High-conviction investment in UK equities

Jupiter UK Growth Investment Trust 6 March 2017
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Jupiter UK Growth Investment Trust

High-conviction investment in UK equities

Investment trusts

6 March 2017

Price

324.0p

Market cap

£45m

AUM

£55.0m

NAV*

325.6p

Discount to NAV

0.5%

NAV**

330.8p

Discount to NAV

2.1%

*Excluding income. **Including income. As at 2 March 2017.

Yield

2.2%

Ordinary shares in issue

14.0m

Code

JUKG

Primary exchange

LSE

AIC sector

UK All Companies

Benchmark

FTSE All-Share

Share price/discount performance

Three-year performance vs index

52-week high/low

324.0p

250.0p

331.6p

251.3p

**Including income.

Gearing

Gross*

17.0%

Net*

9.0%

*As at 31 January 2017.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

Jupiter UK Growth Investment Trust is a research client of Edison Investment Research Limited

Jupiter UK Growth Investment Trust (JUKG) aims to generate long-term capital growth from a concentrated portfolio of predominantly UK equities. Manager Steve Davies runs the portfolio with the same contrarian, high-conviction approach as the much larger, well-established Jupiter UK Growth unit trust. He is “genuinely excited” about JUKG’s current portfolio, which he believes gives him the opportunity to make good the relative underperformance versus the FTSE All-Share benchmark following the Brexit vote. Davies is unconstrained by the benchmark; he currently has zero weightings in the oil & gas and utilities sectors.

12 months ending

Jupiter UK Growth UT
(%)

JPG/JUKG share price
(%)

JPG/JUKG NAV
(%)

Blended benchmark* (%)

FTSE All-Share
(%)

FTSE
World
(%)

28/02/13

25.4

13.3

17.6

14.8

14.1

16.2

28/02/14

26.8

23.5

13.6

12.1

13.3

8.6

28/02/15

10.1

5.7

4.5

8.7

5.6

17.1

29/02/16

(7.3)

(5.8)

(5.7)

(5.6)

(7.3)

(1.5)

28/02/17

7.8

12.8

12.0

23.7

22.8

37.4

Source: Thomson Datastream. Note: All % on a total return basis in GBP. *Benchmark is 75% FTSE All-Share and 25% FTSE World ex-UK until 17 April 2016, and FTSE All-Share thereafter. JUKG track record is for Jupiter Primadona Growth/Jupiter Global Trust until 18 April 2016.

Investment strategy: Bottom-up stock selection

Davies has a sell-side analyst background and uses this experience to build detailed financial models, aiming to select companies trading on reasonable valuations that have the potential to generate meaningful long-term capital growth. The portfolio is concentrated, typically containing c 35 stocks with either recovery potential or secular growth. JUKG is broadly invested in five themes: financials; UK domestic economy; the connected world; brands, travel & leisure; and tomorrow’s world. Up to 20% may be invested in overseas equities (currently less than 10%) and gearing of up to 20% of net assets is permitted.

Market outlook: Valuations looking more full

In 2016, shareholders enjoyed meaningful total returns from both UK and overseas equities. In the UK, share prices more than recovered from the knee-jerk move down following the result of the European referendum, as focus turned to the positive effects of sterling weakness on companies with overseas earnings. As a result, the forward P/E valuation of UK companies is now above the 10-year average. For investors wishing to gain exposure to UK equities a fund with an unconstrained approach, including a focus on value stocks, may be of interest.

Valuation: Nil-discount control policy

JUKG’s current 2.1% share price discount to cum-income NAV compares to the average 1.6% over the last 12 months (range of a 6.7% premium to a 6.4% discount). The trust has a nil-discount control policy, aiming to maintain the share price at close to NAV. Following the change in mandate in April 2016 and the focus on capital growth, in the current financial year, JUKG will move to paying a single annual dividend, which is likely to be lower than the dividend paid in FY16.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

Jupiter UK Growth Investment Trust aims to achieve capital appreciation by holding predominantly listed investments. It invests in a concentrated portfolio made up of the manager’s best ideas from any sector, with typically a bias towards FTSE 100 stocks. The trust was known as Jupiter Global Trust from November 2015 until April 2016 and was previously Jupiter Primadona Growth Trust. It adopted its new name, fund manager, investment strategy and FTSE All-Share benchmark on 18 April 2016.

