LEWIS JARRETT & Co. LIMITED

Transcription

1 LEWIS JARRETT & Co. LIMITED Interim Short Report 2012

2 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (unaudited) for the period 1 May to 31 October 2012 Investment Objective, Policy and Strategy The objective of the Fund is to achieve a total positive return in all market conditions, through investment in a diversified portfolio of transferable securities (including investment trusts), collective investment schemes, warrants, cash or near cash, deposits, money market instruments and derivatives. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the Investment Advisor has the absolute discretion to weight the portfolio towards any investment type or sector at any time. The maximum holding of cash will be 50% of the Fund's total net assets. Unregulated collective investment schemes may be used up to the full extent permitted by the Regulations. The Portfolio will be actively managed and the Fund may invest in derivatives for investment purposes as well as for efficient portfolio management purposes (including hedging). It is not intended that the use of derivatives in this way will change the risk profile of the Fund. Borrowing will be permitted under the terms of the Regulations. Subject to the above, the Fund may invest in any asset class and adopt any investment technique or strategy permitted under the rules in COLL as such rules are applied to Non-UCITS retail schemes. Performance Over the review period and since launch, the relative performance of Elite LJ Absolute Return Portfolio Fund has been as follows: Elite LJ Absolute Return Portfolio Fund IMA Absolute Return Average Sector 6 months 1 year 2 years 3 years *Launch 3.26% 6.01% N/A N/A 7.78% 1.56% 2.31% N/A N/A 2.78% Discrete Performance YTD Elite LJ Absolute Return Portfolio Fund N/A N/A N/A N/A 6.57% *Since re-launch on 26 September 2011 Source: Financial Express. Total Return. Net revenue reinvested

3 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Investment Outlook and Review Following the switches that occurred after the Elite LJ Absolute Return Portfolio merger last year the number of changes within the portfolio has reduced in the current reporting period. The ETFS Physical Gold tracker was sold as the performance had become more correlated to equity markets in the early part of the year and so was not providing as much diversification as required. Following a dip in equity markets during the summer, equity exposure was increased by switching JPM Global Convertibles into Trojan Income Fund and buying Threadneedle European Smaller Companies Fund. With interest rates expected to remain at historically low levels for a considerable period there is likely to be continued demand for higher yielding equities, which the Trojan Income Fund invests in. With the economic and political concerns pushing European equity valuations down to historically cheap levels a small investment was made into Threadneedle European Smaller Companies Fund as the long term performance is strong and the region offers exposure to sectors that are leaders in the global market but that have been impacted by the turmoil within the European economy. The ETFX FTSE100 Leveraged 2x Fund is periodically held to tactically gain short term exposure following equity market falls to benefit from any bounce and was sold since the previous report when equity markets rallied.

4 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Asset Allocation As at the 31st October 2012 the Portfolio was diversified across the following asset classes:

5 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Outlook Global economies look set to continue to display slowly recovering economic growth and some developed economies may fluctuate between recession and growth, which means that economic stimulus through low interest rates or Quantitative Easing is also likely to remain. It is expected that investment activity will remain low in at least the short term as the portfolio is kept widely diversified to help reduce volatility. Market Overview Equity markets dipped early in the summer, as investor concerns over the impact that the European sovereign debt crisis will have on economic growth and corporate profits returned. However, equity markets responded positively to news that the European Central Bank planned to buy European bonds issued by countries that request help, as this led to lower borrowing costs in highly indebted European countries. The expectation of further Quantitative Easing in the US also helped sentiment. The equity market rally began to stall in early autumn, though, as some companies earnings results disappointed and also because investors began looking ahead to the possibility of the so-called US fiscal cliff in Unless action is taken, the US is due to have multi-billion dollar tax increases and spending cuts in early As this would reduce economic growth sharply it is expected that US policy makers will agree measures to avoid this situation and maintain certain spending and tax breaks. However, volatility is likely should political disagreements delay any definite measures. Should there be an early agreement on which measures to take to maintain fiscal levels then equity markets will re-focus on valuations that remain relatively cheap. With interest rates remaining at low levels, the prices of fixed income markets, particularly corporate bonds, have generally risen over the previous six months. With interest rates likely to remain low, corporate bond prices are likely to remain supported. Lewis Jarrett & Co Investment Adviser to the Fund November 2012

