The Charity Multi-Asset Fund. Final Report & Accounts March 2011

Transcription

1 The Charity Multi-Asset Fund Final Report & Accounts March 2011

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3 Fund Information 1 Investment Objective and Policy aims to at least maintain the real value of capital whilst generating a sustainable and reliable distribution through investment in collective investment schemes as well as directly held transferrable securities, derivatives, cash, deposits and money market instruments. Financial highlights Selling price % change Distribution units 45.99p xd 45.10p xd 1.97 Accumulation units 53.56p 50.40p 6.27 Distributions per Payment Distribution unit dates p Quarterly distribution Interim distribution Quarterly distribution Final distribution Fund information Launch date 29 June 2007 Launch price 50.00p per Distribution unit 50.00p per Accumulation unit Accounting Quarterly Interim Quarterly Final dates 30 June 30 September 31 December 31 March Distribution Quarterly Interim Quarterly Final allocation dates 31 August 30 November 28 February 31 May Total expense ratio For the year For the year to to Distribution units 1.24% 1.18% Accumulation units 1.24% 1.18%

4 Fund Information (continued) 2 Participation Charities in England and Wales may participate in the fund unless specifically precluded by their deeds or other governing instrument. The minimum initial investment is 1,000 and, for subsequent purchases 500. There is no maximum limit on the amount which may be invested. The fund can issue both Distribution and Accumulation units. Distribution unitholders receive regular quarterly distributions, while Accumulation unitholders benefit from the reinvestment of their income into the fund. Enquiries For information on the fund ring Investor Services free on Management charges The preliminary charge is 1.00%. The annual management charge is 0.65% (plus VAT) of the value of the fund and is charged to the capital of the fund. The Manager s periodic charge in respect of Schroder funds in which the fund invests is rebated to the fund so that no double charging occurs. Investment adviser Schroder Unit Trusts Limited (the Manager) has delegated the function of Investment Adviser to Schroder Investment Management Limited. Supervisory Board The duties and responsibilities of the Board are set out in the Scheme rules. These include the determination of the criteria and methods for evaluating the performance of the fund, making and revising a written statement of the investment objectives of the fund and an obligation to inform the Charity Commissioners promptly should the Board not be satisfied at any time as to the compliance with the Scheme Particulars by the Trustee or the Manager.

5 Report of the Trustee 3 Statement of the Trustee s responsibilities in relation to the accounts of the Scheme The Trustee is under a duty to take into custody or under its control all of the property of the Scheme and to hold it in trust for the holders of units. Under Clause 9 of the Scheme it is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Scheme in each annual accounting period and to report thereon to unitholders in a report which shall contain the matters prescribed in Clause 9. A copy of the Trustee s report is set out below. Report of the Trustee ( the fund ) Report under Clause 9(h) of the Scheme As Trustee of the above fund we hereby report that, for the period ended 31 March 2011 and having made such enquiries as we think appropriate, we have discharged our responsibilities for those aspects of the administration and management of the fund and its property which are specified in Clause 9 of the Scheme and, in respect of the supervision and oversight of the Manager s compliance with the Scheme of the Charity Commissioners and the Scheme Particulars, and that the Manager has not exceeded the powers conferred on it and is maintaining adequate and proper records, that we have maintained custody and control of the property of the fund and that all revenue which is due to the fund has been collected. Bournemouth J.P. Morgan Trustee and Depositary 26 April 2011 Company Limited Trustee