22 September 2016: Annual report for 12 months ending 30 June 2016. NAV TR -13.1% versus composite benchmark +5.5%.

20 September 2016: Declaration of fifth interim dividend of 0.6p per share.

15 July 2016: Declaration of fourth interim dividend of 1.6p per share.

Forthcoming

Capital structure

Fund details

AGM

November 2017

Ongoing charges

1.13%

Group

Jupiter Unit Trust Managers

Interim results

March 2017

Net gearing

9.0%

Manager

Steve Davies

Year end

30 June

Annual mgmt fee

0.5% (see page 7)

Address

The Zig Zag Building, 70 Victoria St, London SW1E 6SQ

Dividend paid

Annually

Performance fee

Yes (see page 7)

Launch date

June 1972 (April 2016 for new strategy)

Trust life

Indefinite

Phone

+44 (0) 20 3817 1000

Continuation vote

No

Loan facilities

£10m with Scotiabank

Website

www.jupiteram.com/JUKG

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

Dividends were historically paid quarterly, but moved to a single annual dividend from FY17. Owing to a change in dividend policy in Q114, only three dividends were paid in FY14.

A nil-discount management policy was adopted in FY14 and has been retained under the new strategy. The board aims to maintain the share price close to par through the use of regular share buybacks or allotments.

Shareholder base (as at 11 December 2016)

Portfolio exposure by geography, adjusted for net gearing
(as at 31 January 2017)

Top 10 holdings (as at 31 January 2017)

Portfolio weight %

Company

Sector

31 January 2017

31 July 2016

Barclays

Financials

7.5

5.0

Lloyds Banking Group

Financials

7.2

5.9

Legal & General

Financials

6.1

5.6

Dixons Carphone

Consumer services

6.1

6.2

Taylor Wimpey

Consumer goods

4.5

4.1

Apple

Technology

4.2

3.4

Thomas Cook

Consumer services

4.1

N/A

International Consolidated Airlines

Consumer services

4.0

N/A

Sirius Minerals

Basic materials

3.8

N/A

ITV

Consumer services

3.7

3.6

Top 10

51.2

44.8

Source: Jupiter UK Growth IT, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in July 2016 top 10.

Market outlook: More modest index returns likely

Having shaken off volatility early in 2016 following concerns about Chinese economic growth and weak commodity prices, and a period of heightened investor risk aversion, both UK and global equities delivered significant returns for shareholders during the year (Exhibit 2, left-hand side); this performance seems unlikely to be repeated in 2017. In the UK, investors shrugged off the outcome of the UK’s European referendum, focusing on the benefits of a weaker sterling to companies with overseas earnings. As a result, the valuations of UK equities now look less appealing in aggregate – as shown in Exhibit 2 (right-hand side) the forward P/E ratio of the Datastream UK index is towards the high end of its range, and c 20% above its 10-year average; price-to-book ratio is also 5% above its average of the last 10 years. For investors wanting exposure to UK equities, a high-conviction fund with a long-term, value-aware investment approach, may be of interest.

Exhibit 2: Market performance and valuation

UK and rest of the world equity markets over 10 years

Valuation metrics of Datastream UK index

 

Last

High

Low

10-year
average

Last as % of
average

P/E 12 months forward (x)

14.2

15.6

7.4

12.0

118

Price to book (x)

1.9

2.5

1.2

1.8

105

Dividend yield (%)

3.4

6.6

2.7

3.5

98

Return on equity (%)

6.0

21.2

2.5

11.0

54

Source: Thomson Datastream, Edison Investment Research, Bloomberg. Note: Index valuations at 27 February 2017.

Fund profile: Actively managed, concentrated portfolio

JUKG was originally launched in 1972 as the Jupiter Primadona Growth Trust (JPG); it was renamed the Jupiter Global Trust between November 2015 and April 2016. In April 2016, the mandate changed, moving from a portfolio of UK equities and global funds to a concentrated portfolio of c 35 mainly UK equities that mirrors the strategy of the £1.4bn Jupiter UK Growth unit trust. Both funds are managed for long-term capital growth by Steve Davies, Jupiter’s Head of Strategy, UK Growth. Since the change in mandate, JUKG is benchmarked against the FTSE All-Share index, although the manager follows a high-conviction, unconstrained investment approach. Stocks are broadly split between companies with recovery potential (currently 56%) and those with secular growth (44%). Up to 20% may be held in non-UK stocks; currently this is c 10% comprising investments in Apple, BMW and Manchester United. Gearing of up to 20% of net assets is permitted. JUKG has continued with the nil-discount policy that was adopted by JPG in 2014.

