RNS Number:7336F
Close UK Index Growth Fund 2006
26 November 2004
CLOSE ASSETS FUNDS LIMITED
PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS
The Directors announce the unaudited statement of results for the interim period
from 1 April to 30 September 2004 as follows:-
ABOUT THE COMPANY
Close Assets Funds Limited is a Guernsey incorporated, closed ended, umbrella
investment company. Its issued share capital comprises two Management Shares
issued for administrative reasons, 50.5 million Zero Dividend Shares of the
Close UK Index Growth Fund 2006 and 24.5 million US Shares of the Close US Index
Growth Fund 2007. The Company has an unlimited life but the Zero Dividend Shares
will be redeemed on 15 November 2006 and the US Shares will be redeemed on 19
March 2007.
CLOSE UK INDEX GROWTH FUND 2006 - INVESTMENT OBJECTIVE AND POLICY
The investment objective of the Close UK Index Growth Fund 2006 is to provide
holders of Zero Dividend Shares with a maximum predetermined capital growth of
8.25% per annum over the period to the redemption date on 15 November 2006 by
investing in a portfolio of debt securities whose performance is based on the
performance of the FTSE 100 Index. The Zero Dividend Shares were issued on 15
November 2001 at a price of 100p, and have a maximum final capital entitlement
on the redemption date on 15 November 2006 of 148.64p provided that the FTSE 100
Index does not fall by 20% or more over the intervening period. If over that
period the FTSE 100 Index were to fall in excess of 20% then for each 1% fall in
excess of that 20% a holder's final entitlement will be reduced by approximately
4.955p. Accordingly, if over that period the FTSE 100 Index were to fall by 50%
or more then a holder would receive no final capital entitlement whatsoever. No
dividends are paid on the Zero Dividend Shares.
The Close UK Index Growth Fund 2006 is fully invested in nine Medium Term Notes
issued by Approved Financial Institutions with a capital repayment at maturity
linked to the performance of the FTSE 100 Index over the anticipated life of
this fund. At the time of writing all these notes carried an investment grade
credit rating.
CLOSE US INDEX GROWTH FUND 2007 - INVESTMENT OBJECTIVE AND POLICY
The investment objective of the Close US Index Growth Fund 2007 is to provide
holders of US Shares with a maximum predetermined capital growth of 8.1% per
annum over the period to the redemption date by investing in a portfolio of debt
securities whose performance is based on the performance of the S&P 500 Index.
The US Shares were issued on 18 March 2002 at a price of 100p, and have a
maximum final capital entitlement of 147.61p on 19 March 2007 provided that the
S&P 500 Index does not fall by 20 per cent or more over the intervening period.
If over that period the S&P 500 Index were to fall in excess of 20% then for
each 1% fall in excess of that 20% a holder's final entitlement will be reduced
by approximately 4.920p. Accordingly, if over that period the S&P 500 Index were
to fall by 50% or more then a holder would receive no final capital entitlement
whatsoever. No dividends are paid on the US Shares.
The US Shares are Sterling denominated and will not incur any currency risk
associated with the Sterling / US Dollar exchange rate. The Close US Index
Growth Fund 2007 is fully invested in six Medium Term Notes issued by Approved
Financial Institutions with a capital repayment at maturity linked to the
performance of the S&P 500 Index over the anticipated life of this fund. At the
time of writing, all these notes carried an investment grade credit rating.
CLOSE UK INDEX GROWTH FUND 2006
MANAGER'S REPORT FOR THE PERIOD 1 APRIL TO 30 SEPTEMBER 2004
INVESTMENT PERFORMANCE
At launch, the net proceeds derived from the issue of Zero Dividend Shares of
the Fund were invested in a portfolio of debt securities at a price based on the
level of the FTSE 100 Index at the close of business on 15 November 2001, namely
5240.7. On 30 September 2004 the FTSE 100 Index closed at 4570.8, a fall of
12.8% since launch and an increase of 4.2% over the reporting period.
Over the same periods, the total market value of the Fund rose by 14.0% and 8.6%
respectively. As at the reporting date the Zero Dividend Shares of the Fund were
trading at a 0.4% discount to net asset value.
As the Fund's investment portfolio is based upon the FTSE 100 Index, it is
possible to show the potential capital entitlements available to holders of Zero
Dividend Shares based on the level of the FTSE 100 Index on the Fund's
winding-up date of 15 November 2006. These figures are for illustrative purposes
only and do not represent forecasts or take into account any unforeseen
circumstances.
As at 15 November 2006: FTSE 100 Index Net Asset Value
2620.4 0p
3149.2 50p
3678.1 100p
4091.3* 139.1p
4192.6 148.6p
* FTSE 100 Index level at the end of the reporting period.
