HIGH OCTANE UNIT TRUST

Transcription

1 HIGH OCTANE UNIT TRUST FOR THE PERIOD ENDING 30 SEPTEMBER 2016

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 I. S. Gascoigne D. J. Lamb Investment Adviser Oldfield Partners LLP 11 Grosvenor Place London, SW1X7HH 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 Auditor 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 High Octane 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 5 March Please note that following an EGM of Unitholders on 21 September 2016, with effect from 10 October 2016 the Scheme's regulated status was changed by conversion from a Non-UCITS Retail Scheme to a UCITS Retail Scheme. With effect from 10 October 2016, the name of the Scheme has been changed to the St. James's Place Global Smaller Companies Unit Trust. Please note that following an EGM of Unitholders on 21 September 2016, with effect from 10 October 2016 the Scheme s regulated status was changed by conversion from a Non-UCITS Retail Scheme to a UCITS Retail Scheme. Investment Objectives & Policy The investment objective of the Scheme is to provide capital appreciation through investment in a concentrated portfolio of quoted securities on a worldwide basis. The Scheme will be invested, at the Manager's discretion, primarily in global equities and may also be invested in cash or near cash. The Scheme is also permitted to invest in other asset classes permitted for Non-UCITS Retail Schemes under COLL including transferable securities, money market instruments, cash and near cash, units in collective investment schemes and deposits. The Scheme is permitted to invest in derivative and forward transactions for the purposes of efficient portfolio management (including hedging). There are no specific restrictions on the investment of the Scheme including as to economic sector or geographical area except as set out below and as provided in COLL. Please note that the investment objectives of the Scheme were amended by an EGM of Unitholders on 21 September With effect from 10 October 2016, the investment objectives are now as follows: The Scheme aims to achieve capital growth through investment primarily into shares of companies quoted on global stock exchanges, including those in emerging markets, both directly and indirectly by exchange traded funds. The Scheme intends to invest generally in the shares of smaller companies. It may also invest in medium and large companies and is also permitted to invest in other types of transferable securities, units and/or shares in collective investment schemes, money market instruments and deposits. The Scheme is permitted to invest in derivatives for investment purposes (although it is anticipated this will be limited and/or infrequent use) and for the purposes 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. 2

4 Report of the Manager (continued) The Trust's Performance The performance of the Trust since its launch in April 2008, over the five year period since September 2011 and over the period 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. 07/04/08 to 30/09/11 to 31/03/16 to 30/09/16 30/09/16 30/09/16 % change % change % change St. James's Place High Octane Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual MSCI World (Total Return) Source: Lipper for Fund returns 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 High Octane Unit Trust, as disclosed in its most recent Non-UCITS Retail Scheme Key Investor Information Document (NURS- KIID), is a 6. It was calculated using performance data up to 11 July The risk category is recalculated weekly and for the last nine weeks of the period under review the risk category changed from a category 6 to a category 5. Please note that following changes to the Scheme which took place on 10 October 2016, the risk category will be a category 6 and calculated using indicative performance data for the type of investments held. Investment Adviser's Comments The recovery in markets which began in February has continued, interrupted by a flurry of concern centered on Brexit at the end of June. The fall of sterling boosted returns from international equities, and the portfolio strongly outperformed market indices. The foreshadowing of a move to greater fiscal stimulus has been reflected in market performance, with more cyclical companies performing well, benefiting from acknowledgement that their valuations are often extremely low and that if profit margins begin to approach more normal levels, the upside is considerable. We feel this move is likely to continue because, given the vulnerability of the world economy especially at a time of widespread popular disaffection and increased inequality, and the fact that monetary measures are just about exhausted, the efforts by governments to achieve better growth through fiscal means are likely to increase. The valuations of European and Far Eastern markets are sufficiently modest that we hold to the view that medium-term, five and ten-year returns from these levels should be satisfactory. For most of our careers the world has been shrinking in market terms: the correlation between markets has increased and valuations have drawn closer together. Since the global financial crisis, the opposite has occurred, with the gap between the US and the rest of the world widening. The US has become the single world power in markets. There is plenty of rationale for this: a quicker reaction to the financial crisis, a generally more resilient economy, greater entrepreneurialism, and low energy prices. But valuations reflect these advantages fully. So when markets worldwide are described as expensive, we do not subscribe to this view: it applies almost exclusively to the US. The portfolio has now become, since the beginning of October, a global smaller companies fund under a different manager. After a happy relationship with St. James s Place for nearly a decade we wish all its partners and investors every success. Oldfield Partners LLP 14 October

