Index LInked GILts UnIt trust

Transcription

1 Index Linked Gilts 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 I. S. Gascoigne D. J. Lamb Investment Adviser 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 Index Linked Gilts 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 12 March 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 investment objective of the Scheme is to provide a combination of growth and income, by investing primarily in a portfolio of UK index linked gilts. The Scheme may also invest in other, non-uk, highly rated government backed index linked securities, and is also permitted to invest in other types of transferable securities, units and/or shares in collective investment schemes, money market instruments, cash and near cash and deposits. The Scheme is permitted to invest in derivatives and forward transactions 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. The Trust's Performance The performance of the Trust since its launch in April 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 Index Linked Gilts Unit Trust L Income units (offer to offer) L Accumulation units (offer to offer) L Gross Income units (offer to offer)* L Gross Accumulation units (offer to offer)* H Accumulation units (offer to offer)** Y Accumulation units (offer to offer)** Indices - actual FTSE British Government Index Linked Gilts < 5 Years (Total Return) FTSE British Government Index Linked Gilts 5-15 Years (Total Return) 10/04/12 to 31/03/16 to 31/03/17 31/03/17 % change % change * L Gross Accumulation units and L Gross Income units were made available on 6 October 2014 and the performance shown is from that date. ** 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. 2

4 Report of the Manager (continued) Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place Index Linked Gilts Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 3. It was calculated using indicative performance data for the type of investments held, as the Scheme itself was only launched on 10 April Investment Adviser's Comments The UK referendum on EU membership, and the US presidential elections, dominated the period under review. Markets, which had been positioned for a remain vote in the referendum, reacted violently when the UK electorate voted to secede by the relatively slim margin of 4%. Risk assets routed in the immediate aftermath while sterling plunged more than 10% intraday in a record one-day drop that took the currency to levels not seen since A flight to safety saw sovereign bond yields decline sharply. The UK economy defied the expected post-brexit apocalypse with third quarter GDP confirmed at 0.6%, the same as the second quarter, meaning the economy experienced no slowdown following Brexit. In 2016 as a whole, the UK secured its seventh consecutive year of growth since the recession, leaving the economy 8% larger than its pre-crisis level. Unemployment in the three months to January was at a 40-year low (4.7%) yet wage growth remains tepid (2%). There is concern that weak wage growth combined with rising inflation consumer price inflation exceeded the Bank of England s (BoE) target in February for the first time since late 2013 could dampen consumer spending. In the three months to February food spending was up 0.6% year-on-year, while non-food spending fell by 0.4%; the first quarterly drop in more than five years. In August, the BoE delivered a stimulus package that included additional government and corporate bond purchases; it also cut its interest rate for the first time since 2009 to a record-low 0.25%. In the US, the Federal Reserve rose interest rates twice to stand at a target rate of between 0.75% - 1% by period end. The UK 10-year bond yield fell over the period. The yield moved broadly higher to June, at which point concerns over the outcome of the UK referendum took hold and collapsed to mid-august. Yields moved up again from mid-august to the end of 2016 before falling off to period-end. BlackRock Investment Management (UK) Limited 18 April

5 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 (1.14) (1.09) (1.13) Return after operating charges* 5.77 (0.90) 2.14 Distributions on income units (0.55) (1.06) (0.79) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 6.17% (0.94%) 2.27% Other information Closing net asset value ( 000) 3,662 4,650 5,021 Closing number of units 3,708,669 4,972,274 5,258,338 Operating charges** 1.18% 1.16% 1.20% Direct transaction costs - % - % -% Prices Highest unit price (p) Lowest unit price (p) /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 Return before operating charges* Operating charges (1.20) (1.14) (1.16) Return after operating charges* 6.10 (0.63) 2.38 Distributions on accumulation units (0.61) (1.40) (1.01) Retained distributions on accumulation units Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 6.26% (0.64%) 2.48% Other information Closing net asset value ( 000) 124,597 92,025 83,206 Closing number of units 120,351,190 94,395,104 84,556,435 Operating charges** 1.17% 1.17% 1.20% Direct transaction costs - % - % -% Prices Highest unit price (p) Lowest unit price (p)

