Schroder
Global Equity Income Fund
Final Short Report
16 July 2015 to 15 July 2016
Schroder Global Equity
Income Fund
Review of Investment Activities
From 15 July 2015 to 15 July 2016, the price of A Accumulation units
on a dealing price to dealing price basis rose 9.59%. In comparison,
the MSCI World Index generated a net total return of 15.84%1 in
sterling terms.
1 Source: Thomson Reuters Datastream.
Our complete income strategy delivers returns from two sources: firstly, the
income the companies generate through paying dividends; and secondly, the
capital returns generated by lowly valued underperforming companies
improving. The period under review was difficult for value investors as value
underperformed growth, largely due to investors seeking stability in the
uncertain economic environment.
The leading contributor was US electronic component manufacturer Vishay
Intertechnology, a recent addition to the fund. Its business is geographically
diversified, it consistently generates free cash flow and its balance sheet is
robust. Luxury goods businesses Michael Kors Holdings and Coach
performed well as both announced results that were better than the market’s
low expectations.
The main detractor was US office supplier Staples after its proposed merger
with Office Depot was halted by regulators. We believe Staples offers
significant potential for capital and dividend growth. Another detractor was
UK supermarket group Tesco: results indicated that investment would
suppress profits in the short term, but the long term management turnaround
remains on track and the balance sheet is stronger.
There is growing evidence to suggest a primary consideration for investors
since the credit crisis has been avoiding volatility. This only enhances what
we might term the ‘bond proxy paradox’ – the hunt for supposedly safe and
stable stocks, pushing up valuations to a point where they can really no
longer be considered either safe or stable. Indeed, the premium paid for the
perceived safety of many traditionally defensive stocks – such as food &
beverages – has increased. Such things tend to move in cycles and what
was once considered an advantage will, after a critical point is reached,
become a disadvantage. There is no such thing as an asset that is always
safe or always risky – risk is determined by the price you pay.
As of April 2016, and Jamie Lowry’s departure, Ian
Kelly has been the sole manager of the fund.
Fund Manager:
Ian Kelly
Schroder Global Equity Income Fund
Fund Information
Accounting dates
Interim
Final
15 January
15 July
15 March
15 September
Revenue allocation dates
For the year
to 15.7.16
For the year
to 15.7.15
A Income units
1.70%
1.71%
A Accumulation units
1.70%
1.71%
L Income units
0.87%
0.88%
L Accumulation units
0.87%
0.88%
Z Income units
0.95%
0.96%
Z Accumulation units
0.95%
0.96%
Net Asset
Value as at
15.7.16
pence per unit
Net Asset
Value as at
15.7.15
pence per unit
Net Asset
Value
% change
A Income units
56.88
53.35
6.62
A Accumulation units
80.51
73.02
10.26
L Income units
63.08
58.66
7.53
L Accumulation units
68.81
61.90
11.16
Z Income units
77.68
72.30
7.44
Z Accumulation units
90.40
81.38
11.08
3 months
1 year
5 years
Ongoing charges figure
Performance Record
Fund performance
Schroder Global Equity
Income Fund
7.39%
9.59%
61.73%
MSCI World Index1
9.75%
15.84%
75.05%
Fund Source: A Accumulation units on a dealing price to dealing price basis to 15.7.16.
Index Source: Thomson Reuters Datastream, net total return in sterling terms to 15.7.16.
1 With effect from 1 January 2011, the benchmark changed to the MSCI World Index. Prior to this date the
benchmark was the MSCI All Country World Index. The full track record of the previous index has been kept and
chain linked to the new one.
