THE SHARE CENTRE ICVC INVESTMENT FUNDS THE SHARE CENTRE INVESTMENT FUNDS. 28 February 2006 ANNUAL REPORT

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1 THE SHARE CENTRE INVESTMENT FUNDS 28 February 2006 ANNUAL REPORT

2 REPORTS Page Authorised Corporate Director s Final Performance Report 01 ACCOUNTS THE SHARE CENTRE INVESTMENT FUNDS 02 ACCOUNTS THE SHARE CENTRE GROWTH & INCOME FUND Comparative Performance, Investment Review and Performance Record 09 Statement of Total Return, Statement of Movements in Shareholders Funds 12 Portfolio Statement 13 Balance Sheet 16 Summary of Material Portfolio Changes 17 Notes to the Accounts 19 ACCOUNTS THE SHARE CENTRE GLOBAL GROWTH FUND Comparative Performance, Investment Review and Performance Record 22 Statement of Total Return, Statement of Movements in Shareholders Funds 26 Portfolio Statement 27 Balance Sheet 28 Summary of Material Portfolio Changes 29 Notes to the Accounts 30 General Information 32 Statement of the Authorised Corporate Director s and Depositary s Responsibilities 34 Report of the Depositary 35 Independent Auditor s Report 36 Directory 38

3 AUTHORISED CORPORATE DIRECTOR S FINAL PERFORMANCE REPORT The Share Centre (Investment Management) Limited, the Authorised Corporate Director ( ACD ), is pleased to present the Final Performance Report of the Share Centre ICVC Investment Funds ( the Company ) for the period ended 28 February The Company is valued on a mid-market basis, with daily single prices appearing in the Managed Funds Service section of the Financial Times. We hope that you find this Report informative. If you require further information concerning your investment, please call our Customer Services team on Constitution The Company is an open-ended investment company with variable capital. The Company is authorised in the United Kingdom by the Financial Services Authority ( the FSA ) pursuant to Regulation 12 of the "OEIC Regulations" with number IC The effective date of the Authorisation Order made by the FSA was 7 October The minimum Share capital of the Company is 100 and the maximum share capital is 1,000,000,000. The base currency for the Company is pounds sterling. The shareholders are not liable for the debts of the Company. Sub-funds of the Company are not ring-fenced. This means that in the event of the Company being unable to meet liabilities attributable to any particular sub-fund out of the assets attributable to such sub-fund, the excess liabilities may have to be met out of the assets attributable to the other sub-funds. The Company is a UCITS scheme, complying with chapter 5 of the FSA Rules, as defined in the Regulations, and organised as an umbrella company. The funds in which shares are currently available are The Share Centre Growth and Income Fund and The Share Centre Global Fund. 1

4 Company s Financial Statements AGGREGATED STATEMENT OF TOTAL RETURN For the period from 1 March 2005 to 28 February 2006 Note Net gains on investments Gross income Expenses 4 (90) (42) Net income before and after taxation 33 9 Total return for the period Net distribution 5 (104) (51) Net increase in shareholders funds from investment activities AGGREGATED STATEMENT OF MOVEMENT IN SHAREHOLDER S FUNDS For the period from 1 March 2005 to 28 February At start of year 3,199 2,739 Movement due to sales and repurchases of shares: Amounts receivable on creation of shares 1, Amounts payable on cancellation of shares (545) (205) 4,125 2,788 Stamp duty reserve tax received 1 1 Stamp duty reserve tax paid (1) - 4,125 2,789 Net increase in shareholder s funds from investment activities (see above) Net assets at the end of the period 5,025 3,199 Notes to the Accounts are on pages 4 to 8. 2

5 AGGREGATED BALANCE SHEET as at 28 February 2006 FIXED ASSETS Note Investments 4,984 3,135 CURRENT ASSETS Debtors Cash at bank CURRENT LIABILITIES Creditors 7 (70) (94) Distribution payable (61) (52) NET CURRENT ASSETS TOTAL NET ASSETS 5,025 3,199 SHAREHOLDERS FUNDS 5,025 3,199 Notes to the Accounts are on pages 4 to 8. Certification of Accounts by the Authorised Corporate Director, The Share Centre (Investment Management) Limited In accordance with the requirements of the Open-Ended Investment Companies Regulations 2001 (SI2001/1228) and the Collective Investment Schemes Sourcebook Regulations 2001, we hereby certify the report on behalf of the ACD, The Share Centre (Investment Management) Limited. G D R Oldham (Director) The Share Centre (Investment Management) Limited Authorised Corporate Director 28 th June 2006 I P Wallace (Director) The Share Centre (Investment Management) Limited Authorised Corporate Director 28 th June

6 NOTES TO THE ACCOUNTS 1 Accounting Policies Basis of Accounting and Preparation The Accounts have been prepared under the historical cost basis, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice ( SORP ) for the financial statements of Authorised Open-Ended Investment Companies issued by the Investment Management Association. The Company was authorised as an Open-Ended Investment Company by the FSA on 7 October This report and accounts covers the period ended 28 February Recognition of Income Income from quoted equity investments is treated on an accruals basis, dividends being credited to income when the stocks are first quoted ex-dividend. Treatment of Expenses (including management expenses) Expenses are charged against income for The Share Centre Global Fund. However, they are charged against capital for The Share Centre Growth & Income Fund for the purposes of calculating the distribution. Transaction charges including brokerage and stamp duty are added to or deducted from purchases and sales respectively. Distribution Policy Income produced by The Share Centre Growth & Income Fund accumulates during each accounting period. If, at the end of the accounting period, income exceeds expenses, the net income of the Company is available to be allocated to shareholders in accordance with the Regulations. Any income that is not transferred to the distribution account will be carried forward to the next accounting year and be regarded as received at the start of that year. The Share Centre Global Fund does not issue a distribution. Investments The investments have been valued at the mid-market value at noon on 28 February Deferred Taxation Deferred tax is provided in full on timing differences that result in an obligation at the balance sheet date to pay more tax, or a right to pay less tax at a future date, at the rate expected to apply when they crystallise, based on current tax rates and law. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in years different from those in which they are included in financial statements. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted. Exchange rates Transactions in foreign currencies are recorded in sterling at the rate ruling at the date of the transactions. Assets and liabilities expressed in foreign currencies at the end of the accounting period are translated into sterling at the closing middle exchange rates ruling on that date. 4

