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									BRITISH-AMERICAN MONEY MARKET FUND




    REPORT TO THE UNIT HOLDERS



        FOR THE YEAR ENDED

         31 DECEMBER 2006
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006

TABLE OF CONTENTS                                Page No

Trustee and Advisors to the Fund                       1

Trustee’s Report                                       2

Statement of Trustee’s Responsibilities                3

Fund Manager’s Report                                4-5

Asset Allocation                                       6

Report of the Custodian                                7

Report of the Independent Auditors                     8

Financial Statements:

    Income Statement                                   9

    Balance Sheet                                     10

    Cash Flow Statement                               11

    Summary of Significant Accounting Policies    12 - 13

    Notes                                         14 - 16
British-American Money Market Fund
Trustee and Advisors to the Fund
For the year ended 31 December 2006

TRUSTEE

Kenya Commercial Bank Limited
Kencom House, Head Office
P.O. Box 48400
Nairobi, Kenya

FUND & INVESTMENT MANAGERS

British-American Asset Managers
               th
Britak Centre,8 Floor
Junction of Mara and Ragati Roads
Upper Hill
P.O. Box 30375 ,00100
Nairobi, Kenya

CUSTODIAN

Kenya Commercial Bank Limited
Kencom House, Head Office
P.O. Box 48400
Nairobi, Kenya

AUDITORS

PricewaterhouseCoopers
The Rahimtullah Tower
P.O. Box 43963, 00100
Nairobi, Kenya

LAWYERS

Daly & Figgis Advocates
Lonrho House, 8th Floor
Standard Street
P.O. Box 40034, 00100
Nairobi, Kenya




                                      1
British-American Money Market Fund
Trustee’s Report
For the year ended 31 December 2006

The Trustee submits its report together with the audited financial statements For the 12
month period ended 31 December 2006 that disclose the state of affairs of the fund.

INVESTMENT OBJECTIVES
The investment objective of the British-American Money Market Fund is to achieve a high
level of yield while protecting investor’s capital.

To achieve this, the portfolio will be invested in fixed income securities of various durations
at attractive yields to ensure the return on the Fund is maximised.

CHANGES TO INCORPORATION DOCUMENTS

There were no changes made to the incorporation documents (Prospectus, Trust Deed and
Rules of the fund) during the period.

FUND PERFORMANCE

           ,
The highest lowest and average absolute yields during the period were 9.33% (2005: Shs
8.97%), 5.41% (2005: Shs 3.07% ) and 7.75% (2005: Shs 8.19%) respectively.

INCOME DISTRIBUTION

The total net income of Shs 24,959,363 (2005: Shs 1,745,139 ) has been distributed to the
unit holders by reinvestment in the Fund.

TOTAL VALUE OF THE FUND

The market value of the fund as at 31 December 2006 was Shs 566,726,048 (2005: Shs
96,004,965).

AUDITORS

The fund’s auditors, PricewaterhouseCoopers , continue in office in accordance with Section
159(2) of the Companies Act.

By order of the Trustee
Kenya Commercial Bank Limited




                                                                                   2007




                                              2
British-American Money Market Fund
Statement of Trustee’s Responsibilities
For the year ended 31 December 2006

The Capital Markets Act requires the Trustee to prepare financial statements for each
financial year that gives a true and fair view of the state of affairs of the fund as at the end of
the year and of the results of its operations. It also requires the Trustee to ensure that the
fund manager keeps proper accounting records that disclose, with reasonable accuracy, the
financial position of the fund. The Trustee is also responsible for safeguarding the assets of
the fund.

The Trustee accepts responsibility for the annual financial statements, which have been
prepared using appropriate accounting policies in conformity with International Financial
Reporting Standards and the requirements of the Capital Markets Act. The Trustee is of the
opinion that the financial statements give a true and fair view of the state of the financial
affairs of the fund and of its operating results. The Trustees further accept responsibility for
the maintenance of accounting records that may be relied upon in the preparation of
financial statements, as well as designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement.

