INTERNATIONAL EQUITY UNIT TRUST

Transcription

1 INTERNATIONAL EQUITY UNIT TRUST FOR THE YEAR ENDED 30 SEPTEMBER 2014

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 Magellan Asset Management Limited Level 7, 1 Castlereagh Street Sydney, NSW 2000 Australia (Authorised and regulated by the Australian Securities and Investment Commission) 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:

3 Report of the Manager During the year under review, 1 October 2013 to 30 September 2014, the St. James's Place International Equity Unit Trust Income unit offer price rose by 7.5% from 456.3p to 490.3p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) rose by 7.7% from 503.0p to 541.5p. On the 20 November 2014, a recent available date before the printing of this report, the Income unit offer price was 521.4p and the Accumulation unit offer price was 575.9p. The estimated yield was 0.00%. The Trust's Performance The performance of the Trust since its launch in February 1997, over the five year period since September 2009 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 International Equity Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual MSCI World MSCI World NDR Source: Lipper for Fund returns 03/02/97 to 30/09/09 to 30/09/13 to 30/09/14 30/09/14 30/09/14 % 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 Over the 12 months to 30 September 2014, the Federal Reserve has been reducing the rate of its bond purchases as the US economy continued its recovery. In particular, the ongoing improvement in the labour market has been a major influence on policymakers decisions, while conditions in the housing market have also improved, and inflation has started moving closer to the Fed s 2% target. We consider the unwinding of quantitative easing and the associated normalisation of US interest rates as the most important risk for markets and the global economy over the next few years. Higher interest rates could be disruptive to asset markets, particularly those where investors have sought duration and higher yields, while higher US rates pose a threat to economies that are weak and reliant on foreign capital inflows. In Europe, the ECB further loosened its monetary policy stance in the face of persistently weak eurozone inflation and high unemployment. Its actions included a number of measures to boost bank lending, such as the introduction of negative interest rates on funds deposited with the ECB and the provision of ultra-cheap funding to banks for lending to the private sector. The ECB has also signalled its intent to purchase corporate bonds and asset-backed securities, financed by money creation, which amounts to a small-scale version of quantitative easing. Through these various measures the ECB is aiming to grow its balance sheet by approximately 1tn. Across asset markets, there has been a massive compression in risk premia over the last 18 months. Within equity markets, one manifestation of this has been the underperformance of lower-volatility, high-quality stocks. We consider this a warning sign and believe there is an elevated probability of the risk compression unwinding over the next year or so, as investors focus on normalising US interest rates. Against this backdrop, the portfolio delivered solid gains in absolute terms, although trailed the wider global equity market. Microsoft was the top contributor after showing continued strong performance in its core businesses, alongside hyper growth in its cloud services. Google also did well, with its search business driven by rapid query growth, especially on mobile devices. Likewise, DirecTV s share price also rose strongly after receiving a takeover approach from AT&T. 2

4 Report of the Manager (continued) Conversely, the consumer sectors were the main areas of weakness. Tesco was the largest detractor, with continuing weakness in the UK consumer environment, the replacement of its CEO and the recent announcement of an internal investigation into its own accounting practices, which remains an outstanding issue, all taking their toll. Elsewhere in the sector, Adidas also declined due to concerns over its exposure to Russia, weakness in its golf business and rising marketing costs. More positively, however, the investments in custodian banks Bank of New York Mellon and Wells Fargo did well, with each company benefitting from expectations of interest rate rises. Magellan Asset Management Limited 10 October

5 Performance Record Unit Price History Calendar year * Income Accumulation Highest Lowest Highest Lowest Offer Bid Offer Bid p p p p Distributions The record of net distributions paid/payable per unit is shown below: Income Accumulation Net revenue distributed Net revenue distributed per 1,000 per 1,000 Invested Invested per unit at 02/01/09 per unit at 02/01/09 Calendar year p p * The comparative figures have been restated from those published in March Net Asset Values Year ended September Units in Issue Units in Issue Market NAV per Unit NAV per Unit Income Accumulation NAV of Trust Income Accumulation 000 p p 4,248,521 85,252, , ,978, ,383,393 2,273, ,137, ,698,935 2,775, Ongoing Charges Figure The Ongoing Charges Figure for the year ended 30 September 2014 was 1.75% (30 September 2013: 1.80%). 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 International Equity Unit Trust, as disclosed in its most recent Key Investor Information Document (KIID), is a 5. It was calculated using performance data up to 30 June The risk category is recalculated weekly, in February 2014 the SRRI changed from a category 6 to a category 5. * To 30 September

