J O Hambro Capital Management UK Umbrella Fund 2017 · 2017. 9. 21. · management team reviewing...

J O Hambro Capital Management UK Umbrella Fund

2017Interim Report (Unaudited)

for the six months ended 30 June 2017

www.johcm.co.uk

J O Hambro Capital Management UK Umbrella Fund 30/6/2017

Contents

Authorised Corporate Director’s Report 1

Accounting policies 2

JOHCM UK Dynamic Fund, including Financial Statements 3

JOHCM UK Equity Income Fund, including Financial Statements 17

JOHCM UK Opportunities Fund, including Financial Statements 33

Appendix I – Securities Financing Transactions Regulation 49

Further information 52

Directory 53


1

Authorised Corporate Director’s ReportFor the six-month period ended 30 June 2017

General informationThe J O Hambro Capital Management UK Umbrella Fund (‘the Company’) is an open-ended investment company (‘OEIC’) with variable capital. The Company is registered and authorised in the United Kingdom by the Financial Conduct Authority (‘the FCA’). The Company has been established as a UCITS scheme in the form of an umbrella company, currently with three separate sub-funds.

Each sub-fund has an individual investment objective and policy. This Report reviews and reports on the financial results of each of the Company’s sub-funds for the six months ended 30 June 2017.

Subject to approval by the FCA and the Depositary the Company may seek to add new sub-funds in the future.

The sub-funds are segregated portfolios of assets and, accordingly, the assets of a sub-fund belong exclusively to that sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the Company, or any other sub-fund, and shall not be available for any such purpose.

While the provisions of the OEIC Regulations provide for segregated liability between the sub-funds, the concept of segregated liability is relatively new. Accordingly, where claims are brought by local creditors in foreign courts or under foreign law contracts, it is not known how those foreign courts will react to regulations 11A and 11B of the OEIC Regulations.

Shareholders are not liable for the debts of the Company.

The latest prospectus is dated 27 February 2017 and can be accessed at www.johcm.com.

Class X Distribution shares, a new share class of the UK Equity Income sub-fund, were launched on 12 June 2017.

As at 30 June 2017 there were no cross-holdings between sub-funds of the Company.

Further information is shown on pages 52 and 53.

Statement of the Authorised Corporate DirectorWe hereby certify that this report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority and approve it for publication on behalf of J O Hambro Capital Management Limited, Authorised Corporate Director (‘ACD’).

Helen Vaughan, Director

Ken Lambden, Director

24 August 2017


2

Accounting Policies

These interim financial statements have been prepared in compliance with UK Financial Reporting Standard 102 (FRS102) and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the Investment Association in May 2014 (2014 SORP).

Amendment to FRS102 ‘fair value hierarchy disclosures’ effective for annual periods beginning on or after 1 January 2017 have been early adopted. These amendments improve consistency of fair value disclosures for financial instruments with those required by EU adopted International Financial Reporting Standards (IFRS).

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2016 and are described in those Financial Statements. In this regard, comparative figures from previous periods are prepared to the same standards as the current period, unless otherwise stated.


3

“Nam

e” F

und

JOHCM UK Dynamic Fund

A Sub-Fund of J O Hambro Capital Management UK Umbrella Fund

Investment objective & policyThe investment objective of the Fund is to achieve long-term capital growth. Investments will primarily be drawn from companies listed on either of the two primary markets of the London Stock Exchange: the main market and AIM. At least 75% of the Fund’s assets will at all times be invested in equity securities of companies domiciled or exercising the predominant part of their economic activity in the United Kingdom. The Fund may on occasion utilise this position to invest a proportion of its assets in equities listed on a recognised exchange outside the UK. Investment will be made primarily in equity securities which are readily marketable, but investments will also be made in equity securities of smaller companies which can be more lightly traded. The portfolio is likely to be fairly concentrated with the Fund typically holding equity interests in between 35 and 50 different companies.

The benchmark for the Fund will be the FTSE All Share Total Return index. This is a capitalisation weighted index comprising FTSE 350 and FTSE Smallcap indices.

JOH

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4



Investment Management Reportfor the period ended 30 June 2017

PerformanceThe JOHCM UK Dynamic Fund returned 8.86% in sterling terms, net of fees for the ‘A’ share class, for the six-month period ended 30 June 2017. Over the same period the FTSE All-Share Total Return Index (12pm adjusted) returned 6.77%.1

Investment backgroundUK equities achieved decent gains over the first half of 2017, marked by a solid first quarter and more muted progress in the second quarter amid heightened domestic political uncertainty after Prime Minister May’s snap general election call resulted in a hung parliament. By sector, consumer goods was the best performer after the reflation trade that proved popular in the second half of 2016 partially reversed. Oil & gas was the standout laggard against a backdrop of weakness in oil prices.

Fund reviewThe Fund outperformed materially over the period courtesy of strong stock selection within a number of sectors led by industrials. Sector exposure effects, a by-product of our bottom-up process, were neutral in aggregate. Here our sizeable consumer goods underweight was a headwind as overpriced bond proxies such as British American Tobacco and Reckitt Benckiser advanced further in a partial reversal of last year’s reflation trade. Cancelling out this drag were the positive effects of being overweight industrials, underweight the poor-performing oil & gas sector and having no exposure to utilities, as domestic energy companies saw their share prices slide in the run up to the UK general election after both main political parties pledged to cap energy bills.

Turning to individual contributors, the top performer was our longstanding holding in private equity company 3i Group. The market continued to reappraise the strengths of its largest portfolio investment, Action, a European

discount retailer. In March, Action reported strong results for the year to December 2016, which showed revenue growth of 34%, like-for-like revenue growth of 6.9% and earnings growth of 37%. As a result, a number of analysts have increased their valuation assumptions applied to the investment.

SDL closely followed 3i Group. The translation services and software business had a good year-end trading update and subsequent annual results, the non-core assets (Fredhopper and the campaigns business) were sold towards the beginning of 2017, whilst underlying revenues, profits and cash generation from continuing operations have continued to grow.

In industrials, electronics component distributor Electrocomponents added value as its share price benefited from an extremely positive full-year trading update, reporting that both revenue growth and gross margins were ahead of expectations in the final few months of the year.

The main stock laggard over the period was Imagination Technologies, an earlier stage investment made in August 2016. Its share price fell sharply after it announced that Apple “will no longer use the Group’s intellectual property in its new products in the next 15 months.” This represented a crystallisation of a known but inadequately discounted (by us and by the market) tail risk in this particular investment case. Whilst it was early days for this investment in the Fund, this news marked a huge departure from the expected path from the management’s and, crucially, from our own investment case. We elected to crystallise the loss and sold the shares in full on the day of the announcement. Other stragglers over the period included Barclays, Anglo American and BP, but all remain core portfolio holdings.

Alex SavvidesSenior Fund Manager

• 21 years industry experience

• Joined JOHCM in March 2003

1 Source: JOHCM/FTSE Group/Bloomberg. Basis: Fund return, mid to mid with net income reinvested, in sterling.

5



It has been a busy period for new idea generation, which included adding Marks & Spencer and SIG at the beginning of the period. The latter is a stock which we decided to repurchase for the Fund in January 2017 after both a management and strategic change, whilst we see the former as one of the more idiosyncratic business transformation stories in the deeply unloved UK retail sector. M&S has been of interest to the Fund since Steve Rowe took over as CEO. Despite Rowe being an M&S ‘lifer’, we found his new strategy in Clothing & Home refreshing, and it bore a number of similarities to the successful turnaround that is underway at Morrisons: a capital-light approach to a return to top-line growth by getting the basics of retailing right, including less promotions but lower opening price points and simplified ranges but greater availability.

We also added Xaar, a supplier of industrial inkjet printheads, to the portfolio. Here a new management team is implementing an interesting turnaround in this leading global business. Other new positions introduced were Euromoney, where again there is a new management team in place. This new senior team is undertaking a complete portfolio review of assets, while the company is enjoying the benefits of greater balance sheet flexibility after the Daily Mail and General Trust reduced its majority stake. St Modwen Properties is another new position with a new management team reviewing its property portfolio, with a greater focus on high-returning assets. The valuation is attractive, with the shares trading at around a 25% discount to net book value at the time of purchase.

Alex SavvidesSenior Fund Manager

Past performance is not necessarily a guide to future performance. The price of shares may go down as well as up and future income is not guaranteed.

