PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT PUTM UK STOCK MARKET FUND. For the half year: 2 May 2017 to 1 November 2017

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1 PHOENIX UNIT TRUST MANAGERS MANAGER S INTERIM REPORT For the half year: 2 May 2017 to 1 November 2017 PUTM UK STOCK MARKET FUND

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3 Contents Investment review 2-3 Portfolio of investments 4-7 Top ten purchases and sales 8 Statistical information 9-11 Statements of total return & change in unitholders funds 12 Balance sheet 13 Distribution table 14 Corporate information

4 Investment review Dear Investor Welcome to the PUTM Stock Market Unit Trust interim report for the six months to 1 November Performance Review Over the review period, the accumulation units in the PUTM Stock Market Unit Trust returned 12.1%. Over the same period the FTSE 100 Index returned 12.1%. (Source: Lipper, bid to bid, net income reinvested for the six months to 01/11/16). In the table below, you can see how the Fund performed against the FTSE 100 Index over the last five discrete oneyear periods. Standardised Past Performance Nov Nov Nov Nov Nov % growth % growth % growth % growth % growth PUTM UK Stock Market Unit Trust FTSE 100 Index Source: Lipper, bid to bid, net income reinvested to 1 November for each year. Past performance is not a guide to future performance. The value of units and the income from them can go down as well as up and is not guaranteed. You may not get back the full amount invested. Please note that all past performance figures are calculated without taking the initial charge into account. 2

5 Investment review Portfolio and Market Review Despite continued political uncertainty, the UK stock market enjoyed a positive six months. The pound fluctuated over the period, with initial weakness lifting firms that make their revenues overseas. This move reversed somewhat at the close, as investors began to factor in an interest rate rise in the UK. Negotiations around the UK s exit from the EU were a key focal point for investors. As negotiations progressed, Prime Minister Theresa May proposed a two-year transitional period that would involve delaying full Brexit until 2021 and give the UK continued access to the single market. The proposal had limited market impact, however, seen as lacking detail and failing to set out the UK s preferred trading arrangement once the implementation period concludes. Turning to the UK economy, investors faced mixed newsflow as the period progressed. While very low unemployment was positive for the economy, consumer confidence remained downbeat. The effects of the weak pound finally started to manifest in higher inflation, which hit a five-year high of 2.9% in August. This increased the likelihood the Bank of England will raise interest rates at some point in the near future. The pound rose in response, which was negative for those UK companies, including many in the FTSE 100 Index, that make most of their revenue overseas. Market Outlook and Fund Strategy Various factors likely to impact markets continue to require investors ongoing attention. These include Brexit negotiations, which will bring continued uncertainty through 2017 and 2018, and the ongoing development of US policy under President Trump. The US Federal Reserve s monetary policy and any related re-pricing of the long end of the bond yield curve are particularly important. Given economic stability on both sides of the Atlantic, stocks that are proxies for bonds may de-rate from their lofty valuations. Overall, we remain positive on UK equities, as upbeat corporate results lead to earnings upgrades. As a result, earnings growth should be well into double figures this year. 3

6 Portfolio of investments Investments held at 1 November 2017 Market Percentage of value total net assets Holding Investment % United Kingdom (01/05/ %) Chemicals (01/05/ %) ,859 Croda International 120, ,144 Johnson Matthey 138, Forestry & Paper (01/05/ %) ,902 Mondi 145, Mining (01/05/ %) ,780 Anglo American 349, ,674 Antofagasta 65, ,684 BHP Billiton 628, ,140 Fresnillo 54, ,377 Glencore 943, ,977 Randgold Resources 147, ,369 Rio Tinto 926, Automobiles & Parts (01/05/ %) ,701 GKN 116, Beverages (01/05/ %) ,889 Coca Cola 98, ,659 Diageo 1,348, Food Producers (01/05/ %) ,538 Associated British Foods 246, Household Goods (01/05/ %) ,544 Barratt Developments 141, ,548 Berkeley Group Holdings 95, ,536 Persimmon 185, ,302 Reckitt Benckiser 884, ,893 Taylor Wimpey 140, Personal Goods (01/05/ %) ,543 Burberry Group 181, ,081 Unilever 1,070, Tobacco (01/05/ %) ,993 British American Tobacco 2,395, ,483 Imperial Brands 633, Food & Drug Retailers (01/05/ %) ,305 J Sainsbury 87, ,184 Morrison (Wm) Supermarkets 103, ,664 Tesco 318, General Retailers (01/05/ %) ,506 Kingfisher 148, ,710 Marks & Spencer Group 112, ,030 Next 136,

