1. No category

OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Investec
Semi-Annual
short report
For the period ended 31 March 2015
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Contents
Introduction
2
Performance overview
3
Cautious Managed Fund
4
Diversified Income Fund
10
Enhanced Natural Resources Fund
16
Managed Growth Fund
21
Strategic Bond Fund
26
UK Alpha Fund
32
UK Equity Income Fund
37
UK Smaller Companies Fund
42
UK Special Situations Fund
47
Important information
53
Additional information
54
1
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Introduction
Investec Funds Series i — Short report for the period ended 31 March 2015
The short report for the Investec Funds Series i is sent to you twice a year in May and November. A longer version, the long
form Report and Accounts, is also produced and is available upon request. Both the short and the long reports are also
available on our website www.investecassetmanagement.com.
This short report contains key information on each fund in turn. This includes a description of the fund’s investment objective
and policy, a record of its performance over the reporting period and how it is being invested and managed. We also outline
the risk and reward profile, the costs that have been incurred and an outlook for the asset class or market of each fund. We
hope that you find the report interesting and helpful.
Up to date fund prices along with our fund charting tool are available online at www.investecassetmanagement.com.
If you hold shares in any of the sub-funds in Investec Funds Series ii, Investec Funds Series iii or Investec Funds Series iv,
the next short reports will be sent to you towards the end of the months stated below:
INVESTEC FUNDS SERIES II
FEBRUARY AND AUGUST
INVESTEC FUNDS SERIES III
APRIL AND OCTOBER
INVESTEC FUNDS SERIES IV
JANUARY AND JULY
American Fund
Emerging Markets Local Currency Debt Fund
Diversified Growth Fund
Asia ex Japan Fund
Global Bond Fund
Emerging Markets Blended Debt Fund
Global Energy Fund
Global Dynamic Fund
Emerging Markets Equity Fund
Global Strategic Equity Fund
Global Equity Fund
Global Franchise Fund
(formerly Global Free Enterprise Fund)
Global Gold Fund
Global Special Situations Fund
Monthly High Income Fund
Multi-Asset Protector Fund
Multi-Asset Protector Fund 2
Short Dated Bond Fund
Target Return Fund
UK Total Return Fund (formerly
Capital Accumulator Fund)
Please do not hesitate to call us on 020 7597 1900 if you have any questions.
Telephone calls may be recorded for training and quality assurance purposes.
The value of investments can fall as well as rise and you may get back less than you invested
2
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Performance overview
ROLLING 12 MONTH PERFORMANCE (%)
01.10.14 TO
31.03.15
01.04.14 TO
31.03.15
01.04.13 TO
31.03.14
01.04.12 TO
31.03.13
01.04.11 TO 01.04.10 TO
31.03.12
31.03.11
Cautious Managed Fund (1)
4.3
3.2
0.8
11.0
3.9
8.0
UK CPI (Pre 01.04.14 50% FTSE All-Share and
50% Bank of America Merrill Lynch Sterling Broad Market) (4)
(0.6)
(0.1)
3.3
12.3
7.4
7.4
IA Mixed Investment 20-60% Shares
6.6
8.8
3.9
10.6
1.9
5.3
Diversified Income Fund (1)
4.0
7.3
(0.4)
10.5
3.3
5.5
Diversified Income Composite Index (2)
4.9
7.4
2.0
15.9
6.8
8.4
IA Mixed Investment 0-35% Shares
5.7
7.9
1.8
9.1
2.8
4.6
Enhanced Natural Resources Fund (1)
(5.3)
(3.9)
(10.2)
(2.8)
(13.2)
14.9
MSCI ACW Select Natural Resources Capped Index
NDR (Pre 01.04.13 50% MSCI ACW Energy NR,
50% ACW Materials NR) (5)
(6.2)
(5.3)
(6.0)
3.6
(12.4)
17.7
Managed Growth Fund (1)
8.6
10.7
10.5
17.4
(4.6)
16.1
FTSE WMA Stock Market Growth Total Return (3)(4)
8.2
12.1
6.5
14.4
1.9
7.7
IA Flexible Investment
9.0
11.4
4.7
12.6
(1.9)
8.1
Strategic Bond Fund (1)
3.3
5.7
(2.2)
3.1
2.6
3.3
Bank of America Merrill Lynch Sterling Broad Market
8.7
14.2
(1.2)
7.5
13.2
5.3
IA £ Strategic Bond
4.5
7.3
4.1
11.6
6.3
6.0
UK Alpha Fund (1)
8.1
7.5
25.7
24.7
(0.5)
10.7
FTSE All-Share Index (4)
5.3
6.6
8.8
16.8
1.4
8.7
IA UK All Companies
7.3
5.9
14.4
17.6
0.7
11.6
UK Smaller Companies Fund (1)
1.2
(8.9)
47.3
16.7
5.0
41.7
Numis Small-Cap plus AIM ex-IT
(Pre 01.07.13 FTSE Small Cap ex IT) (4)
2.7
(4.7)
29.0
28.0
(0.1)
15.2
IA UK Smaller Companies
4.4
(2.1)
29.7
18.7
1.3
29.4
UK Special Situations Fund (1)
4.4
3.3
11.8
20.6
4.3
8.3
FTSE All-Share Index (4)
5.3
6.6
8.8
16.8
1.4
8.7
IA UK All Companies
7.3
5.9
14.4
17.6
0.7
11.6
All figures shown are percentages for the stated period. Past performance should not be taken as a guide to the future and there is no guarantee that this
investment will make profits. Returns will vary with market movement, fee levels and taxes and in certain market conditions losses may be exaggerated.
Source: Morningstar, total return, net of UK basic rate tax, no initial charges, net of fees in GBP. Index shown for performance comparison purposes only.
(1) ‘A’ net accumulation shares.
(2) 33% FTSE All-Share, 33% BofA European Currency non-financial High Yield Constrained Sterling Hedged, 17% JP Morgan EMBI Global Diversified TR,
17% JP Morgan GBI-EM Global Diversified.
(3) On 7 January 2014 the FTSE APCIMS/Growth index was renamed.
(4) Source: FTSE International Limited (“FTSE”) © FTSE 2014. Please note a disclaimer applies to FTSE data and can be found at
http://www.ftse.com/products/downloads/FTSE_Wholly_Owned_Non-Partner.pdf
(5) Source: MSCI. The MSCI data is comprised of a custom index calculated by MSCI for, and as requested by, Investec Asset Management Limited. The MSCI
data is for internal use only and may not be redistributed or used in connection with creating or offering any securities, financial products or indices. Neither
MSCI nor any other third party involved in or related to compiling, computing or creating the MSCI data (the “MSCI Parties”) makes any express or implied
warranties or representations with respect to such data (or the results to be obtained by the use thereof), and the MSCI Parties hereby expressly disclaim all
warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to such data. Without limiting any of the
foregoing, in no event shall any of the MSCI Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including
lost profits) even if notified of the possibility of such damages.
The performance of other sub-fund ‘A’, ‘B’, ‘I’, ‘J’, ‘R’ or ‘S’ share classes would be similar to that of the above share classes but will differ according to the
taxation and fees charged.
3
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Cautious Managed Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to provide an income and grow the value of
your investment over the long term.
The Fund seeks to invest conservatively in a broad range of
shares of companies (up to 60% of the Fund’s value at any
time) and bonds (contracts to repay borrowed money which
typically pay interest at fixed times) issued by governments,
institutions or companies around the world.
The bonds invested in will predominantly be of investment
grade (high quality) as rated by the credit rating agencies
(companies that rate the ability of the issuers of bonds to
repay borrowed money) but may also be below
investment grade.
The Fund can also invest in other assets including (but not
limited to) derivatives (financial contracts whose value is
linked to the price of an underlying asset).
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Interest rate: The value of fixed income investments (e.g.
bonds) tends to decrease when interest rates and/or
inflation rises.
Multi-asset investment: The Fund is subject to possible
financial losses in multiple markets and may underperform
more focused funds.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
Performance (sterling)
Investec Cautious Managed Fund ‘A’ accumulation shares
+4.3%*
Performance comparison index:
-0.6%**
Peer group:
+6.6%**
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Total deemed income distributions per ‘A’ accumulation share
Risk and Reward profile*
Six months to 31 March 2015
0.52 pence
Six months to 31 March 2014
0.43 pence
Lower risk
Potentially lower rewards
1
2
Higher risk
Potentially higher rewards
3
4
5
6
7
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the risk and reward
indicator scale. This is because, although it invests in the
shares of companies whose values have typically tended to
fluctuate widely, it also invests significantly in bonds which
have not typically fluctuated as much.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
4
UK and Japanese equities provided the strongest
relative returns, while the Fund’s Norwegian government
bonds detracted from performance.
Factors helping performance
The Fund’s holdings in UK shares were the greatest
contributors to performance. Medium-sized companies rose
strongly, with the FTSE 250 index up by 12.2% and reaching
an all-time high. Similarly, the FTSE 100 index of the UK’s
largest companies broke through the 7000 mark for the first
time in its history – investors were seemingly untroubled by
the uncertain outcome of May’s UK general election and the
possibility of Greece’s exit from the euro zone. The underlying
UK economy remains strong, with the UK confirmed as the
fastest-growing of all developed economies in 2014. In the
market, shares that performed particularly well included
Marks and Spencer, Carnival and GlaxoSmithKline.
Similarly, Japanese equities had a strong six months. Shares
were helped by the Bank of Japan’s surprise announcement
in October that it would substantially expand its
government-bond-buying programme (known as quantitative
easing) in an effort to boost the economy. In addition, the
Japanese Government Pension Investment Fund’s decision
to increase its investment in Japanese equities lifted the
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
market further. Japan Airlines was the leading performer, as
its shares were buoyed by lower fuel prices.
way to protect investors’ wealth against these
ongoing uncertainties.
Factors hindering performance
In summary, we believe that in the current environment, with
many stock markets reaching all-time highs, it is important
to protect the value in the Fund and be cautious in our
approach. The type of investor who chooses this Fund
tends to be more risk averse and, we believe, expects this
approach from us. This cautious style has resulted in some
underperformance in the short term. However, we believe
that investors should be willing to hold the Fund for a
minimum of five years, and, while past performance is not
necessarily a guide to the future, our consistent approach
to investing has been proven effective over the long term.
The performance of our holding in Norwegian government
bonds was particularly disappointing. The Norwegian
government’s dependence on tax revenue from oil means its
bonds are closely linked to changes in the oil price. Overall,
exposure to gold and Norwegian krone bonds have been
detrimental to the Fund’s returns recently. We continue to
believe, however, that these assets are vital to the Fund’s
long-term strategy and should recover.
Significant purchases during the period comprised:
ETFS Physical Silver, Uranium Participation, Centrica, Marks
& Spencer, Lloyds Banking.
Significant sales during the period comprised:
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (UK CPI) and peer group (Investment Association Mixed Investment
20-60% Shares sector) shown for performance comparison purposes only.
The opinions expressed herein are as at end of March 2015.
United Kingdom Gilt 4.75% 07/09/2015, Kingspan, Signet
Jewelers, Capita Financial Morant Wright Japan Fund ‘B’
Accumulation, BT.
Outlook
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
31 March, 30 September
INCOME PAYMENT DATES
31 May, 31 August,
30 November, 28/29 February
We maintain our cautious, diversified approach to seek
to protect investors’ wealth over the long term.
We have a lower allocation to equities than we have typically
held in the past. This is because we think share prices have
risen too high and too quickly in several countries, particularly
the US. With this in mind, we have positioned the Fund to
benefit if the US stock market falls from its current high levels;
that said, we still hold a number of individual US company
shares that we find attractive. It may seem questionable to
hold such a negative view on the US, given its recent strong
performance, but the US stock market is at similar levels to
those in the months preceding the global financial crisis of
2008. Instead, we see better value for our clients in Japanese
and UK equities. In the UK, we prefer the shares of the very
largest companies; they have remained relatively unloved and
offer potential gains still to be exploited.