Investment Management Report continued

6



Price and income history

Calendar year

Highest

price (pence)

Lowest

price (pence)

Net distribution

per share (pence)

2013 GBP Class A (distributing) 168.10 129.90 5.358604

GBP Class A (accumulating) 178.70 138.80 5.464042

GBP Class B (distributing) 158.30 122.90 5.001443

GBP Class B (accumulating) 205.70 160.50 6.468729

GBP Class Y (distributing) 102.40 98.60 0.778296

GBP Class Y (accumulating) 102.80 98.90 0.619882













2016 GBP Class A Distributing 188.50 136.60 6.812006

GBP Class A Accumulating 224.09 162.20 8.092414

GBP Class B Distributing 175.60 127.40 6.348625

GBP Class B Accumulating 254.42 184.70 9.196911

GBP Class Y Distributing 117.80 85.20 4.253299

GBP Class Y Accumulating 128.51 93.00 4.640980

2017 (to 30 June) GBP Class A (distributing) 201.90 183.00 -

GBP Class A (accumulating) 248.80 225.50 -

GBP Class B (distributing) 187.70 170.50 -

GBP Class B (accumulating) 281.80 256.00 -

GBP Class Y (distributing) 126.20 114.30 -

GBP Class Y (accumulating) 142.80 129.40 -


Net asset value and distribution history

7



Net asset values

Net asset valueof share class

£

Total sharesin issue

Net asset valueper share

Percentagechange

%

GBP Class A Distributing 31 December 2015 18,917,656 12,211,511 154.92p (4.29)

31 December 2016 17,375,679 9,561,296 181.73p 17.31

30 June 2017 18,482,501 9,414,661 196.32p 8.03

GBP Class A Accumulating 31 December 2015 18,284,051 9,934,405 184.05p (0.09)

31 December 2016 18,266,740 8,151,559 224.09p 21.75

30 June 2017 26,510,838 11,001,405 240.98p 7.54

GBP Class B Distributing 31 December 2015 15,568,597 10,760,252 144.69p (4.85)

31 December 2016 742,550 439,270 169.04p 16.83

30 June 2017 693,094 379,279 182.74p 8.10

GBP Class B Accumulating 31 December 2015 21,814,139 10,395,821 209.84p (0.59)

31 December 2016 19,566,203 7,690,437 254.42p 21.24

30 June 2017 102,866,670 37,587,077 273.68p 7.57

GBP Class Y Distributing 31 December 2015 68,761,305 71,103,645 96.71p (4.24)

31 December 2016 85,207,656 75,061,995 113.52p 17.38

30 June 2017 102,982,185 84,064,236 122.50p 7.91

GBP Class Y Accumulating 31 December 2015 158,371,255 150,075,820 105.53p (0.15)

31 December 2016 230,116,367 179,065,275 128.51p 21.78

30 June 2017 326,042,873 235,225,931 138.61p 7.86

DistributionsJOHCM UK Dynamic Fund pays an annual distribution with ex date 31 December and pay date 28 February.

Net asset value and distribution history continued

8



Ongoing charge figure

Class A distributing shares

Class A accumulating shares

Class B distributing shares

Class B accumulating shares

30 June 2017

31 Dec 2016

30 June 2017

31 Dec 2016

30 June 2017

31 Dec 2016

30 June 2017

31 Dec 2016

Ongoing charge figure 0.85% 0.87% 0.85% 0.87% 1.35% 1.37% 1.33% 1.37%

Performance fee 0.34% 0.56% 0.34% 0.56% 0.30% 0.04% 0.29% 0.38%

Total expense ratio 1.19% 1.43% 1.19% 1.43% 1.65% 1.41% 1.62% 1.75%

Class Y distributing shares

Class Y accumulating shares

30 June 2017

31 Dec 2016

30 June 2017

31 Dec 2016

Ongoing charge figure 0.73% 0.75% 0.72% 0.74%

Performance fee 0.35% 0.57% 0.35% 0.57%

Total expense ratio 1.08% 1.32% 1.07% 1.31%

Performance recordIn the period from 1 January 2017 to 30 June 2017, the price of the Class A shares in the Sub-Fund increased by 8.86%. This compares with a rise of 6.77% in the FTSE All-Share Total Return Index (adjusted for 12 noon) over the same period.Source: JOHCM/FTSE Group/Bloomberg. Basis: Fund return, mid to mid with net income reinvested, in Sterling.


Risk and reward profile* Risk and reward profile**

Lower risk Higher risk Lower risk Higher risk

Typical lower rewards Typical higher rewards Typical lower rewards Typical higher rewards

1 2 3 4 5 6 7 1 2 3 4 5 6 7

* Applicable to the B accumulating share class ** Applicable to all other share classes in the sub-fund

The risk and reward indicator is calculated on the basis of the share class volatility (the ups and downs in its value) over the prior 5 year period.The risk and reward indicator:• is based on historical data and may not be a reliable

indication for the future;• is not guaranteed and may change over time.• The lowest category does not mean that a share class is

risk free.The share class category reflects the following factors:• Higher volatility can result from investments in shares

as their value may fluctuate more than other financial instruments, such as bonds.

• Your initial investment is not guaranteed.

In addition to the risk captured by the indicator, the Sub-Fund’s value may be affected by:• Any change in the Company’s tax status or in legislation

could affect the value of investments held by the Company.• Political and /or regulatory Risks.• Liquidity risk: The risk that some securities held by the

Funds may be difficult or impossible to sell at the desired time and price. The Funds’ investments include shares in small-cap companies. Small-cap companies tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.

• Investors should note that a more detailed description of risk factors is set out in full in the Prospectus.

9



Portfolio statement (unaudited)as at 30 June 2017

Holding/ nominal

value Investment

Market value £'000

Percentage of total net assets

%

Oil & Gas : 10.43%

(31 December 2016 : 12.41%)

Oil & Gas Producers : 10.43%

(31 December 2016 : 12.41%)

7,077,641 BP 31,340 5.43

1,399,302 Royal Dutch Shell 'B' 28,861 5.00

60,201 10.43

Total Oil & Gas 60,201 10.43

Basic Materials : 7.08%

(31 December 2016 : 6.88%)

Chemicals : 1.73%

(31 December 2016 : 0.74%)

3,393,437 Elementis 9,980 1.73

9,980 1.73

Mining : 5.35%

(31 December 2016 : 6.14%)

1,446,217 Anglo American 14,809 2.56

496,246 Rio Tinto 16,088 2.79

30,897 5.35

Total Basic Materials 40,877 7.08

Industrials : 19.27%

(31 December 2016 : 19.23%)

Aerospace & Defense : 4.77%

(31 December 2016 : 5.61%)

4,787,463 Chemring Group 8,857 1.53

6,933,694 QinetiQ 18,735 3.24

27,592 4.77

Electronic & Electrical Equipment : 2.58%

(31 December 2016 : 3.55%)

5,746,277 TT Electronics 11,105 1.92

1,007,141 Xaar 3,787 0.66

14,892 2.58

10



Portfolio statement (unaudited) continued

Holding/ nominal

value Investment

Market value £'000


%

General Industrials : 1.73%

(31 December 2016 : 1.67%)

2,106,828 Smith (David S) 9,978 1.73

9,978 1.73

Industrial Engineering : 0.73%

(31 December 2016 : 0.92%)

5,452,852 Severfield 4,199 0.73

4,199 0.73

Support Services : 9.46%

(31 December 2016 : 7.48%)

536,691 Capita 3,711 0.64

1,347,293 De La Rue 8,986 1.56

3,750,657 Electrocomponents 21,623 3.74

1,344,092 Essentra 7,567 1.31

321,369 Northgate 1,424 0.25

1,283,132 Robert Walters 5,386 0.93

4,018,845 SIG 5,964 1.03

54,661 9.46

Total Industrials 111,322 19.27

Consumer Goods : 5.45%

(31 December 2016 : 4.91%)

Beverages : 3.56%

(31 December 2016 : 3.09%)

2,123,712 Britvic 14,685 2.54

3,462,277 Stock Spirits Group 5,877 1.02

20,562 3.56

Household Goods & Home Construction : 1.89%

(31 December 2016 : 1.82%)

5,820,343 McBride 10,899 1.89

10,899 1.89

Total Consumer Goods 31,461 5.45

11




Holding/ nominal

value Investment

Market value £'000


%

Health Care : 8.10%

(31 December 2016 : 9.13%)

Pharmaceuticals & Biotechnology : 8.10%

(31 December 2016 : 9.13%)