6 Investment Assets as at 30 September 2014 Security Holdings Market Value 000 % of Net Assets FRANCE (8.18%) 196, Danone 1,859,380 76, Sanofi 1,723, , GERMANY (1.86%) 71, SAP 1,606,082 71, NETHERLANDS (1.21%) 61, Unilever 2,508,903 61, SWITZERLAND (8.74%) 209, Nestle 2,893, , Novartis 1,358,132 78, UNITED KINGDOM (7.86%) 441, Lloyds Banking Group 109,624,754 84, St. James's Place Money Market Unit Trust L Acc 250,357, , Tesco 51,149,760 95, UNITED STATES (70.94%) 1,756, American Express 364,213 19, Bank of New York Mellon 3,456,350 82, Coca-Cola 1,269,696 33, DIRECTV 1,568,744 84, ebay 4,681, , Google 'A' Shares 139,770 50, Google 'C' Shares 99,091 35, Home Depot 976,382 56, Lowe's 3,881, , Mastercard 1,446,630 66, McDonald's 701,257 41, Microsoft 5,513, , Oracle 5,355, , State Street 1,829,891 83, Target 3,311, , US Bankcorp 1,453,982 37, Visa 869, , Wal-Mart Stores 3,120, , Wells Fargo 2,759,672 88, Yum! Brands 2,736, , Investment assets 2,736, Total other assets (net) 38, Net assets 2,775, Comparative figures shown in brackets relate to 30 September All investments held are listed, unless otherwise stated. During the year under review the Manager decided to place some of the sterling cash held on deposit into the St. James s Place Money Market Unit Trust in order to spread risk across a number of institutions. The St. James s Place Money Market Unit Trust is highly liquid and is rated AAA by Standard & Poors. This investment is a related party. This investment is a related party. 5

7 Material Portfolio Changes Cost Purchases 000 St. James's Place Money Market Unit Trust L Acc 429,005 Lloyds Banking Group 81,367 SAP 76,142 Target 75,375 Tesco 75,331 Wal-Mart Stores 62,285 ebay 57,095 Home Depot 54,533 DIRECTV 50,589 Lowe's 46,510 Proceeds Sales 000 St. James's Place Money Market Unit Trust L Acc 188,101 DIRECTV 74,843 Lowe's 70,191 American Express 59,002 Microsoft 57,525 Oracle 56,210 Diageo 49,929 Google 'A' Shares 49,362 Johnson & Johnson 48,107 US Bankcorp 46,095 This investment is a related party. 6

8 Statement of the Manager's Responsibilities in relation to the Financial Statements of the Trust The rules in the Financial Conduct Authority's Collective Investment Schemes Sourcebook ("the Rules") require the Manager to prepare Financial Statements for each annual accounting period which give a true and fair view of the financial position of the Trust as at the end of the year and of the net revenue and the net capital gains on the property of the Trust for the year then ended. In preparing the Financial Statements the Manager is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; comply with the requirements of the Statement of Recommended Practice relating to Authorised Funds and the Trust Deed; follow applicable UK Accounting Standards (UK Generally Accepted Accounting Practice); and prepare Financial Statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in operation. The Manager is responsible for keeping proper accounting records and for the management of the Trust in accordance with its Trust Deed, Prospectus and the Rules. The Manager has a general responsibility for taking such steps as are reasonably open to it to prevent and detect fraud and other irregularities. Directors' 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 24 November

