CONTINENTAL EUROPEAN UNIT TRUST

Transcription

1 CONTINENTAL EUROPEAN UNIT TRUST FOR THE YEAR ENDING 30 SEPTEMBER 2015

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 S.W. Mitchell Capital LLP Princes House 38 Jermyn Street London, SW1Y 6DN (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 During the year under review, 1 October 2014 to 30 September 2015, the St. James's Place Continental European Unit Trust Income unit offer price fell by 3.2% from 122.2p to 118.3p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) fell by 3.2% from 126.2p to 122.2p. The Manager's Report consists of Report of the Manager, The Trust's Performance, Investment Adviser's Comments, Risk and Reward Profile and Portfolio Statement. The Trust's Performance The performance of the Trust since its launch in October 2007, over the five year period since September 2010 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 Continental European Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual MSCI Europe (excluding UK) Source: Lipper for Fund returns 01/10/07 to 30/09/10 to 30/09/14 to 30/09/15 30/09/15 30/09/15 % change % change % change 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. Investment Adviser's Comments The portfolio marginally outperformed the wider European equity market over the reporting period. On the positive side, we benefited from exceptional returns in our telecom investments, notably Deutsche Telekom and Telecom Italia. In addition, a number of our growth companies, such as Eurofins, Amadeus, Assa Abloy and Axel Springer performed strongly. On the negative side, we were hurt by poor returns from our more cyclical holdings including Air France, Banco Popular, Commerzbank, RWE, EDF, Zodiac and Volkswagen. We remain optimistic on the outlook for European equities. However, we have been a little surprised by the current panic over the outlook for the Chinese economy. As a stock-picker, in constant contact with management from a broad range of industries, we have been acutely aware of a slow-down in the Chinese economy for over two years. In fact, we sold most of our China-exposed investments as far back as 2012, believing that the market had overly optimistic growth expectations. It has often surprised us over the years how long it can take for the market to adjust to paradigm shifts in deeply rooted investment views. Presumably the futile attempts of the Chinese government to manage the stock market crash, coupled with the unexpected currency devaluation has somehow, finally, undermined investor confidence. Whilst important, we shouldn t over-exaggerate the importance of China to the European economy. In fact, China only accounts for 4% of Eurozone exports. The United Kingdom and United States are much more important trading partners making-up 7% of Eurozone exports respectively. Indeed, Germany, the most China-exposed of the major European economies continues to experience a buoyant 10% growth in factory orders. The German Manufacturing Export Orders PMI, furthermore, reached new highs in August. Of much greater importance is the accelerating recovery in domestic demand that we have repeatedly pointed out over the past few quarters. Second quarter results in 2015 have beaten consensus analyst forecasts by a very healthy 5%. Highlights include a particularly strong quarter from the banking sector, with, most notably, results from BNP, Intesa and Commerzbank significantly exceeding expectations. S.W. Mitchell Capital LLP 12 October 2015

4 Performance Record Unit Price History and Record of Net Distributions Paid/Payable The record of net distributions paid/payable per unit is shown below: Income Calendar year * Accumulation Calendar year * Net revenue distributed Highest Lowest per 1,000 Invested Offer Bid per unit at 04/01/10 p p p Net revenue distributed Highest Lowest per 1,000 Invested Offer Bid per unit at 04/01/10 p p p Net Asset Values Income Year ended September Accumulation Year ended September Market NAV NAV Units in Issue of Class per Unit '000 p 1,890,276 2, ,054,759 2, ,675,780 1, Market NAV NAV Units in Issue of Class per Unit '000 p 237,321, , ,512, , ,966, , Ongoing Charges Figure The Ongoing Charges Figure for the year ended 30 September 2015 was 2.14% (30 September 2014: 2.11%) for Income Units and 2.14% (30 September 2014: 2.11%) for Accumulation Units. The Ongoing Charges Figure ('OCF') is the total expenses paid by the Trust in the year against its average net asset value. It excludes the cost of buying or selling assets for the Trust (unless these assets are shares of another trust). The OCF can fluctuate as underlying costs change. Risk and Reward Profile The synthetic risk and reward indicator for the St. James s Place Continental European Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 6. It was calculated using performance data up to 2 February The risk category is recalculated weekly and during the year under review, the risk category did not change. * To 30 September 2015

