equity income unit trust

Transcription

1 equity income UNIT TRUST FOR THE YEAR ENDED 30 SEPTEMBER 2016

2 Manager St. James's Place Unit Trust Group Limited PO Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Conduct Authority) Directors of the Manager D. C. Bellamy A. M. Croft I. S. Gascoigne D. J. Lamb Investment Adviser RWC Asset Management LLP 60 Petty France London, SW1H 9EU 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 Equity 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 21 January 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 objective is to achieve an above average level of income and to achieve capital growth over the medium to long term. It is intended that the Scheme will be invested in equities in UK and EC companies. There are no specific restrictions on the investment of the Scheme including as to economic sector or geographical area, except as set out below and as provided in the Regulations. 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 February 1997, over the five year period since September 2011 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 Equity Income Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual FTSE All-Share (Total Return) 01/02/97 to 30/09/11 to 30/09/15 to 30/09/16 30/09/16 30/09/16 % change % change % change 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. Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place Equity 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 1 February The risk category is recalculated weekly and during the year under review, the risk category did not change. 2

4 Report of the Manager (continued) Investment Adviser's Comments The last 12 months have been a volatile period for equity markets. Equities sold off sharply at the beginning of the year on worries over global growth, corporate earnings and leverage, however, markets quickly rebounded following further intervention from central banks. At the end of June, the surprise result in the referendum initially caused UK equities to fall, however, the sharp decline of sterling meant that the market recovered to its highs. Many UK listed companies are international in nature and earn a small portion of their profits in the UK. As a consequence of sterling s fall, they have enjoyed a profit upgrade as their nonsterling profits are now translated at a more favourable rate for a sterling based investor. This has benefitted healthcare names; AstraZeneca and GlaxoSmithKline, RELX, Unilever, HSBC, and energy firms BP and Royal Dutch Shell. Smiths Group, a good performer, saw results continuing to exceed expectations. WM Morrison Supermarkets was also a contributor on increasing optimism that, following a difficult period, results are beginning to turn around. The biggest detractors from performance were Next and Sky. Next has suffered over the last 12 months on a combination of weak results and an uncertain outlook. Sky has suffered as investors worry that the company may lose subscribers, as consumers move away from traditional broadcasters to consuming television over the internet. Over the period RBS was added to the portfolio, as its valuation is attractive, and after many years of restructuring the balance sheet, looks as if it can withstand a significant deterioration in the economic backdrop. Although we recognise the immediate outlook for the company has deteriorated, we believe that over the long-term the bank can prosper. A small position in Balfour Beatty was also added to the portfolio. Finding a good number of companies which have strong balance sheets, reasonable growth prospects and which are available at moderate valuations is a challenge in today s markets and we continue to believe that it is wise to keep some excess cash on hand in order to take advantage of opportunities that may arise in the future. RWC Asset Management LLP 14 October

5 Comparative Table as at 30 September 2016 Net Asset Value and Ongoing Charges Figure 30/09/16 30/09/15 30/09/14 Income Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (2.48) Operating charges (2.96) (3.10) (3.02) Return after operating charges* (5.58) 9.05 Distributions on income units (6.63) (6.41) (6.79) Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 10.58% (2.92%) 4.79% Other information Closing net asset value ( 000) 263, , ,411 Closing number of units 137,576, ,060, ,510,980 Operating charges** 1.61% 1.60% 1.61% Direct transaction costs 0.05% 0.05% 0.13% Prices Highest unit price (p) Lowest unit price (p) /09/16 30/09/15 30/09/14 Accumulation Change in net assets per unit (p) (p) (p) Opening net asset value per unit Return before operating charges* (5.21) Operating charges (5.96) (6.03) (5.92) Return after operating charges* (11.24) Distributions on accumulation units (13.34) (12.47) (12.77) Retained distributions on accumulation units Closing net asset value per unit *after direct transaction costs of: Performance Return after charges 10.78% (3.06%) 4.77% Other information Closing net asset value ( 000) 1,869,122 1,611,626 1,549,053 Closing number of units 474,329, ,057, ,128,671 Operating charges** 1.61% 1.60% 1.61% Direct transaction costs 0.05% 0.05% 0.13% Prices Highest unit price (p) Lowest unit price (p) **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. 4

