Monthly Report
December 18 2003 - 9:58AM
UK Regulatory
RNS Number:4376T
Anglo & Overseas Trust PLC
18 December 2003
Anglo & Overseas Trust
REPORT FOR THE MONTH OF NOVEMBER 2003
REVIEW
Global markets marked time with our benchmark index rising 0.4%. We managed to
outperform this rise, the NAV (measured taking debentures at Par) was up 0.6%,
policy and stock selection were just positive with the UK adding most value over
the month. We continue to hold our net gearing at a high level c.18.5% having
trimmed our holdings in the USA into the rise in mid December.
UK
The FTSE All-Share Index rose by another 1.0% in capital terms over the month,
continuing its recovery from very depressed levels earlier in the year.
However, there was a marked difference between the performance from larger
companies (with the FTSE 100 Index rising by 1.3%) and mid- and smaller
companies (with the FTSE Mid-250 Index falling by 0.2% and the FTSE Small Cap
Index by 1.0%).
The best performing sectors over the month were the "defensive" areas of
Beverages, Real Estate, Tobacco and Utilities although Steel & Metals also
performed well due improved newsflow from Corus. The worst performing sectors
over the month were the "cyclical" areas of Electronic & Electrical Equipment
(driven lower by increased concern about the financial strength of Invensys),
Automobiles & Parts and Aerospace & Defence.
Major purchases during the period included buying new holdings in Balfour
Beatty, Emap and Marks & Spencer. Holdings were sold in Reuters and Legal &
General, and were reduced in GlaxoSmithKline.
USA
Upbeat economic reports in November, seemed to point toward an accelerating
market recovery. The revised GDP figure grew at an 8.2% rate in the third
quarter, up from a prior reading of 7.2% and a second quarter rate of 3.3%.
Consumer confidence climbed to its highest level in more than a year, heightened
by hopes of an improving jobs outlook. Also, on an encouraging note, durable
goods orders posted their biggest gain in 16 months and were well above
economists estimates.
However, on top of renewed terrorism fears, investors worried about the strength
of the dollar and climbing oil prices. The dollar sank to a record low against
the euro, raising concern some foreign investors may avoid U.S. assets, while
oil prices rose to an eight-month high. The weakening of the dollar has
benefited gold mining stocks, which have rallied as the dollar's decline has
made the metal more attractive to overseas investors.
All things considered, the broad market S&P 500 index finished on an up note in
November, gaining 0.7% in USD terms. The best performing sectors of the S&P 500
were the technology, materials, and health care sectors. The primary source of
outperformance during the month was stock selection, which is the approach in
which we seek to add value for clients. Our selections in the technology and
financials sectors outperformed on a relative basis while our selections in the
consumer discretionary sector detracted from performance on a relative basis.
There were three significant transactions to the portfolio this month:
We reduced the portfolio's underweight in the Energy sector by adding a 0.5%
weighting in Baker Hughes, an international oil services company. Management
believes that in the next couple of years the company will be able to return
above the cost of capital all through the cycle. If energy prices remain higher
than current expectations and Baker Hughes begins to show improving returns the
stock should outperform.
Interpublic Group, an international advertising conglomerate, was added to the
portfolio for two reasons. First, to bring some direct advertising exposure to
the fund in anticipation of what should be a strong advertising cycle in 2004
with the Olympics and a presidential election; and secondly, as an undervalued
turnaround story that is in its early stages.
International Game Technology, the major producer of casino game machines and
systems, was removed from the portfolio having strongly outperformed the market
and broken through our price target. The stock had performed well through 2003
as casinos moved more to IGT's cashless game technology and the number of
licensed casino regions looks set to increase. However this was all priced into
the shares and sales comparisons get more difficult in future quarters.