DECLARATION STATEMENT

•   The British-American Money Market Fund is an approved Unit Trust within the meaning
    of the Capital Markets Act;
•   The unit-holders are not liable for the debts of the Unit Trust;
•   The British-American Money Market Fund is a securities fund investing in fixed income
    securities of various durations at attractive yields to ensure the return on the Fund is
    maximised.

Nothing has come to the attention of the Trustee to indicate that the fund will not remain a
going concern for at least the twelve months from the date of this statement.



By order of the Trustee
Kenya Commercial Bank Limited




                                                                                       2006




                                                3
British-American Money Market Fund
Fund Manager’s Report
For the year ended 31 December 2006

Dear Unit Holder,

During 2006, the British-American Money Market experienced good growth in new fund
sales.

The fundamental investment objective of the British-American Money Market is to achieve a
high level of current income consistent with the preservation of capital, together with the
ability of to create some capital appreciation by investing primarily in fixed income securities
of various terms issued by the Kenyan government and corporations with strong credit
quality.

The Manager adopts an investmen t philosophy which ensures that the return on the Fund is
maximised. The strategy to achieve this objective is two-pronged: First, the average term
and duration of the portfolio will be adjusted or managed according to the current trend in
general interest rates. In the event the interest rate is rising, the average term and duration
of the portfolio will be shortened while when interest rates are near its peak or falling the
duration and average term will be extended. Secondly, a credit spread strategy will be
adopted. At various times during the economic cycle, corporate bonds which are valued at
a spread over the Treasury bill rates will be added or deleted from the portfolio, with the
strategy being to add bonds when the spreads are at their widest p           oints and reduce
holdings when these bonds’ spread are at their narrowest point in relation to the underling
Government bonds. To protect against credit risk, the Fund invests only in high-quality
investments.

The strong economic growth momentum experienc ed in 2005 continued in 2006, with
estimated growth in the economy of 6%. This growth was underpinned by a stable macro-
economic environment and strong performance in the following sectors: agricultural and
forestry, wholesale and retail trade, tourism and hotels, and transport and communication
sectors and building and construction .

Short term interest rates declined in 2006 with the 91-day Treasury Bill rate reducing from
8.1% in 2005 to 5.8%. The yields also tightened on the longer-end with the yields on 10-
year Treasury bonds decreasing from 14.5% to 13% reflecting a stronger appetite from
investors. Central Bank of Kenya successfully issued a 11 and 12 year bond on behalf of
the Government of Kenya which assisted in lengthening the yield curve.

The British-American Money Market performed in line with expectations .       The Fund
maintained a balanced spread of fixed income securities with an overweight allocation to
Treasury Bonds. The Fund generated absolute returns of 11.1% during the year compared
to the benchmark yield of 7%, the average yield on 91-day Treasury Bill. The net return
generated by the Fund during the year was 8.5%.

Going forward, the Manager will maintain a cautious stance in the management of the
portfolio’s average term and duration in order to maximize yields. The current duration of the
portfolio will be extended by investing in high-yielding short to medium term treasury bonds
in order to boost returns. Cash balances will be invested with approved banks at
competitive rates to enhance the overall return.

The disciplined strategy adopted by the Manager coupled with the philosophy of investing in
high-quality fixed income investments with attractive yields will benefit investors who invest
in the Fund in the medium term.

We thank you for your choice of investing in British-American Money Market to achieve
maximum stability of the capital invested. The team at British-American Asset Managers
Ltd looks forward to working closely with you in assisting to meet and exceed your financial
and investment objectives.




                                               4
We wish you the very best for 2007 .

Yours sincerely,


______________________
Director




                                       5
British-American Money Market Fund
Asset Allocation
As at 31 December 2006




                        Asset Allocation - British-American
                               Money Market Fund


                                                              Cash and bank balances

              16%                    2%        11%            Deposits with financial
                                                              institutions
                                                              Government bonds

                                                              Corporate bond




                                     71%




                                           6
British-American Money Market Fund
Report of the Custodian
For the year ended 31 December 2006

a) In accordance with the Capital Markets (Collective Investments Schemes) Regulations,
   2001 (the regulations) and the Custody Agreement between Kenya Commercial Bank
   Limited as the Custodian and British-American Asset Managers as the Fund Manager,
   we confirm that we have discharged the duties prescribed for a Custodian under
   Regulation 35 of the regulations to British-American Balanced Fund.

