M&S UNIT TRUST FUNDS. The Marks and Spencer Worldwide Managed Fund

Transcription

1 M&S UNIT TRUST FUNDS The Marks and Spencer Worldwide Managed Fund Manager s annual report December 2014

2 Contents Page(s) Manager s investment report 2 to 5 Portfolio statement 6 to 21 Net asset value per unit and comparative table 22 Ongoing charges 23 Risk and reward profile 23 Authorised status 23 Trustee report 23 to 24 Statement of the Manager s responsibilities 24 Certification of financial statements by Directors of the Manager 24 Independent auditor s report 25 Statement of total return 26 Statement of change in net assets attributable to Unitholders 26 Balance sheet 27 Notes to the financial statements 28 to 36 Distribution tables 37

3 The Marks and Spencer Worldwide Managed Fund THE MARKS AND SPENCER WORLDWIDE MANAGED FUND Manager, Registrar, dealing, administration and marketing Marks and Spencer Unit Trust Management Limited Authorised and regulated by the Financial Conduct Authority. Investor helpline: or if calling from abroad. Lines are open 8am-8pm Monday to Friday, 9am- 5pm on Saturday and 10am-4pm bank holidays (closed on Sunday, Christmas Day, Boxing Day and New Year s Day). Please be aware that opening hours may be restricted over the Christmas period, please contact us for details. Calls may be recorded. Head office and registered office Kings Meadow Chester CH99 9FB Registered in England No Directors of the Manager Sue Fox (Executive) - appointed May 2014 Crawford Prentice - resigned December 2014 Dame Denise Holt Peter Shawyer Phillip Scott Justin Turner Keith Woollard Investment advisers HSBC Global Asset Management (UK) Limited 78 St James s Street London SW1A 1EJ HSBC Global Asset Management (UK) Limited directly manage a proportion of the fund and sub-delegate the remaining fund management to the following specialist advisers: GMO UK Limited One Angel Court Throgmorton Street London EC2R 7HJ Insight Investment Management (Global) Limited 33 Old Broad Street London EC2N 1HE Wellington Management International Limited Cardinal Place 80 Victoria Street London SW13 5JL The above listed investment advisers are authorised and regulated by the Financial Conduct Authority. Axiom International Investors LLC 33 Benedict Place Greenwich CT USA Sanders Capital LLC 390 Park Avenue New York NY USA Axiom International Investors LLC and Sanders Capital LLC are not authorised by the Financial Conduct Authority but are registered with the Securities and Exchange Commission in the USA. Trustee State Street Trustees Limited 525 Ferry Road Edinburgh EH5 2AW Authorised and regulated by the Financial Conduct Authority. Independent auditor KPMG Audit Plc 15 Canada Square London E14 5GL PAGE 1

4 Manager s investment report This section gives you an opportunity to see whether we have made any changes to the objectives we give our investment advisers. If no change has occurred it reiterates the objectives laid down for the Manager. Our objectives and methods The Marks and Spencer Worldwide Managed Fund offers access to the share and bond markets, using a mix of different investment styles with the aim of achieving long term capital growth and a reasonable yield. The fund may use derivative instruments (options, futures and contracts for difference) and forward transactions in a currency for the purposes of efficient portfolio management. These instruments can therefore be used to reduce risk, reduce costs, or generate additional capital or income with no, or low levels of, risk. Details of the value of derivative contracts held are confirmed in the Notes to the financial statements section. We used the skills of six investment management companies during the period of the report to select the investments. Each company has been chosen for their specific approach to investment and for skills which will be complementary when matched together. HSBC Global Asset Management (UK) Limited aims to track the performance of the FTSE All-Share Index. GMO UK Limited (removed as an investment adviser on 31 July 2014) aims to use complementary investment techniques to select a balanced portfolio of UK shares. Insight Investment Management (Global) Limited invests in UK and overseas fixed interest securities. Sanders has a value investment strategy where they use fundamental research to identify shares that are undervalued by the markets. Wellington selects shares through fundamental research based on the size of the value gap between the current price and what they think the long term value of the company should be. Axiom invest in companies that they believe will report better results than expected by consensus market forecasts. These positive surprises compared to expectations should mean that the shares will outperform. We develop a working partnership with our investment advisers. We provide each adviser with a benchmark against which to measure performance. Their results and the processes they use to make decisions are regularly monitored by the HSBC Group Investment Committee. The percentages below reflect the actual allocation for each investment sector and adviser, including uninvested cash at 31 December UK shares HSBC Global Asset Management (UK) Limited 23.6% International shares Wellington Management International Limited 27.3% Axiom International Investors LLC 16.4% Sanders Capital LLC 10.7% UK and overseas bonds Insight Investment Management (Global) Limited 21.6% Cash 0.4% Important information With effect from 19 February 2014 we removed the initial charge for the Marks and Spencer Worldwide Managed Fund. This applies to any lump sum or monthly investments from this date. Review of the twelve months to 31 December 2014 During the review period, global equity markets rose 9.9% (in sterling terms). With the gradual winding down of the US Federal Reserve s (the Fed) monthly asset purchases in the first quarter of 2014, investors focused keenly on the outlook for US interest rates. Confusion arose as new Fed chair Janet Yellen implied that rates could rise as early as the first quarter of 2015, seemingly contradicting the earlier message of a very gradual removal of policy accommodation. However, on the last day of March, she announced that considerable slack in the PAGE 2

5 Percentage growth 31/12/09 to 31/12/10 to 31/12/11 to 31/12/12 to 31/12/13 to 31/12/10 31/12/11 31/12/12 31/12/13 31/12/ % -2.6% 8.5% 15.1% 7.3% This information relates to the past, and past performance is no guarantee of future performance. All the above figures are on a bid to bid basis, net income reinvested. The performance figures exclude the initial charge of the fund. Source: Morningstar. labour market was evidence that the central bank s unprecedented accommodation would still be needed for some time to come. As the year progressed, the US economy remained a bright spot in the global landscape after the economy grew at its fastest pace in more than a decade during the third quarter of In Europe, inflation slumped to a five-year low, increasing pressure on the European Central Bank (ECB) to introduce further stimulatory measures. The annual inflation rate stood at a mere 0.3% in November, down from 0.4% the previous month, as energy prices fell, according to Eurostat. Inflation has been below 1% since October The level of unemployment remains at around 11.5%. ECB head Mario Draghi continued to try to win consensus for more stimulus, with Germany still opposed to full-fledged quantitative easing. So far, Draghi s stimulus measures of buying asset-backed securities and covered bonds, and providing cheap loans to banks, have had little effect on European growth. Towards the end of the review period, global stock markets had a choppy time as equities dived in October on concerns over global growth and geopolitical turmoil, and in December as oil traded at its cheapest level in five years and Russia s financial crisis worsened. As a result there was an end-of-year sell-off in emerging markets as investors grew more risk averse. Despite this, many markets ended the year significantly ahead, lifted by above-trend growth in the US and reassurance the US Federal Reserve would take a patient approach to raising rates, renewed stimulus actions in Europe and Japan, and structural economic reforms in many countries like India and China. Gilt yields fell substantially in January as a combination of weaker-than-expected economic data from several emerging markets including China and soft data from US, drove investors back into government bonds. UK gilt yields followed global bond markets in April and May and fell lower amid continuing geopolitical concerns in Ukraine and dovish messages from central banks. Gilt yields rose in June, resulting in the first negative month of the year, as the Bank of England s governor Mark Carney hinted that interest rate rises could happen much sooner than the market was expecting. However, gilt yields resumed their downward trend over the second half of the year as geopolitical events and mixed economic data prompted investors to grow increasingly nervous about the outlook for global growth. The Monetary Policy Committee maintained the base rate at 0.5% throughout the period. However, there was a change in the balance of views in the committee, with two members voting a number of times in favour of raising interest rates. Portfolio review During the review period, GMO UK Limited was removed as an investment adviser from 31 July 2014, with the assets being distributed among the remaining investment managers. In Wellington s part of the fund, its Global Value strategy outperformed the benchmark. PAGE 3

