ETHICAL UNIT TRUST FOR THE YEAR ENDED 31 MARCH 2012

Transcription

1 ETHICAL UNIT TRUST FOR THE YEAR ENDED 31 MARCH 2012

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3 Manager St. James's Place Unit Trust Group Limited P.O. Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Services Authority) Directors of the Manager M. S. Wilson (Chairman) resigned 23/05/11 D. C. Bellamy A. M. Croft I. S. Gascoigne H. J. Gladman resigned 31/12/11 D. J. Lamb W. P. Tonks resigned 31/12/11 Secretary of the Manager St. James's Place Administration Limited Investment Adviser Aberdeen Asset Managers Limited 10 Queen Street Aberdeen, AB10 1YG United Kingdom (Authorised and regulated by the Financial Services Authority) Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London, EC4V 4LA United Kingdom (Authorised and regulated by the Financial Services Authority) Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon, SS15 5FS United Kingdom (Authorised and regulated by the Financial Services Authority) Auditor PricewaterhouseCoopers LLP Erskine House Queen Street Edinburgh, EH2 4NH United Kingdom (From 31 January 2012, PricewaterhouseCoopers LLP replaced KPMG Audit Plc as Auditor to the Trust) 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 P.O. Box 9034, Chelmsford CM99 2XA. Freephone:

4 Report of the Manager During the year under review, 1 April 2011 to 31 March 2012, the St. James's Place Ethical Unit Trust Income unit offer price fell by 5.8% from 140.1p to 132.0p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) fell by 4.2% from 152.3p to 145.9p. On the 16 May 2012, the latest available date before the printing of this report, the Income unit offer price was 120.6p and the Accumulation unit offer price was 133.9p. The estimated yield was 1.90%. The Trust's Performance The performance of the Trust since its launch in April 1999, over the five year period since March 2007 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 Ethical Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual FTSE All-Share FTSE World (net income reinvested) Source: Lipper for Fund returns 06/04/99 to 31/03/07 to 31/03/11 to 31/03/12 31/03/12 31/03/12 % change % change % change 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. Investment Adviser's Comments Global equities posted marginal gains in the year under review, amid much volatility in most asset classes. Initially, markets were weighed down by persistent concerns over global sovereign credit concerns and geopolitical tensions in the Middle East. But towards the latter half of the period, markets rebounded following improving US economic data and abundant liquidity injections in the global financial system. The fund fell over the year, underperforming the FTSE World Index. Both asset allocation and currency were negative and outweighed positive stock selection. The underperformance was largely attributable to being underweight to the US, where stock selection was also negative. Not holding Apple cost the fund as the US technology company's share price was boosted by its release of the ipad 3 towards the end of the period; it also announced its first dividend in 17 years and a US$10 billion stock buyback. Conversely, stock selection in Taiwan helped the fund, where Taiwan Semiconductor Manufacturing outperformed as its technological lead, coupled with a net cash balance sheet, reassured investors. In portfolio activity, we introduced several holdings at attractive valuations. These included UKbased HSBC because of its strong Asian and emerging markets franchise, as well as robust capital position; US cable company Comcast, which has solid cash flows; Hong Kong-based insurance group AIA, a high-quality company with good regional growth prospects; Swedish industrial company Atlas Copco because of its firm business structure and sound management, as well as German industrial gases company Linde. Against this, we divested several companies including German companies Adidas and Metro, UK retailer Mothercare, Belgian telco group Belgacom, as well as Japanese tool manufacturer Amada in view of better opportunities elsewhere. We also sold German utility E.On as regulation of the domestic energy market became increasingly opaque. Macroeconomic uncertainty remains. Economic data in the US point to some stabilisation in the economy; in contrast, economic activity in Europe is slowing and Chinese authorities have downgraded their growth outlook. We remain cautious, and as ever, focus on the underlying fundamental strength of the companies held within the portfolio. Aberdeen Asset Managers Limited 16 April