   For the 1 2 month period ended 31 December 2006, we have held the assets for the
   British-American Money Market Fund, including title deeds, securities and income that
   accrue thereof, to the order of the Fund Manager and facilitated the transfer, exchange
   or delivery in accordance with the instructions received from the Fund Manager.

b) We confirm having effected the sale, redemption and cancellation of units in accordance
   with the creation/liquidation instructions received from the Fund Manager.



By order of the Custodian
Kenya Commercial Bank Limited



                                                                              2007




                                            7
REPORT OF THE INDEPENDENT AUDITORS TO THE UNIT HOLDERS OF BRITISH-
AMERICAN MONEY MARKET FUND

Report on the financial statements

We have audited the financial statements of the British-American Money Market Fund for
the 12 month period ended 31 December 2006 set out o n pages 9 to 16. These financial
statements comprise the balance sheet at 31 December 2006, the income statement, cash
flow statement for the year then ended, and a summary of significant accounting policies
and other explanatory notes.

Trustee’s responsibility for the financial statements

The trustee is responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards and with the
requirements of the Capital Markets Act. This responsibility includes: designing,
implementing and maintaining internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circum stances.

Auditor’s responsibility

Our responsibility is to express an independent opinion on the financial statements based
on our audit. We conducted our audit in accordance with International Standards on
Auditing. Those standards require that we comply with ethical requirements and plan and
perform our audit to obtain reasonable assurance that the financial statements are free
from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
trust funds’ internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
trustee, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Opinion

In our opinion the accompanying financial statements give a true and fair view of the state
of the respective unit trust portfolios’ financial affairs at 31 December 2006 and of their
profit and cash flows for the year then ended in accordance with International Financial
Reporting Standards and the Capital Markets Authority Collective Investment Schemes
Regulations, 2001.




Certified Public Accountants                                                         2007
Nairobi




                                              8
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006

INCOME STATEMENT

                                             Notes         200 6         2005
                                                            Shs          Shs.
INCOME

Interest income                                      33,340,492     2,372,535


EXPENSES

Service fees                                  3       7,987,566       317,935


PROFIT BEFORE INCOME TAX                             25,352,926     2,054,600

Income tax expense                                     (393,563)     (309,461)


PROFIT AFTER TAX                                     24,959,363     1,745,139

DISTRIBUTION                                         (24,959,363)   (1,745,139)


Undistributed profit                                           -             -




                                         9
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006

BALANCE SHEET

                                         Notes             200 6                2005
                                                            Shs                  Shs
ASSETS

Corporate bond                            5          91,500,000           10,817,586
Government bonds                          5         399,411,685           42,862,426
Deposits with financial institutions      5          63,140,959           33,234,708
Interest receivable                                   8,029,966            1,409,878
Other receivables                                           350              970,904
Bank and cash balances                               11,376,62 1           7,774,054


TOTAL ASSETS                                        573,459,581           97,069,556


LIABILITIES


Unit holder liabilities                   6         566,726,048           96,004,965
Unsettled investment transactions                     6,733,533            1,064,591


TOTAL LIABILITIES                                   573,459,581           97,069,556




The financial statements on pages 9 to 16 were approved for issue by the Trustee on
_____________2007 and signed on its behalf by:



___________________
Trustee




                                              10
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006

CASH FLOW STATEMENT

                                              Notes          2006            2005
                                                              Shs             Shs
Operating activities
Cash generated from operations                 7        (8,361,721)     (1,634,126)


Investing activities
Investment in government securities                   (485,309,795)   (150,410,947)
Purchase of corporate bonds                           (230,091,145)    (10,817,586)
Interest received                                       26,720,404       1,918,986
Interest paid                                                    -        (187,275)
Proceeds from sale of investments                      278,000,000      72,900,037


Net cash used in investing activities                 (410,680,536)    (86,596,785)


Financing activities
Net contribution from unit holders                    485,785,783      96,004,965


Increase in cash and cash equivalents                  66,743,526        7,774,054


Movement in cash and cash equivalents
At start of year                                        7,774,054            -
Increase                                               66,743,526        7,774,054


At end of year                                         74,517,580        7,774,054




                                         11
 British-American Money Market Fund
 Annual Report and Financial Statements
 For the year ended 31 December 2006

 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements
are set out below. These policies have been consistently applied during the period, unless
otherwise stated.