6 Positive performance was primarily driven by stock selection in the information technology sector. Stock specific contributors include health insurer UnitedHealth Group which posted above consensus results with performance strongest in Optum (their health services platform company). In addition, Optum are now moving into the Affordable Care Act exchanges (new platform enabling US citizens to shop for health insurance through state exchanges). Nordstrom was also a positive contributor, as it reported solid earnings ahead of consensus estimates. The largest negative contribution came from BG Group which saw its results come in below expectations as a result of weak upstream earnings. Spanish bank, Banco Bilbao Vizcaya Argentaria (BBVA), also had a negative effect on performance as its latest results disappointed the market with higher-than-expected provisioning charges, higher costs from upgrading technology and weakness in emerging market currencies. Purchases over the period included Irish-headquartered healthcare products company Covidien, while sales included UK retailing business Kingfisher and selective Asian vehicle companies. In the part of the fund managed by Sanders Capital, the portfolio outpeformed its benchmark, mainly as a result of positive stock selection in the technology and healthcare sectors. Within the technology sector, Intel, Corning and Apple were the main contributors, whilst within the healthcare sector, a positive contribution came from Novartis and UnitedHealth Group. However, this was offset by a negative contribution from the financial and consumer discretionary sectors. Within the financial sector, the exposure to European bank holdings, such as BNP Paribas and Barclays, were the main detractors. In the consumer discretionary sector, carmaker positions, such as Volkswagen preference and Hyundai Motor also detracted from performance. Purchases during the period included Apple, DR Horton and Taiwan Semiconductor Manufacturing sponsored ADR while sales included GlaxoSmithKline, Ensco and Noble Corporation. In the part of the fund managed by Axiom International Investors, the portfolio underperformed its benchmark. Over the review period, a positive contribution came from the exposure in the health care sector but this was offset by a negative contribution from the holdings in the consumer discretionary sector. At stock level, Axiom sold the LyondellBasel position, whose competitive advantages from low cost natural gas feedstock in the USA have been eroded by the general fall in oil and gas prices. The exposure to Airbus, the European competitor to Boeing, also detracted from performance as cost overruns swamped the benefits of stronger than expected orders for the company s more fuel efficient new planes. In contrast, CSR, the Chinese rail maker, contributed positively to performance. CSR s performance was fuelled by continued strong contract wins, an increasingly favourable policy environment, and a surprise merger with its national rival, China CNR. Purchases during the period included Apple and BMW, while sales included Gilead Sciences and Walgreen. As HSBC tracks the FTSE All-Share Index, purchases and sales were carried out to rebalance holdings in line with the changes in the index. During the period additions to the FTSE All-Share Index included Flybe Group, Just-Eat, Pets at Home Group, Saga plc and Poundland, whilst deletions included Headlam Group, Wilmington Group, JKX Oil & Gas and Ruspetro plc. Insight manages the bond part of the fund and over the review period it outperformed its benchmark. Performance was positive over the first half of 2014 but negative over the second half. Yield curve positioning and duration management contributed positively to performance during the first quarter of 2014, while security selection detracted from it. During the second quarter, duration was neutral for performance, but yield curve was strongly positive. The fund was also active PAGE 4

7 in terms of relative value market allocation trades, taking a short position in 10-year US treasuries against a long position in Europe. Insight took profits on the European part of the trade, replacing it with a long in the UK and shifted the short in the US from the 10-year to the 30-year. In terms of yield curve, in the UK, Insight were overweight 5-year to 10-year maturities and underweight 10-year to 15-year maturities and this contributed strongly to performance in the second quarter. Over the second half of the year, the fund managed duration generally on the shorts side in anticipation of yields rising as the market started to price in interest rate hikes. However yields continued to fall and Insight removed shorts and focused on the UK and Europe in October and closed out a US position in early November. In terms of yield curve, in the UK, the fund was initially positioned for yield curve flattening, which was positive for performance, before moving to an overweight in intermediatedated bonds and underweights either side of the curve, but this was slightly negative. Outlook We expect the global economy to continue growing in 2015 and beyond. However, we would not be surprised to see further spikes in volatility over the coming year. It is unusual for equity markets to rally in the relatively uninterrupted way that they have since the summer of Moreover, previous rate tightening cycles suggests that the US Federal Reserve starting to increase interest rates could trigger higher volatility. In addition, equity valuations look attractive and are at levels that have historically been consistent with moderate but positive long-term returns. However, risks remain such as the ECB failing to prevent the Eurozone sliding into outright deflation and a possible acceleration in the pace of the slowdown in the Chinese economy. The investment advisers in the period under review were: HSBC Global Asset Management (UK) Limited The primary objective of HSBC Global Asset Management (UK) Limited is to track the FTSE All-Share Index. They have constructed a portfolio which closely resembles the UK equity market as a whole but has a slightly above average level of dividend income. To do this they must inevitably have a large range of holdings. GMO UK Limited (removed as an investment adviser on 31 July 2014) GMO used three complementary investment techniques to select a balanced portfolio of UK shares. Their processes aimed to identify undervalued shares, shares with price momentum and market signals to buy or sell shares. Insight Investment Management (Global) Limited Insight aims to add stability and income to the fund by investing in government bonds and other fixed interest securities. The portfolio will invest primarily in UK fixed interest securities but is permitted to hold up to 40% in foreign currency denominated fixed income securities. Wellington Management International Limited Wellington selects shares through fundamental research based on the size of the value gap between the current price and what they think the long term value of the company should be. Axiom International Investors LLC Axiom invest in companies that they believe will report better results than expected by consensus market forecasts. These positive surprises compared to expectations should mean that the shares will outperform. Sanders Capital LLC Sanders has a value investment strategy where they use fundamental research to identify shares that are undervalued by the markets. PAGE 5

8 Portfolio statement This section details all the different companies in which the fund invests, by sector and country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). UK EQUITIES AND CONVERTIBLES (25.08%; 31/12/ %) Oil & gas producers 3.70 Afren 73,250 34, BG Group 423,093 3,659, BP 1,630,071 6,693, Cairn Energy 38,843 69, EnQuest 48,450 17,200 - Exillon Energy 7,400 10,934 - Nostrum Oil & Gas 4,000 16,800 - Ophir Energy 34,050 48, Premier Oil 35,024 58, Royal Dutch Shell 'A' 262,776 5,658, Royal Dutch Shell 'B' 231,100 5,159, Salamander Energy 17,341 11,272 - Soco International 14,798 44, Tullow Oil 61, , Vesuvius 19,715 87, Oil equipment & services 0.08 AMEC 26, , Greencoat UK Wind 27,000 29, Hunting 9,987 52, John Wood 24, , Lamprell 17,000 20,570 - Chemicals 0.16 Croda International 9, , Elementis 30,908 80, Johnson Matthey 13, , Synthomer 18,000 42, Victrex 5, , Forestry & paper 0.05 Mondi 24, , Industrial metals 0.01 Evraz Group 35,340 54, Ferrexpo 9,950 5,249 - Mining 1.01 African Barrick Gold 9,450 24,135 - Anglo American 87,508 1,050, Anglo Pacific 6,430 6,430 - Antofagasta 24, , BHP Billiton 141,309 1,962, Fresnillo 11,360 86, Gem Diamonds Mining 4,300 7,514 - Hochschild Mining 11,300 9,859 - Kazakhmys 17,286 44, Lonmin 28,710 50, Rio Tinto 83,565 2,506, Vedanta Resources 6,976 40, Construction & materials 0.07 Balfour Beatty 46,405 98, Boot (Henry) 6,570 12,582 - Costain 4,860 13,401 - Galliford Try 5,494 70, Keller 4,732 41, Kier Group 3,579 53, Low & Bonar 21,994 10,887 - Marshalls 13,449 30, Morgan Sindall 2,560 15,872 - Norcros 37,380 6,635 - Polypipe Group 8,900 22,072 - Rok* 12, Tyman 11,430 35, PAGE 6

9 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Aerospace & defence 0.49 BAE Systems 213,599 1,007, Chemring 13,170 31, Cobham 76, , Meggitt 54, , QinetiQ 44,400 83, Rolls-Royce 126,655 1,099, Rolls-Royce 'C' 16,971,770 16,972 - Rolls-Royce 'C'* 11,398, Senior 27,993 84, Ultra Electronics Holding 4,618 83, General industrials 0.17 Alent 14,840 47, British Polythene Industries 1,658 10,868 - Exova 7,253 11,423 - Melrose 72, , Rexam 47, , RPC Group 15,294 76, RPC Group Rights 3,782 6,619 - Smith (David S) 62, , Smiths Group 26, , Vitec 2,863 16,849 - Electronic & electrical equipment 0.11 Dialight 2,050 16,410 - Domino Printing 7,512 49, Halma 27, , HellermannTyton Group 13,000 40, Morgan Advanced Materials 23,456 74, Oxford Instruments 3,569 45, Renishaw 2,450 48, Spectris 7, , TT Electronics 10,692 10,772 - Xaar 5,120 19,456 - Industrial engineering 0.17 Bodycote International 13,273 85, Fenner 13,693 29, Hill & Smith 6,000 34,800 - IMI 18, , Rotork 5, , Severfield-Rowen 20,960 14,253 - Spirax-Sarco Engineering 4, , Weir Group 14, , Industrial transportation 0.06 BBA Group 32, , Fisher (James) & Sons 2,755 32, Royal Mail 41, , UK Mail Group 1,516 7,231 - Wincanton 8,492 13,481 - Support services 0.79 Aggreko 16, , Ashtead 33, , Atkins (WS) 6,810 92, Babcock International 33, , Berendsen 11, , Brammer 9,312 31, Bunzl 22, , Capita 44, , Carillion 29,049 97, Connect 14,394 22,167 - De La Rue 6,976 36, Diploma 7,600 53, PAGE 7

