Monthly Report-Replacement
October 15 2003 - 11:40AM
UK Regulatory
RNS Number:9454Q
Anglo & Overseas Trust PLC
15 October 2003
The following replaces the monthly report announcement released at 11.57 a.m. on
15 October 2003 under RNS number 9281Q. The European section of the report has
been amended. All other details remain unchanged, and the full amended text
appears below.
Anglo & Overseas Trust
REPORT FOR THE MONTH OF SEPTEMBER 2003
REVIEW
Our Trust's borrowings did not help the NAV performance over the month which
fell by 4.3% (taking debentures at par) versus the benchmark which was down
3.4%. The underlying portfolio outperformed narrowly (-3.3%), our asset
allocation was positive during the month with stock selection being flat
overall. The recovery in markets post the month end, together with additions to
Europe have helped performance in early October.
UK
There was a reversal in fortunes over the month, with the FTSE All-Share Index
falling by 1.8% in capital terms and larger companies modestly outperforming
both mid- and small-cap stocks.
The best performing sectors over the month were the "defensive" areas of Food &
Drug Retailers (helped by positive trading updates from Tesco and William
Morrison), Pharmaceuticals (despite further weakness in the US$), Telecoms and
Tobacco. The worst performing sectors were the "cyclical" areas of Steels &
Other Metals (further disappointment at Corus) and Insurance (deeply discounted
rights issue from Royal & Sun Alliance). Mining stocks also performed poorly,
hit by further weakness of the US$ and strength of the South African Rand
putting pressure on profit forecasts and high valuations.
Major transactions during the period included adding to existing holdings in
Barclays as well as establishing new holdings in St Ives and William Hill.
Holdings were sold in Aviva, Lonmin and Rentokil Initial as well as being
significantly reduced in SIG.
USA
The broad market S&P 500 drifted lower in September, as some investors took
profits after a six month rally in equity markets. An appeal from the world's
richest nations for more flexible exchange rates, sparked a drop in the dollar
and put pressure on equity markets. A surge in oil prices and some lackluster
economic reports, also hurt equity markets. OPEC's surprise production cut which
caused oil prices to surge, could impact some companies operating margins. On
the economic front, durable goods orders and consumer sentiment came in weaker
than expected, while final revisions to second quarter GDP came in above
consensus forecasts.
The broad market S&P 500 fell by 1.2% in US$ terms in September. The best
performing sectors of the S&P 500 were Utilities, Financials, and Health Care.
Sector returns remain rotational on a month-to-month basis. In August, the
Consumer Discretionary sector was one of the best performing of the S&P 500,
while in September, it was one of the worst. Similarly, the Financials and
Health Care sectors where poor performing sectors in August, but where top
performing in September.
Concerning Transactions, following a positive meeting with the new management
team in the summer, the overweight position in Hershey was increased. This
holding provides diversification through exposure to the food products group.
Elsewhere in the sector, the underweight position in Coke was removed from the
portfolio in September. This small position was established in May 2003 with the
intention of adding to it as conviction in the idea increased. The investment
thesis was that the company would begin to stabilise falling returns at still
relatively high levels as it turned its focus from volume growth to revenue and
earnings growth. Returns could be further enhanced by Coke removing bottling
assets from its balance sheet - a legacy from tougher times in the beverage
industry. However, after some time and further meetings with management, it
became clear that the larger bottling assets, those that would make a difference
to returns, were not going to be removed as soon as initially thought. Further,
the operating leverage of the new business model remained unproven.
A position in Wyeth was established as a replacement for Merck. We still have
concerns on the large pharmaceutical sector. We retain our underweight position
in the sub-sector but are moving to a relatively more attractive name. Revenues
have strengthened in the last couple of quarters and good cost control has
resulted in earnings above expectations. Our analyst thinks the gross margin for
the year can be above current estimates and finds the valuation attractive.