The fund manager: Steve Davies

The manager’s view: Finding opportunities

When selecting stocks, the manager looks to distinguish between stocks where likely developments are already priced in and those whose share prices are anomalous, and therefore provide potential upside opportunity. While he adopted a mild recession outlook, which feeds into his company models and target prices, following the outcome of the UK’s European referendum, he notes that so far, the UK economy has held up better than generally expected. However, Davies comments that a lot of UK domestic companies (as opposed to those with overseas earnings), are pricing in a gloomy economic outlook, which offers a favourable risk/reward profile for active stock pickers.

Consumer disposable income, measured by the Asda Income Tracker, suggests that growth is slowing as higher food and fuel prices are feeding through; however, the manager does not expect a negative growth number, as occurred in 2011. He notes that the UK job market is strong – employment is at an all-time high and wage growth is running around 2.5% pa – and mortgage costs are declining, funded by lower rates on bank deposits. As a result, the manager retains several UK domestic companies in the portfolio such as Dixons Carphone and Taylor Wimpey.

Dixons made a c £450m profit in FY16. The manager suggests that if electrical sales were to decline by 10%, there would be a £70m hit to profits. However, he believes the company could reduce marketing spend by c £30m and could generate c £40m in merger synergies through its programme of combining Currys, PC World and Carphone Warehouse stores (leading to lower rent costs), which would keep profits flat. In addition, Dixon’s Nordic business could contribute more, due to the fall in value of sterling in a declining sales environment. Davies suggests that Taylor Wimpey’s shares are pricing in a dividend cut. The company has committed to a 14p dividend in FY17 and the shares are currently yielding c 8%. The manager has stress-tested his Taylor Wimpey model, factoring in a 20% decline in prices and 30% fewer sales – profits would halve, but the company would likely stop spending money on new land, which would enable cash flow to build, thus supporting the dividend. He believes that the dividend would only be at risk if the housing market collapsed and there was no industry recovery for two to three years.

Asset allocation

Investment process: Investment in recovery and growth

Manager Steve Davies splits the JUKG portfolio into two ‘buckets’ – recovery and growth. Recovery stocks are companies that are viewed as unattractive by investors, but which the manager believes have a potential catalyst such as cyclical recovery or a change in management or strategy. At the time of purchase, recovery stocks typically trade on a forward P/E multiple of less than 10x with a free cash flow yield of more than 10% (for financials, they typically trade below book value). Growth stocks are selected for their sustainable income and predictable business models, while being attractively valued. For these companies, a mixture of sales growth and operating leverage should lead to 12-15% annual total shareholder returns. At end-December 2016, JUKG was split broadly 56%/44% between recovery and growth stocks. This is markedly different from the 35%/65% split respectively in our June 2016 initiation report, due to the Brexit vote; however, rather than indicating a wholesale change in the portfolio make-up, the manager comments that some of the UK domestic companies have been recategorised as recovery rather than growth.

JUKG currently has five broad themes within its portfolio: financials; UK domestic economy; the connected world; brands, travel & leisure; and tomorrow’s world. Financials has been broadened from UK banks to include other companies such as Legal & General, which has a large and growing dividend and is a beneficiary of higher interest rates. The largest position in JUKG’s portfolio is Barclays, which Davies says is a self-help situation; it has strong UK operations generating a high return on equity, its investment banking operations are improving, helped by competition leaving the industry, and Barclays is exiting its underperforming non-core businesses. UK domestic economy comprises companies that are more cyclically exposed, such as furniture retailer DFS and estate agent Countrywide, alongside companies with more resilient business models such as ITV and WHSmith, where strong results from its travel locations and benefits from cost reductions more than outweigh a tough sales environment on the high street. The connected world focuses on the key growth areas of devices, connection, content & data and e-commerce – holdings include Apple and online portal Zoopla. Brands, travel & leisure encompasses companies with structural growth characteristics, such as Merlin Entertainment, Manchester United and cruise ship operator Carnival. The fifth portfolio theme, tomorrow’s world, is a relatively new addition and is essentially ‘patient capital’ where the manager has a three- to five-year time horizon rather than a more typical two- to three-year view. Holdings include Angle, which is a specialist diagnostics company. Its proprietary Parsortix cell separation platform can be used for detecting and harvesting very rare circulating tumour cells from blood samples – the resulting liquid biopsy enables the analysis of these cells for precision cancer care.

