Monthly Report
November 14 2003 - 8:49AM
UK Regulatory
RNS Number:0911S
Anglo & Overseas Trust PLC
14 November 2003
ANGLO & OVERSEAS TRUST PLC
REPORT FOR THE MONTH OF OCTOBER 2003
REVIEW
The trust had a good month in October helped principally by its borrowings. The
net asset value per share (NAV) (measured taking debentures at par) was up 4.2%,
which compares with the benchmark index up 3.9%. Asset allocation was flat over
the month and stock selection negative in both the UK and US. The trusts NAV
(measured taking debentures at market value) was up a pleasing 5.8%, this is a
better short term measure of our trust's performance.
UK
The FTSE All-Share Index rose by 4.8% in capital terms over the month, resuming
its recovery from very depressed levels earlier in the year. In contrast to
recent months, there was little difference between the performance from larger
and smaller companies, with the FTSE 100 Index rising by 4.8%, the FTSE Mid-250
Index by 4.9% and the FTSE Small Cap Index by 5.0%.
The best performing sectors over the month were Health (boosted by the bid for
Amersham), Steel & Other Metals, IT and Mining. The worst performing sector was
the interest rate-sensitive area of Construction & Building Materials, although
Oil & Gas (disappointing quarterly results from both BP and Shell) and Food
Producers (another poor trading update from Unilever) also underperformed.
Major transactions during the period included adding to existing holdings in
Northern Rock and establishing a new holding in HBOS. This was funded by
reducing our holdings in Royal Bank of Scotland and selling our position in
Alliance & Leicester. The holding in GKN was also sold following recent strong
outperformance.
USA
The broad market S&P 500 gained ground despite a traditionally difficult
seasonal period. September and October are two months notable for producing
memorable equity market declines as well as major market bottoms. In October,
strong corporate earnings and a pick up in the economy sent equity markets
higher. The current reporting season has been strong, with generally positive
earnings results coming from the three quarters of the S&P 500 companies that
have reported thus far. U.S GDP expanded more-than-expected at 7.2% for the
quarter. Stronger-than-expected consumer and corporate spending accounted for
the upside surprise. The Federal Reserve kept interest rates unchanged at their
45-year lows and signalled it would keep them there for the foreseeable future.
The broad market S&P 500 gained 5.5% in USD capital terms for the month of
October. The best performing sectors of the S&P 500 were the Materials, Consumer
Discretionary, and Technology sectors.
There were two significant additions to the portfolio this month:
Monsanto is a large overweight in the portfolio and rated a strong outperform by
our analyst. It also ranks highly in our quantitative model. We have been
impressed by senior management including the new CEO (a solid operator promoted
from COO) whom we have met several times this year. Our thesis is that the
company will be able to manage down the price of their globally dominant
pesticide RoundUp now that it is off-patent. At the same time it should be able
to introduce new seeds and traits products 'stacked' or bundled together in soy
and in corn as growth drivers. There is also the potential for market expansion
of Monsanto's seed technology into Europe and for countries like Brazil to
officially recognise and pay for the technology.
An overweight position in USB was added to the portfolio using cash from the
reduction in the Bank of America holding. USB is highly ranked in our
quantitative model, is an overweight in the portfolio and rated an outperform by
our analyst. This maintains the portfolio's weighting in the regional banks
sub-sector, an area we've been underweight for some time now. Bank of America's
announced acquisition of FleetBoston in October signifies what could be the
beginning of further consolidation in the sector. USB is a well run, diversified
regional bank with a greatly improved balance sheet. The capital ratio recently
returned to above the target level of 6.25% and management announced the restart
of its buyback program. This seems to indicate less of a focus on acquisitions
so we see USB as more of an acquiree than an acquirer, although acquisitions
have not been ruled out.
