MANAGED EQUITY & BOND UNIT TRUST

Transcription

1 MANAGED EQUITY & BOND UNIT TRUST FOR THE YEAR ENDED 31 MARCH 2012

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3 Prior to 12 September 2011 the Trust was called the St. James's Place Cautious Unit Trust. From 10 April 2012, the name changed to the St. James's Place Multi Asset Unit Trust. Manager St. James's Place Unit Trust Group Limited P.O. Box 9034, Chelmsford, CM99 2XA United Kingdom Freephone: (Authorised and regulated by the Financial Services Authority) Directors of the Manager M. S. Wilson (Chairman) resigned 23/05/11 D. C. Bellamy A. M. Croft I. S. Gascoigne H. J. Gladman resigned 31/12/11 D. J. Lamb W. P. Tonks resigned 31/12/11 Secretary of the Manager St. James's Place Administration Limited Investment Adviser Jupiter Asset Management Limited 1 Grosvenor Place London, SW1X 7JJ United Kingdom (Authorised and regulated by the Financial Services Authority) Trustee BNY Mellon Trust & Depositary (UK) Limited 160 Queen Victoria Street London, EC4V 4LA United Kingdom (Authorised and regulated by the Financial Services Authority) Registrar International Financial Data Services (UK) Limited IFDS House St. Nicholas Lane Basildon, SS15 5FS United Kingdom (Authorised and regulated by the Financial Services Authority) Auditor PricewaterhouseCoopers LLP Erskine House Queen Street Edinburgh, EH2 4NH United Kingdom (From 31 January 2012, PricewaterhouseCoopers LLP replaced KPMG Audit Plc as Auditor to the Trust) 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 P.O. Box 9034, Chelmsford CM99 2XA. Freephone:

4 Report of the Manager During the year under review, 1 April 2011 to 31 March 2012, the St. James's Place Managed Equity and Bond Unit Trust Income unit offer price fell by 2.3% from 103.3p to 100.9p and the Accumulation unit offer price (in which revenue is reflected in the price rather than distributed) rose by 0.2% from 116.4p to 116.6p. On the 16 May 2012, the latest available date before the printing of this report, the Income unit offer price was 95.19p and the Accumulation unit offer price was 110.4p. The estimated yield was 2.50%. The Trust's Performance The performance of the Trust since its launch in January 2007, over the five year period since March 2007 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 Managed Equity and Bond Unit Trust Income units (offer to offer) Accumulation units (offer to offer) Indices - actual FTSE All-Share FTSE World Europe EX UK Iboxx Corporates 1-3's Iboxx Gilts 1-3's MSCI Em Europe 10/40 Source: Lipper for Fund returns 08/01/07 to 31/03/07 to 31/03/11 to 31/03/12 31/03/12 31/03/12 % 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 year to 31 March 2012 was one of two halves for equity markets; an increasingly volatile first half followed by a recovery in the second half. Eurozone sovereign debt concerns deepened in the first half, while developed economies showed signs of a double-dip recession. However, various efforts by eurozone leaders and central banks eased sovereign debt concerns in the second half. In particular, the European Central Bank s introduction of its Long Term Refinancing Operation in December was viewed to have reduced the risk of a liquidity crisis. At the same time, the US economy showed growing signs of recovery after it was hit by supply chain problems caused by the Japanese tsunami in March and China began to ease its monetary policy as inflation decelerated. The gilt market benefited from investors flight to perceived safety and outperformed corporate bonds until the end of As a result, the 10-year gilt yield fell below 2%, its record low level, at the end of December. However, government bonds fell modestly and underperformed corporate bonds in the first quarter of 2012 as investors risk appetite recovered. The UK equity portfolio significantly outperformed the FTSE All-Share Index, with our holdings in engineering company Charter International, British American Tobacco, life assurer Legal & General and retailer Next making positive contributions. We reduced exposure to the mining sector in June and this was also positive for performance. Strong stock selection boosted our European portfolio but our emerging European portfolio was adversely affected by uncertainty surrounding the Russian presidential election. Within the bond portfolio, the bias towards government and high-quality securities, which were positive in the first half, became negative in the second. 2