Japan
TOPIX fell 4.2% while the Nikkei index fell 4.4% in local currency terms in
November on the back of profit taking, a deteriorating supply/demand situation
and the strong yen. Fears that terrorist attacks would spread to Japan also put
downward pressure on the market. Domestic economic releases during the month
were mixed. Annualised GDP for July to September came in ahead of consensus
while machinery orders and industrial production for September came in well
behind. Positive US economic releases towards the end of the month helped the
market recover somewhat. During the month we sold Honda in favour of Toyota,
which is benefiting from stronger business momentum. We established a holding
in Sony on the back of the restructuring measures it is taking. We also bought
holdings in Amada and Toto, both of which are benefiting from restructuring and
recovery in demand. We sold Uni-Charm and Softbank and reduced Mitsui OSK Lines
and Mizuho Financial following strong relative performance. We sold Konika
Minolta as it became clear they are unlikely to achieve their post-merger
targets set earlier in the year.
EUROPE
Markets showed a modest rise of the course of the month, although towards the
end of November worries about the weakness of the US$ and re-emerging terrorist
threats brought prices back from their best levels.
Fund activity was limited, being largely confined to adjustments to existing
positions. The exceptions to this were in the chemical sector where we sold the
holding in BASF and instead bought positions in Bayer and Ciba Speciality. We
also sold the holding in AP Moeller-Maersk (shipping), as well as the rest of
the positions in Royal Dutch (energy) and Aventis (pharmaceutical).
A new holding was initiated in ENEL (utilities). Price weakness was used to add
to weightings in Credit Suisse (banks) and Siemens (industrials)
NET ASSET VALUE 30/11/03 31/10/03
prior charges at nominal value 220.44p 219.13p
prior charges at market value 207.39p 206.19p
MID-MARKET SHARE PRICE
Ordinary Share 170.00p 168.50p
Dividend Yield (%) 2.3 2.3
Discount/(Premium) (%) 22.9 23.1
DISTRIBUTION OF ASSETS at market value 30/11/03 31/10/03
Market exposure
% %
EQUITIES
United Kingdom 44.2 44.9
U.S.A. 34.4 34.7
Latin America 0.7 0.7
Japan 7.1 6.7
Austria 0.1 0.1
Denmark 0.2 0.3
Eire 0.2 0.2
Finland 0.5 0.4
France 2.2 2.1
Germany 1.9 1.6
Greece 0.1 0.1
Italy 1.0 1.0
Netherlands 0.9 1.1
Portugal 0.1 -
Spain 0.7 0.8
Sweden 0.1 0.1
Switzerland 2.5 2.3
TOTAL PORTFOLIO 96.9 97.1
Net Current Assets 3.1 2.9
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TOTAL 100.00 100.00
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Based on total assets less current liabilities of #299.2 million (#297.8 million).
GEARING
Borrowings and Gearing at 30/11/03 31/10/03
#000's #000's
Debenture Stock 2020 34,422 34,419
Debenture Stock 2012 33,780 33,768
----------- -----------
68,202 68,187
===== =====
29.5% 29.7%
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Based on net asset value of #231.0 million (#229.6 million).
LARGEST HOLDINGS (market value #114.6 million equal to 39.6% of total portfolio)
% of
#'000's portfolio
Vodafone Group 11,585 4.0
HSBC Holdings 11,106 3.8
BP 9,102 3.1
GlaxoSmithKline 8,294 2.9
AstraZeneca 5,816 2.0
Royal Bank of Scotland 5,144 1.8
Barclays 5,108 1.8
Shell Transport & Trading 5,007 1.7
Scottish and Southern Energy 4,132 1.4
Citigroup 4,091 1.4
Microsoft 3,739 1.3
Cisco Systems 3,677 1.3
Exxon Mobil 3,534 1.2
General Electric Co. of America 3,514 1.2
Morgan Stanley 3,381 1.2
BT Group 3,330 1.2
Pfizer 3,264 1.2
United Technologies 2,980 1.0
Imperial Tobacco 2,714 0.9
3M Company 2,693 0.9
Gallaher Group 2,559 0.9
Lloyds TSB 2,549 0.9
Avon Products 2,537 0.9
Vardy (Reg) 2,386 0.8
Texas Instruments 2,376 0.8
FINANCIAL CALENDAR
Year-end 31 December 2003
Lead Fund Manager, John Murray
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
END
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