1 Close XXXXXXXXXXX Fund XXXXXXXXXXXXXXXXXXXXXXX. Manager s Report & Financial Statements for the period ended 30 September 2011 (unaudited)

Transcription

1 1 Close XXXXXXXXXXX Fund Funds XXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXX Close Discretionary Funds Manager s Report & Financial Statements for the period ended 30 September 2011 (unaudited)

2 2 Close XXXXXXXXXXX Fund Close XXXXXXXXXX Discretionary Funds XXXXXXXXXXXXXXXXXXXXXXX

3 Contents Page General Information 2 Directory 5 Manager s Responsibilities 6 Market Overview 8 Aggregated Long Form Financial Statements of Close Discretionary Funds 9 Manager s Report and Financial Statements of each sub-fund of Close Discretionary Funds: Close Bond Income Portfolio Fund (formerly known as at 30 September 2011 as the Bond Income Portfolio Fund) 13 Close Diversified Income Portfolio Fund (formerly known as at 30 September 2011 as the Conservative Portfolio Fund) 24 Close Conservative Portfolio Fund (formerly known as at 30 September 2011 as the Balanced Portfolio Fund) 37 Close Balanced Portfolio Fund (formerly known as at 30 September 2011 as the Growth Portfolio Fund) 53 Close Growth Portfolio Fund (formerly known as at 30 September 2011 as the Dynamic Portfolio Fund) 68

4 2 Close Discretionary Funds General Information Constitution Close Discretionary Funds ( the Trust ) is a unit trust scheme which is constituted by its Trust Deed entered into between the Manager, Close Asset Management (UK) Limited, and the Trustee, Citibank International Plc. The Trust was authorised by the Financial Services Authority on 25 August The Trust is a UCITS (Undertakings for Collective Investments in Transferable Securities Directive) scheme. The Trust is an umbrella unit trust comprising a number of funds. The sub funds ( the Existing Funds ) in which units were available as at 30 September 2011 were: Close Bond Income Portfolio Fund ( the Bond Fund ) (previously known as at 30 September 2011 as Bond Income Portfolio Fund) Close Diversified Income Portfolio Fund ( the Income Fund ) (previously known as at 30 September 2011 as Conservative Portfolio Fund) Close Conservative Portfolio Fund ( the Conservative Fund ) (previously known as at 30 September 2011 as Balanced Portfolio Fund) Close Balanced Portfolio Fund ( the Balanced Fund ) (previously known as at 30 September 2011 as Growth Portfolio Fund) Close Growth Portfolio Fund ( the Growth Fund ) (previously known as at 30 September 2011 as Dynamic Portfolio Fund) The names of the Existing Funds changed as detailed above on 17 October Also as at 17 October 2011 the annual management charges of each of the Existing Funds were split between a lower annual management charge and an administration charge such that the overall charges incurred by the Existing Funds were unchanged. Launch of Funds Each of the Existing Funds commenced trading on 3 September On 17 October 2011 seven new sub funds were launched as follows: Close Managed Diversified Income Fund Close Managed Conservative Fund Close Managed Balanced Fund Close Managed Growth Fund Close Tactical Select Passive Conservative Fund Close Tactical Select Passive Balanced Fund Close Tactical Select Passive Growth Fund

5 Close Discretionary Funds 3 General Information (continued) Objectives and Manager s Report Individual investment objectives and a review of investment activities of each Fund during the period under review are included within the Fund Manager s Reviews. As at 17 October 2011 the Income Fund, following unitholder approval, changed its investment objective and policy so as to make possible the generation of more income. Buying and Selling Units may be purchased on any business day between 9.00 a.m. and 5.00 p.m. by telephoning our unit trust dealers on *. Deals will only be placed following receipt of cleared funds. To sell your units, please send a signed request to repurchase to Close Asset Management (UK) Limited at BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG or telephone * to request a form. Payment will normally be made within 5 working days of receipt of signed documentation. Redemption proceeds will be forwarded at the unitholder s risk. Unit Prices Unit prices are calculated daily at noon and all dealings are currently on a forward price basis. Deals for the noon unit price must be placed with our dealers before a.m. The Manager, to protect unitholders, reserves the right to revalue in times of currency or market volatility. Prices for all Close Asset Management (UK) Limited ( Close ) range of authorised unit trusts and open-ended investment companies ( OEICS ) are available on Close s website, or the website of the IMA, or by contacting Close on *. Scheme Documentation Copies of the Prospectus and of the Key Investor Information Document for each share class of each sub-fund of the Trust are available free of charge from the Manager. These set out the initial, annual and administration charges and minimum investments for all twelve sub-funds of the Trust ( the Funds ). Taxation of the Unitholder As sub-funds of an authorised unit trust, each of the Funds is currently exempt from UK tax on capital gains on disposals of capital assets held for investment purposes. The income of the property of each Fund is subject to UK Corporation Tax, which is currently at the rate of 20%. Unitholders who are resident or ordinarily resident in the UK for UK tax purposes may, depending on their circumstances, be liable to UK Capital Gains Tax on the disposal of their units. An individual s first 10,600 of net gains on disposals in 2011/2012 is exempt from UK Capital Gains Tax. Gains in excess of 10,600 are subject to tax at the individual s top marginal rate of Income Tax. Capital Gains and Income Tax rates and reliefs are always subject to change. Special rules apply to institutional investors and Trustees. Details of the tax treatment of any distributions paid by the Funds (including distributions reinvested in accumulation units) are set out in the Prospectus. *Calls to this number may be recorded.