5 Report of the Manager (continued) Investors appear to be becoming increasingly anxious that 2012 is a re-run of 2011, when recovery hopes early in the year drained away. This is possible but we do not think it is the most likely outcome. Recovery momentum in the US appears to be gathering pace, while the situation in Europe may be stabilising, although there is a downside risk. We expected to see a significant slowdown in China but this may have largely run its course. We therefore continue to believe the outlook for the global economy remains benign. Jupiter Asset Management Limited 17 April 2012 From 10 April 2012, PIMCO Europe Limited replaced Jupiter Asset Management Limited as Investment Adviser to the Trust. 3

6 Performance Record The St. James's Place Managed Equity and Bond Unit Trust was first offered on 8 January 2007 at an offer price of p per unit. 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 08/01/07 per unit at 08/01/07 Calendar year p p * Net Asset Values Year ended March Units in Issue Units in Issue Market NAV per NAV per Unit Income Accumulation NAV of Trust Income Accumulation '000 p p 12,454, ,985, , ,803, ,469, , ,638, ,102, , Total Expense Ratio Year ended March TER (%) The Total Expense Ratio (TER) is the total expenses paid by the Trust in the year, against its average net asset value. The prior year TER has been restated. * To 31 March

7 St. James's Place Managed Equity & Bond Unit Trust Investment Assets as at 31 March 2012 Security Holdings Market Value 000 % of Net Assets AUSTRALIA (0.07%) 10, Commonwealth Bank of Australia 3.875% 14/12/2015 GBP5,000,000 5, International Ferro Metals 1,509, National Australia Bank 5.375% 08/12/2014 GBP5,000,000 5, BELGIUM (0.89%) 20, Council of Europe Development Bank 2.5% 11/12/2013 GBP5,000,000 5, European Investment Bank 3.375% 08/09/2014 GBP10,000,000 10, European Investment Bank 2.25% 22/01/2015 GBP5,000,000 5, CANADA (1.23%) 7, Province of Ontario Canada 2% 10/12/2013 GBP7,000,000 7, DENMARK (1.06%) - - FINLAND (1.22%) 7, Nordic Investment Bank 1.625% 10/12/2013 GBP7,000,000 7, FRANCE (0.91%) 8, France Telecom 5.5% 24/05/2012 GBP8,000,000 8, GERMANY (2.70%) 15, Kreditanstalt fuer Wiederaufbau 3% 09/09/2013 GBP15,000,000 15, NETHERLANDS (1.81%) 10, Rabobank Nederland 4.625% 31/05/2012 GBP10,000,000 10, UNITED KINGDOM (84.73%) 460, Aerospace & Defence Rolls-Royce 883,342 7, Automobiles & Parts GKN 4,223,802 8, Banks Barclays 4,954,299 11, HSBC 1,909,310 10, Lloyds Banking Group 21,183,998 7, Royal Bank of Scotland 36,903,185 10, Corporate Bonds Abbey National Treasury Services 5.5% 18/06/2014 GBP5,000,000 5, BG Energy Capital 5.875% 13/11/2012 GBP8,000,000 8, Centrica 5.875% 02/11/2012 GBP8,000,000 8, JTI UK Finance 5.75% 06/02/2013 GBP7,000,000 7, Lloyds TSB Bank 6.375% 15/04/2014 GBP8,000,000 8, Royal Bank of Scotland 6.375% 29/04/2014 GBP8,000,000 8, Skipton Building Society 2% 05/04/2012 GBP5,000,000 5, Standard Chartered 6.5% 28/04/2014 GBP7,000,000 7, Unilever 4% 19/12/2014 GBP8,000,000 8, Financial Services RSM Tenon 3,333, Fixed Line Telecommunications Cable & Wireless Communications 7,412,936 2, Talk Talk Telecom 3,119,830 4,