6 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure (continued) 31/03/17 31/03/16 31/03/15 L Gross Income Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (3.00) Operating charges (1.14) (1.09) (0.55) Return after operating charges* 5.82 (0.63) (3.55) Distributions on income units (0.55) (1.36) (0.32) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 6.23% (0.66%) (3.57%) Other information Closing net asset value ( 000) 13,902 14,882 14,078 Closing number of units 14,079,120 15,921,978 14,747,673 Operating charges** 1.18% 1.16% 1.20% Direct transaction costs - % - % -% Prices Highest unit price (p) Lowest unit price (p) /03/17 31/03/16 31/03/15 L Gross Accumulation Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (3.07) Operating charges (1.20) (1.13) (0.57) Return after operating charges* 6.05 (0.64) (3.64) Distributions on accumulation units (0.59) (1.40) (0.33) Retained distributions on accumulation units Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 6.18% (0.65%) (3.57%) Other information Closing net asset value ( 000) 71,760 56,950 45,021 Closing number of units 69,086,048 58,220,703 45,726,720 Operating charges** 1.17% 1.16% 1.20% Direct transaction costs - % - % -% Prices Highest unit price (p) Lowest unit price (p)

7 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure (continued) H Accumulation Change in net assets per unit 31/03/17 Opening net asset value per unit Return before operating charges* 1.94 Operating charges (0.56) Return after operating charges* 1.38 Distributions on accumulation units (0.43) Retained distributions on accumulation units 0.41 Closing net asset value per unit *after direct transaction costs of: - Performance Return after charges 1.35% Other information Closing net asset value ( 000) 10 Closing number of units 9,804 Operating charges** 1.67% Direct transaction costs -% Prices Highest unit price (p) Lowest unit price (p) (p) 6

8 Comparative Table as at 31 March 2017 Net Asset Value and Ongoing Charges Figure (continued) Y Accumulation Change in net assets per unit 31/03/17 Opening net asset value per unit Return before operating charges* 1.95 Operating charges (0.24) Return after operating charges* 1.71 Distributions on accumulation units (0.43) Retained distributions on accumulation units 0.41 Closing net asset value per unit *after direct transaction costs of: - Performance Return after charges 1.68% Other information Closing net asset value ( 000) 20 Closing number of units 19,399 Operating charges** 0.72% Direct transaction costs -% Prices Highest unit price (p) Lowest unit price (p) H Accumulation and Y Accumulation units were made available on 1 December L Gross Accumulation units and L Gross Income units were made available on 6 October 2014 and the performance shown is from that date. **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) 7

9 Portfolio Statement as at 31 March 2017 Security Holdings Market Value 000 % of Net Assets UK GOVERNMENT INDEX LINKED GILTS (99.67%) 212, UK Treasury Index Linked 1.25% 22/11/ ,452,410 34, UK Treasury Index Linked 0.125% 22/11/ ,895,000 19, UK Treasury Index Linked 2.5% 16/04/ ,725,880 51, UK Treasury Index Linked 1.875% 22/11/ ,423,410 18, UK Treasury Index Linked 0.125% 22/03/ ,057,000 14, UK Treasury Index Linked 2.5% 17/07/2024 4,927,950 18, UK Treasury Index Linked 0.125% 22/03/2026 6,815,000 8, UK Treasury Index Linked 1.25% 22/11/ ,221,000 19, UK Treasury Index Linked 0.125% 22/03/ ,320,000 14, UK Treasury Index Linked 4.125% 22/07/2030 3,500,000 12, Investment Assets 212, Total other assets (net) 1, Net assets 213, Comparative figures shown in brackets relate to 31 March All investments are approved securities as defined in the Collective Investment Schemes sourcebook unless otherwise stated. 8

10 Material Portfolio Changes Cost Purchases 000 UK Treasury Index Linked 2.5% 16/04/ ,195 UK Treasury Index Linked 1.25% 22/11/ ,513 UK Treasury Index Linked 0.125% 22/11/2019 9,032 UK Treasury Index Linked 0.125% 22/03/2026 4,850 UK Treasury Index Linked 2.5% 17/07/2024 3,207 UK Treasury Index Linked 1.875% 22/11/2022 3,127 UK Treasury Index Linked 1.25% 22/11/2027 2,903 UK Treasury Index Linked 4.125% 22/07/2030 2,770 UK Treasury Index Linked 0.125% 22/03/2024 2,178 UK Treasury Index Linked 0.125% 22/03/2029 2,138 Proceeds Sales 000 UK Treasury Index Linked 2.5% 26/07/ ,249 UK Treasury Index Linked 4.125% 22/07/2030 1,501 UK Treasury Index Linked 2.5% 17/07/2024 1,466 UK Treasury Index Linked 1.875% 22/11/2022 1,170 UK Treasury Index Linked 1.25% 22/11/2027 1,033 UK Treasury Index Linked 1.25% 22/11/ UK Treasury Index Linked 2.5% 16/04/ UK Treasury Index Linked 0.125% 22/03/ UK Treasury Index Linked 0.125% 22/03/ UK Treasury Index Linked 0.125% 22/03/