6 Review of Investment Activities 4 From 1 April 2010 to 1 April 2011 the price of Accumulation units on a selling price to selling price basis rose 6.27%. In comparison, the FTSE All Share Index and the FTSE British Government Fixed All Stocks Index generated total returns of 9.20% and 4.80% respectively (Source: Thomson Financial Datastream). Equity markets generated modest returns in comparison to the previous year s rebound from the market lows in March The fund participated in the equity market gains but, fell behind the long term target of RPI +4% as UK inflation hit a twenty year high in February We benefited from our allocation in equities funds, such as the Schroder UK Equity Fund, Artemis UK Special Situations Fund and Schroder US Mid Cap Fund, as well as our exposure to the strongly performing commodity markets. The value biased funds, The Charity Equity Fund and Schroder Income Maximiser, underperformed the market particularly during the fourth quarter of 2010 as significant underweights in mining stocks, the best performing sector, affected relative performance. We continue to have a bias towards risk assets, primarily through our exposure to equities, while we are maintaining our zero weight to UK gilts as we expect yields to rise modestly. Given increased market volatility, we continue to favour an allocation to more defensive absolute return strategies. This reflects both our caution of bond markets and our wish to incorporate a defensive element to the fund should the oil price continue to rise or the Chinese economy slow more than we currently expect. We have therefore purchased the Trojan Fund, managed by Troy Asset Management, and Ruffer Investment Company, which focus on generating real and absolute returns respectively. 18 April 2011 Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money.

7 Net Asset Value and Comparative Tables 5 Unit price range Year to Distribution units Accumulation units 31 Dec Highest Lowest Highest Lowest buying selling buying selling p p p p to 31 Mar Net revenue Year to Distribution units Accumulation units 31 Dec pence pence per unit per unit to 31 Mar Net asset value As at Net asset Net asset Number 31 Mar value value per of units unit in issue 000 s p 2009 Distribution units 38, ,787,789 Accumulation units 3, ,620, Distribution units 98, ,824,440 Accumulation units 11, ,175, Distribution units 170, ,525,555 Accumulation units 43, ,562,590 Please remember that past performance is not a guide to future performance and it might not be repeated. The value of investments and the revenue from them may go down as well as up and investors may not get back the amount originally invested. Because of this, you are not certain to make a profit on your investments and you may lose money.

8 Risk Profile 6 The fund invests in assets which are not denominated in sterling. Exchange rates may cause the value of overseas investments and the revenue from them to rise or fall. The fund invests in emerging markets and the Far East. This involves a high degree of risk and should be seen as long term in nature. The fund invests in alternative investments (hedge funds, property funds and private equity) and may invest in derivatives. These types of investments involve an above average degree of risk and can be more volatile. They should only be considered as a long term investment. As a result of the annual management fee being charged wholly to capital, the distributable revenue of the fund may be higher, but the capital value of the fund may be eroded which may affect future performance. For these reasons, the purchase of units should not normally be regarded as a short term investment.

9 Statement of the Manager s Responsibilities 7 The Manager is required to prepare accounts for each annual and half yearly accounting period which give a true and fair view of the financial position of the fund and of its net revenue and the net capital gains on the property of the fund for the year. In preparing the accounts the Manager is required to: select suitable accounting policies and then apply them consistently; follow generally accepted accounting principles and applicable accounting standards; prepare the accounts on the basis that the fund will continue in operation unless it is inappropriate to do so; keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements. The Manager is responsible for the management of the fund in accordance with the Scheme Particulars and the Scheme made by the Charity Commissioners on 11 June 2007 and for taking reasonable steps for the prevention and detection of fraud, error and non-compliance with law or regulations. In accordance with the Scheme, Part Vl of the Charities Act 1993 and the Charities (Accounts and Reports) Regulations 2008 the Manager is deemed to be the charity trustee of the fund. In the opinion of the Manager, the Investment Adviser has complied with the terms of the Scheme, and the investment management agreement for the year from 1 April 2010 to 31 March The Manager s report and accounts for the year ended 31 March 2011 were signed on 23 May 2011 on behalf of the Manager by: C.E. Helmstetter J.M. Cardew Directors

10 Report of the Independent Auditors 8 Independent Auditors report to the unitholders of ( the fund ) We have audited the financial statements of The Charity Multi-Asset Fund for the year ended 31 March 2011 which comprise the statement of total return, the statement of change in net assets attributable to unitholders, the balance sheet, the related notes and the distribution table. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Respective responsibilities of the Manager and the Auditors As explained more fully in the Statement of Manager s Responsibilities, the Manager is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. We have been appointed under section 43 of the Charities Act 1993 and report in accordance with regulations made under section 44 of that Act. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinion, has been prepared for and only for the unitholders as a body, in accordance with the Scheme Particulars and Regulation 24 of the Charities (Accounts and Reports) Regulations 2008, and for no other purpose. We do not, in giving this opinion, accept or assume responsibility, for any other purpose, or to any other person to whom this report is shown or into whose hands it may come, save where expressly agreed by our prior consent in writing. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the fund s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Manager; and the overall presentation of the financial statements.