8 St. James's Place Managed Equity & Bond Unit Trust Investment Assets (continued) as at 31 March 2012 Security Holdings Market Value 000 % of Net Assets Food Producers Unilever 151,818 3, General Industrials Cookson 364,578 2, General Retailers Dixons Retail 26,327,644 5, Howden Joinery 7,052,622 8, Next 265,756 7, WH Smith 756,658 4, Government Bonds UK Treasury 4.5% 07/03/2013 GBP30,000,000 31, UK Treasury 8% 27/09/2013 GBP27,000,000 30, Life Insurance Legal & General 7,733,165 10, Media British Sky Broadcasting 337,010 2, Centaur Media 834, ITV 7,349,462 6, Pearson 311,733 3, Mining Rio Tinto 88,710 3, Xstrata 704,705 7, Mobile Telecommunications Carphone Warehouse 818,653 1, Vodafone 9,900,137 17, Non Equity Investment Instruments Jupiter Emerging European Opportunites Fund 15,578,666 29, Jupiter European Fund 6,513,196 60, St. James's Place Money Market Unit Trust (Acc) 22,368,238 23, Non Life Insurance Hiscox 1,540,822 6, RSA Insurance 2,942,220 3, Oil & Gas Producers BP 2,556,031 11, Royal Dutch Shell 'B' Shares 402,534 8, Pharmaceuticals & Biotechnology AstraZeneca 241,344 6, GlaxoSmithKline 415,584 5, Real Estate Investment & Services Trikona Trinity Capital 1,570, Support Services Experian 617,031 6, Tobacco British American Tobacco 534,641 16, Travel & Leisure Compass 451,370 2, Whitbread 275,832 5,

9 St. James's Place Managed Equity & Bond Unit Trust Investment Assets (continued) as at 31 March 2012 Security Holdings Market Value 000 % of Net Assets UNITED STATES (3.51%) 20, International Bank for Reconstruction & Development GBP15,000,000 15, % 10/12/2013 Wal-Mart Stores 4.75% 29/01/2013 GBP5,000,000 5, Assets 560, Total other assets (net) 9, Net assets 570, Comparative figures shown in brackets relate to 31 March 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. Previously named St. James's Place Cash Unit Trust (Acc) until 12 September This investment is a related party. This investment is a related party. Market Value 000 % of Net Assets Asset Class Split Interest bearing assets 227, Equities 219, Collective Investment Schemes 113, Total other assets (net) 9, , Summary of Investment Assets by Credit Ratings Rating Block Investment grade 222, Unrated 5, Total bonds 227, Other 342, Net assets 570,

10 St. James's Place Managed Equity & Bond Unit Trust Material Portfolio Changes/Movements Cost Purchases 000 St. James's Place Money Market Unit Trust (Acc) 153,886 UK Treasury 8% 27/09/ ,335 European Investment Bank 3.375% 08/09/ ,474 Unilever 4% 19/12/2014 8,367 Jupiter Emerging European Opportunites Fund 7,900 BP 5,403 National Australia Bank 5.375% 08/12/2014 5,364 UK Treasury 4.5% 07/03/2013 5,270 Jupiter European Fund 5,200 Abbey National Treasury Services 5.5% 18/06/2014 5,200 Commonwealth Bank of Australia 3.875% 14/12/2015 5,198 UK Treasury 5% 07/03/2012 5,161 UK Treasury 3.25% 07/12/2011 5,066 European Investment Bank 2.25% 22/01/2015 4,998 Royal Bank of Scotland 4,605 Rolls-Royce 4,435 Dixons Retail 4,244 Barclays 4,068 Vodafone 3,592 Pearson 3,398 Other purchases 48,634 Total purchases for the year 330,798 Proceeds Sales 000 St. James's Place Money Market Unit Trust (Acc) 150,655 UK Treasury 5% 07/03/ ,103 UK Treasury 3.25% 07/12/ ,079 Charter International 13,630 UK Treasury 5% 07/09/ ,181 Nationwide Building Society 3.75% 21/11/2011 9,000 BHP Billiton 8,300 Rio Tinto 8,192 Booker 7,235 Whitbread 7,166 Abbey National Treasury Services 7.125% 20/06/2011 7,000 Danske Bank 6.875% 20/06/2011 6,000 WH Smith 4,078 Compass 3,292 Taylor Wimpey 3,292 Rolls-Royce 3,187 Inmarsat 3,150 HSBC 2,706 Lloyds TSB Bank 4% 17/11/2011 2,500 Herald Investment Trust 2,497 Other sales 12,035 Total sales for the year 320,278 This investment is a related party. St. James's Place Money Market Unit Trust (Acc) was previously named St. James's Place Cash Unit Trust (Acc) until 12 September This investment is a related party. 8

