LEI: 549300JZQ39WJPD7U596
INVESCO SELECT TRUST PLC
HALF-YEARLY FINANCIAL REPORT
SIX MONTHS ENDED 30 NOVEMBER
2023
Unless noted below all page numbers refer to the Half-Yearly
Financial Report on the Company’s website.
Investment
Objective
The
Company’s investment objective is to provide shareholders with a
choice of investment
strategies and policies, each intended to generate attractive
risk-adjusted returns.
The
Company’s share capital comprises four share classes: UK Equity
Shares, Global Equity Income Shares, Balanced Risk Allocation
Shares and Managed Liquidity Shares, each of which has its own
separate portfolio of assets and attributable
liabilities.
Investment
Policy
The
Company’s Investment Policy, which includes the objectives,
policies, risks and investment limits for the Company and the
separate portfolios, is disclosed in full on pages 44 to 46 of the
Company’s 2023 Annual Financial Report, which is available to view
or download from each of the share class web pages. Within this
report, the investment objective of each portfolio is shown at the
start of the applicable Portfolio Manager’s Report.
The Company
enables shareholders to adjust their asset allocation to reflect
their views of prevailing market conditions by means of an
opportunity to convert between share classes, free of UK capital
gains tax, every three months.
Financial
Performance
Cumulative
Total Returns(1)(2)
To
30 November 2023
|
|
Six
|
One
|
Three
|
Five
|
|
UK
Equity Share Portfolio
|
Months
|
Year
|
Years
|
Years
|
|
Net Asset
Value
|
3.2%
|
4.7%
|
30.2%
|
36.7%
|
|
Share
Price
|
0.7%
|
–0.2%
|
12.9%
|
17.8%
|
|
FTSE
All–Share Index
|
1.6%
|
1.8%
|
27.3%
|
26.8%
|
|
|
|
|
|
|
|
|
Six
|
One
|
Three
|
Five
|
|
Global
Equity Income Share Portfolio
|
Months
|
Year
|
Years
|
Years
|
|
Net Asset
Value
|
8.4%
|
16.8%
|
52.2%
|
68.1%
|
|
Share
Price
|
7.0%
|
12.8%
|
33.2%
|
48.4%
|
|
MSCI World
Index (£)
|
6.4%
|
6.3%
|
29.3%
|
62.1%
|
|
|
|
|
|
|
|
|
Six
|
One
|
Three
|
Five
|
|
Balanced
Risk Allocation Share Portfolio
|
Months
|
Year
|
Years
|
Years
|
|
Net Asset
Value
|
2.7%
|
–0.8%
|
0.3%
|
16.4%
|
|
Share
Price
|
–8.4%
|
–4.4%
|
–18.0%
|
–8.1%
|
|
Composite
Benchmark Index(3)
|
5.2%
|
–5.2%
|
1.9%
|
5.9%
|
|
ICE BoA
Merrill Lynch 3 month LIBOR plus 5% per annum
|
5.1%
|
9.4%
|
20.3%
|
31.8%
|
|
|
|
|
|
|
|
|
Six
|
One
|
Three
|
Five
|
|
Managed
Liquidity Share Portfolio
|
Months
|
Year
|
Years
|
Years
|
|
Net Asset
Value
|
2.5%
|
5.3%
|
8.6%
|
12.1%
|
|
Share
Price
|
6.1%
|
0.6%
|
–3.4%
|
–1.4%
|
Period
end Net Asset Value, Share Price and Discount
|
|
Net
Asset
|
Share
|
|
|
|
Value
|
Price
|
Premium/
|
|
Share
Class
|
(pence)
|
(pence)
|
(Discount)
|
|
UK
Equity
|
184.63
|
157.25
|
(14.8)%
|
|
Global
Equity Income
|
284.52
|
245.00
|
(13.9)%
|
|
Balanced
Risk Allocation
|
150.59
|
117.50
|
(22.0)%
|
|
Managed
Liquidity
|
111.29
|
95.50
|
(14.2)%
|
(1) Alternative
Performance Measure (APM). See pages 41 to 44 for the explanation
and calculation of APMs. Further details are provided in the
Glossary of Terms and Alternative Performance Measures in the
Company’s 2023 Annual Financial Report.
(2)
Source:
LSEG Data & Analytics.
(3)
With effect
from 1 June 2021, the benchmark
adopted by the Balanced Risk Allocation Share Portfolio is
comprised of 50% 30-year UK Gilts Index, 25% GBP hedged MSCI World
Index (net) and 25% GBP hedged S&P Goldman Sachs Commodity
Index. Prior to this, the benchmark was ICE BoA Merrill Lynch 3
month LIBOR plus 5% per annum. Accordingly, both the new and old
benchmark are shown.
Chairman’s
Statement
Introduction
Your
Company was launched in 2006 with a multi-share class structure to
enable Shareholders to invest in a wide array of asset classes and
to rebalance their portfolio by allowing them to convert,
tax-efficiently between share classes.
Your
Company’s share capital comprises four share classes: UK Equity
Shares, Global Equity Income Shares, Balanced Risk Allocation
Shares and Managed Liquidity Shares, each of which has its own
separate portfolio of assets and attributable
liabilities.
Your
Company’s investment policy is disclosed in full on pages 44 to 46
of the Company’s 2023 Annual Financial Report.
Performance
In net
asset value (NAV) total return terms, with dividends reinvested,
the UK Equity Share Portfolio returned +3.2% over the six months to
the end of November 2023, and +0.7%
on the share price, compared with its benchmark, the FTSE All-Share
Index total return of +1.6%. The top contributor to the NAV
outperformance was strong stock selection in the consumer
discretionary and consumer staples sectors. Gearing also
contributed positively over the period. The largest detractor came
from holdings in the basic materials sector.
The Global
Equity Income Share Portfolio returned +8.4% in NAV terms, and
+7.0% on the share price (both on a total return basis), compared
with its benchmark, the MSCI World Index (£) total return over the
period of +6.4%. The biggest stock contributors to the portfolio’s
outperformance were Rolls-Royce, KKR & Co and Aker BP.
Detractors came predominantly from companies whose revenues are
exposed to China.
The
Balanced Risk Allocation Share Portfolio returned +2.7% in NAV
terms, and –8.4% on the share price (both on a total return basis).
The portfolio’s benchmark, the Composite Benchmark Index returned
+5.2%. Commodities especially, as well as equities, contributed
positively to the portfolio’s performance, however, the government
bond allocation negatively affected the overall performance of the
portfolio, as interest rates were raised across the
globe.
The Managed
Liquidity Share Portfolio had a total return of +2.5% based on NAV
and +6.1% based on the share price. The higher interest rate
environment contributed positively to the portfolio’s income yield,
although returns were tempered by the effect of increased yields on
capital gains.
The
Portfolio Managers provide a detailed overview of their respective
portfolio’s performance during the period including, where
applicable, further information on key contributors and detractors
to performance and their views on the outlook in their reports,
which follow on pages 4 to
25.
Gearing
The UK
Equity and Global Equity Income Share Portfolios are able to employ
gearing by means of a £40 million bank loan facility. The Portfolio
Managers continue to use this facility tactically and actively,
increasing or reducing the level to take advantage of market
opportunities. The gross gearing level at 30
November 2023 was 10.4% and 0.1% on the UK Equity Share
Portfolio and the Global Equity Income Share Portfolio,
respectively.
Dividends
Your Board
has declared equal first, second and third quarterly dividends for
the current year for each of the equity share classes. For both the
UK Equity Shares and the Global Equity Income Shares each of these
dividends was 1.60p, making 4.80p declared for the financial year
to date.
Your Board
recognises that income is an important component of the total
return of these share classes and the ability of companies to make
dividend distributions is closely monitored. As I reported in your
Company’s Annual
Financial Report, for the year ending 31 May
2024, your Board will target at least maintaining the
dividend level from year to year for each of the UK Equity and
Global Equity Income Shares. Depending on the level of income
received in the relevant quarters, the quarterly dividends for each
share class may be enhanced with contributions from capital and
your Board has continued with the policy of a partial augmentation
from capital where it was felt appropriate to do so.
It remains
the case that in order to maximise the capital return on the
Balanced Risk Allocation Shares, your Board only intend to declare
dividends on the Balanced Risk Allocation Shares to the extent
required, having taken into account the dividends paid on the other
share classes, to maintain your Company’s status as an investment
trust. As set out in the Annual Financial Report, the Board
declared an interim dividend for the current financial year, of
1.00p per share for the Balanced Risk Allocation Shares and, in
expectation of higher levels of income being received by the
portfolio, a special dividend of 2.00p per share, making a total of
3.00p declared for the financial year to date.
Again, as
set out in the Annual Financial Report, a dividend of 1.00p has
been paid in respect of the current financial year on the Managed
Liquidity Shares. This was paid from retained revenue reserves.
Given the income yield quantum involved it is unlikely that such
payments will be more frequent than annually and may indeed be less
frequent.
Discount
and Share Buy Backs
Your
Company continues to operate a discount control policy for all four
share classes. During the period, the Company bought back 1,168,169
UK Equity Shares at an average price of 152.9p and 153,963 Global
Equity Income Shares at an average price of 233.8p. Since the end
of the period the Company has bought back a further 270,974 UK
Equity Shares at an average price of 158.8p.
Share
Class Conversions
Your
Company enables Shareholders to adjust their asset allocation to
reflect their views of future market conditions. Shareholders have
the opportunity to convert their holdings of shares into any other
class of share, without incurring any tax charge (under current
legislation). The total number of share class conversions that have
occurred over the first two conversion opportunities resulted in
net flows of £1.4 million out of the UK Equity Share Portfolio; of
£1.6 million into the Global Equity Income Share Portfolio; of £0.2
million out of the Balanced Risk Allocation Share Portfolio; and
£0.1 million into the Managed Liquidity Share Portfolio. In order
to facilitate the Restructuring Proposals, announced on
14 December 2023, the Board has
determined to postpone the conversion that would have taken place
in February 2024.
Restructuring
Proposals
As
described in the announcement of 14 December
2023, your Board has undertaken a review of your Company and
its strategy, with the objective of broadening the appeal of the
Company as well as improving liquidity and narrowing the discount
at which the Company’s shares trade. Consequently, your Board
intends to put forward proposals to the Company’s Shareholders
imminently, to simplify the Company’s corporate structure and to
introduce certain features that we believe will appeal to a broad
investor base.
In recent
years, your Company has seen a limited take-up of the conversion
opportunities between the existing four share classes. The Balanced
Risk Allocation Class and the Managed Liquidity Class now amount
to, in aggregate, only circa 3.7% of the net assets of your Company
as at 5 February 2024. Further, with
demand from investors for larger, more liquid investment vehicles,
your Board believes it could be increasingly challenging to market
separately the Global Share Class and the UK Share Class in their
current forms, with the structure potentially presenting an
additional hurdle for those looking to invest.
Your Board
believes that the Global universe offers the broadest set of
investment opportunities for equity investors whilst also providing
diversification benefits for UK investors. Additionally, your Board
has confidence in its award-winning Global Equity Income fund
manager, Stephen Anness, to continue
to seek out investment opportunities for the ongoing benefit of
Shareholders. Your Board believes his approach to be rigorous,
differentiated and balanced. Under Stephen’s stewardship the Global
Equity Income Share Portfolio has delivered strong, sector-leading
NAV total return performance over both one and three year
periods(1).
Accordingly,
your Board has concluded that it would be in the best interests of
Shareholders as a whole to consolidate the UK Equity, Balanced Risk
Allocation and Managed Liquidity share classes into the Global
Share Class. As part of this consolidation your Board will put
forward a 15% tender offer on the UK Equity Share Class.
Additionally, given the Balanced Risk Allocation and Managed
Liquidity share classes offer significantly differentiated risk
profiles and asset exposures to the Global Equity Income Share
Class, your Board will provide those two share classes with the
opportunity for a full cash exit through tender offers. The tender
offer prices will be based on the NAVs of the respective share
classes less the costs of the proposals, including those incidental
costs of the tender offers, less a 2% discount.
Based on
NAVs as at 5 February 2024 and on an
assumption that the tender offers are subscribed in full, the
consolidation would result in your Company having net assets of
approximately £182million. As compared with any of your Company’s
current share classes individually, your Board believes this should
increase the appeal to investors and would be expected to have a
beneficial impact on liquidity, and potentially on the discount of
the enlarged Global Equity Income Share Class.
The
investment objective and investment policy of the Global Equity
Income Share Class will be retained, reflecting your Board’s
confidence in Stephen’s investment process as well as the strength
and depth of his team. In the recent Citywire Investment Trust
Awards 2023, held in November, Stephen
Anness and his team won ‘Best International Income Trust’,
which awards three year NAV growth and shareholder returns, for
their best-in-class risk-adjusted performance(2).
Additionally, further recognition of your manager’s performance
came from Kepler Trust Intelligence who awarded the Global Equity
Income Share Class with a ‘Kepler Growth Rating’(2).
In
recognition of the increasing importance of dividends to
Shareholders in the current economic environment, your Board
intends, subject to Shareholder approval of the proposals, to
enhance the current dividend policy of the Global Equity Income
Share Class, which consists of three equal interim dividends and a
`wrap-up’ fourth interim dividend. The new policy will involve
paying at least 4 per cent. calculated on the unaudited year end
NAV, paid quarterly in equal amounts. The intention would be that
these dividends would predominantly be paid from your Company’s
revenues and topped up from capital reserves as required. Your
Board believes that this should provide both an enhanced dividend
compared to current levels on the Global Equity Income Share Class
and, once the relevant NAV is known, a smoother, predictable income
stream for Shareholders.
If the
restructuring proposals are approved, your Board intends to put
forward a vote at your Company’s AGM in 2026 for the continuation
of your Company.
If the 2026
continuation vote is passed your Board will put forward a
continuation vote at the AGM in 2031 and, if passed, at each fifth
AGM thereafter.
Your Board
also intends to introduce a discount control policy in the enlarged
Global Equity Income Share Class which will seek to maintain the
discount at less than 10%, in normal market conditions.
These
proposals will require the approval of Shareholders. Your Board has
received indications of support for the proposals from those
Shareholders it was able to consult through market soundings. Your
Company anticipates being able to publish a circular and notice of
meetings in connection with the proposals imminently.
Outlook
NAV total
returns from the period 30 November
2023 to 31 January 2024 versus
each respective benchmark are as follows:
• UK
Equity Share Portfolio: 3.0% v 3.1%
• Global
Equity Income Share Portfolio: 5.0% v 5.5%
• Balanced
Risk Allocation Share Portfolio: 3.3% v 4.6%
• Managed
Liquidity Share Portfolio: 1.0% (no benchmark)
The
performance of the underlying portfolios and the rating of the
individual share classes continue to be monitored closely by your
Board.
As
indicated above, I anticipate that the circular and notice of
general and class meetings will shortly be dispatched and made
available online to Shareholders. I encourage Shareholders to
attend the meetings and vote their shares in favour of the
proposals, as your Board intend to do so for their respective
shareholdings.
After
publication, the Circular will be made available on the Invesco
website.
Additionally,
your Board aims to include further supporting information including
an update from the fund manager of the Global Equity Income Share
Portfolio, Stephen
Anness.
Please note
that any supporting materials do not replace the Circular which
contains all the essential information relating to the proposal,
including the timetable and any actions requiring your
attention. If
you have any questions on this proposal or any other matter, then
do make contact, in the first instance by contacting your Company
Secretary, at james.poole@invesco.com who will co-ordinate a
response. Your Board looks forward to meeting Shareholders at your
Company’s upcoming general and class meetings.
Victoria Muir
Chairman
8 February 2024
(1)
Source: JP
Morgan Cazenove Investment Companies Daily Interactive Statistics
as at 30 November 2023.
(2)
Please
refer to the respective Company website for further information and
methodology.