(a)   Basis of preparation

      The financial statements are prepared in accordance with and comply with International
      Financial Reporting Standards (IFRS). The financial statements are presented in the
      functional currency, Kenya Shillings (Shs), and prepared under the historical cost
      convention as modified by the carrying of investments at fair values.

      The preparation of financial statements in conformity with International Financial
      Reporting Standards requires the use of estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported amounts of revenues
      and expenses during the reporting period. Although these estimates are based on the
      Trustee’s best knowledge of current events and actions, actual results ultimately may
      differ from those estimates

(b) Revenue recognition

      Interest income is recognised on a time proportion basis that takes into account the
      effective yield on the asset. Dividends are recognised as income in the period in which
      the right to receive payment is established.


(c)   Investments

      The fund classifies its investments depending on the purpose for which the investments
      were acquired. The appropriate classification of the fund’s investments is determined at
      the time of the purchase and re-evaluated on a regular basis as follows:

      i) Financial assets at fair value through profit and loss

      Investments intended to be held for an indefinite period of time, but which may be sold in
      response to needs for liquidity or changes in interest rates, are classified at fair value with
      adjustments going through profit and loss. These are included in non-current assets
      unless management has the express intention of holding the investment for less than 12
      months from the balance sheet date or unless they will need to be sold to raise operating
      capital. Government securities are classified under this category

      ii) Held-to-maturity investments

      Held-to-maturity investments are non derivative financial assets with fixed determinable
      payment and fixed maturities that the group has positive intention and ability to hold to
      maturity. Corporate bonds are classified under this category.

      Purchases and sales of investments are recognised on the trade date, which is the date
      the fund commits to purchase or sell the asset. The cost of purchase includes transaction
      costs. Realised and unrealised gains and losses arising from changes in the fair value are
      recorded in the profit and loss account in the period in which they arise.




                                                  12
 British-American Money Market Fund
 Annual Report and Financial Statements
 For the year ended 31 December 2006

 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Distribution

      All income arising from receipts of investment income is distributed to unit holders after
      provision or expenses and taxes. All distributions including unclaimed distributions are
      reinvested in the unit holders’ account.

(e)   Unit holder liabilities

      Unit holder liabilities are redeemable on demand at an amount equal to a proportionate
      share of the unit portfolio’s net asset value. The liabilities are carried at the redemption
      amount that is payable at the balance sheet date if the holder exercised their right to
      redeem the liabilities.


(f)   Cash and cash equivalents

      Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of
      the cash flow statement, cash and cash equivalents comprise cash on hand and
      deposits held at call with banks.

(g) Risk management objectives and policies

      The fund’s activities expose it to a variety of financial risks like the effects of changes in debt
      and equity market prices, and interest rates. The fund’s overall risk management programme
      focuses on the identification and management of risks and the unpredictability of financial
      markets and seeks to minimise potential adverse effects on its financial performance. There is
      no significant concentration of risk at the year end.

      The company’s risk management policies include the use of guidelines governing the
      acceptance of clients and investment policies are in place which help manage liquidity and
      seek to maximise return within an acceptable level of interest rate risk.


(h) Critical accounting estimates and judgements

      Estimates and judgements are continually evaluated and are based on historical experience
      and other factors, including experience of future events that are believed to be reasonable
      under the circumstances.

(i) Critical judgements in applying the entity’s accounting policies

      In the process of applying the company’s accounting policies , management made
      judgements in determining the classification and the impairment of financial assets.