7 Portfolio of investments Investments held at 1 November 2017 Market Percentage of value total net assets Holding Investment % Media (01/05/ %) ,614 Informa 121, ,054 ITV 122, ,523 Merlin Entertainments 50, ,578 Pearson 123, ,648 RELX 390, ,678 Sky 213, ,986 WPP 357, Travel & Leisure (01/05/ %) ,940 Carnival 195, ,522 Compass Group 552, ,869 easyjet 79, ,947 InterContinental Hotels Group 166, ,676 International Consolidated Airlines Group 221, ,862 Paddy Power 149, ,784 TUI 118, ,926 Whitbread 142, Banks (01/05/ %) ,058 Barclays 668, ,278 HSBC Holdings 3,142, ,516,455 Lloyds Banking Group 1,038, ,946 Royal Bank of Scotland Group 186, ,764 Standard Chartered 405, Financial Services (01/05/ %) ,798 3i Group 199, ,715 Hargreaves Lansdown 89, ,825 London Stock Exchange 255, ,670 Schroders 92, ,286 Worldpay Group 156, Life Insurance (01/05/ %) ,745 Aviva 438, ,809 Legal & General 335, ,996 Old Mutual 191, ,843 Prudential 1,040, ,100 St James s Place 131, ,867 Standard Life 253, Non-Life Insurance (01/05/ %) ,730 Admiral Group 89, ,020 Direct Line Insurance 115, ,933 RSA Insurance Group 132, Real Estate Investment Trusts (01/05/ %) ,049 British Land 125, ,457 Hammerson 80, ,900 Land Securities 152, ,937 Segro 118,

8 Portfolio of investments Investments held at 1 November 2017 Market Percentage of value total net assets Holding Investment % Healthcare Equipment & Services (01/05/ %) ,598 Convatec Group 57, ,693 Mediclinic International 50, ,452 NMC Health 42, ,202 Smith & Nephew 255, Pharmaceuticals & Biotechnology (01/05/ %) ,995 AstraZeneca 1,380, ,885 GlaxoSmithKline 1,415, ,199 Shire 717, Aerospace & Defence (01/05/ %) ,945 BAE Systems 397, ,357 Rolls Royce Holdings 329, ,580,422 Rolls-Royce Holdings ''C'' Preference Shares* Construction & Materials (01/05/ %) ,203 CRH 513, General Industrials (01/05/ %) ,404 Smiths Group 131, ,777 Smurfit Kappa Group 110, Industrial Transportation (01/05/ %) Support Services (01/05/ %) ,841 Ashtead Group 210, ,880 Babcock International 79, ,229 Bunzl 168, ,876 DCC 134, ,657 Experian Group 309, ,497 Ferguson 289, ,725 G4S 96, ,427 Intertek Group 184, ,675 Rentokil Initial 139, Oil & Gas Producers (01/05/ %) ,930 BP 2,122, ,051 Royal Dutch Shell A 2,274, ,903 Royal Dutch Shell B 1,934, Software & Computer Services (01/05/ %) ,399 Micro Focus International 249, ,084 Sage Group 172, Fixed Line Telecommunications (01/05/ %) ,728 BT Group 467, Mobile Telecommunications (01/05/ %) ,129 Vodafone Group 1,244,

9 Portfolio of investments Investments held at 1 November 2017 Market Percentage of value total net assets Holding Investment % Electricity (01/05/ %) ,144 SSE 287, Gas, Water & Multiutilities (01/05/ %) ,124 Centrica 198, ,654 National Grid 655, ,032 Severn Trent 105, ,533 United Utilities Group 120, Equity Investment Instruments (01/05/ %) ,713 Scottish Mortgage IT 137, Futures (01/05/17 (0.03%)) 10 ICF FTSE 100 December Portfolio of investments 41,397, Net other assets 1,606, Net assets 43,004, All investments are listed on recognised stock exchanges and are approved securities within the meaning of the FCA rules unless otherwise stated. The counterparty for the derivative contracts is UBS. *Due to a change in accounting treatment the value of the shares is recognised as income at xd date rather than pay date. The value of the shares is therefore reflected within the income of the Fund rather than within the Fund portfolio. 7

10 Top ten purchases and sales For the half year ended 1 November 2017 Purchases Cost British American Tobacco 583,710 Royal Dutch Shell A 167,397 HSBC Holdings 126,609 BP 121,674 Segro 110,372 G4S 108,905 Micro Focus International 107,877 Berkeley Group Holdings 89,459 Lloyds Banking Group 87,287 GlaxoSmithKline 70,151 Sales Proceeds HSBC Holdings 378,903 Royal Dutch Shell A 299,753 British American Tobacco 257,190 BP 249,980 GlaxoSmithKline 224,800 Royal Dutch Shell B 208,279 Diageo 189,930 AstraZeneca 169,176 Unilever 161,409 Vodafone Group 151,834 Total purchases 2,459,241 Total sales 5,068,661 8