10 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Electrocomponents 31,621 67, Essentra 17, , G4S 105, , Hays 94, , HomeServe 18,420 61, Howden Joinery 43, , Interserve 9,685 53, Intertek 10, , Mears Group 6,500 24,408 - Menzies (John) 3,867 13,747 - Michael Page International 20,539 84, Mitie 26,552 73, Northgate 9,027 54, Paypoint 4,757 42, Premier Farnell 24,798 43, Rentokil Initial 126, , Robert Walters 4,426 13,555 - RPS Group 17,153 35, Safestore 13,000 30, Serco 35,055 56, Shanks 31,766 31, SIG 40,208 69, Speedy Hire 38,850 30,303 - St.Ives 7,695 14,197 - SThree 7,900 22,930 - Travis Perkins 16, , Xchanging 16,350 25,424 - Automobiles & parts 0.07 GKN 109, , Beverages 1.16 A.G. Barr 5,670 33, Britvic 15, , Diageo 242,949 4,490, SABMiller 63,079 2,120, Stock Spirits 12,678 27, Food producers 0.56 Associated British Foods 23, , Cranswick 3,705 51, Dairy Crest 9,500 47, Devro 13,036 39, Premier Foods 46,641 14,809 - SSP Group 17,880 52, Tate & Lyle 31, , Unilever 80,783 2,122, Household goods 0.91 AGA Foodservice 4,267 5,035 - Barratt Developments 65, , Bellway 8, , Berkeley Group Holdings 8, , Bovis Homes Group 9,111 80, Crest Nicholson Holdings 14,500 56, Persimmon 121,926 1,920, Reckitt Benckiser 43,343 2,258, Redrow 14,871 43, Taylor Wimpey 217, , Leisure goods - Games Workshop 2,100 10,605 - Pets At Home 14,480 29,279 - Photo-Me International 17,000 23,460 - Personal goods 0.11 Burberry 30, , PZ Cussons 20,850 63, Ted Baker 1,800 39, PAGE 8

11 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Tobacco 1.54 British American Tobacco 189,065 6,617, Imperial Tobacco 85,193 2,416, Healthcare equipment & services 0.16 Al Noor Hospitals Group 3,550 35, Consort Medical 3,218 27, NMC Health 4,600 21,091 - Smith & Nephew 60, , Spire Healthcare 11,000 41, Synergy Healthcare 3,800 78, Pharmaceuticals & biotechnology 1.94 AstraZeneca 139,514 6,355, BTG 24, , Dechra Pharmaceuticals 5,987 50, Genus 4,460 55, GlaxoSmithKline 325,783 4,482, Hikma Pharmaceuticals 9, , Indivior 43,343 64, Vectura 27,040 34, Food & drug retailers 0.32 Booker 108, , Greggs 7,110 51, Morrison (Wm) Supermarkets 146, , Ocado Group 29, , Sainsbury (J) 94, , Tesco 543,534 1,025, General retailers 0.62 AO World 11,910 33, Card Factory 11,828 33, Carpetright 3,438 13,752 - Carphone Warehouse Group 63, , Darty 26,789 18,350 - Debenhams 82,871 62, Dignity 3,276 62, Dunelm Group 6,160 56, Game Digital 5,561 19,614 - Halfords 13,526 63, Home Retail 55, , Inchcape 31, , JD Sports Fashion 3,920 19,600 - Kingfisher 160, , Laura Ashley 16,700 4,843 - Lookers 21,177 27, Marks & Spencer** 212,852 1,019, Mothercare 5,121 8,911 - N Brown Group 11,501 43, Next 9, , Pendragon 93,105 29, Poundland 9,930 32, Sports Direct International 17, , SuperGroup 2,180 19,228 - WH Smith 8, , Media 0.56 Bloomsbury Publishing 7,121 11,411 - British Sky Broadcasting 70, , Centaur Media 12,160 7,722 - Chime Communications 5,400 15,336 - Euromoney Institutional Investor 2,576 26,971 - Informa 42, , ITE 19,536 31, ITV 253, , PAGE 9

12 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Merlin Entertainments 37, , Moneysupermarket.com 29,460 68, Pearson 55, , Reed Elsevier 77, , Rightmove 6, , Trinity Mirror 20,806 33, UTV Media 6,979 12,213 - Travel & leisure 1.00 Betfair 6,250 97, Bwin.Party Digital Entertainment 48,900 57, Carnival 12, , Cineworld 13,144 54, Compass 227,700 2,506, Domino's Pizza 9,170 64, easyjet 16, , Enterprise Inns 34,238 39, FirstGroup 81,165 86, Flybe 14,000 15,295 - Go-Ahead 2,804 68, Greene King 14, , InterContinental Hotels 15, , Ladbrokes 62,109 68, Marston's 41,803 59, Millennium & Copthorne Hotels 10,245 59, Mitchells & Butlers 15,864 60, National Express 28,463 70, Punch Taverns 14,354 16,938 - Rank Group 7,400 11,840 - Restaurant Group 14,430 94, Saga 20,900 31, Spirit Pub 44,461 45, Stagecoach 28, , Thomas Cook 99, , Wetherspoon (JD) 5,939 48, Whitbread 12, , William Hill 57, , Fixed line telecommunications 0.43 British Telecom 545,837 2,191, Cable & Wireless Communications 181,949 90, Kcom 39,691 35, TalkTalk Telecom 32,722 99, Telecom Plus 3,908 49, Mobile telecommunications 0.88 Inmarsat 28, , Vodafone 2,211,152 4,923, Electricity 0.20 Drax 27, , Infinis Energy 6,300 13,734 - Scottish & Southern Energy 65,699 1,065, Gas, water & multi-utilities 0.94 Centrica 332, , National Grid 387,409 3,556, Pennon 26, , Severn Trent 16, , United Utilities 46, , Banks 3.45 Bank of Georgia Holdings 1,800 37, Barclays 2,575,670 6,271, HSBC Holdings** 1,513,438 9,210, Lloyds Banking 3,603,870 2,732, Royal Bank of Scotland 143, , PAGE 10

13 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Standard Chartered 136,287 1,312, TSB Banking 16,600 46, Non-life insurance 0.13 Admiral 13, , Amlin 33, , esure 17,060 34, Jardine Lloyd Thompson 8,394 74, Novae 4,342 25,748 - Royal & Sun Alliance Insurance 66, , Life insurance 1.04 Aviva 199, , Chesnara 8,423 28, Legal & General 396, , Old Mutual 330, , Partnership Assurance 9,900 13,811 - Prudential 170,733 2,547, St. James's Place Capital 34, , Standard Life 159, , Real estate investment services 0.56 Big Yellow Group REIT 8,714 52, British Land REIT 67, , Capital & Counties Properties 49, , Capital & Regional 25,506 13,391 - CLS Holdings 2,161 32, Countrywide 10,350 45, Daejan Holdings ,443 - Derwent London REIT 6, , Development Securities 8,416 18,684 - Foxtons 15,000 23,850 - Grainger 30,165 56, Great Portland Estates REIT 24, , Hammerson 52, , Hansteen Holdings REIT 46,200 49, Helical Bar 6,860 25,725 - Intu Properties REIT 59, , Land Securities REIT 53, , LondonMetric Property 48,000 73, LSL Property Services 5,690 16,743 - McKay Securities 14,578 34, Mucklow (A&J) Group REIT 2,000 8,905 - Primary Health Properties REIT 7,000 25,760 - Quintain Estates & Development 32,432 30, Redefine International REIT 50,000 27,200 - Savills 8,300 55, Segro REIT 49, , Shaftesbury 18, , St Modwen Properties 12,889 49, Town Centre Securities 3,564 9,347 - Tritax Big Box REIT 24,000 25,860 - Unite 14,933 69, Workspace Group REIT 7,818 59, Financial services 0.45 Aberdeen Asset Management 66, , Arrow Global 9,000 20,475 - Ashmore 26,800 74, Brewin Dolphin 17,636 52, Charles Taylor 2,600 6,500 - Close Brothers 9, , Hargreaves Lansdown 15, , ICAP 36, , IG Group Holdings 24, , Intermediate Capital 27, , International Personal Finance 15,938 71, PAGE 11

14 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Investec 34, , IP Group 30,821 62, Just Retirement 14,000 20,650 - Liontrust Asset Management 2,350 6,392 - London Stock Exchange 16, , Man Group 106, , Paragon Group of Companies 20,327 84, Provident Financial 9, , Rathbone Brothers 3,135 63, S & U 220 4,303 - Schroders 7, , Tullett Prebon 14,108 40, Equity investment instruments i Bioscience* 3, i Group 65, , Aberforth Smaller Companies 7,118 75, Alliance Trust 42, , Asian Total Return Investment 5,005 9,660 - Bankers Investment Trust 11,506 66, Baring Emerging Europe 9,250 45, Biotech Growth Trust 4,249 28,808 - BlackRock Smaller Companies 3,220 24,649 - BlackRock Throgmorton Trust 6,726 18,497 - BlackRock World Mining Investment Trust 17,337 53, British Assets Investment Trust 34,530 45, British Empire Securities 9,826 50, Caledonia Investments 2,190 50, Candover Investments 1,732 6,807 - City of London Investment Trust 25,340 96, Dunedin Income Growth Investment Trust 12,318 32, Edinburgh Dragon Investment Trust 19,710 53, Edinburgh Investment Trust 13,140 85, Electra Private Equity 3,196 96, European Investment Trust 4,462 33, F&C Capital & Income Investment Trust 6,949 17,859 - F&C Global Smaller Companies 5,842 52, Fidelity Special Values Investment Trust 3,670 31, Finsbury Growth & Income Trust 6,260 33, Foreign & Colonial Investment Trust 37, , Graphite Enterprise Trust 7,000 39, Henderson Smaller Companies Investment Trust 6,179 34, Herald Investment Trust 5,249 34, HgCapital Trust 2,482 26,061 - Impax Environmental Markets 15,090 23,012 - Invesco Perpetual UK Smaller Companies Investment Trust 4,560 14,467 - JPMorgan Asian Investment Trust 12,976 29, JPMorgan Claverhouse Investment Trust 3,703 22,218 - JPMorgan Emerging Markets Investment Trust 11,465 68, PAGE 12