11 Statement of the Manager's Responsibilities in relation to the Financial Statements of the Trust The rules in the Financial Services 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 Services Authority's Collective Investment Schemes Sourcebook. Directors A. M. Croft London D. J. Lamb 21 May

12 Statement of Trustee's Responsibilities The Trustee is under a duty to take into custody and to hold the property of the Scheme 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 Scheme and to ensure that the Scheme 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 scheme, 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 scheme, and otherwise in accordance with the Trust Deed and the rules in the Financial Services Authority's Collective Investment Scheme provisions of the Sourcebook. For and on behalf of: BNY Mellon Trust & Depositary (UK) Limited London 21 May

13 (the "Trust") Independent Auditors' Report to the Unitholders We have audited the financial statements of the Trust for the year end 31 March 2012 which comprise the statement of total return, the statement of change in net assets attributable to unitholders, the balance sheet, the related notes and the distribution table. 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) and the Statement of Recommended Practice Financial Statements of Authorised Funds issued by the Investment Management Association (the Statement of Recommended Practice for Authorised Funds ). Respective responsibilities of Manager and Auditors As explained more fully in the Manager s Responsibilities Statement the 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 International Standards on Auditing (UK and 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. Scope of the audit of the financial statements 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 Manager; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on the financial statements In our opinion the financial statements: give a true and fair view of the financial position of the Trust at 31 March 2012 and of the net revenue 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 the Statement of Recommended Practice for Authorised Funds, the Collective Investment Schemes sourcebook and the Trust Deed. Opinion on other 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 Manager s Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Collective Investment Schemes sourcebook requires us to report to you if, in our opinion: proper accounting records for the Trust have not been kept; or the financial statements are not in agreement with the accounting records and returns. PricewaterhouseCoopers LLP Chartered Accountants & Statutory Auditors Edinburgh 21 May 2012 The Financial Statements are published on www sjp.co.uk which is a website maintained by St. James s Unit Trust Group Limited. The maintenance and integrity of the website is the responsibility of the directors; 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. Visitors to the website need to be aware that legislation in the United Kingdom governing the presentation and dissemination of the Financial Statements may differ from legislation in their jurisdiction. 11

14 Statement of Total Return for the year ended 31 March 2012 Income Net capital (losses)/gains Revenue Expenses Finance costs: Interest Net revenue before taxation Taxation Net revenue after taxation 01/04/11 to 31/03/12 01/04/10 to 31/03/11 Notes (3,269) 27, ,005 12,187 4 (10,825) (9,610) 6 (1) - 4,179 2,577 5 (21) (8) 4,158 2,569 Total return before distributions ,846 Finance costs: Distributions 6 (13,400) (10,515) Change in net assets attributable to unitholders from investment activities (12,511) 19,331 Statement of Change in Net Assets Attributable to Unitholders for the year ended 31 March /04/11 to 31/03/12 01/04/10 to 31/03/ Opening net assets attributable to unitholders 570, ,215 Movement due to creation and cancellation of units: Amounts receivable on creation of units 33,978 96,937 Amounts payable on cancellation of units (34,263) (9,825) Stamp duty reserve tax Change in net assets attributable to unitholders from investment activities (see above) Retained distribution on accumulation units Closing net assets attributable to unitholders (285) 87,112 (123) (105) (12,511) 19,331 13,024 10, , ,163 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. The prices per unit as at 30 March 2012 (unaudited) were: Income units Accumulation units Bid Offer p p

15 Balance Sheet as at 31 March 2012 Assets Investment assets Debtors Cash and bank balances Total other assets Total assets 31/03/12 31/03/11 Notes , , ,858 5, ,819 5,709 10,677 11, , ,797 Liabilities Creditors 10 (767) (559) Distribution payable on income units (55) (75) Total liabilities Net assets attributable to unitholders (822) (634) 570, ,163 The presentation of the financial statements have been changed from 's to 000's, the comparatives have been restated accordingly. 13