6 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PERFORMANCE RECORD as at 31 October 2012 Fund Size Accounting Share Net Asset Shares Net Asset Value Date Class Value in per share issue P 30 April 2010 'A' Accumulation 73,055 66, 'B' Accumulation 11,537,176 10,292, April 2011 'A' Accumulation 20,623 18, 'B' Accumulation 12,247,744 10,541, April 2012 'A' Accumulation 14,882 13, 'B' Accumulation 22,397,166 19,815, October 2012 'A' Accumulation 11,333 10, 'B' Accumulation 22,165,961 19,006, Price and Income History Calendar Share Highest Lowest Income per Year Class Price Price Distribution 1,000 P P per Share 19/06/2006 invested 2007 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation 'A' Accumulation 'B' Accumulation ** 'A' Accumulation 'B' Accumulation ** 1 January 2012 to 31 October 2012 Other Relevant Prices Share Price per Date Class share P Launch Date 19 June 2006 'A' Accumulation 'B' Accumulation Accounts Date 31 October 2012 'A' Accumulation 'B' Accumulation Latest date 7 December 2012 'A' Accumulation 'B' Accumulation

7 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PERFORMANCE RECORD (continued) Total Expense Ratio (TER) The Total Expense Ratio (TER) is the total expenses of the Fund, excluding transaction costs, interest payable and expenses of a capital nature, expressed as a percentage of the average net assets during the accounting period. The TER of the Fund's share classes as at 31 October 2012 are 2.29% for Class A and 1.79% for Class B. (30 April 2012: Class A 2.07%, Class B 1.57%)

8 ELITE LJ ABSOLUTE RETURN PORTFOLIO FUND PORTFOLIO STATEMENT as at 31 October 2012 Percentage Market of total Value net assets Holding % UK Collective Investment Schemes: 42.86% (34.26%) 290,000 AcenciA Debt Strategies 243, ,888 Kames Capital High Yield Bond B Accumulation 489, ,166 Kames High Yield Bond Fund A Accumulation 664, ,059,832 Kames Strategic Bond B Fund Income 1,214, ,302 Liontrust Special Situations 1,133, ,157,766 M&G Strategic Corporate Bond Fund 1,096, ,005,616 M&G UK Inflation Linked Corporate Bond Fund 1,100, ,474 Standard Life Global Index Linked Bond Inst Accumulation 1,324, ,521 Threadneedle Credit Opportunities 1,103, ,349 Troy Trojan Income 1,135, ,505, Overseas Collective Investment Schemes: 51.73% (62.64%) 10,488 Aquila Risk Parity 12 Fund GBP A 1,157, ,849 Aviva Investors Global Convertibles Absolute Return 1,118, ,992 Braemar Student Accommodation 513, ,496 Insight Absolute Credit B1P GBP 1,121, ,600 Ishares Barlays Capital Index Linked Gilts 1,677, ,412 * Matrix New Horizon Closed Ended Fund Accumulation 9, ,768 Melchior Selected Trust European Fund 1,105, ,403 ML IS Columbus Circle Investors Healthcare 1,160, ,082,156 Smith & Williamson Enterprise Fund 1,145, ,138 Threadneedle European Smaller Companies Inst Accumulation 203, ,954 Veritas Global Real Return A 1,094, ,975 Wealthy Nations Bond 1,164, ,471, UK Investment Trusts: 1.22% (1.59%) 75,287 Henderson Private Equity Investment Trust 270, Market Value of Investments: 95.81% (98.49%) 21,247, Net other assets: 4.19% (1.51%) 929, Total net assets 22,177, * Unregulated Overseas Collective Investment Schemes Note: Comparative figures shown in brackets relate to 30 April 2012.

9 ELITE LJ ACTIVE PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (unaudited) for the period 1 May to 31 October 2012 Investment Objective, Policy and Strategy The objective of the Fund is to achieve a total positive return in all market conditions, through active investment in a diversified portfolio of transferable securities (including investment trusts), collective investment schemes, warrants, cash or near cash, deposits, money market instruments and derivatives. Subject to the requirements of the Regulations, the portfolio will normally remain fully invested. There will, however be no restrictions on the underlying content of the investments held, in terms of investment type, geographical or economic sector, other than those imposed by the Regulations, meaning that the Investment Advisor has the absolute discretion to weight the portfolio towards any investment type or sector at any time. The maximum holding of cash will be 50% of the Fund's total net assets. Unregulated collective investment schemes may be used up to the full extent permitted by the Regulations. The Portfolio will be actively managed and the Fund may invest in derivatives for investment purposes as well as for efficient portfolio management purposes (including hedging). It is not intended that the use of derivatives in this way will change the risk profile of the Fund. Borrowing will be permitted under the terms of the Regulations. Subject to the above, the Fund may invest in any asset class and adopt any investment technique or strategy permitted under the rules in COLL as such rules are applied to Non- UCITS retail schemes. Performance Over the review period and since launch, the relative performance of Elite LJ Active Portfolio Fund has been as follows: Elite LJ Active Portfolio Fund 6 months 1 year 2 years 3 years *Launch -2.77% 0.96% N/A N/A 6.97% Discrete Performance YTD Elite LJ Active Portfolio Fund N/A N/A N/A N/A 3.99% *Since re-launch on 26 September 2011 Source: Financial Express Analytics. Total Return. Net revenue reinvested.