7 NOTES TO THE ACCOUNTS (CONTINUED) 2 Net Gains on Investments The net gains on investments during the period comprise: Proceeds from sales of investments during the period 12,968 6,159 Original cost of investments sold during the period (12,421) (6,014) Gains realised on investments sold during the period Net unrealised appreciation for the period Net gains on investments Gross Income Dividends from UK companies Bank deposit interest 9 3 Gross income Expenses Payable to the ACD, associates of the ACD and agents of either of them: Periodic charge ShareMark Fee 6 4 Registrar Fees Payable to the Depositary, associates of the Depositary and agents of either of them: Depositary Fee 7 5 Transaction Fees 6 3 Custodial Fee Other Expenses: Audit Fee 7 7 Fee for publication of prices 6 2 FSA Fee 2 1 Other 1 - Total expenses

8 NOTES TO THE ACCOUNTS (CONTINUED) 5 Distribution Interim 43 - Final Net income after taxation 33 9 Add back: expenses charged to capital Periodic charges to ACD Audit fee 7 7 Depositary fee 7 5 ShareMark fee 6 4 Transaction fees payable to depository 6 3 FT fee 6 2 FSA fee 2 1 Registrar fee 1 1 Lawyers Fee 1 Distribution payable Distribution Table For the period ended 28 February 2006 Total Distribution No. 1 Group 1: Shares purchased prior to 28 February 2006 Gross Income 2006 pence per share Tax Credit 2006 pence per share Net Income 2006 pence per share Distribution payable 2006 pence per share Distribution payable 2006 pence per share Group

9 NOTES TO THE ACCOUNTS (CONTINUED) 6 Debtors Pre paid fees in advance 21 3 Amounts receivable for the issue of shares 13 1 Outstanding dividends receivable 5 12 Sales awaiting settlement Creditors Amounts owed for cancellations 21 9 Purchases awaiting settlement 5 63 Accrued expenses Taxation The tax assessed for the period is calculated at the standard rate of corporation tax in the UK:20%. The differences are explained below: Profit on ordinary activities before tax 33 9 Tax at 20% thereon: 6 2 Effects of: Creation of tax losses 17 8 UK Dividend Income (23) (10) Current tax charge for period - - A deferred tax asset has not been recognised in respect of timing differences relating to surplus management expenses, as there is insufficient evidence that the asset will be recovered. The amount of the asset not recognised is 23,028. The asset would be recovered if sufficient taxable profits were made in the future. 7

10 NOTES TO THE ACCOUNTS (CONTINUED) 9 Contingent Liabilities and Outstanding Commitments There were no contingent liabilities or outstanding commitments at the balance sheet date. 10 Post-balance Sheet Events There were no material post balance sheet events which have a bearing on the understanding of the Accounts. 11 Related Party Transactions The ACD s and the Registrar s periodic fees and the ShareMark fee, payable to an associate of the ACD, are shown in note 4, and details of the shares created and cancelled by the ACD are shown in the Statement of Movements in Shareholders Funds. 12 FRS 13: Derivatives and Other Financial Instruments In pursuing its investment objectives, the Company holds financial instruments, which comprise of securities, other investments, cash balances, debtors and creditors that arise directly from its operations. For example, in respect of sales and purchases of securities awaiting settlement, amounts receivable for creations and payable for liquidations, and debtors for accrued income. The Company has little exposure to credit, cash flow or interest rate risk. There are no borrowings or borrowing facilities, or unlisted securities and, therefore, little exposure to liquidity risk. At 28 February 2006 all of the Company s net assets were denominated in sterling, which is the functional currency of the Company. The primary risk facing the Company is market risk, being the risk that the value of investment holdings will fluctuate as a result of changes in market prices caused by factors other than interest rate or currency movement. The ACD s policies for managing the market price risk are summarised below and have been applied throughout the period. The Company s investment portfolio is exposed to market price fluctuations which are monitored daily by the ACD in pursuance of the investment objective and policy set out on pages 9 and 22. Adherence to investment guidelines and to investment and borrowing powers set out in the Instrument of Incorporation, the Prospectus and in the Regulations mitigates the risk of excessive exposure to any particular type of security or issuer. The Company s assets comprise readily realisable securities, which can be easily sold. The main liability of the Company is the redemption of any shares which investors wish to sell. Certain transactions in securities which the Company enters into expose it to the risk that the counterparty will not deliver the investment (purchase) or cash (sale) after the Company has fulfilled its responsibilities. The Company only buys and sells investments through brokers which have been approved by the ACD as an acceptable counter-party. These are reviewed on an ongoing basis. All financial assets and liabilities of the Company are stated at fair value. The investments have been valued at the mid-market value at noon on 28 February The Company held no fixed rate instruments, nor any derivatives during the period to 28 February