Japan
The TOPIX rose 2.4% and the Nikkei index 3.3% in local currency terms during the
month on the back of firmer equity markets overseas, generally good mid-term
results from Japanese companies and a supportive supply demand backdrop. Markets
globally were buoyed by strong GDP and payroll data out from the US. Japanese
economic statistics out during the month were also positive on the whole, adding
to the evidence that the recovery is gaining momentum and broadening. At the
start of the month we raised the portfolio's exposure to banks by buying MTFG.
We took profits on our banking exposure at the end of the month following a
period of strong outperformance by reducing Mizuho Financial Group. We sold JFE
in favour of Nippon Steel on valuation grounds. We purchased a holding in Toppan
Printing on signs of sales recovery and restructuring and bought a holding in
Trend Micro following a positive meeting with management. We sold Konami and
reduced Daiwa House following a period of strong performance. We sold
Bridgestone after a disappointing meeting.
EUROPE
European markets rallied in October helped by better macroeconomic news and the
absence of any material upsets in the first phase of the third quarter reporting
season.
At the start of the month we added to our exposure in the region by committing
new funds across our existing portfolio holdings. Although growth looks less
convincing in Europe than in many other regions this appears to be more than
discounted in valuations.
Aside from this we were reasonably active in financials; holdings in Mediolanum,
Fortis and Nordea were sold and new positions in Axa, Alpha Bank and Erste Bank
acquired in their place.
In the healthcare area we sold the last of our Schering holding and reapplied
proceeds to Stada, a producer and distributor of generic drugs
NET ASSET VALUE 31/10/03 30/09/03
prior charges at nominal value 219.13p 210.24p
prior charges at market value 206.19p 194.88p
MID-MARKET SHARE PRICE
Ordinary Share 168.50p 161.75p
Dividend Yield (%) 2.3 2.4
Discount/(Premium) (%) 23.1 23.1
DISTRIBUTION OF ASSETS at market value 31/10/03 30/09/03
Market exposure
% %
EQUITIES
United Kingdom 44.9 44.7
U.S.A. 34.7 35.1
Latin America 0.7 0.7
Japan 6.7 5.6
Austria 0.1 0.1
Belgium - 0.2
Denmark 0.3 0.3
Eire 0.2 0.1
Finland 0.4 0.4
France 2.1 1.9
Germany 1.6 1.4
Greece 0.1 0.1
Italy 1.0 1.0
Netherlands 1.1 0.9
Spain 0.8 0.8
Sweden 0.1 0.2
Switzerland 2.3 2.2
TOTAL PORTFOLIO 97.1 95.7
Net Current Assets 2.9 4.3
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TOTAL 100.00 100.00
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Based on total assets less current liabilities of #297.8 million (#288.4 million).
GEARING
Borrowings and Gearing at 31/10/03 30/09/03
#000's #000's
Debenture Stock 2020 34,419 34,416
Debenture Stock 2012 33,768 33,756
----------- -----------
68,187 68,172
===== =====
29.7% 30.9%
===== =====
Based on net asset value of #229.6 million (#220.3 million).
LARGEST HOLDINGS (market value #114.9 million equal to 39.7% of total portfolio)
#'000's % of
portfolio
HSBC Holdings 11,678 4.0
Vodafone Group 10,739 3.7
BP 9,175 3.2
GlaxoSmithKline 8,842 3.1
AstraZeneca 6,101 2.1
Shell Transport & Trading 5,007 1.7
Royal Bank of Scotland 5,005 1.7
Barclays 4,953 1.7
Citigroup 4,179 1.4
Scottish and Southern Energy 3,885 1.3
Microsoft 3,853 1.3
Exxon Mobil 3,619 1.3
BT Group 3,555 1.2
Cisco Systems 3,436 1.2
Morgan Stanley 3,402 1.2
General Electric Co. of America 3,311 1.1
United Technologies 3,294 1.1
Pfizer 3,114 1.1
3M Company 2,761 1.0
Avon Products 2,551 0.9
Gallaher Group 2,548 0.9
Lloyds TSB 2,538 0.9
Vardy (Reg) 2,526 0.9
Imperial Tobacco 2,490 0.9
Amgen 2,358 0.8
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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