9 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 24 November

10 Independent Auditors' Report to the Unitholders of St. James's Place International Equity 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 2014 and of the net revenue and the net capital gains of the scheme property of the Trust for the year then ended; and have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice, the Statement of Recommended Practice for 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 International Equity 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 2014; the statement of total return of the Trust for the year then ended; the statement of change in net assets attributable to unitholders of the Trust for the year then ended; the notes to the Trust s financial statements, which include a summary of significant accounting policies and other explanatory information; and the distribution tables. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), the Statement of Recommended Practice Financial Statements of 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. 9

11 Independent Auditors' Report to the Unitholders of St. James's Place International Equity 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 7, 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 25 November 2014 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. 10

12 Statement of Total Return for the year ended 30 September 2014 Income Net capital gains Revenue Expenses Finance costs: Interest Net revenue before taxation Taxation Net revenue after taxation 01/10/13 to 30/09/14 01/10/12 to 30/09/13 Notes , , ,237 34,112 4 (44,468) (25,897) 6 (2) - 6,767 8,215 5 (6,568) (4,322) 199 3,893 Total return before distribution 185, ,513 Finance costs: Distribution 6 (199) (3,889) Change in net assets attributable to unitholders from investment activities 185, ,624 Statement of Change in Net Assets Attributable to Unitholders for the year ended 30 September /10/13 to 30/09/14 01/10/12 to 30/09/ Opening net assets attributable to unitholders 2,273, ,817 Assets transferred from Unit Trusts* - 1,607,922 Movement due to creation and cancellation of units: Amounts receivable on creation of units 324, ,085 Amounts payable on cancellation of units (9,126) (31,778) Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Class actions Closing net assets attributable to unitholders 315, ,307 (20) (52) 185, , ,137 (1) 13 2,775,097 2,273,768 *Relating to the transfer of assets from the St. James's Place Net International Equity Unit Linked Life and Pension Fund ( 583,015,533), the St. James's Place Exempt International Equity Unit Linked Life and Pension Fund ( 603,591,194), the St. James's Place International Equity Unit Linked Life and Pension Fund ( 373,050,894) and the St. James's Place International Equity $ Unit Linked Life and Pension Fund ( 48,264,161). The prices per unit as at 30 September 2014 (unaudited) were: Income units Accumulation units Bid Offer p p

13 Balance Sheet as at 30 September 2014 Assets Investment assets Debtors Cash and bank balances Total other assets Total assets 30/09/14 30/09/13 Notes ,736,948 2,246, ,986 19, ,061 17,816 43,047 37,513 2,779,995 2,283,844 Liabilities Creditors 10 (4,896) (10,044) Distribution payable on income units (2) (32) Total liabilities (4,898) (10,076) Net assets attributable to unitholders 2,775,097 2,273,768 12

14 Notes to the Financial Statements for the year ended 30 September (a) (b) (c) (d) (e) (f) (g) (h) (i) 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 and stamp duty reserve tax which are deducted from capital. Valuation of investments Listed investments have been valued at bid market value at midday on 30 September 2014 (30/09/13: 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. 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. Special dividends Special dividends are treated as revenue or a repayment of capital reflecting the facts of each particular case. 13

15 Notes to the Financial Statements (continued) (j) Scrip dividends The ordinary element of stocks received in lieu of cash dividends is recognised as revenue and where applicable, is included in the distribution. In the case of enhanced scrip dividends, the value of the enhancement is treated as capital. (k) 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. 2. Net capital gains 01/10/13 to 30/09/14 01/10/12 to 30/09/ Non-derivative securities 184, ,359 Forward currency contracts - (666) Futures contracts - (5,735) Currency gains 1,511 16,675 Handling charges (20) (13) Net capital gains 185, , Revenue 01/10/13 to 30/09/14 01/10/12 to 30/09/ UK dividends 6,859 4,764 Overseas dividends 41,836 28,812 Distributions from Regulated Collective Investment Schemes Interest distributions Bank interest Management charge rebate on underlying holdings Scrip dividends 2, Total revenue 51,237 34, Expenses 01/10/13 to 30/09/14 01/10/12 to 30/09/ Payable to the Manager Management charge 43,143 24,817 Payable to the Trustee Trustee's fee Other expenses Audit fee 8 7 Professional fees - 6 Registrar's fee 1, Safe custody fee , Total expenses 44,468 25,897 14