11 THE SHARE CENTRE GROWTH & INCOME FUND Investment Objective and Policy The Share Centre Growth and Income Fund aims to achieve long-term capital growth that exceeds the growth in the FTSE All-Share Index, with a projected income yield of 2.5%. The Company invests in UK listed equities with higher potential for capital and/or income growth than the FTSE All-Share Index. The general nature of the portfolio is to invest in the securities described above. The Share Centre Growth and Income Fund does not currently intend to invest in money market instruments, derivatives or in other collective investment schemes. COMPARATIVE PERFORMANCE The Share Centre Growth & Income Fund We report a performance against our benchmark, the FTSE All-Share Index, of: Return from launch to 28 February 2006 % The Share Centre Growth & Income Fund 42.0% FTSE All Share Index 50.2% Relative underperformance 8.2% Historical Performance Please find below a table of past performance for The Share Centre Growth & Income Fund. Please note that past performance should not be seen as an indication of future performance and nor does this constitute a projection of future performance. Fund Name The Share Centre Growth & Income Fund % Growth Jan 01 Dec 01 % Growth Jan 02 Dec 02 % Growth Jan 03 Dec 03 % Growth Jan 04 Dec 04 % Growth Jan 05 Dec % Performance figures shown are on a single priced basis including income re-invested and any charges levied on the fund, except any initial charge which may apply. The Share Centre Growth & Income Fund was launched on 8th July 2004 and therefore there are no performance figures available for the years Please note that this information is up to date as of 31 st December If you require up to date performance data please contact The Share Centre on

12 INVESTMENT REVIEW 9 UK Equity markets have continued to rally over the last twelve months, despite the ongoing concerns over high oil and commodity prices, interest rates, debt levels, rising US dollar and hurricane damage. The FTSE All-Share and FTSE 100 Indices rose by 22.3% and 20.5% respectively on a total return basis, with the All-Share benefiting from an extremely strong performance of the Mid-capitalisation stocks (FTSE Mid 250 Index rose by 33.8%). The Fund slightly underperformed the FTSE All-Share over the year, returning 21.8%, but performance in the latter half of the year significantly improved as exposure to the smaller capitalisation stocks was increased. The top performing sectors over the period were predominantly resource based and included Aerospace, Mining, Electricity, General Financials and Chemicals. Underperforming sectors included the more consumer sensitive sectors such as Leisure Goods, Telecoms, Health Care Equipment, Media and General Retail. The portfolio remains well diversified with between holdings spread across approximately 25 sectors. The Fund benefited from overweight exposure to Basic Materials, Construction, Industrial Goods & Services and Financials. The Fund also benefited in the second half to the underweight exposure to Pharmaceuticals and Telecoms. Major stock purchases in the last few months of the year included Xstrata, Whitbread, Royal Bank of Scotland, Standard Chartered, Costain, Aviva, Pilkington, Prudential, Chemring, Shaftesbury, Colt Telecom and BHP Billiton. Again the majority of sales were made to realise profits or release capital. The performance of the Fund has improved in the second half providing a total return of 13.5%, compared to 12.3% and 10.5% on the FTSE All-Share and FTSE 100 Indices respectively. This improvement was due in part to the increased weighting in mid cap stocks made at the start of the second half, as these smaller companies continued to perform well and benefit from takeover speculation. The market traded steadily higher throughout the period, despite a setback in October, before reaching new five-year highs towards the end of the quarter. The downturn in October followed concerns over falling commodity prices and a degree of profit taking in the Oil and Mining sectors. Towards the end of the period, markets benefited from Oil prices subsiding from their peak levels of $70 per barrel, inflation moderating, economic growth falling gently and UK interest rates stabilising or falling slowly during In addition, corporate earnings growth, dividend growth and takeover activity continued to underpin markets with corporate cashflow extremely strong. UK corporate earnings growth has beaten all expectations, as the oil and mining sectors have seen considerable upgrades. Overall earnings are seen growing by 15% in 2005 and 8% in 2006, with dividends up by 10% in each year. The UK market is still good value on 13 times prospective earnings and a prospective dividend yield of 3.4%. Although concerns still exist regarding commodities, currency, interest rates and debt, the large numbers of bids, MBOs and share buybacks continue to provide key supports on the downside for the equity market, and institutional liquidity continues to be strong.

13 10 NET ASSET VALUE PER SHARE AND PERFORMANCE RECORD Net Asset Value per Share* The net asset values for the accounting dates since launch are: Accounting Date Total Net Asset Value Net Assets per Share Number of Shares in Issue 28/02/03 1, p 1,641,652 29/02/04 2, p 2,355,570 28/02/05 3, p 2,706,528 28/02/06 3, p 2,531,744 Price Record* Income Shares were first issued on 4 th November Income Shares Year Highest Lowest Pence Pence ** Distribution Record* Year Interim Final Total Note(a) Pence Pence Pence (a) Net Income distributed per 1,000 invested on 4 November 2002 * The Share Centre Growth & Income Fund is a sub-fund of the Company and prior to the scheme of arrangement of 8 th July 2004, was a UK investment company. In order to provide comparative information, the Net Asset Value Per Share and Performance Record covers periods prior to the scheme of arrangement.

14 ** - To 28 February STATEMENT OF TOTAL RETURN For the year to 28 February 2006 Note Net gains on investments Gross income Expenses 4 (77) (42) Net income before and after taxation 27 9 Total return for the period Net distribution 5 (104) (51) Net increase in shareholders funds from investment activities STATEMENT OF MOVEMENT IN SHAREHOLDERS FUNDS For the year to 28 February At Start of year 3,199 2,739 Movement due to sales and repurchases of shares: Amounts receivable on creation of shares Amounts payable on cancellation of shares (534) (205) 2,972 2,788 Stamp duty reserve tax received 1 1 Stamp duty reserve tax paid (1) - 2,972 2,789 Net increase in shareholders funds from investment activities (see above) Net assets at the end of the period 3,595 3,199 Notes to the accounts are on pages 19 to 21

