The Jupiter Global Fund - Jupiter Asset Management

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the jupiter global fund Jupiter Europa ■■Jupiter Europa* Schedule of Investments as at 30 September 2012 (continued) Quantity Description Fair Value € Fair Value as a Percentage of Net Assets % Transferable securities and money market instruments admitted to an official exchange listing Luxembourg 1,582,071 2.92 85,115 IVS Group 831,786 1.54 10,075 RTL Group 750,285 1.38 The Netherlands 3,821,806 7.06 28,952 ASML Holding 1,204,982 2.22 122,177 Reed Elsevier 1,275,528 2.36 50,217 Ziggo 1,341,296 2.48 Norway 2,935,249 5.42 135,344 DNB Holding 1,294,068 2.39 74,691 Orkla 445,827 0.82 30,742 Yara International 1,195,354 2.21 Portugal 1,200,639 2.22 96,495 Galp Energia ‘B’ 1,200,639 2.22 Sweden 2,503,459 4.62 28,181 Modern Times Group ‘B’ 983,542 1.81 230,983 SEB ‘A’ shares 1,519,917 2.81 Switzerland 5,866,839 10.83 22,695 Actelion 890,732 1.64 14,782 Dufry Group 1,407,326 2.60 7,936 Roche Holding 1,160,063 2.14 6,809 Syngenta 1,994,302 3.68 36,190 Temenos Group 414,416 0.77 United Kingdom 698,754 1.29 820,121 ImmuPharma 698,754 1.29 Total Equities 46,844,747 86.49 Total transferable securities and money market instruments admitted to an official exchange listing 46,844,747 86.49 Other Net Assets 7,319,403 13.51 Net Assets 54,164,150 100.00 *As at 18 October 2011, the name of the Fund was changed from Jupiter European Absolute Return to Jupiter Europa. The accompanying notes form an integral part of these financial statements. 80
the jupiter global fund Jupiter Strategic Total Return ■■Jupiter Strategic Total Return Review of Portfolio as at 30 September 2012 Performance NAV 30.09.12 30.09.11 % Change Class L US Dollar Shares USD 10.01 USD 9.90 1.11% Class L Euro Shares EUR 10.10 EUR 9.98 1.20% Class L Sterling Shares GBP 10.06 GBP 9.93 1.31% Class L Swiss Franc Shares CHF 9.89 CHF 9.84 0.51% Class I US Dollar Shares USD 10.09 USD 9.93 1.61% Class I Euro Shares EUR 10.21 EUR 10.03 1.79% Class I Sterling Shares GBP 10.16 GBP 9.97 1.91% Class I Swiss Franc Shares CHF 10.00 CHF 9.90 1.01% Performance Review In the period to 30 September 2012, the total return for the euro class was 1.20% compared with a return of 0.62% for its benchmark, the Euribor 1 month TR index. The Sterling, Swiss franc and US dollar classes’ total returns were respectively 1.31%, 0.51% and 1.11% compared with their benchmarks. Market Review In the period under review, markets were caught between opposing forces. One the one hand, the chronic inability of eurozone politicians to address the financial problems arising from their political Frankenstein made life unnecessarily harsher for millions of people. Austerity, once regarded as a medicine, became the poison that enervated the global economy. To counter this and the other contractionary forces arising from the mass deleveraging of commercial bank balance sheets, central banks unleashed a nearrolling programme of unorthodox monetary policies to manipulate the price of financial assets. However, despite renewed attempts by EU leaders to formulate a convincing response to the sovereign debt crisis such as installing technocratic governments in Greece and Italy, investors continued to worry about the impact on global growth. Investor sentiment was deeply pessimistic at the start of 2012. There were well-founded fears that eurozone banks lacked the wherewithal to refinance maturing sovereign debt due to be rolled-over in the spring as several member states had lost effective access to bond markets. Circumstances soon changed. The European Central Bank (ECB)used its Long Term Refinancing Operation (LTRO) to offer commercial banks unlimited cheap three-year loans in exchange for collateral of varying quality. The yields on Italian and Spanish sovereign debt fell sharply as banks repurchased their debt, reducing yields and thus the cost of financing deficits. This backdoor monetisation was intended to buy time for politicians to agree on sensible fiscal policies but it also permitted core banks to divest themselves of peripheral debt and repatriate capital. The LTRO transformed a solvency crisis into a liquidity-driven rally. Equity markets responded positively aided by supportive US economic data and indications that China was easing fiscal policy. The UK economy remained weak and its budget deficit high. On 2 March 2012, all EU member states excepting the UK and the Czech Republic, signed the Fiscal Stability Treaty as a step towards fiscal union. This required them to run a budget that was either balanced or in surplus. Such requirements were likely to intensify preexisting recessionary conditions in some member states. Almost immediately, the new government in Spain announced it would flout these rules. Shortly afterwards it became the fourth country to require a bailout when it was forced to nationalise 90% of Bankia, a conglomerate of seven regional savings banks. Cyprus became the fifth just days before it took over the rotating presidency of the EU. A profound change in mood swept across markets over the summer after Mario Draghi said the ECB was prepared to do whatever it took to preserve the euro. Unlike equities, sovereign bond and currency markets continued to react to the intensity of Europe’s problems. An internal flight to safety saw yields for the two-year bonds of perceived havens (Germany, Austria, Netherlands, Finland and France) turn negative whereas debt servicing costs for Spain and Italy remained unsustainably high. Elsewhere in the world, central banks redoubled their efforts to boost growth in the face of a global slowdown. In September, the ECB’s commitment to unlimited, direct purchases of sovereign debt (subject to conditions) and the US Federal Reserve’s move to open-ended Quantitative Easing underpinned further gains in equities. Policy Review The aim of the Fund is to generate positive long-term returns across varying market conditions. In order to help achieve this while minimising volatility, we use a wide range of different, offsetting strategies to respond to dynamic changes in financial markets. In the period under review, the tendency of stock markets to switch almost daily between ‘risk on’ and ‘risk off’ modes created much turbulence. In order to eschew unwanted volatility we maintained our net equity exposure at a very low level, typically around 2.5%, preferring to gain equity exposure by holding convertible bonds since they also offered significant downside protection. Our cautious position in risk assets helped to protect the Fund in 2011 but also allowed it to gain ground in early 2012 and again in late summer/early autumn. The other reason we maintained a low equity exposure was because we had sizable short positions in some government bonds and sovereign debt that we considered to be extremely overvalued. There is a positive correlation between long equity and short bonds and we wished to avoid doubling up. 81
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The Jupiter Global Fund - Jupiter Asset Management

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