15 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). JPMorgan European Investment Trust 12,895 28, JPMorgan European Smaller Companies Trust 10,800 21,924 - JPMorgan Global Emerging Markets Fund 19,247 22,519 - JPMorgan Indian Investment Trust 7,230 35, JPMorgan Japanese Investment Trust 12,042 28, JPMorgan Mid Cap Investment Trust 1,700 13,396 - JPMorgan Overseas Investment Trust 2,765 28, JPMorgan Overseas Investment Trust (Sub share) JPMorgan Russian Securities 7,850 21,823 - JPMorgan Smaller Companies Investment Trust 3,760 26,997 - Jupiter European Opportunities Trust 5,790 26,764 - Law Debenture 8,990 47, Lowland Investment Company 1,810 23,385 - Martin Currie Global Portfolio Trust 16,753 29, Mercantile Investment Trust 8, , Merchants Trust 7,066 33, Monks Investment Trust 20,172 79, Murray Income Trust 5,478 41, Murray International Trust 9,725 99, North American Income Trust 5,529 48, Pantheon International 3,600 45, Perpetual Income & Growth Investment Trust 21,370 85, Personal Assets Trust , Polar Capital Technology Trust 10,262 59, RIT Capital Partners 8, , Schroder Asia Pacific Fund 10,000 27,300 - Schroder Japan Growth Investment Trust 25,300 32, Schroder UK Growth Investment Trust 10,860 17,186 - Scottish American Investment Trust 10,193 25,304 - Scottish Investment Trust 11,346 69, Scottish Mortgage Investment Trust 82, , Securities Trust of Scotland* 44, SVG Capital 13,900 61, Temple Bar Investment Trust 6,210 73, Templeton Emerging Markets Investment Trust 25, , TR European Growth Trust 3,385 17,280 - TR Property Investment 21,407 60, Witan Investment Trust 12,857 96, Witan Pacific Investment Trust 4,480 10,438 - Worldwide Healthcare Trust 3,728 63, Non-equity investment instruments 0.11 BlackRock Latin American Investment Trust 5,250 20,803 - Direct Line Insurance 101, , Ecofin Water & Power Opportunities 17,000 25,585 - Fidelity China Special Situations Trust 38,558 51, Fidelity European Values 40,920 66, PAGE 13

16 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). JPMorgan American Investment Trust 26,550 76, Jupiter Fund Management 28, , Riverstone Energy 3,039 26, Software & computer services 0.17 Anite 21,940 17,333 - Aveva 4,353 56, Computacenter 5,342 31, Fidessa 2,681 64, Innovation 82,000 24,395 - Just-Eat 18,437 56, Micro Focus International 10, , NCC Group 13,000 26, Playtech 12,900 88, Sage 72, , SDL 6,000 24,900 - Telecity 13, , Zoopla Property Group (WI) 12,000 23,340 - Technology hardware & equipment 0.22 Arm Holdings 94, , CSR 11,194 95, Imagination Technologies 14,550 33,247 - Laird 19,572 60, Pace 21,483 74, Spirent 45,748 34, Total United Kingdom 147,270, OVERSEAS SHARES (52.24%; 31/12/ %) CONTINENTAL EUROPE (12.48%; 31/12/ %) Austria (-; 31/12/ %) Erste Bank 53,524 1,125, Total Austria 1,125, Belgium (0.72%; 31/12/ %) Anheuser-Busch InBev 51,825 3,762, Delhaize 10, , Total Belgium 4,253, Channel Islands (1.75%; 31/12/ %) 3i Infrastructure 39,549 60, Aberdeen Asian Income Fund 12,950 25,706 - Advance Developing Markets Fund 8,850 37, Assura 60,000 30, Bacit 20,000 23,100 - Beazley 35, , BH Global 1,840 22,724 - Bluecrest Allblue Fund 37,000 68, Cape 8,200 19,721 - Centamin 70,750 41, City Merchants High Yield 12,984 24,475 - Delphi Automotive 29,100 1,357, Dexion Absolute 9,140 15,995 - Experian 66, , F&C Commercial Property Trust 34,399 46, PAGE 14

17 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). F&C UK Real Estate Investment 14,760 13,874 - Friends Life 92, , GCP Infrastructure Investments 29,000 35, Genesis Emerging Markets Fund 9,080 47, Glencore Xtrata 712,599 2,128, Hardy Oil & Gas 4,520 2,802 - Henderson Far East Income 7,201 23,475 - Henderson 69, , HICL Infrastructure 87, , International Public Partnership 66,091 89, John Laing Infrastructure Fund 50,000 61, Kennedy Wilson Europe Real Estate 7,406 77, MedicX Fund 23,560 19,555 - NB Global Floating Rate Income Fund 84,000 83, Petrofac 17, , Picton Property 30,000 19,500 - Polymetal International 13,650 78, Randgold Resources 6, , Real Estate Credit Investments 4,910 7,782 - Regus 41,061 85, Schroder Oriental Income Fund 14,000 26, Schroder Real Estate Investment 31,780 18,830 - Shire 39,553 1,792, Standard Life Investments Property 10,450 8,151 - Stobart 24,500 26, UK Commercial Property Trust 27,400 24,167 - United Business Media 29, , Wolseley 17, , WPP 89,532 1,203, Total Channel Islands 10,287, France (1.59%; 31/12/ %) AXA 63, , BNP Paribas 93,570 3,573, Renault 38,200 1,794, Sanofi 30,500 1,787, Schneider Electric 19, , Total 9, , Total France 9,334, Germany (2.07%; 31/12/ %) Allianz (registered) 13,095 1,402, BMW 26,277 1,831, Deutsche Annington Immobilien 42, , Henkel preference 17,377 1,203, Porsche preference 21,348 1,115, ProSiebenSat.1 Media 86,861 2,347, Siemens 31,775 2,316, TUI AG 12, , TUI AG New 13, , Volkswagen preference 4, , Total Germany 12,131, Greece (0.12%; 31/12/13 -) Alpha Bank 1,978, , Total Greece 706, PAGE 15

18 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Ireland (0.86%; 31/12/ %) Bank of Ireland 961, , Bank of Ireland (LSE) 3,057, , Covidien 27,000 1,771, CRH (London listed) 49, , DCC (London listed) 5, , Grafton 15,000 95, Greencore 28,000 80, ishares FTSE , , ishares FTSE , , Kenmare Resources 180,000 5,670 - UDG Healthcare 16,200 62, Total Ireland 5,026, Italy (0.67%; 31/12/ %) Generali 181,056 2,388, Enel 207, , Intesa Sanpaolo SpA 508, , Total Italy 3,938, Luxembourg (0.01%; 31/12/ %) BBGI SICAV 28,630 35, Colt Telecom 23,499 30,713 - Total Luxembourg 66, Netherlands (1.21%; 31/12/ %) Akzo Nobel 36,356 1,623, Delta Lloyd 62, , Heineken 20, , NXP Semiconductors 1,100 53, Sensata Technologies 62,200 2,089, Unilever 59,831 1,515, Total Netherlands 7,093, Portugal (0.11%; 31/12/ %) Energias de Portugal 252, , Total Portugal 631, Norway (0.46%; 31/12/ %) DNB 139,942 1,325, Telenor 105,451 1,366, Total Norway 2,691, Spain (0.39%; 31/12/ %) BBV Argentaria 260,337 1,586, BBV Argentaria Rights 260,337 15,961 - International Consolidated Airlines 137, , Total Spain 2,270, Sweden (0.24%; 31/12/ %) Nordea Bank 193,000 1,437, Total Sweden 1,437, Switzerland (2.28%; 31/12/ %) ACE 24,700 1,819, CIE Financiere Richemont 18,096 1,036, Coca-Cola 13, , Julius Baer 51,791 1,531, PAGE 16

