UK and General ProGressive UniT TrUsT

Transcription

1 UK and General Progressive UNIT TRUST FOR THE YEAR ENDED 31 MARCH 2017

2 Manager St. James's Place Unit Trust Group Limited PO Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Conduct Authority) Directors of the Manager D. C. Bellamy A. M. Croft Investment Advisers J O Hambro Capital Management Limited Ryder Court 14 Ryder Street London, SW1Y 6QB United Kingdom I. S. Gascoigne D. J. Lamb Majedie Asset Management Limited 10 Old Bailey London, EC4M 7NG United Kingdom BlackRock Investment Management (UK) Limited 12 Throgmorton Avenue London, EC2N 2DL United Kingdom (Authorised and regulated by the Financial Conduct Authority) Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London, EC4V 4LA United Kingdom (Authorised and regulated by the Financial Conduct Authority) Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon, SS15 5FS United Kingdom (Authorised and regulated by the Financial Conduct Authority) Independent Auditors PricewaterhouseCoopers LLP Atria One 144 Morrison Street Edinburgh, EH3 8EX United Kingdom Prospectus and Manager's Reports Copies of the up to date Prospectus (Scheme Particulars) and latest Manager's Report and Financial Statements for the range of St. James's Place Unit Trusts can be requested from a member of the St. James's Place Partnership or, at any time during normal business hours, from the Administration Centre at PO Box 9034, Chelmsford CM99 2XA. Freephone:

3 Report of the Manager The Report of the Manager consists of The Trust, Investment Objectives & Policy, The Trust's Performance, Risk and Reward Profile, Investment Adviser's Comments and Portfolio Statement. The Trust St. James's Place UK and General Progressive Unit Trust is an authorised Unit Trust scheme under section 243 of the Financial Services and Markets Act (2000) and is constituted by a Trust Deed dated 15 September The Unit Trust is subject to the rules of the Financial Conduct Authority's Collective Investment Scheme Sourcebook and is classified as a UCITS Scheme. Investment Objectives & Policy The Scheme aims to maximise total return, comprising both capital appreciation and income, through investment principally but not exclusively in the United Kingdom. The Scheme may also invest in any other geographic area. The Scheme will concentrate on seeking opportunities for exceptional growth in undervalued stocks which may be less popular but which, in the opinion of the Investment Adviser, offer good value for money. The scheme is also permitted to invest in derivative and forward transactions for the purpose of efficient portfolio management (including hedging). It is the Manager's intention that the assets of the Unit Trust will be invested so that the Unit Trust will be eligible for inclusion in an ISA. The Trust's Performance The performance of the Trust since its launch in October 1989, over the five year period since March 2012 and over the year under review is shown below, together with figures for the most commonly quoted indices in comparable markets where the major proportion of the Trust has been invested. St. James's Place UK and General Progressive Unit Trust L Income units (offer to offer) L Accumulation units (offer to offer) H Accumulation units (offer to offer)* Y Accumulation units (offer to offer)* Indices - actual FTSE All-Share (Total Return) 02/10/89 to 31/03/12 to 31/03/16 to 31/03/17 31/03/17 31/03/17 % change % change % change , * Class H Accumulation and Y Accumulation units were made available on 1 December 2016 and the performance shown is from that date. Source: FTSE International Limited ( FTSE ) FTSE FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. REMEMBER THAT THE PRICE OF UNITS AND REVENUE FROM THEM MAY GO DOWN AS WELL AS UP. PLEASE BE AWARE THAT PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place UK and General Progressive Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 5. It was calculated using performance data up to 6 February The risk category is recalculated weekly and during the year under review, the risk category did not change. 2

