Over the course of 2016, Jupiter Dividend & Growth’s portfolio returned 3.7%, well behind the 12.5% return delivered by the All-Share Index, its benchmark. The portfolio struggled in part because it was positioned for a “remain” vote in the referendum. The fund is a split capital trust with gearing provided by a zero dividend preference share and a class of shares, “common shares”, which also have a fixed capital entitlement. The ordinary income shares are entitled to what’s left over once the other two sets of investors have been paid back and they also get a share of the income. Dividends totalling 1.60p per ordinary income share and 4.48p per common share were paid to the respective shareholders for the year ending 31 December 2016.
As 30 November 2017 looms, the date when the company needs to be wound up or restructured, between now and then, the manager estimates that the investment portfolio (total assets) would need to grow by approximately 6.7 per cent. (annualised, after meeting the operating expenses of the company) in order for the common and ZDP shareholders to expect a final entitlement on that date equal to their preferred entitlement of 150p per share.
The investment portfolio would need to grow by approximately 20.5 per cent. on the same annualised basis in order for the ordinary income shareholders to expect a final entitlement on that date equal to their closing middle market price, as at 29 March 2017, of 4.50p per share.
In the event that the investment portfolio does not grow sufficiently to meet the final entitlements of common and ZDP shareholders on 30 November 2017 then those two share classes will receive as much of the capital assets as are available for distribution in accordance with their preferred entitlements to capital under the articles of association. Regrettably ordinary income shareholders would not receive any capital distribution from the company in those circumstances.
The hurdle rates refer to capital growth only and do not take into account any further dividend(s) between now and 30 November 2017.
Reconstruction proposals for the company
Detailed proposals for the liquidation or reconstruction of the company and information about the arrangements for shareholders wishing to either cash in their investment at the end of the planned life on 30 November 2017 or to continue or ‘roll over’ their investment in a UK capital gains tax efficient manner have yet to be formulated in detail. The directors are considering various options and proposals are expected to be announced in the autumn.
JDT / JDTC / JDTZ : Jupiter Dividend & Growth struggles as the end looms