5 Performance Record Unit Price History Calendar year * Income Accumulation Highest Lowest Highest Lowest Offer Bid Offer Bid p p p p Distributions The record of net distributions paid/payable per unit is shown below: Income Accumulation Net revenue distributed Net revenue distributed per 1,000 per 1,000 Invested Invested per unit 02/01/07 per unit at 02/01/07 Calendar year p p * Net Asset Values Year ended March Units in Issue Units in Issue Market NAV per Unit NAV per Unit Income Accumulation NAV of Trust Income Accumulation '000 p p 3,669, ,909, , ,424, ,846, , ,526, ,797, , Total Expense Ratio Year ended March TER (%) The Total Expense Ratio (TER) is the total expenses paid by the Trust in the year against its average net asset value. * To 31 March

6 Investment Assets as at 31 March 2012 Security Holdings Market Value 000 % of Net Assets AUSTRALIA (3.44%) 3, QBE Insurance 427,100 3, BELGIUM (1.00%) - - BRAZIL (4.47%) 12, Banco Bradesco ADR 608,400 6, Petroleo Brasileiro ADR 336,000 5, CANADA (1.70%) 4, Canadian National Railway 86,700 4, CHINA (1.17%) 3, China Mobile 544,000 3, FRANCE (7.47%) 23, Casino Guichard Perrachon 128,300 7, Essilor 85,200 4, GDF Suez 285,000 4, Schneider Electric 151,900 6, GERMANY (9.92%) 11, Fuchs Petrolub 119,499 3, Linde 34,400 3, Wincor Nixdorf 134,400 4, HONG KONG (1.48%) 5, AIA 1,010,600 2, Swire Pacific 'B' 2,042,500 2, ITALY (4.20%) 7, ENI 537,500 7, JAPAN (7.92%) 14, Canon 159,500 4, Daito Trust Construction 48,500 2, Fanuc 30,300 3, Shin-Etsu Chemical 94,900 3, LUXEMBOURG (2.82%) 7, Tenaris ADR 305,400 7, NETHERLANDS (1.02%) 4, Fugro 106,600 4, SINGAPORE (3.29%) 6, City Developments 389,000 2, Singapore Telecommunications 2,776,000 4, SOUTH KOREA (2.31%) 6, Samsung Electronics GDR 28,700 6, SWEDEN (5.48%) 14, Atlas Copco 248,700 3, Nordea Bank 1,143,400 6, Telefonaktiebolaget LM Ericsson 725,400 4, SWITZERLAND (2.41%) 4, Zurich Financial Services 28,400 4, TAIWAN (5.37%) 13, Taiwan Mobile 2,196,000 4, Taiwan Semiconductor Manufacturing ADR 1,008,000 9,

7 Investment Assets (continued) as at 31 March 2012 Security Holdings Market Value 000 % of Net Assets UNITED KINGDOM (17.54%) 44, Centrica 2,185,700 6, HSBC 976,400 5, Millennium & Copthorne Hotels 1,143,000 5, Spirax-Sarco Engineering 117,200 2, Standard Chartered 552,500 8, Tesco 1,724,100 5, Vodafone 6,159,000 10, UNITED STATES (14.24%) 32, Cisco Systems 350,600 4, Comcast 128,800 2, EOG Resources 80,600 5, Kellogg 127,800 4, Oracle 213,600 3, Pepsi 151,600 6, Quest Diagnostics 70,100 2, Schlumberger 73,400 3, Investment assets 222, Total other assets (net) Net assets 222, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. Stocks shown as ADRs & GDRs represent American Depositary Receipts and Global Depositary Receipts. 5