11 Report of the Independent Auditors (continued) 9 Opinion on financial statements In our opinion the financial statements: give a true and fair view of the financial position of the fund at 31 March 2011 and of the net revenue and the net capital gains of the scheme property of the fund for the year then ended; have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and have been prepared in accordance with the Regulation 6 of the Charities (Accounts & Reports) Regulations 2008, the Charities Act 1993, and the Scheme Particulars. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Charities Act 1993 requires us to report to you if, in our opinion: the information given in the Manager s Report is inconsistent in any material respect with the financial statements; or sufficient accounting records have not been kept; or the financial statements are not in agreement with the accounting records and returns; or we have not received all the information and explanations we require for our audit. London PricewaterhouseCoopers LLP 23 May 2011 Chartered Accountants & Statutory Auditors (a) (b) The maintenance and integrity of the website is the responsibility of the Manager; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

12 Portfolio Statement as at Holding Market % of at value total net s assets Absolute Return Funds 17.48% ( %) Absolute Return Trust 3,140,970 3, BH Macro Fund 101,872 1, BlackRock UK Absolute Alpha Fund P Accumulation Units 3,452,426 4, BlueCrest AllBlue Fund 1,355,932 2, Jupiter Absolute Return Fund Accumulation 12,616,864 5, OPUS Multi Strategy Hedge Fund Notes # 485, Ruffer Investment Preference 2,189,894 4, Schroder International Selection Fund Emerging Markets Debt Absolute Return C Income 350,309 8, Thames River Multi Hedge PCC 1,592,868 1, Trojan Fund S Income Units 2,217,722 4, , Cash Funds 0.00% ( %) Commercial Property Funds 6.92% ( %) Henderson UK Property Fund Income Units 4,897,254 4, Ignis UK Property Fund 4,342,108 3, Invista Foundation Property Trust 3,011,693 1, M&G Property Fund A Income Units 262,046 1, Mayfair Capital Property Income Trust for Charities 4,718,615 3, , Commodity Funds 3.68% ( %) Lyxor Gold Bullion Securities 31,481 2, Schroder Alternative Solutions Commodity Fund A Accumulation 14,387 1, Schroder Alternative Solutions Commodity Fund A Accumulation GBP Hedged 28,739 3, ,

13 Portfolio Statement as at (continued) 11 Holding Market % of at value total net s assets European Equity Funds 3.55% ( %) Cazenove European Fund X Accumulation 620,655 2, Schroder European Alpha Plus Fund A Income Units 4,044,579 4, , Global Funds 2.89% ( %) Schroder QEP Global Active Fund I Income Units 10,586,116 6, , Japanese Equity Funds 4.80% ( %) ishares MSCI AC Far East ex-japan 126,642 3, Schroder Tokyo Fund A Income Units 3,804,754 6, , Pacific & Emerging Markets Equity Funds 4.91% ( %) Schroder Global Emerging Markets Fund A Income Units 5,350,622 7, Schroder Pacific Fund A Income Units 920,767 3, , Private Equity 0.66% ( %) Electra Private Equity 25, HgCapital Trust 16, HgCapital Trust Subordinated 3, JPMorgan Private Equity 800, JPMorgan Private Equity Warrants 133, SVG Capital 108, , Sterling Denominated Medium Term Bonds 0.00% ( %)