MARKET REVIEW
The FTSE 100 Index rose 4.2% in the reporting period, outperforming other major
world indices in local currency and sterling terms.
The Index began the period under review recovering well from the terrorist
attack in Madrid. In May, attacks on the main oil terminal in the Iraqi port of
Basra and on an oil workers' compound in Saudi Arabia, coupled with
investigations into the abuse of prisoners in Iraq by coalition forces, raised
oil prices significantly which adversely impacted global equity markets. Further
rises in oil prices and poor US jobs data pointing to a slowing in economic
growth caused markets to fall again in July and the beginning of August.
The end of August unusually saw both equities and oil prices rise as investors
began to concentrate on factors other than the price of oil. Expectations that
the Bank of England would rein in plans for further interest rate rises improved
sentiment and on 21st September the FTSE 100 Index closed at a new high for over
two years.
InterContinental Hotels Group was the best performing stock in the Index over
the period following positive second quarter results on cost cuts, a recovery in
room occupancy, and an announcement that it planned to return #750 million to
shareholders. Xstrata, the mining group, also rose significantly on high metal
prices and record interim results which exceeded market expectations. The
caterer, Compass Group, was the worst performing stock. The company's share
price fell 25% on the day the company announced that future earnings would be
affected by higher costs, partly due to it changing one of its major UK
distributors.
MARKET OUTLOOK
Equity markets are likely to continue to be affected by the Bank of England's
(BoE) future interest rate decisions, which will be a delicate balance of
several factors. There is evidence that house price growth has begun to slow
down following the recent interest rate rises. Indeed the BoE's latest report
recognizes that there is now a greater possibility of an abrupt correction to
house prices which could considerably impact consumer spending. The decline in
the pound, if it persists, may also add to inflationary pressures. Oil prices
will continue to influence equity markets, although their effect may be less
marked than during the reporting period.
The prompt and decisive outcome to the US elections immediately after the
reporting period allayed investor apprehension and equity markets consequently
rallied. Whether the upward movement will be sustained remains uncertain.
CLOSE US INDEX GROWTH FUND 2007
MANAGER'S REPORT FOR THE PERIOD 1 APRIL TO 30 SEPTEMBER 2004
INVESTMENT PERFORMANCE
At launch, the net proceeds derived from the issue of US Shares of the Fund were
invested in a portfolio of debt securities at a price based on the level of the
S&P 500 Index at the close of business on 15 March 2002, namely 1166.16. On 30
September 2003 the S&P 500 Index closed at 995.97, a fall of 14.6% since launch
and an increase of 17.4% over the reporting period.
Over the same periods, the total market value of the Fund was down 6.2% and up
56.3% respectively. As at the reporting date the US Shares of the Fund were
trading at a 1.6% discount to net asset value.
As the Fund's investment portfolio is based upon the S&P 500 Index, it is
possible to show the potential capital entitlements available to holders of US
Shares based on the level of the S&P 500 Index on the Fund's winding-up date of
19 March 2007. These figures are for illustrative purposes only and do not
represent forecasts or take into account any unforeseen circumstances.
As at 19 March 2007: S&P 500 Index Net Asset Value
583.1 0p
701.6 50p
820.1 100p
932.9 147.6p
995.97* 147.6p
* S&P 500 Index level at the end of the reporting period
MARKET REVIEW
The S&P 500 Index fell 1% over the reporting period as the market consolidated
after the very substantial gains made in 2003. During the period the Index had
some sizeable swings as investor sentiment shifted between negative and
positive.
The period began with the Index trading lower on expectations of the US Federal
Reserve ("Fed") raising interest rates and oil prices breaking through the $40
barrier for the first time since the first Gulf War, dampening corporate profits
forecasts. Indeed, the negative correlation between oil prices and equity prices
became very noticeable over the period as geopolitical events continued to
dominate the news headlines. With OPEC operating at near full capacity and
strong demand, increasing unrest in Iraq led to forecasts that oil prices would
continue to rise and undermine the global economic recovery.
At its June meeting, the Fed raised its key Fed Funds target rate by 0.25% to
1.25%, the first of three quarter-point increases over the period, signalling
the start of a new tightening bias as they viewed the economic recovery strong
enough to withstand the unwinding of the super-easy monetary policy that had
been in place. Whilst this was not unexpected, the reality of higher borrowing
costs coupled with oil prices climbing to record highs led to the market falling
to its lowest point of 2004 over the following weeks.
