Rathbone Unit Trust Management Limited Rathbone Income and Growth Fund

Transcription

1 Rathbone Unit Trust Management Limited Rathbone Income and Growth Fund Short Report as at 31 December 2006

2 The photography is of the Orangery, one of the most notable features of our New Bond Street offices in London. It is an imposing internal glassed atrium within a grade II listed building of much character and tradition, that dates back to circa 1830.

3 Rathbone Unit Trust Management Limited Rathbone Income and Growth Fund Manager Rathbone Unit Trust Management Limited 159 New Bond Street London W1S 2UD Telephone Facsimile A member of the Rathbone Group Authorised and regulated by the Financial Services Authority and member of the Investment Management Association Dealing Office 2 The Boulevard, City West One Office Park, Gelderd Road, Leeds LS12 6NT Telephone Facsimile Registrar Capita Financial Administrators Limited 2 The Boulevard, City West One Office Park, Gelderd Road, Leeds LS12 6NT Telephone Facsimile Authorised and regulated by the Financial Services Authority Auditor RSM Robson Rhodes LLP Chartered Accountants and Registered Auditor 30 Finsbury Square London EC2P 2YU Directors GM Powell Chairman PG Pearson Lund Chief Executive Officer JR Chillingworth Chief Investment Officer CRC Hexton RP Lanyon RE Loader FCA CP Mason Compliance Director AD Pomfret CR Stick JG Thomson Administrator Capita Financial Administrators Limited Beaufort House 15 St Botolph Street London EC3A 7HH Telephone Facsimile Authorised and regulated by the Financial Services Authority Trustee Royal Bank of Scotland plc Trustee and Depositary Services The Broadstone, 50 South Gyle Crescent, Edinburgh EH12 9UZ Authorised and regulated by the Financial Services Authority 1

4 Rathbone Unit Trust Management Limited Manager s report for the half year to 31 December 2006 During the period the offer price of income units of the Rathbone Income and Growth Fund increased from p to p or 10.6%, whilst the FTSE All-Share Index rose by 8.6%. Furthermore, the dividend increased in line with inflation. The fund s outperformance was driven principally by our overweight positions in the utilities and tobacco sector, both of which benefited from corporate activity. Oil services also continued to exhibit strong growth as investors opted for a long-term view of the sector over short-term dips in the oil price. The period in question has seen yo-yoing between different theories on the depth of the inflation problem the direction of interest rates; commodity prices; house prices and currencies. The amount of data to gather and dissect can be as confusing as it is exhaustive. Broadly speaking, the surprising strength of US economic data has significantly diminished chances of an interest rate cut during the first half of 2007.We have a similar story in the UK where a rise to 5.25% and a CPI figure of 3% has also sent a strong signal about the inflation outlook and the potential for further hikes. However, we believe that global economies are still vulnerable to a US-led slowdown based on a deteriorating housing market, and reliance on the consumer.to this end, we have maintained our focus on quality businesses that should respond well to various economic climates. The autumn months saw a recovery in the telecoms sector as sentiment improved. We benefited from our exposure to BT Group a stock we added to - and Vodafone. In December, we continued to build our position in the banks by adding to Barclays.At the time, the stock was trading on a forward multiple of around 9x a compelling valuation relative to growth prospects. We believe investors were, and still are, factoring in too aggressive a slowdown. We continued to buy into International Power, Drax Group and Bateman Litwin on the long-term energy story. On the sell-side, we exited Biffa, having topped up the stock during the previous months. Biffa had de-merged from Severn Trent, and was looking fully-valued with very few obvious catalysts for growth. We also exited Experian Group on valuation grounds, also with questions surrounding future growth. At this juncture, consensus points to a resurgence in risk appetite and smaller stocks. Broadly speaking, these stocks are looking expensive, and we believe that value is now more apparent in large capitalisation stocks, where merger and acquisition activity continues to be less pronounced. Right now, a slide in the oil price is raising some questions, but demand fundamentals remain strong. Low levels of volatility are also causing concern. Volatility is related to the ability to predict cashflows and earnings. In a tighter monetary environment in which leverage is already high and bond yields are expected to rise, we anticipate increased volatility over Consequently, we believe a prudent approach is warranted, and that we should concentrate on companies with visible cashflows and defensive growth profiles to drive earnings and dividends forward. Julian Chillingworth 23 January

5 Net asset value per unit and comparative tables Fund size Net Asset Net Asset Value Attributable Units in Value (pence Date to issue per unit) 30 June 2002* 22,372,873 Income 24,112, June ,622,253 Income 26,626, June ,895,719 Income 29,265, June ,694,761 Income 34,976, June ,742,660 Income 33,217, June ,305,809 Accumulation# 1,005, December ,402,973 Income 34,216, December ,761,020 Accumulation 2,600, * On 30 June 2002, the fund merged with the Anthony Bryant Optimum Active Managed Fund # Available from 1 July 2005 Price history The table below shows, on a calendar year basis, the highest buying and lowest selling prices in pence per unit for the last five years. Past performance should not be seen as an indication of future performance. Income units Accumulation units# Highest buying Lowest selling Highest buying Lowest selling # Available from 1 July 2005 Income record Income units Accumulation units# Net income per unit Net income per unit Year p p * * To 28 February 2007 # Available from 1 July 2005 The annual management fee is taken from the capital of the fund.this will enhance income but restrict capital growth. 3

