Monthly Report
September 22 2003 - 10:34AM
UK Regulatory
RNS Number:0218Q
Anglo & Overseas Trust PLC
22 September 2003
Anglo & Overseas Trust
REPORT FOR THE MONTH OF AUGUST 2003
REVIEW
Our trust outperformed its benchmark again in August, its net asset value taking
debentures at par was up 3.1% versus 2.5% for the benchmark, stock selection was
good, especially in the United States, policy was slightly negative due
principally to our UK overweight which we have reduced in favour of the USA. We
continue to maintain asset gearing at e.18.5%.
UK
The UK equity market was relatively flat over the month, with the FTSE All-Share
Index rising by just 0.9% in capital terms. However, larger companies continued
to underperform, with the FTSE 100 Index rising by just 0.1% whereas the FTSE
Mid 250 Index rose by 5.0% and the FTSE Small Cap Index by 6.3%.
The best performing sectors over the month were the "cyclical" areas of Steel &
Other Metals, IT Hardware, Electronic & Electrical Equipment and Autos. Mining
stocks also continued to perform well which, given our large underweighting,
proved to be a drag upon performance. Financial stocks performed poorly, led
downwards by the Banks due to concerns about a general rise in bad debt
provisions and continued sluggish housing market. "Defensive" stocks also
continued to underperform, in particular Telecoms and other Utilities, as
investors continued to invest in stocks with greater scope for earnings upgrades
into an economic recovery.
Major transactions during the period included adding to existing holdings in
Barclays, FirstGroup and United Business Media. Holdings were reduced in Tate &
Lyle and sold in both Tesco and Aggreko.
USA
In August, the broad market S&P 500 landed in positive territory for its sixth
straight month. Trading volume was light as many investors were taking late
summer vacations. Now that the second quarter earnings season has all but ended,
economic data has become the focal point of the market. Reports on economic
growth, new home sales, consumer confidence, and durable goods orders all
matched or beat expectations, giving investors optimism that this year's rally
may continue.
The broad market S&P 500 gained 1.8% in USD capital terms for the month of
August. Sector returns remained rotational on a month-to-month basis, but
technology and consumer discretionary shares are leading the way year-to-date.
The energy, information technology, and consumer discretionary sectors were the
strongest performing sectors during the month, with each gaining more than 5.0%.
The health care and financials sectors were the largest decliners in the S&P 500
in August.
We replaced First Energy with a small 0.6% position in Exelon. It is the GST's
largest overweight and is rated a 'buy' in our quant model. Our strategy in the
small weighted Utilities sector is to be diversified in two stable companies. We
followed the GST out of FirstEnergy. We lost faith in the fundamental outlook
and management. The company was late in disclosing a need to restate past
earnings and a cut in FY2003 estimates. The company faces rising expenses and
prolonged nuclear plant outages.
We added a 1% position in MEL at the expense of Comerica. It is ranked a 'hold'
in our model but the GST is overweight and recently increased the price target.
We believe it is the best value company of the asset managers and trust banks,
and is leveraged to the improving financial markets. We eliminated Comerica as
it still faces more significant margin compression in this low rate environment
than its peers. We believe the recent earnings result was of poor quality with
net interest margin down and loan loss provisions high. Credit trends in
important Midwest markets also remain weak. For these reasons the money was
moved away from regional banking and into Mellon Financial.
JAPAN
An improvement in the supply-demand situation as foreign investors bought
heavily coupled with a series of macroeconomic statistics showing firm evidence
of economic recovery, combined to boost the market. For the month, the NIKKEI
index rose 8.2%, while the TOPIX index went up by 6.7% both in yen capital
terms. Q2 GDP figures were much stronger than expected showing annualised growth
of +3.9% driven by a sharp recovery in capital spending. Leading economic
indicators were also encouraging as were various signals pointing to an easing
of deflationary pressure. During the month we sold Japan Telecom in favour of
NTT DoCoMo, which looks attractively valued now that its 3G service is taking
off. Following positive company meetings we added to Daiwa House and Konami and
initiated a holding in Konica Minolta, which looks cheap on the basis of its
post merger targets. We sold Matsui & Co reflecting concerns about management
and rising bad debt charges and reduced Daito Trust Construction on fears of
rising vacancy rates.
