Equity Income UNIT TRUST FOR THE PERIOD ENDING 31 MARCH 2017
Manager St. James's Place Unit Trust Group Limited PO Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: 0800 027 1031 (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 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: 0800 027 1031 1
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 1997. 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 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 in the Scheme Prospectus 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 March 2012 and over the period under review is shown below, together with figures for the most commonly quoted indices in comparable markets where the major proportion of the Trust has been invested. St. James's Place Equity 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)* Indices - actual FTSE All-Share (Total Return) 01/02/97 to 31/03/12 to 30/09/16 to 31/03/17 31/03/17 31/03/17 % change % change % change +109.5 +27.3 +3.3 +334.9 +52.6 +4.9 +6.7 +2.4 +268.5 +58.7 +8.1 * H Accumulation and Y Accumulation units were made available on 1 December 2016 and the performance shown is from that date. Source: FTSE International Limited ( FTSE ) FTSE 2017. FTSE is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE s express written consent. REMEMBER THAT THE PRICE OF UNITS AND REVENUE FROM THEM MAY GO DOWN AS WELL AS UP. PLEASE BE AWARE THAT PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. 2
Report of the Manager (continued) 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 6 February 2017. The risk category is recalculated weekly and during the year under review, the risk category did not change. Investment Adviser's Comments The world s stock markets have enjoyed a strong six months on the back of improving optimism that the new Tump administration will be successful in driving faster growth in the US and that the Federal Reserve can successfully apply the monetary brakes without de-railing the economy. In the UK, the economy has continued to defy the doomsayers and whilst there are some signs of weakness activity in the dominant services sector appears to be relatively robust. Donald Trump has promised that he will cut taxes and increase infrastructure spending in an effort to boost economic growth. The prospect of these inflationary policies resulted in a significant rotation in the market towards those companies which would benefit most from a period of stronger growth and higher interest rates. This included banks, miners and oil companies. The strong performance of equity markets in the last twelve months has pushed both the S&P500 and the FTSE100 towards their all-time highs and sentiment stands in marked contrast to where it did twelve to eighteen months ago. The sharp rise in share prices has not been matched by increased earnings and consequently valuations have risen towards record levels on the more stable valuation metrics. It therefore continues to be a challenging time to find new investments which offer the potential returns that we look for with a reasonable level of risk. We nevertheless added Rolls Royce to the portfolio in the period in the belief that the company has untapped profit margin potential. Over the six months, the portfolio benefitted from a strong performance from Unilever which was the object of a failed takeover bid from Kraft of the US. Kraft s intention was to gear up the balance sheet and cut costs aggressively in an attempt to boost returns. Our view was that Unilever was right to turn down the proposed deal and we communicated this to the company. Next plc further detracted from performance as the depreciation of sterling and fiercely competitive conditions resulted in more downgrades to profit expectations. RWC Asset Management LLP 18 April 2017 3