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ class – accumulation
1.59
1.59
‘A’ class – income
1.59
1.59
1.59
1.59
‘I’ class – accumulation
0.84
0.84
‘I’ class – income
0.84
0.84
0.84
0.84
0.74
0.74
0.74
0.74
‘R’ class – accumulation
1.09
1.09
‘S’ class – accumulation
0.09
0.09
‘A’ class – income-2
‘I’ class – income-2
‡
‘J’ class – accumulation
‘J’ class – income-2
Investors typically choose a cautious managed fund
because they want steady returns without big surprises or
large falls in value. And that is the aim of our Fund. We seek
to achieve this by blending assets with: the potential for
long-term growth, such as UK and international equities;
and other assets that help spread risk, such as inflationlinked government bonds, Norwegian government bonds
and shares in gold miners. This second group of
investments help reduce the Fund’s risk by limiting its
exposure to a single asset class. We believe this diversified
approach is essential, as we are concerned that debt levels
in many countries remain very high and the impact of
governments’ quantitative easing programmes is still
unclear. A mix of different assets, therefore, is the best
‡
‡
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
‡The OCF shown here is an estimate of the charges.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
5
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Cautious Managed Fund (continued)
Summary
Share price range
Distributions
Cautious Managed Fund ‘A’ Class
(Accumulation shares)
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.14
AS AT 31.03.15
CALENDAR YEAR
2015*
2014
2013
‘A’ Class – accumulation
0.52
0.43
Highest Price
380.98
369.16
371.36
‘A’ Class – income
0.34
0.29
Lowest Price
360.81
351.80
340.04
‘A’ Class – income-2
0.87
n/a
0.52
1.12
1.35
‘I’ Class – accumulation
0.83
0.79
2012
2011
2010
‘I’ Class – income
0.58
0.56
Highest Price
337.82
323.19
315.21
‘I’ Class – income-2
0.88
n/a
Lowest Price
309.87
296.88
274.28
‘J’ Class – accumulation
0.58
0.56
3.70
4.36
4.41
‘J’ Class – income-2
0.87
n/a
‘R’ Class – accumulation
0.43
0.39
Cautious Managed Fund ‘A’ Class
(Income shares)
‘S’ Class – accumulation
1.29
1.21
CALENDAR YEAR
2015*
2014
2013
Highest Price
253.17
246.07
247.86
Lowest Price
239.76
233.78
227.51
0.34
0.75
0.90
2012
2011
2010
Net revenue per accumulation share
Net revenue per accumulation share
Performance
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
Net revenue per income share
‘A’ Class – accumulation
377.27
361.61
‘A’ Class – income
250.36
240.30
Highest Price
226.32
220.83
216.74
‘A’ Class – income-2
103.38
100.00
Lowest Price
209.78
202.30
191.10
‘I’ Class – accumulation
164.77
157.34
Net revenue per income share
2.44
3.04
3.06
‘I’ Class – income
115.07
110.45
‘I’ Class – income-2
103.77
100.00
‘J’ Class – accumulation
105.53
100.72
‘J’ Class – income-2
103.82
100.00
‘R’ Class – accumulation
112.20
107.28
S’ Class – accumulation
160.32
152.62
6
Cautious Managed Fund ‘A’ Class
(Income-2 shares)(4)
CALENDAR YEAR
2015*
2014
2013
Highest Price
104.92
101.08
-
Lowest Price
99.37
97.22
-
0.53
0.34
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
Net revenue per income share
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Cautious Managed Fund ‘I’ Class
(Accumulation shares)
Cautious Managed Fund ‘J’ Class
(Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
166.37
160.44
159.95
Highest Price
106.54
102.69
102.13
Lowest Price
157.31
153.12
146.05
Lowest Price
100.73
98.02
99.20
0.56
1.73
1.68
0.39
1.21
0.16
2012
2011
2010
2012
2011
2010
Highest Price
145.09
137.51
133.59
Highest Price
-
-
-
Lowest Price
132.22
126.37
115.74
Lowest Price
-
-
-
2.49
2.65
2.46
Net revenue per accumulation share
-
-
-
CALENDAR YEAR
2015*
2014
2013
Net revenue per accumulation share
Net revenue per accumulation share
Cautious Managed Fund ‘I’ Class
(Income shares)(1)
Net revenue per accumulation share
Cautious Managed Fund ‘J’ Class
(Income-2 shares)(4)
CALENDAR YEAR
2015*
2014
2013
Highest Price
116.59
113.33
114.08
Highest Price
105.35
101.23
-
Lowest Price
110.24
107.49
104.59
Lowest Price
99.60
97.26
-
0.40
1.22
1.21
0.53
0.34
-
2012
2011
2010
2012
2011
2010
Highest Price
104.23
-
-
Highest Price
-
-
-
Lowest Price
96.43
-
-
Lowest Price
-
-
-
1.16
-
-
Net revenue per income share
-
-
-
CALENDAR YEAR
2015*
2014
2013
Net revenue per income share
Net revenue per income share
Cautious Managed Fund ‘I’ Class
(Income-2 shares)(4)
Net revenue per income share
Cautious Managed Fund ‘R’ Class
(Accumulation shares)(2)
CALENDAR YEAR
2015*
2014
2013
Highest Price
105.31
101.22
-
Highest Price
113.29
109.41
109.43
Lowest Price
99.57
97.25
-
Lowest Price
107.18
104.39
100.00
0.53
0.34
-
Net revenue per accumulation share
0.32
0.90
0.90
2012
2011
2010
2012
2011
2010
Highest Price
-
-
-
Highest Price
-
-
-
Lowest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per income share
7
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Cautious Managed Fund (continued)
Portfolio analysis
Cautious Managed Fund ‘S’ Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
161.85
155.56
154.04
Lowest Price
152.85
148.57
140.17
0.80
2.58
2.52
Top 10 Holdings (%)
SECURITY
Net revenue per accumulation share
31.03.15
Norway Government Bond 5% 15/05/2015
7.8
United Kingdom Treasury Inflation Linked 1.25% 22/11/2027
5.8
United States Treasury Inflation Indexed Bonds 0.125% 15/01/2023
5.5
United Kingdom Treasury Inflation Linked 0.125% 22/03/2029
5.4
2012
2011
2010
Highest Price
139.23
130.84
126.72
Grafton
3.5
Lowest Price
126.17
120.31
109.20
db Physical Gold ETC
3.1
3.23
3.29
3.02
Source Physical Markets Gold P-ETC
3.1
ETFS Physical Gold (Jersey)
3.1
ETFS Physical Silver
3.1
HSBC
2.5
Net revenue per accumulation share
* Up to 31 March 2015
(1)
Launched 2 May 2012
(2)
Launched 2 January 2013
(3)
Launched 4 October 2013
(4)
Launched 30 September 2014
SECURITY
30.09.14
High and low prices are quoted at mid valuations.
United Kingdom Treasury 4.75% 07/09/2015
8
11.6
Norway Government 5% 15/05/2015
7.7
United Kingdom Treasury Inflation Linked 0.125% 22/03/2029
5.6
United Kingdom Treasury Inflation Linked 1.25% 22/11/2027
5.2
United States Treasury Inflation Indexed 0.125% 15/01/2023
4.7
United Kingdom Treasury Inflation Linked 1.25% 22/11/2017
3.0
Royal Dutch Shell ‘B’ Shares
2.8
Grafton
2.7
HSBC
2.7
Capita Financial Morant Wright Japan Fund ‘B’ Accumulation
2.4
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Sector split (%)
Other information
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
Fund specific changes not requiring notice
– Cautious Managed Fund, A, Income-2, Net, GBP share class
was launched on 30 September 2014.
– Cautious Managed Fund, I, Income-2, Net, GBP share class
was launched on 30 September 2014.
2015
– Cautious Managed Fund, J, Income-2, Net, GBP share class
was launched on 30 September 2014.
Government Bonds
Financials
Industrials
Consumer Services
Oil & Gas
Net other assets
Basic Materials
Consumer Goods
Health Care
Technology
Utilities
Collective Investment Scheme
Perpetual Bonds
Telecommunications
Derivatives – Futures
Corporate Bonds
Forward Foreign Exchange Contracts
31.03.15
30.09.14
32.2
27.8
11.6
7.3
5.5
3.4
3.2
3.0
2.2
1.7
1.7
0.4
0.3
0.3
–
–
(0.6)
40.8
20.9
10.4
7.4
6.4
2.1
3.0
2.9
1.9
1.7
–
0.4
0.6
1.2
–
0.1
0.2
There have been no other fundamental changes to the Company
or the Fund that required shareholder approval or any other
significant changes to the operation of the Company or Fund
requiring pre-notification.
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
9
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Diversified Income Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to provide an income with the opportunity to
grow the value of your investment over the long term.
The Fund attempts to reduce risk by investing around the
world in a large range of bonds (contracts to repay borrowed
money which typically pay interest at fixed times), shares of
companies and related derivatives (financial contracts whose
value is linked to the price of an underlying asset).
The Fund invests mostly in bonds. These may be issued by
companies or governments, have varying lifespans and be of
investment grade (high quality) or below investment grade as
rated by the credit rating agencies (companies that rate the
ability of the issuers of bonds to repay borrowed money).
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Lower risk
Potentially lower rewards
2
Higher risk
Potentially higher rewards
3
4
Developing market: Some of the countries in which the Fund
invests may have less developed legal, political, economic
and/or other systems. These markets carry a higher risk of
financial loss than those in countries generally regarded as
being more developed.
Investing in China: Investment in mainland China may involve
a higher risk of financial loss when compared with countries
generally regarded as being more developed.
Multi-asset investment: The Fund is subject to possible
financial losses in multiple markets and may underperform
more focused funds.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
Risk and Reward profile*
1
Derivatives: The use of derivatives may increase the overall
risk in the Fund by multiplying the effect of both gains and
losses. This may lead to large changes in the value of the
Fund and potentially large financial loss.
5
6
7
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
Performance (sterling)
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
Performance comparison index:
+4.9%**
Peer group:
+5.7%**
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
Total deemed income distributions per ‘A’
accumulation share
The Fund appears towards the middle of the risk and reward
indicator scale. This is because, whilst it invests in the
shares of companies whose values typically tend to fluctuate
widely, it also invests significantly in bonds which do not
typically fluctuate as much.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Default: There is a risk that the issuers of fixed income
investments (e.g. bonds) may not be able to meet interest
payments nor repay the money they have borrowed. The
worse the credit quality of the issuer, the greater the risk of
default and therefore investment loss.
Derivative counterparty: A counterparty to a derivative
transaction may fail to meet its obligations to the Fund
thereby leading to financial loss.
10
Investec Diversified Income Fund ‘A’ accumulation shares
+4.0%*
Six months to 31 March 2015
5.15 pence
Six months to 31 March 2014
5.31 pence
The Fund’s holdings in high-yield bonds were a key
factor in its underperformance. But our positions in
shares, currencies and emerging market bonds issued in
local currencies were positive and partially offset the
impact of this.
Factors helping performance
Within the Fund, we held bonds in emerging markets. These
included bonds issued by countries in their local currency,
and also in ‘hard’ currency – generally the US dollar. The
Fund’s local currency bonds rose in value compared with their
benchmarks, which helped the portfolio’s performance. These
bonds did particularly well in the second half of the period.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
The Fund’s equity holdings (shares issued by companies)
also benefited performance over the period. The global
economy showed signs of improvement, while central banks
in Europe and Japan took measures to improve market
conditions. This encouraged investors to favour equities
over bonds.
Finally, the Fund’s currency exposure was beneficial, with a
long-standing US dollar position adding to returns relative to
the performance comparison index. Our defensive
positioning in emerging market currencies was also helpful.
Factors hindering performance
The Fund’s investments in high-yield bonds detracted from
relative returns over the period. The prices of high-yield
bonds (issued by companies with lower credit ratings),
fluctuated over the six months under review, which
negatively affected the Fund’s performance given the difficult
conditions this created with no obvious upward or
downward trend to take advantage of. Towards the end of
the period, however, high yield bonds recovered as the
global economy appeared to improve. The Fund’s emerging
market ‘hard’ currency bonds performed relatively poorly
over the quarter, partially offsetting the positive effect of the
local currency bonds.
Significant purchases during the period comprised:
New Zealand Government Bond 6% 15/12/2017,
New Zealand Government Bond 6% 15/04/2015,
United Kingdom Treasury Bond 8% 12/07/2015,
Queensland Treasury 6% 21/02/2018, South Africa
Government Bond 13.5% 15/09/2015.
Significant sales during the period comprised:
Queensland Treasury 6% 21/02/2018, Mexican Bonos 9.5%
18/12/2014, United Kingdom Treasury Bond 8%
12/07/2015, F&C Commercial Property Trust, Western
Australian Treasury 8% 15/07/2017.
Outlook
In equity markets, we think that corporate earnings
forecasts are too pessimistic and valuations appear
excessive. Elsewhere, we are optimistic on the outlook
for US government bonds and believe they offer better
value than many European government bonds.
Companies’ reported earnings for the fourth quarter were
comfortably ahead of expectations, although earnings
forecasts were reduced for 2015 and 2016, led by the
energy sector. But the pace of these downgrades is
lessening and we feel that current estimates are too
pessimistic. Sustained lower bond yields may justify the
currently high equity valuations (given that equities look
relatively more attractive), but we would sound a note of
caution, at least until earnings growth picks up and relatively
excessive valuation levels come down.
There is a growing divergence in yield levels across global
bond markets. This has coincided with a higher level of
volatility in both developed-market and emerging-market
currencies. Much of this activity in bond and currency
markets is happening because of the differing prospects for
monetary policy, especially with the US Federal Reserve
getting closer to raising interest rates.
More importantly, valuations across markets appear high.
So, although our outlook remains in line with our longer-term
strategic views, we are looking to take advantage of shorterterm tactical opportunities.
Looking at the US in more detail, sustained economic growth
and the growing prospect of higher interest rates has seen
the yield on 10-year US government bonds (known as
Treasuries) fluctuating around 2%. This is well above the
yields investors can earn even from bonds in peripheral
European markets like Spain and Portugal. Given that US
inflation is likely to remain low, and demand for US Treasuries
should remain strong, this seems reasonably good value.
However, while the postponement of US interest-rate rises
should be positive for US Treasuries, the surrounding
uncertainty could be destabilising for bonds in general.
Nonetheless, although Treasury yields remain near historically
low levels, we do not see any evidence at the moment of the
conditions needed for them to rise significantly.
Emerging market hard currency debt appears reasonably
well valued, although still appears expensive relative to
developed market corporate bond markets. Emerging
market local currency debt valuations look more attractive,
especially relative to developed market bonds.
Finally, the US dollar appears to have weakened slightly from
a high level, but we believe this is temporary and expect the
dollar to strengthen again in due course.
The outlook statement reflects the views of the output from
our Multi-Asset process and is, therefore, similar to that of
the Investec Strategic Bond Fund and the Investec Managed
Growth Fund.
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (Composite Index: 33% FTSE All-Share, 33% BofA ML European
Currency non-financial High Yield Constrained Sterling Hedged, 17%
JP Morgan EMBI Global Diversified TR, 17% JP Morgan GBI-EM Global
Diversified) and peer group (Investment Association Mixed Investment 0-35%
Shares sector) shown for performance comparison purposes only.
The opinions expressed herein are as at end of March 2015.
11
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Diversified Income Fund (continued)
Performance
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
31 May, 31 August,
30 November, 28/29 February
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
‘A’ Class – accumulation
283.50
272.61
83.22
81.52
‘I’ Class – accumulation
149.94
143.61
‘I’ Class – income
107.28
104.69
‘J’ Class – accumulation
111.42
106.65
‘J’ Class – income
104.95
102.36
‘R’ Class – accumulation
114.33
109.61
‘R’ Class – income
104.22
101.78
‘A’ Class – income
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ Class – accumulation
1.65
1.62
‘A’ Class – income
1.65
1.62
‘I’ Class – accumulation
0.90
0.87
‘I’ Class – income
0.90
0.87
‘J’ Class – accumulation
0.80
0.77
Share price range
‘J’ Class – income
0.80
0.77
‘R’ Class – accumulation
1.15
1.12
Diversified Income Fund ‘A’ Net Class
(Accumulation shares)(2)
‘R’ Class – income
1.15
1.12
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
CALENDAR YEAR
2015*
2014
2013
Highest Price
286.08
277.89
273.48
Lowest Price
275.84
258.80
251.08
2.72
10.92
10.88
2012
2011
2010
Net revenue per accumulation share
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
Highest Price
251.16
238.41
231.16
Summary
Lowest Price
234.93
227.09
212.33
7.84
6.49
5.09
2015*
2014
2013
Highest Price
84.78
83.23
86.97
Lowest Price
81.74
79.74
80.06
0.80
3.32
3.45
2012
2011
2010
Distributions
SHARE CLASS
Net revenue per accumulation share
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
Diversified Income Fund ‘A’ Net Class
(Income shares)(2)
‘A’ Class – accumulation
5.15
5.31
‘A’ Class – income
1.53
1.65
‘I’ Class – accumulation
2.73
2.79
‘I’ Class – income
1.99
2.11
‘J’ Class – accumulation
2.04
2.02
‘J’ Class – income
1.94
2.01
‘R’ Class – accumulation
2.10
2.15
Highest Price
81.72
81.28
79.43
‘R’ Class – income
1.92
2.05
Lowest Price
78.07
76.79
73.89
2.58
2.16
1.75
CALENDAR YEAR
Net revenue per income share
Net revenue per income share
12
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
‘Diversified Income Fund ‘I’ Net Class
(Accumulation shares)(2)
Diversified Income Fund ‘J’ Net Class
(Income shares)(4)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
151.27
146.59
142.53
Highest Price
106.90
104.59
102.79
Lowest Price
145.62
135.65
130.48
Lowest Price
102.89
99.75
99.92
1.44
5.75
5.78
1.02
4.20
0.93
2012
2011
2010
2012
2011
2010
Highest Price
130.46
122.64
118.49
Highest Price
-
-
-
Lowest Price
121.27
116.90
108.29
Lowest Price
-
-
-
4.30
3.61
2.67
Net revenue per income share
-
-
-
Net revenue per accumulation share
Net revenue per accumulation share
Diversified Income Fund ‘I’ Net Class
(Income shares)(1) (2)
Net revenue per income share
Diversified Income Fund ‘R’ Net Class
(Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
109.27
106.89
110.61
Highest Price
115.33
111.79
109.90
Lowest Price
105.19
102.11
102.08
Lowest Price
111.08
103.69
100.00
1.05
4.29
4.31
1.10
4.41
4.36
2012
2011
2010
2012
2011
2010
Highest Price
103.45
-
-
Highest Price
-
-
-
Lowest Price
98.71
-
-
Lowest Price
-
-
-
2.69
-
-
Net revenue per accumulation share
-
-
-
Net revenue per income share
Net revenue per income share
Diversified Income Fund ‘J’ Net Class
(Accumulation shares)(4)
Net revenue per accumulation share
Diversified Income Fund ‘R’ Net Class
(Income shares)(3)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
112.40
109.05
102.78
Highest Price
106.15
103.89
107.83
Lowest Price
108.18
100.66
99.92
Lowest Price
102.25
99.41
99.46
1.08
4.30
0.93
1.01
4.14
4.25
2012
2011
2010
2012
2011
2010
Highest Price
-
-
-
Highest Price
-
-
-
Lowest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per income share
-
-
-
Net revenue per accumulation share
Net revenue per income share
* Up to 31 March 2015
(1) Launched 2 May 2012
(2) Fund name change from 31 July 2012 (previously known as Managed
Distribution Fund)
(3) Launched 2 January 2013
(4) Launched 4 October 2013
High and low prices are quoted at mid valuations.