8 Material Portfolio Changes/Movements Cost Purchases 000 St. James's Place Money Market Unit Trust (Acc) 14,542 Essilor 4,591 HSBC 3,808 Taiwan Mobile 3,380 Atlas Copco 3,184 Linde 3,010 Fugro 2,935 Casino Guichard Perrachon 2,560 Petroleo Brasileiro ADR 2,514 AIA 2,326 Oracle 2,290 Vodafone 2,262 Pepsi 2,183 Comcast 2,181 Spirax-Sarco Engineering 2,109 Tenaris ADR 1,988 Wincor Nixdorf 1,580 Tesco 1,372 Schneider Electric 1,279 EOG Resources 1,162 Other purchases 9,826 Total purchases for the year 71,082 Proceeds Sales 000 St. James's Place Money Market Unit Trust (Acc) 14,542 Adidas 6,037 Metro 4,408 Taiwan Mobile 3,468 E.ON 3,076 Amada 3,003 Hess 2,824 Taiwan Semiconductor Manufacturing ADR 2,409 ENI 2,291 QBE Insurance 2,260 Belgacom 1,922 Zurich Financial Services 1,687 Oversea-Chinese Banking 1,645 Vodafone 1,493 Canon 1,447 Quest Diagnostics 1,272 Mothercare 1,200 Daito Trust Construction 1,068 EOG Resources 898 Cisco Systems 867 Other sales 5,379 Total sales for the year 63,196 Stocks shown as ADRs represent American Depositary Receipts. This investment is a related party. St. James's Place Money Market Unit Trust (Acc) was previously named St. James's Place Cash Unit Trust (Acc) until 12 September

9 Statement of the Manager's Responsibilities in relation to the Financial Statements of the Trust The rules in the Financial Services 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 losses 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' Certificate This report is certified in accordance with the requirements of the rules in the Financial Services Authority's Collective Investment Schemes Sourcebook. Directors A. M. Croft London D. J. Lamb 21 May

10 Statement of Trustee's Responsibilities The Trustee is under a duty to take into custody and to hold the property of the Scheme in trust for the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Scheme and to ensure that the Scheme is managed in accordance with all applicable rules and restrictions in each annual accounting period, and to report thereon to unitholders. Report of the Trustee In our opinion, the Manager has managed the scheme, in all material aspects, during the period covered by this Report in accordance with the investment and borrowing powers and the restrictions applicable to the scheme, and otherwise in accordance with the Trust Deed and the rules in the Financial Services Authority's Collective Investment Scheme provisions of the Sourcebook. For and on behalf of: BNY Mellon Trust & Depositary (UK) Limited London 21 May

11 (the "Trust") Independent Auditors' Report to the Unitholders We have audited the financial statements of the Trust for the year ended 31 March 2012 which comprise the statement of total return, the statement of change in net assets attributable to unitholders, the balance sheet, the related notes and the distribution table. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and the Statement of Recommended Practice Financial Statements of Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for Authorised Funds ). Respective responsibilities of Manager and Auditors As explained more fully in the Manager s Responsibilities Statement the 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 International Standards on Auditing (UK and 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. Scope of the audit of the financial statements 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 Manager; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on the financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Trust at 31 March 2012 and of the net revenue and the net capital losses of the scheme property of the Trust for the year then ended; and have been properly prepared in accordance with the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. Opinion on other 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 Manager s Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Collective Investment Schemes sourcebook requires us to report to you if, in our opinion: proper accounting records for the Trust have not been kept; or the financial statements are not in agreement with the accounting records. PricewaterhouseCoopers LLP Chartered Accountants & Statutory Auditors Edinburgh 21 May 2012 The Financial Statements are published on www sjp.co.uk which is a website maintained by St. James s Unit Trust Group Limited. The maintenance and integrity of the website is the responsibility of the directors; 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. Visitors to the website need to be aware that legislation in the United Kingdom governing the presentation and dissemination of the Financial Statements may differ from legislation in their jurisdiction. 9

12 Statement of Total Return for the year ended 31 March /04/11 to 31/03/12 01/04/10 to 31/03/11 Notes Income Net capital (losses)/gains 2 (14,795) 10,128 Revenue 3 8,653 6,265 Expenses 4 (3,707) (3,173) Finance costs: Interest 6 (1) - Net revenue before taxation 4,945 3,092 Taxation 5 (690) (535) Net revenue after taxation 4,255 2,557 Total return before distributions (10,540) 12,685 Finance costs: Distributions 6 (4,256) (2,556) Change in net assets attributable to unitholders from investment activities (14,796) 10,129 Statement of Change in Net Assets Attributable to Unitholders for the year ended 31 March /04/11 to 31/03/12 01/04/10 to 31/03/ Opening net assets attributable to unitholders 235, ,040 Movement due to creation and cancellation of units: Amounts receivable on creation of units 11,773 59,225 Amounts payable on cancellation of units (13,816) (1,487) Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Class actions Closing net assets attributable to unitholders (2,043) 57,738 (18) (16) (14,796) 10,129 4,171 2, , ,668 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. The prices per unit as at 30 March 2012 (unaudited) were: Income units Accumulation units Bid Offer p p