367,913 AstraZeneca 18,892 3.27

1,706,428 GlaxoSmithKline 27,892 4.83

46,784 8.10

Total Health Care 46,784 8.10

Consumer Services : 15.65%

(31 December 2016 : 13.34%)

General Retailers : 3.61%

(31 December 2016 : 2.54%)

1,959,825 Majestic Wine 6,271 1.09

2,220,402 Marks & Spencer Group 7,400 1.28

3,436,150 Saga 7,188 1.24

20,859 3.61

Food & Drug Retailers : 4.02%

(31 December 2016 : 3.92%)

9,647,084 WM Morrison Supermarkets 23,230 4.02

23,230 4.02

Travel & Leisure : 4.17%

(31 December 2016 : 3.71%)

3,361,347 National Express Group 12,313 2.13

3,591,737 Restaurant Group 11,763 2.04

24,076 4.17

12




Holding/ nominal

value Investment

Market value £'000


%

Media : 3.85%

(31 December 2016 : 3.17%)

1,417,849 Ascential 4,585 0.79

359,809 Daily Mail & General Trust 2,400 0.42

400,816 Euromoney Institutional Investor 4,297 0.74

2,941,048 ITE Group 4,522 0.78

938,017 Pearson 6,486 1.12

22,290 3.85

Total Consumer Services 90,455 15.65

Telecommunications : 3.60%

(31 December 2016 : 3.56%)

Mobile Telecommunications : 3.60%

(31 December 2016 : 3.56%)

9,545,954 Vodafone Group 20,782 3.60

20,782 3.60

Total Telecommunications 20,782 3.60

Financials : 26.74%

(31 December 2016 : 28.46%)

Banks : 12.82%

(31 December 2016 : 14.83%)

10,625,633 Barclays 21,538 3.73

4,215,803 HSBC Holdings 30,004 5.19

34,036,220 Lloyds Banking Group 22,515 3.90

74,057 12.82

Life Insurance : 4.33%

(31 December 2016 : 4.34%)

4,759,129 Aviva 25,033 4.33

25,033 4.33

13




Holding/ nominal

value Investment

Market value £'000


%

Real Estate : 2.88%

(31 December 2016 : 1.80%)

1,476,503 St Modwen Properties 5,290 0.92

4,323,415 Urban & Civic 11,327 1.96

16,617 2.88

Financial Services : 6.71%

(31 December 2016 : 7.49%)

2,277,617 3i Group 20,533 3.55

1,479,261 CMC Markets 2,112 0.37

6,388,351 Man Group 9,883 1.71

2,548,543 Numis Corp 6,238 1.08

38,766 6.71

Total Financials 154,473 26.74

Technology : 2.18%

(31 December 2016 : 2.43%)

Technology Hardware & Equipment : 0.00%

(31 December 2016 : 0.75%)

Software & Computers Services : 2.18%

(31 December 2016 : 1.68%)

2,032,377 SDL 12,580 2.18

12,580 2.18

Total Technology 12,580 2.18

Portfolio of investments 568,935 98.50

Net other assets 8,643 1.50

Total net assets 577,578 100.00

All securities are approved securities unless otherwise stated.

14



Summary of top ten purchases and sales (unaudited)for the period ended 30 June 2017

Security Cost

£’000 Security Proceeds

£’000

PURCHASES SALES

BP 11,723 British Sky Broadcasting Group 11,075

HSBC Holdings 10,134 E2V Technologies 5,721

Royal Dutch Shell 'B' 9,527 3i Group 4,267

Marks & Spencer Group 9,050 HSBC Holdings 4,216

WM Morrison Supermarkets 8,759 Acacia Mining 3,186

GlaxoSmithKline 8,457 AstraZeneca 3,004

Barclays 8,257 Ascential 2,978

Aviva 7,381 Acal 2,975

Anglo American 7,291 Capita 2,949

Essentra 7,214 QinetiQ 2,082

15



Financial statements

Statement of total returnfor the period ended 30 June 2017

30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Income

Net capital gains 26,299 119

Revenue 11,506 7,838

Expenses (3,711) (1,261)

Interest payable and similar charges* (2) -

Net revenue before taxation 7,793 6,577

Taxation - -

Net revenue after taxation 7,793 6,577

Total return before distributions 34,092 6,696

Finance costs: Distributions 1,024 196

Change in net assets attributable to shareholders from investment activities 35,116 6,892

*Interest payable has been reclassified from Distributions to Expenses in the current year.

Statement of changes in net assets attributable to shareholdersfor the period ended 30 June 2017

30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Opening net assets attributable to shareholders 371,275 301,717

Amounts receivable on issue of shares 221,111 89,864

Less: Amounts payable on cancellation of shares (49,924) (64,325)

171,187 25,539

Dilution levy/adjustment - 29

Stamp duty reserve tax - (1)


Closing net assets attributable to shareholders 577,578 334,176

The above statement shows the comparative closing net assets at 30 June 2016 whereas the current accounting period commenced 1 January 2017.

16



Financial statements continued

Balance sheetas at 30 June 2017

30 June 2017 31 December 2016

£’000 £’000 £’000 £’000

ASSETS

Fixed assets:

Investments 568,935 372,587

Current assets:

Debtors 4,795 2,517

Cash and bank balances 11,602 2,633

Total current assets 16,397 5,150

Total assets 585,332 377,737

LIABILITIES

Creditors:

Other creditors (7,754) (2,590)

Distribution payable on income shares - (3,872)

Total liabilities (7,754) (6,462)

Net assets attributable to shareholders 577,578 371,275


17

JOH

CM U

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uity

Inco

me

Fund

JOHCM UK Equity Income Fund


Investment objective & policyThe aim of the Fund is to achieve long-term capital appreciation and generate an above average dividend yield which will grow over time primarily through investment in transferable securities, although the Fund may also be invested in money market instruments, deposits, warrants and units in other collective investment schemes. The Fund will aim to achieve this objective mainly through investments in equity securities that are listed on the London Stock Exchange (or other relevant UK exchanges). The vast majority of stocks selected will be constituents of the FTSE 350 Index although there may be a number of smaller company stocks. Performance of the Fund will be measured against the FTSE All Share Total Return Index (the “UK Index”). At all times at least two thirds of the Fund’s total assets will be invested in equity securities of companies domiciled or exercising the predominant part of their economic activity in the United Kingdom.

The Fund will exclusively concentrate on stocks that generate a prospective yield above that of the FTSE All Share average, with a strict selling discipline once a stock’s yield falls below the average level. This approach will naturally give the Fund a contrarian style and also means that the portfolio will be very different from the UK Index. There will be no maximum overweight or underweight limits on stocks or sectors. The focus on dividends also means the Fund will have a bias toward cash generative companies (as measured by free cash flow and EBITDA), particularly those that can grow their dividends regularly through different investment and economic cycles. The bias towards higher yielding stocks is based on a belief that managers of businesses in the UK use their dividend distributions as an indication of the medium term earnings power of the company and these payments tend to be much less volatile than earnings per share. This will often mean that the Fund will invest in stocks with no immediate catalyst, but which are materially undervalued. Furthermore, historical evidence has shown that dividend income has consistently contributed a very high proportion of the UK market’s real return and we expect that to continue.


18



PerformanceThe JOHCM UK Equity Income Fund returned 7.93% in sterling terms, net of fees for the ‘A’ share class, for the six-month period ended 30 June 2017. Over the same period the FTSE All-Share Total Return Index (12pm adjusted) returned 6.77%.1 Investment backgroundUK equities achieved decent gains over the first half of 2017, marked by a solid first quarter and more muted progress in the second quarter amid heightened domestic political uncertainty after Prime Minister May’s snap general election call resulted in a hung parliament. By sector, consumer goods was the best performer after the reflation trade that proved popular in the second half of 2016 partially reversed. Oil & gas was the standout laggard against a backdrop of weakness in oil prices. The acceleration of inflationary pressures globally and signs of an end to the multi-year experiment with zero interest rate policies were defining features of the period. Resurgent inflationary pressures were apparent early on when the Chinese Producer Price Index recorded 7.8% year-on-year growth in February, a nine-year high, clearly highly significant given that Chinese industrial production has been a key factor behind the global deflationary trend around the world. Elsewhere, global lead economic indicators continued to surprise positively, particularly in recovering Continental Europe. In the UK, the resilience of economic activity continued early on with a strong Q4 2016 GDP print, although political uncertainty caused by the general election outcome and ongoing Brexit negotiations has exacerbated a short-term economic slowdown in recent months, with higher inflation resulting from sterling’s post-Brexit vote devaluation weighing upon consumer sentiment. In terms of monetary policy tightening, the US Federal Reserve is furthest along this path, with two interest rate rises over the six-month period under review. But comments by ECB President Draghi and Bank of

England Governor Carney in June suggest a shift towards tighter monetary policy is also on the cards for the Europe and the UK.