6 4 Close Discretionary Funds General Information (continued) Cancellation If you invest in the Funds through a financial advisor, or after taking advice from an authorised intermediary, you have the right to cancel the agreement under the Financial Services Authority Conduct of Business Sourcebook Chapter 15.2 and you will be sent a cancellation notice. You may exercise your right to cancel by returning it to the Manager within 14 days. If you exercise this right, you will not get a full refund of the money you paid if the value of the investment falls before the cancellation notice is received by the Manager, because an amount equal to that fall in value will be deducted from any refund you would otherwise receive. Such a deduction will not be made from the first instalment paid into a regular savings scheme. Customers dealing direct with the Manager are deemed to be Execution-only customers and will have no rights of cancellation, as outlined above. Price of a Unit of the Funds Units are priced on a single mid-market pricing basis in accordance with the COLL Sourcebook and the Trust Deed. Each Fund deals on a forward pricing basis (and not on the basis of published prices). A forward price is a price calculated at the next valuation point after the deal is agreed. The price of a unit is the net asset value of a Fund attributable to the relevant unit class of that Fund divided by the number of units in that class in issue. Dealing costs in, and spreads between, the buying and selling prices of a Fund s underlying investments mean that the buying and selling prices of units calculated for a Fund may differ from the value of the proportionate interests those units represent in the Fund and dealing at those prices could lead to a reduction in the value of the scheme property of the Fund and so disadvantage other unitholders. The effect of this is known as dilution. In order to mitigate the effect of dilution the Manager operates a single swinging price; details of which are set out in Section 6.4 of the Prospectus of the Trust. Risk Warnings Investors should remember that past performance is not a guide to future performance as the price and value of units, and the income from them, can fall as well as rise. Investors may not get back the amount originally invested. This information relating to Close Discretionary Funds is issued by Close Asset Management (UK) Limited, which is authorised and regulated by the Financial Services Authority.

7 Close Discretionary Funds 5 Directory Manager Close Asset Management (UK) Limited (Authorised and regulated by the Financial Services Authority) Registered office: 10 Crown Place, London EC2A 4FT Business address: 10 Exchange Square, Primrose Street, London, EC2A 2BY Telephone: Dealing only * Directors M. Andrew P. Chambers G. Clarke R. Curry S. Dyer Investment Advisor Close Asset Management Limited (Authorised and regulated by the Financial Services Authority) 10 Crown Place London EC2A 4FT Trustee Citibank International Plc (Authorised and regulated by the Financial Services Authority) Citigroup Centre Canada Square Canary Wharf London E14 5LB Registrar The Bank of New York Mellon (International) Limited (Authorised and regulated by the Financial Services Authority) BNY Mellon House, Ingrave Road, Brentwood Essex CM15 8TG Independent Auditor Ernst & Young LLP 1 More London Place London SE1 2AF *Calls to this number will be recorded for monitoring purposes. The Manager (Close Asset Management (UK) Limited) and the Investment Advisor (Close Asset Management Limited) are both subsidaries of Close Brothers Plc.

8 6 Close Discretionary Funds Manager s Responsibilities Statement of Manager s Responsibilities in relation to the Report and Financial Statements of the Trust The Collective Investment Schemes Sourcebook of the Financial Services Authority ( COLL ) requires the Manager to prepare annual financial statements that give a true and fair view of the financial affairs of the Trust and of its revenue/expenditure for the year. In preparing these financial statements, the Manager is required to select suitable accounting policies and apply them consistently; make judgements and estimates that are reasonable and prudent; prepare the financial statements in accordance with generally accepted accounting principles and applicable accounting standards, the Statement of Recommended Practice for Authorised Funds issued by the Investment Management Association ( IMA ) in October 2010, the COLL Sourcebook and the Trust Deed, subject to any material departures disclosed and explained in the financial statements; and to prepare the financial statements on the going concern basis unless it is not appropriate to presume that the Trust will continue in operation. The Manager is responsible for keeping such accounting and other records as are necessary to demonstrate that the financial statements as prepared comply with the above requirements and to take reasonable steps for the prevention and detection of fraud and other irregularities. The Manager is also responsible for the management of the Trust in accordance with its Trust Deed and the COLL Sourcebook.

9 Close Discretionary Funds 7 Authorised Status Authorised Status The Trust is an authorised Scheme under the Financial Services and Market Act 2000 (the Act ). The Scheme is classified as a UCITS Scheme. Certification of Financial Statements by Directors of the Manager This Manager s report has been prepared in accordance with the Financial Services Authority collective Investment Schemes ( COLL ) Sourcebook. P Chambers (Director) Close Asset Management (UK) Limited 30 November 2011 S Dyer (Director)

10 8 Close Discretionary Funds Market Overview The last 6 months saw declines in most major global equity markets, with the greatest falls occurring in the final couple of months of the period under review. Economic growth levels in the UK remain stagnant following the publication of numbers for the first half of 2011, which broadly just cancelled out the declines seen in the last quarter of Similarly economic growth and job creation levels in the US remained poor. Emerging market growth, however, remained strong despite all major emerging markets continuing to tighten policy. Events in Europe again made the headlines with further tensions in the Eurozone currency area causing bond yields in Greece, Ireland and Portugal specifically to rise. Portugal received its first bailout whilst Greece received its second one in less than a year. Despite the enhanced support packages put together by the European Central Bank, we don t believe this situation has yet been fully resolved. In the developed world, governments and central banks continued to remain committed to low interest rates, but the risks to sustaining this policy are rising. Global fixed interest markets, however, performed strongly during the period under review as concerns about the waning prospects for global economic growth pushed investors into fixed interest assets. Global commodity markets were mixed as talk of more quantitative easing was countered by a reduction in speculative interest. Gold and silver continued to move up strongly and outperformed industrial metals like copper. Oil prices were highly volatile during the early part of the period under review, due to political tensions in North Africa and the Middle East, but fell sharply near the end of the period as these tensions stabilised. Other commodity markets were highly volatile with wheat, corn and cocoa markets seeing large fluctuations during the period under review as estimates about global harvests moved sharply up and down. Policymakers have a difficult balancing act ahead, trying to keep both the hard-pressed consumer and the Government bond markets happy; the former preferring tax cuts and extra Government spending and the latter preferring the complete opposite. We believe that the world s major governments and central banks are likely to announce new measures to boost the global economy. Given the already significant fiscal deficits, this is likely to take the form of further quantitative easing. This may temporarily boost the economy and the stock market. However the sustainability of such stimulus is in question and we anticipate that financial markets will be volatile over the next year as a consequence.

11 Close Discretionary Funds 9 Aggregated Long Form Financial Statements of Close Discretionary Funds Aggregated Statement of Total Return for the period ended 30 September 2011 Period ended 30 September 2011 Income Net capital losses Revenue Expenses Finance costs: Interest Net revenue before taxation for the period Taxation Net revenue after taxation for the period Total return before distributions Finance costs: Distributions Change in net assets attributable to Unitholders from investment activities 14,891,396 (6,823,855) (3,299) 8,064,242 (507,850) (28,754,824) 7,556,392 (21,198,432) (7,646,891) (28,845,323) The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives.

12 10 Close Discretionary Funds Aggregated Long Form Financial Statements of Close Discretionary Funds (continued) Aggregated Statement of Change in Net Assets attributable to Unitholders for the period ended 30 September 2011 Period ended 30 September 2011 Opening net assets attributable to Unitholders 984,964,494 Movement due to sales and repurchases of units: Amounts received on creation of units Amounts paid on cancellation of units Stamp duty reserve tax Change in net assets attributable to Unitholders from investment activities Retained distribution on accumulation units Closing net assets attributable to Unitholders 108,234,683 (50,703,121) 57,531,562 (146,929) (28,845,323) 5,124,086 1,018,627,890 The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives.

13 Close Discretionary Funds 11 Aggregated Long Form Financial Statements of Close Discretionary Funds (continued) Aggregated Balance Sheet as at 30 September 2011 As at 30 September 2011 As at 31 March 2011 ASSETS Investment assets Debtors Cash and bank balances Total other assets Total assets LIABILITIES Creditors Distribution payable on income units Total liabilities Net assets attributable to Unitholders 14,919,602 36,939,394 (5,748,420) (2,180,023) 974,697,337 51,858,996 1,026,556,333 (7,928,443) 1,018,627,890 60,818,905 25,413,164 (57,219,193) (1,499,525) 957,451,143 86,232,069 1,043,683,212 (58,718,718) 984,964,494

14 12 Close Discretionary Funds Aggregated Long Form Financial Statements of Close Discretionary Funds - Notes to the Financial Statements for the period ended 30 September Accounting policies The financial statements have been prepared under the historical cost convention, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the IMA in October 2010 ('the IMA SORP 2010').

15 Close Bond Income Portfolio Fund 13 The Close Bond Income Portfolio Fund* - Manager s Report Fund objective and policy The investment objective of the Close Bond Income Portfolio Fund ( the Bond Fund ) is to seek to generate income whilst maintaining its capital value over the medium term. The Bond Fund will invest primarily in fixed income securities, including government and corporate bonds (typically of investment grade and varying maturities), and deposits (including money market instruments) in order to meet its investment objective. The Bond Fund will not invest in equities or alternative investments. In order to gain exposure to fixed income securities and deposits (including money market instruments) and to meet its investment objective, the Bond Fund may invest in collective investment schemes (which may include schemes managed by the Manager or an affiliate of the Manager) and closed-ended funds. The Bond Fund will be solely invested in fixed income securities and deposits (including money market instruments), or investments giving exposure to those asset classes, to ensure that the risk profile of the Bond Fund is managed in line with its investment objective. Investment Advisor s Report - October 2011 The period under review has been characterised by falling bond yields and rising uncertainty within financial markets. The Bond Fund has endeavoured throughout the period to take a pragmatic view of market direction and sentiment whilst also targeting a realistic distribution, capital preservation and the overall quality of the portfolio. With that in mind the portfolio holdings have been adjusted and diversified so that there are no significant weighting in any one issuer or sector. The changes made can be split into three themes. First, the concentration of corporate credit has been increased at the expense of the weighting of shorter dated AAA/Supranational paper. Increasing the number of non-government bond holdings by selling EIB and UK government bonds has enabled further diversification of the portfolio by adding selected issuers. In the communications sector we bought British Telecom, Telecom Italia, ITV and Pearson. In industrials we added Cie De St Gobain and Firstgroup. In consumers we added Anheuser-Busch InBev, Next, Tate & Lyle and WPP. Secondly, we reduced the exposure to the financial sector by limiting our position in Lloyds and closing out the GE Capital and HSBC positions. Thirdly, we have sought to preserve the capital of the Bond Fund by selling assets at a profit where we believe that profit would otherwise be lost or eroded by continuing to hold the assets, and by reinvesting the proceeds into lower risk assets. *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

16 14 Close Bond Income Portfolio Fund The Close Bond Income Portfolio Fund* - Manager s Report (continued) Fund Performance From Launch on 3/9/2010 to 30/9/2011 From 31/3/2011 to 30/9/2011 The Bond Fund +3.10% +4.15% IMA Cautious Managed Sector** +0.12% -5.21% Source; Lipper Hindsight. Units are priced on a single mid-market basis. The percentage growth in prices is calculated using the published dealing price of units (which may include a dilution adjustment to the mid-market value) in Sterling with net revenue re-invested. **With effect from 17 October 2011, the Bond Fund is included within the IMA Sterling Corporate Bond Sector. *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

17 Close Bond Income Portfolio Fund 15 The Close Bond Income Portfolio Fund* - Performance Record Accounting Date Total Net Asset Value Net Asset Value per Unit Number of Units in Issue 30/9/11 Income Accumulation 31/3/11 Income Accumulation 236,896,771 21,980, ,348,760 13,680, p p 98.30p 98.77p 233,437,254 21,370, ,723,959 13,850,445 Accumulation and income units were first offered at p on 3 September Calendar Year 2011* Income Accumulation 2010** Income Accumulation Highest Unit Price 103.9p 104.4p 100.6p 100.5p *i.e. period from 1 January 2011 to 30 September 2011 **i.e. period from 3 September 2010 to 31 December 2010 Lowest Unit Price 98.10p 98.00p 98.73p 98.64p Net Revenue per Unit paid and payable in Calendar Period p p The above performance information and that contained in the Investment Advisor s Report relate to past performance. Past performance is not a guide to future performance. The price of units and revenue from them may go down as well as up. Ongoing Charges Figure Period ended 30/9/11 (annualised) Income Accumulation The Ongoing Charges Figure is the ratio of the Bond Fund s ongoing charges (including the ongoing charges of any collective investment schemes in which the Bond Fund invests but excluding interest on borrowings) to the average net assets of the Bond Fund % 0.97% *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

18 16 Close Bond Income Portfolio Fund The Close Bond Income Portfolio Fund* - Portfolio Statement as at 30 September 2011 Holding/ Nominal Value Investment Market Value % of Net Assets UNITED KINGDOM % (98.55%) 6,000,000 6,000,000 9,000,000 6,000,000 3,000,000 6,000,000 6,000,000 3,000,000 3,200,000 3,000,000 3,000,000 3,000,000 6,000,000 6,000,000 6,000,000 UNITED KINGDOM DENOMINATED CORPORATE BONDS % (96.48) Anheuser-Busch InBev 6.5% European Medium Term Notes 23/6/2017 B.A.T. International Finance 6.375% Guaranteed European Medium Term Notes 12/12/2019 Bank Nederlandse Gemeenten 5.25% Guaranteed Senior European Medium Term Notes 26/2/2016 BAT 5.5% Guaranteed European Medium Term Bonds 15/9/2016 British Telecommunications 7.75% Variable Bonds 7/12/2016 Centrica 5.5% Guaranteed Senior European Medium Term Bonds 24/10/2016 Compagnie de St Gobain 5.625% Guaranteed Senior European Medium Term Bonds 15/12/2016 European Investment Bank 4.375% Guaranteed Senior European Medium Term Notes 8/7/2015 European Investment Bank 4.5% European Medium Term Notes 14/1/2013 European Investment Bank 4.875% European Medium Term Notes 7/9/2016 European Investment Bank 6.25% Bonds 15/4/2014 FirstGroup 6.125% Bonds 18/1/2019 France Telecom 5% Guaranteed Senior European Medium Term Notes 12/5/2016 Imperial Tobacco Finance 5.5% Guaranteed European Medium Term Notes 22/11/2016 Imperial Tobacco Finance 7.75% Guaranteed European Medium Term Notes 24/6/2019 6,995,598 6,953,718 10,272,690 6,627,186 3,675,789 6,656,028 6,403,530 3,294,471 3,342,355 3,393,642 3,370,980 3,181,881 6,441,060 6,474,732 7,261, Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

19 Close Bond Income Portfolio Fund 17 The Close Bond Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets 1,000,000 1,500,000 6,000,000 9,000,000 6,000,000 2,000,000 6,000,000 7,500,000 7,500,000 5,000,000 6,000,000 6,000,000 6,000,000 6,000,000 5,000,000 6,000,000 6,000,000 UNITED KINGDOM DENOMINATED CORPORATE BONDS (continued) ITV 5.375% European Medium Term Notes 19/10/2015 ITV 7.375% Guaranteed European Medium Term Notes 5/1/2017 Koninklijke KPN 5.75% Guaranteed Senior European Medium Term Bonds 18/3/2016 Lloyds TSB Bank 5.875% Subordinated European Medium Term Bonds 20/6/2014 Marks & Spencer 6.125% Guaranteed European Medium Term Notes 2/12/2019 Marks & Spencer Finance 6.375% European Medium Term Notes 7/11/2011 National Grid Gas 6% European Medium Term Notes 7/6/2017 Network Rail 4.625% Guaranteed European Medium Term Bonds 21/7/2020 Network Rail 4.875% Guaranteed European Medium Term Bonds 27/11/2015 Next 5.25% Senior Bonds 30/9/2013 Next 5.375% Guaranteed Senior Bonds 26/10/2021 Northumbrian Water Finance 6% Notes 11/10/2017 Pearson Funding One 6% Guaranteed Notes 15/12/2015 Rabobank Nederland 3.25% Guaranteed Senior European Medium Term Notes 1/11/2017 Scottish & Southern Energy 4.25% Senior European Medium Term Bonds 14/9/2021 Severn Trent 6% Guaranteed European Medium Term Notes 22/1/2018 Tate & Lyle International Finance 6.75% Guaranteed Notes 25/11/ ,000 1,474,800 6,594,216 8,429,616 6,341,010 2,007,700 6,891,876 8,684,198 8,540,558 5,203,850 5,973,552 6,880,920 6,704,352 6,073,794 5,004,170 6,857,154 6,853, Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

20 18 Close Bond Income Portfolio Fund The Close Bond Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets 4,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 UNITED KINGDOM DENOMINATED CORPORATE BONDS (continued) Telecom Italia 5.625% Guaranteed Senior European Medium Term Bonds 29/12/2015 Tesco 5.5% Notes 13/12/2019 Tesco 6.125% Guaranteed Senior European Medium Term Bonds 24/2/2022 Total Capital 3.875% Guaranteed European Medium Term Notes 14/12/2018 United Utilities 6.125% Guaranteed Senior European Medium Term Notes 29/12/2015 Vattenfall 6.125% Guaranteed Senior European Medium Term Bonds 16/12/2019 Vodafone 5.375% Guaranteed Senior European Medium Term Notes 5/12/2017 WPP Finance 6% Guaranteed Bonds 4/4/2017 3,828,028 6,666,324 6,858,366 6,215,280 6,754,686 7,084,494 6,710,604 6,547, ,505, ,000,000 5,500,000 3,000,000 UNITED KINGDOM DEMONINATED GOVERNMENT BONDS % (2.07%) Treasury 0% Stock 2012 Treasury 3.75% Stock 2020 Treasury 4.25% Stock ,976,780 6,141,355 3,353, ,471, Portfolio of investments Net other assets Total net assets 253,977,704 4,899, ,876, All securities are approved securities which are listed on an official stock exchange and traded on regular markets, unless otherwise stated. All investments are investment grade. Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

21 Close Bond Income Portfolio Fund 19 The Close Bond Income Portfolio Fund* - Financial Statements Statement of Total Return for the period ended 30 September 2011 Period to 30 September 2011 Income Net capital gains Revenue Expenses Finance costs: Interest Net revenue before taxation for the period Taxation Net revenue after taxation for the period Total return before distributions Finance costs: Distributions Change in net assets attributable to Unitholders from investment activities 4,179,754 (1,277,824) (656) 2,901,274-8,520,120 2,901,274 11,421,394 (2,923,880) 8,497,514 The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives. *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

22 20 Close Bond Income Portfolio Fund The Close Bond Income Portfolio Fund* - Financial Statements (continued) Statement of Change in Net Assets attributable to Unitholders for the period ended 30 September 2011 Period to 30 September 2011 Opening net assets attributable to Unitholders Movement due to sales and repurchases of units: Amounts received on creation of units Amounts paid on cancellation of units Change in net assets attributable to Unitholders from investment activities Retained distribution on accumulation units Closing net assets attributable to Unitholders 9,901,080 (25,743,511) 266,029,355 (15,842,431) 8,497, , ,876,869 The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives. *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

23 Close Bond Income Portfolio Fund 21 The Close Bond Income Portfolio Fund* - Financial Statements (continued) Balance Sheet as at 30 September 2011 As at 30 September 2011 As at 31 March 2011 ASSETS Investment assets Debtors Cash and bank balances Total other assets Total assets LIABILITIES Creditors Distribution payable on income units Total liabilities Net assets attributable to Unitholders 7,371,200 1,162,155 (1,545,340) (2,088,850) 253,977,704 8,533, ,511,059 (3,634,190) 258,876,869 52,592,004 6,062,959 (53,329,502) (1,478,069) 262,181,963 58,654, ,836,926 (54,807,571) 266,029,355 *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

24 22 Close Bond Income Portfolio Fund The Close Bond Income Portfolio Fund* - Notes to the Financial Statements for the period ended 30 September Accounting policies The accounting policies for the Fund are the same as those disclosed in the aggregated financial statements on page 12. *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

25 Close Bond Income Portfolio Fund 23 The Close Bond Income Portfolio Fund* - Distribution Table for the period ended 30 September 2011 Interim interest distribution in pence per unit Group 1: units purchased prior to 1 April Group 2: units purchased between 1 April 2011 and 30 September Gross of tax Revenue Income Tax Net of tax Revenue Equalisation Distribution payable by 30/11/11 Distribution paid 31/7/11* Income Units Group p p p p - Group p p p p p p Accumulation Units Group p p p p - Group p p p p p p Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital; being capital it is not liable to Income Tax but must be deducted from the cost of units for Capital Gains Tax purposes. *The distribution paid on 31 July 2011 was paid to qualifying units as at 31 March At that point these units were categorised as Group 2 units. The same units are now treated as Group 1 units in relation to distribution payable on 30 November *Previously known as at 30 September 2011 as the Bond Income Portfolio Fund.

26 24 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Manager s Report Fund objective and policy Until 17 October 2011, the investment objective of the Close Diversified Income Portfolio Fund ( the Income Fund ) was to seek to generate limited growth with an emphasis on capital preservation over the medium term. In order to meet its investment objective, the Income Fund invested mainly in fixed income securities, including government and corporate bonds (which included emerging market debt, typically of investment grade and varying maturities). In addition, the Income Fund also invested in equities and deposits (including money market instruments). Exposure to the above asset classes was also gained through investment in other transferable securities, closed-ended funds, and collective investment schemes. Change of investment objective As of 17 October 2011, following unitholder approval, the Income Fund changed its investment objective and policy so as to make possible the generation of higher income. Investment Advisor s Report - October 2011 In a volatile period for stock markets the Income Fund remained defensively positioned, with the mix of assets held helping to smooth out performance. In terms of the equity positioning, it continues to be underweight financials and overweight pharmaceuticals, tobacco and the asset-backed companies in the oil sector. The weighting to alternatives was increased, with purchases of Infrastructure Funds, adding some inflation protected long-term income streams to the portfolio. With the Retail Price Index remaining above 5% over the last 6 months, this will boost their cash flows going forward versus their expectations, as they tend to assume 2.75% for their models. Another asset allocation change was to reduce the weighting to Gilts and Bond Funds, in order to build up new positions in corporate bonds. We have added ITV, Tullett Prebon, William Hill and Next amongst other names to the portfolio. These all offer attractive yields versus Gilts, whilst having decent cash flows and balance sheet strength. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

27 Close Diversified Income Portfolio Fund 25 The Close Diversified Income Portfolio Fund* - Manager s Report (continued) Fund Performance From Launch on 3/9/2010 to 30/9/2011 From 31/3/2011 to 30/9/2011 The Income Fund +1.90% +0.69% IMA Cautious Managed Sector** +0.12% -5.21% Source; Lipper Hindsight. Units are priced on a single mid-market basis. The percentage growth in prices is calculated using the published dealing price of units (which may include a dilution adjustment to the mid-market value) in Sterling with net revenue re-invested. **With effect from 17 October 2011, the Income Fund is included within the IMA Equity and Bond Income Sector. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

28 26 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Performance Record Accounting Date Total Net Asset Value Net Asset Value per Unit Number of Units in Issue 30/9/11 Income Accumulation 31/3/11 Income Accumulation 2,220,918 33,124,225 1,029,521 22,478, p p p p 2,215,181 32,564,628 1,026,507 22,296,259 Accumulation and income units were first offered at p on 3 September Calendar Year Highest Unit Price Lowest Unit Price Net Revenue per Unit paid and payable in Calendar Period 2011* Income Accumulation 2010** Income Accumulation 102.9p 103.5p 102.3p 102.3p 99.35p 99.35p 99.81p 99.82p p p - - *i.e. period from 1 January 2011 to 30 September 2011 **i.e. period from 3 September 2010 to 31 December 2010 The above performance information and that contained in the Investment Advisor s Report relate to past performance. Past performance is not a guide to future performance. The price of units and revenue from them may go down as well as up. Ongoing Charges Figure Period ended 30/9/11 (annualised) Income Accumulation 1.50% 1.50% The Ongoing Charges Figure is the ratio of the Income Fund s ongoing charges (including the ongoing charges of any collective investment schemes in which the Income Fund invests but excluding interest on borrowings) to the average net assets of the Income Fund. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

29 Close Diversified Income Portfolio Fund 27 The Close Diversified Income Portfolio Fund* - Portfolio Statement as at 30 September 2011 Holding/ Nominal Value Investment Market Value % of Net Assets EQUITIES % (49.55%) UNITED KINGDOM % (45.84%) Aerospace & Defence % (0.25%) 54,000 Banks % (1.19%) HSBC 265, Chemicals % (0.27%) 385,500 1,532,437 1,503, ,500 Equity Investment Instruments % (3.43%) GCP Infrastructure Investments Fund HICL Infrastructure Fund John Laing Infrastructure Fund John Laing Infrastructure Fund (Rights 29/10/2011) 398,993 1,773,030 1,581,908 1,879 3,755, ,800 Food & Drug Retailers % (0.82%) Tesco 354, ,653 Financial Services % (0.00%) ICAP 209, ,500 Gas, Water & Multiutilities % (0.00%) Centrica 184, Life Insurance % (0.20%) 6,000 Mining % (1.58%) BHP Billiton 103, ,000 Mobile Telecommunications % (1.05%) Vodafone 802, Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