15 12 PORTFOLIO STATEMENT UK Investments Holding Market Value Share of Fund % Aerospace & Defence: 3.96% Bae Systems Plc 10, Chemring Group Plc 5, Rolls Royce Group 10, Banks: 16.72% Barclays Plc 15, HSBC Plc 25, Royal Bank Of Scotland Plc 10, Standard Chartered Plc 4, Construction & Materials: 2.58% Costain Group Plc 70, Pilkington Plc 20, Ultraframe Plc 100, Electronic & Electrical: 1.15% Invensys Plc 200, Fixed Line Telcommunications: 0.86% Colt Telecom Group Plc 50, Food Producers: 1.65% Unilever Plc 10, Gas Water & Utilities: 1.23% Centrica Plc 15, General Financial: 7.82% Arbuthnnot Banking Plc 7, Close Brothers Group Plc 4, Guinness Peat Group Plc 40, Helphire Group Plc 10, Icap Plc 10, Panmure Gordon Plc 20, RAB Capital Plc 50, General Industrials: 1.00% Cookson Group Plc 7, General Retailers: 1.85% Halfords Group Plc 15, Next Plc 1, Household Goods: 1.78% Berkeley Group Holdings Plc 3, Wilson Bowden Plc 2, Industrial Engineering: 2.52% Charter Plc 7, Foseco Plc 25,

16 PORTFOLIO STATEMENT (CONTINUED) Investments Holding Market Value Share of Fund % Industrial Metals: 1.38% Corus Group Plc 70, Industrial Transportation: 2.05% BBA Group Plc 11, Forth Ports Plc 2, Leisure Goods: 1.10% Amstrad Plc 20, Life Insurance: 4.65% Aviva Plc 10, Friends Provident Plc 15, Prudential Plc 9, Media: 4.36% Empire Online Plc 15, Informa Plc 10, Reed Elsevier Plc 6, Reuters Group Plc 7, United Business Media Plc 5, Mining: 7.37% Aurum Mining Plc 75, Avocet Mining Plc 30, BHP Billiton Plc 10, Kazakhmys Plc 5, UK Coal Plc 25, Non Life Insurance: 0.88% Amlin Plc 12, Oil & Gas Producers: 13.55% Bowleven Plc 7, Bp Plc 50, Burren Energy Plc 3, Cairn Energy Plc 2, Oilexco Plc 25, Soco International Plc 5, Phameceuticals: 0.68% Skyepharma Plc 60, Real Estate: 5.51% CLS Holdings Plc 7, Countrywide Plc 10, Minerva Plc 15, Savills Plc 4, Shaftesbury Plc 3, Software & Computer Services: 2.61% Earthport Plc 50, NSB Retail Systems Plc 90, Sage Group Plc 15,

17 PORTFOLIO STATEMENT (CONTINUED) Investments Holding Market Value Share of Fund % Support Services: 5.24% Atkins (Ws) Plc 5, Group 4 Securicor Plc 20, Hat Pin Plc 50, RPS Group Plc 20, Serco Group Plc 12, Technology Hardware Equipment: 2.60% Arm Holdings Plc 50, Spirent Communications Plc 50, Travel & Leisure: 4.46% Firstgroup Plc 10, Intercontinental Hotels Group Plc 5, Stagecoach Group Plc 35, William Hill Plc 6, Total Investments 3, Net Current Assets Total Net Assets 3, All investments are in ordinary shares. Please note that comparative figures are not included for 2005 due to a reclassification of FTSE Sectors in

18 BALANCE SHEET as at 28 February 2006 FIXED ASSETS Note Investments 3,579 3,135 CURRENT ASSETS Debtors Cash at bank CURRENT LIABILITIES Creditors 7 (60) (94) Distribution payable (61) (52) NET CURRENT ASSETS TOTAL NET ASSETS 3,595 3,199 SHAREHOLDERS FUNDS 3,595 3,199 Notes to the Accounts are on pages 19 to

19 SUMMARY OF MATERIAL PORTFOLIO CHANGES Major purchases Cost Major sales Proceeds BP Plc 293 Royal Dutch Shell B Plc 295 Royal Bank of Scotland Plc 286 Royal Bank of Scotland Plc 285 Vodafone Group Plc 261 Barclays Plc 249 Glaxosmithkline Plc 204 Vodafone Group Plc 232 Barclays Plc 201 BP Plc 229 HSBC Plc 183 HSBC Plc 225 BHP Billiton Plc 172 Glaxosmithkline Plc 210 Cookson Group Plc 161 Friends Provident Plc 164 Corus Group Plc 143 Morgan Crucible Plc 156 Standard Chartered Plc 142 Standard Chartered Plc 152 Friends Provident Plc 141 Rio Tinto Plc 146 Anglo American Plc 139 BHP Billiton Plc 144 Aviva Plc 134 Anglo American Plc 144 Arm Holdings Plc 126 Corus Group Plc 143 Intercontinental Hotels Group Plc 123 Xstrata Plc 137 BBA Group Plc 113 Taylor Woodrow Plc 131 Morgan Crucible Plc 111 Cookson Group Plc 128 Unilever Plc 110 O2 Plc 128 British American Tobacco Plc 109 Aviva Plc 127 BOC Group Plc 108 Intercontinental Hotels Group Plc 127 Whitbread Plc 102 BBA Group Plc 122 Sage Group Plc 101 British American Tobacco Plc 115 Charter Plc 100 British Airways Plc 114 FKI Plc 98 Pilkington Plc 111 Pilkington Plc 97 Rotork Plc 108 Hanson Group Plc 97 BOC Group Plc 108 Prudential Plc 96 Whitbread Plc 105 Taylor Woodrow Plc 95 Rank Group Plc 104 Bovis Homes Group Plc 92 Prudential Plc 103 HBOS Plc 89 Hanson Plc 99 Alliance & Leicester Plc 88 Lonmin Plc 99 National Grid Plc 88 Bovis Homes Group Plc 97 Stagecoach Group Plc 88 FKI Plc 96 Business Post Group Plc 86 Royal & Sun Alliance Plc 93 British Airways Plc 86 Slough Estates Plc 92 BT Group Plc 86 National Grid Plc 91 EMI Group Plc 83 Aegis Plc 90 Rio Tinto Plc 83 Alliance & Leicester Plc 89 Diageo Plc 83 BT Group Plc 85 Royal Dutch Shell B Plc 83 Diageo Plc 85 Halfords Group Plc 80 HBOS Plc 82 Man Group Plc 78 Rolls Royce Group Plc 80 Lonmin Plc 78 International Power Plc 80 Rank Group Plc 77 Compass Group Plc 77 Rexam Plc 75 Rexam Plc 76 Rolls Royce Group Plc 75 Findel Plc 76 Findel Plc 72 Charter Plc 76 Lloyds TSB Group Plc 72 VT Group Plc 75 GUS Plc 71 Man Group Plc 73 Helphire Group Plc 70 Logica cmg Plc 72 Compass Group Plc 69 Business Post Group Plc 72 17