13
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Diversified Income Fund (continued)
Portfolio analysis
Sector split (%)
Top 10 Holdings (%)
SECURITY
31.03.15
New Zealand Government Bond 6% 15/12/2017
5.5
New Zealand Government Bond 6% 15/04/2015
4.3
Western Australian Treasury 8% 15/07/2017
4.0
Brazil Notas do Tesouro Nacional 10% 01/01/2017
2.3
South Africa Government Bond 13.5% 15/09/2015
1.6
South Africa Government Bond 13.5% 15/09/2016
1.4
Royal Dutch Shell ‘B’ Shares
1.4
John Laing Infrastructure Fund
1.3
GlaxoSmithKline
1.2
Japan Tobacco
1.2
SECURITY
30.09.14
Western Australian Treasury 8% 15/07/2017
4.1
Queensland Treasury 6% 21/02/2018
3.1
Mexican Bonos 9.5% 18/12/2014
2.3
F&C Commercial Property Trust
2.0
Brazil Notas do Tesouro Nacional 10% 01/01/2017
1.8
Royal Dutch Shell ‘B’ Shares
1.6
John Laing Infrastructure Fund
1.3
GlaxoSmithKline
1.2
New Zealand Government 6% 15/04/2015
1.0
HICL Infrastructure
1.0
14
2015
Government Bonds
Corporate Bonds
Financials
Consumer Goods
Health Care
Oil & Gas
Industrials
Consumer Services
Technology
Net other assets
Telecommunications
Utilities
Basic Materials
Total Return Swap
Government Treasury Bills
Perpetual Bonds
Derivatives – Options
Derivatives – Interest Rate Swaps
Derivatives – Futures
Forward Foreign Exchange Contracts
31.03.15
30.09.14
33.5
29.8
9.8
7.6
3.7
3.1
3.0
2.6
2.1
2.1
2.0
0.8
0.2
0.1
0.1
–
–
–
(0.1)
(0.4)
35.0
26.7
9.1
6.9
4.2
3.9
2.7
2.9
1.8
1.2
2.1
0.4
0.2
0.1
0.1
1.0
–
–
0.2
1.5
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Other information
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
Fund specific change requiring notice
After consultation with the Depositary and in accordance
with the requirements of Section 4.3 of the COLL,
shareholders were given notice of following:
On 30 January 2014 of the change of the current income
share classes name from “income” (“Inc”) to “income 2”
(“Inc-2”) on Diversified Income Fund effective 6 April 2015.
Although the name of the share class changed, there is no
change to the way in which the charges and expenses of the
share class are being charged against the capital value of
the share class. For current “accumulation” (“Acc”)
shareholders, effective 6 April 2015, charges and expenses
are paid for, in the first instance, out of income earned rather
than the capital value of the share class. Should there be
insufficient income, then the remainder will be paid out of
the capital value if the share class.
There have been no other fundamental changes to the
Company or the Fund that required shareholder approval or
any other significant changes to the operation of the
Company or Fund requiring pre-notification.
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
15
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Enhanced Natural Resources Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to grow the value of your investment over the
long term.
The Fund invests around the world, primarily in the shares of
companies that are expected to benefit from an increase in
the prices of commodities and natural resources, and in
related derivatives (financial contracts whose value is linked
to the price of an underlying asset). This includes companies
involved in mining, extracting, producing, processing,
transporting or other activity relating to commodities and
natural resources.
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Lower risk
Potentially lower rewards
2
Higher risk
Potentially higher rewards
3
4
Derivatives: The use of derivatives may increase the overall
risk in the Fund by multiplying the effect of both gains and
losses. This may lead to large changes in the value of the
Fund and potentially large financial loss.
Equity investment: The value of equities (e.g. shares) and
equity-related investments may vary according to company
profits and future prospects as well as more general market
factors. In the event of a company default, the owners of
their equity rank last in terms of any financial payment from
that company.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
Risk and Reward profile*
1
Derivative counterparty: A counterparty to a derivative
transaction may fail to meet its obligations to the Fund
thereby leading to financial loss.
5
6
7
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
Performance (sterling)
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the Risk and
Reward Indicator scale. This is because it invests in the
shares of companies linked to commodities and natural
resources whose values tend to fluctuate more widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Concentration: Investments may be primarily concentrated
in specific areas (e.g. countries/geographical regions and/or
industry sectors), in terms of investment style (e.g. income
or growth), in individual holdings and/or in a number of other
ways. This may mean the value of the Fund may decrease
whilst more broadly invested funds might grow.
Currency exchange: Changes in the relative values of
different currencies may adversely affect the value of the
Fund’s investments and any related income.
16
Investec Enhanced Natural Resources Fund ‘A’ accumulation shares
Performance comparison index:
-5.3%*
-6.2%**
The Fund’s precious metals and agricultural stocks
made a strong positive contribution. However, on the
negative side its exposure to the base metals & bulk and
energy sectors, particularly exploration & production
holdings, hurt performance.
Factors helping performance
The agriculture & softs sector was the strongest performer,
in absolute terms, particularly our exposure to fertiliser and
plantation stocks. In the phosphate fertiliser market, the
market remained tight as we moved into the first quarter of
2015. Fertiliser prices rose during January and February,
improving margins for vertically integrated producers (those
companies that control multiple steps in their own supply
chains). In the plantations sector, New Britain Palm Oil was
the star performer. News that Sime Darby, a large palm-oil
producer itself, had made a cash offer for all the shares – at
a substantial premium – rallied the stock.
Exposure to precious metals also boosted the Fund’s
returns. Gold prices were relatively flat over the period and
our exposure contributed marginally to performance. Over
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
the past year, gold prices were lower, meaning profits and, in
turn, disposable cashflow from gold equities was limited,
with many companies having high levels of debt on their
balance sheets. With this in mind, we focus our holdings on
equities with some of the lowest all-in costs (which account
for every element of cost in a transaction) and robust
balance sheets which we believe can withstand sustained
low gold prices. We also favour the gold royalty model,
which provides no exposure to mining costs or inflation: gold
royalty companies Franco-Nevada and Royal Gold were
positive contributors during the review period.
Factors hindering performance
The Fund’s exposure to both the energy and base metals &
bulks sectors were the main reasons for the negative
absolute performance. Exposure to energy stocks dragged
on returns after the sharp decline in oil prices prompted by
Opec’s November 2014 meeting, which resulted in Opec
maintaining higher-than-expected levels of oil production.
The meeting’s outcome was a significant surprise and our
Fund was positioned for a recovery in the oil price. The oilprice drop also affected returns via our exposure to
exploration & production companies, with Marathon Oil and
Afren among the worst performers.
In the base metals & bulks sector, companies exposed to
iron ore and coal suffered heavy sell-offs, in many cases
justifiably so, given the large volumes that had built up. With
the recent price falls weighing on commodities in general,
end-user stockpiles have started to run low: why buy metal
today when it is likely to be cheaper tomorrow? Iron ore was
down over 30% during the period, which hurt producers
BHP Billiton and Rio Tinto. Meanwhile, the market is
experiencing a huge supply surge, as long-term capital
projects undertaken by suppliers in Western Australia and
Brazil enter the market, the effects of which will be felt over
the next two years. Elsewhere, aluminium and copper
producers were also negative contributors, and Glencore
was affected by weak coal and base metal prices.
Significant purchases during the period comprised:
Rio Tinto, BHP Billiton (UK Listing), BHP Billiton (Australian
Listing), Agrium, Royal Dutch Shell ‘B’ Shares, EOG
Resources, Mosaic, Century Aluminum, Exxon Mobil.
Significant sales during the period comprised:
Monsanto, PotashCorp, Chevron, BHP Billiton (Australian
Listing), Source Physical Palladium P-ETC, Suncor Energy,
Rio Tinto, Agrium, Glencore, ETFS Physical Platinum,
Mosaic, CF Industries, Alumina, Archer-Daniels-Midland.
Outlook
We believe that oil and base metal prices will recover
throughout 2015 as supply growth diminishes. Meanwhile,
crop prices look likely to come under pressure.
After a turbulent start to the year, we believe that the
prospects for the Fund are promising, with a number of
distinct opportunities within its available investment universe.
After the sharp falls in oil and iron-ore prices, which were
overwhelmed by supply and a stronger US dollar, 2015 has
been characterised by nervous trading and a notable pickup in investor interest. This should be beneficial for the
strategy as its diversified nature – being exposed to energy,
base & bulk metals, precious metals and agriculture – allows
us to invest in companies which can benefit in
different ways.
The key question for equity investors is to what extent the
recent cost reductions (lower oil prices and weaker
currencies versus the US dollar) outweigh the falls in
commodity prices. For those companies that can preserve,
and even increase, profit margins in the current environment,
the outlook should be positive – particularly if commodity
prices recover later in the year. For every company, the
answer is different, depending on the commodities they
produce and the countries in which their operations are
based. But it is also clear that in the resources sell-off at the
end of 2014, many companies were oversold – and now
appear to be at attractive valuations compared with their
long-term prospects.
With most base metals in deficit, or close to it, there is much
greater potential for prices to rise in the coming months,
particularly if lower oil prices stimulate global demand. Large
diversified producers such as BHP Billiton, Rio Tinto and
Glencore should provide some protection, as we believe
these companies may cut costs rather than their dividends.
For gold companies, the position has already improved, as
prices have held up in recent months while costs are down
amid currency and oil moves.
In the energy sector, after steep falls in oil and equity prices,
we believe the market is focused on the short term and, as a
result, company valuations appear low. We believe that oil
prices should recover in 2015 as supply growth is reduced,
primarily by capital-expenditure cuts in US onshore and
disruption in Russia, Libya and Colombia. We expect prices
to rise by the fourth quarter of this year and, as a
consequence, prices for exploration & production
companies could rally, as may integrated producers that
have good growth profiles.
17
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Enhanced Natural Resources Fund (continued)
We believe crop prices will come under pressure as farmers
who have hoarded grains come to market. This should affect
demand for agricultural farm equipment where there are high
global inventories of first- and second-hand machinery.
Although livestock prices have declined slightly, profits are
expected to remain above average – particularly in the US,
where consumer demand looks strong. We believe the
strength in the US economy will continue to raise housing
starts from their low levels and tighten further the North
American lumber market.
The opinions expressed herein are as at end of March 2015.
Summary
Distributions
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.14
AS AT 31.03.15
‘A’ Class – accumulation
-
-
‘B’ Class – accumulation
-
-
‘I’ Class – accumulation
-
-
‘J’ Class – accumulation
-
-
‘R’ Class – accumulation
-
-
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
As distributions are paid annually on 30 November, no distributions are
payable within this interim short report.
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (MSCI*** All Countries World Select Natural Resources Capped)
shown for performance comparison purposes only.
Performance
*** Source: MSCI. The MSCI data is comprised of a custom index calculated
by MSCI for, and as requested by, Investec Asset Management Limited.
The MSCI data is for internal use only and may not be redistributed or used in
connection with creating or offering any securities, financial products or
indices. Neither MSCI nor any other third party involved in or related to
compiling, computing or creating the MSCI data (the “MSCI Parties’’) makes
any express or implied warranties or representations with respect to such
data (or the results to be obtained by the use thereof), and the MSCI Parties
hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to such data.
Without limiting any of the foregoing, in no event shall any of the MSCI Parties
have any liability for any direct, indirect, special, punitive, consequential or any
other damages (including lost profits) even if notified of the possibility of
such damages.
Fund facts
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.09.14
AS AT 31.03.15
‘A’ Class – accumulation
98.26
103.61
‘B’ Class – accumulation
n/a
98.58
‘I’ Class – accumulation
103.34
108.56
‘J’ Class – accumulation
94.40
99.12
‘R’ Class – accumulation
88.57
93.16
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
Share price range
31 March, 30 September
30 November
Enhanced Natural Resources Fund ‘A’ Class
(Accumulation shares)(2)
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ Class – accumulation
1.63
1.66
‘B’ Class – accumulation
n/a
2.16
‘I’ Class – accumulation
0.88
0.91
‘J’ Class – accumulation
0.78
0.81
‘R’ Class – accumulation
1.13
1.16
CALENDAR YEAR
2015*
2014
2013
Highest Price
103.72
109.43
118.10
Lowest Price
95.45
93.95
103.30
-
0.14
0.24
2012
2011
2010
Highest Price
126.06
136.98
136.26
Lowest Price
107.57
109.11
109.04
-
-
-
Net revenue per accumulation share
Net revenue per accumulation share
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
18
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Enhanced Natural Resources Fund ‘B’ Class
(Accumulation shares)(6)
CALENDAR YEAR
Enhanced Natural Resources Fund ‘R’ Class
(Accumulation shares)(4)
2015*
2014
2013
Highest Price
-
104.18
113.27
Lowest Price
-
91.20
98.93
Net revenue per accumulation share
-
-
-
2012
2011
2010
Highest Price
121.56
135.48
135.05
Lowest Price
103.57
105.41
102.43
-
-
-
Net revenue per accumulation share
Enhanced Natural Resources Fund ‘I’ Class
(Accumulation shares)
2015*
2014
2013
Highest Price
108.99
114.50
122.36
Lowest Price
100.23
98.60
107.26
-
1.03
1.12
2012
2011
2010
Highest Price
129.59
139.86
138.11
Lowest Price
110.74
111.83
109.77
0.92
0.38
-
Net revenue per accumulation share
2014
2013
Highest Price
93.44
94.73
104.58
Lowest Price
85.95
84.57
92.25
-
0.72
1.24
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
CALENDAR YEAR
2015*
2014
2013
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
2012
2011
2010
Highest Price
92.14
101.40
-
Lowest Price
84.64
79.27
-
-
0.86
-
Net revenue per accumulation share
* Up to 31 March 2015
Enhanced Natural Resources Fund ‘J’ Class
(Accumulation shares)(5)
CALENDAR YEAR
2015*
Enhanced Natural Resources Fund ‘S’ Class
(Accumulation shares)(1) (3)
CALENDAR YEAR
Net revenue per accumulation share
CALENDAR YEAR
(1) Launched 4 January 2011
2015*
2014
2013
Highest Price
99.55
104.53
103.67
Lowest Price
91.54
90.04
98.79
-
1.04
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
(2) Change of “P” Shares to “A” Shares 1 April 2011
(3) Closed on 22 March 2012
(4) Launched 2 January 2013
Net revenue per accumulation share
(5) Launched 4 October 2013
(6) Closed 29 January 2015
High and low prices are quoted at mid valuations.