The triggering of Article 50 towards the end of March was the most significant step yet in the changing economic and political relationship between the UK and the rest of Europe. The road will doubtless prove to be a very long and winding one shrouded in uncertainty, but sterling’s weakness has led to a rapid and substantial improvement in the UK’s terms of trade, acting as an important safety valve, even if business confidence remains fragile. Fund reviewThe Fund outperformed over the period courtesy of good stock picking. Industrials was the clear winner for us as names such as construction company Morgan Sindall Group, our brick-makers, Ibstock and Forterra, and packaging company DS Smith contributed well, the latter reporting strong results and announcing a good US acquisition. Morgan Sindall was the portfolio’s top performer after recording solid results and staging a very successful capital markets day; we took some profits but believe there is still material upside potential here. We also trimmed our position in Ibstock, where our holding had become full after our participation in the private equity sell-down and subsequent strong share price performance. Construction remains an area of the market where we find plenty of attractive opportunities and is currently our largest sub-sector overweight. Down the market cap scale, it was also pleasing to see strong results and good share price performances from a number of our small-cap positions such as Eurocell and Vitec Group.

The main laggards over the period were BP, hurt by falling oil prices, and Barclays. The latter trades on 0.7x book value and is moving towards delivering a double-digit percentage return on capital employed. It also successfully

James LowenSenior Fund Manager


• Joined JOHCM in September 2004

Clive BeaglesSenior Fund Manager





19


exited South Africa during June (which materially enhanced its capital position). Whilst several legacy issues remain (SFO and US Mortgage settlement), these relate to historic management action, and we believe they will be addressed by the current board, with finality seen in the next 12/18 months.

The part-reversal of the reflation trade brought more succour for the over-priced consumer staple bond proxies such as British American Tobacco and Reckitt Benckiser Group. Our lack of ownership in this part of the market therefore had a negative effect upon relative returns. In the same camp, not owning Unilever was a relative headwind as it was boosted by a swiftly-aborted takeover bid from Kraft Heinz and subsequent commitment by management to reform its operations. Elsewhere, ITV laboured on a tougher advertising outlook. OutlookThe path to policy normalisation has categorically begun in the US and is moving nearer in the UK and Europe. The true distortive impact of effectively zero interest rates in the developed world on various asset classes will only become apparent in future years. However, without doubt it has pushed many assets or individual instruments to elevated levels that will be hard to justify, if the cost of capital rises. Within the equity markets, we strongly believe that this overvaluation is most apparent in the world of consumer staples and other defensive sectors such as utilities and pharmaceuticals. The fact that the likes of Nestle and Unilever have found themselves the target of activist shareholders, despite the shares trading at all-time absolute highs, smacks of euphoria and/or bubble mania. Furthermore, the fact that Nestle’s response has been to lever themselves up, with interest rates at all-time lows (but rising from here), compounds the sense of how late we are in this particular style cycle.

We have no investments in the staples area or indeed in most of the bond-proxy sectors. However, despite the fact that global monetary policy tightening will make it hard for equity market indices to make much progress from here over the next few months, we believe that many of the areas that we are exposed to will respond well to this change of leadership, particularly financials. Elsewhere, valuations in both the oil and mining sectors continue to look attractive to us, whilst there are also still selective opportunities in the UK domestic arena too, despite the challenging macro. We continue to be encouraged by the dividend growth that our companies are exhibiting and believe that the Fund’s dividend yield is attractive relative to other asset classes.

James Lowen and Clive BeaglesSenior Fund Managers



JOHCM Equity Income Fund

20




Calendar year

Highest

price (pence)

Lowest

price (pence)

Net distribution

per share (pence)

























2017 (to 30 June) GBP Class A Distributing 206.50 191.20 5.202987






GBP Class X Distributing 100.50 98.20 0.042064

JOHCM Equity Income Fund

21




Net asset values


£



Percentage change

%

GBP Class A Distributing 31 December 2015 536,362,595 314,350,618 170.63p (3.57)

31 December 2016 458,172,350 240,844,553 190.24p 11.49

30 June 2017 473,467,878 238,552,333 198.48p 4.33

GBP Class A Accumulating 31 December 2015 245,640,749 86,547,816 283.82p 0.88

31 December 2016 275,941,434 83,021,594 332.37p 17.11

30 June 2017 328,022,750 92,144,778 355.99p 7.11

GBP Class B Distributing 31 December 2015 554,804,862 343,222,445 161.65p (4.08)

31 December 2016 665,488,851 370,662,748 179.54p 11.07

30 June 2017 655,067,996 350,132,057 187.09p 4.21

GBP Class B Accumulating 31 December 2015 211,061,499 78,233,288 269.78p 0.49

31 December 2016 190,304,437 60,477,732 314.67p 16.64

30 June 2017 197,024,385 58,558,676 336.46p 6.92

GBP Class Y Distributing 31 December 2015 648,809,195 567,080,026 114.41p (3.56)

31 December 2016 903,657,739 707,315,072 127.76p 11.67

30 June 2017 1,088,036,065 816,030,002 133.33p 4.36

GBP Class Y Accumulating 31 December 2015 364,747,056 320,120,897 113.94p 0.89

31 December 2016 389,835,757 291,712,205 133.64p 17.29

30 June 2017 431,962,000 301,815,656 143.12p 7.09

GBP Class X Distributing* 30 June 2017 136,470 140,000 97.48p -

* Launched 12 June 2017

DistributionsJOHCM UK Equity Income Fund annually pays quarterly distributions as follows: ex date 31 March, pay date 31 May; ex date 30 June, pay date 31 August; ex date 30 September, pay date 30 November and ex date 31 December, pay date 28 February.


22







30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016


Performance fee 0.19% 0.07% 0.19% 0.06% 0.01% - 0.02% -




Class X distributing shares

30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016

Ongoing charge figure 0.68% 0.69% 0.68% 0.69% 0.60% n/a

Performance fee 0.19% 0.09% 0.20% 0.10% 0.11% n/a

Total expense ratio 0.87% 0.78% 0.88% 0.79% 0.71% n/a

Performance recordIn the period from 1 January 2017 to 30 June 2017, the price of the Class A shares in the Sub-Fund increased by 7.93%. This compares with a rise of 6.77% in the UK FTSE All-Share Total Return Index (adjusted for 12 noon) over the same period.Source: JOHCM/FTSE Group/Bloomberg. Basis: Fund return, mid to mid with net income reinvested, in Sterling.


Risk and reward profile

Lower risk Higher risk

Typical lower rewards Typical higher rewards

1 2 3 4 5 6 7

The risk and reward indicator is calculated on the basis of the share class volatility (the ups and downs in its value) over the prior 5 year period.The risk and reward indicator:• is based on historical data and may not be a reliable

indication for the future;• is not guaranteed and may change over time.• The lowest category does not mean that a share class is risk

free.The share class category reflects the following factors:• Higher volatility can result from investments in shares




could affect the value of investments held by the Company.• Political and /or regulatory Risks.• Liquidity risk: The risk that some securities held by the Funds

may be difficult or impossible to sell at the desired time and price. The Funds’ investments include shares in small-cap companies. Small-cap companies tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.