13 Balance Sheet as at 31 March 2012 Assets Investment assets Debtors Cash and bank balances Total other assets Total assets 31/03/12 31/03/11 Notes , , , ,863 1,304 9, , ,426 Liabilities Creditors 10 (530) (2,753) Bank overdraft (218) - Distribution payable on income units (27) (5) Total other liabilities (775) (2,758) Net assets attributable to unitholders 222, ,668 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. 11

14 7 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 Services Authority's Collective Investment Schemes Sourcebook. They have been prepared in accordance with applicable UK accounting standards and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the IMA in October 2010 (IMA SORP 2010). (b) Revenue Dividends receivable from equity investments are credited to the revenue account when the investments are first quoted ex-dividend. Interest on deposits is 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 St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. Other revenue is accounted for on a receipts basis. (c) Expenses All expenses of the Trust are deducted from revenue with the exception of handling charges and stamp duty reserve tax which are deducted from capital. (d) Valuation of investments Listed investments have been valued at bid market value at midday on 30 March 2012 (31/03/11: bid market value at midday). (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 Distributions are made in respect of the periods ended 31 March and 30 September. 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. (h) Equalisation (i) 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. Special dividends Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. 12

15 7 Notes to the Financial Statements (j) Scrip dividends 2. Net capital (losses)/gains Non-derivative securities Currency losses Handling charges 01/04/11 to 31/03/12 (continued) Stockreceivedinlieuofcashdividendsisrecognisedasrevenueandformspartofthe distribution. 01/04/10 to 31/03/ (14,608) 10,272 (180) (140) (7) (4) Net capital (losses)/gains (14,795) 10, Revenue 01/04/11 to 31/03/12 01/04/10 to 31/03/ UK dividends 2,117 1,272 Overseas dividends non taxable 6,181 4,664 Distributions from Regulated Collective Investment Schemes Interest distributions - 7 Bank interest 5 9 Interest on capital Management charge rebate on underlying holdings 2 15 Scrip dividends Total revenue 8,653 6, Expenses 01/04/11 to 31/03/12 01/04/10 to 31/03/ Payable to the Manager Management charge* 3,394 2,890 Payable to the Trustee Trustee's fees Other expenses Audit fee 7 7 Other professional fees 1 - Registrar's fees Safe custody fees ADR issuance fee* Total expenses * The prior year figure has been reclassified. 3,707 3, Taxation 01/04/11 to 31/03/12 01/04/10 to 31/03/ (a) Analysis of charge in year: Irrecoverable overseas tax Adjustments in respect of prior years - (5) Total current tax (note 5b)

16 7 Notes to the Financial Statements (continued) (b) Factors affecting current 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% (2011: 20%). The differences are explained below: Net revenue before taxation 4,945 3,092 (c) (d) Corporation Tax at 20% (2011: 20%) Effects of: UK dividends not subject to corporation tax Non taxable scrip dividends Non taxable foreign dividends Double tax relief Movement in excess management expenses Irrecoverable overseas tax Adjustments in respect of prior years Current tax charge for year (note 5a) Factors that may affect future tax charges Distributions and interest (423) (254) - (22) (1,239) (933) (10) (5) Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. At the year end, after offset against revenue taxable on receipt, there is a potential deferred tax asset of 1,372,893 (31/03/11: 689,494) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely the Fund would generate sufficient taxable profits in the future to utilise these amounts. Finance costs The distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/04/11 to 31/03/12 01/04/10 to 31/03/ Interim distribution 3,202 2,636 Final distribution 1, Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units Net distributions for the year Interest Total finance costs Movement between net revenue and net distribution Net revenue after taxation Add: brought forward from previous year Less: carried forward to next year Net distributions for the year 4,281 2, (70) (302) 4,256 2, ,257 2,556 01/04/11 to 31/03/12 01/04/10 to 31/03/ ,255 2, (1) 4,256 2,556 14