The manager builds detailed financial models for potential investee companies, aiming to highlight stocks which are selling at a significant discount to the estimated intrinsic value of their underlying businesses. Jupiter has a keen focus on corporate governance, and the manager suggests that meeting with board members may provide a different perspective than can be achieved by meeting a company’s chief executive or finance director.

Current portfolio positioning

As shown in Exhibit 3, JUKG is heavily overweight consumer services versus the FTSE All-Share index and as a further illustration of his unconstrained investment approach Davies retains zero exposure to oil & gas and utilities. He expects the oil price to remain in a range of $40-60, suggesting that OPEC has a difficult decision to make given that efficient North American shale producers are coming back onstream very quickly; if Saudi Arabia does not roll forward its production cuts in the summer, the oil price could fall to the bottom of this range. Davies also does not hold any consumer staples companies as he considers them expensive. In a rising interest rate environment, these stocks should underperform the broader market, while financial stocks should be well positioned; this sector comprises more than a quarter of JUKG’s portfolio.

Exhibit 3: Portfolio sector exposure vs benchmark (% unless stated)

Portfolio end-January 2017

Portfolio end-July 2016

Change (pp)

Index weight

Active weight vs index (pp)

Trust weight/ index weight (x)

Consumer services

39.3

39.7

-0.4

11.4

27.9

3.4

Financials

27.8

25.1

2.8

25.9

1.9

1.1

Consumer goods

9.9

8.8

1.1

14.8

-4.9

0.7

Industrials

7.5

8.7

-1.2

10.7

-3.2

0.7

Telecommunications

5.9

7.7

-1.8

3.7

2.2

1.6

Technology

3.8

3.3

0.5

0.8

3.0

4.6

Basic materials

3.4

2.6

0.8

7.7

-4.3

0.4

Healthcare

1.9

1.3

0.6

8.8

-6.9

0.2

Other

0.5

2.9

-2.4

16.2

-15.7

0.0

100.0

100.0

100.0

Source: Jupiter UK Growth Investment Trust, Edison Investment Research. Note: Adjusted for net gearing.

Davies suggests that mergers and acquisitions could be a key theme in the markets during 2017. JUKG has had two recent takeover approaches for portfolio holdings; following 21st Century Fox’s bid for Sky at a c 25% premium, the Sky position was sold. In February 2016, Tesco made a bid for JUKG’s Booker holding – the manager says he can see the strategic logic of the deal and will assess the outlook for Tesco to determine its upside potential. If he decides not to accept the Tesco offer, he suggests that there are plenty of other holdings in the portfolio that he can add to.

The manager considers top 10 holding, Sirius Minerals, the most exciting stock in the portfolio. Its stock price was very weak in November 2016, following the announcement of a $1.2bn fund raise (JUKG participated in the offering, which was successfully completed in a volatile week prior to the US election). Davies believes that although some future debt funding may be required, sufficient equity has now been raised to enable the construction phase of the project to be completed, which has further de-risked the investment case for Sirius. The manager suggests that Sirius is well suited for a long-term investor, such as an investment trust – he believes that when running at full capacity, annual profits could reach £1bn compared to Sirius’s current market cap of c £750m.

Performance: Improved near-term performance

Given JUKG’s change in strategy in April 2016, the relevant performance periods highlighted below are one, three and six months and since inception. In Exhibit 4 (right-hand side), since inception JUKG’s share price and NAV total returns of 8.5% and 10.4% respectively are meaningfully behind the FTSE All-Share index total return of 20.5%. A significant period of relative underperformance followed the Brexit vote in June 2016; this is highlighted starkly in Exhibit 6. A number of JUKG’s UK domestic holdings fell by 30-50% – the largest negative contributors to performance included Dixons Carphone, Thomas Cook and the UK bank holdings. However, as shown in Exhibit 5, near-term relative performance is improving. JUKG has outperformed the FTSE All-Share benchmark over one and three months in both share price and NAV total return terms. Bank stocks have been significant contributors to better relative performance, due to rising bond yields, higher investment banking activity and self-help initiatives. Davies also comments that JUKG has benefited in relative terms from not holding companies that have issued large profit warnings, such as BT and Pearson.