11 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 expenses 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

12 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 Index Linked Gilts Unit Trustfor the year ended 31 March 2017 The Depositary in its capacity as Trustee of St. James's Place Index Linked Gilts 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

13 Independent Auditors' Report to the Unitholders of St. James's Place Index Linked Gilts Unit Trust Our opinion In our opinion, St. James's Place Index Linked Gilts 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 expenses 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. 12

14 Independent Auditors' Report to the Unitholders of St. James's Place Index Linked Gilts Unit Trust (continued) 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 10, 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 M 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. 13

15 Statement of Total Return for the year ended 31 March 2017 Income Net capital gains/(losses) Revenue Expenses Interest payable and similar charges Net (expenses)/revenue before taxation 01/04/16 to 31/03/17 01/04/15 to 31/03/16 Note ,848 (1,437) 3 1,167 2,456 4 (2,222) (1,927) - - (1,055) Taxation Net (expenses)/revenue after taxation (1,055) 529 Total return before distributions 10,793 (908) Distributions 6 (1,168) (2,332) Change in net assets attributable to unitholders from investment activities 9,625 (3,240) 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 168, ,325 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 49,253 45,347 Amounts payable on cancellation of units* (14,472) (22,762) 34,781 22,585 Change in net assets attributable to unitholders from investment activities (see above) 9,625 (3,240) Retained distribution on accumulation units 1,038 1,837 Closing net assets attributable to unitholders 213, ,507 * Prior year creations and cancellations have been reclassified due to reallocations from income to accumulation units to make these comparable to current year. 14

16 Balance Sheet as at 31 March 2017 Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Creditors Distribution payable Other creditors 10 Total liabilities Net assets attributable to unitholders 31/03/17 31/03/16 Note , , , , ,858 (91) (113) (1,035) (238) (1,126) (351) 213, ,507 15

17 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 Interest on deposits is accounted for on an accruals basis. Interest earned on interest bearing securities are determined on an effective yield basis. Effective yield is a revenue calculation that reflects the amount of amortisation of any discount or premium on the purchase price over the remaining life of the security. (c) Expenses All expenses of the Trust are recognised on an accruals basis and are deducted from revenue with the exception of Investment Adviser's fee, handling charges which are deducted from capital. The manager has agreed that 100% of the annual management charge and all other expenses are to be transferred to capital for the purpose of calculating the distribution, as permitted by the Collective Investment Schemes Sourcebook. (d) (e) (f) (g) Valuation of investments Listed investments have been valued at bid market value at midday on 31 March 2017 (31/03/16: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. 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. Taxation Provision is made for corporation tax at the current rate on the excess of taxable revenue over allowable expenses. 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. Distribution policy Distributions are made in respect of quarters ended 31 March, 30 June, 30 September and 31 December. At the end of the accounting period all remaining revenue, less revenue expenses and taxation, will be attributable to unitholders. 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. For the purposes of the calculation of the distribution, revenue from Index Linked debt securities is computed on an effective yield basis excluding indexation for UK Index Linked securities. The Fund satisfied the qualifying investments test of Section 468 L Income and Corporation Taxes Act 1988 throughout the year. All distributions made are therefore made as interest distributions. 16

18 Notes to the Financial Statements (continued) 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. 2. Net capital gains/(losses) 01/04/16 to 31/03/17 01/04/15 to 31/03/ Non-derivative securities 11,848 (1,435) Handling charges - (2) Net capital gains/(losses) 11,848 (1,437) 3. Revenue 01/04/16 to 31/03/17 01/04/15 to 31/03/ Interest on debt securities 1,167 2,456 Total revenue 1,167 2, Expenses 01/04/16 to 31/03/17 01/04/15 to 31/03/ Payable to the Manager Management charge 2,113 1,728 Payable to the Trustee Trustee's fee - 10 Other expenses Audit fee - 6 Investment administration fee - 8 Registrar's fee - 98 Safe custody fee - 1 Tax & compliance fee - 1 Investment adviser's fees Total expenses 2,222 1,927 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 and AMC fee rebates. This includes current year Audit Fee of 12,480 (31/03/2016: 12,480). 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