17 Notes to the Financial Statements Debtors Sales awaiting settlement Amounts receivable for creation of units Accrued revenue Overseas tax recoverable Total debtors Cash and bank balances Cash and bank balances: Sterling Cash and bank balances: Overseas Total cash and bank balances 10. Creditors Purchases awaiting settlement Amounts payable for cancellation of units Accrued expenses Total creditors Units in issue (continued) 31/03/12 31/03/ , ,380 31/03/12 31/03/ , ,863 31/03/12 31/03/ , ,753 At the year end there were Income units of 4,526,268 (31/03/11: 4,424,233) and Accumulation units of 156,797,292 (31/03/11: 158,846,900) resulting in equivalent Income units of 178,632,711 (31/03/11: 177,217,890). 12. Related party transactions St. James's Place Unit Trust Group Limited and BNY Mellon Trust & Depositary (UK) Limited together with their 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 to St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 495,365 (31/03/11: due from 687,497). Trustee's fees and interest payable to the BNY Mellon Trust & Depositary (UK) Limited and their associates are shown in notes 4 and 6 respectively. The net balances due from BNY Mellon Trust & Depositary (UK) Limited and their associates at the year end in respect of these transactions was nil (31/03/11: nil). 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 Ethical Unit Trust. The value of these investments at the year end was 126,696,034 (31/03/11: 130,942,039). Capital commitments and contingent liabilities On 31 March 2012, the Trust had no capital commitments (31/03/11: nil) and no contingent liabilities (31/03/11: nil). 15

18 7 Notes to the Financial Statements (continued) 14. Financial instruments In accordance with the investment objectives, as stated on page 20, the Trust holds certain financial instruments. These comprise: Equity shares, units in collective investment schemes; and 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 period satisfies these requirements. 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 FSA 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, foreign currency 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. (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 reward profile is maintained. (b) Foreign currency risk The revenue and capital value of the Trust s investments can be significantly affected by currency translation movements as a proportion of the Trust s assets and revenue that are denominated in currencies other than sterling, which is the Trust s functional currency. The Manager has identified three principal areas where foreign currency risk could impact the Trust: Movements in exchange rates affect the value of investments; Movements in exchange rates affect short term timing differences; and Movements in exchange rates affect revenue received. The Trust may be subject to short term exposure to exchange rate movements, for instance where there is a difference between the date an investment purchase or sale is entered into and the date when settlement of the proceeds occurs. When the Trust enters into such a transaction which will involve the buying or selling of foreign currency in order to complete, a foreign exchange contract is entered into as soon as possible after the initial transaction in order to minimise the exchange rate risk. 16

19 7 Notes to the Financial Statements (continued) The Trust receives revenue in currencies other than sterling and movements in exchange rates can affect the sterling values of this revenue. The Trust converts all receipts of revenue into sterling on or near the date of receipt, it does not however hedge or otherwise seek to avoid exchange rate risk on revenue accrued but not received. An analysis of monetary assets and liabilities for all currencies at the year end is shown below: Net foreign currency assets Net foreign currency assets Currency Monetary exposures 31/03/12 Nonmonetary exposures 31/03/11 Nonmonetary exposures Total Monetary exposures Total (600) 44,998 44,398 2,568 41,303 43, ,930 4, ,109 8, ,025 48, ,629 56, ,839 8, ,263 6, ,281 14, ,681 18, ,494 6, ,755 7,766-14,902 14, ,929 12, ,726 5, ,689 5, ,159 4, ,553 3, ,108 72,469 2,199 69,272 71,471 GBP AUD CAD EUR HKD JPY SGD SEK CHF TWD USD , ,991 6, , ,668 Prior year comparatives have been recategorised. (c) Interest rate risk Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. (d) Credit risk 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. (e) 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. (f) Derivative risk The Manager may use derivative instruments to hedge the value of the investment portfolio against market and stock specific risk through investment in warrants, options 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