16 Notes to the Financial Statements 5. (a) (b) Taxation Analysis of charge in year: Irrecoverable overseas tax Factors affecting current tax charge for the year: (continued) 01/10/13 to 01/10/12 to 30/09/14 30/09/ ,568 4,322 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% (2013: 20%). The differences are explained below: Net revenue before taxation 6,767 8,215 (c) (d) Corporation Tax at 20% (2013: 20%) Effects of: UK dividends not subject to corporation tax Non taxable scrip dividends Non taxable foreign dividends Movement in excess management expenses Irrecoverable overseas tax Current tax charge for year (note 5a) Finance costs Distribution and interest 1,353 1,643 (1,371) (953) (461) (78) (8,367) (5,762) 8,846 5,150 6,568 4,322 6,568 4,322 Authorised Unit Trusts are exempt from tax on capital gains, therefore any capital return is not included in the above reconciliation. Deferred taxation: There is no provision required for deferred taxation at the balance sheet date. 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 22,127,406 (30/09/13: 13,281,116) 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. The distribution takes account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/10/13 to 30/09/14 01/10/12 to 30/09/ Final distribution 356 4,169 Add: Revenue deducted on cancellation of units 6 50 Deduct: Revenue received on creation of units (163) (330) Net distribution for the year Interest Total finance costs Movement between net revenue and net distribution Net revenue after taxation Add: brought forward from previous year Less: carried forward to next year Net distribution for the year 01/10/13 to 30/09/ , ,889 01/10/12 to 30/09/ , (4) (4) 199 3,889 15

17 Notes to the Financial Statements 8. Debtors Sales awaiting settlement Amounts receivable for creation of units Accrued revenue Rebate receivable on underlying holdings Income tax recoverable 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 Purchases awaiting settlement Accrued expenses Total creditors Units in issue (continued) 30/09/14 30/09/ ,281 12,235 2,617 4, , ,401 1,219 10,986 19,697 30/09/14 30/09/ ,004 11,379 18,057 6,437 32,061 17,816 30/09/14 30/09/ ,778 6, ,189 4,896 10,044 At the year end there were Income units of 4,137,755 (30/09/13: 3,978,386) and Accumulation units of 534,698,935 (30/09/13: 471,383,393) resulting in equivalent Income units of 594,766,199 (30/09/13: 524,621,344). 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 from St. James's Place Unit Trust Group Limited at the year end in respect of these transactions was 2,617,093 (30/09/13: 1,833,511). Trustee's fees and interest payable to the 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 (30/09/13: 33,806). 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 International Equity Unit Trust. The value of these investments at the year end was 2,226,138,932 (30/09/13: 1,835,058,628*). Included in the investment portfolio is a holding of 250,357,298 units (30/09/13: 19,195,374) in St. James's Place Money Market Unit Trust (a St. James's Place Unit Trust Group Limited fund) with a market value of 260,932,140 (30/09/13: 19,994,093). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. 16

18 Notes to the Financial Statements (continued) The Manager is a member of the St. James's Place plc group of companies whose ultimate holding company is St. James s Place plc. On advice of the investment adviser the scheme holds investments in Lloyds Banking Group plc which was a related party up until the 31 December The investment adviser has been appointed to act as discretionary investment adviser to the scheme by St. James s Place Unit Trust Group. St. James s Place Unit Trust Group has given the investment adviser complete discretion in the investment of the property of the scheme in accordance with the Regulations, the Trust Deed and the Prospectus. The value of these investments at the year end was 84,367,211 (30/09/13: nil). Included in the investment portfolio is a holding of 3,456,350 units (30/09/13: 4,680,451) in Bank of New York Mellon with a market value of 82,496,996 (30/09/13: 87,596,338). Revenue from this holding is shown in note 3 as overseas dividends. * The comparative figures for 2013 have been reanalysed to reflect the market values. 13. Capital commitments and contingent liabilities On 30 September 2014, the Trust had no capital commitments (30/09/13: nil) and no contingent liabilities (30/09/13: nil). 14. Derivatives and other financial instruments In accordance with the investment objectives, as stated on page 21, the Trust held certain financial instruments. These comprise: Equity shares; 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. 15. 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. (a) Market price risk Market price risk represents the potential loss the Trust might suffer through holding market positions in the face of price movements. The Manager has delegated the investment management of the portfolio to an external Investment Adviser who determines the asset allocation and minimises the risk associated with particular countries or industry sectors, whilst continuing to follow the Trust s investment objectives. The Manager has the responsibility for monitoring the portfolio to ensure compliance with the investment objectives and that an acceptable risk reward profile is maintained. 17