6 Rathbone Unit Trust Management Limited Rathbone Income and Growth Fund Distributions A distribution of 1.40p per unit will be paid to income unitholders on 28 February 2007.The total distributions for the period under review amount to 1.40p per income unit compared with 1.36p per income unit for last year. Fund Performance Unit Class Net Asset Value as Net Asset Value as Net Asset at 30 June 2006 at 31 December 2006 Value Change (pence per unit) (pence per unit) % Income % Accumulation % Performance record Performance to months 1 year 3 years 5 years Rathbone Income and Growth Fund 11.32% 17.66% 69.77% 74.62% S&P UT UK All Companies Sector 11.26% 17.44% 60.23% 49.93% From To Rathbone Income and Growth Fund % 20.24% 19.58% 20.67% 17.66% S&P UT UK All Companies Sector % 22.06% 12.82% 20.93% 17.44% Source: Standard & Poor s, bid to bid, net income re-invested. Risk factors An investment in a unit trust should be regarded as a medium to long term investment. Investors should be aware that the price of units and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance should not be seen as an indication of future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable. 4 Total expense ratios Expense Type Manager s periodic charge 1.50% 1.50% Other expenses 0.08% 0.08% Total Expense Ratio (TER) 1.58% 1.58%

7 Portfolio information Top 10 largest holdings The top 10 holdings at the end of the previous year and at the end of the current year are shown below Alliance Boots 3.82% Barclays 3.57% Hamworthy 3.44% Puma Brandenburg 3.18% Royal Dutch Shell B 3.15% Centrica 3.12% Halfords Group 3.12% Royal Bank of Scotland Group 3.12% United Utilities 3.05% BP 3.05% Royal Dutch Shell B 3.95% Puma Brandenburg 3.64% Rio Tinto 3.32% Royal Bank of Scotland Group 3.31% Halfords Group 3.03% Centrica 2.98% Titan Europe 2.98% United Utilities 2.98% BP 2.93% Hamworthy 2.88% Sector breakdown Cash General Financial Life Insurance Real Estate Banks Gas, Water & Multiutilities Electricity Mobile Telecommunications Fixed Line Telecommunications General Retailers Food & Drug Retailers Tobacco Household Goods Food Producers Beverages Industrial Transportation Industrial Engineering General Industrials Aerospace & Defence Mining Oil Equipment, Services & Distributions Oil & Gas Producers 2.49% 2.29% 2.57% 1.78% 1.61% 1.23% 1.67% 2.36% 2.90% 4.09% 3.84% 3.11% 2.38% 3.82% 2.45% 2.80% 2.87% 2.97% 2.30% 2.88% 2.37% 2.18% 2.51% 2.45% 2.04% 2.59% 2.42% 3.77% 5.24% 4.18% 4.99% 5.95% 5.86% 6.40% 7.04% 6.51% 6.70% 8.15% 10.83% 10.07% 11.15% 11.75% 11.42% 11.02% Weighting (%) 5

8 Rathbone Unit Trust Management Limited Rathbone Income and Growth Fund Capitalisation split FTSE % 60.78% FTSE 250 FTSE Small Cap 1.78% 3.77% 11.32% 14.31% AIM, and other UK 17.43% 16.28% Cash 5.18% 7.85% Weighting (%) Risk profile There is little exposure to credit or cash flow risk. There are no net borrowings or unlisted securities and so little exposure to liquidity risk. The main risks arising from the financial instruments are foreign currency, interest rate, market price and counterparty. The investment portfolio is exposed to market price fluctuations which are monitored by the Manager in pursuance of the investment objective and policy set out in the Prospectus. Adherence to investment guidelines and to investment and borrowing powers set out in the Trust Deed and Prospectus and the rules of the FSA s New Collective Investment Schemes Sourcebook mitigates the risk of excessive exposure to any particular type of security or issuer. ISA and PEP eligibility The fund has been managed throughout the year to ensure that it is eligible to qualify and be included in an Individual Savings Account (ISA) and a Personal Equity Plan (PEP).The fund will at all times be invested in such a way that the units will constitute Qualifying Investments for purposes of the Individual Savings Account (ISA) Regulations 1998 and the Personal Equity Plan (PEP) Regulations 1989, as amended from time to time. 6

9 General information Authorised status The Rathbone Income and Growth Fund is an authorised unit trust scheme, established by a Trust Deed dated 17 October 1989 and launched in October It is a UCITS Scheme authorised under Section 243 of the Financial Services and Markets Act 2000, and the currency of the fund is pounds Sterling. Investment objective and policy The objective of the fund is to achieve an above average and steadily increasing income return coupled with capital growth from a portfolio of transferable securities. The Manager s present intention is that not less than 75% will be invested in transferable securities issued by UK companies.there will be no specialisation in any other geographic area or in any industrial or economic sector. To meet the objective the fund may also invest at the Manager s discretion in money market instruments, warrants, cash and near cash, deposits and units in collective investment schemes. Use may be made of stocklending, borrowing, cash holdings, hedging and other investment techniques permitted by the FSA Rules. Valuation of the fund The fund is valued on each business day at 12 noon for the purpose of determining prices at which units in the fund may be bought or sold.valuations may be made at other times on business days with the Trustee s approval. Fund composition Data for the top 10 holdings and sector breakdown of the fund have been based on investments valued at the closing bid-market prices ruling on the markets on which the stocks are quoted, on the last business day of the accounting period. Long Report The full report and accounts are available free of charge upon written request from: Capita Financial Administrators Limited, Beaufort House 15 St Botolph Street London EC3A 7HH Further details Should you require further details of this fund or any of the other Funds managed by Rathbone Unit Trust Management Limited, a Prospectus or a Simplified Prospectus (incorporating Key Features) please write to: Capita Financial Administrators Limited Beaufort House 15 St Botolph Street London EC3A 7HH All literature is available free of charge. Information is also available on our website: 7

10

11

12 Rathbone Unit Trust Management Limited Authorised and regulated by the Financial Services Authority and member of the Investment Management Association 159 New Bond Street, London W1S 2UD Information Line: Telephone: Facsimile: Website: