Report to 30 June 2000
Deutsche Equity Income Trust PLC
11 July 2000
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Deutsche Equity Income Trust
REPORT TO 30 JUNE 2000
MARKET BACKGROUND
The UK Equity market as measured by the FT-SE All-Share fell by 2.6% in
capital terms in the 3 months to 30 June. The market remained subdued by the
possibility of higher interest rates and despite the strength of the world
economy a number of companies found it difficult to increase profits ahead of
investors' expectations.
In contrast to the closing months of 1999, the market conditions in this
period were much more favourable for income funds. Many of the so-called 'old
economy' sectors having fallen sharply in the preceding months staged a steady
recovery, examples being Tobacco +24%, Water +18%, Insurance +19%, Aerospace
+16%. By contrast the growth sectors such as Software and Telecoms fell by
32% and 23% respectively.
Against this background we were successful in switching from growth into less
favoured areas selling Marconi, BT and Colt Telecom and purchasing or
increasing holdings in Powell Duffryn, Laird and Croda. As a result over the
period the net asset value actually rose by 2.7% outperforming the market by
5.3%.
OUTLOOK
We currently feel that growth sectors such as software and media, while
attractive in the long term, are too expensive to justify a major portfolio
shift, whilst many 'old economy' stocks appear cheap, but are experiencing
virtually static or declining returns.
While we feel interest rates are close to their peak, we do not anticipate a
big decline in interest rates and therefore levels of economic activity are
likely to remain at or below current positions. Intense competition and the
challenge of technology remain threats and therefore the message of keeping
the core of the portfolio in those companies best able to withstand low growth
and low inflation remains.
NET ASSET VALUE 30/06/00 31/03/00
266.1p 259.0p
MID-MARKET SHARE PRICE 30/06/00 31/03/00
Ordinary Shares 253.5p 221.5p
Dividend Yield (%) 2.9 3.3
LARGEST HOLDINGS (market value £63.2 million equal to
59.5% of total portfolio)
% of
30/06/00 £'000's portfolio
BP Amoco 6,929 6.5
Vodafone Airtouch 5,196 4.9
Shell Transport & Trading 4,595 4.3
AstraZeneca 4,403 4.1
Glaxo Wellcome 3,775 3.6
United Utilities 2,819 2.6
Carlton Communications 2,755 2.6
Britannic 2,695 2.5
British Telecom 2,334 2.2
HSBC Holdings 2,286 2.2
Boots 2,170 2.0
SmithKline Beecham 2,130 2.0
Cable & Wireless 1,983 1.9
Croda International 1,870 1.8
Royal & Sun Alliance 1,867 1.8
Marshalls 1,699 1.6
Powell Duffryn 1,628 1.5
Mediaone 1,571 1.5
British American Tobacco 1,547 1.5
Singer & Friedlander 1,525 1.4
Centrica 1,506 1.4
BAE Systems 1,486 1.4
Lonmin 1,477 1.4
Marconi 1,457 1.4
Abbey National 1,452 1.4
For further information, contact Adrian Frost at Deutsche Asset Management on
020-7545-6000.
For additional copies, changes of address or details of our Private Investors'
Plan and low cost ISA contact Mark Pope on 020-7545-0520, e-mail address:
mark.pope@db.com. Further details of the Deutsche Equity Income Trust
including the latest annual and interim reports can be found on the Deutsche
Asset Management website located at www.deam.co.uk.
Issued by Deutsche Equity Income Trust PLC and approved by Deutsche Investment
Trust Managers Limited, regulated by the Investment Management Regulatory
Organisation and manager of Deutsche Equity Income Trust PLC. Investors
should be aware that past performance is not necessarily a guide to future
returns, values can fall as well as rise and investors may not get back the
amount they invested.
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