19 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Metropolitan Bank & Trust on UBS Warrant 20/4/ , , Novartis (registered) 44,833 2,670, Roche Holding - participating 13,020 2,267, Zurich Insurance 14,514 2,919, Total Switzerland 13,398, NORTH AMERICA (29.94%; 31/12/ %) Bermuda (0.63%; 31/12/ %) Aquarius Platinum 84,908 12,524 - Catlin 22, , Hiscox 21, , Kofax 4,914 21,978 - Lancashire Holdings 12,800 71, Lazard 30, , Marvell Technology Group 238,600 2,218, Petra Diamonds 25,660 49, Utilico Emerging Markets Utilites 14,360 26, Total Bermuda 3,699, Canada (0.09%; 31/12/ %) Barrick Gold 66, , Entertainment One 13,350 42, Total Canada 500, Cayman Islands (0.36%; 31/12/ %) BH Macro 2,880 58, Alibaba Group Holding ADR 11, , Phoenix Group Holdings 14, , Tencent Holdings 128,700 1,197, Total Cayman Islands 2,116, Mexico (0.36%; 31/12/ %) Cemex ADR 181,528 1,185, Grupo Televisa ADR 41, , Total Mexico 2,086, United States (28.50%; 31/12/ %) Activision 70, , Aetna 19,500 1,110, American Express 22,400 1,336, Amgen 22,500 2,298, Anthem 12, , Apache 12, , Apple 127,630 9,034, Applied Materials 58, , AutoNation 14, , Bank of America 180,000 2,065, Bed Bath & Beyond 10, , Biogen Idec 3, , BlackRock 9,800 2,246, Blackstone 57,500 1,245, Bristol Myers Squibb 114,900 4,348, Cabot Oil & Gas 44, , Carnival 33, , CBRE Group 39, , CBS 76,300 2,707, Cigna 11, , Cisco Systems 182,200 3,249, Citigroup 154,900 5,376, Comcast 26, , Constellation Brands 28,950 1,821, PAGE 17

20 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Corning 135,100 1,986, Delta Air Lines 63,500 2,002, DR Horton 103,500 1,678, Eaton 49,300 2,148, EMC 105,510 2,013, EOG Resources 62,770 3,706, Facebook 60,200 3,012, General Electric 144,500 2,341, Goldman Sachs 15,500 1,926, Google 'C' 2, , Halliburton 60,100 1,514, HCA Holdings 43,200 2,033, Hewlett-Packard 53,600 1,379, Home Depot 36,100 2,429, IAC/InterActive 21, , Intel 227,600 5,297, International Business Machines 6, , International Flavours & Fragrances 10, , International Paper 86,300 2,964, Johnson & Johnson 34,640 2,323, JPMorgan Chase & Co 116,200 4,664, Kraft Foods Group 45,300 1,820, Las Vegas Sands 25, , Lennar 3,200 91, Marathon Oil 76,100 1,380, Marsh & Mclennan 59,400 2,180, Maxim Integrated Products 154,800 3,164, Medtronic 30,700 1,421, Merck & Co 128,400 4,676, Meritage Homes 20, , MetLife 73,200 2,539, Microsoft 181,600 5,409, Mohawk Industries 11,660 1,161, Mondelez International 42, , Monsanto 19,560 1,498, Morgan Stanley 46,800 1,164, Mylan 47,800 1,728, Nordstrom 44,100 2,245, PepsiCo 10, , Pioneer Natural Resources 13,200 1,260, PNC Financial Services 54,400 3,182, Priceline 1,977 1,445, Procter & Gamble 26,400 1,542, Pulte Group 143,500 1,974, PVH 18,900 1,553, Raytheon 6, , Regeneron Pharmaceuticals 5,470 1,438, Rockwell Automation 18,080 1,288, Ryland 18, , Sandisk 9, , Schlumberger 18,800 1,029, Southwestern Energy 36, , Splunk 23, , St. Jude Medical 35,400 1,476, SunTrust Banks 22, , Symantec 96,500 1,587, United Rentals 13, , United Technologies 23,300 1,718, UnitedHealth Group 61,500 3,987, Valero Energy 14, , Verizon Communications (NYSE) 42,352 1,270, Vertex Pharmaceuticals 14,000 1,066, Visa 'A' Shares 10,420 1,752, Wabco Holdings 21,400 1,437, Wal-Mart Stores 18, , Wells Fargo & Co 56,000 1,968, Whirlpool 10,445 1,297, PAGE 18

21 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Xcel Energy 26, , Xerox 217,700 1,935, Total United States 167,347, SOUTH AMERICA (0.35%; 31/12/ %) Brazil (0.35%; 31/12/ %) Embraer S.A. Sponsored ADR 48,500 1,146, Itau Unibanco ADR 131, , Itausa Investimentos 131, , Total Brazil 2,059, FAR EAST (9.03%; 31/12/ %) China (1.23%; 31/12/ %) China Longyuan Power 'H' 2,514,000 1,667, China Petroleum & Chemical 'H' 823, , China Resources Power Holdings 134, , CSR 1,156, , Dongfeng Motor Group 1,380,000 1,253, Industrial & Commercial Bank of China 2,577,000 1,206, PetroChina 2,048,000 1,453, Total China 7,223, Hong Kong (0.56%; 31/12/ %) AIA Group 417,600 1,485, Cathay Pacific Airways 389, , China Mobile Hong Kong 167,000 1,252, Total Hong Kong 3,280, India (0.40%; 31/12/ %) ICICI Bank ADR 226,600 1,678, LIC Housing Finance on UBS Warrants 7/12/ , , Total India 2,374, Indonesia (0.13%; 31/12/ %) Bank Rakyat Indonesia on UBS Warrants 17/2/2017 1,308, , Total Indonesia 787, Israel (-; 31/12/ %) Japan (4.41%; 31/12/ %) Eisai 58,800 1,466, FANUC 12,230 1,304, Fuji Heavy Industries 216,900 4,988, Honda Motor 21, , Japan Tobacco 66,600 1,183, KDDI 20, , Mitsubishi UFJ Financial 1,028,000 3,651, Nidec 33,100 1,389, Nippon Telegraph & Telephone 48,700 1,617, NTT DoCoMo 165,600 1,565, Omron 32, , Orix 114, , Rakuten 125,000 1,124, PAGE 19

22 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Seven and I Holdings 55,600 1,295, T&D Holdings 179,900 1,402, Toyota Motor 43,500 1,758, Total Japan 25,870, Korea (1.08%; 31/12/ %) BS Financial Group 36, , DGB Financial Group 900 5,908 - DGB Financial Group Rights Hana Financial Holdings 69,032 1,288, Hyundai Heavy Industries 3, , Hyundai Motor 3, , Samsung Electronics 3,303 2,555, Shinhan Financial Group 11, , SK Hynix 46,818 1,304, Total Korea 6,354, Malaysia (0.41%; 31/12/ %) Airasia Berhad 4,830,700 2,410, Total Malaysia 2,410, Panama (-; 31/12/ %) Russia (0.07%; 31/12/ %) Gazprom OAO 38, , Gazprom OAO ADR 10,200 30, Rosneft Oil GDR 119, , Total Russia 408, Singapore (-; 31/12/ %) Taiwan (0.74%; 31/12/ %) Taiwan Semiconductor Manufacturing sponsored ADR 303,500 4,354, Total Taiwan 4,354, Thailand (-; 31/12/ %) AFRICA (0.21%; 31/12/13 -) South Africa (0.21%; 31/12/13 -) Naspers 14,535 1,220, Total South Africa 1,220, PACIFIC BASIN (0.23%; 31/12/ %) Australia (0.23%; 31/12/ %) Fortescue Metals Group 570, , Rio Tinto 16, , Total Australia 1,322, FIXED INTEREST SECURITIES (20.94%; 31/12/ %) UK government bonds Treasury 1.25% 22/7/ ,464,323 19,664, Treasury 1.75% 22/1/ ,910,396 14,262, Treasury 1.75% 7/9/ ,039,784 14,235, Treasury 2.25% 7/9/2023 5,730,605 6,004, PAGE 20

23 Portfolio statement This section details all the different companies in which the fund invests, by sector/country. It also shows the number of shares held, the percentage each company represents of the fund as a whole and the value of those shares at the end of the year (shown under bid value). Treasury 2.75% 7/9/ ,651,000 14,854, Treasury 3.25% 22/1/2044 4,148,221 4,780, Treasury 3.5% 22/1/2045 4,499,589 5,429, Treasury 3.5% 22/7/ ,181 1,274, Treasury 3.75% 22/7/2052 3,190,132 4,163, Treasury 4% 7/3/2022 1,796,060 2,105, Treasury 4% 22/1/2060 2,288,596 3,234, Treasury 4.25% 7/12/2040 5,529,505 7,417, Treasury 4.25% 7/12/2055 2,205,168 3,218, Treasury 4.5% 7/9/2034 7,287,632 9,780, Treasury 4.75% 7/12/2030 3,028,520 4,086, Treasury 4.75% 7/12/2038 1,728,399 2,464, Treasury 5% 7/3/2025 4,598,774 5,993, Total fixed interest securities 122,972, FORWARD FOREIGN EXCHANGE CONTRACTS (0.02%; 31/12/13 - ) Sold Korean won 4,473,547,000 for US dollars $4,233, , (expires 5/2/2015) Sold US dollars $4,020,262 for Korean won 4,473,547,000 27,573 - (expires 5/2/2015) Total forward foreign exchange contracts 136, FUTURES CONTRACTS ((0.02%); 31/12/ %) LIFFE Long Gilt Future March 2015 (30) (99,540) (0.02) Total futures contracts (99,540) (0.02) Portfolio of investments 576,961, Net other assets 10,213, Net assets 587,175, Investments Equity 453,952, Bond 122,972, Forward foreign exchange contracts 136, Futures contracts (99,540) (0.02) Portfolio of investments 576,961, Bond credit ratings AAA 122,972, Total bonds 122,972, Equity 453,952, Forward currency contracts assets 136, ,061, Futures liabilities (99,540) (0.02) Total portfolio of investments 576,961, Source: Standard & Poor's and Moody's * These are delisted securities and have been valued at the Manager's best assessment of their value. ** Related parties The securities held are approved and are admitted to an official listing unless otherwise stated. PAGE 21