5 Report of the Manager (continued) From 10 October 2016, Paradice Investment Management LLC replaced Oldfield Partners LLP as Investment Adviser to the Trust. Over the past three years, the global market value of bonds priced at negative yields has risen from a negligible amount to north of $10 trillion. Almost all of this pitiful paper emanates from Japan and Western Europe, where demographics weigh heavily on the outlook for future growth. Japan s workforce peaked in the 1990 s, around the time the country first knocked interest rates down to approximately zero a level from which they have not recovered over the following two decades. Perhaps that is only a coincidence, and a situation unique to Japan. If not, however, this year s expected decline in the working-age population of the entire developed world as well as in China is a concern. It would be wonderful if we could punt these considerations regarding debt and demographics to macro traders, freeing us to focus on the bottom-up stock picking that is our bread and butter. Unfortunately, these larger forces colour everything we do. We worry that low/negative rates may be driving capital misallocation at the corporate level (e.g. binging on accretive, debt-financed share repurchases and acquisitions) and at the portfolio level (e.g. fellow investors accepting a 4% earnings yield on a low-growth, defensive stock because the local sovereign yields 2%). Demographics, meanwhile, are a key long-term driver of economic growth (or the lack thereof), and as noted above, may have the power to keep a lid on rates for the foreseeable future. Some market participants have apparently concluded that we have entered a new paradigm, and have relaxed their return requirements accordingly. There is no other way to explain the multiple expansion that has taken place across global equities in recent years. Our German universe, just to pick an illustrative geography, is trading on a ~40% premium to its historical enterprise valueto-sales multiple. We understand the pressure to adapt, but we have also been investing long enough to witness past rounds of new paradigm thinking, only to see the immutable laws of valuation bring the market violently back into line with the long-term averages. We intend to stick to our process of identifying undervalued, underlevered, quality businesses. 4

6 Comparative Table as at 30 September 2016 (unaudited) Net Asset Value and Ongoing Charges Figure 30/09/16 31/03/16 31/03/15 31/03/14 Income Closing net asset value ( 000) Closing number of units 647, , , ,058 Closing net asset value per unit (p) Operating charges** 2.00% 2.08% 2.12% 2.14% 30/09/16 31/03/16 31/03/15 31/03/14 Accumulation Closing net asset value ( 000) 238, , , ,236 Closing number of units 188,293, ,813, ,833, ,178,303 Closing net asset value per unit (p) Operating charges** 2.00% 2.08% 2.12% 2.14% **Operating charges are prepared using the same methodology as the ongoing charges appearing in the KIID, based on the information in this report. Please note that following changes to the Scheme which came into effect on 10 October 2016, the Manager estimates that the future Ongoing Charges Figure for this Scheme will be 2.15%. 5

7 Portfolio Statement as at 30 September 2016 (unaudited) Security Holdings Market Value 000 % of Net Assets CANADA (3.30%) 9, Barrick Gold 672,700 9, GERMANY (8.56%) 9, E.ON 1,468,937 7, Uniper 123,773 1, ITALY (4.57%) 9, Eni 851,337 9, JAPAN (32.58%) 80, East Japan Railway 143,100 9, Kansai Electric Power 1,257,400 8, Komatsu 864,900 15, Kyocera 300,200 11, Mitsubishi UFJ Financial 3,563,600 13, Nomura 3,381,200 11, Toyota Motor 226,300 9, RUSSIA (3.65%) 9, Lukoil ADR 265,980 9, SOUTH KOREA (5.29%) 14, Samsung Electronics 12,934 14, SPAIN (0.00%) 11, Banco Bilbao Vizcaya Argentaria 2,535,426 11, UNITED KINGDOM (17.79%) 41, BP 1,084,465 4, Rio Tinto 580,866 15, St. James's Place Money Market Unit Trust L Acc 9,621,505 10, Tesco 6,743,911 12, UNITED STATES (23.07%) 51, Citigroup 437,300 15, General Motors 541,300 13, Hewlett-Packard Enterprise 614,000 10, HP 977,900 11, Investment Assets 236, Total other assets (net) 2, Net assets 239, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. Stocks shown as ADRs represent American Depositary Receipts. During the period 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. 6

8 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 29,134 Banco Bilbao Vizcaya Argentaria 11,097 Nomura 2,357 Citigroup 2,323 General Motors 1,711 Tesco 1,332 E.ON 1,266 BP 216 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 19,879 Volkswagen Preference Shares 9,213 BP 9,066 Staples 7,244 This investment is a related party. 7