5 Portfolio Statement as at 30 September 2015 Market Value 000 % of Net Assets Security Holdings FRANCE (34.90%) 142, Air France-KLM 2,176,211 9, BNP Paribas 428,945 16, Carrefour 604,510 11, Cie de St-Gobain 432,065 12, Dassault Aviation 18,917 14, Essilor International 243,490 19, Legrand 382,066 13, Orange 1,749,938 17, SEB 272,777 16, Zodiac Aerospace 646,643 9, GERMANY (24.07%) 56, Axel Springer 278,475 10, Commerzbank 1,366,740 9, Deutsche Telekom 1,579,461 18, SAP 301,316 12, Volkswagen Preference Shares 69,621 4, ITALY (14.88%) 57, Intesa Sanpaolo 9,711,117 22, Mediaset 5,719,701 17, Telecom Italia 22,468,022 18, LUXEMBOURG (3.73%) 17, Eurofins Scientific 83,612 17, NETHERLANDS (0.00%) 16, Airbus 406,467 16, SPAIN (18.33%) 31, Amadeus IT 526,560 14, Banco Popular Espanol 4,769,149 11, Banco Popular Español Rights 01/10/2015 4,769, Sacyr 3,592,482 5, SWEDEN (3.56%) 14, Assa Abloy 1,192,623 14, Investment assets 335, Total other assets (net) 1, Net assets 337, Comparative figures shown in brackets relate to 30 September All investments held are listed, unless otherwise stated.

6 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 52,394 SEB 17,954 Dassault Aviation 16,581 Airbus 14,548 Carrefour 14,032 Fomento de Construcciones y Contratas 4,740 Air France-KLM 4,075 Intesa Sanpaolo 1,189 Essilor International 975 Orange 934 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 52,393 Banco Santander 14,412 RWE 13,770 Electricite de France 13,477 Eiffage 9,630 Volkswagen Preference Shares 8,741 Fomento de Construcciones y Contratas 6,990 Intesa Sanpaolo 6,102 Essilor International 2,675 FCC 1,729 This investment is a related party.

7 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 expenses and the net capital losses 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' Certificate This report is certified in accordance with the requirements of the rules in the Financial Conduct Authority's Collective Investment Schemes Sourcebook. Directors A. M. Croft London D. J. Lamb November 2015

8 Statement of Trustee's Responsibilities The Trustee is under a duty to take into custody and to hold the property of the Trust in trust for the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Trust and to ensure that the Trust is managed in accordance with all applicable rules and restrictions in each annual accounting period, and to report thereon to unitholders. Report of the Trustee In our opinion, the Manager has managed the Trust, in all material aspects, during the period covered by this Report in accordance with the investment and borrowing powers and the restrictions applicable to the Trust and otherwise in accordance with the provisions of the Trust Deed and the rules in the Financial Conduct Authority's Collective Investment Scheme provisions of the Sourcebook. For and on behalf of: BNY Mellon Trust & Depositary (UK) Limited London November 2015

9 Independent Auditors' Report to the Unitholders of St. James's Place Continental European Unit Trust Our opinion In our opinion the financial statements, defined below: give a true and fair view of the financial position of the Trust as at 30 September 2015 and of the net expenses and the net capital losses 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 Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. This opinion is to be read in the context of what we say in the remainder of this report. What we have audited The financial statements of St. James s Place Continental European Unit Trust (the Trust ), 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 2015 ; 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. 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 Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for 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. 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. In addition, we read all the financial and non-financial information in the Annual 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.

10 Independent Auditors' Report to the Unitholders of St. James's Place Continental European Unit Trust (continued) 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 Authorised Fund Manager s Responsibilities Statement set out on page 6, 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. 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. PricewaterhouseCoopers LLP Chartered Accountants & Statutory Auditors Edinburgh November 2015 The maintenance and integrity of the St. James s Place website is the responsibility of the 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 Statement of Total Return for the year ended 30 September 2015 Income Net capital losses Revenue Expenses Finance costs: Interest Net (expenses)/revenue before taxation Taxation Net (expenses)/revenue after taxation Total return before equalisation/distribution Finance costs: Equalisation/Distribution Change in net assets attributable to unitholders from investment activities 01/10/14 to 30/09/15 01/10/13 to 30/09/14 Notes (11,540) (638) 3 7,289 8,365 4 (7,591) (7,233) (302) 1,132 5 (126) (1,063) (428) 69 (11,968) (569) 6 8 (70) (11,960) (639) Statement of Change in Net Assets Attributable to Unitholders for the year ended 30 September /10/14 to 30/09/15 01/10/13 to 30/09/ Opening net assets attributable to unitholders 348, ,761 Movement due to creation and cancellation of units: Amounts receivable on creation of units 124,592 84,149 Amounts payable on cancellation of units (123,621) (18,223) ,926 Dilution levy charged Change in net assets attributable to unitholders from investment activities (see above) (11,960) (639) Retained distribution on accumulation units Closing net assets attributable to unitholders 337, ,170 The prices per unit as at 30 September 2015 (unaudited) were: Income units Accumulation units Bid Offer p p