Schroder Global Equity Income Fund
Comparative Tables
A Income units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
48.44
Change in net asset value
Opening net asset value
53.35
48.42
Return before operating charges
6.21
7.38
2.27
Operating charges
(0.87)
(0.91)
(0.82)
Return after operating charges*
5.34
6.47
1.45
Distributions1
(1.81)
(1.54)
(1.47)
56.88
53.35
48.42
(0.05)
(0.08)
(0.06)
10.01
13.36
2.99
Closing net asset value
*after direct transaction costs of
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
6,411
13,226
18,243
11,270,365
24,793,354
37,679,677
Operating charges (%)
1.70
1.71
1.70
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
58.38
59.39
50.63
Lowest dealing price (p)
46.53
47.23
46.18
Prices
Schroder Global Equity Income Fund
Comparative Tables (continued)
A Accumulation units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
62.52
Change in net asset value
Opening net asset value
73.02
64.40
Return before operating charges
8.69
9.84
2.95
Operating charges
(1.20)
(1.22)
(1.07)
Return after operating charges*
Closing net asset value
7.49
8.62
1.88
80.51
73.02
64.40
Retained distributions1
2.50
2.06
1.91
*after direct transaction costs of
(0.06)
(0.11)
(0.08)
10.26
13.39
3.01
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
25,839
40,839
46,771
32,093,323
55,925,802
72,622,595
Operating charges (%)
1.70
1.71
1.70
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
80.93
79.77
65.98
Lowest dealing price (p)
64.51
62.83
59.61
Prices
Schroder Global Equity Income Fund
Comparative Tables (continued)
L Income units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
50.00
Change in net asset value
Opening net asset value
58.66
52.79
Return before operating charges
6.92
8.09
4.54
Operating charges
(0.50)
(0.53)
(0.40)
Return after operating charges*
6.42
7.56
4.14
Distributions1
(2.00)
(1.69)
(1.35)
63.08
58.66
52.79
(0.05)
(0.09)
(0.07)
10.94
14.32
8.28
Closing net asset value
*after direct transaction costs of
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
16,368
2,438
711
25,949,097
4,158,360
1,346,118
Operating charges (%)
0.87
0.88
0.73
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
64.74
65.16
55.42
Lowest dealing price (p)
51.42
51.62
50.00
Prices
The unit class was launched on 1 October 2013.
Schroder Global Equity Income Fund
Comparative Tables (continued)
L Accumulation units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
50.00
Change in net asset value
Opening net asset value
61.90
54.14
Return before operating charges
7.44
8.31
4.54
Operating charges
(0.53)
(0.55)
(0.40)
Return after operating charges*
Closing net asset value
6.91
7.76
4.14
68.81
61.90
54.14
Retained distributions1
2.13
1.74
1.35
*after direct transaction costs of
(0.05)
(0.09)
(0.07)
11.16
14.33
8.28
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
20,638
10,618
1,850
29,991,556
17,153,945
3,417,182
Operating charges (%)
0.87
0.88
0.73
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
69.17
67.48
55.42
Lowest dealing price (p)
54.94
52.93
50.00
Prices
The unit class was launched on 1 October 2013.
Schroder Global Equity Income Fund
Comparative Tables (continued)
Z Income units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
64.65
Change in net asset value
Opening net asset value
72.30
65.12
Return before operating charges
8.51
9.96
3.07
Operating charges
(0.66)
(0.70)
(0.62)
Return after operating charges*
7.85
9.26
2.45
Distributions1
(2.47)
(2.08)
(1.98)
77.68
72.30
65.12
(0.06)
(0.11)
(0.08)
10.86
14.22
3.79
Closing net asset value
*after direct transaction costs of
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
45,689
32,083
9,965
58,817,065
44,376,381
15,305,374
Operating charges (%)
0.95
0.96
0.95
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
79.73
80.33
68.04
Lowest dealing price (p)
63.34
63.65
61.70
Prices
Schroder Global Equity Income Fund
Comparative Tables (continued)
Z Accumulation units
Financial year to 15 July
2016
p per unit
2015
p per unit
2014
p per unit
68.63
Change in net asset value
Opening net asset value
81.38
71.23
Return before operating charges
9.77
10.92
3.26
Operating charges
(0.75)
(0.77)
(0.66)
9.02
10.15
2.60
90.40
81.38
71.23
Return after operating charges*
Closing net asset value
Retained distributions1
2.80
2.29
2.11
*after direct transaction costs of
(0.07)
(0.12)
(0.08)
11.08
14.25
3.79
Performance
Return after charges (%)
Other information
Closing net asset value (£000’s)
Closing number of units
34,051
25,127
11,040
37,664,791
30,876,666
15,497,820
Operating charges (%)
0.95
0.96
0.95
Direct transaction costs (%)**
0.09
0.15
0.12
Highest dealing price (p)
90.88
88.73
72.92
Lowest dealing price (p)
72.20
69.62
65.50
Prices
1 These figures have been rounded to 2 decimal places.
** Direct transaction costs have been stated after deducting the proportion of the amounts collected from dilution
adjustments.
Please remember that past performance is not a guide to future performance and it might not be repeated. The value
of investments and the revenue from them may go down as well as up and investors may not get back the amount
originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money.