19
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Enhanced Natural Resources Fund (continued)
Portfolio analysis
Geographical split (%)
Top 10 Holdings (%)
SECURITY
31.03.15
BHP Billiton
5.2
Exxon Mobil
4.6
BHP Billiton
4.1
Royal Dutch Shell ‘B’ Shares
4.0
Phillips 66
3.7
Rio Tinto
3.7
ConocoPhillips
3.3
Tyson Foods
3.2
Glencore
3.2
EOG Resources
3.2
SECURITY
30.09.14
Suncor Energy
5.0
Glencore
4.6
Monsanto
4.5
Chevron
4.2
ConocoPhillips
4.1
BHP Billiton
3.7
Physical Palladium Source P-ETC
3.3
Marathon Oil
2.9
Archer-Daniels-Midland
2.8
Anadarko Petroleum
2.5
2015
United States
Canada
United Kingdom
Australia
Norway
Jersey
France
Bermuda
Net other assets
Russia
Germany
Ireland
Luxembourg
Belgium
Cayman Islands
Derivatives – Options
New Zealand
Derivatives – Contracts For Difference
31.03.15
30.09.14
38.5
16.3
14.1
8.6
5.5
5.3
2.2
2.0
1.9
1.7
1.0
1.0
0.9
0.9
0.3
(0.2)
36.7
16.0
5.0
6.4
4.4
7.5
1.6
1.4
11.2
1.9
1.0
3.3
2.3
0.8
0.5
-
Other information
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
Fund specific changes not requiring notice
– Enhanced Natural Resources, B, Accumulation, Net, GBP
share class was closed on 29 January 2015.
There have been no other fundamental changes to the Company
or the Fund that required shareholder approval or any other
significant changes to the operation of the Company or Fund
requiring pre-notification.
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
20
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Managed Growth Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to provide an income and grow the value of
your investment.
The Fund invests around the world, primarily in the shares of
investment companies or other funds and in related
derivatives (financial contracts whose value is linked to the
price of an underlying asset).
The Fund may be up to 100% invested in other funds.
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Risk and Reward profile*
Lower risk
Potentially lower rewards
1
2
Higher risk
Potentially higher rewards
3
4
5
6
7
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the risk and reward
indicator scale. This is because the values of the investment
companies and funds in which it invests tend to fluctuate widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
Investment trust: The prices of investment trust shares may
trade at a higher or lower value than their underlying holdings
may imply. This may create greater risk of financial loss.
Multi-asset investment: The Fund is subject to possible
financial losses in multiple markets and may underperform
more focused funds.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund's risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
Performance record
Performance (sterling)
Investec Managed Growth Fund ‘A’ accumulation shares
+8.6%*
Performance comparison index:
+8.2%**
Peer group:
+9.0%**
Asian, Japanese and US equities provided strong
returns relative to the performance comparison index,
while the Fund’s holdings in Latin America detracted
from performance.
Factors helping performance
Asian and Japanese stock markets rose in value over the six
months, benefiting the Fund, which is invested in both. We
have a bias to these stock markets on the premise of
supportive measures from the central banks in these regions,
particularly in Japan. US stock markets also gained in value.
As nearly a quarter of the Fund’s investments are in US
stocks, this too helped the Fund’s performance. The US
benefited from strong economic data and a more buoyant
outlook for the future growth of the economy, which in turn
proved beneficial to the stock market.
From a sector perspective, technology and healthcare stocks
were also beneficial. Finally, our exposure to smaller
companies aided performance, as these outperformed the
shares of larger companies. While smaller companies are
often riskier, in periods of rising equity markets, it can often be
the case that smaller companies outperform larger
companies, as was the case here.
Factors hindering performance
During the period, companies in Latin America suffered from
falls in commodity prices, particularly oil. Our investments in
these shares detracted from the Fund’s performance over
the period. Oil prices fell as Opec, and Saudi Arabia in
particular, maintained their high levels of oil supply (as
supply moves higher, prices go down).
Portfolio activity
In terms of activity, portfolio turnover (stocks bought and
sold) was modest over the six-month review period,
prompted largely by monies flowing to and from the Fund.
We added a US company, Pershing Square Holdings, to the
portfolio, and divested from the Schroder UK Growth Fund
to invest instead in the Investec UK Alpha Fund. We also
sold our position in the Investec Global Energy Fund. The
number of holdings increased to 57, with a very low amount
invested in cash.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
21
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Managed Growth Fund (continued)
The Fund’s investments continued to be balanced between
high-quality, liquid (easily tradable) funds and smaller
holdings in regional and thematic funds. We believe the
potential for performance is greater in these smaller holdings.
Our strategy is to broadly diversify the Fund, while aiming to
deliver returns at least in line with global equity markets.
Significant purchases during the period comprised:
Investec UK Alpha Fund, Investec GSF Global Endurance
Equity Fund, Pershing Square, Baillie Gifford Shin Nippon,
Capita Financial Morant Wright Japan Fund 'B'
Accumulation.
The outlook statement reflects the views of the output from
our Multi-Asset process and is, therefore similar to that of
the Investec Diversified Income Fund and the Investec
Strategic Bond Fund.
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (FTSE*** WMA Stock Market Growth Total Return Index) and peer
group (Investment Association Flexible Investment sector) shown for
performance comparison purposes only.
*** Source: FTSE International Limited (“FTSE”) © FTSE 2014. Please note a
disclaimer applies to FTSE data and can be found at
http://www.ftse.com/products/downloads/FTSE_Wholly_Owned_NonPartner.pdf
The opinions expressed herein are as at end of March 2015.
Significant sales during the period comprised:
Schroder UK Growth & Income Trust, Investec GSF Global
Endurance Equity Fund, Investec Global Energy Fund, 3i,
Aberforth Geared Income Trust.
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
30 November
Outlook
We believe equity valuations appear excessive at
present, and expect US government bond yields to stay
low in the short term.
Earnings made by companies in the fourth quarter were
higher than expected; however, some companies have
lowered their forecasts for earnings in 2015 and 2016.
Looking ahead, equity valuations justify an element of
caution, until earnings growth picks up and valuations come
down – they currently appear relatively excessive.
In bond markets, sustained economic growth and the
growing prospect of higher interest rates has seen the yield
on 10-year US government bonds (known as Treasuries)
fluctuating around 2%. This is well above the yields investors
can earn even from bonds in peripheral European markets
like Spain and Portugal. Given that US inflation is likely to
remain very low and demand for US Treasuries should
remain strong, this seems reasonably good value.
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ Class – accumulation‡
1.69
1.59
‘I’ Class – accumulation‡
0.94
0.84
‘R’ Class – accumulation‡
1.19
1.09
‘S’ Class – accumulation‡
0.19
0.09
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
‡ The OCF shown here is an estimate of the charges.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
Summary
However, while the postponement of US interest rate rises
should be positive for US Treasuries, the surrounding
uncertainty could actually be destabilising for bonds.
Nonetheless, although Treasury yields remain near historically
low levels, we do not see any evidence at the moment of the
conditions needed for them to rise significantly.
Distributions
Emerging market hard currency debt appears reasonably
well valued, although still appears expensive relative to
developed market credit markets. Emerging market local
currency debt valuations look more attractive, especially
relative to developed market bonds.
Finally, the US dollar appears to have weakened slightly from
a high level, but we believe this is temporary and expect the
dollar to strengthen again in due course.
22
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
‘A’ Class – accumulation
-
-
‘I’ Class – accumulation
-
-
‘R’ Class – accumulation
-
-
‘S’ Class – accumulation
-
-
As distributions are paid annually on 30 November, no distributions are
payable within this interim short report.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Performance
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
‘A’ Class – accumulation
183.99
169.58
‘I’ Class – accumulation
160.88
147.73
‘R’ Class – accumulation
137.46
126.38
‘S’ Class – accumulation
174.10
159.26
Managed Growth Fund ‘R’ Class
(Accumulation shares)(1)
CALENDAR YEAR
2015*
2014
2013
Highest Price
140.55
130.12
125.05
Lowest Price
128.63
116.63
100.00
0.44
0.59
0.51
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
p = pence
Share price range
Managed Growth Fund ‘A’ Class
(Accumulation shares)
Managed Growth Fund ‘S’ Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
188.15
174.45
168.43
CALENDAR YEAR
2015*
2014
2013
Lowest Price
172.37
156.46
135.35
Highest Price
177.97
164.24
156.43
0.15
-
0.06
Lowest Price
162.54
147.04
123.86
2012
2011
2010
1.37
2.29
2.08
Highest Price
134.32
138.90
134.80
2012
2011
2010
Lowest Price
117.51
113.82
102.96
Highest Price
122.89
124.31
119.72
0.24
-
-
Lowest Price
105.94
102.44
90.23
1.88
1.35
1.22
Net revenue per accumulation share
Net revenue per accumulation share
Net revenue per accumulation share
Net revenue per accumulation share
Managed Growth Fund ‘I’ Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
164.49
152.16
145.91
Lowest Price
150.46
136.35
116.38
0.70
1.04
1.00
2012
2011
2010
Highest Price
115.48
118.10
114.24
Lowest Price
100.29
97.06
86.87
0.99
0.33
0.24
* Up to 31 March 2015
(1) Launched 2 January 2013
Net revenue per accumulation share
Net revenue per accumulation share
High and low prices are quoted at mid valuations.
23
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Managed Growth Fund (continued)
Portfolio analysis
Geographical split (%)
Top 10 Holdings (%)
SECURITY
31.03.15
Baillie Gifford Japan Trust
4.3
Investec Global Strategic Equity Fund†
4.3
Jupiter European Opportunities Trust
3.6
RIT Capital Partners Fund
3.2
Conventum Lyrical Fund
3.1
JPMorgan European Smaller Companies Trust
3.1
Investec GSF Global Endurance Equity Fund†
3.0
Edinburgh Worldwide Investment Trust
2.9
Law Debenture
2.8
Finsbury Growth & Income Trust
SECURITY
2.7
30.09.14
Investec Global Free Enterprise Fund†
4.1
Baillie Gifford Japan Trust
3.8
RIT Capital Partners Fund
3.2
Jupiter European Opportunities Trust
3.1
Genesis Emerging Markets Fund
3.0
Schroder UK Mid Cap Fund
3.0
Law Debenture Fund
2.9
Investec GSF Global Endurance Equity Fund†
2.9
Conventum Lyrical Fund
2.9
JPMorgan European Smaller Companies Trust
2.8
† A related party to the Fund
24
2015
Global
United Kingdom
United States & North America
Japan
Other Emerging
Private Equity
Europe
Asia Pacific
Splits
Net other assets
31.03.15
30.09.14
33.4
18.1
11.1
8.6
7.9
6.4
6.0
5.5
1.9
1.2
32.9
18.6
7.6
7.4
9.5
6.9
8.2
5.5
1.8
1.7
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Other information
Please refer to the important information section at the
back for changes which generally apply across the Investec
Fund Series.
There have been no fundamental changes to the Company
or the Fund that required shareholder approval or any other
significant changes to the operation of the Company or Fund
requiring pre-notification.
More information about the activities and performance of
the Fund for this and previous periods can be obtained from
the ACD.
25
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Strategic Bond Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to provide an income.
The Fund invests around the world primarily in bonds
(contracts to repay borrowed money which typically pay
interest at fixed times) issued by governments or companies.
The Fund may use derivatives (financial contracts whose
value is linked to the price of an underlying asset) for
investment purposes.
The bonds invested in will primarily be of investment grade
(high quality) as rated by credit rating agencies (companies
that rate the ability of the issuers of bonds to repay
borrowed money) but may also be below investment grade.
The Fund is managed to minimise any currency risk (a form
of risk that arises from the change in price of one currency
against another) in sterling.
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details of this Fund’s investment objective and policy
can be found in the prospectus.
Risk and Reward profile*
Lower risk
Potentially lower rewards
1
2
Higher risk
Potentially higher rewards
3
4
5
6
7
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the lower end of the Risk and
Reward Indicator scale. This is because it invests in bonds
whose returns tend to fluctuate more than those of cash
funds but less than those of funds which invest in the shares
of companies.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Default: There is a risk that the issuers of fixed income
investments (e.g. bonds) may not be able to meet interest
payments nor repay the money they have borrowed. The
worse the credit quality of the issuer, the greater the risk of
default and therefore investment loss.
26
Derivative counterparty: A counterparty to a derivative
transaction may fail to meet its obligations to the Fund
thereby leading to financial loss.
Derivatives: The use of derivatives may increase the overall
risk in the Fund by multiplying the effect of both gains and
losses. This may lead to large changes in the value of the
Fund and potentially large financial loss.
Developing market: Some of the countries in which the Fund
invests may have less developed legal, political, economic
and/or other systems. These markets carry a higher risk of
financial loss than those in countries generally regarded as
being more developed.
Interest rate: The value of fixed income investments (e.g.
bonds) tends to decrease when interest rates and/or
inflation rises.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund's risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
Performance (sterling)
Investec Strategic Bond Fund ‘A’ accumulation shares
+3.3%*
Performance comparison index:
+8.7%**
Peer group:
+4.5%**
Total deemed income distributions per ‘A’ accumulation share
Six months to 31 March 2015
3.50 pence
Six months to 31 March 2014
3.73 pence
The Fund’s exposure to interest-rate-sensitive investments
was lower relative to the index, which negatively affected
its returns, but its holdings in credit markets, currencies
and emerging market bonds issued in local currencies were
positive and partially offset the impact of this.
Factors helping performance
The Fund’s holdings in credit markets (such as corporate
bonds and high yield bonds) performed better than the index.
We have less exposure to corporate bonds than the index,
which meant our returns were not as negative as those of the
index. This was a particularly favourable outcome for the
Fund given the poor performance of these bonds.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Furthermore, a notable positive contribution to the Fund’s
performance came from our positioning in currency markets.
Our preference for the US dollar, a long-term strategic
position for the Fund, was particularly helpful.
Factors hindering performance
The Fund’s total return was lower than that from its comparative
index over the six-month period. The main reason for this was
falling yields (and therefore rising prices) in the UK bond market.
UK government bonds performed well because of falling
inflation, disappointing economic news and the European
Central Bank’s announcement that it would start to buy
European government bonds (known as quantitative easing). As
our interest rate exposure was lower relative to the index, this
led to underperformance over the period. UK bond prices rose
strongly which we did not participate in to the same extent as
the index. However, some of the Fund’s bond holdings were
positive for performance. For example, our holding in a UK
government bond with a long period until it matures (known as
a long-dated gilt) performed particularly well in early 2015. Also,
the Fund’s positions in bonds from smaller, high-quality
developed markets added to performance as they benefited
from central banks within these countries cutting interest rates.
The Fund held some bonds issued within emerging market
countries and these bonds were generally negative for our
returns relative to the index. This was a difficult time for most
emerging market investments – both shares and bonds – but
emerging market bonds issued in hard currency, such as US
dollars, performed very poorly as these become less
favoured by investors and prices fell. Emerging market bonds
denominated in the local currency of the issuer did
outperform, but not well enough to fully offset the poor
performance of the Fund’s hard currency bonds.