From these lows, the Index rallied in the final 6 weeks of the period as
expectations of high oil prices were assimilated into economic and corporate
models which predicted that today's modern service based economies had less
dependence on oil and were thus better adapted to cope with higher energy costs.
MARKET OUTLOOK
In the run-up to the Fed's first rate hike, the bond markets factored in an
increase in long-term borrowing costs of up to 1%. These rate expectations have
subsequently come back considerably such that, at the end of the period, the 10
year US Treasury yield was only 0.3% higher than where it started despite the
three interest rate rises.
This would seem to suggest that inflation is expected to remain tame and that
the Fed will keep rates at still historically low levels. In this scenario, with
GDP growth at a healthy level and the S&P 500 yielding 5.9% on next years
earnings, there is reasonable scope for equity markets to do well.
An alternative interpretation, however, is that the low yields on offer are
simply a reflection of investors forecasting weaker growth and moving into safer
fixed income securities. The desire of Asian countries to peg their exchange
rates to the US Dollar is also leading to extraordinary demand from Asian
countries for US Treasuries, helping to keep yields at artificially low levels.
If high oil prices, slow wage and job growth, and the removal of much of the
fiscal and monetary stimuli which have been in place are also considered, then
earnings forecasts for equities may even be overstated.
Given the various factors at play, the most likely direction for the equity
markets over the coming months would be steady but unspectacular growth.
However, any indications that the economy is significantly slowing may cause a
re-rating downwards of corporate earnings forecasts and subsequently a fall for
equity prices.
The prompt and decisive outcome to the US elections immediately after the
reporting period allayed investor apprehension and equity markets consequently
rallied. Whether the upward movement will be sustained remains uncertain.
STATEMENT OF OPERATIONS
for the period from 1 April to 30 September 2004
FUND FUND TOTAL
2006 2007 GBP
GBP GBP
Operating expenses (177,137) (79,756) (256,893)
Net movement in unrealised appreciation
on investments for the period 5,090,284 1,571,675 6,661,959
Gain before financing costs and taxation 4,913,147 1,491,919 6,405,066
Gain on ordinary activities before
taxation 4,913,147 1,491,919 6,405,066
Taxation on ordinary activities - - -
Net gain for the period 4,913,147 1,491,919 6,405,066
Net gain brought forward 4,636,834 3,242,222 7,879,056
Net gain carried forward 9,549,981 4,734,141 14,284,122
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the period other than those
disclosed above.
STATEMENT OF OPERATIONS (COMPARATIVES)
for the period from 1 April to 30 September 2003
FUND FUND TOTAL
2006 2007 GBP
GBP GBP
Operating expenses (177,137) (79,756) (256,893)
Net movement in unrealised
appreciation
on investments for the period 10,669,666 5,070,275 15,739,941
Gain before financing costs and
taxation 10,492,529 4,990,519 15,483,048
Gain on ordinary activities before
taxation 10,492,529 4,990,519 15,483,048
Taxation on ordinary activities - - -
Net gain for the period 10,492,529 4,990,519 15,483,048
Net loss brought forward (12,607,750) (5,168,366) (17,776,116)
Net loss carried forward (2,115,221) (177,847) (2,293,068)
In arriving at the results for the financial period, all amounts above relate to
continuing operations.
There are no recognised gains or losses for the period other than those
disclosed above.
BALANCE SHEET
as at 30 September 2004
FUND FUND MANAGEMENT TOTAL
2006 2007 FUND GBP
GBP GBP GBP
FIXED ASSETS
Financial assets at 57,026,342 27,861,900 - 84,888,242
valuation
CURRENT ASSETS
Debtors 3,514 5,107 2 8,623
Cash at bank 1,086,200 469,142 - 1,555,342
1,089,714 474,249 2 1,563,965
CURRENT LIABILITIES
Creditors due within one 338,575 82,008 - 420,583
year
