Winner of Money Observer 2006 Award for Best UK Equity Trust Bloomberg Money Investment Award 2006 for Best UK Investment Trust
Fund Managers Commentary
During the month of August the Net Asset Value per share ( including income ) fell by 4.62% compared with a rise of 0.56% in the benchmark. The FTSE ALL-Share Index fell by 0.87% over the month. Concerns that US subprime defaults could lead to a global credit crunch lead to a high level of stock market volatility. Markets rallied after the Fed sought to boost liquidity by cutting the discount rate by 50bp. The discount rate is the rate that the Fed is willing to lend very short-term funds to commercial banks at the discount window . Concerns over global inflation have been replaced by credit market jitters and the fear of the impact of market disruption on the availability of credit and the consequent threat of recession. The fear is that the contagion could move from the financial sector in to the real economy, hitting companies and households, thereby eroding global economic growth. The Fed is balancing its policy response to the competing demands of the real economy and a financial system in shock, and has so far avoided a cut to the Fed Funds rate.
The Fed flooded the money market with liquidity because inter-bank lending was seizing up, with banks wanting to hold on to their cash because they may need it in the weeks ahead, with each of the big banks fearing one of its peers could be sitting on huge losses in the commercial paper market. When big banks do not trust each other for a loan they demand a higher interest rate of each other. The fear is that the banks may be on the "hook" for tens of billions of dollars of emergency back-up loans needed to bail out the commercial paper market. A lot of the commercial paper was used to finance asset-backed securities, some of which were for subprime mortgages in the US. Most of these loans were put in place in the belief that they would never be called upon, and were parcelled up into collateralised debt obligations and sold on to somebody else. Investors in the commercial paper market have gone on a buyers' strike and banks are facing demands to settle these loans. Many of the buyers of collateralised debt obligations were highly leveraged hedge funds. As the banks who lent to these hedge funds got nervous, they demanded more security which could only be raised by selling assets, while nervous investors also wanted to take out their cash, necessitating further asset sales. The hedge funds cannot sell their collateralized debt obligations because of the buyers' strike and complete lack of liquidity in the commercial paper market, so have had to sell their better quality and liquid assets like blue chip shares. Hence the subprime conflagration leapt over the firebreak and ignited the tinder under the equity markets. Similarly in the LBO market banks have got stuck with a number of loans that they wanted to syndicate on to others in the market, taking a fee in the process. This has also had a knock-on effect on the equity market as leveraged buyouts have been one of the factors boosting share prices.
BHP BILLITON announced a stellar set of final results, forecasting robust growth in Asian economies, particularly China. BHP has worked hard to ramp up production, while the potential value of the uranium deposits in their Olympic dam mine is significant. Diversification across both a range of commodities and exchange rate exposures help to make it a less risky investment than some of its smaller peers. CAPE INDUSTRIES, the international provider of essential support services to the energy sector acquired the Australian based Total Corrosion Control group of companies, which offer a wide range of industrial services to blue chip clients in the mining, oil, gas and construction industries.
The Fed should be able to buy enough time to restore confidence in markets, but the likelihood is a period of recognising losses, tightening credit conditions and deleveraging, so expect continued volatility. The corporate sector is in rude health and does not need to borrow. Companies are undertaking big capital expenditure programmes and are likely to be looking at strategic and value-creating merger opportunities. A mid-cycle growth slowdown could provide relief from higher interest rates and the threat of inflation and in time provide the backdrop for an expansion in multiples.
/10 Year Total Return Performance:
Significant Holdings - either those
more than 5% of Gross Assets (inc.
Income) or Top Ten Holdings (%): Analysis of Assets (£m):
Ocean Wilsons Holdings / 30.4 / Total Investment / 246.9Resolution / 9.4 / Net current assets/(liabs) / (1.7)
BRIT Insurance Holdings / 4.3 / Total assets / 245.2
Hargreaves Services / 2.6 / Short-term borrowing / 0.0
Ark Therapeutics / 2.4 / Net assets (ex Income) / 245.2
Scottish&Southern Energy / 2.3
BP / 2.3 / Gearing / 0.0%
BG Group / 2.3 / Net Cash / 0.2
Eni / 2.1
HSBC Holdings / 2.0 / Sector Analysis (%):
Strategic / 30.4
Total
/ 60.1 / Smaller Cap / AIM / 25.0Natural Resources / 10.9
No. of Holdings / 58 / Closed Life Funds / 9.4
Property (inc.Commitments) / 7.9
+ unquoted / Large cap / 6.2
Insurance
(includingCCommitments / 5.0
Utilities / 4.2
Mid Cap / 3.0
Investment Trusts / 2.0
Cash Funds / 0.2
of which Unquoted / 5.0
There are NO Listed Investment Company holdings where the investee company has a policy that does not limit them to investing less than 15% of gross assets in other listed Investment Companies (%):
Share Price on £100 (£):
/ Ordinary / ‘A’ Ordinary1 Year / 115.90 / 119.70
3 Years / 252.70 / 247.80
5 Years / 371.30 / 368.90
10 Years / 426.10 / 440.30
Performance Statistics (%):
/Fin.