19 Notes to the Financial Statements (continued) for the year ended 31 March (a) (b) (c) (d) Taxation Analysis of charge in year: There is no corporation tax charge in the current year or prior year. Factors affecting total tax charge for the year: 01/04/16 to 01/04/15 to 31/03/17 31/03/ 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 (expenses)/revenue before taxation (1,055) 529 Corporation Tax at 20% (2016: 20%) Effects of: Movement in excess management expenses Tax deductible interest distributions Total tax charge for year (note 5a) (211) (31) - (75) - - 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 nil (31/03/16: nil) 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. Distributions The distributions take 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/ First interim distribution Second interim distribution Third interim distribution Final distribution Revenue tax withheld Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units Net distributions for the year Movement between net (expenses) / revenue and net distributions 01/04/16 to 31/03/17 1,196 2, (38) (103) 1,168 2,332 01/04/15 to 31/03/ Net (expense)/revenue after taxation (1,055) 529 Management charge 2,114 1,728 Other expenses paid out of capital Net distributions for the year 1,168 2,332 18

20 Notes to the Financial Statements for the year ended 31 March Debtors Amounts receivable for creation of units Accrued revenue Total debtors Cash and bank balances Cash and bank balances: Sterling Total cash and bank balances 10. Other creditors Purchases awaiting settlement Amounts payable for cancellation of units Accrued expenses Total other creditors 11. Units in issue Reconciliation of the unit movement in the year: (continued) 31/03/17 31/03/ , /03/17 31/03/ /03/17 31/03/ , L Income L Accumulation Opening units in issue Units converted Creations Cancellations Closing units in issue 4,972, ,257 (1,762,862) 3,708,669 94,395,104-34,405,359 (8,449,273) 120,351,190 L Gross Income 15,921,978-1,066,677 (2,909,535) 14,079,120 L Gross Accumulation 58,220,703-12,476,597 (1,611,252) 69,086,048 H Accumulation - - 9,804-9,804 Y Accumulation ,399-19, 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 549,886 (31/03/16: due to 99,034). The Manager, St. James's Place Unit Trust Group Limited, is a subsidiary of St. James's Place Wealth Management Group plc ('SJPWMG'). Two fellow subsidiaries of SJPWMG, St. James's Place International plc and St. James's Place UK plc, invest some of their life and pension policyholders' funds into the St. James's Place Index Linked Gilts Unit Trust. The value of these investments at the year end was 93,910,035 (31/03/16: 66,823,661). Any transactions with related parties (connected persons) have been entered into in the ordinary course of business and on normal commercial terms. 13. 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). 19

21 Notes to the Financial Statements (continued) for the year ended 31 March Derivatives and other financial instruments In accordance with the investment objectives, as stated on page 2, the Trust held certain financial instruments. These comprise: Interest bearing assets; and Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations. 15. 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 Adviser, 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). (a) Market price risk 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: Lowest monthly VaR Highest monthly VaR Average monthly VaR 01/04/16 to 31/03/17 01/04/15 to 31/03/16 % %

22 Notes to the Financial Statements (continued) for the year ended 31 March 2017 (b) Interest rate risk Interest rate risk arises due to variability in market interest rates. Some investments held by the Trust, such as Gilts, are highly sensitive to fluctuations in market interest rates. Interest receivable on bank deposits or payable on bank overdraft positions will also be affected by these fluctuations. This risk is managed by ensuring that the Trust s assets are diversified. The interest rate risk profile of the Trust's financial assets and liabilities at 31 March 2017 was: Floating rate financial assets Fixed rate financial assets Net Financial assets not carrying interest Currency Total /03/17 GBP , ,951 31/03/16 GBP , ,507 (c) 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. Where the Investment Managers make an investment in a bond with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question. The risk is managed by reviewing the credit ratings of those bonds at time of purchase and on an ongoing basis. Summary of Investment Assets by Credit Ratings Rating Block Investment grade bonds Total bonds 31/03/17 31/03/ , , , ,959 21