4 Report of the Manager Investment Advisers' Comments The UK stock market rose strongly over the 12-month period to 31 March 2017, as the anticipated post-brexit UK economic growth lull failed to materialise. Moreover, inflation and growth expectations rose significantly in the US, boosted by the possibility of a policy shift. Sterling s sharp fall and its impact on earnings was positive for the many international companies on the UK stock market. Some of the main holdings that detracted from performance had strong domestic exposure, among them Next, Capital & Counties and easyjet. At a sector level, the fund s underweight position in resource companies was a detractor as the recovery in commodity prices buoyed share prices in the sector. Next was the single largest detractor weaker consumer spending spurred a downgrade to revenue guidance - even then, the share price fall was substantial. The company is responding to these pressures, such as investing to improve its online shopping facility. Capital & Counties was one of the stocks we reduced in the first half of 2016 ahead of the Brexit vote. The share price then fell significantly on concerns about weakening demand for central London residential property. Shares in easyjet fell after the company issued a profit warning. It said that rapid growth in industry capacity had increased supply, while terrorist attacks had hit demand. The Fund s holdings in Melrose, BAT, RELX, Compass, Wolseley and Barclays benefited from good earnings results and performed well, but were more than offset by the detractors. Fund activity included additions to Rio Tinto, Reckitt Benckiser and Barclays. Paddy Power Betfair was sold, with reductions to Johnson Matthey, Just Eat and AstraZeneca. Geopolitical risks remain, not least given forthcoming elections in Europe and Brexit-related uncertainty. But the UK stock market continues to provide us with opportunities to invest in global companies that can deliver sustainable earnings and cashflow growth. We believe the earnings power of these businesses is underappreciated and undervalued by the market, particularly over 3 to 5 years. BlackRock Investment Management (UK) Limited 18 April 2017 The defining event of the 12-month period under review was the British electorate's vote for Brexit in the EU membership referendum in late June. The Leave result initially caused a sharp stock market sell-off, although share prices quickly recovered. Boosted by sterling's marked depreciation in the wake of the referendum, the FTSE 100 index, dominated as it is by multinational companies that earn most of their profits abroad, propelled the broader UK stock market higher. The trend continued for the rest of 2016 and into 2017, and the FTSE 100 index reached a record high in March From a sector perspective, basic materials and oil & gas were the clear winners, benefiting from a major recovery in commodities prices. The fund management team has for some time believed that valuations in the UK stock market have been artificially inflated by quantitative easing and extreme monetary policy; in the team's view, valuations continued to bear little relation to underlying corporate fundamentals. They opted to hold a high cash balance over the period rather than dilute their long-standing absolute valuation and quality disciplines in a bid to chase market performance. 3

5 Report of the Manager Turning to individual stocks, the portfolio's industrial holdings weighed upon returns outsourcing group Capita, which suffered after it issued profit warnings, was the clear laggard. Travis Perkins, a builders merchant and home improvement retailer, struggled over the period, while Next, a fashion retailer, experienced share price weakness after issuing a profit warning in early January. Brighter spots for the portfolio were Tesco and Smiths Group, an engineering conglomerate. Stocks brought into the portfolio included WM Morrison's, GlaxoSmithKline, Vodafone Group, Severn Trent, United Utilities and Cobham, a defence company. We sold Capita, Travis Perkins, Spectris and IMI. The fund management team's emphasis remains on a concentrated portfolio of companies that are capable of growing and developing their businesses over time. Thanks to strong balance sheets, the companies within the portfolio have the ability to reinvest in themselves, so as to generate compounding growth irrespective of the economic environment. The team remains faithful to a long-established process that has the avoidance of capital loss at its core. J O Hambro Capital Management Limited 18 April 2017 The 12-month period to 31 March 2017 saw two political shocks: the UK s vote to leave the EU and the US election victory of Donald Trump. Companies sensitive to the UK domestic economy performed poorly following the Brexit result, although a rally soon ensued. The election of Trump boosted the financial sector, and the portfolio benefited from positions in HSBC, Barclays and Standard Chartered. An overweight position in miners was the largest source of positive performance; operational improvements and a commodity price recovery helped Anglo American, BHP Billiton and KAZ Minerals. Some of our favoured mid-caps showed strength, including Rentokil and Electrocomponents. BT and Tesco were key detractors. BT delivered a profit warning after discovering extensive fraud within its Italian business, but has an enviable franchise and a fully converged business (i.e. multiple communication modes on a single network) which we find attractive. Tesco has progressed well in its restructuring programme and margin improvement, but its announced intention to bid for Booker was regarded by the market as a potential distraction. An underweight position in Glencore, stemming from its debt pile, dragged as it re-rated. We have taken an increasingly cautious outlook, as we are concerned about the risks of a US recession and of tightening in China after a period of fiscal expansion. We have sold some banks, namely HSBC and Barclays, and moved our mining exposure towards gold, and away from the bulk commodities selling BHP Billiton and Rio Tinto. We reduced the position in Anglo American and increased the positions in Centrica and GlaxoSmithKline. We also picked up retailers Marks & Spencer and Kingfisher, after Brexit fears hit their share prices. We remain unenthusiastic about the consumer staples sector: structural pressures are building and volumes deteriorating, yet these bond proxies are on peak margins and high valuations. Overall, we have taken the spinnaker down, but money-making ideas persist in the form of holdings in Ryanair, Saga and Card Factory. Majedie Asset Management Limited 18 April

