UK HIGH INCOME UNIT TRUST

Transcription

1 UK HIGH INCOME UNIT TRUST FOR THE PERIOD ENDED 30 SEPTEMBER 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 On 1 January 2018 D. C. Bellamy will retire from the board of St. James's Place Unit Trust Group Limited. Investment Adviser Woodford Investment Management LLP 9400 Garsington Road Oxford Business Park Oxford, OX4 2HN United Kingdom On 30th September 2016 the business of Woodford Investment Management LLP novated to Woodford Investment Management Limited, authorised and regulated by the Financial Conduct Authority. Trustee BNY Mellon Trust & Depositary (UK) Limited National Westminster Bank Plc 160 Queen Victoria Street 250 Bishopsgate London, EC4V 4LA London, EC2M 4AA United Kingdom United Kingdom Following a full review and tender of trustee and depositary services provided to the St. James s Place range of authorised unit trusts, National Westminster Bank plc are to be appointed the new Trustee to the funds, replacing BNY Mellon Trust & Depositary (UK) Limited. The change is expected to take place on 1 December (Authorised and regulated by the Financial Conduct Authority) Registrar DST Financial Services Europe Limited DST House St. Nicholas Lane Basildon, SS15 5FS United Kingdom The name of the registrar changed from International Financial Data Services (UK) Limited to DST Financial Services Europe Limited on 14 August (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 UK High Income 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 6 December 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 aim of the Scheme is to achieve an above average level of income whilst also providing the potential for capital appreciation over the medium to long term. It is the intention to achieve these aims by investment predominantly into UK equities, however, it may also invest into global equities. The scheme is also permitted to invest in other types of transferable securities, UK and overseas fixed interest and index-linked securities, units and/or shares in collective investment schemes, money market instruments, deposits, cash and near cash, derivatives and forward transactions for the purpose of efficient portfolio management (including hedging). The Scheme is permitted to invest in derivative 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 January 1992, over the five year period since September 2012 and over the period under review is shown below. St. James's Place UK High Income Unit Trust L Income units (offer to offer) L Accumulation units (offer to offer) H Accumulation units (offer to offer)* Y Accumulation units (offer to offer)* Source: Lipper for Fund returns 01/01/92 to 30/09/12 to 31/03/17 to 30/09/17 30/09/17 30/09/17 % change % change % change * Class H Accumulation and Y Accumulation units were made available on 01 December 2016 and the performance shown is from that date. 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 UK High Income Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 5. It was calculated using performance data up to 26 June The risk category is recalculated weekly and during the year under review, the risk category did not change. Investment Adviser's Comments During the period, UK market leadership has become increasingly narrowly focused, with returns driven by stocks that are seen as proxies for Chinese credit growth, such as mining companies, Asian exposed banks and some consumer staples businesses. We do not believe this behaviour is fully justified by fundamentals but the rest of the market has languished behind. The portfolio underperformed the broader UK market in the six months to 30 September 2017, with performance affected by a mix of stock-specific disappointments and a general mood of market antipathy towards much of the rest of the portfolio. The largest detractor was Provident Financial, which has experienced significant operational disruption in its household consumer credit division. This has clearly been very disappointing but we think that the market s reaction has been highly disproportionate to the fundamental impact on the company s inherent long-term value. We have maintained our exposure to the business, believing that Provident Financial will ultimately get back on track, but acknowledge that it may take some time to do so. The largest positive contribution came from AbbVie, which saw its shares reach all-time highs during the period. We believe the market has started to appreciate the value of the company s Humira franchise and its future pipeline potential more appropriately but, even after taking the shares recent surge into account, they remain very attractively priced. We believe the market consensus has become far too cautious about the outlook for the UK economy and, as a result, the fund has increased its exposure to some very high-quality UK businesses, which trade on eye-catchingly low valuations and where future growth expectations are far too modest. These include Barratt Developments and RBS. The same view led us to introduce a number of new holdings, including Lloyds and Bovis Homes. Meanwhile, to fund these additions we sold the portfolio s holdings in GlaxoSmithKline, Hiscox and Compass. As long-term investors, sometimes what we re doing won t chime with market sentiment. Although in the short-term, this is painful, our response is to continuously retest our investment hypothesis. In doing so, we repeatedly return to the same conclusion our approach is very appropriate for the prevailing economic conditions and we remain confident of delivering what investors expect over the longer term. Woodford Investment Management LLP 13 October