14 Portfolio Statement as at (continued) 12 Holding Market % of at value total net s assets UK Equity Funds 45.34% ( %) Aegon UK Equity B Income Units 483,536 5, Artemis UK Special Situations Fund Accumulation Units 3,502,814 12, BlackRock UK Dynamic Fund A Income Units 5,816,690 8, ishares FTSE 100 Index Fund 1,482,549 8, Schroder Income Maximiser A Income Units 26,047,558 11, Schroder Recovery Fund A Income Units 76,166 5, Schroder UK Alpha Plus Fund A Income Units 13,650,022 15, Schroder UK Equity Fund A Income Units 2,546,190 15, The Charity Equity Fund Income Units # 5,418,607 13, , UK Fixed Interest Funds 5.18% ( %) M&G Corporate Bond Fund I Income 24,449,615 8, Schroder Corporate Bond Fund A Income Units 6,565,941 2, , US Equity Funds 3.69% ( %) ishares S&P 500 Index Fund 665,896 5, Schroder US Mid Cap Fund A Income 4,097,077 2, , Portfolio of investments 212, Net other assets 1, Net assets attributable to unitholders 214, % Unless otherwise stated the above securities are ordinary shares or common stock and admitted to official stock exchange listings or Collective Investment Schemes permitted under the COLL. # Unlisted securities within the meaning of the COLL. Securities that are not approved within the meaning of the COLL. A related party to the fund (Note 10).

15 Statement of Total Return 13 For the year ended 31 March Notes 000 s 000 s 000 s 000 s Income Net capital gains 2 10,856 17,436 Revenue 3 3,364 1,623 Expenses 4 (322) (425) Net revenue before taxation 3,042 1,198 Taxation 5 (108) 0 Net revenue after taxation 2,934 1,198 Total return before distributions 13,790 18,634 Finance costs: Distributions 6 (7,461) (2,921) Change in net assets attributable to unitholders from investment activities 6,329 15,713 Statement of Change in Net Assets Attributable to Unitholders For the year ended 31 March s 000 s 000 s 000 s Opening net assets attributable to unitholders 109,807 41,647 Amounts receivable on issue of units 106,356 54,604 Amounts payable on cancellation of units (10,341) (2,493) 96,015 52,111 Change in net assets attributable to unitholders from investment activities 6,329 15,713 Retained distribution on Accumulation units 1, Closing net assets attributable to unitholders 214, ,807

16 Balance Sheet 14 As at 31 March Notes 000 s 000 s 000 s 000 s Assets Investment assets 212, ,295 Debtors 7 2,708 4,046 Cash and bank balances 1,166 4,927 Total other assets 3,874 8,973 Total assets 215, ,268 Liabilities Creditors 8 (186) (2,455) Distribution payable on Distribution units (1,752) (1,006) Total other liabilities (1,938) (3,461) Total liabilities (1,938) (3,461) Net assets attributable to unitholders 214, ,807

17 Notes to the Accounts Accounting policies Basis of accounting The accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with applicable accounting standards. These standards include: the Charities (Accounts and Reports) Regulations 2008; the Statement of Recommended Practice (SORP) relating to Authorised Funds issued by the Investment Management Association in October 2010, which supersedes the SORP issued by the IMA in December 2005 and November 2008, (as required by the SORP for Accounting and Reporting by Charities issued by the Charity Commissioners for England and Wales in February 2005 as amended in 2008) and; the Scheme of the Charity Commissioners of 11 June As a result of the change in the SORP, there is no longer a requirement to disclose the Portfolio turnover ratio and this has been removed accordingly. Revenue Dividends receivable from equity investments and distributions receivable from authorised unit trusts and other collective investment schemes are recognised net of attributable tax credits and are credited to revenue when they are first quoted ex-dividend. Interest receivable from bank balances is accounted for on an accruals basis. Interest receivable from debt securities is accounted for on an effective yield basis. Special dividends Special dividends are treated as revenue or capital depending on the facts of each particular case. Equalisation Equalisation on the distributions received by the fund is deducted from the cost of investments.