30 28 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets 30,000 15,500 1,466, ,000 17,200 22,720 17,000 23,392 51,200 65,700 31,500 72,650 57,284 93,325 Non-Equity Investment Instruments % (32.28%) Blackrock Gold & General ETFS Physical Gold Legal & General Dynamic Bond Fund Templeton Global Bond Fund Oil & Gas Producers % (1.26%) BG BP Cairn Energy Royal Dutch Shell 'B' Shares Oil Equipment, Services & Distribution % (0.33%) Amec Cape Pharmaceuticals & Biotechnology % (1.26%) AstraZeneca GlaxoSmithKline Support Services % (0.91%) Babcock Mears 445,500 1,582, ,458 1,418,760 4,312, ,990 89,449 46, , , , , , , ,702 1,863, , , , Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

31 Close Diversified Income Portfolio Fund 29 The Close Diversified Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets 9,055 16,522 Tobacco % (1.01%) British American Tobacco Imperial Tobacco 247, , , BELGIUM % (0.27%) Beverages % (0.27%) FRANCE % (0.30%) 47,700 Media % (0.30%) Vivendi 626, ,000 Oil & Gas Producers % (0.00%) Total 797, JAPAN % (1.72%) Non-Equity Investment Instruments % (1.72%) JERSEY % (0.31%) 2,850 Mining % (0.31%) Randgold Resources 173, NETHERLANDS % (1.11%) 15,000 Fixed Line Telecommunications % (0.00%) Koninklijke KP 126, Oil & Gas Producers % (1.11%) Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

32 30 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets SWITZERLAND % (0.00%) 3,500 Pharmaceuticals & Biotechnology % (0.00%) Roche 363, BONDS % (43.82%) 600, , , , , , , , , , , , ,000 UNITED KINGDOM DENOMINATED CORPORATE BONDS % (21.76%) Anheuser-Busch InBev 6.5% Guaranteed European Medium Term Notes 23/6/2017 Anheuser-Busch InBev 9.75% Guaranteed Medium Term Notes 30/7/2024 BAT 5.5% Guaranteed European Medium Term Bonds 15/9/2016 BAT International Finance 6.375% Guaranteed European Medium Term Bonds 12/12/2019 BAT International Finance 7.25% Guaranteed European Medium Term Notes 12/3/2024 Centrica 5.5% Guaranteed Senior European Medium Term Bonds 24/10/2016 European Investment Bank 4.5% Guaranteed Senior European Medium Term Bonds 7/6/2029 European Investment Bank 5.375% Guaranteed Senior Bonds 7/6/2021 Imperial Tobacco Finance 5.5% Guaranteed European Medium Term Bonds 22/11/2016 Imperial Tobacco Finance 8.125% Guaranteed Senior European Medium Term Notes 15/3/2024 Imperial Tobacco Finance 9% Guaranteed Senior European Medium Term Notes 17/2/2022 ITV 5.375% Guaranteed European Medium Term Notes 19/10/2015 ITV 7.375% Guaranteed European Medium Term Notes 5/1/2017 Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Conservative Portfolio Fund. 699,560 1,082, , , , , ,396 1,066, , , , , ,

33 Close Diversified Income Portfolio Fund 31 The Close Diversified Income Portfolio Fund* - Portfolio Statement (continued) Holding/ Nominal Value Investment Market Value % of Net Assets 550,000 1,225, , , , , ,000 UNITED KINGDOM DEMONIATED CORPORATE BONDS (continued) Koninklijke KPN 5.75% Guaranteed Senior European Medium Term Bonds 18/3/2016 Next 5.375% Bonds 26/10/2021 Pearson Funding One 6% Notes 15/12/2015 Tesco 6.125% Guaranteed European Medium Term Notes 24/2/2022 Tullett Prebon 7.04% Bonds 6/7/2016 Vodafone 8.125% Guaranteed Senior European Medium Term Notes 26/11/2018 William Hill 7.125% Guaranteed European Medium Term Notes 11/11/ ,470 1,219, , , , , , ,400,000 1,000,000 UNITED KINGDOM DENOMINATED GOVERNMENT BONDS % (22.06%) Treasury 4.25% Guaranteed Bonds 2040 Treasury 5% Guaranteed Bonds ,233,899 1,565,074 1,242,830 2,807, Portfolio of investments Net other assets Total net assets 32,763,642 2,581,501 35,345, All securities are approved securities which are listed on an official stock exchange and traded on regulated markets, unless otherwise stated. Securities shown in the Portfolio Statement are ordinary shares unless otherwise stated. All debt securities in the portfolio at 30 September 2011 are investment grade. Note: Comparative figures shown in brackets relate to 31 March *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

34 32 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Financial Statements Statement of Total Return for the period ended 30 September 2011 Period to 30 September 2011 Income Net capital losses Revenue Expenses Finance costs: Interest Net revenue before taxation for the period Taxation Net revenue after taxation for the period Total return before distributions Finance costs: Distributions Change in net assets attributable to Unitholders from investment activities 484,262 (189,919) (2) 294,341 (29,538) (119,793) 264, ,010 (270,001) (124,991) The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

35 Close Diversified Income Portfolio Fund 33 The Close Diversified Income Portfolio Fund* - Financial Statements (continued) Statement of Change in Net Assets attributable to Unitholders for the period ended 30 September 2011 Period to 30 September 2011 Opening net assets attributable to Unitholders Movement due to sales and repurchases of units: Amounts received on creation of units Amounts paid on cancellation of units Stamp duty reserve tax Change in net assets attributable to Unitholders from investment activities Retained distribution on accumulation units Closing net assets attributable to Unitholders 12,951,176 (1,287,374) 23,508,078 11,663,802 (5,487) (124,991) 303,741 35,345,143 The Existing Funds commenced trading on 3 September 2010 and hence there are no six monthly figures available to report as comparatives. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