EUROPE
The market rose during August, with strong gains being seen in perceived
beneficiaries of cyclical recovery.
Additions to the portfolio included ABB (engineering), Skandia (insurance),
STMicroelectronics (technology), and St Gobain (materials). Holdings in Nokia
(technology) and Nestle (food) were increased.
Disposals included Sandvik and Schneider (both engineering) and Deutsche Telekom
(telecommunications). Holdings were reduced in Philips (electricals), UBS
(banks), E.On and Suez (both utilities) and Unilever (foods).
NET ASSET VALUE 31/08/03 31/07/03
prior charges at nominal value 219.76p 213.22p
prior charges at market value 204.39p 197.25p
MID-MARKET SHARE PRICE
Ordinary Share 172.00p 171.75p
Dividend Yield (%) 2.3 2.3
DISTRIBUTION OF ASSETS at market value 31/08/03 31/07/03
Market exposure
% %
EQUITIES
United Kingdom 44.9 45.3
U.S.A. 35.0 33.6
Latin America 0.7 0.7
Japan 5.3 4.8
Belgium 0.3 0.3
Denmark 0.4 0.4
Eire 0.1 0.1
Finland 0.5 0.4
France 2.4 2.2
Germany 1.4 1.8
Italy 1.0 1.0
Netherlands 0.9 1.0
Spain 0.8 0.8
Sweden 0.2 0.2
Switzerland 2.0 2.1
TOTAL PORTFOLIO 95.9 94.7
Net Current Assets 4.1 5.3
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TOTAL 100.00 100.00
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Based on total assets less current liabilities of #298.4 million (#291.5 million).
GEARING
Borrowings and Gearing at 31/08/03 31/07/03
#000's #000's
Debenture Stock 2020 34,414 34,411
Debenture Stock 2012 33,744 33,732
----------- -----------
68,158 68,143
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29.6% 30.5%
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Based on net asset value of #230.2 million (#223.4 million).
LARGEST HOLDINGS (market value #112.1 million equal to 39.1% of total portfolio)
#'000's % of
portfolio
HSBC Holdings 10,728 3.7
Vodafone Group 9,349 3.3
BP 8,529 3.0
GlaxoSmithKline 8,452 2.9
Royal Bank of Scotland 6,653 2.3
AstraZeneca 5,647 2.0
Shell Transport & Trading 5,395 1.9
Microsoft 4,004 1.4
Citigroup 3,914 1.4
Scottish and Southern Energy 3,889 1.4
Exxon Mobil 3,821 1.3
BT Group 3,526 1.2
United Technologies 3,465 1.2
General Electric Co. of America 3,457 1.2
Barclays 3,343 1.2
Bank of America 3,342 1.2
Cisco Systems 3,219 1.1
Morgan Stanley 3,097 1.1
Pfizer 3,019 1.0
3M Company 2,675 0.9
Amgen 2,580 0.9
Lloyds TSB 2,573 0.9
Imperial Tobacco 2,518 0.9
Avon Products 2,464 0.9
Morrison (W) Supermarket 2,396 0.8
FINANCIAL CALENDAR
Interim dividend paid 12 September 2003
For further information, contact Mark Pope at Deutsche Investment Trust Managers
Limited on 020-7545-6000.
For additional copies, changes of address or details of our Private Investors'
Plan, low cost ISA, PEP Transfer and Dividend Reinvestment Plan (a plan through
which shareholders, who hold their shares on the Company's main register, can
use their dividends to purchase further shares) contact Mark Pope on
020-7545-0520, e-mail address: mark.pope@db.com. Further details of Anglo &
Overseas Trust including the latest annual, interim and monthly reports can be
found on the Deutsche Investment Trust Managers website located at
www.deutsche-its.co.uk.
Issued by Anglo & Overseas Trust PLC and approved by Deutsche Investment Trust
Managers Limited, authorised and regulated by the Financial Services Authority
and manager of Anglo & Overseas Trust PLC. Investors should be aware that past
performance is not necessarily a guide to future returns, the price of shares
and the income from them can fall as well as rise and investors may not get back
the amount they invested. Fluctuations in exchange rates may also affect the
value of your investment. Anglo & Overseas Trust PLC may invest in shares traded
in emerging markets which may at times be illiquid and/or volatile.
This information is provided by RNS
The company news service from the London Stock Exchange
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