23


Holding/ nominal

value Investment

Market value £'000


%

Oil & Gas : 15.52%

(31 December 2016 : 17.55%)


(31 December 2016 : 16.78%)

47,598,654 BP 210,767 6.64


492,521 15.52

Total Oil & Gas 492,521 15.52

Oil Equipment, Services & Distribution : 0.00%

(31 December 2016 : 0.77%)


(31 December 2016 : 6.51%)

Mining : 8.04%

(31 December 2016 : 6.51%)

825,000 Anglo American 8,448 0.27

4,667,402 Rio Tinto 151,317 4.77

33,162,000 Glencore 95,241 3.00

255,006 8.04



(31 December 2016 : 16.18%)

Construction & Materials : 7.30%

(31 December 2016 : 7.40%)

5,929,781 Costain Group 27,321 0.86

14,034,989 Forterra 35,754 1.12

17,261,078 Ibstock 42,393 1.34

1,737,851 Keller Group 15,250 0.48

31,588,143 Low & Bonar 26,850 0.85

190,956 Marshalls 716 0.02

4,481,502 Morgan Sindall 55,526 1.75

10,980,011 Eurocell 27,999 0.88

231,809 7.30



24



Holding/ nominal

value Investment

Market value £'000


%


(31 December 2016 : 2.61%)

20,230,348 Smith (David S) 95,811 3.02

95,811 3.02

Industrial Engineering : 1.75%

(31 December 2016 : 1.65%)

30,422,730 Severfield 23,426 0.74

3,171,238 Vitec Group 32,061 1.01

55,487 1.75

Industrial Transportation : 1.43%

(31 December 2016 : 1.58%)

13,297,637 BBA Aviation 40,877 1.29

18,219,838 DX Group 4,555 0.14

45,432 1.43


(31 December 2016 : 2.94%)

9,381,039 Northgate 41,558 1.31

12,458,935 St Ives 6,416 0.20

11,017,924 Sthree 33,715 1.06

81,689 2.57



(31 December 2016 : 0.50%)


(31 December 2016 : 0.00%)

3,709,017 Bovis Homes Group 35,421 1.12

8,170,000 Countryside Properties 27,811 0.88

63,232 2.00


(31 December 2016 : 0.50%)

13,491,944 Hollywood Bowl Group 22,532 0.71

22,532 0.71



25


Holding/ nominal

value Investment

Market value £'000


%

Health Care : 3.92%

(31 December 2016 : 4.30%)


(31 December 2016 : 4.30%)

2,424,436 AstraZeneca 124,494 3.92

124,494 3.92



(31 December 2016 : 11.62%)


(31 December 2016 : 1.35%)

18,811,524 J Sainsbury 47,349 1.49

47,349 1.49


(31 December 2016 : 1.76%)

8,756,500 DFS Furniture 17,973 0.57

8,017,395 Halfords 27,411 0.86

11,127,880 Saga 23,280 0.73

68,664 2.16

Media : 3.76%

(31 December 2016 : 4.30%)

6,703,039 Bloomsbury Publishing 11,094 0.35

32,667,585 Huntsworth 18,947 0.60

49,166,500 ITV 89,188 2.81

119,229 3.76


(31 December 2016 : 4.21%)

1,553,342 Go-Ahead Group 27,323 0.86

22,441,240 National Express Group 82,202 2.59

8,523,765 Rank Group 20,218 0.64

19,313,447 Thomas Cook Group 17,363 0.55

147,106 4.64




26


Holding/ nominal

value Investment

Market value £'000


%


(31 December 2016 : 4.79%)

Mobile Telecommunication : 3.79%

(31 December 2016 : 4.79%)

55,214,709 Vodafone Group 120,202 3.79

120,202 3.79


Utilities : 0.00%

(31 December 2016 : 1.06%)

Gas, Water & Multiutilities : 0.00%

(31 December 2016 : 1.06%)

Financials : 28.07%

(31 December 2016 : 26.79%)

Banks : 16.11%

(31 December 2016 : 15.83%)

69,383,079 Barclays 140,640 4.43

30,666,410 HSBC Holdings 218,253 6.88

230,589,112 Lloyds Banking Group 152,535 4.80

511,428 16.11

Real Estate : 3.50%

(31 December 2016 : 3.46%)

13,708,517 Countrywide 22,927 0.72

2,870,875 Savills 25,192 0.79

13,695,148 U & I Group 25,850 0.81

65,627,726 Raven Russia 31,993 1.01

93,386,413 Dolphin Capital Investors 5,370 0.17

111,332 3.50

Real Estate Investment Trusts : 1.68%

(31 December 2016 : 2.50%)

9,062,886 McKay Securities 20,595 0.65

17,916,666 Real Estate Investors 10,571 0.33

4,577,323 SEGRO (REIT) 22,305 0.70

53,471 1.68



27



Holding/ nominal

value Investment

Market value £'000


%

Financial Services : 6.29%

(31 December 2016 : 4.51%)

4,957,500 Aberdeen Asset Management 14,972 0.47

21,261,018 Brewin Dolphin Holdings 72,734 2.29

3,319,047 Charles Stanley Group 11,783 0.37

10,306,846 CMC Markets 14,713 0.46

6,688,250 Morses Club 8,160 0.26

7,484,543 Paragon Group of Cos 31,959 1.01

848,976 Polar Capital Holdings 3,757 0.12

8,874,691 TP ICAP 41,427 1.31

199,505 6.29

Equity Investment Instruments : 0.49%

(31 December 2016 : 0.49%)

1,769,373 P2P Global Investments 15,685 0.49

15,685 0.49

Total Financials 891,421 28.07

Insurance : 8.99%

(31 December 2016 : 9.17%)

Nonlife Insurance : 0.38%

(31 December 2016 : 1.42%)

8,221,446 Randall And Quilter Investment 11,920 0.38

11,920 0.38

Life Insurance : 8.61%

(31 December 2016 : 7.75%)

5,563,481 Phoenix Group Holdings 43,034 1.35

23,506,395 Aviva 123,643 3.90

26,744,251 Standard Life 106,683 3.36

273,360 8.61

Total Insurance 285,280 8.99


28


Holding/ nominal

value Investment

Market value £'000


%

Technology : 1.46%

(31 December 2016 : 0.88%)

Technology Hardware & Equipment : 1.46%

(31 December 2016 : 0.88%)

33,534,675 Laird Group 46,278 1.46

46,278 1.46

Total Technology 46,278 1.46

Portfolio of investments 3,193,542 100.62

Net other liabilities (19,824) (0.62)

Total net assets 3,173,718 100.00




29


Security Cost


£’000

PURCHASES SALES

Royal Dutch Shell 'B' 47,283 Kier Group 34,985

Glencore 43,551 BHP Billiton 30,930

Rio Tinto 35,746 Premier Farnell 29,817

Paragon Group of Cos 34,905 Intermediate Capital Group 29,049

BP 34,109 BP 26,244

Bovis Homes Group 33,187 Rio Tinto 23,869

TP ICAP 31,417 John Laing Group 22,041

Barclays 26,400 AstraZeneca 21,800

Laird 25,378 HSBC Holdings 20,989

Countryside Properties 25,195 Royal Dutch Shell 'B' 19,817



30




30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Income

Net capital gains/(losses) 143,439 (111,558)

Revenue 82,398 73,316

Expenses (17,956) (10,969)

Interest payable and similar charges - (1)


Taxation (39) -


Total return before distributions 207,842 (49,212)

Finance costs: Distributions (81,640) (72,971)

Change in net assets attributable to shareholders from investment activities 126,202 (122,183)


30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Opening net assets attributable to shareholders 2,883,400 2,561,426



139,738 31,063

Change in net assets attributable to shareholders from investment activities 126,202 (122,183)

Retained distributions on accumulation shares 24,378 22,630

Closing net assets attributable to shareholders 3,173,718 2,492,936

The above statement shows the comparative closing net assets at 30 June 2016 whereas the current accounting period commenced on 1 January 2017.


31





£’000 £’000 £’000 £’000

ASSETS

Fixed assets:

Investments 3,193,542 2,864,563

Current assets:

Debtors 21,790 25,842



Total assets 3,234,262 2,917,391

LIABILITIES

Creditors:


Distribution payable on income shares (37,183) (17,394)


Net assets attributable to shareholders 3,173,718 2,883,400


32


JOHCM UK Equity Income Fund annually pays quarterly distributions as follows: ex date 31 March, pay date 31 May; ex date 30 June, pay date 31 August; ex date 30 September, pay date 30 November; and ex date 31 December, pay date 28 February. The following tables show the distributions paid and payable by each share class.