Significant purchases during the period comprised:
Sweden Government Bond 2.5% 12/05/2015, Indonesia
Government International Bond 6.875% 17/01/2018, Turkey
Government International Bond 6.25% 26/09/2022, GE
Capital UK Funding 5.875% 04/11/2020, United States
Treasury Inflation Indexed Bonds 0.75% 15/02/2045.
There is a growing divergence in yield levels across global
bond markets. This has coincided with a higher level of
volatility in both developed-market and emerging-market
currencies. Much of this activity in bond and currency
markets is happening because of the differing prospects for
monetary policy, especially with the US Federal Reserve
seeming to get closer to raising interest rates.
More importantly, valuations across markets appear high in
both absolute terms and relative value terms. So, although
our outlook remains in line with our longer-term strategic
views, we are looking to take advantage of shorter-term
tactical opportunities.
Looking at the US in more detail, sustained economic
growth and the growing prospect of higher interest rates has
seen the yield on 10-year US government bonds (known as
Treasuries) fluctuating around 2%. This is well above the
yields investors can earn from even bonds in peripheral
European markets like Spain and Portugal. Given that US
inflation is likely to remain very low and demand for US
Treasuries should remain strong, this seems reasonably
good value. However, while the postponement of US interest
rate rises should be positive for US Treasuries, the
uncertainty over when US interest rates will actually rise
could actually be destabilising for bonds. Nonetheless,
although Treasury yields remain near historically low levels,
we do not see any evidence at the moment of the conditions
needed for them to rise significantly.
Emerging market hard currency debt appears reasonably
well valued, although still appears expensive relative to
developed market credit markets. Emerging market local
currency debt valuations look more attractive, especially
relative to developed market bonds.
Finally, the US dollar appears to have weakened slightly from
a high level, but we believe this is temporary and expect the
dollar to strengthen again in due course.
The outlook statement reflects the views of the output from
our Multi-Asset process and is, therefore, similar to that of the
Investec Diversified Income Fund and the Investec Managed
Growth Fund.
Significant sales during the period comprised:
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
United Kingdom Gilt 1.75% 07/09/2022, United Kingdom Gilt
3.75% 22/07/2052, Norway Government 3% 14/03/2024,
Poland Government 4% 25/10/2023, Brazil Notas do Tesouro
Nacional 6% 15/08/2018.
**Index (BofA Merrill Lynch Sterling Broad Market TR Index) and peer group
(Investment Association Strategic Bond sector) shown for performance
comparison purposes only.
The opinions expressed herein are as at end of March 2015.
Outlook
We are optimistic on the outlook for US government
bonds and believe they offer better value than many
European government bonds.
27
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Strategic Bond Fund (continued)
Performance
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
31 May, 31 August
30 November, 28/29 February
SHARE CLASS
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
‘A’ Class – net accumulation
239.24
231.67
‘A’ Class – net income
120.70
118.62
‘I’ Class – net accumulation
108.36
104.67
‘I’ Class – net income
100.19
98.21
‘R’ Class – net accumulation
103.99
100.48
96.92
95.12
157.43
151.10
2015
2014
‘A’ Class – net accumulation
1.11
1.10
‘A’ Class – net income
1.11
1.10
‘I’ Class – net accumulation
0.61
0.60
‘I’ Class – net income
0.61
0.60
Performance records
‘R’ Class – net accumulation
0.86
0.85
‘R’ Class – net income
0.86
0.85
Strategic Bond Fund ‘A’ Net Class
(Accumulation shares)
‘S’ Class – gross accumulation
0.11
0.10
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
‘R’ Class – net income
‘S’ Class – gross accumulation
CALENDAR YEAR
2015*
2014
2013
Highest Price
244.65
238.39
234.10
Lowest Price
238.24
224.67
223.54
1.71
6.77
7.91
2012
2011
2010
Net revenue per accumulation share
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
Highest Price
232.52
222.71
223.16
Summary
Lowest Price
219.31
212.83
205.09
6.21
6.40
7.82
Distributions
SHARE CLASS
Net revenue per accumulation share
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
‘A’ Class – net accumulation
3.50
3.73
‘A’ Class – net income
1.79
1.97
‘I’ Class – net accumulation
1.58
1.72
‘I’ Class – net income
1.48
1.61
‘R’ Class – net accumulation
1.59
1.63
‘R’ Class – net income
1.43
1.60
‘S’ Class – gross accumulation
2.85
3.03
Strategic Bond Fund ‘A’ Net Class
(Income shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
124.33
122.06
125.78
Lowest Price
121.07
117.10
118.76
0.87
3.51
4.23
2012
2011
2010
Highest Price
127.09
127.02
128.98
Lowest Price
122.18
119.88
121.12
3.43
3.61
4.64
Net revenue per income share
Net revenue per income share
28
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Strategic Bond Fund ‘I’ Net Class
(Accumulation shares)(1)
Strategic Bond Fund ‘R’ Net Class
(Income shares)(2)
CALENDAR YEAR
2015*
2014
2013
Highest Price
110.74
107.85
105.04
Lowest Price
107.83
101.18
100.50
0.77
3.09
3.53
2012
2011
2010
Highest Price
104.03
-
-
Lowest Price
99.94
-
2.14
-
Net revenue per accumulation share
Net revenue per accumulation share
2015*
2014
2013
Highest Price
99.79
97.95
100.50
Lowest Price
97.19
93.85
95.06
0.70
2.83
3.32
2012
2011
2010
Highest Price
-
-
-
-
Lowest Price
-
-
-
-
Net revenue per income share
-
-
-
Strategic Bond Fund ‘I’ Net Class
(Income shares)
CALENDAR YEAR
Net revenue per income share
Strategic Bond Fund ‘S’ Gross Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
103.12
101.19
103.45
Highest Price
160.58
156.24
148.92
Lowest Price
100.41
96.84
97.94
Lowest Price
156.21
144.72
143.13
0.72
2.94
3.48
1.40
5.53
6.29
2012
2011
2010
2012
2011
2010
Highest Price
104.30
104.19
105.78
Highest Price
146.59
136.81
135.88
Lowest Price
100.20
98.32
99.31
Lowest Price
136.26
131.65
123.21
3.12
3.38
4.12
5.94
6.33
7.02
2015*
2014
2013
Net revenue per income share
Net revenue per income share
Strategic Bond Fund ‘R’ Net Class
(Accumulation shares)(2)
Gross revenue per accumulation share
Gross revenue per accumulation share
Strategic Bond Fund ‘S’ Net Class
(Income shares)(3)
CALENDAR YEAR
2015*
2014
2013
Highest Price
106.30
103.54
101.43
Highest Price
-
-
103.44
Lowest Price
103.52
97.57
96.99
Lowest Price
-
-
98.26
0.75
2.96
3.38
Net revenue per income share
-
-
2.55
2012
2011
2010
2012
2011
2010
Highest Price
-
-
-
Highest Price
104.06
103.92
105.64
Lowest Price
-
-
-
Lowest Price
99.89
98.02
99.13
Net revenue per accumulation share
-
-
-
Net revenue per income share
3.43
3.70
4.65
Net revenue per accumulation share
CALENDAR YEAR
* Up to 31 March 2015
(1) Launched 2 May 2012
(2) Launched 2 January 2013
(3) Closed on 11 December 2013
High and low prices are quoted at mid valuations.
29
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Strategic Bond Fund (continued)
Portfolio analysis
Sector split (%)
Top 10 Holdings (%)
SECURITY
31.03.15
United Kingdom Treasury 3.75% 22/07/2052
25.0
Province of Quebec Canada 4.25% 01/12/2021
6.2
United States Treasury Note 3.125% 15/08/2044
3.8
United Kingdom Treasury Inflation Linked 2.5% 26/07/2016
2.6
2015
Investec GSF Emerging Markets Local Currency
Dynamic Debt $ Fund
†
2.4
Investec GSF Emerging Markets Local Currency
†
2.4
United Kingdom Treasury 1.75% 07/09/2022
2.3
Sri Lanka Government International Bond 6.25% 27/07/2021
1.8
Bonos de la Tesoreria de la Republica en pesos 6% 01/01/2020
1.6
South Africa Government Bond 8% 21/12/2018
1.5
Dynamic Debt £ Fund
SECURITY
30.09.14
United Kingdom Treasury 3.75% 22/07/2052
21.2
Province of Quebec Canada 4.25% 01/12/2021
5.4
United Kingdom Treasury 1.75% 07/09/2022
5.0
United States Treasury Bond 3.125% 15/08/2044
2.7
Investec GSF Emerging Markets Local Currency
Dynamic Debt £ Fund
†
United Kingdom Treasury Inflation Linked 2.5% 26/07/2016
2.4
2.4
Investec GSF Emerging Markets Local Currency
Dynamic Debt $ Fund
†
2.4
Sri Lanka Government International Bond 6.25% 27/07/2021
1.5
Norway Government 3% 14/03/2024
1.4
Bonos de la Tesoreria de la Republica en pesos 6% 01/01/2020
1.4
† A related party to the Fund
30
Government Bonds
Corporate Bonds
Net other assets
Collective Investment Schemes
Cash Collateral
Forward Foreign Exchange Contracts
Perpetual Bonds
Derivatives – Credit Default Swaps
Derivatives – Futures
31.03.15
30.09.14
63.0
26.9
4.8
4.8
0.6
0.3
0.8
(0.5)
(0.7)
60.2
31.4
1.5
4.7
0.7
1.2
0.6
(0.5)
0.2
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Other information
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
Fund specific change requiring notice
After consultation with the Depositary and in accordance
with the requirements of Section 4.3 of the COLL,
shareholders were given notice of following:
On 30 January 2014 of the change of the current income
share classes name from “income” (“Inc”) to “income 2”
(“Inc-2”) on Strategic Bond Fund effective 6 April 2015.
Although the name of the share class changed, there is no
change to the way in which the charges and expenses of the
share class are being charged against the capital value of
the share class. For current “accumulation” (“Acc”)
shareholders, effective 6 April 2015, charges and expenses
are paid for, in the first instance, out of income earned rather
than the capital value of the share class. Should there be
insufficient income, then the remainder will be paid out of
the capital value if the share class.
Fund specific changes not requiring notice
– The Bombay Stock Exchange and National Stock
Exchange of India were added to the prospectus as new
eligible securities markets for the Strategic Bond Fund.
There have been no other fundamental changes to the
Company or the Fund that required shareholder approval or
any other significant changes to the operation of the
Company or Fund requiring pre-notification.
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
31
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Alpha Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to grow the value of your investment over the
long term.
The Fund invests primarily in the shares of UK companies or
in related derivatives (financial contracts whose value is
linked to the price of an underlying asset).
The Fund invests in a relatively small number of UK
companies and seeks to invest in shares which offer good
potential for growth and income.
The Investment Manager is free to choose how the Fund is
invested and will not track an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Risk and Reward profile*
Higher risk
Potentially higher rewards
Lower risk
Potentially lower rewards
1
2
3
4
5
6
7
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the higher end of the Risk and
Reward Indicator scale. This is because it invests in the shares
of companies, whose values tend to fluctuate more widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Concentration: Investments may be primarily concentrated
in specific areas (e.g. countries/geographical regions and/or
industry sectors), in terms of investment style (e.g. income
or growth), in individual holdings and/or in a number of other
ways. This may mean the value of the Fund may decrease
whilst more broadly invested funds might grow.
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
Equity investment: The value of equities (e.g. shares) and
equity-related investments may vary according to company
32
profits and future prospects as well as more general market
factors. In the event of a company default, the owners of
their equity rank last in terms of any financial payment from
that company.
Liquidity: There may be insufficient buyers or sellers of
particular investments giving rise to delays in trading and
being able to make settlements from the Fund and/or large
fluctuations in the value of the Fund which may lead to larger
financial losses than might be anticipated.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
Performance (sterling)
Investec UK Alpha Fund ‘A’ accumulation shares
+8.1%*
Performance comparison index:
+5.3%**
Peer group:
+7.3%**
The Fund’s limited exposure to oil & gas companies,
which performed poorly in the period, was beneficial to
performance. Meanwhile, the holding in
biopharmaceuticals stock Shire detracted from relative
returns, as did the underweight position in Vodafone.
UK stock markets enjoyed a strong run through 2014 and
into the first quarter of 2015, as the underlying economy
improved. The European Central Bank took measures to
stimulate the economy, propelling the FTSE All-Share Index
higher than its peaks at the turn of the century.
Encouragingly, more people found work in the UK in 2014
than in any year since 1988. Unemployment reached a
six-year low of 5.7%.
Factors helping performance
During the six-month period, oil & gas prices fell sharply,
damaging the share price of oil & gas companies Royal
Dutch Shell and BG Group. Our underweight exposure to
these companies in comparison to the index therefore
benefited the Fund’s relative returns. Furthermore at a sector
level, the Fund’s underweight exposure to the broader oil &
gas sector was a strong contributor to relative returns.
Meanwhile, our holdings in packaging business DS Smith
performed well, making a contribution to performance. The
company reported interim results showing its business was
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
doing better than the market expected. Not holding
resources company Glencore also helped returns. The
company was affected was the sharp sell-off in iron ore
prices over the period as large volumes of iron ore continue
to head to market, pushing the price down. Signet Jewelers
performed well as it continued to realise the benefits from the
acquisition of its industry rival Zales. In addition, the retailer
announced above-consensus fourth-quarter and full-year
2015 figures.
Factors hindering performance
The Fund’s holding in speciality biopharmaceuticals company
Shire detracted from relative returns. Shire’s high-profile
merger with AbbVie fell through, causing the share price to
drop. In addition, we had limited exposure to
telecommunications services company Vodafone, which
performed very well. The Fund’s exposure to energy
company Dragon Oil and miner Amerisur weighed on returns
in line with the rout in commodity prices. We have since
exited both positions. UK food retailer Booker had their credit
rating downgraded by ratings agency Goldman Sachs, which
saw the stock sell off in the aftermath. Despite the
competitive and challenging outlook for the sector we remain
positive on Booker due to its strong balance sheet and
attractive cash generation.
We believe markets will be more volatile than they’ve been in
the past. However, by thoroughly analysing companies, we
hope to use this volatility to generate returns for the Fund,
by seeking out good investment opportunities while
managing risks prudently.
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (FTSE*** All-Share Total Return Index) and peer group (Investment
Association UK All Companies) shown for performance comparison
purposes only.
*** Source: FTSE International Limited (“FTSE”) © FTSE 2014. Please note a
disclaimer applies to FTSE data and can be found at
http://www.ftse.com/products/downloads/FTSE_Wholly_Owned_NonPartner.pdf
The opinions expressed herein are as at end of March 2015.
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
30 November
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ Class – accumulation
1.60
1.61
Significant purchases during the period comprised:
‘I’ Class – accumulation
0.85
0.86
GlaxoSmithKline, Reckitt Benckiser, Imperial Tobacco, Royal
Dutch Shell ‘B’ Shares, Unilever, Legal & General, Capita,
Breedon Aggregates.