Japan
The Japanese stock market rallied early in the month following some positive
economic data, firmer U.S. equity markets and continued foreign buying of
Japanese equities. The dollar then depreciated sharply following the G7 meeting
as it became clear that the US authorities favoured a weaker currency,
depressing the share prices of export dependent stocks. The impact of this was
more acute for the Nikkei 225 index than the TOPIX due to the higher weights of
foreign sensitive stocks. In local currency terms the Nikkei 225 index closed
the month down 1.2%, while the TOPIX rose 1.7%. During the month we restructured
the portfolio's auto exposure selling Toyota after a period of relative strong
performance in favour of Toyota Industries, Honda and Nissan. We established
holdings in Fast Retailing, Softbank, Asahi Breweries and Takashimaya during the
month. We sold the holdings in Ito-Yokado and Fujisawa following a period of
strong performance. Kao was sold after a meeting with management suggesting a
dull outlook and the potential for a damaging price war in nappies.
EUROPE
European markets fell in September, with concerns about the decline in the level
of the US Dollar and the negative consequences for European competitiveness
depressing sentiment.
During September a number of changes were made to the portfolio. The technology
weighting was reduced by total sales of Alcatel and STMicro, only partially
offset by a purchase of ASML.
Our holding in Orange was the subject of a takeover bid from majority
shareholder France Telecom. We sold Orange in the market on this news, and
subsequently used price weakness to establish a position in France Telecom
towards the close of the month.
In the healthcare area we have reduced our overweights in two large
capitalisation names, Aventis and Novartis, and have established positions in
Altana and Nobel Biocare, two smaller businesses with strong growth prospects.
After the strong gains in the summer period we reduced weightings in some
cyclically sensitive names. This included total disposals in Lafarge (materials)
and Pro Sieben (broadcasting).
The net effect of the changes effected in September is that the portfolio is
slightly more cautious in emphasis than a month ago.
NET ASSET VALUE 30/09/03 31/08/03
prior charges at nominal value 210.24p 219.76p
prior charges at market value 194.88p 204.39p
MID-MARKET SHARE PRICE
Ordinary Share 161.75p 172.00p
Dividend Yield (%) 2.4 2.3
Discount/(Premium) (%) 23.1 21.7
DISTRIBUTION OF ASSETS at market value 30/09/03 31/08/03
Market exposure
% %
EQUITIES
United Kingdom 44.7 44.9
U.S.A. 35.1 35.0
Latin America 0.7 0.7
Japan 5.6 5.3
Austria 0.1 0.0
Belgium 0.2 0.3
Denmark 0.3 0.4
Eire 0.1 0.1
Finland 0.4 0.5
France 1.9 2.4
Germany 1.4 1.4
Greece 0.1 0.0
Italy 1.0 1.0
Netherlands 0.9 0.9
Spain 0.8 0.8
Sweden 0.2 0.2
Switzerland 2.2 2.0
TOTAL PORTFOLIO 95.7 95.9
Net Current Assets 4.3 4.1
---------- ----------
TOTAL 100.00 100.00
---------- ----------
Based on total assets less current liabilities of #288.4 million (#298.4 million).
GEARING
Borrowings and Gearing at 30/09/03 31/08/03
#000's #000's
Debenture Stock 2020 34,416 34,414
Debenture Stock 2012 33,756 33,744
----------- -----------
68,172 68,158
===== =====
30.9% 29.6%
===== =====
Based on net asset value of #220.3 million (#230.2 million).
LARGEST HOLDINGS (market value #113.1 million equal to 41.0% of total portfolio)
#'000's % of
portfolio
HSBC Holdings 10,471 3.8
Vodafone Group 10,246 3.7
BP 8,744 3.2
GlaxoSmithKline 8,172 3.0
Royal Bank of Scotland 6,237 2.3
AstraZeneca 5,908 2.1
Shell Transport & Trading 5,055 1.8
Barclays 4,602 1.7
Microsoft 4,185 1.5
Citigroup 4,098 1.5
Scottish and Southern Energy 3,851 1.4
Exxon Mobil 3,699 1.3
General Electric Co. of America 3,475 1.3
BT Group 3,450 1.2
Cisco Systems 3,285 1.2
Bank of America 3,283 1.2
Morgan Stanley 3,195 1.2
United Technologies 3,070 1.1
Pfizer 3,057 1.1
Lloyds TSB 2,566 0.9
Amgen 2,516 0.9
Imperial Tobacco 2,500 0.9
Avon Products 2,475 0.9
3M Company 2,469 0.9
Gallaher Group 2,447 0.9
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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