18 Notes to the Accounts (continued) 16 Interest on debt securities bought and sold Interest on debt securities bought and sold is excluded from the capital cost of securities, and is dealt with as part of the revenue of the fund. Expenses Expenses of the fund are charged against revenue except for costs associated with the purchase and sale of investments, which are allocated to the capital of the fund. The Manager s periodic charge is initially charged to revenue but ultimately borne by the capital of the fund. The Manager s periodic charge in respect of the Schroder funds in which the fund invests is rebated to the fund so that no double charging occurs. The rebates received from other Investment Managers are also receipted to the fund. All rebates are treated as revenue or capital based on the underlying fund s treatment. Distributions Quarterly distributions are made on 31 May, 31 August, 30 November and 28 February. Such distributions are based on the target distribution rate of 4.00% per annum and can be funded from both revenue and capital. Valuation Listed investments of the fund have been valued at market value, dual priced authorised unit trusts have been valued at cancellation price, single priced authorised unit trusts have been valued at the dealing price and open ended investment companies have been valued at the latest available bid price at on the balance sheet date. Market value is defined by the SORP as fair value which generally is the bid value of each security. Unquoted, illiquid and suspended investments are valued by the Investment Adviser at a best assessment of fair value. Forward currency contracts The net losses are reflected in net capital gains. Foreign currencies Transactions in foreign currencies are translated into sterling at the exchange rate prevailing on the date of the transaction. Assets and liabilities valued in foreign currencies have been translated into sterling at the exchange rates prevailing at the balance sheet date.

19 Notes to the Accounts (continued) Net capital gains The net capital gains during the year comprise: s 000 s Non-derivative securities 10,755 17,392 Forward currency contracts (4) 0 Currency gains 3 9 Transaction charges (4) (1) Manager s periodic charge rebate Net capital gains 10,856 17, Revenue s 000 s UK dividends 0 30 Overseas dividends Franked distributions 1, Unfranked distributions 1, Interest distributions Scrip dividends 0 1 Interest on debt securities Bank interest Manager s periodic charge rebate * Total revenue 3,364 1,623 * Manager s periodic charge rebate received in respect of non-schroder funds.

20 Notes to the Accounts (continued) Expenses s 000 s Payable to the Manager, associates of the Manager and agents of either of them: Manager s periodic charge 1, Manager s periodic charge rebate (1,055) (83) Payable to the Trustee, associates of the Trustee and agents of either of them: Trustee s fees 19 7 Safe custody fees Other expenses: Audit fee * Total expenses Manager s periodic charge rebate received in respect of Schroder funds. * The Audit fee for the prior year includes fees for additional services carried out due to the change in provider of fund accounting services from State Street Bank & Trust Company to J.P. Morgan Europe Limited. 5. Taxation is a registered charity and its unitholders are restricted to those with charitable status in England and Wales. Investment policy is set in recognition of the charitable restrictions and accordingly the revenue and the net capital gains are exempt from direct taxation in the United Kingdom. Indirect taxation suffered is included in the expenditure to which it relates. The Trustee, J.P.Morgan Trustee and Depositary Company Limited, arranges for the reclaim of tax on revenue received by the fund. However, it may not always be possible for overseas tax to be reclaimed. Quarterly distributions are paid without deduction of tax. Analysis of the tax charge for the year s 000 s Irrecoverable income tax Total taxation 108 0

21 Notes to the Accounts (continued) Finance costs Distributions The distributions take account of revenue received on the creation of units and revenue deducted on the cancellation of units, and comprise: s 000 s Quarterly Dividend distribution 1, Interim Dividend distribution 1, Quarterly Dividend distribution 2, Final Dividend distribution 2,196 1,124 7,845 3,142 Add: Revenue deducted on cancellation of units Deduct: Revenue received on creation of units (400) (241) Finance costs: Distributions 7,461 2,921 Net revenue after taxation 2,934 1,198 Managers periodic charge taken to capital 1, Distribution paid from capital 3,180 1,239 Finance costs: Distributions 7,461 2,921 Details of the distributions per unit are set out in the table on pages 25 and Debtors s 000 s Amounts receivable for creation of units 105 3,790 Sales awaiting settlement 1,924 0 Accrued UK dividends 0 12 Accrued franked distributions Accrued unfranked distributions Accrued interest distributions Accrued interest on debt securities 0 8 Accrued bank interest 2 1 Accrued Manager s periodic charge rebate Income tax recoverable Total debtors 2,708 4,046