‘I’ Class – income
0.85
0.86
0.76
0.76
0.76
n/a
‘R’ Class – accumulation
1.10
1.11
‘S’ Class – accumulation
0.10
0.11
‘J’ Class – accumulation
J’ Class – income
Significant sales during the period comprised:
Shire, Prudential, Bovis Home, WPP, Berkeley, ITV, National
Express, Rio Tinto, SABMiller, IG, Entertainment One,
Capita, HellermannTyton, Ashtead, Hays, Direct Line
Insurance, Babcock International, Reed Elsevier, Compass.
Outlook
We believe that companies and governments will
continue to shed their debts, which should improve
economic growth in the developed world.
‡
‡
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
‡The OCF shown here is an estimate of the charges.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
The environment for investing has become increasingly
uncertain, with a range of factors introducing risk. These
include the risk that the global economy slows, potential
action taken by central banks, and geopolitical risks.
In this difficult environment, we aim to invest in companies
with strong balance sheets that are generating cash. In
particular, we seek to find companies that reinvest these
cashflows back into their businesses, allowing them to grow
in future. While such companies might appear expensive,
sustainable growth is a rare and valuable attribute that could
warrant these valuations.
33
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Alpha Fund (continued)
Summary
UK Alpha Fund ‘I’ Class
(Accumulation shares)(2)
Distributions
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
CALENDAR YEAR
2015*
2014
2013
Highest Price
178.17
164.29
152.49
158.33
144.20
112.48
-
2.90
2.24
2012
2011
2010
Highest Price
110.85
-
-
Lowest Price
89.81
-
-
0.93
-
-
CALENDAR YEAR
2015*
2014
2013
Highest Price
314.47
294.31
274.17
Lowest Price
279.44
254.51
205.53
-
5.20
4.06
2012
2011
2010
‘A’ Class – accumulation
-
-
Lowest Price
‘I’ Class – accumulation
-
-
Net revenue per accumulation share
‘I’ Class – income
-
-
‘J’ Class – accumulation
-
-
J’ Class – income
-
-
‘R’ Class – accumulation
-
-
‘S’ Class – accumulation
-
-
Net revenue per accumulation share
UK Alpha Fund ‘I’ Class
(Income shares)
As distributions are paid annually on 30 November, no distributions are
payable within this interim short report.
Performance
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
Net revenue per income share
‘A’ Class – accumulation
2,060.13
1,905.72
‘I’ Class – accumulation
171.71
158.24
‘I’ Class – income
303.06
279.32
Highest Price
202.54
198.66
188.08
‘J’ Class – accumulation
106.79
98.34
Lowest Price
167.85
149.47
150.95
J’ Class – income
108.64
n/a
4.27
2.44
3.04
‘R’ Class – accumulation
151.67
139.91
‘S’ Class – accumulation
2,083.89
1,913.33
CALENDAR YEAR
2015*
2014
2013
Highest Price
110.80
102.13
-
Lowest Price
98.44
89.62
-
-
1.50
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Share price range
UK Alpha Fund ‘A’ Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
2,138.00
1,979.82
1,846.64
Lowest Price
1,902.56
1,736.04
1,372.37
-
20.69
15.73
Net revenue per accumulation share
2012
2011
2010
Highest Price
1,352.88
1,295.27
1,227.67
Lowest Price
1,100.95
984.71
972.16
19.97
12.79
11.21
Net revenue per accumulation share
34
Net revenue per income share
UK Alpha Fund ‘J’ Class
(Accumulation shares)(4)
Net revenue per accumulation share
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Portfolio analysis
UK Alpha Fund ‘J’ Class
(Income shares)(5)
CALENDAR YEAR
2015*
2014
2013
Highest Price
112.73
103.68
-
Lowest Price
100.15
98.42
-
-
-
-
Top 10 Holdings (%)
SECURITY
Net revenue per income share
31.03.15
BT
4.2
GlaxoSmithKline
4.1
Reckitt Benckiser
3.1
2012
2011
2010
BP
3.1
Highest Price
-
-
-
Imperial Tobacco
2.8
Lowest Price
-
-
-
Royal Dutch Shell ‘B’ Shares
2.7
Net revenue per income share
-
-
-
Legal & General
2.6
Unilever
2.5
London Stock Exchange
2.4
St James’s Place
2.0
UK Alpha Fund ‘R’ Class
(Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
Highest Price
157.39
145.23
135.20
Lowest Price
139.93
127.51
99.91
-
2.05
1.69
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
UK Alpha Fund ‘S’ Class
(Accumulation shares)(1)
CALENDAR YEAR
2015*
2014
2013
Highest Price
2,162.03
1,989.11
1,833.58
Lowest Price
1,918.57
1,744.12
1,342.49
-
48.59
37.41
2012
2011
2010
Highest Price
1,322.66
1,232.20
116.55
Lowest Price
1,067.47
945.36
91.61
36.24
29.27
2.53
Net revenue per accumulation share
Net revenue per accumulation share
SECURITY
30.09.14
Prudential
5.0
BP
4.6
Shire
4.5
Rio Tinto
4.1
BT
3.6
Lloyds Banking
3.5
Reed Elsevier
3.2
SABMiller
3.1
Compass
3.0
Bovis Homes
3.0
* Up to 31 March 2015
(1) Consolidation 18 July 2011
(2) Launched 2 May 2012
(3) Launched 2 January 2013
(4) Launched 27 February 2014
(5) Launched 12 December 2014
High and low prices are quoted at mid valuations.
35
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Alpha Fund (continued)
Other information
Sector split (%)
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
There have been no fundamental changes to the Company or the
Fund that required shareholder approval or any other significant
changes to the operation of the Company or Fund requiring prenotification.
2015
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
Financials
Consumer Goods
Industrials
Consumer Services
Oil & Gas
Health Care
Telecommunications
Basic Materials
Technology
Net other assets
36
31.03.15
30.09.14
20.1
19.5
18.2
14.5
7.2
7.1
5.8
4.3
2.2
1.1
23.9
14.3
15.1
24.0
7.2
4.5
4.3
4.1
1.2
1.4
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Equity Income Fund
(UK Equity Income Fund was launched 29 January 2015)
Significant purchases during the period comprised:
Summary of the Fund’s investment objective
and policy
Imperial Tobacco, AstraZeneca, GlaxoSmithKline, British
American Tobacco, Unilever, Royal Dutch Shell ‘B’ Shares,
Pearson, Legal & General, Reckitt Benckiser, Diageo, BAE
Systems, BT, Royal Dutch Shell ‘A’ Shares, Rio Tinto,
Booker, HSBC, Next, Aviva.
The Fund aims to provide an income with the opportunity to
grow the value of your investment by investing primarily in
the shares of UK companies.
The Fund can also invest in other assets including (but not
limited to) derivatives (financial contracts whose value is
linked to the price of an underlying asset). Derivatives are
used for investment purposes.
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Performance Record
The UK Equity Income Fund was launched on the 29th of
January, 2015, and due to this short time period we have
not included a performance review commentary within this
report. However, analysis of the Fund’s performance will
be included in the annual report for the period ending
30 September 2015, issued later in the year. For the latest
performance updates, including a monthly portfolio
manager’s commentary, please visit our website at
www.investecassetmanagement.com.
Outlook
We believe that many developed economies around the
world are heavily indebted relative to history, and that their
need to pay this debt off will continue to cause sustained
low economic growth in the developed world. The
environment for investing has become increasingly
uncertain, and very real risks remain, for example around
global growth, central bank policy, regulation, geopolitical
risk, a potential Greek exit from the euro and commodity
prices. Similarly, at the stock level, we believe valuations in
many cases now leave little room for disappointment, with
fewer value opportunities than in prior years.
We take a ‘total return’ approach that combines income and
capital growth, and we focus on long term sustainable
dividend growth, not dividend yield. In this difficult
environment, we believe that companies with sustainably
high or improving returns, low requirements for capital
spending, healthy cashflows, and the ability to reinvest those
cashflows in their business for future growth, are those most
likely to grow their dividends and deliver attractive total
returns.
Significant sales during the period comprised:
Royal Dutch Shell ‘A’ Shares, BAE Systems, Royal Dutch
Shell ‘B’ Shares.
Risk and Reward profile*
Higher risk
Potentially higher rewards
Lower risk
Potentially lower rewards
1
2
3
4
5
6
7
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the Risk and Reward
Indicator scale. This is because it invests in the shares of
companies whose values tend to fluctuate more widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Concentration: Investments may be primarily concentrated
in specific areas (e.g. countries/geographical regions and/or
industry sectors), in terms of investment style (e.g. income
or growth), in individual holdings and/or in a number of other
ways. This may mean the value of the Fund may decrease
whilst more broadly invested funds might grow.
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
Equity investment: The value of equities (e.g. shares) and
equity-related investments may vary according to company
profits and future prospects as well as more general market
factors. In the event of a company default, the owners of
their equity rank last in terms of any financial payment from
that company.
Liquidity: There may be insufficient buyers or sellers of
particular investments giving rise to delays in trading and
being able to make settlements from the Fund and/or large
fluctuations in the value of the Fund which may lead to larger
financial losses than might be anticipated.
37
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Equity Income Fund (continued)
Third party operational: The Fund’s operations depend on
third parties. You may suffer disruption or financial loss in the
event of third party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
30 November
Performance
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
‘A’ Class - accumulation
98.19
n/a
‘A’ Class - income-2
99.15
n/a
‘I’ Class - accumulation
98.25
n/a
‘I’ Class - income-2
99.28
n/a
100.42
n/a
‘J’ Class - income-2
99.63
n/a
‘S’ Class - income-2
99.40
n/a
‘J’ Class - accumulation
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
Share price range
2015
2014
‘A’ Class - accumulation ‡
1.61
n/a
‘A’ Class - income-2 ‡
1.61
n/a
‘I’ Class - accumulation ‡
0.86
n/a
‘I’ Class - income-2 ‡
0.86
n/a
‘J’ Class - accumulation ‡
0.76
n/a
‘J’ Class - income-2 ‡
0.76
n/a
‘S’ Class - income-2 ‡
0.11
n/a
UK Equity Income Fund ‘A’
Class (Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
Highest Price
102.33
-
-
Lowest Price
97.83
-
-
0.32
-
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
CALENDAR YEAR
2015*
2014
2013
Highest Price
104.24
-
-
Lowest Price
98.00
-
-
0.93
-
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Net revenue per accumulation share
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
UK Equity Income Fund ‘A’ Class
(Income-2 shares)(1)
‡ The OCF shown here is an estimate of the charges.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
Summary
Distributions
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
‘A’ Class - accumulation
0.32
n/a
‘A’ Class - income-2
0.93
n/a
‘I’ Class - accumulation
0.38
n/a
‘I’ Class - income-2
0.91
n/a
‘J’ Class - accumulation
0.70
n/a
‘J’ Class - income-2
0.79
n/a
‘S’ Class - income-2
0.91
n/a
38
Net revenue per income share
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Equity Income Fund ‘I’ Class
(Accumulation shares)(3)
UK Equity Income Fund ‘J’ Class
(Income-2 shares)(2)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
102.40
-
-
Highest Price
104.66
-
-
Lowest Price
97.86
-
-
Lowest Price
100.00
-
-
0.38
-
-
Net revenue per income share
0.79
-
-
2012
2011
2010
2012
2011
2010
Highest Price
-
-
-
Highest Price
-
-
-
Lowest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per income share
-
-
-
CALENDAR YEAR
2015*
2014
2013
Net revenue per accumulation share
UK Equity Income Fund ‘I’ Class
(Income-2 shares)(1)
UK Equity Income Fund ‘S’ Class
(Income-2 shares)(1)
CALENDAR YEAR
2015*
2014
2013
Highest Price
104.44
-
-
Highest Price
104.52
-
Lowest Price
98.03
-
-
Lowest Price
98.05
-
0.91
-
-
Net revenue per income share
0.91
-
2012
2011
2010
2012
2011
2010
Highest Price
-
-
-
Highest Price
-
-
-
Lowest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Net revenue per income share
-
-
-
Net revenue per income share
* Up to 31 March 2015
UK Equity Income Fund ‘J’ Class
(Accumulation shares)(2)
CALENDAR YEAR
Highest Price
2015*
104.66
2014
-
2013
-
(1)
Launched 29 January 2015
(2)
Launched 18 February 2015
(3)
Launched 27 February 2015
High and low prices are quoted at mid valuations.
Lowest Price
100.00
-
-
0.70
-
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
39
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Equity Income Fund (continued)
Portfolio analysis
Sector split (%)
Top 10 Holdings (%)
SECURITY
31.03.15
Imperial Tobacco
5.5
GlaxoSmithKline
5.1
AstraZeneca
4.9
British American Tobacco
4.5
Unilever
4.3
Pearson
4.2
Legal & General
4.0
Reckitt Benckiser
3.9
Royal Dutch Shell ‘B’ Shares
3.8
BT
2.9
40
2015
31.03.15
Consumer Goods
Financials
Consumer Services
Industrials
Health Care
Oil & Gas
Basic Materials
Telecommunications
Technology
Utilities
Net other assets
22.4
22.4
15.9
14.9
10.0
4.9
3.7
2.9
1.9
1.3
(0.3)
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Other information
Please refer to the important information section at the back for
changes which generally apply across the Investec Fund Series.
Fund specific changes not requiring notice
– UK Equity Income Fund was launched on 29 January 2015.
– UK Equity Income Fund, A, Income-2, Net, GBP share class
was launched on 29 January 2015.
– UK Equity Income Fund, I, Income-2, Net, GBP share class was
launched on 29 January 2015.
– UK Equity Income Fund, J, Income-2, Net, GBP share class was
launched on 18 February 2015.
– UK Equity Income Fund, S, Income-2, Net, GBP share class
was launched on 29 January 2015.
– UK Equity Income Fund, A, Accumulation, Net, GBP share class
was launched on 27 February 2015.
– UK Equity Income Fund, I, Accumulation, Net, GBP share class
was launched on 27 February 2015.
– UK Equity Income Fund, J, Accumulation, Net, GBP share class
was launched on 18 January 2015.
There have been no other fundamental changes to the Company
or the Fund that required shareholder approval or any other
significant changes to the operation of the Company or Fund
requiring pre-notification.
More information about the activities and performance of the Fund
for this and previous periods can be obtained from the ACD.
41
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Smaller Companies Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to grow the value of your investment over the
long term.
The Fund invests primarily in the shares of UK smaller
companies and in related derivatives (financial contracts
whose value is linked to the price of an underlying asset).
UK smaller companies are companies considered to be
small based on the size of their issued capital (the value of
all shares held by their shareholders added together) and
which are included in the Numis Smaller Companies plus
AIM (excluding Investment Trusts) Index.
The Investment Manager is free to choose how the Fund is
invested and does not manage it with reference to an index.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
Risk and Reward profile*
Lower risk
Potentially lower rewards
1
2
Higher risk
Potentially higher rewards
3
4
5
6
7
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
Equity investment: The value of equities (e.g. shares) and
equity-related investments may vary according to company
profits and future prospects as well as more general market
factors. In the event of a company default, the owners of
their equity rank last in terms of any financial payment from
that company.