UK
Equity Share Portfolio Performance Record
Total
Return
|
|
Six
Months to 30 November
2023
|
Year
To
31
May
2023
|
Year
to
31
May
2022
|
Year
to
31
May
2021
|
Year
to
31
May
2020
|
|
|
|
|
|
Net Asset
Value(1)
|
3.2%
|
–2.6%
|
6.8%
|
34.6%
|
–12.4%
|
|
Share
Price(1)
|
0.7%
|
–4.7%
|
3.0%
|
31.6%
|
–16.2%
|
|
FTSE
All-Share Index(1)
|
1.6%
|
0.4%
|
8.3%
|
23.1%
|
–11.2%
|
|
Revenue
return per share
|
3.51p
|
6.40p
|
6.00p
|
3.90p
|
4.12p
|
|
Dividends
|
3.20p
|
7.05p
|
6.70p
|
6.65p
|
6.60p
|
(1) Source:
LSEG Data & Analytics.
UK
Equity Share Portfolio Managers’ Report
Q: How
did the portfolio perform in the six months under
review?
A: The
portfolio outperformed its benchmark over the six months to
30 November 2023, with a net asset
value return of +3.2%. Over the same period the FTSE All-Share
Index rose +1.6%.The portfolio was ranked 4th out of 21 trusts in
the Association of Investment Companies (‘AIC’) UK Equity Income
Sector peer group over this period, 6th over one and three years
and 4th over five years(1),
so in the top 25% of comparable peers over each of those
periods.
Over the
six-month period the UK equity market was focused on UK inflation
figures which continued to fall. The November print of CPI was 3.9%
which compared with a figure of 8.7% in May
2023. UK interest rates peaked at 5.25% in August and have
remained unchanged since. The Bank of England expects growth to be flat in the
fourth quarter of 2023 into 2024. Comments from the central bank
confirmed that interest rates would need to remain at elevated
levels for some time to ensure that inflation was properly under
control despite the risk of tipping the economy into a mild
recession. Most commentators now expect the first rate cut to be in
the third quarter of 2024 but the push and pull of various data,
particularly employment and inflation data, makes it difficult to
predict with certainty.
UK wage
growth slowed in the three months to September, with the Office for
National Statistics (‘ONS’) data additionally showing that hiring
slowed with vacancies also falling. Additional data from the ONS
showed that average total pay grew at an annual rate of 7.7% in the
three months to September in comparison to a year ago. An easing
jobs market combined with falling inflation in the coming months
would further support the cutting of interest rates.
Meanwhile,
UK consumer confidence unexpectedly rose in November according to
research group GfK. The consumer confidence index, a measure of how
people view their personal finances and wider economic prospects,
showed signs of resilience in the economy. This data dampened
expectations of interest rate cuts, which in turn pushed the pound
to a 12-week high.
In the
Chancellor of the Exchequer’s Autumn Statement, Jeremy Hunt cut national insurance and extended
the business tax relief scheme for retail, hospitality and leisure
businesses, in what he called an ‘Autumn Statement for growth’.
However, the tax burden is still on track to reach a post-war high
by 2028.
Within the
FTSE All-Share Index the technology sector, albeit small, has been
the best performing sector overall. Elsewhere, energy stocks in
particular have performed well over the period, whilst basic
materials and industrials also performed strongly. On the flipside
the weaker sectors have been healthcare, telecoms and consumer
staples.
Q: What
were the key contributors and detractors to performance over the
year?
A: At
a sector level six out of eleven of the sectors saw a positive
relative performance versus the benchmark with strong stock
selection exhibited in the consumer discretionary and consumer
staples sectors. The largest contribution to positive performance
versus the benchmark over the six-month period was the portfolio’s
overweight to the consumer discretionary sector.
Next and
RELX
both
performed well. A trading update from Next
showed
strong resilience in the first half of the year as they increased
guidance for the full year for the third time this year.
RELX
was a
significant contributor to performance after reporting first half
results ahead of expectations and a favourable outlook for the rest
of the year. In the same sector Future
also
contributed to relative performance following a strong trading
update, reporting that audience numbers had stabilised. Some of the
positive performance was eroded by the portfolio’s position in
non-index stock Young
& Co’s Brewery,
and CVS
which was
weaker following an announcement by the Competition and Markets
Authority that it will do a review of the veterinary care sector.
Not holding gaming stocks Flutter Entertainment and Entain in the
portfolio also helped contribute to positive attribution relative
to the benchmark.
XPS
Pensions, a UK
pensions consultancy, was the biggest contributor within financials
after a well-received interim results report showing continued good
growth.
Industrial
stock Ferguson
also
contributed strongly following fourth quarter results ahead of
expectations leading the company to increase guidance for 2024.
Within the same sector defence contractor Babcock
International provided
substantial outperformance following an announcement that it had
won a new contract and was in talks regarding a long-term strategic
partnership with the Royal Navy. The share price was further
boosted following strong full-year results, a more promising
outlook and an analyst upgrade. The company also provided a
positive trading update later in the period which further
benefitted performance.
Basic
Materials was the largest area of detraction for the portfolio.
Within the sector specialist chemicals company Croda
International and the
portfolio’s holding in Treatt,
the flavour and fragrance manufacturer, were the largest
detractors. Croda
International issued a
second profits warning in five months citing customers reducing
stock which was piled up during the pandemic and consumers spending
less on their beauty regimes. Treatt
suffered
from similar destocking issues. Meanwhile, the portfolio’s holdings
in gold mining stocks
Barrick Gold and
Newmont
were flat
over the period as precious metals saw some weakness over the
period following central banks guidance that further interest rate
rises may stay ‘higher for longer’. The decision not to hold
positions in Glencore and Rio Tinto, which performed strongly, also
detracted from relative performance.
The
portfolio’s stock selection and overweight position in utilities
detracted from performance. Drax,
formerly a coal-fired power station operator, has already
transitioned to using renewable biomass for electricity generation
and is now looking to become carbon negative through new bioenergy
carbon capture and storage (‘BECCS’) projects.
Sentiment
was tested by negative news flow and by comments in the market
around working capital arrangements reported by the company. In our
view Drax
remains key
to helping the UK achieve its net zero targets through large-scale
Power BECCS and its working capital is appropriately managed and
well disclosed.
Health care
was a further area of detraction within the portfolio.
PureTech
Health fell in the
quarter despite half year results noting that drug development
remains on track, and the pipeline continues to build. The share
price remained particularly volatile in the face of challenging
macro conditions for biotechs due to funding pressures, higher
interest rates, and a general risk-off sentiment amongst
investors. Smith
& Nephew detracted
from performance following first half results coming in lower than
expected. There was a further detractor in the sector from not
holding GSK. There was also a helpful contribution from the
portfolio’s underweight in AstraZeneca, a position which was sold
during the period.
|
|
|
30
November 2023
|
|
|
Performance
Impact
|
Portfolio
Weight
|
|
Key
Contributors
|
%
|
%
|
|
Next
|
+0.96
|
5.0
|
|
AstraZeneca
|
+0.80
|
–
|
|
XPS
Pensions
|
+0.65
|
2.0
|
|
RELX
|
+0.53
|
5.6
|
|
Ferguson
|
+0.39
|
3.1
|
|
|
|
30
November 2023
|
|
|
Performance
Impact
|
Portfolio
Weight
|
|
Key
Detractors
|
%
|
%
|
|
Drax
|
–0.56
|
2.1
|
|
CVS
|
–0.37
|
1.1
|
|
PureTech
Health
|
–0.35
|
0.7
|
|
Croda
International
|
–0.34
|
1.2
|
|
Phoenix
|
–0.33
|
2.3
|
Q: How
has gearing impacted the performance and what is your strategy
going forward?
A: The
use of gearing in the portfolio over the period was helpful to
overall performance. Gearing over the six-month period was in the
range of 6% to 8% before rising to 10% in November. This level is
below the limit of 25% set by the Board.
The level
of gearing is under regular review. In the current higher interest
rate environment, the cost of gearing the portfolio is an important
consideration when ascertaining the appropriate level for the
portfolio. We are comfortable that the current level of gearing
provides an opportunity to enhance the portfolio’s returns relative
to the FTSE All-Share
Index when considering a wider macro view and the opportunities in
the portfolio.
Q: Have
your views on inflation changed over the six-month period and have
you altered your approach at all as a result?
A: Our
view for some time has been that inflation would remain higher for
longer and that view has not changed over the last six months.
Despite year-on-year inflation figures declining we think that to
reach the Bank of England’s target of 2% from this point will be
trickier. Our expectations are that the first cut to interest rates
will likely come in the second half of 2024. For the businesses in
which we invest, this means that the cost of capital will remain at
these higher levels for longer than perhaps expected. Our focus has
been for some time to concentrate on strong businesses with pricing
power and robust balance sheets. We think this prudent and our view
in this regard has not changed.
Q: How
has the portfolio evolved over the period and how is it currently
positioned?
A: On
a sectoral basis and relative to the FTSE All-Share Index, we
remain over-weight utilities and consumer discretionary stocks. The
overweight to utilities offers an inflation-linked return that is
attractive in our view and is underappreciated by the market. Our
exposure to energy has also been maintained as these companies
generate significant free cash flows and make significant
distributions to shareholders. We expect oil prices to be volatile
in the coming months with the geopolitics looking evermore complex
and as Organization of the Petroleum Exporting Countries (‘OPEC’)
continues to manage supply. These energy businesses continue to
invest in renewables and so it is also possible that they will
benefit from a rerating as they are rewarded for their increased
and continued commitment to invest in low carbon energy projects.
We favour oil over mining, given the drivers for oil (global
demand, OPEC’s role in supply) versus metals and the dependence of
the latter on demand from China.
An additional argument in their favour is that oil producers offer
higher free cash flow and distribution yields than miners. We
hold Shell
and
BP.
Their dividend yields are between 3.5% and 4%, but one must also
take into account the number of shares they are buying back, which
enhances overall returns.
We remain
under-weight healthcare and consumer staples, the latter we see as
expensive. Within financials we are underweight in general but
within banks we hold sizeable positions in Barclays
and
Lloyds.
Barclays
has had its
challenges, but just looking in terms of profitability and returns,
performance is dramatically improved. It has exceeded its financial
targets for the past three years and management are promising a new
set of targets and that has the potential to help kick-start a
share price recovery. Within life assurance we hold
Phoenix,
Legal
& General and
Chesnara,
which has more international exposure than the others.
We have a
holding in British
American Tobacco (‘BAT’). The key
attraction here is its rapidly growing next-generation or Reduce
Risk Products (‘RRP’) business, which is now contributing
increasingly to profits and pointing to a future for
BAT
beyond
tobacco. We cannot ignore the health hazards of smoking, but they
are showing how they can move beyond tobacco. The dividend yield is
now around 9% and continues to grow at the same time as the company
is paying down debt.
We are
excited by all these holdings but we also see opportunities
elsewhere, for example among the higher-growth companies in
interesting niches where we can still find attractively priced
opportunities. Here we would count companies like
Experian,
RELX,
Whitbread
and recent
purchases, Haleon
and
London
Stock Exchange (‘LSE’). These are
all leaders in their respective industries and have strong track
records.
Over the
period we removed two holdings from the portfolio. Hays had been
sold due to concerns around the investment case and strategy
following a change in management, and AstraZeneca has been sold
following a loss of conviction in the investment case.
Q: What
is your outlook for the next twelve months and beyond? Why invest
in the UK now?
A: Like
many other UK equity fund managers, we have been saying for some
time that the UK is cheap and we sincerely believe that this has
created an attractive starting point to make good returns from
here. Whilst until recently this value was concentrated in what are
sometimes referred to as “old economy” stocks and sectors, we have
now seen the derating of shares in many higher growth companies so
that attractively valued companies are now available in many areas
of the market as described in the previous section with regard to
portfolio positioning.
In
referring to “old economy” stocks we are referring to relatively
mature, lower growth companies that in the absence of compelling
growth investment opportunities can return the bulk of the cash
flows they generate to shareholders via dividends and in many cases
share buybacks. The disconnect between the share prices and the
income generated results in a starting yield, and importantly a
yield that can grow, that looks hugely compelling both in absolute
terms and on a risk adjusted basis.
It is not
uncommon to be able to purchase a share at a level that suggests
the expected dividends in the next twelve months represent a yield
of 6-10%. At that level, the dividend alone offers a good
investment return, and that is before considering growth in the
earnings and cashflows that pay the dividends. In many cases the
per share growth will be enhanced by share buybacks (which shrink
the number of shares and so grow the dividend per share).
Investment cases for the best companies in this cohort certainly do
not rely on any capital growth from a future re-rating of the
valuation, but that would of course enhance returns further. We
believe that the total return potential is compelling both versus
history and also against a backdrop of gilts now paying a fixed
yield of around 4%.
Investing
always involves the unexpected but potential future bad news seems
already to be priced into many of these shares. It is hard to think
of what that news could be to justify the current valuations across
the life insurance, oil, mining, tobacco and bank sectors. Taking
advantage of the broader market malaise we hold stocks in each of
these five areas.
We can also
point to multiple examples of UK listed companies that are trading
on lower multiples than their US peer group. The negative sentiment
generated by the UK economy is frustrating. But the
UK stockmarket
is not a proxy for the UK economy – 75% of its revenues are derived
from overseas. It includes a large number of fantastic global
leaders. At some point investors are going to realise what they are
missing out on.
We are
maintaining our focus on companies that are of good quality, with
sound fundamentals and strong cash generation. Careful selection of
stocks with strong liquidity, means we can remain active and
maintain a portfolio of our highest conviction ideas, across a
range of sectors. We remain confident in the long-term prospects of
the companies that we own in the UK Equity Share Portfolio. We
further believe that these companies have the potential to
strengthen their competitive positions in the year ahead
irrespective of the economic and market regime that will
develop.