20 Reckitt Benckiser Plc 69 Cobham Plc 71 Shaftesbury Plc 69 GUS Plc 71 Kensington Plc 69 Laird Group Plc 71 IMI Plc 69 Punch Taverns Plc 71 Close Brothers Group Plc 68 Weir Group Plc 71 Rotork Plc 68 Wolverhampton & Dudley Breweries 71 William Hill Plc 68 Salvesen Plc 71 Wolverhampton & Dudley Breweries 68 Premier Farnell Plc 71 Panmure Gordon Plc 68 Reckitt Benckiser Plc 70 VT Group Plc 67 Lloyds TSB Group Plc 70 Weir Group Plc 67 IMI Plc 69 Marconi Plc 67 Allied Domecq Plc 69 Misys Plc 66 Close Bros Group Plc 69 Taylor Nelson Sofres Plc 65 Interserve Plc 68 Cobham Plc 65 ARM Holdings Plc 67 Minerva Plc 65 Group 4 Securicor Plc 66 Wilson Bowden Plc 64 Vedanta Resources Plc 66 P&O Plc 65 BAE Systems Plc 65 Taylor Nelson Sofres Plc 65 Total cost of purchases 11,857 Total proceeds from Sales 12,113 All transactions detailed above are in UK Equities. 18

21 NOTES TO THE ACCOUNTS 1 Accounting Policies The fund s Financial statements have been prepared on the same basis as the Company s Financial Statements. 2 Net Gains on Investments The net gains on investments during the period comprise : Proceeds from sales of investments during the period 12,113 6,159 Original cost of investments sold during the period (11,653) (6,014) Gains realised on investments sold during the period Net unrealised appreciation for the period Net gains on investments Gross Income Dividends from UK companies Bank deposit interest 4 3 Gross income Expenses Payable to the ACD, associates of the ACD and agents of either of them : Periodic charge ShareMark Fee 6 4 Registrar Fees Payable to the Depositary, associates of the Depositary and agents of either of them : Depositary Fee 7 5 Transaction Fees 5 3 Custodial Fee Other Expenses: Audit Fee 7 7 Fee for publication of prices 4 2 FSA Fee 1 1 Total expenses

22 NOTES TO THE ACCOUNTS (CONTINUED) 5 Distribution Interim 43 - Final Net income after taxation 27 9 Add back: expenses charged to capital Periodic charges to ACD Audit fee 7 7 Depositary fee 7 5 ShareMark fee 6 4 Transaction fees payable to depository 5 3 FT fee 4 2 FSA fee 1 1 Registrar fee 1 1 Distribution payable

23 NOTES TO THE ACCOUNTS (CONTINUED) 6 Debtors Amounts receivable for the issue of shares 12 1 Outstanding dividends receivable 3 12 Pre paid fees in advance 3 3 Sales awaiting settlement Creditors Amounts owed for cancellations 21 9 Purchases awaiting settlement - 63 Accrued expenses Taxation The tax assessed for the period is calculated at the standard rate of corporation tax in the UK: 20%. The differences are explained below: Profit on ordinary activities before tax 27 9 Tax at 20% thereon: 5 2 Effects of: Creation of tax losses 15 8 UK Dividend Income (20) (10) Current tax charge for period - - A deferred tax asset has not been recognised in respect of timing differences relating to surplus management expenses, as there is insufficient evidence that the asset will be recovered. The amount of the asset not recognised is 21,378. The asset would be recovered if sufficient taxable profits were made in the future. 21

24 THE SHARE CENTRE GLOBAL FUND Investment Objective and Policy The Share Centre Global Fund aims to achieve long term capital growth primarily through investment in a portfolio of investment trusts and closed end investment companies (together Investment Vehicles ) providing global diversification. The Share Centre Global Fund will not be limited in the geographic allocation of its assets, and will target a balance as between UK and non-uk investments. Whilst The Share Centre Global Fund will invest primarily in Investment Vehicles, it may also invest in other investments having similar properties thereto, with the common aim of achieving The Share Centre Global Fund s investment objective. Furthermore, The Share Centre Global Fund shall not be limited by the type of underlying assets in which Investment Vehicles invest, and, by way of example and not limitation, The Share Centre Global Fund may invest in Investment Vehicles with underlying assets including equities, bonds, zero dividend preference shares, endowments and real property. The Share Centre Global Fund shall seek to invest in Investment Vehicles and other investments which, taken together, have a higher potential for capital and/or income growth than the FTSE Investment Companies Index. The general nature of the portfolio will be to invest in the securities described above. The Share Centre Global Fund does not currently intend to invest in money market instruments or derivatives (other than for efficient management purposes). In connection with its investment objective, The Share Centre Global Fund may invest in collective investment schemes. COMPARATIVE PERFORMANCE The Share Centre Global Fund We report a performance against our benchmark, the FTSE Investment Companies Index, of: Return from launch to 28 February 2006 % The Share Centre Global Fund 30.0% FTSE Investment Companies Index 32.0% Relative underperformance 2.0% Historical Performance The Share Centre Global Fund was launched on 25 May 2005 and therefore there are no historical performance figures currently available. 22