6 Portfolio Statement as at 30 September 2016 Security Holdings Market Value 000 % of Net Assets Banks (3.67%) 129, HSBC 16,004,909 91, Royal Bank of Scotland 21,890,000 38, Construction & Materials (0.00%) 1, Balfour Beatty 700,000 1, Corporate Bonds (0.42%) 7, RSA Insurance 6.701% Perpetual GBP7,500,000 7, Financial Services (2.13%) 36, Close Brothers 2,675,597 36, Fixed Line Telecommunications (4.13%) 63, BT 16,626,581 63, Food & Drug Retailers (6.15%) 150, Tesco 44,948,737 80, WM Morrison Supermarkets 32,792,292 70, Gas, Water & Multiutilities (4.08%) 85, Centrica 37,675,313 85, General Industrials (3.10%) 98, Smiths 6,776,492 98, General Retailers (6.19%) 78, Next 1,663,153 78, Life Insurance (7.83%) 135, Legal & General 36,665,691 79, Old Mutual 15,869,633 31, Standard Life 7,453,019 25, Media (11.20%) 221, RELX 7,943, , Sky 11,833, , Mobile Telecommunications (2.77%) 57, Vodafone 26,007,644 57, Non Equity Investment Instruments (9.44%) 202, St. James's Place Money Market Unit Trust L Acc 193,928, , Non Life Insurance (3.54%) 94, RSA Insurance 17,298,365 94, Oil & Gas Producers (7.23%) 186, BP 21,635,476 97, Royal Dutch Shell 'B' Shares 4,439,915 89, Personal Goods (6.04%) 147, Unilever 4,082, ,

7 Portfolio Statement (continued) as at 30 September 2016 Security Holdings Market Value 000 % of Net Assets Pharmaceuticals & Biotechnology (13.08%) 246, AstraZeneca 2,219, , GlaxoSmithKline 8,328, , Investment Assets 1,945, Total other assets (net) 187, Net assets 2,132, Comparative figures shown in brackets relate to 30 September All investments held are listed, unless otherwise stated. During the year under review the Manager decided to place some of the sterling cash held on deposit into the St. James s Place Money Market Unit Trust in order to spread risk across a number of institutions. The St. James s Place Money Market Unit Trust is highly liquid and is rated AAA by Standard & Poors. This investment is a related party. 6

8 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 175,668 Royal Bank of Scotland 41,206 Tesco 18,534 Smiths 11,039 HSBC 10,816 Next 9,210 Centrica 8,968 Unilever 5,461 GlaxoSmithKline 4,947 Legal & General 4,854 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 149,230 AstraZeneca 53,467 Unilever 10,288 BT 10,115 Legal & General 5,715 This investment is a related party. 7

9 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 revenue 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 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 London 25 November

10 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 Equity Income Unit Trust for the year ended 30 September 2016 The Depositary in its capacity as Trustee of St. James's Place Equity Income 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 Director Date 25 November

11 Independent Auditors' Report to the Unitholders of St. James's Place Equity Income Unit Trust Our opinion In our opinion, St. James's Place Equity Income Unit Trusts financial statements, defined below: give a true and fair view of the financial position of the Trust as at 30 September 2016 and of the net revenue and the net capital gains of the scheme property of the Trust 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, which are prepared by St. James s Place Unit Trust Group Limited (the Authorised Fund Manager ), comprise: the balance sheet of the Trust as at 30 September 2016 ; the statement of total return of the Trust for the year then ended; the statement of change in net assets attributable to unitholders of the Trust for the year then ended; the notes to the Trust s 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), 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. 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 8, 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. 10

12 Independent Auditors' Report to the Unitholders of St. James's Place Equity Income Unit Trust (continued) 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 directors' 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 25 November 2016 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. 11

13 Statement of Total Return for the year ended 30 September /10/15 to 30/09/16 01/10/14 to 30/09/15 Note Income Net capital gains/(losses) 2 164,873 (95,197) Revenue 3 72,074 65,262 Expenses 4 (31,895) (30,565) Interest payable and similar charges - - Net revenue before taxation Taxation Net revenue after taxation 40,179 34, ,179 34,697 Total return before distributions 205,052 (60,500) Distributions 6 (71,695) (63,375) Change in net assets attributable to unitholders from investment activities 133,357 (123,875) Statement of Change in Net Assets Attributable to Unitholders for the year ended 30 September /10/15 to 30/09/16 01/10/14 to 30/09/ Opening net assets attributable to unitholders 1,862,385 1,796,464 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 113, ,574 Amounts payable on cancellation of units* (39,652) (22,034) 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 73, , ,357 (123,875) 62,791 55, ,132,386 1,862,385 * Prior year creations and cancellations have been reclassified due to reallocations from income to accumulation units to make these comparable to current year. Prior year figures in relation to Dilution Levy have also been reclassified and included within creations and cancellation of units as this was income and expenses arising from creations and cancellations respectively. 12