10 ELITE LJ ACTIVE PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Investment Review Following the switches that occurred after the Elite LJ Active Portfolio merger last year the number of changes within the portfolio has reduced in the current reporting period. One new addition has been added to the portfolio during the reporting period, the Unicorn UK Income Fund, which invests into a portfolio of higher yielding UK equities. With interest rates likely to stay at historical lows for an extended period, the demand for higher yielding assets is likely to remain strong and with the yield on many equities, including those held in the Fund, higher than UK gilt yields, demand for these types of company s shares is likely to be supportive of their prices. The ETFX FTSE100 Leveraged 2x Fund is periodically held to tactically gain short term exposure following equity market falls to benefit from any bounce and was sold since the previous report when equity markets rallied. The Fund has been holding a small weighting in longer term property developments that couldn t be sold until the schemes were completed. During August, the Mission German Capital Cities Fund was written off as the scheme was unable to receive funding to complete its work. Asset Allocation As at the 31st October 2012 the Portfolio was diversified across the following asset classes:

11 ELITE LJ ACTIVE PORTFOLIO FUND REPORT OF THE INVESTMENT ADVISER (continued) Outlook Global economies look set to continue to display slowly recovering economic growth and some developed economies may fluctuate between recession and growth, which means that economic stimulus through low interest rates or Quantitative Easing is also likely to remain. It is expected that investment activity will remain low in at least the short term as the portfolio is kept globally diversified to spread risk across many sectors and regions. Market Overview Equity markets dipped early in the summer, as investor concerns over the impact that the European sovereign debt crisis will have on economic growth and corporate profits returned. However, equity markets responded positively to news that the European Central Bank planned to buy European bonds issued by countries that request help, as this led to lower borrowing costs in highly indebted European countries. The expectation of further Quantitative Easing in the US also helped sentiment. The equity market rally began to stall in early autumn, though, as some companies earnings results disappointed and also because investors began looking ahead to the possibility of the so-called US fiscal cliff in Unless action is taken, the US is due to have multi-billion dollar tax increases and spending cuts in early As this would reduce economic growth sharply it is expected that US policy makers will agree measures to avoid this situation and maintain certain spending and tax breaks. However, volatility is likely should political disagreements delay any definite measures. Should there be an early agreement on which measures to take to maintain fiscal levels then equity markets will re-focus on valuations that remain relatively cheap. Lewis Jarrett & Co Investment Adviser to the Fund November 2012

12 ELITE LJ ACTIVE PORTFOLIO FUND PERFORMANCE RECORD as at 31 October 2012 Fund Size Accounting Share Net Asset Shares Net Asset Value Date Class Value in per share issue P 30 April 2010 'B' Accumulation 5,925,366 6,059, April 2011 'B' Accumulation 8,493,691 7,847, April 2012 'B' Accumulation 11,097,735 11,369, October 2012 'B' Accumulation 10,510,166 11,075, Price and Income History Calendar Share Highest Lowest Distribution Income per Year Class Price Price per share 1,000 20/07/2009 P P P 2009* 'B' Accumulation 'B' Accumulation 'B' Accumulation ** 'B' Accumulation * 20 July 2009 to 31 December 2009 ** 1 January 2012 to 31 October 2012 Other Relevant Prices Share Price per Date Class share P Launch Date 20 July 2009 'B' Accumulation Accounts Date 31 October 2012 'B' Accumulation Latest date 7 December 2012 'B' Accumulation Total Expense Ratio (TER) The Total Expense Ratio (TER) is the total expenses of the Fund, excluding transaction costs, interest payable and expenses of a capital nature, expressed as a percentage of the average net assets during the accounting period. The TER of the sub-fund as at 31 October 2012 was 1.78% (30 April 2012: 1.79%)