16 7 Notes to the Financial Statements for the year ended 31 March Accounting and Distribution policies (a) 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 Services 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). (b) Revenue Dividends receivable from equity investments are credited to the revenue account when the investments are first quoted ex-dividend. Interest on deposits and on interest bearing assets are accounted for on an accruals basis. Revenue on interest bearing assets is recognised on an effective interest 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 the St. James's Place Money Market Unit Trust are recognised as revenue on an accruals basis and form part of the distribution. Other revenue is accounted for on a receipts basis. (c) Expenses (d) All expenses of the Trust are charged to revenue with the exception of handling charges and stamp duty reserve tax which are deducted from capital. The manager has agreed that 100% of the annual management charge is to be transferred to capital for the purpose of calculating the distribution, as permitted by the Collective Investment Schemes Sourcebook. Valuation of investments Listed investments have been valued at bid market value at midday on 30 March 2012 (31/03/11: bid market value at midday). (e) 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. (f) 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. (g) Distribution policy Distributions are made in respect of quarters ended 31 March, 30 June, 30 September and 31 December. At the end of the accounting period all remaining revenue, less revenue expenses and taxation, will be attributable to unitholders. In the case of income unitholders this will be paid as a distribution. In the case of accumulation unitholders the distribution will be reinvested. 14

17 7 Notes to the Financial Statements (h) Equalisation (i) /04/11 to 31/03/12 (continued) 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. Net capital (losses)/gains Non-derivative securities Currency gains Handling charges Net capital (losses)/gains Revenue 01/04/10 to 31/03/ (3,265) 27, (6) (4) (3,269) 27,277 01/04/11 to 31/03/12 01/04/10 to 31/03/ UK dividends 7,340 5,117 Overseas dividends Distributions from Regulated Collective Investment Schemes Franked investment revenue Interest distributions Bank interest Interest on debt securities 4,955 5,712 Management charge rebate on underlying holdings 1,286 1,148 Total revenue 15,005 12,187 Expenses 01/04/11 to 31/03/12 01/04/10 to 31/03/ Payable to the Manager Management charge 10,418 9,255 Payable to the Trustee Trustee's fees Other expenses Audit fee 7 8 Investment administration fee Registrar's fees Safe custody fees Tax & compliance fee 1 1 Total expenses ,825 9,610 15

18 Notes to the Financial Statements 7 5. (a) (b) Taxation Analysis of charge in year: Irrecoverable overseas tax Adjustments in respect of prior years Total current tax (note 5b) Factors affecting current tax charge for the year: (continued) 01/04/11 to 01/04/10 to 31/03/12 31/03/ The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an authorised unit trust of 20% (2011: 20%). The differences are explained below: Net revenue before taxation 4,179 2,577 (c) (d) 6. Corporation Tax at 20% (2011: 20%) Effects of: UK dividends not subject to corporation tax Non taxable foreign dividends Movement in excess management expenses Irrecoverable overseas tax Adjustments in respect of prior years Current tax charge for year (note 5a) Distributions and interest (1,628) (1,054) (117) (3) 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 1,451,382 (31/03/11: 542,378) relating to surplus management expenses. No deferred tax asset was recognised in the current or prior year as it was considered unlikely the Fund would generate sufficient taxable profits in the future to utilise these amounts. Finance costs The distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units and comprises: 01/04/11 to 31/03/12 01/04/10 to 31/03/ First interim distribution 3,976 2,954 Second interim distribution 3,549 2,842 Third interim distribution 3,751 2,162 Final distribution 2,103 2,943 Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units Net distributions for the year Interest Total finance costs 13,379 10, (112) (430) 13,400 10, ,401 10,515 16

19 Notes to the Financial Statements Movement between net revenue and net distributions 01/04/11 to 31/03/12 (continued) 01/04/10 to 31/03/ Net revenue after taxation 4,158 2,569 Management charge 10,418 9,255 Corporation tax relief to capital (1,176) (1,309) Add: brought forward from previous year Less: carried forward to next year Net distributions for the year Debtors Sales awaiting settlement Amounts receivable for creation of units Accrued revenue Rebate receivable on underlying holdings Income tax recoverable Overseas tax recoverable Corporation 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 Amounts payable for cancellation of units Accrued expenses Total creditors 11. Units in issue 1 1 (1) (1) 13,400 10,515 31/03/12 31/03/ ,138 4,218 3, ,858 5,582 31/03/12 31/03/ ,781 5, ,819 5,709 31/03/12 31/03/ At the year end there were Income units of 15,638,406 (31/03/11: 14,803,282) and Accumulation units of 502,102,918 (31/03/11: 503,469,677) resulting in equivalent Income units of 598,027,581 (31/03/11: 584,831,650). 12. 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 271,946 (31/03/11: due from 969,758). 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 (31/03/11: nil). 17