14 Balance Sheet as at 30 September 2016 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 30/09/16 30/09/15 Note ,945,312 1,694, ,992 16, , ,082 2,140,211 1,899,338 (4,580) (4,839) (3,245) (32,114) (7,825) (36,953) 2,132,386 1,862,385 13

15 Notes to the Financial Statements for the year ended 30 September 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). Both FRS 102 and SORP 2014 have been adopted in the current year. The changes in the SORP 2014 are presentational only and there have been no changes to any figures detailed within the financial statements. The financial statements are prepared on the going concern basis. (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 on interest bearing assets is recognised on an effective interest rate 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 the St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. (c) (d) (e) (f) Expenses All expenses of the Trust are deducted from revenue with the exception of handling charges and the Investment Adviser's fees which are deducted from capital. The manager has agreed that 100% of the annual management charge is to be transferred to capital for the purpose of calculating the distribution, as permitted by the Collective Investment Schemes Sourcebook. Valuation of investments Listed investments have been valued at bid market value at midday on 30 September 2016 (30/09/15: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. Authorised unit trusts are valued at cancellation price for funds managed by the manager and a bid price for all other funds. 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. 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. 14

16 Notes to the Financial Statements (continued) for the year ended 30 September 2016 (g) 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. (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. (i) Special dividends Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. (j) Derivatives The Trust may enter into permitted transactions such as derivative contracts or forward foreign currency transactions. Where these transactions are used to protect or enhance revenue, and the circumstances support this, the returns are included within net revenue in the Statement of Total Return. Where the transactions are used to protect or enhance investments, and the circumstances support this, the returns are treated as capital and included within gains/losses on investments in the Statement of Total Return. Any open positions in these type of transactions at the year end are included in the Balance Sheet at their mark to market value. 2. Net capital gains/(losses) 01/10/15 to 01/10/14 to 30/09/16 30/09/15 3. Non-derivative securities Handling charges Net capital gains/(losses) Revenue ,874 (95,194) (1) (3) 164,873 (95,197) 01/10/15 to 30/09/16 01/10/14 to 30/09/ UK dividends 70,539 63,592 Distributions from Regulated Collective Investment Schemes Interest distributions Bank interest Interest on debt securities Management charge rebate on underlying holdings Total revenue 72,074 65,262 15

17 Notes to the Financial Statements (continued) for the year ended 30 September Expenses 01/10/15 to 01/10/14 to 30/09/16 30/09/ Payable to the Manager Management charge 27,322 28,678 Payable to the Trustee Trustee's fee Other expenses Audit fee - 9 Registrar's fee - 1,704 Safe custody fee - 17 Investment adviser's fees 4,573-4,573 1,730 Total expenses 31,895 30,565 Expenses include irrecoverable VAT where applicable. 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. This includes current year Audit Fee of 9k. 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 October Taxation 01/10/15 to 01/10/14 to 30/09/16 30/09/ (a) Analysis of charge in year: There is no corporation tax charge in the current year or prior year. (b) Factors affecting total 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% (2015: 20%). The differences are explained below: Net revenue before taxation 40,179 34,697 Corporation Tax at 20% (2015: 20%) Effects of: UK dividends not subject to corporation tax Movement in excess management expenses 8,036 6,939 (14,108) (12,718) 6,072 5,779 Total tax charge for year (note 5a) - - Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. (c) Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. (d) 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 29,719,768 (30/09/15: 23,647,813) 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. 16