Exhibit 4: Investment trust performance to 28 February 2017

Price, NAV and benchmark total return performance, one-year rebased

Price, NAV and benchmark total return performance (%)

Source: Thomson Datastream, Edison Investment Research. Note: Three and five-year performance figures annualised. Note: Blended benchmark is 75% FTSE All-Share and 25% FTSE World ex-UK until 17 April 2016 and FTSE All-Share thereafter. *SI = since JUKG strategy inception, 18 April 2016.

Exhibit 5: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to blended benchmark

0.4

2.2

(1.2)

(8.8)

(11.4)

(3.6)

(8.7)

NAV relative to blended benchmark

1.9

3.5

(0.3)

(9.5)

(13.1)

(9.7)

(7.3)

Price relative to FTSE All-Share

0.4

2.2

(1.2)

(8.2)

(6.5)

1.3

(8.7)

NAV relative to FTSE All-Share

1.9

3.5

(0.3)

(8.8)

(8.2)

(5.1)

(7.3)

Price relative to FTSE World

(0.5)

1.6

(5.6)

(17.9)

(29.1)

(21.4)

(16.7)

NAV relative to FTSE World

1.0

2.8

(4.8)

(18.5)

(30.4)

(26.3)

(15.5)

Source: Thomson Datastream, Edison Investment Research. Note: Data to end-February 2016. Geometric calculation.

Exhibit 6: NAV total return performance relative to blended benchmark over one year

Source: Thomson Datastream, Edison Investment Research

Discount: Shares continue to trade in a narrow range

Following on from the adoption of a nil-discount control policy by JPG in February 2014, the shares have traded in a narrow range, typically between a 2% premium and a 2% discount. The current 2.1% share price discount to cum-income NAV compares to the average of 1.6% over the last 12 months and the averages of the last three, five and 10 years of 1.4%, 4.3% and 7.0% respectively. As shown in Exhibit 1, during FY17 there have been active share repurchases; in the financial year to date, 1.1m shares have been bought back at a cost of £3.1m.

Exhibit 7: Share price premium/discount to NAV (including income) over three years (%)

Source: Thomson Datastream, Edison Investment Research

Capital structure and fees

JUKG is a conventional investment trust with one class of share; there are currently 14.0m ordinary shares in issue. The trust has a £10m borrowing facility with Scotiabank of which £9.5m was drawn at end-January 2017 (gross gearing of 17.0%).

From 18 April 2016, the annual management fee was reduced from 0.80% to 0.50% of net assets up to £150m, falling to 0.45% between £150m and £250m of net assets and 0.40% above £250m. This was designed to make JUKG’s fees more competitive with both open- and closed-ended peers. A performance fee is payable subject to a high watermark (the NAV at the end of the prior financial year). There is a 2% hurdle over the FTSE All-Share index total return performance, of which JUKG may earn a performance fee of 15% of outperformance. Total fees (management and performance fees) are capped at 2% of year-end adjusted net assets. At end-January 2017, Jupiter estimated the total expense ratio at 1.13%; this is 41bp lower than six months before.

Dividend policy and record

Having paid quarterly dividends since FY14, JUKG will pay annual dividends from FY17. Given there is now more of a focus on capital growth, the FY17 dividend is likely to be lower than in prior years. Based on the 7p total dividends paid in FY16, the dividend yield is currently 2.2%.

Peer group comparison

Exhibit 8 shows the members of the AIC UK All Companies sector. We have also included Jupiter UK Growth UT as a comparator. It is important to remember that the majority of JUKG’s performance data relates to the old global mandate. Both JUKG and Jupiter UK Growth UT NAV total returns lag the investment trust weighted averages over the periods shown. In terms of risk-adjusted returns, as measured by the Sharpe ratio, JUKG is modestly behind the investment trust weighted average over one and three years. Its discount is narrower than average, ranking third out of 18 funds, and its gearing is the highest in the sector. JUKG’s dividend yield is above the sector weighted average, ranking eighth out of 18 funds.