6 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure 31/03/17 31/03/16 31/03/15 L Income Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* Operating charges (16.65) (15.47) (14.80) Return after operating charges* (3.19) Distributions on income units (9.00) (9.90) (7.73) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 15.45% (0.40%) 7.29% Other information Closing net asset value ( 000) 14,911 13,709 14,696 Closing number of units 1,657,794 1,742,147 1,837,015 Operating charges** 1.95% 1.95% 1.97% Direct transaction costs 0.20% 0.20% 0.13% Prices Highest unit price (p) Lowest unit price (p)

7 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure 31/03/17 31/03/16 31/03/15 L Accumulation Change in net assets per unit (p) (p) (p) Opening net asset value per unit 1, , , Return before operating charges* Operating charges (25.11) (22.99) (22.37) Return after operating charges* (4.29) Distributions on accumulation units (13.57) (14.72) (11.41) Retained distributions on accumulation units Closing net asset value per unit 1, , , *after direct transaction costs of: Performance Return after charges 15.43% (0.36%) 7.29% Other information Closing net asset value ( 000) 1,555,347 1,289,286 1,250,914 Closing number of units 113,645, ,742, ,125,488 Operating charges** 1.95% 1.95% 1.97% Direct transaction costs 0.20% 0.20% 0.13% Prices Highest unit price (p) 1, , , Lowest unit price (p) 1, , ,

8 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure H Accumulation Change in net assets per unit 31/03/17 Opening net asset value per unit 1, Return before operating charges* Operating charges (10.89) Return after operating charges* Distributions on accumulation units - Retained distributions on accumulation units - Closing net asset value per unit 1, *after direct transaction costs of: 2.67 Performance Return after charges 6.32% Other information Closing net asset value ( 000) 11 Closing number of units 780 Operating charges** 2.45% Direct transaction costs 0.20% Prices Highest unit price (p) 1, Lowest unit price (p) 1, (p) 7

9 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure Y Accumulation Change in net assets per unit 31/03/17 Opening net asset value per unit 1, Return before operating charges* Operating charges (5.36) Return after operating charges* Distributions on accumulation units (4.96) Retained distributions on accumulation units 4.96 Closing net asset value per unit 1, *after direct transaction costs of: 2.67 Performance Return after charges 6.89% Other information Closing net asset value ( 000) 20 Closing number of units 1,472 Operating charges** 1.20% Direct transaction costs 0.20% Prices Highest unit price (p) 1, Lowest unit price (p) 1, H Accumulation and Y Accumulation units were made available on 1 December **Operating charges are prepared using the same methodology as the ongoing charges appearing in the KIID, based on the information in this report. This figure may differ from the performance figure quoted in the Investment Report. The Investment Report performance figure is calculated using the last available published price for a given unit class in the period compared to the equivalent for the prior period. The price per the financial statements values the fund on a bid-price basis. The financial statements unit class valuation is based on market prices on the last day of the period, which can differ from the intraday pricing point of the Trust. (p) 8

10 Portfolio Statement as at 31 March 2017 Security Holdings Market Value 000 % of Net Assets Aerospace & Defence (1.60%) 37, BAE Systems 1,070,419 6, Cobham 9,803,126 13, Rolls-Royce 89, Ultra Electronics 808,186 16, Banks (4.55%) 80, Barclays 16,534,903 37, HSBC 3,448,663 22, Royal Bank of Scotland 4,439,252 10, Standard Chartered 1,242,091 9, Beverages (1.47%) 27, Diageo 1,188,391 27, Chemicals (2.38%) 8, Johnson Matthey 267,800 8, Construction & Materials (0.09%) 1, Marshalls 338,288 1, Electricity (0.73%) 32, SSE 2,203,452 32, Electronic & Electrical Equipment (1.24%) - - Financial Services (0.90%) 10, i 170,676 1, Hargreaves Lansdown 740,000 9, Fixed Line Telecommunications (0.85%) 12, BT 3,833,404 12, Food & Drug Retailers (1.96%) 54, J Sainsbury 2,494,024 6, Tesco 8,889,400 16, WM Morrison Supermarkets 12,928,940 30, Forestry & Paper (0.39%) 5, Mondi 298,512 5, Gas, Water & Multiutilities (4.92%) 98, Centrica 16,223,496 35, National Grid 4,251,814 42, Severn Trent 448,420 10, United Utilities 1,030,788 10, General Industrials (1.68%) 8, Smiths 499,822 8, General Retailers (4.17%) 54, Card Factory 1,300,709 3, Dunelm 185,669 1, Just Eat 774,100 4, Kingfisher 1,193,872 3, Marks & Spencer 2,404,572 8, Next 636,842 27, Saga 2,847,834 5, Health Care Equipment & Services (1.37%) 22, Smith & Nephew 1,813,177 22,