11 Statistical information Comparative table Accumulation 01/11/17 01/05/17 01/05/16 01/05/15 pence pence pence pence Change in net assets per unit Opening net asset value per unit Return before operating charges* (18.50) Operating charges (0.11) (0.28) (0.20) (0.13) Return after operating charges* (18.70) Distributions on accumulation units (6.76) (11.75) (10.06) (10.06) Retained distributions on accumulation units Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 6.06% 19.32% (6.39%) 6.27% Other information Closing net asset value ( 000) 43,004 43,710 39,820 46,309 Closing number of units 12,408,068 13,376,479 14,540,314 15,829,122 Operating charges 0.06% 0.09% 0.08% 0.04% Direct transaction costs 0.03% 0.04% 0.03% 0.02% Prices + Highest unit price (pence) Lowest unit price (pence) High and low price disclosures are based on quoted unit prices. Therefore, the opening and closing NAV prices may fall outside the high/low price threshold. 9

12 Statistical information Investment objective The objective of the Fund is to provide long term total return derived from the capital and income returns of UK Equities. Investment policy The Fund will usually be invested in a diversified portfolio of UK Equities. This will be achieved by investment in equities to achieve a return in line with a representative index, FTSE 100 index. The Manager may choose to invest in equities of other Geographical areas or invest in other securities issued by Governments, Public Authorities, Supranationals and Corporate entities if such investment in the opinion of the Manager is considered appropriate for achieving the objective of the Fund. The Fund may also invest in deposits and money market instruments and use derivative contracts within the scope set out in the Prospectus. Revenue distribution and pricing Units of the Fund are available as Accumulation units (where revenue is reinvested to enhance the unit price). There will be two potential distributions in each accounting year: an interim distribution as at 1 November and a final distribution as at 1 May. At each distribution the net revenue after deduction of expenses, arising in the preceding six months from the investments of the Fund is apportioned amongst the unitholders. Unitholders receive a tax voucher giving details of the distribution and the Manager s Report no later than two months after these dates. 10

13 Statistical information Risk and reward profile The Risk and Reward Indicator table demonstrates where the Fund ranks in terms of its potential risk and reward. The higher the rank the greater the potential reward but the greater the risk of losing money. It is based on past data, may change over time and may not be a reliable indication of the future risk profile of the Fund. The shaded area in the table below shows the Fund's ranking on the Risk and Reward Indicator. fi Typically lower rewards, Typically higher rewards, lower risk higher risk fi This Fund is ranked at 5 because funds of this type have experienced medium to high rises and falls in value in the past. Although this is a high risk ranking it is not the highest. The above figure applies to the following unit class: Accumulation Please note that even the lowest risk class can lose you money and that extreme market circumstances can mean you suffer severe losses in all cases. Please note the Fund s risk category may change in the future. The indicator does not take into account the following risks of investing in this Fund: The small differences in the returns between the index tracking Fund and the Index (and tracking error) are due to levels of cash, expenses and portfolio turnover. Counterparty Risk: the insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss. The Fund may use derivatives to reduce risk or cost or to generate additional capital or income at low risk, or to meet its investment objective. For more information on the Risk and Reward profiles of our Funds, please refer to the most up to date relevant fund and Unit Class Key Investor Information Documents (KIIDs). These are available online at Directors statement This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority. 21 December 2017 Craig Baker, Director Andrew Moss, Director 11

14 Interim financial statements (unaudited) For the half year ended 1 November 2017 Statement of total return Income 01/11/17 01/11/16 Net capital gains 1,740,926 4,213,406 Revenue 883, ,662 Expenses (12,942) (19,698) Interest payable and similar charges (6) (1) Net revenue before taxation 870, ,963 Taxation (1,281) (1,496) Net revenue after taxation 869, ,467 Total return before distributions 2,610,416 5,012,873 Distributions (869,481) (799,461) Change in unitholders' funds from investment activities 1,740,935 4,213,412 Statement of change in unitholders funds 01/11/17 01/11/16* Opening net assets 43,709,810 39,819,863 Amounts receivable on issue of units 32,658 Amounts payable on cancellation of units (3,285,067) (1,933,514) (3,285,067) (1,900,856) Change in unitholders funds from investment activities 1,740,935 4,213,412 Retained distributions on accumulation units 838, ,215 Closing net assets 43,004,426 42,913,634 *Please note that the comparative figures are for the comparative interim period. The brought forward net assets for the current period do not, therefore equal the carried forward figure in the comparative. 12