22 Notes to the Accounts (continued) Creditors s 000 s 000 s 000 s Amounts payable for cancellation of units 0 30 Purchases awaiting settlement 30 2,353 Accrued expenses Manager and Agents Manager s periodic charge Trustee and Agents Trustee s fees 2 1 Safe custody fees Other accrued expenses Total creditors 186 2, Contingent liabilities There were no contingent liabilities at the balance sheet date (2010 Nil). 10. Related party transactions The Manager, the Trustee and the Supervisory Board actively co-operate to exercise control over the fund and are therefore related parties by virtue of their controlling influence. Amounts paid during the year or due to the Manager or the Trustee at the balance sheet date are disclosed under Net capital gains, Expenses and Creditors in the Notes to the Accounts. Bank interest paid or payable to the fund by the Trustee is disclosed in Revenue and Debtors in the Notes to the Accounts. Manager s periodic charge rebates paid or payable to the fund by the Manager are disclosed in Net capital gains, Expenses and Debtors in the Notes to the Accounts. Transactions relating to the creation and cancellation of units and the purchases and sales of investments which pass through, but are not for the benefit of, any related party are disclosed in the Statement of Change in Net Assets Attributable to Unitholders, Finance costs and Portfolio transaction costs in the Notes to the Accounts. Amounts due to or from the fund at the balance sheet date in relation to these transactions are disclosed under Debtors and Creditors in the Notes to the Accounts. Cash and bank balances with the Trustee are disclosed in the Balance Sheet. Related party holdings are disclosed in the Portfolio Statement.

23 Notes to the Accounts (continued) Unit classes The fund currently has two unit classes: Distribution units and Accumulation units. The annual management charge (plus VAT) is based on the average value of the fund, calculated on a monthly basis, and covers the remuneration of the Manager, the Investment Adviser and their overhead expenses and for each unit class is as follows: Distribution units 0.65% Accumulation units 0.65% The net asset value of each unit class, the net asset value per unit and the number of units in issue in each class are given in the Net Asset Value and Comparative Tables on page 5. The distributions per unit class are given in the Distribution Table on pages 25 and 26. Both classes have the same rights on winding up. 12. Derivative and other financial instruments In accordance with the investment objective, the fund may hold certain financial instruments. These comprise: securities are held in accordance with the investment objective and policies; cash and short term debtors and creditors arising directly from operations. The main risks arising from the fund s financial instruments are market price, foreign currency, liquidity, credit and interest rate risks. The Manager s policies for managing these risks are summarised below and have been applied throughout the year and the prior year. Market price risk The fund s investment portfolio is exposed to market price fluctuations which are monitored by the Manager in pursuance of the investment objective and policy. Adherence to investment guidelines and to investment and borrowing powers set out in the Scheme made by the Charity Commissioners on 11 June 2007 and the Scheme Particulars mitigates the risk of excessive exposure to any particular type of security or issuer. Foreign currency risk The fund invests in overseas securities, collective investment schemes valued in foreign currencies and underlying funds investing in overseas securities and the balance sheet can be significantly affected by movements in foreign exchange rates. The Manager seeks to manage exposure to currency movement by using forward currency contracts.

24 Notes to the Accounts (continued) 22 Revenue received in other currencies is converted to sterling on or near the date of receipt. The fund does not hedge or otherwise seek to avoid currency movement risk on accrued revenue. Currency risk profile The currency risk profile of the fund s net assets at the balance sheet date was as follows: Currency Monetary Non- Total exposure monetary exposure 000 s 000 s 000 s Sterling , , , ,512 99, ,226 US dollar ,652 5, ,581 4,581 Liquidity risk The primary source of this risk to the fund is the liability to unitholders for any cancellation of units. This risk is minimised by holding cash, readily realisable securities and access to overdraft facilities. Credit risk Some underlying funds invest in debt securities. The debt securities are exposed to credit risk which reflects the ability of the issuer to meet its obligations. Interest rate risk Some underlying funds invest in debt securities. The revenue of the fund may be affected by changes to interest rates relevant to particular securities or as a result of the Manager being unable to secure similar returns on the expiry of contracts or sale of securities. The value of debt securities may be affected by interest rate movements or the expectation of such movements in the future. Interest receivable on bank balances will be affected by fluctuations in interest rates.