24 Net asset value per unit and comparative table This section details in concise figures how the fund has performed, in terms of the size of the fund, the price of units and the income distributions made. FUND SIZE YEAR NET ASSET VALUE NET ASSET VALUE NO OF UNITS M PER UNIT (PENCE) IN ISSUE 2012 Income ,884,255 Accumulation ,254, Income ,572,331 Accumulation ,200, * Income ,277,703 Accumulation ,040,205 * The fund size as at 31/12/14 UNIT PRICE RANGE YEAR INCOME UNITS ACCUMULATION UNITS HIGH LOW HIGH LOW (PENCE) (PENCE) (PENCE) (PENCE) * High = Highest offer price Low = Lowest bid price * Over the period 01/01/14 to 31/12/14 NET INCOME DISTRIBUTION (CALENDAR YEARS ON A PAID BASIS) YEAR INCOME UNITS ACCUMULATION UNITS PENCE PER UNIT PENCE PER UNIT * *The next distribution will be payable on 31/08/15 Please remember that the value of units and the income from them can go down as well as up. Also, past performance is no guarantee of future performance. PAGE 22

25 Ongoing charges For the 12 month period to 31 December 2014: 1.58% For the 12 month period to 31 December 2013: 1.59% The ongoing charges measure the annual charges and expenses of an investment fund. These will affect the returns to the investor. Most European investment funds highlight the ongoing charges to help you compare the annual charges and expenses of different funds. Ex-distribution (XD) dates: Income payment dates: 1 January and 1 July 28 February and 31 August Risk and reward profile Lower risk Higher risk Typically lower rewards Typically higher rewards More about this rating The rating is based on price volatility over the last five years. As it is based on historical data, it may not be a reliable indicator of the future risk profile of the fund. The rating is not guaranteed and may change over time. The lowest rating does not mean a risk-free investment. Why is this fund in category 5? This multi-asset fund has a higher risk profile than funds holding solely bonds and/or money market instruments as it invests predominantly in shares. Authorised status The fund is an authorised unit trust under Section 243 of the Financial Services and Markets Act 2000 (authorisation orders) and the Financial Conduct Authority Handbook and is categorised as an Undertakings for Collective Investment in Transferable Securities (UCITS) scheme. Trustee report Statement of the Trustee s responsibilities in respect of the report and financial statements of the scheme The Trustee is under a duty to take into its custody or under its control all of the property of the scheme and to hold it in trust for the holders of units. Under the rules in the Financial Conduct Authority s Collective Investment Schemes Sourcebook relating to reports it is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the scheme in each accounting year and to report thereon to Unitholders in a report which shall contain the matters prescribed by the rules. PAGE 23

26 Report of the Trustee to the Unitholders of The Marks and Spencer Worldwide Managed Fund for the year 1 January 2014 to 31 December 2014 Having carried out such procedures as we considered necessary to discharge our responsibilities as Trustee of the scheme it is our opinion, based on the information available and the explanations provided, that the Manager has in all material respects managed the scheme during the period in accordance with the investment and borrowing powers and restrictions applicable to the scheme, and otherwise in accordance with the provisions of the Trust Deed and the rules in the Financial Conduct Authority s Collective Investment Schemes Sourcebook. State Street Trustees Limited 17 February 2015 Statement of the Manager s responsibilities Marks and Spencer Unit Trust Management Limited (Authorised and regulated by the Financial Conduct Authority) is the Manager of the fund. The company is a subsidiary of HSBC Bank plc. The rules in the Financial Conduct Authority s Collective Investment Schemes Sourcebook ( the Rules ) require the Manager to prepare financial statements for each annual accounting period which give a true and fair view of the financial position of the trust as at the end of the period and of the net income and the net gains or losses of the property of the trust for the period then ended. In preparing the financial statements the Manager is required to: select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; comply with the disclosure requirements of the Statement of Recommended Practice relating to Authorised Funds, the Financial Conduct Authority s Collective Investment Schemes Sourcebook and the Trust Deed; follow applicable UK Accounting Standards (UK Generally Accepted Accounting Practice); prepare the financial statements on the going concern basis unless it is inappropriate to presume that the trust will continue in operation. The Manager is responsible for keeping proper accounting records and for the management of the trust in accordance with its Trust Deed, Prospectus and the Rules. The Manager has a general responsibility for taking such steps as are reasonably open to it to prevent and detect fraud and other irregularities. Certification of financial statements by Directors of the Manager This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Conduct Authority. Sue Fox (Chief Executive) 17 February 2015 Phillip Scott (Director) 17 February 2015 PAGE 24

27 Independent auditor s report THE MARKS AND SPENCER WORLDWIDE MANAGED FUND Independent auditor s report to Unitholders of The Marks and Spencer Worldwide Managed Fund Unit Trust ( the Fund ) We have audited the financial statements of the Fund for the year ended 31 December 2014 set out on pages 27 to 37. The financial reporting framework that has been applied in their preparation is applicable law, UK Accounting Standards (UK Generally Accepted Accounting Practice). This report is made solely to the Fund s Unitholders, as a body, in accordance with Rule of the Collective Investment Schemes Sourcebook ( COLL ) issued by the Financial Conduct Authority under section 247 of the Financial Services and Markets Act Our audit work has been undertaken so that we might state to the Fund s Unitholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Fund and the Fund s Unitholders, as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of the Manager, Marks and Spencer Unit Trust Management Limited and the auditor As explained more fully in the statement of the Manager s responsibilities set out on page 24, the Manager is responsible for the preparation of the Annual Report and the financial statements and for being satisfied that they give a true and fair view. 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 (APB s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's website at Opinion on financial statements In our opinion the financial statements: give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the financial position of the Fund as at 31 December 2014 and of its net revenue and net capital gains on the property of the Fund for the year then ended; and have been prepared in accordance with the requirements of the Trust Deed, Statement of Recommended Practice relating to Authorised Funds and the COLL Rules. Opinion on other matters prescribed by the COLL Rules In our opinion the information given in the Manager s report is consistent with the financial statements. We have received all of the information and explanations which we consider necessary for the purposes of the audit. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where under the COLL Rules we are required to report to you if, in our opinion: proper accounting records for the Fund have not been kept; or the financial statements are not in agreement with the accounting records. Jatin Patel for and on behalf of KPMG Audit Plc Statutory Auditor Chartered Accountants 15 Canada Square London E14 5GL 17 February 2015 PAGE 25

28 Statement of total return This section details the income of the fund over the period of the report and explains how this income is distributed to the investors. It also provides an analysis of increases and decreases in net assets over the accounting year. For the year ended 31 December 2014 Income Net capital gains Revenue Notes ,607,291 33,491,782 15,726,399 71,114,726 Expenses 4 (8,867,415) (8,669,967) Finance costs: Interest 6 (513) (636) Net revenue before taxation 5,739,363 7,055,796 Taxation 5 (542,978) (497,257) Net revenue after taxation 5,196,385 6,558,539 Total return before distributions 38,688,167 77,673,265 Finance costs: Distributions 6 (5,196,726) (6,575,703) Change in net assets attributable to Unitholders 33,491,441 71,097,562 Statement of change in net assets attributable to Unitholders For the year ended 31 December Opening net assets attributable to Unitholders 568,318, ,320,057 Amounts receivable on issue of units 2,957,190 1,684,705 Less: Amounts payable on cancellation of units (22,644,833) (25,153,678) (19,687,643) (23,468,973) Stamp duty reserve tax (7,684) (19,825) Change in net assets attributable to Unitholders from investment activities (see table above) 33,491,441 71,097,562 Retained distribution on accumulation units 5,037,482 6,359,948 Unclaimed distributions over 6 years old 1,524 1,846 Dilution levy 21,620 27,704 Closing net assets attributable to Unitholders 587,175, ,318,319 PAGE 26

29 Balance sheet Notes ASSETS Investment assets 577,061, ,451,936 Debtors 8 1,742,682 2,471,828 Cash and bank balances 9 9,589,118 7,928,825 Total other assets 11,331,800 10,400,653 TOTAL ASSETS 588,393, ,852,589 LIABILITIES Investment liabilities (99,540) (39,043) Creditors 10 (1,088,392) (1,449,869) Distribution payable on income units (30,053) (45,358) Total other liabilities (1,118,445) (1,495,227) TOTAL LIABILITIES (1,217,985) (1,534,270) Net assets attributable to Unitholders 587,175, ,318,319 PAGE 27

