holdings B 1,647 Michael Kors Holdings 1,468 13

14 Statement of the Manager s Responsibilities The Financial Conduct Authority s Collective Investment Schemes sourcebook (COLL) requires the Manager to prepare accounts for each annual and half yearly accounting period, in accordance with United Kingdom Generally Accepted Accounting Practice, which give a true and fair view of the financial position of the fund and of its net revenue and the net capital gains on the property of the fund for the period. In preparing the accounts the Manager is required to: select suitable accounting policies and then apply them consistently; comply with the disclosure requirements of the Statement of Recommended Practice (SORP) for UK Authorised Funds issued by the Investment Management Association (IMA (now the Investment Association (IA))) in May 2014; follow generally accepted accounting principles and applicable accounting standards; prepare the accounts on the basis that the fund will continue in operation unless it is inappropriate to do so; keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements; make judgements and estimates that are prudent and reasonable. The Manager is responsible for the management of the fund in accordance with its Trust Deed, the Prospectus and the COLL, and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations. The Manager s report and accounts for the period ended 15 January 2018 were signed on 2 March 2018 on behalf of the Manager by: J.A. Walker-Hazell Directors R.E. Stoakley 14

15 Statement of Total Return (unaudited) For the six months ended 15 January 2018 Income s 000 s 000 s 000 s Net capital gains 18,268 30,855 Revenue 2,717 2,041 Expenses (1,015) (840) Net revenue before taxation 1,702 1,201 Taxation (207) (329) Net revenue after taxation 1, Total return before distributions 19,763 31,727 Distributions (2,413) (1,707) Change in net assets attributable to unitholders from investment activities 17,350 30,020 Statement of Change in Net Assets Attributable to Unitholders (unaudited) For the six months ended 15 January s 000 s 000 s 000 s Opening net assets attributable to unitholders 170, ,996 Amounts receivable on issue of units 27,541 14,418 Amounts payable on cancellation of units (6,810) (15,965) 20,731 (1,547) Dilution adjustment 10 0 Change in net assets attributable to unitholders from investment activities 17,350 30,020 Retained distribution on Accumulation units 1, Closing net assets attributable to unitholders 210, , The Opening net assets attributable to unitholders for the current period do not equal the Closing net assets attributable to unitholders for the comparative period as they are not consecutive periods. 15

16 Balance Sheet (unaudited) As at 15 January s 000 s Assets Investments 201, ,883 Current assets Debtors 1,371 2,058 Cash and bank balances 8,641 2,864 Total assets 211, ,805 Liabilities Creditors Distributions payable (1,173) (1,739) Other creditors (397) (537) Total liabilities (1,570) (2,276) Net assets attributable to unitholders 210, ,529 16

17 Notes to the Accounts (unaudited) Basis of preparation The accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the SORP for UK Authorised Funds issued by the IMA in May 2014 and in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard Applicable in the UK and Republic of Ireland (FRS 102)). Accounting policies The accounting policies applied are consistent with those of the annual accounts for the year ended 15 July 2017 and are described in those annual accounts. 17

18 Distribution Table (unaudited) Interim distribution for the six months ended 15 January 2018 Group 1 Units purchased prior to 16 July 2017 Group 2 Units purchased on or after 16 July 2017 A Income units Net Distribution Distribution revenue Equalisation payable paid p per unit p per unit p per unit p per unit Group Group A Accumulation units Group Group L Income units Group Group L Accumulation units Group Group Z Income units Group Group Z Accumulation units Group Group Corporate unitholders Corporate unitholders receive the dividend distribution payment as detailed below: % of the total distribution is received as franked investment income. Equalisation Equalisation applies to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of Group 2 units and is refunded to the holders of these units as a return of capital. Being capital it is not liable to income tax but must be deducted from the cost of units for capital gains tax purposes. 18

19 General Information Manager Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Conduct Authority Registrar Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Conduct Authority Investment Adviser Schroder Investment Management Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Conduct Authority Trustee J.P. Morgan Europe Limited Chaseside Bournemouth BH7 7DA Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority Administration Details Schroders FREEPOST RLTZ-CHSY-HBUT PO Box 1102 Chelmsford Essex CM99 2XX Investor Services Dealing Fax Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Authorisation Other information The fund is an authorised unit trust and is constituted pursuant to the COLL and is structured as a trust. The fund is a UCITS scheme for the purpose of the categorisation of the COLL. The Prospectus, the Key Investor Information Document and details of investment charges and costs are available on request or can be downloaded from our website 19

20 For further literature please contact Schroder Investor Services on or at or visit our website at Issued in March 2018 by Schroder Unit Trusts Limited, 31 Gresham Street, London EC2V 7QA. Registered No: England. Authorised and regulated by the Financial Conduct Authority. w35641