11 Portfolio Statement as at 31 March 2017 Security Holdings Market Value 000 % of Net Assets Household Goods & Home Construction (1.71%) 32, Reckitt Benckiser 443,200 32, Industrial Engineering (1.28%) 15, Melrose Industries 6,900,000 15, Life Insurance (0.44%) 6, Aviva 1,243,960 6, Media (7.77%) 112, Auto Trader 2,400,000 9, Daily Mail & General Trust 628,590 4, Pearson 405,487 2, RELX 4,731,152 73, Sky 2,320,000 22, Mining (2.48%) 52, Acacia Mining 326,600 1, Anglo American 994,306 12, BHP Billiton 444,585 5, Fresnillo 86,771 1, Hochschild Mining 298, KAZ Minerals 988,016 4, Lonmin 1,088, Polymetal International 131,943 1, Rio Tinto 770,000 24, Miscellaneous (0.00%) - - Yes Television* 26, Mobile Telecommunications (1.58%) 39, Vodafone 19,005,332 39, Non Equity Investment Instruments (7.32%) 117, BlackRock Institutional Sterling Liquidity Fund A Inc 13,555,070 13, Majedie UK Smaller Companies Fund B Acc 11,123,805 37, St. James's Place Money Market Unit Trust L Acc 63,477,388 66, Non Life Insurance (0.06%) 3, Jardine Lloyd Thompson 94,093 1, RSA Insurance 425,164 2, Oil & Gas Producers (8.93%) 166, BP 13,522,494 62, Cairn Energy 2,876,600 5, Royal Dutch Shell 'B' Shares 4,387,284 97, Tullow Oil 685,451 1, Oil Equipment, Services & Distribution (0.00%) 2, AMEC 397,283 2, Personal Goods (1.74%) 13, Ted Baker 41,683 1, Unilever 319,417 12, Pharmaceuticals & Biotechnology (3.87%) 79, AstraZeneca 277,196 13, GlaxoSmithKline 2,323,020 38, Shire 575,000 27,

12 Portfolio Statement as at 31 March 2017 Market Value 000 % of Net Assets Security Holdings Real Estate Investment & Services (0.69%) 6, Capital & Counties Properties 2,239,000 6, Purplebricks 204, Software & Computer Services (0.34%) 6, FDM 258,056 1, Sage 686,633 4, Support Services (13.58%) 141, Aggreko 196,154 1, Bunzl 658,733 15, Carillion 822,766 1, De La Rue 367,522 2, Electrocomponents 1,518,320 7, Experian 1,240,893 20, Hays 2,093,683 3, Mears 498,994 2, Michael Page International 3,229,897 13, Rentokil Initial 5,002,417 12, Serco 3,506,685 4, Travis Perkins 295,509 4, Wolseley 1,057,815 52, Technology Hardware & Equipment (0.22%) - - Tobacco (6.21%) 72, British American Tobacco 1,035,759 54, Imperial Tobacco 447,024 17, Travel & Leisure (7.88%) 104, Compass 4,304,516 64, easyjet 923,900 9, Firstgroup 5,101,752 6, Greene King 111, GVC 416,272 3, Ladbrokes 793,723 1, Merlin Entertainments 2,600,000 12, Ryanair 469,538 5, William Hill 370,960 1, Investment Assets 1,426, Total other assets (net) 143, Net assets 1,570, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. During the year under review the Manager decided to place some of the sterling cash held on deposit into the St. James s Place Money Market Unit Trust in order to spread risk across a number of institutions. The St. James s Place Money Market Unit Trust is highly liquid and is rated AAA by Standard & Poors. This investment is a related party. * Unlisted securities. 11

13 Material Portfolio Changes Cost Purchases 000 BlackRock Institutional Sterling Liquidity Fund A Inc 61,898 St. James's Place Money Market Unit Trust L Acc 41,319 GlaxoSmithKline 29,786 Vodafone 28,264 SSE 23,755 Tesco 23,469 WM Morrison Supermarkets 22,309 Royal Dutch Shell 'B' Shares 19,173 Cobham 16,091 Centrica 15,121 Proceeds Sales 000 BlackRock Institutional Sterling Liquidity Fund A Inc 52,728 St. James's Place Money Market Unit Trust L Acc 34,360 Johnson Matthey 26,425 British American Tobacco 25,913 Tesco 25,802 Smiths 21,707 Travis Perkins 20,828 Unilever 18,164 Bunzl 17,927 Spectris 16,619 This investment is a related party. 12