9 Statement of Total Return for the period 01 April 2016 to 30 September 2016 (unaudited) Income Net capital gains/(losses) Revenue Expenses Interest payable and similar charges Net revenue before taxation Taxation Net revenue after taxation Total return before equalisation Equalisation Change in net assets attributable to unitholders from investment activities 01/04/16 to 30/09/16 01/04/15 to 30/09/ ,212 (36,157) 3,679 2,799 (2,159) (2,189) (1) - 1, (380) (289) 1, ,351 (35,836) 5-41,356 (35,836) Statement of Change in Net Assets Attributable to Unitholders for the period 01 April 2016 to 30 September 2016 (unaudited) 01/04/16 to 30/09/16 01/04/15 to 30/09/ Opening net assets attributable to unitholders 194, ,460 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 18,740 20,723 Amounts payable on cancellation of units* (15,687) (14,105) Change in net assets attributable to unitholders from investment activities (see above) Closing net assets attributable to unitholders 3,053 6,618 41,356 (35,836) 239, ,242 Comparative information is provided for the Statement of Change in Net Assets Attributable to Unitholders. Since this information is for the prior interim period, the net assets at the end of that period do not correspond to the net assets at the start of the current period. *Prior year figures in relation to Dilution Levy have been reclassified and included within creations and cancellation of units as this was income and expenses arising from creations and cancellations respectively. 8

10 Balance Sheet as at 30 September 2016 (unaudited) Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Creditors Distribution payable Other creditors Total liabilities Net assets attributable to unitholders 30/09/ /03/ , ,430 2,682 1,584 1,158 1, , ,147 - (3) (1,173) (402) (1,173) (405) 239, ,742 Accounting and Distribution policies for the period 01 April 2016 to 30 September 2016 (unaudited) 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 changes in the SORP 2014 are presentational only and there have been no changes to any figures detailed with the financial statements. The financial statements are prepared on the going concern basis. Directors of the Managers' 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 25 November

11 General Information Unit Dealings Dealings on the Trust take place on a daily basis. Purchase or sale instructions can be made by telephone or in writing to St. James's Place Unit Trust Group Limited, PO Box 9034, Chelmsford, CM99 2XA, United Kingdom, freephone: The Manager adopts a policy of forward pricing, i.e. the order will be transacted on the dealing day following receipt of the client's instructions, or if received before noon, on that dealing day. In the case of telephone purchases of units from the Manager, settlement must be by return of post after receipt of the contract note. In the case of telephone redemptions, the proceeds will not become payable until the receipt at the Administration Centre of a written request. A contract note confirming the subscription or redemption price and the number of units involved will be forwarded, together with a cancellation notice, where appropriate, on the next business day. The most recent issue and redemption prices will be published on the Manager's website: and are available by calling the Administration Centre on Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment is 150 and the minimum monthly increment is 50. The minimum annual investment is 1,500 and the minimum annual increment is 500. Renaming of Unit Classes On 10 October 2016 the Manager denominated the existing unit class in the fund as Class L units. This change will have no impact on the way in which the fund is managed or how daily unit prices are calculated. H & Y Unit Classes On 10 October 2016 the Manager launched Class H and Class Y accumulation unit classes. Restrictions apply to all Class H and Class Y units, please see the Prospectus for details. Management Charges The Trust Deed permits the following management charges which are receivable by the Manager: (a) A Preliminary Charge of 5 per cent which is included in the offer price of the Units. (b) An Annual Management Charge at a rate of 1.37 per cent of the value of the Trust. Income Distributions Income distributions are made annually on or before the 31 May. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. Tax Vouchers Income unitholders that receive income distributions by direct credit and accumulation unitholders (where the distribution income is reinvested) receive an annual consolidated tax voucher in May with all the relevant payment and tax information required to complete a tax return. Tax vouchers will be enclosed if income unitholders receive payment by cheque. Capital Gains Tax The Trust is not liable to tax on capital gains and any individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2016/2017 exceed 11,100 (2015/ ,100). To calculate capital gains on accumulation units, the total amount of reinvested net revenue (shown on the annual tax credit vouchers) should be added to the base cost of the units purchased. Unitholders should consult their professional advisers for any advice regarding their tax position. 10

12 St. James s Place Unit Trust Group Ltd is authorised and regulated by the Financial Conduct Authority. St. James s Place Unit Trust Group Ltd Registered Office: St. James s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP, United Kingdom. Registered in England Number Perivan Financial Print High Octane (11/16)