20 Notes to the Financial Statements 7 (g) (h) (i) 16. Maturity profile of financial liabilities Non-derivative securities Commissions Taxes Total costs Total trades in the year after transaction costs (continued) All financial liabilities of the Trust at the period end are due to settle in one year or less, or on demand. Other short-term debtors and creditors Other short-term debtors and creditors have been excluded from disclosures of financial instruments. Fair value of financial assets and liabilities Securities held by the Trust are valued at bid-price (see Note 1(d)). Other financial assets and liabilities of the Trust are included in the Balance Sheet at fair value. Portfolio transaction costs Analysis of total trade costs. Purchases Sales 01/04/11 to 31/03/12 01/04/10 to 31/03/11 01/04/11 to 31/03/12 01/04/10 to 31/03/ , ,468 63,253 91, (55) (29) (2) (57) (29) 71, ,673 63,196 91,895 18

21 Distribution Tables Distributions in pence per unit Group 1 Interim Units purchased prior to 1 April 2011 Final Units purchased prior to 1 October 2011 Group 2 Interim Units purchased on or after 1 April 2011 to 30 September 2011 Final Units purchased on or after 1 October 2011 to 31 March 2012 Income Net revenue Equalisation Distributions paid to/ payable 31/05/12 Distributions paid to 31/05/11 Group 1 (p) (p) (p) (p) Interim Final Group 2 (p) (p) (p) (p) Interim Final Accumulation Net revenue Equalisation Distributions paid to/ payable 31/05/12 Distributions paid to 31/05/11 Group 1 (p) (p) (p) (p) Interim Final Group 2 (p) (p) (p) (p) Interim Final Corporate Tax A unitholder liable to corporation tax receives this distribution, excluding equalisation, as follows: All dividends % of the dividend, together with the tax credit, is received as franked investment income. All dividends % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. All dividends % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. 19

22 General Information The Trust St. James's Place Ethical 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 February The Unit Trust is subject to the rules of the Financial Services Authority's Collective Investment Scheme Sourcebook and is classified as a UCITS Scheme. The Trust Manager The Manager of the Trust is St. James's Place Unit Trust Group Limited which is a member of the IMA and is authorised and regulated by the Financial Services Authority. Investment Objectives The investment objective of the Scheme is to achieve both long term capital growth and income, by investing in companies that meet generally accepted ethical criteria (a statement of the ethical investment principles is available on request). The Scheme will invest principally in equities and convertible stock and may hold fixed interest securities. It will invest mainly (but not exclusively) in companies in the European Union. In selecting assets, the Manager will not knowingly invest in any company, industry or country whose business or behaviour offends against generally accepted ethical criteria. 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. European Savings Directive It is the Manager's intention that the Trust will not normally hold 15% or more of its value in money debt instruments. 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, P.O. 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 the dealing day, 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. Telephone instructions are not accepted for ISA wrapped investments or the Unit Trust Investment Plan (Regular Premium Unit Trust). 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 in the Daily Telegraph and on the Manager's website: Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment to the Unit Trust Investment Plan is 150 and the minimum monthly increment is 50. The minimum annual investment to the Unit Trust Investment Plan is 1,500 and the minimum annual increment is 500. 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 1.5 per cent of the value of the Trust. 20

23 General Information (continued) Income Distributions Income distributions are made semi-annually on or before 31 May and 30 November each year. 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. Report A report is sent semi-annually to all unitholders on or before 31 May and 30 November each year. Capital Gains Tax The Trust is not liable to tax on capital gains and an individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2012/2013 exceed 10,600 (2011/ ,600). 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. 21

24 NOTES 22

25 NOTES 23

26 NOTES 24

27

28 UK members of the St. James s Place Wealth Management Group are authorised and regulated by the Financial Services Authority. St. James s Place Unit Trust Group Limited: Registered Office St. James s Place House, 1 Tetbury Road, Cirencester, Gloucestershire GL7 1FP United Kingdom. Registered in England Number Perivan Financial Print Alternative Assets (06/12)