20 7 Notes to the Financial Statements (continued) 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, invests some of their life and pension policyholders' funds into the St. James's Place Managed Equity and Bond Unit Trust. The value of these investments at the year end was 434,127,628 (31/03/11: 440,132,671). Included in the investment portfolio is a holding of 22,368,238 units (31/03/11: 19,309,877) in St. James's Place Money Market Unit Trust (a St. James's Place Unit Trust Group Limited fund) with a market value of 23,253,662 (31/03/11: 20,004,453). Revenue and management charge rebates from this holding are shown in note 3 as interest distributions and management charge rebates on the underlying holdings. The Manager is a member of the St. James's Place plc group of companies whose ultimate holding company is Lloyds Banking Group plc. On advice of the investment adviser the scheme holds investments in Lloyds Banking Group plc. 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 7,096,639 (30/09/11: 17,382,321). 13. Capital commitments and contingent liabilities On 31 March 2012, the Trust had no capital commitments (31/03/11: nil) and no contingent liabilities (31/03/11: nil). 14. Financial instruments In accordance with the investment objectives, as stated on page 23, the Trust holds certain financial instruments. These comprise: Equity shares; interest bearing assets 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. 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 FSA 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, interest rate 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. 18

21 Notes to the Financial Statements 7 (a) Market price risk (b) Floating rate financial assets Fixed rate financial assets Fixed rate weighted average interest rate Fixed rate weighted average period for which rate is fixed Financial assets not carrying interest (continued) Interest rate risk Interest rate risk arises due to variability in market interest rates. Some investments held by the Trust, such as Corporate Bonds or Gilts, are highly sensitive to fluctuations in market interest rates. Interest receivable on bank deposits or payable on bank overdraft positions will also be affected by these fluctuations. This risk is managed by ensuring that the Trust s assets are diversified. Currency 31/03/12 GBP USD Total 31/03/11 GBP USD Total 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. The interest rate risk profile of the Trust's financial assets and liabilities at 31 March 2012 was: Total % Years , , , , , , , ,268 5, , , , , , , ,163 The prior year figures have been recategorised. 19

22 7 Notes to the Financial Statements (continued) (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. Where the Investment Managers make an investment in a bond with credit risk, that credit risk is assessed and then compared to the prospective investment return of the security in question. The risk is managed by reviewing the credit ratings of those bonds at time of purchase and on an ongoing basis. (d) Liquidity 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. (e) Derivative risk The Manager may use derivative instruments to hedge the value of the investment portfolio against market and stock specific risk through investment in warrants, options 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. No such derivatives were held by the Trust in the year to 31 March (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) Other short-term debtors and creditors Other short-term debtors and creditors have been excluded from disclosures of financial instruments. (h) Fair value of financial assets and liabilities Securities held by the Trust are valued at bid-price (see Note 1(d)). Other financial assets and liabilities of the Trust are included in the Balance Sheet at fair value. 20

23 Notes to the Financial Statements Portfolio transaction costs Analysis of total trade costs. Non-derivative securities Commissions Taxes Total costs Total trades in the year after transaction costs (continued) Purchases Sales 01/04/11 to 31/03/12 01/04/10 to 31/03/11 01/04/11 to 31/03/12 01/04/10 to 31/03/ , , , , (87) (74) (87) (74) 330, , , ,356 21