Ciaran Mallon & James
Goldstone
Joint
Portfolio Managers
8 February 2024
UK
Equity Share Portfolio List of Investments
AT 30 November
2023
Ordinary
shares listed in the UK unless stated otherwise
|
|
|
Market
|
|
|
|
|
Value
|
%
of
|
|
Company
|
Sector†
|
£’000
|
Portfolio
|
|
Shell
|
Oil, Gas
And Coal
|
8,414
|
6.2
|
|
RELX
|
Media
|
7,576
|
5.6
|
|
Next
|
Retailers
|
6,802
|
5.0
|
|
SSE
|
Electricity
|
6,669
|
4.9
|
|
BP
|
Oil, Gas
and Coal
|
6,368
|
4.7
|
|
National
Grid
|
Gas, Water
and Multi-Utilities
|
5,810
|
4.3
|
|
Barrick
Gold – US
Listed
|
Precious
Metals and Mining
|
4,379
|
3.2
|
|
Ferguson
|
Industrial
Support Services
|
4,217
|
3.1
|
|
Barclays
|
Banks
|
4,216
|
3.1
|
|
Bunzl
|
General
Industrials
|
3,776
|
2.8
|
|
Top
Ten Holdings
|
|
58,227
|
42.9
|
|
Experian
|
Industrial
Support Services
|
3,755
|
2.8
|
|
PRS
REIT
|
Real Estate
Investment Trusts
|
3,661
|
2.8
|
|
Tesco
|
Personal
Care, Drug and Grocery Stores
|
3,519
|
2.6
|
|
Phoenix
|
Life
Insurance
|
3,102
|
2.3
|
|
Legal &
General
|
Life
Insurance
|
3,011
|
2.2
|
|
Young &
Co’s Brewery – Non-Votingᴬᴵᴹ
|
Travel and
Leisure
|
2,932
|
2.1
|
|
Drax
|
Electricity
|
2,834
|
2.1
|
|
British
American Tobacco
|
Tobacco
|
2,814
|
2.0
|
|
United
Utilities
|
Gas, Water
and Multi-Utilities
|
2,747
|
2.0
|
|
XPS
Pensions
|
Investment
Banking and Brokerage Services
|
2,728
|
2.0
|
|
Top
Twenty Holdings
|
|
89,330
|
65.8
|
|
Ashtead
|
Industrial
Transportation
|
2,456
|
1.8
|
|
Newmont
– US
Listed
|
Precious
Metals and Mining
|
2,304
|
1.7
|
|
Compass
|
Consumer
Services
|
2,300
|
1.7
|
|
Whitbread
|
Travel and
Leisure
|
2,240
|
1.6
|
|
Chemring
|
Aerospace
and Defence
|
2,129
|
1.6
|
|
Coats
|
General
Industrials
|
2,124
|
1.6
|
|
Severn
Trent
|
Gas, Water
& Multi-Utilities
|
2,112
|
1.5
|
|
JD Sports
Fashion
|
Retailers
|
2,055
|
1.5
|
|
Smith &
Nephew
|
Medical
Equipment and Services
|
1,986
|
1.5
|
|
Babcock
International
|
Aerospace
and Defence
|
1,978
|
1.5
|
|
Top
Thirty Holdings
|
|
111,014
|
81.8
|
|
Sirius Real
Estate
|
Real Estate
Investment Trusts
|
1,932
|
1.4
|
|
Lancashire
|
Non-life
Insurance
|
1,921
|
1.4
|
|
Lloyds
|
Banks
|
1,876
|
1.4
|
|
London
Stock Exchange
|
Finance and
Credit Services
|
1,756
|
1.3
|
|
JTC
|
Investment
Banking and Brokerage Services
|
1,750
|
1.3
|
|
Cranswick
|
Food
Producers
|
1,733
|
1.2
|
|
Hiscox
|
Non-life
Insurance
|
1,590
|
1.2
|
|
Croda
International
|
Chemicals
|
1,587
|
1.2
|
|
Man
|
Investment
Banking and Brokerage Services
|
1,576
|
1.1
|
|
Chesnara
|
Life
Insurance
|
1,458
|
1.1
|
|
Top
Forty Holdings
|
|
128,193
|
94.4
|
|
CVSᴬᴵᴹ
|
Consumer
Services
|
1,295
|
1.1
|
|
Nicholsᴬᴵᴹ
|
Beverages
|
1,285
|
0.9
|
|
Haleon
|
Pharmaceuticals
and Biotechnology
|
1,274
|
0.9
|
|
PureTech
Health
|
Pharmaceuticals
and Biotechnology
|
986
|
0.7
|
|
Essentra
|
Industrial
Support Services
|
895
|
0.7
|
|
Treatt
|
Chemicals
|
743
|
0.5
|
|
Future
|
Media
|
707
|
0.5
|
|
Sherborne
Investors (Guernsey) C
|
Investment
Banking and Brokerage Services
|
389
|
0.3
|
|
Total
Holdings 48 (2023: 47)
|
|
135,767
|
100.0
|
AIM Investments
quoted on AIM.
† FTSE
Industry Classification Benchmark.
UK
Equity Share Portfolio Income Statement
|
|
Six
months ended
|
Six
months ended
|
|
|
30
November 2023
|
30
November 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Gains/(losses)
on investments held at fair value
|
–
|
1,565
|
1,565
|
–
|
(8,554)
|
(8,554)
|
|
Losses on
foreign exchange
|
–
|
(3)
|
(3)
|
–
|
(5)
|
(5)
|
|
Income
|
2,772
|
–
|
2,772
|
2,948
|
–
|
2,948
|
|
Investment
management fees – note 2
|
(100)
|
(233)
|
(333)
|
(106)
|
(246)
|
(352)
|
|
Other
expenses
|
(181)
|
(1)
|
(182)
|
(248)
|
(1)
|
(249)
|
|
Net return
before finance costs and taxation
|
2,491
|
1,328
|
3,819
|
2,594
|
(8,806)
|
(6,212)
|
|
Finance
costs – note 2
|
(85)
|
(197)
|
(282)
|
(54)
|
(126)
|
(180)
|
|
Return
before taxation
|
2,406
|
1,131
|
3,537
|
2,540
|
(8,932)
|
(6,392)
|
|
Tax – note
3
|
(14)
|
–
|
(14)
|
(28)
|
–
|
(28)
|
|
Return
after taxation for the financial period
|
2,392
|
1,131
|
3,523
|
2,512
|
(8,932)
|
(6,420)
|
|
Return per
ordinary share – note 4
|
3.51p
|
1.65p
|
5.16p
|
3.47p
|
(12.35)p
|
(8.88)p
|
Summary
of Net Assets
|
|
At
|
At
|
|
|
30
November
|
31
May
|
|
|
2023
|
2023
|
|
|
£’000
|
£’000
|
|
Fixed
assets
|
135,767
|
134,346
|
|
Current
assets
|
892
|
1,010
|
|
Creditors
falling due within one year, excluding borrowings
|
(268)
|
(270)
|
|
Bank
facility
|
(12,850)
|
(9,650)
|
|
Net
assets
|
123,541
|
125,436
|
|
Net asset
value per ordinary share – note 5
|
184.63p
|
182.11p
|
|
Gearing:
|
|
|
|
–
gross
|
10.4%
|
7.7%
|
|
–
net
|
10.2%
|
7.5%
|
Summary
of Changes in Net Assets
|
|
Period
ended
30
November
2023
£’000
|
Year
ended
31
May
2023
£’000
|
|
|
|
|
|
|
|
Net assets
brought forward
|
125,436
|
143,374
|
|
Shares
bought back and held in treasury
|
(1,795)
|
(6,286)
|
|
Share
conversions
|
(1,438)
|
(1,995)
|
|
Return
after taxation for the financial period/year
|
3,523
|
(4,676)
|
|
Dividend
paid
|
(2,185)
|
(4,981)
|
|
Net assets
at the period/year end
|
123,541
|
125,436
|
Global
Equity Income Share Portfolio Performance
Record
Total
Return
|
|
Six
Months to
30
November 2023
|
Year
to
31
May
2023
|
Year
to
31
May 2022
|
Year
to
31
May
2021
|
Year
to
31
May
2020
|
|
|
|
|
|
Net Asset
Value(1)
|
8.4%
|
9.8%
|
9.6%
|
35.9%
|
–6.4%
|
|
Share
Price(1)
|
7.0%
|
4.6%
|
4.4%
|
32.6%
|
–6.1%
|
|
MSCI World
Index (£)(1)
|
6.4%
|
3.8%
|
7.4%
|
22.3%
|
8.9%
|
|
Revenue
return per share
|
2.06p
|
5.20p
|
4.85p
|
3.95p
|
5.39p
|
|
Dividends
|
3.20p
|
7.20p
|
7.15p
|
7.10p
|
7.05p
|
(1) Source:
LSEG Data & Analytics.
Global
Equity Income Share Portfolio Manager’s Report
Q: How
has the portfolio performed over the period?
A: Over
the last six months, the portfolio returned +8.4%, outperforming
its benchmark, MSCI World Index, which delivered +6.4% over the
same period. Over the twelve-month period from November 2022, the portfolio also outperformed,
achieving +16.8% versus 6.3% for the benchmark. All figures are in
£ terms, total return basis.
|
|
|
30
November 2023
Portfolio
Weight
%
|
|
|
Performance
Impact
|
|
Key
Contributors
|
%
|
|
Rolls-Royce
|
0.90
|
2.1
|
|
KKR &
Co
|
0.87
|
2.8
|
|
Aker
BP
|
0.84
|
3.3
|
|
Universal
Music
|
0.73
|
2.2
|
|
Progressive
|
0.63
|
3.2
|
|
|
|
30
November 2023
Portfolio
Weight
%
|
|
|
Performance
Impact
|
|
Key
Detractors
|
%
|
|
Royal
Unibrew
|
–1.06
|
2.4
|
|
AIA
|
–0.70
|
3.4
|
|
Reckitt
Benckiser
|
–0.64
|
2.9
|
|
Link
REIT
|
–0.46
|
1.2
|
|
Kone
|
–0.44
|
—
|
On the
positive side, Rolls-Royce
benefitted
after raising their profit outlook, driven by strong performance
from its civil aerospace and defence divisions. Rolls-Royce
sits firmly
in the third bucket of how we think about the structure of the
portfolio – Dividend Restoration – and we’re pleased to see the
turnaround story taking shape.
Meanwhile,
KKR
& Co, a private
equity group, also rallied off the back of strong trading results
and news that they were increasing their stake in one of their
portfolio companies which was viewed favourably by the
markets. Aker
BP, one of
the lowest cost producers of oil (and cleanest) was boosted by the
rally in oil prices.
The two
other leading performers were examples of high-quality businesses
we felt the market had become overly pessimistic on:
Universal
Music and
Progressive.
Both delivered results that were ahead of expectations and
outperformed.
At the
other end, the Hang Seng index has been broadly flat for around a
decade and after another tough year (–10% in USD) it is
unsurprising the majority of our detractors were largely
China-exposed companies
(Kone, Link
REIT, AIA). We moved
to reduce our total China exposure
by selling Kone and have retained AIA
and
Link
REIT.
After a
reasonable 2022 (in relative terms) many defensives had a tougher
time as the market became excited about a “soft landing” and more
latterly “no landing” and interest rate cuts. As such,
Royal
Unibrew and
Reckitt
Benckiser were
notable underperformers. We have found “defensives” are a little
like insurance – most of the time you don’t need it, but when you
do, you are very glad you have it! The cost of insurance has become
cheaper given the poor relative performance of this
cohort.
Q: Has
the positioning of the portfolio changed significantly over the
period?
A: To
reiterate comments we have made in previous reports, we do not
allocate to particular countries or sectors, rather our portfolio
is built from the bottom up with companies that meet our key
investment criteria, namely:
Good
Quality: We seek
businesses that are strong enough to thrive through the economic
cycle.
Competitively
advantaged within their industry, with strong balance sheets and no
obvious Environmental, Social and Governance (‘ESG’) risks. Their
management teams need to have demonstrated capital allocation
policies that have created value for all shareholders.
Cashflow:
We view
strong free cashflow as the best measure of a company’s health. It
allows the company to pursue opportunities which enhance
shareholder value: investing at attractive rates, paying dividends,
buying back shares or paying down debt.
Price:
We need to
be able to buy the company at a price that represents a significant
discount to intrinsic value. In short, we want to buy good
companies when they are ‘on sale’.
Some
individual names within the portfolio have of course changed. We
began a new position in Azelis
during the
third quarter, a specialty chemicals distributor. We continued to
add to the position on weakness, and combined with a rally into
year-end, Azelis is now a top 10 holding. Similarly, we used
weakness in the early part of the fourth quarter to add to our
position in Tractor
Supply.
Further
additions included Analog
Devices and
Texas
Instruments as we felt
the market had become too focused on the challenging short-term
outlook for these two excellent companies. Both companies have
excellent long-term prospects, in our opinion, have strong balance
sheets, and generate extremely attractive free cash flow
margins.
We exited
our position in Kone the elevator manufacturer. Recent results from
the company have been disappointing and we felt our thesis was not
playing out in the way that we had hoped. We still think the
company and industry have very attractive characteristics, but we
had higher conviction elsewhere. Other notable trims include
KKR
& Co, this was
driven by a degree of profit taking after extremely strong
performance in the shares recently.
|
|
Global
|
|
|
|
Equity
|
MSCI
World
Index
|
|
|
Income
|
|
Portfolio
Metric
|
Share
Portfolio
|
|
Price/Earnings
Ratio (12m forward)
|
15.6
|
17.3
|
|
Dividend
Yield (12m forward)
|
2.6
|
2.1
|
|
Free
Cashflow Yield
|
4.1
|
4.2
|
|
Return on
Equity
|
17.0
|
14.0
|
|
Price/Book
Value
|
3.2
|
3.0
|
Source:
Bloomberg, January 2024.
Q: What
is your outlook for 2024?
A: The
final quarter of the year brought with it a substantial rally in
most risk assets as the Fed surprised market participants with a
significant shift in the outlook for the direction of interest rate
policy, i.e., a clear indication that rates have very likely peaked
and are likely to be cut more aggressively in 2024 than was
expected. This shift in rate expectations, driven by inflation
falling faster than expected was very helpful for equity
markets.
Having
underperformed markedly as rates rose it was of little surprise to
see the real estate sector led the market as rate expectations
fell. As markets moved to price in a soft landing, technology,
industrials and financials were the other leading sectors. Consumer
staples, healthcare and utilities lagged along with
energy.
As we turn
the page to 2024 the underperformance of the defensive triumvirate
of consumer staples, healthcare and utilities in the last few
months is an interesting one. With the market now clearly expecting
a soft-landing it is noteworthy that these historically defensive
sectors have lagged significantly, not just in the recent quarter
but the last few years.
We have had
limited exposure to these sectors in recent years as we felt
valuations were elevated for limited growth. But now with
valuations reset, we are starting to increase the time devoted to
these sectors. Whilst they may not grow as quickly as they have
done in the past, several of them are likely to offer an attractive
blend of highly recurring cashflows, attractive dividends and may
serve a role as protection for investors should the
macro-environment turn out to be worse than currently priced
in.
We would
also highlight the relative attractiveness of small and mid-cap
companies (‘SMID’) relative to their large cap brethren. Whilst the
valuation gap is not what it was in October (SMID has outperformed
large cap since the peak in rates), it is still substantial. We
find a number of companies with market capitalisations in the
$3 billion to $20 billion range that offer an attractive mix of
business quality, growth opportunity and valuation. With less
pressure from higher interest rates, we believe this segment of the
market could be an exciting opportunity for investors over the next
few years.
Q: Any
final thoughts?
A: The
last few years have created very challenging conditions for
companies to operate under. The pandemic, lockdowns, supply chain
disruption and geo-political tension have challenged typical demand
patterns of consumption with several industries operating well
above, or indeed well below typical demand patterns. Rather than
one economic cycle, this has driven a breakdown of typical
cross-industry relationships as significant supply/demand
conditions have exacerbated the usual inventory dynamics; this
should lead to opportunities in sectors and individual securities
as these patterns normalise. This should be a good environment for
individual stock selection.