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

15 Statement of the Depositary's Responsibilities in Respect of the Scheme and Report of the Depositary to the Unitholders of the St. James's Place UK and General Progressive Unit Trust for the year ended 31 March 2017 The Depositary in its capacity as Trustee of St. James's Place UK and General Progressive Unit Trust must ensure that the Trust is managed in accordance with the Financial Conduct Authority s Collective Investment Schemes Sourcebook, and, from 22 July 2014 the Investment Funds Sourcebook, the Financial Services and Markets Act 2000, as amended, (together the Regulations ), the Trust Deed and Prospectus (together the Scheme documents ) as detailed below." The Depositary must in the context of its role act honestly, fairly, professionally, independently and in the interests of the Trust and its investors. The Depositary is responsible for the safekeeping all of custodial assets and maintaining a record of all other assets of the Trust in accordance with the Regulations. the Trust s cash flows are properly monitored and that cash of the Trust is booked in cash accounts in accordance with the Regulations; the sale, issue, repurchase and cancellation of units are carried out in accordance with the Regulations; the value of units of the Trust are calculated in accordance with the Regulations; any consideration relating to transactions in the Trust s assets is remitted to the Trust within the usual time limits; the Trust s income is applied in accordance with the Regulations; and the instructions of the Authorised Fund Manager ( the AFM ), which is the UCITS Management Company, are carried out (unless they conflict with the Regulations). The Depositary also has a duty to take reasonable care to ensure that the Trust is managed in accordance with the Regulations and the Scheme documents of the Trust in relation to the investment and borrowing powers applicable to the Trust. Having carried out such procedures as we considered necessary to discharge our responsibilities as Depositary of the Trust, it is our opinion, based on the information available to us and the explanations provided, that, in all material respects the Trust, acting through the AFM: (i) has carried out the issue, sale, redemption and cancellation, and calculation of the price of the Trust s units and the application of the Trust s income in accordance with the Regulations and the Scheme documents of the Trust; and (ii) has observed the investment and borrowing powers and restrictions applicable to the Trust in accordance with the Regulations and the Scheme documents of the Trust. For and on behalf of BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London EC4V 4LA Manager Date May

16 Independent Auditors' Report to the Unitholders of St. James's Place UK and General Progressive Unit Trust Our opinion In our opinion, St. James's Place UK and General Progressive Unit Trust's financial statements, (the "financial statements"): give a true and fair view of the financial position of the Trust as at 31 March 2017 and of the net revenue and the net capital gains of its scheme property for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of Recommended Practice for UK Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. What we have audited The financial statements, included within the Long Report, which are prepared by St. James s Place Unit Trust Group Limited (the Authorised Fund Manager ), comprise: the balance sheet as at 31 March 2017; the statement of total return for the year then ended; the statement of change in net assets attributable to unitholders for the year then ended; the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information; and the distribution tables. The financial reporting framework that has been applied in their preparation is United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and applicable law), the Statement of Recommended Practice Financial Statements of UK Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for UK Authorised Funds ), the Collective Investment Schemes sourcebook and the Trust Deed. In applying the financial reporting framework, the Authorised Fund Manager has made a number of subjective judgements, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Opinions on matters prescribed by the Collective Investment Schemes sourcebook In our opinion: we have obtained all the information and explanations we consider necessary for the purposes of the audit; and the information given in the Authorised Fund Manager s Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Other matters on which we are required to report by exception Propriety of accounting records and information and explanations received Under the Collective Investment Schemes sourcebook we are required to report to you if, in our opinion: proper accounting records have not been kept; or the financial statements are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. 15

17 Independent Auditors' Report to the Unitholders of St. James's Place UK and General Progressive Unit Trust Responsibilities for the financial statements and the audit Our responsibilities and those of the Authorised Fund Manager As explained more fully in the Statement of the Manager's Responsibilities set out on page 13, the Authorised Fund Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the Trust s unitholders as a body in accordance with paragraph of the Collective Investment Schemes sourcebook and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) ( ISAs (UK & Ireland) ). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Trust s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Authorised Fund Manager; and the overall presentation of the financial statements. We primarily focus our work in these areas by assessing the Authorised Fund Manager s judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the Long Report (the Annual Report ) to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh May 2017 The maintenance and integrity of the St. James s Place website is the responsibility of the Authorised Fund Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 16