12 Balance Sheet as at 30 September 2015 Assets Investment assets Debtors Cash and bank balances 30/09/15 30/09/14 Notes , , , ,353 1,023 2,125 2, , ,374 Total other assets Total assets Liabilities Creditors 10 (192) (203) Distribution payable on income units - (1) Total liabilities (192) (204) Net assets attributable to unitholders 337, ,170

13 Notes to the Financial Statements for the year ended 30 September (a) (b) (c) (d) (e) (f) (g) Accounting and Distribution policies 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 applicable UK accounting standards and in accordance with the Statement of Recommended Practice (SORP) for Financial Statements of Authorised Funds issued by the IMA in October 2010 (IMA SORP 2010). 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 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 St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. Expenses All expenses of the Trust are recognised on an accruals basis and are deducted from revenue with the exception of handling charges which are deducted from capital. Valuation of investments Listed investments have been valued at bid market value at midday on 30 September 2015 (30/09/14: bid market value at midday), net of any accrued interest which is included in the Balance Sheet as a revenue related item. 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. Distribution policy The manager has chosen to pay all revenue less revenue expenses and taxation as a final distribution at the end of the accounting period. 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.

14 Notes to the Financial Statements (continued) (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, the returns are included within net revenue in the Statement of Total Return. Where the transactions are used to protect or enhance investments, 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. No such transactions were entered in to in the current or prior year. 2. Net capital losses 01/10/14 to 30/09/15 01/10/13 to 30/09/ Non-derivative securities (11,355) (512) Currency losses (179) (120) Handling charges (6) (6) Net capital losses (11,540) (638) 3. Revenue 01/10/14 to 30/09/15 01/10/13 to 30/09/ Overseas dividends 7,285 8,348 Distributions from Regulated Collective Investment Schemes - - Interest distributions - 1 Bank interest 3 4 Management charge rebate on underlying holdings 1 12 Total revenue 7,289 8, Expenses 01/10/14 to 30/09/15 01/10/13 to 30/09/ Payable to the Manager Management charge 7,343 6,982 Payable to the Trustee Trustee's fee Other expenses Audit fee 9 8 Investment administration fee Registrar's fee Safe custody fee Tax & compliance fee Total expenses 7,591 7,233 Expenses include irrecoverable VAT where applicable.

15 Notes to the Financial Statements 5. Taxation (a) Analysis of charge in year: Irrecoverable overseas tax (continued) 01/10/14 to 01/10/13 to 30/09/15 30/09/ ,063 (b) Factors affecting current tax charge for the year: The tax assessed for the year is higher than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2014: 20%). The differences are explained below: Net (expenses)/revenue before taxation (302) 1,132 (c) (d) Corporation Tax at 20% (2014: 20%) Effects of: Non taxable foreign dividends Movement in excess management expenses Irrecoverable overseas tax Current tax charge for year (note 5a) Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. (60) 226 (1,457) (1,669) 1,517 1, , ,063 Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. 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 6,609,483 (30/09/14: 5,092,149) 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. Finance costs Equalisation/Distribution and interest The Equalisation/Distribution takes account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/10/14 to 30/09/15 01/10/13 to 30/09/ Final distribution Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (65) (101) Net Equalisation/Distribution for the year (8) 70 Interest - - Total finance costs (8) 70 Movement between net (expenses) / revenue and net distribution 01/10/14 to 01/10/13 to 30/09/15 30/09/ Net (expense)/revenue after taxation (428) 69 Deficit transferred to capital Add: brought forward from previous year - 1 Net Equalisation/Distribution for the year (8) 70

16 Notes to the Financial Statements Debtors Amounts receivable for creation of units Overseas tax recoverable Total debtors Cash and bank balances Cash and bank balances: Sterling Cash and bank balances: Overseas Total cash and bank balances Creditors Amounts payable for cancellation of units Accrued expenses (continued) 30/09/15 30/09/ ,016 30/09/15 30/09/ ,296 1, ,353 1,023 30/09/15 30/09/ Total creditors 11. Related party transactions St. James's Place Unit Trust Group Limited and BNY Mellon Trust & Depositary (UK) Limited together with their 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 164,893 (30/09/14: 11,912). Trustee's fees and interest payable to BNY Mellon Trust & Depositary (UK) Limited and their associates are shown in notes 4 and 6 respectively. The net balances due from BNY Mellon Trust & Depositary (UK) Limited and their associates at the year end in respect of these transactions was nil (30/09/14: nil). 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 Continental European Unit Trust. The value of these investments at the year end was 266,415,782 (30/09/14: 278,573,838). Included in the investment portfolio is a holding of nil units (30/09/14: nil) in St. James's Place Money Market Unit Trust (a St. James's Place Unit Trust Group Limited fund) with a market value of nil (30/09/14: nil). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. 12. Capital commitments and contingent liabilities On 30 September 2015, the Trust had no capital commitments (30/09/14: nil) and no contingent liabilities (30/09/14: nil). 13. Financial instruments In accordance with the investment objectives, as stated on page 19, the Trust held certain financial instruments. These comprise: Equity shares and units in collective investment schemes; and Cash (including overdrafts) and short-term debtors and creditors that arise directly from its operations. 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.