36 34 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Financial Statements (continued) Balance Sheet as at 30 September 2011 As at 30 September 2011 As at 31 March 2011 ASSETS Investment assets Debtors Cash and bank balances 1,704,134 2,481,215 32,763, ,148 1,634,839 21,949,556 Total other assets 4,185,349 2,275,987 Total assets 36,948,991 24,225,543 LIABILITIES Creditors Distribution payable on income units (1,583,270) (20,578) (712,112) (5,353) Total liabilities (1,603,848) (717,465) Net assets attributable to Unitholders 35,345,143 23,508,078 *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

37 Close Diversified Income Portfolio Fund 35 The Close Diversified Income Portfolio Fund* - Notes to the Financial Statements for the period ended 30 September Accounting policies The accounting policies for the Fund are the same as those disclosed in the aggregated financial statements on page 12. *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

38 36 Close Diversified Income Portfolio Fund The Close Diversified Income Portfolio Fund* - Distribution Table for the period ended 30 September 2011 Interim distribution in pence per unit Group 1: units purchased prior to 1 April Group 2: units purchased between 1 April 2011 and 30 September Income Units Group 1 Group 2 Accumulation Units Group 1 Group 2 Net of tax Revenue p p p p Equalisation p p Distribution payable by 30/11/ p p p p Distribution paid 31/07/11* p p Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of all Group 2 units and is refunded to the holders of these units as a return of capital; being capital it is not liable to Income Tax but must be deducted from the cost of units for Capital Gains Tax purposes. *The distribution paid on 31 July 2011 was paid to qualifying units as at 31 March At that point these units were categorised as Group 2 units. The same units are now treated as Group 1 units in relation to distribution payable on 30 November *Previously known as at 30 September 2011 as the Conservative Portfolio Fund.

39 Close Conservative Portfolio Fund 37 The Close Conservative Portfolio Fund* - Manager s Report Fund objective and policy The investment objective of the Close Conservative Portfolio Fund ( the Conservative Fund ) is to seek to generate moderate growth through a combination of capital returns and the accumulation of income over the medium to long term. In order to meet its investment objective, the Conservative Fund will invest in a portfolio comprising a mixture of fixed income securities, including government and corporate bonds (which may include emerging market debt typically of investment grade and varying maturities), and equities. In addition, the Conservative Fund may also invest in deposits (including money market instruments). Exposure to the above asset classes may be gained through investment in other transferable securities, closed ended funds and collective investment schemes (which may include schemes managed by the Manager or an affiliate of the Manager). The equity component of the Conservative Fund may comprise shares in smaller companies and companies listed in emerging markets, either directly or indirectly through collective investment schemes, investment trusts and certain exchange-traded funds to the extent that such investments are for the purposes of meeting the investment objective of the Conservative Fund. The Conservative Fund may also use derivatives, including exchange traded and over the counter derivatives, for investment purposes as well as for efficient portfolio management (including hedging). The Conservative Fund may also gain exposure to alternative asset classes, such as commodities or hedge funds through investment in certain exchange traded funds (classified as transferable securities) or exchange traded commodities or closed ended funds that are transferable securities. Investment Advisor s Report - October 2011 Reflecting relative market opportunity during the period under review, the Conservative Fund sold a number of its third party positions in the international equity and bond area, replacing them with directly held stocks or investment grade corporate debt. This reflected specific, strong opportunities that have been uncovered via ongoing research work in direct equity and bond positions, as opposed to third party funds. Following a meeting with the manager of the Legal & General Dynamic Bond Fund, we decided to reduce our holdings within the Conservative Fund. The experienced team at Legal & General continues to work diligently on their products but, at the margin, we felt having higher weightings in direct corporate bonds made more sense given some of the specific strong opportunities we have uncovered recently. For the same reason, we reduced our holding in the Kames Strategic Bond Fund. Therefore positions were added to the corporate bonds of a number of positions including Next, Centrica, ITV, Pearson, Imperial Tobacco, Anheuser-Busch InBev and British American Tobacco. Other third party exposures changed during the period under review include selling the Edinburgh US Tracker Fund and switching the monies raised into a diversified range of specific directly held US stocks. A similar policy was adopted in Japan where we sold the Baillie Gifford Japan Fund. Finally the ETF Physical Gold holding was reduced again in favour of directly held gold mining equities. *Previously known as at 30 September 2011 as the Balanced Portfolio Fund.

40 38 Close Conservative Portfolio Fund The Close Conservative Portfolio Fund* - Manager s Report (continued) Fund Performance From Launch on 3/9/2010 to 30/9/2011 From 31/3/2011 to 30/9/2011 The Conservative Fund +2.50% -2.57% IMA Cautious Managed Sector +0.12% -5.21% Source; Lipper Hindsight. Units are priced on a single mid-market basis. The percentage growth in prices is calculated using the published dealing price of units (which may include a dilution adjustment to the mid-market value) in Sterling with net revenue re-invested. *Previously known as at 30 September 2011 as the Balanced Portfolio Fund.