Schroder Global Equity Income Fund
Portfolio Information
% of net
assets
as at
15.7.16
Spread of investments
% of net
assets
as at
15.7.15
Hong Kong
5.34
5.38
Japan
1.42
0.00
Singapore
0.00
1.56
South Korea
4.03
1.85
United Arab Emirates
2.11
0.00
Belgium
4.37
5.04
Finland
2.32
0.00
France
5.02
8.55
Germany
3.65
4.66
Italy
2.09
1.76
Netherlands
1.68
3.24
Norway
1.50
1.78
Spain
2.87
3.89
15.76
19.30
United Kingdom
Canada
United States
2.42
3.52
40.80
34.25
Brazil
1.26
1.00
US Dollar Denominated Derivatives
0.78
0.37
Net other assets
2.58
3.85
Major holdings
% of net
assets
as at
15.7.16
% of net
assets
as at
15.7.15
Cisco Systems
4.69
Ageas
5.04
Ageas
4.37
Staples
4.32
Intel
4.24
Cisco Systems
4.23
Samsung Electronics Preference
4.03
Tesco
3.68
JPMorgan Chase
3.40
Deutsche Telekom
3.56
HSBC Holdings
3.20
Legal & General Group
3.40
Staples
3.20
Direct Line Insurance Group
3.36
Centrica
3.07
Centrica
3.16
Tesco
3.05
Microsoft
3.04
Pearson
3.01
HSBC Holdings
3.01
Schroder Global Equity Income Fund
Investment Objective & Policy
The fund’s investment objective is to provide income and capital growth for
investors over the long term primarily through investment in equity and equity
related securities of companies worldwide which offer attractive yields and
sustainable dividend payments.
Investment will be in directly held transferable securities. The fund may also
invest in collective investment schemes, warrants and money market
instruments.
On 23 October 2015 Appendix II (Investment Powers and Restrictions) of the
Prospectus was amended to draw attention to the Manager’s general power
under Chapter 5 of the Collective Investment Schemes sourcebook to enter
into underwriting or sub-underwriting agreements.
Risk Profile
Risk and reward indicator
Lower risk
Potentially lower reward
1
2
Higher risk
Potentially higher reward
3
4
55
6
7
The risk category was calculated using historical performance data and may
not be a reliable indicator of the fund’s future risk profile.
The fund is in this category because it can take higher risks in search of
higher rewards and its price may rise and fall accordingly.
The fund’s risk category is not guaranteed to remain fixed and may change
over time.
A fund in the lowest category does not mean a risk free investment.
Specific risks
The fund invests in assets which are exposed to currencies other than
sterling. Exchange rates may cause the value of overseas investments and
the revenue from them to rise or fall.
The fund invests in emerging markets and the Far East. This involves a high
degree of risk and should be seen as long term in nature.
The fund invests in a smaller number of stocks. This carries more risk than
funds spread across a larger number of companies.
Schroder Global Equity Income Fund
Risk Profile (continued)
The fund may use derivatives for specific investment purposes. This involves
a higher degree of risk and may lead to a higher volatility in the unit prices of
the fund.
As a result of the expenses being charged wholly to capital, the distributable
revenue of the fund may be higher, but the capital value of the fund may be
eroded which may affect future performance.
For these reasons, the purchase of units should not normally be regarded as
a short term investment.
Report & Accounts
This document is a short report for Schroder Global Equity Income Fund
for the year ended 15 July 2016. The long form Report & Accounts for the
fund are available on our website www.schroders.co.uk or upon written
request to Schroders, FREEPOST, RLTZ-CHSY-HBUT, PO Box 1102,
Chelmsford, Essex CM99 2XX.
Other Information
The information contained in this report is designed to enable unitholders to
make an informed judgement on the activities of the fund during the period it
covers and the results of those activities at the end of the period. For more
information about the activities and performance of the fund during this and
previous periods, please contact the Manager.
The Prospectus, the Key Investor Information Document and details of
investment charges and costs are available on request or can be
downloaded from our website www.schroders.co.uk.
Please remember that past performance is not a guide to future performance and it might not be repeated.
The value of investments and the revenue from them may go down as well as up and investors may not
get back the amount originally invested. Because of this, you are not certain to make a profit on your
investments and you may lose money.
For investors’ security, calls to Schroder Investor Services may be recorded. Manager: Schroder Unit Trusts Limited,
31 Gresham Street, London EC2V 7QA. Authorised and regulated by the Financial Conduct Authority. Investment
Adviser: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Authorised and
regulated by the Financial Conduct Authority. Trustee: J.P. Morgan Europe Limited, Chaseside, Bournemouth
BH7 7DA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and
Prudential Regulation Authority. Independent Auditors: PricewaterhouseCoopers LLP, Atria One, 144 Morrison
Street, Edinburgh EH3 8EX.
For further literature please contact Schroder Investor Services on 0800 718 777 or at
[email protected], or visit our website at www.schroders.co.uk.
Issued in September 2016 by Schroder Unit Trusts Limited, 31 Gresham
Street, London EC2V 7QA. Registered No: 04191730 England. Authorised
and regulated by the Financial Conduct Authority. w35659 MR112BF16