Exhibit 8: AIC UK All Companies investment trusts as at 23 February 2017

% unless stated

Market cap £m

NAV TR 1 Year

NAV TR 3 Year

NAV TR 5 Year

NAV TR 10 Year

Sharpe 1y (NAV)

Sharpe 3y (NAV)

Discount (ex-par)

Ongoing charge

Perf. fee

Net gearing

Dividend yield (%)

Jupiter UK Growth Trust

44.3

13.8

10.3

44.5

82.3

(0.1)

(0.4)

(0.8)

1.1

Yes

117

2.2

Jupiter UK Growth UT

1,387.6

8.9

7.7

68.8

68.3

(0.2)

(0.4)

N/A

1.8

No

N/A

1.1

Aberdeen UK Tracker

337.5

25.7

20.1

52.5

69.2

0.5

(0.2)

(3.7)

0.3

No

100

3.2

Artemis Alpha Trust

112.5

20.8

7.2

25.4

64.8

0.2

(0.7)

(20.3)

0.9

Yes

104

1.6

Aurora

56.8

15.8

2.5

(6.1)

(13.6)

0.0

(0.5)

1.7

2.4

Yes

100

0.5

Crystal Amber

224.8

58.0

51.4

126.9

2.1

0.2

(0.9)

2.2

Yes

100

2.2

Damille Investments II

42.5

30.7

23.6

32.3

1.0

(0.4)

(7.9)

2.4

Yes

100

0.0

Fidelity Special Values

620.8

29.6

27.1

116.8

137.3

0.5

(0.2)

(1.0)

1.1

No

109

1.6

Henderson Opportunities

74.2

23.7

23.0

111.7

65.2

0.4

(0.2)

(15.7)

0.9

Yes

115

2.1

Invesco Perp Select UK Equity

69.3

17.0

33.1

110.2

155.6

0.0

(0.1)

(1.5)

1.0

Yes

100

3.4

JPMorgan Mid Cap

231.4

13.5

28.6

133.6

77.3

(0.0)

(0.1)

(8.0)

0.9

No

104

2.2

Keystone

226.4

7.7

15.3

73.6

110.5

(0.4)

(0.4)

(12.6)

0.7

Yes

107

3.2

Manchester & London

65.8

37.1

41.1

19.0

35.9

0.8

0.1

(21.9)

0.9

No

111

2.0

Mercantile

1,555.7

12.3

21.6

94.8

89.5

(0.1)

(0.2)

(11.8)

0.5

No

104

2.4

Sanditon Investment Trust

51.8

2.2

(0.8)

(0.9)

0.5

1.3

Yes

100

1.1

Schroder UK Growth

266.2

21.8

6.1

60.1

75.4

0.3

(0.5)

(11.6)

0.3

No

100

3.2

Schroder UK Mid Cap

168.8

16.9

12.9

94.3

137.2

0.1

(0.4)

(16.3)

1.0

No

100

2.5

Threadneedle UK Select Trust

43.5

20.2

22.3

55.9

74.4

0.2

(0.2)

(8.0)

1.9

Yes

103

2.3

Woodford Patient Capital Trust

767.0

10.8

(0.3)

(0.9)

(5.1)

0.2

Yes

100

0.3

Sector weighted average (ITs)

18.7

22.4

89.6

94.3

0.1

(0.3)

(8.2)

0.7

104

2.0

JUKG rank in sector

16

13

13

12

6

14

12

3

6

1

8

Source: Morningstar, Edison Investment Research. Note: TR=total return. Sharpe ratio is a measure of risk-adjusted return. The ratios shown are calculated by Morningstar for the past 12- and 36-month periods by dividing a fund’s annualised excess returns over the risk-free rate by its annualised standard deviation. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

There are four directors on the board of JUKG; all are non-executive and independent of the manager. The board remains unchanged from that of Jupiter Global Trust and Jupiter Primadona Growth Trust. Chairman Tom Bartlam was elected in July 2013 and assumed his current role in November of that year. The other board members and their dates of appointment are: Lorna Tilbian (2001), Jonathan Davis (2011) and Graham Fuller (2013).

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

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Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Jupiter UK Growth Investment Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority (www.fsa.gov.uk/register/firmBasicDetails.do?sid=181584). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Jupiter UK Growth Investment Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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