18 Notes to the Financial Statements (continued) for the year ended 30 September Distributions The distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/10/15 to 01/10/14 to 30/09/16 30/09/ First interim distribution 16,527 13,837 Second interim distribution 18,969 14,818 Third interim distribution 19,640 20,221 Final distribution 16,866 15,130 72,002 64,006 Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (542) (724) Net distributions for the year 71,695 63, Movement between net revenue and net distributions 01/10/15 to 01/10/14 to 30/09/16 30/09/ Net revenue after taxation 40,179 34,697 Management charge paid out of capital 27,178 28,678 Other expenses paid out of capital 4,573 - Corporation tax relief to capital (235) - Net distributions for the year 71,695 63, Debtors 30/09/16 30/09/ Sales awaiting settlement - 10,588 Amounts receivable for creation of units 816 1,897 Accrued revenue 4,068 4,050 Rebate receivable on underlying holdings 58 - Income tax recoverable Total debtors 4,992 16, Cash and bank balances 30/09/16 30/09/ Cash and bank balances: Sterling 189, , Other creditors 30/09/16 30/09/ Purchases awaiting settlement - 31,965 Accrued expenses 3, Total other creditors 3,245 32, Units in issue Reconciliation of the unit movement in the year: Income Accumulation Opening units in issue Units converted Creations Cancellations Closing units in issue 140,060,732-4,399,458 (6,883,926) 137,576, ,057,594-28,716,184 (7,443,788) 474,329,990 17

19 Notes to the Financial Statements (continued) for the year ended 30 September 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 to St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 1,554,431 (30/09/15: due from 1,894,814). 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 Equity Income Unit Trust. The value of these investments at the year end was 1,160,933,443 (30/09/15: 997,622,719). Included in the investment portfolio is a holding of 193,928,197 shares (30/09/15: 168,557,042) in St. James's Place Money Market Unit Trust (St. James's Place Unit Trust Group Limited fund) with a market value of 202,571,383 (30/09/15: 175,846,965). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. As at 30/09/16 total revenue earned amounts to 942,995 (30/09/15: 834,598). 13. Capital commitments and contingent liabilities On 30 September 2016, the Trust had no capital commitments (30/09/15: nil) and no contingent liabilities (30/09/15: nil). 14. Derivatives and other financial instruments In accordance with the investment objectives, as stated on page 2, the Trust held certain financial instruments. These comprise: Equity shares; interest bearing assets and units in collective investment schemes. Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations; and Derivatives which the Trust may enter into (principally futures contracts, options and contracts for difference) for the purpose of which is to manage the market risk arising from the Trust's investment activities (and related financing). 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 year satisfies these requirements. 15. Risk management 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 and that an acceptable risk reward profile is maintained. 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 2015). 18

20 Notes to the Financial Statements (continued) for the year ended 30 September 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: 01/10/15 to 30/09/16 01/10/14 to 30/09/15 % % Lowest monthly VaR Highest monthly VaR Average monthly VaR (b) Interest rate risk Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. (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. (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. 19

21 Notes to the Financial Statements (continued) for the year ended 30 September 2016 (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. As the trust is not considered a sophisticated fund, the manager uses the commitment approach to measure the global exposure to derivatives. (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 Analysis of total trade costs. Purchases Sales 01/10/15 to 30/09/16 01/10/14 to 30/09/15 01/10/15 to 30/09/16 01/10/14 to 30/09/ Collective Investment Schemes 175, , , ,228 Equities 139, ,982 79,685 37,582 Trades in the year before transaction costs 315, , , ,810 Commissions Collective Investment Schemes Equities Taxes Collective Investment Schemes Equities (100) (41) (100) (41) Total costs Trades in the year after transaction costs 315, , , ,769 Total transaction cost expressed as a percentage of asset type cost. Purchases Sales 01/10/15 to 30/09/16 01/10/14 to 30/09/15 01/10/15 to 30/09/16 01/10/14 to 30/09/15 % % % % Commissions Collective Investment Schemes Equities Taxes Collective Investment Schemes Equities Total transaction cost expressed as a percentage of net asset value. 01/10/15 to 30/09/16 01/10/14 to 30/09/15 % % Commissions Taxes Total costs

22 Notes to the Financial Statements (continued) for the year ended 30 September Average portfolio dealing spread The average portfolio dealing spread at the balance sheet date was 0.05%. (30/09/15: 0.05%). 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. 30/09/16 30/09/15 Assets Liabilities Assets Liabilities Valuation technique Level 1 1,735,032-1,511,057 - Level 2 210, ,638 - Level Total fair value 1,945,312-1,694,695 - 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. 21