25 INVESTMENT REVIEW The Global Fund was launched on 15 th June since when the case for diversifying one s portfolio globally has been vindicated by the results achieved. Since its summertime launch the fund has generated a total return after expenses of 30% compare with the FTSE 100 s 16.9% total return and the wider UK equity market s 19% as measured by the FTSE All Share index. The Equity Investment Instruments total return index was up 32%, some 3% of which was due to Foreign & Colonial Trust s announcement it would support its discount level at above 10%, resulting in a wholesale re-rating of the Generalist trusts that by market weighting constitute a large part of the index. Overseas markets were generally stronger in sterling terms, with the Financial Times World Index excluding the UK rising 21.2%. We are satisfied with the Fund in terms of both the absolute and relative returns, but perhaps the most satisfying aspect of the results is that they have been achieved with relatively low volatility. The figures are not due to any one-off exceptional event, but the result of solid stock selection. In our first week of trading, European and London markets hit 3-year highs, while New York and Tokyo, despite US oil futures rising to the then high of $57 a barrel, were also firm due to better prospects for US inflation. On 29 July the FTSE 100 breached 5300 a 40-month high. With cash to invest it cost us a little performance at the outset, but by the end of August we were practically fully invested and had clawed ourselves ahead despite having absorbed the initial cost of investment. Our aim initially was to structure a portfolio of holdings intended to provide good returns over the medium term. Occasionally we will exploit shorter-term opportunities. The portfolio we have built is well diversified geographically, by currency and by investment theme. Already we have had exposure to asset classes other than equities, including property, hedge funds and endowment policies and have included some more defensive investments such as zero dividend preference shares and structured products at the time of purchase. Most of our purchase decisions have been driven by two or more factors. For example, a share may fulfil an asset allocation objective while at the same time be undervalued with the potential for the discount to net asset value to narrow. This provides two opportunities to make money: first, from good asset allocation decisions and secondly, from the re-rating of the shares to a narrower discount. Prospects As we promised at launch, the use of investment trusts and closed-ended investment companies to invest in global markets has allowed the Fund access to a diverse range of investment opportunities, in contrast with a typical global fund that will focus on the principal blue-chip stocks in the world s major equity markets. To date we have captured exceptional gains in a very short time particularly as inflation remains relatively low. It must be expected that markets will become more volatile during the remainder of the year simply because investors have significant gains to protect, and must be expected to become more risk-averse from time to time as a result; predictable and perfectly understandable investor behaviour. Furthermore, we readily concede that there are real concerns that may impact on equity markets. Not necessarily that they will come about, but that concern about them must be expected to heighten at times. 23

26 The negatives are well documented, and we do not need to devote too much space to them here. The main economic concern is the US. A long-term theme has been its enormous balance of payments deficit, for which there is no short-term fix. US inflation is another hardy perennial, driven by higher interest rates and higher commodity prices. In turn these and house prices might impact on the US consumer. Likewise in the UK the impact of higher fuel bills, interest rates and council tax on the consumer is all too apparent to the man in the street. International tensions in the Middle East, Iraq and Iran are the most obvious, and the rate of sustainable growth in China and India coupled with the consequence on raw material prices will be a long-term theme. Nevertheless, the news from companies globally is encouraging and ratings by historical standards not too demanding in many markets. It is apparent from the number of corporate deals both in the UK and overseas that Boards are of a like mind, and the sums of money being returned to investors needing to be reinvested are enormous. Even monies bound for the property market are being channelled through stock market-listed investment vehicles these days. Not that we have found weight of money arguments particularly compelling over the years, but they seem to be supporting shares prices in the near term at least. In the longer term the major themes will be internationalisation and demographics. The fact we are fully invested is testament to our current stance. We are encouraged by the quality of funds available, and are not confining ourselves to the UK investment companies sector. There are reasonable returns to be made both in the UK and overseas without unnecessary risk, and means by which we can limit currency risk. Backing active managers is our forte however, and these will be the main drivers of our performance. That and the fact that being a small fund means we have the potential to be far more agile and pro-active in driving the Net Asset Value than larger funds. 24

27 NET ASSET VALUE PER SHARE AND PERFORMANCE RECORD Net Asset Value per Share* The net asset values for the accounting dates since launch are: Accounting Date Total Net Asset Value Net Assets per Share Number of Shares in Issue 28/02/06 1,430, p 1,097,614 Price Record* Accumulation Shares were first issued on 15 th June Income Shares Year Highest Lowest Pence Pence p p 2006* p p * - To 28 February

28 STATEMENT OF TOTAL RETURN For the period from 15 June 2005 to 28 February 2006 Note Net gains on investments Gross income 3 19 Expenses 4 (13) Net income before and after taxation 6 Total return for the period 277 Net increase in shareholders funds from investment activities 277 STATEMENT OF MOVEMENT IN SHAREHOLDERS FUNDS For the period from 15 June 2005 to 28 February 2006 At authorisation - Movement due to sales and repurchases of shares: Amounts receivable on creation of shares 1,164 Amounts payable on cancellation of shares (11) 1,153 Stamp duty reserve tax received - Stamp duty reserve tax paid - 1,153 Net increase in shareholders funds from investment activities (see above) 277 Net assets at the end of the period 1,430 Notes to the accounts are on pages 30 to 31 26