                                                 13
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006

NOTES

 1)          General information

             The fund started operations on 1 July 2005, is registered under the Capital
             Markets Authority Act and is domiciled in Kenya. The address of its registered
             office is:

             Britak Centre
             Junction of Mara and Ragati Roads
             Upper Hill
             Nairobi

 2)          Financial risk management objectives and policies


             The fund’s activities expose it to a variety of financial risks, including credit
             risk and the effects of changes in market prices and interest rates. The fund’s
             overall risk management programme focuses on the unpredictability of
             financial markets and seeks to minimise potential adverse effects on its
             financial performance. There is no concentration of risk at year end.

             Risk management is carried out by the Investment Manager, British-American
             Asset Managers (BAAM). BAAM identifies, evaluates and manages financial
                                                              e
             risks, with emphasis on specific areas such as int rest rate risk, credit risk
             and investing excess liquidity.

             The fund has policies in place to ensure compliance with international best
             practice in corporate governance.


 3)         Service fees

            The expense relates to service fees paid to British-American Asset Managers
            Limited for the professional management of the fund. This is charged at 2% per
            annum, computed on the daily fund balances.

 4)         Taxation

            The unit trust is registered under the Income Tax Act (Collective Investment
            Scheme Rules 2002), and is exempt from income tax including the payment of
            the withholding tax on investment income per exemption certificate obtained
            from Kenya Revenue Authority in February 2006. The income tax expense
            reported in the income statement relates to the period before the exemption.




                                             14
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006


NOTES (CONTINUED)

 5)          Investments

      (i)    Maturity profile of investments in the money market


                    Due within 3   Due within 6     Due within      Due after 5      TOTALS     TOTALS 2005
                        months      6 months&       1 & 5 years          years          2006            Shs
                                    12 m onths                                           Shs
Fixed Deposits
                     63,140,959               -              -                -    63,140,959      33,234,708
Government
Securities          155,561,685     19,700,000    109,900,000      114,250,000    399,411,685      42,862,426
Corporate
Bonds                91,500,000               -              -                -    91,500,000      10,817,586


TOTAL               310,202,644     19,700,000    109,900,000      114,250,000    554,052,644      86,914,720



6)      Unit holder funds                                           200 6                                        2005
                                     No. of units                  Value            No. of units                Value
                                                                     Shs                                          Shs
       At start of year               96,004,965              96,004,965                      -                     -
       Creations                   1,016,899,143             991,939,780           108,154,965           108,039,469
       Liquidation                 (546,178,060)           (546,178,060)           (12,150,000)          (12,150,000)
       Distributions                            -             24,959,363                      -               115,496


       At close of the year         566,726,048              566,726,048             96,004,965            96,004,965


 7)         Cash generated from operations
                                                                         2006                   2005
                                                                          Shs                    Shs

            Amounts available for distribution                     24,959,363              1,745,139
            Adjustments for :
            Fair value gains                                                  -            (215,868)
            Investment income                                     (33,340,492 )          (1,847,206)
            Changes in working capital
             - increase in other receivables                       (5,649,534)           (2,380,782)
             - increase in current liabilities                       5,668,942             1,064,591


            Cash generated from operations                         (8,361,721)           (1,634,126)


8)          Related party transactions

            British-American Asset Managers Money Market Fund is managed by British-
            American Asset Managers (BAAM). BAAM is controlled by British-American
            Investment Company (Kenya) Limited (BICL) incorporated in Kenya . The ultimate
            parent of BICL is British American Investment Company (Mtius) Limited. There are
            other companies that are related to BAAM through common shareholdings or
            common directorship.

                                                     15
British-American Money Market Fund
Annual Report and Financial Statements
For the year ended 31 December 2006


NOTES (CONTINUED)

8)      Related party transactions (continued)

 a)    Unit holder balance

                                                         2006         2005
                                                          Shs          Shs

       Units purchased by British-American
       Insurance Company (K) Limited                11,857,812   10,987,234


 b)   Service fees


       British-American Asset Managers               7,987,566     317,935




                                         --0 00--




                                             16

								
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