19 Notes to the Financial Statements (continued) (b) 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. 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 30/09/14 30/09/13 Nonmonetary Monetary monetary Non- Monetary Currency exposures exposures Total exposures exposures Total GBP CHF EUR USD , , ,590 14, , ,489 2, , ,025 2, , , , ,904 1, , ,163 19,031 1,756,547 1,775,578 8,767 1,613,111 1,621,878 38,149 2,736,948 2,775,097 27,437 2,246,331 2,273,768 (c) Interest rate risk Interest receivable on bank deposits or payable on bank overdraft positions will be affected by fluctuations in interest rates. (d) 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. 18

20 Notes to the Financial Statements (e) Liquidity risk (f) (continued) 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. (g) 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. (h) Fair value of financial assets and liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the Balance Sheet, and their fair values. 16. Portfolio transaction costs Analysis of total trade costs. Purchases Sales 01/10/13 to 30/09/14 01/10/12 to 30/09/13 01/10/13 to 30/09/14 01/10/12 to 30/09/ Non-derivative securities* 1,364,063 6,514,987 1,058,773 4,818,788 Futures contracts** - 2,098,449-2,119,867 Trades in the year before transaction costs Commissions Taxes Total costs Total trades in the year after transaction costs 1,364,063 8,613,436 1,058,773 6,938, (163) (1,035) 886 1,255 (15) (17) 1,082 1,917 (178) (1,052) 1,365,145 8,615,353 1,058,595 6,937,603 *This includes transactions in St. James's Place Money Market Unit Trust which does not incur transactions costs. **Purchases and sales of futures contracts do not incur transaction costs and have been included at the value of their exposure. 19

21 Distribution Tables Distribution in pence per unit Group 1 Final Units purchased prior to 1 October 2013 Group 2 Final Units purchased on or after 1 October 2013 to 30 September 2014 Income Net revenue Equalisation Distribution payable 30/11/14 Distribution paid 30/11/13 Group 1 (p) (p) (p) (p) Final Group 2 (p) (p) (p) (p) Final Accumulation Net revenue Equalisation Distribution payable 30/11/14 Distribution paid 30/11/13 Group 1 (p) (p) (p) (p) Final Group 2 (p) (p) (p) (p) Final

22 General Information The Trust St. James's Place International Equity Unit Trust is an authorised Unit Trust scheme under section 243 of the Financial Services and Markets Act (2000) and is constituted by a Trust Deed dated 21 January The Unit Trust is subject to the rules of the Financial Conduct Authority's Collective Investment Scheme Sourcebook and is classified as a UCITS Scheme. The Trust Manager The Manager of the Trust is St. James's Place Unit Trust Group Limited which is a member of the IMA and is authorised and regulated by the Financial Conduct Authority. Investment Objectives The investment objective of the Scheme is to achieve long-term capital appreciation by investing internationally in a focused portfolio of equities. The Scheme will invest primarily in equities, cash and near cash. The Scheme is also permitted to invest in 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. 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. (b) An Annual Management Charge at a rate of 1.7 per cent 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. 21

23 General Information (continued) Tax Vouchers Income unitholders that receive income distributions by direct credit and accumulation unitholders (where the distribution income is reinvested) receive an annual consolidated tax voucher in May with all the relevant payment and tax information required to complete a tax return. Tax vouchers will be enclosed if income unitholders receive payment by cheque. 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 2014/2015 exceed 11,000 (2013/ ,900). 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

24 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 International Equity (11/14)