25 Notes to the Accounts (continued) 23 Interest rate risk profile of financial assets and financial liabilities The interest rate risk profile of financial assets and liabilities at the balance sheet date was as follows: Currency Floating rate Fixed rate Financial Total financial financial assets not assets assets carrying interest 000 s 000 s 000 s 000 s Sterling , , , , , ,687 US dollar ,376 5, ,581 4,581 Currency Floating rate Financial Total financial liabilities not liabilities carrying interest 000 s 000 s 000 s Sterling ,938 1, ,461 3,461 Fixed rate financial assets Currency Weighted Weighted average average interest period for rate which rate is fixed Sterling 2011 N/A N/A % 6.20 years There are no material amounts of non-interest bearing financial assets, other than equities and collective investment schemes, which do not have a maturity date. Floating rate financial assets and financial liabilities Sterling denominated bank balances bear interest at rates based on SONIA. Fair value of financial assets and financial liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet, and their fair value.

26 Notes to the Accounts (continued) Portfolio transaction costs s 000 s 000 s 000 s Analysis of total purchase costs Purchases in period before transaction costs 141,320 74,362 Commissions Taxes 5 0 Total purchase costs Gross purchase total 141,349 74,388 Analysis of total sales costs Gross sales in period before transaction costs 44,364 25,122 Commissions (25) (3) Total sales costs (25) (3) Total sales net of transaction costs 44,339 25,119

27 Distribution Table 25 Quarterly distribution for the three months ended 30 June 2010 Group 1 Units purchased prior to 1 April 2010 Group 2 Units purchased on or after 1 April 2010 Net Equalisation Distribution Distribution income paid paid p per unit p per unit p per unit p per unit Distribution Units Group Group Accumulation Units Group Group Interim distribution for the three months ended 30 September 2010 Group 1 Units purchased prior to 1 July 2010 Group 2 Units purchased on or after 1 July 2010 Net Equalisation Distribution Distribution income paid paid p per unit p per unit p per unit p per unit Distribution Units Group Group Accumulation Units Group Group

28 Distribution Table (continued) 26 Quarterly distribution for the three months ended 31 December 2010 Group 1 Units purchased prior to 1 October 2010 Group 2 Units purchased on or after 1 October 2010 Net Equalisation Distribution Distribution income paid paid p per unit p per unit p per unit p per unit Distribution Units Group Group Accumulation Units Group Group Final distribution for the three months ended 31 March 2011 Group 1 Units purchased prior to 1 January 2011 Group 2 Units purchased on or after 1 January 2011 Net Equalisation Distribution Distribution income payable paid p per unit p per unit p per unit p per unit Distribution Units Group Group Accumulation Units Group Group Equalisation applies to units purchased during the distribution period (Group 2 units). It is the average amount of revenue included in the purchase price of Group 2 units and is refunded to the holders of these units as a return of capital.

29 General Information 27 Manager Schroder Unit Trusts Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Services Authority Trustee J.P. Morgan Trustee and Depositary Company Limited Chaseside Bournemouth BH7 7DA Authorised and regulated by the Financial Services Authority Investment Adviser Schroder Investment Management Limited 31 Gresham Street London EC2V 7QA Authorised and regulated by the Financial Services Authority Registrar * International Financial Data Services Limited IFDS House St Nicholas Lane Basildon Essex SS15 5FS Supervisory Board M. Pomery (Chairman) J. Bonds D. Gibbons R.E. Hills A.R. Langley I. Macgregor M. Samuel D.R.W. Silk Administration details Schroders FREEPOST RLTZ-CHSY-HBUT PO Box 1102 Chelmsford Essex CM99 2XX Investor Services Dealing Fax Independent Auditors PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT * The Trustee has delegated the function of Registrar to International Financial Data Services Limited. is a registered charity. Its registered number is

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