Stephen Anness
Portfolio
Manager
8 February 2024
Global
Equity Income Share Portfolio List of
Investments
AT 30 November
2023
Ordinary
shares unless stated otherwise
|
|
|
|
Market
|
|
|
|
|
|
Value
|
%
of
|
|
Company
|
Sector†
|
Country
|
£’000
|
Portfolio
|
|
3i
|
Financial
Services
|
United
Kingdom
|
4,015
|
5.5
|
|
Microsoft
|
Software
& Services
|
United
States
|
3,410
|
4.7
|
|
UnitedHealth
|
Health Care
Equipment & Services
|
United
States
|
3,264
|
4.5
|
|
American
Tower
|
Equity Real
Estate Investment Trusts (REITs)
|
United
States
|
3,176
|
4.4
|
|
Union
Pacific
|
Transportation
|
United
States
|
3,021
|
4.2
|
|
Azelis
|
Capital
Goods
|
Belgium
|
2,886
|
4.0
|
|
Broadcom
|
Semiconductors
& Semiconductor Equipment
|
United
States
|
2,676
|
3.7
|
|
AIA
|
Insurance
|
Hong
Kong
|
2,458
|
3.4
|
|
Aker
BP
|
Energy
|
Norway
|
2,408
|
3.3
|
|
Progressive
|
Insurance
|
United
States
|
2,316
|
3.2
|
|
Top
Ten Holdings
|
|
|
29,630
|
40.9
|
|
Verallia
|
Materials
|
France
|
2,248
|
3.1
|
|
Zurich
Insurance
|
Insurance
|
Switzerland
|
2,129
|
2.9
|
|
Texas
Instruments
|
Semiconductors
& Semiconductor Equipment
|
United
States
|
2,128
|
2.9
|
|
Reckitt
Benckiser
|
Household
& Personal Products
|
United
Kingdom
|
2,060
|
2.9
|
|
Tractor
Supply
|
Consumer
Discretionary Distribution & Retail
|
United
States
|
2,030
|
2.8
|
|
Infrastrutture
|
Telecommunication
Services
|
Italy
|
2,017
|
2.8
|
|
KKR &
Co
|
Financial
Services
|
United
States
|
2,015
|
2.8
|
|
Samsung
Electronics –
|
Technology
Hardware & Equipment
|
South
Korea
|
1,849
|
2.6
|
|
preference
shares
|
|
|
|
|
|
Coca-Cola
|
Food,
Beverage & Tobacco
|
United
States
|
1,810
|
2.5
|
|
LVMH
|
Consumer
Durables & Apparel
|
France
|
1,749
|
2.4
|
|
Top
Twenty Holdings
|
|
|
49,665
|
68.6
|
|
Standard
Chartered
|
Banks
|
United
Kingdom
|
1,727
|
2.4
|
|
Royal
Unibrew
|
Food,
Beverage & Tobacco
|
Denmark
|
1,725
|
2.4
|
|
Intercontinental
Exchange
|
Financial
Services
|
United
States
|
1,724
|
2.4
|
|
Herc
Holdings
|
Capital
Goods
|
United
States
|
1,664
|
2.3
|
|
RELX
|
Commercial
& Professional Services
|
United
Kingdom
|
1,645
|
2.3
|
|
Universal
Music
|
Media &
Entertainment
|
Netherlands
|
1,566
|
2.2
|
|
Recordati
|
Pharmaceuticals,
Biotechnology & Life Sciences
|
Italy
|
1,555
|
2.1
|
|
Rolls-Royce
|
Capital
Goods
|
United
Kingdom
|
1,541
|
2.1
|
|
Analog
Devices
|
Semiconductors
& Semiconductor Equipment
|
United
States
|
1,466
|
2.0
|
|
Celanese
|
Materials
|
United
States
|
1,402
|
1.9
|
|
Top
Thirty Holdings
|
|
|
65,680
|
90.7
|
|
Kenvue
|
Household
& Personal Products
|
United
States
|
922
|
1.3
|
|
Howden
Joinery
|
Capital
Goods
|
United
Kingdom
|
888
|
1.2
|
|
Danaher
|
Pharmaceuticals,
Biotechnology & Life Sciences
|
United
States
|
883
|
1.2
|
|
Link
REIT
|
Equity Real
Estate Investment Trusts (REITs)
|
Hong
Kong
|
842
|
1.2
|
|
Canadian
Pacific Kansas City
|
Transportation
|
Canada
|
721
|
1.0
|
|
Besi
|
Semiconductors
& Semiconductor Equipment
|
Netherlands
|
683
|
0.9
|
|
Home
Depot
|
Consumer
Discretionary Distribution & Retail
|
United
States
|
490
|
0.7
|
|
American
Express
|
Financial
Services
|
United
States
|
448
|
0.6
|
|
CME
|
Financial
Services
|
United
States
|
435
|
0.6
|
|
Ferguson
|
Capital
Goods
|
United
Kingdom
|
349
|
0.5
|
|
Top
Forty Holdings
|
|
|
72,341
|
99.9
|
|
Accenture
– A
Shares
|
Software
& Services
|
United
States
|
64
|
0.1
|
|
Sberbank* –
ADR
|
Banks
|
Russia
|
–
|
–
|
|
Total
Holdings 42 (2023: 43)
|
|
|
72,405
|
100.0
|
ADR American
Depositary Receipts – are certificates that represent shares in the
relevant stock and are issued by a US bank. They are denominated
and pay dividends in US dollars.
† MSCI
and Standard & Poor’s Global Industry Classification
Standard.
* The
investment in Sberbank – ADR has been valued at zero as secondary
listings of the depositary receipts on Russian companies have been
suspended from trading.
Global
Equity Income Share Portfolio Income Statement
|
|
Six
months ended
|
Six
months ended
|
|
|
30
November 2023
|
30
November 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Gains on
investments held at fair value
|
–
|
5,192
|
5,192
|
–
|
790
|
790
|
|
Gains on
foreign exchange
|
–
|
5
|
5
|
–
|
12
|
12
|
|
Income
|
754
|
–
|
754
|
702
|
–
|
702
|
|
Investment
management fees – note 2
|
(59)
|
(138)
|
(197)
|
(51)
|
(121)
|
(172)
|
|
Other
expenses
|
(95)
|
(3)
|
(98)
|
(83)
|
(1)
|
(84)
|
|
Net return
before finance costs and taxation
|
600
|
5,056
|
5,656
|
568
|
680
|
1,248
|
|
Finance
costs – note 2
|
(7)
|
(17)
|
(24)
|
(24)
|
(54)
|
(78)
|
|
Return
before taxation
|
593
|
5,039
|
5,632
|
544
|
626
|
1,170
|
|
Tax – note
3
|
(74)
|
–
|
(74)
|
(84)
|
–
|
(84)
|
|
Return
after taxation for the financial period
|
519
|
5,039
|
5,558
|
460
|
626
|
1,086
|
|
Return per
ordinary share – note 4
|
2.06p
|
19.97p
|
22.03p
|
1.84p
|
2.51p
|
4.35p
|
Summary
of Net Assets
|
|
At
30
November
2023
£’000
|
At
31
May
2023
£’000
|
|
|
|
|
|
|
|
Fixed
assets
|
72,405
|
66,026
|
|
Current
assets
|
550
|
861
|
|
Creditors
falling due within one year, excluding borrowings
|
(170)
|
(144)
|
|
Bank
facility
|
(100)
|
–
|
|
Net
assets
|
72,685
|
66,743
|
|
Net asset
value per ordinary share – note 5
|
284.52p
|
265.53p
|
|
Gearing:
|
|
|
|
–
gross
|
0.1%
|
0.0%
|
|
–
net
|
0.0%
|
–0.8%
|
Summary
of Changes in Net Assets
|
|
Period
ended
30
November
2023
£’000
|
Year
ended
31
May
2023
£’000
|
|
|
|
|
|
|
|
Net assets
brought forward
|
66,743
|
62,638
|
|
Shares
bought back and held in treasury
|
(362)
|
(1,677)
|
|
Share
conversions
|
1,550
|
1,774
|
|
Return
after taxation for the financial period/year
|
5,558
|
5,799
|
|
Dividend
paid
|
(804)
|
(1,791)
|
|
Net assets
at the period/year end
|
72,685
|
66,743
|
Balanced
Risk Allocation Share Portfolio Performance
Record
Total
Return
|
|
Six
Months to 30
November
2023
|
Year
to
31
May
2023
|
Year
to
31
May
2022
|
Year
to
31
May
2021
|
Year
to
31
May
2020
|
|
|
|
|
|
Net Asset
Value(1)
|
2.7%
|
–11.4%
|
0.3%
|
25.4%
|
–3.1%
|
|
Share
Price(1)
|
–8.4%
|
–14.3%
|
–5.2%
|
26.4%
|
–6.9%
|
|
Composite
Benchmark(2)
|
5.2%
|
–17.1%
|
–6.1%
|
16.8%
|
2.8%
|
|
ICE BoA
Merrill Lynch 3 month LIBOR
|
|
|
|
|
|
|
plus
5% per annum(1)
|
5.1%
|
7.5%
|
5.1%
|
5.1%
|
5.9%
|
|
Revenue
return per share
|
2.33p
|
3.38p
|
1.05p
|
–0.17p
|
–0.02p
|
|
Dividends
|
3.00p
|
1.00p
|
nil
|
nil
|
nil
|
(1) Source:
LSEG Data & Analytics.
(2) With
effect from 1 June 2021, the
benchmark adopted by the Balanced Risk Allocation Share Portfolio
is comprised of 50% 30-year UK Gilts Index, 25% GBP hedged MSCI
World Index (net) and 25% GBP hedged S&P Goldman Sachs
Commodity Index. Prior to this, the benchmark was ICE BoA Merrill
Lynch 3 month LIBOR plus 5% per annum. Accordingly, both the new
and old benchmark are shown. Source: LSEG Data &
Analytics/Bloomberg.
Balanced
Risk Allocation Share Portfolio Manager’s
Report
Q: How
has the strategy performed in the period under
review?
A: The
Balanced Risk Allocation Share Portfolio NAV total return for the
six months to 30 November 2023 was
2.7%. Markets continued their upward trend as inflation showed
signs of cooling and stronger-than-expected economic data boosted
optimism that a soft landing was possible. Central banks continued
to raise interest rates but with easing inflation, market
expectations turned to the possibility that rates have peaked.
Policy makers, however, signalled that they weren’t ready to close
the door on future hikes, raising the possibility that consumer
prices, and therefore interest rates, will remain higher for
longer. Against this backdrop, commodities and equities rose while
government bonds declined.
Q: What
were the biggest contributors and detractors to
performance?
A: Strategic
exposure to commodities was the largest contributor to results,
with all four commodity complexes (i.e., agriculture, energy,
industrial metals, precious metals) posting gains. Energy was the
top contributor at the sub-complex level with gains in five of the
six exposures, the exception being natural gas. Energy continues to
benefit from rising global demand and tight supplies driven by
production cuts by the Organization of the Petroleum Exporting
Countries (‘OPEC’) and Russia,
along with refinery maintenance that is keeping fuel product
inventories at low levels. Agriculture performance was driven by
gains in the soy complex, sugar and coffee. Hot weather and severe
drought conditions in key growing regions of the US were the
principal catalyst for higher soybean, soymeal and soybean oil
prices. Precious metals contributed as well, with silver
outperforming gold, despite the yield on the US 10-year Treasury
increasing to levels last seen in 2007, while the US dollar surged
in response. Industrial metals delivered more modest gains for the
period, with gains in copper countering losses in
aluminium.
Strategic
exposure to global equities contributed to results, with five of
the six equity markets posting gains. US equities were the top
contributor to results with small caps outperforming their large
cap counterparts as higher beta exposures benefitted from growing
expectations for interest rate cuts in 2024. European equities also
posted gains as economic data suggested that economic conditions
are stabilising. Japanese equities contributed on the back of
strong corporate earnings and the Bank of Japan continuing to maintain its more
accommodative monetary policy relative to the rest of the developed
world. Emerging equities also contributed despite ongoing concerns
over China’s lacklustre economic recovery. UK equities finished
flat for the period due to continued signs of economic
distress.
Strategic
exposure to government bonds detracted from results, with all six
government bond markets generating losses. US Treasuries were the
top detractor as yields surged on stronger-than-expected US
economic data and the hawkish “higher for longer” stance of the
Federal Reserve. German bunds detracted as the European Central
Bank (ECB) hiked rates to their highest level and signalled it
intends to leave rates at elevated levels for a “sufficiently long
duration.” Australian and Canadian government bonds detracted from
results as well as both country’s central banks raised interest
rates over the period. Similarly, UK gilts declined as the Bank of
England maintained its “higher for
longer” interest rate approach to combat inflation.
Q: How
did the tactical allocation perform?
A: The
portfolio’s tactical allocation produced positive results as gains
from positioning across government bonds overshadowed losses from
positioning across global equities and commodities.
Q: What
is your 30-day outlook?
A: Despite
rapid interest rate hikes over the course of 2022 and 2023, many
developed economies continue to grow and have only recently begun
to show signs of strain. Investors are now showing optimism that
monetary policymakers have reached the end of their tightening
cycles after nearly two years of battling inflation. However, the
ripple effects of past rate hikes continue to be felt and likely
are not completely known yet. Looking forward, investors will have
to consider the balance between the durability of growth and the
stickiness of inflation. Outcomes will likely vary by country — for
example, the US has been the most resilient to the effects of
tightening policy and credit conditions, while growth in the
eurozone and the UK is already flagging. Risks and uncertainty have
also remained elevated since the global pandemic. The Russian
invasion of Ukraine, events in the
Middle East and continued tensions
over Taiwan have introduced
greater uncertainty for global markets, supply chains and prices.
The ongoing conflicts could also trigger another commodity price
shock that negatively impacts growth. Meanwhile, the rapid
tightening of credit conditions across many major economies has
raised fears about potential financial “accidents,” such as the US
regional bank failures that occurred in the first half of
2023.
Against
this backdrop, the portfolio started 2024 with increased
allocations to global equities and government bonds, while it
slightly reduced its allocation to commodities. Relative to this
positioning February saw increased allocations to equities and
commodities. The allocation to fixed income was slightly reduced.
We will rebalance the portfolio both strategically and tactically
again at the beginning of March as per our usual cadence.. Unlike
more passive or index based strategies, this once a month
rebalancing gives the portfolio more flexibility to position itself
according to prevailing market conditions – all while seeking to
maintain better economic diversification than traditional balanced
portfolios.
Scott Wolle
Portfolio
Manager
8 February 2024
Balanced
Risk Allocation Share Portfolio List of
Investments
AT
30 NOVEMBER 2023
|
|
|
Market
|
%
|
|
|
Yield
|
value
|
of
|
|
|
%
|
£’000
|
Portfolio
|
|
Short
Term Investments
|
|
|
|
|
Invesco
Liquidity Funds plc – Sterling
|
5.32
|
3,363
|
59.3
|
|
UK Treasury
Bill – 0% 18 Mar 2024
|
5.62
|
738
|
13.0
|
|
UK Treasury
Bill – 0% 07 May 2024
|
5.35
|
587
|
10.4
|
|
UK Treasury
Bill – 0% 29 Apr 2024
|
5.35
|
489
|
8.6
|
|
UK Treasury
Bill – 0% 13 May 2024
|
5.37
|
293
|
5.2
|
|
UK Treasury
Bill – 0% 15 Apr 2024
|
5.39
|
196
|
3.5
|
|
Total
Short Term Investments
|
|
5,666
|
100.0
|
|
Hedge
Funds(1)
|
|
|
|
|
Harbinger –
Streamline Offshore Fund
|
|
–
|
–
|
|
Total
Hedge Funds
|
|
–
|
–
|
|
Total
Fixed Asset Investments
|
|
5,666
|
100.0
|
(1) The
hedge fund investments are residual holdings of the previous
investment strategy, which are awaiting realisation of underlying
investments. Given lack of availability of recent valuation the
market value has been written-down to zero.
Derivative
instruments held in the Balanced Risk Allocation Share Portfolio
are shown on the next page. At the period end all the derivative
instruments held in the Balanced Risk Allocation Share Portfolio
were exchange traded futures contracts. Holdings in futures
contracts that are not exchange traded are permitted as explained
in the investment policy disclosed in full on page 45 of the
Company’s 2023 Annual Financial Report.