NET CURRENT ASSETS 751,139 392,241 2 1,143,382
NET ASSETS 57,777,481 28,254,141 2 86,031,624
SHAREHOLDERS' FUNDS
Share capital 5,050 2,450 2 7,502
Share premium 48,222,451 23,517,550 - 71,740,001
48,227,501 23,520,000 2 71,747,503
Retained earnings 9,549,980 4,734,141 - 14,284,121
TOTAL SHAREHOLDERS' FUNDS 57,777,481 28,254,141 2 86,031,624
SHARES IN ISSUE 50,500,000 24,500,000 2
Pence Pence
NAV PER SHARE 114.41 115.32
BALANCE SHEET (COMPARATIVES)
as at 31 March 2004
FUND FUND MANAGEMENT TOTAL
2006 2007 FUND GBP
GBP GBP GBP
FIXED ASSETS
Financial assets at 51,936,058 26,290,225 - 78,226,283
valuation
CURRENT ASSETS
Debtors 13,072 6,752 2 19,826
Cash at bank 1,205,722 537,897 - 1,743,619
1,218,794 544,649 2 1,763,445
CURRENT LIABILITIES
Creditors - due within one 290,517 72,652 - 363,169
year
NET CURRENT ASSETS 928,277 471,997 2 1,400,276
NET ASSETS 52,864,335 26,762,222 2 79,626,559
SHAREHOLDERS' FUNDS
Share capital 5,050 2,450 2 7,502
Share premium 48,222,451 23,517,550 - 71,740,001
48,227,501 23,520,000 2 71,747,503
Retained earnings 4,636,834 3,242,222 - 7,879,056
TOTAL SHAREHOLDERS' FUNDS 52,864,335 26,762,222 2 79,626,559
SHARES IN ISSUE 50,500,000 24,500,000 2
Pence Pence
NAV PER SHARE 104.68 109.23
BALANCE SHEET (COMPARATIVES)
as at 30 September 2003
FUND FUND MANAGEMENT TOTAL
2006 2007 FUND GBP
GBP GBP GBP
FIXED ASSETS
Financial assets at 45,006,867 22,790,400 - 67,797,267
valuation
CURRENT ASSETS
Debtors 6,364 6,376 2 12,742
Cash at bank 1,335,938 606,791 - 1,942,729
1,342,302 613,167 2 1,955,471
CURRENT LIABILITIES
Creditors due within one 236,889 61,414 - 298,303
year
NET CURRENT ASSETS 1,105,413 551,753 2 1,657,168
NET ASSETS 46,112,280 23,342,153 2 69,454,435
SHAREHOLDERS' FUNDS
Share capital 5,050 2,450 2 7,502
Share premium 48,222,451 23,517,550 - 71,740,001
48,227,501 23,520,000 2 71,747,503
Retained earnings (2,115,221) (177,847) - (2,293,068)
TOTAL SHAREHOLDERS' FUNDS 46,112,280 23,342,153 2 69,454,435
SHARES IN ISSUE 50,500,000 24,500,000 2
Pence Pence
NAV PER SHARE 91.31 95.27
STATEMENT OF CASH FLOWS
for the period from 1 April to 30 September 2004
FUND FUND TOTAL
2006 2007 GBP
GBP GBP
OPERATING ACTIVITIES
Bank interest received 24,855 10,902 35,757
Expenses paid (144,377) (79,657) (224,034)
Net cash outflow from operating activities (119,522) (68,755) (188,277)
Decrease in cash and cash equivalents (119,522) (68,755) (188,277)
Opening cash balance 1,205,722 537,897 1,743,619
Closing cash balance 1,086,200 469,142 1,555,342
CASH MOVEMENTS (119,522) (68,755) (188,277)
STATEMENT OF CASH FLOWS (COMPARATIVES)
for the period from 1 April to 30 September 2003
FUND FUND TOTAL
2006 2007 GBP
GBP GBP
OPERATING ACTIVITIES
Bank interest received 24,464 11,226 35,690
Expenses paid (149,856) (80,437) (230,293)
Net cash outflow from operating activities (125,392) (69,211) (194,603)
Decrease in cash and cash equivalents (125,392) (69,211) (194,603)
Opening cash balance 1,461,330 676,002 2,137,332
Closing cash balance 1,335,938 606,791 1,942,729
CASH MOVEMENTS (125,392) (69,211) (194,603)
STATEMENT OF CHANGES IN EQUITY
for the period from 1 April to 30 September 2004
FUND FUND MANAGEMENT TOTAL
2006 2007 FUND GBP
GBP GBP GBP
Opening balance 52,864,335 26,762,222 2 79,626,559
Gain for the period 4,913,147 1,491,919 - 6,405,066
Closing balance 57,777,482 28,254,141 2 86,031,625
STATEMENT OF CHANGES IN EQUITY (COMPARATIVES)
for the period from 1 April to 30 September 2003
FUND FUND MANAGEMENT TOTAL
2006 2007 FUND GBP
GBP GBP GBP
Opening balance 35,619,751 18,351,634 2 53,971,387
Gain for the period 10,492,529 4,990,519 - 15,483,048
Closing balance 46,112,280 23,342,153 2 69,454,435
For further information contact:
John R Le Prevost, for Company Secretary. Tel: Guernsey 01481 722260
For Close Assets Funds Limited
Anson Fund Managers Limited - Company Secretary
26 November 2004
END OF ANNOUNCEMENT
This information is provided by RNS
The company news service from the London Stock Exchange
END
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