13 ELITE LJ ACTIVE PORTFOLIO FUND PORTFOLIO STATEMENT as at 31 October 2012 Percentage Market of total Value net assets Holding % UK Collective Investment Schemes: 32.93% (29.17%) 247,190 Baillie Gifford American 'B' Accumulation 564, ,149 Cavendish Technology Inst Income 501, ,876 CF Lindsell Train UK Equity Accumulation 627, ,081 JP Morgan Emerging Markets Infrastructure 'A' Accumulation 392, ,085 Rathbone Global Opportunities Accumulation 561, ,829 Unicorn Outstanding British Companies Institutional Accumulation 609, ,779 Unicorn UK Income 203, ,461, Overseas Collective Investment Schemes: 42.38% (45.69%) 30,130 DB X-Trackers MSCI Russia 537, ,123 Digital Stars Europe 599, ,260 ishares MSCI Emerging Markets 542, ,280 ishares MSCI Far East ex-japan Accumulation 432, ,665 * Matrix Asset Based 2 Closed End Inst Accumulation 79, ,442 * Matrix Asset Based 2 Closed End Retail 31, ,479,862 Mission Real Estate Germany ,420 Mission Tuscany Property Investment 115, ,489 PFB Data Centres 155, ,626 Pictet Latin American Local Currency Debt 561, ,110 Pictet Timber P Distribution 592, ,302 Polar Capital Global Insurance 'F' Accumulation 567, ,362 SPL Parallel Private Equity 239, ,454, UK Investment Trusts: 22.94% (21.45%) 228,800 Edinburgh Dragon Trust 572, ,260 Electra Private Equity 559, ,050 Herald Investment Trust 531, ,691 SVG Capital 199, ,439 Scottish Mortgage Investment Trust 547, ,410, Market Value of Investments: 98.25% (96.31%) 10,326, Net other assets: 1.75% (3.69%) 184, Total net assets 10,510, * Unregulated Overseas Collective Investment Schemes Note: Comparative figures shown in brackets relate to 30 April 2012.

14 ELITE LJ PORTFOLIO FUND Risk profile The following are important warnings: Investors should appreciate that there are inherent risks in all types of investments. Stock market prices can move erratically and be unpredictably affected by many diverse factors, including political and economic events but also rumours and sentiment. Investment in the Fund should be regarded as a long-term investment. There can be no guarantee that the objectives of the Fund will be achieved. As a Non-UCITS retial Scheme, the Fund can invest up to 20% of its assets, in aggregate, into unapproved securities and irregulated funds, which may from time to time, prove to be less liquid then their approved and regulated equivalents. The capital value and the income from shares in the Fund can fluctuate and the price of shares and the income from them can go down as well as up and are not guaranteed. On encashment, particularly in the short term, investors may receive less than the original amount invested. The ACD s initial charge is deducted from an investment at the outset and an equivalent rise in the value of the shares is required before the original investment can be recovered. Defensive investment in cash and money market instruments, at times when relevant stockmarket indices are rising, may constrain the growth of capital invested in the Fund. Investments may be made in assets denominated in various currencies and the movement of exchange rates may have a separate effect, unfavourable as well as favourable, on the gains and losses otherwise experienced on such investments. It must be emphasised that past performance is not necessarily a guide to future growth or rates of return. Exemptions, thresholds and rates of tax may change in future tax years. Some or all of any other charges and expenses may be treated as a capital expense in accordance with the Regulations, which may have the effect of eroding capital or constraining capital growth. 14

15 ELITE LJ PORTFOLIO FUND Other information about the Fund Reports & Accounts The information in this report is designed to enable shareholders to make an informed judgment on the activities of the Company during the period it covers and the result of those activities at the end of the period. The full Report and Accounts are available free of charge on request from the ACD. For more information about the activities and performance of the Fund during the period and previous periods, please contact the ACD at the address as noted on the back page. Listing of prices The latest share prices are available at Alternatively, you can contact us on (9 a.m. to 5 p.m. Monday-Friday excluding bank holidays) and we will be happy to provide you with the most recent price of your shares. 15

16 Authorised Corporate Director ( the ACD ) Investment Adviser and Registrar Lewis Jarrett & Co. Limited WAY Fund Managers Limited The Grange Cedar House Spixworth Road 3 Cedar Park Norwich Cobham Road Norfolk NR6 7NF Wimborne Dorset BH21 7SB Authorised and regulated by the Financial Services Authority and a member of the IMA. Authorised and regulated by the Financial Services Authority Depositary Independent Auditor State Street Trustees Limited Grant Thornton UK LLP 20 Churchill Place 30 Finsbury Square Canary Wharf London EC2P 2YU London E14 5HJ Authorised and regulated by the Financial Services Authority Telephone: Fax: Website: [email protected] Calls may be recorded for security purposes and to improve customer service. 16