Ytd /1 Yr
/3 Yrs
/5 Yrs
/10 Yrs
Net Asset Value (Ex Income)
/ -0.8 / 27.9 / 127.9 / 213.4 / 293.0Tot.Ret. on Net Asset Value(#)
/ 0.0 / 29.5 / 137.6 / 235.5 / 349.6Benchmark
/ 2.8 / 6.7 / 20.4 / 34.7 / 77.0Share Price – Ordinary
/ -11.2 / 15.9 / 152.7 / 271.3 / 326.1Tot.Return on Ord. Shs (#)
/ -10.5 / 17.3 / 163.4 / 300.1 / 394.3Share Price – ‘A’ Ordinary
/ -4.4 / 19.7 / 147.8 / 268.9 / 340.3Tot.Return on ‘A’Ord.Shs(#)
/ -3.6 / 21.3 / 158.8 / 298.5 / 415.5FTSE All-Share Index
/ -0.7 / 8.4 / 47.2 / 59.3 / 43.2Tot.Return FTSE All-Share (#)
/ 0.9 / 12.2 / 63.9 / 91.4 / 98.7Market Data
/Share Price (p)
/NAV (p)
Ex. Income
/(Discount) / Premium (%)
/Gross Yield (%)
Ordinary
/ 997.00 / 1021.73 / (2.4) / 1.2‘A’ Ordinary
/ 977.50 / 1021.73 / (4.3) / 1.3FSA - Standardised Performance Information
12 months Period
(Bid to Bid) / 2002Q2 to 2003Q2 / 2003Q2 to 2004Q2 / 2004Q2 to 2005Q2 / 2005Q2 to 2006Q2 / 2006Q2 to 2007Q2
Total Return
%age – Ord / -12.88 / 39.30 / 68.16 / 23.09 / 47.91
Total Return
%age –AOrd / -15.74 / 38.13 / 61.97 / 24.78 / 43.55
Fund Details:
Fund Manager: / John Alexander of Hansa Capital Partners LLPLaunch Date: / 1912 (name changed to Hansa Trust in October 2001)
Investor Sector: / UK Growth
Capital Structure: / 8,000,000 Ordinary shares of 5p
16,000,000 ‘A’ non voting Ordinary shares of 5p
Year End: / 31st March
Dividend: / Final - ex date June, payment date August
Interim - ex date and payment date December
Directors: / R.A. Hammond-Chambers, Chairman
W.H. Salomon, Lord Borwick,
Prof. G.E. Wood
Ownership / Board of Directors and connected parties own or are interested in 52.5% of the Ordinary shares.
Managers: / Hansa Capital Partners LLP – authorised and regulated by the Financial Services Authority (FSA)
Management Fee: / Maximum of 1.00% per annum (payable by the Trust)
Benchmark: / 3 year rolling average composite of 5 year Govt.Bond Yield (with interest being re-invested semi-annually) + 2% from 1 April 2003
Investment Goals, Policy and Benchmark / To achieve growth of shareholder value Hansa Trust PLC invests in a portfolio of special situations, where individual holdings or specific sectors may constitute a significant proportion of the portfolio or that of the equity of the companies concerned. This investment approach may produce returns which are not replicated by movements in any market indices. Performance is measured against an absolute benchmark derived from the three-year average rolling rate of return of the five year government bond with interest being re-invested semi-annually, plus 2 percent. Investments are intended to add value over the medium to longer term through a non-market correlated, conviction based investment style.
FSA Investment Restriction: / It is the stated policy of the Board not to limit investments in Investment Companies to less than 15% of gross assets as detailed in the FSA Listing Rules Chapter 21.20 (i)
Net Asset Value per share is calculated in accordance with the guidelines of the Association of Investment Companies in that income received by the company in the period since the last annual accounts is excluded. Total net assets are stated inclusive of income received. Hansa Trust PLC is a member of the Association of Investment Companies.
Risk warning The information provided here has been issued by Hansa Capital Partners LLP, which is regulated by the Financial Services Authority. Share and performance information has been compiled by Hansa Capital Partners LLP. Past performance is not necessarily a guide to future performance as market and exchange rate movements may cause the value of shares and income from them to fall as well as rise, and an investor may not get back the amount invested. Investment Trust share prices may not fully reflect underlying net asset values. The spread on Investment Trusts typically averages 1-2% each way on the mid-market price (the price halfway between the bid and offer prices). However, investors wishing to invest in Hansa Trust ‘A’ shares should note that the market for these shares is at times quite illiquid which leads to a large spread between the buying and the selling prices, the bid to offer spread. For example, for the ‘A’ shares, as at 31 August 2007 the bid to offer spread was 1.49%*. *Source: Bloomberg /
Fund Codes:
Sedol No: / O 0787972 – AO 0787983ISIN No: / GB0007879228
RIC Code: / HAN.L (Ordinary)
HANA.L (‘A’ Ordinary)
Bloomberg Code: / HAN LN (Ordinary)
HANA LN (‘A’ Ordinary)
Share price information is also available from FT Cityline by dialling the following numbers:
Ordinary shares / 0906 003 3954
or / 0906 843 3954
‘A’ Ordinary shares / 0906 003 3955
or / 0906 843 3955
(use last 4 digits as a code when prompted)
Investment Routes:
Available within wrapper products:
· ISA· PEP
· Savings Schemes inc. MileStones
Available outside wrapper:
· Direct Dealing through investors’ own stockbroker facilities
Online investment and account management available for wrapper products at www.closeinvestments.co.uk
Current and historic factsheets are available on our website at www.hansagrp.com# NOTES: -
Total Returns on Net Asset Value (Ex.Income) and Shares has been sourced from unaudited internal management information and from the Close WINS Investment Trusts database, and assumes that all dividends are re-invested.
Other than Standardised Performance Information prices quoted are mid price and performance returns are mid to mid.
Contact Details:
For further information from
Investment Manager & Corporate Secretary
Hansa Capital Partners LLP
50 Curzon Street
London
W1J 7UW
Phone:
Fax:
Website:
E-mail: / 020 7647 5750
020 7647 5770
www.hansagrp.com
hansatrustenquiry
@hansacap.com
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