29 PORTFOLIO STATEMENT UK Investment Instruments Holding Market Value Share of Fund % Gartmore Irish Growth Fund 4, Barclays Global Inv Endowment Fund II Ltd Ord 1p 21, North Atlantic Small Co Inv Tst Plc Ord 5p 6, Exeter Securities (Guernsey) Ld Zero Div Pref 10p 35, Elders Merill Lynch Japan Protected Growth Shs Class 9C 36, Invesco Asia Trust Plc Ord 10p 57, Premier Pacific Income Fund Plc Ord NPV 113, Principle Capital Investment Trust Plc Ord 1p 45, Witan Pacific Investment Trust Plc Ord 25p 20, Electra Private Equity Plc Ord 25p 7, JP Morgan Fleming Japanese IT Plc Ord 25p 14, Close Assets Funds Ltd Us Index Shares p 25, Gartmore European Investment Trust Plc Ord 50p 9, Hedgefirst Ltd Share 0.01p 25, Tribune Trust Plc Ord 22.5p 7, Templeton Emerging Markets Inv Trust Plc Ord 25p 16, Schroder Asia Pacific Fund Ord 10p 50, Barclays Capital DDQ protected Commodities Fund 18, Finsbury Technology Trust Plc Ord 25p 11, Tr European Growth Trust Plc Ord 25p 20, Barclays Capital 125% Sterling S&P 500 Bond Fund 110, BFS Us Special Opportunities Trust Plc Inc Shares 0.1p 110, Elders Merill Lynch Japan Protected Grwth Shs Class 13C 40, UK Investment Trust Warrants: Aberdeen Asian Income Fund Ltd Wts To Sub For Ord 5, International Investment Trusts Eurazeo Plc DWS Global Commodities Fund 5, Investor AB B Shares 5, Altus Capital Ltd Japan Opportunities II Fund 6, Total Investments 1, Net Current Assets Total Net Assets 1, Please note that comparative figures are not included for 2005 as the fund was not launched until June

30 BALANCE SHEET as at 28 February 2006 FIXED ASSETS 2006 Note Investments 1,405 CURRENT ASSETS Debtors 5 21 Cash at bank CURRENT LIABILITIES Creditors 6 (10) NET CURRENT ASSETS 25 TOTAL NET ASSETS 1,430 SHAREHOLDERS FUNDS 1,430 Notes to the Accounts are on pages 30 to 31 28

31 SUMMARY OF MATERIAL PORTFOLIO CHANGES Major purchases Cost Major sales Proceeds Barclays Capital 125% Sterling 100 Hedgefirst 82 Hedgefirst 98 Insight Foundation Property Trust 75 Electra Investment Trust 86 Polar Capital Technology Trust 70 TR European Growth Trust 74 Aberdeen Asian Income Fund 52 Insight Foundation Property Trust 70 JZ Equity Partners 49 Premier Pacific Income Fund 70 BFS Managed Properties ZDPF 46 BFS US Special Opportunities 66 Scottish Mortgage Investment Trust 44 Elders Class 13C Japan Protected 62 Scottish Investment Trust 42 Polar Capital Technology Trust 60 Private Equity Investor Plc 38 North Atlantic Smaller Companies 59 Foreign & Colonial Emerging Markets 36 Exeter Guernsey Zero Div Preference 54 Martin Currie Japan Investment Trust 36 Investor AB B Shares 53 Baillie Gifford Japan Investment Trust 35 Schroder Asia Pacific Fund 52 Jupiter European Opportunities Trust 35 Scudder Global Opportunities 51 Real Estate Opportunities Plc 34 Aberdeen Asian Income Fund 50 ING UK REIT 34 Barclays Global Inv Endowment Fund 50 Morant Wright Japan Income Trust 31 JP Morgan Fleming Japanese Trust 48 Henderson High Income Trust Plc 30 JZ Equity Partners Plc 46 Polar Capital Technology Warrants 19 Principle Capital Investment Trust 45 Invesco City & Commercial Trust 19 Elders Class 9C Japan Protected 40 Exeter Securities (Guernsey) ZDPF 18 BFS Managed Properties ZDPF 39 Invesco Asia Trust Plc 38 Gartmore European Inv Trust 38 Scottish Mortgage Inv Trust 37 Templeton Emerging Markets 37 Tribune Trust Plc 36 Scottish Investment Trust Plc 36 Real Estate Opportunities Plc 35 Jupiter Opportunities Trust Plc 34 Private Equity Investor Plc 34 ING UK REIT 33 Altus Japan Opportunities Fund 33 Close Asset Fund US Shares 32 Gartmore Irish Growth Fund 32 Foreign & Colonial Emerging Markets 31 Morant Wright Japan Inv Trust 30 Henderson High Income Trust 29 Witan Pacific Investment Trust 29 Total cost of purchases 2,009 Total proceeds from Sales 855 All transactions detailed above are in Investment Trusts. 29

32 NOTES TO THE ACCOUNTS 1 Accounting Policies The fund s Financial statements have been prepared on the same basis as the Company s Financial Statements. 2 Net Gains on Investments Period from 15 June 2005 to 28 Feb 2006 The net gains on investments during the period comprise: Proceeds from sales of investments during the period 855 Original cost of investments sold during the period (768) Gains realised on investments sold during the period 87 Net unrealised appreciation for the period 184 Net gains on investments Gross Income Period from 15 June 2005 to 28 Feb 2006 Dividends from UK companies 14 Bank deposit interest 5 Gross income 19 4 Expenses Period from 15 June 2004 to 28 Feb 2006 Payable to the ACD, associates of the ACD and agents of either of them: Periodic charge 8 8 Payable to the Depositary, associates of the Depositary and agents of either of them: Transaction Fees 1 Custodial Fee - 1 Other Expenses: FT Fee 2 FSA Fee 1 Lawyers Fee 1 Total expenses 13 30