Balanced
Risk Allocation Share Portfolio List of Derivative
Instruments
AT 30 November
2023
|
|
|
Notional
|
|
|
Notional
|
Exposure
|
|
|
Exposure
|
as
% of
|
|
|
£’000
|
Net
Assets
|
|
Government
Bond Futures:
|
|
|
|
Australia
|
1,356
|
22.5
|
|
Japan
|
1,098
|
18.2
|
|
Germany
|
1,028
|
17.0
|
|
UK
|
387
|
6.4
|
|
Canada
|
70
|
1.1
|
|
Total
Bond Futures (5)
|
3,939
|
65.2
|
|
Equity
Futures:
|
|
|
|
Japan
|
508
|
8.4
|
|
Emerging
markets
|
312
|
5.2
|
|
Europe
|
227
|
3.8
|
|
UK
|
224
|
3.7
|
|
US small
cap
|
215
|
3.5
|
|
US large
cap
|
180
|
3.0
|
|
Total
Equity Futures (6)
|
1,666
|
27.6
|
|
Commodity
Futures:
|
|
|
|
Energy
|
|
|
|
Gasoline
|
144
|
2.4
|
|
Brent
crude
|
127
|
2.1
|
|
Low sulphur
gasoline
|
127
|
2.1
|
|
New York
Harbor ultra-low sulphur diesel
|
86
|
1.4
|
|
WTI
crude
|
60
|
1.0
|
|
Agriculture
|
|
|
|
Soyabean
meal
|
134
|
2.2
|
|
Soyabean
|
109
|
1.8
|
|
Cotton
|
95
|
1.6
|
|
Sugar
|
92
|
1.5
|
|
Soyabean
oil
|
74
|
1.3
|
|
Industrial
Metals
|
|
|
|
Aluminium
|
173
|
2.8
|
|
Copper
|
167
|
2.8
|
|
Precious
Metals
|
|
|
|
Gold
|
163
|
2.7
|
|
Total
Commodity Futures (13)
|
1,551
|
25.7
|
|
Total
Derivative Instruments (24)
|
7,156
|
118.5
|
|
|
|
|
|
Target
Annualised Risk:
|
|
|
|
The
targeted annualised risk (volatility of monthly returns) for the
portfolio as listed above is analysed as follows:
|
|
|
|
Asset
Class
|
Risk
|
Contribution
|
|
Equities
|
3.9%
|
44.4%
|
|
Commodities
|
2.8%
|
32.3%
|
|
Fixed
Income
|
2.1%
|
23.3%
|
|
|
8.8%
|
100.0%
|
Balanced
Risk Allocation Share Portfolio Income
Statement
|
|
Six
months ended
|
Six
months ended
|
|
|
30
November 2023
|
30
November 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Losses on
investments held at fair value
|
–
|
(1)
|
(1)
|
–
|
(1)
|
(1)
|
|
(Losses)/gains
on derivative instruments
|
(3)
|
58
|
55
|
31
|
(665)
|
(634)
|
|
(Losses)/gains
on foreign exchange
|
–
|
(12)
|
(12)
|
–
|
21
|
21
|
|
Income
|
153
|
–
|
153
|
55
|
–
|
55
|
|
Investment
management fees - note 2
|
(7)
|
(16)
|
(23)
|
(7)
|
(18)
|
(25)
|
|
Other
expenses
|
(14)
|
(1)
|
(15)
|
(14)
|
(1)
|
(15)
|
|
Return
before taxation
|
129
|
28
|
157
|
65
|
(664)
|
(599)
|
|
Tax – note
3
|
(32)
|
32
|
–
|
–
|
–
|
–
|
|
Return
after taxation for the financial period
|
97
|
60
|
157
|
65
|
(664)
|
(599)
|
|
Return per
ordinary share – note 4
|
2.33p
|
1.46p
|
3.79p
|
1.55p
|
(15.80)p
|
(14.25)p
|
Summary
of Net Assets
|
|
At
|
At
|
|
|
30
November
|
31
May
|
|
|
2023
|
2023
|
|
|
£’000
|
£’000
|
|
Fixed
assets
|
5,666
|
5,542
|
|
Derivative
assets held at fair value though profit or loss
|
110
|
125
|
|
Current
assets
|
309
|
735
|
|
Derivative
liabilities held at fair value though profit or loss
|
(30)
|
(186)
|
|
Creditors
falling due within one year, excluding borrowings
|
(17)
|
(26)
|
|
Net
assets
|
6,038
|
6,190
|
|
Net asset
value per ordinary share – note 5
|
150.59p
|
149.56p
|
|
Notional
exposure of derivative instruments as % of net assets
|
118.5%
|
147.7%
|
Summary
of Changes in Net Assets
|
|
Period
ended
30
November
2023
£’000
|
Year
ended
31
May
2023
£’000
|
|
|
|
|
|
|
|
Net assets
brought forward
|
6,190
|
7,085
|
|
Shares
bought back and held in treasury
|
–
|
(147)
|
|
Share
conversions
|
(185)
|
122
|
|
Return
after taxation for the financial period/year
|
157
|
(829)
|
|
Dividend
paid
|
(124)
|
(41)
|
|
Net assets
at the period/year end
|
6,038
|
6,190
|
Managed
Liquidity Share Portfolio Performance Record
Total
Return
|
|
Six
Months to 30 November
2023
|
Year
to
31
May
2023
|
Year
to 31 May
2022
|
Year
to
31
May
2021
|
Year
to
31
May
2020
|
|
|
|
|
|
Net Asset
Value(1)
|
2.5%
|
3.5%
|
–0.3%
|
3.6%
|
1.1%
|
|
Share
Price(1)
|
6.1%
|
–5.2%
|
–4.0%
|
0.5%
|
1.6%
|
|
Revenue
return per share
|
2.14p
|
1.06p
|
–0.02p
|
1.35p(2)
|
0.65p
|
|
Dividends
|
1.00p
|
1.00p
|
1.00p
|
nil
|
0.80p
|
(1) Source:
LSEG Data & Analytics.
(2) Includes
a £34,000 (1.40p per share) refund of management fees in respect of
prior year overcharges.
Managed
Liquidity Share Portfolio Manager’s Report
Q: How
does the portfolio generate returns?
A: The
investment objective of the portfolio is to produce an appropriate
level of income return combined with a high degree of security. We
aim to generate returns by investing mainly in sterling-based high
quality debt securities and similar assets but with the flexibility
to invest in assets with a greater weighted average maturity than a
money market fund. Accordingly, the value of the portfolio may rise
or fall. The majority of the portfolio is invested in the
iShares
– Sterling Ultrashort Bond UCITS ETF. The ETF
invests in Sterling denominated investment grade corporate bonds
and quasi-government bond, aiming to track performance of the
Markit iBoxx GBP Liquid Investment Grade Ultrashort Index. It has a
weighted average maturity of under one year and an effective
duration of 0.2 years. We also hold a portion of the portfolio in
the AAA-rated Sterling Liquidity Portfolio of Invesco
Liquidity Funds plc – Sterling to meet
short term payment obligations.
We review
the Exchange Traded Fund universe annually and reconfirmed this
fund in December 2023. The ETF
delivers a good yield for a low level of credit risk (average
rating AA), while maintaining a low average maturity and
demonstrating good liquidity.
Q: What
has the performance of your fund been over the last six
months?
A: The
Managed Liquidity Share Portfolio NAV total return for the
six months
to 30 November 2023 was 2.5%. The
portfolio delivered a dividend of around 0.9% income over the
period.
Q: What’s
the outlook for returns?
A: The
fund’s low duration means that the major driver of the portfolio’s
returns from year to year is its income yield. However, over
shorter period changes in interest rate expectations (and hence
bond prices) have some impact.
Financial
conditions remain supportive for high quality (AAA, AA and A-rated)
issuers, such as those held by the Managed Liquidity
Share
Portfolio.
Over the
six months to November 2023 markets
priced in a higher path for interest rates which modestly detracted
from capital returns. However, this reversed in December 2023 as the US Federal Reserve indicated
it expected to cut rates in 2024, and lower-than-expected UK
inflation led UK markets to expect greater rate cuts in the UK too.
This had a modest positive effect on portfolio returns into
calendar year end.
Looking
further ahead, inflation is likely to remain above central bank
targets in 2024. Discussion is focused on whether central banks
will retain higher interest rates for longer. To the extent
interest rates remain at current levels, this will contribute to
the income yield for the Managed Liquidity Share
Portfolio.
We continue
to expect the portfolio to deliver low and stable growth in Net
Asset Value above cash deposits.
Derek Steeden
Portfolio
Manager
8 February 2024
Managed
Liquidity Share Portfolio List of Investments
AS AT 30 November
2023
|
|
Market
|
|
|
|
Value
|
%
of
|
|
|
£’000
|
Portfolio
|
|
Invesco
Liquidity Funds plc – Sterling
|
152
|
9.5
|
|
iShares –
Sterling Ultrashort Bond UCITS ETF
|
1,442
|
90.5
|
|
|
1,594
|
100.0
|
Income
Statement
|
|
Six
months ended
|
Six
months ended
|
|
|
30
November 2023
|
30
November 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Gains on
investments held at fair value
|
–
|
9
|
9
|
–
|
9
|
9
|
|
Income
|
31
|
–
|
31
|
6
|
–
|
6
|
|
Investment
management fees – note 2
|
(1)
|
–
|
(1)
|
(1)
|
–
|
(1)
|
|
Other
expenses
|
(3)
|
–
|
(3)
|
(3)
|
–
|
(3)
|
|
Return
before taxation
|
27
|
9
|
36
|
2
|
9
|
11
|
|
Tax – note
3
|
–
|
–
|
–
|
–
|
–
|
–
|
|
Return
after taxation for the financial period
|
27
|
9
|
36
|
2
|
9
|
11
|
|
Return
per ordinary share – note
4
|
2.14p
|
0.69p
|
2.83p
|
0.17p
|
0.67p
|
0.84p
|
Managed
Liquidity Share Portfolio Summary of Net Assets
|
|
At
30
November
2023
£’000
|
At
31
May
2023
£’000
|
|
|
|
|
|
|
|
Fixed
assets
|
1,594
|
1,475
|
|
Current
assets
|
11
|
34
|
|
Creditors
falling due within one year, excluding borrowings
|
(139)
|
(139)
|
|
Net
assets
|
1,466
|
1,370
|
|
Net asset
value per ordinary share – note 5
|
111.29p
|
109.51p
|
Summary
of Changes in Net Assets
|
|
Period
ended
30
November
2023
£’000
|
Year
ended
31
May
2023
£’000
|
|
|
|
|
|
|
|
Net assets
brought forward
|
1,370
|
1,324
|
|
Shares
bought back and held in treasury
|
–
|
(77)
|
|
Share
conversions
|
73
|
99
|
|
Return
after taxation for the financial period/year
|
36
|
36
|
|
Dividend
paid
|
(13)
|
(12)
|
|
Net assets
at the period/year end
|
1,466
|
1,370
|
Principal
Risks and Uncertainties
The Board
has carried out a robust assessment of the risks facing the
Company, including those that would threaten its business model,
future performance, solvency and liquidity. As part of this
process, the Board conducted a full review of the Company’s risk
control summary and considered new and emerging risks. These are
not necessarily principal risks for the Company at present but may
have the potential to be in the future. In carrying out this
assessment, the Board considered the emerging risks facing the
Company including geopolitical risks such as the ongoing war in
Ukraine and conflict in the
Middle East, cyber threats,
climate related risks and risks related to adverse outcomes of
corporate projects. The principal risks that follow are those
identified by the Board as the most significant after consideration
of mitigating factors and not intended to cover all the risk
categories as shown in the Internal Controls and Risk Management
section on page 69 of the Company’s 2023 Annual Financial Report.
In the view of the Board, these principal risks and uncertainties
are as much applicable to the remaining six months of the financial
year as they were to the six months under review. The Company
continues to operate effectively and to pursue its investment
objectives and resilience of the Company, its Board and its service
providers has been demonstrated throughout the period.
|
Category
and Principal Risk Description
|
Mitigating
Procedures and Controls
|
Risk
trend during
the
period
|
|
Strategic
Risk
|
|
|
|
Investment
Objectives and Attractiveness to Investors
There is no
guarantee that the Investment Policy of the Company and of each
portfolio will provide the returns sought by the Company. There can
be no guarantee, therefore, that the Company will achieve its
investment objectives or that the shares will continue to meet
investors’ needs (for example if the Company fails to adapt to
changes in investor demand including in relation to ESG and climate
change). As a result the Company may become unattractive to
investors, leading to decreased demand for its shares and a
widening discount.
|
The Board
monitors the share registers and the performance of the Company and
each portfolio. It has established a structure offering a range of
options for investors and has set guidelines to ensure that the
Investment Policy of the Company and each portfolio is pursued by
the Manager.
|
Unchanged
|
|
Market
Movements and Portfolio Performance
Individual
portfolio performance is substantially dependent on the performance
of the securities (including derivative instruments) held within
the portfolio. The prices of these securities are influenced by
many factors including the general health of regional and worldwide
economies; interest rates; inflation; government policies; industry
conditions; political and diplomatic events; tax laws;
environmental laws; and by the demand from investors. The current
conflicts in Ukraine and the Middle East continue to have an impact
on the global economy, ranging from decreases to the supply (and/or
increases to the costs) of goods to increases (and increased
volatility) in energy and commodity prices and inflation. In
addition, the portfolios’ investments are subject to risks arising
from inflation and rising interest rates. This was driven by the
knock-on effects of the Covid-19 pandemic and other geopolitical
tensions and uncertainties which have impacted global supply
chains.
These risks
represent the potential loss the portfolio might suffer through
holding investments in the face of negative market
movements.
The Manager
strives to maximise the total return from the portfolios, but the
investments held are influenced by market conditions and the Board
acknowledges the external influences on the performance of each
portfolio.
Further
risks specifically applicable to the Balanced Risk Allocation
Shares are set out on page 29.
|
The
performance of the Manager is carefully monitored by the Board and
the continuation of the Manager’s mandates is reviewed each year.
The Board has established guidelines to ensure that the investment
policies of each class of share are pursued by the
Manager.
For a
fuller discussion of the economic and market conditions facing the
Company and the current and future performance of the different
portfolios of the Company, please see both the Chairman’s Statement
on pages 2 and 3 and the Portfolio Managers’ Reports starting on
pages 4 to 25.
The Company
has a nil-valued holding in Sberbank, a Russian bank but no other
direct investments in Russia or other holdings with significant
links to Russia.
|
Unchanged
|
|
Risks
Applicable to the Company’s Shares
Shares in
the Company are designed to be held over the long-term and may not
be suitable as short-term investments. There can be no guarantee
that any appreciation in the value of the Company’s shares will
occur and investors may not get back the full value of their
investments. Owing to the potential difference between the
mid-market price of the shares and the prices at which they are
sold, there is no guarantee that their realisable value will
reflect their mid-market price.
The market
value of a share, as well as being affected by its net asset value
(‘NAV’), is also influenced by investor demand, its dividend yield,
where applicable, and prevailing interest rates, amongst other
factors. As such, the market value of a share can fluctuate and may
not reflect its underlying NAV. Shares may therefore trade at
discounts to their NAVs.
Past
performance of the Company’s shares is not necessarily indicative
of future performance.
|
The Board
has adopted a discount control policy that applies to all share
classes and the Board and the Manager monitor the market rating of
each share class.
While it is
the intention of the Directors to pay dividends to holders of the
UK Equity, Global Equity Income and Managed Liquidity Shares, this
will be affected by the returns achieved by the respective
portfolios and the dividend policy adopted by the Board.
Accordingly, the amount of dividends paid to shareholders may
fluctuate. Any change in the tax or accounting treatment of
dividends received or other returns may also affect the level of
dividend paid on the shares in future years. The Directors have
resolved, in the absence of unforeseen circumstances, to supplement
revenue with capital profits in order to pay equity portfolio
dividends at levels set by the Board (see pages 46 and
47 of the Company’s 2023 Annual Financial Report).
|
Unchanged
|
|
Viability
and Compulsory Conversion of a Class of Share
It is
possible that through poor performance, market sentiment, or
otherwise, lack of demand for one of the Company’s share classes
could result in the relevant portfolio becoming too small to be
viable.
The
continued listing on the Official List of each class of share is
dependent on at least 25% of the shares in that class being held in
public hands. This means that if more than 75% of the shares of any
class were held by, inter alia, the Directors, persons connected
with Directors or persons interested in 5% or more of the relevant
shares, the listing of that class of share might be suspended or
cancelled. The Listing Rules state that the FCA may allow a
reasonable period of time for the Company to restore the
appropriate percentage if this rule is breached, but in the event
that the listing of any class of shares were cancelled the Company
would lose its investment trust status.
|
The Board
monitors share conversions and portfolio sizes and liaises with the
Manager on the continued viability of each share class.
The Board
has received assurances from the Manager that the size of the
portfolio is not critical to the Manager being able to continue to
offer its investment management services in respect of any of the
Company’s four portfolio strategies.