Liquidity: There may be insufficient buyers or sellers of
particular investments giving rise to delays in trading and
being able to make settlements from the Fund and/or large
fluctuations in the value of the Fund which may lead to larger
financial losses than might be anticipated.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
The full list of the Fund’s risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Performance record
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the Risk and
Reward Indicator scale. This is because it invests in the
shares of companies, whose values tend to fluctuate
more widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Concentration: Investments may be primarily concentrated
in specific areas (e.g. countries/geographical regions and/or
industry sectors), in terms of investment style (e.g. income
or growth), in individual holdings and/or in a number of other
ways. This may mean the value of the Fund may decrease
whilst more broadly invested funds might grow.
42
Performance (sterling)
Investec UK Smaller Companies Fund ‘A’ accumulation shares
+1.2%*
Performance comparison index:
+2.7%**
Peer group:
+4.4%**
Small-cap companies underperformed mid- and largecap companies in general, which affected the Fund’s
performance. However, the Fund’s underweight
exposure to the oil and gas sector made a significant
contribution to relative returns.
UK equities, especially mid-cap stocks, enjoyed a solid run over
the review period, with the FTSE 250 returning 12.2% and hitting
an all-time high. Similarly, the FTSE 100 broke through the 7000
mark for the first time in its history, with investors apparently
undeterred by the uncertain outcome of May’s general election
and the possibility of a Greek exit from the eurozone. However,
small-cap companies lagged behind their larger counterparts.
The underlying dynamics of the economy remained strong, with
the UK the fastest growing of all developed economies in 2014.
Meanwhile, the oil-price collapse in the final quarter of 2014 led to
a decrease in inflationary pressure, extended expectations for the
timing of interest-rate rises and increased consumer confidence.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Factors helping performance
The Fund benefited from the decline in the oil price, with our
underweight exposure to the oil and gas sector the largest
contributor to relative returns.
In terms of individual stocks, the greatest contributor was
Plus500. The Fund had supported the 2013 initial public
offering of this brokerage company, which provided robust
returns after it announced a special dividend and rallied
further after publishing a strong set of annual results in
February. Other strong performers were Eros, an Indian
media company experiencing strong growth, and Bovis,
a leading housebuilder.
Factors hindering performance
likely to affect all stages of the value chains supporting
industries such as oil & gas, though consumers stand to
benefit through lower prices.
The diversity of the smaller-company market provides better
opportunities for stock-picking, and we continue to find
what we believe are attractively valued companies with
strong potential through new technology and exposure to
growth markets.
The opinions expressed herein are as at end of March 2015.
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (Numis Small-Cap (ex-IT) plus AIM Index) and peer group (Investment
Association UK Smaller Companies sector) shown for performance
comparison purposes only.
Fund facts
By contrast, our stock selection within the industrials and
technology sectors detracted most from relative returns. The
chief detractor from performance was Tungsten, an
electronic-invoicing specialist, which was hit by negative
newsflow. Elsewhere, technology stock Digital Globe
Services announced a loss for the second half of 2014 and
Amerisur Resources, an oil and gas company, suffered as a
result of the falling oil price. Other poor performers included
Quindell and Pressure Technologies, two stocks in which we
have subsequently closed our positions. Actions taken by
Quindell’s management over the period called into question
the company’s ability to fulfil its potential.
Significant purchases during the period comprised:
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
30 November
Ongoing Charges as per the
Key Investor Information Document (%)
SHARE CLASS
2015
2014
‘A’ Class – accumulation
1.59
1.59
‘A’ Class – income
1.59
1.59
‘I’ Class – accumulation
0.84
0.84
Interserve, Gamma Communications, Eurocell, ISG,
Mortgage Advice Bureau.
‘I’ Class – income
0.84
0.84
‘R’ Class – accumulation
1.09
1.09
Significant sales during the period comprised:
‘S’ Class – accumulation
0.09
0.09
Eros International, Keller, Telecom Plus, Bovis Home,
Plus500.
‘S’ Class – income
0.09
0.09
Outlook
We are optimistic on the outlook for UK smaller
companies as, in our opinion, their diverse nature offers
more opportunities to find value through stock-picking.
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
The global economic outlook is still ambiguous, with
uncertainty about economic recoveries in Europe and Asia
balanced against signs of sustained GDP growth and rising
real wages in the UK and the US. And after years of
improving economic conditions and stock-market
performance, many financial markets are becoming
increasingly volatile.
The valuation case for equities continues to be well
supported, as other investments, such as bonds, yield close
to zero or even negative returns. Commodity-price falls are
43
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Smaller Companies Fund (continued)
Summary
UK Smaller Companies Fund ‘A’ Class
(Income shares)
Distributions
SHARE CLASS
CALENDAR YEAR
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
2015*
2014
2013
Highest Price
3,199.33
3,547.77
3,167.00
3,020.78
2,864.03
2,207.07
-
-
-
2012
2011
2010
Highest Price
2,177.66
1,989.58
1,790.58
Lowest Price
1,754.29
1,651.21
1,265.67
-
-
5.30
‘A’ Class – accumulation
-
-
Lowest Price
‘A’ Class – income
-
-
Net revenue per income share
‘I’ Class – accumulation
-
-
‘I’ Class – income
-
-
‘R’ Class – accumulation
-
-
‘S’ Class – accumulation
-
-
‘S’ Class – income
-
-
Net revenue per income share
UK Smaller Companies Fund ‘I’ Class
(Accumulation shares)(2)
As distributions are paid annually on 30 November, no distributions are
payable within this interim short report.
CALENDAR YEAR
2015*
2014
2013
Highest Price
161.28
177.56
158.16
Lowest Price
152.11
143.91
109.38
-
0.97
0.51
2012
2011
2010
Performance
SHARE CLASS
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
Net revenue per accumulation share
‘A’ Class – accumulation
3,371.28
3,330.86
‘A’ Class – income
3,132.30
3,094.78
157.93
155.45
Highest Price
107.91
-
-
4,548.53
4,477.03
Lowest Price
91.41
-
-
‘R’ Class – accumulation
143.47
141.39
0.42
-
-
‘S’ Class – accumulation
3,607.65
3,537.63
‘S’ Class – income
3,186.56
3,123.08
2015*
2014
2013
Highest Price
4,645.07
5,144.57
4,583.01
Lowest Price
4,380.87
4,144.68
3,180.30
-
26.81
14.27
2012
2011
2010
Highest Price
3,137.73
2,874.79
2,577.24
Lowest Price
2,524.54
2,387.49
1,821.17
18.94
18.17
22.22
‘I’ Class – accumulation
‘I’ Class – income
Net revenue per accumulation share
UK Smaller Companies Fund ‘I’ Class
(Income shares)
CALENDAR YEAR
Share price range
UK Smaller Companies Fund ‘A’ Class
(Accumulation shares)
CALENDAR YEAR
2015*
2014
2013
Highest Price
3,443.34
3,818.40
3,408.58
Lowest Price
3,251.19
3,082.49
2,374.54
-
-
-
Net revenue per accumulation share
2012
2011
2010
Highest Price
2,342.89
2,141.10
1,926.95
Lowest Price
1,887.31
1,776.99
1,357.50
-
-
5.71
Net revenue per accumulation share
44
Net revenue per income share
Net revenue per income share
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Portfolio analysis
UK Smaller Companies Fund ‘R’ Class
(Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
Highest Price
146.52
161.70
144.14
Lowest Price
138.24
130.88
99.90
-
0.55
0.33
Top 10 Holdings (%)
SECURITY
Net revenue per accumulation share
31.03.15
Plus500
3.4
Optimal Payments
3.2
National Express
2.9
2012
2011
2010
Entertainment One
2.8
Highest Price
-
-
-
HellermannTyton
2.5
Lowest Price
-
-
-
Arrow Global
2.1
Net revenue per accumulation share
-
-
-
Staffline
2.1
Redcentric
2.1
Pace
2.1
SafeStyle UK
2.0
UK Smaller Companies Fund ‘S’ Class
(Accumulation shares)(1)
CALENDAR YEAR
2015*
2014
2013
Highest Price
3,683.63
4,026.60
3,579.56
Lowest Price
3,470.20
3,276.09
2,457.22
-
48.44
31.01
2012
2011
2010
Highest Price
2,424.17
2,166.75
129.00
Lowest Price
1,923.81
1,800.68
89.67
30.13
28.48
1.82
Net revenue per accumulation share
Net revenue per accumulation share
UK Smaller Companies Fund ‘S’ Class
(Income shares)(1)
CALENDAR YEAR
2015*
2014
2013
Highest Price
3,252.12
3,604.11
3,203.97
Lowest Price
3,063.69
2,892.31
2,221.37
-
43.36
28.03
2012
2011
2010
Highest Price
2,191.50
2,015.28
149.98
Lowest Price
1,761.95
1,666.96
105.95
27.59
26.48
2.14
Net revenue per income share
Net revenue per income share
SECURITY
30.09.14
Optimal Payments
3.4
National Express
3.2
Bovis Homes
2.7
Plus500
2.6
Entertainment One
2.5
Amerisur Resources
2.4
Skyepharma
2.1
Keller
2.1
HellermannTyton
2.1
Tungsten
1.9
* Up to 31 March 2015
(1) Consolidated 18 July 2011
(2) Launched 2 May 2012
(3) Launched 2 January 2013
High and low prices are quoted at mid valuations.
45
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Smaller Companies Fund (continued)
Other information
Sector split (%)
Please refer to the important information section at the back
for changes which generally apply across the Investec
Fund Series.
There have been no fundamental changes to the Company
or the Fund that required shareholder approval or any other
significant changes to the operation of the Company or Fund
requiring pre-notification.
2015
More information about the activities and performance of the
Fund for this and previous periods can be obtained from
the ACD.
Industrials
Consumer Services
Financials
Technology
Consumer Goods
Net other assets
Health Care
Oil & Gas
Basic Materials
Utilities
Telecommunications
46
31.03.15
30.09.14
22.7
22.2
16.5
15.3
7.5
5.8
3.3
3.1
2.3
1.3
-
22.6
23.1
15.3
16.2
4.7
4.2
3.3
5.1
2.4
1.3
1.8
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Special Situations Fund
Summary of the Fund’s investment objective
and policy
The Fund aims to provide an income and to grow the value
of your investment over the long term.
The Fund invests primarily in the shares of companies in the
UK and in related derivatives (financial contracts whose
value is linked to the price of an underlying asset). The Fund
will use a contrarian approach (investing in a way that is
likely to be different to current general market views) in
selecting investments.
The Investment Manager is free to choose how the Fund is
invested. However, the FTSE All-Share Index is taken into
account when the Fund’s investments are selected.
Equity investment: The value of equities (e.g. shares) and
equity-related investments may vary according to company
profits and future prospects as well as more general market
factors. In the event of a company default, the owners of
their equity rank last in terms of any financial payment from
that company.
Liquidity: There may be insufficient buyers or sellers of
particular investments giving rise to delays in trading and
being able to make settlements from the Fund and/or large
fluctuations in the value of the Fund which may lead to larger
financial losses than might be anticipated.
Third party operational: The Fund’s operations depend on
third parties. Investors in the Fund may suffer disruption or
financial loss in the event of third-party operational failure.
Full details on this Fund’s investment objective and policy
can be found in the prospectus.
The full list of the Fund's risks are contained in Appendix vii of the Investec
Funds Series i prospectus.
Risk and Reward profile*
*The Risk and Reward profile is taken from the Key Investor Information
Document. Please note that, the Risk and Reward profile section is based on
Sterling “A” Class Accumulation shares.
Lower risk
Potentially lower rewards
1
2
Higher risk
Potentially higher rewards
3
4
5
6
7
Performance record
Performance (sterling)
Investec UK Special Situations Fund ‘A’ accumulation shares
This indicator is based on historical data and may not be a
reliable indication of the future risk profile of the Fund. The
risk and reward category shown is not guaranteed to remain
unchanged and may shift over time. The lowest category
does not mean ‘risk free’.
The value of your investment and any income from it can fall
as well as rise and you are not certain of making profits;
losses may be made.
The Fund appears towards the middle of the risk and reward
indicator scale. This is because it invests in the shares of
companies whose values tend to fluctuate more widely.
The following risks may not be fully captured by the Risk
and Reward Indicator:
Concentration: Investments may be primarily concentrated
in specific areas (e.g. countries/geographical regions and/or
industry sectors), in terms of investment style (e.g. income
or growth), in individual holdings and/or in a number of other
ways. This may mean the value of the Fund may decrease
whilst more broadly invested funds might grow.
Derivatives: The use of derivatives is not intended to
increase the overall level of risk in the Fund. However, the
use of derivatives may still lead to large changes in the value
of the Fund and includes the potential for large financial loss.
+4.4%*
Performance comparison index:
+5.3%**
Peer group:
+7.3%**
The Fund’s top contributors to relative returns were
Grafton Group and Carnival, with our underweight
exposure to the mining sector, which performed poorly,
also positive. In contrast, Qinetiq Group and Avon
Products were the chief detractors.
Factors helping performance
The stock that performed the best for the Fund over the
period was Grafton Group. Shares in the constructionmaterials supplier performed well after the company
released better-than-expected full-year results for 2014. Its
management reported the UK’s continued recovery and
rapidly improving Irish construction market were the main
drivers of its results.
Carnival shares also performed well, as the cruise operator
continued to enjoy the benefit of lower fuel costs. This was
confirmed by the company’s first-quarter results, in which it
reported moving from loss to profit thanks to a 7% decline in
costs. Over the longer term, we think the structure of the
industry should help Carnival to deliver decent returns.
In other positive factors for the Fund’s relative performance,
continued concerns in the market about the global
47
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Special Situations Fund (continued)
economic outlook pulled the mining sector lower. We shared
these concerns, therefore the Fund did not hold miners BHP
Billiton and Glencore, which was positive for performance as
both stocks fell over the period.
Factors hindering performance
Turning to stocks that were negative, defence-technology
contractor Qinetiq Group was the worst-performing stock over
the period. The shares fell when the chief executive left the
company towards the end of 2014. The company was also hit
by fears that reversals in working capital (a company’s assets
minus its liabilities) may weaken the firm’s balance sheet. The
stock has been more stable so far in 2015.
Avon Products was also unhelpful for the Fund’s performance. A
stronger US dollar and weak profits from emerging markets were
unhelpful for trading, but we have long believed that the
company’s issues are primarily of its own making, and that there
is the potential for it to be better managed and far more
profitable than in recent years. For example, Avon’s operating
profit margin in 2013 was 4.3%, compared with 12.5% as
recently as 2008. However, with recovery still showing little sign
of getting off the ground, the company has generated lower
levels of cash than expected – this has begun to leave Avon’s
balance sheet looking weaker than we would like. We have
conducted significant balance-sheet analysis over the past two
years. As a result, we still believe Avon offers a potentially
attractive opportunity, but we will keep its performance closely
under review.
In addition, we see the potential for higher volatility at the
broader market level coming from geopolitical problems,
central banks’ interest-rate policies, emerging market
problem areas, and the growing levels of government debt
around the world. Again, this is likely to impact on share
prices and may provide us with new investment
opportunities.
The opinions expressed herein are as at end of March 2015.
*Source: Morningstar, total return, income reinvested net of UK basic rate tax,
no initial charge, accumulation share class (acc), net of fees in GBP.
**Index (FTSE*** All-Share Total Return Index) and peer group (Investment
Association UK All Companies sector) shown for performance comparison
purposes only.