23 Distribution Tables Distributions in pence per unit Group 1 First interim Units purchased prior to 1 October 2015 Second interim Units purchased prior to 1 January 2016 Third interim Units purchased prior to 1 April 2016 Final Units purchased prior to 1 July 2016 Group 2 First interim Units purchased on or after 1 October 2015 to 31 December 2015 Second interim Units purchased on or after 1 January 2016 to 31 March 2016 Third interim Units purchased on or after 1 April 2016 to 30 June 2016 Final Units purchased on or after 1 July 2016 to 30 September 2016 Income Net revenue Equalisation Distributions paid to/ payable 31/01/17 Distributions paid to 31/01/16 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final Accumulation Net revenue Equalisation Distributions paid to/ payable 31/01/17 Distributions paid to 31/01/16 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final

24 General Information The Trust Manager Unit Dealings Dealings on the Trust take place on a daily basis. Purchase or sale instructions can be made by telephone or in writing to St. James's Place Unit Trust Group Limited, PO Box 9034, Chelmsford, CM99 2XA, United Kingdom, freephone: The Manager adopts a policy of forward pricing, i.e. the order will be transacted on the dealing day following receipt of the client's instructions, or if received before noon, on that dealing day. In the case of telephone purchases of units from the Manager, settlement must be by return of post after receipt of the contract note. In the case of telephone redemptions, the proceeds will not become payable until the receipt at the Administration Centre of a written request. A contract note confirming the subscription or redemption price and the number of units involved will be forwarded, together with a cancellation notice, where appropriate, on the next business day. The most recent issue and redemption prices will be published on the Manager's website: and are available by calling the Administration Centre on Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment is 150 and the minimum monthly increment is 50. The minimum annual investment is 1,500 and the minimum annual increment is 500. Renaming of Unit Classes On 10 October 2016 the Manager denominated the existing unit class in the fund as Class L units. This change will have no impact on the way in which the fund is managed or how daily unit prices are calculated. H & Y Unit Classes On 10 October 2016 the Manager launched Class H and Class Y accumulation unit classes. Restrictions apply to all Class H and Class Y units, please see the Prospectus for details. Management Charges With effect from 26 October 2015 the Manager changed the charging structure of the Scheme. The annual management charge has been adjusted to include many of the predictable costs, such as trustee fees and administration fees, which were previously charged directly to the Scheme, and to exclude the fees for Investment Advisers, which are now charged directly to the Scheme. These changes were presentational only and there has been no overall increase in the total charges met by the Scheme. In addition, the way the annual management charge is calculated has been changed. The charge was previously calculated monthly, based on the Scheme value on the first business day of the month; with effect from 26 October 2015 it is calculated daily, based on the Scheme value every day. 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 1.36 per cent (1.5 per cent prior to 26 October 2015) of the value of the Trust. Income Distributions Income distributions are made quarterly on or before the 31 January, 30 April, 31 July and 31 October. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. 23

25 General Information (continued) Tax Vouchers Income unitholders that receive income distributions by direct credit and accumulation unitholders (where the distribution income is reinvested) receive an annual consolidated tax voucher in May with all the relevant payment and tax information required to complete a tax return. Tax vouchers will be enclosed if income unitholders receive payment by cheque. Capital Gains Tax The Trust is not liable to tax on capital gains and any individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2016/2017 exceed 11,100 (2015/ ,100). To calculate capital gains on accumulation units, the total amount of reinvested net revenue (shown on the annual tax credit vouchers) should be added to the base cost of the units purchased. Unitholders should consult their professional advisers for any advice regarding their tax position. Remuneration St. James s Place PLC ( SJP PLC ) personnel providing services to St. James s Place Unit Trust Group Limited ( the Manager ) are subject to the SJP PLC Remuneration Policy (the Remuneration Policy ). The Remuneration Policy reflects the remuneration requirements of the UCITS V Directive (2014/91/EU). Details of the Remuneration Policy are available through www1.sjp.co.uk/about-st-james-place/our-responsibilities/corporate-governance which is updated periodically to reflect changes to the policy. Following the implementation of UCITS V in the UK on 18 March 2016, all authorised UCITS Managers are required to comply with the UCITS V Remuneration Code from the start of their next accounting year. Under the UCITS V Directive, the Manager is required to disclose information relating to the remuneration paid to its staff for the financial year, split into fixed and variable remuneration. The Manager s Financial Year end is 31 December, it is therefore anticipated that the Manager s Remuneration Policy and associated financial disclosures will be made within the Annual Reports starting from 31 December 2017, following its first full performance period. Prior to this date, and in line with the FCA's guidance on the UCITS V remuneration disclosures, the Manager would be part way through its first performance period and the information available would not be relevant or provide a proper basis for comparison. 24