33 NOTES TO THE ACCOUNTS (CONTINUED) 5 Debtors 2006 Pre paid fees in advance 18 Outstanding dividends receivable 2 Amounts receivable for the issue of shares Creditors 2006 Purchases awaiting settlement 5 Accrued expenses Taxation The tax assessed for the period is calculated at the standard rate of corporation tax in the UK: 20%. The differences are explained below: 2006 Profit on ordinary activities before tax 6 Tax at 20% thereon: 1 Effects of: Creation of tax losses 2 UK Dividend Income (3) Current tax charge for period - A deferred tax asset has not been recognised in respect of timing differences relating to surplus management expenses, as there is insufficient evidence that the asset will be recovered. The amount of the asset not recognised is 1,650. The asset would be recovered if sufficient taxable profits were made in the future. 31

34 GENERAL INFORMATION Launch Date: 13 October 2003 First Day Trading: 08 July 2004 Accounting Periods: Interim - 31 August Final - 28 February Annual Management Charges: Global Accumulation A Shares - 1.4% Global Accumulation B Shares - 0.8% Growth & Income Shares - 1.4% Share Prices The prices quoted for the Funds are determined by reference to the underlying market value of the net assets of the Fund at the valuation point. The Funds are normally valued at noon each business day for the purpose of determining the share price, and its share price and trading activity are displayed on ShareMark ( and prices are quoted in the managed funds section of the Financial Times. Dealing in Shares Shares may be bought and sold on any business day by contacting your stockbroker, or by application in writing to The Share Centre, PO Box 2000, Aylesbury, Bucks, HP21 8ZB or by telephoning between 8.00 am and 6.00 pm. All transactions will be dealt on a forward pricing basis, i.e. at the next valuation point following receipt of a valid application. Contract notes are issued for all purchases and sales of shares and will be posted within 24 hours of the next valuation point following receipt of application. The shares of the Company are non-certificated. A Word of Warning The price of shares, their value and the income from them can go down as well as up, and investors may get back less than they invested. The investment in an Open Ended Investment Company must be regarded as long-term, and is not suitable for money which may be required at short notice. Past performance is not necessarily a guide to future performance. Neither income nor capital is guaranteed. Dealing charges and the bid/offer spread on the underlying securities in The Share Centre Growth and Income Fund could have the effect that investors would not achieve the indicative returns stated. Changes in exchange rates may also cause the value of investments to go down as well as up. Please note shareholders are not liable for debts of the Company. 32

35 GENERAL INFORMATION (CONTINUED) Taxation Income Income earned by shareholders from the Company is liable to UK Income Tax at the rate applicable for the individual shareholders. Tax Certificates will be issued annually with the valuation in April and will carry a credit for Income Tax. The value of the tax credit is currently 10% of the grossed-up dividend. This tax credit is not reclaimable by non-taxpayers. The aggregate of the distribution and the tax credit should be included in shareholders total income for Income Tax purposes. Shareholders liable to the starting rate or basic rate only will have no further liability to Income Tax on a distribution. There will be a further liability to income tax for higher rate taxpayers. Capital Gains There is no tax on capital gains within the Company. Gains realised on disposal of shares by shareholders who are ordinarily resident in the UK for taxation purposes may be liable to Capital Gains Tax. All taxation information in this Report is based on current legislation and may be subject to change. Reports and Prospectus Copies of the Prospectus and this Report and Accounts may be obtained from the ACD at the address shown at the beginning of this Report. The Company s Interim Report will be prepared for the sixmonth period to 31 August Broker Fees Broker fees are payable to authorised intermediaries, rates are available on request and details are set out on the contract note. Stamp Duty Reserve Tax Stamp Duty Reserve Tax is not charged on purchases or sales of The Share Centre Global Fund. Calculations of money due to the Inland Revenue are made each month and payment is made from capital account of the Fund. Stamp Duty Reserve Tax is charged on purchases of The Share Centre Growth & Income Fund. Calculations of money due to the Inland Revenue are made each month and any excess funds received are kept within the capital account for the benefit of the fund. 33

36 STATEMENT OF THE AUTHORISED CORPORATE DIRECTOR S RESPONSIBILITIES IN RELATION TO THE REPORT AND ACCOUNTS OF THE COMPANY The Open-Ended Investment Companies Regulations 2001 (SI2001/1228) ( the Regulations ) and the rules contained within the Collective Investment Scheme Sourcebook Regulations 2001 issued by the Financial Services Authority ( the FSA ) require the ACD to prepare financial statements for each annual accounting period which give a true and fair view of the financial affairs of the Company and of its income and expenditure for the period. In preparing the accounts, the ACD is required to: select suitable accounting policies and then apply them consistently; comply with the disclosure requirements of the Statement of Recommended Practice: Financial Statements of Authorised Funds issued by the Investment Management Association ( IMA ) in November 2003; follow generally accepted accounting principles and applicable accounting standards; and keep proper accounting records which enable it to demonstrate that the accounts as prepared comply with the above requirements. The ACD is responsible for the management of the Company in accordance with its Instrument of Incorporation, Prospectus and the Regulations. The ACD is responsible for keeping proper books of account, the system of internal controls and for ensuring that reasonable steps are taken for the prevention and detection of fraud and other irregularities. STATEMENT OF THE DEPOSITARY S RESPONSIBILITIES IN RELATION TO THE REPORT AND ACCOUNTS OF THE COMPANY The Depositary is responsible for the safekeeping of all the property of the Company (other than tangible moveable property) which is entrusted to it. It is the duty of the Depositary to take reasonable care to ensure that the Company is managed in accordance with the Financial Services Authority s Collective Investment Scheme Sourcebook, the Open-Ended Investment Companies Regulations 2001 (SI2001/1228) ( the OEIC Regulations ) and the Company s Instrument of Incorporation, in relation to the pricing of, and dealings in, shares in the Company; the application of income of the Company, and the investment and borrowing powers of the Company. 34