First interim distributionNet income

pence per shareEqualisation

pence per share1

Distribution payable 31.05.17

pence per share

Distribution paid 28.05.16

pence per share

Group 1: Shares purchased prior to 1 January 2017 Group 2: Shares purchased from 1 January 2017 to 31 March 2017

GBP Class A Distributing Group 1 1.867091 - 1.867091 1.707953

GBP Class A Distributing Group 2 1.040118 0.826973 1.867091 1.707953

GBP Class B Distributing Group 1 1.774756 - 1.774756 1.617527

GBP Class B Distributing Group 2 0.155045 1.619711 1.774756 1.617527

GBP Class Y Distributing Group 1 1.249930 - 1.249930 1.145952

GBP Class Y Distributing Group 2 0.676566 0.573364 1.249930 1.145952

GBP Class A Accumulating Group 1 3.277365 - 3.277365 2.841231

GBP Class A Accumulating Group 2 2.181481 1.095884 3.277365 2.841231

GBP Class B Accumulating Group 1 3.095443 - 3.095443 2.697318

GBP Class B Accumulating Group 2 1.994256 1.101187 3.095443 2.697318

GBP Class Y Accumulating Group 1 1.317311 - 1.317311 1.140916

GBP Class Y Accumulating Group 2 0.961504 0.355807 1.317311 1.140916

Second interim distributionNet income

pence per shareEqualisation

pence per share1

Distribution payable 31.08.17

pence per share

Distribution paid 28.08.16

pence per share

Group 1: Shares purchased prior to 1 April 2017 Group 2: Shares purchased from 1 April 2017 to 30 June 2017

GBP Class A Distributing Group 1 3.335896 - 3.335896 3.242356

GBP Class A Distributing Group 2 0.776801 2.559095 3.335896 3.242356

GBP Class B Distributing Group 1 3.135952 - 3.135952 3.066597

GBP Class B Distributing Group 2 0.900217 2.235735 3.135952 3.066597

GBP Class Y Distributing Group 1 2.235786 - 2.235786 2.175006

GBP Class Y Distributing Group 2 0.959240 1.276546 2.235786 2.175006

GBP Class X Distributing Group 1 0.042064 - 0.042064 -

GBP Class X Distributing Group 2 0.042064 - 0.042064 -

GBP Class A Accumulating Group 1 5.882361 - 5.882361 5.447945

GBP Class A Accumulating Group 2 2.967080 2.915281 5.882361 5.447945

GBP Class B Accumulating Group 1 5.545969 - 5.545969 5.167920

GBP Class B Accumulating Group 2 0.731524 4.814445 5.545969 5.167920

GBP Class Y Accumulating Group 1 2.361858 - 2.361858 2.188169

GBP Class Y Accumulating Group 2 0.819768 1.542090 2.361858 2.188169

(1) Equalisation only applies to shares purchased during the distribution period (Group 2 shares). It is the average amount of income included in the purchase price of all Group 2 shares and is refunded to holders of these shares as a return of capital. Being capital, it is not liable to income tax but must be deducted from the cost of shares for capital gains tax purposes.

Distributionsfor the six months ended 30 June 2017


33

JOH

CM U

K Op

port

uniti

es F

und

JOHCM UK Opportunities Fund


Investment objective & policyThe objective of the Fund is to achieve long-term capital appreciation through investment in a concentrated portfolio primarily invested in transferable securities of UK companies. Up to 10% of the value of the Fund may be invested in non-UK companies. The Fund may also invest in money market instruments, deposits, warrants and units in other collective investment schemes. The benchmark against which performance is measured is the FTSE All Share Total Return Index in Sterling. At all times at least two thirds of the Fund’s assets will be invested in equity securities of companies domiciled or exercising the predominant part of their economic activity in the United Kingdom.


34



PerformanceThe JOHCM UK Opportunities Fund returned 2.82% in sterling terms, net of fees for the ‘A’ share class, for the six-month period ended 30 June 2017. Over the same period the FTSE All-Share Total Return Index (12pm adjusted) returned 6.77%.1

Investment backgroundUK equities achieved decent gains over the first half of 2017, marked by a solid first quarter and more muted progress in the second quarter amid heightened domestic political uncertainty after Prime Minister May’s snap general election call resulted in a hung parliament. By sector, consumer goods was the best performer after the reflation trade that proved popular in the second half of 2016 partially reversed. Oil & gas was the standout laggard against a backdrop of weakness in oil prices. Signs of an end to the multi-year experiment with zero interest rate policies were a defining feature of the period. In terms of monetary policy tightening, the US Federal Reserve is furthest along this path, with two interest rate rises over the six-month period under review. But comments by ECB President Draghi and Bank of England Governor Carney in June suggest a shift towards tighter monetary policy is also on the cards for the Europe and the UK.

Fund reviewFlow, rather than corporate fundamentals, continued to drive markets and share prices. This flow is coming from ever-swelling ranks of price-insensitive passive investors. Our long-established process has the avoidance of capital loss at its core. Rather than chase relative performance, we remain firmly wedded to our absolute valuation and quality disciplines and held a high level of cash rather than engage in inevitable capital destruction at the top of the cycle.

Looking at individual stocks, whilst we saw positive contributions from RELX Group, PageGroup and BT Group over the period, overall stock picking effects were negative. Next (sold from the portfolio in April), Centrica and SSE were the weakest performers over the six months, the latter two stocks selling off in the run up to the UK general election as both main political parties pledged to cap energy costs.


John Wood*Senior Fund Manager


• Joined JOHCM in October 2005

Rachel ReutterFund Manager



Michael UlrichFund Manager


• Joined JOHCM in August 2015


35


OutlookThe UK general election was a reminder that political risk is now a prominent feature of the investment landscape. After the electorate effectively decided to vote for “none of the above”, the short-term political outlook for the UK is unclear as the Brexit negotiations start in earnest. A minority Conservative government propped up by the tiny Democratic Unionist Party and led by a prime minister shorn of all authority is a terrible starting point for these challenging talks.

The wider story, though, is that the UK (along with the US) has lost confidence in the benefits of free markets and free trade. We saw this in the Conservative party’s campaign manifesto, which was a far cry from the Thatcherite worship of market forces to deliver the best outcomes for consumers, and in the election result itself, with a far better than expected showing for Jeremy Corbyn’s Labour party and its heavily left-wing agenda. Political attitudes seem to be shifting leftwards, particularly amongst the young.

With faith in market forces fading, the risks of greater state intervention become more acute. High-earning sectors (e.g. technology) or monopolies should be wary of the government stepping in to re-distribute profits deemed to be excessively high. And with a public seemingly now exhausted by the perceived austerity policies of the past seven years, the balance between cutting public spending and raising taxes could well be moving in favour of the latter.

Since the global financial crisis, the central bankers have called the shots. Their actions – extreme monetary policy including quantitative easing – substantially inflated the wealth of the asset-rich but did little for large swathes of the population. The backlash is now well under way; we have already seen that in the Brexit vote and Trump’s election. The omnipotence of the central bankers has reached its limits as politicians reassert themselves with populist, redistributive agendas. Investors would be wise to heed this shift in the political tectonic plates.

John Wood* Rachel ReutterSenior Fund Manager Fund Manager

Michael Ulrich Fund Manager

* On 15 March 2017, it was announced that John Wood, lead manager of the JOHCM UK Opportunities Fund, has advised of his intention to retire from the investment management industry on 30 September 2017. Rachel Reutter and Michael Ulrich, co-managers and well-established members of the JOHCM UK Opportunities team, will assume lead responsibilities for the fund, with John continuing as normal until the end of September to ensure an orderly transition.




36




Calendar year

Highest

price (pence)

Lowest

price (pence)

Net distribution

per share (pence)














GBP Class X Accumulating 102.70 94.00 0.419690


















37



Calendar year

Highest

price (pence)

Lowest

price (pence)

Net distribution

per share (pence)