24 Distribution Tables Distributions in pence per unit Group 1 First interim Units purchased prior to 1 April 2011 Second interim Units purchased prior to 1 July 2011 Third interim Units purchased prior to 1 October 2011 Final Units purchased prior to 1 January 2012 Group 2 Income Net revenue Equalisation Distributions paid to/ payable 31/05/12 Distributions paid to 31/05/11 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final Accumulation First interim Units purchased on or after 1 April 2011 to 30 June 2011 Second interim Units purchased on or after 1 July 2011 to 30 September 2011 Third interim Units purchased on or after 1 October 2011 to 31 December 2011 Final Units purchased on or after 1 January 2012 to 31 March 2012 Net revenue Equalisation Distributions paid to/ payable 31/05/12 Distributions paid to 31/05/11 Group 1 (p) (p) (p) (p) First interim Second interim Third interim Final Group 2 (p) (p) (p) (p) First interim Second interim Third interim Final Corporate Tax A unitholder liable to corporation tax receives this distribution, excluding equalisation, as follows: All dividends % of the dividend, together with the tax credit, is received as franked investment income. All dividends % of the dividend is received as an annual payment (non-foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. The tax deemed to have been deducted is treated as income tax. All dividends % of the dividend is received as an annual payment (foreign element) received after deduction of income tax at the lower rate and is liable to corporate tax. It is treated as foreign income in the hands of the corporate investor and is liable to corporation tax. The associated deemed tax is treated as foreign tax in the hands of the investor, who may be able to claim double tax relief. Investors cannot reclaim any of this deemed tax on the foreign element from HM Revenue and Customs. 22

25 General Information The Trust St. James's Place Managed Equity and Bond 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 2 January The Unit Trust is subject to the rules of the Financial Services Authority's Collective Investment Scheme Sourcebook and is classified as a Non-UCITS retail 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 Services Authority. Investment Objectives during the year under review The investment objective of the Scheme is to provide capital appreciation and income. The Scheme will achieve this objective by investing primarily in UK and international equities and UK and international fixed interest and index linked securities, cash and near cash. The Scheme is also permitted to invest in other asset classes permitted for non-ucits retail schemes in accordance with the investment and borrowing powers set out in the prospectus including other types of transferable securities, (including, but not restricted to, the securities of investment trusts and companies which themselves invest in property), units and/or shares in other collective investment schemes, (including, but not restricted to, collective investment schemes which themselves invest in property), money market instruments, deposits, and derivatives and forward transactions (for the purposes of hedging only). It is the Manager's intention that the composition of the Scheme will enable it to qualify for inclusion in the Investment Management Association's 'Mixed Investment 20-60% Shares' Sector (formerly known as the Cautious Managed Sector). With the approval of a resolution of unitholders at an EGM held on 21 March 2012, the investment objectives of the Trust were amended on 10 April 2012 to the following: The investment objective of the Scheme is to provide capital appreciation and income. The Scheme will achieve this objective by investing in a wide range of asset classes, both directly and also indirectly via investment in derivatives and units and/or shares in other collective investment schemes (including unregulated schemes, such as hedge funds). Asset classes which the Scheme will invest in and/or seek exposure to include, but are not limited to, global equities, global fixed interest and index linked securities, immovable property and commodities (including gold). The Scheme will not invest directly in either immovable property or commodities. The Scheme may also invest in other types of transferable securities, money market instruments, deposits, cash and near cash, and 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 As a Non-UCITS retail scheme, the Trust is currently exempt from the reporting requirements of this Directive. 23

26 General Information (continued) 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, P.O. 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 the dealing day, 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. Telephone instructions are not accepted for ISA wrapped investments or the Unit Trust Investment Plan (Regular Premium Unit Trust). 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 in the Daily Telegraph and on the Manager's website: Minimum Investment The minimum lump sum investment is 1,500, thereafter the minimum additional investment is 1,000. The minimum monthly investment to the Unit Trust Investment Plan is 150 and the minimum monthly increment is 50. The minimum annual investment to the Unit Trust Investment Plan 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) (b) A Preliminary Charge of 5 per cent which is included in the offer price of the Units. An Annual Management Charge at a rate of 1.85 per cent of the value of the Trust applied during the year under review. From 1 May 2012 the Annual Management Charge was increased to a rate of 1.92 per cent. Income Distributions Income distributions are made quarterly on or before 28 February, 31 May, 31 August and 30 November each year. 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 each year. Capital Gains Tax The Trust is not liable to tax on capital gains and an individual holding units will not be liable to capital gains tax unless the total chargeable gains for the tax year 2012/2013 exceed 10,600 (2011/ ,600). 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. 24

27

28 UK members of the St. James s Place Wealth Management Group are authorised and regulated by the Financial Services Authority. St. James s Place Unit Trust Group Limited: Registered Office St. James s Place House, 1 Tetbury Road, Cirencester, Gloucestershire GL7 1FP United Kingdom. Registered in England Number Perivan Financial Print Alternative Assets (06/12)