5 Comparative Table as at 30 September 2017 (unaudited) Net Asset Value and Ongoing Charges Figure 30/09/17 31/03/17 31/03/16 31/03/15 L Income Closing net asset value ( 000) 352, , , ,958 Closing number of units 88,487,283 91,796,858 95,711,497 93,801,612 Closing net asset value per unit (p) Operating charges* 1.67% 1.66% 1.72% 1.81% 30/09/17 31/03/17 31/03/16 31/03/15 L Accumulation Closing net asset value ( 000) 1,497,888 1,539,350 1,411,591 1,330,021 Closing number of units 147,843, ,380, ,485, ,317,647 Closing net asset value per unit (p) 1, , Operating charges* 1.67% 1.66% 1.72% 1.81% 30/09/17 31/03/17 H Accumulation Closing net asset value ( 000) Closing number of units 958 1,076 Closing net asset value per unit (p) 1, , Operating charges* 2.17% 2.16% 30/09/17 31/03/17 Y Accumulation Closing net asset value ( 000) Closing number of units 2,016 2,016 Closing net asset value per unit (p) 1, , Operating charges* 0.93% 0.91% H Accumulation and Y Accumulation units were made available on 1 December *Operating charges are prepared using the same methodology as the ongoing charges appearing in the KIID, based on the information in this report. 4

6 Portfolio Statement as at 30 September 2017 (unaudited) Security Holdings Market Value 000 % of Net Assets Banks (1.24%) 121, Lloyds Banking 115,546,290 77, Royal Bank of Scotland 16,090,494 43, Construction & Materials (1.62%) 34, Breedon 40,879,921 34, Corporate Bonds (0.00%) 6 - Barclays Bank 0% 31/01/2019* 12,574, Electricity (1.35%) 24, Drax 7,916,226 24, Equity Investment Instruments (0.51%) 12, Syncona 6,756,697 12, Financial Services (7.50%) 80, Allied Minds 4,438,458 5, BCA Marketplace 14,732,546 32, IP 13,988,192 18, Masawara 1,360, Provident Financial 2,910,748 23, Food Producers (1.31%) 12, Cranswick 428,443 12, General Retailers (1.55%) 78, Kingfisher 10,887,447 32, Next 878,912 46, Health Care Equipment & Services (1.33%) 17, Spire Healthcare 7,835,025 17, Household Goods & Home Construction (1.39%) 121, Barratt Developments 4,246,835 25, Bovis Homes 674,105 7, Countryside Properties 6,086,419 20, Crest Nicholson 4,727,653 25, Redrow 2,885,501 17, Taylor Wimpey 12,704,293 24, Life Insurance (7.39%) 151, Aviva 7,619,937 39, Legal & General 42,997, , Media (1.26%) 29, Euromoney Institutional Investor 2,142,065 24, ITWP Acquisitions* 436,324,350 4, Non Life Insurance (3.23%) 44, Beazley 4,785,644 22, Lancashire 3,287,406 21,

7 Portfolio Statement (continued) as at 30 September 2017 (unaudited) Security Holdings Market Value 000 % of Net Assets Pharmaceuticals & Biotechnology (35.88%) 562, AbbVie 1,600, , Alkermes 1,410,583 54, AstraZeneca 3,804, , Biogen 150,567 34, Bioverativ 764,986 32, BTG 7,531,357 50, Circassia Pharmaceuticals 5,318,106 4, e-therapeutics 9,394, Gilead Sciences 662,964 40, Roche 265,914 50, USL Pharma International 1,080, Real Estate Investment & Services (0.24%) 20, Deutsche Wohnen 609,993 19, Raven Russia Preference Shares 971,210 1, Real Estate Investment Trusts (0.99%) 69, British Land 6,175,973 37, LondonMetric Property 7,191,834 11, NewRiver 5,880,102 19, Software & Computer Services (2.17%) 48, Micro Focus International 2,008,479 48, Support Services (11.55%) 231, AA 11,474,381 19, Babcock International 7,307,372 60, Capita 10,314,005 58, G4S 15,756,067 43, HomeServe 4,611,357 38, PayPoint 1,122,385 10, Tobacco (15.94%) 154, British American Tobacco 519,337 24, Imperial Brands 4,099, , Travel & Leisure (3.06%) 33, International Consolidated Airlines 5,600,937 33,

8 Portfolio Statement (continued) as at 30 September 2017 (unaudited) Security Holdings Market Value 000 % of Net Assets Derivatives (-0.13%) 9, Bought CHF5,445,439 for GBP4,286,026 Settlement 31/10/2017 (83) - Bought CHF4,868,794 for GBP3,887,447 Settlement 31/10/2017 (130) (0.01) Bought CHF4,805,135 for GBP3,866,643 Settlement 31/10/2017 (158) (0.01) Bought CHF4,533,175 for GBP3,666,579 Settlement 31/10/2017 (168) (0.01) Bought CHF9,696,154 for GBP7,800,606 Settlement 31/10/2017 (317) (0.02) Bought CHF8,967,455 for GBP7,251,116 Settlement 31/10/2017 (330) (0.02) Bought USD17,210,281 for GBP12,741,089 Settlement 31/10/ Bought USD18,037,365 for GBP13,676,067 Settlement 31/10/2017 (211) (0.01) Bought USD17,557,997 for GBP13,607,264 Settlement 31/10/2017 (500) (0.03) Sold CHF98,482,320 for GBP80,109,913 Settlement 31/10/2017 4, Sold EUR12,330,634 for GBP11,063,168 Settlement 31/10/ Sold EUR1,071,312 for GBP987,846 Settlement 31/10/ Sold EUR2,320,209 for GBP2,081,366 Settlement 31/10/ Sold EUR2,252,959 for GBP2,012,455 Settlement 31/10/ Sold EUR1,612,981 for GBP1,443,659 Settlement 31/10/ Sold USD335,394,577 for GBP256,944,333 Settlement 31/10/2017 6, Sold USD22,053,048 for GBP17,018,605 Settlement 31/10/ Sold USD17,486,631 for GBP13,228,907 Settlement 31/10/ Investment Assets 1,858, Total other liabilities (net) (8,753) (0.47) Net assets 1,850, Comparative figures shown in brackets relate to 31 March All investments held are listed, unless otherwise stated. * Unlisted securities. 7