17 Notes to the Financial Statements (continued) 14. Risk management The Manager s objectives in managing investment risk are to ensure that the investment profile of the Trust is consistent with its stated investment objectives and risk profile, and to ensure appropriate liquidity. Day to day responsibility for managing investment risk is delegated to the Investment Adviser, who is required to manage the Trust in accordance with FCA regulations, the Prospectus and the terms of their Investment Management Agreement with the Manager. The Manager monitors the activities of the Investment Adviser, through a variety of mechanisms including the following: 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, foreign currency 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 2014). (a) Market price risk (b) 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. Foreign currency risk The revenue and capital value of the Trust's investments can be significantly affected by currency translation movements as a proportion of the Trust's assets and revenue are denominated in currencies other than sterling, which is the Trust's functional currency. The Manager has identified three principal areas where foreign currency risk could impact the Trust: Movements in exchange rates affect the value of investments; Movements in exchange rates affect short term timing differences; and Movements in exchange rates affect revenue received. The Trust may be subject to short term exposure to exchange rate movements, for instance where there is a difference between the date an investment purchase or sale is entered into and the date when settlement of the proceeds occurs. When the Trust enters into such a transaction which will involve the buying or selling of foreign currency in order to complete, a foreign exchange contract is entered into as soon as possible after the initial transaction in order to minimise the exchange rate risk. The Trust receives revenue in currencies other than sterling and movements in exchange rates can affect the sterling values of this revenue. The Trust converts all receipts of revenue into sterling on or near the date of receipt, it does not however hedge or otherwise seek to avoid exchange rate risk on revenue accrued but not received.

18 Notes to the Financial Statements Currency (d) (e) Liquidity risk Monetary exposures 30/09/15 Nonmonetary exposures 30/09/14 Nonmonetary exposures (continued) An analysis of monetary assets and liabilities for all currencies at the year end is shown below: Net foreign currency assets Net foreign currency assets Total Monetary exposures Total ,105-1, , , , ,645-14,156 14,156-12,407 12,407 GBP CHF EUR SEK 1, , ,381 1, , ,170 (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. 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. 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.

19 Notes to the Financial Statements (continued) (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. 15. Portfolio transaction costs Analysis of total trade costs. Purchases Sales 01/10/14 to 30/09/15 01/10/13 to 30/09/14 01/10/14 to 30/09/15 01/10/13 to 30/09/ Non-derivative securities* 140, , , ,068 Commissions (166) (223) Taxes Total costs (166) (223) Total trades in the year after transaction costs 140, , , ,845 *This includes transactions in St. James Place Money Market Unit Trust which does not incur transactions costs.

20 General Information The Trust St. James's Place Continental European Unit Trust is an authorised Unit Trust scheme under section 243 of the Financial Services and Markets Act (2000) and is constituted by a Trust Deed dated 6 September 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. The Trust Manager The Manager of the Trust is St. James's Place Unit Trust Group Limited which is authorised and regulated by the Financial Conduct Authority. Investment Objectives The investment objective of the Scheme is to achieve capital appreciation. The Scheme will achieve this by investing in shares of companies from Continental Europe, including any listed on the London Stock Exchange. In economic conditions judged by the Investment Adviser to be adverse, the Scheme may hold cash or near cash for as long as is necessary to protect the Scheme's value. The Scheme is also permitted to invest in other asset classes permitted for UCITS schemes under COLL including other types of transferable securities, units and/or shares in collective investment schemes, money market instruments and deposits. The Scheme is permitted to invest in derivatives 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. European Savings Directive It is the Manager's intention that the Trust will not normally hold 15% or more of its value in money debt instruments. 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.

21 General Information (continued) Management Charges With effect from 26 October 2015 the Manager has 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 are therefore presentational only and there is 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; in future it will be 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 1.35 per cent (2.05 per cent prior to 26 October 2015) of the value of the Trust. Income Distributions Income distributions are made annually on or before the 30 November. Accumulation Distributions Revenue due to accumulation unitholders is reflected in the price of their units. 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. Report A report is sent semi-annually to all unitholders on or before 31 May and 30 November. 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 2015/2016 exceed 11,100 (2014/ ,000). 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.

22 St. James s Place Unit Trust Group Ltd is authorised and regulated by the Financial Conduct Authority. St. James s Place Unit Trust Group Ltd Registered Office: St. James s Place House, 1 Tetbury Road, Cirencester, Gloucestershire, GL7 1FP, United Kingdom. Registered in England Number Perivan Financial Print Continental European (11/15)