30 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 1. Accounting policies (a) Basis of accounting The financial statements have been prepared in accordance with the Statement of Recommended Practice ("SORP") for Authorised Funds issued by the Investment Association ("IA") in October (b) Recognition of revenue Interest and revenue from fixed interest stock is recognised on an effective yield basis. Revenue from quoted equities is recognised net of attributable tax credits when the security is quoted ex-dividend. Interest from bank deposits is recognised on an accrual basis. All other revenue is recognised on a receipts basis. Overseas revenue received after the deduction of withholding tax is shown gross of taxation, with the taxation consequences shown within the taxation charge. Special dividends are treated as repayments of capital or revenue depending on the facts of each particular case. The ordinary element of stock dividends is treated as revenue and forms part of the distribution. In the case of an enhanced stock dividend, the value of the enhancement is treated as capital and does not form part of the distribution. (c) Treatment of expenses All expenses (other than those relating to the purchase and sale of investments and stamp duty reserve tax) are charged to revenue on an accruals basis. The Manager's periodic charge is deducted from revenue for the purpose of calculating the distribution. PAGE 28 (d) Distribution policy The policy is to distribute all available revenue, after deduction of those expenses which are chargeable in calculating the distribution. In order to conduct a controlled dividend flow, interim distributions will be at the Manager's discretion, up to a maximum of the distributable revenue for the year. All remaining revenue is distributed in accordance with the Collective Investment Schemes Sourcebook. Distributions which have remained unclaimed by Unitholders for over six years are credited to the capital property of the fund. (e) Basis of valuation of investments The investments, including derivatives, are valued at bid market value, excluding any accrued revenue, at 5pm on 31 December 2014, being the last working day of the accounting year. Where values cannot be readily determined, the securities are valued at the Manager's best assessment of their value. (f) Taxation Provision is made for taxation at current rates on the excess of investment revenue over expenses. Deferred tax is provided for on all timing differences that have originated but not reversed by the balance sheet date, other than those differences that are regarded as permanent. Any liability to deferred tax is provided for at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. (g) Exchange rates Transactions in foreign currencies are translated at the rate of exchange ruling on the date of the transaction. Where applicable, assets and liabilities denominated in foreign currencies are translated into sterling at the rates of exchange ruling at 5pm on 31 December 2014, being the last working day of the accounting year.

31 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 2. Net capital gains on investments The net capital gains on investments during the year comprise: Transaction charges (121,737) (155,058) Currency (losses)/gains (318,998) 68,793 Non-derivative securities 34,061,931 71,184,629 Derivative contracts (557,724) 347,325 Forward foreign exchange contracts 428,310 (330,963) Net capital gains on investments 33,491,782 71,114,726 Amounts included in net gains on investments in respect of special dividends which were treated as capital 383, , Revenue UK dividends 6,525,593 7,906,317 Overseas dividends 5,442,427 5,414,786 Property income 68,449 87,857 Interest on debt securities 2,569,240 2,315,318 Bank interest 3,516 3,309 Deposit interest (1,934) (1,188) Total revenue 14,607,291 15,726, Expenses Payable to the Manager, associates of the Manager, and agents of either of them: Manager s periodic charge 8,559,379 8,351,561 Payable to the Trustee, associates of the Trustee, and agents of either of them: Trustee fee 54,035 54,047 Safe custody fee 86,480 84,589 Dividend collection expenses 2,966 2, , ,295 Other expenses: Registration fee 152, ,400 Audit fee 11,695 11,419 FCA fee , ,111 Total expenses 8,867,415 8,669, Taxation (a) Analysis of charge in year Overseas tax 542, ,257 Total current tax charge for the year (note 5b) 542, ,257 (b) Factors affecting current tax charge for the year The tax assessed for the year is lower than the standard rate of corporation tax in the UK for an authorised unit trust (20%). The differences are explained below: Net revenue before taxation 5,739,363 7,055,796 Corporation tax at 20% 1,147,873 1,411,159 Effects of: Revenue not subject to taxation (2,370,925) (2,646,186) Realised gains on non-qualifying offshore funds - 17,308 Current year expenses not utilised 1,226,149 1,219,847 Irrecoverable overseas tax 542, ,257 Tax relief on overseas tax suffered (3,097) ( 2,128) Current tax charge for year (note 5a) 542, ,257 (c) Provision for deferred taxation At 31 December 2014 there is a potential deferred tax asset of 5,507,679 (31/12/13: 4,281,529) in relation to surplus management expenses. It is unlikely the fund will generate sufficient taxable profits in the future to utilise this amount and therefore no deferred tax asset has been recognised in the year. PAGE 29

32 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 6. Finance costs Distributions The distributions take account of amounts received on the issue of units and amounts deducted on the cancellation of units, and comprise: Interim dividend distribution 3,793,020 4,583,553 Final dividend distribution 1,361,272 1,932,244 5,154,292 6,515,797 Add: Amount deducted on cancellation of units 47,943 64,956 Deduct: Income received on issue of units (5,509) (5,050) Net distributions for the year 5,196,726 6,575,703 Finance costs Net distribution for the year 5,196,726 6,575,703 Interest Total finance costs 5,197,239 6,576, Movement between net revenue and distributions Net revenue after taxation 5,196,385 6,558,539 Movement in net income property 176 (144) Corporation tax on realised gain on offshore funds - 17,308 Irrecoverable withholding tax on stock dividends Net distribution 5,196,726 6,575, Debtors Amounts receivable for issue of units 83, ,548 Sales awaiting settlement - 713,427 Accrued revenue 1,502,606 1,510,285 Income tax recoverable 1, Overseas tax recoverable 155, ,667 VAT recoverable - 2,639 Total debtors 1,742,682 2,471, Cash and bank balances Cash and bank balances 9,427,681 7,893,810 Amounts held at derivative clearing houses and brokers 161,437 35,015 Total cash and bank balances 9,589,118 7,928, Creditors Amounts payable for cancellation of units 80, ,702 Purchases awaiting settlement 191, ,093 Accrued expenses 816, ,074 Total creditors 1,088,392 1,449, Equalisation This applies only to units purchased during the distribution period (Group 2 units). It is the average amount of income 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. PAGE 30

33 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 12. Contingent liabilities and outstanding commitments There were no contingent liabilities and outstanding commitments at the balance sheet date (same as at 31 December 2013). 13. Risk in relation to financial instruments In accordance with its investment objectives and policies, the fund holds certain financial instruments. These comprise: - Securities held in accordance with the investment objectives and policies; - Cash and short term debtors and creditors that arise directly from its operations; - Unitholders' funds which represent investors' monies which are invested on their behalf. The fund does not trade in financial instruments to make short term speculative gains. It buys investments with the intention of giving long term capital growth and above average income. The Manager may use derivative transactions for the purposes of efficient portfolio management (EPM). Permitted transactions include derivative transactions (involving options, futures and contracts for differences) or forward transactions in a currency. Overall responsibility for the Marks & Spencer Unit Trust Funds rests with the Board of Directors of Marks and Spencer Unit Trust Management Limited (M&SUTM), a wholly owned subsidiary of HSBC Bank plc. Board meetings are held quarterly. Fund performance and issues relating to selection/de-selection of the fund advisers is delegated to the HSBC Global Asset Management (UK) Limited Investment Committee, which reports to the board. The director of (M&SUTM) responsible for investment management represents the Board of M&SUTM on the Investment Committee. The terms of reference of the Investment Committee is to review the performance of the existing investment products, funds and mandates of the combined UK business of HSBC and ensure they are managed in accordance with the investment objectives and against appropriate benchmarks. Specifically the proceedings of the Investment Committee include deciding, having due regard to the advice of the fund adviser and by reference to the relevant regulations, the investment policy for the funds. The objective being to achieve the maximum tax efficient return consistent with the agreed risk profile, having due regard to factors such as liquidity and regulatory restrictions. Due diligence investment advisers visits are carried out by HSBC Global Asset Managers (UK) Limited Compliance. The outcome of these visits is reviewed by the M&S Bank Compliance department. The main risks arising from the fund's financial instruments are market price risk, foreign currency risk, liquidity risk, interest rate risk and credit/counterparty risk. The Manager has policies for managing each of these risks and these are summarised below. These policies have remained unchanged for the current and prior year. Market price risk The fund's investment portfolio is exposed to market price fluctuations. As most of the fund is invested in shares on the stock market, such price movements can significantly affect the fund's value. The risk is reduced by having a wide spread of investments in the fund, as shown in the portfolio statement in this report. In addition, we ensure that the fund complies with the investment guidelines and investment and borrowing powers set out in the Trust Deed and the Prospectus. This is done through daily checks and quarterly reviews. Foreign currency risk Foreign currency risk is the risk that the value of the fund's investment holdings will fluctuate as a result of changes in foreign currency exchange rates. The balance sheet can be affected by movements in foreign exchange rates. The table on the next page shows the foreign currency holdings at the report date. Revenue received in other currencies is converted to sterling on the date of receipt. The Manager may seek to manage exposure to currency movements by using forward exchange contracts or by hedging the sterling value of investments that are priced in other currencies. PAGE 31