18 Statement of Total Return for the year ended 31 March /04/16 to 31/03/17 01/04/15 to 31/03/16 Note Income Net capital gains/(losses) 2 187,384 (21,186) Revenue 3 42,642 40,831 Expenses 4 (27,620) (24,927) Interest payable and similar charges - - Net revenue before taxation 15,022 15,904 Taxation 5 (7) - Net revenue after taxation 15,015 15,904 Total return before distribution 202,399 (5,282) Distribution 6 (15,015) (15,904) Change in net assets attributable to unitholders from investment activities 187,384 (21,186) Statement of Change in Net Assets Attributable to Unitholders for the year ended 31 March /04/16 to 31/03/17 01/04/15 to 31/03/ Opening net assets attributable to unitholders 1,302,995 1,265,610 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 85,866 61,698 Amounts payable on cancellation of units* (21,374) (19,139) 64,492 42,559 Change in net assets attributable to unitholders from investment activities (see above) 187,384 (21,186) Retained distribution on accumulation units 15,418 16,011 Unclaimed distributions - 1 Closing net assets attributable to unitholders 1,570,289 1,302,995 * Prior year creations and cancellations have been reclassified due to reallocations from income to accumulation units to make these comparable to current year. 17

19 Balance Sheet as at 31 March 2017 Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Creditors Distribution payable Other creditors 9 Total liabilities Net assets attributable to unitholders 31/03/17 31/03/16 Note ,426,753 1,229, ,562 7, ,515 69,699 1,576,830 1,307,372 (149) (172) (6,392) (4,205) (6,541) (4,377) 1,570,289 1,302,995 18

20 Notes to the Financial Statements for the year ended 31 March Accounting and Distribution policies (a) Basis of accounting The Financial Statements have been prepared under the historical cost basis, as modified by the revaluation of investments, in compliance with the Financial Conduct Authority's Collective Investment Schemes Sourcebook. They have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice, including Financial Reporting Standard 102 (The Financial Reporting Standard applicable in the UK and Republic of Ireland FRS 102) and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the Investment Management Association May 2014 (IMA SORP 2014). The financial statements are prepared on the going concern basis. (b) Revenue Dividends receivable from equity investments are credited to the revenue account when the investments are first quoted ex-dividend. Interest on deposits are accounted for on an accruals basis. Revenue from other authorised collective investment schemes is recognised when the investments are quoted ex-dividend. Management fee rebates from underlying funds will be taken to revenue or capital depending on the treatment adopted in the underlying funds. Management fee rebates received from the St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. (c) Expenses All expenses of the Trust are recognised on an accruals basis and are deducted from revenue with the exception of handling charges which are deducted from capital. (d) Valuation of investments Listed investments have been valued at bid market value at midday on 31/03/2017 (31/03/2016: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. Authorised unit trusts are valued at cancellation price for funds managed by the manager and a bid price for all other funds. Suspended, delisted, unquoted or manually priced securities are valued by the manager taking into account, where appropriate, latest dealing prices, financial performance and other relevant factors. (e) Foreign exchange Assets and liabilities have been translated into sterling at the exchange rates prevailing at the Balance Sheet date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. (f) Taxation Provision is made for corporation tax at the current rate on the excess of taxable revenue over allowable expenses. UK dividend revenue is disclosed net of any related tax credit. Overseas dividends continue to be disclosed gross of any foreign tax suffered, the tax element being separately disclosed in the tax note. Deferred tax is provided for on the liability method on all timing differences. A deferred tax asset is only recognised to the extent that a timing difference will be of future benefit. (g) Distribution policy The manager has chosen to pay all revenue less revenue expenses and taxation as a final distribution at the end of the accounting period. In the case of income unitholders this will be paid as a distribution. In the case of accumulation unitholders the distribution will be reinvested. Equalisation on distributions received is deducted from the cost of the investment. 19