15 Interim financial statements (unaudited) As at 1 November 2017 Balance sheet 01/11/17 01/05/17 Assets: Fixed assets: Investments 41,398,032 42,383,332 Current assets: Debtors 83, ,517 Cash and bank balances 1,561,487 1,129,709 Total current assets 1,645,414 1,365,226 Total assets 43,043,446 43,748,558 Liabilities: Investment liabilities (585) (14,790) Creditors: Other creditors (38,435) (23,958) Total creditors (38,435) (23,958) Total liabilities (39,020) (38,748) Net assets 43,004,426 43,709,810 Unitholders funds 43,004,426 43,709,810 Notes to the interim financial statements Accounting policies The interim financial statements have been prepared under the historical cost basis, as modified by the valuation of investments and in compliance with FRS102 and in accordance with the Statement of Recommended Practice (2014 SORP) for financial statements of Authorised Funds issued by The Investment Association in May Unless otherwise stated all accounting policies applied are consistent with those of the Annual Report for the year ended 1 May 2017 and are described in those financial statements. 13

16 Distribution table For the half year ended 1 November 2017 Interim distribution in pence per unit Group 1: units purchased prior to 2 May 2017 Group 2: units purchased 2 May 2017 to 1 November pence pence per unit per unit Net payable paid income Equalisation 1 Jan 1 Jan Accumulation Group Group Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all 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 the units for capital gains tax purposes. 14

17 Corporate information The information in this report is designed to enable unitholders to make an informed judgement on the activities of the Fund during the period it covers and the results of those activities at the end of the period. Phoenix Unit Trust Managers Limited is part of the Phoenix Group. Ignis Investment Services Limited is part of the Standard Life Aberdeen plc group and its subsidiaries. Unit prices appear daily on our website Dealing: Administration: Remuneration The Manager has adopted a remuneration policy, up-to-date details of which can be found on These details describe how remuneration and benefits are calculated and identify the committee which oversees and controls the policy. A paper copy of these details can be requested free of charge from the Manager. Following the implementation of UCITS V in the UK on 18 March 2016, all authorised UCITS Managers are required to comply with the UCITS V Remuneration Code from the start of their next accounting year. Under the UCITS V Directive, the Manager is required to disclose information relating to the remuneration paid to its staff for the financial year, split into fixed and variable remuneration. The Manager s Financial Year end is 31 December, it is therefore anticipated that the Manager's Remuneration Policy and associated financial disclosures will be made within the Annual Reports starting from 31 December 2017, following its first full performance period. Prior to this date, and in line with the FCA s guidance on the UCITS V remuneration disclosures, the Manager would be part way through its first performance period and the information available would not be relevant or provide a proper basis for comparison. Risk The price of units and the revenue from them can go down as well as up and investors may not get back the amount they invested, particularly in the case of early withdrawal. Tax levels and reliefs are those currently applicable and may change. The value of any tax relief depends on personal circumstances. Depending on the fund, the value of your investment may change with currency movements. 15

18 Corporate information Manager Phoenix Unit Trust Managers Limited (PUTM) 1 Wythall Green Way Wythall Birmingham B47 6WG Tel: Registered in England No Authorised and regulated by the Financial Conduct Authority. Directors Andrew Moss PUTM Director, Chief Executive Phoenix Life; Shamira Mohammed PUTM Director, Finance Director Phoenix Life (resigned 13 June 2017); Craig Baker PUTM Director, Head of Investment Management Phoenix Life; Mike Urmston Non Executive Director of PUTM Registrar and correspondence address Phoenix Unit Trust Managers Limited PO Box Chelmsford CM99 2EN Authorised and regulated by the Financial Conduct Authority Investment Adviser Ignis Investment Services Limited 1 George Street Edinburgh EH2 2LL Registered in Scotland No.SC Authorised and regulated by the Financial Conduct Authority. Trustee HSBC Bank plc 1-2 Lochside Way Edinburgh Park Edinburgh EH12 9DT Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Independent Auditor to the Fund Ernst & Young LLP Atria One 144 Morrison Street Edinburgh EH3 8EX Investment Manager State Street Global Advisors Limited 20 Churchill Place Canary Wharf London E14 5HJ Authorised and regulated by the Financial Conduct Authority. Authorised status This Fund is an Authorised Unit Trust scheme under section 243 of the Financial Services & Markets Act 2000 and is categorised under the Collective Investment Schemes Sourcebook as a UCITS fund. 16

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20 Contact: Client Services Call: Correspondence Address: PO Box Chelmsford CM99 2EN Visit: phoenixunittrust.co.uk Telephone calls may be monitored and/or recorded for the purposes of security, internal training, accurate account operation, internal customer monitoring and to improve the quality of service. Please note the Key Investor Information Document (KIID), the supplementary Information Document (SID) and the full prospectus are available free of charge. These are available by contacting Client Services on Phoenix Unit Trust Managers Limited does not accept liability for any claims or losses of any nature arising directly or indirectly from use of the data or material in this report. The information supplied is not intended to constitute investment, tax, legal or other advice. Phoenix Unit Trust Managers Limited* is a Phoenix Group Company. Registered in England No Registered office: 1 Wythall Green Way, Wythall, Birmingham B47 6WG. *Authorised and regulated by the Financial Conduct Authority. B