Comparative Table as at 31 March 2017 (unaudited) Net Asset Value and Ongoing Charges Figure 31/03/17 30/09/16 30/09/15 30/09/14 L Income Closing net asset value ( 000) 270,850 263,264 250,759 247,411 Closing number of units 136,813,693 137,576,264 140,060,732 129,510,980 Closing net asset value per unit (p) 197.97 191.36 179.04 191.03 Operating charges* 1.61% 1.61% 1.60% 1.61% 31/03/17 30/09/16 30/09/15 30/09/14 L Accumulation Closing net asset value ( 000) 1,933,711 1,869,122 1,611,626 1,549,053 Closing number of units 467,620,869 474,329,990 453,057,594 422,128,671 Closing net asset value per unit (p) 413.52 394.06 355.72 366.96 Operating charges* 1.61% 1.61% 1.60% 1.61% 31/03/17 H Accumulation Closing net asset value ( 000) 11 Closing number of units 2,596 Closing net asset value per unit (p) 412.84 Operating charges* 2.11% 31/03/17 Y Accumulation Closing net asset value ( 000) 20 Closing number of units 4,898 Closing net asset value per unit (p) 414.26 Operating charges* 0.91% H Accumulation and Y Accumulation units were made available on 1 December 2016. *Operating charges are prepared using the same methodology as the ongoing charges appearing in the KIID, based on the information in this report. 4
Portfolio Statement as at 31 March 2017 (unaudited) Security Holdings Market Value 000 % of Net Assets Aerospace & Defense (0.00%) 23,779 1.08 Rolls-Royce 3,145,400 23,779 1.08 Banks (6.07%) 175,753 7.97 HSBC 16,004,909 104,592 4.74 Royal Bank of Scotland 29,405,441 71,161 3.23 Construction & Materials (0.09%) 1,855 0.08 Balfour Beatty 700,000 1,855 0.08 Corporate Bonds (0.36%) - - Financial Services (1.70%) 22,093 1.00 Close Brothers 1,446,797 22,093 1.00 Fixed Line Telecommunications (2.98%) 52,740 2.39 BT 16,626,581 52,740 2.39 Food & Drug Retailers (7.07%) 162,026 7.35 Tesco 44,948,737 83,784 3.80 WM Morrison Supermarkets 32,792,292 78,242 3.55 Gas, Water & Multiutilities (4.03%) 81,454 3.70 Centrica 37,675,313 81,454 3.70 General Industrials (4.62%) 102,149 4.63 Smiths 6,356,492 102,149 4.63 General Retailers (3.69%) 75,690 3.43 Next 1,761,460 75,690 3.43 Life Insurance (6.38%) 148,430 6.74 Legal & General 36,665,691 90,417 4.10 Old Mutual 15,869,633 31,644 1.44 Standard Life 7,453,019 26,369 1.20 Media (10.39%) 239,341 10.86 RELX 7,943,680 123,842 5.62 Sky 11,833,929 115,499 5.24 Mobile Telecommunications (2.69%) 54,148 2.46 Vodafone 26,007,644 54,148 2.46 Non Equity Investment Instruments (9.50%) 210,146 9.53 St. James's Place Money Market Unit Trust L Acc 201,218,472 210,146 9.53 Non Life Insurance (4.43%) 101,282 4.60 RSA Insurance 17,298,365 101,282 4.60 Oil & Gas Producers (8.74%) 204,116 9.26 BP 22,972,376 105,949 4.81 Royal Dutch Shell 'B' Shares 4,439,915 98,167 4.45 Personal Goods (6.93%) 126,831 5.75 Unilever 3,217,023 126,831 5.75 Pharmaceuticals & Biotechnology (11.56%) 194,810 8.83 AstraZeneca 1,124,882 55,383 2.51 GlaxoSmithKline 8,328,948 139,427 6.32 Investment Assets 1,976,643 89.66 Total other assets (net) 227,949 10.34 Net assets 2,204,592 100.00 Comparative figures shown in brackets relate to 30 September 2016. All investments held are listed, unless otherwise stated. During the period under review the Manager decided to place some of the sterling cash held on deposit into the St. James s Place Money Market Unit Trust in order to spread risk across a number of institutions. The St. James s Place Money Market Unit Trust is highly liquid and is rated AAA by Standard & Poors. This investment is a related party. 5
Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 56,959 Rolls-Royce 21,451 Royal Bank of Scotland 13,863 BP 6,130 Next 4,974 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 49,351 AstraZeneca 49,060 Unilever 32,006 Close Brothers 18,323 RSA Insurance 6.701% Perpetual 7,634 Smiths 6,294 This investment is a related party. 6