2017 (to 30 June) GBP Class A Distributing 213.40 199.10 -

GBP Class A Accumulating 287.40 268.10 -

GBP Class B Distributing 205.40 192.00 -

GBP Class B Accumulating 272.80 254.90 -

GBP Class Y Distributing 142.90 133.20 -

GBP Class Y Accumulating 159.80 149.00 -

GBP Class X Distributing 119.80 111.70 -

GBP Class X Accumulating 132.00 123.10 -



38


Net asset values


£



Net asset value per share

GBP Class A Distributing 31 December 2015 226,464,356 123,565,621 183.27p 4.42

31 December 2016 133,943,392 65,975,086 203.02p 10.78

30 June 2017 110,931,189 53,727,083 206.47p 1.70

GBP Class A Accumulating 31 December 2015 196,331,886 81,959,960 239.55p 7.51

31 December 2016 198,913,216 72,756,142 273.40p 14.13

30 June 2017 149,417,520 53,827,205 277.59p 1.53

GBP Class B Distributing 31 December 2015 40,176,629 22,636,681 177.48p 4.05

31 December 2016 37,307,602 19,034,773 196.00p 10.43

30 June 2017 33,505,747 16,857,299 198.76p 1.41

GBP Class B Accumulating 31 December 2015 388,112,512 169,570,590 228.88p 7.21

31 December 2016 398,372,397 153,130,479 260.15p 13.66

30 June 2017 315,889,766 119,710,714 263.88p 1.43

GBP Class Y Distributing* 31 December 2015 203,394,184 165,799,762 122.67p 4.02

31 December 2016 403,650,058 297,093,476 135.87p 10.76

30 June 2017 290,684,993 210,161,571 138.32p 1.80

GBP Class Y Accumulating 31 December 2015 257,224,589 193,239,535 133.11p 7.16

31 December 2016 356,879,064 234,753,958 152.02p 14.21

30 June 2017 342,000,100 220,821,354 154.88p 1.88

GBP Class X Distributing 31 December 2015 184,090,569 179,169,202 102.75p 4.79

31 December 2016 208,740,584 183,146,422 113.97p 10.92

30 June 2017 188,809,410 159,169,726 118.62p 4.08

GBP Class X Accumulating 31 December 2015 73,604,840 67,020,916 109.82p 7.89

31 December 2016 82,076,725 65,309,706 125.67p 14.43

30 June 2017 78,029,149 61,074,735 127.76p 1.66

DistributionsJOHCM UK Opportunities Fund pays an annual distribution with ex date 31 December and pay date 28 February.



39







30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016


Performance fees - - - - - - - -




Class X distributing shares

Class X accumulating shares

30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016

30 June2017

31 Dec2016


Performance fee - - - - - - - -


Performance recordIn the period from 1 January 2017 to 30 June 2017 the price of the Class A shares in the Sub-Fund increased by 2.82%. This compares with a rise of 6.77% in the FTSE All-Share Total Return Index (adjusted for 12 noon) over the same period.Source: JOHCM/FTSE Group/Bloomberg. Basis: Fund return, mid to mid with net income reinvested, in Sterling.


Risk and reward profile

Lower risk Higher risk

Typical lower rewards Typical higher rewards

1 2 3 4 5 6 7

The risk and reward indicator is calculated on the basis of the share class volatility (the ups and downs in its value) over the prior 5 year period.The risk and reward indicator:• Is based on historical data and may not be a reliable

indication for the future;• Is not guaranteed and may change over time.• The lowest category does not mean that a share class is

risk free.The share class category reflects the following factors:• Higher volatility can result from investments in shares




could affect the value of investments held by the Company.• Political and /or regulatory Risks.• Liquidity risk: The risk that some securities held by the

Funds may be difficult or impossible to sell at the desired time and price. The Funds’ investments include shares in small-cap companies. Small-cap companies tend to be traded less frequently and in lower volumes than larger companies making them potentially less liquid and more volatile.



40



Holding/ nominal

value Investment

Market value £'000


%

Oil & Gas : 10.66%

(31 December 2016 : 10.51%)


(31 December 2016 : 10.51%)

16,637,016 BP 73,669 4.88


160,954 10.66

Total Oil & Gas 160,954 10.66


(31 December 2016 : 1.31%)

Chemicals : 0.00%

(31 December 2016 : 1.31%)

Mining : 1.96%

(31 December 2016 : 0.00%)

912,391 Rio Tinto 29,580 1.96

29,580 1.96



(31 December 2016 : 17.63%)

Aerospace & Defense : 4.30%

(31 December 2016 : 4.74%)

24,254,867 Cobham 31,434 2.08

1,637,277 Ultra Electronics Holdings 33,515 2.22

64,949 4.30


(31 December 2016 : 1.86%)

5,750,902 Smith (David S) 27,236 1.80

848,394 Smiths Group 13,540 0.90

40,776 2.70


41



Holding/ nominal

value Investment

Market value £'000


%


(31 December 2016 : 11.03%)

970,716 Bunzl 22,200 1.47

5,418,613 Michael Page International 25,776 1.71

2,162,570 Experian 34,039 2.26

799,692 Wolseley 37,689 2.50

119,704 7.94



(31 December 2016 : 11.51%)

Beverages : 3.32%

(31 December 2016 : 3.61%)

2,211,415 Diageo 50,166 3.32

50,166 3.32


(31 December 2016 : 0.00%)

628,954 Persimmon 14,096 0.93

7,820,270 Taylor Wimpey 13,771 0.91

27,867 1.84

Personal Goods : 1.04%

(31 December 2016 : 2.87%)

376,967 Unilever 15,663 1.04

15,663 1.04

Tobacco : 4.33%

(31 December 2016 : 5.03%)

330,146 British American Tobacco 17,280 1.14

1,395,462 Imperial Tobacco 48,123 3.19

65,403 4.33



42



Holding/ nominal

value Investment

Market value £'000


%

Health Care : 6.47%

(31 December 2016 : 3.90%)

Health Care Equipment & Services : 2.24%

(31 December 2016 : 2.36%)

2,547,573 Smith & Nephew 33,755 2.24

33,755 2.24


(31 December 2016 : 1.54%)

3,909,376 GlaxoSmithKline 63,900 4.23

63,900 4.23



(31 December 2016 : 13.67%)


(31 December 2016 : 2.73%)

8,771,729 WM Morrison Supermarkets 21,122 1.40

21,122 1.40


(31 December 2016 : 3.17%)

Media : 3.21%

(31 December 2016 : 4.12%)

2,919,290 Reed Elsevier 48,460 3.21

48,460 3.21


(31 December 2016 : 3.65%)

3,149,867 Compass Group 51,028 3.39

1,430,504 Stagecoach Group 2,665 0.18

53,693 3.57



43



Holding/ nominal

value Investment

Market value £'000


%


(31 December 2016 : 0.00%)

Fixed Line Telecommunications : 3.40%

(31 December 2016 : 0.00%)

17,419,325 BT Group 51,309 3.40

51,309 3.40

Mobile Telecommunications : 4.00%

(31 December 2016 : 0.00%)

27,702,941 Vodafone Group 60,309 4.00

60,309 4.00


Utilities : 11.72%

(31 December 2016 : 14.45%)

Electricity : 4.64%

(31 December 2016 : 4.52%)

4,818,143 SSE 70,008 4.64

70,008 4.64

Gas, Water & Multiutilities : 7.08%

(31 December 2016 : 9.93%)

16,263,482 Centrica 32,559 2.16

7,807,289 National Grid 74,302 4.92

106,861 7.08

Total Utilities 176,869 11.72


44


Holding/ nominal

value Investment

Market value £'000


%

Financials : 0.00%

(31 December 2016 : 9.07%)

Investment Funds : 0.00%

(31 December 2016 : 9.07%)

Real Estate Investment Trusts : 1.35%

(31 December 2016 : 0.00%)

2,008,930 Land Securities Group 20,330 1.35

20,330 1.35

Total Real Estate Investment Trusts 20,330 1.35

Sovereign : 15.22%

(31 December 2016 : 3.85%)

Government : 15.22%

(31 December 2016 : 3.85%)

20,000,000 United Kingdom Treasury Bill 0% 02/10/2017 19,988 1.32








229,882 15.22

Total Sovereign 229,882 15.22

Portfolio of investments 1,334,691 88.43

Net other assets 174,577 11.57

Total net assets 1,509,268 100.00




45



Security Cost


£’000

PURCHASES SALES

Vodafone Group 67,243 Next 47,785

BT Group 53,711 Unilever 46,301

GlaxoSmithKline 42,410 Travis Perkins 42,013

Rio Tinto 28,530 Reed Elsevier 38,340

Smith (David S) 25,738 WM Morrison Supermarkets 30,839

United Utilities Group 24,561 British American Tobacco 29,462

Land Securities Group 21,702 Severn Trent 29,074

Persimmon 14,800 Centrica 27,588

Taylor Wimpey 14,067 United Utilities Group 26,499

Imperial Tobacco 13,494 Smiths Group 25,916


46




30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Income

Net capital gains 6,525 118,275

Revenue 38,203 31,575

Expenses (7,360) (17,866)


Taxation - -


Total return before distributions 37,368 131,984

Finance costs: Distributions (3,969) (39)



30 June 2017 30 June 2016

£’000 £’000 £’000 £’000

Opening net assets attributable to shareholders 1,819,883 1,569,400



(344,014) (903)


Closing net assets attributable to shareholders 1,509,268 1,700,442

The above statement shows the comparative closing net assets at 30 June 2016 whereas the current accounting period commenced on 1 January 2017.