*** Source: FTSE International Limited (“FTSE”) © FTSE 2014. Please note a
disclaimer applies to FTSE data and can be found at
http://www.ftse.com/products/downloads/FTSE_Wholly_Owned_NonPartner.pdf
Fund facts
INTERIM/ANNUAL
ACCOUNTING DATES
INCOME PAYMENT DATES
31 March, 30 September
30 November
Ongoing Charges as per the
Key Investor Information Document (%)
2015
2014
‘A’ class – accumulation
1.60
1.59
‘A’ class – income
1.60
1.59
Significant purchases during the period comprised:
‘A’ class – income-2 ‡
1.60
n/a
United Kingdom Gilt 4.75% 07/09/2015, Lloyds Banking,
Drax, Centrica, BP.
‘B’ class – accumulation
1.10
1.09
‘B’ class – income
1.10
1.09
Significant sales during the period comprised:
‘I’ class – accumulation
0.85
0.84
Unilever, Imperial Tobacco, Signet Jewelers, Tesco, QinetiQ.
‘I’ class – income
0.85
0.84
Outlook
‘I’ class – income-2 ‡
0.85
n/a
We think that stock prices are overvalued, and that
we’re in an environment of significant macroeconomic
risk. We will be watchful for investment opportunities
that arise from volatility in individual stocks and at the
broader market level.
‘J’ class – accumulation
0.75
0.74
‘J’ class – income ‡
0.75
0.74
‘J’ class – income-2 ‡
0.75
n/a
‘R’ class – accumulation
1.10
1.09
‘S’ class – accumulation
0.11
0.09
We continue to look for cheap stocks that are out of favour
in the market. Our opportunity set has certainly become
more attractive during the year, though it is hard to find
outstanding value. We believe share prices now reflect high
expectations for future profitability, and we would not be
surprised if a number of companies fail to meet these
expectations. Therefore, we expect to see more volatility at
the individual stock level which could give us the opportunity
to invest if we feel that share prices over-react to bad news.
48
SHARE CLASS
The Ongoing Charges Figure (OCF) is the ratio of the Fund’s total disclosable
costs (excluding overdraft interest) to the average net assets of the Fund and
is based on the expenses of the Fund’s Annual Reports & Accounts.
‡ The OCF shown here is an estimate of the charges.
The Fund’s Annual Report & Accounts for each financial year will include
details on the exact charges made.
For more information about charges, please see section 7 of the Investec
Fund Series i Prospectus.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Summary
Share price range
Distributions
UK Special Situations Fund ‘A’ Class
(Accumulation shares)
SHARE CLASS
DISTRIBUTIONS (P) DISTRIBUTIONS (P)
AS AT 31.03.15
AS AT 31.03.14
CALENDAR YEAR
2015*
2014
2013
Highest Price
1,086.92
1,056.20
1,030.34
Lowest Price
996.00
949.24
831.99
-
24.46
21.03
2012
2011
2010
‘A’ class – accumulation
-
-
‘A’ class – income
-
-
‘A’ class – income-2
-
n/a
‘B’ class – accumulation
-
-
‘B’ class – income
-
-
Highest Price
826.17
766.87
734.08
‘I’ class – accumulation
-
-
Lowest Price
719.88
645.66
607.79
‘I’ class – income
-
-
Net revenue per accumulation share
21.14
17.99
15.91
‘I’ class – income-2
-
n/a
‘J’ class – accumulation
-
-
‘J’ class – income
-
-
‘J’ class – income-2
-
‘R’ class – accumulation
‘S’ class – accumulation
Net revenue per accumulation share
UK Special Situations Fund ‘A’ Class
(Income shares)
CALENDAR YEAR
2015*
2014
2013
n/a
Highest Price
440.07
438.17
427.43
-
-
Lowest Price
403.26
384.32
352.70
-
-
Net revenue per income share
-
10.15
8.92
2012
2011
2010
Highest Price
352.32
343.27
328.59
Lowest Price
313.50
283.45
278.64
9.21
8.05
7.30
As distributions are paid annually on 30 November, no distributions are
payable within this interim short report.
Performance
SHARE CLASS
‘A’ class – accumulation
NET ASSET VALUE NET ASSET VALUE
(P) PER SHARE
(P) PER SHARE
AS AT 31.03.15
AS AT 30.09.14
1,067.68
1,022.76
‘A’ class – income
432.28
414.14
‘A’ class – income-2
102.89
n/a
1,125.67
1,075.62
‘B’ class – income
445.86
426.11
‘I’ class – accumulation
169.81
162.06
‘I’ class – income
134.54
128.42
‘I’ class – income-2
103.21
n/a
‘J’ class – accumulation
110.46
105.36
‘J’ class – income
103.63
98.80
‘J’ class – income-2
103.16
n/a
‘R’ class – accumulation
129.76
123.99
‘S’ class – accumulation
1,124.31
1,068.88
‘B’ class – accumulation
Net revenue per income share
UK Special Situations Fund ‘A’ Class
(Income-2 shares)(6)
CALENDAR YEAR
2015*
2014
2013
Highest Price
104.75
100.00
-
Lowest Price
95.98
93.68
-
-
-
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Net revenue per income share
49
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Special Situations Fund (continued)
UK Special Situations Fund ‘B’ Class
(Accumulation shares)
CALENDAR YEAR
UK Special Situations Fund ‘I’ Class
(Income shares)(1)
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
1,145.85
1,110.63
1,079.54
Highest Price
136.95
136.35
132.30
Lowest Price
1,048.89
998.53
867.43
Lowest Price
125.29
119.22
108.69
-
28.36
24.37
-
3.65
3.16
2012
2011
2010
2012
2011
2010
Highest Price
861.20
793.58
757.70
Highest Price
108.71
100.46
-
Lowest Price
746.82
668.47
625.80
Lowest Price
96.23
86.75
-
23.90
20.45
18.06
3.21
0.73
-
Net revenue per accumulation share
Net revenue per accumulation share
UK Special Situations Fund ‘B’ Class
(Income shares)
Net revenue per income share
Net revenue per income share
UK Special Situations Fund ‘I’ Class
(Income-2 shares)(6)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
453.85
451.89
439.24
Highest Price
105.04
100.00
-
Lowest Price
415.46
395.51
361.43
Lowest Price
96.08
93.72
-
-
11.54
10.08
-
-
-
2012
2011
2011
2012
2011
2010
Highest Price
361.34
350.92
335.05
Highest Price
-
-
-
Lowest Price
320.41
289.33
284.12
Lowest Price
-
-
-
10.26
9.04
8.19
Net revenue per income share
-
-
-
Net revenue per income share
Net revenue per income share
UK Special Situations Fund ‘I’ Class
(Accumulation shares)
Net revenue per income share
UK Special Situations Fund ‘J’ Class
(Accumulation shares)(4)
CALENDAR YEAR
2015*
2014
2013
CALENDAR YEAR
2015*
2014
2013
Highest Price
172.85
167.32
162.35
Highest Price
112.43
108.78
105.46
Lowest Price
158.14
150.46
130.12
Lowest Price
102.84
97.83
98.92
-
4.47
3.84
-
2.94
-
2012
2011
2010
2012
2011
2010
Highest Price
129.18
118.60
113.16
Highest Price
-
-
-
Lowest Price
111.75
99.92
93.46
Lowest Price
-
-
-
3.73
3.12
2.70
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
Net revenue per accumulation share
50
Net revenue per accumulation share
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Special Situations Fund ‘J’ Class
(Income shares)(5)
CALENDAR YEAR
2015*
2014
2013
Highest Price
105.48
102.75
-
Lowest Price
96.49
91.72
-
-
0.73
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Net revenue per income share
2012
2011
2010
Highest Price
841.04
764.04
120.97
Lowest Price
722.60
644.21
99.43
26.97
23.04
3.39
Net revenue per accumulation share
* Up to 31 March 2015
(1) Launched 15 July 2011
(2) Consolidation 18 July 2011
(3) Launched 2 January 2013
(4) Launched 4 October 2013
(5) Launched 27 June 2014
(6) Launched 5 December 2014
High and low prices are quoted at mid valuations.
UK Special Situations Fund ‘J’ Class
(Income-2 shares)(6)
Portfolio analysis
CALENDAR YEAR
2015*
2014
2013
Highest Price
105.04
100.00
-
Lowest Price
96.08
93.72
-
-
-
-
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per income share
-
-
-
Top 10 Holdings (%)
SECURITY
Net revenue per income share
UK Special Situations Fund ‘R’ Class
(Accumulation shares)(3)
CALENDAR YEAR
2015*
2014
2013
Highest Price
132.09
128.02
124.45
Lowest Price
120.91
115.10
100.96
-
3.26
2.69
2012
2011
2010
Highest Price
-
-
-
Lowest Price
-
-
-
Net revenue per accumulation share
-
-
-
Net revenue per accumulation share
UK Special Situations Fund ‘S’ Class
(Accumulation shares)(2)
CALENDAR YEAR
2015*
2014
2013
Highest Price
1,144.32
1,103.44
1,065.04
Lowest Price
1,045.34
992.80
847.42
-
33.24
28.33
Net revenue per accumulation share
31.03.15
HSBC
8.1
GlaxoSmithKline
7.4
Royal Dutch Shell 'B' Shares
7.4
United Kingdom Treasury 4.75% 07/09/2015
6.9
BP
6.2
Grafton
5.0
Lloyds Banking
4.0
Royal Bank of Scotland
3.5
Carnival
3.4
British American Tobacco
3.1
SECURITY
30.09.14
Royal Dutch Shell 'B' Shares
9.0
HSBC
8.7
GlaxoSmithKline
6.9
BP
5.3
United Kingdom Treasury 4.75% 07/09/2015
4.5
Grafton
4.1
British American Tobacco
3.5
Royal Bank of Scotland
3.3
Unilever
3.3
QinetiQ
3.2
51
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
UK Special Situations Fund (continued)
Other information
Sector split (%)
Please refer to the important information section at the back
for changes which generally apply across the Investec
Fund Series.
Fund specific change requiring notice
After consultation with the Depositary and in accordance
with the requirements of Section 4.3 of the COLL,
shareholders were given notice of following:
2015
On 30 September 2014 of the change in allocation policy of
UK Special Situations Fund to allow Income-2 share classes.
Financials
Industrials
Oil & Gas
Consumer Services
Health Care
Bonds
Net other assets
Utilities
Consumer Goods
Telecommunications
Basic Materials
Technology
Forward Foreign Exchange Contracts
Derivatives
52
31.03.15
30.09.14
24.8
16.0
15.0
11.3
7.4
7.0
5.5
4.1
4.1
2.6
1.4
0.8
–
–
22.8
17.3
16.4
11.1
6.9
4.9
5.3
0.8
9.7
2.8
1.1
0.8
0.1
–
On 30 September 2014 of the change to the charges and
expenses policy of the UK Special Situations Fund. With
effect from 5 December 2014 100% of the charges and
expenses will be paid out of the income earned by the Fund
rather than 50% out of income and 50% out of capital.
There have been no other fundamental changes to the
Company or the Fund that required shareholder approval or
any other significant changes to the operation of the
Company or Fund requiring pre-notification.
More information about the activities and performance of the
Fund for this and previous periods can be obtained from
the ACD.
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Important information
Changes made requiring notice
Other changes
After consultation with the Depositary and in accordance
with the requirements of Section 4.3 of the COLL,
shareholders were given notice of the following:
In accordance with CASS, the ACD will operate under the
Delivery versus Payment Exemption (“DvP Exemption”) in
relation to subscriptions and redemptions with effect from
8 May 2015 (or if not, a date thereafter up to 1 June 2015).
The DvP Exemption allows the ACD two small periods of time
during which the ACD can process a Shareholder’s money
without holding it in a client money account (as detailed in
CASS, an account designed to protect a Shareholder’s rights
to money). In summary, these exceptions are:
– On 31 July 2014, of the change of the settlement period
from four business days to three business days, effective
6 October 2014.
Report and Accounts
Please contact Investec Fund Managers Limited for the long
form report and accounts of the OEIC.
Share class conversion
For share class conversions within the same Fund it may be
necessary, at the discretion of the ACD and only when it is in
the interests of shareholders for accounting purposes to do
so, defer the completion of such conversions to a
subsequent valuation point or ultimately to the valuation
point immediately following the end of the relevant Fund's
accounting period. If such a deferral is required, the ACD will
notify the shareholder requesting the conversion as soon as
practicable and will discuss with the shareholder the timing
for the completion of the conversion.
(1) for subscriptions of Shares into the Funds, where money is
provided to the ACD from the Shareholder earlier than the
relevant settlement date for the Shares, the money will be
held in the ACD’s corporate bank account and transferred
to a client money account or to the relevant Fund at the
latest by the end of the business day after the ACD
received the money from the Shareholder; or
(2) for redemptions of Shares in the Funds, where money is
received from the Fund by the ACD to pay the Shareholder
for the redemption, this money may be held in a corporate
bank account prior to payment to the Shareholder and if
not paid by the ACD to the Shareholder at the latest by the
end of the business day after receipt from the Fund, the
money will be transferred to a client money account.
Typically the ACD would only not have paid the money to
the Shareholder within this period after immediately on
receipt from the Fund if the ACD had not received
completed redemption documentation from the
Shareholder.
There have been no other fundamental changes to Funds that
required shareholder approval or any other significant changes
to the operation of the Funds requiring pre-notification.
53
OEIC | SEMI-ANNUAL SHORT REPORT INVESTEC FUNDS SERIES I
Additional information
ISA status
During the year under review, the shares of the funds met
the requirements for eligibility to be held in a stocks and
shares ISA as determined by the regulations which govern
ISAs. Investec Fund Managers Limited offer the A shares of
the funds through its own ISA plan*. *Please note that while
the Multi-Asset Protector Fund became a qualifying
investment for a stocks and shares ISA as of 1 January
2011, this may change over time. Please refer to the section
of the Supplementary Information Document titled 'ISA
Investment in the Multi-Asset Protector Fund' for further
information.
Distributions
Where a distribution is to be paid, it has been calculated as
at 31 March 2015 and will be distributed to shareholders
where applicable on 31 May 2015.
For accumulation shares income distribution payments are
deemed to be paid on 31 May 2015.
Telephone calls
Telephone calls may be recorded for training and quality
assurance purposes.
54
Investment Adviser
Authorised Corporate Director (ACD)
Investec Asset Management Limited
Woolgate Exchange,
25 Basinghall Street,
London, EC2V 5HA
Investec Fund Managers Limited
Contact address
PO Box, 9042, Chelmsford CM99 2XL
Telephone
+44 (0)20 7597 1900
Registrar
Freephone
0800 389 2299
International Financial Data Services (UK) Limited
IFDS House,
St Nicholas Lane,
Basildon,
Essex, SS15 5FS
Email
[email protected]
Indicator
online valuation service
www.investecassetmanagement.com
Registered address
Woolgate Exchange, 25 Basinghall
Street, London, EC2V 5HA
Depositary
State Street Trustees Limited
20 Churchill Place,
London, E14 5HJ
Fund Administrator
State Street Bank and Trust Company Limited
20 Churchill Place,
London, E14 5HJ
Independent Auditors
IAM/R&Ai/Interim/05/15
KPMG LLP
15 Canada Square,
Canary Wharf,
London, E14 5GL
Issued by Investec Fund Managers Limited, May 2015.
Authorised and regulated by the Financial Conduct Authority.