Statement of Total Return for the period 01 October 2016 to 31 March 2017 (unaudited) Income Net capital gains Revenue Expenses Interest payable and similar charges Net revenue before taxation Taxation Net revenue after taxation Total return before distributions Change in net assets attributable to unitholders from investment activities 01/10/16 to 31/03/17 01/10/15 to 31/03/16 000 000 000 000 90,469 37,023 31,582 35,410 (17,400) (15,530) - - 14,182 19,880 - - 14,182 19,880 104,651 56,903 (31,430) (35,143) 73,221 21,760 Statement of Change in Net Assets Attributable to Unitholders for the period 01 October 2016 to 31 March 2017 (unaudited) 01/10/16 to 31/03/17 01/10/15 to 31/03/16 000 000 000 000 Opening net assets attributable to unitholders 2,132,386 1,862,385 Movement due to creation and cancellation of units: Amounts receivable on creation of units* 18,624 78,180 Amounts payable on cancellation of units* (47,129) (12,581) Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Unclaimed distributions (28,505) 65,599 73,221 21,760 27,487 30,865 3 2 Closing net assets attributable to unitholders 2,204,592 1,980,611 * Prior year creations and cancellations have been reclassified due to reallocations from income to accumulation units to make these comparable to current year. 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. 7
Balance Sheet as at 31 March 2017 (unaudited) Assets Investments Current assets Debtors Cash and bank balances Total assets Liabilities Creditors Distribution payable Other creditors Total liabilities Net assets attributable to unitholders 31/03/17 30/09/16 000 000 1,976,643 1,945,312 15,885 4,992 220,293 189,907 2,212,821 2,140,211 (3,872) (4,580) (4,357) (3,245) (8,229) (7,825) 2,204,592 2,132,386 Accounting and Distribution policies for the period 01 October 2016 to 31 March 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 25 May 2017 8
Distribution Tables in pence per unit Group 1 Group 2 L Income Net revenue Equalisation paid to/ payable 31/07/17 paid to 31/07/16 Group 1 (p) (p) (p) (p) First interim 1.547-1.547 1.558 Second interim 1.282-1.282 1.750 Group 2 (p) (p) (p) (p) First interim 0.557 0.990 1.547 1.558 Second interim 0.675 0.607 1.282 1.750 L Accumulation Net revenue Equalisation paid to/ payable 31/07/17 paid to 31/07/16 Group 1 (p) (p) (p) (p) First interim 3.184-3.184 3.093 Second interim 2.662-2.662 3.507 Group 2 (p) (p) (p) (p) First interim 1.007 2.177 3.184 3.093 Second interim 1.452 1.210 2.662 3.507 H Accumulation Net revenue Equalisation paid to/ payable 31/07/17 Group 1 (p) (p) (p) First interim 0.339-0.339 Second interim 2.671-2.671 Group 2 (p) (p) (p) First interim 0.339-0.339 Second interim 2.671-2.671 Y Accumulation First interim Units purchased prior to 1 October 2016 Second interim Units purchased prior to 1 January 2017 First interim Units purchased on or after 1 October 2016 to 31 December 2016 Second interim Units purchased on or after 1 January 2017 to 31 March 2017 Net revenue Equalisation paid to/ payable 31/07/17 Group 1 (p) (p) (p) First interim 0.339-0.339 Second interim 2.670-2.670 Group 2 (p) (p) (p) First interim 0.339-0.339 Second interim 2.660 0.010 2.670 H Accumulation and Y Accumulation units were made available on 1 December 2016. 9
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: 0800 027 1031. 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: www.sjp.co.uk and are available by calling the Administration Centre on 0800 027 1031. 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 has 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. Please note that Class H and Class Y accumulation units were first issued on 1 December 2016. 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 1.36 per cent for Class L Income and Accumulation Units; 1.86 per cent for Class H Accumulation; 0.67 per cent for Class Y Accumulation of the value of the Trust. Income Income distributions are made quarterly on or before the 31 January, 30 April, 31 July and 31 October. Accumulation 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 (2016/2017 11,100). To calculate capital gains on accumulation units, the total amount of reinvested net revenue (shown on the annual tax credit vouchers) should be added to the base cost of the units purchased. Unitholders should consult their professional advisers for any advice regarding their tax position. 10
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 947644. Perivan Financial Print 245233 Equity Income (05/17)