If at any
time the Board considers that the listing of any class of share on
the Official List is likely to be cancelled and the loss of such
listing would mean that the Company would no longer be able to
qualify for approval as an investment trust under section 1158 of
the Corporation Tax Act 2010,
the Board may serve written notice on the holders of the relevant
shares requiring them to convert their shares into another share
class.
|
Unchanged
|
|
Liability
of a Portfolio for the Liabilities of Another
Portfolio
|
The
Directors intend that, in the absence of unforeseen circumstances,
each portfolio will effectively operate as if it were a stand-alone
company. However, investors should be aware of the following
factors:
• As a
matter of law, the Company is a single entity. Therefore, in the
event that any of the portfolios has insufficient funds or assets
to meet all of its liabilities, on a winding-up or otherwise, such
a shortfall would become a liability of the other portfolios and
would be payable out of the assets of the other portfolios in such
proportions as the Board may determine; and
• The
Companies Act 2006 prohibits the Directors from declaring dividends
in circumstances where, following the distribution, the Company’s
assets would represent less than one and a half times the aggregate
of its liabilities or the amount of net assets would be less than
the aggregate of its share capital and undistributable reserves. If
the Company were to incur material liabilities in the future,
a significant
fall in the value of the Company’s assets as a whole may affect the
Company’s ability to pay dividends on a particular
class of share, even though there are distributable profits
attributable to the relevant portfolio.
|
Unchanged
|
|
Gearing
Borrowing
will amplify the effect on shareholders’ funds of gains and losses
on the underlying securities.
Whilst the
use of borrowings by the Company should enhance the total return on
a particular class of share where the return on the underlying
securities is rising and exceeds the cost of borrowing, it will
have the opposite effect where the underlying return is falling,
further reducing the total return on that share class. Similarly,
the use of gearing by investment companies or funds in which the
Company invests increases the volatility of those
investments.
The Company
has a £40 million 364 day multicurrency revolving credit facility
and there is no guarantee that these facilities will be renewed at
maturity or on terms acceptable to the Company. If it were not
possible to renew these facilities or replace them with one from
another lender, the amounts owing by the Company would need to be
funded by the sale of securities.
|
Gearing
levels of the different portfolios will change from time to time in
accordance with the respective portfolio managers’ assessments of
risk and reward. The Manager assesses the exposure to gearing on a
regular basis, including the level of borrowings and covenants of
the credit facility.
The
Balanced Risk Allocation Share Portfolio may also be geared (by up
to 250%, according to the investment policy set out on page 45 of
the Company’s 2023 Annual
Financial Report) by means of the derivative instruments in which
it invests. This is discussed separately below, under the heading:
Additional Risks Applicable to Balanced Risk Allocation
Shares.
The Manager
assesses the exposure to gearing on a regular basis, including the
level of borrowings and covenants of the credit
facility.
|
Unchanged
|
|
Hedging
Where
hedging is used there is a risk that the hedge will not be
effective.
|
The Company
may use derivatives to hedge its exposure to currency or other
risks and for the purpose of efficient portfolio management. There
may be a correlation between price movements in the underlying
securities, currency or index, on the one hand, and price movements
in the investments, which are the subject of the hedge, on the
other hand. In addition, an active market may not exist for a
particular hedging derivative instrument at any particular
time.
|
Unchanged
|
|
Regulatory
and Tax Related
The Company
is subject to various laws and regulations by virtue of its status
as a public limited investment company registered under the
Companies Act 2006, its status as an investment trust and its
listing on the London Stock Exchange. Loss of investment trust
status could lead to the Company being subject to UK Capital Gains
Tax on the sale of its investments. A serious breach of other
regulatory rules could lead to suspension from the London Stock
Exchange, a fine or a qualified Audit Report. Other control
failures, either by the Manager or any other of the Company’s
service providers, could result in operational or reputational
problems, erroneous disclosures or loss of assets through fraud, as
well as breaches of regulations.
|
The Manager
reviews the level of compliance with the Corporation Tax Act 2010
and other financial regulatory requirements on a daily basis. All
transactions, income and expenditure are reported to the Board. The
Board regularly considers the risks to which the Company is
exposed, the measures in place to control them and the potential
for other risks to arise. The Board ensures that satisfactory
assurances are received from service providers. The depositary and
the Manager’s compliance and internal audit officers report
regularly to the Company’s Audit Committee.
The risks
and risk management policies and procedures as they relate to the
financial assets and liabilities of the Company are also detailed
in note 17 to the financial statements in the Company’s 2023 Annual
Financial Report.
|
Unchanged
|
|
Additional
Risks Applicable to Balanced Risk Allocation
Shares
The use of
financial derivative instruments, in particular futures, forms part
of the investment policy and strategy of the Balanced Risk
Allocation Share Portfolio. The degree of leverage inherent in
futures trading potentially means that a relatively small price
movement in a futures contract may result in an immediate and
substantial loss to the portfolio. The portfolio’s ability to use
these instruments may be limited by market conditions, regulatory
limits and tax considerations.
The absence
of a liquid market for any particular instrument at any particular
time may inhibit the ability of the Manager to liquidate a
financial derivative instrument at an advantageous
price.
|
The Manager
actively seeks the most liquid means of obtaining the required
exposures. The financial derivative instruments used for the
strategy are geared instruments and the aggregate notional exposure
will usually exceed the net asset value of the portfolio. Whilst
this could result in greater fluctuations in the net asset value,
and consequently the share price, the use of leverage is normally
necessary to achieve the target volatility required to meet the
return objective. The degree of leverage inherent in futures
trading potentially means that a relatively small price movement in
a futures contract may result in an immediate and substantial loss
and it would be necessary to increase the collateral held at the
clearing broker to cover such loss. This is mitigated by the
Company not using financial derivative instruments to create net
short positions in any asset class combined with holding cash
balances sufficient to meet collateral requirements.
|
Unchanged
|
|
Third
Party Service Providers Risk
|
|
|
|
Reliance
on Third Party Service Providers
The Manager
may be exposed to reputational risks. In particular, the Manager
may be exposed to the risk that litigation, misconduct, operational
failures, negative publicity and press speculation, whether or not
it is valid, will harm its reputation. Any damage to the reputation
of the Manager could result in potential counterparties and third
parties being unwilling to deal with the Manager and by extension
the Company. This could have an adverse impact on the ability of
the Company to successfully pursue its Investment
Policy.
The Company
has no employees and the Board comprises non-executive directors
only. The Company is therefore reliant upon the performance of
third-party service providers for its executive function and
service provisions. The Company’s operational structure means that
all cyber risk (information and physical security) arises at its
third-party service providers, including fraud, sabotage or crime
against the Company. The Company’s operational capability relies
upon the ability of its third-party service providers to continue
working throughout the disruption caused by a major event such as
the Covid-19 pandemic. Failure by any service provider to carry out
its obligations to the Company in accordance with the terms of its
appointment could have a materially detrimental impact on the
operation of the Company and could affect the ability of the
Company to successfully pursue its investment policy. The Company’s
main service providers, of which the Manager is the principal
provider, are listed on page 45. The Manager may be exposed to
reputational risks. In particular, the Manager may be exposed to
the risk that litigation, misconduct, operational failures,
negative publicity and press speculation, whether or not it is
valid, will harm its reputation. Damage to the reputation of the
Manager could potentially result in counterparties and third
parties being unwilling to deal with the Manager and by extension
the Company, which carries the Manager’s name. This could have an
adverse impact on the ability of the Company to pursue its
investment policy successfully.
|
Third-party
service providers are subject to ongoing monitoring by the Manager
and the Company. The Manager reviews the performance of all
third-party providers regularly through formal and informal
meetings. The Audit Committee reviews regularly the performance and
internal controls of the Manager and all third-party providers
through audited service organisation control reports, together with
updates on information security, the results of which are reported
to the Board.
The
Manager’s business continuity plans are reviewed on an ongoing
basis and the Directors are satisfied that the Manager has in place
robust plans and infrastructure to minimise the impact on its
operations so that the Company can continue to trade, meet
regulatory obligations, report and meet shareholder requirements.
The Board receives regular update reports from the Manager and
third-party service providers on business continuity processes and
has been provided with assurance from them all insofar as possible
that measures are in place for them to continue to provide
contracted services to the Company.
|
Unchanged
|
Governance
Going
Concern
The
financial statements have been prepared on a going concern basis.
The Directors consider this to be appropriate as the Company has
adequate resources to continue in operational existence for the
foreseeable future, taken as twelve months from the signing of the
financial statements for this purpose. This conclusion is
consistent with the longer term viability statement on page 53 of
the 2023 Annual Financial Report and in reaching it the Directors
took into account the value of net assets; the Company’s Investment
Policy; its risk management policies; the diversified portfolio of
readily realisable securities which can be used to meet funding
commitments; the credit facility and the overdraft which can be
used for short-term funding requirements; the liquidity of the
investments which could be used to repay the credit facility in the
event that the facility could not be renewed or replaced; its
revenue; the current economic outlook and the ability of the
Company in the light of these factors to meet all its liabilities
and ongoing expenses.
Related
Party Transactions
Under
United Kingdom Generally Accepted Accounting Practice (UK
Accounting Standards and applicable law), the Company has
identified the Directors and their dependents as related parties.
No other related parties have been identified during the period. No
transactions with related parties have taken place which have
materially affected the financial position or the performance of
the Company.
Statement
of Directors’ Responsibilities
IN
RESPECT OF THE PREPARATION OF THE HALF-YEARLY FINANCIAL
REPORT
The
Directors are responsible for preparing the half-yearly financial
report using accounting policies consistent with applicable law and
UK Accounting Standards.
The
Directors confirm that, to the best of their knowledge:
–
the
condensed set of financial statements contained within the
half-yearly financial report has been prepared in accordance with
the FRC’s FRS 104 Interim Financial Reporting;
–
the interim
management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the FCA’s Disclosure
Guidance and Transparency Rules; and
–
the interim
management report includes a fair review of the information
required on related party transactions.
The
half-yearly financial report has not been audited or reviewed by
the Company’s auditor.
Signed on
behalf of the Board of Directors.
Victoria Muir
Chairman
8 February 2024
Condensed
Income Statement
|
|
For
the six months ended
|
For
the six months ended
|
|
|
30
November 2023
|
30
November 2022
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Gains/(losses)
on investments
|
|
|
|
|
|
|
|
held
at fair value
|
–
|
6,765
|
6,765
|
–
|
(7,756)
|
(7,756)
|
|
(Losses)/gains
on derivative instruments
|
(3)
|
58
|
55
|
31
|
(665)
|
(634)
|
|
(Losses)/gains
on foreign exchange
|
–
|
(10)
|
(10)
|
–
|
28
|
28
|
|
Income
|
3,710
|
–
|
3,710
|
3,711
|
–
|
3,711
|
|
Investment
management fees – note 2
|
(167)
|
(387)
|
(554)
|
(165)
|
(385)
|
(550)
|
|
Other
expenses
|
(293)
|
(5)
|
(298)
|
(348)
|
(3)
|
(351)
|
|
Net return
before finance costs
|
|
|
|
|
|
|
|
and
taxation
|
3,247
|
6,421
|
9,668
|
3,229
|
(8,781)
|
(5,552)
|
|
Finance
costs – note 2
|
(92)
|
(214)
|
(306)
|
(78)
|
(180)
|
(258)
|
|
Return
before taxation
|
3,155
|
6,207
|
9,362
|
3,151
|
(8,961)
|
(5,810)
|
|
Tax – note
3
|
(120)
|
32
|
(88)
|
(112)
|
–
|
(112)
|
|
Return
after taxation for the
|
|
|
|
|
|
|
|
financial
period
|
3,035
|
6,239
|
9,274
|
3,039
|
(8,961)
|
(5,922)
|
|
Return per
ordinary share – note 4
|
|
|
|
|
|
|
|
– UK
Equity Share Portfolio
|
3.51p
|
1.65p
|
5.16p
|
3.47p
|
(12.35)p
|
(8.88)p
|
|
– Global
Equity Income Share Portfolio
|
2.06p
|
19.97p
|
22.03p
|
1.84p
|
2.51p
|
4.35p
|
|
– Balanced
Risk Allocation Share Portfolio
|
2.33p
|
1.46p
|
3.79p
|
1.55p
|
(15.80)p
|
(14.25)p
|
|
– Managed
Liquidity Share Portfolio
|
2.14p
|
0.69p
|
2.83p
|
0.17p
|
0.67p
|
0.84p
|
The total
columns of this statement represent the Company’s profit and loss
account, prepared in accordance with UK Accounting Standards. The
return after taxation is the total comprehensive income and
therefore no additional statement of other comprehensive income is
presented. The supplementary revenue and capital columns are
presented for information purposes in accordance with the Statement
of Recommended Practice issued by the Association of Investment
Companies. All items in the above statement derive from continuing
operations of the Company. No operations were acquired or
discontinued in the period. Income Statements for the different
Share classes are shown on pages 10, 16, 21 and 24
for the UK Equity, Global Equity Income, Balanced Risk Allocation
and Managed Liquidity Share Portfolios respectively.
Condensed
Statement of Changes in Equity
|
|
|
|
|
Capital
|
|
|
|
|
|
Share
|
Share
|
Special
|
Redemption
|
Capital
|
Revenue
|
|
|
|
Capital
|
Premium
|
Reserve
|
Reserve
|
Reserve
|
Reserve
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Six
months ended 30 November 2023
|
|
|
|
|
|
|
|
|
At 31 May
2023
|
1,707
|
–
|
137,424
|
377
|
60,129
|
102
|
199,739
|
|
Cancellation
of deferred shares
|
–
|
–
|
(4)
|
4
|
–
|
–
|
–
|
|
Shares
bought back and held
|
|
|
|
|
|
|
|
|
in
treasury
|
–
|
–
|
(2,157)
|
–
|
–
|
–
|
(2,157)
|
|
Share
conversions
|
(3)
|
–
|
3
|
–
|
–
|
–
|
–
|
|
Return
after taxation per the
|
|
|
|
|
|
|
|
|
income
statement
|
–
|
–
|
–
|
–
|
6,239
|
3,035
|
9,274
|
|
Dividends
paid – note 9
|
–
|
–
|
(285)
|
—
|
—
|
(2,841)
|
(3,126)
|
|
At 30
November 2023
|
1,704
|
–
|
134,981
|
381
|
66,368
|
296
|
203,730
|
|
Six
months ended 30 November 2022
|
|
|
|
|
|
|
|
|
At 31 May
2022
|
1,709
|
122,990
|
18,935
|
372
|
70,414
|
1
|
214,421
|
|
Cancellation
of deferred shares
|
–
|
–
|
–
|
2
|
(2)
|
–
|
–
|
|
Cancellation
of share premium
|
|
|
|
|
|
|
|
|
account(1)
|
–
|
(122,990)
|
122,990
|
–
|
–
|
–
|
–
|
|
Shares
bought back and held in
|
|
|
|
|
|
|
|
|
treasury
|
–
|
–
|
(900)
|
–
|
(3,516)
|
–
|
(4,416)
|
|
Share
conversions
|
(1)
|
–
|
1,104
|
–
|
(1,103)
|
–
|
–
|
|
Return
after taxation per the
|
|
|
|
|
|
|
|
|
income
statement
|
–
|
–
|
–
|
–
|
(8,961)
|
3,039
|
(5,922)
|
|
Dividends
paid – note 9
|
–
|
–
|
(310)
|
–
|
–
|
(2,641)
|
(2,951)
|
|
At 30
November 2022
|
1,708
|
–
|
141,819
|
374
|
56,832
|
399
|
201,132
|
(1) Following
class consents and approval of shareholders at the Company’s Annual
General Meeting on 4 October 2022,
the Court process to cancel the share premium accounts of the UK
Equity and Balanced Risk Allocation Share Classes was implemented
on 17 November 2022. Following the
implementation the entire share premium account of each of the UK
Equity and Balanced Risk Allocation Share Classes was cancelled,
amounting to £121,700,000 and £1,290,000 respectively. These
distributable reserves provide the Company with flexibility,
subject to financial performance, to make future distributions
and/or, subject to shareholder authority, in buying back
shares.