34 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. Net currency monetary/non-monetary assets and liabilities consist of: Net foreign currency assets Net foreign currency assets Monetary Non-monetary Total Monetary Non-monetary Total exposures exposures exposures exposures Sterling 6,833, ,232, ,066,058 6,349, ,940, ,289,661 Australian dollar (21) 1,322,196 1,322,175-1,369,520 1,369,520 Brazilian real 1, , ,831 2, , ,758 Euro 283,952 38,247,425 38,531, ,125 28,536,112 28,794,237 Hong Kong dollar 41 11,700,599 11,700,640 2,419 9,107,811 9,110,230 Indonesian rupiah , ,876 Japanese yen 20,757 25,870,863 25,891,620 (33,897) 22,805,720 22,771,823 Korean won 4,663 6,463,325 6,467,988-7,823,721 7,823,721 Malaysian ringgit - 2,410,070 2,410, , ,504 Norwegian krone - 2,691,694 2,691,694-2,252,884 2,252,884 Singapore dollar , ,585 South African rand 114 1,220,843 1,220, Swedish krona - 1,437,278 1,437,278 (11) 1,494,600 1,494,589 Swiss franc 22,088 10,425,967 10,448,055 28,526 8,085,306 8,113,832 Thai baht ,106,404 2,106,404 United States dollar 3,046, ,641, ,688,316 2,298, ,658, ,956,695 Total 10,213, ,961, ,175,059 8,905, ,412, ,318,319 PAGE 32

35 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. Interest rate risk Interest rate risk is the risk that the value of the fund's investment holdings will fluctuate as a result of changes in interest rates. Cash balances are held with HSBC Bank plc and interest is earned at a rate linked to the UK base rate, or international equivalent. The tables below detail the interest rate profile of the fund's assets as at the year end date. Floating rate* Fixed rate None Total Portfolio Sterling ,972, ,065, ,260, ,874, ,232, ,940,437 Australian dollar ,322,196 1,369,520 1,322,196 1,369,520 Brazilian real , , , ,357 Euro ,247,425 28,536,112 38,247,425 28,536,112 Hong Kong dollar ,700,599 9,107,811 11,700,599 9,107,811 Indonesian rupiah , ,876 Japanese yen ,870,863 22,805,720 25,870,863 22,805,720 Korean won ,463,325 7,823,721 6,463,325 7,823,721 Malaysian ringgit ,410, ,504 2,410, ,504 Norwegian krone ,691,694 2,252,884 2,691,694 2,252,884 Singapore dollar , ,585 South African rand ,220,843-1,220,843 - Swedish krona ,437,278 1,494,600 1,437,278 1,494,600 Swiss franc ,425,967 8,085,306 10,425,967 8,085,306 Thai baht ,106,404-2,106,404 United States dollar ,641, ,658, ,641, ,658,056 Cash at bank 9,589,118 7,928, ,589,118 7,928,825 Other Assets ,742,682 2,471,828 1,742,682 2,471,828 Liabilities (1,118,445) (1,495,227) (1,118,445) (1,495,227) Total 9,589,118 7,928, ,972, ,065, ,613, ,323, ,175, ,318,319 *Floating rate interest was earned at rates based on LIBOR, or international equivalent. Market value Fixed rate financial Fixed rate financial assets assets weighted weighted average average period for which interest rate interest rate is fixed m m % % Years Years Sterling PAGE 33

36 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. Liquidity risk This is the risk that the fund does not have enough liquid assets, such as cash, to cover any liabilities that become due. The main liability of the fund is the redemption of any units that Unitholders may wish to sell. All of the fund's financial liabilities are payable on demand. To manage this risk, the majority of the fund's assets are in shares of large companies or organisations which can usually be sold immediately to raise cash to settle any liabilities. In addition, a small percentage of the fund is held as cash in sterling with the custodian, HSBC, and interest is earned at a rate linked to the UK base rate. Credit/counterparty risk Certain transactions in securities that the fund enters into expose it to the risk that the counterparty will not deliver the investment (purchase), or cash (sale) after the fund has fulfilled its responsibilities. The extent of this risk is usually limited as amount awaiting settlement from transactions at any point is only a small proportion of the fund. This risk is managed by the investment adviser, carefully selecting the authorised counterparties they deal with and dealing only on eligible stock markets. Cash in the fund is held with the custodian, HSBC. The Trustee appoints the custodian and has the regulatory responsibility for monitoring them. The fund's assets held with banks and with the Trustee are also exposed to credit risk. The banks and Trustee used by the fund are subject to regular review. PAGE 34

37 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 14. Financial derivatives The fund has used financial derivatives for hedging and meeting investment objectives including risk reduction and implementation of investment policies. The use of derivatives can create additional counterparty risks. Details of the policy adopted by the Manager for managing counterparty and other risks are set out in the Notes to the financial statements section. The types of THE MARKS AND SPENCER WORLDWIDE MANAGED FUND derivatives held at the year end were index futures. Details of the individual contracts are shown on the portfolio statement on page 21, and the total position by the counterparty at the year end is summarised below: The underlying exposure for each category of derivatives were as follows: Futures Forward Currency Total Counterparty HSBC Bank - - 2,606,617 5,729,606 2,606,617 5,729,606 Central Bank of America - - 2,579,043-2,579,043 - Goldman Sachs International 3,585,900 5,810, ,585,900 5,810,960 UBS AG ,158-38, Post balance sheet events There were no material post balance sheet events which have a bearing on the understanding of the financial statements. 16. Ultimate controlling party and related party transactions The Manager and Trustee are regarded as controlling parties of the fund by virtue of having the ability to act in concert in respect of fund operations. The ultimate controlling party of the Manager and Trustee is HSBC Group plc and State Street Corporation respectively. These entities and their subsidiaries are also related parties of the fund. At the year end, the Manager and its associates held 42.52% (41.20% as at 31 December 2013) of the fund's units in issue. There were no units held by the Trustee or its associates. Details of all other material related party transactions during the year and any payment amounts outstanding at the balance sheet date are disclosed in notes 4, 8 and 10 to the financial statements and the statement of change in net assets attributable to Unitholders and the portfolio statement. Within note 10, accrued expenses (including amounts due to associates and agents) of 19,633 ( 28,415 as at 31 December 2013) are due to the Trustee and 747,503 ( 713,890 as at 31 December 2013) are due to the Manager. During the year, dividends received from HSBC Holdings totalled 514,503 ( 658,736 for the year ended 31 December 2013) and those from Marks and Spencer Group totalled 71,154 ( 85,179 for the year ended 31 December 2013). At the year end, dividends receivable from HSBC Holdings were nil ( nil as at 31 December 2013) and Marks and Spencer Group 13,623 ( 32,221 as at 31 December 2013). At the year end the fund held 9,210,784 ( 12,762,355 as at 31 December 2013) in HSBC Holdings, the parent company of the Manager and 1,019,135 ( 2,203,660 as at 31 December 2013) in Marks & Spencer Group. During the year transactions in HSBC Holdings totalled 8,202,754 ( 4,739,146 as at 31 December 2013) and those in Marks and Spencer Group totalled 2,134,618 ( 1,146,722 as at 31 December 2013). PAGE 35

38 Notes to the financial statements This section provides a more detailed explanation of specific items included in the balance sheet and statement of total return. 17. Portfolio and transaction costs Analysis of total purchase costs Purchases in year before transaction costs 478,288, ,856,280 Commissions 172, ,462 Taxes 72, ,205 Other charges 149, ,798 Total purchase costs 393, ,465 Total purchases including transaction costs 478,682, ,277,745 Analysis of total sales costs Sales in year before transaction costs 494,621, ,657,465 Commissions (172,840) (140,771) Taxes (8,753) (52,471) Other charges (17,600) (15,837) Total sales costs (199,193) (209,079) Total sales net of transaction costs 494,422, ,448, Sensitivity analysis The fund may utilise derivatives for efficient portfolio management and during the year entered into forward foreign exchange contracts in order to minimise the effect of exchange rate movements. The impact upon the fund of different market movements is not significant. 19. Stock lending activities The fund does not currently undertake stock lending. PAGE 36

39 Distribution tables For the year ended 31 December 2014 Interim Group 1: Units purchased prior to 1 January 2014 Group 2: Units purchased between 1 January 2014 to 30 June 2014 Net Equalisation Distribution Distribution income paid paid pence per unit pence per unit pence per unit pence per unit Income units Group Group Accumulation units Group Group Final Group 1: Units purchased prior to 1 July 2014 Group 2: Units purchased between 1 July 2014 to 31 December 2014 Net Equalisation Distribution Distribution income payable paid pence per unit pence per unit pence per unit pence per unit Income units Group Group Accumulation units Group Group PAGE 37

40 Please call if you would like to receive this information in an alternative format such as large print, Braille or audio. FTSE is a trademark of the London Stock Exchange plc and The Financial Times Limited and is used by FTSE International Limited (FTSE ) under licence. The FTSE indices are calculated by FTSE and all rights in and to these indices vest in FTSE and its licensors. FTSE does not sponsor, endorse or promote our products. M&S Savings and Investments is a trading name of Marks and Spencer Unit Trust Management Limited. Registered in England No Registered office: Kings Meadow, Chester CH99 9FB. Authorised and regulated by the Financial Conduct Authority. A wholly owned subsidiary of HSBC Bank plc. Marks & Spencer is a registered trademark of Marks and Spencer plc and is used under licence. Marks and Spencer Unit Trust Management Limited All rights reserved. Marks and Spencer Unit Trust Management Limited is entered in the Financial Services Register. Registration No Calls may be recorded for mutual security, training and monitoring purposes SI 5991SI/UKS/LONGREP/0215