21 Notes to the Financial Statements for the year ended 31 March 2017 (h) Equalisation Equalisation applies only to units purchased during the distribution period. It is the accrued revenue element of the purchase price of all such units and is refunded to holders of these units as a return of capital. Being capital it is not liable to income tax, but must be deducted from the cost of units for capital gains tax purposes. (i) Special dividends Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. (j) Derivatives The Trust may enter into permitted transactions such as derivative contracts or forward foreign currency transactions. Where these transactions are used to protect or enhance revenue, and the circumstances support this, the returns are included within net revenue in the Statement of Total Return. Where the transactions are used to protect or enhance investments, and the circumstances support this, the returns are treated as capital and included within gains/losses on investments in the Statement of Total Return. Any open positions in these type of transactions at the year end are included in the Balance Sheet at their mark to market value. (k) Underwriting commission Underwriting commission is recognised when the issue takes place. Where the Trust is required to take up some or all of the shares underwritten, an appropriate proportion of the commission earned is deducted from the cost of those shares. Net capital gains/(losses) Non-derivative securities Currency gains Handling charges Net capital gains/(losses) Revenue 01/04/16 to 31/03/17 01/04/15 to 31/03/ ,390 (21,162) 2 1 (8) (25) 187,384 (21,186) 01/04/16 to 31/03/17 01/04/15 to 31/03/ UK dividends 40,622 37,918 Overseas dividends 885 1,976 Distributions from Regulated Collective Investment Schemes Franked investment revenue Unfranked investment revenue 5 - Interest distributions Offshore interest distribution Bank interest Management charge rebate on underlying holdings Underwriting commission - 19 Total revenue 42,642 40,831 20

22 Notes to the Financial Statements for the year ended 31 March Expenses 01/04/16 to 31/03/17 01/04/15 to 31/03/ Payable to the Manager Management charge 19,582 21,077 Payable to the Trustee Trustee's fee - 69 Other expenses Audit fee - 5 Registrar's fee Safe custody fee - 7 Investment adviser's fees 8,038 3,026 8,038 3,781 Total expenses 27,620 24,927 With effect from 26 October 2015 all expenses are now paid by the Manager out of the Annual Management Charge with exception of the Investment Adviser fees. This includes current year Audit Fee of 9,360 (31/03/16: 9,360). For presentation purposes in the table above, all expenses other than Investment Adviser fees have been shown as part of the Annual Management Charges for the full year from 1 April Taxation 01/04/16 to 31/03/17 01/04/15 to 31/03/ (a) Analysis of charge in year: Irrecoverable overseas tax 7 - (b) Factors affecting total tax charge for the year: The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2016: 20%). The differences are explained below: Net revenue before taxation 15,022 15,904 (d) Corporation Tax at 20% (2016: 20%) 3,004 3,181 Effects of: UK dividends not subject to corporation tax (8,281) (7,691) Non taxable foreign dividends (177) (395) Movement in excess management expenses 5,454 4,905 Irrecoverable overseas tax 7 - Total tax charge for year (note 5a) 7 - Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. (c) Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. Factors that may affect future tax charges At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of 39,301,291 (31/03/16: 33,847,682) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely the Trust would generate sufficient taxable profits in the future to utilise these amounts. 21

23 Notes to the Financial Statements for the year ended 31 March Distributions The distribution takes account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/04/16 to 31/03/17 01/04/15 to 31/03/ Final distribution 15,567 16,184 Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (665) (414) Net distribution for the year 15,015 15,904 Debtors Sales awaiting settlement Amounts receivable for creation of units Accrued revenue Rebate receivable on underlying holdings Income tax recoverable Overseas tax recoverable Total debtors Cash and bank balances Cash and bank balances: Sterling Cash and bank balances: Overseas Total cash and bank balances Other creditors Purchases awaiting settlement Amounts payable for cancellation of units Accrued expenses Total other creditors 10. Units in issue Reconciliation of the unit movement in the year: 31/03/17 31/03/ ,160 1,831 1, ,437 5, ,562 7,690 31/03/17 31/03/ ,515 69, ,515 69,699 31/03/17 31/03/ ,547 1, ,812 2,276 6,392 4,205 Opening units in issue Units converted Creations Cancellations Closing units in issue L Income 1,742, ,649 (266,002) 1,657,794 L Accumulation 108,742,689-6,464,417 (1,561,551) 113,645,555 H Accumulation Y Accumulation - - 1,472-1,472 22