Condensed
Balance Sheet
Registered
Number 5916642
AS
AT 30 NOVEMBER
2023
|
|
|
Global
|
Balanced
|
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Fixed
assets
|
|
|
|
|
|
|
Investments
held at fair value through profit or loss
|
135,767
|
72,405
|
5,666
|
1,594
|
215,432
|
|
Current
assets
|
|
|
|
|
|
|
Derivative
assets held at fair value through profit or loss
|
–
|
–
|
110
|
–
|
110
|
|
Debtors
|
648
|
426
|
215
|
3
|
1,292
|
|
Cash and
cash equivalents
|
244
|
124
|
94
|
8
|
470
|
|
|
892
|
550
|
419
|
11
|
1,872
|
|
Creditors:
amounts falling due within one year
|
|
|
|
|
|
|
Derivative
liabilities held at fair value through profit or loss
|
—
|
—
|
(30)
|
—
|
(30)
|
|
Other
creditors
|
(268)
|
(170)
|
(17)
|
(139)
|
(594)
|
|
Bank
facility
|
(12,850)
|
(100)
|
—
|
—
|
(12,950)
|
|
|
(13,118)
|
(270)
|
(47)
|
(139)
|
(13,574)
|
|
Net current
(liabilities)/assets
|
(12,226)
|
280
|
372
|
(128)
|
(11,702)
|
|
Net
assets
|
123,541
|
72,685
|
6,038
|
1,466
|
203,730
|
|
Capital and
reserves
|
|
|
|
|
|
|
Share
capital
|
1,066
|
425
|
106
|
107
|
1,704
|
|
Special
reserve
|
114,379
|
17,706
|
2,078
|
818
|
134,981
|
|
Capital
redemption reserve
|
87
|
81
|
29
|
184
|
381
|
|
Capital
reserve
|
7,802
|
54,473
|
3,773
|
320
|
66,368
|
|
Revenue
reserve
|
207
|
—
|
52
|
37
|
296
|
|
Shareholders’
funds
|
123,541
|
72,685
|
6,038
|
1,466
|
203,730
|
|
Net asset
value per ordinary share – note 5
|
184.63p
|
284.52p
|
150.59p
|
111.29p
|
|
Condensed
Balance Sheet
AS
AT 31 MAY 2023
|
|
|
Global
|
Balanced
|
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
Total
|
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Fixed
assets
|
|
|
|
|
|
|
Investments
held at fair value through profit or loss
|
134,346
|
66,026
|
5,542
|
1,475
|
207,389
|
|
Current
assets
|
|
|
|
|
|
|
Derivative
assets held at fair value through profit or loss
|
–
|
–
|
125
|
–
|
125
|
|
Debtors
|
732
|
350
|
460
|
4
|
1,546
|
|
Cash and
cash equivalents
|
278
|
511
|
275
|
30
|
1,094
|
|
|
1,010
|
861
|
860
|
34
|
2,765
|
|
Creditors:
amounts falling due within one year
|
|
|
|
|
|
|
Derivative
liabilities held at fair value through profit or loss
|
–
|
–
|
(186)
|
–
|
(186)
|
|
Other
creditors
|
(270)
|
(144)
|
(26)
|
(139)
|
(579)
|
|
Bank
facility
|
(9,650)
|
–
|
–
|
–
|
(9,650)
|
|
|
(9,920)
|
(144)
|
(212)
|
(139)
|
(10,415)
|
|
Net current
(liabilities)/assets
|
(8,910)
|
717
|
648
|
(105)
|
(7,650)
|
|
Net
assets
|
125,436
|
66,743
|
6,190
|
1,370
|
199,739
|
|
Capital and
reserves
|
|
|
|
|
|
|
Share
capital
|
1,074
|
419
|
107
|
107
|
1,707
|
|
Special
reserve
|
117,607
|
16,809
|
2,263
|
745
|
137,424
|
|
Capital
redemption reserve
|
84
|
81
|
28
|
184
|
377
|
|
Capital
reserve
|
6,671
|
49,434
|
3,713
|
311
|
60,129
|
|
Revenue
reserve
|
–
|
–
|
79
|
23
|
102
|
|
Shareholders’
funds
|
125,436
|
66,743
|
6,190
|
1,370
|
199,739
|
|
Net asset
value per ordinary share – note 5
|
182.11p
|
265.53p
|
149.56p
|
109.51p
|
|
Condensed
Statement of Cash Flows
|
|
For
the
|
For
the
|
|
|
six
months
|
six
months
|
|
|
ended
|
ended
|
|
|
30
November
|
30
November
|
|
|
2023
|
2022
|
|
|
£’000
|
£’000
|
|
Cash flows
from operating activities
|
|
|
|
Net return
before finance costs and taxation
|
9,668
|
(5,552)
|
|
Tax on
overseas income
|
(88)
|
(112)
|
|
Adjustments
for:
|
|
|
|
Purchase
of investments
|
(38,147)
|
(24,088)
|
|
Sale
of investments
|
36,785
|
35,057
|
|
Sale
of futures
|
(87)
|
(507)
|
|
|
|
|
|
|
(1,449)
|
10,462
|
|
Scrip
dividends
|
—
|
(231)
|
|
(Gains)/losses
on investments
|
(6,765)
|
7,756
|
|
(Gains)/losses
on derivatives
|
(55)
|
634
|
|
Decrease in
debtors
|
343
|
203
|
|
(Decrease)/increase
in creditors
|
(1)
|
35
|
|
Net cash
inflow from operating activities
|
1,653
|
13,195
|
|
Cash flows
from financing activities
|
|
|
|
Interest
paid on bank borrowings
|
(294)
|
(258)
|
|
Increase/(decrease)
in bank facility
|
3,300
|
(5,550)
|
|
Share buy
back costs
|
(2,157)
|
(4,559)
|
|
Equity
dividends paid – note 9
|
(3,126)
|
(2,951)
|
|
Net cash
outflow from financing activities
|
(2,277)
|
(13,318)
|
|
Net
decrease in cash and cash equivalents
|
(624)
|
(123)
|
|
Cash and
cash equivalents at the start of the period
|
1,094
|
947
|
|
Cash and
cash equivalents at the end of the period
|
470
|
824
|
|
Reconciliation
of cash and cash equivalents to the Balance Sheet is as
follows:
|
|
|
|
Cash held
at custodian
|
470
|
824
|
|
Cash and
cash equivalents
|
470
|
824
|
|
Cash flow
from operating activities includes:
|
|
|
|
Interest
received
|
23
|
8
|
|
Dividends
received
|
3,641
|
3,589
|
Reconciliation
of net debt
|
|
At
1
June
2023
£’000
|
Cash
Flows
£’000
|
At
30
November
2023
£’000
|
|
|
|
|
|
|
|
Analysis of
changes in net debt
|
|
|
|
|
Cash and
cash equivalents
|
1,094
|
(624)
|
470
|
|
Bank
facility
|
(9,650)
|
(3,300)
|
(12,950)
|
|
Total
|
(8,556)
|
(3,924)
|
(12,480)
|
Notes
to the Condensed Financial Statements
1. Accounting
Policies
The
condensed financial statements have been prepared in accordance
with applicable United Kingdom Accounting Standards and applicable
law (UK Generally Accepted Accounting Practice), including FRS
102 The
Financial Reporting Standard applicable in the UK and Republic of Ireland, FRS 104 Interim Financial
Reporting and the Statement of Recommended Practice Financial
Statements of Investment Trust Companies and Venture Capital
Trusts, issued by
the Association of Investment Companies in July 2022. The financial statements are issued on
a going concern basis.
The
accounting policies applied to these condensed financial statements
are consistent with those applied in the Annual Financial Report
for the year ended 31 May
2023.
2. Management
Fees and Finance Costs
Investment
management fees and finance costs are charged to the applicable
Portfolio as follows, in accordance with the Board’s expected split
of long-term income and capital returns:
|
|
Revenue
|
Capital
|
|
Portfolio
|
Reserve
|
Reserve
|
|
UK
Equity
|
30%
|
70%
|
|
Global
Equity Income
|
30%
|
70%
|
|
Balanced
Risk Allocation
|
30%
|
70%
|
|
Managed
Liquidity
|
100%
|
–
|
The Manager
is entitled to a flat annual management fee which is calculated and
payable quarterly. The fee is based on the net assets of each
Portfolio, at the following percentages:
– 0.55%
per annum on net assets up to £100 million and 0.50% over £100
million for both UK Equity and Global Equity Income Share
Portfolios;
– 0.75%
per annum for the Balanced Risk Allocation Share Portfolio;
and
– 0.12%
per annum for the Managed Liquidity Share Portfolio.
3. Investment
Trust Status and Tax
It is the
intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions for approval as an investment
trust company. As such, the Company has not provided any UK
corporation tax on any realised or unrealised capital gains or
losses.
The tax
charge represents withholding tax suffered on overseas income for
the period.
4. Basic
Return per Share
Basic
revenue, capital and total return per ordinary share is based on
each of the returns on ordinary activities after taxation as shown
by the income statement for the applicable Share class and on the
following number of shares being the weighted average number of
shares in issue throughout the period for each applicable Share
class:
|
|
Weighted
Average
|
|
|
Number
Of Shares
|
|
|
Six
Months
Ended
30
November
2023
|
Six
Months
Ended
30
November
2022
|
|
|
|
|
|
Share
|
|
UK
Equity
|
68,231,832
|
72,322,839
|
|
Global
Equity Income
|
25,230,982
|
24,951,232
|
|
Balanced
Risk Allocation
|
4,158,733
|
4,201,998
|
|
Managed
Liquidity
|
1,262,789
|
1,257,588
|
5. Net
Asset Values per Ordinary Share
The net
asset values per ordinary share were based on the following
Shareholders’ funds and shares (excluding treasury shares) in issue
at the period end:
|
|
At
30
November
2023
£’000
|
At
31
May
2023
£’000
|
|
|
|
|
|
|
|
Portfolio
Shareholders’ Funds
|
|
|
|
UK
Equity
|
123,541
|
125,436
|
|
Global
Equity Income
|
72,685
|
66,743
|
|
Balanced
Risk Allocation
|
6,038
|
6,190
|
|
Managed
Liquidity
|
1,466
|
1,370
|
|
|
Number
Of Shares
|
|
|
At
30
November
2023
|
At
31
May
2023
|
|
|
|
|
|
Portfolio
Shares In Issue
|
|
|
|
UK
Equity
|
66,912,787
|
68,881,153
|
|
Global
Equity Income
|
25,546,911
|
25,135,742
|
|
Balanced
Risk Allocation
|
4,009,751
|
4,138,995
|
|
Managed
Liquidity
|
1,317,292
|
1,251,360
|
6. Classification
Under Fair Value Hierarchy
FRS 102 as
amended for fair value hierarchy disclosures sets out three fair
value levels. These are:
Level 1 –
fair value based on quoted prices in active markets for identical
assets.
Level 2 –
fair values based on valuation techniques using observable inputs
other than quoted prices within level 1.
Level 3 –
fair values based on valuation techniques using inputs that are not
based on observable market data.
The fair
value hierarchy analysis for investments held at fair value at the
period end is as follows:
|
|
|
Global
|
Balanced
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
At
30 November 2023
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Financial
assets at fair value through profit or loss:
|
|
|
|
|
|
Level
1
|
135,767
|
72,405
|
2,303
|
1,442
|
|
Level
2
|
–
|
–
|
3,473
|
152
|
|
Total for
financial assets
|
135,767
|
72,405
|
5,776
|
1,594
|
|
Financial
liabilities:
|
|
|
|
|
|
Level 2 –
derivatives liabilities held at fair value
|
–
|
–
|
30
|
–
|
|
|
|
Global
|
Balanced
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
At
31 May 2023
|
£’000
|
£’000
|
£’000
|
£’000
|
|
Financial
assets at fair value through profit or loss:
|
|
|
|
|
|
Level
1
|
134,346
|
66,026
|
2,430
|
1,345
|
|
Level
2
|
–
|
–
|
3,232
|
130
|
|
Level
3
|
–
|
–
|
5
|
–
|
|
Total for
financial assets
|
134,346
|
66,026
|
5,667
|
1,475
|
|
Financial
liabilities:
|
|
|
|
|
|
Level 2 –
derivatives liabilities held at fair value
|
–
|
–
|
186
|
–
|
Level
1 – This
is the majority of the Company’s investments and comprises all
quoted investments and Treasury bills.
Level
2 – This
comprises liquidity funds held in the Balanced Risk Allocation and
Managed Liquidity Share Portfolios, and any derivative
instruments.
Level
3 – This
included the remaining legacy hedge fund investments of the
Balanced Risk Allocation Share Portfolio which were written down to
zero during the period.
7. Movements
in Share Capital and Share Class Conversions
|
|
|
Global
|
Balanced
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
For
the six months ended 30 November 2023
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
Ordinary 1p
shares (number)
|
|
|
|
|
|
At 31 May
2023
|
68,881,153
|
25,135,742
|
4,138,995
|
1,251,360
|
|
Shares
bought back into treasury
|
(1,168,169)
|
(153,963)
|
–
|
–
|
|
Arising on
share conversion:
|
|
|
|
|
|
August
2023
|
(228,495)
|
108,847
|
78,597
|
2,668
|
|
November
2023
|
(571,702)
|
456,285
|
(207,841)
|
63,264
|
|
At 30
November 2023
|
66,912,787
|
25,546,911
|
4,009,751
|
1,317,292
|
|
Treasury
shares (number)
|
|
|
|
|
|
At 31 May
2023
|
38,515,775
|
16,776,159
|
6,547,218
|
9,393,678
|
|
Shares
bought back into treasury
|
1,168,169
|
153,963
|
—
|
—
|
|
At 30
November 2023
|
39,683,944
|
16,930,122
|
6,547,218
|
9,393,678
|
|
Total
shares in issue at 30 November 2023
|
106,596,731
|
42,477,033
|
10,556,969
|
10,710,970
|
|
Average buy
back price
|
152.9p
|
233.8p
|
n/a
|
n/a
|
As part of
the conversion process, 433,269 deferred shares of 1p each were
created. All deferred shares are cancelled before the period end
and so no deferred shares are in issue at the start or end of the
period.
Subsequent
to the period end, 270,974 UK Equity Portfolio Shares have been
bought back to treasury at an average price of 158.8p.
8. Share
Prices
|
|
|
Global
|
Balanced
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
Period
end
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
30 November
2022
|
165.00p
|
224.00p
|
127.00p
|
96.00p
|
|
31 May
2023
|
159.50p
|
232.00p
|
131.50p
|
91.00p
|
|
30 November
2023
|
157.25p
|
245.00p
|
117.50p
|
95.50p
|
9. Dividends
on Ordinary Shares
First
quarterly interim dividends for UK Equity, Global Equity Income,
Balanced Risk Allocation and Managed Liquidity shares along with a
special dividend on Balanced Risk Allocation were paid on
15 August 2023. Second quarterly
interim dividends for UK Equity and Global Equity Income were paid
on 15 November 2023:
|
|
Number
of
Shares
|
Dividend
Rate
(Pence)
|
|
|
|
Total
|
|
Period
end
|
£’000
|
|
UK
Equity
|
|
|
|
|
First
interim
|
68,881,153
|
1.60
|
1,102
|
|
Second
Interim
|
67,701,484
|
1.60
|
1,083
|
|
|
|
3.20
|
2,185
|
|
Global
Equity Income
|
|
|
|
|
First
interim
|
25,135,742
|
1.60
|
402
|
|
Second
Interim
|
25,127,260
|
1.60
|
402
|
|
|
|
3.20
|
804
|
|
Balanced
Risk Allocation
|
|
|
|
|
First
interim
|
4,138,995
|
1.00
|
41
|
|
Special
Dividend
|
4,138,995
|
2.00
|
83
|
|
|
|
3.00
|
124
|
|
Managed
Liquidity
|
|
|
|
|
First
interim
|
1,251,360
|
1.00
|
13
|
|
|
|
1.00
|
13
|
Dividends
paid for the six months to 30 November
2023 totalled £3,126,000 (six months to 30 November 2022: £2,951,000).