23 Notes to the Financial Statements (continued) for the year ended 31 March 2017 (d) Liquidity risk Liquidity risk arises where liabilities cannot be met when they fall due or can only be met at an uneconomic price. For instance, this could arise if the Trust faces significant redemptions in a short period of time. In order to manage this risk the manager monitors the Trust with the aim of ensuring that it contains diversified liquid assets, that the Trust possesses sufficient liquidity for the purpose of meeting the redemption of units, and that the Trust has sources of borrowing available to it. (e) Derivative risk The Manager may use derivative instruments to hedge the value of the investment portfolio against market, currency and stock specific risk through investment in warrants, options, forwards and futures. The purpose of the financial instruments is efficient portfolio management. In particular futures may be used to implement the investment policy in a timely manner and to manage market risk arising from the time lag between funds being receivable or payable by the Trust and investment and disinvestment in underlying securities. No such derivatives were held by the Trust in the year to 31 March (f) Maturity profile of financial liabilities All financial liabilities of the Trust at the year end are due to settle in one year or less, or on demand. (g) Fair value of financial assets and liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the Balance Sheet, and their fair values. 16. Portfolio transaction costs There were no transactions costs incurred during the year to 31 March Purchases Sales 01/04/16 to 31/03/17 01/04/15 to 31/03/16 01/04/16 to 31/03/17 01/04/15 to 31/03/ Bonds 71,201 70,435 37,106 47,431 Trades in the year before transaction costs 71,201 70,435 37,106 47,431 Commissions Bonds Taxes Bonds Total costs Trades in the year after transaction costs 71,201 70,435 37,106 47,431 Total transaction cost expressed as a percentage of asset type cost. Purchases Sales 01/04/16 to 31/03/17 01/04/15 to 31/03/16 01/04/16 to 31/03/17 01/04/15 to 31/03/16 % % % % Commissions Bonds Taxes Bonds

24 Notes to the Financial Statements (continued) for the year ended 31 March 2017 Total transaction cost expressed as a percentage of net asset value. 01/04/16 to 31/03/17 01/04/15 to 31/03/16 % Commissions - Taxes - Total costs - % Average portfolio dealing spread The average portfolio dealing spread at the balance sheet date was 0.08% (31/03/2016: 0.03%). There have been no soft commission arrangements relating to dealings in the property of the scheme during the year (31/03/16: nil). 17. Fair value The intention of a fair value measurement is to estimate the price at which an asset or a liability could be exchanged in the market conditions prevailing at the measurement date. The measurement assumes the exchange is an orderly transaction (that is, it is not a forced transaction, involuntary liquidation or distress sale) between knowledgeable, willing participants on an independent basis. The purpose of the fair value hierarchy is to prioritise the inputs that should be used to measure the fair value of assets and liabilities. The highest priority is given to quoted prices at which a transaction can be entered into and the lowest priority to unobservable inputs. The fund has early adopted the March 2016 amendment to section 34 of FRS102 (Fair Value Hierarchy disclosures that simplify preparation of financial instrument disclosure), which is applicable to accounting periods beginning on or after 1 January 2017 with earlier application permitted. 31/03/17 31/03/16 Assets Liabilities Assets Liabilities Valuation technique Level 1 212, ,959 - Level Level Total fair value 212, ,959 - Level 1: The unadjusted quoted price in an active market for identical assets or liabilities that the entity can access at the measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly. Level 3: Inputs are unobservable (i.e. for which market data is unavailable) for the asset or liability. Over the Counter (OTC) derivatives (including equity swaps) are held at fair value which are determined by valuation techniques or single broker quotes. 23

25 Distribution Tables Distributions in pence per unit Group 1 First interim Units purchased prior to 1 April 2016 Second interim Units purchased prior to 1 July 2016 Third interim Units purchased prior to 1 October 2016 Final Units purchased prior to 1 January 2017 Group 2 First interim Units purchased on or after 1 April 2016 to 30 June 2016 Second interim Units purchased on or after 1 July 2016 to 30 September 2016 Third interim Units purchased on or after 1 October 2016 to 31 December 2016 Final Units purchased on or after 1 January 2017 to 31 March 2017 L Income Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Distributions paid to 31/05/16 Group 1 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final L Accumulation Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Distributions paid to 31/05/16 Group 1 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final L Gross Income Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Distributions paid to 31/05/16 Group 1 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final

26 Distribution Tables (continued) L Gross Accumulation Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Distributions paid to 31/05/16 Group 1 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) (p) (p) First interim Second interim Third interim Final H Accumulation Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Group 1 (p) (p) (p) (p) (p) Third interim Final Group 2 (p) (p) (p) (p) (p) Third interim Final Y Accumulation Gross revenue Income tax Net revenue Equalisation Distributions paid to/ payable 31/05/17 Group 1 (p) (p) (p) (p) (p) Third interim Final Group 2 (p) (p) (p) (p) (p) Third interim Final H Accumulation and Y Accumulation units were made available on 1 December From 6 April 2017, following a change in HMRC's regulations, all interest distributions will be made without deduction of income tax. Further details will be included in tax certificates provided to unitholders. 25