24 Notes to the Financial Statements for the year ended 31 March Related party transactions St. James's Place Unit Trust Group Limited together with the subsidiaries including associates are related parties and regarded as controlling parties by virtue of having the ability to act in respect of operations of the Trust. The Manager's service charge paid to St. James's Place Unit Trust Group Limited is shown in note 4 and details of the value of units created and cancelled by St. James's Place Unit Trust Group Limited are shown in the Statement of Change in Net Assets Attributable to Unitholders. The net balances due from St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 99,535 (31/03/16: 748,783). The Manager, St. James's Place Unit Trust Group Limited, is a subsidiary of St. James's Place Wealth Management Group plc ('SJPWMG'). A fellow subsidiary of SJPWMG, St. James's Place International plc, invests some of its life and pension policyholders' funds into the St. James's Place UK and General Progressive Unit Trust. The value of these investments at the year end was 761,842,623 (31/03/16: 605,567,599). Included in the investment portfolio is a holding of 63,477,388 units (31/03/16: 56,802,216) in St. James's Place Money Market Unit Trust (St. James's Place Unit Trust Group Limited fund) with a market value of 66,293,689 (31/03/16: 59,297,935). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. As at 31/03/17 total revenue earned amounts to 270,099 (31/03/16: 277,003). Any transactions with related parties (connected persons) have been entered into in the ordinary course of business and on normal commercial terms. 12. Capital commitments and contingent liabilities On 31 March 2017, the Trust had no capital commitments (31/03/16: nil) and no contingent liabilities (31/03/16: nil). 13. Derivatives and other financial instruments In accordance with the investment objectives, as stated on page 2, the Trust held certain financial instruments. These comprise: Equity shares and units in collective investment schemes. Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations. The rules in the Scheme Documents set out the financial instruments in which the Trust may invest. The Trust's use of financial instruments during the year satisfies these requirements. 14. Risk management The Manager s objectives in managing investment risk are to ensure that the investment profile of the Trust is consistent with its stated investment objectives and risk profile, and to ensure appropriate liquidity. Day to day responsibility for managing investment risk is delegated to the Investment Adviser, who is required to manage the Trust in accordance with FCA regulations, the Prospectus and the terms of their Investment Management Agreement with the Manager. The Manager monitors the activities of the Investment Advisers, through a variety of mechanisms including the following: Initial and ongoing due diligence of Investment Adviser investment and risk management procedures including on site reviews; Periodic reviews of the investments held by the Trust and their compliance with investment objectives and liquidity requirements; and Ongoing review of the investment performance of the Trust against appropriate benchmarks. The main risks arising from the Trust's financial instruments are market price risk, interest rate risk, credit risk and liquidity risk. The Manager's policies for managing these risks are summarised below. These policies have remained unchanged since the beginning of the year to which these financial statements relate (same for 2016). 23

25 Notes to the Financial Statements for the year ended 31 March 2017 (a) Market price risk Lowest monthly VaR Highest monthly VaR Average monthly VaR (b) Interest rate risk (c) Market price risk represents the potential loss the Trust might suffer through holding market positions in the face of price movements. The Manager has delegated the investment management of the portfolio to an external Investment Adviser who determines the asset allocation and minimises the risk associated with particular countries or industry sectors, whilst continuing to follow the Trust s investment objectives. The Manager has the responsibility for monitoring the portfolio to ensure compliance with the investment objectives and that an acceptable risk and reward profile is maintained. The sensitivity of the fund to market risk is calculated using the Value-at-Risk (VaR) approach. VaR is a mathematical-statistical concept and is commonly used as a standard measure of risk in the financial sector. The maximum potential loss that a fund could suffer under normal market conditions within a given time horizon and a certain degree of confidence is estimated. An absolute VaR is calculated using the historic return series of each fund. Using the Historical VaR approach, a 1% 20-day VaR using 10 years of historical daily data is calculated. An annualised VaR limit of 20% is considered for the fund. The actual VaR is summarised in the table below: 01/04/16 to 31/03/17 01/04/15 to 31/03/16 % % Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. Credit risk Credit risk occurs where there is a risk associated with the uncertainty of a counterparty s ability to meet its obligations. This risk is managed by reviewing the counterparty s credit rating, at the time of purchase and on an ongoing basis, and ensuring that the portfolio is sufficiently diversified. The impact of movements in credit rating and spread, and their effect on market prices, is considered to be part of market price risk, which is discussed above. The Trust s investments and cash are held on its behalf by State Street Bank and Trust Company (acting as agent), the custodian to the Trust, and its appointed sub custodians. Bankruptcy or insolvency of the custodian or its sub custodians may cause the Trust s rights with respect to securities to be delayed. This risk is managed through ongoing monitoring of the custodian and periodic reviews of its procedures for selecting and monitoring sub custodians, together with ad hoc reviews of custodian and sub custodian credit ratings. Certain transactions in securities that the Trust enters into expose it to the risk that the counterparty will not deliver the investment (purchase) or cash (sale) after the fund has fulfilled its responsibilities. The external Investment Adviser selects acceptable counterparties through which investments are bought and sold. The Manager has responsibility for monitoring the process by which these counterparties are selected to minimise risk. 24