On
5 December 2023 the Company announced
the third quarterly interim dividends for the year ending
31 May 2024. The dividend declared
for UK Equity Shares of 1.60p and Global Equity Income Shares of
1.60p will be paid on 15 February
2024 and they went ex-dividend on 18
January 2024.
10. Status
of Half-Yearly Financial Report
The
financial information contained in this half-yearly financial
report, which has not been reviewed or audited by the independent
auditor, does not constitute statutory accounts within the meaning
of section 434 of the Companies Act 2006. The financial information
for the half years ended 30 November
2023 and 30 November 2022 has
not been audited. The figures and financial information for the
year ended 31 May 2023 are extracted
and abridged from the latest audited accounts and do not constitute
the statutory accounts for that year. Those accounts have been
delivered to the Registrar of Companies and include the Independent
Auditor’s Report, which was unqualified and did not include a
statement under section 498 of the Companies Act 2006.
By order of
the Board
Invesco
Asset Management Limited
Company
Secretary
Date:
8 February 2024
Glossary
of Terms and Alternative Performance Measures
(Discount)/Premium
Discount is
a measure of the amount by which the mid-market price of an
investment company share is lower than the underlying net asset
value (NAV) of that share. Conversely, Premium is a measure of the
amount by which the mid-market price of an investment company share
is higher than the underlying net asset value of that share. In
this half year financial report the discount is expressed as a
percentage of the net asset value per share and is calculated
according to the formula set out below. If the shares are trading
at a premium the result of the below calculation will be positive
and if they are trading at a discount it will be
negative.
Gearing
The gearing
percentage reflects the amount of borrowings that a company has
invested. This figure indicates the extra amount by which net
assets, or shareholders’ funds, would move if the value of a
company’s investments were to rise or fall. A positive percentage
indicates the extent to which net assets are geared; a nil gearing
percentage, or ‘nil’, shows a company is ungeared. A negative
percentage indicates that a company is not fully invested and is
holding net cash as described in the Alternative Performance
Measures section below.
Total
Return
Total
return is the theoretical return to shareholders that measures the
combined effect of any dividends paid, together with the rise or
fall in the share price or NAV. In this half-yearly financial
report these return figures have been sourced from LSEG Data &
Analytics who calculate returns on an industry comparative
basis.
Net
Asset Value Total Return
Total
return on net asset value per share, with debt at market value,
assuming dividends paid by the Company were reinvested into the
shares of the Company at the NAV per share at the time the shares
were quoted ex-dividend.
Share
Price Total Return
Total
return to shareholders, on a mid-market price basis, assuming all
dividends received were reinvested, without transaction costs, into
the shares of the Company at the time the shares were quoted
ex-dividend.
Benchmark
Total Return
Total
return on the benchmark is on a mid-market value basis, assuming
all dividends received were reinvested, without transaction costs,
into the shares of the underlying companies at the time the shares
were quoted ex-dividend.
Notional
Exposure
Notional
exposure in relation to a future, or other derivative contract, is
the value of the assets referenced by the contract that could
alternatively be held to provide an identical return.
Volatility
Volatility
refers to the amount of uncertainty or risk about the size of
changes in a security’s value. It is a statistical measure of the
dispersion of returns for a given security or market index measured
by using the standard deviation or variance of returns from that
same security or market index. Commonly, the higher the volatility,
the riskier the security.
Alternative
Performance Measures (‘APM’)
An APM is a
measure of performance or financial position that is not defined in
applicable accounting standards and cannot be directly derived from
the financial statements. The calculations shown in the
corresponding tables are for the six months ended 30 November 2023 and the year ended 31 May 2023. The APMs listed here are widely used
in reporting within the investment company sector and consequently
aid comparability.
(Discount)/Premium
(APM)
|
|
|
|
|
Global
|
Balanced
|
|
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
30
November 2023
|
Page
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
Share
price
|
1
|
a
|
157.25p
|
245.00p
|
117.50p
|
95.50p
|
|
Net asset
value per share
|
1
|
b
|
184.63p
|
284.52p
|
150.59p
|
111.29p
|
|
Discount
|
|
c =
(a-b)/b
|
(14.8)%
|
(13.9)%
|
(22.0)%
|
(14.2)%
|
|
31
May 2023
|
|
|
|
|
|
|
|
Share
price
|
39
|
a
|
159.50p
|
232.00p
|
131.50p
|
91.00p
|
|
Net asset
value per share
|
35
|
b
|
182.11p
|
265.53p
|
149.56p
|
109.51p
|
|
Discount
|
|
c =
(a-b)/b
|
(12.4)%
|
(12.6)%
|
(12.1)%
|
(16.9)%
|
Gross
Gearing (APM)
This
reflects the amount of gross borrowings in use by a company and
takes no account of any cash balances. It is based on gross
borrowings as a percentage of net assets.
|
|
|
|
|
Global
|
|
|
|
|
UK
|
Equity
|
|
|
|
|
Equity
|
Income
|
|
30
November 2023
|
Page
|
|
£’000
|
£’000
|
|
Bank
facility
|
34
|
|
12,850
|
100
|
|
Gross
borrowings
|
|
a
|
12,850
|
100
|
|
Net asset
value
|
34
|
b
|
123,541
|
72,685
|
|
Gross
gearing
|
|
c =
a/b
|
10.4%
|
0.1%
|
|
31 May
2023
|
|
|
|
|
|
Bank
facility
|
35
|
|
9,650
|
–
|
|
Gross
borrowings
|
|
a
|
9,650
|
–
|
|
Net asset
value
|
35
|
b
|
125,436
|
66,743
|
|
Gross
gearing
|
|
c =
a/b
|
7.7%
|
nil
|
Net
Gearing or Net Cash (APM)
Net gearing
reflects the amount of net borrowings invested, i.e. borrowings
less cash and cash equivalents (incl. investments in money market
funds). It is based on net borrowings as a percentage of net
assets. Net cash reflects the net exposure to cash and cash
equivalents, as a percentage of net assets, after any offset
against total borrowings.
|
|
|
|
|
Global
|
|
|
|
|
UK
|
Equity
|
|
|
|
|
Equity
|
Income
|
|
30
November 2023
|
Page
|
|
£’000
|
£’000
|
|
Bank
facility
|
34
|
|
12,850
|
100
|
|
Less cash
and cash equivalents
|
34
|
|
(244)
|
(124)
|
|
Net
borrowings
|
|
a
|
12,606
|
(24)
|
|
Net asset
value
|
34
|
b
|
123,541
|
72,685
|
|
Net
gearing
|
|
c =
a/b
|
10.2%
|
0.0%
|
|
31
May 2023
|
|
|
|
|
|
Bank
facility
|
35
|
|
9,650
|
–
|
|
Less cash
and cash equivalents
|
35
|
|
(278)
|
(511)
|
|
Net
borrowings
|
|
a
|
9,372
|
(511)
|
|
Net asset
value
|
35
|
b
|
125,436
|
66,743
|
|
Net
gearing/(net cash)
|
|
c =
a/b
|
7.5%
|
(0.8)%
|
Total
Return
Net
Asset Value Total Return (APM)
|
|
|
|
|
Global
|
Balanced
|
|
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
30
November 2023
|
Page
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
As at 30
November 2023
|
34
|
|
184.63p
|
284.52p
|
150.59p
|
111.29p
|
|
As at 31
May 2023
|
35
|
|
182.11p
|
265.53p
|
149.56p
|
109.51p
|
|
Change in
period
|
|
a
|
1.4%
|
7.2%
|
0.7%
|
1.6%
|
|
Impact of
dividend reinvestments(1)
|
|
b
|
1.8%
|
1.2%
|
2.0%
|
0.9%
|
|
Net
asset value total return for the period
|
|
c =
a+b
|
3.2%
|
8.4%
|
2.7%
|
2.5%
|
|
31
May 2023
|
|
|
|
|
|
|
|
As at 31
May 2023
|
35
|
|
182.11p
|
265.53p
|
149.56p
|
109.51p
|
|
As at 31
May 2022
|
|
|
194.35p
|
249.00p
|
169.87p
|
106.92p
|
|
Change in
year
|
|
a
|
(6.3)%
|
6.6%
|
(12.0)%
|
2.4%
|
|
Impact of
dividend reinvestments(1)
|
|
b
|
3.7%
|
3.2%
|
0.6%
|
1.1%
|
|
Net
asset value total return for the year
|
|
c =
a+b
|
(2.6)%
|
9.8%
|
(11.4)%
|
3.5%
|
(1) Total
dividends paid during the period for the UK Equity Share Portfolio
of 3.20p (year to 31 May 2023:
7.05p), Global Equity Income Share Portfolio of 3.20p (year to
31 May 2023: 7.20p), Balanced Risk
Allocation Share Portfolio 3.00p (year to 31
May 2023: 1.00p) and Managed Liquidity Share Portfolio 1.00p
(year to 31 May 2023: 1.00p),
reinvested at the NAV or share price on the ex-dividend date. A
fall in the NAV or share price, subsequent to the reinvestment
date, consequently further reduces the returns and vice versa if
NAV or share price rises.
Share
Price Total Return (APM)
Total
return to shareholders, on a mid-market price basis, assuming all
dividends received were re-invested, without transaction costs,
into the same class of shares in the Company at the time the shares
were quoted ex-dividend.
|
|
|
|
|
Global
|
Balanced
|
|
|
|
|
|
UK
|
Equity
|
Risk
|
Managed
|
|
30
November 2023
|
Page
|
|
Equity
|
Income
|
Allocation
|
Liquidity
|
|
As at 30
November 2023
|
39
|
|
157.25p
|
245.00p
|
117.50p
|
95.50p
|
|
As at 31
May 2023
|
39
|
|
159.50p
|
232.00p
|
131.50p
|
91.00p
|
|
Change in
period
|
|
a
|
(1.4)%
|
5.6%
|
(10.6)%
|
4.9%
|
|
Impact of
dividend reinvestments(1)
|
|
b
|
2.1%
|
1.4%
|
2.2%
|
1.2%
|
|
Share
price total return for the period
|
|
c =
a+b
|
0.7%
|
7.0%
|
(8.4)%
|
6.1%
|
|
31
May 2023
|
Page
|
|
|
|
|
|
|
As at 31
May 2023
|
39
|
|
159.50p
|
232.00p
|
131.50p
|
91.00p
|
|
As at 31
May 2022
|
|
|
175.00p
|
229.00p
|
154.50p
|
97.00p
|
|
Change in
year
|
|
a
|
(8.9)%
|
1.3%
|
(14.9)%
|
(6.2)%
|
|
Impact of
dividend reinvestments(1)
|
|
b
|
4.2%
|
3.3%
|
0.6%
|
1.0%
|
|
Share
price total return for the year
|
|
c =
a+b
|
(4.7)%
|
4.6%
|
(14.3)%
|
(5.2)%
|
(1) Total
dividends paid during the period for the UK Equity Share Portfolio
of 3.20p (year to May 2023: 7.05p),
Global Equity Income Share Portfolio of 3.20p (year to May 2023: 7.20p), Balanced Risk Allocation Share
Portfolio 3.00p (year to May 2023:
1.00p) and Managed Liquidity Share Portfolio 1.00p (year to
May 2023: 1.00p), reinvested at the
NAV or share price on the ex-dividend date. A fall in the NAV or
share price, subsequent to the reinvestment date, consequently
further reduces the returns and vice versa if NAV or share price
rises.
Directors,
Investment Manager and Administration
Directors
Victoria Muir (Chairman of the Board and Nomination
Committee)
Craig Cleland (Chairman of the Audit Committee)
Davina Curling (Senior Independent Director and Chairman of
the
Management
Engagement Committee)
Mark Dampier (Chairman of the Marketing
Committee)
Tim Woodhead
All the
Directors are, in the opinion of the Board, independent of the
management company.
All
Directors are members of the Management Engagement, Nomination and
Marketing Committees.
All
Directors, except the Chairman of the Board, are members of the
Audit Committee.
Registered
Office and Company Number
Perpetual
Park
Perpetual
Park Drive
Henley-on-Thames
Oxfordshire
RG9
1HH
Registered
in England and Wales Number
05916642
Alternative
Investment Fund Manager (Manager)
Invesco
Fund Managers Limited
Company
Secretary
Invesco
Asset Management Limited
Company
Secretarial contact: James
Poole
020 7543
3559
email:
James.Poole@invesco.com
Correspondence
Address
43-45
Portman Square
London W1H 6LY
020 3753
1000
email:
investmenttrusts@invesco.com
Depositary
and Custodian
The Bank of
New York Mellon (International) Limited
160 Queen
Victoria Street, London EC4V 4LA
Corporate
Broker
Winterflood
Investment Trusts
The Atrium
Building
Cannon
Bridge
25 Dowgate
Hill
London EC4R 2GA
General
Data Protection Regulation
The
Company’s privacy notice can be found at
www.invesco.co.uk/investmenttrusts
Invesco
Client Services
Invesco has
a Client Services Team, available to assist you from 8.30am to 6.00pm Monday to Friday (excluding UK
Bank Holidays). Please note no investment advice can be given. 0800
085 8677.
www.invesco.co.uk/investmenttrusts
Registrar
Link
Group
Central
Square
29
Wellington Street
Leeds LS1 4DL
If your
shares are held directly, rather than through an ISA, SIP or
dealing platform, and you have queries relating to your
shareholding, you should contact the Registrar on:
0371 664
0300 from the UK, or
+44 371 664
0300 from overseas.
Calls are
charged at the standard geographic rate and will vary by provider.
Calls from outside the United
Kingdom will be charged at the applicable international
rate. Lines are open from 9.00am to
5.30pm, Monday to Friday (excluding Public Holidays in
England and Wales).
Shareholders
holding shares directly can also access their holding details via
Link’s website: www.signalshares.com.
Link Group
provide an on-line and telephone share dealing service to existing
shareholders who are not seeking advice on buying or selling. This
service is available at www.linksharedeal.com or 0371 664
0445.
Calls are
charged at the standard geographic rate and will vary by
provider.
From
outside the UK: +44 371 664 0445. Calls from outside the UK will be
charged at the applicable international rate. Lines are open from
8.00am to 4.30pm, Monday to Friday
(excluding Public Holidays in England and Wales).
Link Group
is the business name of Link Market
Services Limited.
Investor
Warning
The
Company, Invesco and the Registrar would never contact members of
the public to offer services or require any type of upfront
payment. If you suspect you have been approached by fraudsters,
please contact the FCA consumer helpline on 0800 111 6768
and Action Fraud on 0300 123 2040. Further details for reporting
frauds, or attempted frauds, can be found below.
The
Association of Investment Companies
The Company
is a member of the Association of Investment Companies. Contact
details are as follows:
020 7282
5555
Email:
enquiries@theaic.co.uk
Website:
www.theaic.co.uk
Website
Information
relating to the Company can be found on the Company’s section of
the Manager’s website.
Each share
class has a separate web page that can be accessed via the Invesco
investment trusts hub at
www.invesco.co.uk/investmenttrusts.
The
contents of websites referred to in this document, or accessible
from links within those websites, are not incorporated into, nor do
they form part of, this document.
The
Company’s ordinary shares qualify to be considered as a mainstream
investment product suitable for promotion to retail
investors.
National
Storage Mechanism
A copy of
the Half-Yearly Financial
Report will be submitted
shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Hard copies
of the Half-Yearly Financial Report will be posted to shareholders
and can be requested from the Company Secretary by email
at investmenttrusts@invesco.com or
at the
Company’s correspondence address, 2nd Floor,
43-45 Portman Square, London W1H
6LY.
For further
information, please contact:
James Poole
For and on
behalf of Invesco Asset Management Limited
Corporate
Secretary to Invesco
Select Trust plc
Email:
investmenttrusts@invesco.com
Will Ellis
Head of
Specialist Funds - Invesco
Email: will.ellis@invesco.com
Invesco
Asset Management Limited
Corporate
Company Secretary
8
February 2024