9 Material Portfolio Changes Cost Purchases 000 Lloyds Banking 79,385 Kingfisher 37,555 British Land 35,954 Bioverativ 29,600 Crest Nicholson 24,310 Countryside Properties 19,470 Deutsche Wohnen 18,213 Redrow 16,894 St. James's Place Money Market Unit Trust L Acc 16,370 Royal Bank of Scotland 16,229 Proceeds Sales 000 British American Tobacco 128,699 GlaxoSmithKline 122,401 Roche 34,105 Compass 31,098 Hiscox 25,832 AbbVie 17,067 Cranswick 16,715 St. James's Place Money Market Unit Trust L Acc 16,369 Gilead Sciences 6,751 Raven Russia Preference Shares 3,316 This investment is a related party. 8

10 Statement of Total Return for the period 01 April 2017 to 30 September 2017 (unaudited) Income Net capital (losses)/gains Revenue Expenses Interest payable and similar charges Net revenue before taxation Taxation Net revenue after taxation Total return before distributions Distributions Change in net assets attributable to unitholders from investment activities 01/04/17 to 30/09/17 01/04/16 to 30/09/ (36,968) 89,616 34,329 31,865 (15,942) (15,451) (16) (8) 18,371 16,406 (488) (430) 17,883 15,976 (19,085) 105,592 (33,825) (31,428) (52,910) 74,164 Statement of Change in Net Assets Attributable to Unitholders for the period 01 April 2017 to 30 September 2017 (unaudited) 01/04/17 to 30/09/17 01/04/16 to 30/09/ Opening net assets attributable to unitholders 1,915,150 1,780,279 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 13,863 38,604 Amounts payable on cancellation of units* (53,118) (36,599) Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Unclaimed distributions Closing net assets attributable to unitholders (39,255) 2,005 (52,910) 74,164 27,139 25, ,850,127 1,881,517 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 period creations and cancellations have been reclassified due to reallocations from income to accumulation units to make these comparable to current period. 9

11 Balance Sheet as at 30 September 2017 (unaudited) Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Investment liabilities Creditors Bank overdrafts Distribution payable Other creditors Total liabilities Net assets attributable to unitholders 30/09/17 31/03/ ,860,777 1,905,963 4,209 18, ,865,238 1,925,478 (1,897) (2,685) (6,540) - (2,612) (3,762) (4,062) (3,881) (15,111) (10,328) 1,850,127 1,915,150 Accounting and Distribution policies for the period 01 April 2017 to 30 September 2017 (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 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 27 November

12 Distribution Tables Distributions in pence per unit Group 1 First interim Units purchased prior to 1 April 2017 Second interim Units purchased prior to 1 July 2017 Group 2 First interim Units purchased on or after 1 April 2017 to 30 June 2017 L Income Net revenue Equalisation Distributions paid to/ payable 31/12/17 Distributions paid to 31/12/16 Group 1 (p) (p) (p) (p) First interim Second interim Group 2 (p) (p) (p) (p) First interim Second interim L Accumulation Second interim Units purchased on or after 1 July 2017 to 30 September 2017 Net revenue Equalisation Distributions paid to/ payable 31/12/17 Distributions paid to 31/12/16 Group 1 (p) (p) (p) (p) First interim Second interim Group 2 (p) (p) (p) (p) First interim Second interim

13 Distribution Tables (continued) H Accumulation Net revenue Equalisation Distributions paid to/ payable 31/12/17 Group 1 (p) (p) (p) First interim Second interim Group 2 (p) (p) (p) First interim Second interim Y Accumulation Net revenue Equalisation Distributions paid to/ payable 31/12/17 Group 1 (p) (p) (p) First interim Second interim Group 2 (p) (p) (p) First interim Second interim H Accumulation and Y Accumulation units were made available on 1 December

14 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. 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. For Class Y units the Preliminary Charge is 0 per cent. (b) An Annual Management Charge at a rate of 1.37 per cent for Class L Income and Accumulation Units; 1.87 per cent for Class H Accumulation Units and 0.63 per cent for Class Y Accumulation Units of the value of the Trust. Income Distributions Income distributions are made quarterly on or before the 31 March, 30 June, 30 September and 31 December. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. Tax Certificates 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 certificates 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 2017/2018 exceed 11,300 (2016/ ,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. 13

15 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 UK High Income (11/17)