47




£’000 £’000 £’000 £’000

ASSETS

Fixed assets:

Investments 1,334,691 1,563,338

Current assets:

Debtors 46,492 5,988



Total assets 1,575,817 1,846,854

LIABILITIES

Creditors:


Distribution payable on income shares - (24,184)


Net assets attributable to shareholders 1,509,268 1,819,883



48


49

Appendix I - Securities Financing Transactions Regulation

Stock lendingA Sub-Fund, or the Depositary at the Company’s request, may enter into stock lending transactions (involving a disposal of securities in the Sub-Fund and reacquisition of equivalent securities) when it reasonably appears to the Sub-Fund or to the Company to be appropriate to do so with a view to generating additional income for the Sub-Fund with an acceptable degree of risk.

Such transactions must comply with conditions set out in the FCA Rules, which require (among other things) that:i) the stock lending transaction must be of a kind described in Section 263B of the Taxation of Chargeable Gains Act 1992;ii) the terms of the agreement under which the Depositary is to re-acquire the securities for the account of the Sub-Fund must be acceptable to the Depositary and in accordance with good market practice; andiii) the counterparty must be acceptable in accordance with the FCA Rules.

The collateral obtained must be acceptable to the Depositary and must also be adequately and sufficiently immediate as set down in the FCA Rules (Coll 5.4.4).

The ACD shall maintain a collateral management policy in accordance with applicable rules and regulations.

Sub-Fund Currency Collateral

(%) of Net Assets

Gross income

Securities Lending

Agent Revenue

Tax Withheld

Direct and indirect costs

and fees deducted from

gross securities lending income

J O Hambro Capital Management UK Dynamic Fund

GBP 74,657,143 8% 89,961 62,973 - 26,988

J O Hambro Capital Management UK Equity Income Fund

GBP 94,560,643 7% 304,342 213,039 - 91,303

Total GBP 169,217,786 394,303 118,291


50

Securities Financing Transactions Regulation continued

Top 10 Largest Collateral Counterparties RankValue (in GBP) of Collateral securities

commodities received

Natixis 1 67,682,873

Abbey National Treasury Services 2 25,212,450

The Bank of Nova Scotia 3 15,088,201

Morgan Stanley & Co. Intl 4 12,094,075

Deutsche Bank 5 10,806,636

BNP Paribas Securities Services 6 10,211,998

Skandinaviska Enskilda Bkn 7 7,933,729

UBS 8 4,491,296

RBC Europe 9 3,844,032

Barclays Capital Securities 10 3,738,056

Top 10 Largest Collateral Counterparties RankValue (in GBP) of Collateral securities

commodities received

United Kingdom Gilt 1 8,508,346

United Kingdom Gilt Inflation Linked 2 6,827,173

French Republic Government Bond OAT 3 6,272,188

Kingdom of Belgium Government Bond 4 6,154,803

United States Treasury Note/Bond 5 2,393,056

France Treasury Bill BTF 6 1,465,911

Province of Ontario Canada 7 1,074,665

Swiss Confederation Government Bond 8 800,580

Bundesobligation 9 717,629

Bundesrepublik Deutschland 10 713,798

Type of Collateral Value (in GBP) Proportion (%)

Equities and Equivalents 131,413,076 78%

Bonds 37,804,710 22%

Collateral Maturity Value (in GBP) Proportion (%)

1 day - -

less than 1 week - -

less than 1 month 45,671 0.03

less than 3 months 1,603,928 0.95

less than 1 year 1,688,389 1.00

more than 1 year 34,466,722 20.37

no maturity 131,413,076 77.65


51

Securities Financing Transactions Regulation continued

Currencies of Collateral Value (in GBP) Proportion (%)

AUD 392,615 0.23

CAD 7,828,123 4.63

CHF 1,006,523 0.59

DKK 1,127 0.00

EUR 17,340,763 10.25

GBP 63,026,883 37.25

JPY 3,419,794 2.02

NOK 387,753 0.23

SEK 722,269 0.43

USD 75,091,936 44.37

Securities Lending MaturityThere is no maturity on the securities lending as all securities are equities.Countries of Counterparties Value (in GBP) Proportion (%)

Canada 15,088,203 8.92

Denmark 458,851 0.27

France 77,897,696 46.03

Germany 10,806,636 6.39

Ireland 1,099,770 0.65

Netherlands 771,793 0.46

Sweden 7,933,724 4.69

Switzerland 4,491,302 2.65

United Kingdom 50,669,811 29.94

Settlement & Clearing Value (in GBP) Proportion (%)

Tri-party - -

Central Counterparty - -

Bilateral 169,217,786 100.00

Data on Reuse of CollateralThe collateral received for securities lending purpose is not reused.Safekeeping of Collateral ReceivedCustodians Amount of collateral assets safe-kept

RBC Investor Services Bank S.A. 169,217,786

Safekeeping of Collateral Granted Collateral held in segregated accounts (%)

Collateral held in pooled accounts (%)

Collateral held in other accounts (%)

100% - -


52

Further Information

Authorised StatusThe Company is an investment company with variable capital (‘ICVC’) for the purposes of the Financial Conduct Authority’s Collective Investment Schemes Sourcebook (the ‘Sourcebook’). The Company was incorporated in England and Wales with registered number IC000335 on 26 October 2004 and is Authorised and Regulated by the Financial Conduct Authority (‘FCA’).

Documentation Copies of the current Prospectus and Key Investor Information Documents (‘KIIDs’), together with the latest Annual and Interim Report and Accounts, are available on the website www.johcm.co.uk or upon request from the ACD and are available for inspection at the registered office between 9.00am and 5.00pm each business day.

The Annual Report of the Company will be published on or before 31 March and the Interim Report on or before 31 August in each year.

CorrespondencePlease send correspondence to the Company’s Administrator, RBC Investor Services Ireland Limited, 4th Floor, One George’s Quay Plaza, George’s Quay, Dublin 2, Ireland.

Complaints and CompensationComplaints about the operation of the Company and the Funds may be made by the investor by writing to the ACD or the Depositary. Any complaint will be investigated and the outcome will be notified to the investor, within eight weeks. If the investor is not satisfied with the outcome, he may also write directly to the Financial Ombudsman Service, Exchange Tower, London E14 9SR. If the ACD cannot meet its financial obligations to the investor, the investor may be entitled to compensation under the Investor’s Compensation Scheme, under the Financial Services Markets Act 2000. Details of the investor’s rights to compensation can be obtained from the ACD on request.


53

Directory

Company and Registered OfficeJ O Hambro Capital Management UK Umbrella FundGround Floor, Ryder Court14 Ryder StreetLondon SW1Y 6QB

Authorised Corporate DirectorJ O Hambro Capital Management LimitedGround Floor, Ryder Court14 Ryder StreetLondon SW1Y 6QB

Communications(FAO OEIC Dealing)J O Hambro Capital Management LimitedGround Floor, Ryder Court14 Ryder StreetLondon SW1Y 6QB

Dealing telephone number0845 450 1970

Retail enquiries020 7747 5648

Representative and paying agent in SwitzerlandRBC Investor Services BankS.A., Esch-sur-Alzette, Zürich Branch Badenerstrasse 567PO Box 1292CH-8048 ZurichSwitzerland

Paying and information agent in GermanyGerman Fund Information Service UGZum Eichhagen 421382 Brietlingen Germany

Representative and paying agent in AustriaErste Bank der OsterreichischenSparkassen AG Garben 21A-1010 ViennaAustria

Investment ManagerJ O Hambro Capital Management LimitedGround Floor, Ryder Court14 Ryder StreetLondon SW1Y 6QB DepositaryNorthern Trust Global Services Ltd50 Bank Street, Canary WharfLondon E14 5NT, United Kingdom

(Authorised by the Prudential Regulation Authority and regulated by the PRA and the FCA)

Administrator, Registrar and Transfer AgentRBC Investor Services Trust Riverbank House, 2 Swan Lane,London EC4R 3AF

AuditorErnst & Young LLP Ten George Street Edinburgh EH2 2DZ

Facilities agent in Ireland RBC Investor Services Ireland Limited4th Floor, One George’s Quay PlazaGeorge’s Quay, Dublin 2, Ireland

J O Hambro Capital Management Limited Ground Floor, Ryder Court14 Ryder StreetLondon SW1Y 6QB

Tel: 020 7747 5678 Fax: 020 7747 5647 www.johcm.co.uk

J O Hambro Capital Management UK Umbrella Fund 2017 · 2017. 9. 21. · management team reviewing...

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